Exhibit 99(2)
- --------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER
Dated as of February 5, 1999
Among
COMPUTER ASSOCIATES INTERNATIONAL, INC.
THEBETTERPLAN ("TBP"), INC.
And
COMPUTER MANAGEMENT SCIENCES, INC.
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
Page
----
ARTICLE I
THE OFFER
SECTION 1.1. The Offer.........................................................................................1
SECTION 1.2. Company Action....................................................................................2
SECTION 1.3. Directors.........................................................................................2
ARTICLE II
THE MERGER
SECTION 2.1. The Merger........................................................................................3
SECTION 2.2. Conversion of Shares..............................................................................3
SECTION 2.3. Surrender and Payment.............................................................................4
SECTION 2.4. Dissenting Shares.................................................................................5
SECTION 2.5. Stock Options.....................................................................................5
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation......................................................................6
SECTION 3.2. Bylaws............................................................................................6
SECTION 3.3. Directors and Officers............................................................................6
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. Representations and Warranties of the Company.....................................................7
(a) Organization, Standing and Corporate Power.............................................................7
(b) Subsidiaries...........................................................................................7
(c) Capital Structure......................................................................................7
(d) Authority; Noncontravention............................................................................8
Page
----
(e) SEC Documents; Financial Statements; No Undisclosed Liabilities........................................9
(f) Disclosure Documents...................................................................................9
(g) Absence of Certain Changes or Events..................................................................10
(h) Litigation............................................................................................11
(i) Absence of Changes in Stock and Benefit Plans.........................................................11
(j) Participation and Coverage in Benefit Plan............................................................11
(k) ERISA Compliance......................................................................................11
(l) Taxes.................................................................................................12
(m) State Takeover Statutes...............................................................................13
(n) Brokers; Schedule of Fees and Expenses................................................................14
(o) Permits; Compliance with Laws; Environmental Matters..................................................14
(p) Contracts; Debt Instruments...........................................................................14
(q) Opinion of Financial Advisor..........................................................................16
(r) Interests of Officers and Directors...................................................................16
(s) Technology............................................................................................16
(t) Change of Control.....................................................................................17
SECTION 4.2. Representations and Warranties of Parent and Merger Subsidiary...................................17
(a) Organization, Standing and Corporate Power............................................................17
(b) Authority; Noncontravention...........................................................................17
(c) Disclosure Documents..................................................................................18
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1. Conduct of Business..............................................................................19
SECTION 5.2. Stockholder Meeting; Proxy Material..............................................................20
SECTION 5.3. Access to Information............................................................................21
SECTION 5.4. Other Offers.....................................................................................21
SECTION 5.5. State Takeover Statutes..........................................................................21
-ii-
Page
----
ARTICLE VI
COVENANTS OF PARENT AND MERGER SUBSIDIARY
SECTION 6.1. Obligations of Merger Subsidiary.................................................................22
SECTION 6.2. Voting of Shares.................................................................................22
SECTION 6.3. Indemnification..................................................................................22
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. HSR Act Filings; Reasonable Efforts; Notification................................................22
SECTION 7.2. Public Announcements.............................................................................24
SECTION 7.3. Confidentiality..................................................................................24
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1. Conditions to the Obligations of Each Party......................................................24
ARTICLE IX
TERMINATION
SECTION 9.1. Termination......................................................................................25
SECTION 9.2. Effect ofTermination.............................................................................26
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. Nonsurvival of Representations and Warranties...................................................26
SECTION 10.2. Notices.........................................................................................26
SECTION 10.3. Amendments; No Waivers..........................................................................27
SECTION 10.4. Fees and Expenses...............................................................................27
SECTION 10.5. Successors and Assigns..........................................................................28
-iii-
SECTION 10.6. Governing Law...................................................................................28
SECTION 10.7. Counterparts; Effectiveness; Interpretation.....................................................29
SECTION 10.8. Enforcement.....................................................................................29
SECTION 10.9. Severability....................................................................................29
SECTION 10.10 Entire Agreement; No Third Party Beneficiaries..................................................29
-iv-
AGREEMENT AND PLAN OF MERGER dated as of February 5, 1999
among COMPUTER ASSOCIATES INTERNATIONAL, INC., a Delaware
corporation ("Parent"), THEBETTERPLAN ("TBP"), INC., a Florida
corporation and a wholly owned subsidiary of Parent ("Merger
Subsidiary"), and COMPUTER MANAGEMENT SCIENCES, INC., a
Florida corporation (the "Company").
The parties agree as follows:
ARTICLE I
THE OFFER
SECTION 1.1. THE OFFER. (a) Provided that nothing shall have
occurred that would result in a failure to satisfy any of the conditions set
forth in Annex I hereto, Merger Subsidiary shall, as promptly as practicable
after the date hereof, but in no event later than five business days following
the public announcement of the terms of this Agreement, commence an offer (the
"Offer") to purchase all of the outstanding shares of common stock, par value
$.01 per share (the "Shares"), of the Company at a price of $28.00 per Share,
net to the seller in cash. The Offer shall be subject to the condition that
there shall be validly tendered in accordance with the terms of the Offer prior
to the expiration date of the Offer and not withdrawn a number of Shares which,
together with the Shares then owned by Parent and Merger Subsidiary, represents
at least a majority of the total number of outstanding Shares, assuming the
exercise of all outstanding options, rights and convertible securities (if any)
and the issuance of all Shares that the Company is obligated to issue (such
total number of outstanding Shares being hereinafter referred to as the "Fully
Diluted Shares") (the "Minimum Condition") and to the other conditions set forth
in Annex I hereto. Parent and Merger Subsidiary expressly reserve the right to
waive the conditions to the Offer and to make any change in the terms or
conditions of the Offer; PROVIDED that, without the written consent of the
Company, no change may be made which changes the form of consideration to be
paid, decreases the price per Share or the number of Shares sought in the Offer,
imposes conditions to the Offer in addition to those set forth in Annex I,
changes or waives the Minimum Condition, extends the Offer (except as set forth
in the following sentence), or makes any other change to any condition to the
Offer set forth in Annex I which is materially adverse to the holders of Shares.
Subject to the terms of the Offer in this Agreement and the satisfaction (or
waiver to the extent permitted by this Agreement) of the conditions to the
Offer, Merger Subsidiary shall accept for payment all Shares validly tendered
and not withdrawn pursuant to the Offer as soon as practicable after the
applicable expiration date of the Offer and shall pay for all such Shares
promptly after acceptance; PROVIDED that Merger Subsidiary may extend the Offer
if, at the scheduled expiration date of the Offer or any extension thereof any
of the conditions to the Offer shall not have been satisfied, until such time as
such conditions are satisfied or waived, and Merger Subsidiary may extend the
Offer for a further period of time of not more than 20 business days to meet the
objective (which is not a condition to the Offer) that there be validly
tendered, in accordance with the terms of the Offer, prior to the expiration
date of the Offer (as so extended) and not withdrawn a number of Shares, which
together with Shares then owned by Parent and Merger Subsidiary, represents at
least 80% of the Fully Diluted Shares.
(b) As soon as practicable on the date of commencement of the
Offer, Parent and Merger Subsidiary shall (i) file with the SEC (defined below
in Section 4.1(a)) a Tender Offer Statement on Schedule 14D-l with respect to
the Offer which will contain the offer to purchase and form of the related
letter of transmittal (together with any supplements or amendments thereto,
collectively the "Offer Documents") and (ii) cause the Offer Documents to be
disseminated to holders
of Shares. Parent, Merger Subsidiary and the Company each agrees promptly to
correct any information provided by it for use in the Offer Documents if and to
the extent that it shall have become false or misleading in any material
respect. Parent and Merger Subsidiary agree to take all steps necessary to cause
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given a
reasonable opportunity to review and comment on the Schedule 14D-l prior to its
being filed with the SEC.
SECTION 1.2. COMPANY ACTION. (a) The Company hereby consents
to the Offer and represents that its Board of Directors, at a meeting duly
called and held, has (i) unanimously determined that this Agreement and the
transactions contemplated hereby, including the Offer and the Merger (defined
below in Section 2.1), and the Stockholder Option Agreement, dated as of
February 5, 1999 (the "Stockholder Option Agreement"), among the stockholders of
the Company that are named therein ("Stockholders") and Merger Subsidiary, and
the transactions contemplated thereby, are fair to and in the best interest of
the Company's stockholders, (ii) unanimously approved this Agreement and the
transactions contemplated hereby, including the Offer and the Merger, and the
Stockholder Option Agreement and the transactions contemplated thereby, which
approval satisfies in full the requirements of Sections 607.0901 and 607.0902 of
the General Corporation Act of the State of Florida (the "Florida Law"), and
(iii) unanimously resolved to recommend acceptance of the Offer and approval and
adoption of this Agreement and the Merger by its stockholders. The Company
further represents that The Robinson-Humphrey Company LLC has delivered to the
Company's Board of Directors its opinion that the consideration to be paid in
the Offer and the Merger is fair to the holders of Shares from a financial point
of view. The Company has been advised that all of its directors and executive
officers presently intend either to tender their Shares pursuant to the Offer or
to vote in favor of the Merger. The Company will promptly furnish Parent and
Merger Subsidiary with a list of its stockholders, mailing labels and any
available listing or computer file containing the names and addresses of all
record holders of Shares and lists of securities positions of Shares held in
stock depositories, in each case as of the most recent practicable date, and
will provide to Parent and Merger Subsidiary such additional information
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Parent or Merger
Subsidiary may reasonably request in connection with the Offer.
(b) As soon as practicable on the day that the Offer is
commenced the Company will file with the SEC and disseminate to holders of
Shares a Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") which shall reflect the recommendations of the Company's Board of
Directors referred to above, subject to the fiduciary duties of the Board of
Directors of the Company as advised in writing by Holland & Knight LLP, counsel
to the Company. The Company, Parent and Merger Subsidiary each agrees promptly
to correct any information provided by it for use in the Schedule 14D-9 if and
to the extent that it shall have become false or misleading in any material
respect. The Company agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and to be disseminated to holders
of Shares, in each case as and to the extent required by applicable federal
securities laws. Parent and its counsel shall be given a reasonable opportunity
to review and comment on the Schedule 14D-9 prior to its being filed with the
SEC.
SECTION 1.3. DIRECTORS. (a) Effective upon the acceptance for
payment by Merger Subsidiary of a majority of the Shares pursuant to the Offer,
Parent shall be entitled to designate the number of directors, rounded up to the
next whole number, on the Company's Board of Directors that equals the product
of (i) the total number of directors on the Company's Board of Directors (giving
effect to the election of any additional directors pursuant to this Section) and
(ii) the percentage that the number of Shares owned by Parent or Merger
Subsidiary (including Shares accepted for payment) bears to the total number of
Shares outstanding, and the Company shall take all action necessary to cause
Parent's designees to be elected or appointed to the Company's Board of
Directors, including,
-2-
without limitation, increasing the number of directors, or seeking and accepting
resignations of incumbent directors, or both; PROVIDED that, after the
acceptance for payment and prior to the Effective Time (defined below in Section
2.1(b)), the Company's Board of Directors shall always have one member who is
neither a designee nor an affiliate of Parent or Merger Subsidiary nor an
employee of the Company (an "Independent Director"). If the number of
Independent Directors is reduced below one for any reason prior to the Effective
Time, the departing Independent Director shall be entitled to designate a person
to fill such vacancy. No action proposed to be taken by the Company to amend or
terminate this Agreement or waive any action by Parent or Merger Subsidiary
shall be effective without the approval of the Independent Director. At such
times, the Company will use its best efforts to cause individuals designated by
Parent to constitute the same percentage as such individuals represent on the
Company's Board of Directors of (x) each committee of the Board, (y) each board
of directors of each subsidiary (defined below in Section 4.1(a)) and (z) each
committee of each such board.
