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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
IVI CHECKMATE CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
COMMON STOCK, PAR VALUE $.01 PER SHARE
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(2) Aggregate number of securities to which transaction applies:
20,853,787
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
$3.30
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(4) Proposed maximum aggregate value of transaction:
$68,817,497
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(5) Total fee paid:
$13,764
-------------------------------------------------------------------------
[x] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
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Notes:
Reg. (S) 240.14a-101.
SEC 1913 (3-99)
[IVI CHECKMATE CORP. LOGO]
1003 Mansell Road
Roswell, Georgia 30076
June 21, 2001
Dear Stockholder:
You are cordially invited to attend a 2001 special meeting of stockholders
of IVI Checkmate Corp., which will take place on Wednesday, August 8, 2001, at
10:00 a.m., local time, at our headquarters in Roswell, Georgia. We have
provided a map to our headquarters at the end of the accompanying proxy
statement.
At the meeting you will be asked to consider and vote upon a proposal to
approve the Agreement and Plan of Merger, dated as of April 6, 2001, by and
among IVI Checkmate Corp., Ingenico S.A. and Idaho Acquisition Corp., a wholly
owned subsidiary of Ingenico. If the merger is completed, IVI Checkmate will
become a subsidiary of Ingenico, and you will receive $3.30 in cash, without
interest, for each of your shares of common stock of IVI Checkmate and for each
of your exchangeable shares of IVI Checkmate Ltd., a subsidiary of IVI
Checkmate.
Your Board of Directors has determined that the merger is fair to and in the
best interests of IVI Checkmate and its stockholders, including the holders of
exchangeable shares. Accordingly, your Board has unanimously approved and
adopted the merger agreement and the merger, and unanimously recommends that
you vote FOR the approval of the merger agreement at the special meeting.
The accompanying notice of this special meeting and proxy statement explain
the proposed merger and provide additional information concerning the meeting
itself. Since we expect to consummate the merger pending your approval, we are
delaying our 2001 annual stockholders' meeting until after we receive your vote
on this matter. If the merger is approved and consummated, we will not hold the
2001 annual meeting; however, if the merger is not approved and consummated for
any reason, we will promptly give you notice of and hold the 2001 annual
stockholders' meeting.
Your vote is very important, so please read these materials carefully. We
cannot complete the merger unless the merger agreement is approved by holders
of at least a majority of all of our outstanding shares of common stock and
exchangeable shares. Accordingly, failing to vote your shares will have the
same effect as a vote against the merger. Whether or not you plan to be present
at the meeting, please vote your proxy as soon as possible so that your vote
will be counted.
If you plan to attend the meeting, please so indicate by marking the
designated box on your proxy card. If your shares are not registered in your
name (i.e., they are held in "street name" by a brokerage firm) and you would
like to attend and vote at the meeting, please bring a copy of a brokerage
statement reflecting your stock ownership as of the record date. Additionally,
if you are a "street name" stockholder who wishes to vote at the meeting, you
will need to obtain a proxy form from the institution that holds your shares.
Sincerely,
/s/ L. Barry Thomson
L. Barry Thomson
President and Chief Executive
Officer
This proxy statement is dated June 21, 2001, and is first being mailed to
stockholders on or about June 21, 2001.
[IVI CHECKMATE INC LOGO]
1003 Mansell Road
Roswell, Georgia 30076
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 8, 2001
10:00 A.M.
NOTICE IS HEREBY GIVEN that a special meeting of stockholders of IVI
Checkmate Corp., a Delaware corporation, will be held on Wednesday, August 8,
2001, at 10:00 a.m., local time. The meeting will be held at our headquarters
located at 1003 Mansell Road, Roswell, Georgia 30076. The purpose of the
meeting is for the stockholders to consider and vote upon a proposal to approve
the Agreement and Plan of Merger, dated as of April 6, 2001, by and among
IVI Checkmate Corp., Ingenico S.A., a societe anonyme organized and existing
under the laws of the Republic of France, and Idaho Acquisition Corp., a
Delaware corporation that is a wholly owned subsidiary of Ingenico.
Pursuant to the merger agreement, and subject to your approval, the Ingenico
subsidiary will be merged with and into IVI Checkmate Corp. and, other than
dissenting shares, which have statutorily defined rights as described in
further detail in this proxy, and shares held by IVI Checkmate Corp., Ingenico
or their respective subsidiaries, which will be canceled, (i) each share of our
common stock outstanding immediately prior to the merger will be converted into
the right to receive $3.30 in cash, without interest and (ii) subject to the
approval of a special resolution by the holders of the exchangeable shares,
each exchangeable share of IVI Checkmate Ltd. (a subsidiary of IVI Checkmate
Corp.) outstanding immediately after the merger will be purchased by IVI
Checkmate Corp. for $3.30 in cash, without interest.
Stockholders of record, including the holders of exchangeable shares, at the
close of business on June 18, 2001 are entitled to receive notice of and to
vote at the special meeting and any adjournments of the special meeting. A list
of those stockholders will be available for inspection during ordinary business
hours from June 19, 2001 through the time of the special meeting on August 8,
2001 at our principal offices at 1003 Mansell Road in Roswell, Georgia for any
purposes related to the meeting. The list of stockholders will also be
available at the meeting.
It is important that your shares be represented and voted at the special
meeting. Please vote in one of these ways:
(1) USE THE TOLL-FREE TELEPHONE NUMBER shown on the proxy card;
(2) VISIT THE WEB SITE noted on your proxy card to vote via the Internet;
(3) MARK, SIGN, DATE AND PROMPTLY RETURN the enclosed proxy card in the
postage-paid envelope; OR
(4) VOTE IN PERSON by appearing at the special meeting.
By Order of the Board of Directors,
/S/ John J. Neubert
John J. Neubert
Corporate Secretary
Roswell, Georgia
June 21, 2001
SUMMARY TERM SHEET FOR THE MERGER
This summary term sheet for the merger highlights selected information from
this proxy statement regarding the merger and the merger agreement and may not
contain all of the information that is important to you as an IVI Checkmate
stockholder. Accordingly, we encourage you to carefully read this entire
document and the documents to which we have referred.
The Companies (page 1)
IVI Checkmate Corp. (page 1). IVI Checkmate Corp., a Delaware corporation.
Ingenico S.A. (page 1). Ingenico S.A., a societe anonyme organized and
existing under the laws of the Republic of France and headquartered in Puteaux
Cedex, France, is a multinational leading provider of smart card based secured
transaction products and systems.
Idaho Acquisition Corp. (page 1). Idaho Acquisition Corp., a Delaware
corporation, and a wholly owned subsidiary of Ingenico.
The Special Meeting (page 1)
The Proposal (page 1). You are being asked to consider and vote upon a
proposal to approve the agreement and plan of merger (which we sometimes refer
to as the "merger agreement") that provides for IVI Checkmate Corp. to be
acquired by Ingenico S.A.
Date, Time and Place of Special Meeting (page 1). The special meeting will
be held on Wednesday, August 8, 2001, at 10:00 a.m., local time, at our
headquarters located at 1003 Mansell Road, Roswell, Georgia.
What You Will Receive (page 1). Upon consummation of the merger, you will
receive $3.30 in cash for each of your shares of IVI Checkmate common stock
unless you properly dissent. In addition, provided that the special resolution
is approved by the holders of the exchangeable shares, you will receive $3.30
in cash for each of your exchangeable shares of IVI Checkmate Ltd. (a
subsidiary of IVI Checkmate Corp.) unless you properly dissent. We frequently
refer to both the holders of the common stock and the exchangeable shares as
IVI Checkmate stockholders.
Voting (page 1)
Voting Rights of Holders of Exchangeable Shares (page 1). The holders of
exchangeable shares of IVI Checkmate Ltd. have received notice of a special
meeting of the holders of exchangeable shares to consider a special resolution,
the effect of which, if approved, would be that each exchangeable share
outstanding immediately following the completion of the merger (other than
those held by IVI Checkmate and its subsidiaries) will be purchased by IVI
Checkmate for $3.30 in cash, without interest. The approval of the special
resolution will result in the holders of the exchangeable shares (other than
IVI Checkmate and its subsidiaries) participating in the merger to the same
extent and on an economically equivalent basis as the holders of common stock.
Required Vote (page 3). Approval of the merger requires the affirmative vote
of the holders of at least a majority of the outstanding shares of IVI
Checkmate common stock and the exchangeable shares (excluding shares held by
IVI Checkmate and its subsidiaries), voting together as one class.
Who May Vote (page 3). You are entitled to vote at the special meeting if
you owned shares of IVI Checkmate common stock or exchangeable shares at the
close of business on June 18, 2001, the record date for the special meeting. A
total of 20,853,787 shares of IVI Checkmate common stock and exchangeable
shares were outstanding and entitled to be voted as of the record date.
How You Can Vote (page 4 ). You may vote in any of four ways:
(1) Voting by Mail. If you choose to vote by mail, simply mark your proxy,
date and sign it, and return it in the postage-paid envelope provided.
i
(2) Voting by Telephone. You can vote your shares by telephone by calling
the toll-free telephone number on your proxy card. Telephone voting is
available 24 hours a day.
(3) Voting by Internet. You can also vote via the Internet. The web site
for Internet voting is on your proxy card, and voting is also available
24 hours a day.
(4) Voting in Person. You can also vote by appearing and voting in person
at the special meeting.
Holders of exchangeable shares may vote in person or by instructing Montreal
Trust Company of Canada how each share they hold should be voted. Holders of
the exchangeable shares should also see "--Voting Rights of Holders of
Exchangeable Shares" for further explanation of the proper voting procedures
for exchangeable shares.
How You May Revoke or Change Your Vote (page 5).
You can revoke or change your proxy at any time before it is voted at the
special meeting by:
(1) giving written notice of revocation to the Corporate Secretary;
(2) submitting another proper proxy by telephone, Internet or on another
written proxy; or
(3) attending the special meeting and voting by paper ballot in person. If
your shares are held in the name of a bank, broker, trustee or other
holder of record, including the trustee or other fiduciary of an
employee benefit plan, you must obtain a proxy, executed in your favor,
from the holder of record to be able to vote at the special meeting.
The Merger (page 6)
IVI Checkmate Board's Recommendation to Stockholders (page 9)
Your Board of Directors has determined by a unanimous vote that the merger
is fair to and in the best interests of IVI Checkmate and its stockholders and
has approved and adopted the merger agreement and the merger. Your Board
recommends that stockholders vote FOR approval of the merger agreement at the
special meeting.
Opinion of Wachovia Securities, Inc. (page 10 and Appendix B)
On April 4, 2001, Wachovia Securities, Inc., the financial advisor to the
IVI Checkmate Special Committee of the Board of Directors, delivered an oral
opinion to the IVI Checkmate Special Committee, which was confirmed in a
written opinion dated April 4, 2001. In that connection, Wachovia Securities
opined that, as of the date of its opinion and based on and subject to the
matters and various assumptions and limitations stated in that opinion, the
$3.30 per share cash consideration, without interest, to be paid to the holders
of IVI Checkmate common stock and the economic equivalent to be paid to the
holders of IVI Checkmate Ltd. exchangeable shares pursuant to the merger
agreement was fair to such holders from a financial point of view.
Wachovia Securities provided its advisory services and its opinion for the
information and assistance of the Special Committee of IVI Checkmate's Board of
Directors in connection with its consideration of the merger. Wachovia
Securities' opinion is not a recommendation as to how any IVI Checkmate
stockholder should vote at the special meeting, and should not be relied upon
by any stockholder as a recommendation. The full text of the opinion, which
sets forth the assumptions made, matters considered and limitations on the
review undertaken, is attached as Appendix B to this proxy statement, and you
are urged to, and should, read the opinion in its entirety.
Material Federal Income Tax Consequences (page 14). The merger will be a
taxable transaction to you. For United States federal income tax purposes, you
will generally recognize gain or loss in the merger in an amount determined by
the difference between the cash you receive and your tax basis in IVI Checkmate
ii
common stock or exchangeable shares. Because determining the tax consequences
of the merger can be complicated, you should consult your own tax advisor in
order to understand fully how the merger will affect you.
The Canadian tax consequences of the merger to the holders of the
exchangeable shares of IVI Checkmate Ltd. are described in the management
information circular provided to the holders of the exchangeable shares in
connection with the special meeting of the holders of exchangeable shares being
held on July 24, 2001.
Regulatory Matters (page 15). Under United States federal antitrust law, the
merger may not be completed until Ingenico and IVI Checkmate have made filings
with the United States Federal Trade Commission and the United States
Department of Justice and the applicable waiting periods have expired or been
terminated. On May 22, 2001, Ingenico and IVI Checkmate filed the requisite
notification reports with the Federal Trade Commission and the Department of
Justice. On June 5, 2001, the Federal Trade Commission granted an early
termination of the applicable waiting period.
While no assurances can be made that the merger will receive all other
necessary regulatory clearances on acceptable terms at any particular time, if
any, we expect regulatory clearances will be obtained no later than the third
calendar quarter of 2001.
Interests of IVI Checkmate Directors, Officers and Employees in the Merger
(page 16). When IVI Checkmate's Special Committee and, subsequently, its full
Board of Directors considered the merger and the merger agreement, both the
Special Committee and the Board of Directors were aware that certain of the
officers and directors of IVI Checkmate have interests and arrangements that
may be different from, or in addition to, your interests as IVI Checkmate
stockholders. All vested and unvested IVI Checkmate stock options and similar
rights, including those held by directors and officers, will be canceled in
exchange for value in the merger. In addition, under the merger agreement,
Ingenico and IVI Checkmate will indemnify and provide insurance for directors
and officers of IVI Checkmate after the merger.
IVI Checkmate compensates certain directors for their services. IVI
Checkmate agreed to compensate Mr. Bert Nordin in the amount of $150,000 to
serve as Chairman of the Special Committee. IVI Checkmate also agreed to
reimburse Mr. Nordin for all reasonable costs and expenses incurred in
performance of those duties. In 1998, IVI Checkmate entered into an agreement
with Mr. J. Stanford Spence, Chairman of the Board, which expires on December
31, 2005. This agreement with Mr. Spence was amended so that effective as of
the time of the merger with Ingenico, the agreement will provide for, among
other things, Mr. Spence's resignation from our Board of Directors.
You should also be aware that certain members of our Board of Directors were
appointed to the Board by Ingenico and have interests in Ingenico. Gerard
Compain is an executive vice president and director of Ingenico, Bertrand
Cambou is a director of Ingenico and Gareth Owen is an officer of a subsidiary
of Ingenico.
Finally, in connection with the execution of the merger agreement, certain
officers and directors of IVI Checkmate executed support agreements with
Ingenico. Each individual who executed a support agreement agreed to vote all
of his shares of IVI Checkmate stock in favor of the merger, the merger
agreement and the transactions contemplated thereby.
Appraisal and Dissent Rights (page 18 and Appendix C). Under Delaware law,
holders of IVI Checkmate common stock, including holders of exchangeable shares
that have exchanged those shares for common stock before completion of the
merger, are entitled to appraisal rights with respect to their shares of IVI
Checkmate common stock in connection with the merger. Under the laws of Canada,
holders of exchangeable shares of IVI Checkmate Ltd. will have dissent rights
with respect to their exchangeable shares in connection with the special
meeting of the holders of exchangeable shares as more fully described in the
management information circular provided to the holders of exchangeable shares.
iii
The Merger Agreement (page 21 and Appendix A)
The Structure (page 21). Upon the terms and conditions of the merger
agreement, a wholly owned subsidiary of Ingenico will merge with and into IVI
Checkmate. IVI Checkmate will remain in existence as a wholly owned subsidiary
of Ingenico. IVI Checkmate stockholders will have no equity interest in IVI
Checkmate or Ingenico after the merger.
Closing of the Merger (page 26). Before we can complete the merger, a number
of conditions must be satisfied or waived by the applicable party. These
include, among other things:
(1) approval of the merger agreement by the requisite vote of IVI Checkmate
stockholders;
(2) the absence of any restraint, injunction or prohibition by any order or
ruling of a court or any governmental entity and the absence of any
statute, rule or regulation applicable to the merger which prevents the
merger or the other transactions contemplated by the merger or has the
effect of making the purchase of shares of IVI Checkmate common stock
illegal;
(3) the absence of any pending action challenging or seeking to restrain or
prohibit the consummation of the merger that could reasonably be
expected to be determined adversely to IVI Checkmate and, if adversely
determined, could, individually or in the aggregate, reasonably be
expected to have a material adverse effect on IVI Checkmate or on the
merger;
(4) the expiration or early termination of applicable time periods under
United States federal antitrust laws and the satisfaction of any
requirement and the receipt of any approval under the Investment Canada
Act or any other applicable foreign or supranational antitrust law;
(5) no party shall have terminated the merger agreement;
(6) the absence of any action by any governmental authority including the
enactment or issuance of any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction applicable to the merger,
other than the routine application of the waiting period provisions of
the federal antitrust laws, that would reasonably be expected to: (i)
make illegal or otherwise prohibit or materially delay the merger or
seek to obtain material damages or make the merger materially more
costly, (ii) prohibit or materially limit the ownership or operation by
Ingenico or the surviving corporation of all or any material portion of
the business or assets of IVI Checkmate or compel Ingenico to dispose
of or hold separately all or any material portion of its or the
surviving corporation's business or assets, or seek to impose any
material limitation on the ability of Ingenico or the surviving
corporation, following the merger, to conduct its business or own its
assets, (iii) impose material limitations on the ability of Ingenico
effectively to acquire, hold or exercise full rights of ownership of
the shares of the surviving corporation's common stock following the
merger or (iv) require divestiture by Ingenico of any shares of common
stock of the surviving corporation;
(7) the absence of any development, event or condition that has, or could
reasonably be expected to have, a material adverse effect on the
business, assets, liabilities, financial condition, results of
operations, profitability or prospects of IVI Checkmate and its
subsidiaries taken as a whole;
(8) the truth and accuracy of IVI Checkmate's representations and
warranties set forth in the merger agreement;
(9) IVI Checkmate's compliance in all material respects with its
obligations, covenants and agreements under the merger agreement;
(10) the Special Committee and the Board of IVI Checkmate must not have
withdrawn or modified in a manner adverse to Ingenico or its
subsidiary the adoption or recommendation of the merger or the merger
agreement, and must not have resolved to do the same;
(11) the holders of the exchangeable shares (other than IVI Checkmate and
its subsidiaries) must have approved and adopted a special resolution
by the requisite vote, the effect of which would be to
iv
authorize the purchase of each exchangeable share that is outstanding
immediately after the completion of the merger by IVI Checkmate (other
than those shares being held by IVI Checkmate and its subsidiaries) for
$3.30 in cash, without interest, with the result that the holders of the
exchangeable shares (other than IVI Checkmate and its subsidiaries) will
participate in the merger to the same extent and on an economically
equivalent basis as the holders of common stock;
(12) the receipt of any and all necessary orders and rulings from
applicable Canadian securities regulatory authorities, on terms
acceptable to Ingenico acting reasonably; and
(13) all participants in the IVI Checkmate stock option exchange program
must have duly executed and delivered to IVI Checkmate and Ingenico a
release, relinquishment and waiver in a form satisfactory to Ingenico,
unless this condition has already lapsed as set forth in the merger
agreement.
We expect to complete the merger as promptly as practicable after all of the
conditions to the merger have been satisfied or waived.
Termination of the Merger Agreement (page 28). The merger agreement may be
terminated at any time prior to the effective time of the merger, whether
before or after IVI Checkmate stockholders have approved it, in any of the
following cases:
(1) by mutual written consent of the parties;
(2) by either IVI Checkmate or Ingenico, if the merger is not consummated
by September 30, 2001, or if any condition to consummate the merger
becomes impossible to satisfy, for reason other than a breach of the
merger agreement by the party seeking to terminate the merger
agreement, prior to September 30, 2001;
(3) by either IVI Checkmate or Ingenico, if any governmental entity issues
a final and non-appealable order, decree or ruling or takes any action
permanently enjoining, restraining or otherwise prohibiting the merger;
(4) by IVI Checkmate if, prior to its stockholders' approval of the merger,
its Board approves or recommends an acquisition transaction with a
third party which is determined to be a superior proposal in accordance
with the terms of the merger agreement, provided that the termination
of the merger agreement will not be effective unless and until IVI
Checkmate pays Ingenico for all of its fees and expenses related to the
merger, plus a termination fee in the amount of $2.75 million;
(5) by Ingenico if the Board of Directors of IVI Checkmate or the Special
Committee (i) withdraws or modifies in a manner adverse to Ingenico's
subsidiary its approval or recommendation of the merger or the merger
agreement, (ii) approves or recommends another offer or an agreement to
effect an acquisition transaction by any third party (other than an
affiliate of Ingenico) or (iii) resolves to effect any of the
foregoing;
(6) by Ingenico if the Board of Directors of IVI Checkmate Ltd. does not
recommend, or withdraws or modifies in a manner adverse to Ingenico its
recommendation, that the holders of the exchangeable shares vote in
favor of a special resolution, the effect of which would be to
authorize the purchase of each exchangeable share that is outstanding
immediately after the completion of the merger by IVI Checkmate (other
than those held by IVI Checkmate and its subsidiaries) for $3.30 in
cash, without interest, with the result that the holders of
exchangeable shares (other than IVI Checkmate and its subsidiaries)
will participate in the merger to the same extent and on an
economically equivalent basis as the holders of common stock;
(7) by Ingenico if any person (other than Ingenico, Merger Sub or any of
their respective affiliates) makes a proposal or public announcement or
communication to IVI Checkmate with respect to an acquisition
transaction which IVI Checkmate notifies Ingenico is a superior
proposal under the terms of the merger agreement;
v
(8) by Ingenico if there shall have occurred, and continues to exist, (i)
any general suspension of, or limitation on prices for, trading in
securities on the New York Stock Exchange or on the Paris Bourse, (ii)
any decline of at least 20% in the Dow Jones Average of Industrial
Stocks, the Standard & Poor's 500 Index or the CAC-40 Index from the
close of business on the last trading day immediately preceding the
date of the merger agreement, (iii) any change in currency exchange
rates measured from the close of business on the date of the merger
agreement, resulting in an increase of 15% or more in the consideration
payable pursuant to the merger as translated from U.S. Dollars into
Euros, (iv) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, France or the
European Union, or a material limitation (whether or not mandatory) by
any governmental entity on the extension of credit by banks or other
lending institutions, (v) a commencement of a war, armed hostilities or
other significant national or international crisis directly or
indirectly involving the United States or France, or (vi) in the case
of clauses (i) and (ii) existing as of the date of the merger
agreement, a material acceleration or worsening thereof;
(9) by either IVI Checkmate or Ingenico if, upon a vote taken at the
stockholder meeting, IVI Checkmate's stockholders do not approve the
merger agreement;
(10) by Ingenico if, upon a vote taken at the special meeting of the
holders of exchangeable shares, the holders of the exchangeable shares
(other than IVI Checkmate and its subsidiaries) do not approve or
adopt a special resolution, the effect of which would be to authorize
the purchase of each exchangeable share that is outstanding
immediately after the completion of the merger by IVI Checkmate (other
than those held by IVI Checkmate and it subsidiaries) for $3.30 in
cash, without interest, with the result that the holders of
exchangeable shares (other than IVI Checkmate and its subsidiaries)
will participate in the merger to the same extent and on an
economically equivalent basis as holders of common stock;
(11) by IVI Checkmate if (i)(A) any of the representations and warranties
of Ingenico or its subsidiary which are qualified as to materiality
were when made or later became untrue or incorrect or (B) any other
representations or warranties of Ingenico or its subsidiary were when
made or later became untrue or incorrect except where the failure to
be true and correct could not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on Ingenico
or on the ability of Ingenico or its subsidiary to complete the
merger, or (ii) Ingenico or its subsidiary breaches or fails to comply
in any material respect with any of their respective agreements or
obligations under the merger agreement, unless the breach is cured
within 10 business days following notice of the breach; and
(12) by Ingenico if (i)(A) any of the representations or warranties of IVI
Checkmate which are qualified as to materiality or relate to the
capitalization of IVI Checkmate were when made or later became untrue
or incorrect or (B) any other representations or warranties of IVI
Checkmate were when made or later became untrue or incorrect except
where the failure to be true and correct could not, individually or in
the aggregate, reasonably be expected to have a material adverse
effect on IVI Checkmate or on the ability of IVI Checkmate to complete
the merger, or (ii) IVI Checkmate breaches or fails to comply in any
material respect with any of its agreements, unless the breach is
cured within 10 business days following notice of the breach.
Fees and Expenses if Merger Is Not Completed (page 30)
Under the terms of the merger agreement, IVI Checkmate must pay Ingenico a
termination fee of $2.75 million and also pay all of Ingenico's and its
subsidiary's out-of-pocket fees and expenses related to the merger agreement,
the transactions contemplated by the merger agreement and any related financing
if the merger agreement is terminated in any of the following cases:
(1) by Ingenico, following any public proposal with respect to an
acquisition transaction, for the reasons stated in paragraph 2 of "--
Termination of the Merger Agreement" above on the basis of a breach
vi
of IVI Checkmate's obligation to duly call, give notice of, convene and
hold a stockholder meeting for the purpose of presenting the merger
agreement to the stockholders for their consideration and approval;
(2) by either IVI Checkmate or Ingenico following any public proposal with
respect to an acquisition transaction, for the reasons stated in
paragraph 9 of "--Termination of the Merger Agreement" above;
(3) by Ingenico, following any public proposal with respect to an
acquisition transaction, for the reasons stated in paragraph 10 of "--
Termination of the Merger Agreement" above;
(4) by IVI Checkmate for the reasons stated in paragraph 4 of "--
Termination of the Merger Agreement" above;
(5) by Ingenico for the reasons stated in paragraph 5 of "--Termination of
the Merger Agreement" above;
(6) by Ingenico for the reasons stated in paragraph 6 of "--Termination of
the Merger Agreement" above; and
(7) by Ingenico for the reasons stated in paragraph 12 of "--Termination of
the Merger Agreement" above and within six months of the date of that
termination, IVI Checkmate enters into an agreement for an acquisition
transaction with any person other than Ingenico and its affiliates; in
that event, IVI Checkmate must pay Ingenico the termination fee of
$2.75 million and reimburse Ingenico for all of its fees and expenses
prior to or simultaneously with entering into such agreement.
Ingenico must pay IVI Checkmate a termination fee of $2.75 million and also
pay all of IVI Checkmate's out-of-pocket fees and expenses related to the
merger if the merger agreement is terminated by either IVI Checkmate or
Ingenico, if IVI Checkmate's stockholders do not approve the merger upon a
vote taken at the special meeting and Ingenico is in breach of its obligations
to vote its shares of common stock and to cause each of its affiliates to vote
its shares of common stock in favor of the merger agreement (unless IVI
Checkmate has breached or failed to comply with any of its obligations under
the merger agreement).
vii
TABLE OF CONTENTS
Page
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THE COMPANIES............................................................. 1
IVI Checkmate Corp. ..................................................... 1
Ingenico S.A. ........................................................... 1
Merger Subsidiary........................................................ 1
THE SPECIAL MEETING....................................................... 1
General--The Proposed Transaction........................................ 1
VOTING.................................................................... 1
Voting Rights of Holders of Exchangeable Shares.......................... 1
Record Date and Voting................................................... 3
How You Can Vote......................................................... 4
How You May Revoke or Change Your Vote................................... 5
Cost of Proxy Solicitation............................................... 5
Adjournments............................................................. 6
THE MERGER................................................................ 6
Background of the Merger................................................. 6
IVI Checkmate's Reasons for the Merger--Recommendation of the IVI
Checkmate Board......................................................... 9
Opinion of Wachovia Securities, Inc...................................... 10
Material U.S. Federal Income Tax Consequences............................ 14
Governmental and Regulatory Clearances................................... 15
Merger Financing; Source and Amounts of Funds............................ 16
Interests of IVI Checkmate Directors, Officers and Employees in the
Merger.................................................................. 16
Amendment to IVI Checkmate Stockholder Protection Rights Agreement....... 18
Appraisal and Dissenters' Rights......................................... 18
THE MERGER AGREEMENT...................................................... 21
Structure and Effective Time............................................. 21
Merger Consideration..................................................... 21
Payment Procedures....................................................... 21
Treatment of IVI Checkmate Stock-Based Rights............................ 22
Directors and Officers................................................... 22
Representations and Warranties........................................... 22
Covenants; Conduct of the Business of IVI Checkmate Prior to the Merger.. 23
No Solicitation.......................................................... 25
Agreement to Use Reasonable Best Efforts................................. 26
IVI Checkmate Board Recommendation....................................... 26
Conditions to the Consummation of the Transaction........................ 26
Termination of the Merger Agreement...................................... 28
Termination Fees and Expenses if Merger Is Not Completed................. 30
MATTERS RELATED TO DATACARD............................................... 31
PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.................. 31
STOCK OWNERSHIP INFORMATION............................................... 32
Five Percent Owners...................................................... 32
Common Stock Ownership of Directors and Executive Officers............... 33
Page
----
MARKET PRICE OF IVI CHECKMATE COMMON STOCK AND DIVIDEND INFORMATION........ 34
FORWARD LOOKING STATEMENTS................................................. 35
STOCKHOLDERS' PROPOSALS FOR 2002 ANNUAL MEETING............................ 35
WHERE YOU CAN FIND MORE INFORMATION........................................ 36
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE............................ 36
APPENDICES
Appendix A--Agreement and Plan of Merger................................. A-1
Appendix B--Opinion of Wachovia Securities, Inc........................... B-1
Appendix C--Appraisal Rights under the Delaware General Corporation Law... C-1
THE COMPANIES
IVI Checkmate Corp.
IVI Checkmate is a major electronic transaction solutions provider in North
America. The company designs, develops and markets innovative payment and
value-added solutions that optimize transaction management at the point-of-
service in the retail, financial, travel and entertainment, health care and
transportation industries. IVI Checkmate's software, hardware and professional
services minimize transaction costs, reduce operational complexity and improve
profitability for its customers in the United States, Canada and Latin America.
IVI Checkmate maintains its principal executive offices at 1003 Mansell
Road, Roswell, Georgia, 30076; telephone: (770) 594-6000.
For additional information with respect to IVI Checkmate, see the documents
specified under "Incorporation of Certain Documents by Reference."
Ingenico S.A.
Ingenico is a leading provider of smart card based secured transaction
products and systems. It has subsidiaries and partnerships all over the world
and customers in over 50 countries and territories where its installed base
exceeds 3 million point-of-service terminals.
Ingenico maintains its principal executive office at 9, quai de Dion Bouton,
92816 Puteaux Cedex, France; telephone: 01 46 25 82 00.
Merger Subsidiary
Idaho Acquisition Corp. (which we sometimes refer to as "Merger Sub") is a
Delaware corporation formed by Ingenico in 2001 solely for the purpose of
merging with and into IVI Checkmate. Merger Sub is a direct wholly owned
subsidiary of Ingenico. The mailing address of Merger Sub's principal executive
offices is c/o Ingenico, 9, quai de Dion Bouton, 92816 Puteaux Cedex, France;
telephone: 01 46 25 82 00.
THE SPECIAL MEETING
General--The Proposed Transaction
This proxy statement is being furnished to the IVI Checkmate stockholders as
part of the solicitation of proxies by the IVI Checkmate Board for use at a
special meeting to be held on Wednesday, August 8, 2001, starting at 10:00
a.m., local time, at our headquarters located at 1003 Mansell Road, Roswell,
Georgia. We have provided a map to our headquarters at the end of this proxy
statement. The purpose of the special meeting is for the IVI Checkmate
stockholders to consider and vote upon a proposal to approve the Agreement and
Plan of Merger, dated as of April 6, 2001, by and among IVI Checkmate, Ingenico
and Merger Sub, which provides for the merger of Merger Sub with and into IVI
Checkmate. Upon consummation of the merger, you will receive $3.30 in cash for
each of your shares of IVI Checkmate common stock unless you properly dissent.
In addition, provided that the special resolution is approved by the holder of
the exchangeable shares, you will receive $3.30 in cash for each of your
exchangeable shares of IVI Checkmate Ltd. unless you properly dissent. A copy
of the merger agreement is attached to this proxy statement as Appendix A. This
proxy statement and the enclosed form of proxy are first being mailed to the
IVI Checkmate stockholders on or about June 21, 2001.
VOTING
Voting Rights of Holders of Exchangeable Shares
We were formed as a Delaware corporation in 1998 in anticipation of the
combination of International Verifact Inc., which we refer to as IVI, and
Checkmate Electronics, Inc., which we refer to as Checkmate. On June 23, 1998,
the stockholders of IVI and Checkmate approved the combination of the two
companies into what is now called IVI Checkmate Corp., and we acquired both IVI
and Checkmate as our subsidiaries effective June 25, 1998. Upon the completion
of the acquisition, IVI was renamed IVI Checkmate Ltd., and Checkmate was
renamed IVI Checkmate Inc.
