Exhibit 99.1
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LONE STAR HOLDING CORP.,
LONE STAR MERGER CORP.
AND
ACTIVANT SOLUTIONS HOLDINGS INC.
----------
Dated as of March 12, 2006
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER, dated as of March 12, 2006 (this
"Agreement"), by and among Lone Star Holding Corp., a corporation existing under
the laws of Delaware ("Parent"), Lone Star Merger Corp., a corporation existing
under the laws of Delaware and a wholly-owned subsidiary of Parent ("Merger
Sub"), and Activant Solutions Holdings Inc., a Delaware corporation (the
"Company").
WITNESSETH:
WHEREAS, the Board of Directors of each of Merger Sub and the Company has
approved and declared advisable, and the Board of Directors of Parent has
approved, this Agreement and the merger of Merger Sub with and into the Company
(the "Merger"), upon the terms and subject to the conditions set forth in this
Agreement;
WHEREAS, concurrently with the execution and delivery of this Agreement,
Xxxxxxx & Xxxxxxxx Capital Partners V, L.P. and certain of its affiliates and
Xxxxx Xxxxxxx Fund VII, L.P. and its affiliate (the foregoing, collectively, the
"Guarantors") are executing and delivering to the Company a limited guarantee,
in the form attached hereto as Exhibit A (the "Guarantee"), pursuant to which,
and subject to the terms and conditions thereof, the Guarantors have guaranteed
certain obligations of Parent and Merger Sub hereunder; and
WHEREAS, Parent, Merger Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Merger and also to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the representations, warranties,
covenants and agreements contained in this Agreement, the parties hereto agree
as follows:
ARTICLE 1
DEFINITIONS
1.1 Certain Definitions.
(a) For purposes of this Agreement, the following terms shall have the
meanings specified in this Section 1.1:
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, such Person, and the term
"control" (including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through
ownership of voting securities, by contract or otherwise.
"Business Day" means any day of the year on which national banking
institutions in New York, New York is open to the public for conducting business
and are not required or authorized to close.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Company Option Plans" means the Activant Solutions Holdings Inc. 1998
Stock Option Plan, the Activant Solutions Holdings Inc. Amended and Restated
2000 Stock Option Plan for Key Employees, the Activant Solutions Holdings Inc.
2001 Broad-Based Stock Option Plan, and the Activant Solutions Holdings Inc.
2006 Equity Incentive Plan, as such plans have been amended from time to time.
"Competition Laws" means the HSR Act (and any similar Law enforced by any
Governmental Antitrust Entity regarding preacquisition notifications for the
purpose of competition reviews), the Xxxxxxx Act, as amended, the Xxxxxxx Act,
as amended, the Federal Trade Commission Act, as amended, and any other
national, federal, regional, state or local statutes, rules, regulations,
orders, decrees, administrative or judicial doctrines or other Laws that are
designed to prohibit, restrict or regulate actions having the purpose or effect
of monopolization, lessening of competition or restraint of trade.
"Contract" means any contract, indenture, note, bond, lease, commitment or
other legally binding agreement.
"Environmental Law" means any applicable Law relating to the protection of
the environment, human health as it relates to environmental protection or
natural resources, including the Comprehensive Environmental Response,
Compensation and Liability Act (42 U.S.C. Section 9601 et seq.) ("CERCLA"), the
Hazardous Materials Transportation Act (49 U.S.C. App. Section 1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42 U.S.C.
Section 7401 et seq.) the Toxic Substances Control Act (15 U.S.C. Section 2601
et seq.), and the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Setion 136 et seq.), as each has been amended and the regulations promulgated
pursuant thereto.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"Existing Credit Agreement" means the Fourth Amended and Restated Credit
Agreement, dated as of September 13, 2005, among the Company, Activant Solutions
Inc., JPMorgan Chase Bank, N.A., X.X. Xxxxxx Securities Inc. and Deutsche Bank
Securities, Inc.
"GAAP" means generally accepted accounting principles in the United States,
consistently applied.
"Governmental Antitrust Entity" means any Governmental Body with regulatory
jurisdiction over enforcement of any applicable Competition Law.
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"Governmental Body" means any government or governmental or regulatory body
thereof, or political subdivision thereof, whether foreign, European Union or
other supra-national, national, federal, regional, state or local or any agency,
instrumentality or authority thereof, or any court or arbitrator.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the rules and regulations promulgated thereunder.
"Indebtedness" of any Person means, without duplication, (i) the principal
of and accrued interest or premium (if any) in respect of (A) indebtedness of
such Person for money borrowed and (B) indebtedness evidenced by notes,
debentures, bonds or other similar instruments for the payment of which such
Person is responsible or liable; (ii) all obligations of such Person issued or
assumed as the deferred purchase price of property, all conditional sale
obligations of such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable and other accrued
current liabilities arising in the Ordinary Course of Business); (iii) all
obligations of such Person under leases required to be capitalized in accordance
with GAAP; (iv) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction; (v) all obligations of the type referred to in clauses (i) through
(iv) of other Persons for the payment of which such Person is responsible or
liable, directly or indirectly, as obligor, guarantor, surety or otherwise,
including guarantees of such obligations and (vi) all obligations of the type
referred to in clauses (i) through (v) of other Persons secured by any Lien on
any property or asset of such Person (whether or not such obligation is assumed
by such Person).
"Intellectual Property" means all intellectual property or industrial
property rights existing anywhere in the world associated with all: (i) patents
and patent applications, including continuations, divisionals,
continuations-in-part, reissues or reexaminations and patents issuing thereon
(collectively, "Patents"), (ii) trademarks, service marks, trade dress, logos,
corporate names, trade names and Internet domain names, together with the
goodwill associated with any of the foregoing, and all applications and
registrations therefor (collectively, "Marks"), (iii) copyrights and
registrations and applications therefor, works of authorship and moral rights
(collectively, "Copyrights"), and (iv) confidential and proprietary information,
including trade secrets, discoveries, concepts, ideas, research and development,
algorithms, know-how, formulae, inventions (whether or not patentable),
processes, techniques, technical data, designs, drawings, specifications,
databases, and customer lists, in each case excluding any rights in respect of
any of the foregoing that comprise or are protected by Patents (collectively,
"Trade Secrets").
"IRS" means the U.S. Internal Revenue Service.
"Knowledge of the Company" means the actual knowledge of those Persons
identified on Schedule 1.1(a).
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"Law" means any law (including common law), statute, code, ordinance, rule
or regulation, of any Governmental Body.
"Legal Proceeding" means any judicial, administrative or arbitral actions,
suits or proceedings (public or private) by or before a Governmental Body.
"Liability" means any debt, liability or obligation (whether direct or
indirect, absolute or contingent, accrued or unaccrued, liquidated or
unliquidated, or due or to become due) and including all costs and expenses
relating thereto.
"Lien" means any lien, encumbrance, pledge, mortgage, deed of trust,
security interest, claim, lease, charge, option, right of first refusal,
easement, servitude or transfer restriction. Solely for purposes of Section
5.12, it is understood that "Lien" does not include any license or similar right
granted with respect to any Intellectual Property.
"Marketing Period" means the period commencing on the date of this
Agreement and ending on May 8, 2006.
"Material Adverse Effect" means (i) a material adverse effect on the
business, assets, liabilities, properties, results of operations or financial
condition of the Company and its Subsidiaries (taken as a whole) or (ii) a
material adverse effect on the ability of the Company to consummate the
transactions contemplated by this Agreement, in each case, other than an effect
resulting from an Excluded Matter. "Excluded Matter" means any one or more of
the following to the extent not specifically related to or disproportionately
impacting the Company or any of its Subsidiaries: (A) the effect of any change
in economies or securities or financial markets in general in the United States
or elsewhere; (B) the effect of any change that generally affects the industry
in which the Company and its Subsidiaries operate; (C) the effect of any change
arising in connection with natural disasters or acts of nature, hostilities,
acts of war, sabotage or terrorism or military actions or any escalation or
material worsening of any such hostilities, acts of war, sabotage or terrorism
or military actions existing or underway as of the date hereof; or (D) the
effect of any changes in applicable Laws or accounting rules.
"Materials of Environmental Concern" means any material, substance or waste
characterized or regulated under Environmental Laws as "hazardous," "toxic,"
"radioactive" or a "pollutant" or "contaminant," including gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum product,
polychlorinated biphenyl, asbestos or asbestos-containing material,
urea-formaldehyde insulation, radioactive material, or toxic mold.
"Optionholder" means those Persons holding Options under any Company Option
Plan as set forth on Schedule 1.1(b).
"Order" means any order, injunction, judgment, decree, ruling, writ,
assessment or arbitration award of a Governmental Body of competent
jurisdiction.
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"Ordinary Course of Business" means the ordinary and usual course of
business of the Company and its Subsidiaries consistent with past practices.
"Permits" means any approvals, authorizations, consents, licenses, permits
or certificates of a Governmental Body.
"Permitted Exceptions" means (i) all defects, exceptions, restrictions,
easements, rights of way and encumbrances disclosed in policies of title
insurance; (ii) statutory liens for current Taxes, assessments or other
governmental charges not yet delinquent or the amount or validity of which is
being contested in good faith by appropriate proceedings, provided an
appropriate reserve is established therefor; (iii) mechanics', carriers',
workers', repairers' and similar Liens arising or incurred in the Ordinary
Course of Business; (iv) zoning, entitlement and other land use and
environmental regulations by any Governmental Body; (v) Liens securing
Indebtedness as disclosed in the Financial Statements; (vi) title of a lessor
under a capital or operating lease; (vii) real property Liens of public record
and (viii) such other imperfections in title, charges, easements, rights of way,
restrictions, defects, exceptions and encumbrances that do not materially and
adversely impact the value or utility of the affected property.
"Person" means any individual, corporation, partnership, limited liability
company, firm, joint venture, association, joint-stock company, trust,
unincorporated organization, Governmental Body or other entity.
"SEC" means the Securities and Exchange Commission.
"Software" means any and all (i) computer programs, including any and all
software implementations of algorithms, models and methodologies, whether in
source code or object code, (ii) databases and compilations, including any and
all data and collections of data, whether machine readable or otherwise, (iii)
descriptions, flow-charts and other work product used to design, plan, organize
and develop any of the foregoing, screens, user interfaces, report formats,
firmware, development tools, templates, menus, buttons and icons and (iv) all
documentation, including user manuals and other training documentation, related
to any of the foregoing.
"Subsidiary" means any Person (i) of which a majority of the outstanding
voting securities or other voting equity interests are owned, directly or
indirectly, by the Company or (ii) with respect to which the Company or any of
its Subsidiaries is a general partner or managing member.
"Taxes" means (i) all national, federal, regional, state or local taxes,
charges, fees, imposts, levies or other assessments in any jurisdiction,
including all net income, gross receipts, capital, sales, use, ad valorem, value
added, transfer, franchise, profits, inventory, capital stock, license,
withholding, payroll, employment, social security, unemployment, excise,
severance, stamp, occupation, property and estimated taxes, customs duties,
fees, assessments and charges of any kind whatsoever, and (ii) all
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interest, penalties, fines, additions to tax or additional amounts imposed by
any taxing authority in connection with any item described in clause (i).
"Tax Return" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes
and any schedules or attachments thereto.
(b) Terms Defined Elsewhere in this Agreement. For purposes of this
Agreement, the following terms have meanings set forth in the sections
indicated:
Term Section
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Acquisition Proposal 7.16
Activant 7.13(a)
Activant Debt Tender Offers 7.13(a)
Agreement Preamble
Appraisal Shares 3.2
Balance Sheet 5.6
Balance Sheet Date 5.6
Bridge Debt Commitment Letter 6.6
CERCLA 1.1 (in definition of Environmental Law)
Certificate 3.1(c)
Certificate of Merger 2.3
Claim 7.7(c)
Class A Common Stock 3.1
Class A Merger Consideration 3.1(c)
Closing 2.2
Closing Date 2.2
Common Merger Consideration 3.1(c)
Common Stock 3.1
Company Preamble
Company Benefit Plans 5.14(a)
Company Charter Documents 5.1
Company Debt Tender Offer 7.13(a)
Company Documents 5.2
Company Employee 5.14(a)
Company Registered Intellectual Property 5.12(a)
Company Stock 3.1
Company Stock Award 5.4(c)
Confidentiality Agreement 7.6
Consent Solicitation 7.13(e)
Continuing Employees 7.10(a)
Copyrights 1.1 (in definition of Intellectual Property)
Debt Commitment Letters 6.6
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Term Section
---- -------
Debt Tender Offers 7.13(a)
DGCL 2.1
Effective Time 2.3
ERISA 5.14(a)
Errors 5.12(j)
Excluded Matter 1.1 (in definition of Material Adverse Effect)
Existing Policy 7.7(e)
Financial Statements 5.6
Fixed Notes 7.13(a)
Floating Notes 7.13(a)
Foreign Benefit Plans 5.14(g)
Form S-1 7.11
Guarantee Recitals
Guarantors Recitals
HMCo 7.15
Indemnitees 7.7(a)
Insurance Cap 7.7(e)
Letter of Transmittal 3.3(b)
Marks 1.1 (in definition of Intellectual Property)
Material Contracts 5.13(a)
Material In-Bound License Agreements 5.12(l)
Merger Recitals
Merger Consideration 3.1(c)
Merger Sub Preamble
Offer Documents 7.13(b)
Option 3.1(d)
Option Payment 3.1(d)
Outside Date 4.1(a)
Parent Preamble
Parent Documents 6.2
Parent Plans 7.10(b)
Patents 1.1 (in definition of Intellectual Property)
Personal Property Leases 5.11
PIK Notes 7.13(a)
Present Fair Salable Value 6.7
Real Property Lease 5.10
Real Property Leases 5.10
Requested Consents 7.13(e)
Required Financial Information 7.12
SEC Filings 5.23(a)
Section 262 3.2
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Term Section
---- -------
Securities Act 5.23(a)
Senior Secured Debt Commitment Letter 6.6
Solvency 6.7
Solvent 6.7
Stockholders 3.1(c)
Subsidiary Charter Documents 5.5(c)
Surviving Corporation 2.1
Tender Amount 7.13(c)
Tendered Notes 7.13(c)
Tender Offer Notes 7.13(a)
Termination Fee 4.3(b)
Trade Secrets 1.1 (in definition of Intellectual Property)
Vested Options 3.1(d)
(c) Other Definitional and Interpretive Matters. Unless otherwise
expressly provided herein, for purposes of this Agreement, the following rules
of interpretation shall apply:
Calculation of Time Period. When calculating the period of time before
which, within which or following which any act is to be done or step taken
pursuant to this Agreement, the date that is the reference date in
calculating such period shall be excluded. If the last day of such period
is a non-Business Day, the period in question shall end on the next
succeeding Business Day.
Dollars. Any reference in this Agreement to Dollars or $ shall mean U.S.
dollars.