(b) The Company's obligations to appoint designees to the
Board of Directors shall be subject to Section 14(f) of the Exchange Act
(defined below in Section 4.1(d)) and Rule 14f-l promulgated thereunder. The
Company shall promptly take all actions required pursuant to Section 14(f) and
Rule 14f-l in order to fulfill its obligations under this Section 1.3 and shall
include in the Schedule 14D-9 such information with respect to the Company and
its officers and directors as is required under Section 14(f) and Rule 14f-l to
fulfill its obligations under this Section 1.3. Parent will supply to the
Company in writing and be solely responsible for any information with respect to
itself and its nominees, officers, directors and affiliates required by Section
14(f) and Rule 14f-1.
ARTICLE II
THE MERGER
SECTION 2.1. THE MERGER. (a) At the Effective Time, Merger
Subsidiary shall be merged (the "Merger") with and into the Company in
accordance with the Florida Law, whereupon the separate existence of Merger
Subsidiary shall cease, and the Company shall be the surviving corporation (the
"Surviving Corporation").
(b) As soon as practicable after satisfaction or, to the
extent permitted hereunder, waiver of all conditions to the Merger, the Company
and Merger Subsidiary will file articles of merger with the Department of State
of the State of Florida and make all other filings or recordings required by
Florida Law in connection with the Merger. The Merger shall become effective at
such time as the articles of merger are duly filed with the Department of State
of the State of Florida or, with the consent of the Independent Director, at
such later time as is specified in the articles of merger (the "Effective
Time").
(c) From and after the Effective Time, the Surviving
Corporation shall possess all the rights, privileges, powers and franchises and
be subject to all of the restrictions, disabilities and duties of the Company
and Merger Subsidiary, all as provided under Florida Law.
SECTION 2.2. CONVERSION OF SHARES. At the Effective Time:
(a) each Share held by the Company as treasury stock or owned
by Parent, Merger Subsidiary or any subsidiary of either of them
immediately prior to the Effective Time shall be canceled, and no
payment shall be made with respect thereto;
(b) each share of common stock of Merger Subsidiary
outstanding immediately prior to the Effective Time shall be converted
into and become one share of common stock of the Surviving Corporation
with the same rights, powers and
-3-
privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation; and
(c) each Share outstanding immediately prior to the Effective
Time shall, except as otherwise provided in Section 2.2(a) or as
provided in Section 2.4 with respect to Shares as to which appraisal
rights have been exercised, be converted into the right to receive
$28.00 in cash or any higher price paid for each Share in the Offer,
without interest (the "Merger Consideration").
SECTION 2.3. SURRENDER AND PAYMENT. (a) Prior to the Effective
Time, Parent shall appoint a bank or trust company (the "Exchange Agent") for
the purpose of exchanging certificates representing Shares for the Merger
Consideration. Parent will make available to the Exchange Agent, as needed, the
Merger Consideration to be paid in respect of the Shares (the "Exchange Fund").
For purposes of determining the Merger Consideration to be made available,
Parent shall assume that no holder of Shares will perfect his right to appraisal
of his Shares. Promptly after the Effective Time, Parent will send, or will
cause the Exchange Agent to send, to each holder of Shares at the Effective Time
a letter of transmittal for use in such exchange (which shall specify that the
delivery shall be effected, and risk of loss and title shall pass, only upon
proper delivery of the certificates representing Shares to the Exchange Agent).
The Exchange Agent shall, pursuant to irrevocable instructions, make the
payments provided in this Section 2.3. The Exchange Fund shall not be used for
any other purpose, except as provided in this Agreement.
(b) Each holder of Shares that have been converted into a
right to receive the Merger Consideration, upon surrender to the Exchange Agent
of a certificate or certificates representing such Shares, together with a
properly completed letter of transmittal covering such Shares and such other
documents as may be reasonably requested, will be entitled to receive the Merger
Consideration payable in respect of such Shares. Until so surrendered, each such
certificate shall, after the Effective Time, represent for all purposes, only
the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid
to a person other than the registered holder of the Shares represented by the
certificate or certificates surrendered in exchange therefor, it shall be a
condition to such payment that the certificate or certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a person other than the
registered holder of such Shares or establish to the satisfaction of the
Exchange Agent that such tax has been paid or is not payable. For purposes of
this Agreement, "person" means an individual, a corporation, a partnership, a
limited liability company, an association, a trust or any other entity or
organization, including a government or political subdivision or any agency or
instrumentality thereof.
(d) After the Effective Time, there shall be no further
registration of transfers of Shares. If, after the Effective Time, certificates
representing Shares are presented to the Surviving Corporation, they shall be
canceled and exchanged for the consideration provided for, and in accordance
with the procedures set forth, in this Article II.
(e) Any portion of the Exchange Fund made available to the
Exchange Agent pursuant to Section 2.3(a) that remains unclaimed by the holders
of Shares six months after the Effective Time shall be returned to Parent, upon
demand, and any such holder who has not exchanged his Shares for the Merger
Consideration in accordance with this Section 2.3 prior to that time shall
thereafter look only to Parent for payment of the Merger Consideration in
respect of his Shares. Notwithstanding the foregoing, Parent shall not be liable
to any holder of Shares for any amount paid to a public official pursuant to
applicable abandoned property laws. Any amounts remaining unclaimed by holders
-4-
of Shares immediately prior to such time as such amounts would otherwise escheat
to or become property of any governmental entity shall, to the extent permitted
by applicable law, become the property of Parent free and clear of any claims or
interest of any person previously entitled hereto.
(f) Any portion of the Merger Consideration made available to
the Exchange Agent pursuant to Section 2.3(a) to pay for Shares for which
appraisal rights have been perfected shall be returned to Parent, upon demand.
SECTION 2.4. DISSENTING SHARES. Notwithstanding Section 2.2,
Shares outstanding immediately prior to the Effective Time and held by a holder
who has not voted in favor of the Merger or consented thereto in writing and who
has demanded appraisal for such Shares in accordance with Florida Law shall not
be converted into a right to receive the Merger Consideration, unless such
holder fails to perfect or withdraws or otherwise loses his right to appraisal.
If after the Effective Time such holder fails to perfect or withdraws or loses
his right to appraisal, such Shares shall be treated as if they had been
converted as of the Effective Time into a right to receive the Merger
Consideration. The Company shall give Parent prompt notice of any demands
received by the Company for appraisal of Shares, and Parent shall have the right
to participate in all negotiations and proceedings with respect to such demands.
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.
SECTION 2.5. STOCK OPTIONS. (a) The Company shall amend each
of the Company's Stock Plans (defined below) to provide that, at the Effective
Time, each of the then outstanding Company Options (defined below), whether
vested or unvested in accordance with the relevant Stock Plans and stock option
agreements, shall by virtue of the Merger, and without any further action on the
part of any holder thereof, be assumed by Parent and converted into an option to
purchase that number of shares of common stock, par value $.10 per share
("Parent Common Stock"), of Parent determined by multiplying the number of
Shares subject to such Company Option at the Effective Time by the quotient
obtained by dividing (x) $28.00 by (y) the average closing price of Parent
Common Stock on the New York Stock Exchange Composite Tape for the 30
consecutive trading days immediately prior to the Effective Time (such quotient,
the "Conversion Number"), at an exercise price per share of Parent Common Stock
equal to the quotient obtained by dividing (x) the exercise price per Share of
such Company Option immediately prior to the Effective Time by (y) the
Conversion Number. If the foregoing calculation results in an assumed Company
Option being exercisable for a fraction of a share of Parent Common Stock, then
the number of shares of Parent Common Stock subject to such option shall be
rounded down to the nearest whole number of shares. The term, exercisability,
vesting schedule, status as an "incentive stock option" under Section 422 of the
Internal Revenue Code of 1986, as amended, and the rules and regulations
thereunder (the "Code"), if applicable, and all other terms and conditions of
Company Options will, to the extent permitted by law and otherwise reasonably
practicable, be unchanged. Continuous employment with the Company or any of its
subsidiaries shall be credited to the optionee for purposes of determining the
vesting of the number of shares of Parent Common Stock subject to exercise under
the optionee's assumed Company Option after the Effective Time. "Company
Options" means any option granted, and not exercised or expired, to a current or
former employee, director or independent contractor of the Company or any of its
subsidiaries or any predecessor thereof to purchase Shares pursuant to any stock
option, stock bonus, stock award, or stock purchase plan, program, or
arrangement of the Company or any of its subsidiaries or any predecessor thereof
(collectively, the "Stock Plans") or any other contract or agreement entered
into by the Company or any of its subsidiaries.
(b) Parent shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery pursuant to the terms set forth in this Section 2.5. Parent shall cause
the shares of Parent Common Stock issuable upon exercise of the assumed Company
Options to be registered, or to be issued pursuant to a then effective
registration statement,
-5-
no later than 90 days after the Effective Time on Form S-8 promulgated by the
SEC and shall use its best efforts to maintain the effectiveness of such
registration statement or registration statements for so long as such assumed
Company Options remain outstanding. With respect to those individuals who
subsequent to the Merger will be subject to the reporting requirements under
Section 16(a) of the Exchange Act, Parent shall administer the Company Options
assumed pursuant to this Section 2.5 in a manner that complies with Rule 16b-3
promulgated by the SEC under the Exchange Act, but shall have no responsibility
for such compliance by the Company or its predecessors.
(c) Paragraphs (a) and (b) of this Section 2.5
notwithstanding, the Company shall further amend the Stock Plans to provide
holders of Company Options, which Company Options are then vested and
exercisable (including Company Options which became vested and exercisable in
accordance with the relevant Stock Plans and stock option agreements as a result
of the consummation of the Offer or the Merger), the opportunity to elect to
receive cash in an amount set forth below in exchange for each vested and
exercisable Company Option. Pursuant to such amendment, Parent and the Company
shall take all actions necessary to provide that, as to those holders who so
elect, at or immediately prior to the Effective Time, (i) each vested and
exercisable Company Option, so surrendered for cash, shall be cancelled and (ii)
in consideration of such cancellation, and except to the extent that Parent and
the holder of any such Company Option otherwise agree, the Company shall pay to
each such holder of Company Options an amount in cash in respect thereof equal
to the product of (1) the excess of the Merger Consideration over the exercise
price thereof and (2) the number of Shares subject thereto.
ARTICLE III
THE SURVIVING CORPORATION
SECTION 3.1. CERTIFICATE OF INCORPORATION. The certificate of
incorporation of Merger Subsidiary in effect at the Effective Time shall be
the certificate of incorporation of the Surviving Corporation until amended
in accordance with applicable law, except that the name of the Surviving
Corporation shall be changed to the name of the Company.
SECTION 3.2. BYLAWS. The bylaws of Merger Subsidiary in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 3.3. DIRECTORS AND OFFICERS. From and after the Effective
Time, until successors are duly elected or appointed and qualified in
accordance with applicable law, (i) the directors of Merger Subsidiary at the
Effective Time shall be the directors of the Surviving Corporation, and (ii)
the officers of the Merger Subsidiary at the Effective Time shall be the
officers of the Surviving Corporation.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Parent and Merger Subsidiary as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of the
Company and each of its subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is
incorporated and has the requisite corporate power and authority to carry on its
business as now being conducted. Each of the Company and each of its
subsidiaries is duly
-6-
qualified or licensed to do business and is in good standing in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed
(individually or in the aggregate) could not reasonably be expected to have a
material adverse effect on the condition (financial or otherwise), business,
assets, results of operations or prospects of the Company and its subsidiaries
taken as a whole (a "Material Adverse Effect"). The Company has delivered to
Parent complete and correct copies of its Articles of Incorporation and By-Laws
and the certificates of incorporation and by-laws of its Significant
Subsidiaries, in each case as amended to the date of this Agreement. For
purposes of this Agreement, a "subsidiary" of any person means another person,
an amount of the voting securities, other voting ownership or voting partnership
interests of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting interests,
50% or more of the equity interests of which) is owned directly or indirectly by
such first person; and a "Significant Subsidiary" means any subsidiary of a
person that constitutes a significant subsidiary of such person within the
meaning of Rule 1-02 of Regulation S-X of the Securities and Exchange Commission
(the "SEC").