As part of the combination, all of the outstanding shares of Checkmate
common stock were converted into shares of our common stock, and, at the
election of the respective IVI stockholders, the outstanding common shares of
IVI were converted into either shares of our common stock or exchangeable
shares of IVI Checkmate Ltd. Holders of exchangeable shares are entitled to
dividends, dissolution entitlements and other rights designed to be
economically equivalent to the attributes of our common stock, as well as the
right to attend and vote at all meetings that the common stockholders are
entitled to attend and vote, including this special meeting. Holders of the
exchangeable shares (other than IVI Checkmate and its subsidiaries) may convert
each of their exchangeable shares into one share of our common stock at any
time through June 25, 2008.
Each share of our common stock outstanding on the record date is entitled to
one vote on each matter submitted to the stockholders at the special meeting.
Because the exchangeable shares are issued by IVI Checkmate Ltd. rather than by
us, we and IVI Checkmate Ltd. entered into an agreement that allows the holders
of exchangeable shares (other than IVI Checkmate and its subsidiaries) to vote
on matters presented to the holders of our common stock. Montreal Trust Company
of Canada, as trustee under the voting agreement, holds one share of special
preferred voting stock of IVI Checkmate for the benefit of the holders of the
exchangeable shares. The special preferred voting stock carries a number of
votes, exercisable at any meeting at which our common stockholders are entitled
to vote, equal to the number of then outstanding exchangeable shares (excluding
shares held by IVI Checkmate). Each holder of exchangeable shares (other than
IVI Checkmate and its subsidiaries) is entitled to instruct the trustee to
exercise one of the votes attached to the preferred voting stock for each
exchangeable share held by any of the four voting methods described in the
Section "How You Can Vote" set forth below. Registered holders of exchangeable
shares are entitled to attend the special meeting and personally exercise the
votes to which they are entitled. If no voting instructions are received from a
holder of exchangeable shares, the votes to which such holder is entitled will
not be exercised by the trustee. The trustee may only vote that number of votes
attached to the preferred voting stock for which it has received voting
instructions.
Upon a request from a registered holder of exchangeable shares, the trustee
will provide a proxy to allow that holder to personally exercise the votes
attached to the preferred voting stock that the registered holder of
exchangeable shares is entitled to vote rather than having those shares voted
through the trustee. If a registered holder of exchangeable shares has
previously provided the trustee with instructions to vote on his or her behalf,
the holder must provide the trustee with written revocation of the previous
instructions before the exchangeable shareholder may personally vote at the
special meeting. Registered holders of exchangeable shares that attend the
special meeting in person will have the same rights as the trustee to speak and
to vote at the special meeting in respect of any matter, question or
proposition that comes before the holders of common stock at the special
meeting. The holders of the exchangeable shares have also received a notice, a
management information circular and a form of proxy for a special meeting of
the holders of exchangeable shares being held on July 24, 2001 to consider a
special resolution, the effect of which would be to authorize the purchase, of
each exchangeable share that is outstanding immediately after the completion of
the merger by IVI Checkmate (other than those held by IVI Checkmate and its
subsidiaries) for $3.30 in cash, without interest, with the result that the
holders of the exchangeable shares (other than IVI Checkmate and its
subsidiaries) will participate in the merger to the same extent and on an
economically equivalent basis as holders of common stock.
The obligations of Ingenico and Merger Sub to complete the merger are
subject to, among other things, the condition that the special resolution
discussed above is approved by the holders of the exchangeable shares at the
special meeting of the holders of exchangeable shares. See "The Merger
Agreement--Conditions to the Consummation of the Transaction" for an additional
description of this and other conditions to complete the merger. In the event
the holders of the exchangeable shares do not approve the special resolution,
Ingenico may decide to complete the merger by waiving this condition. If
Ingenico decides to complete the merger without the holders of the exchangeable
shares having voted to approve the special resolution, then any holder of
exchangeable shares whose exchangeable shares have not been exchanged for
shares of IVI Checkmate common stock prior to completion of the merger will be
entitled to receive and must accept, upon the exchange of those exchangeable
shares, $3.30 in cash per share, without interest, in lieu of the IVI Checkmate
common stock that the holder would otherwise have been entitled to receive. In
that circumstance, the value of the
2
exchangeable shares will remain at $3.30 per share, without interest, and will
no longer be dependent on the assets and operations of IVI Checkmate. This
scenario, along with other information specifically related to the holders of
the exchangeable shares, is more fully described in the management information
circular provided to the holders of the IVI Checkmate Ltd. exchangeable shares
in connection with their special meeting.
IVI Checkmate Ltd. has been exempted by discretionary orders from certain
continuous disclosure and insider reporting obligations of otherwise applicable
Canadian securities laws on the condition that analogous disclosure be provided
by IVI Checkmate to the holders of exchangeable shares. Because holders of
exchangeable shares have an economic and voting interest that is effectively
equivalent to an interest in common stock of IVI Checkmate, we have provided
such holders with information regarding the consolidated financial condition
and results of operations of IVI Checkmate to ensure that they receive
meaningful and relevant disclosure regarding their investment. Information
respecting the financial condition and results of operations of IVI Checkmate
Ltd. would not be relevant to holders of exchangeable shares because the value
of such shares is dependent upon the consolidated financial condition and
results of operations of IVI Checkmate.
Record Date and Voting
The holders of record of common stock and exchangeable shares as of the
close of business on the record date, which was June 18, 2001, are entitled to
receive notice of, and to vote at, the special meeting. On the record date,
excluding shares held by IVI Checkmate and its subsidiaries which will not be
voted at the meeting, there were 15,726,615 shares of common stock and
5,127,172 exchangeable shares outstanding, totaling 20,853,787 outstanding
shares, with each outstanding share entitled to one vote.
The holders of a majority of the outstanding shares of common stock and
exchangeable shares, on June 18, 2001, represented in person or by proxy, will
constitute a quorum for purposes of the special meeting. A quorum is necessary
to hold the special meeting. In the event that a quorum is not present at the
special meeting, it is expected that the meeting will be adjourned or postponed
to solicit additional proxies. In determining whether a quorum is present at
the meeting, we will apply the following principles:
(1) we will count shares that you direct to be abstained from voting as
present for the purpose of determining the presence or absence of a
quorum;
(2) we will count any broker non-votes as present for the purpose of
determining the presence or absence of a quorum;
(3) we will not count any shares of stock held in treasury by IVI
Checkmate or by its subsidiaries for the purpose of determining the
presence or absence of a quorum; and
(4) because the trustee is not entitled to cast votes with regard to
exchangeable shares as to which the registered holders do not provide
voting instructions to the trustee, we will not count those
exchangeable shares for which no voting instructions have been
received for the purpose of determining the presence or absence of a
quorum.
"Broker non-votes" result when brokers are precluded from exercising their
voting discretion with respect to the approval of non-routine matters, such as
the merger proposal, because the beneficial owner of the relevant shares did
not provide the broker with specific voting instructions (which we urge you to
provide) with respect to those non-routine matters.
The approval and adoption of the merger agreement requires the affirmative
vote of the holders of a majority of the shares of IVI Checkmate common stock
and the exchangeable shares that are outstanding on June 18, 2001 (excluding
those exchangeable shares held by IVI Checkmate and its subsidiaries). As a
result, shares which are present but not voted, either by abstention or non-
vote (including broker non-vote), in addition to shares that are not present
and exchangeable shares as to which holders do not provide voting instructions,
will not be counted as votes in favor of the merger agreement. Because the vote
is based on the number of shares of common stock and exchangeable shares
outstanding rather than on the number of votes cast, failure to vote your
shares is effectively a vote against the merger agreement.
3
As of the record date, the directors and executive officers of IVI Checkmate
beneficially owned, in the aggregate, 1,232,308 shares of IVI Checkmate common
stock and exchangeable shares, or collectively approximately 5.9% of the total
outstanding shares of IVI Checkmate common stock and exchangeable shares on
that date. In addition, as of the record date, Ingenico and its subsidiaries
and affiliates owned, in the aggregate, 4,164,869 shares of IVI Checkmate
common stock, or collectively approximately 19.9% of the total outstanding
shares of IVI Checkmate common stock and exchangeable shares on that date.
You should note that, under Delaware law, holders of shares of IVI Checkmate
common stock are entitled to appraisal rights in connection with the merger
and, under the laws of Canada, the holders of exchangeable shares are entitled
to dissent rights in connection with the special meeting of the holders of
exchangeable shares. See "The Merger--Appraisal and Dissenters' Rights" for
information on the requirements of Delaware law for a proper dissent. Holders
of exchangeable shares should refer to the management information circular
provided to them in connection with the special meeting of the holders of
exchangeable shares.
How You Can Vote
Each share of common stock and each exchangeable share outstanding on June
18, 2001 is entitled to vote at the special meeting (other than those
exchangeable shares held by IVI Checkmate and its subsidiaries). You may vote
your shares in any of four ways:
(1) Voting by Mail. If you choose to vote by mail, simply mark your proxy,
date and sign it, and return it in the postage-paid envelope provided.
(2) Voting by Telephone. You can vote your shares by telephone proxy by
calling the toll-free telephone number on your proxy card. Telephone
voting is available 24 hours a day.
(3) Voting by Internet. You can also vote your proxy via the Internet. The
web site for Internet voting is on your proxy card, and voting is also
available 24 hours a day.
(4) Voting in Person. You can also vote by appearing and voting in person
at the special meeting.
If you vote by telephone or via the Internet you should not return your
proxy card. Instructions on how to vote by telephone or via the Internet are
located on the proxy card attached to this proxy statement. The accompanying
proxy card is for your use if you are unable to attend the special meeting in
person and if you do not wish to vote via telephone or the Internet. You may
also vote by telephone, via the Internet or by proxy card if you are able to
attend the meeting but do not wish to vote in person. If you choose to vote by
proxy card, you should specify your choices with regard to the proposal on the
enclosed proxy card. The proxy cards that the holders of exchangeable shares
properly complete, date, sign and return, as well as the votes they cast by
telephone or via the Internet, will serve as voting instructions to their
trustee to vote those shares at the special meeting as directed. Please vote by
telephone, via the Internet or properly complete, sign and date the proxy card
and return it in the enclosed envelope.
If you plan to attend the meeting, please so indicate by marking the
designated box on your proxy card. If your shares are not registered in your
name (i.e., they are held in "street name" by a brokerage firm) and you would
like to attend the meeting, please bring a copy of a brokerage statement
reflecting your stock ownership as of the record date. Additionally, if you are
a "street name" stockholder who wishes to vote at the meeting, you will need to
obtain a proxy form from the institution that holds your shares.
If you return a properly dated and signed proxy card that we or the trustee
for the exchangeable shares, as applicable, receives before the votes on the
proposals are taken at the special meeting, the shares represented by the proxy
will be voted in accordance with your instructions by the persons named as
proxies on the enclosed proxy card or by the trustee, as applicable. In the
absence of such instructions, the shares represented by a properly signed and
dated proxy card will be voted "FOR" the approval of the merger agreement.
4
If you participate in the IVI Checkmate 401(k) Plan, you will receive a
proxy card that, when properly completed, dated, signed and returned by you,
will serve as voting instructions to the trustee of the plan. If you have
shares credited in the plan, only the trustee can vote your plan shares, even
if you attend the special meeting. If you properly complete, date, sign and
return your proxy card in accordance with the instructions provided, the
trustee will vote your plan shares in accordance with your instructions. If you
properly sign, date and return the proxy card but do not specify how you want
your plan shares to be voted, the trustee will vote your plan shares "FOR"
approval of the merger agreement. If you do not return the proxy card, your
plan shares will not be voted. Failure to return the proxy card will have the
same effect as a vote against the merger.
The board of directors is not presently aware of any business to be
presented to a vote at the special meeting other than the merger proposal noted
above. If any other matter properly comes before the meeting, the proxy holders
will vote as recommended by the board of directors or, if no recommendation is
made, in their own discretion.
Your submission of a proxy will not affect your right to vote in person
should you attend the special meeting (except that participants in the 401(k)
plan may not vote their plan shares in person at the special meeting under any
circumstances).
How You May Revoke or Change Your Vote
If you vote your shares of IVI Checkmate common stock or your exchangeable
shares by submitting a proxy, your shares will be voted at the special meeting
as you indicated on your proxy card, telephone proxy or Internet proxy. You can
revoke your proxy at any time before it is voted at the special meeting by:
(1) giving written notice of revocation to:
. John J. Neubert, our Corporate Secretary, at 1003 Mansell Road,
Roswell, Georgia 30076, or
. with regard to exchangeable shares, the trustee, Montreal Trust
Company of Canada, Proxy Department, at 100 University Avenue,
Toronto, Ontario, Canada M5J 2Y1;
(2) submitting another proper proxy by telephone, Internet or on another
written proxy; or
(3) attending the special meeting and voting by paper ballot in person
(except that participants in the 401(k) plan may not vote these plan
shares in person at the special meeting under any circumstances and
holders of exchangeable shares must first revoke, in writing, the
instructions provided to the trustee through instructions given by
telephone, via the Internet or by previously completed and returned
proxy cards). If your shares are held in the name of a bank, broker,
trustee or other holder of record, you must obtain a proxy, executed in
your favor, from the holder of record to be able to vote at the special
meeting. Holders of the exchangeable shares should refer to "--Voting
Rights of Holders of Exchangeable Shares" for information on how they
may vote at the special meeting in person.
Cost of Proxy Solicitation
IVI Checkmate will pay the costs of soliciting proxies for the special
meeting. Officers, directors and employees of IVI Checkmate may solicit proxies
by telephone, mail, the Internet or in person. However, they will not be paid
for soliciting proxies. IVI Checkmate also will request that individuals and
entities holding shares in their names, or in the names of their nominees, that
are beneficially owned by others, send proxy materials to and obtain proxies
from those beneficial owners, and will reimburse those holders for their
reasonable expenses in performing those services. MacKenzie Partners, Inc. has
been retained by IVI Checkmate to assist it in the solicitation of proxies,
using the means referred to above, and will receive fees of up to approximately
$6,000, plus reimbursement of out-of-pocket expenses.
5
Adjournments
Although it is not expected, the special meeting may be adjourned for, among
other reasons, the purpose of soliciting additional proxies to a date not later
than 90 days after the date of the special meeting. You should note that the
meeting could be successively adjourned to a specified date not longer than 90
days after such adjournment. If the special meeting is adjourned for the
purpose of soliciting additional proxies, stockholders who have already sent in
their proxies will be allowed to revoke them at any time prior to their use.
THE MERGER
Background of the Merger
In September 2000, in light of IVI Checkmate's then-current market position,
Mr. L. Barry Thomson, our president, chief executive officer and a director,
proposed to the Board of Directors that it create a Special Committee to
investigate and explore strategic opportunities with third parties. The Board
of Directors approved that proposal and created a Special Committee. The
Special Committee consisted of Mr. Bertil Nordin, as chairman, and Mr. Peter
Roode. Mr. Paul Noblett was subsequently appointed to the Special Committee.
As part of the Special Committee's mandate, Mr. Nordin contacted Ingenico to
see whether discussions between the two companies regarding possible strategic
opportunities were warranted. On September 21 and 22, 2000, Messrs. Nordin and
Thomson met with Mr. Gerard Compain, a member of the IVI Checkmate Board of
Directors and on executive vice president and director of Ingenico, in Phoenix,
Arizona for a general discussion of the relationship between IVI Checkmate and
Ingenico. Following that meeting, Mr. Nordin and Mr. Compain scheduled another
meeting for October 4, 2000 to continue the discussion.
On October 2, 2000, at a meeting of the Board of Directors of IVI Checkmate,
Mr. Nordin apprised the Board of Directors with respect to the prior and
planned discussions with Ingenico. The Special Committee also informed the
Board that it was proceeding to engage Wachovia Securities, Inc. as its
investment banking advisor.
On October 4, 2000, Mr. Nordin, together with representatives of Hunton &
Williams, the Special Committee's legal counsel, and Wachovia Securities,
attended a meeting in New York with a representative of Union Europeenne de CIC
Finance, an Ingenico investment advisor; representatives of Ingenico's special
U.S. counsel, Wachtell, Lipton, Rosen & Katz, were also present. At that
meeting, the parties discussed the respective strategic directions of IVI
Checkmate and Ingenico, as well as the state of the companies' mutual
commercial and governance relationship.
On October 9, 2000, at a meeting of the Special Committee of the Board of
Directors, which, by invitation, was also attended by certain directors who
were not members of the Special Committee or nominees of Ingenico as well as
representatives from Wachovia Securities and Hunton & Williams, Mr. Nordin
reported on the October 4th meeting.
On October 18, 2000, at a meeting of the Special Committee of the Board of
Directors, which, by invitation, was also attended by certain directors who
were not members of the Special Committee or nominees of Ingenico as well as
representatives from Wachovia Securities and Hunton & Williams, the Special
Committee discussed IVI Checkmate's upcoming third fiscal quarter results. The
Special Committee authorized Mr. Nordin to inform Ingenico that IVI Checkmate
would be interested to consider any ideas from Ingenico as to how to strengthen
the Ingenico-IVI Checkmate relationship. Mr. Nordin subsequently communicated
that information to Mr. Jean-Jacques Poutrel, the chairman and chief executive
officer of Ingenico.
On October 26, 2000 IVI Checkmate reported third quarter operating results
that did not meet its previously announced expectations, and it lowered its
expectations for its performance in the fourth quarter. Subsequent to this
announcement, there were discussions between Ingenico and IVI Checkmate
regarding the possibility of a business combination transaction between IVI
Checkmate and Ingenico, but none was pursued.
6
On October 30, 2000, IVI Checkmate and Ingenico entered into a
confidentiality agreement to facilitate the exchange of confidential
information between the parties, and, beginning in November 2000 Ingenico and
IVI Checkmate began to exchange confidential business information.
On November 21, 2000, Mr. J. Stanford Spence, the chairman of the IVI
Checkmate Board of Directors but not a member of the Special Committee, sent an
e-mail to Messrs. Nordin, Roode, Noblett and Thomson proposing that IVI
Checkmate consider a sale of some of its assets to a third party.
On November 22, 2000, at a meeting of the Special Committee of the Board of
Directors, which, by invitation, was also attended by certain directors who
were not members of the Special Committee or nominees of Ingenico as well as
representatives from Wachovia Securities and Hunton & Williams, the Special
Committee reviewed Mr. Spence's proposal. At that meeting, Wachovia Securities
also reported to the Special Committee that it had received no responses in its
broad effort to solicit proposals from other parties that might be interested
in acquiring IVI Checkmate.
On December 5, 2000, the Special Committee, after considering a tax analysis
of asset sales, decided that it would not pursue this strategy as a primary
option.
On January 11, 2001, at a meeting of the IVI Checkmate Board of Directors,
Mr. Compain notified the Board that Ingenico, while not prepared to make any
proposals, would discuss the possibility of enhancing its relationship with IVI
Checkmate. Later that day, at a meeting of the Special Committee of the Board
of Directors, which, by invitation, was also attended by directors who were not
members of the Special Committee or nominees of Ingenico as well as a
representative from Hunton & Williams, the Special Committee instructed Mr.
Nordin to propose to Ingenico that it acquire, through the issuance of shares
of IVI Checkmate common stock, a minimum 51% ownership interest in, and thus
management control of, IVI Checkmate.
On January 26, 2001, Ingenico retained Deutsche Banc Alex Brown to assist it
in considering an enhanced financial investment in IVI Checkmate.
In late January 2001, IVI Checkmate determined that it did not meet its
fourth quarter expectations and that it would need to lower its published 2001
first quarter expectations.
On January 31, 2001, Mr. Nordin requested Mr. Thomson's assistance in
polling the IVI Checkmate directors to informally determine if they would be
prepared to support an Ingenico offer to acquire a majority interest in IVI
Checkmate at a price of $3.00 per share, provided that Wachovia Securities
could deliver a favorable fairness opinion. Mr. Nordin also asked Mr. Thomson
to contact Mr. Poutrel at Ingenico, after he had spoken with each of the IVI
Checkmate directors, to inform him of the Board's predisposition.
On January 31, 2001, Mr. Thomson spoke to each of the IVI Checkmate
directors and determined that the Board would look favorably upon a transaction
in which Ingenico would acquire a majority interest in IVI Checkmate at a price
of $3.00 per share. Mr. Thomson then spoke to Mr. Poutrel at Ingenico and
informed him of the results of his inquiry. Mr. Poutrel later phoned Mr.
Thomson and requested that the results of Mr. Thomson's inquiry be confirmed in
writing. After a brief conversation with Mr. Nordin, Mr. Thomson provided the
requested written confirmation. The parties subsequently publicly disclosed
this confirmation.
After further discussions among the parties and their respective financial
and legal advisors, in mid-February 2001, the parties began to consider a
transaction in which Ingenico would purchase all, rather than merely a
majority, of the issued and outstanding stock of IVI Checkmate, including the
exchangeable shares. During the remainder of February and the first week of
March, the parties' financial advisors discussed the price at which such a
transaction might be acceptable.
On March 9, 2001, the Special Committee held a conference call to discuss
the potential acquisition of all of the issued and outstanding stock of IVI
Checkmate including exchangeable shares by Ingenico at a price of $3.30 per
share. Mr. Osby of Wachovia Securities also participated in the conference
call. During this call,
7
Mr. Osby informed the Special Committee that Wachovia Securities' financial
analysis of the transaction would support providing the Board of Directors an
opinion that consideration of $3.30 per share was fair from a financial point
of view, subject to certain qualifications and final delivery of a written
opinion. After much deliberation, the Special Committee determined on the call
that it would recommend approval of an acquisition of IVI Checkmate by Ingenico
at a price of $3.30 per share.
On March 15, 2001, at a meeting of the IVI Checkmate Board of Directors, Mr.
Nordin delivered a report of the Special Committee, and stated that the focus
of discussions with Ingenico had recently changed from Ingenico's possible
acquisition of a majority interest in IVI Checkmate, to its possible purchase
of all of IVI Checkmate's outstanding common stock and the exchangeable shares.
Based on these recent discussions, Mr. Nordin said that the Special Committee
had received from Ingenico's legal counsel on March 14, 2001 a proposed merger
agreement for review, which provided for Ingenico's purchase of all of IVI
Checkmate's outstanding common stock and the exchangeable shares.
At the March 15, 2001 meeting, Wachovia Securities informed the Board of its
belief that Ingenico would offer approximately $3.30 per share. Mr. Nordin
explained the major provisions of the proposed merger agreement to the
directors and noted that there were still significant issues to be resolved
between the parties. Mr. Nordin also noted that Ingenico's Board of Directors
had not yet considered the proposed merger agreement. Mr. Compain indicated
that Ingenico's Board of Directors was scheduled to meet on March 21, 2001 to
consider the proposed merger agreement.
In addition, at the March 15, 2001 meeting, the Board unanimously
determined, subject to additional due diligence, that, based upon numerous
factors including discussions with Wachovia Securities, current market
conditions and IVI Checkmate's business prospects, a purchase offer of $3.30
per share appeared fair to the stockholders from a financial point of view. Mr.
Thomson strongly emphasized that IVI Checkmate required significant capital
funding within the next 45 days to fund IVI Checkmate's normal business
operations. Management and several directors suggested that, in light of the
proposed merger, it would be appropriate for Ingenico to provide that funding.
On March 19, 2001, at a meeting of the IVI Checkmate Board of Directors
which, by invitation, was also attended by a representative from Hunton &
Williams, Mr. Nordin updated the Board on the continuing negotiations with
Ingenico. Mr. Thomson expressed concern about receiving adequate funding for
IVI Checkmate and the need for a financing commitment from Ingenico.
From March 19, 2001, through the execution of the merger agreement on April
6, 2001, representatives of IVI Checkmate and Ingenico, and their respective
legal and financial advisors, spoke repeatedly (whether in person or on the
telephone) to discuss, negotiate and finalize the terms of the merger agreement
and related documents. Ingenico continued to conduct its financial, legal and
accounting due diligence investigation during this time.
On April 4, 2001, Wachovia Securities made a presentation to the Special
Committee of the Board of Directors, and concluded that on such date, and based
upon the assumptions made, matters considered and limitations on the review
undertaken set forth in the written opinion, the $3.30 per share offer price
was fair from a financial point of view to the stockholders of IVI Checkmate
including the holders of the exchangeable shares. Wachovia Securities
subsequently confirmed that conclusion in a written opinion. On the same date,
the Special Committee of the Board of Directors unanimously recommended to the
Board of Directors approval and acceptance of Ingenico's offer to acquire IVI
Checkmate in a merger transaction. The Board of Directors unanimously accepted
that recommendation and approved the merger agreement, and further approved the
issuance to Ingenico of 2,620,453 shares of common stock for a total purchase
price of $5,240,906 to fund near-term capital requirements. As of April 4,
2001, the Ingenico Board of Directors also approved the merger agreement and
the equity investment of $5,240,906.
On April 6, 2001, senior management of each of Ingenico and IVI Checkmate
finalized, executed and delivered the merger agreement and related documents.
On that same day, IVI Checkmate issued 2,620,453 shares of common stock to
Ingenico for a total purchase price of $5,240,906. The parties then published a
joint public announcement of these transactions.
8
IVI Checkmate's Reasons for the Merger--Recommendation of the IVI Checkmate
Board
At a meeting of the Special Committee of the Board of Directors on April 4,
2001, the IVI Checkmate Special Committee unanimously determined that the
merger was fair to and in the best interests of IVI Checkmate and its
stockholders and unanimously approved and adopted the merger agreement and the
transactions contemplated by that agreement. These conclusions were
subsequently reached by the full IVI Checkmate Board of Directors at a meeting
of the Board of Directors held on the same day. Accordingly, the IVI Checkmate
Board recommends that IVI Checkmate stockholders vote FOR approval of the
merger agreement at the special meeting.
In reaching its decision to approve and adopt the merger agreement and the
transactions contemplated by that agreement, and to recommend that IVI
Checkmate stockholders vote to approve the merger agreement, the IVI Checkmate
Board considered the following material factors:
(1) the IVI Checkmate Board's familiarity with, and presentations by
management and its financial advisors regarding, the business,
operations, properties and assets, financial condition, competitive
position, business strategy and prospects of IVI Checkmate (as well as
the risks involved in achieving those prospects), and the current
environment for the transaction management industry in which IVI
Checkmate competes, and current industry, economic and market
conditions, both on a historical and on a prospective basis;
(2) the fact that the $3.30 per share price represented an approximate 65%
premium over the closing price of IVI Checkmate common stock on April
5, 2001;
(3) the current, historical and estimated future market prices of IVI
Checkmate common stock relative to those of other industry
participants and general market and sector indices;
(4) the fact that the merger consideration is all cash, which provides
relative certainty of value to IVI Checkmate stockholders;
(5) the extensive negotiations with and various commitments of Ingenico;
(6) the presentation by Wachovia Securities, Inc. on April 4, 2001, and
its oral opinion on that date, which was confirmed in a written
opinion dated April 4, 2001, that, as of the date of such opinion, and
based on and subject to the matters, assumptions and limitations set
forth in that opinion, the $3.30 per share cash consideration to be
received by holders of IVI Checkmate common stock and the exchangeable
shares pursuant to the merger agreement was fair from a financial
point of view to such holders (see "--Opinion of Wachovia Securities,
Inc.");
(7) the fact that the terms of the merger agreement provide that, under
certain circumstances, and subject to certain conditions more fully
described under "The Merger Agreement--No Solicitation," "--
Termination of the Merger Agreement," and "--Termination Fee and
Expenses if Merger Is Not Completed," IVI Checkmate can furnish
information to, and conduct negotiations with, a third party in
connection with an unsolicited proposal for an acquisition of IVI
Checkmate and can terminate the merger agreement for a superior
proposal prior to stockholder approval of the merger agreement
provided that IVI Checkmate pays to Ingenico a $2.75 million
termination fee and other expense related amounts (see "The Merger
Agreement");
(8) the fact that, under the terms of the merger agreement, the completion
of the merger is not conditioned upon Ingenico obtaining financing;
and
(9) the fact that the merger could be structured in a way that enabled the
holders of the exchangeable shares to participate in an economically
equivalent manner.
9
The IVI Checkmate Board also considered potential adverse facts and risks
relating to the merger, including the following adverse material facts and
risks:
(1) the fact that gains arising from an all-cash transaction would be
taxable to IVI Checkmate stockholders for United States and Canadian
federal income tax purposes;
(2) the possibility that, notwithstanding the provisions of the merger
agreement allowing IVI Checkmate under certain circumstances to furnish
information to and conduct negotiations with a third party and
terminate the merger agreement prior to stockholder approval of the
merger agreement in connection with a superior proposal for a business
combination or acquisition of IVI Checkmate with a third party, the
termination fee payable upon such termination might discourage other
parties that might otherwise have an interest in a business combination
with, or an acquisition of, IVI Checkmate (see "The Merger Agreement");
(3) the possibility that the transaction may not receive the requisite
regulatory clearances; and
(4) the possibility that the merger may not be completed.
In addition, the IVI Checkmate Board was aware of the interests of executive
officers and directors of IVI Checkmate described under "--Interests of IVI
Checkmate Directors, Officers and Employees in the Merger."
The foregoing discussion addresses certain material information and factors
considered by the IVI Checkmate Board in its consideration of the merger,
including factors that support the merger as well as those that may weigh
against it. In view of the variety of factors and the quality and amount of
information considered, the IVI Checkmate Board did not find it practicable to,
and accordingly did not, make specific assessments of, quantify or otherwise
assign relative weights to, the specific factors considered in reaching its
determination. In addition, the IVI Checkmate Board did not undertake to make
any specific determination as to whether any particular factor, or any aspect
of any particular factor, was favorable or unfavorable to its ultimate
determination. The determination to approve the merger was made after
consideration of all of the factors in the aggregate. In addition, individual
members of the IVI Checkmate Board may have given different weights to
different factors.
Opinion of Wachovia Securities, Inc.
Engagement and Fairness Opinion of Wachovia Securities, Inc.
On October 19, 2000 Wachovia Securities, Inc. was retained by the Special
Committee of the Board of Directors to act as a financial advisor in connection
with IVI Checkmate's exploration of strategic alternatives including, but not
limited to, the sale of IVI Checkmate. In addition, Wachovia Securities was
retained to assess the fairness, from a financial point of view, of the
consideration to be received by the stockholders of IVI Checkmate in connection
with a proposed merger with Ingenico. IVI Checkmate chose Wachovia Securities
based on the firm's reputation and general investment banking experience,
including its experience in rendering fairness opinions. Wachovia Securities is
a nationally recognized investment banking firm which, as part of its
investment banking business, is engaged in the valuation of businesses and
their securities in connection with mergers and acquisitions, negotiated
underwritings, competitive biddings, secondary distributions of listed and
unlisted securities, private placements and valuations for estate, corporate
and other purposes.
Wachovia Securities acted as an advisor to IVI Checkmate during the merger
negotiations but IVI Checkmate, through the Special Committee, negotiated and
determined the final amount of the consideration to be paid by Ingenico in the
merger. During and subsequent to the negotiation process, Wachovia Securities
separately analyzed the merger and, on April 4, 2001, Wachovia Securities
rendered its oral opinion to IVI Checkmate's board of directors that, as of
April 4, 2001 and based upon and subject to the assumptions and limitations
described to the board of directors and set forth in an opinion letter dated
April 4, 2001, the consideration to be received by the stockholders and the
economic equivalent to be paid to holders of the exchangeable shares upon
consummation of the merger was fair, from a financial point of view, to such
stockholders. Wachovia Securities has consented to the inclusion of the
Wachovia Securities opinion in this proxy statement.
10
The full text of the Wachovia Securities opinion, which sets forth the
assumptions made, procedures followed, matters considered and limits on the
review undertaken, is attached as Appendix B to this proxy statement and is
incorporated herein by reference. The summary of the Wachovia Securities
opinion set forth herein is qualified in its entirety by reference to the full
text of the opinion in Appendix B. Stockholders are urged to read the Wachovia
opinion in its entirety. The Wachovia Securities analysis and opinion were
prepared for and addressed to the Special Committee of IVI Checkmate and the
Board of IVI Checkmate for its information and addresses only the fairness,
from a financial point of view, of the per share merger consideration to be
received by the IVI Checkmate stockholders and the economic equivalent to be
received by the holders of the exchangeable shares upon consummation of the
merger and does constitute an opinion as to the merits of the merger or a
recommendation to any IVI Checkmate stockholder as to how to vote in
connection with the merger.