Exhibits/Schedules. The Exhibits and Schedules to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this
Agreement. All Exhibits and Schedules annexed hereto or referred to herein
are hereby incorporated in and made a part of this Agreement as if set
forth in full herein. The Company may, at its option, include in the
Schedules items that are not material in order to avoid any
misunderstanding, and such inclusion, or any references to dollar amounts,
shall not be deemed to be an acknowledgement or representation that such
items are material, to establish any standard of materiality or to define
further the meaning of such terms for purposes of this Agreement. Any
capitalized terms used in any Schedule or Exhibit but not otherwise defined
therein shall be defined as set forth in this Agreement.
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Gender and Number. Any reference in this Agreement to gender shall include
all genders, and words imparting the singular number only shall include the
plural and vice versa.
Headings. The provision of a Table of Contents, the division of this
Agreement into Articles, Sections and other subdivisions and the insertion
of headings are for convenience of reference only and shall not affect or
be utilized in construing or interpreting this Agreement. All references in
this Agreement to any "Section" are to the corresponding Section of this
Agreement unless otherwise specified.
Herein. The words such as "herein," "hereinafter," "hereof," and
"hereunder" refer to this Agreement as a whole and not merely to a
subdivision in which such words appear unless the context otherwise
requires.
Including. The word "including" or any variation thereof means "including,
without limitation" and shall not be construed to limit any general
statement that it follows to the specific or similar items or matters
immediately following it.
Reflected On or Set Forth In. An item arising with respect to a specific
representation or warranty shall be deemed to be "reflected on" or "set
forth in" a balance sheet or financial statements, to the extent any such
phrase appears in such representation or warranty, if (a) there is a
reserve, accrual or other similar item underlying a number on such balance
sheet or financial statements that related to the subject matter of such
representation, (b) such item is otherwise specifically set forth on the
balance sheet or financial statements or (c) such item is reflected on the
balance sheet or financial statements and is specifically set forth in the
notes thereto.
(d) The parties hereto have participated jointly in the negotiation
and drafting of this Agreement and, in the event an ambiguity or question of
intent or interpretation arises, this Agreement shall be construed as jointly
drafted by the parties hereto and no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any provision
of this Agreement.
ARTICLE 2
THE MERGER
2.1 The Merger. Upon the terms and subject to the conditions set forth in
this Agreement and in accordance with the General Corporation Law of the State
of Delaware (the "DGCL"), Merger Sub shall be merged with and into the Company
at the Effective Time. Following the Effective Time, the separate corporate
existence of Merger Sub
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shall cease, and the Company shall continue as the surviving corporation in the
Merger (the "Surviving Corporation") and shall succeed to and assume all the
rights and obligations of Merger Sub in accordance with the DGCL.
2.2 Closing. Subject to the satisfaction of the conditions set forth in
Sections 8.1 and 8.2 (or the waiver thereof by the party entitled to waive any
such condition), the closing of the Merger (the "Closing") will take place at
10:00 a.m. (Central Time) on a date to be specified by the parties (the "Closing
Date"), which shall be no later than the later of (a) the second Business Day
after satisfaction or waiver of each condition to the Closing set forth in
Sections 8.1 and 8.2 (other than those conditions that by their terms are to be
satisfied at the Closing, but subject to the satisfaction or waiver of those
conditions), and (b) the earlier of (x) a date during the Marketing Period to be
specified by Parent on no less than two Business Day's notice to the Company (it
being understood that such date may be conditioned upon the simultaneous
completion of a high yield debt financing) and (y) May 8, 2006, at the offices
of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxxxx Xxxxx
00000, unless another date or place is agreed to in writing by the parties
hereto.
2.3 Effective Time. Subject to the provisions of this Agreement, as soon as
practicable on the Closing Date, the parties shall file a certificate of merger
(the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and, as soon as practicable on or after the Closing Date,
shall make all other filings or recordings required under the DGCL. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with the Secretary of State of the State of Delaware, or at such other time as
Parent and the Company shall agree and shall specify in the Certificate of
Merger (the time the Merger becomes effective being the "Effective Time").
2.4 Effects of the Merger. The Merger shall have the effects set forth in
Section 259 of the DGCL.
2.5 Certificate of Incorporation and Bylaws. Effective immediately
following the Merger, the certificate of incorporation of the Company, as in
effect immediately prior to the Effective Time, shall be the certificate of
incorporation of the Surviving Corporation until amended in accordance with
applicable Law. Effective immediately following the Merger, the bylaws of the
Company, as in effect immediately prior to the Effective Time, shall be the
bylaws of the Surviving Corporation until amended in accordance with applicable
Law.
2.6 Directors. The directors of Merger Sub at the Effective Time shall be
the initial directors of the Surviving Corporation and shall hold office in
accordance with the certificate of incorporation and bylaws of the Surviving
Corporation until their successors are duly elected or appointed and qualified
or until their earlier death, resignation or removal.
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2.7 Officers. The officers of the Company at the Effective Time shall be
the initial officers of the Surviving Corporation and shall hold office in
accordance with the certificate of incorporation and bylaws of the Surviving
Corporation until their successors are duly elected or appointed and qualified
or until their earlier death, resignation or removal.
ARTICLE 3
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
3.1 Effect on Capital Stock. At the Effective Time, by virtue of the Merger
and without any action on the part of the holder of any shares of common stock,
par value $0.000125 per share, of the Company ("Common Stock") or shares of
Class A common stock, par value $0.000125 per share, of the Company (the "Class
A Common Stock" together with the Common Stock, the "Company Stock") or any
shares of capital stock of Merger Sub:
(a) Capital Stock of Merger Sub. Each issued and outstanding share of
capital stock of Merger Sub shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock, par value $0.000125
per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each share
of Company Stock that is owned by the Company or its Subsidiaries, Parent or
Merger Sub shall automatically be canceled and retired and shall cease to exist,
and no consideration shall be delivered in exchange therefor.
(c) Conversion of Company Stock. Each issued and outstanding share of
Common Stock (other than shares to be canceled in accordance with Section 3.1(b)
and the Appraisal Shares) shall be converted into the right to receive an amount
in cash equal to $4.00 per share, without interest (the "Common Merger
Consideration"). Each issued and outstanding share of Class A Common Stock shall
be converted into the right to receive an amount in cash equal to $7.2965 per
share, without interest (the "Class A Merger Consideration"). At the Effective
Time, all such shares of Company Stock shall no longer be outstanding and shall
automatically be canceled and retired and shall cease to exist, and each holder
of a certificate (collectively, the "Stockholders"), which immediately prior to
the Effective Time represented any such shares of Company Stock (each, a
"Certificate"), shall cease to have any rights with respect thereto except the
right to receive the Common Merger Consideration or Class A Merger Consideration
(as applicable, the "Merger Consideration").
(d) Termination of Options.
(i) At or prior to the Effective Time, and except as provided in
Section 3.1(d)(iii), the Company shall cancel and terminate each
outstanding
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stock option (each an "Option") heretofore granted under the Company Option
Plans which is vested and exercisable immediately prior to the Effective
Time (giving effect to any acceleration of vesting resulting from the
Merger) (the "Vested Options"), and each such Vested Option shall be
converted into the right to receive a payment in cash only, without
interest, from the Surviving Corporation (the "Option Payment"), in
accordance with the terms hereof, equal to the product of (A) the total
number of shares of Common Stock as to which the Vested Option is vested
and exercisable immediately prior to the Effective Time and (B) the excess,
if any, of the Common Merger Consideration over the exercise price per
share of Common Stock subject to such Vested Option, less applicable
withholding taxes (as provided in Section 3.4 below). The Option Payment
made pursuant to Section 3.3 shall be consideration in full for the
cancellation of the Vested Options.
(ii) The Company shall cancel and terminate each Option that is
not a Vested Option without the right to receive any Option Payment or
other consideration in respect of the cancellation and termination thereof.
In addition, the Company shall terminate the Company Option Plans and any
other plan, program, agreement or arrangement, whether oral or written,
providing for the issuance or grant of any other interest in respect of the
capital stock of the Company or any Subsidiary as of the Effective Time
without the right to receive any consideration for the termination thereof
except as otherwise expressly set forth in this Agreement. The Company has
taken or will take prior to the Effective Time all steps necessary to
ensure that none of the Company or any of its Subsidiaries is or will be
bound by any Options, other options, warrants, rights, agreements or
arrangements, whether written or oral, that would entitle any Person, other
than pursuant to this Agreement, to acquire any capital stock of the
Surviving Corporation or any of its subsidiaries or, except as otherwise
provided in this Agreement, to receive any payment in respect thereof and
to cause all Options to be canceled and the Vested Options to be converted
into the right to receive the Option Payment.
(iii) Notwithstanding anything in this Agreement to the contrary,
the Company shall reasonably cooperate with Parent to allow certain of the
Options held by key employees of the Company designated by Parent, with the
agreement of such holders of such Options, to be substituted at the
Effective Time for options to acquire common stock of Parent on such terms
as Parent and the holders of such Options may mutually agree.
3.2 Appraisal Rights. Notwithstanding anything in this Agreement to the
contrary, shares (the "Appraisal Shares") of Company Stock issued and
outstanding immediately prior to the Effective Time that are held by any holder
who is entitled to demand and properly demands appraisal of such shares pursuant
to, and who complies in all respects with, the provisions of Section 262 of the
DGCL ("Section 262") shall not be converted into the right to receive the Merger
Consideration as provided in Section 3.1(c), but instead such holder shall be
entitled to payment of the fair value of
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such shares in accordance with the provisions of Section 262. At the Effective
Time, all Appraisal Shares shall no longer be outstanding and shall
automatically be canceled and shall cease to exist, and each holder of Appraisal
Shares shall cease to have any rights with respect thereto, except the right to
receive the fair value of such Appraisal Shares in accordance with the
provisions of Section 262. Notwithstanding the foregoing, if any such holder
shall fail to perfect or otherwise shall waive, withdraw or lose the right to
appraisal under Section 262 or a court of competent jurisdiction shall determine
that such holder is not entitled to the relief provided by Section 262, then the
right of such holder to be paid the fair value of such holder's Appraisal Shares
under Section 262 shall cease and each such Appraisal Share shall be deemed to
have been converted at the Effective Time into, and shall have become, the right
to receive the Merger Consideration as provided in Section 3.1(c). The Company
shall serve prompt notice to Parent of any demands for appraisal of any shares
of Company Stock, and Parent shall have the right to participate in all
negotiations and proceedings with respect to such demands. Prior to the
Effective Time, the Company shall not, without the prior written consent of
Parent, make any payment with respect to, or settle or offer to settle, any such
demands, or agree to do any of the foregoing.
3.3 Payment of Merger Consideration; Exchange of Certificates.
(a) Payment. Subject to compliance with Section 3.3(b), the Surviving
Corporation shall pay (i) to each Stockholder the Merger Consideration in
respect of each share of Company Stock held by such Stockholder and (ii) to each
Optionholder, the Option Payment in respect of each Option held by such
Optionholder. All payments shall be made by wire transfer of immediately
available funds to the account of such Stockholder and by check to such
Optionholder.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Company shall mail a Letter of Transmittal, in customary
form reasonably acceptable to the Company and Parent (the "Letter of
Transmittal") to each Stockholder. Upon surrender of the Certificate or
Certificates representing the Company Stock held by each Stockholder to the
Company, together with a duly executed Letter of Transmittal, such Stockholder
shall be entitled to receive, subject to the terms and conditions hereof, the
Merger Consideration for each share of Company Stock represented by such
Certificate or Certificates, and Certificates so surrendered shall forthwith be
canceled. Until surrendered as contemplated by this Section 3.3(b), each
Certificate shall be deemed at any time after the Effective Time to represent
only the right to receive upon such surrender the Merger Consideration. No
interest will be paid or will accrue on the cash payable upon surrender of any
Certificate.
(c) No Further Ownership Rights in Company Stock. All cash paid upon
the surrender of Certificates in accordance with the terms of this Article 3
shall be deemed to have been paid in full satisfaction of all rights pertaining
to the shares of Company Stock previously represented by such Certificates. From
and after the Effective Time, the stock transfer books of the Company shall be
closed and there shall be no further registration of transfers on the stock
transfer books of the Surviving
14
Corporation of the shares of Company Stock that were outstanding immediately
prior to the Effective Time. If, at any time after the Effective Time,
Certificates are presented to the Surviving Corporation or Parent for any
reason, they shall be canceled and exchanged as provided in this Article 3.
(d) No Liability. None of Parent, Merger Sub or the Company shall be
liable to any Person in respect of any cash delivered to a public official
pursuant to any applicable abandoned property, escheat or similar Law.
(e) Lost Certificates. If any Certificate shall have been lost, stolen
or destroyed, upon the making of an affidavit of that fact by the Person
claiming such Certificate to be lost, stolen or destroyed, the Surviving
Corporation will issue in exchange for such lost, stolen or destroyed
Certificate the Merger Consideration for the Company Stock represented by such
Certificate to which such holder would be entitled pursuant to this Article 3.
3.4 Withholding Taxes. Notwithstanding anything to the contrary contained
herein, the Company, Parent and the Surviving Corporation shall be entitled to
deduct and withhold from the payment of the Merger Consideration and the Option
Payment otherwise payable to a Stockholder or an Optionholder, respectively,
pursuant to this Agreement such amounts as may be required to be deducted and
withheld with respect to the making of such payment under the Code, or under any
provision of state, local or foreign Tax Law. To the extent amounts are so
withheld and paid over to the appropriate Taxing authority, the withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
Person in respect of which such deduction and withholding was made.
ARTICLE 4
TERMINATION
4.1 Termination of Agreement. This Agreement may be terminated at any time
prior to the Effective Time as follows:
(a) at the election of the Company or Parent on or after June 30, 2006
(the "Outside Date"), if the Merger shall not have occurred by the close of
business on such date, provided that the Company may not terminate this
Agreement pursuant to this Section 4.1(a) if it is in material default of any of
its obligations hereunder, and provided further that such date shall be
automatically extended for sixty (60) days if only the conditions to Closing set
forth in Sections 8.1(d) and 8.2(d) remain unsatisfied or unwaived at June 30,
2006;
(b) by mutual written consent of the Company and Parent;
(c) by the Company or Parent if there shall be in effect a final
nonappealable Order restraining, enjoining or otherwise prohibiting the
consummation of
15
the transactions contemplated hereby; it being agreed that the parties hereto
shall use all commercially reasonable efforts to promptly appeal any adverse
determination that is not nonappealable and diligently pursue such appeal;
(d) by Parent if (i) the Company shall be in material violation of any
of its obligations hereunder, and if such violation (if curable) is not cured
within twenty (20) days after the giving of written notice by Parent to the
Company or (ii) there has been any event, change, occurrence or circumstance
that renders the condition set forth in Section 8.1(a) incapable of being
satisfied by the Outside Date;
(e) by the Company if (i) Parent or Merger Sub shall be in material
violation of any of their obligations hereunder, and if such violation (if
curable) is not cured within twenty (20) days after the giving of written notice
by the Company to Parent, or (ii) there has been any event, change, occurrence
or circumstance that renders the condition set forth in Section 8.2(a) incapable
of being satisfied by the Outside Date; or
(f) by the Company if (i) all the conditions set forth in Section 8.1
have been satisfied or waived (other than those conditions that by their terms
are to be satisfied at the Closing, but subject to the satisfaction or waiver of
those conditions) and (ii) Parent and Merger Sub do not complete the Merger by
the later of (A) two Business Days thereafter and (B) May 8, 2006.