(b) SUBSIDIARIES. Section 4.1(b) of the disclosure schedule
delivered by the Company to Parent and Merger Subsidiary prior to the execution
of this Agreement (the "Disclosure Schedule") lists each subsidiary of the
Company and its respective jurisdiction of incorporation and indicates whether
such subsidiary is a Significant Subsidiary. All the outstanding shares of
capital stock of each such subsidiary have been validly issued and are fully
paid and nonassessable and are owned by the Company, by another subsidiary of
the Company or by the Company and another such subsidiary, free and clear of all
pledges, claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever (collectively, "Liens") and free of any other limitation or
restriction (including any restriction on the right to vote, sell or otherwise
dispose of such capital stock (other than restrictions under applicable
securities laws)). Except for the capital stock of its subsidiaries, the Company
does not own, directly or indirectly, any capital stock or other ownership
interest in any person.
(c) CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 40,000,000 shares of Common Stock and 5,000,000 shares of
preferred stock, par value $.01 per share (the "Preferred Stock"). At the time
of execution of this Agreement, (i) 14,644,054 shares of Common Stock were
issued and outstanding, (ii) no shares of Preferred Stock were issued and
outstanding, (iii) no shares of Common Stock were held by the Company in its
treasury or by any of the Company's subsidiaries, and (iv) 2,556,785 shares of
Common Stock were reserved for issuance pursuant to the Stock Plans. Except as
set forth above, at the time of execution of this Agreement, no shares of
capital stock or other voting securities of the Company are issued, reserved for
issuance or outstanding. All outstanding shares of capital stock of the Company
are, and all shares which may be issued pursuant to the Stock Plans will be,
when issued, duly authorized, validly issued, fully paid and nonassessable and
not subject to preemptive rights. There are not any bonds, debentures, notes or
other indebtedness or securities of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to vote) on
any matters on which shareholders of the Company may vote. Except as set forth
above and in Section 4.1(c) of the Disclosure Schedule, there are not any
securities, options, warrants, calls, rights, commitments, agreements,
arrangements or undertakings of any kind to which the Company or any of its
subsidiaries is a party or by which any of them is bound obligating the Company
or any of its subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock or other voting securities
of the Company or of any of its subsidiaries or obligating the Company or any of
its subsidiaries to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.
There are no outstanding rights, commitments, agreements, arrangements or
undertakings of any kind obligating the Company or any of its subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock or other
voting securities of the Company or any of its subsidiaries or any securities of
the type described in the two immediately preceding sentences. The Company has
delivered to Parent complete
-7-
and correct copies of the Stock Plans and all forms of Company Options. Section
4.1(c) of the Disclosure Schedule sets forth a complete and accurate list of all
Company Options outstanding as of the date of this Agreement and the exercise
price of each outstanding Company Option.
(d) AUTHORITY; NONCONTRAVENTION. The Company has the requisite
corporate power and authority to enter into this Agreement and, except for any
required approval by the Company's stockholders in connection with the
consummation of the Merger, to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated by this Agreement
have been duly authorized by all necessary corporate action on the part of the
Company, except for any required approval by the Company's stockholders in
connection with the consummation of the Merger. This Agreement has been duly
executed and delivered by the Company and, assuming this Agreement constitutes a
valid and binding agreement of Parent and Merger Subsidiary, constitutes a valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms. The execution and delivery of this Agreement does
not, and the consummation of the transactions contemplated by this Agreement and
compliance with the provisions of this Agreement will not, conflict with, or
result in any violation of, or default (with or without notice or lapse of time,
or both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a material benefit under, or result
in the creation of any Lien upon any of the properties or assets of the Company
or any of its subsidiaries under, (i) the Articles of Incorporation or By-Laws
of the Company or the comparable charter or organizational documents of any of
its subsidiaries, (ii) any loan or credit agreement, note, bond, mortgage,
indenture, lease or other agreement, instrument, permit, concession, franchise
or license applicable to the Company or any of its subsidiaries or their
respective properties or assets or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the Company or
any of its subsidiaries or their respective properties or assets, other than, in
the case of clause (ii) or (iii) above, any such conflicts, violations,
defaults, rights or Liens that individually or in the aggregate could not
reasonably be expected to (A) have a Material Adverse Effect, (B) impair the
ability of the Company to perform its obligations under this Agreement or (C)
prevent or materially delay consummation of any of the transactions contemplated
by this Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with or exemption by (collectively,
"Consents") any federal, state or local government or any court, administrative
or regulatory agency or commission or other governmental authority or agency,
domestic or foreign (a "Governmental Entity"), is required by or with respect to
the Company or any of its subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated by this Agreement, except for (i) the filing of a
premerger notification and report form by the Company under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules
and regulations thereunder (the "HSR Act"), (ii) compliance with any applicable
requirements of the Securities Exchange Act of 1934, as amended, and the rules
and regulations thereunder (the "Exchange Act"), (iii) the filing of articles of
merger in accordance with Florida Law and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business, and (iv) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as to which the failure to obtain or
make could not reasonably be expected to (x) have a Material Adverse Effect or
(y) prevent or materially delay the consummation of any of the transactions
contemplated by this Agreement.
(e) SEC DOCUMENTS; FINANCIAL STATEMENTS; NO UNDISCLOSED
LIABILITIES. The Company has filed all required reports, schedules, forms,
statements and other documents with the SEC since January 1, 1996 (the "SEC
Documents"). As of their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act of 1933, as
amended, and the rules and regulations thereunder (the "Securities Act"), or the
Exchange Act, as the case may be, applicable to such SEC Documents, and none of
the SEC Documents contained any untrue statement
-8-
of a material fact or omitted to state a material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The financial
statements of the Company included in the SEC Documents comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in the Company Filed SEC
Documents (defined below in Section 4.1(g)), neither the Company nor any of its
subsidiaries has any liabilities or obligations of any nature (whether accrued,
absolute, contingent or otherwise) and there is no existing condition, situation
or set of circumstances which are required by generally accepted accounting
principles to be set forth on a consolidated balance sheet of the Company and
its consolidated subsidiaries or in the notes thereto, except for liabilities
which, individually or in the aggregate, could not reasonably be expected to
have a Material Adverse Effect.
(f) DISCLOSURE DOCUMENTS. (i) Each document required to be
filed by the Company with the SEC in connection with the transactions
contemplated by this Agreement (the "Company Disclosure Documents"), including,
without limitation, the Schedule 14D-9, the proxy or information statement of
the Company (the "Company Proxy Statement"), if any, to be filed with the SEC in
connection with the Merger, and any amendments or supplements thereto will, when
filed, comply as to form in all material respects with the applicable
requirements of the Exchange Act.
(ii) At the time the Company Proxy Statement or any amendment
or supplement thereto is first mailed to stockholders of the Company and at the
time such stockholders vote on adoption of this Agreement, the Company Proxy
Statement, as supplemented or amended, if applicable, will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. At the time of the filing of any
Company Disclosure Document other than the Company Proxy Statement and at the
time of any distribution thereof, such Company Disclosure Document will not
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties contained in this Section 4.1(f)(ii) will not apply to statements
or omissions included in the Company Disclosure Documents based upon information
furnished to the Company in writing by Parent or Merger Subsidiary specifically
for use therein.
(iii) The information with respect to the Company or any
subsidiary that the Company furnishes to Parent or Merger Subsidiary in writing
specifically for use in the Offer Documents will not, at the time of the filing
thereof, at the time of any distribution thereof and at the time of the
consummation of the Offer, 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 the light of the circumstances
under which they were made, not misleading.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the SEC Documents filed and publicly available prior to the date of this
Agreement (the "Company Filed SEC Documents"), since December 31, 1997, the
Company has conducted its business only in the ordinary course consistent with
past practice, and there has not been (i) any event, occurrence or development
of a state of circumstances which has had or could reasonably be expected to
have a Material Adverse Effect, (ii) any declaration, setting aside or payment
of any dividend or other distribution (whether in
-9-
cash, stock or property) with respect to any of the Company's capital stock or
any repurchase, redemption or other acquisition by the Company or any of its
subsidiaries of any outstanding shares of capital stock or other securities of
the Company or any of its subsidiaries, (iii) any split, combination or
reclassification of any of its capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of its capital stock, (iv) (A) any granting by the
Company or any of its subsidiaries to any current or former director, officer or
employee of the Company or any of its subsidiaries of any increase in
compensation or benefits or severance or termination pay or benefits, except in
the ordinary course of business consistent with past practice or as was required
under employment, severance or termination agreements or plans in effect as of
December 31, 1997, or (B) any entry by the Company or any of its subsidiaries
into any employment, deferred compensation, severance or termination agreement
with any such current or former director, officer or employee, except in the
ordinary course of business consistent with past practice, (v) any damage,
destruction or loss, whether or not covered by insurance, that has had or could
have a Material Adverse Effect, (vi) any change in accounting methods,
principles or practices by the Company or any of its subsidiaries, (vii) any
amendment of any material term of any outstanding security of the Company or any
of its subsidiaries, (viii) any incurrence, assumption or guarantee by the
Company or any of its subsidiaries of any indebtedness for borrowed money other
than in the ordinary course of business consistent with past practice, but in no
event in the amount of more than $100,000 in the aggregate, (ix) any creation or
assumption by the Company or any of its subsidiaries of any Lien on any asset
other than in the ordinary course of business consistent with past practice, but
in no event in the amount of more than $100,000 for any one transaction or
$500,000 in the aggregate, (x) any making of any loan, advance or capital
contributions to or investment in any person other than in the ordinary course
of business consistent with past practice, but in no event in the amount of more
than $100,000 for any one transaction or $500,000 in the aggregate and other
than investments in cash equivalents made in the ordinary course of business
consistent with past practice, (xi) any transaction or commitment made, or any
contract or agreement entered into, by the Company or any of its subsidiaries
relating to its assets or business (including the acquisition or disposition of
any assets or the merger or consolidation with any person) or any relinquishment
by the Company or any of its subsidiaries of any contract or other right, in
either case, material to the Company and its subsidiaries taken as a whole,
other than transactions and commitments in the ordinary course of business
consistent with past practice and those contemplated by this Agreement, but in
no event representing commitments on behalf of the Company or any of its
subsidiaries of more than $100,000 for any transaction or $500,000 for any
series of transactions, (xii) any material labor dispute, other than routine
individual grievances, or any activity or proceeding by a labor union or
representative thereof to organize any employees of the Company or any of its
subsidiaries, which employees were not subject to a collective bargaining
agreement at December 31, 1997, or any material lockouts, strikes, slowdowns,
work stoppages or threats thereof by or with respect to such employees or (xiii)
any agreement, commitment, arrangement or undertaking by the Company or any of
its subsidiaries to perform any action described in clauses (i) through (xii).
(h) LITIGATION. Except as disclosed in the Company Filed SEC
Documents or in Section 4.1(h) of the Disclosure Schedule, there is no suit,
action or proceeding pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries that, individually
or in the aggregate, could reasonably be expected to (i) have a Material Adverse
Effect, (ii) impair the ability of the Company to perform its obligations under
this Agreement or (iii) prevent or materially delay the consummation of the
Offer, the Merger or any of the other transactions contemplated by this
Agreement, nor is there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or any of its
subsidiaries having, or which, insofar as reasonably can be foreseen, in the
future would have, any such effect. Section 4.1(h) of the Disclosure Schedule
sets forth, with respect to any pending suit, action or proceeding to which the
Company or any its subsidiaries is a party and which involves claims which if
adversely determined
-10-
would exceed $250,000, the forum, the parties thereto, the subject matter
thereof and the amount of damages claimed.