Matters Reviewed
In connection with rendering the Wachovia Securities opinion, Wachovia
Securities, among other things:
. reviewed a draft of the merger agreement;
. held discussions with certain senior officers, directors and other
representatives and advisors of IVI Checkmate and certain
representatives and advisors of Ingenico concerning the businesses,
operations and prospects of IVI Checkmate and Ingenico;
. examined certain business and financial information relating to IVI
Checkmate and Ingenico that was publicly available or furnished to
Wachovia Securities;
. reviewed financial analyses and certain financial forecasts and other
information and data for IVI Checkmate which were provided to Wachovia
Securities by the management of IVI Checkmate including, but not limited
to, information relating to certain strategic implications and
operational benefits anticipated to result from the merger;
. reviewed the financial terms of the merger agreement in relation to,
among other things, current and historical market prices and trading
volumes of IVI Checkmate's common stock, the historical and projected
operating performance of IVI Checkmate, the financial capacity of
Ingenico to consummate the merger, the capitalization and financial
condition of IVI Checkmate, and the current financial and economic
environment;
. analyzed certain financial, stock market and other publicly available
information relating to publicly held companies in businesses similar to
that of IVI Checkmate;
. analyzed, to the extent available, the financial terms of recent
business combinations involving companies in businesses similar to IVI
Checkmate;
. solicited indications of interest in acquiring IVI Checkmate from
parties other than Ingenico; and
. conducted relevant research, analyses and examinations and considered
other financial, economic and market criteria.
Wachovia Securities has not assumed any responsibility for independent
verification of any of the information set forth above and has relied on all
such information being accurate and complete in all material respects.
Assumptions and Limitations
In its review and analysis and in formulating its opinion, Wachovia
Securities assumed and relied upon, without independent verification, the
reasonableness of all estimated financial information and assumptions to the
estimates provided to Wachovia Securities by IVI Checkmate's management and
assumed that such information was prepared and such assumptions were derived
in accordance with accepted practice reflecting the best currently available
estimates and good faith judgments of IVI Checkmate's management. Wachovia
Securities also assumed that the merger will be completed in a timely manner
in accordance with the terms in
11
the merger agreement, without regulatory limitations, restrictions or
conditions that would have a material adverse effect on IVI Checkmate. Wachovia
Securities has not made or considered any independent evaluations or appraisals
of the assets or liabilities (contingent or otherwise) of either IVI Checkmate
or Ingenico. Other than as set forth herein, there were no limitations imposed
by the IVI Checkmate Board or the Special Committee on Wachovia Securities with
respect to the investigations made or procedures followed by Wachovia
Securities in rendering the Wachovia Securities opinion.
Presentation to the IVI Checkmate Board of Directors
The following is a summary of the material financial analyses considered and
performed by Wachovia Securities in connection with providing the Wachovia
Securities opinion. Such summary does not purport to be a complete description
of the analyses performed by Wachovia Securities. The preparation of a fairness
opinion involves various determinations as to the most appropriate and relevant
methods of financial analysis and the application of those methods to
particular circumstances and, therefore, is not necessarily susceptible to
partial analysis or a summary description. Wachovia Securities did not reach a
conclusion as to whether any individual analysis, considered in isolation,
supported or failed to support an opinion as to fairness from a financial point
of view. Rather, in reaching its conclusions, Wachovia Securities considered
the results of all analyses in light of each other and ultimately reached its
opinion based on the results of all analyses undertaken taken as a whole. The
estimates contained in Wachovia Securities' analysis and the ranges of
valuations resulting from any particular analysis are not necessarily
indicative of actual values or predictive of future results or values which may
be significantly more or less favorable than those suggested by the analyses.
In addition, analyses relating to the value of businesses or securities do not
purport to be appraisals or to reflect the prices at which businesses or
securities actually may be sold.
Valuation of IVI Checkmate
Comparable Companies Analysis. Wachovia Securities considered a comparable
companies analysis in its valuation of IVI Checkmate. In this methodology,
financial information, ratios and public market multiples relating to a company
are reviewed and compared to corresponding publicly available financial data
for comparable companies. In performing this analysis, Wachovia Securities
determined a group of companies comparable in focus, operating characteristics
and scope to IVI Checkmate, and reviewed earnings estimates and other publicly
available information for such companies. In performing the comparable
companies analysis, Wachovia Securities reviewed the following information for
the universe of comparable companies against that of IVI Checkmate:
. Compound annual sales growth rate;
. Historical earnings before interest, taxes, depreciation and
amortization ("EBITDA") margin and projected margin;
. Enterprise Value to historical and projected sales;
. Enterprise Value to historical and projected EBITDA; and
. Enterprise Value to historical and projected EBITDA after adjustments
for non-recurring items.
None of the companies in the comparable universe was directly comparable to
IVI Checkmate. Accordingly, an analysis of the results of such a comparison is
not purely mathematical but involves complex considerations and judgments
concerning differences in historical and projected financial and operating
characteristics of the companies and other factors that could affect the public
trading values of the companies. For instance, such factors as IVI Checkmate's
lack of institutional investor ownership, the relative lack of liquidity in its
stock, the lack of widespread research coverage and IVI Checkmate's historical
ability to achieve expected results were considered in the analysis.
Based on this methodology, Wachovia Securities deemed the valuation implied
by the merger consideration to be received by the stockholders of IVI Checkmate
to be reasonable relative to the valuation of the comparable company universe.
12
Comparable Transactions Analysis. Wachovia Securities used a comparable
transaction analysis in its evaluation of the fairness, from a financial
standpoint, of the consideration to be received by the stockholders in the
merger. In performing this analysis, Wachovia Securities reviewed mergers and
acquisitions completed during the period from May 1997 until April 2001
involving companies that Wachovia Securities deemed generally comparable to IVI
Checkmate including the following:
. Verifone/Hewlett Packard;
. Checkmate/IVI;
. Procomp Amazonia Ind. Electronica/Diebold, Inc.;
. Percon, Inc./PSC, Inc.; and
. Comtec Information Systems/Zebra Technologies Corp.
Wachovia Securities also reviewed separately mergers and acquisitions
involving technology and communication companies with similar size, growth rate
and operating and market characteristics to that of IVI Checkmate completed
during the last three years in which the consideration paid in the transaction
included a cash component.
In examining these transactions, Wachovia Securities reviewed and analyzed
the transaction value of each acquired company and determined the multiple of
sales, EBITDA and net income, where possible. In addition, where possible,
Wachovia Securities reviewed the qualitative factors associated with the
transaction and assessed their impact on the consideration paid in the mergers.
Based on this methodology, Wachovia Securities deemed the valuation of IVI
Checkmate implied by the merger consideration to be received by the
stockholders of IVI Checkmate to be reasonable relative to the valuation of IVI
Checkmate implied by the multiples derived from the comparable transaction
universe.
Premiums Paid Analysis. Wachovia Securities reviewed certain information
relating to transactions completed between January 2000 and March 2001 in which
a U.S. public technology or telecommunication company with an enterprise value
between $50 million and $200 million was acquired, merged into or sold a
majority ownership interest to another entity. These transactions were analyzed
to determine the premiums paid relative to the seller's stock price one day,
one week and four weeks prior to the public announcement of the acquisition of
the acquired company. Wachovia Securities also reviewed median premiums paid in
acquisitions of all US companies from 1997 through 2000. Based on this
analysis, Wachovia Securities deemed the merger consideration to be received by
the stockholders of IVI Checkmate to be reasonable relative to the prices and
premiums paid in the universe of transactions examined.
Other Analyses. Wachovia Securities reviewed various current and historical
published research reports on IVI Checkmate and other companies in its industry
and the investment opinions, stock price targets and earnings estimates
contained therein. In addition, Wachovia Securities reviewed and analyzed the
historical trading prices and volumes for IVI Checkmate common stock and
exchangeable shares. In this case, due to the inherent uncertainties of
predicting future performance, a discounted cash flow analysis was not
performed.
Other Considerations. As set forth above, Wachovia Securities was engaged by
IVI Checkmate as financial advisor to IVI Checkmate to explore strategic
alternatives, including the sale of IVI Checkmate. In connection with its
engagement as financial advisor, Wachovia Securities solicited indications of
interest in acquiring all or part of IVI Checkmate from parties other than
Ingenico. To Wachovia Securities' knowledge, IVI Checkmate received no
indications of interest other than the offer made by Ingenico whether as a
result of Wachovia Securities' efforts or otherwise.
Miscellaneous. For the services provided by Wachovia Securities in
connection with rendering the Wachovia Securities opinion, the Wachovia
Securities' fee is $300,000. No portion of the fee for the Wachovia Securities
opinion has been or is contingent upon the consummation of the merger. As set
forth above, Wachovia Securities also acted as financial advisor to IVI
Checkmate in connection with IVI Checkmate's
13
exploration of strategic alternatives, including but not limited to a sale to
Ingenico. Pursuant to the engagement, Wachovia Securities is entitled to a fee
equal to 0.75% of the enterprise value of IVI Checkmate for a transaction with
Ingenico or 1% of the enterprise value of IVI Checkmate for a transaction with
another party. Accordingly, contingent upon consummation of the merger,
Wachovia Securities will be entitled to a fee of approximately $660,000. In
addition, IVI Checkmate has agreed to reimburse Wachovia Securities for its
reasonable out-of-pocket expenses incurred in connection with the merger and to
indemnify Wachovia Securities against certain liabilities, including certain
liabilities arising under the federal securities laws, arising out of Wachovia
Securities' engagement.
Wachovia Securities has advised IVI Checkmate that, in the ordinary course
of its business as a full-service securities firm, Wachovia Securities may,
subject to certain restrictions, actively trade the equity or debt securities
of IVI Checkmate or Ingenico for its own account or for the accounts of its
customers and, accordingly, may at any time hold a long or short position in
such securities. Wachovia Securities has made a market in the past in the IVI
Checkmate common stock, for which it has received customary compensation.
Material U.S. Federal Income Tax Consequences
General
The following general discussion summarizes the anticipated material United
States federal income tax consequences of the merger to U.S. holders and non-
U.S. holders of IVI Checkmate common stock and exchangeable shares. This
summary is based upon the provisions of the Internal Revenue Code of 1986, as
amended, applicable current and proposed United States Treasury Regulations,
judicial authority, and administrative rulings and practice. Legislative,
judicial or administrative rules and interpretations are subject to change,
possibly on a retroactive basis, at any time, and, therefore, the following
statements and conclusions could be altered or modified. It is assumed that the
shares of IVI Checkmate common stock and the exchangeable shares are held as
capital assets. This discussion does not address all aspects of United States
federal income taxation that may be relevant to a particular IVI Checkmate
stockholder in light of that IVI Checkmate stockholder's individual
circumstances, or those IVI Checkmate stockholders subject to special rules
under the United States federal income tax laws (for example, life insurance
companies, tax-exempt organizations, financial institutions, certain United
States expatriates, controlled foreign corporations and passive foreign
investment companies). In addition, this discussion does not address the
aspects of United States federal income taxation that may be relevant to IVI
Checkmate stockholders who hold shares of IVI Checkmate common stock or the
exchangeable shares as part of a hedging, "straddle," conversion or other
integrated transaction, or IVI Checkmate stockholders who acquired their shares
through the exercise of directors or employee stock options or other
compensation arrangements. In addition, the discussion does not address any
aspect of foreign, state or local taxation or estate and gift taxation that may
be applicable to an IVI Checkmate stockholder.
The Canadian tax consequences of the merger to the holders of the IVI
Checkmate Ltd. exchangeable shares are described in the management information
circular provided to those holders in connection with the special meeting of
the holders of exchangeable shares.
U.S. Holders
In general, a U.S. holder is (i) a citizen or resident of the United States,
(ii) a corporation or other entity created or organized in or under the laws of
the United States or any state thereof (including the District of Columbia),
(iii) an estate the income of which is subject to U.S. federal income taxation
regardless of its source, (iv) a trust if (a) a court within the United States
is able to exercise primary supervision over the administration of the trust
and one or more U.S. persons have the authority to control all substantial
decisions of the trust, or (b) the trust has a valid election in effect to be
treated as a U.S. person. The receipt of the merger consideration in the merger
will be a taxable transaction for U.S. holders of IVI checkmate common stock
and exchangeable shares. Each such U.S. holder of IVI Checkmate common stock or
exchangeable shares
14
will recognize gain or loss equal to the difference between such holder's
adjusted tax basis in the IVI Checkmate common stock and exchangeable shares
converted in the merger, and the amount of cash received. Gain or loss will be
calculated separately for each block of shares converted in the merger (i.e.,
shares acquired at the same cost in a single transaction). The gain or loss
will generally be capital gain or loss, and will be long-term gain or loss if,
at the effective time of the merger, the IVI Checkmate common stock or
exchangeable shares converted in the merger were held for more than one year.
In the case of U.S. holders who are individuals, long-term capital gain is
currently eligible for reduced rates of federal income tax. There are
limitations on the deductibility of capital losses.
Non-U.S. Holders
A holder that is not a U.S. holder generally will not be subject to United
States federal income tax on any gain realized upon the receipt of the merger
consideration in the merger unless (i) such gain is effectively connected with
a trade or business of the non-U.S. holder in the United States, or, if a tax
treaty applies, is attributable to a permanent establishment maintained by the
non-U.S. holder in the United States, (ii) the non-U.S. holder is an individual
and is present in the United States for 183 days or more during the year in
which the merger is completed (and certain other conditions are met), or (iii)
the non-U.S. holder is subject to tax pursuant to the provisions of the
Internal Revenue Code regarding the taxation of U.S. expatriates. Non-U.S.
holders should also refer to the paragraph below entitled "Backup Tax
Withholding" for information related to IRS Form W-8 BEN.
Backup Tax Withholding
Under the United States federal income tax backup withholding rules, unless
an exemption applies, Ingenico is required to and will withhold 31% of all
payments to which an IVI Checkmate stockholder or other payee is entitled in
the merger, unless the IVI Checkmate stockholder or other payee provides its
taxpayer identification number ("TIN") (social security number, in the case of
an individual, or employer identification number, in the case of other
stockholders), and certifies under penalties of perjury that the TIN provided
is correct (or that such stockholder or other payee is awaiting a TIN) and that
such stockholder is not subject to backup withholding. Each IVI Checkmate
stockholder that is a U.S. holder should complete and sign the substitute Form
W-9 that will be part of the letter of transmittal to be returned to the
exchange agent (or other agent) in order to provide the information and
certification necessary to avoid backup withholding, unless an applicable
exemption exists and is otherwise proved in a manner satisfactory to the
exchange agent (or other agent). The exemptions provide that certain IVI
Checkmate stockholders (including, among others, all corporations and certain
non-U.S. holders) are not subject to these backup withholding requirements. In
order for a non-U.S. holder to qualify as an exempt recipient, however, such
non-U.S. holder must provide its name and address on an IRS Form W-8 BEN (or a
suitable successor form), and certify, under penalties of perjury, its status
as a non-U.S. holder or otherwise establish an exemption. Any amounts withheld
will be allowed as a credit against the holder's United States federal income
tax liability for that year. If withholding results in an overpayment of taxes,
a refund may be obtained by filing a tax return with the Internal Revenue
Service.
IVI Checkmate stockholders should consult their own tax advisors to
determine the United States federal, state and local and foreign tax
consequences of the merger to them in view of their own particular
circumstances.
Governmental and Regulatory Clearances
A filing with respect to transactions such as the merger must be made with
the United States Federal Trade Commission (the "FTC") and the Antitrust
Division of the United States Department of Justice (the "DOJ"), and is
reviewed under applicable antitrust laws. Under the provisions of the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder (the "HSR Act"), the merger may not be
completed until applicable waiting period requirements have expired or
15
been terminated. Ingenico and IVI Checkmate each filed notification report
forms with the FTC and DOJ under the HSR Act on May 22, 2001. On June 5, 2001,
the FTC granted an early termination of the applicable waiting period.
IVI Checkmate conducts operations in North America and Ingenico conducts
operations throughout the world, including in a number of countries other than
in North America. As a result, filings may have to be made with the governments
of these countries under their respective premerger notification statutes.
Where necessary, the parties intend to make such filings. You should understand
that the receipt of any foreign antitrust approvals, consents and filings the
absence of which would prohibit the consummation of the merger, or would be
reasonably likely to have a material adverse effect on IVI Checkmate or
Ingenico, is a condition to the completion of the merger.
You should understand that the timing of regulatory clearances, if any, will
depend on a variety of factors including any inquiries of regulators, the
extent of any substantive issues that regulators may raise and the timing and
extent of any discussions that Ingenico may undertake, or commitments that
Ingenico may agree to with regulators to resolve any issues raised. While no
assurances can be made that the merger will receive all necessary regulatory
clearances on acceptable terms at any particular time, if any, we expect
regulatory clearances will be obtained no later than the third calendar quarter
of 2001. For more information regarding IVI Checkmate's and Ingenico's
commitments in connection with governmental and regulatory clearances, see "The
Merger Agreement--Agreement to Use Reasonable Best Efforts," and "--Conditions
to the Consummation of the Transaction" below.
Merger Financing; Source and Amounts of Funds
The total amount of funds required by Ingenico to consummate and to pay all
related fees and expenses in connection with the merger is estimated to be
approximately $63,750,000. Ingenico expects to obtain such funds from available
cash on hand, available lines of credit and bank loans to be negotiated. The
exact source and terms of financing, if any, from any third party will be
determined on the basis of interest rates and debt market conditions at the
time such financing is arranged.
Interests of IVI Checkmate Directors, Officers and Employees in the Merger
General
Some members of IVI Checkmate's management and the IVI Checkmate Board have
certain interests in the merger that are or may be considered different from or
in addition to the interests of IVI Checkmate stockholders generally. These
additional interests, to the extent material, are described below. The IVI
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Checkmate Board was aware of these interests and considered them in approving
and adopting the merger agreement and the merger. In addition to the following,
the information relating to compensation plans and executive compensation as
disclosed in IVI Checkmate's Form 10-K for the fiscal year ended December 31,
2000, as amended, is hereby incorporated by reference (except as amended or
superseded by the following).
Interested Directors
Certain members of our Board of Directors were appointed to the Board by
Ingenico and have interests in Ingenico. Gerard Compain is an executive vice
president and director of Ingenico, Bertrand Cambou is a director of Ingenico
and Gareth Owen is an officer of a subsidiary of Ingenico.
Stock Based Rights
All stock options, warrants, rights or similar agreements held by employees,
officers and directors of IVI Checkmate, whether vested or not, will be
canceled at the time of the merger in exchange for a cash payment equal to the
"spread" on the option times the number of shares subject to the option, less
any applicable withholding taxes. The "spread" equals $3.30 minus the exercise
price of the option. In addition, all shares of restricted stock, if any, held
by employees, officers and directors of IVI Checkmate will be canceled at the
time of the merger in exchange for a cash payment equal to $3.30 times the
number of shares.
Support Agreements
In connection with the execution of the merger agreement, certain officers
and directors of IVI Checkmate, namely Messrs. Whitton, Spence, Compain,
Noblett, Nordin, Owen, Roode, Thomson and Neubert, executed support agreements
with Ingenico. Each individual who executed a support agreement agreed, among
other things, to vote all of his shares of IVI Checkmate stock in favor of the
merger, the merger agreement and the transactions contemplated thereby.
Employment Agreements
Certain of the officers and directors of IVI Checkmate and its subsidiaries
have entered into employment agreements with IVI Checkmate or its subsidiaries,
as the case may be, which provide for, among other things, enhanced severance
payments if the individual is involuntarily terminated within one year of a
change of control. Under these agreements, the consummation of the merger would
qualify as a change of control.
In connection with the Special Committee of the Board of Directors, IVI
Checkmate issued a letter agreement on November 6, 2000 agreeing to compensate
Mr. Bert Nordin in the amount of $150,000 to serve as Chairman of the Special
Committee of the Board of Directors. IVI Checkmate also agreed to reimburse
Mr. Nordin for all reasonable costs and expenses incurred in performance of
those duties. Mr. Nordin subsequently accepted the terms of the letter
agreement.
IVI Checkmate entered into an agreement with J. Stanford Spence, our
Chairman of the Board, dated June 25, 1998, as amended on September 16, 1998,
that provided, among other things, for Mr. Spence's service to us as the
Chairman of our Board at an initial base rate of $220,000 per year, adjusted
annually to reflect changes in the Consumer Price Index. The agreement, which
expires on December 31, 2005, obligated our directors, consistent with their
fiduciary duties, to nominate Mr. Spence for re-election to our Board of
Directors each year during the term of the agreement. The agreement provides
that in the event of its termination: (i) by us other than as a result of Mr.
Spence's death or disability or by Mr. Spence for good reason, Mr. Spence will
receive any unpaid amounts up to the date of termination and he will continue
to receive amounts thereunder until the end of the agreement's term; (ii) by
Mr. Spence other than for good reason or by us due to any disability affecting
Mr. Spence, Mr. Spence will receive any unpaid amounts under the agreement up
to the date of termination and he will continue to receive amounts owing
thereunder until the end of the term of the agreement, but his base rate will
be reduced to $150,000 per year, adjusted annually to reflect changes in the
Consumer Price Index; and (iii) due to Mr. Spence's death, Mr. Spence's estate
will be entitled to receive any unpaid amounts under the agreement up to the
date of his death. The agreement includes non-disclosure, non-compete and non-
solicitation covenants that run through the term of the agreement, regardless
of whether the agreement has been terminated prior to the scheduled expiration
of its term.
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On June 14, 2001, the parties amended the agreement with Mr. Spence,
effective as of the time of the merger between us and Ingenico, to provide that
Mr. Spence will resign as a member of our Board of Directors at the time of the
merger and the Board will no longer be required to nominate Mr. Spence to sit
on our Board of Directors. Pursuant to the amendment, if the agreement is
terminated, Mr. Spence will be entitled to the amounts described above, except
that in the case of Mr. Spence's death or disability prior to December 31,
2005, Mr. Spence, or his estate, will be entitled to a lump sum equal to the
amounts payable under the agreement through December 31, 2005, together with
any applicable death or disability benefits. The non-disclosure, non-compete
and non-solicitation covenants in the agreement will continue to run through
calendar year 2005, except that Mr. Spence's affiliation as a principal or
representative of PayMate.net Corporation is expressly permitted.
Indemnification of Officers and Directors
Under the merger agreement, the surviving corporation is obligated to
indemnify the officers and directors of IVI Checkmate for any acts or omissions
occurring prior to the completion of the merger to the extent currently
provided under IVI Checkmate's certificate of incorporation and by-laws.
In the merger agreement, Ingenico has agreed that, for a period of not less
than six years from and after the completion of the merger, it will maintain in
effect the current policies of directors' and officers' liability insurance
maintained by IVI Checkmate, provided that the surviving corporation is not
obligated to make annual premium payments that exceed $150,000. If annual
premium payments exceed $150,000, the surviving corporation will obtain the
greatest comparable insurance coverage possible for an annual premium equal to
$150,000. In addition, at any time on or after the third anniversary of the
closing of the merger, Ingenico may, at its election, provide funds to the
surviving corporation so that the surviving corporation may self-insure at an
equal level of coverage in lieu of any directors' and officers' liability
insurance policy.
Amendment to IVI Checkmate Stockholder Protection Rights Agreement
On April 6, 2001, IVI Checkmate amended its rights agreement (sometimes
called a "poison pill"), dated as of September 16, 1998, between IVI Checkmate
and First Union National Bank, as rights agent, to provide that neither the
merger nor the merger agreement will cause Ingenico or any of its subsidiaries
or affiliates to become an "acquiring person" under the rights agreement. In
addition, the amendment amends the rights agreement to provide that a
"separation time," "stock acquisition date" and "flip-over transaction or
event" will not occur as a result of the approval, execution, delivery or
performance of the merger agreement, or the consummation of the transactions
contemplated thereby or from the issuance of additional IVI Checkmate common
stock pursuant to the merger agreement. The amendment also provides that an
"expiration time" will occur simultaneously with the closing of the merger. The
amendment provides that no person will have any right of action under the
rights agreement solely by virtue of (i) the approval, execution or delivery of
the merger agreement, (ii) the consummation of the merger, (iii) the
consummation of any transaction contemplated in the merger agreement or (iv)
the public announcement of any of the foregoing. Finally, the amendment also
provides that the rights will cease to be exercisable immediately prior to the
closing of the merger.
Appraisal and Dissent Rights
Under the merger agreement and the Delaware General Corporation Law, holders
of IVI Checkmate common stock, including holders of exchangeable shares that
have exchanged those shares for common stock prior to completion of the merger,
are entitled to appraisal rights with respect to their shares of IVI Checkmate
common stock in connection with the merger. Holders of exchangeable shares, who
have not exchanged their shares for common stock, are entitled to dissent and
demand fair value for their exchangeable shares in connection with the special
meeting of the holders of exchangeable shares, as is further described in the
management information circular issued to the holders of the exchangeable
shares relating to the special meeting of the holders of exchangeable shares.
Delaware law entitles the holders of record of shares of IVI Checkmate
common stock who follow the procedures specified in Section 262 of the Delaware
General Corporation Law to have their shares appraised by the Delaware Court of
Chancery and to receive the "fair value," as determined by the court, of such
shares as
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of the completion of the merger instead of the merger consideration. In order
to exercise such rights, a stockholder must demand and perfect the rights in
accordance with Section 262. The following is a summary of Section 262 and is
qualified in its entirety by reference to Section 262, a copy of which is
attached as Appendix C to this proxy statement. Stockholders should carefully
review Section 262 as well as the information discussed below to determine
their rights to appraisal.
If a stockholder of IVI Checkmate elects to exercise the right to an
appraisal under Section 262, that stockholder must do all of the following:
(1) file with IVI Checkmate at its corporate headquarters in Roswell,
Georgia, a written demand for appraisal of shares of IVI Checkmate
common stock held, which demand must identify the stockholder and
expressly request an appraisal, before the vote is taken on the merger
agreement at the special meeting. This written demand for appraisal
must be in addition to and separate from any proxy or vote against the
merger agreement; neither voting against, abstaining from voting nor
failing to vote on the merger agreement will constitute a demand for
appraisal within the meaning of Section 262;
(2) not vote in favor of, or consent in writing to, the merger agreement.
Failing to vote or abstaining from voting will satisfy this
requirement, but a vote in favor of the merger agreement, by proxy or
in person, or the return of a signed proxy that does not specify a vote
against approval and adoption of the merger agreement, will constitute
a waiver of the stockholder's right of appraisal and will nullify any
previously filed written demand for appraisal; and
(3) continuously hold such shares through the effective time of the merger.
All written demands for appraisal should be addressed to: IVI Checkmate
Corp., 1003 Mansell Road, Roswell, Georgia, 30057, Attention: Corporate
Secretary, before the vote is taken on the merger agreement at the special
meeting, and should be executed by, or on behalf of, the holder of record of
the relevant shares of IVI Checkmate stock. Such demand must reasonably inform
IVI Checkmate of the identify of the stockholder and that the stockholder is
thereby demanding appraisal of his or her shares of IVI Checkmate common stock.
Within 10 days after the completion of the merger, the surviving corporation
of the merger will give written notice of the completion of the merger to each
stockholder of IVI Checkmate who has satisfied the requirements of Section 262
and has not voted for or, consented to, the proposal to approve and adopt the
merger agreement and the transactions contemplated thereby. We refer to such a
stockholder as a "dissenting stockholder." Within 120 days after the completion
of the merger, the surviving corporation or any dissenting stockholder may file
a petition in the Delaware court demanding a determination of the fair value of
the shares of IVI Checkmate common stock that are held by all dissenting
stockholders. Any dissenting stockholder desiring to file this petition is
advised to file the petition on a timely basis unless the dissenting
stockholder receives notice that a petition has already been filed by the
surviving corporation or another dissenting stockholder.
If a petition for appraisal is timely filed, the court will determine which
stockholders are entitled to appraisal rights and thereafter will determine the
fair value of the shares of IVI Checkmate common stock held by dissenting
stockholders, exclusive of any element of value arising from the accomplishment
or expectation of the merger, but together with a fair rate of interest, if
any, to be paid on the amount determined to be fair value. In determining such
fair value, the court will take into account all relevant factors. The court
may determine such fair value to be more than, less than or equal to the
consideration that the dissenting stockholder would otherwise be entitled to
receive pursuant to the merger agreement. If a petition for appraisal is not
timely filed, then the right to an appraisal shall cease. The costs of the
appraisal proceeding may be determined by the court and taxed against the
parties as the court determines to be equitable under the circumstances. Upon
the application of any stockholder, the court may determine the amount of
interest, if any, to be paid upon the value of the shares of IVI Checkmate
common stock of stockholders entitled to such interest. Upon application
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of a stockholder, the court may order all or a portion of the expenses incurred
by any stockholder in connection with the appraisal proceeding, including,
without limitation, reasonable attorneys' fees and the fees and expenses of
experts, to be charged pro rata against the value of all shares of IVI
Checkmate common stock entitled to appraisal.
From and after the completion of the merger, no dissenting stockholder will
have any rights of an IVI Checkmate stockholder with respect to that dissenting
stockholder's shares for any purpose, except to receive payment of their fair
value and to receive payment of dividends or other distributions on that
dissenting stockholder's shares of IVI Checkmate common stock, if any, payable
to IVI Checkmate stockholders of record as of a date prior to the completion of
the merger. If a dissenting stockholder delivers to the surviving corporation a
written withdrawal of the demand for an appraisal within 60 days after the
completion of the merger, or thereafter with the written approval of the
surviving corporation, or, if no petition for appraisal is filed within 120
days after the completion of the merger, then the right of that dissenting
stockholder to an appraisal will cease and the dissenting stockholder will be
entitled to receive only the merger consideration.
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THE MERGER AGREEMENT
The following is a summary of the material terms of the merger agreement.
The summary is qualified in its entirety by reference to the merger agreement,
a copy of which is attached to this proxy statement as Appendix A and is
incorporated herein by reference.
Structure and Effective Time
The merger agreement provides for the merger of Merger Sub with and into IVI
Checkmate upon the terms and subject to the conditions of the merger agreement.
As the surviving corporation, IVI Checkmate will survive the merger and
continue to exist as a wholly owned subsidiary of Ingenico. The merger will
become effective at the time the certificate of merger is filed with the
Delaware Secretary of State (or at a later time if agreed by the parties and
specified in the certificate of merger). We intend to complete the merger as
promptly as practicable after satisfaction of all the conditions to closing,
including the receipt of the IVI Checkmate stockholder approval and all
requisite regulatory clearances. See "The Merger--Governmental and Regulatory
Clearances," "--Agreement to Use Reasonable Best Efforts" and "--Conditions to
the Consummation of the Transaction."
Merger Consideration
The merger agreement provides that each share of IVI Checkmate common stock
outstanding immediately prior to the effective time of the merger will be
converted at the effective time of the merger into the right to receive $3.30
in cash, without interest. Provided the holders of exchangeable shares approve
a special resolution amending certain terms of the exchangeable shares at the
special meeting of the holders of exchangeable shares, each exchangeable share
outstanding immediately after the completion of the merger (other than those
exchangeable shares held by IVI Checkmate and its subsidiaries) will be
purchased by IVI Checkmate for $3.30 in cash, without interest. However, shares
of common stock that are outstanding immediately prior to the merger held by
any dissenting stockholder who properly perfects his or her dissenter's rights
will not be converted into the right to receive $3.30 in cash, without
interest, but rather the dissenting stockholder will be entitled to payment of
the fair value of his or her dissenting shares in accordance with and subject
to Section 262 of the Delaware General Corporate Laws. See "The Merger--
Appraisal and Dissenters' Rights."
In addition, at the effective time of the merger, all outstanding shares of
common stock will be canceled, and each holder will have no further rights with
respect to those shares, other than the right to receive the $3.30 per share
merger consideration, without interest, applicable to those shares. All shares
of IVI Checkmate common stock held in the treasury of IVI Checkmate and shares
of IVI Checkmate common stock owned by IVI Checkmate and its wholly owned
subsidiaries, Ingenico and Merger Sub, will be canceled at the effective time
of the merger, and no payment will be made for those shares.
Subject to receiving the requisite approval for the special resolution of
holders of exchangeable shares of IVI Checkmate Ltd. approving the amendment of
the provisions of the exchangeable shares, immediately after the effective time
of the merger, all issued and outstanding exchangeable shares (other than those
held by IVI Checkmate and its subsidiaries) will be purchased by IVI Checkmate
for $3.30 in cash, without interest.
Payment Procedures
Ingenico will select a bank that is reasonably acceptable to IVI Checkmate
to act as paying agent. The paying agent will make payment of the merger
consideration to you in exchange for your certificates representing shares of
IVI Checkmate common stock. The paying agent will also make payment of the
merger consideration to you in exchange for your certificates representing the
exchangeable shares provided the special resolution being voted upon by
exchangeable shareholders is approved at the special meeting of the holders of
exchangeable shares. Ingenico will cause the surviving corporation to provide
the paying agent on a timely basis the cash necessary to pay the merger
consideration as and when needed after the merger. As soon as
21
practicable after the completion of the merger, the paying agent will send each
IVI Checkmate stockholder of record and, provided the special resolution being
voted upon by exchangeable shareholders is approved at the special meeting of
the holders of exchangeable shares, each IVI Checkmate Ltd. exchangeable
shareholder of record a letter of transmittal. This letter of transmittal will
contain specific instructions explaining how to send your stock certificates
representing either common stock or exchangeable shares to the paying agent in
exchange for cash. The paying agent will mail you a check for the appropriate
merger consideration, minus any withholding taxes required by law, promptly
following the paying agent's receipt and processing of your stock certificates
and properly completed transmittal documents.