4.2 Procedure upon Termination. In the event of termination and abandonment
by Parent or the Company, or both, pursuant to Section 4.1 hereof, written
notice thereof shall forthwith be given to the other party or parties, and this
Agreement shall terminate, and the Merger shall be abandoned, without further
action by Parent or the Company.
4.3 Effect of Termination.
(a) In the event that this Agreement is validly terminated in
accordance with Section 4.1, then each of the parties shall be relieved of their
duties and obligations arising under this Agreement after the date of such
termination and such termination shall be without liability to Parent, Merger
Sub or the Company; provided, however, that, subject to the terms of this
Section 4.3, (a) no such termination shall relieve any party hereto from
liability for any willful breach of this Agreement and (b) the provisions of
this Section 4.3 and Section 7.6 (Confidentiality) and Article 9 (Miscellaneous)
shall remain in full force and effect and survive any termination of this
Agreement in accordance with its terms.
(b) Parent agrees that, if this Agreement shall have been terminated
by (i) the Company or Parent pursuant to Section 4.1(a) and, at the time of such
termination, all of the conditions set forth in Section 8.1 have been satisfied
or waived as of such date (treating such date as if it were the Closing Date),
(ii) the Company pursuant to Section 4.1(e) as a result of a willful breach of
this Agreement by Parent or Merger Sub
16
or (iii) the Company pursuant to Section 4.1(f), then Parent shall pay to the
Company a fee of $30 million (the "Termination Fee") in immediately available
funds no later than ten Business Days after such termination by the Company.
(c) Each of the Company, Parent and Merger Sub acknowledges that the
agreements contained in this Section 4.3 are an integral part of the
transactions contemplated by this Agreement. Notwithstanding anything to the
contrary in this Agreement, the Company's right to receive payment of the
Termination Fee pursuant to this Section 4.3 (subject to the terms and
conditions of this Section 4.3) or the guarantee thereof pursuant to the
Guarantees shall be the sole and exclusive remedy of the Company against Parent,
Merger Sub, any of the Guarantors or any of their respective stockholders,
partners, members, directors, officers or agents for any loss, damage or injury
suffered as a result of the failure of the Merger to be consummated or for any
breach of this Agreement by Parent or Merger Sub (including any willful breach),
and upon payment of the Termination Fee in accordance with this Section 4.3,
none of Parent, Merger Sub, any of the Guarantors or any of their respective
stockholders, partners, members, directors, officers or agents shall have any
further Liability or obligation relating to or arising out of this Agreement or
the transactions contemplated by this Agreement (except with respect to the
provisions of Section 7.6 (Confidentiality)).
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub that:
5.1 Organization and Good Standing. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate its properties and to carry on its business as now conducted. The
Company is duly qualified or authorized to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction in which it owns or
leases real property and each other jurisdiction in which the conduct of its
business or the ownership of its properties requires such qualification or
authorization, except where the failure to be so qualified, authorized or in
good standing, individually or in the aggregate, would not have a Material
Adverse Effect. The Company has made available to Parent prior to the date
hereof a true and complete copy of the Certificate of Incorporation and Bylaws
of the Company, each as amended to date (together, the "Company Charter
Documents"), and each such instrument is in full force and effect and no other
organizational documents are applicable to or binding upon the Company. The
Company is not in violation in any material respect of any of the provisions of
the Company Charter Documents.
5.2 Authorization of Agreement. The Company has all requisite power and
authority to execute and deliver this Agreement and each other agreement,
document, or instrument or certificate contemplated by this Agreement or to be
executed by the Company in connection with the consummation of the transactions
contemplated by this
17
Agreement (the "Company Documents") and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
and the Company Documents and the consummation of the transactions contemplated
hereby and thereby have been duly authorized by all requisite corporate action
on the part of the Company. This Agreement has been, and each of the Company
Documents will be at or prior to the Closing, duly and validly executed and
delivered by the Company and (assuming the due authorization, execution and
delivery by the other parties hereto and thereto) this Agreement constitutes,
and each Company Document when so executed and delivered will constitute, the
legal, valid and binding obligations of the Company, enforceable against it in
accordance with their terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws affecting creditors' rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at law or
in equity). The Company has delivered to Parent a true and correct copy of a
written consent of each of Hicks, Muse, Xxxx & Xxxxx Equity Fund III, L.P., HM3
Coinvestors, L.P. and A. Xxxxxxxx Xxxxx adopting resolutions approving the
Merger and this Agreement and the transactions contemplated hereby and such
consent is the only vote, approval or consent of the holders of any class or
series of the Company's capital stock or other securities necessary for the
approval and adoption of this Agreement and for the consummation by the Company
of the other transactions contemplated by this Agreement.
5.3 Conflicts; Consents of Third Parties.
(a) Except as set forth on Schedule 5.3(a), none of the execution and
delivery by the Company of this Agreement or the Company Documents, the
consummation of the transactions contemplated hereby or thereby, or compliance
by the Company with any of the provisions hereof or thereof will conflict with,
result in any violation of or default (with or without notice or lapse of time,
or both) under, give rise to a right of termination or cancellation under,
require a consent or waiver under, require the payment of a penalty or increased
liabilities or fees or the loss of a benefit under or result in the imposition
of any Lien under, any provision of (i) the certificate of incorporation and
bylaws or comparable organizational documents of the Company or any Subsidiary;
(ii) any material Contract or Permit to which the Company or any Subsidiary is a
party or by which any of the material properties or assets of the Company or any
Subsidiary are bound; (iii) any Order applicable to the Company or any
Subsidiary or by which any of the properties or assets of the Company or any
Subsidiary are bound; or (iv) any applicable Law, the violation of which has or
may have a material impact on the business of the Company or any of its
Subsidiaries.
(b) Except as set forth on Schedule 5.3(b), no material consent,
waiver, approval, Order, Permit or authorization of, or declaration or filing
with, or notification to, any Governmental Body is required on the part of the
Company or any Subsidiary in connection with the execution and delivery of this
Agreement or the Company Documents or the compliance by the Company with any of
the provisions hereof or thereof, or the consummation of the transactions
contemplated hereby or
18
thereby, except for (i) compliance with the applicable requirements of the HSR
Act (and any similar Law enforced by any Governmental Antitrust Entity regarding
preacquisition notifications for the purpose of competition reviews) and (ii)
the filing of the Certificate of Merger with the Secretary of State of the State
of Delaware and appropriate documents with the relevant authorities of other
states in which the Company is qualified to do business.
5.4 Capitalization.
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Common Stock and 25,000,000 shares of Class A Common
Stock. As of the date hereof, there are 19,392,497 shares of Common Stock issued
and outstanding, none of which are held by the Company as treasury stock or held
by any Subsidiary. As of the date hereof, there are 25,000,000 shares of Class A
Common Stock issued and outstanding, none of which are held by the Company as
treasury stock or by any Subsidiary. A list of all stockholders of the Company
together with the address and number of shares held by each stockholder is set
forth on Schedule 5.4(a). All of the issued and outstanding shares of Company
Stock were duly authorized for issuance and are validly issued, fully paid and
non-assessable and free and clear of any pre-emptive or similar rights.
(b) Except as set forth on Schedule 5.4(b)(i), there is no existing
option, warrant, call, right, or Contract of any character to which the Company
is a party requiring, and there are no securities of the Company outstanding
that upon conversion, exercise or exchange would require, the issuance of any
shares of capital stock of the Company or other securities convertible into,
exchangeable for or evidencing the right to subscribe for, purchase or receive
shares of capital stock of the Company. Except as set forth on Schedule
5.4(b)(ii), the Company is not a party to, or otherwise subject to, any voting
trust, proxy or other Contract with respect to the voting, redemption,
repurchase, sale, transfer or other disposition of the Company Stock.
(c) Schedule 5.4(c) sets forth the following information with respect
to each Option and each award of restricted Common Stock (each, a "Company Stock
Award") granted under the Company Option Plans outstanding as of the date of
this Agreement: (i) the name of the recipient of the Company Stock Award; (ii)
the type of Company Stock Award; (iii) the particular Company Option Plan
pursuant to which the Company Stock Award was granted; (iv) the number and class
of shares of Company Stock subject to such Company Stock Award; (v) the exercise
or purchase price of such Company Stock Award; (vi) the date on which such
Company Stock Award was granted; (vii) the date on which such Company Stock
Award expires; (viii) the applicable vesting schedule; and (ix) whether the
exercisability or right of repurchase of such Company Stock Award will be
accelerated in any way by the Merger, and if so, the extent of such
acceleration.
19
5.5 Subsidiaries.
(a) Schedule 5.5(a) sets forth the name of each Subsidiary, and, with
respect to each Subsidiary, the jurisdiction in which it is incorporated or
organized, the jurisdictions, if any, in which it is qualified to do business,
the number of shares of its authorized capital stock, the number and class of
shares thereof duly issued and outstanding, the names of all stockholders or
other equity owners and the number of shares of stock owned by each stockholder
or the amount of equity owned by each equity owner. Except as set forth on
Schedule 5.5(a), neither the Company nor any of its Subsidiaries owns any
capital stock or other equity interests in any Person. Each Subsidiary is a duly
organized and validly existing corporation or other entity in good standing
under the laws of the jurisdiction of its incorporation or organization. Each
Subsidiary is duly qualified or authorized to do business as a foreign
corporation or entity and is in good standing under the laws of each
jurisdiction in which the conduct of its business or the ownership of its
properties requires such qualification or authorization, except where the
failure to be so qualified, authorized or in good standing, individually or in
the aggregate, would not have a Material Adverse Effect. Each Subsidiary has all
requisite corporate or entity power and authority to own, lease and operate its
properties and carry on its business as now conducted. There is no Contract
pursuant to which the Company or any of its Subsidiaries is obligated to make
any capital contribution or other investment in or loan to any Person.
(b) The outstanding shares of capital stock and other equity interests
of each Subsidiary are validly issued, fully paid and non-assessable, and all
such shares or other equity interests represented as being owned, directly or
indirectly, by the Company and its Subsidiaries are owned free and clear of any
and all Liens and pre-emptive or similar rights, except as set forth on Schedule
5.5(b). No shares of capital stock are held by any Subsidiary as treasury stock.
There is no existing option, warrant, call, right or Contract of any character
to which any Subsidiary is a party requiring, and there are no securities of any
Subsidiary outstanding that upon conversion, exercise or exchange would require,
the issuance of any shares of capital stock or other equity interests of any
Subsidiary or other securities convertible into, exchangeable for or evidencing
the right to subscribe for, purchase or receive shares of capital stock or other
equity interests of any Subsidiary. Except as set forth on Schedule 5.5(b),
neither the Company nor any Subsidiary is party to, or otherwise subject to, any
voting trust, proxy or other Contract with respect to the voting, redemption,
repurchase, sale, transfer or other disposition of the shares of capital stock
or other equity interests of any Subsidiary.
(c) The Company has made available to Parent true and complete copies
of the charter, by-laws or other organizational documents of each Subsidiary of
the Company (the "Subsidiary Charter Documents"), and each such instrument is in
full force and effect and no other organizational documents are applicable to or
binding upon such Subsidiaries. None of the Subsidiaries is in violation in any
material respect of any of the provisions of its Subsidiary Charter Documents.
20
5.6 Financial Statements. The Company has delivered to Parent copies of (i)
the audited consolidated balance sheets of the Company and its Subsidiaries as
at September 30, 2005 and 2004 and the related audited consolidated statements
of income, cash flows and stockholders equity of the Company and its
Subsidiaries for the years ended September 30, 2005, 2004 and 2003 and (ii) the
unaudited consolidated balance sheet of the Company and its Subsidiaries as at
December 31, 2005 and the related consolidated statements of income, cash flows
and stockholders equity of the Company and its Subsidiaries for the three months
then ended (such audited and unaudited statements, including the related notes
and schedules thereto, are referred to herein as the "Financial Statements").
Except as set forth in the notes thereto and, in the case of the unaudited
financial statements, normal recurring year-end adjustments, each of the
Financial Statements has been prepared in accordance with GAAP and presents
fairly in all material respects the consolidated financial position, results of
operations and cash flows of the Company and its Subsidiaries as at the dates
and for the periods indicated therein. For the purposes hereof, the audited
consolidated balance sheet of the Company and its Subsidiaries as at December
31, 2005 is referred to as the "Balance Sheet" and December 31, 2005 is referred
to as the "Balance Sheet Date".
5.7 No Undisclosed Liabilities.
(a) Except as set forth on Schedule 5.7(a), neither the Company nor
any Subsidiary has any Liabilities of any kind that would have been required to
be reflected in, reserved against or otherwise described on the Balance Sheet or
in the notes thereto in accordance with GAAP and were not so reflected, reserved
against or described, other than (i) Liabilities incurred in the Ordinary Course
of Business after the Balance Sheet Date, (ii) Liabilities incurred in
connection with the transactions contemplated hereby as disclosed on Schedule
5.7(a) or (iii) Liabilities that, individually or in the aggregate, would not
have a Material Adverse Effect.
(b) Except as set forth on Schedule 5.7(b), neither the Company nor
any of its Subsidiaries is a party to, or has any commitment to become a party
to (a) any off-balance sheet partnership or any similar Contract or arrangement
(including any Contract or arrangement relating to any transaction or
relationship between or among the Company and any of its Subsidiaries, on the
one hand, and any unconsolidated Affiliate on the other hand), including any
"off-balance sheet arrangement" (as defined in Item 303(a) of Regulation S-K
promulgated by the SEC); or (b) any hedging, derivatives or similar Contract or
arrangement.
5.8 Absence of Certain Developments.
(a) Except as contemplated by this Agreement or as set forth on
Schedule 5.8(a), since the Balance Sheet Date (i) the Company and its
Subsidiaries have conducted their respective businesses only in the Ordinary
Course of Business and (ii) there has not been any event, change, occurrence or
circumstance that, individually or in the aggregate, has had or reasonably would
be expected to have a Material Adverse Effect.