(i) ABSENCE OF CHANGES IN STOCK AND BENEFIT PLANS. Since
December 31, 1997, there has not been (i) any acceleration, amendment or change
of the period of exercisability or vesting of any Company Options or restricted
stock, stock bonus or other awards under the Stock Plans or any other options to
purchase Shares or stock of any subsidiary of the Company (including any
discretionary acceleration of the exercise periods or vesting by the Company's
Board of Directors or any committee thereof or any other persons administering a
Stock Plan) or authorization of cash payments in exchange for any Company
Options, restricted stock, stock bonus or other awards granted under any of such
Stock Plans or any other options to purchase Shares or stock of any subsidiary
of the Company; or (ii) any adoption or amendment by the Company or any of its
subsidiaries of any collective bargaining agreement or any bonus, pension,
profit sharing, deferred compensation, incentive compensation, stock ownership,
stock purchase, stock option, phantom stock, stock appreciation right,
retirement, vacation, severance, disability, death benefit, hospitalization,
medical, workers' compensation, supplementary unemployment benefits or other
plan, arrangement or understanding providing benefits to any current or former
employee, officer or director of the Company or any of its subsidiaries or any
beneficiary thereof entered into, maintained or contributed to, as the case may
be, by the Company or any of its subsidiaries (collectively, "Benefit Plans"),
other than immaterial amendments to any such Benefit Plan.
(j) PARTICIPATION AND COVERAGE IN BENEFIT PLAN. There has been
no written interpretation or announcement (whether or not written) by the
Company or any of its subsidiaries relating to, or change in employee
participation or coverage under, any Benefit Plan which would increase (other
than in an immaterial manner) the expense of maintaining such Benefit Plan above
the level of the expense incurred in respect thereof for the fiscal year ended
on December 31, 1997.
(k) ERISA COMPLIANCE. (i) Section 4.1(k) of the Disclosure
Schedule contains a list and brief description of (A) all "employee pension
benefit plans" (defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")), "employee welfare benefit plans"
(defined in Section 3(l) of ERISA) and all other Benefit Plans maintained, or
contributed to, by the Company or any of its subsidiaries or ERISA affiliates
(defined below) for the benefit of any current or former employees, officers or
directors of the Company or any of its subsidiaries or ERISA affiliates or under
which the Company or any of its subsidiaries or ERISA affiliates has any
liability other than Benefit Plans exempt from Title I of ERISA pursuant to
Section 4(b)(4) of ERISA and (B) all Benefit Plans maintained outside of the
United States primarily for the benefit of persons substantially all of whom are
non-resident aliens with respect to the United States. For purposes of this
Agreement, "ERISA affiliate" of the Company means any person which, together
with the Company or any of its subsidiaries, would be treated as a single
employer under Section 414 of the Code. The only Benefit Plans described in
clause (A) of the preceding sentence which individually or collectively would
constitute an "employee pension benefit plan" defined in Section 3(2) of ERISA
(the "Pension Plans") are identified as such in Section 4.1(k) of the Disclosure
Schedule.
(ii) Each Benefit Plan has been maintained and administered in
compliance in all material respects with its terms and with the requirements
prescribed by any and all applicable statutes, orders, rules and regulations,
and is, to the extent required by applicable law or contract, fully funded
without having any material deficit or material unfunded actuarial liability.
Any Benefit Plan intended to be qualified under Section 401(a) of the Code has
been determined by the Internal Revenue Service to be so qualified and, to the
Company's knowledge, nothing has occurred to cause the loss of such qualified
status.
-11-
(iii) No Benefit Plan is covered by Title IV of ERISA or
Section 412 of the Code. Neither the Company nor any of its subsidiaries has
incurred or expects to incur any liability under Title IV of ERISA or any
liability or penalty under Section 4975 or 4980B of the Code or Section 502(i)
of ERISA.
(iv) Except as disclosed in Section 4.1(k)(iv) of the
Disclosure Schedule, there are no pending or anticipated claims against or
otherwise involving any of the Benefit Plans and no suit, action or other
litigation has been brought against or with respect to any Benefit Plan
(excluding, in each case, claims for benefits incurred in the ordinary course of
Benefit Plan activities).
(v) All contributions, reserves or premium payments required
to be made as of the date hereof to or with respect to the Benefit Plans have
been made or provided for.
(vi) Except as required by law or as disclosed in Section
4.1(k)(vi) of the Disclosure Schedule, neither the Company nor any of its
subsidiaries has any obligations for post-retirement or post-termination health
and life benefits under any Benefit Plan.
(l) TAXES. As used in this Agreement, "tax" or "taxes" shall
include all Federal, state, local and foreign income, property, sales, excise
and other taxes, tariffs or governmental charges or assessments of any nature
whatsoever as well as any interest, penalties and additions thereto.
(i) The Company and each of its subsidiaries have timely filed
all tax returns, statements, reports and forms required to be filed with any tax
authority and in accordance with all applicable laws. All such tax returns are
correct and complete in all respects. All taxes owed by the Company and any of
its subsidiaries (whether or not shown on any tax return) have been paid. There
are no Liens on any of the assets of the Company or any of its subsidiaries that
arose in connection with any failure (or alleged failure) to pay any tax.
(ii) The Company and each of its subsidiaries has withheld and
timely paid all taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(iii) Neither the Company nor any of its subsidiaries expects
any authority to assess any additional taxes against the Company or any of its
subsidiaries for any period for which tax returns have been filed. No dispute or
claim concerning any tax liability of the Company or any of its subsidiaries has
been proposed or claimed in writing by any authority. The Company has provided
Parent with a list of all Federal, state, local, and foreign income tax returns
filed with respect to the Company and any of its subsidiaries for taxable
periods ended on or after December 31, 1995, indicating those tax returns that
have been audited, and indicating those tax returns that currently are the
subject of audit. The Company has provided Parent with correct and complete
copies of all its Federal income tax returns, and examination reports, and
statements of deficiencies assessed against or agreed to by the Company and any
of its subsidiaries since December 31, 1995.
(iv) Neither the Company nor any of its subsidiaries has
waived any statute of limitations in respect of taxes or agreed to any extension
of time with respect to a tax assessment or deficiency.
(v) Neither the Company nor any of its subsidiaries has filed
a consent pursuant to Section 341(f) of the Code concerning collapsible
corporations. Neither the Company nor any of its subsidiaries is a party to any
tax allocation or sharing agreement. Neither the Company nor any of its
subsidiaries has any liability for the taxes of any person (other than the
Company and any of its subsidiaries that is currently a member of the Company's
affiliated group filing a consolidated federal
-12-
income tax return) under Treas. Reg. ss.1.1502-6 (or any similar provision of
state, local, or foreign law), as a transferee or successor, by contract, or
otherwise.
(vi) As of the date of the most recent financial statements
included in the Company Filed SEC Documents, the unpaid taxes of the Company and
its subsidiaries did not exceed the liability for taxes (rather than any reserve
for deferred taxes established to reflect timing differences between book and
tax income) set forth on the face of such financial statements.
(vii) Neither the Company nor any of its subsidiaries is
required to include in income any adjustment pursuant to Section 481(a) of the
Code (or similar provisions of other law or regulations) in its current or in
any future taxable period by reason of a change in accounting method; nor does
the Company or any of its subsidiaries have any knowledge that the Internal
Revenue Service (or other taxing authority) has proposed or is considering
proposing, any such change in accounting method. Neither the Company nor any of
its subsidiaries is a party to any agreement, contract, or arrangement that,
individually or collectively, could give rise to the payment of any amount
(whether in cash or property, including Shares) that would not be deductible
pursuant to the terms of Sections 162(a)(1), 162(m), 162(n) or 280G of the Code.
(m) STATE TAKEOVER STATUTES. The Board of Directors of the
Company has unanimously approved this Agreement, the Stockholder Option
Agreement and the transactions contemplated hereby and thereby including,
without limitation, the Offer and the Merger, and such approval is sufficient to
render inapplicable to this Agreement, the Stockholder Option Agreement and the
transactions contemplated hereby and thereby including, without limitation, the
Offer and the Merger, the provisions of Sections 607.0901 and 607.0902 of
Florida Law. To the best of the Company's knowledge, no other "fair price",
"moratorium", "control share acquisition", or other anti-takeover statute or
similar statute or regulation, applies or purports to apply to the Offer, the
Merger, this Agreement or any of the other transactions contemplated hereby or
thereby.
(n) BROKERS; SCHEDULE OF FEES AND EXPENSES. No broker,
investment banker, financial advisor or other person, other than The
Robinson-Humphrey Company LLC, the fees and expenses of which will be paid by
the Company (and a copy of whose engagement letters and a calculation of the
fees that would be due thereunder has been provided to Parent), is entitled to
any broker's, finder's, financial advisor's or other similar fee or commission
in connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of the Company or any of its subsidiaries.
Assuming consummation of the Offer and the Merger, no such engagement letter
obligates the Company to continue to use their services or pay fees or expenses
in connection with any future transaction.
(o) PERMITS; COMPLIANCE WITH LAWS; ENVIRONMENTAL MATTERS. (i)
Each of the Company and its subsidiaries has in effect all federal, state, local
and foreign governmental approvals, authorizations, certificates, filings,
franchises, licenses, notices, permits and rights ("Permits") necessary for it
to own, lease or operate its properties and assets and to carry on its business
as now conducted, and there has occurred no default under any such Permit,
except for the absence of Permits and for defaults under Permits which absence
or defaults, individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect. The Company and its subsidiaries have been,
and are, in compliance in all material respects with all applicable statutes,
laws or material ordinances, regulations, rules, judgments, decrees or orders of
any Governmental Entity, and neither the Company nor any of its subsidiaries has
received any notice from any Governmental Entity or any other person that either
the Company or any of its subsidiaries is in violation of, or has violated, in
any material respect any applicable statutes, laws or material ordinances,
regulations, rules, judgments, decrees or orders.
-13-
(ii) Neither the Company nor any of its subsidiaries has (i)
placed, held, located, released, transported or disposed of any Hazardous
Substance (as defined below) on, under, from or at any of the Company's or any
of its subsidiaries' properties or any other properties, other than in a manner
that could not, in all such cases taken individually or in the aggregate,
reasonably be expected to have or result in a Material Adverse Effect, (ii) any
knowledge of the presence of any Hazardous Substances that have been released
into the environment on, under or at any of the Company's or any of its
subsidiaries' properties other than that which could not reasonably be expected
to have or result in a Material Adverse Effect, or (iii) received any written
notice (A) of any violation of any applicable statute, law, ordinance,
regulation, rule, judgment, decree or order of any Governmental Entity relating
to any matter of pollution, protection of the environment or environmental
regulation or control or regarding Hazardous Substances (collectively,
"Environmental Laws") that has not been resolved or settled with the relevant
Governmental Entity, (B) of the institution or pendency of any suit, action,
claim, proceeding or investigation by any Governmental Entity or any third party
in connection with any such violation, (C) requiring the response to or
remediation of Hazardous Substances at or arising from any of the Company's or
any of its subsidiaries' properties or any other properties, (D) alleging
non-compliance by the Company or any of its subsidiaries with the terms of any
permit required under any Environmental Law in any manner reasonably likely to
require material expenditures or to result in material liability or (E)
demanding payment for response to or remediation of Hazardous Substances at or
arising from any of the Company's or any of its subsidiaries' properties or any
other properties. For purposes of this Agreement, the term "Hazardous Substance"
shall mean any material defined as toxic or hazardous, including any petroleum
and petroleum products, under any applicable Environmental Law.