In the event the merger is completed even though the holders of the
exchangeable shares do not approve the special resolution, please see "--Voting
Rights of Holders of Exchangeable Shares" for information related to the rights
of the holders of exchangeable shares in this situation.
Treatment of IVI Checkmate Stock-Based Rights
The merger agreement provides that the IVI Checkmate Board of Directors has
taken all appropriate and necessary actions so that, at the effective time of
the merger, each IVI Checkmate stock option, whether or not then vested or
exercisable, granted under any stock option or similar plan of IVI Checkmate or
its subsidiaries outstanding at the effective time will be canceled in return
for the right to receive an amount of cash, less applicable withholding taxes,
equal to the excess, if any, of $3.30 over the exercise price of the IVI
Checkmate stock option, multiplied by the number of shares of IVI Checkmate
stock subject to the canceled IVI Checkmate stock option. Ingenico will cause
the foregoing amounts to be paid as soon as practicable after the effective
time of the merger.
Directors and Officers
The merger agreement provides that the directors of Merger Sub immediately
before the effective time of the merger will be the initial directors of the
surviving corporation after the merger, and that they will hold office until
their successors are duly elected and qualified, or their earlier death,
resignation or removal. The officers of IVI Checkmate will be the officers of
the surviving corporation after the merger, together with any additional
officers designated by Ingenico, and they will hold office until their
successors are duly elected and qualified, or their earlier death, resignation
or removal.
Representations and Warranties
The merger agreement contains representations and warranties made by IVI
Checkmate to Ingenico and Merger Sub regarding IVI Checkmate and its
subsidiaries, including representations and warranties relating to:
(1) due organization, power and standing, and other corporate matters;
(2) certificate of incorporation, by-laws and other organizational
documents;
(3) capital structure;
(4) authorization, execution, delivery and enforceability of the merger
agreement;
(5) conflicts under charter documents, violations of any instruments or
law, and required consents and approvals;
(6) reports and financial statements filed with the Securities and Exchange
Commission and any other governmental entity and the accuracy of the
information in those documents and the absence of certain undisclosed
liabilities;
(7) compliance by IVI Checkmate Ltd. with all applicable Canadian
securities legislation not covered by IVI Checkmate Ltd.'s exemption
order, which exemption order exempts IVI Checkmate Ltd. from continuous
disclosure requirements in Canada;
(8) matters relating to the Employee Retirement Income Security Act of
1974, as amended (which we sometimes refer to as "ERISA"), compliance
and compensation matters (including retirement and other employee
benefit plans) and labor matters;
22
(9) litigation;
(10) truth and accuracy of information supplied by IVI Checkmate for
inclusion in this proxy statement;
(11) tax matters;
(12) intellectual property;
(13) inapplicability of state takeover laws that would restrict or prohibit
the merger agreement or merger;
(14) brokers' and finders' fees with respect to the merger;
(15) opinion of financial advisor;
(16) vote required to approve the merger agreement and merger;
(17) amendment of the IVI Checkmate Stockholder Protection Rights
Agreement;
(18) environmental matters;
(19) compliance with applicable laws;
(20) material contracts and compliance with agreements and debt
instruments;
(21) execution of support agreements;
(22) investments of IVI Checkmate Ltd.;
(23) matters relating to the IVI Checkmate stock option exchange program;
and
(24) execution and delivery of a waiver and consent agreement with Congress
Financial Corporation (Southern).
The merger agreement also contains representations and warranties made by
Ingenico and Merger Sub to IVI Checkmate, including representations and
warranties relating to:
(1) due organization, power and standing, and other corporate matters;
(2) authorization, execution, delivery and enforceability of the merger
agreement;
(3) conflicts under charter documents, violations of any instruments or
law, and required consents and approvals;
(4) truth and accuracy of information supplied by Ingenico or Merger Sub
for inclusion in this proxy statement; and
(5) availability of funds necessary to complete the merger.
The representations and warranties of each of the parties to the merger
agreement will expire upon completion of the merger.
Covenants; Conduct of the Business of IVI Checkmate Prior to the Merger
From the date of the merger agreement through the effective time of the
merger, IVI Checkmate and its subsidiaries are required to comply with certain
restrictions on their conduct and operations.
IVI Checkmate has agreed that, prior to the effective time of the merger,
except as otherwise contemplated by the merger agreement or with the prior
written consent of Ingenico, IVI Checkmate will and will cause its subsidiaries
to:
(1) conduct their respective businesses in the ordinary and usual course of
business, consistent with past practice;
(2) use all reasonable efforts to preserve intact their respective business
organizations and goodwill, keep available the services of their
respective present officers and key employees, and preserve
satisfactory business relationships with customers, suppliers,
licensors, distributors and others having business relationships with
them;
23
(3) not adopt or propose any amendment to their articles of incorporation,
by-laws or comparable organizational documents;
(4) not issue, reissue, pledge, sell or authorize the same with respect to
(i) any shares of capital stock, other than shares of IVI Checkmate
common stock pursuant to the exercise of stock options or pursuant to
DataCard's exercise of its warrants outstanding on the date of the
merger agreement (see "--Matters Related to DataCard"); (ii) any
securities convertible into or exchangeable for capital stock, or any
options, warrants or rights to acquire shares of capital stock, or
(iii) any other security in respect of, in lieu of, or in substitution
for, shares of capital stock outstanding on the date of the merger
agreement which govern such issuance;
(5) not make any other changes to its capital structure;
(6) not declare, set aside or pay any dividend or other distribution in
respect of any class or series of capital stock other than between IVI
Checkmate and any of its wholly owned subsidiaries;
(7) not split, combine, subdivide, reclassify or redeem, purchase or
otherwise acquire (or propose to redeem, purchase or otherwise acquire)
any shares of its outstanding capital stock;
(8) not incur, assume or pre-pay any long-term debt or incur or assume any
short-term debt, except that IVI Checkmate and its subsidiaries may
incur or pre-pay debt in the ordinary course of business consistent
with past practice, including by repaying facilities with SMTC
Manufacturing Corporation of Canada, The Bank of Nova Scotia and
Congress Financial Corporation (Southern);
(9) not assume, guarantee, endorse or otherwise become liable or
responsible for the obligations of any other person except in the
ordinary course of business consistent with past practice;
(10) not make any loans, advances or capital contributions to, or
investments in, any other person except in the ordinary course of
business consistent with past practice except for loans, advances or
capital contributions between IVI Checkmate and any wholly owned
subsidiary or between any wholly owned subsidiaries of IVI Checkmate;
(11) except in the ordinary course of business consistent with past
practice, not (i) modify, amend or terminate any material contract,
(ii) waive, relinquish or assign any material contract, right or claim
except as required by law, or (iii) cancel or forgive any indebtedness
owed;
(12) not increase the compensation or severance payable to its directors,
officers, employees or consultants (including the grant of equity or
long term compensation awards), except in accordance with past
practices or except as agreed;
(13) not grant any severance or termination pay to, or enter into or amend
any employment or severance agreement with, any current or prospective
employee of IVI Checkmate or any of its subsidiaries except as agreed;
(14) not establish, adopt, enter into or amend any collective bargaining
agreement or employee benefit plan except as may be required by law;
(15) not file any tax return other than in the ordinary course of business,
or make or revoke any tax election, or change any method of
accounting, except as required by law or to the extent that the action
is consistent with past practice and would not be material;
(16) not enter into any material contract or agreement other than in the
ordinary course of business;
(17) not make any change in its methods or principles of accounting except
as required by a change in law or in GAAP; and
(18) not take any action that would cause any material breach of any
representation or warranty in the merger agreement.
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No Solicitation
The merger agreement provides that IVI Checkmate, its affiliates and their
respective officers, directors, employees, representatives and agents must
immediately cease any existing discussions or negotiations, if any, with any
parties with respect to any acquisition or exchange of all or any material
portions of the assets of, or any equity interest in, IVI Checkmate or any of
its subsidiaries or any business combination with IVI Checkmate or any of its
subsidiaries other than discussions with DataCard regarding related options and
warrants (see "--Matters Related to DataCard"). The merger agreement further
provides that, prior to the effective time of the merger, IVI Checkmate will
not, and will not authorize or permit any of its subsidiaries, or any of its
subsidiaries' directors, officers, employees, agents or representatives, to:
(1) directly or indirectly solicit, initiate, encourage or facilitate, or
furnish or disclose non-public information in furtherance of, any
inquiries or making of any proposal for an acquisition transaction (as
defined below);
(2) enter into any agreement, arrangement or understanding requiring the
abandonment, termination or failure of the merger or the merger
agreement; or
(3) negotiate, explore, or otherwise engage in discussions with any other
party (other than Ingenico, Merger Sub or their respective directors,
officers, employees, agents and representatives) with respect to any
acquisition transaction.
However, prior to the receipt of IVI Checkmate stockholder approval of the
merger agreement, IVI Checkmate may, in response to an unsolicited bona fide
proposal of acquisition transaction which did not result from a breach of the
no solicitation provision and which the IVI Checkmate Board determines, in good
faith, is a superior proposal (as defined below), the IVI Checkmate Board may:
(1) furnish information, pursuant to a customary confidentiality agreement,
to the party making the superior proposal; and
(2) participate in discussions or negotiations with that person regarding
the superior proposal.
In addition, in the event of an unsolicited bona fide proposal for an
acquisition transaction as described above, the merger agreement provides that
IVI Checkmate must promptly advise Merger Sub in writing of any acquisition
transaction inquiries, negotiations or proposals relating to any acquisition
transaction, the material terms and conditions of any such acquisition
transaction (including any changes thereto) and the identity of the person
making any proposal or inquiry. In doing so, IVI Checkmate must:
(1) advise Ingenico of any material developments related to the inquiry or
proposal; and
(2) promptly provide to Ingenico copies of all written proposals and other
inquiries from any third party relating to an acquisition transaction.
Prior to the approval or recommendation of a superior proposal by the IVI
Checkmate Board, IVI Checkmate must negotiate in good faith with Ingenico for a
period of not less than three business days so that Ingenico can propose
adjustments in the terms and conditions of the merger agreement in order to
proceed with the merger.
It should be noted, however, that nothing contained in the merger
agreement's no solicitation provision prohibits IVI Checkmate from taking and
disclosing to its stockholders a position contemplated by Rule 14e-2 under the
Securities Exchange Act of 1934, as amended.
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For purposes of the no solicitation provision, an "acquisition transaction"
means any merger, liquidation, recapitalization, consolidation or other
business combination involving IVI Checkmate or any of its subsidiaries or
acquisition of any capital stock or any material portion of the assets of IVI
Checkmate or its subsidiaries, or any combination of the foregoing.
For purposes of the no solicitation provision, a bona fide written proposal
for an acquisition transaction is a "superior proposal" if all necessary
financing for the proposal is then, in the judgment of the IVI Checkmate Board,
readily obtainable, and if the Board determines in good faith that failing to
respond to the proposal would constitute a breach of the fiduciary duties of
the Board (after consultation with, and receipt of advice from, its outside
legal counsel to that effect), and if, in the written opinion of IVI
Checkmate's financial advisor, the proposal is more favorable to IVI
Checkmate's stockholders from a financial point of view than the transactions
contemplated by the merger agreement, as the merger agreement has been proposed
to be amended by Ingenico following three business days of negotiation, in good
faith.
Agreement to Use Reasonable Best Efforts
Subject to the terms and conditions of the merger agreement, IVI Checkmate,
Ingenico and Merger Sub have agreed, along with their respective subsidiaries,
to use their respective reasonable best efforts to, among other things:
(1) make all filings that are necessary, proper or advisable under
applicable laws and regulations to complete and make effective the
merger and the other transactions contemplated by the merger agreement,
including this proxy statement, a management information circular
related to the special meeting of the holders of exchangeable shares,
any HSR filings and any foreign filings;
(2) promptly respond to requests for information from any governmental
entity in connection with any HSR filings or any foreign filings;
(3) inform each other party of any event or circumstance related to IVI
Checkmate, Ingenico or Merger Sub which should be set forth in an
amendment to this proxy statement; and
(4) promptly obtain all necessary consents, approvals or waivers from any
government entity or other third party.
IVI Checkmate Board Recommendation
In the merger agreement, IVI Checkmate agreed, through its Board of
Directors, to recommend to its stockholders that they approve of the merger,
the merger agreement and the transactions contemplated thereby. However, prior
to stockholder approval of the merger agreement, the IVI Checkmate Board may
withdraw or modify its recommendation:
(1) if the merger agreement is terminated in accordance with its terms; or
(2) if the IVI Checkmate Board determines in good faith, after consultation
with outside counsel, that it is necessary to do so in order to comply
with its fiduciary obligations.
Conditions to the Consummation of the Transaction
Mutual Closing Conditions
The merger agreement provides for a number of conditions which must be
satisfied or waived on or prior to the closing date of the transaction. The
following is a list of these closing conditions:
(1) IVI Checkmate must obtain approval of the merger agreement by the
affirmative vote of the holders of a majority of the outstanding shares
of common stock and exchangeable shares, voting together as a single
class;
26
(2) The consummation of the merger must not be restrained, enjoined or
prohibited by any order, judgment, decree, injunction or ruling of a
court of competent jurisdiction or any governmental entity, and there
must not have been any statute, rule or regulation enacted, promulgated
or deemed applicable to the merger by any governmental entity which
prevents the completion of the merger or the other transactions
contemplated by the merger agreement or has the effect of making the
purchase of shares of IVI Checkmate common stock illegal;
(3) There must not be any pending claim, action, suit, hearing or
proceeding challenging or seeking to restrain or prohibit the
consummation of the transactions contemplated by the merger agreement,
or any other action filed against IVI Checkmate or any of its
subsidiaries after the date of the merger agreement that could
reasonably be expected to be determined adversely to IVI Checkmate and,
if adversely determined, could, individually or in the aggregate,
reasonably be expected to have a material adverse effect on IVI
Checkmate or on the consummation of the transactions contemplated by
the merger agreement;
(4) Any waiting period (and any extension thereof) under the HSR Act
applicable to the merger must be terminated or expire, and any other
approvals must be received, and requirements complied with, under any
other applicable antitrust laws including the Investment Canada Act;
and
(5) No party shall have terminated the merger agreement.
Ingenico Closing Conditions
The obligations of Ingenico and Merger Sub to consummate the merger are
further subject to the satisfaction or waiver of the following conditions:
(1) There must not have been any action taken nor any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, enforced, promulgated, amended, issued or deemed applicable to
the merger, by any legislative body, court, government or governmental,
administrative or regulatory authority or agency, other than the
routine application of the waiting period provisions of the HSR Act to
the merger, that would reasonably be expected to: (i) make illegal or
otherwise prohibit or materially delay consummation of the merger or
seek to obtain material damages or make the merger materially more
costly, (ii) prohibit or materially limit the ownership or operation by
Ingenico or the surviving corporation of all or any material portion of
the business or assets of IVI Checkmate or any of its subsidiaries
taken as a whole or compel Ingenico to dispose of or hold separately
all or any material portion of Ingenico's or the surviving
corporation's or any of its subsidiaries', taken as a whole, business
or assets, or seek to impose any material limitation on the ability of
Ingenico or the surviving corporation, to conduct its business or own
such assets, (iii) impose material limitations on the ability of
Ingenico effectively to acquire, hold or exercise full rights of
ownership, including voting rights, of the shares of the surviving
corporation's common stock, or (iv) require divestiture by Ingenico of
any shares of common stock of the surviving corporation;
(2) There must not have been any development, event or condition that has,
or could reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the business, assets,
liabilities, financial condition, results of operations, profitability
or prospects of IVI Checkmate and its subsidiaries taken as a whole;
(3) (i) Each of the representations and warranties of IVI Checkmate (A)
that is qualified as to materiality or (B) that relates to the
capitalization of IVI Checkmate or its subsidiaries, must be true and
correct, and (ii) each of the representations and warranties that is
not so qualified (other than the representations and warranties
regarding the capitalization of IVI Checkmate or its subsidiaries) must
be true and correct in every respect except where the failure of such
representations and warranties to be true and correct could not,
individually or in the aggregate, reasonably be expected to have a
material adverse effect on IVI Checkmate, in each case as if such
representations and warranties were made on the date of the merger
agreement and on the date of the closing of the merger agreement;
27
(4) IVI Checkmate must have complied in all material respects with its
obligations, covenants and agreements under the merger agreement;
(5) The Special Committee and the Board of IVI Checkmate must not have
withdrawn or modified in a manner adverse to Ingenico or Merger Sub the
adoption or recommendation of the merger or the merger agreement, and
must not have resolved to do the same;
(6) IVI Checkmate must have provided Ingenico and Merger Sub with a
certificate of the Chief Executive Officer of IVI Checkmate, dated as
of the closing date of the merger, as to the satisfaction of certain
closing conditions;
(7) The holders of the exchangeable shares (other than IVI Checkmate and
its subsidiaries) must have approved and adopted a special resolution
by the requisite vote in order to authorize the purchase of each
exchangeable share that is outstanding immediately after the completion
of the merger by IVI Checkmate (other than those held by IVI Checkmate
and its subsidiaries) for $3.30 in cash, without interest, with the
result that the holders of the exchangeable shares (other than IVI
Checkmate and the subsidiaries) will participate in the merger to the
same extent and on an economically equivalent basis as the holders of
common stock, and the holders of exchangeable shares must have approved
any amendments to any other documents necessary to implement that
special resolution;
(8) The orders and rulings necessary under applicable Canadian securities
legislation (including the rules and published policies of regulators)
must have been obtained on terms acceptable to Ingenico, acting
reasonably, so that after the effective time of the merger, there is no
requirement that might restrict transactions, activities or
relationships between IVI Checkmate Ltd. and Ingenico or any affiliate
of Ingenico or that might require public disclosure by or in respect of
IVI Checkmate Ltd.; and
(9) All participants in the IVI Checkmate stock option exchange program
must have duly executed and delivered to IVI Checkmate and Ingenico a
release, relinquishment and waiver in a form satisfactory to Ingenico,
unless this condition has already lapsed as set forth in the merger
agreement.
Termination of the Merger Agreement
The merger agreement may be terminated at any time prior to the effective
time of the merger, whether before or after IVI Checkmate stockholders have
approved it:
(1) by mutual written consent of the parties;
(2) by either IVI Checkmate or Ingenico, if (i) the merger is not
consummated by September 30, 2001 (provided that if any governmental
entity has made a request for additional information under the HSR Act,
such date will be extended to a date which is 60 days after substantial
compliance with such request, but in no event later than December 31,
2001), whether the date is before or after the date the IVI Checkmate
stockholders approve the merger agreement (unless the failure to
consummate the merger by the required date is due to the breach of any
obligation under the merger agreement by the party seeking to terminate
the merger agreement) or (ii) any condition to either party's
obligation to consummate the merger has become impossible to satisfy on
or prior to the required date (unless resulting from the breach of any
obligation under the merger agreement by the party seeking to terminate
the merger agreement);
(3) by either IVI Checkmate or Ingenico, if any court or other governmental
entity issues an order, decree or ruling or takes any other action
permanently enjoining, restraining or otherwise prohibiting the merger,
and the order, decree or ruling or other action is final and
nonappealable;
(4) by IVI Checkmate if, prior to its shareholders' approval of the merger,
its Board approves or recommends a superior proposal in accordance with
the terms of the merger agreement, provided that the termination of the
merger agreement will not be effective unless and until IVI Checkmate
pays for all of Ingenico's fees and expenses related to the merger,
plus a termination fee in the amount of $2.75 million;
28
(5) by Ingenico if the Board of Directors of IVI Checkmate or the Special
Committee (i) withdraws or modifies in a manner adverse to Merger Sub
its approval or recommendation of the merger or the merger agreement,
(ii) approves or recommends another offer or an agreement to effect an
acquisition transaction by any third party (other than an affiliate of
Ingenico) or (iii) resolves to effect any of the foregoing;
(6) by Ingenico if the Board of Directors of IVI Checkmate Ltd. does not
recommend, or withdraws or modifies in a manner adverse to Ingenico its
recommendation, that the holders of the exchangeable shares vote in
favor of a special resolution, the effect of which would be to
authorize the purchase of each exchangeable share that is outstanding
immediately after the completion of the merger by IVI Checkmate (other
than those held by IVI Checkmate and its subsidiaries) for $3.30 in
cash, without interest, with the result that the holders of
exchangeable shares (other than IVI Checkmate and its subsidiaries)
will participate in the merger to the same extent and on an
economically equivalent basis as the holders of common stock;
(7) by Ingenico if any party (other than Ingenico, Merger Sub or any
affiliate) makes a proposal or public announcement or communication to
IVI Checkmate with respect to an acquisition transaction which IVI
Checkmate notifies Ingenico is a superior proposal under the terms of
the merger agreement;
(8) by Ingenico if there occurs and continues to exist (i) any general
suspension of, or limitation on prices for, trading in securities on
the New York Stock Exchange or on the Paris Bourse (excluding
suspensions or limitations resulting solely from physical damage or
interference with the exchanges not related to market conditions), (ii)
any decline of at least 20% in the Dow Jones Average of Industrial
Stocks, the Standard & Poor's 500 Index or the CAC-40 Index from the
close of business on the last trading day immediately preceding the
date of the merger agreement, (iii) any change in currency exchange
rates measured from the close of business on the date of the merger
agreement, resulting in an increase of 15% or more in the consideration
payable pursuant to the merger as translated from U.S. Dollars into
Euros, (iv) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, France or the
European Union, or a material limitation (whether or not mandatory) by
any governmental entity on the extension of credit by banks or other
lending institutions, (v) a commencement of a war, armed hostilities or
other significant national or international crisis directly or
indirectly involving the United States or France, or (vi) in the case
of the foregoing clauses (i) and (ii) existing as of the date of the
merger agreement, a material acceleration or worsening thereof;
(9) by either IVI Checkmate or Ingenico if, upon a vote taken at a duly
held stockholder meeting, the IVI Checkmate shareholders do not approve
the merger agreement;
(10) by Ingenico if, upon a vote taken at the special meeting of the
holders of exchangeable shares to obtain approval and adoption of a
special resolution, the effect of which would be to authorize the
purchase of the exchangeable shares that are outstanding immediately
after the completion of the merger by IVI Checkmate (other than those
held by IVI Checkmate and its subsidiaries) for $3.30 in cash, without
interest, with the result that the holders of exchangeable shares
(other than IVI Checkmate and its subsidiaries) will participate in
the merger to the same extent and on an economically equivalent basis
as the holders of common stock, the holders of the exchangeable shares
do not approve or adopt the special resolution;
(11) by IVI Checkmate if (i)(A) any of the representations and warranties
of Ingenico or Merger Sub contained in the merger agreement which are
qualified as to materiality were when made or later became untrue or
incorrect (B) any other representations or warranties of Ingenico or
Merger Sub contained in the merger agreement were when made or later
became untrue or incorrect except where the failure to be true and
correct could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on Ingenico or on the
ability of Ingenico or Merger Sub to consummate the merger, or (ii)
Ingenico or Merger Sub breaches or fails to comply in any material
respect with any of their respective agreements or obligations under
the merger agreement, unless the breach is cured within 10 business
days following notice of the breach; and
29
(12) by Ingenico if (i)(A) any of the representations or warranties of IVI
Checkmate (1) contained in the merger agreement and qualified as to
materiality or (2) contained in the merger agreement regarding the
capitalization of IVI Checkmate and its subsidiaries were untrue or
incorrect when made or thereafter or (B) any other representations or
warranties of IVI Checkmate contained in the merger agreement (other
than regarding capitalization and its subsidiaries) were untrue or
incorrect when made or thereafter except where the failure to be true
and correct could not, individually or in the aggregate, reasonably be
expected to have a material adverse effect on IVI Checkmate or on its
ability to consummate the merger or (ii) IVI Checkmate breaches or
fails to comply in any material respect with any of its agreements or
obligations under the merger agreement, unless the breach is cured
within 10 business days following notice of the breach.
Termination Fees and Expenses if Merger Is Not Completed
Under the terms of the merger agreement, IVI Checkmate must pay Ingenico a
termination fee of $2.75 million and also pay all of Ingenico's and Merger
Sub's out-of-pocket fees and expenses (including printing fees, filing fees and
fees and expenses of their legal and financial advisors) related to the merger
agreement, the transactions contemplated by the merger agreement and any
related financing if the merger agreement is terminated:
(1) by Ingenico, following any public proposal with respect to an
acquisition transaction, for the reasons stated in paragraph 2 of "--
Termination of the Merger Agreement" on the basis of a breach of IVI
Checkmate's obligation to duly call, give notice of, convene and hold a
stockholder meeting for the purpose of presenting the merger agreement
to the stockholders for their consideration and approval;
(2) by either IVI Checkmate or Ingenico following any public proposal with
respect to an acquisition transaction, for the reasons stated in
paragraph 9 of "--Termination of the Merger Agreement";
(3) by Ingenico, following any public proposal with respect to an
acquisition transaction, for the reasons stated in paragraph 10 of "--
Termination of the Merger Agreement";
(4) by IVI Checkmate for the reasons stated in paragraph 4 of "--
Termination of the Merger Agreement";
(5) by Ingenico for the reasons stated in paragraph 5 of "--Termination of
the Merger Agreement";
(6) by Ingenico for the reasons stated in paragraph 6 of "--Termination of
the Merger Agreement"; and
(7) by Ingenico for the reasons stated in paragraph 12 of "--Termination of
the Merger Agreement" and within six months of the date of that
termination, IVI Checkmate enters into an agreement for an acquisition
transaction with any person other than Ingenico and its affiliates; in
that event, IVI Checkmate must pay Ingenico the termination fee of
$2.75 million and reimburse Ingenico for all of its fees and expenses
prior to or simultaneously with entering into such agreement.
Ingenico must pay IVI Checkmate a termination fee of $2.75 million and also
pay all of IVI Checkmate's out-of-pocket fees and expenses (including printing
fees, filing fees and fees and expenses of its legal and financial advisors)
related to the merger agreement, the transactions contemplated by the merger
agreement and any related financing if the merger agreement is terminated by
either IVI Checkmate or Ingenico for the reasons stated in paragraph 9 of "--
Termination of the Merger Agreement" and Ingenico is in breach of its
obligations to vote its shares of common stock and to cause its affiliates to
vote each of their shares of common stock, together with all subsequent
transferees of common stock held by Ingenico or by each of its affiliates, in
favor of the merger agreement and the transactions contemplated thereby (unless
IVI Checkmate has breached or failed to comply with any of its obligations
under the merger agreement).
30
MATTERS RELATED TO DATACARD
In April 1999, IVI Checkmate issued to DataCard Corporation 894,663 shares
of Series D Preferred Stock. This Series D Preferred Stock carried a 9%
cumulative dividend. The terms of the Series D Preferred Stock issued to
DataCard granted DataCard the right on certain dates to, among other things,
require IVI Checkmate to redeem the preferred stock, plus all accrued and
unpaid dividends. On April 9, 2001, DataCard exercised such right, however,
based on the timing of the exercise, the redemption price was at a relative
discount to the redemption price DataCard would have received had it exercised
its redemption right at the end of the redemption period. After DataCard
exercised its redemption right, IVI Checkmate then had the option to either
redeem the Series D Preferred Stock for cash or for common stock. On May 9,
2001, IVI Checkmate redeemed the Series D Preferred Stock for cash at an
aggregate price of $7,869,427. IVI Checkmate obtained funding for the
redemption of the Series D Preferred Stock from Ingenico and issued Ingenico a
12% subordinated note in the principal sum of $7,869,427 due May 9, 2003.
Pursuant to the terms of the note, IVI Checkmate must make monthly interest
payments to Ingenico beginning August 1, 2001. The note, however, was issued
subject to a subordination agreement between, among others, IVI Checkmate,
Ingenico and Congress Financial Corporation (Southern) which provides that IVI
Checkmate must cease making any interest payments and may not make any
principal payments due under the note if, and for so long as, IVI Checkmate is
in default of its loan and security agreement with Congress Financial.
PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS
On December 17, 1996, IVI Checkmate entered into a strategic alliance with
Ingenico. The alliance enabled IVI Checkmate to gain exclusive rights to market
Ingenico products and technology in the Americas, to gain access to Ingenico's
smart card technology, to raise capital and to benefit from joint product
development, purchasing and manufacturing. In furtherance of this alliance, IVI
Checkmate and Ingenico entered into a master alliance agreement dated December
5, 1996, as amended on December 17, 1996, and five separate agreements, each
dealing with a separate aspect of the alliance. Pursuant to the investment
agreement, Ingenico purchased 1,439,000 shares of IVI Checkmate's common stock
in December 1996, equal at the time to approximately 16.7% of IVI Checkmate's
outstanding common stock, for approximately $7,240,000. Additionally, IVI
Checkmate granted Ingenico a future participation right, enabling Ingenico to
preserve its percentage ownership of IVI Checkmate's common stock on a non-
diluted basis by subscribing to purchase additional shares of IVI Checkmate's
common stock if IVI Checkmate issued additional shares.
Under the investment agreement, IVI Checkmate also agreed to reconstitute
its Board of Directors so that it would be comprised of eight members, two of
whom initially would be nominees of Ingenico. One nominee of Ingenico would
also be a member of the nominating and governance committee of the Board. If
Ingenico's ownership position in IVI Checkmate decreased to a percentage of
less than 15% but more than 5% on a non-diluted basis, then Ingenico would be
permitted only one nominee on the Board of Directors. If Ingenico's ownership
position in IVI decreased below 5%, it would no longer have the right to
nominate a director of IVI Checkmate. Ingenico's ownership of our stock as of
December 31, 2000 was approximately 8.5%. As a result, Ingenico was
contractually permitted only one representative on our Board, who was Mr.
Gerard Compain, Ingenico's executive vice president and director. Mr. Gareth
Owen, an officer of one of Ingenico's subsidiaries, also serves on our Board.
Pursuant to the terms of the merger agreement, simultaneously with the
execution of the merger agreement, Ingenico purchased 2,620,453 newly issued
shares of IVI Checkmate common stock at a price equal to $2.00 per share. The
purchase of the shares of common stock brought Ingenico's beneficial ownership
in IVI Checkmate common stock to approximately 19.9%. In connection with this
purchase of our common stock, we entered into a registration rights agreement
with Ingenico which requires us to register under the Securities Act of 1933
those newly issued shares of our common stock held by Ingenico, subject to
certain terms and conditions. In addition, pursuant to the merger agreement the
size of the IVI Checkmate Board of Directors was
31
increased by one director and Ingenico had the right to and did in fact appoint
Mr. Bertrand Cambou to fill the newly created vacancy. Each committee of the
IVI Checkmate Board of Directors was also increased by one director and the
vacancy in each Committee was filled by a director appointed by Ingenico.
STOCK OWNERSHIP INFORMATION
The following tables set forth the amount of IVI Checkmate common stock and
exchangeable shares beneficially owned by each of its directors, its two
executive officers during fiscal year 2000, and all directors and executive
officers as a group as of June 14, 2001, and each shareholder known to IVI
Checkmate to be the owner of more than five percent of the outstanding shares
of IVI Checkmate common stock and exchangeable shares. Unless otherwise
indicated, each shareholder has sole investment and voting power with respect
to the shares indicated, as of June 14, 2001.
Five Percent Owners
The table below lists the persons known by IVI Checkmate to beneficially own
at least 5% of our common stock and exchangeable shares as of June 14, 2001.
Name and Address Title of Amount and Nature of % of Shares
of Beneficial Owner Class Beneficial Ownership outstanding(1)
------------------- -------- -------------------- --------------
Ingenico S.A................ Common Stock 4,164,869(2) 19.9%
9, quai de Dion Bouton
92816 Puteaux Cedex, France
- --------
(1) The number of shares outstanding used in this calculation was the number of
shares of common stock and exchangeable shares outstanding on June 14, 2001
(excluding any shares held by IVI Checkmate or its subsidiaries).
(2) We have entered into an agreement and plan of merger, dated April 6, 2001,
with Ingenico and its wholly owned subsidiary which is being considered by
our stockholders for approval pursuant to this proxy statement. Under the
terms of an investment agreement between Ingenico and us, if we issue
shares of common stock to any third party on or before December 31, 2001,
Ingenico has the right to purchase additional shares of common stock from
us to maintain an established percentage ownership of our common stock.
(See "Common Stock Ownership of Directors and Executive Officers" for
additional information regarding Ingenico's holdings.)
In connection with Ingenico's purchase of 2,620,453 newly issued shares of
IVI Checkmate common stock at a price equal to $2.00 per share simultaneously
with the execution of the merger agreement, the size of the IVI Checkmate Board
of Directors was increased by one and Ingenico had the right to and did in fact
appoint Mr. Bertrand Cambou to fill the newly created vacancy. Each committee
of the IVI Checkmate Board of Directors was also increased by one director and
the vacancy was filled by a director appointed by Ingenico. While IVI Checkmate
does not believe that the share purchase and the appointment of an additional
director to the IVI Checkmate Board and each committee thereof resulted in a
change of control of IVI Checkmate, these events are part of the merger
agreement which, if consummated, would result in a change in control of IVI
Checkmate.