21
(b) Without limiting the generality of the foregoing, except as set
forth in Schedule 5.8(b), or as expressly contemplated by this Agreement to
occur after the date hereof, (i) since the Balance Sheet Date, neither the
Company nor any Subsidiary (A) has incurred or discharged or satisfied any
Indebtedness or any other material obligation or liability except for normal
trade obligations incurred in the Ordinary Course of Business, (B) has sold,
transferred or otherwise disposed of any of its material properties or assets or
any interest therein, or agreed to do any of the foregoing, except sales and
non-exclusive licenses of products and sales in the Ordinary Course of Business
or the disposal of obsolete or worthless assets, (C) has written off as
uncollectible accounts receivables, or written down the value of its assets,
except in each case in the Ordinary Course of Business and at a rate no greater
than during the 12-month period ending on the Balance Sheet Date, (D) (1) has
granted, or is committed to grant, salary or wage increases or any increase in
or addition to any other compensation or benefits to Company Employees (except
in the case of employees that are not officers, increases in salary, wages or
incentive compensation in the Ordinary Course of Business), (2) has made any
loan or advance of money or other property to any of the Company Employees
(other than routine advances to employees for business expenses in the Ordinary
Course of Business in an amount not exceeding $25,000 to any individual
employee), (3) has established, adopted, entered into, amended or terminated any
Company Benefit Plans, or (4) has granted or promised to grant any equity or
equity-based awards to any Company Employees, (E) has purchased or redeemed any
shares of capital stock or other equity interests, or made or declared any
dividend or distribution with respect to any capital stock or equity security,
(F) has changed its methods of keeping of its books of account or accounting
practices, except as required by GAAP, (G) except in the Ordinary Course of
Business, has changed or modified its existing credit, collection and payment
policies, procedures and practices (including any acceleration in the collection
of receivables or delay in the payment of payables), (H) has entered into any
transaction, agreement or arrangement outside the Ordinary Course of Business
that would be required to be disclosed on Schedule 5.20 or (I) has agreed or
committed to do any of the foregoing and (ii) since the Balance Sheet Date
through the date hereof, neither the Company or any Subsidiary (A) has waived or
released any of its material rights with respect to its business, assets,
Intellectual Property or Permits or permitted any of such rights to lapse or (B)
in the case of the Company, lost the services of an executive officer.
5.9 Taxes. Except as set forth on Schedule 5.9:
(a) the Company and its Subsidiaries have duly and timely filed all
material Tax Returns that are required by applicable Laws to be filed by them,
and such Tax Returns are complete and accurate in all material respects;
(b) the Company and its Subsidiaries have paid all Taxes that have
become due and payable, other than those Taxes being contested in good faith
through appropriate proceedings for which provision has been made in accordance
with GAAP on the Financial Statements, and with respect to any period for which
Tax Returns have not yet been filed or for which Taxes are not yet due or owing,
the Company has made due and sufficient accruals for such Taxes in the Financial
Statements and in its books and
22
records and all required estimated Tax payments sufficient to avoid any
underpayment penalties have been made by or on behalf of the Company and each
Subsidiary;
(c) all Taxes that the Company and its Subsidiaries are required by
Law to withhold and collect at or prior to Closing have been duly withheld,
collected and paid over, in each case, to the proper taxing authorities to the
extent due and payable;
(d) neither the Company nor any of its Subsidiaries has executed any
waiver to extend, or otherwise taken or failed to take any action that would
have the effect of extending, the applicable statute of limitations in respect
of any Tax liabilities of the Company or any of its Subsidiaries for the taxable
years prior to and including the most recent taxable year;
(e) all Taxes of the Company and its Subsidiaries that are due with
respect to any completed and settled audit, examination or deficiency litigation
with any taxing authority have been paid in full. To the Knowledge of the
Company, there is no audit, examination, deficiency or refund litigation pending
with respect to any Taxes of the Company or any of its Subsidiaries and no
taxing authority has given written notice of the commencement of (or its intent
to commence) any audit, examination or deficiency litigation with respect to any
such Taxes. In respect of any ongoing audit, investigation and other proceedings
by a taxing authority, the Company or Subsidiary has filed appropriate
submissions defending itself against such action and tax claim and believes that
such action and claim can be successfully defended based on the filed
submissions;
(f) there are no outstanding assessments, claims or deficiencies for
any Taxes of the Company or any of its Subsidiaries that have been proposed,
asserted or assessed, in each case in writing;
(g) to the Knowledge of the Company, no written claim has been made by
a taxing authority that the Company or any of its Subsidiaries is or may be
subject to Tax in a jurisdiction where the Company or its Subsidiaries does not
file Tax Returns;
(h) there are no Liens as a result of any unpaid Taxes upon any of the
assets of the Company or any Subsidiary;
(i) neither the Company nor any of its Subsidiaries (A) is or has ever
been a member of an affiliated group (other than a group the common parent of
which is the Company) filing a consolidated federal income Tax Return or (B) has
any liability for Taxes of any person arising from the application of Treasury
Regulation Section 1.1502-6 or any analogous provision of state, local or
foreign law, or as a transferee or successor, by contract, or otherwise;
(j) none of the Company or any of its Subsidiaries is a party to, is
bound by or has any obligation under any Tax sharing or Tax indemnity agreement
or similar contract or arrangement;
23
(k) none of the Company or any of its Subsidiaries has been either a
"distributing corporation" or a "controlled corporation" in a distribution
occurring during the last five years in which the parties to such distribution
treated the distribution as one to which Section 355 of the Code is applicable;
(l) neither the Company nor any of its Subsidiaries will be required
to include any item of income in, or exclude any item of deduction from, taxable
income as a result of (A) any change in accounting method initiated by it or any
other relevant party prior to the Closing Date, (B) a closing agreements
pursuant to Section 7121 of the Code or any similar provision of state, local or
foreign law entered into prior to the Closing Date, (C) an installment sale or
open transaction arising in a taxable period (or portion thereof) ending on or
before the Closing Date, (D) a prepaid amount received, or paid, prior to the
Closing Date or (E) deferred gains arising prior to the Closing Date; and
(m) neither the Company nor any of its Subsidiaries has engaged in any
"reportable transactions" as defined in Section 6111 of the Code or the
regulations promulgated thereunder.
This Section 5.9 represents the sole and exclusive representation and
warranty of the Company regarding tax matters.
5.10 Real Property. Schedule 5.10 sets forth a complete list of all leases
and subleases of real property to or by the Company or a Subsidiary involving
annual payments in excess of $85,000 (individually, a "Real Property Lease" and
collectively, the "Real Property Leases"). To the Knowledge of the Company,
neither the Company nor any Subsidiary has received any notice of any default or
event that with notice or lapse of time, or both, would constitute a default by
the Company or any Subsidiary under any of the Real Property Leases, except for
such defaults that are no longer continuing or, individually or in the
aggregate, would not have a Material Adverse Effect. Neither the Company nor any
Subsidiary owns any real property.
5.11 Tangible Personal Property. Schedule 5.11 sets forth all leases and
subleases of personal property to or by the Company or a Subsidiary ("Personal
Property Leases") involving annual payments in excess of $200,000. To the
Knowledge of the Company, neither the Company nor any Subsidiary has received
any notice of any default or any event that with notice or lapse of time, or
both, would constitute a default, by the Company or any Subsidiary under any of
the Personal Property Leases except for such defaults that are no longer
continuing or, individually or in the aggregate, would not have a Material
Adverse Effect.
5.12 Intellectual Property.
(a) Schedule 5.12(a)(i) sets forth an accurate and complete list of
all issued Patents, pending Patent applications, registered Marks, pending
applications for registration of Marks, registered Copyrights, and Internet
domain names owned by the Company or any Subsidiary (the foregoing being,
collectively, the "Company Registered
24
Intellectual Property"). Schedule 5.12(a)(i) lists (i) the record owner of each
such item of Company Registered Intellectual Property and (ii) the jurisdictions
in which each such item of Company Registered Intellectual Property has been
issued or registered or in which each such application for issuance or
registration of such item of Company Registered Intellectual Property has been
filed. Except as set forth on Schedule 5.12(a)(ii), to the Knowledge of the
Company, no registrations or applications for material Company Registered
Intellectual Property has expired or been canceled or abandoned except in
accordance with the expiration of the term of such rights or where the Company
has made a reasonable business judgment to permit such registrations or
applications to expire, be canceled, or become abandoned.
(b) The Company and the Subsidiaries own or have valid rights to use
all material Intellectual Property used by the Company and the Subsidiaries in
the Ordinary Course of Business, free and clear of all Liens (except for
Permitted Exceptions).
(c) The conduct of the business of the Company and its Subsidiaries
(including the products and services of the Company and its Subsidiaries) does
not in any material respect infringe, violate or constitute misappropriation of
any Intellectual Property of any third Person except for such infringements,
violations and misappropriations that, individually or in the aggregate, would
not have a Material Adverse Effect.
(d) Except as set forth on Schedule 5.12(d), to the Knowledge of the
Company, no third Person is infringing, violating, or misappropriating any
material Intellectual Property owned by the Company or the Subsidiaries.
(e) Except as set forth on Schedule 5.12(e), there is no pending Legal
Proceeding or, to the Knowledge of the Company, threatened claim that the
Company or any Subsidiary has infringed, violated or misappropriated, or is
infringing or violating any Intellectual Property rights of any third Person.
(f) There are no Orders to which the Company or any Subsidiary is a
party or, to the Knowledge of the Company, by which the Company or any
Subsidiary is bound, that restricts the Company's or the Subsidiaries' rights to
use any material Intellectual Property used by the Company or the Subsidiaries
in the Ordinary Course of Business.
(g) No material Trade Secret or any other confidential, proprietary
information material to the business of the Company or the Subsidiaries as
currently conducted has been authorized to be disclosed or, to the Knowledge of
the Company, has been actually disclosed by the Company or any Subsidiary to any
third Person other than pursuant to a written nondisclosure agreement
restricting the disclosure and use of such Trade Secrets and confidential,
proprietary information. The Company and the Subsidiaries have taken
commercially reasonable security measures to protect the confidentiality of the
material Trade Secrets of the Company and the Subsidiaries and
25
third party confidential information provided to the Company or any Subsidiary
that the Company or such Subsidiary is obligated to maintain in confidence,
which measures are commercially reasonable in the industry in which the Company
or such Subsidiary operates. The Company has in place a practice whereby the
Company and its Subsidiaries execute confidentiality and Intellectual Property
assignment and/or employee's rights agreements with all of their respective
officers, employees, consultants and contractors.
(h) Except as set forth on Schedule 5.12(h), neither the Company nor
any Subsidiary has incorporated any "open source," "freeware," "shareware" or
other Software code having similar licensing restrictions or distribution models
in any Software developed by the Company or any Subsidiary that is incorporated
in any Software distributed by the Company or any Subsidiary.
(i) Except as set forth on Schedule 5.12(i), neither the Company nor
any Subsidiary has licensed to any third Person, or otherwise permitted any
third Person to use, any source code of any Software developed by or on behalf
of the Company or any Subsidiary. Except as set forth on Schedule 5.12(i), as of
the date of this Agreement, neither the Company nor any Subsidiary is a party to
any source code escrow agreement or other agreement requiring the deposit of
source code of any Software developed by or on behalf of the Company or any
Subsidiary for the benefit of any third Person and no source code has ever been
released to any third Person from any such escrow or deposit.
(j) To the Knowledge of the Company, all currently released products
and services of the Company are free from any material defect, bug, malware,
virus or programming design or documentation error or corruptant (the foregoing
being, collectively ("Errors"), and the Company has no reasonable basis to
believe any currently released products or services of the Company are not free
from material Errors.
(k) Except as, individually or in the aggregate, would not have a
Material Adverse Effect, (i) the Company and its Subsidiaries take reasonable
steps to protect the confidentiality and security of their software, databases,
systems, networks and internet sites from any unauthorized use, access,
interruption or modification by third parties, and (ii) the Company and its
Subsidiaries fully comply with the Company's own policies with respect to the
privacy of all their customers and any of their personally identifiable
information, and no written claims have been asserted or threatened in writing
against the Company or any of its Subsidiaries by any Person alleging a
violation of any of the foregoing.
(l) Schedule 5.12(l) sets forth a complete and accurate list of all
agreements to which the Company or any Subsidiary is a party, and pursuant to
which the Company or any Subsidiary is granted the right to use any third
Person's Intellectual Property (excluding licenses pertaining to "off-the-shelf"
commercially available Software used pursuant to shrink-wrap or click-through
license agreements for a license fee of no more than $50,000 in the aggregate
per Software product) that (i) is material to the functionality of any currently
released commercial product, or for the performance of
26
any currently provided service, of the Company or any Subsidiary and cannot be
replaced in a reasonable period of time with other Intellectual Property that
does not materially change the functionality of such product or the ability to
provide such service or (ii) is material to the operation of the business of the
Company and its Subsidiaries and cannot be replaced in a reasonable period of
time, at a reasonable cost, with other Intellectual Property (the foregoing
being, collectively, the "Material In-Bound License Agreements"). The Company
and its Subsidiaries are not, and have not received written notice alleging them
to be, in breach or default of any Material In-Bound License Agreements, except
for such breaches or defaults that, individually or in the aggregate, would not
have a Material Adverse Effect.
(m) Schedule 5.12(m) sets forth a complete and accurate list of all
agreements to which the Company or any Subsidiary is a party, and pursuant to
which the Company or any Subsidiary has granted to any third Person the right to
use any material Intellectual Property of the Company or any Subsidiary, other
than non-exclusive licenses of the Company's and its Subsidiaries' products and
services in the Ordinary Course of Business.
5.13 Material Contracts.
(a) Schedule 5.13(a) sets forth all of the following Contracts to
which the Company or any of its Subsidiaries is a party or by which it is bound
as of the date hereof (collectively and together with those Contracts set forth
on Schedules 5.10, 5.11, 5.12(h), 5.12(i), 5.12(k) and 5.12(l) the "Material
Contracts"):
(i) each Contract with any Stockholders or any current officer or
director of the Company or any of its Subsidiaries or any Affiliate (other
than a Subsidiary) of the Company or any of the Stockholders;
(ii) each Contract with any labor union or association
representing any employee of the Company or any of its Subsidiaries;
(iii) each Contract relating to the sale of any of the assets of,
or the provisions of any services by, the Company or any of its
Subsidiaries other than the sale or provision of goods and services in the
Ordinary Course of Business, for consideration in excess of $250,000 or the
equivalent in other currencies;
(iv) each Contract relating to the acquisition or disposition by
the Company or any of its Subsidiaries of any business, division or product
line or the capital stock of any other Person, in each case (A) for
consideration in excess of $250,000 or the equivalent in other currencies
or (B) pursuant to which any Liabilities or obligations of the Company or
its Subsidiaries remain outstanding;
(v) each Contract relating to the incurrence of Indebtedness, or
the making of any loans (other than routine advances to employees for
business
27
expenses in the Ordinary Course of Business in an amount not exceeding
$25,000 to any individual employee);
(vi) each Contract creating or governing a partnership, limited
liability company, joint venture or similar arrangement;
(vii) each Contract (A) containing a covenant expressly limiting
the freedom of the Company or any of its Subsidiaries (or that would limit
the freedom of Parent, the Surviving Corporation and their respective
Subsidiaries after the Closing) to engage in any business with any Person
or in any geographic area or to compete with any Person or limiting the
ability of the Company or any of its Subsidiaries to incur indebtedness for
borrowed money, to guarantee or otherwise become responsible for the
indebtedness for borrowed money of any other Person or to create Liens, (B)
containing most favored nation or similar provisions in favor of any
customer or other counterparty to the Company or any of its Subsidiaries or
(C) obligating the Company or any of its Subsidiaries to purchase or
otherwise obtain any product or service exclusively from a single party or
sell any product or service exclusively to a single party;
(viii) each Contract creating a Lien (other than Permitted
Exceptions) upon any assets (including any Lien placed on the Company's or
any of the Company Subsidiary's Intellectual Property), other than purchase
money security interests in connection with the acquisition of equipment in
the Ordinary Course of Business;
(ix) each Contract reflecting a settlement of any threatened or
pending Legal Proceedings, other than (A) releases immaterial in nature or
amount entered into with former employees or independent contractors of the
Company and its Subsidiaries in the Ordinary Course of Business in
connection with the routine cessation of such employee's or independent
contractor's employment with the Company and its Subsidiaries, (B)
settlement agreements for cash only (which has been paid) and does not
exceed $100,000 as to such settlement or (C) settlement agreements entered
into more than three (3) years prior to the date of this Agreement under
which none of the Company or its Subsidiaries have any continuing
obligations, liabilities, or rights (excluding releases);
(x) any other "material contract" (as such term is defined in
Item 601(b)(10) of Regulation S-K of the SEC); and
(xi) each other Contract that involves the expenditure by the
Company and its Subsidiaries of more than $250,000 or the equivalent in
other currencies in the aggregate.