(p) CONTRACTS; DEBT INSTRUMENTS. (i) Except as otherwise
disclosed in Section 4.1(p)(i) of the Disclosure Schedule, neither the Company
nor any of its subsidiaries is a party to or subject to:
(A) any union contract, or any employment, consulting,
severance, termination, or indemnification agreement, contract or
arrangement providing for future payments, written or oral, with any
current or former officer, consultant, director or employee which (1)
exceeds $100,000 per annum or (2) requires aggregate annual payments or
total payments over the life of such agreement, contract or arrangement
to such current or former officer, consultant, director or employee in
excess of $50,000 or $150,000, respectively, and is not terminable by
it or its subsidiary on 30 days' notice or less without penalty or
obligation to make payments related to such termination;
(B) any joint venture contract or arrangement or any other
agreement which has involved or is expected to involve a sharing of
revenues of $100,000 per annum or more with other persons;
(C) any lease for real or personal property in which the
amount of payments which the Company is required to make on an annual
basis exceeds $100,000;
(D) any material agreement, contract, policy, license, Permit,
document, instrument, arrangement or commitment which has not been
terminated or performed in its entirety and not renewed which may be,
by its terms, terminated, impaired or adversely affected by reason of
the execution of this Agreement, the closing of the Offer or the
Merger, or the consummation of the other transactions contemplated
hereby;
(E) any agreement, contract, policy, license, Permit,
document, instrument, arrangement or commitment that limits in any
material respect the freedom of the Company or any subsidiary of the
Company to compete in any line of business or with any person or in any
-14-
geographic area or which would so limit in any material respect the
freedom of the Company or any subsidiary of the Company after the
Effective Time; or
(F) any other agreement, contract, policy, license, Permit,
document, instrument, arrangement or commitment not made in the
ordinary course of business which is material to the Company and its
subsidiaries taken as a whole.
(ii) Neither the Company nor any subsidiary of the Company is
in default in any material respect under the terms of any exclusive license or
distribution agreement or arrangement that, by its terms, provides for payments
to the Company or any of its subsidiaries of $100,000 or more per annum or any
other material license or distribution agreement or arrangement, true and
complete copies or descriptions of all of which have been delivered to Parent.
To the knowledge of the Company, none of the parties to any of the contracts
identified in Section 4.1(p)(i) of the Disclosure Schedule or otherwise
disclosed in the Company Filed SEC Documents has terminated, or in any way
expressed an intent to materially reduce or terminate the amount of, its
business with the Company or any of its subsidiaries in the future.
(iii) Set forth in Section 4.1(p)(iii) of the Disclosure
Schedule is (A) a list of all loan or credit agreements, notes, bonds,
mortgages, indentures and other agreements and instruments pursuant to which any
indebtedness of the Company or any of its subsidiaries in an aggregate principal
amount in excess of $100,000 is outstanding or may be incurred and (B) the
respective principal amounts currently outstanding thereunder. For purposes of
this Section 4.1(p)(iii), "indebtedness" shall mean, with respect to any person,
without duplication, (A) all obligations of such person for borrowed money, or
with respect to deposits or advances of any kind to such person, (B) all
obligations of such person evidenced by bonds, debentures, notes or similar
instruments, (C) all obligations of such person upon which interest charges are
customarily paid, (D) all obligations of such person under conditional sale or
other title retention agreements relating to property purchased by such person,
(E) all obligations of such person issued or assumed as the deferred purchase
price of property or services (excluding obligations of such person to creditors
for raw materials, inventory, services and supplies incurred in the ordinary
course of such person's business), (F) all capitalized lease obligations of such
person, (G) all obligations of others secured by any Lien on property or assets
owned or acquired by such person, whether or not the obligations secured thereby
have been assumed, (H) all obligations of such person under interest rate or
currency swap transactions (valued at the termination value thereof), (I) all
letters of credit issued for the account of such person (excluding letters of
credit issued for the benefit of suppliers to support accounts payable to
suppliers incurred in the ordinary course of business), (J) all obligations of
such person to purchase securities (or other property) which arises out of or in
connection with the sale of the same or substantially similar securities or
property, and (K) all guarantees and arrangements having the economic effect of
a guarantee of such person of any indebtedness of any other person.
(q) OPINION OF FINANCIAL ADVISOR. The Company has received the
opinion of The Robinson-Humphrey Company LLC, dated the date hereof, a copy of
which has been or, within two business days of the date hereof, will be provided
to Parent, to the effect that, as of such date, the consideration to be paid in
the Offer and the Merger is fair to the Company's stockholders from a financial
point of view.
(r) INTERESTS OF OFFICERS AND DIRECTORS. None of the Company's
or any of its subsidiaries' officers or directors has direct or indirect any
interest in any property, real or personal, tangible or intangible, including
inventions, patents, copyrights, trademarks, trade names, trade secrets or
know-how, used in or pertaining to the business of the Company or that of its
subsidiaries, or any supplier, distributor or customer of the Company or any of
its subsidiaries, except for the normal rights
-15-
of a stockholder and rights under existing employee benefit plans and except for
any such interest which would not be required to be disclosed under the Exchange
Act.
(s) TECHNOLOGY. (i) The Company exclusively owns, or is
licensed to use, without restriction (other than as set forth in Section
4.1(s)(i) of the Disclosure Schedule), the rights to all patents, trademarks,
trade names, service marks, copyrights and any applications therefor, maskworks,
net lists, schematics, inventories, technology, trade secrets, source codes,
know-how, computer software programs or applications and tangible or intangible
proprietary information or material that in any material respect are used or
proposed to be used in the business of the Company and any of its subsidiaries
as currently conducted or proposed to be conducted (the "Company Intellectual
Property Rights"). Section 4.1(s)(i) of the Disclosure Schedule lists: (A) all
patents, trademarks, trade names, service marks, registered and unregistered
copyrights, and any applications therefor included in the Company Intellectual
Property Rights, together with a list of all of the Company's currently marketed
software products and a list of which, if any, of such products have been
registered for copyright protection with the United States Copyright Office and
any foreign offices; and (B) all licenses and other agreements to which the
Company or any of its subsidiaries is a party and pursuant to which the Company
or any of its subsidiaries is authorized to use any Company Intellectual
Property Right, and includes the identities of the parties thereto, a
description of the nature and subject matter thereof, the applicable royalty and
the term thereof. Neither the Company nor any of its subsidiaries is, or as a
result of the execution, delivery or performance of the Company's obligations
hereunder will be, in violation of, or lose any rights pursuant to, any license
or agreement described in Section 4.1(s)(i) of the Disclosure Schedule.
(ii) No claims with respect to the Company Intellectual
Property Rights have been asserted or, to the knowledge of the Company, are
threatened by any person nor does the Company or any subsidiary of the Company
know of any valid grounds for any bona fide claims (A) to the effect that the
manufacture, sale or use of any product or process as now used or offered or
proposed for use or sale by the Company or any subsidiary of the Company
infringes on any copyright, trade secret, patent or other intellectual property
right of any person, (B) against the use by the Company or any subsidiary of the
Company of any Company Intellectual Property Rights, or (C) challenging the
ownership, validity or effectiveness of any of the Company Intellectual Property
Rights. All granted and issued patents and all registered trademarks and service
marks listed in Section 4.1(s)(i) of the Disclosure Schedule and all copyrights
held by the Company or any of its subsidiaries are valid, enforceable and
subsisting. To the Company's knowledge, there has not been and there is not any
material unauthorized use, infringement or misappropriation of any of the
Company Intellectual Property Rights by any third party, employee or former
employee.
(iii) No Company Intellectual Property Right is subject to any
outstanding order, judgment, decree, stipulation or agreement restricting in any
manner the licensing thereof by the Company or any of its subsidiaries. Neither
the Company nor any of its subsidiaries has entered into any agreement to
indemnify any other person against any charge of infringement of any Company
Intellectual Property Right. Neither the Company nor any of its subsidiaries has
entered into any agreement granting any third party the right to bring
infringement actions with respect to, or otherwise to enforce rights with
respect to, any Company Intellectual Property Right. The Company and its
subsidiaries have the exclusive right to file, prosecute and maintain all
applications and registrations with respect to the Company Intellectual Property
Rights.
(t) CHANGE OF CONTROL. Except as set forth in Section 4.1(i),
4.1(p)(i)(A) or 4.1(t) of the Disclosure Schedule, the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby will
not (i) result in or increase the amount of any payment or benefit (including a
payment or benefit contingent on the occurrence of one or more events including,
without limitation, termination of employment) becoming due to any current or
former employee, director or
-16-
independent contractor of the Company or any of its subsidiaries, from the
Company or any of its subsidiaries under the terms of any Stock Plan, Benefit
Plan, agreement or otherwise, or (ii) result in the acceleration of the time of
payment, exercise or vesting of any such payment or benefits. Pursuant to the
terms of the relevant stock option agreements, all then outstanding Company
Options will immediately vest and become exercisable in connection with the
consummation of the Offer.
SECTION 4.2. REPRESENTATIONS AND WARRANTIES OF PARENT AND
MERGER SUBSIDIARY. Parent and Merger Subsidiary represent and warrant to the
Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Each of Parent
and Merger Subsidiary is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
the requisite corporate power and authority to carry on its business as now
being conducted.
(b) AUTHORITY; NONCONTRAVENTION. Parent and Merger Subsidiary
have all requisite corporate power and authority to enter into this Agreement
and to consummate the transactions contemplated by this Agreement. The execution
and delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement have been duly authorized by all necessary
corporate action on the part of Parent and Merger Subsidiary. This Agreement has
been duly executed and delivered by Parent and Merger Subsidiary and, assuming
this Agreement constitutes a valid and binding agreement of the Company,
constitutes a valid and binding obligation of such party, enforceable against
such party in accordance with its terms. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated by this
Agreement and compliance with the provisions of this Agreement will not,
conflict with, or result in any violation of, or default (with or without notice
or lapse of time, or both) under, or give rise to a right of termination,
cancellation or acceleration of any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the properties or
assets of Parent or any of its subsidiaries under, (i) the certificate of
incorporation or by-laws of Parent or Merger Subsidiary or the comparable
charter or organizational documents of any other subsidiary of Parent, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
Parent or Merger Subsidiary or their respective properties or assets or (iii)
subject to the governmental filings and other matters referred to in the
following sentence, any judgment, order, decree, statute, law, ordinance, rule
or regulation applicable to Parent, Merger Subsidiary or any other subsidiary of
Parent or their respective properties or assets, other than, in the case of
clause (ii) or (iii), any such conflicts, violations, defaults, rights or Liens
that individually or in the aggregate would not (A) have a material adverse
effect on Parent and its subsidiaries taken as a whole, (B) impair the ability
of Parent and Merger Subsidiary to perform their respective obligations under
this Agreement or (C) prevent the consummation of any of the transactions
contemplated by this Agreement. No Consent of any Governmental Entity is
required by or with respect to Parent, Merger Subsidiary or any other subsidiary
of Parent in connection with the execution and delivery of this Agreement or the
consummation by Parent or Merger Subsidiary, as the case may be, of any of the
transactions contemplated by this Agreement, except for (i) the filing of a
premerger notification and report form under the HSR Act, (ii) compliance with
any applicable requirements of the Exchange Act, (iii) the filing of articles of
merger in accordance with Florida Law and appropriate documents with the
relevant authorities of other states in which the Company is qualified to do
business and (iv) such other consents, approvals, orders, authorizations,
registrations, declarations and filings as (A) may be required under the laws of
any foreign country in which the Company or any of its subsidiaries conducts any
business or owns any property or assets or (B) as to which the failure to obtain
or make could not reasonably be expected to (x) have a material adverse effect
on Parent and its subsidiaries taken as a whole or (y) prevent or materially
delay the consummation of any of the transactions contemplated by this
Agreement.
-17-
(c) DISCLOSURE DOCUMENTS. (i) The information with respect to
Parent and its subsidiaries that Parent furnishes to the Company in writing
specifically for use in any Company Disclosure Document will not contain, any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (A) in the case of the Company Proxy
Statement at the time the Company Proxy Statement or any amendment or supplement
thereto is first mailed to stockholders of the Company and at the time the
stockholders vote on adoption of this Agreement, and (B) in the case of any
Company Disclosure Document other than the Company Proxy Statement, at the time
of the filing thereof and at the time of any distribution thereof.
(ii) The Offer Documents, when filed, will comply as to form
in all material respects with the applicable requirements of the Exchange Act
and will not at the time of the filing thereof, at the time of any distribution
thereof or at the time of consummation of the Offer, contain any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading, PROVIDED, that this representation and warranty
will not apply to statements or omissions in the Offer Documents based upon
information furnished to Parent or Merger Subsidiary in writing by the Company
specifically for use therein.