32
Common Stock Ownership of Directors and Executive Officers
The table below contains information regarding ownership of our common stock
and exchangeable shares by our directors and executive officers as of June 14,
2001. It does not reflect any changes in ownership that may have occurred after
that date. Each person named in the table gave us his or her own personal stock
ownership information about themselves. In accordance with SEC regulations,
beneficial ownership as reported in the table includes shares of stock as to
which a person possesses sole or shared voting or investment power and shares
which may be acquired on or before June 14, 2001 upon the exchange of
exchangeable shares or the exercise of stock options. Except as explained in
the footnotes below, the named persons have sole voting and investment power
with regard to the shares shown as beneficially owned by them.
Shares
Beneficially % of Shares
Directors and Executive Officers Owned Outstanding
-------------------------------- ------------ -----------
J. Stanford Spence............................ 978,664(1) 4.7%
Chairman of the Board
L. Barry Thomson.............................. 10,000 *
President, Chief Executive Officer and
Director
John J. Neubert............................... 46,428 *
Executive Vice President--Finance and
Administration, Chief Financial Officer,
Secretary and Treasurer
George Whitton................................ 78,300 *
Vice Chairman of the Board
Bertil D. Nordin.............................. 31,916(2) *
Director
Peter E. Roode................................ 27,000(2) *
Director
Gerard Compain................................ 20,000(1)(3) *
Director
Bertrand Cambou............................... -- *
Director
Paul W. Noblett............................... 20,000(2) *
Director
Gareth Owen................................... 20,000(2) *
Director
All directors and executive officers as a
group (10 persons)........................... 1,232,308(4) 5.9%
- --------
In general, "beneficial ownership" includes those shares a director or
executive officer has the power to vote or transfer, as well as shares
owned by immediate family members that reside with the director or officer.
Unless otherwise indicated below, directors and executive officers named in
the table above have sole voting and investment authority with respect to
the shares set forth in the table. The table above also indicates shares
that may be obtained within 60 days upon the exercise of options. An
asterisk indicates beneficial ownership of less than one percent of the
outstanding IVI Checkmate common stock.
(1) Includes 312,183 shares that Mr. Spence may acquire upon the exercise of
stock options.
(2) Includes 20,000 shares that the named director may acquire upon the
exercise of stock options.
(3) Gerard Compain, who is an executive vice president and director of
Ingenico, is considered to beneficially own the shares held by Ingenico
because of his ability to vote and dispose of those shares on behalf of
Ingenico. (See "Five Percent Owner" table for additional information
regarding Ingenico's holdings.) In addition, Mr. Compain individually is
the beneficial owner of 20,000 shares that he may acquire upon the exercise
of stock options. Mr. Compain's address is 9 quai de Dion Bouton, Puteaux,
France.
(4) Includes a total of 412,183 shares that the directors and executive
officers may acquire upon the exercise of stock options.
33
MARKET PRICE OF IVI CHECKMATE COMMON STOCK
AND DIVIDEND INFORMATION
IVI Checkmate common stock is traded on the Nasdaq National Market under the
symbol "CMIV" and on the Toronto Stock Exchange under the symbol "IVC". The
exchangeable shares are also traded on the Toronto Stock Exchange under the
symbol "IVI". The table below sets forth by quarter, since the beginning of IVI
Checkmate's fiscal year ended December 31, 1999, the high and low sale prices
of IVI Checkmate common stock on the Nasdaq National Market Issues, as reported
in The Wall Street Journal. No dividends have been paid by IVI Checkmate.
Market Prices
-------------
High Low
------ ------
Fiscal Year 1999
1st Quarter.................................................... $7.375 $2.938
2nd Quarter.................................................... 3.750 2.750
3rd Quarter.................................................... 2.875 2.813
4th Quarter.................................................... 4.250 2.250
Fiscal Year 2000
1st Quarter.................................................... 6.813 3.250
2nd Quarter.................................................... 4.125 2.438
3rd Quarter.................................................... 3.719 2.188
4th Quarter.................................................... 4.094 1.219
Fiscal Year 2001
1st Quarter.................................................... 2.750 1.406
On April 5, 2001, the last full trading day prior to the public announcement
of the merger agreement, the high and low sale prices of IVI Checkmate common
stock as reported on the Nasdaq National Market Issues were $2.031 and $2.000,
respectively, and a closing price of $2.000. On June 18, 2001, the latest
practicable date prior to the date of this proxy statement, the closing price
of IVI Checkmate common stock as reported on the Nasdaq National Market Issues
was $3.20. As of June 18, 2001, 15,726,615 shares of our common stock and
5,127,172 exchangeable shares of IVI Checkmate Ltd., totaling 20,853,787
shares, were outstanding.
Stockholders are encouraged to obtain current market quotations for IVI
Checkmate.
34
FORWARD LOOKING STATEMENTS
This proxy statement includes and incorporates by reference statements that
are not historical facts. These statements are "forward-looking statements" (as
defined in the Private Securities Litigation Reform Act of 1995) based, among
other things, on our current plans and expectations, and, as such, these
forward-looking statements involve uncertainty and risk. These forward-looking
statements are contained in the sections entitled "Summary Term Sheet for the
Merger" and "The Merger" and other sections of this proxy statement, as well as
in the documents incorporated by reference in this proxy statement. These
forward-looking statements should be read in conjunction with the section
entitled "Special Cautionary Notice Regarding Forward-Looking Statements" in
Item 1 of our Annual Report on Form 10-K, as amended, for the year ended
December 31, 2000, which describes many of the external factors that could
cause our actual results to differ materially from our expectations. Our Form
10-K, as amended, is on file with the Securities and Exchange Commission, and a
copy is available without charge upon written request to: Corporate Secretary,
IVI Checkmate Corp., 1003 Mansell Road, Roswell, Georgia 30076. The Form 10-K,
as amended, is also available via the Internet at www.sec.gov.
In addition, actual results could differ materially from the forward-looking
statements contained in this proxy statement because of many factors, such as
general adverse market conditions, failure of certain conditions set forth in
the merger agreement, and failure to consummate the transactions contemplated
by the merger agreement. Other factors and assumptions not identified above
could also cause the actual results to differ materially from those set forth
in any forward-looking statement. We do not undertake any obligation to update
the forward-looking statements contained or incorporated in this proxy
statement to reflect actual results, changes in assumptions, or changes in
other factors affecting these forward-looking statements.
All information contained in this proxy statement with respect to Ingenico
and Merger Sub and the source and amounts of funds for the merger has been
supplied by and is the responsibility of Ingenico and Merger Sub.
STOCKHOLDERS' PROPOSALS FOR 2002 ANNUAL MEETING
Under our by-laws, no business may be brought before an annual meeting
unless it is specified in the notice of the meeting or is otherwise brought
before the meeting by or at the direction of the Board or by a stockholder
entitled to vote who has delivered notice to us, containing certain information
specified in Section 2.7(A) of our by-laws, not less than 60 nor more than 90
days prior to the first anniversary of the preceding year's annual meeting
provided, however, that in the event that the date of the 2002 annual meeting
is more than 30 days before or more than 60 days after the anniversary date of
the preceding year's annual meeting, notice by the stockholder to be timely
must be delivered not earlier than the close of business on the 90th day prior
to that 2002 annual meeting and not later than the close of business on the
later of the 60th day prior to that 2002 annual meeting or the 10th day
following the day on which public announcement of the date of that 2002 annual
meeting is first made by IVI Checkmate. These requirements are separate from
and in addition to the SEC's requirements that a stockholder must meet in order
to have a stockholder proposal included in our proxy statement.
Stockholders interested in submitting a proposal for inclusion in the proxy
materials for the 2002 annual meeting of stockholders may do so by following
the procedures prescribed in SEC Rule 14a-8. To be eligible for inclusion,
stockholder proposals must be received by us no later than July 16, 2001, or
the 10th day following the day we publicly announce the date of the 2002 annual
meeting.
All director nominations and other proposals of stockholders with regard to
the 2002 annual meeting should be submitted within the specified time period by
certified mail, return receipt requested, to our Corporate Secretary, IVI
Checkmate Corp. at 1003 Mansell Road, Roswell, Georgia, 30076. We will provide
you a copy of Section 2.7(A) of our by-laws upon request in writing to our
Corporate Secretary at this address.
35
The United States securities laws require our directors and executive
officers and any persons who beneficially own more than ten percent of our
common stock to file with the Securities and Exchange Commission and the Nasdaq
Stock Market initial reports of ownership and reports of changes in ownership
of our securities. To our knowledge, based solely on a review of the copies of
the reports furnished to us and written representations that no other reports
were required, during 2000 all executive officers, directors and any beneficial
owners of more than ten percent of our stock made all required filings.
WHERE YOU CAN FIND MORE INFORMATION
IVI Checkmate is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended. IVI Checkmate files reports, proxy statements
and other information with the SEC. You may read and copy these reports, proxy
statements and other information at the SEC's Public Reference Section at
450 Fifth Street, N.W., Washington, D.C. 20549. You may obtain information on
the operation of the Public Reference Room by calling the SEC at 1-800-SEC-
0330. The SEC also maintains an Internet website, located at www.sec.gov, that
contains reports, proxy statements and other information regarding companies
and individuals that file electronically with the SEC.
You may also read reports, proxy statements and other information relating
to IVI Checkmate at the offices of The Nasdaq Stock Market, Reports Section,
1735 K Street N.W., Washington, D.C. 20006.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
IVI Checkmate incorporates by reference into this proxy statement the
following documents that it has filed with the SEC: (1) Annual Report on Form
10-K for the year ending December 31, 2000, as amended; (2) Current Report on
Form 8-K dated April 10, 2001; and (3) Quarterly Report on Form 10-Q for the
period ending March 31, 2001.
Any statement contained in a document incorporated or deemed to be
incorporated by reference in this proxy statement will be deemed to be modified
or superseded for purposes of this proxy statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference in this proxy statement
modifies or supersedes that statement. Any statement so modified or superseded
will not be deemed, except as so modified or superseded, to constitute a part
of this proxy statement.
Any person receiving a copy of this proxy statement may obtain, without
charge, upon written or oral request, a copy of any of the documents
incorporated by reference except for the exhibits to such documents (other than
the exhibits expressly incorporated in those documents by reference). Requests
should be directed to: Corporate Secretary, IVI Checkmate Corp., 1003 Mansell
Road, Roswell, Georgia 30076, telephone: (770) 594-6000. A copy will be
provided by first class mail or other equally prompt means within one business
day after receipt of your request.
We have authorized no one to give you any information or to make any
representation about the merger or our company that differs from or adds to the
information contained in this proxy statement or in the documents we have
publicly filed with the SEC. Therefore, if anyone should give you any different
or additional information, you should not rely on it.
The information contained in this proxy statement speaks only as of the date
indicated on the cover of this proxy statement unless the information
specifically indicates that another date applies.
36
APPENDIX A
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
dated April 6, 2001
by and among
Ingenico S.A.,
Idaho Acquisition Corp.
and
IVI Checkmate Corp.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER.......................................................................... A-1
Section 1.1. The Merger............................................................. A-1
Section 1.2. Effective Time......................................................... A-2
Section 1.3. Effects of the Merger.................................................. A-2
Section 1.4. Certificate of Incorporation and By-Laws of the Surviving Corporation.. A-2
Section 1.5. Directors.............................................................. A-2
Section 1.6. Officers............................................................... A-2
Section 1.7. Conversion of Shares of Common Stock................................... A-2
Section 1.8. Conversion of Merger Sub Common Stock.................................. A-3
Section 1.9. Options................................................................ A-3
Section 1.10. No Other Equity....................................................... A-3
Section 1.11. Stockholders' Meeting................................................. A-3
Section 1.12. Special Meeting of IVI Checkmate Ltd. ................................ A-4
Section 1.13. Additional Actions.................................................... A-4
Section 1.14. Closing............................................................... A-5
ARTICLE II PAYMENT FOR SHARES.................................................................. A-5
Section 2.1. Dissenting Shares...................................................... A-5
Section 2.2. Payment for Shares of Common Stock..................................... A-5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................................... A-6
Section 3.1. Organization and Qualification; Subsidiaries........................... A-6
Section 3.2. Certificate of Incorporation and By-Laws............................... A-6
Section 3.3. Capitalization; Subsidiaries........................................... A-7
Section 3.4. Authority Relative to this Agreement................................... A-8
Section 3.5. No Conflict; Required Filings and Consents............................. A-8
Section 3.6. SEC Reports and Financial Statements................................... A-9
Section 3.7. IVI Checkmate Ltd...................................................... A-10
Section 3.8. Employee Benefit Matters............................................... A-10
Section 3.9. Litigation............................................................. A-12
Section 3.10. Information........................................................... A-12
Section 3.11. Taxes................................................................. A-12
Section 3.12. Intellectual Property................................................. A-14
Section 3.13. Certain Approvals..................................................... A-14
Section 3.14. Brokers............................................................... A-15
Section 3.15. Opinions of Financial Advisor......................................... A-15
Section 3.16. Vote Required......................................................... A-15
Section 3.17. Rights Agreement...................................................... A-15
Section 3.18. Environmental Matters................................................. A-15
Section 3.19. Compliance with Applicable Laws....................................... A-15
Section 3.20. Material Contracts.................................................... A-16
Section 3.21. Support Agreements.................................................... A-16
Section 3.22. Ingenico Agreements................................................... A-16
Section 3.23. Investments........................................................... A-16
Section 3.24. Stock Option Exchange Program......................................... A-16
Section 3.25. Congress Financial Corporation (Southern)............................. A-16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER.......................... A-17
Section 4.1. Organization and Qualification......................................... A-17
Section 4.2. Authority Relative to this Agreement................................... A-17
-i-
Page
----
Section 4.3. No Conflict; Required Filings and Consents.... A-17
Section 4.4. Information................................... A-18
Section 4.5. Financing..................................... A-18
ARTICLE V COVENANTS.................................................. A-18
Section 5.1. Conduct of Business of the Company............ A-18
Section 5.2. Access to Information......................... A-19
Section 5.3. Reasonable Best Efforts....................... A-20
Section 5.4. Public Announcements.......................... A-20
Section 5.5. Indemnification............................... A-20
Section 5.6. Notification of Certain Matters............... A-21
Section 5.7. Takeover Laws................................. A-21
Section 5.8. Rights Agreement.............................. A-21
Section 5.9. No Solicitation............................... A-21
Section 5.10. Equity Investment............................ A-22
Section 5.11. Additional Director; Board Committees........ A-22
Section 5.12. Registration Rights Agreement................ A-22
Section 5.13. Stock Option Exchange Program................ A-23
Section 5.14. Restructuring................................ A-23
Section 5.15. Paid-Up Capital.............................. A-23
Section 5.16. Series B Preferred Stock..................... A-23
Section 5.17. Parent Vote.................................. A-23
ARTICLE VI CONDITIONS TO CONSUMMATION OF THE MERGER................... A-23
Section 6.1. Conditions.................................... A-23
Section 6.2. Parent and Merger Sub Conditions.............. A-24
ARTICLE VII TERMINATION; AMENDMENTS; WAIVER............................ A-25
Section 7.1. Termination................................... A-25
Section 7.2. Effect of Termination......................... A-26
Section 7.3. Amendment..................................... A-27
Section 7.4. Extension; Waiver............................. A-27
ARTICLE VIII MISCELLANEOUS.............................................. A-27
Section 8.1. Non-Survival.................................. A-27
Section 8.2. Entire Agreement; Assignment.................. A-27
Section 8.3. Validity...................................... A-27
Section 8.4. Notices....................................... A-28
Section 8.5. Governing Law................................. A-28
Section 8.6. Descriptive Headings.......................... A-29
Section 8.7. Counterparts.................................. A-29
Section 8.8. Parties in Interest........................... A-29
Section 8.9. Fees and Expenses............................. A-29
Section 8.10. By-Laws...................................... A-29
Section 8.11. Certain Definitions.......................... A-29
Section 8.12. Specific Performance......................... A-30
-ii-
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of April 6, 2001,
by and among Ingenico S.A., a societe anonyme organized and existing under the
laws of the Republic of France ("Parent"), Idaho Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and IVI
Checkmate Corp., a Delaware corporation (the "Company").
WHEREAS, Parent beneficially owns 1,544,416 shares (the "Parent Shares") of
the common stock, par value $0.01 par share, of the Company (the "Common
Stock");
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have approved the acquisition of the Company by Parent on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and the
Company have approved the merger of Merger Sub with and into the Company (the
"Merger"), whereby each issued share of Common Stock not owned directly by
Parent or the Company shall be converted into the right to receive $3.30 in
cash without interest thereon (the "Merger Consideration"), upon the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, a special committee (the "Special Committee") comprised of three
independent directors of the Board of Directors of the Company (the "Board")
who are not affiliated with Parent or any member of the Company's management
has received the written opinion of Wachovia Securities, Inc. (the "Financial
Advisor") that, based on, and subject to, the various assumptions and
qualifications set forth in such opinion, as of the date of such opinion, the
consideration to be received by the holders of Common Stock (other than Parent
and Merger Sub) pursuant to the Merger is fair to such holders from a financial
point of view;
WHEREAS, IVI Checkmate Ltd., a subsidiary of the Company, has outstanding a
class of shares (the "Exchangeable Shares") that, pursuant to their terms and
the terms of a related support agreement and voting and exchange trust
agreement (collectively, the "Exchangeable Share Provisions") are intended to
afford the holder substantially the same economic and voting rights as are
available to the holders of the Common Stock;
WHEREAS, the Board of Directors of IVI Checkmate Ltd. has received the
written opinion of the Financial Advisor that, based on, and subject to, the
various assumptions and qualifications set forth in such opinion, as of the
date of such opinion, the implementation of the Merger is fair to the holders
of the Exchangeable Shares; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Parent,
Merger Sub and the Company agree as follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. Upon the terms and subject to the satisfaction or
waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement and the General Corporation Law of the State of
Delaware (the "DGCL"), at the Effective Time (as defined below) Merger Sub
shall be merged with and into the Company. Following the Merger, the separate
corporate existence of Merger Sub shall cease and the Company shall continue as
the surviving corporation and a wholly owned subsidiary of Parent (the
A-1
"Surviving Corporation"). At the option of Parent, and provided that such
amendment does not materially delay the Effective Time, the Merger may be
structured so that, and this Agreement shall thereupon be amended to provide
that, the Company shall be merged with and into Merger Sub or with another
direct or indirect wholly owned subsidiary of Parent, with the Company, Merger
Sub or such other subsidiary of Parent continuing as the Surviving Corporation
(as determined by Parent); provided, however, that the Company shall be deemed
not to have breached any of its representations and warranties herein if and to
the extent such breach would have been attributable to such election. In such
event, the parties agree to execute an appropriate amendment to this Agreement
in order to reflect the foregoing and, where appropriate, to provide that
Merger Sub (or another Parent subsidiary designated by Parent) shall be the
Surviving Corporation.
Section 1.2. Effective Time. As soon as practicable after the satisfaction
or waiver of the conditions set forth in Sections 6.1 and 6.2 of this
Agreement, the Company shall execute, in the manner required by the DGCL and
deliver to the Secretary of State of the State of Delaware a duly executed
certificate of merger, and the parties shall take such other and further
actions as may be required by law to make the Merger effective. The Merger
shall be effective upon the filing of the certificate of merger or such later
time as specified in the certificate of merger. The time the Merger becomes
effective in accordance with applicable law is referred to as the "Effective
Time."
Section 1.3. Effects of the Merger. From and after the Effective Time, the
Merger shall have the effects set forth in Section 259 of the DGCL.
Section 1.4. Certificate of Incorporation and By-Laws of the Surviving
Corporation.
(a) The Certificate of Incorporation of Merger Sub, as in effect immediately
prior to the Effective Time, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended in accordance with its
provisions and applicable law, except for Article I thereof, which shall read
as follows: "The name of the corporation is IVI Checkmate Corp. (hereinafter
the "Corporation')."
(b) The By-Laws of Merger Sub in effect at the Effective Time shall be the
By-Laws of the Surviving Corporation until thereafter amended in accordance
with its provisions and applicable law.
Section 1.5. Directors. Subject to applicable law, the directors of Merger
Sub immediately prior to the Effective Time shall be the initial directors of
the Surviving Corporation and shall hold office until their respective
successors are duly elected and qualified, or their earlier death, resignation
or removal.
Section 1.6. Officers. The officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation and
shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
Section 1.7. Conversion of Shares of Company Stock.
(a) At the Effective Time, by virtue of the Merger and without any action on
the part of the holder thereof, each share of Common Stock issued and
outstanding immediately prior to the Effective Time (other than any shares of
Common Stock held by Parent, Merger Sub, any wholly owned subsidiary of Parent
or Merger Sub, in the treasury of the Company or by any wholly owned subsidiary
of the Company, which shares of Common Stock, by virtue of the Merger and
without any action on the part of the holder thereof, shall be cancelled and
retired and shall cease to exist with no payment being made with respect
thereto and other than Dissenting Shares (as defined below)), shall be
converted into the right to receive in cash an amount equal to the Merger
Consideration, payable to the holder thereof, without interest thereon, upon
surrender of the certificate formerly representing such share of Common Stock.
(b) If, at the Effective Time there are outstanding any Exchangeable Shares
which are not owned by the Company, any of its Subsidiaries or any person
directly or indirectly controlled by or under common control of the Company, or
there are shares of stock, debt, options or other agreements of the Company or
any of its Subsidiaries which could give rise to the issuance of any
Exchangeable Shares to any person (other than the
A-2
Company, any of its Subsidiaries or any person directly or indirectly
controlled by or under common control of the Company), then each share of
Series B Preferred Stock (as defined below) outstanding at the Effective Time
shall remain outstanding in accordance with its terms.
(c) Each share of Series D Preferred Stock issued and outstanding
immediately prior to the Effective Time (other than any shares of Series D
Preferred Stock held by Parent, Merger Sub, any wholly owned subsidiary of
Parent or Merger Sub, in the treasury of the Company or by any wholly owned
subsidiary of the Company, which shares of Series D Preferred Stock, by virtue
of the Merger and without any action on the part of the holder thereof, shall
be cancelled and retired and shall cease to exist with no payment being made
with respect thereto) shall remain outstanding in accordance with its terms.
Section 1.8. Conversion of Merger Sub Common Stock. At the Effective Time,
by virtue of the Merger and without any action on the part of the holder
thereof, each share of common stock of Merger Sub issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
validly issued, fully paid and non-assessable share of common stock, par value
$0.01 per share, of the Surviving Corporation.
Section 1.9. Options. The Board (or, if appropriate, any Committee thereof)
has adopted appropriate resolutions and taken all other actions necessary to
provide for the cancellation, effective at the Effective Time, of all the
outstanding stock options (the "Options") heretofore granted under any stock
option or similar plan of the Company or its Subsidiaries (the "Stock Plans").
Immediately prior to the Effective Time, (i) each Option, whether or not then
vested or exercisable, shall no longer be exercisable but shall entitle each
holder thereof at the Effective Time, in cancellation and settlement therefor,
to payments in cash, reduced by any applicable withholding taxes (the "Cash
Payment"), at the Effective Time, equal to the product of (x) the total number
of shares of Common Stock subject or related to such Option, whether or not
then vested or exercisable and (y) the excess (if any) of the Merger Price over
the exercise price per share subject or related to such Option, each such Cash
Payment to be paid to each holder of an outstanding Option as soon as
practicable following the Effective Time. The Stock Plans and any other plan,
program or arrangement providing for the issuance or grant of any other
interest in respect of the capital stock of the Company or any subsidiary shall
terminate as of the Effective Time. The Company will obtain all consents, if
any, that are necessary to ensure that after the Effective Time, the only
rights of the holders of Options will be to receive the Cash Payment in
cancellation and settlement of the Option.
Section 1.10. No Other Equity. Except as provided in Section 5.16 with
respect to the Series B Preferred Stock and except for the Series D Preferred
Stock, the Company will take all appropriate steps acceptable to Parent to
ensure that after the Effective Time none of the Parent, the Company or any of
their respective subsidiaries is or will be bound by any Options, or any other
options, warrants, rights or agreements which would entitle any Person, other
than Parent or its affiliates, to own any capital stock of the Surviving
Corporation or any of its subsidiaries or to receive any payment in respect
thereof or have any right under the Stock Plans or otherwise to acquire any
capital stock of the Company, Parent, the Surviving Corporation or any of their
respective subsidiaries.
Section 1.11. Stockholders' Meeting.
(a) The Company, acting through the Board, shall, as soon as practicable
following the execution of this Agreement and in accordance with applicable law
and the Company's Certificate of Incorporation and By-Laws:
(i) duly call, give notice of, convene and hold a special meeting of the
Company's stockholders (the "Stockholders") (such meeting, the "Special
Meeting") for the purpose of presenting this Agreement to the Stockholders
for their consideration and approval;
(ii) prepare and file with the United States Securities and Exchange
Commission (the "SEC") and with the securities regulatory authority of each
of the Canadian provinces of British Columbia, Alberta, Saskatchewan,
Manitoba and Ontario (the "Canadian Jurisdictions"), a preliminary proxy
statement
A-3
relating to this Agreement, and use its reasonable best efforts (x) to
obtain and furnish the information required to be included by the SEC in
the Proxy Statement (as defined below) and, after consultation with Parent,
to respond promptly to any comments made by the SEC or its staff with
respect to the preliminary proxy statement and cause a definitive proxy
statement (the "Proxy Statement") to be mailed to its Stockholders and (y)
subject to the fiduciary duties of the Board under applicable law, to
obtain the necessary approvals of the Merger and this Agreement by its
Stockholders; and
(iii) subject to the fiduciary obligations of the Board and the Special
Committee under applicable law, include in the Proxy Statement the
recommendation of the Board and the Special Committee that Stockholders
vote in favor of the approval and adoption of this Agreement.
(b) Parent agrees that it will vote, or cause to be voted, all of the shares
of Common Stock then owned by it, Merger Sub or any of its other subsidiaries
in favor of the approval of this Agreement at the Special Meeting.
Section 1.12. Special Meeting of IVI Checkmate Ltd.
(a) The Company, acting through the Board, shall, as soon as practicable
following the execution of this Agreement and in accordance with applicable law
and the Articles of Incorporation and By-laws of IVI Checkmate Ltd., cause IVI
Checkmate Ltd. to:
(i) duly hold a special meeting (the "Canadian Special Meeting") of
holders (the "Holders") of the Exchangeable Shares not less than 20
business days prior to the Special Meeting to consider a special
resolution, in form and substance acceptable to Parent, acting reasonably
(the "Resolution"), of the Holders approving an amendment (the "Exchange
Amendment") to the Exchangeable Share Provisions to permit the redemption
of the Exchangeable Shares, or their purchase by the Surviving Corporation,
Parent or one of their affiliates, immediately following the Effective Time
on a basis which results in Holders receiving, on an economically
equivalent basis, the same consideration for each Exchangeable Share as is
received by the Stockholders for each share of Common Stock. Parent shall
provide, on terms to be agreed, funding to the Surviving Corporation
sufficient to fully fund the Surviving Corporation's redemption or
repurchase, if any, of the Exchangeable Shares; and
(ii) in connection with the Canadian Special Meeting, ensure that an
information circular (the "Circular") containing all information necessary
to permit the Holders to make an informed decision and the recommendation
of the Board of Directors of IVI Checkmate Ltd. that the Holders approve
the Resolution and as otherwise may be required by applicable law is
circulated to all of the Holders.
(b) After having called the Canadian Special Meeting, other than as
expressly contemplated in this Agreement or as required by applicable law, the
Company shall ensure that IVI Checkmate Ltd. shall not, without the prior
written consent of Parent, adjourn, postpone or cancel, or except as required
for quorum purposes pursuant to Article 8 of the provisions attaching to the
Exchangeable Shares or as required by Holders pursuant to a valid point of
order raised at the Canadian Special Meeting, adjourn or postpone the Canadian
Special Meeting.
(c) The Company shall cause IVI Checkmate Ltd., in consultation with, and
with the cooperation of Parent, to prepare, file and distribute the Circular
and such other documents as may be necessary or desirable to permit the Holders
to vote on the Resolution and to otherwise implement the Resolution and shall
cause the Board of Directors of IVI Checkmate Ltd. to recommend to the Holders
in the Circular that the Holders approve the Resolution.
(d) The Company will vote, or cause to be voted, all of the common shares of
IVI Checkmate Ltd. in favor of the approval of the Resolution.
Section 1.13. Additional Actions. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any further deeds,
assignments or assurances in law or any other acts are necessary or desirable
to (a) vest, perfect or confirm, of record or otherwise, in the Surviving
Corporation its
A-4
right, title or interest in, to or under any of the rights, properties or
assets of the Company, or (b) otherwise carry out the provisions of this
Agreement, the Company and its officers and directors shall be deemed to have
granted to the Surviving Corporation an irrevocable power of attorney to
execute and deliver all such deeds, assignments or assurances in law and to
take all acts necessary, proper or desirable to vest, perfect or confirm title
to and possession of such rights, properties or assets in the Surviving
Corporation and otherwise to carry out the provisions of this Agreement, and
the officers and directors of the Surviving Corporation are authorized in the
name of the Company or otherwise to take any and all such action.
Section 1.14. Closing. The closing of the Merger (the "Closing") shall take
place at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street,
New York, New York 10019, at 10:00 a.m. on the second business day following
the satisfaction (or, to the extent permitted by law, waiver by the applicable
party) of the conditions set forth in Article VI (other than those that by
their terms cannot be satisfied until the time of the Closing, but subject to
their satisfaction at such time), or at such other place, time and date as
shall be agreed in writing between Parent and the Company. The date on which
the Closing occurs is referred to in this Agreement as the "Closing Date."
ARTICLE II
PAYMENT FOR SHARES
Section 2.1. Dissenting Shares. Notwithstanding anything in this Agreement
to the contrary, shares of Common Stock outstanding immediately prior to the
Effective Time and held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who has demanded appraisal for such shares in
accordance with the requirement of Section 262 of the DGCL ("Dissenting
Shares"), shall not be converted into the right to receive the Merger
Consideration as provided in Section 1.7, unless and until such holder fails to
perfect or withdraws or otherwise loses his or her right to appraisal and
payment under the DGCL. If, after the Effective Time, any such holder fails to
perfect or withdraws or loses his or her right to appraisal, such Dissenting
Shares shall thereupon be treated as if they had been converted as of the
Effective Time into, and had become exchangeable solely for the right to
receive, the Merger Consideration to which such holder is entitled, without
interest or dividends thereon. The Company shall give Parent prompt notice of
any demands received by the Company for appraisal of shares of Common Stock
and, prior to the Effective Time, Parent shall have the right to participate in
all negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, except with the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any
such demands, or agree to do any of the foregoing.
Section 2.2. Payment for Shares of Common Stock.
(a) From and after the Effective Time, a bank or trust company selected by
Parent and reasonably acceptable to the Company, shall act as paying agent (the
"Paying Agent") in effecting the payment of the Merger Price in respect of
certificates (the "Certificates") that, prior to the Effective Time,
represented shares of Common Stock entitled to payment of the Merger Price
pursuant to Section 1.7. Promptly following the Effective Time, Parent or the
Purchaser shall deposit, or cause to be deposited, with the Paying Agent the
aggregate Merger Price to which holders of shares of Common Stock shall be
entitled at the Effective Time pursuant to Section 1.7.
(b) Promptly after the Effective Time, the Paying Agent shall mail to each
record holder of Certificates that immediately prior to the Effective Time
represented shares of Common Stock (other than Certificates representing shares
of Common Stock held by Parent or the Purchaser, any wholly owned subsidiary of
Parent or the Purchaser, in the treasury of the Company or by any wholly owned
subsidiary of the Company and other than Certificates representing Dissenting
Shares) a form of letter of transmittal which shall specify that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon proper delivery of the Certificates to the Paying Agent and instructions
for use in surrendering such Certificates and receiving the Merger
Consideration in respect thereof. Upon the surrender of each such Certificate,
the Paying Agent shall
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pay the holder of such Certificate the Merger Consideration multiplied by the
number of shares of Common Stock formerly represented by such Certificate, in
consideration therefor, and such Certificate shall be cancelled. Until so
surrendered, each such Certificate (other than Certificates representing shares
of Common Stock held by Parent or the Purchaser, any wholly owned subsidiary of
Parent or the Purchaser, in the treasury of the Company or by any wholly owned
subsidiary of the Company and other than Certificates representing Dissenting
Shares) shall represent solely the right to receive the aggregate Merger
Consideration relating thereto. No interest or dividends shall be paid or
accrued on, or with respect to, the Merger Consideration. If the Merger
Consideration (or any portion thereof) is to be delivered to any person other
than the person in whose name the Certificate formerly representing shares of
Common Stock surrendered therefor is registered, it shall be a condition to
such right to receive such Merger Consideration that the Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the person surrendering such shares of Common Stock shall pay
to the Paying Agent any transfer or other taxes required by reason of the
payment of the Merger Consideration to a person other than the registered
holder of the Certificate surrendered, or shall establish to the satisfaction
of the Paying Agent that such tax has been paid or is not applicable.