(b) True and correct copies of each Material Contract have been made
available to Parent prior to the date hereof. Each Material Contract is a valid
and binding
28
agreement of the Company or a Subsidiary, as the case may be, and, to the
Company's Knowledge, the other parties thereto enforceable in accordance with
its terms (subject to applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting generally the enforcement of creditors'
rights and subject to general principles of equity). Except as set forth on
Schedule 5.13(b), the Company or a Subsidiary and, to the Knowledge of the
Company, each of the other parties thereto, have performed all obligations
required to be performed by them under, and are not in breach of, default or
violation under, any of such Contracts and no event has occurred that with
notice or lapse of time, or both, would constitute such a breach, default or
violation, except for any such non-performance or breaches, defaults or
violations that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. Neither the Company nor any
Subsidiary has received any written notice of any default or event that with
notice or lapse of time, or both, would constitute a default by the Company and
its Subsidiaries under any Material Contract, except for such defaults that,
individually or in the aggregate, would not have a Material Adverse Effect.
5.14 Employee Benefits Plans.
(a) Schedule 5.14(a) contains a true and complete list of each
"employee benefit plan" (within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), including
multiemployer plans within the meaning of ERISA Section 3(37), and all stock
purchase, stock option, severance, employment, change of control, bonus,
incentive or deferred compensation, employee loan, and all other benefit plans,
agreements, programs or policies, whether or not subject to ERISA, under which
any current or former employee, director or consultant of the Company or any of
its Subsidiaries (each, a "Company Employee") has any right to benefits and
which are contributed to, sponsored or maintained by the Company or any of its
Subsidiaries, or under which the Company or any of its Subsidiaries has had or
has any liability. All such plans, agreements, programs, policies and
arrangements are collectively referred to herein as "Company Benefit Plans."
(b) With respect to each Company Benefit Plan, the Company has made
available to Parent prior to the date hereof (i) a current and complete copy of
the plan document and, to the extent applicable, any related trust fund or other
funding instrument, (ii) the most recent determination letter, if applicable,
(iii) any summary plan descriptions or other written descriptions delivered by
the Company or any of its Subsidiaries to the participants concerning such
Company Benefit Plan, (iv) for the most recent plan year, copies of all Forms
5500 and accompanying schedules, statements and actuarial valuation reports
relating to such Company Benefit Plans, if applicable and (v) a summary of any
proposed amendments or changes anticipated (as of the date of this Agreement) to
be made to the Company Benefit Plans at any time within the twelve (12) months
immediately following the date hereof.
(c) Each Company Benefit Plan has been established and administered in
accordance with its terms in all material respects, and in compliance with the
applicable provisions of ERISA, the Code and other applicable laws, rules and
29
regulations in all material respects. Each Company Benefit Plan that is intended
to be qualified within the meaning of Section 401(a) of the Code is so
qualified, has received a favorable determination letter as to its
qualification, and no event or circumstance has occurred or failed to occur that
could reasonably be expected to cause the loss of such qualification. No
condition exists that would reasonably be expected to subject the Company or its
Subsidiaries, either directly or by reason of their affiliation with any member
of their "Controlled Group" (defined as any organization which is a member of a
controlled group of organizations within the meaning of Sections 414(b), (c),
(m) or (o) of the Code), to any material tax, fine, lien or penalty or other
material liability imposed by ERISA, the Code or other applicable laws, rules
and regulations. For each Company Benefit Plan with respect to which a Form 5500
has been filed, no material change has occurred with respect to the matters
covered by the most recent Form 5500 since the date thereof. No nonexempt
"prohibited transaction" (as such term is defined in Section 406 of ERISA and
4957 of the Code) has occurred with respect to any Company Benefit Plan that
could reasonably be expected to subject the Company or its Subsidiaries to any
material liability. Neither the Company nor any of its Subsidiaries has incurred
any current or projected material liability in respect of post-employment or
post-retirement health, medical, or life insurance benefits for current, former
or retired employees of the Company or any of its Subsidiaries, except as set
forth on Schedule 5.14(c) or except as required to avoid an excise tax under
Section 4980B of the Code or except with respect to claims incurred on or before
the end of the month in which an employee is terminated or retires or otherwise
except as may be required pursuant to any other applicable law.
(d) None of the Company Benefit Plans is subject to Title IV or
Section 302 of ERISA, and neither the Company nor any member of its Controlled
Group has incurred any liability under Title IV or Section 302 of ERISA that
remains unsatisfied. Neither the Company nor any member of its Controlled Group
has any obligation or liability (contingent or otherwise) to contribute to a
multiemployer pension plan within the meaning of ERISA Section 3(37).
(e) With respect to any Company Benefit Plan: (i) no actions, suits or
claims (other than routine claims for benefits in the ordinary course) are
pending or, to the Knowledge of the Company, threatened, (ii) to the Knowledge
of the Company, no facts or circumstances exist that could give rise to any
actions, suits or claims and (iii) no administrative investigation, audit or
other administrative proceeding by the Department of Labor, the Pension Benefit
Guaranty Corporation, the IRS or other governmental agencies are pending, in
progress or, to the Knowledge of the Company, threatened.
(f) Except as set forth in Schedule 5.14(f), no Company Benefit Plan
exists that, as a result of the execution of this Agreement, stockholder
approval of this Agreement, or the transactions contemplated by this Agreement
(whether alone or in connection with any subsequent event(s)), could: (i) result
in severance pay or any increase in severance pay upon any termination of
employment after the date of this Agreement, (ii) accelerate the time of payment
or vesting or result in any payment or funding (through a grantor trust or
otherwise) of compensation or benefits under, increase the amount payable or
result in any other material obligation pursuant to, any of the
30
Company Benefit Plans, (iii) limit or restrict the right of the Company to
merge, amend or terminate any of the Company Benefit Plans, (iv) cause the
Company to record additional compensation expense on its income statement with
respect to any outstanding stock option or other equity-based award, or (v)
result in payments under any of the Company Benefit Plans (1) which would not be
deductible under Section 280G of the Code or (2) as a result of any excise tax
imposed on any employee by Section 4999 of the Code or any comparable federal,
state, local or foreign excise tax rule or regulation.
(g) Except as set forth in Schedule 5.14(g) or with respect to those
Company Benefit Plans mandated by applicable foreign law, no material Company
Benefit Plan is maintained outside the jurisdiction of the United States, or
covers any employee residing or working outside of the United States (any such
Company Benefit Plans either set forth on Schedule 5.14(g) or mandated by
applicable foreign law, the "Foreign Benefit Plans"). With respect to any
Foreign Benefit Plans, except for such matters which, individually or in the
aggregate, would not have a Material Adverse Effect, (i) all Foreign Benefit
Plans have been established, maintained and administered in compliance with
their terms; (ii) all Foreign Benefit Plans that are required to be funded are
fully funded, and with respect to all other Foreign Benefit Plans, adequate
reserves therefor have been established on the accounting statements of the
applicable Company or Subsidiary entity (to the extent applicable); and (iii) no
material liability or obligation of the Company or its Subsidiaries exists with
respect to such Foreign Benefit Plans that has not been disclosed on Schedule
5.14(g).
(h) Sections 5.4, 5.7, 5.8, 5.14 and 5.17 represent the sole and
exclusive representations and warranties of the Company regarding employee
benefit matters.
5.15 Labor.
(a) Neither the Company nor any of its Subsidiaries is a party to, or
bound by, any collective bargaining agreement, contract or other arrangement or
understanding with a labor union or a labor organization.
(b) There are no current (i) strikes, work stoppages, work slowdowns
or lockouts pending or, to the Knowledge of the Company, threatened against or
involving the Company or any of its Subsidiaries, or (ii) unfair labor practice
charges, grievances or complaints pending or, to the Knowledge of the Company,
threatened by or on behalf of any employee or group of employees of the Company
or any of its Subsidiaries. To the Knowledge of the Company, and except as set
forth on Schedule 5.15(b), there are no investigations, inquiries or proceedings
before the U.S. National Labor Relations Board, the U.S. Equal Employment
Opportunity Commission, the U.S. Department of Labor, the U.S. Department of
Justice, the U.S. Occupational Health and Safety Administration or any other
Governmental Body with respect to or relating to the terms and conditions of
employment of the employees of the Company and its Subsidiaries.
31
5.16 Litigation. Except as set forth on Schedule 5.16, there are no Legal
Proceedings pending or, to the Knowledge of the Company, threatened against the
Company or any of its Subsidiaries or any of its executive officers before any
Governmental Body, that, if adversely determined, would, individually or in the
aggregate, have a Material Adverse Effect. The Company is not subject to any
Order except to the extent the same, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect.
5.17 Compliance with Laws; Permits.
(a) The Company and its Subsidiaries are in compliance with all Laws
of any Governmental Body applicable to their respective businesses or operations
and the Company, its Subsidiaries and its Stockholders are in compliance with
all rules and regulations of the Offer of Foreign Assets Control of the United
States Department of the Treasury, in each case except where the failure to be
in compliance, individually or in the aggregate, would not have a Material
Adverse Effect. Neither the Company nor any Subsidiary has received any written
notice of or been charged with the violation of any such Laws, except where such
violation has been cured or, individually or in the aggregate, would not have a
Material Adverse Effect.
(b) The Company and its Subsidiaries currently have all material
Permits that are required for the operation of their respective businesses as
presently conducted. Neither the Company nor any of its Subsidiaries is in
material default or violation (and no event has occurred that, with notice or
the lapse of time or both, would constitute a material default or violation) of
any term, condition or provision of any material Permit to which it is a party.
5.18 Environmental Matters. Except as set forth on Schedule 5.18 hereto and
except in each case as would not have a Material Adverse Effect:
(i) the Company and each of its Subsidiaries are, and have been
since December 31, 2002, in compliance with all applicable Environmental
Laws, which compliance includes obtaining, maintaining and complying with
all Permits required under applicable Environmental Laws to operate its
business;
(ii) neither the Company nor any of its Subsidiaries is the
subject of any outstanding Order or Contract with any Governmental Body
pursuant to any Environmental Laws or concerning any Hazardous Substances
that imposes obligations on the Company or any of its Subsidiaries, and, to
the Knowledge of the Company, no other Person is the subject of any such
Order or Contract that would reasonably be expected to adversely affect the
Company or any of its Subsidiaries;
(iii) neither the Company nor any of its Subsidiaries is subject
to any pending claims or Legal Proceedings or, to the Knowledge of the
Company, threatened claims alleging noncompliance with or potential
Liability
32
under Environmental Laws, and, to the Knowledge of the Company, no other
Person is the subject of any such claim or Legal Proceeding that would
reasonably be expected to adversely affect the Company or any of its
Subsidiaries;
(iv) to the Knowledge of the Company, there are no investigations
of the businesses of the Company or any of its current or former
Subsidiaries, or currently or previously owned, operated or leased property
of the Company or any of its current or former Subsidiaries pending or
threatened that would reasonably result in the Company or any of its
Subsidiaries incurring any Liabilities under Environmental Laws or
concerning Materials of Environmental Concern; and
(v) to the Knowledge of the Company, Materials of Environmental
Concern are not present at, on, in or under any property currently or
formerly owned or leased by the Company or any of its Subsidiaries, or at
any other location (including any property used for the treatment, storage
or disposal of wastes related to the Company or any of its Subsidiaries),
in a condition or under circumstances that could reasonably be expected to
result in material Liability to the Company or any of its Subsidiaries as a
result of any Environmental Law.
(b) To the Knowledge of the Company, the Company has made available to
Parent copies of all material studies, audits, assessments or other similar
documents, concerning compliance with, or liability or obligations under, any
Environmental Laws affecting the Company or any of its Subsidiaries, to the
extent such documents are in the possession or control of the Company or any of
its Subsidiaries.
This Section 5.18 constitutes the sole and exclusive representation and
warranty with respect to Environmental Laws and any and all environmental and
natural resource matters.
5.19 Insurance. Schedule 5.19 lists the material insurance policies
maintained by or on behalf of the Company and its Subsidiaries and a copy of
each such policy has been made available to Parent prior to the date hereof. To
the Knowledge of the Company, such policies evidence insurance in such amounts
and against such risks and losses as are generally maintained with respect to
comparable companies and properties. All of such insurance policies are in full
force and effect, and neither the Company nor any Subsidiary is in material
default with respect to any of its obligations under any of such insurance
policies. To the Knowledge of the Company, (i) there is no threatened
termination of, or material premium increase with respect to, any of such
policies other than increases in connection with the Company's annual renewal
process, which increases shall not be materially different than past annual
increases and (ii) there is no material claim pending regarding the Company or
any of its Subsidiary under any of such policies as to which coverage has been
questioned, denied or disputed by the underwriters of such policies.
33
5.20 Transactions with Related Person; Affiliates. Except as set forth on
Schedule 5.20, the Company does not have any Liabilities, contractual or
otherwise, owed to or owing from, directly or indirectly, any Affiliate of the
Company (other than a Subsidiary) or any Stockholder.
5.21 Books and Records. True, correct and complete copies of the books of
account, stock record books and minute books of the Company and each of its
Subsidiaries for the past two (2) years have been made available to Parent, and
such books and records have been maintained in accordance with good business
practices and in accordance with applicable Law. Except as set forth on Schedule
5.21, the minute books of the Company and each of its Subsidiaries contain
accurate and complete records in all material respects of all meetings of the
stockholders, the Board of Directors or other governing bodies, and committees
of the Board of Directors or such other governing bodies, of such company, and
no meeting of any such stockholders, Board of Directors, other governing body or
committee has been held where the corporate actions were authorized for which
minutes or written consents have not been prepared and are not contained in such
minute books. At the Closing, all of such books and records will be in the
possession of the Company or its Subsidiaries.
5.22 Financial Advisors. Except as set forth on Schedule 5.22, no Person
has acted, directly or indirectly, as a broker, finder or financial advisor for
the Company or any of its Subsidiaries in connection with the transactions
contemplated by this Agreement and no Person is entitled to any fee or
commission or like payment from Parent, Merger Sub, the Company or any of its
Subsidiaries in respect thereof.