ARTICLE V
COVENANTS OF THE COMPANY
SECTION 5.1. CONDUCT OF BUSINESS. During the period from the
date of this Agreement to the Effective Time, the Company shall, and shall cause
its subsidiaries to, carry on their respective businesses in the ordinary course
in substantially the same manner as heretofore conducted and, to the extent
consistent therewith, use all reasonable efforts to preserve intact their
current business organizations, keep available the services of their current
officers and employees and preserve their relationships with customers,
suppliers, licensors, licensees, distributors and others having business
dealings with them. Without limiting the generality of the foregoing, during the
period from the date of this Agreement to the Effective Time, the Company shall
not, and shall not permit any of its subsidiaries to, without the prior written
approval of Parent:
(a) (i) declare, set aside or pay any dividends on, or make
any other distributions in respect of, any of its capital stock, other than
dividends and distributions by any direct or indirect wholly owned subsidiary of
the Company to its parent, (ii) split, combine or reclassify any of its capital
stock or issue or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock or (iii) purchase,
redeem or otherwise acquire any shares of capital stock of the Company or any of
its subsidiaries or any other securities thereof or any rights, warrants or
options to acquire any such shares or other securities (other than in connection
with the exercise of Company Options);
(b) issue, deliver, sell, pledge or otherwise encumber any
shares of its capital stock, any other voting securities or any securities
convertible into, or any rights, warrants or options to acquire, any such
shares, voting securities or convertible securities (other than the issuance of
Shares upon the exercise of Company Options outstanding on the date of this
Agreement in accordance with their terms on such date);
(c) amend its articles or certificate of incorporation,
by-laws or other comparable charter or organizational documents;
-18-
(d) acquire or agree to acquire (including, without
limitation, by merger, consolidation or acquisition of stock or assets) any
business, including through the acquisition of any interest in any corporation,
partnership, joint venture, association or other business organization or
division thereof;
(e) (i) mortgage or otherwise encumber or subject to any Lien,
any of the Company Intellectual Property Rights or any other material properties
or assets, (ii) except in the ordinary course of business consistent with past
practice and pursuant to existing contracts or commitments, sell, lease,
transfer or otherwise dispose of any of the Company Intellectual Property Rights
or any other material properties or assets, or (iii) except in the ordinary
course of business consistent with past practice or pursuant to existing
contracts or commitments, license any of the Company Intellectual Property
Rights;
(f) make or agree to make any new capital expenditures in
excess of $100,000, except pursuant to existing commitments which are set forth
in Section 5.1 of the Disclosure Schedule;
(g) make any material tax election (unless required by law) or
settle or compromise any material income tax liability;
(h) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice and in accordance with their
terms, of (i) liabilities reflected or reserved against in, or contemplated by,
the most recent consolidated financial statements (or the notes thereto) of the
Company included in the Company Filed SEC Documents or (ii) liabilities incurred
in the ordinary course of business consistent with past practice; or, subject to
the fiduciary duties of the Board of Directors of the Company as advised in
writing by Holland & Knight LLP, counsel to the Company, waive the benefits of,
or agree to modify in any manner, any confidentiality, standstill,
non-competition or similar agreement to which the Company or any of its
subsidiaries is a party;
(i) commence a lawsuit other than (i) for the routine
collection of bills or (ii) to enforce this Agreement or (iii) in such cases
where the Company in good faith determines that the failure to commence suit
would result in a material impairment of a valuable aspect of the Company's
business, provided that the Company consults with Parent prior to filing such
suit;
(j) (i) enter into or amend any employment agreement, (ii)
enter into any agreement pursuant to which the Company or any of it subsidiaries
will provide services for a term of more than 30 days at a fixed or capped price
or otherwise pursuant to terms that are not consistent with agreements entered
into by the Company or any of its subsidiaries in the ordinary course of
business, (iii) enter into any customer sale or license agreement with
non-standard terms or at discounts from list prices in excess of 10%, (iv) pay
commissions to sales employees except on the basis of executed customer
contracts with respect to products actually delivered to customers, (v) enter
into any contracts or series of related contracts in excess of $250,000, (vi)
enter into or amend any agreement or arrangement for professional services or
advice, (vii) enter into any customer agreements providing for product
replacements or (viii) make any determination as to amounts payable under any
plan, arrangement, or agreement, providing for discretionary incentive
compensation or bonus to any officer, director, employee or independent
contractor of the Company or any of its subsidiaries;
(k) authorize any of, or commit or agree to take any of, the
foregoing actions; or
(l) (i) take or agree or commit to take any action that would
make any representation or warranty of the Company hereunder inaccurate in any
respect at, or as of any time prior to, the
-19-
Effective Time or (ii) omit or agree or commit to omit to take any action
necessary to prevent any such representation or warranty from being inaccurate
in any respect at any such time.
SECTION 5.2. STOCKHOLDER MEETING; PROXY MATERIAL. The Company
shall cause a meeting of its stockholders (the "Company Stockholder Meeting") to
be duly called and held as soon as reasonably practicable following Merger
Subsidiary's acquisition of Shares in the Offer for the purpose of voting on the
approval and adoption of this Agreement and the Merger unless a vote of
stockholders of the Company is not required by Florida Law. The Directors of the
Company shall, subject to their fiduciary duties as advised in writing by
Holland & Knight LLP, counsel to the Company, recommend approval and adoption of
this Agreement and the Merger by the Company's stockholders. In connection with
such meeting, the Company (i) will promptly prepare and file with the SEC, will
use its best efforts to have cleared by the SEC and will thereafter mail to its
stockholders as promptly as practicable the Company Proxy Statement and all
other proxy materials for such meeting, (ii) subject to the fiduciary duties of
the Board of Directors of the Company as advised in writing by Holland & Knight
LLP, counsel to the Company, will use its best efforts to obtain the necessary
approvals by its stockholders of this Agreement and the transactions
contemplated hereby and (iii) will otherwise comply with all legal requirements
applicable to such meeting.
SECTION 5.3. ACCESS TO INFORMATION. From the date hereof until
the Effective Time, the Company will give Parent, its counsel, financial
advisors, auditors and other authorized representatives access (during normal
business hours and upon reasonable notice) to the offices, properties, books and
records of the Company and the subsidiaries, will furnish to Parent, its
counsel, financial advisors, auditors and other authorized representatives such
financial and operating data and other information as such persons may
reasonably request and will instruct the Company's employees, counsel and
financial advisors to cooperate with Parent in its investigation of the business
of the Company and the subsidiaries; PROVIDED that no investigation pursuant to
this Section 5.3 shall affect any representation or warranty given by the
Company to Parent hereunder.
SECTION 5.4. OTHER OFFERS. Until the termination of this
Agreement, the Company and its subsidiaries will not, and will not authorize or
permit the officers, directors, employees or other agents of the Company and its
subsidiaries to, directly or indirectly, (i) take any action to solicit,
initiate or encourage any Acquisition Proposal (defined below) or (ii) subject
to the fiduciary duties of the Board of Directors of the Company under
applicable law, as advised in writing by Holland & Knight LLP, counsel to the
Company, and in response to an unsolicited request therefor by a person who a
majority of the Company's Board of Directors believes intends to submit a
Superior Acquisition Proposal (defined below), engage in negotiations with, or
disclose any nonpublic information relating to the Company or any of its
subsidiaries or afford access to the properties, books or records of the Company
or any of its subsidiaries to, any person that has advised the Company or
otherwise publicized the fact that such person may be considering making, or
that has made, an Acquisition Proposal; PROVIDED, nothing herein shall prohibit
the Company's Board of Directors from taking and disclosing to the Company's
stockholders a position with respect to a tender offer pursuant to Rules 14d-9
and 14e-2 promulgated under the Exchange Act. The Company will promptly notify
Parent after receipt of any Acquisition Proposal or any notice that any person
is considering making an Acquisition Proposal or any request for nonpublic
information relating to the Company or any of its subsidiaries or for access to
the properties, books or records of the Company or any of its subsidiaries by
any person that has advised the Company or otherwise publicized the fact that
such person may be considering making, or that has made, an Acquisition Proposal
and will keep Parent fully informed of the status and details of any such
Acquisition Proposal, indication or request. For purposes of this Agreement,
"Acquisition Proposal" means any offer or proposal for, or any indication of
interest in, a merger or other business combination involving the Company or any
of its subsidiaries or the acquisition of any significant equity interest in, or
a significant portion of the assets of, the Company or any of its subsidiaries,
other than the transactions contemplated by this Agreement; and "Superior
-20-
Acquisition Proposal" means an Acquisition Proposal which a majority of the
disinterested directors determines in its good faith judgment (based on advice
of the Company's independent financial advisor) to be more favorable to the
Company's stockholders than the Offer or the Merger, and for which financing, to
the extent required, is then committed.
SECTION 5.5. STATE TAKEOVER STATUTES. If any "fair price",
"control share acquisition", "moratorium" or other anti-takeover statute, or
similar statute or regulation shall become applicable to this Agreement, the
Stockholder Option Agreement or any of the transactions contemplated hereby or
thereby, including, without limitation, the Offer or the Merger, the Company and
its Board of Directors shall take all action necessary to ensure that the Offer,
the Merger and the other transactions contemplated hereby and thereby, may be
consummated as promptly as practicable on the terms contemplated hereby and
otherwise to minimize the effect of such statute or regulation on the Offer, the
Merger and the other transactions contemplated hereby or thereby.
ARTICLE VI
COVENANTS OF PARENT AND MERGER SUBSIDIARY
SECTION 6.1. OBLIGATIONS OF MERGER SUBSIDIARY. Parent will
take all action necessary to cause Merger Subsidiary to perform its obligations
under this Agreement and to consummate the Offer and the Merger on the terms and
conditions set forth in this Agreement (including ensuring that Merger
Subsidiary has sufficient funds to consummate the Offer and the Merger).
SECTION 6.2 VOTING OF SHARES. Parent agrees to make a quorum
and vote all Shares acquired in the Offer or otherwise beneficially owned by it
in favor of adoption of this Agreement at the Company Stockholder Meeting.
SECTION 6.3 INDEMNIFICATION. For six years after the Effective
Time, Parent agrees that it will and will cause the Surviving Corporation to
indemnify and hold harmless the current and former directors and officers of the
Company in respect of acts or omissions occurring prior to the Effective Time to
the same extent such persons are indemnified or are entitled to indemnification
by the Company pursuant to the Company's articles of incorporation, by-laws or
the Florida Law in effect on the date of this Agreement, subject to any
limitations imposed from time to time by applicable law. Parent will cause to be
maintained for a period of not less than two years from the Effective Time the
Company's current directors' and officers' insurance and indemnification policy
to the extent that it provides coverage for events occurring prior to the
Effective Time (the "D&O Insurance") for all persons who are directors or
officers of the Company on the date of this Agreement, so long as the annual
premium therefor would not be in excess of 115% of the amount per annum the
Company paid in its last full fiscal year, which amount has been disclosed to
Parent. If the existing D&O Insurance cannot be maintained, expires or is
terminated or canceled during such two-year period, Parent will use all
reasonable efforts to cause to be obtained as much D&O Insurance as can be
obtained for the remainder of such period for an annualized premium not in
excess of 115% of the amount per annum the Company paid in its last full fiscal
year, which amount has been disclosed to Parent, on terms and conditions
substantially similar to the existing D&O Insurance.
-21-
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.1. HSR ACT FILINGS; REASONABLE EFFORTS;
NOTIFICATION. (a) Each of Parent and the Company shall (i) promptly make or
cause to be made the filings required of such party or any of its subsidiaries
under the HSR Act with respect to the transactions contemplated by this
Agreement, (ii) comply at the earliest practicable date with any request under
the HSR Act for additional information, documents, or other material received by
such party or any of its subsidiaries from the Federal Trade Commission or the
Department of Justice or any other Governmental Entity in respect of such
filings or such transactions, and (iii) cooperate with the other party in
connection with any such filing and in connection with resolving any
investigation or other inquiry of any such agency or other Governmental Entity
under any Antitrust Laws (defined below) with respect to any such filing or any
such transaction. Each party shall promptly inform the other party of any
communication with, and any proposed understanding, undertaking, or agreement
with, any Governmental Entity regarding any such filings or any such
transaction. Neither party shall participate in any meeting with any
Governmental Entity in respect of any such filings, investigation, or other
inquiry without giving the other party notice of the meeting and, to the extent
permitted by such Governmental Entity, the opportunity to attend and
participate.