(c) Promptly following the date which is 90 days after the Effective Time
(or such later date as the Surviving Corporation shall request), the Paying
Agent shall deliver to the Surviving Corporation all cash, Certificates and
other documents in its possession relating to the Transactions, and the Paying
Agent's duties shall terminate. Thereafter, each holder of a Certificate
formerly representing a share of Common Stock may surrender such Certificate to
the Surviving Corporation and (subject to applicable abandoned property,
escheat and similar laws) receive in consideration therefor the aggregate
Merger Consideration relating thereto, without any interest or dividends
thereon.
(d) From and after the Effective Time, there shall be no transfers on the
stock transfer books of the Surviving Corporation of any shares of Common Stock
which were outstanding immediately prior to the Effective Time. If, on or after
the Effective Time, Certificates formerly representing shares of Common Stock
are presented to the Surviving Corporation or the Paying Agent, they shall be
surrendered and cancelled in return for the payment of the aggregate Merger
Consideration relating thereto, as provided in this Article II, subject to
applicable law in the case of Dissenting Shares.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub that:
Section 3.1. Organization and Qualification; Subsidiaries. The Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware. Each of the Company's subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation. The Company and each of its
subsidiaries has the requisite corporate power and authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified or licensed to do business, and is in good standing, in
each jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failure to have such power or authority, or the
failure to be so qualified, licensed or in good standing, could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. The term "Material Adverse Effect on the
Company," as used in this Agreement, means any change in or effect on the
business, assets, liabilities, financial condition, results of operations,
profitability or prospects of the Company or any of its subsidiaries that is
materially adverse to the Company and its subsidiaries taken as a whole.
Section 3.2. Certificate of Incorporation and By-Laws. The Company has
heretofore made available to Parent and Merger Sub a complete and correct copy
of the certificate of incorporation and the by-laws or comparable
organizational documents, each as amended to, and as in effect on, the date
hereof, of the Company and each of its subsidiaries.
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Section 3.3. Capitalization; Subsidiaries.
(a) The authorized capital stock of the Company consists of 99,000,000
shares of Common Stock and 1,000,000 shares of Preferred Stock, par value $.01
per share (the "Preferred Stock"), one share of which Preferred Stock is
designated "Series A Preferred Stock" (the "Series A Preferred Stock"), one
share of which is designated "Series B Special Voting Preferred Stock" (the
"Series B Preferred Stock"), 100,000 shares of which are designated "Series C
Junior Participating Preferred Stock" (the "Series C Preferred Stock") and
authorized in connection with the Rights Agreement, and 894,663 shares of which
are designated "Series D Convertible Preferred Stock" (the "Series D Preferred
Stock"). As of April 5, 2001, 12,927,017 shares of Common Stock were issued and
outstanding, one share of Series B Preferred Stock was issued and outstanding,
803,353 shares of Series D Preferred Stock were issued and outstanding and no
shares of Series A Preferred Stock or Series C Preferred Stock were
outstanding. As of April 5, 2001, no shares of Common Stock were held in
treasury.
(b) As of the date hereof, 3,376,746 shares of Common Stock were reserved
for issuance upon exercise of options outstanding under the Company's Stock
Plans. As of the date hereof, the Company has options to purchase shares of
Common Stock outstanding and issued as listed by individuals holding such
options (including exercise price and vesting schedule) in Section 3.3(b) of
the disclosure schedule delivered to Parent by the Company on the date hereof
(the "Company Disclosure Schedule"). As of April 5, 2001, 5,306,317
Exchangeable Shares were outstanding which are exchangeable by the holders of
such shares at any time for shares of Common Stock on a one-for-one basis. All
the outstanding shares of Common Stock and the Exchangeable Shares are, and all
shares of Common Stock which may be issued pursuant to the exercise of
outstanding Options or the retraction or redemption of the Exchangeable Shares
will be, when issued in accordance with the respective terms thereof, duly
authorized, validly issued, fully paid and nonassessable and are not subject
to, nor were they issued in violation of, any pre-emptive rights. There are no
bonds, debentures, notes or other indebtedness having general voting rights (or
convertible into securities having such rights) ("Voting Debt") of the Company
or any of its subsidiaries issued and outstanding.
(c) Except (i) as set forth in Section 3.3(b), (ii) for the Rights, (iii)
for the 200,000 warrants issued in April 1999 to DataCard Corporation (the
"DataCard Warrants") each of which has an exercise price of $6.00 per share and
(iv) for the transactions contemplated by this Agreement (the "Transactions"),
there are no existing options, warrants, calls, subscriptions or other rights,
agreements, arrangements or commitments of any character, relating to the
issued or unissued capital stock of the Company or any of its subsidiaries,
obligating the Company or any of its subsidiaries to issue, transfer or sell or
cause to be issued, transferred or sold any shares of capital stock or Voting
Debt of, or other equity interest in, the Company or any of its subsidiaries or
securities convertible into or exchangeable for such shares or equity interests
and neither the Company nor any of its subsidiaries is obligated to grant,
extend or enter into any such option, warrant, call, subscription or other
right, agreement, arrangement or commitment. Except as contemplated by this
Agreement and except for the Company's obligations in respect of the Options
under the Stock Plans, the Exchangeable Shares and the DataCard Warrants, there
are no outstanding contractual obligations of the Company or any of its
subsidiaries to repurchase, redeem or otherwise acquire any shares of Common
Stock or the capital stock or other equity interests of the Company or any of
its subsidiaries. Each of the outstanding shares of capital stock or other
equity interests of each of the Company's subsidiaries is duly authorized,
validly issued, fully paid, and to the extent applicable, nonassessable, and,
except as set forth in Section 3.3(c) of the Company Disclosure Schedule, such
shares or other equity interests of the Company's subsidiaries as are owned by
the Company or by a subsidiary of the Company are owned in each case free and
clear of any lien, claim, option, charge, security interest, limitation,
encumbrance and restriction of any kind (any of the foregoing being a "Lien").
Except as set forth in Section 3.3(c) of the Company Disclosure Schedule, the
Company has not agreed to register any securities under the United States
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "Securities Act"), or under any state securities law or granted
registration rights to any person or entity; copies of any registration rights
agreements set forth in Section 3.3(c) of the Company Disclosure Schedule have
previously been provided to Parent. Set forth in Section 3.3(c) of the Company
Disclosure Schedule is a complete and correct list of each subsidiary (direct
or indirect) of the Company and any joint
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ventures, partnerships or similar arrangements in which the Company has an
interest (and the amount and percentage of any such interest). No entity in
which the Company owns, directly or indirectly, less than a 50% equity interest
is, individually or when taken together with all such other entities, material
to the business of the Company and its subsidiaries taken as a whole.
Section 3.4. Authority Relative to this Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement
and to consummate the Transactions (except that the Merger requires Stockholder
Approval (as defined below)). The execution and delivery of this Agreement by
the Company and the consummation by the Company of the Transactions have been
duly and validly authorized and approved by the Board and the Special Committee
and no other corporate proceedings on the part of the Company are necessary to
authorize or approve this Agreement or to consummate the Transactions (other
than the approval of this Agreement by the affirmative vote of the holders of a
majority of the then outstanding shares of Common Stock and Exchangeables
Shares, in each case, entitled to vote thereon, voting together as a single
class, to the extent required by applicable law ("Stockholder Approval")). No
corporate proceedings on the part of IVI Checkmate Ltd. are necessary in
connection with this Agreement or the consummation of the Transactions (other
than the approval of the Resolution by the affirmative vote of two-thirds of
the votes cast in respect thereof). This Agreement has been duly and validly
executed and delivered by the Company and, assuming the due and valid
authorization, execution and delivery of this Agreement by Parent and Merger
Sub, constitutes a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
Section 3.5. No Conflict; Required Filings and Consents.
(a) Assuming (i) the filings required under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), foreign or supranational
antitrust, competition, trade regulatory or similar laws, rules or regulations
("Antitrust Laws"), and the Investment Canada Act (Canada) are made and the
waiting periods thereunder have been terminated or have expired, (ii) the
requirements of the United States Securities Exchange Act of 1934, as amended,
and the rules and regulations thereunder (the "Exchange Act"), and any
applicable state securities, "blue sky" or takeover laws, statutes and any
applicable provincial securities laws, rules or instruments are met, (iii) the
filing of the certificate of merger and other appropriate merger documents, if
any, as required by the DGCL, is made, (iv) Stockholder Approval is received
and (v) the Resolution is passed, none of the execution and delivery of this
Agreement by the Company, the consummation by the Company of the Transactions
or compliance by the Company with any of the provisions hereof will (a)
conflict with or violate the Certificate of Incorporation or By-Laws of the
Company or the comparable organizational documents of any of its subsidiaries,
(b) conflict with or violate any statute, ordinance, rule, regulation, order,
judgment or decree applicable to the Company or any of its subsidiaries, or by
which any of them or any of their respective properties or assets may be bound
or affected, or (c) result in a violation or breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in any loss of any material benefit, or the creation
of any Lien on any of the property or assets of the Company or any of its
subsidiaries (any of the foregoing referred to in clause (b) or this clause (c)
being a "Violation") pursuant to, any note, bond, mortgage, indenture,
contract, agreement, arrangement, lease, license, permit, franchise or other
instrument or obligation to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or any of their
respective properties may be bound or affected, except in the case of the
foregoing clauses (b) or (c) for any such Violations which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company, or could not, individually or in the aggregate,
reasonably be expected to prevent or materially delay consummation of the
Transactions. Section 3.5(a) of the Company Disclosure Schedule sets forth any
such Violation of clause (c) of the immediately preceding sentence.
(b) None of the execution and delivery of this Agreement by the Company, the
consummation by the Company of the Transactions or compliance by the Company
with any of the provisions hereof will require any consent, waiver, approval,
authorization or permit of, or registration or filing with or notification to
(any of the foregoing being a "Consent"), any federal, state, provincial,
local, foreign or supranational administrative,
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governmental or regulatory authority, agency, commission, tribunal or body (a
"Governmental Entity"), except for (i) compliance with any applicable
requirements of the Exchange Act, (ii) the filing of the certificate of merger
pursuant to the DGCL, (iii) compliance with the HSR Act and any requirements of
any Antitrust Laws and the Investment Canada Act (Canada), (iv) Consents, which
are listed on Section 3.5(b) of the Company Disclosure Schedule, the failure of
which to obtain or make could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect on the Company or reasonably be
expected to prevent or materially delay consummation of the Transactions, (v)
compliance with the requirements of applicable Canadian corporate and
securities legislation in respect of the Canadian Special Meeting and (vi) the
filing of any articles required to implement the Resolution.
Section 3.6. SEC Reports and Financial Statements.
(a) The Company has filed with the SEC all forms, reports, schedules,
registration statements and definitive proxy statements required to be filed by
the Company with the SEC since January 1, 1998 (as they have been amended since
the time of their filing, collectively, the "SEC Reports"). As of their
respective dates, the SEC Reports (including but not limited to any financial
statements or schedules included or incorporated by reference therein) complied
in all material respects with the requirements of the Exchange Act and the
Securities Act, and the rules and regulations of the SEC promulgated thereunder
applicable, as the case may be, to such SEC Reports, and, as of their
respective dates, none of the SEC Reports contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.
(b) The Company has heretofore furnished to Parent the latest available
drafts of filings to be made with the SEC pursuant to the Exchange Act which
have not been filed with the SEC, including without limitation drafts of the
Company's Annual Report to Stockholders (collectively, the "Draft Filings").
Each of the Draft Filings will comply when filed as to form in all material
respects with the provisions of the Exchange Act, and will not contain any
untrue statement of a material fact or omit to state a material fact required
to be stated or incorporated by reference therein, or necessary to make the
statement made therein, in light of the circumstances under which they were
made, not misleading.
(c) The financial statements of the Company included in the SEC Reports at
the time filed (and, in the case of registration statements and proxy
statements, on the dates of effectiveness and the dates of mailing,
respectively, and, in the case of any SEC Report amended or superseded by a
filing prior to the date of this Agreement, then on the date of such amending
or superseding filing) complied as to form in all material respects with
applicable accounting requirements and with the published rules and regulations
of the SEC with respect thereto, were prepared in accordance with United States
generally accepted accounting principles ("GAAP") applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto
or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC),
and fairly present (subject, in the case of unaudited statements, to normal,
recurring audit adjustments) the consolidated financial position of the Company
and its consolidated subsidiaries as at the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended. No
subsidiary of the Company is subject to the periodic reporting requirements of
the Exchange Act or required to file any form, report or other document with
the SEC, the Nasdaq Stock Market, any stock exchange or any other comparable
Governmental Authority except for IVI Checkmate Ltd. which is subject to the
continuous disclosure requirements of the securities legislation of the
Canadian Jurisdictions. IVI Checkmate Ltd. has received an exemption order
dated June 2, 1998 (the "Exemption Order") from the securities regulatory
authorities of the Canadian Jurisdictions which exempts it from the continuous
disclosure requirements of these jurisdictions.
(d) Except as reflected, reserved against or otherwise disclosed in the
financial statements of the Company included in the SEC Reports or as otherwise
disclosed in the SEC Reports, in each case, filed prior to the date of this
Agreement or as set forth in Section 3.6(d) of the Company Disclosure Schedule,
as of the date hereof, neither the Company nor any of its subsidiaries has any
liabilities or obligations (absolute, accrued, fixed, contingent or otherwise)
which would be required to be reflected on a balance sheet or the notes thereto
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prepared in accordance with GAAP, other than liabilities incurred in the
ordinary course of business consistent with past practice since December 31,
2000 which could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on the Company.
(e) Since December 31, 2000, (i) no development or event has occurred that
has, or could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect on the Company or on the ability of the Company,
Parent or Merger Sub to consummate the Transactions, (ii) the Company and each
of its subsidiaries has conducted its respective operations in the ordinary and
usual course of business consistent with past practice and (iii) neither the
Company nor any of its subsidiaries has taken any action or omitted to take any
action, which act or omission, if after the date of this Agreement, would
result in a breach or violation of Section 5.1.
(f) The Company has heretofore furnished to Parent a complete and correct
copy of any amendments or modifications which have not yet been filed with the
SEC to agreements, documents or other instruments which previously had been
filed by the Company with the SEC pursuant to the Securities Act or the
Exchange Act.
Section 3.7. IVI Checkmate Ltd. IVI Checkmate Ltd. is a reporting issuer in
each of the Canadian Jurisdictions and is not in default of, and has filed all
forms, reports and documents required to be filed under, any of the
requirements of the securities legislation of the Canadian Jurisdictions for
which it has not received relief from pursuant to the Exemption Order. No
securities commission, stock exchange or similar regulatory authority has
issued or threatened to issue any order preventing or suspending trading in any
securities of IVI Checkmate Ltd. nor has the Company or IVI Checkmate Ltd.
received notice that any such order is pending. IVI Checkmate Ltd. has complied
with, and is currently in compliance with, the terms and conditions of the
Exemption Order and the Exemption Order continues to have effect, unamended, as
of the date of this Agreement.
Section 3.8. Employee Benefit Matters.
(a) Section 3.8(a) of the Company Disclosure Schedule lists any employee
benefit plan, program, policy, practice, or other arrangement, agreement or
understanding providing benefits to any current or former employee, officer or
director of the Company or any of its subsidiaries or any beneficiary or
dependent thereof that is sponsored or maintained by the Company or any of its
subsidiaries or to which the Company or any of its subsidiaries contributes or
is obligated to contribute, whether or not written, including without
limitation any employee welfare benefit plan within the meaning of Section 3(1)
of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
any employee pension benefit plan within the meaning of Section 3(2) of ERISA
(whether or not such plan is subject to ERISA), any bonus, incentive, deferred
compensation, vacation, stock purchase, stock option, severance, employment,
change of control or fringe benefit plan, program or policy, and any contract,
offer letter or agreement of the Company or any of its subsidiaries with or
addressed to any individual who is rendering or has rendered services thereto
as an employee or consultant pursuant to which the Company or any of its
subsidiaries has any actual or contingent liability or obligation to provide
compensation and/or benefits in consideration for past, present or future
services (the "Employee Benefit Plans").
(b) With respect to each Employee Benefit Plan, the Company has delivered to
Parent a true, correct and complete copy of: (i) each writing constituting a
part of such Plan, including without limitation all plan documents, trust
agreements, and insurance contracts and other funding vehicles; (ii) the most
recent Annual Report (Form 5500 Series) and accompanying schedule, if any;
(iii) the current summary plan description and any material modifications
thereto, if any; (iv) the most recent annual financial report, if any; (v) the
most recent actuarial report, if any; and (vi) the most recent determination
letter from the Internal Revenue Service, if any. Except as specifically
provided in the foregoing documents delivered to Parent, there are no
amendments to any Plan that has been adopted or approved.
(c) Except as discussed in Section 3.8(c) of the Company Disclosure
Schedule, (i) all Employee Benefit Plans are in compliance with and have been
administered in compliance with all applicable requirements of law, including,
but not limited to, the Code and ERISA (except with respect to the Employee
Benefit Plans
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offered exclusively in Canada), if applicable, and have been operated in
accordance with their terms, and all contributions required to be made to each
such plan under the terms of such plan, ERISA or the Code, as applicable, for
any period through the date hereof have been timely paid or made in full and
through the Effective Time will be timely paid or made in full; (ii) no
nonexempt "prohibited transaction" (as defined in Section 4975 of the Code or
Section 406 of ERISA) has occurred with respect to any Employee Benefit Plan
which would reasonably be expected to subject any Employee Benefit Plan (or its
related trust), the Company or any subsidiary or any person the Company or its
subsidiaries has an obligation to indemnify, to a tax or penalty imposed under
Section 4975 of the Code or Section 502 or ERISA; (iii) none of the Company,
its subsidiaries or any entity, trade or business that is considered one
employer with the Company or any of its subsidiaries under Section 4001(a)(14)
of ERISA or Section 414(b) or (c) of the Code (an "ERISA Affiliate") is
required to contribute to, or during the five-year period ending on the
Effective Time will have been required to contribute to, or could have any
liability under, any "multiemployer plan" (as defined in Section 3(37) of
ERISA); (iv) each Employee Benefit Plan which is not maintained in the United
States is funded and/or book reserved for in accordance with applicable laws
and reasonable accounting assumptions; and (v) there is no pending or, to the
Company's knowledge, threatened legal action, suit or claim relating to any
current or former employee of the Company or its subsidiaries or any Employee
Benefit Plan other than routine claims for benefits that could not reasonably
be expected to result in any material liability to the Company or its
subsidiaries or any person the Company or its subsidiaries has an obligation to
indemnify.
(d) Section 3.8(d) of the Company Disclosure Schedule identifies each
Employee Benefit Plan that is intended to be a "qualified plan" within the
meaning of Section 401(a) of the Code ("Qualified Plans"). The Internal Revenue
Service has issued a favorable determination letter with respect to each
Qualified Plan and the related trust that has not been revoked, and, to the
Company's knowledge, there are no existing circumstances and no events have
occurred that could adversely affect the qualified status of any Qualified Plan
or the related trust.
(e) No Employee Benefit Plan is subject to Title IV or Section 302 of ERISA
or Section 412 or 4971 of the Code.
(f) The Company and its subsidiaries have no liability for life, health,
medical or other welfare benefits to former employees or beneficiaries or
dependents thereof, except for health continuation coverage as required by
Section 4980B of the Code or Part 6 of Title I of ERISA or other applicable
laws. The Company and each of its subsidiaries has reserved the right to amend,
terminate or modify at any time all plans or arrangements providing for retiree
health or life insurance coverage.
(g) No labor organization or group of employees of the Company or any of its
subsidiaries has made a pending demand for recognition or certification, and
there are no representation or certification proceedings or petitions seeking a
representation proceeding presently pending or, to the Company's knowledge,
threatened to be brought or filed, with the National Labor Relations Board or
any other labor relations tribunal or authority. There are no organizing
activities, strikes, work stoppages, slowdowns, lockouts, material arbitrations
or material grievances, or other material labor disputes pending or, to the
Company's knowledge, threatened against or involving the Company or any of its
subsidiaries. Each of the Company and its subsidiaries is in compliance with
all applicable laws and collective bargaining agreements respecting employment
and employment practices, terms and conditions of employment, wages and hours
and occupational safety and health.
(h) Each individual who renders services to the Company or any of its
subsidiaries who is classified by the Company or such subsidiary, as
applicable, as having the status of an independent contractor or other non-
employee status for any purpose (including for purposes of taxation and tax
reporting and under Employee Benefit Plans) is properly so characterized,
except as would not be reasonably expected to have a Material Adverse Effect on
the Company.
(i) Other than as contemplated in Section 1.9 hereof and Section 3.8(i) of
the Company Disclosure Schedule, the Transactions will not, separately or in
the aggregate, constitute a "change of control" under, require the consent from
or the giving of notice to a third party pursuant to, or accelerate vesting,
funding or
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repurchase rights under the terms, conditions or provisions of any Employee
Benefit Plan. Except as set forth in Section 3.8(i) of the Company Disclosure
Schedule, neither the Company nor any of its subsidiaries is a party to any
agreement, contract or arrangement that could result, on account of the
Transactions, separately or in the aggregate (including upon any subsequent
termination of employment), in the payment of any excess parachute payments
within the meaning of Section 280G of the Code or any payment that would be
nondeductible under Section 162(m) of the Code. No such agreement, contract or
arrangement provides for the reimbursement of excise taxes under Section 4999
of the Code or any income taxes under the Code. The total amounts payable to
the employees and consultants of the Company, as set forth in Section 3.8(i) of
the Company Disclosure Schedule, as a result of the Transactions contemplated
by this Agreement and/or any subsequent employment termination (excluding any
cash-out or acceleration of options and restricted stock but including any
"gross-up" payments with respect thereto), based on compensation data
applicable as of the date hereof, calculated assuming effective Federal tax
rates of 39.6%, will not exceed the amount set forth on such Schedule.
Section 3.9. Litigation. Except as specifically disclosed in the SEC Reports
filed prior to the date of this Agreement, there is no suit, claim, action,
proceeding or investigation pending or threatened in writing against the
Company or any of its subsidiaries before any Governmental Entity which could,
individually or in the aggregate, if adversely determined, reasonably be
expected to have a Material Adverse Effect on the Company or prevent or
materially delay the consummation of the Transactions. Except as specifically
disclosed in the SEC Reports filed prior to the date of this Agreement, neither
the Company nor any of its subsidiaries is subject to any outstanding order,
writ, injunction or decree which could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company or
prevent or materially delay the consummation of the Transactions.
Section 3.10. Information. None of the information supplied by the Company
in writing specifically for inclusion or incorporation by reference in (i) the
Proxy Statement or (ii) any other document to be filed with the SEC or any
other Governmental Entity prior to the Effective Time (the "Other Filings")
will, at the respective times filed with the SEC or other Governmental Entity
and, in addition, in the case of the Proxy Statement, at the date it or any
amendment or supplement is mailed to the Stockholders, at the time of the
Special Meeting and at the Effective Time, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act, except that no representation is made by the Company with respect
to statements made therein based on information supplied by Parent or Merger
Sub in writing specifically for inclusion in the Proxy Statement.
Section 3.11. Taxes.
(a) Except as set forth in 3.11(a) of the Company Disclosure Schedule and
except as could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on the Company: (i) all Tax Returns required
to be filed (taking into account extensions) on or before the Effective Time
for taxable periods ending on or before the Effective Time by, or with respect
to any activities of, or property owned by, the Company, its subsidiaries, or
each affiliated, consolidated, combined or unitary group that included or
includes the Company or any of its subsidiaries (a "Tax Group"), have been or
will be filed in accordance with all applicable laws and are true, correct and
complete in all respects as filed and have not been amended, all Taxes shown as
due on such Tax Returns have been or will be timely paid, and reserves
reflected on the most recent balance sheet of the Company are in accordance
with GAAP and are sufficient to cover all Taxes (whether or not shown as due on
any Tax Return) accrued as of such date and, adjusted for the passage of time,
will be sufficient to cover all Taxes as of the Effective Time; (ii) all Taxes
required to be withheld by the Company or its subsidiaries have been withheld,
and such withheld Taxes have either been duly and timely paid to the proper
Governmental Entities or set aside in accounts for such purpose if not yet due;
(iii) no Tax Return filed by the Company or any of its subsidiaries is
currently under audit by any Taxing Authority or is the subject of any judicial
or administrative proceeding, and to the Company's knowledge no Taxing
Authority is threatening to commence any such audit; (iv) no Taxing Authority
is now asserting against the Company or
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any of its subsidiaries any deficiency or claim for Taxes or any adjustment of
Taxes; (v) other than any Tax sharing or indemnification agreement to which
the parties are exclusively the Company and/or some or all of its
subsidiaries, neither the Company nor any of its subsidiaries is subject to or
bound by any Tax sharing agreement (or other arrangement or practice for the
sharing of Taxes); (vi) neither the Company nor any of its subsidiaries has
ever been a member of a Tax Group, other than one for which the Company or one
of its subsidiaries was the common parent; (vii) there are no liens for Taxes
(other than Taxes not yet due) upon any of the assets of the Company or any of
its subsidiaries; and (viii) neither the Company nor any of its Subsidiaries
has any liability for the Taxes of any person other than the Company and its
subsidiaries.
(b) Neither the Company nor any of its subsidiaries is or has been a
"United States real property holding corporation" within the meaning of
Section 897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
(c) Neither the Company nor any of its subsidiaries has constituted a
"distributing corporation" or a "controlled corporation" in a distribution of
stock qualifying for tax-free treatment under Section 355 of the Code (i) in
the past 24-month period or (ii) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
(d) Prior to the date hereof, the Company has provided Parent with written
schedules of (i) the taxable years of the Company for which the statute of
limitations with respect to federal, state and local income Taxes has not yet
expired, and (ii) with respect to federal, state and local income Taxes, those
years for which examinations by a Taxing Authority have been completed, those
years for which examinations by a Taxing Authority have commenced but not yet
been completed, and those years for which examinations by a Taxing Authority
have not yet commenced.
(e) IVI Checkmate Ltd. has withheld from each payment made to any non-
resident of Canada the amount of all Taxes and other deductions required to be
withheld or remitted in respect thereof and has remitted any such withheld
amounts to the proper Taxing Authority within the time required by law.
(f) Section 3.11(f) of the Company Disclosure Schedule sets out, to the
best knowledge of the Company, acting in good faith, a preliminary estimate of
the paid-up capital of all issued and outstanding shares of IVI Checkmate Ltd.
for the purposes of the Income Tax Act (Canada) (the "ITA") and any relevant
principal taxing statute.
(g) No amount in respect of any outlay or expense that is deductible for
the purposes of computing the income of IVI Checkmate Ltd. for the purposes of
the ITA has been owing by IVI Checkmate Ltd. for longer than two years to a
person not dealing at arm's length (for the purposes of the ITA) with IVI
Checkmate Ltd. at the time the outlay or expense was incurred.
(h) Except as set forth in Section 3.11(h) of the Company Disclosure
Schedule, there are no circumstances which exist and would result in, or which
have existed and resulted in, Sections 79 or 80 of the ITA applying to IVI
Checkmate Ltd.
(i) IVI Checkmate Ltd. has neither directly nor indirectly transferred
property to or supplied services to or acquired property or services from a
person, corporation, partnership, trust or other taxpayer with whom it was not
dealing at arm's length (for the purposes of the ITA) for consideration other
than consideration equal to the fair market value of the property or services
at the time of the transfer, supply or acquisition of the property or
services.
(j) IVI Checkmate Ltd. has not entered into any advance pricing agreement
with any Taxing Authority.
(k) Neither IVI Checkmate Ltd. nor any corporation to which IVI Checkmate
Ltd. is related (for the purposes of the ITA) is a corporation whose principal
business is (A) the lending of money to persons with whom such corporation is
dealing at arm's length (for the purposes of the ITA); (B) the purchasing of
debt obligations issued to such persons; or (C) a combination thereof.
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(l) IVI Checkmate Ltd. has not been party to any elections filed under
sections 83 or 85 of the ITA.
(m) All applicable retail sales tax was paid by IVI Checkmate Ltd. on the
initial acquisition of its tangible personal property and none of the assets of
IVI Checkmate Ltd. have been transferred at any time on a tax exempt basis
under section 13 of regulation 1013 of the Retail Sales Tax Act (Ontario).
(n) IVI Checkmate Ltd. has not made any elections under the Excise Tax Act
(Canada).
(o) None of the Company's wholly-owned Subsidiaries owns shares of Common
Stock, and neither the Company nor any of its Subsidiaries owns any shares of
the Company's Preferred Stock.
(p) "Tax" or "Taxes" means any and all taxes, fees, assessments, levies,
duties, tariffs, imposts, and other charges of any kind (together with any and
all interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Entity, including, without
limitation, taxes or other charges on or with respect to income, franchises,
windfall or other profits, gross receipts, property, assets, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, severance, occupation, or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer,
estimated, value added, or gains taxes; license, registration and documentation
fees; and customs' duties, tariffs, and similar charges. "Taxing Authority"
means any Governmental Entity having jurisdiction over the assessment,
determination, collection or other imposition of any Tax. "Tax Return" means
any return, declaration, report, claim for refund, information statement,
schedule or other document (including any related or supporting information and
including any Form 1099 or other document or report required to be provided by
the Company or any of its subsidiaries to third parties) relating to Taxes,
including any document required to be retained or provided to any Taxing
Authority relating to the Company or any of its subsidiaries or any
consolidated group of which any such entity was a member at the applicable
time, and any amended Tax Returns.
Section 3.12. Intellectual Property. The Company owns, or possesses adequate
rights to use, all Intellectual Property that is used in the conduct of the
business of the Company and its subsidiaries. The Company has not received any
notice of any conflict with or violation or infringement of, any asserted
rights of any other person with respect to any Intellectual Property owned or
licensed by the Company or any of its subsidiaries, which could, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect
on the Company. The conduct of the Company's and its subsidiaries' respective
businesses as currently conducted does not conflict with any patents,
registered trademarks, registered copyrights or, to the Company's knowledge,
any patent rights, licenses, trademark rights, trade names, trade name rights,
unregistered copyrights or any other rights of others with respect to
Intellectual Property, in any way that could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on the Company. To the
Company's knowledge, there is no infringement of any proprietary right owned by
or licensed by or to the Company or any of its subsidiaries that could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company. "Intellectual Property" means all domestic or
foreign trademarks (registered and unregistered) and trademark applications and
registrations, patents, patent applications, inventions (whether or not
patentable), processes, products, technologies, discoveries, copyrightable and
copyrighted works, apparatus, trade secrets, brand names, certification marks,
service marks and service mark applications and registrations, trade names,
trade dress, copyright registrations, design rights, mask works, technical
information (whether confidential or otherwise), and all documentation thereof.
Section 3.13. Certain Approvals. The Board has taken appropriate action such
that the provisions of Section 203 of the DGCL will not apply to the execution
of this Agreement or any of the Transactions. No other state takeover law or
other law, rule or published policy that purports to limit or restrict business
combinations or the ability to vote shares or imposes requirements for approval
by any specific group of shareholders, other than such approvals expressly
provided for in this Agreement, applies to the execution of this Agreement or
any of the Transactions contemplated hereby.
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Section 3.14. Brokers. Except as set forth on Section 3.14 of the Company
Disclosure Schedule and except for the engagement of the Financial Advisor,
none of the Company, any of its subsidiaries, or any of their respective
officers, directors or employees has employed any broker or finder or incurred
any liability for any brokerage fees, commissions, contingent payments or
finder's fees in connection with the Transactions. The Company has previously
delivered to Parent a copy of the Company's engagement letter with the
Financial Advisor.
Section 3.15. Opinions of Financial Advisor. The Special Committee has
received the written opinion of the Financial Advisor, to the effect that, as
of the date of such opinion, the Merger Consideration to be received by the
Stockholders is fair to the Stockholders (other than Parent and Merger Sub)
from a financial point of view. The Board of Directors of IVI Checkmate Ltd.
has received the written opinion of the Financial Advisor, to the effect that,
as of the date of such opinion, the Merger is fair to the Holders from a
financial point of view. The Company has previously delivered to Parent a copy
of such opinion.
Section 3.16. Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Common Stock and Exchangeable Shares
entitled to vote with respect to this Agreement, voting together as a single
class, is the only vote of the holders of any class or series of the Company's
capital stock that is or may be necessary to approve this Agreement and the
Transactions. The affirmative vote of two-thirds of the votes cast in respect
of the Resolution is the only vote of the shareholders of IVI Checkmate Ltd.
(other than the approval by the Company as the holder of the common shares of
IVI Checkmate Ltd.) that is or may be necessary to approve the Resolution.
Section 3.17. Rights Agreement. The Company has taken all action necessary
or appropriate to amend its Rights Agreement (the "Rights Agreement Amendment")
so that (a) the execution of this Agreement and the consummation of the
Transactions do not and will not result in the ability of any person to
exercise any Rights or enable or require such Rights to separate from the
shares of the Company's capital stock to which they are attached or to be
triggered or become exercisable, and (b) the Company's Shareholder Rights
Agreement will expire immediately prior to the Effective Time. The Company has
provided Parent with a copy of the Rights Agreement Amendment duly executed and
delivered by the Company and the Rights Agent.