5.23 SEC Filings.
(a) Each registration statement, form, report and other document
required to be filed by the Company or such Subsidiary, as the case may be, with
the SEC since January 1, 2003 (other than registration statements not yet
declared effective) (the "SEC Filings") (i) at the time filed, complied, and
will comply when filed, as to form in all material respects with the applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act")
and the Exchange Act, as the case may be, and the rules and regulations of the
SEC thereunder applicable to such SEC Filings, each as in effect on the date
filed, and (ii) did not at the time filed and will not when filed (except to the
extent that information contained in any SEC Filing has been superseded or
revised by a subsequent SEC Filing filed prior to the date hereof) contain any
untrue statement of a material fact or omit to state a material fact required to
be stated in each such SEC Filing or necessary in order to make the statements
in each such SEC Filing, in the light of the circumstances under which they were
made, not misleading.
(b) The Company maintains disclosure controls and procedures required
by Rule 13a-15 or 15d-15 under the Exchange Act. Such disclosure controls and
procedures are designed to ensure that all material information concerning the
Company is made known on a timely basis to the individuals responsible for the
34
preparation of the Company's filings with the SEC and other public disclosure
documents.
(c) To the Knowledge of the Company, neither the Company nor any of
its Subsidiaries has received any complaint, allegation, assertion or claim in
writing regarding its internal accounting controls or that the Company or any of
its Subsidiaries has engaged in improper or questionable accounting or auditing
practices. The Company has made available to Parent a summary of any disclosure
made by management to the Company's auditors and audit committee since October
1, 2002 regarding any significant deficiencies, material weaknesses or fraud.
5.24 No Other Representations or Warranties; Schedules. Except for the
representations and warranties contained in this Article V (as modified by the
Schedules hereto), neither the Company nor any other Person makes any other
express or implied representation or warranty with respect the Company, its
Subsidiaries or the transactions contemplated by this Agreement, and the Company
disclaims any other representations or warranties, whether made by the Company
or any of its Affiliates, officers, directors, employees, agents or
representatives. Except for the representations and warranties contained in
Article V hereof (as modified by the Schedules hereto), the Company hereby
disclaims all liability and responsibility for any representation, warranty,
projection, forecast, statement, or information made, communicated, or furnished
(orally or in writing) to Parent or its Affiliates or representatives (including
any opinion, information, projection, or advice that may have been or may be
provided to Parent by any director, officer, employee, agent, consultant, or
representative of the Company or any of its Affiliates). The Company makes no
representations or warranties to Parent or Merger Sub regarding the probable
success or profitability of the Company. The disclosure of any matter or item in
any schedule hereto shall not be deemed to constitute an acknowledgment that any
such matter is required to be disclosed.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby represent and warrant to the Company that:
6.1 Organization and Good Standing. Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and operate
properties and carry on its business. Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to own, lease and
operate properties and carry on its business.
6.2 Authorization of Agreement. Each of Parent and Merger Sub has all
requisite corporate power and authority to execute and deliver this Agreement
and each other agreement, document, instrument or certificate contemplated by
this Agreement or to be executed by Parent or Merger Sub in connection with the
consummation of the
35
transactions contemplated hereby and thereby (collectively, the "Parent
Documents") and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and each Parent Document and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all requisite corporate action on behalf of Parent and Merger Sub.
This Agreement has been, and each Parent Document will be at or prior to the
Closing, duly executed and delivered by Parent and Merger Sub and (assuming the
due authorization, execution and delivery by the other parties hereto and
thereto) this Agreement constitutes, and each Parent Document when so executed
and delivered will constitute, the legal, valid and binding obligations of
Parent and Merger Sub, enforceable against Parent and Merger Sub in accordance
with their terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity).
6.3 Conflicts; Consents of Third Parties.
(a) None of the execution and delivery by Parent or Merger Sub of this
Agreement or the Parent Documents, the consummation of the transactions
contemplated hereby or thereby, or compliance by Parent or Merger Sub with any
of the provisions hereof or thereof will conflict with, result in any violation
of or default (with or without notice or lapse of time, or both) under, give
rise to a right of termination or cancellation under, require a consent or
waiver under, require the payment of a penalty or increased liabilities or fees
or the loss of a benefit under or result in the imposition of any Lien under,
any provision of (i) the certificate of incorporation and bylaws or comparable
organizational documents of Parent or Merger Sub; (ii) any Contract or Permit to
which Parent or Merger Sub is a party or by which any of the properties or
assets of Parent or Merger Sub are bound; (iii) any Order applicable to Parent
or Merger Sub or by which any of the properties or assets of Parent or Merger
Sub are bound; or (iv) any applicable Law.
(b) No consent, waiver, approval, Order, Permit or authorization of,
or declaration or filing with, or notification to, any Governmental Body is
required on the part of Parent or Merger Sub in connection with the execution
and delivery of this Agreement or the Parent Documents or the compliance by
Parent or Merger Sub with any of the provisions hereof or thereof, or the
consummation of the transactions contemplated hereby or thereby, except for (i)
compliance with the applicable requirements of the HSR Act (and any similar Law
enforced by any Governmental Antitrust Entity regarding preacquisition
notifications for the purpose of competition reviews) (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware.
6.4 Litigation. There are no Legal Proceedings pending or, to the knowledge
of Parent or Merger Sub, threatened that are reasonably likely to prohibit or
restrain the ability of Parent or Merger Sub to enter into this Agreement or any
Parent Documents or consummate the transactions contemplated hereby or thereby.
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6.5 Financial Advisors. Except as set forth on Schedule 6.5, no Person has
acted, directly or indirectly, as a broker, finder or financial advisor for
Parent or Merger Sub in connection with the transactions contemplated by this
Agreement and no other Person is entitled to any fee or commission or like
payment in respect thereof.
6.6 Financing. Parent and Merger Sub have furnished the Company with
evidence of its ability (a) to pay the aggregate Merger Consideration and any
expenses incurred by Parent and Merger Sub in connection with the transactions
contemplated by this Agreement and (b) to perform their obligations under this
Agreement and all Parent Documents, in each case in the form of (x) the executed
equity commitment letters, dated as of the date hereof, among Parent, Merger
Sub, Xxxxxxx & Xxxxxxxx Capital Partners V, L.P., Xxxxx Xxxxxxx Capital Partners
and the other parties thereto, true and complete copies of which has been made
available to the Company (the "Equity Commitment Letters") and (y) the executed
(i) Senior Secured Financing Commitment Letter, dated as of the date hereof,
among Deutsche Bank Trust Company Americas, Deutsche Bank Securities Inc. and
Parent, a true and complete copy of which has been made available to the Company
(the "Senior Secured Debt Commitment Letter") and (ii) Acquisition Financing
Commitment Letter, dated as of the date hereof, between Deutsche Bank AG Cayman
Islands Branch and Parent, a true and complete copy of which has been made
available to the Company (the "Bridge Debt Commitment Letter," and together with
the Senior Secured Debt Commitment Letter, the "Debt Commitment Letters," and
the Debt Commitment Letters together with the Equity Commitment Letters, the
"Commitment Letters"). The Commitment Letters are not subject to any conditions
other than as set forth therein and are in full force and effect on the date
hereof. All commitments and other fees required to be paid under the Commitment
Letters prior to the date hereof have been paid, and Parent is unaware of any
fact or occurrence existing on the date hereof that would reasonably be expected
to make any of the assumptions or any of the statements set forth in the
Commitment Letters inaccurate or that would reasonably be expected to cause the
Commitment Letters to be ineffective. Assuming no breach or default by the
Company under this Agreement and based upon facts and events known by Parent as
of the date of this Agreement, Parent believes that the conditions to the
funding contemplated by the Commitment Letters will be satisfied, and Parent is
not aware of the existence of any fact or event as of the date of this Agreement
that would reasonably be expected to cause such conditions to funding not to be
satisfied.
6.7 Solvency. Assuming the satisfaction of all of the conditions to
Parent's and Merger Sub's obligations to consummate the transactions
contemplated by this Agreement and based on the financial projections provided
by the Company to Parent, immediately after giving effect to the transactions
contemplated by this Agreement, the Surviving Corporation and each of its
Subsidiaries shall be Solvent. No transfer of property is being made and no
obligation is being incurred in connection with the transactions contemplated by
this Agreement with the intent to hinder, delay or defraud either present or
future creditors of the Company or its Subsidiaries. For purposes of this
Agreement, "Solvent" when used with respect to the Surviving Corporation, means
that,
37
as of any date of determination, (i) the Present Fair Salable Value of its
assets will, as of such date, exceed all of its liabilities, contingent or
otherwise, as of such date, (ii) the Surviving Corporation will not have, or
have access to, as of such date, an unreasonably small amount of capital for the
business in which it is engaged or will be engaged and (iii) the Surviving
Corporation will be able to pay its debts as they become absolute and mature, in
the ordinary course of business, taking into account the timing of and amounts
of cash to be received by it and the timing of and amounts of cash to be payable
on or in respect of its indebtedness, in each case after giving effect to the
transactions contemplated by this Agreement. The term "Solvency" shall have a
correlative meaning. For purposes of the definition of "Solvent" (A) "debt"
means liability on a "claim"; and (B) "claim" means (i) any right to payment,
whether or not such a right is reduced to judgment, liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, secured or
unsecured or (ii) the right to an equitable remedy for a breach in performance
if such breach gives rise to a right to payment, whether or not such equitable
remedy is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or
unsecured. "Present Fair Salable Value" means the amount that may be realized if
the aggregate assets of the Surviving Corporation (including goodwill) are sold
as an entirety with reasonable promptness in an arm's length transaction under
present conditions for the sale of comparable business enterprises.
6.8 No Prior Activities. Except for obligations incurred in connection with
its incorporation or organization or the negotiation and consummation of this
Agreement and the transactions contemplated hereby, Merger Sub has neither
incurred any obligation or liability nor engaged in any business or activity of
any type or kind whatsoever or entered into any agreement or arrangement with
any Person.
6.9 Condition of the Business. Notwithstanding anything contained in this
Agreement to the contrary, Parent and Merger Sub acknowledge and agree that the
Company is not making any representations or warranties whatsoever, express or
implied, beyond those expressly given by the Company in Article V (as modified
by the Schedules hereto as supplemented or amended). Parent and Merger Sub
further represent that none of the Company or any of its Affiliates nor any
other Person has made any representation or warranty, express or implied, as to
the accuracy or completeness of any information regarding the Company or any of
its Subsidiaries, or the transactions contemplated by this Agreement not
expressly set forth in this Agreement, and none of the Company, any of its
Affiliates or any other Person will have or be subject to any liability to
Parent, Merger Sub or any other Person resulting from the distribution to
Parent, Merger Sub or their respective representatives or Parent's or Merger
Sub's use of, any such information. Parent and Merger Sub acknowledge that they
have conducted to their satisfaction, their own independent investigation of the
condition, operations and business of the Company and its Subsidiaries and, in
making their determination to proceed with the transactions contemplated by this
Agreement, Parent and Merger Sub have relied on the results of their own
independent investigation.
38
ARTICLE 7
COVENANTS
7.1 Access to Information. Prior to the Closing Date, Parent shall be
entitled, through its officers, employees and representatives (including its
legal advisors and accountants), to make such investigation of the properties,
businesses and operations of the Company and its Subsidiaries and such
examination of the books and records and Tax reporting positions of the Company
and its Subsidiaries as it reasonably requests and to make extracts and copies
of such books and records at its own expense. Any such investigation and
examination shall be conducted during regular business hours and under
reasonable circumstances and shall be subject to restrictions under applicable
Law. The Company shall cause the officers, employees, consultants, agents,
accountants, attorneys and other representatives of the Company and its
Subsidiaries to cooperate with Parent and Parent's representatives in connection
with such investigation and examination, and Parent and its representatives
shall cooperate with the Company and its representatives and shall use their
commercially reasonable efforts to minimize any disruption to the business.
Notwithstanding anything herein to the contrary, no such investigation or
examination shall be permitted to the extent that it would require the Company
or any of its Subsidiaries to disclose information subject to attorney-client
privilege or conflict with any confidentiality obligations to which the Company
or any of its Subsidiaries is bound; provided, however, that the Company shall
request, but shall not be required to obtain, a waiver of any such
confidentiality obligations upon Parent's reasonable request. Notwithstanding
anything to the contrary contained herein, prior to the Closing, (a) without the
prior written consent of the Company (which consent may not be unreasonably
withheld), Parent shall not contact any suppliers to, or customers of, the
Company or any Subsidiary, other than in the ordinary course of business of
Parent or any of its Affiliates with respect to matters not involving the
Company or its Subsidiaries, and provided that the Company shall have the right
to have a representative present during any such contact in the event that it
consents to such contact, and (b) Parent shall have no right to perform invasive
or subsurface investigations of the properties or facilities of the Company or
any of its Subsidiaries without the prior written consent of the Company (which
consent may be withheld for any reason).
7.2 Conduct of the Business Pending the Closing.
(a) Prior to the Closing, except (i) as set forth on Schedule 7.2(a),
(ii) as required by applicable Law, (iii) as otherwise expressly contemplated by
this Agreement or (iv) with the prior written consent of Parent (which consent
shall not be unreasonably withheld, delayed or conditioned), the Company shall,
and shall cause its Subsidiaries to:
(i) conduct the respective businesses of the Company and its
Subsidiaries only in the Ordinary Course of Business; and
39
(ii) use its commercially reasonable efforts to (A) preserve the
present business operations, organization and goodwill of the Company and
its Subsidiaries, (B) preserve the present relationships with customers and
suppliers of the Company and its Subsidiaries, (C) maintain insurance
coverage on such terms and in such amounts substantially as maintained on
the date of this Agreement and (D) keep available the services of the
current officers and key employees of the Company and its Subsidiaries.