(b) Each of Parent and the Company shall use all reasonable
efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the transactions contemplated by this
Agreement under the HSR Act, the Sherman Act, as amended, the Clayton Act, as
amended, the Federal Trade Commission Act, as amended, and any other federal,
state or foreign statutes, rules, regulations, orders or decrees that are
designed to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade (collectively, "Antitrust Laws"). In
connection therewith, if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Antitrust Law, and, if by
mutual agreement, Parent and the Company decide that litigation is in their best
interests, each of Parent and the Company shall cooperate and use all reasonable
efforts vigorously to contest and resist any such action or proceeding and to
have vacated, lifted, reversed, or overturned any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent (each an "Order"),
that is in effect and that prohibits, prevents, or restricts consummation of any
such transaction. Each of Parent and the Company shall use all reasonable
efforts to take such action as may be required to cause the expiration of the
notice periods under the HSR Act or other Antitrust Laws with respect to such
transactions as promptly as possible after the execution of this Agreement.
(c) Subject to the fiduciary duties of the Board of Directors
of the Company as advised in writing by Holland & Knight LLP, counsel to the
Company, each of the parties agrees to use all reasonable efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, and to assist
and cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer, the Merger and the other transactions contemplated by
this Agreement, including (i) the obtaining of all other necessary actions or
nonactions, waivers, consents and approvals from Governmental Entities and the
making of all other necessary registrations and filings (including other filings
with Governmental Entities, if any), (ii) the obtaining of all necessary
consents, approvals or waivers from third parties, (iii) the preparation of the
Company Disclosure Documents and the Offer Documents, and (iv) the execution and
delivery of any additional instruments necessary to consummate the transactions
contemplated by, and to fully carry out the purposes of, this Agreement.
(d) Notwithstanding anything to the contrary in Section
7.1(a), (b) or (c), (i) neither Parent nor any of its subsidiaries shall be
required to divest any of their respective businesses, product lines or assets,
(ii) neither Parent nor any of its subsidiaries shall be required to take or
agree to take
-22-
any other action or agree to any limitation that could reasonably be expected to
have an adverse effect on the business, assets, condition (financial or
otherwise), results of operations or prospects of Parent and its subsidiaries
taken as a whole or of Parent combined with the Surviving Corporation after the
Effective Time, (iii) neither the Company nor its subsidiaries shall be required
to divest any of their respective businesses, product lines or assets, or to
take or agree to take any other action or agree to any limitation that could
reasonably be expected to have a Material Adverse Effect, and (iv) no party
shall be required to agree to the imposition of or to comply with, any
condition, obligation or restriction on Parent or any of its subsidiaries or on
the Surviving Corporation or any of its subsidiaries of the type referred to in
clause (a) or (b) of Annex I and (v) neither Parent nor Merger Subsidiary shall
be required to waive any of the conditions to the Offer set forth in Annex I or
any of the conditions to the Merger set forth in Section VIII.
(e) Each party shall give prompt notice to the other parties
upon learning of (i) any representation or warranty made by it contained in this
Agreement becoming untrue or inaccurate in any respect or (ii) the failure by it
to comply with or satisfy in any respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement; PROVIDED, that no such
notification shall affect the representations, warranties, covenants or
agreements of the parties or the conditions to the obligations of the parties
under this Agreement.
(f) The Company shall give prompt notice to Parent, and Parent
or Merger Subsidiary shall give prompt notice to the Company, of:
(i) any notice or other communication from any person
alleging that the consent of such person is or may be required in
connection with the transactions contemplated by this Agreement;
(ii) any notice or other communication from any
Governmental Entity in connection with the transactions contemplated by
this Agreement; and
(iii) any actions, suits, claims, investigations or
proceedings commenced or, to the best of its knowledge threatened
against, relating to or involving or otherwise affecting it or any of
its subsidiaries (x) which, in the case of the Company, if pending on
the date of this Agreement would have been required to have been
disclosed pursuant to Section 4.1(g), 4.1(h), 4.1(i), 4.1(k), 4.1(l),
4.1(o) or (y) in the case of any party, which relate to the
consummation of the transactions contemplated by this Agreement.
SECTION 7.2. PUBLIC ANNOUNCEMENTS. Parent and Merger
Subsidiary, on the one hand, and the Company, on the other hand, will consult
with each other before issuing, and provide each other the opportunity to review
and comment upon, any press release or other public statements with respect to
the transactions contemplated by this Agreement, including the Offer and the
Merger, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by applicable
law, court process or by obligations pursuant to any listing agreement with any
national securities exchange. The parties agree that the initial press release
to be issued with respect to the transactions contemplated by this Agreement
will be in a form agreed to by the parties and such press release will be issued
no later than the next business day immediately succeeding the date of this
Agreement.
SECTION 7.3. CONFIDENTIALITY. Parent and its subsidiaries will
hold, and will cause their Representatives (defined in the Confidentiality
Agreement, dated January 7, 1999 (the "Confidentiality Agreement"), between
Parent and the Company) to hold, any Evaluation Material (defined in the
Confidentiality Agreement) in confidence in accordance with the terms of the
Confidentiality Agreement.
-23-
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.1. CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The
obligations of the Company, Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following conditions:
(i) if required by Florida Law, this Agreement shall have been
adopted by the stockholders of the Company in accordance with such Law;
(ii) any applicable waiting period under the HSR Act relating
to the Merger shall have expired;
(iii) no provision of any applicable law or regulation and no
judgment, injunction, order or decree shall prohibit the consummation
of the Merger, and no proceeding challenging this Agreement or the
transactions contemplated hereby or seeking to prohibit, alter, prevent
or materially delay the Merger shall have been instituted by any person
before any court, arbitrator or governmental body, agency or official
and be pending;
(iv) Parent or Merger Subsidiary shall have purchased Shares
in an amount equal to at least the Minimum Condition pursuant to the
Offer; and
(v) other than the filing of articles of merger in accordance
with Florida Law, all Consents required to permit the consummation of the Merger
including those set forth in Sections 4.1(d) and 4.2(b) shall have been filed,
occurred or been obtained.
ARTICLE IX
TERMINATION
SECTION 9.1. TERMINATION. This Agreement may be terminated and
the Merger may be abandoned at any time prior to the Effective Time
(notwithstanding any approval of this Agreement by the stockholders of the
Company):
(a) by mutual written consent of the Company
and Parent;
(b) by either the Company or Parent, if the Merger
has not been consummated by September 30, 1999 (PROVIDED that the party
seeking to terminate this Agreement shall not have breached its
obligations under this Agreement in any material respect);
(c) by either the Company or Parent, if there shall
be any law or regulation that makes consummation of the Merger illegal
or otherwise prohibited or if any judgment, injunction, order or decree
enjoining Parent or the Company from consummating the Merger is entered
and such judgment, injunction, order or decree shall become final and
nonappealable;
(d) by either the Company or Parent, (x) if Parent or
Merger Subsidiary shall have failed to commence the Offer within five
business days following the date of this Agreement (PROVIDED that
Parent shall not be entitled to terminate this Agreement pursuant to
this sub-clause (x) as a result of its breach of this Agreement), (y)
if Parent or Merger Subsidiary shall not have purchased any Shares
pursuant to the Offer prior to July 31, 1999 or
-24-
(z) if the Offer shall have been terminated without Parent or Merger
Subsidiary having purchased any Shares pursuant to the Offer;
(e) by Parent, upon the occurrence of any Trigger
Event described in clauses (i) through (v) of Section 10.4(b); or
(f) by the Company, upon the occurrence of any
Trigger Event described in clause (v) of Section 10.4(b).
SECTION 9.2. EFFECT OF TERMINATION. If this Agreement is
terminated pursuant to Section 9.1, this Agreement shall become void and of no
effect with no liability on the part of any party hereto or their respective
officers and directors, except that the agreements contained in Sections 7.3,
10.4, 10.6 and 10.8 shall survive the termination hereof and except to the
extent that such termination results from the willful and material breach by a
party of any of its representations, warranties, covenants or agreements set
forth in this Agreement.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 10.1 shall not limit any covenant or agreement of the parties
which by its terms contemplates performance after the Effective Time.
SECTION 10.2. NOTICES. All notices, requests and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) or by telecopy (with copies by overnight courier) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent or Merger Subsidiary, to:
Computer Associates International, Inc.
One Computer Associates Plaza
Islandia, New York 11788-7000
Attention: Sanjay Kumar
President and Chief Operating Officer
Fax: 516-342-3300
with a copy to:
Howard, Smith & Levin LLP
1330 Avenue of the Americas
New York, New York 10019
Attention: Scott F. Smith
Fax: 212-841-1010
-25-
(b) if to the Company, to:
Computer Management Sciences, Inc.
8133 Baymeadows Way
Jacksonville, Florida 32256
Attention: Halsey Wise
President and Chief Operating Officer
Fax: 904-367-0134
with a copy to:
Holland & Knight LLP
50 North Laura Street
Jacksonville, Florida 32202
Attention: L. Kinder Cannon III
Fax: 904-358-2199
SECTION 10.3. AMENDMENTS; NO WAIVERS. (a) Any provision of
this Agreement may be amended or waived prior to the Effective Time if, and only
if, such amendment or waiver is in writing and signed, in the case of an
amendment, by the Company, Parent and Merger Subsidiary or in the case of a
waiver, by the party against whom the waiver is to be effective; PROVIDED that
after the adoption of this Agreement by the stockholders of the Company, no such
amendment or waiver shall, without the further approval of such stockholders,
alter or change (i) the amount or kind of consideration to be received in
exchange for any shares of capital stock of the Company, (ii) any term of the
certificate of incorporation of the Surviving Corporation or (iii) any of the
terms or conditions of this Agreement if such alteration or change would
adversely affect the holders of any shares of capital stock of the Company.
(b) No failure or delay by any party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 10.4. FEES AND EXPENSES.
(a) Except as otherwise provided in this Section, all costs
and expenses incurred in connection with this Agreement shall be paid by the
party incurring such cost or expense.
(b) The Company agrees to pay Parent a fee in immediately
available funds equal to $20,000,000 promptly, but in no event later than one
business day, after the termination of this Agreement as a result of the
occurrence of any of the events set forth below (a "Trigger Event"):
(i) the Company shall have entered into, or shall have
publicly announced its intention to enter into, an agreement or an
agreement in principle with respect to any Acquisition Proposal;
(ii) any person or group (as defined in Section 13(d)(3) of
the 1934 Act) (other than Parent or any of its affiliates) shall have
become the beneficial owner (as defined in Rule 13d-3
-26-
promulgated under the 1934 Act) of at least 25% of the outstanding
Shares or shall have acquired, directly or indirectly, at least 25% of
the assets of the Company;
(iii) any representation or warranty made by the Company in,
or pursuant to, this Agreement that is qualified as to materiality
shall not have been true and correct when made or at any time prior to
the consummation of the Offer as if made at and as of such time, or any
representation or warranty made by the Company in, or pursuant to, this
Agreement that is not so qualified shall not have been true and correct
in all material respects when made or at any time prior to the
consummation of the Offer as if made at and as of such time, or the
Company shall have failed to observe or perform in any material respect
any of its obligations under this Agreement;
(iv) the Board of Directors of the Company (or any special
committee thereof) shall have withdrawn or materially modified in a
manner adverse to Parent or Merger Subsidiary its approval or
recommendation of the Offer, the Merger or this Agreement or its
approval of the entry by Parent and Merger Subsidiary into the
Stockholder Option Agreement, in any such case whether or not such
withdrawal or modification is required by the fiduciary duties of the
Board of Directors (or any special committee thereof); or
(v) prior to the purchase of any Shares under the Offer, the
Company shall have received any Acquisition Proposal which the Board of
Directors has determined is more favorable to the Company's
shareholders than the transactions contemplated by this Agreement,
whether or not such determination is required by the fiduciary duties
of the Board of Directors;
PROVIDED that, if (x) the only Trigger Event having occurred is an event
pursuant to clause (iii) above and (y) the breaches of representation or
warranty, or failures to observe or perform any obligation under clause (iii)
above (A) individually or in the aggregate would not have or result in a
Material Adverse Effect or prevent or materially delay the consummation of the
transactions contemplated by this Agreement or (B) were unintentional, then the
amount of the fee payable by the Company to the Parent under this Section
10.4(b) shall be $5,000,000 instead of $20,000,000.