Section 3.18. Environmental Matters. Except as set forth in Section 3.18 of
the Company Disclosure Schedule or except as disclosed in the SEC Reports or
otherwise would not have a Material Adverse Effect:
(a) the Company and its subsidiaries are and have been in compliance in
all respects with federal, state, local and foreign laws and regulations
relating to pollution, protection or preservation of human health or the
environment ("Environmental Laws") relating to the generation, storage,
containment, disposal, transport or handling of regulated levels of
hazardous or toxic materials, substances or wastes ("Hazardous Materials"),
including compliance with any environmental permits or similar governmental
authorizations or the terms and conditions thereof;
(b) there is no pending claim, investigation, order, or judicial or
administrative proceeding against the Company or any of its subsidiaries
for any violation of Environmental Laws or for investigation, remediation
or clean up of Hazardous Materials, or payment therefor, by any third party
included in any governmental authority, pursuant to any Environmental Law
at any location owned or operated by the Company or its subsidiaries, or at
any location to which the Company or any of its subsidiaries have sent
Hazardous Materials; and
(c) there currently exist no facts or circumstances that could
reasonably be expected to (i) give rise to proceedings described in
subsection (b) above and (ii) prevent the renewal or reissuance, on terms
reasonably comparable to those in existence, or any permits or
authorizations required for the Company's operations under any
Environmental Law as such laws currently exist.
Section 3.19. Compliance with Applicable Laws. The Company and its
subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities (the "Company Permits") required in
order to own their assets and to conduct their respective businesses as
currently conducted, except
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where the failure to hold such Company Permits, would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. The Company and its subsidiaries are in compliance with the terms of
the Company Permits except where the failure to comply would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect
on the Company. The operations of the Company and its subsidiaries have been
conducted in compliance with all applicable laws, ordinances and regulations of
any Governmental Entity, except violations which will not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
Section 3.20. Material Contracts. Except as identified in the SEC Reports,
neither the Company nor any of its subsidiaries is party to, nor is the Company
or any of its subsidiaries (or their respective assets) bound by, any contract,
indenture, lease or other agreement which, individually or in the aggregate, is
material to the Company and the subsidiaries taken as a whole. Except as
identified in the SEC Reports or in Section 3.20 of the Company Disclosure
Schedule, there are no (i) contracts, indentures, leases or other agreements
between the Company or any subsidiary, on the one hand, and any current or
former director, officer, employee or 5% or greater shareholder of the Company
or any of their affiliates or family members, on the other, or (ii) any non-
competition agreement or any other agreement or obligation which purports to
limit in any respect the manner in which, or the localities in which, the
business of the Company and its subsidiaries, is or would be conducted. All
contracts, indentures, leases and agreement to which the Company or any of the
subsidiaries is a party or by which any of their respective assets is bound are
valid and binding, in full force and effect in accordance with its terms would
and enforceable against the parties thereto in accordance with their respective
terms, other than such failures to be so valid and binding, in full force and
effect or enforceable which would not, either individually or in the aggregate,
be reasonably expected to have a Material Adverse Effect on the Company. There
is not under any such contract, indenture or agreement any existing default, or
event, which after notice or lapse of time, or both, would constitute a
default, by the Company or any of its subsidiaries, or to the Company's
knowledge, any other party, except to the extent for any such defaults or
events that would not, individually or in the aggregate, be reasonably expected
to have a Material Adverse Effect on the Company.
Section 3.21. Support Agreements. The individuals specified in Annex A, have
each duly executed a support agreement (the "Support Agreement") substantially
in the form of Exhibit 3.20 hereto, copies of each of which Support Agreement
have been delivered to Parent.
Section 3.22. Ingenico Agreements. For purposes of this Article III and the
Company Disclosure Schedules, the Company shall be deemed to have disclosed the
agreements by and between the Company and Parent and all of the provisions
thereof.
Section 3.23. Investments. IVI Checkmate Ltd. owns no shares or debt
instruments of, or other investments in, any affiliate of the Company other
than certain preferred shares and debt instruments of IVI Checkmate, Inc. (the
"Investments"). IVI Checkmate Ltd. holds the Investments as capital property
for the purposes of the ITA and the fair market value of each of the
Investments for the purposes of the ITA does not exceed the adjusted cost base
to IVI Checkmate Ltd. of each Investment for the purposes of the ITA.
Section 3.24. Stock Option Exchange Program. Attached hereto as Exhibit 3.24
is a true, accurate and complete copy of the Company Stock Option Exchange
Program dated as of January 25, 2001 and of all documents which may grant any
rights thereunder (the Company Stock Option Exchange Program, together with all
such documents, the "SOEP"). All New Options and Top Up Options (as those terms
are defined in the SOEP) issuable under the SOEP will, if issued, be issued on
August 31, 2001.
Section 3.25. Congress Financial Corporation (Southern). Each of the Company
and Congress Financial Corporation (Southern) ("Congress Financial") has duly
executed and delivered an agreement (the "Waiver and Consent"), a copy of which
Waiver and Consent is attached hereto as Exhibit 3.25 and which as of the
Effective Time will not have been amended and will remain in full force and
effect.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND THE PURCHASER
Parent and Merger Sub represent and warrant to the Company as follows:
Section 4.1. Organization and Qualification. Parent is a societe anonyme
duly organized, validly existing and in good standing under the laws of the
Republic of France. The Merger Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each of
Parent and Merger Sub has the requisite corporate power and authority to own,
operate or lease its properties and to carry on its business as it is now being
conducted, and is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction in which the nature of its business or the
properties owned, operated or leased by it makes such qualification, licensing
or good standing necessary, except where the failure to have such power or
authority, or the failure to be so qualified, licensed or in good standing,
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Parent. The term "Material Adverse Effect on
Parent," as used in this Agreement, means any change in or effect on the
business, assets, liabilities, financial condition, results of operations,
profitability or prospects of Parent or any of its subsidiaries that is
materially adverse to Parent and its subsidiaries taken as a whole.
Section 4.2. Authority Relative to this Agreement. Each of Parent and Merger
Sub has all necessary corporate power and authority to execute and deliver this
Agreement and to consummate the Transactions. The execution and delivery of
this Agreement by Parent and Merger Sub and the consummation by Parent and
Merger Sub of the Transactions have been duly and validly authorized and
approved by the Supervisory Board of Parent and the Board of Directors of
Merger Sub and by Parent as sole stockholder of Merger Sub and no other
corporate proceedings on the part of Parent or Merger Sub are necessary to
authorize or approve this Agreement or to consummate the Transactions. This
Agreement has been duly executed and delivered by each of Parent and Merger Sub
and, assuming the due and valid authorization, execution and delivery by the
Company, constitutes a valid and binding obligation of each of Parent and
Merger Sub enforceable against each of them in accordance with its terms.
Section 4.3. No Conflict; Required Filings and Consents.
(a) Assuming (i) the filings required under the HSR Act, the Antitrust Laws
and the Investment Canada Act (Canada) are made and the waiting periods
thereunder have been terminated or have expired, (ii) the requirements of the
Exchange Act and any applicable state securities, "blue sky" or takeover law
are met and (iii) the filing of the certificate of merger and other appropriate
merger documents, if any, as required by the DGCL is made, none of the
execution and delivery of this Agreement by Parent or Merger Sub, the
consummation by Parent or Merger Sub of the Transactions or compliance by
Parent or Merger Sub with any of the provisions hereof will (i) conflict with
or violate the organizational documents of Parent or Merger Sub, (ii) conflict
with or violate any statute, ordinance, rule, regulation, order, judgment or
decree applicable to Parent or Merger Sub, or by which any of them or any of
their respective properties or assets may be bound or affected, or (iii) result
in a Violation pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or Merger Sub is a party or by which any of their respective
properties or assets may be bound or affected, except in the case of the
foregoing clauses (ii) and (iii) for any such Violations which could not,
individually or in the aggregate, reasonably be expected to prevent
consummation of the Transactions.
(b) None of the execution and delivery of this Agreement by Parent and
Merger Sub, the consummation by Parent and Merger Sub of the Transactions or
compliance by Parent and Merger Sub with any of the provisions hereof will
require any Consent of any Governmental Entity, except for (i) compliance with
any applicable requirements of the Exchange Act and any state securities "blue
sky" or takeover law, (ii) the filing of the certificate of merger pursuant to
the DGCL, (iii) compliance with the HSR Act and any requirements of any foreign
or supranational Antitrust Laws and the Investment Canada Act (Canada) and (iv)
Consents the
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failure of which to obtain or make could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent or
materially adversely affect the ability of Parent or reasonably be expected to
prevent consummation of the Transactions.
Section 4.4. Information. None of the information supplied or to be supplied
by Parent and Merger Sub in writing specifically for inclusion in the Proxy
Statement or the Other Filings will, at the respective times filed with the SEC
or such other Governmental Entity and, in addition, in the case of the Proxy
Statement, at the date it or any amendment or supplement is mailed to the
Stockholders, at the time of the Special Meeting and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
Section 4.5. Financing. At the Effective Time, Parent and Merger Sub will
have available all of the funds necessary to consummate the Transactions.
ARTICLE V
COVENANTS
Section 5.1. Conduct of Business of the Company. Except as permitted,
required or specifically contemplated by, or otherwise described in, this
Agreement or otherwise with the prior written consent of Parent, during the
period from the date of this Agreement to the Effective Time, the Company will,
and will cause each of its subsidiaries to, conduct its operations only in the
ordinary and usual course of business consistent with past practice and will
use its reasonable best efforts, and will cause each of its subsidiaries to use
its reasonable best efforts, to preserve intact the business organization of
the Company and each of its subsidiaries, to keep available the services of its
and their present officers and key employees, and to preserve the good will of
those having business relationships with it, including, without limitation,
maintaining satisfactory relationships with licensors, suppliers, distributors,
customers and others having business relationships with the Company. Without
limiting the generality of the foregoing, and except as otherwise expressly
permitted, required or specifically contemplated by, or otherwise described in,
this Agreement, the Company will not, and will not permit any of its
subsidiaries to, prior to the Effective Time, without the prior written consent
of Parent:
(a) adopt or propose any amendment to its Certificate of Incorporation
or By-Laws or comparable organizational documents;
(b) (i) issue, reissue, pledge or sell, or authorize the issuance,
reissuance, pledge or sale of (A) additional shares of capital stock of any
class, or securities convertible into capital stock of any class, or any
rights, warrants or options to acquire any convertible securities or
capital stock, other than the issuance of shares of Common Stock, in
accordance with the terms of the instruments governing such issuance on the
date hereof, pursuant to the exercise of Options or the DataCard Warrants
outstanding on the date hereof or (B) any other securities in respect of,
in lieu of, or in substitution for, shares of its capital stock outstanding
on the date hereof or (ii) make any other changes in its capital structure;
(c) declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in
respect of any class or series of its capital stock other than between any
of the Company and any of its wholly owned subsidiaries;
(d) split, combine, subdivide, reclassify or redeem, purchase or
otherwise acquire, or propose to redeem or purchase or otherwise acquire,
any shares of its capital stock, or any of its other securities or create
any subsidiaries;
(e) (i) incur, assume or pre-pay any long-term debt or incur or assume
any short-term debt, except that the Company and its subsidiaries may incur
or pre-pay debt in the ordinary course of business in
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amounts and for purposes consistent with past practice, including by
repaying facilities with SMTC Manufacturing Corporation of Canada, The Bank
of Nova Scotia and Congress Financial Corporation (Southern), (ii) assume,
guarantee, endorse or otherwise become liable or responsible (whether
directly, contingently or otherwise) for the obligations of any other
person except in the ordinary course of business consistent with past
practice, or (iii) make any loans, advances or capital contributions to, or
investments in, any other person except in the ordinary course of business
consistent with past practice and except for loans, advances or capital
contributions between any wholly owned subsidiary of the Company and the
Company or another wholly owned subsidiary of the Company;
(f) other than in the ordinary course of business consistent with past
practice, (i) modify, amend or terminate any material contract, (ii) except
as required by law, waive, release, relinquish, settle, compromise or
assign any material contract (or any of the Company's rights thereunder),
right or claim, or (iii) cancel or forgive any indebtedness owed to the
Company or any of its subsidiaries except in the ordinary course of
business consistent with past practice;
(g) (i) increase the compensation or severance payable or to become
payable to its directors, officers, employees or consultants (including the
grant of stock options or other equity or long-term compensation awards),
except for increases in salary or wages of employees of the Company or its
subsidiaries in accordance with past practices and except for increases set
forth on Section 5.1(g)(i) of the Company Disclosure Schedule; (ii) except
as set forth on Section 5.1(g)(ii) of the Company Disclosure Schedule,
grant any severance or termination pay to, or enter into or amend any
employment or severance agreement with, any current or prospective employee
of the Company or any of its subsidiaries; or (iii) establish, adopt, enter
into or amend any collective bargaining agreement or Employee Benefit Plan,
including, without limitation, any plan that provides for the payment of
bonuses or incentive compensation, trust, fund, policy or arrangement for
the benefit of any current or former directors, officers, employees or
consultants or any of their beneficiaries, except, in each case, as may be
required by law;
(h) file any Tax Return (except in the ordinary course of business), or
make or revoke any Tax election, or change any method of accounting, except
as required by law or to the extent that such action is consistent with
past practice and would not be material;
(i) other than in the ordinary course of business, enter into any
contract or agreement that would be material to the Company and its
subsidiaries taken as a whole;
(j) except as may be required as a result of a change in applicable law
or in GAAP, make any change in its methods or principles of accounting; or
(k) agree in writing or otherwise to take any of the foregoing actions
prohibited under this Section 5.1 or any action which would cause any
representation or warranty in this Agreement to be or become untrue or
incorrect in any material respect.
Section 5.2. Access to Information.
(a) From the date of this Agreement until the Effective Time, the Company
will, and will cause its subsidiaries, and each of their respective officers,
directors, employees, counsel, advisors and representatives (collectively, the
"Company Representatives") to, give Parent and Merger Sub and their respective
officers, employees, counsel, advisors and representatives (collectively, the
"Parent Representatives") reasonable access, during normal business hours, to
the offices and other facilities and to the books and records of the Company
and its subsidiaries and will cause the Company Representatives and the
Company's subsidiaries to furnish Parent, Merger Sub and the Parent
Representatives to the extent available with such financial and operating data
and such other information with respect to the business and operations of the
Company and its subsidiaries as Parent and Merger Sub may from time to time
reasonably request. The Company shall furnish to Parent and Merger Sub prior to
filing a copy of each report, schedule, registration statement and other
document to be filed by it or its subsidiaries during such period pursuant to
the requirements of federal or state securities laws.
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(b) No investigation pursuant to this Section 5.2 shall affect any
representation or warranty in this Agreement of the Company or any condition to
the obligations of the parties hereto.
(c) All information furnished to Parent or Merger Sub or the Parent
Representatives shall be deemed "Evaluation Material" under the Confidentiality
Agreement between Parent and the Company dated October 30, 2000 (the
"Confidentiality Agreement") and Parent shall cause Merger Sub and the Parent
Representatives to honor and be bound by Parent's obligations thereunder.
(d) Each of the parties will use its reasonable best efforts to obtain from
applicable Canadian securities regulatory authorities such orders or rulings as
may be necessary so that, after the Effective Time, any requirements of
applicable Canadian securities legislation (including the rules and published
policies of the regulators) that might otherwise restrict transactions,
activities or relationships between IVI Checkmate Ltd. and Parent or any
affiliate of Parent or that might require public disclosure by or in respect of
IVI Checkmate Ltd. shall no longer be applicable.
Section 5.3. Reasonable Best Efforts.
(a) Subject to the terms and conditions provided herein, each of the
Company, Parent and Merger Sub shall, and the Company shall cause each of its
subsidiaries to, cooperate and use their respective reasonable best efforts to
(i) cause to be made all filings necessary, proper or advisable under
applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including but not limited to
cooperation in the preparation and filing of the Proxy Statement, the Circular
with respect to the Canadian Special Meeting, any required filings under the
HSR Act, or other foreign filings and any amendments to any thereof and (ii)
respond promptly to requests for further information by any Governmental Entity
in connection with any filings under the HSR Act or other foreign filings or
amendments thereof.
(b) In addition, if at any time prior to the Effective Time any event or
circumstance relating to either the Company or Parent or Merger Sub or any of
their respective subsidiaries should be discovered by the Company, Parent or
Merger Sub, as the case may be, which should be set forth in an amendment to
the Proxy Statement, the discovering party will promptly inform the other
parties of such event or circumstance.
(c) Each of the parties will use its reasonable best efforts to obtain as
promptly as practicable all Consents of any Governmental Entity or any other
person required in connection with, and waivers of any Violations that may be
caused by, the consummation of the transactions contemplated by this Agreement.
Section 5.4. Public Announcements. The Company, on the one hand, and Parent
and Merger Sub, on the other hand, agree to consult promptly with each other
prior to issuing any press release or otherwise making any public statement
with respect to the Merger and the other Transactions, agree to provide to the
other party for review a copy of any such press release or statement, and shall
not issue any such press release or make any such public statement prior to
such consultation and review, unless required by applicable law or any listing
agreement with a securities exchange.
Section 5.5. Indemnification.
(a) From and after the Effective Time, the Surviving Corporation shall
indemnify and hold harmless the officers and directors of the Company (the
"Indemnified Parties") in respect of acts or omissions occurring prior to the
Effective Time to the extent currently provided under the Company's Certificate
of Incorporation or By-Laws.
(b) Parent agrees that the Company, and from and after the Effective Time,
the Surviving Corporation shall cause to be maintained in effect for not less
than six years (except as provided in the last sentence of this Section 5.5(b))
from the Effective Time the current policies of the directors' and officers'
liability insurance maintained by the Company; provided, that the Surviving
Corporation may substitute therefor other policies not less advantageous to the
beneficiaries of the current policies and provided that such substitution shall
not result
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in any gaps or lapses in coverage with respect to matters occurring prior to
the Effective Time; and provided, further, that the Surviving Corporation shall
not be required to pay aggregate premiums in excess of $150,000 and if the
Surviving Corporation is unable to obtain the insurance required by this
Section 5.5(b) it shall obtain the greatest comparable insurance coverage as
possible for an annual premium equal to such maximum amount. Notwithstanding
the foregoing, at any time on or after the third anniversary of the Effective
Time, Parent may, at its election, undertake to provide funds to the Surviving
Corporation to the extent necessary so that the Surviving Corporation may self-
insure at a level of coverage no less than that otherwise required under this
Section 5.5(b) in lieu of causing to remain in effect any directors' and
officers' liability insurance policy.
(c) Any Indemnified Party wishing to claim indemnification under paragraph
(a) of this Section, upon learning of any such claim, action, suit, proceeding
or investigation, shall promptly notify Parent thereof. In the event of any
such claim, action, suit, proceeding or investigation (whether arising before
or after the Effective Time), (i) Parent or the Surviving Corporation shall
have the right, from and after the Effective Time, to assume the defense
thereof and Parent shall not be liable to such Indemnified Parties for any
legal expenses of other counsel or any other expenses subsequently incurred by
such Indemnified Parties in connection with the defense thereof provided that
Parent assumes such defense in a timely manner, (ii) the Indemnified Parties
will cooperate in the defense of any such matter and (iii) Parent shall not be
liable for any settlement effected without its prior written consent; and
provided, further, that Parent shall not have any obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall
ultimately determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law.
Section 5.6. Notification of Certain Matters. Parent and the Company shall
promptly notify each other of (a) the occurrence or non-occurrence of any fact
or event which would be reasonably likely (i) to cause any representation or
warranty contained in this Agreement to be untrue or inaccurate in any material
respect at any time from the date hereof to the Effective Time or (ii) to cause
any material covenant, condition or agreement under this Agreement not to be
complied with or satisfied in all material respects and (b) any failure of the
Company, Parent or Merger Sub, as the case may be, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
hereunder in any material respect; provided, however, that no such notification
shall affect the representations or warranties of any party or the conditions
to the obligations of any party hereunder. Each of the Company, Parent and
Merger Sub shall give prompt notice to the other parties hereof of any notice
or other communication from any third party alleging that the consent of such
third party is or may be required in connection with the Transactions.
Section 5.7. Takeover Laws. Laws The Company shall, upon the request of
Parent or Merger Sub, take all reasonable steps to assist in any challenge by
Parent or Merger Sub to the validity or applicability to the Merger or the
other Transactions of any state takeover law or statute or any applicable
provincial securities law, rule or instrument or other similar law.
Section 5.8. Rights Agreement. The Company covenants and agrees that it will
not (i) redeem the Rights, (ii) amend the Rights Agreement or (iii) take any
action which would allow any Person (as defined in the Rights Agreement) other
than Parent or Merger Sub to acquire beneficial ownership of 15% or more of the
Common Shares without causing a Stock Acquisition Date (as defined in the
Rights Agreement) or a Separation Time (as defined in the Rights Agreement) to
occur.
Section 5.9. No Solicitation.
(a) The Company, its affiliates and their respective officers, directors,
employees, representatives and agents shall immediately cease any existing
discussions or negotiations, if any, with any parties conducted heretofore with
respect to any acquisition or exchange of all or any material portion of the
assets of, or any equity interest in, the Company or any of its subsidiaries or
any business combination with the Company or any of its subsidiaries.
Notwithstanding the immediately preceding sentence, the Company shall be
permitted to engage in discussions regarding the DataCard Warrants and Options
issued under the Stock Plans with the
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individual holders of such DataCard Warrants or Options, which discussions
shall be solely (i) in response to any exercise thereof in accordance with the
terms of the DataCard Warrants or Options, as the case may be, and (ii) for the
limited purpose of effecting the exercise thereof in accordance with the terms
of the DataCard Warrants or Options, as the case may be. The Company agrees
that, prior to the Effective Time, it shall not, and shall not authorize or
permit any of its subsidiaries or any of its or its subsidiaries' directors,
officers, employees, agents or representatives, directly or indirectly, to
solicit, initiate, encourage or facilitate, or furnish or disclose non-public
information in furtherance of, any inquiries or the making of any proposal with
respect to any merger, liquidation, recapitalization, consolidation or other
business combination involving the Company or any of its subsidiaries or
acquisition of any capital stock or any material portion of the assets of the
Company or its subsidiaries, or any combination of the foregoing (an
"Acquisition Transaction"), or negotiate, explore or otherwise engage in
discussions with any person (other than Merger Sub, Parent or their respective
directors, officers, employees, agents and representatives) with respect to any
Acquisition Transaction or enter into any agreement, arrangement or
understanding requiring it to abandon, terminate or fail to consummate the
Merger or any other Transactions contemplated by this Agreement; provided that
prior to the receipt of the Stockholder Approval, the Company may furnish
information, pursuant to a customary confidentiality agreement, to, and
negotiate or otherwise engage in discussions with, any party who delivers a
bona fide written proposal for an Acquisition Transaction for which all
necessary financing is then in the judgment of the Board readily obtainable, if
the Board determines in good faith by a vote of a majority of the members of
the full Board that failing to take such action would constitute a breach of
the fiduciary duties of the Board (after consultation and receipt of advice
from its outside legal counsel to such effect) and such a proposal is, in the
written opinion of the Financial Advisor, more favorable to the Company's
Stockholders from a financial point of view than the Transactions contemplated
by this Agreement as the same has been proposed to be amended by Parent
pursuant to Section 5.9(b) (such bona fide written proposal, a "Superior
Proposal"). Nothing herein shall prevent or prohibit, or be construed to
prevent or prohibit, the Company from complying with Rule 14e-2 of the Exchange
Act.
(b) From and after the execution of this Agreement, the Company shall
promptly advise Merger Sub in writing of the receipt, directly or indirectly,
of any inquiries, discussions, negotiations or proposals relating to an
Acquisition Transaction, identify the offeror and furnish to Merger Sub a copy
of any such proposal or inquiry, if it is in writing, relating to an
Acquisition Transaction. The Company shall promptly advise Parent of any
material development relating to such proposal, including the results of any
discussions or negotiations with respect thereto. Notwithstanding anything in
this Agreement to the contrary, prior to the approval or recommendation of a
Superior Proposal by the Board, the Company shall give Parent sufficient notice
of the material terms and conditions of any such Acquisition Transaction, and
negotiate in good faith with Parent for a period of not less than three
business days (the "Negotiation Period") after it determines and notifies
Parent that such proposal or inquiry constitutes a Superior Proposal to make
such adjustments in the terms and conditions of this Agreement as would enable
the Company to proceed with the transactions contemplated herein.
Section 5.10. Equity Investment. Simultaneously with the execution of this
Agreement, Parent or Merger Sub shall purchase two million and six-hundred
twenty thousand four hundred fifty three (2,620,453) validly issued, fully paid
and non-assessable shares of Common Stock from the Company at a price equal to
$2.00 per share of Common Stock.
Section 5.11. Additional Director; Board Committees. Simultaneously with the
execution of this Agreement, (a) the size of the Board shall be automatically
increased by one director, (b) Bertrand Cambou shall be appointed to fill the
vacancy created by such increase and (c) each Committee of the Board shall be
automatically increased by one director, and one of the directors of the
Company designated by Parent shall be appointed to each such Committee.
Section 5.12. Registration Rights Agreement. Simultaneously with the
execution of this Agreement, the Company and Parent shall enter into, duly
execute and deliver to each other a registration rights agreement (the
"Registration Rights Agreement") in the form attached hereto as Exhibit 5.12.
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Section 5.13. Stock Option Exchange Program. The Company will seek and use
its reasonable best efforts to obtain releases, relinquishments and waivers
from all participants in the SOEP in a form satisfactory to Parent.
Section 5.14. Restructuring. Prior to the Effective Time, the Company and
its Subsidiaries shall exert their reasonable best efforts to effect and
complete such corporate reorganizations and restructurings as Parent may
reasonably request in writing prior to the Effective Date in order to complete
the Merger and re-order the affairs of the Company and its Subsidiaries in the
most advantageous manner possible from a tax, legal and business perspective,
provided that such reorganization is not materially prejudicial to the Company,
any of its Subsidiaries, or the public shareholders of the Company or IVI
Checkmate Ltd.
Section 5.15. Paid-Up Capital. Each of the parties will, following the
execution of this Agreement and before the Effective Time, act together in good
faith to determine the paid-up capital of all issued and outstanding shares of
IVI Checkmate Ltd.
Section 5.16. Series B Preferred Stock. At such time (prior to, at or after
the Effective Time) as there shall be no outstanding Exchangeable Shares which
are not owned by the Company, any of its Subsidiaries or any person directly or
indirectly controlled by or under common control of the Company, and there are
no shares of stock, debt, options or other agreements of the Company or any of
its Subsidiaries which could give rise to the issuance of any Exchangeable
Shares to any person (other than the Company, any of its Subsidiaries or any
person directly or indirectly controlled by or under common control of the
Company), then at Parent's direction, the Company shall redeem each share of
Series B Preferred Stock outstanding, without any action on the part of the
holder thereof, in accordance with Section 6(c) of the Certificate of the
Powers, Designations, Preferences and Rights of the Series B Preferred Stock of
IVI Checkmate Corp., dated as of June 23, 1998.
Section 5.17. Parent Vote. Parent shall vote its shares of Common Stock, and
shall cause each of its affiliates that holds shares of Common Stock, together
with all subsequent transferees of the Common Stock held by Parent and each of
its affiliates, to vote their shares of Common Stock in favor of the
Transactions.
ARTICLE VI
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 6.1. Conditions. The respective obligations of Parent, Merger Sub
and the Company to consummate the Merger are subject to the satisfaction or
waiver, at or before the Effective Time, of each of the following conditions:
(a) Stockholder Approval. The Stockholder Approval shall have been
obtained.
(b) Injunctions; Illegality. The consummation of the Merger shall not be
restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any
Governmental Entity and there shall not have been any statute, rule or
regulation enacted, promulgated or deemed applicable to the Merger by any
Governmental Entity which prevents the consummation of the Merger or the
other transactions contemplated hereby or has the effect of making the
purchase of shares of Common Stock illegal.
(c) Litigation. There shall not be pending any claim, action, suit,
hearing, or proceeding ("Action") challenging or seeking to restrain or
prohibit the consummation of the Transactions, or any other Action filed
against the Company or any of its subsidiaries after the date of this
Agreement that could reasonably be expected to be determined adversely to
the Company and, if adversely determined, could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company or on the consummation of the Transactions.
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(d) HSR Act. Any waiting period (and any extension thereof) under the
HSR Act applicable to the Merger shall have expired or terminated and any
other approvals or requirements under any other Antitrust Laws and the
Investment Canada Act (Canada) shall have been obtained or complied with.
(e) Termination. No party hereto shall have terminated this Agreement as
permitted herein.
Section 6.2. Parent and Merger Sub Conditions. In addition to the
satisfaction, at or before the Effective Time, of the conditions set forth in
Section 6.1, the obligations of Parent and Merger Sub to consummate the Merger
are subject to the satisfaction, at or before the Effective Time, of each of
the following conditions:
(a) no action shall have been taken, nor shall any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction have
been enacted, enforced, promulgated, amended, issued or deemed applicable
to the Merger, by any legislative body, court, government or governmental,
administrative or regulatory authority or agency, other than the routine
application of the waiting period provisions of the HSR Act to the Merger,
that would reasonably be expected to: (i) make illegal or otherwise
prohibit or materially delay consummation of the Merger or seek to obtain
material damages or make the Merger materially more costly, (ii) prohibit
or materially limit the ownership or operation by Parent or the Surviving
Corporation of all or any material portion of the business or assets of the
Company or any of its subsidiaries taken as a whole or compel Parent to
dispose of or hold separately all or any material portion of the business
or assets of Parent or the Surviving Corporation or any of its subsidiaries
taken as a whole, or seek to impose any material limitation on the ability
of Parent or the Surviving Corporation to conduct its business or own such
assets, (iii) impose material limitations on the ability of Parent
effectively to acquire, hold or exercise full rights of ownership of the
shares of common stock of the Surviving Corporation, including, without
limitation, the right to vote any shares of common stock of the Surviving
Corporation acquired or owned by the Purchaser on all matters properly
presented to the Surviving Corporation's stockholders, or (iv) require
divestiture by Parent of any shares of common stock of the Surviving
Corporation;
(b) there shall not have occurred any development, event or condition
that has, or could reasonably be expected to have, individually or in the
aggregate, a material adverse effect on the business, assets, liabilities,
financial condition, results of operations, profitability or prospects of
the Company and its subsidiaries taken as a whole;
(c) (i) each of the representations and warranties of the Company (A)
that are qualified as to materiality or (B) set forth in Section 3.3, shall
be true and correct, and (ii) each of such representations and warranties
that are not so qualified (other than the representations and warranties
set forth in Section 3.3) shall be true and correct in every respect except
where the failure of such representations and warranties to be true and
correct could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on the Company, in each case as if such
representations and warranties were made at and as of the date hereof and
at and as of the Closing Date (except as to any such representation or
warranty which speaks as of a specific date, which must be true and correct
in the foregoing respects as of such specific date); provided, however,
that for purposes of this Section 6.2(c), the representations and
warranties in Section 3.12 qualified "to the Company's knowledge" shall be
deemed not so qualified and shall be deemed made without regard to the
Company's knowledge (or lack of knowledge) with respect to the statements
made in Section 3.12;
(d) the Company shall have complied in all material respects with each
of its obligations, covenants and agreements contained herein;
(e) (i) the Special Committee and the Board shall not have withdrawn or
modified in a manner adverse to Parent or Merger Sub the adoption or
recommendation of the Merger or the Merger Agreement, and (ii) neither the
Special Committee nor the Board shall have resolved to do any of the
foregoing;
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(f) the Company shall have provided Parent and Merger Sub with a
certificate of the Chief Executive Officer of the Company, dated as of the
Closing Date, as to the satisfaction of the conditions set forth in
Sections 6.1(a), 6.2(b), 6.2(c) and 6.2(d);
(g) the Holders shall have approved and adopted the Resolution by the
requisite vote, and the Exchange Amendment and any amendments to any other
documents necessary to implement the Resolution shall have become
effective;
(h) the orders and rulings contemplated by Section 5.2(d) shall have
been obtained on terms acceptable to Parent acting reasonably, and shall be
in full force and effect; and
(i) all participants in the SOEP shall have duly executed and delivered
to the Company and Parent a release, relinquishment and waiver as
contemplated in Section 5.13; provided, however, that this condition shall
lapse on the business day next following the date on which all of the New
Options and Top Up Options (as those terms are defined in the SOEP)
issuable under the SOEP which have not otherwise been released,
relinquished and waived in accordance with Section 5.13 are granted.