(b) Except (i) as set forth on Schedule 7.2(b), (ii) as required by
applicable Law, (iii) as otherwise expressly contemplated by this Agreement or
(iv) with the prior written consent of Parent (which consent shall not be
unreasonably withheld, delayed or conditioned), the Company shall not, and shall
not permit its Subsidiaries to:
(i) declare, set aside, make or pay any dividend or other
distribution in respect of the capital stock of the Company or repurchase,
redeem or otherwise acquire, or grant any rights or enter into any
Contracts or commitments to repurchase, redeem or acquire, any outstanding
shares of the capital stock or other securities of, or other ownership
interests in, the Company or any of its Subsidiaries;
(ii) issue or sell any shares of capital stock or other
securities of the Company or any of its Subsidiaries (except for any
issuance made pursuant to the exercise of any Option) or grant options,
warrants, calls or other rights to purchase or otherwise acquire shares of
the capital stock or other securities of the Company or any of its
Subsidiaries;
(iii) effect any recapitalization, reclassification or like
change in the capitalization of the Company or any of its Subsidiaries;
(iv) amend the certificate of incorporation or bylaws or
comparable organizational documents of the Company or any of its
Subsidiaries;
(v) except as set forth in Schedule 7.2(b), (A) increase the
annual level of compensation of any director, officer, employee or
consultant of the Company or any of its Subsidiaries (except increases in
salaries and wages of non-officer employees and consultants in the Ordinary
Course of Business), (B) grant any bonus, equity or equity-based
compensation, severance, benefit or other direct or indirect compensation
to any director, executive officer, employee or consultant, (C) increase
the coverage or benefits available under any (or create any new) severance
pay, termination pay, vacation pay, company awards, salary continuation for
disability, sick leave, deferred compensation, bonus or other incentive
compensation, insurance, pension or other Company Benefit Plan or otherwise
modify or amend or terminate any such Company Benefit Plan, (D) enter into
any employment, deferred compensation, severance, consulting,
non-competition or similar agreement (or amend any such agreement) to which
the Company or any of its Subsidiaries is a party or involving any
employee,
40
consultant or director of the Company or any of its Subsidiaries that would
be a Company Benefit Plan if it were in existence as of the date of this
Agreement, or (E) hire or terminate any executive officer or vice president
of the Company or any of its Subsidiaries, except, in each case, as
required as of the date of this Agreement by the terms of any Company
Benefit Plans;
(vi) acquire any material properties or assets or sell, assign,
license, transfer, convey, lease or otherwise dispose of any of the
material properties or assets of the Company or any of its Subsidiaries
(except sales and non-exclusive licenses of products and sales in the
Ordinary Course of Business or the disposal of obsolete or worthless
assets);
(vii) make any loan, advance or capital contribution to or
investment in any Person (other than (A) loans, advances or capital
contributions to or investments in a Subsidiary of the Company and (B)
routine advances to employees for business expenses in the Ordinary Course
of Business in an amount not exceeding $25,000 to any individual employee);
(viii) other than in the Ordinary Course of Business, cancel or
compromise any material debt or claim or waive or release any material
right of the Company or any of its Subsidiaries or permit any such right to
lapse;
(ix) initiate, compromise or settle (A) any Legal Proceeding
(other than in connection with the enforcement of the Company's rights
under this Agreement), other than non-material Legal Proceedings, or (B)
any material claim under any insurance policy for the benefit of the
Company or any of its Subsidiaries;
(x) enter into, modify or terminate any labor or collective
bargaining agreement or, through negotiations or otherwise, make any
commitment or incur any Liability to any labor organizations;
(xi) enter into or agree to enter into any merger or
consolidation with any corporation or other entity, or acquire the
securities or any division, business or all or substantially all of the
assets of any other Person;
(xii) enter into or modify any Contract with any Stockholder or
any Affiliate of any Stockholder;
(xiii) except to the extent required by Law, make, change or
rescind any election relating to Taxes, change any method of Tax
accounting, file any amended Tax Return, or settle or compromise any claim,
investigation, audit or controversy relating to an amount of Taxes, agree
to an extension or waiver of the statute of limitations with respect to the
assessment or determination of Taxes, enter into any closing agreement with
respect to any Tax or surrender any right to claim a Tax refund;
41
(xiv) except to the extent required by Law or GAAP, make any
material change to any of its methods of accounting or methods of reporting
revenue and expenses or accounting practices;
(xv) grant any licenses under any Intellectual Property of the
Company and its Subsidiaries (other than non-exclusive licenses granted in
the Ordinary Course of Business);
(xvi) enter into any joint venture, general or limited
partnership agreement, limited liability company agreement or other similar
agreement or any material joint development agreement;
(xvii) enter into any new Contract that would be a Material
Contract if entered into on or prior to the date hereof or, except as
required by their terms, terminate or amend, or modify any Material
Contract or any such new Contract;
(xviii) incur (A) any Indebtedness (other than borrowings in the
Ordinary Course of Business under the Company's existing revolving credit
facility) or (B) any Lien (other than Permitted Exceptions) on any asset or
properties (whether tangible or intangible) of the Company or any of its
Subsidiaries (other than purchase money security interests in connection
with the acquisition of equipment in the Ordinary Course of Business);
(xix) amend, extend, renew or permit to lapse existing insurance
policies or enter into new insurance policies, except in either case on
such terms and for such amounts as is consistent with past practice;
(xx) enter into any Contract with any Person which provides such
Person rights or entitlements in connection with a change of control of the
Company or any of its Subsidiaries; or
(xxi) agree or commit to do anything prohibited by this Section
7.2(b).
7.3 Consents. Parent and the Company shall use (and the Company shall cause
its Subsidiaries to use) their commercially reasonable efforts to obtain at the
earliest practicable date all consents and approvals required to consummate the
transactions contemplated by this Agreement, including the consents and
approvals referred to in Sections 5.3 and 6.3 hereof (or the Schedules thereto),
provided, however, that (a) no party shall be obligated to pay any consideration
to any third party from whom consent or approval is requested and (b) the
consent of Parent shall be required with respect to any amendment or
modification to any Contract in connection with obtaining any such consent or
approval that is adverse in any material respect to Parent, Merger Sub, the
Company or any of its Subsidiaries.
42
7.4 Regulatory Approvals.
(a) Subject to the terms and conditions herein provided, each of the
parties agrees to use all commercially reasonable efforts to take, or cause to
be taken, all action, and to do, or cause to be done as promptly as practicable,
all things necessary, proper and advisable under applicable Laws to consummate
and make effective as promptly as practicable the transactions contemplated by
this Agreement. Subject to appropriate confidentiality protections, each party
hereto shall furnish to the other parties such necessary information and
reasonable assistance as such other party may reasonably request in connection
with the foregoing.
(b) Each of the parties shall cooperate with one another and use all
commercially reasonable efforts to prepare all necessary documentation
(including furnishing all information required under the Competition Laws) to
effect promptly all necessary filings and to obtain all consents, waivers and
approvals necessary to consummate the transactions contemplated by this
Agreement. Each party hereto shall provide to the other parties copies of all
correspondence between it (or its advisors) and any Governmental Antitrust
Entity relating to the transactions contemplated by this Agreement or any of the
matters described in this Section 7.4. Each such party shall promptly inform the
other parties hereto of any oral communication with, and provide copies of
written communications with, any Governmental Body regarding any such filings or
any such transaction. No party hereto shall independently participate in any
formal meeting with any Governmental Body in respect of any such filings,
investigation, or other inquiry without giving the other parties hereto prior
notice of the meeting and, to the extent permitted by such Governmental Body,
the opportunity to attend and/or participate. Subject to applicable Law, the
parties hereto will consult and cooperate with one another in connection with
any analyses, appearances, presentations, memoranda, briefs, arguments, opinions
and proposals made or submitted by or on behalf of any party hereto relating to
proceedings under the Competition Laws.
(c) Without limiting the generality of the undertakings pursuant to
this Section 7.4, the parties hereto shall provide or cause to be provided as
promptly as practicable to any Governmental Antitrust Entity information and
documents requested by any Governmental Antitrust Entity or necessary, proper or
advisable to permit consummation of the transactions contemplated by this
Agreement, including filing any notification and report form and related
material required under the HSR Act (and any similar Law enforced by any
Governmental Antitrust Entity regarding preacquisition notifications for the
purpose of competition reviews) as promptly as practicable, but in no event
later than ten (10) Business Days after the date hereof for filings required
under the HSR Act and twenty (20) Business Days after the date hereof for all
other filings, and thereafter to respond promptly to any request for additional
information or documentary material that may be made under the HSR Act (and any
similar Law enforced by any Governmental Antitrust Entity regarding
preacquisition notifications for the purpose of competition reviews).
43
(d) Further, each of the parties hereto shall use its commercially
reasonable efforts to resolve such objections, if any, as may be asserted by any
Governmental Antitrust Entity with respect to the transactions contemplated by
this Agreement under any Competition Law. In connection therewith, if any Legal
Proceeding is instituted (or threatened to be instituted) challenging any
transaction contemplated by this Agreement as in violation of any Competition
Law, each of parties hereto shall cooperate and use its commercially reasonable
efforts to contest and resist any such Legal Proceeding, and to have vacated,
lifted, reversed or overturned any decree, judgment, injunction or other order
whether temporary, preliminary or permanent, that is in effect and that
prohibits, prevents or restricts consummation of the transactions contemplated
by this Agreement, including by pursuing all available avenues of administrative
and judicial appeal and all available legislative action, unless, by mutual
agreement, Parent and the Company decide that litigation is not in their
respective best interests. Each of Parent and the Company shall use its
commercially reasonable efforts to take such action as may be required to cause
the expiration of the notice periods under the Competition Laws with respect to
such transactions as promptly as possible after the execution of this Agreement.
In connection therewith, and without limiting the foregoing, each of Parent and
the Company agree to use its commercially reasonable efforts to take promptly
any and all steps necessary to avoid or eliminate each and every impediment
under any Competition Laws that may be asserted by any Governmental Antitrust
Entity, so as to enable the parties to close the transactions contemplated by
this Agreement as expeditiously as possible in order to avoid the entry of, or
to effect the dissolution of, any decree, order, judgment, injunction, temporary
restraining order or other order in any suit or preceding that would otherwise
have the effect of preventing or materially delaying the consummation of the
transactions contemplated by this Agreement.
7.5 Further Assurances. Each of Parent and the Company shall use (and the
Company shall cause each of its Subsidiaries to use) its commercially reasonable
efforts to (i) take all actions necessary or appropriate to consummate the
transactions contemplated by this Agreement and (ii) cause the fulfillment at
the earliest practicable date of all of the conditions to their respective
obligations to consummate the transactions contemplated by this Agreement.
7.6 Confidentiality. Parent and Merger Sub acknowledge that the information
provided to them in connection with this Agreement and the transactions
contemplated hereby is subject to the terms of the confidentiality agreement
between the Company and Xxxxxxx & Xxxxxxxx Advisors LLC dated as of February 1,
2006 (the "Confidentiality Agreement"), the terms of which are incorporated
herein by reference. The Confidentiality Agreement shall terminate at the
Effective Time.
7.7 Indemnification, Exculpation and Insurance.
(a) From and after the Closing Date until six (6) years from the
Effective Time, Parent shall cause the Surviving Corporation to indemnify,
defend and hold harmless, to the fullest extent permitted under applicable Law,
the individuals who
44
on or prior to the Closing Date were directors or officers of the Company or any
of its Subsidiaries (collectively, the "Indemnitees") with respect to all acts
or omissions by them in their capacities as such or taken at the request of the
Company or any of its Subsidiaries at any time on or prior to the Closing Date.
Parent agrees that all rights of the Indemnitees to indemnification and
exculpation from liabilities for acts or omissions occurring on or prior to the
Closing Date as provided in the respective certificate of incorporation or
bylaws or comparable organizational documents of the Company or any of its
Subsidiaries as now in effect, and any indemnification agreements of the Company
or any of its Subsidiaries shall survive the Closing Date and shall continue in
full force and effect in accordance with their terms. Such rights shall not be
amended or otherwise modified in any manner that would adversely affect the
rights of the Indemnitees, unless such modification is required by Law or
approved by such Indemnitees. In addition, Parent shall, or shall cause the
Surviving Corporation to, pay or reimburse any expenses of any Indemnitee under
this Section 7.7 as incurred to the fullest extent permitted under applicable
Law, provided that the person to whom expenses are advanced provides an
undertaking to repay such advances to the extent required by applicable Law.
(b) Parent, from and after the Closing Date, shall cause (i) the
certificate of incorporation and bylaws or comparable organizational documents
of the Surviving Corporation to contain provisions no less favorable to the
Indemnitees with respect to limitation of certain liabilities of directors,
officers, employees and agents and indemnification than are set forth as of the
date of this Agreement in the certificate of incorporation and bylaws of the
Company and (ii) the certificate of incorporation and bylaws or comparable
organizational documents of each Subsidiary of the Surviving Corporation to
contain the current provisions regarding indemnification of directors, officers,
employees and agents, which provisions in each case shall not be amended,
repealed or otherwise modified in a manner that would adversely affect the
rights thereunder of the Indemnitees.
(c) The Surviving Corporation shall have the right (but not the
obligation) to control the defense of, including the investigation and any
settlement or compromise of, any litigation, claim or proceeding (each, a
"Claim") relating to any acts or omissions covered under this Section 7.7 with
counsel selected by the Surviving Corporation; provided, however, that the
Indemnitee shall be permitted to participate in the defense of such Claim at his
own expense.
(d) Each of the Surviving Corporation and the Indemnitee shall
cooperate, and cause their respective Affiliates to cooperate, in the defense of
any Claim and shall provide access to properties and individuals as reasonably
requested and furnish or cause to be furnished records, information and
testimony, and attend such conferences, discovery proceedings, hearings, trials
or appeals, as may be reasonably requested in connection therewith.
(e) The Surviving Corporation shall provide or maintain in effect for
six (6) years from the Effective Time, through the purchase of "run-off"
coverage or otherwise, directors' and officers' and corporate liability
insurance covering those
45
individuals who are covered by the directors' and officers' and corporate
liability insurance policy or policies provided for directors and officers of
the Company and its Subsidiaries as of the date hereof (the "Existing Policy")
on terms (other than with respect to minimum aggregate limits of liability for
directors' and officers' and corporate liability insurance coverage) comparable
in all respects to the Existing Policy and such coverage shall contain minimum
aggregate limits of liability for directors' and officers' and corporate
liability insurance coverage for directors and officers of the Company and its
Subsidiaries with the amount of coverage at least equal to that of the Existing
Policy and deductibles no larger than those customary for such type of insurance
coverage; provided, however, that if such "run-off" or other coverage is not
available at a cost not greater than 200% of the annual premiums paid as of the
date hereof under the Existing Policy (the "Insurance Cap") (which premium the
Company hereby represents and warrants is as set forth in Schedule 7.7(e)), then
the Surviving Corporation shall be required to obtain as much coverage as is
possible under substantially similar policies for such annual premiums as do not
exceed the Insurance Cap.
(f) The provisions of this Section 7.7: (i) are intended to be for the
benefit of, and shall be enforceable by, each Indemnitee, his or her heirs and
his or her representatives and (ii) are in addition to, and not in substitution
for, any other rights to indemnification or contribution that any such person
may have by Contract or otherwise.
(g) In the event that the Surviving Corporation or any of their
respective successors or assigns (i) consolidates or merges with or into any
other Person and is not the continuing or surviving corporation or entity of
such consolidation or merger; or (ii) transfers or conveys all or substantially
all of its properties and assets to any Person, then, and in each such case,
proper provision shall be made so that the successors and assigns of the
Surviving Corporation shall assume all of the obligations thereof set forth in
this Section 7.7.
(h) The obligations of the Surviving Corporation under this Section
7.7 shall not be terminated or modified in such a manner as to adversely affect
any Indemnitee to whom this Section 7.7 applies without the consent of the
affected Indemnitee (it being expressly agreed that the Indemnitees to whom this
Section 7.7 applies shall be third party beneficiaries of this Section 7.7).
(i) Nothing in this Agreement is intended to, shall be construed to or
shall release, waive or impair any rights to directors' and officers' insurance
claims under any policy that is or has been in existence with respect to the
Company, any of its Subsidiaries or any of its directors or officers, it being
understood and agreed that the indemnification provided for in this Section 7.7
is not prior to or in substitution for any such claims under such policies.
7.8 Preservation of Records. Parent shall, and shall cause the Surviving
Corporation to, preserve and keep the records held by them relating to the
respective businesses of the Company and its Subsidiaries for a period of seven
(7) years from the Closing Date (or longer if required by applicable Law) and
shall make such records (or
46
copies) and reasonably appropriate personnel available, at reasonable times and
upon reasonable advance notice, to any Stockholder as may be reasonably required
by such party in connection with any insurance claims by, Legal Proceedings or
Tax audits against, governmental investigations of, or compliance with legal
requirements by, the Stockholders or any of their Affiliates.