(c) If this Agreement is terminated as a result of the
occurrence of a Trigger Event, in addition to any amounts paid or payable by the
Company to Parent pursuant to Section 10.4(b), the Company shall promptly assume
and pay, or reimburse Parent for, all fees payable and expenses incurred by
Parent (including the fees and expenses of its counsel) in connection with this
Agreement and the transactions contemplated hereby.
SECTION 10.5. SUCCESSORS AND ASSIGNS. The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto except that Merger
Subsidiary may transfer or assign, in whole or from time to time in part, to one
or more of Parent or any of its wholly-owned subsidiaries, the right to purchase
Shares pursuant to the Offer, but any such transfer or assignment will not
relieve Merger Subsidiary of its obligations under the Offer or prejudice the
rights of tendering stockholders to receive payment for Shares validly tendered
and accepted for payment pursuant to the Offer.
SECTION 10.6. GOVERNING LAW. This Agreement shall be construed
in accordance with and governed by the law of the State of New York, except that
the consummation and effectiveness of the Merger shall be governed by, and
construed in accordance with, Florida Law.
-27-
SECTION 10.7. COUNTERPARTS; EFFECTIVENESS; INTERPRETATION.
This Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the other
parties hereto. When a reference is made in this Agreement to a Section, such
reference shall be to a Section of this Agreement unless otherwise indicated.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation".
SECTION 10.8. ENFORCEMENT. The parties 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 of this Agreement 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. In addition, each
of the parties hereto (a) consents to submit itself to the exclusive personal
jurisdiction of any court of the United States located in the State of New York
or of any New York state court in the event any dispute arises out of this
Agreement or the transactions contemplated by this Agreement, and (b) agrees
that it will not attempt to deny or defeat such personal jurisdiction by motion
or other request for leave from any such court.
SECTION 10.9. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination that
any term other provision is invalid, illegal or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible to the fullest
extent permitted by applicable law in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible.
SECTION 10.10. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
This Agreement and the Confidentiality Agreement (a) constitute the entire
agreement and supersede all prior agreements and understandings, both written
and oral, among the parties hereto with respect to the subject matter hereof,
and (b) are not intended to confer upon any person other than the parties hereto
any rights or remedies hereunder.
-28-
The parties hereto have caused this Agreement to be signed by
their respective authorized officers as of the date first written above.
COMPUTER ASSOCIATES INTERNATIONAL, INC.
By: /S/ CHARLES P. MCWADE
----------------------------------
Name: Charles P. McWade
Title: Senior Vice President
THEBETTERPLAN ("TBP"), INC.
By: /S/ STEVEN M. WOGHIN
----------------------------------
Name: Steven M. Woghin
Title: Vice President and Secretary
COMPUTER MANAGEMENT SCIENCES, INC.
By: /S/ ANTHONY V. WEIGHT
----------------------------------
Name: Anthony V. Weight
Title: Acting Chief Executive Officer
and Corporate Secretary
-29-
ANNEX I
Notwithstanding any other provision of the Offer, Parent and
Merger Subsidiary shall not be required to accept for payment or (subject to any
applicable rules and regulations of the SEC, including Rule 14e-1(c) under the
Exchange Act (relating to Merger Subsidiary's obligation to pay for or return
tendered Shares after the termination or withdrawal of the Offer)) to pay for
any Shares, and may terminate the Offer, if (i) by the expiration of the Offer,
the Minimum Condition shall not have been satisfied, (ii) by the expiration of
the Offer, the applicable waiting period under the HSR Act shall not have
expired or been terminated, or (iii) at any time on or after February 5, 1999
and prior to the acceptance for payment of Shares pursuant to the Offer, any of
the following conditions exist:
(a) there shall be instituted or pending any action or
proceeding by any Governmental Entity or by any other person, domestic
or foreign, before any Governmental Entity or arbitrator, (i)
challenging or seeking to make illegal, to delay materially or
otherwise directly or indirectly to restrain or prohibit the
acquisition by Merger Subsidiary or any of its affiliates of Shares
pursuant to the Stockholder Option Agreement, the making of the Offer,
the acceptance for payment of or payment for some of or all the Shares
by Parent or Merger Subsidiary or the consummation by Parent or Merger
Subsidiary of the Merger, seeking to obtain material damages or
otherwise directly or indirectly relating to the transactions
contemplated by the Stockholder Option Agreement, this Agreement, the
Offer or the Merger, (ii) seeking to restrain or prohibit Parent's or
Merger Subsidiary's ownership or operation (or that of their respective
subsidiaries or affiliates) of all or any material portion of the
business or assets of the Company and its subsidiaries, taken as a
whole, or of Parent and its subsidiaries, taken as a whole, or to
compel Parent or any of its subsidiaries or affiliates to dispose of or
hold separate all or any material portion of the business or assets of
the Company and its subsidiaries, taken as a whole, or of Parent and
its subsidiaries, taken as a whole, (iii) seeking to impose material
limitations on the ability of Parent or any of its subsidiaries or
affiliates effectively to exercise full rights of ownership of the
Shares, including, without limitation, the right to vote any Shares
acquired or owned by Parent or any of its subsidiaries or affiliates on
all matters properly presented to the Company's stockholders, (iv)
seeking to require divestiture by Parent or any of its subsidiaries or
affiliates of any Shares, or (v) that otherwise, in the judgment of
Parent, is likely to materially adversely affect the Company and its
subsidiaries, taken as a whole, or Parent and its subsidiaries, taken
as a whole; or
(b) there shall be any action taken, or any statute, rule,
regulation, injunction, order or decree proposed, enacted, enforced,
promulgated, issued or deemed applicable to the Stockholder Option
Agreement, this Agreement, the Offer or the Merger, by any Governmental
Entity or arbitrator other than the application of the waiting period
provisions of the HSR Act to the Stockholder Option Agreement, this
Agreement, the Offer or the Merger, that, in the judgment of Parent, is
substantially likely, directly or indirectly, to result in any of the
consequences referred to in clauses (i) through (v) of paragraph (a)
above; or
(c) any change shall have occurred or been threatened (or any
development shall have occurred or been threatened involving a
prospective change) in the business, assets, condition (financial or
otherwise), capitalization, operations or results of operations of the
Company or any of its subsidiaries that, in the reasonable judgment of
Parent, is or is likely to have a Material Adverse Effect; or
(d) a tender or exchange offer for some or all of the Shares
shall have been made by another person, or it shall have been publicly
disclosed or Parent shall have otherwise learned that (i) any person or
"group" (as defined in Section 13(d)(3) of the Exchange Act) shall have
acquired beneficial ownership of more than 25% of any class or series
of capital stock of the Company (including the Shares), through the
acquisition of stock, the formation of a group or otherwise, or shall
have been granted any option, right or warrant, conditional or
otherwise, to acquire beneficial ownership of more than 25% of any
class or series of capital stock of the Company (including the Shares)
other than acquisitions for bona fide arbitrage purposes only and other
than as disclosed in a Schedule 13D or 13G on file with the Commission
on February 5, 1999, (ii) any such person or group which, prior to
February 5, 1999, had filed such a Schedule with the Commission shall
have acquired beneficial ownership of additional shares of any class or
series of capital stock of the Company (including the Shares), through
the acquisition of stock, the formation of a group or otherwise, which,
together with such ownership as is reflected on such Schedule, shall
constitute 25% or more of any such class or series, or shall have been
granted any option, right or warrant, conditional or otherwise, to
acquire beneficial ownership of additional shares of any class or
series of capital stock of the Company (including the Shares) which,
together with such ownership as is reflected on such Schedule, shall
constitute 25% or more of any such class or series or (iii) any person
shall have filed a Notification and Report Form under the HSR Act
reflecting an intent to acquire the Company or any material portion of
assets of the Company or securities of the Company which, together with
such ownership as is reflected on any such Schedule, shall constitute
25% or more of any such class of securities; or
(e) there shall have occurred (i) any general suspension of
trading in, or limitation on prices for, securities on the New York
Stock Exchange or the American Stock Exchange, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in
the United States, (iii) any material limitation (whether or not
mandatory) by any Governmental Entity on the extension of credit by
banks or other lending institutions, (iv) a commencement of a war or
armed hostilities or other national or international calamity directly
or indirectly involving the United States which would reasonably be
expected to have a Material Adverse Effect or prevent (or materially
delay) the consummation of the Offer or (v) in the case of any of the
foregoing existing at the time of commencement of the Offer, a material
acceleration or worsening thereof; or
(f) any Consent (other than the filing of articles of merger
or approval by the stockholders of the Company of the Merger (if
required by Florida Law)) required to be filed, occurred or been
obtained by the Company or any of its subsidiaries or Parent of any of
its subsidiaries (including Merger Subsidiary) in connection with the
execution and delivery of this Agreement, the Offer and the
consummation of the transactions contemplated by this Agreement shall
not have been filed, occurred or been obtained (other than any such
Consents the failure to file, occur or obtain in the aggregate, could
not reasonably be expected to (i) have a Material Adverse Effect or
(ii) prevent or materially delay the consummation of the Offer or the
Merger); or
(g) the Company shall have breached or failed to perform in
any material respect any of its covenants or agreements under this
Agreement, or any of the representations and warranties of the Company
set forth in this Agreement that is qualified as to materiality shall
not be true when made or at any time prior to consummation of the Offer
as if made at and as of such time, or any of the representations and
warranties set forth in this Agreement that is
-2-
not so qualified shall not be true in any material respect when made or
at any time prior to the consummation of the Offer as if made at and as
of such time; or
(h) any party to the Stockholder Option Agreement other than
Merger Subsidiary or Parent shall have breached or failed to perform in
any material respect any of its agreements under the Stockholder Option
Agreement or any of the representations and warranties of any such
party set forth in the Stockholder Option Agreement shall not be true
in any material respect, in each case, when made or at any time prior
to the consummation of the Offer as if made at and as of such time, or
the Stockholder Option Agreement shall have been invalidated or
terminated with respect to any Shares subject thereto; or
(i) this Agreement or the Stockholder Option Agreement shall
have been terminated in accordance with its terms; or
(j) the Board of Directors of the Company (or any special
committee thereof) shall have withdrawn or materially modified in a
manner adverse to Parent or Merger Subsidiary its approval or
recommendation of the Offer, the Merger or this Agreement or its
approval of the entry by Parent and Merger Subsidiary into the
Stockholder Option Agreement; or
(k) the Company shall have entered into, or shall have
publicly announced its intention to enter into, an agreement or
agreement in principle with respect to any Acquisition Proposal;
which, in the judgment of Parent in any such case, and regardless of the
circumstances (including any action or omission by Parent or Merger Subsidiary)
giving rise to any such condition, makes it inadvisable to proceed with such
acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent and Merger
Subsidiary and may be asserted by Parent in its discretion regardless of the
circumstances (including any action or omission by Parent or Merger Subsidiary)
giving rise to any such condition or (other than the Minimum Condition) may,
subject to the terms of this Agreement, be waived by Parent and Merger
Subsidiary in their sole discretion in whole at any time or in part from time to
time. The failure by Parent or Merger Subsidiary at any time to exercise its
rights under any of the foregoing conditions shall not be deemed a waiver of any
such right; the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right which may be
asserted at any time or from time to time.
-3-