ARTICLE VII
TERMINATION; AMENDMENTS; WAIVER
Section 7.1. Termination. This Agreement may be terminated and the Merger
contemplated hereby may be abandoned at any time prior to the Effective Time,
whether before or after receipt of the Stockholder Approval (unless otherwise
specified) (with any termination by Parent also being an effective termination
by Merger Sub):
(a) by the mutual written consent of Parent and the Company, by action
of the Supervisory Board (with respect to Parent) and of the Board (with
respect to the Company);
(b) by Parent or the Company if (i) the Merger shall not have been
consummated by September 30, 2001 (provided that if any Governmental Entity
has made a request for additional information under the HSR Act, such date
shall be extended to a date which is 60 days after substantial compliance
with such request, but in no event later than December 31, 2001), whether
such date is before or after the date of the Stockholder Approval (the
"Termination Date") (unless the failure to consummate the Merger by such
date shall be due to the breach of any obligation under this Agreement by
the party seeking to terminate this Agreement) or (ii) any condition to
such party's obligation to consummate the Merger shall have become
impossible to satisfy on or prior to the Termination Date (unless resulting
from such party's breach of any of such party's obligations under this
Agreement);
(c) by Parent or the Company if any court or other Governmental Entity
shall have issued an order, decree or ruling or taken any other action
permanently enjoining, restraining or otherwise prohibiting the Merger and
such order, decree or ruling or other action shall have become final and
nonappealable;
(d) by the Company if, prior to the receipt of the Stockholder Approval,
the Board approves or recommends a Superior Proposal; provided that the
termination described in this Section 7.1(d) shall not be effective unless
and until the Company shall have paid to Parent all of the fees and
expenses described in Section 8.9(b) including, without limitation, the
Termination Fee (as hereinafter defined);
(e) by Parent if the Board or the Special Committee (i) shall have
withdrawn or modified in a manner adverse to Merger Sub its approval or
recommendation of this Agreement or the Merger, (ii) shall have approved or
recommended another offer or an agreement to effect a proposal made by a
third party (other than an affiliate of Parent) to effect an Acquisition
Transaction or (iii) shall have resolved to effect any of the foregoing;
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(f) by Parent if the board of directors of IVI Checkmate Ltd. does not
recommend, or withdraws or modifies in a manner adverse to Parent its
recommendation, that the holders of Exchangeable Shares vote in favor of
the Resolution;
(g) by Parent if any person (other than Parent or Merger Sub or any
affiliate thereof) shall have made a proposal or public announcement or
communication to the Company with respect to an Acquisition Transaction
which, pursuant to Section 5.9, the Company notifies Parent is a Superior
Proposal;
(h) by Parent if there shall have occurred, and continued to exist, (i)
any general suspension of, or limitation on prices for, trading in
securities on the New York Stock Exchange or on the Paris Bourse (excluding
suspensions or limitations resulting solely from physical damage or
interference with such exchanges not related to market conditions), (ii)
any decline of at least 20% in the Dow Jones Average of Industrial Stocks,
the Standard & Poor's 500 Index or the CAC-40 Index from the close of
business on the last trading day immediately preceding the date of the
Merger Agreement, (iii) any change in currency exchange rates measured from
the close of business on the date of the Merger Agreement, resulting in an
increase of 15% or more in the Merger Consideration as translated from U.S.
Dollars into Euros, (iv) a declaration of a banking moratorium or any
suspension of payments in respect of banks in the United States, France or
the European Union, or a material limitation (whether or not mandatory) by
any Governmental Entity on the extension of credit by banks or other
lending institutions, (v) a commencement of a war, armed hostilities or
other significant national or international crisis directly or indirectly
involving the United States or France, or (vi) in the case of any of the
foregoing clauses (i) and (ii) existing as of the date hereof, a material
acceleration or worsening thereof;
(i) (x) by Parent or the Company if, upon a vote taken at a duly held
meeting to obtain the Stockholder Approval, the Stockholder Approval is not
obtained, or (y) by Parent if, upon a vote taken at the Canadian Special
Meeting to obtain approval and adoption of the Resolution, the Holders'
approval and adoption of the Resolution is not obtained; or
(j) by the Company if (i) (A) any of the representations and warranties
of Parent or Merger Sub contained in this Agreement and qualified as to
materiality were when made or have since become untrue or incorrect or (B)
any other representations or warranties of Parent or Merger Sub contained
in this Agreement were when made or have become untrue or incorrect except
where the failure of such representations and warranties to be true and
correct could not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect on Parent or on the ability of Parent or
Merger Sub to consummate the Merger, or (ii) Parent or Merger Sub shall
have breached or failed to comply in any material respect with any of their
respective agreements or obligations under this Agreement, which breach
shall not have been cured within 10 business days following notice of such
breach; and
(k) by Parent if (i) (A) any of the representations or warranties of the
Company (1) contained in this Agreement and qualified as to materiality or
(2) contained in Section 3.3 were when made or have since become untrue or
incorrect or (B) any other representations or warranties of the Company
contained in this Agreement (other than the representations and warranties
set forth in Section 3.3) were when made or have become untrue or incorrect
except where the failure of such representations and warranties to be true
and correct could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company or on the ability
of the Company to consummate the Merger; provided, however, that for
purposes of this Section 7.1(k), the representations and warranties in
Section 3.12 qualified "to the Company's knowledge" shall be deemed not so
qualified and shall be deemed made without regard to the Company's
knowledge (or lack of knowledge) with respect to the statements made in
Section 3.12, or (ii) the Company shall have breached or failed to comply
in any material respect with any of its agreements or obligations under
this Agreement, which breach shall not have been cured within 10 business
days following notice of such breach.
Section 7.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 7.1, this Agreement shall forthwith become void
and have no effect, without any liability on the part of
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any party or its directors, officers or stockholders, other than the provisions
of this Section 7.2, Section 8.9 and Section 8.10, which shall survive any such
termination. Notwithstanding the foregoing, nothing contained in this Section
7.2 shall relieve any party from liability for any breach of this Agreement or
for fraud.
Section 7.3. Amendment. This Agreement may be amended by the Company, Parent
and Merger Sub at any time before or after any approval of this Agreement by
the Stockholders but, after any such approval, no amendment shall be made which
decreases the Merger Consideration or which adversely affects the rights of the
Stockholders hereunder without the approval of such Stockholders. This
Agreement may not be amended except by an instrument in writing signed on
behalf of all the parties.
Section 7.4. Extension; Waiver. At any time prior to the Effective Time,
Parent and Merger Sub, as a party on the one hand, and the Company, as a party
on the other hand, may (i) extend the time for the performance of any of the
obligations or other acts of any other party hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein by the
other party or in any document, certificate or writing delivered pursuant
hereto by the other party or (iii) waive compliance with any of the agreements
of the other party or with any conditions to its own obligations. Any agreement
on the part of either party to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Non-Survival. The representations, warranties and covenants
made in this Agreement shall not survive beyond the Effective Time.
Notwithstanding the foregoing, the agreements set forth in Section 1.3, Section
1.9, Section 1.12, Article II, Section 5.5, Section 5.6 and Section 8.9 shall
survive the Effective Time indefinitely (except to the extent a shorter period
of time is explicitly specified therein).
Section 8.2. Entire Agreement; Assignment.
(a) This Agreement (including the Confidentiality Agreement, Support
Agreements and Registration Rights Agreement and the documents and the
instruments referred to herein) constitute the entire agreement and supersede
all prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or obligations
hereunder will be assigned by any of the parties hereto (whether by operation
of law or otherwise) without the prior written consent of the other parties
(except that Parent may assign its rights and Merger Sub may assign its rights,
interest and obligations to any affiliate or direct or indirect subsidiary of
Parent without the consent of the Company; provided, that no such assignment
shall relieve Parent of any liability for any breach by such assignee). Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors
and assigns.
Section 8.3. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, each of which shall remain in full force and
effect.
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Section 8.4. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
If to Parent or Merger Sub:
Ingenico S.A.
9, quai de Dion Bouton
92816 Puteaux Cedex
FRANCE
Attention: Gerard Compain
Telecopy: 01 47 72 56 95
with a copy to:
Tour Ernst & Young
92037 Paris La Defense Cedex
FRANCE
Attention: Raphaelle Francois-Poncet
Telecopy: 01 58 47 66 25
and
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attention: David A. Katz, Esq.
David C. Karp, Esq.
Telecopy: (212) 403-2000
If to the Company:
IVI Checkmate Corp.
1003 Mansell Road
Roswell, Georgia 30076
Attention: President and Chief
Executive Officer
Telecopy: (770) 594-6041
with a copy to:
Hunton & Williams
Bank of America Plaza
600 Peachtree Street, N.E.
Atlanta, Georgia 30308
Attention: Scott M. Hobby, Esq.
W. Tinley Anderson, III, Esq.
Telecopy: (404) 888-4190
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above;
provided that notice of any change of address shall be effective only upon
receipt thereof.
Section 8.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of laws thereof.
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Section 8.6. Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
Section 8.7. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 8.8. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and, except with respect to
Sections 1.9 and 5.5, nothing in this Agreement, express or implied, is
intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement.
Section 8.9. Fees and Expenses.
(a) Whether or not the Merger is consummated, except as otherwise
specifically provided herein, all costs and expenses incurred in connection
with this Agreement and the Transactions shall be paid by the party incurring
such expenses;
(b) In the event that this Agreement is terminated pursuant to (w) (1)
Section 7.1(b) by Parent on the basis of a breach of the covenants contained in
Section 1.11(a)(i) or (2) Section 7.1(i), in each case following any public
proposal with respect to an Acquisition Transaction, (x) Section 7.1(d), (y)
Section 7.1(e) or (z) Section 7.1(f), then the Company shall simultaneously
with such termination (or, in the case of a termination by Parent, within one
business day thereafter) reimburse Parent for the out-of-pocket fees and
expenses of Parent and Merger Sub (including printing fees, filing fees and
fees and expenses of its legal and financial advisors) related to this
Agreement, the Transactions contemplated hereby and any related financing
(collectively "Expenses"), and at the same time pay Parent a termination fee of
$2.75 million (the "Termination Fee") in immediately available funds by wire
transfer to an account designated by Parent. In the event that (A) this
Agreement is terminated pursuant to Section 7.1(k) by Parent and (B) within six
months of the date of such termination, the Company shall enter into an
agreement for an Acquisition Transaction with any person other than Parent and
its affiliates, then, prior to or simultaneously with entering into such
agreement, the Company shall pay Parent the Termination Fee and reimburse
Parent for its Expenses, in each case in immediately available funds by wire
transfer to an account designated by Parent.
(c) In the event that this Agreement is terminated pursuant to Section
7.1(i)(x) and Parent is in breach of its obligations under Section 5.17 (unless
the Company shall have breached or failed to comply with any of the Company's
obligations under this Agreement), Parent shall immediately reimburse the
Company for the out-of-pocket fees and expenses of the Company (including
printing fees, filing fees and fees and expenses of its legal and financial
advisors) related to this Agreement, the Transactions contemplated hereby and
any related financing, and at the same time pay the Company a termination fee
of $2.75 million in immediately available funds by wire transfer to an account
designated by the Company.
(d) The prevailing party in any legal action undertaken to enforce this
Agreement or any provision hereof shall be entitled to recover from the other
party the costs and expenses (including attorneys' and expert witness fees)
incurred in connection with such action.
Section 8.10. By-Laws. In the event that this Agreement is terminated for
any reason, the Company's By-Laws shall simultaneously with such termination be
automatically amended and restated in their entirety in the form attached
hereto as Exhibit 8.10. Any subsequent amendment or restatement of the
Company's By-Laws during any period in which Parent beneficially owns 15% or
more of the outstanding Common Stock in a manner adverse to Parent shall be
deemed a breach of this Agreement. The parties hereto acknowledge and agree
that the Termination Fees referred to in Section 8.9(b) is not a measure of
liquidated damages for a breach of this Section 8.10 and actual damages to
Parent in the event of such a breach may be higher or lower than the amount of
the Termination Fee.
Section 8.11. Certain Definitions. As used in this Agreement:
(a) the term "affiliate", as applied to any person, shall mean any
other person directly or indirectly controlling, controlled by, or under
common control with, that person. For the purposes of this definition,
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"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as applied to any person,
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of that person, whether
through the ownership of voting securities, by contract or otherwise;
(b) the term "Person" or "person" shall include individuals,
corporations, partnerships, trusts, other entities and groups (which term
shall include a "group" as such term is defined in Section 13(d)(3) of the
Exchange Act);
(c) the term "subsidiary" when used with respect to any party means any
corporation or other organization, incorporated or unincorporated, (i) of
which such party or another subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by
such party or any subsidiary of such party do not have 50% or more of the
voting interests in such partnership) or (ii) 50% or more of the securities
or other interests of which having by their terms ordinary voting power to
elect at least 50% of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or one or more of
its subsidiaries (or if there are no such voting securities or interests,
50% or more of the equity interests of which is directly or indirectly
owned or controlled by such party or one or more of its subsidiaries); and
(d) the term "knowledge" when used with respect to any corporation means
the actual knowledge of the directors and executive officers of such
corporation and the knowledge such individuals should have after due
inquiry.
Section 8.12. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity, provided, that this
Section 8.11 shall have no force and effect from and after the termination of
this Agreement in accordance with Section 7.2.
[signature page follows]
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IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized, all
as of the day and year first above written.
INGENICO S.A.
By: /s/ Jean-Jacques Poutrel
----------------------------------
Name: Jean-Jacques Poutrel
Title: President and Chief
Executive Officer
IDAHO ACQUISITION CORP.
By: /s/ Jean-Jacques Poutrel
----------------------------------
Name: Jean-Jacques Poutrel
Title: Chairman
IVI CHECKMATE CORP.
By: /s/ John J. Nuebert
----------------------------------
Name: John J. Nuebert
Title: Executive Vice President-
Finance and Administration, Chief
Financial Officer, Treasurer and
Secretary
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APPENDIX B
[Wachovia logo]
Wachovia Securities, Inc.
Resurgens Plaza
945 East Paces Ferry Road
Atlanta, Georgia 30326
April 4, 2001
Special Committee of the Board of Directors of IVI Checkmate Corporation
Board of Directors of IVI Checkmate Limited
IVI Checkmate Corporation
1003 Mansell Road
Roswell, Georgia 30076
Gentlemen:
We understand that IVI Checkmate Corporation (the "Company") proposes to
enter into an agreement and plan of merger (the "Merger Agreement") pursuant to
which the Company will be merged with and into a wholly-owned subsidiary of
Ingenico, S.A. ("Ingenico") (the "Merger") and each issued share of common
stock of the Company not owned directly by Ingenico or the Company will be
converted into the right to receive $3.30 in cash without interest (the "Merger
Consideration") on the terms and subject to the conditions set forth in the
Merger Agreement. You have requested our opinion as to the fairness to the
holders of the Company's common stock and exchangeable shares (the
"Shareholders"), from a financial point of view, of the Merger Consideration.
In arriving at our opinion, we:
.reviewed a draft of the Merger Agreement, a copy of which is attached
hereto;
. held discussions with certain senior officers, directors and other
representatives and advisors of the Company and certain representatives
and advisors of Ingenico concerning the businesses, operations and
prospects of the Company and Ingenico;
. examined certain business and financial information relating to the
Company and Ingenico that was publicly available or furnished to us;
. reviewed financial analyses and certain financial forecasts and other
information and data for the Company which were provided to us by the
management of the Company including, but not limited to, information
relating to certain strategic implications and operational benefits
anticipated to result from the Merger;
. reviewed the financial terms of the Merger Agreement in relation to,
among other things, current and historical market prices and trading
volumes of the Company's common stock, the historical and projected
operating performance of the Company, the financial capacity of Ingenico
to consummate the merger, the capitalization and financial condition of
the Company, and the current financial and economic environment;
. analyzed certain financial, stock market and other publicly available
information relating to the businesses of other companies which we
considered generally comparable to that of the Company;
. analyzed, to the extent available, the prices and premiums in certain
recent business combinations involving companies that we considered
generally comparable to the Company;
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. solicited indications of interest in acquiring the Company from parties
other than Ingenico; and
. conducted such other research, analyses and examinations and considered
such other financial, economic and market criteria as we deemed
appropriate for the purposes of rendering this opinion.
In rendering this opinion, we relied upon the accuracy of the financial and
business information, including projections and estimates, provided to us by or
on behalf of the Company and Ingenico, that was available from publicly
available or published information, or that was otherwise reviewed or used by
us in arriving at our opinion. We were not requested to, nor have we performed
any independent verification of the accuracy or completeness of any such
information. We have assumed and relied upon the reasonableness of all
estimated financial information and assumptions to the estimates provided to us
by the Company's management and we have assumed that such information was
prepared and such assumptions were derived in accordance with accepted practice
reflecting the best currently available estimates and good faith judgments of
the Company's management. We have assumed that the Merger will be completed in
a timely manner in accordance with the terms in the Merger Agreement, without
regulatory limitations, restrictions or conditions that would have a material
adverse effect on the Company.
Our opinion is based on economic and market conditions and other
circumstances existing on and known to us as of the date hereof and we have
assumed that there have been no material adverse changes in the assets,
financial condition, results of operations, business or prospects since the
date of the most recent financial statements furnished to us. We assume no
responsibility for updating or revising our opinion based on circumstances or
events occurring after the date hereof. We have not made or considered any
independent evaluations or appraisals of the assets or liabilities, contingent
or otherwise, of the Company and, consequently, we express no opinion as to the
value of any assets of the Company.
As a part of our investment banking business, we are engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements and
valuations for corporate and other purposes. We have acted as financial advisor
to the Company concerning the Merger and will receive customary fees for
advisory services, a substantial portion of which is contingent upon the
successful consummation of the Merger. In addition, we will receive a customary
fee for rendering this opinion. In addition, the Company has agreed to
indemnify us for certain liabilities that may arise out of our relationship
with the Company. In the ordinary course of business, we and our affiliates may
trade equity securities of Ingenico and/or the Company for our own account or
for the accounts of customers and, accordingly, may at any time hold a long or
short position in these securities.
It is expressly understood that this opinion is provided for the information
of the Board of Directors of the Company in its evaluation of the proposed
Merger. Our opinion is not intended to be and does not constitute a
recommendation to any shareholder of the Company as to how such shareholder
should vote, or take any other action, with respect to the Merger or any
matters relating to the Merger. This letter and any supporting material
supplied by us is not to be used for any other purpose, or be reproduced,
disseminated, quoted from, or referred to, in whole or in part, at any time
without our prior written consent. Notwithstanding the foregoing, the Company
may include this letter in its entirety in any proxy solicitation to be
distributed to Shareholders concerning the Merger and any required filing with
the Securities and Exchange Commission and references to this letter may be
included in required communications and filings with regulatory bodies and
shareholders.
Based on the foregoing and our general experience in the valuations for
corporate, estate and other purposes, we are of the opinion that on the date
hereof that the Merger Consideration paid to the holders of the common stock
and the economic equivalent paid to the holders of the exchangeable shares is
fair, from a financial point of view.
Sincerely yours,
/s/ WACHOVIA SECURITIES, INC.
WACHOVIA SECURITIES, INC.
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APPENDIX C
Section 262 of the Delaware General Corporation Law
Delaware Rights of Appraisal
SECTION 262 OF THE
DELAWARE GENERAL CORPORATION LAW
262 APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of stock on
the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares
through the effective date of the merger or consolidation, who has
otherwise complied with subsection (d) of this section and who has neither
voted in favor of the merger or consolidation nor consented thereto in
writing pursuant to (S)228 of this title shall be entitled to an appraisal
by the Court of Chancery of the fair value of the stockholder's shares of
stock under the circumstances described in subsections (b) and (c) of this
section. As used in this section, the word "stockholder" means a holder of
record of stock in a stock corporation and also a member of record of a
nonstock corporation; the words "stock" and "share" mean and include what
is ordinarily meant by those words and also membership or membership
interest of a member of a nonstock corporation; and the words "depository
receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the
depository.
(b) Appraisal rights shall be available for the shares of any class or series
of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to (S)251 (other than a merger effected pursuant to
(S)251(g) of this title), (S)252, (S)254, (S)257, (S)258, (S)263 or (S)264
of this title:
(1) Provided, however, that no appraisal rights under this section shall be
available for the shares of any class or series of stock, which stock,
or depository receipts in respect thereof, at the record date fixed to
determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange
or designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers,
Inc. or (ii) held of record by more than 2,000 holders; and further
provided that no appraisal rights shall be available for any shares of
stock of the constituent corporation surviving a merger if the merger
did not require for its approval the vote of the stockholders of the
surviving corporation as provided in subsection (f) of (S)251 of this
title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal rights
under this section shall be available for the shares of any class or
series of stock of a constituent corporation if the holders thereof are
required by the terms of an agreement of merger or consolidation
pursuant to (S)(S)251, 252, 254, 257, 258, 263 and 264 of this title to
accept for such stock anything except:
a. Shares of stock of the corporation surviving or resulting from
such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository receipts
in respect thereof, which shares of stock (or depository receipts in
respect thereof) or depository receipts at the effective date of the
merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 holders;
c. Cash in lieu of fractional shares of fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
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d. Any combination of the shares of stock, depository receipts and
cash in lieu of fractional shares or fractional depository receipts
described in the foregoing subparagraphs a., b. and c. of this
paragraph.
(3) In the event all of the stock of a subsidiary Delaware corporation
party to a merger effected under (S)253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal
rights shall be available for the shares of the subsidiary Delaware
corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of
any class or series of its stock as a result of an amendment to its
certificate of incorporation, any merger or consolidation in which the
corporation is a constituent corporation or the sale of all or
substantially all of the assets of the corporation. If the certificate of
incorporation contains such a provision, the procedures of this section,
including those set forth in subsections (d) and (e) of this section, shall
apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights are
provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior
to the meeting, shall notify each of its stockholders who was such on
the record date for such meeting with respect to shares for which
appraisal rights are available pursuant to subsections (b) or (c)
hereof that appraisal rights are available for any or all of the shares
of the constituent corporations, and shall include in such notice a
copy of this section. Each stockholder electing to demand the appraisal
of such stockholder's shares shall deliver to the corporation, before
the taking of the vote on the merger or consolidation, a written demand
for appraisal of such stockholder's shares. Such demand will be
sufficient if it reasonably informs the corporation of the identity of
the stockholder and that the stockholder intends thereby to demand the
appraisal of such stockholder's shares. A proxy or vote against the
merger or consolidation shall not constitute such a demand. A
stockholder electing to take such action must do so by a separate
written demand as herein provided. Within 10 days after the effective
date of such merger or consolidation, the surviving or resulting
corporation shall notify each stockholder of each constituent
corporation who has complied with this subsection and has not voted in
favor of or consented to the merger or consolidation of the date that
the merger or consolidation has become effective; or
(2) If the merger or consolidation was approved pursuant to (S)228 or
(S)253 of this title, each constituent corporation, either before the
effective date of the merger or consolidation or within ten days
thereafter, shall notify each of the holders of any class or series of
stock of such constituent corporation who are entitled to appraisal
rights of the approval of the merger or consolidation and that
appraisal rights are available for any or all shares of such class or
series of stock of such constituent corporation, and shall include in
such notice a copy of this section; provided that, if the notice is
given on or after the effective date of the merger or consolidation,
such notice shall be given by the surviving or resulting corporation to
all such holders of any class or series of stock of a constituent
corporation that are entitled to appraisal rights. Such notice may,
and, if given on or after the effective date of the merger or
consolidation, shall, also notify such stockholders of the effective
date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of such
notice, demand in writing from the surviving or resulting corporation
the appraisal of such holder's shares. Such demand will be sufficient
if it reasonably informs the corporation of the identity of the
stockholder and that the stockholder intends thereby to demand the
appraisal of such holder's shares. If such notice did not notify
stockholders of the effective date of the merger or consolidation,
either (i) each such constituent corporation shall send a second notice
before the effective date of the merger or consolidation notifying each
of the holders of any class or series of stock of such constituent
corporation that are entitled to appraisal rights of the effective date
of the merger or consolidation or (ii) the surviving or resulting
corporation shall send such a second notice to all such holders on or
within 10 days after such effective date; provided, however, that if
such second notice is sent more than 20 days following the sending of
the first notice, such second
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notice need only be sent to each stockholder who is entitled to appraisal
rights and who has demanded appraisal of such holder's shares in
accordance with this subsection. An affidavit of the secretary or
assistant secretary or of the transfer agent of the corporation that is
required to give either notice that such notice has been given shall, in
the absence of fraud, be prima facie evidence of the facts stated
therein. For purposes of determining the stockholders entitled to receive
either notice, each constituent corporation may fix, in advance, a record
date that shall be not more than 10 days prior to the date the notice is
given, provided, that if the notice is given on or after the effective
date of the merger or consolidation, the record date shall be such
effective date. If no record date is fixed and the notice is given prior
to the effective date, the record date shall be the close of business on
the day next preceding the day on which the notice is given.
(e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who was complied
with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the
effective date of the merger or consolidation, any stockholder shall have
the right to withdraw such stockholder's demand for appraisal and to accept
the terms offered upon the merger or consolidation. Within 120 days after
the effective date of the merger or consolidation, any stockholder who has
complied with the requirements of subsections (a) and (d) hereof, upon
written request, shall be entitled to receive from the corporation
surviving the merger or resulting from the consolidation a statement
setting forth the aggregate number of shares not voted in favor of the
merger or consolidation and with respect to which demands for appraisal
have been received and the aggregate number of holders of such shares. Such
written statement shall be mailed to the stockholder within 10 days after
such stockholder's written request for such a statement is received by the
surviving or resulting corporation or within 10 days after expiration of
the period for delivery of demands for appraisal under subsection
(d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register
in Chancery in which the petition was filed a duly verified list containing
the names and addresses of all stockholders who have demanded payment for
their shares and with whom agreements as to the value of their shares have
not been reached by the surviving or resulting corporation. If the petition
shall be filed by the surviving or resulting corporation, the petition
shall be accompanied by such a duly verified list. The Register in
Chancery, if so ordered by the Court, shall give notice of the time and
place fixed for the hearing of such petition by registered or certified
mail to the surviving or resulting corporation and to the stockholders
shown on the list at the addresses therein stated. Such notice shall also
be given by 1 or more publications at least 1 week before the day of the
hearing, in a newspaper of general circulation published in the City of
Wilmington, Delaware or such publication as the Court deems advisable. The
forms of the notices by mail and by publication shall be approved by the
Court, and the costs thereof shall be borne by the surviving or resulting
corporation.
(g) At the hearing on such petition, the Court shall determine the stockholders
who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded
an appraisal for their shares and who hold stock represented by
certificates to submit their certificates of stock to the Register in
Chancery for notation thereon of the pendency of the appraisal proceedings;
and if any stockholder fails to comply with such direction, the Court may
dismiss the proceedings as to such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any
element of value arising from the accomplishment or expectation of the
merger or consolidation, together with a fair rate of interest, if any, to
be paid upon the amount determined to be the fair value. In determining
such fair value, the Court shall take into account all relevant factors. In
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determining the fair rate of interest, the Court may consider all relevant
factors, including the rate of interest which the surviving or resulting
corporation would have had to pay to borrow money during the pendency of
the proceeding. Upon application by the surviving or resulting corporation
or by any stockholder entitled to participate in the appraisal proceeding,
the Court may, in its discretion, permit discovery or other pretrial
proceedings and may proceed to trial upon the appraisal prior to the final
determination of the stockholder entitled to an appraisal. Any stockholder
whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has
submitted such stockholder's certificate of stock to the Register in
Chancery, if such is required, may participate fully in all proceedings
until it is finally determined that such stockholder is not entitled to
appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation
to the stockholders entitled thereto. Interest may be simple or compound,
as the Court may direct. Payment shall be so made to each such stockholder,
in the case of holders of uncertified stock forthwith, and the case of
holders of shares represented by certificates upon the surrender to the
corporation of the certificates representing such stock. The Court's decree
may be enforced as other decrees in the Court of Chancery may be enforced,
whether such surviving or resulting corporation be a corporation of this
State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed upon
the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
proceeding, including, without limitation, reasonable attorney's fees and
the fees and expenses of experts, to be charged pro rata against the value
of all the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection
(d) of this section shall be entitled to vote such stock for any purpose or
to receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a
date which is prior to the effective date of the merger or consolidation);
provided, however, that if no petition for an appraisal shall be filed
within the time provided in subsection (e) of this section, or if such
stockholder shall deliver to the surviving or resulting corporation a
written withdrawal of such stockholder's demand for an appraisal and an
acceptance of the merger or consolidation, either within 60 days after the
effective date of the merger or consolidation as provided in subsection (e)
of this section or thereafter with the written approval of the corporation,
then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of
Chancery shall be dismissed as to any stockholder without the approval of
the Court, and such approval may be conditioned upon such terms as the
Court deems just.
(l) The shares of the surviving or resulting corporation to which the shares of
such objecting stockholders would have been converted had they assented to
the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation.
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[MAP GRAPHIC]
FOLD AND DETACH HERE
PROXY
IVI CHECKMATE CORP.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE SPECIAL MEETING OF
STOCKHOLDERS ON AUGUST 8, 2001 AT 10:00 A.M., 1003 MANSELL ROAD, ROSWELL,
GEORGIA 30076.
If I am a holder of shares of common stock of IVI Checkmate Corp., I hereby
appoint John J. Neubert and Victor Young, and each of them, proxies, with full
power of substitution, to vote all shares of common stock of IVI Checkmate
Corp. that I am entitled to vote at the special meeting of stockholders of IVI
Checkmate Corp. and at any adjournments thereof as indicated below provided,
however, if both Mr. Neubert and Mr. Young are unable to serve in such
capacity, for any reason, I hereby appoint their respective designees to act
in such capacity. If I am a holder of exchangeable shares of IVI Checkmate
Ltd., I direct Montreal Trust Company of Canada, as trustee, acting through
its authorized representatives, to vote all exchangeable shares that I am
entitled to vote at the special meeting and at any adjournments thereof as
indicated below. In either case, such persons are further authorized to vote
in their discretion on any other matters which properly come before the
special meeting and any adjournments thereof.
This proxy when properly executed will be voted in the manner directed herein
by the undersigned stockholder. A proxy that is returned properly signed but
without direction as to voting will be voted "FOR" approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL
(Important -- To be signed and dated on reverse side)
RETURN PROXY CARD PROMPTLY USING THE ENCLOSED ENVELOPE
OR VOTE BY TELEPHONE OR THE INTERNET
SPECIAL MEETING
Special Meeting of Stockholders
ADMISSION TICKET
August 8, 2001
10:00 a.m. local time; 1003 Mansell Road, Roswell, Georgia 30076
Please present this ticket for admittance of the shareholder(s) named above.
Admittance will be based upon availability of seating.
- --------------------------------------------------------------------------------
INSTRUCTIONS FOR VOTING YOUR PROXY
This proxy covers all IVI Checkmate Corp. shares of common stock or
exchangeable shares you own.
THESE ARE THREE WAYS TO VOTE YOUR PROXY
TELEPHONE VOTING INTERNET VOTING VOTING BY MAIL
This method of voting Visit the Internet Simply mark, sign and
is available for voting website at date your proxy card
residents of the U.S. http://www.proxyvotenow.com/ivi. and return it in the
and Canada. On a touch Enter the CONTROL postage-paid envelope.
tone telephone, call NUMBER shown below and If you are voting by
TOLL FREE 1-866-849- follow the instructions telephone or the
8136, 24 hours a day, 7 on your screen. You Internet, please do
days a week. You will will incur only your not mail your proxy
be asked to enter ONLY usual internet charges. card.
the CONTROL NUMBER
shown below. Have your
proxy card ready, then
follow the prerecorded
instructions. Your vote
will be confirmed and
cast as you directed.
IVI Checkmate Corp.'s Board of Directors recommends a vote "FOR" the Proposal
MARK THE APPROPRIATE BOXES, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE
IN ACCORDANCE WITH THE RECOMMENDATION OF THE BOARD OF DIRECTORS.
1. Proposal to approve the Agreement and Plan of Merger, dated as of April 6,
2001, by and among IVI Checkmate Corp., Ingenico S.A., a societe anonyme
organized and existing under the laws of the Republic of France, and a wholly
owned subsidiary of Ingenico S.A. pursuant to which the subsidiary will be
merged with and into IVI Checkmate Corp. and other than shares held by IVI
Checkmate Corp., Ingenico S.A. or their respective subsidiaries, which will be
canceled, (i) each share of common stock of IVI Checkmate Corp. outstanding
immediately prior to the merger will be converted into the right to receive
U.S. $3.30 in cash, without interest; and (ii) subject to the approval of a
special resolution by the holders of the exchangeable shares, each exchangeable
share of IVI Checkmate Ltd. outstanding immediately after the merger will be
purchased by IVI Checkmate Corp. for U.S. $3.30 in cash, without interest.
[_] FOR [_] AGAINST [_] ABSTAIN
Date:______________________________
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Signature(s)
IMPORTANT: Please sign exactly as
your name(s) appear(s). When
shares are held by joint tenants,
both should sign personally. When
signing as attorney, executor,
administrator, trustee or
guardian, please give full title
as such. If a corporation, please
sign in full corporate name by
President or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person. Where
applicable, indicate your official
position or representative
capacity.