7.9 Publicity.
(a) None of the Company, Merger Sub or Parent shall issue any press
release or public announcement or comment concerning this Agreement or the
transactions contemplated hereby without obtaining the prior written approval of
the other party hereto, which approval will not be unreasonably withheld or
delayed, unless and only to the extent, in the judgment of the Company or
Parent, disclosure is otherwise required by applicable Law (including the
periodic reporting requirements under the Exchange Act) or under the rules of
any securities exchange on which the securities of Parent are listed; provided
that, to the extent required by applicable Law, the party intending to make such
release shall use its commercially reasonable efforts consistent with applicable
Law to consult with the other party with respect to the text thereof.
(b) Each of Parent, Merger Sub and the Company agrees that the terms
of this Agreement shall not be disclosed or otherwise made available to the
public and that copies of this Agreement shall not be publicly filed or
otherwise made available to the public, except where such disclosure,
availability or filing is required by applicable Law (including the periodic
reporting requirements under the Exchange Act) and only to the extent required
by such Law or under the rules of any securities exchange on which the
securities of Parent are listed. In the event that such disclosure, availability
or filing is required by applicable Law (other than any filing required by the
Exchange Act or the Securities Act), each of Parent, Merger Sub and the Company
agrees to use its commercially reasonable efforts to obtain "confidential
treatment" of this Agreement and to redact such terms of this Agreement the
other party shall request.
7.10 Employment and Employee Benefits.
(a) Parent covenants and agrees to cause the Surviving Corporation to,
(i) for a period of one year following the Closing Date, provide compensation
and benefits to Continuing Employees at levels that are similar, on an overall
basis, to the levels of compensation and benefits as in effect under the Company
Benefit Plans (with the exception of any equity compensation) immediately prior
to the Closing and (ii) provide severance compensation and benefits to any
Continuing Employees during the one-year period following the Closing Date at
levels at least equivalent to the levels of such compensation and benefits as in
effect under the Company Benefit Plans immediately prior to the Closing.
Employees of the Company or its Subsidiaries immediately prior to the Closing
who continue their employment with the Surviving Corporation or its Subsidiaries
following the Closing Date are hereinafter referred to as the "Continuing
Employees." Notwithstanding anything in this Agreement to the contrary, the
Buyer shall be permitted to reduce compensation and benefits with respect
47
to any Continuing Employee if such Continuing Employee is reclassified from
"exempt" to "non-exempt" status for purposes of the Fair Labor Standards Act
and/or any state laws of similar effect so that the total compensation
opportunity for such Continuing Employee after reclassification from "exempt" to
"non-exempt" status is similar, on an overall basis, to the total compensation
opportunity for such Continuing Employee immediately prior to such
reclassification.
(b) For purposes of eligibility and vesting (but not benefit accrual)
under the employee benefit plans of Parent or the Surviving Corporation to which
Continuing Employees are eligible to participate (the "Parent Plans"), Parent
and the Surviving Corporation shall credit each Continuing Employee with his or
her years of service with the Company, its Subsidiaries and any predecessor
entities, to the same extent as such Continuing Employee was entitled
immediately prior to the Closing to credit for such service under any similar
Company Benefit Plan. The Parent Plans shall not deny Continuing Employees
coverage on the basis of pre-existing conditions to the extent such conditions
were waived under similar Company Benefit Plans immediately prior to the Closing
and shall credit such Continuing Employees for any deductibles and out-of-pocket
expenses paid prior to the Closing Date in satisfying any deductibles and
out-of-pocket expenses in the year of initial participation in the Parent Plans.
(c) As soon as practicable following the date of this Agreement and in
any event prior to the Closing, the Company (i) will use commercially reasonable
efforts to seek stockholder approval that satisfies the requirements of Section
280G(b)(5)(B) of the Code of certain payments and benefits in the nature of
compensation that would, but for the approval described in this Section 7.10(c),
be treated as "parachute payments" under Section 280G of the Code (either alone
or in conjunction with any other event), including, to the extent applicable,
any such payments or benefits or accelerated vesting with respect to Options,
Company Benefit Plans and any other arrangements (collectively, the
"Compensatory Arrangements") such that, to the extent such amounts are approved
by the stockholders of the Company as contemplated by this Section 7.10(c), no
"disqualified individual" within the meaning of Section 280G of the Code would
be subject to an excise tax under Section 4999 of the Code; and (ii) make
disclosure of the Compensatory Arrangements that satisfies the requirements of
Section 280G of the Code to all stockholders of the Company entitled to vote
under Section 280G of the Code. The form and substance of the disclosure
materials to be provided to the Company's stockholders in furtherance of the
Company's obligations contemplated in this Section 7.10(c) shall be subject to
the review and approval of Parent, which shall not be unreasonably withheld.
(d) The parties hereto acknowledge and agree that all provisions
contained in this Section 7.10 with respect to employees of the Company and its
Subsidiaries are included for the sole benefit of the respective parties hereto
and shall not create any right (i) in any other person, including without
limitation, any employees, former employees, any participant or any beneficiary
thereof in any Company Benefit Plan or Parent Plan, or (ii) to continued
employment with the Company, any of its Subsidiaries, Parent or the Surviving
Corporation. After the Effective Time, nothing
48
contained in this Section 7.10 shall interfere with Parent's right to amend,
modify or terminate any Company Benefit Plan (subject to the provisions of
Section 7.10(a) and (b) above) or to terminate the employment of any employee of
the Company or its Subsidiaries for any reason.
7.11 Form S-1. The Company agrees that after the date hereof until the
earlier of the Closing or the termination of this Agreement in accordance with
its terms, the Company shall not (a) file with the SEC any amendments to the
Registration Statement on Form S-1 (File No. 333-125438) originally filed with
the SEC on June 2, 2005 (the "Form S-1") or (b) take any actions for the purpose
of making effective the Form S-1 (including any correspondence with the SEC
related thereto).
7.12 Financing Assistance. The Company agrees to provide, and shall cause
the Subsidiaries and its and their officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives to provide, all
reasonable cooperation (including with respect to timeliness) in connection with
the arrangement of the debt financing contemplated by the Debt Commitment
Letters as may be reasonably requested by Parent, including (i) participation in
meetings, drafting sessions and due diligence sessions; (ii) promptly furnishing
Parent and its financing sources with financial and other pertinent information
regarding the Company as may be reasonably requested by Parent, including all
financial statements and financial data of the type required by Regulation S-X
and Regulation S-K under the Securities Act and of type and form customarily
included in private placements under Rule 144A of the Securities Act to
consummate the offering of senior or senior subordinated notes (the "Required
Financial Information"); (iii) promptly satisfying the condition set forth in
paragraph (f) of Annex I of the Senior Secured Debt Commitment Letter (to the
extent the satisfaction of such condition requires actions by or cooperation of
the Company); (iv) assisting Parent and Merger Sub and their financing sources
in the preparation of (A) an offering document for any of such debt financing
and (B) materials for rating agency presentations; (v) reasonably cooperating
with the marketing efforts of Parent and Merger Sub and their financing sources
for any of such debt financing; (vi) providing and executing documents as may be
reasonably requested by Parent, including a certificate of the chief financial
officer of the Company or any Subsidiary with respect to solvency matters and
consents of accountants for use of their reports in any materials relating to
such debt financing; (vii) reasonably facilitating the pledging of collateral;
and (viii) using commercially reasonable efforts to obtain accountants' comfort
letters, legal opinions, surveys and title insurance as reasonably requested by
Parent. Notwithstanding the foregoing, (x) such requested cooperation shall not
unreasonably interfere with the ongoing operations of the Company and its
Subsidiaries and (y) neither the Company nor any of its Subsidiaries shall be
required to pay any commitment or other similar fee or incur any other liability
in connection with the financings contemplated by the Debt Commitment Letters
prior to the Effective Time (unless such fee or liability is subject to the
immediately succeeding sentence or such commitment fee or liability is
conditional on the occurrence of the Effective Time).
49
7.13 Debt Tender Offers.
(a) As soon as reasonably practicable after the date of this
Agreement, but subject to the compliance by Parent of its obligation in the
first sentence of Section 7.13(b) below, the Company shall launch a tender offer
and Consent Solicitation (the "Company Debt Tender Offer") for all of the
outstanding Senior Floating Rate PIK Notes due 2011 of the Company (the "PIK
Notes") and Activant Solutions, Inc. ("Activant") shall launch tender offers and
Consent Solicitations (the "Activant Debt Tender Offers" and collectively with
the Company Debt Tender Offer, the "Debt Tender Offers") for all of the
outstanding 10-1/2% Senior Notes due 2011 of Activant (the "Fixed Notes") and
all of the outstanding Floating Rate Senior Notes due 2010 of Activant (the
"Floating Notes" and, together with the Fixed Notes and the PIK Notes, the
"Tender Offer Notes"), on the terms set forth on Schedule 7.13, and Parent and
Merger Sub shall assist the Company and Activant in connection therewith.
(b) Promptly after the date of this Agreement, Parent shall prepare
all necessary and appropriate documentation in connection with the Debt Tender
Offers, including the offers to purchase, related letters of transmittal and
other related documents (collectively, the "Offer Documents"). Parent and the
Company shall cooperate with each other in the preparation of the Offer
Documents. All mailings to the holders of the Tender Offer Notes in connection
with the Debt Tender Offers shall be subject to the prior review and comment by
each of the Company and Parent and shall be reasonably acceptable to each of
them.
(c) Promptly upon the receipt of the Requested Consents with respect
to the Indenture for the PIK Notes, the Indenture for the Fixed Notes or the
Indenture for the Floating Notes, the Company or Activant, as applicable, will
enter into a supplemental indenture or supplemental indentures reflecting the
amendments to such indentures approved by such Requested Consent and will use
its reasonable best efforts to cause the relevant indenture trustee to promptly
enter into such supplemental indenture or supplemental indentures; provided,
that the amendments contained in such supplemental indentures shall become
operative upon the acceptance of the applicable Debt Tender Offers. The closing
of any Debt Tender Offer shall be conditioned on the occurrence of the Closing,
and the parties shall use their reasonable best efforts to cause the Debt Tender
Offer to close on the Closing Date. Upon the closing of the Debt Tender Offer,
at Closing and in accordance with the terms of the Debt Tender Offer, the
Company or Activant, as applicable, shall accept for purchase and purchase the
Tender Offer Notes tendered in the Debt Tender Offer (the "Tendered Notes") and
purchase all of the Tendered Notes, including payment of any applicable
premiums, and all related fees and expenses (the "Tender Amount").
(d) If requested by Parent, the Company shall enter into one or more
dealer manager agreements with such Persons as Parent shall reasonably request,
Parent shall pay the reasonable fees and expenses of any dealer manager,
information agent, depositary or other agent retained in connection with the
Debt Offers. Notwithstanding the foregoing, the Company shall not be obligated
to agree to cause its counsel to provide
50
any 10b-5 negative assurance letters with regard to the Offer Documents with any
such dealer manager pursuant to such dealer manager agreement(s).
(e) For purposes of this Agreement, "Consent Solicitation" shall mean
a solicitation of the Requested Consents from the holders of the applicable
Tender Offer Notes; and "Requested Consents" shall mean the consents of holders
of a majority in principal amount of the holders of the PIK Notes, the Fixed
Notes or the Floating Notes, as the case may be, to the amendments to such
Tender Offer Notes described in Schedule 7.13 or in the applicable Consent
Solicitation materials, as the case may be.
7.14 Termination of Senior Indebtedness. On or prior to the second Business
Day prior to the Effective Time, the Company shall use its commercially
reasonable efforts to deliver to Parent copies of payoff letters (subject to
delivery of funds as arranged by Parent and Merger Sub), in commercially
reasonable form, from the administration agent under the Existing Credit
Agreement and shall use its commercially reasonable efforts to make arrangements
for the release of all mortgages, liens and other security over the Company's
and its Subsidiaries' properties and assets securing such obligations (subject
to delivery of funds as arranged by Parent and Merger Sub, if necessary).
7.15 Termination of Affiliate Arrangements. Prior to the Closing, the
Company shall, and shall cause the counterparties thereto to, execute and
deliver (a) a termination and release agreement, substantially in the form
attached hereto as Exhibit B, with respect to the Company's Stockholders
Agreement, dated as of May 26, 1999, and (b) a termination and release
agreement, substantially in the form attached hereto as Exhibit C with respect
to (i) that certain Monitoring and Oversight Agreement, dated as of February 27,
1997, among the Company, Activant and Xxxxx, Muse & Co. Partners, L.P. ("HMCo")
and (ii) that certain Financial Advisory Agreement, dated as of February 27,
1997, among the Company, Activant and HMCo, each without any monetary Liability
having been incurred or satisfied by the Company or any Company Subsidiary under
such Contracts or other arrangements on or after the date hereof except as set
forth on Schedule 7.15.
7.16 Exclusivity. The Company agrees that after the date hereof until the
earlier of the Closing or the termination of this Agreement in accordance with
its terms, it shall not, and it shall cause its Subsidiaries and Affiliates and
shall use its reasonable best efforts to cause the officers, directors,
employees, investment bankers, attorneys, accountants, agents, advisors,
representatives and Affiliates of the Company and its Subsidiaries not to,
directly or indirectly: (a) solicit, initiate, facilitate or encourage the
submission of any Acquisition Proposal; (b) participate in any discussions or
negotiations regarding, or furnish to any Person any information with respect
to, or take any other action knowingly to facilitate or encourage any inquiries
or the making of any proposal that constitutes, or could be expected to lead to,
any Acquisition Proposal; (c) grant any waiver or release under any standstill
or similar agreement with respect to any class of the Company's or any Company
Subsidiaries' securities; or (d) enter into any agreement with respect to any
Acquisition Proposal. The Company agrees to promptly notify Parent
51
upon receipt of, and promptly communicate to Parent the terms of, any
Acquisition Proposal or any request for non-public information in connection
with an Acquisition Proposal and to keep Parent informed, on a current basis,
regarding any such matters. Parent and Merger Sub acknowledge that prior to the
date of this Agreement the Company has solicited or caused to be solicited
indications of interest and proposals for an Acquisition Proposal. Without
limiting the generality of the foregoing, the Company shall, and shall cause its
Subsidiaries to, and shall use its reasonable best efforts to cause its and
their officers, employees, representatives and Affiliates to, immediately cease
and cause to be terminated any existing activities, including discussions or
negotiations with any Person, conducted prior to the date hereof with respect to
any Acquisition Proposal. For purposes of this Section 7.16, "Acquisition
Proposal" means any offer or proposal for, or indication of interest in, a
merger, consolidation, stock exchange, business combination, reorganization,
recapitalization, liquidation, dissolution or other similar transaction
involving the Company or any of its Subsidiaries, any purchase of at least 5% of
the assets of the Company and its Subsidiaries, taken as a whole, or any capital
stock of the Company or any of its Subsidiaries, other than the transactions
contemplated by this Agreement.
7.17 Resignations. At the Closing, the Company shall cause to be delivered
to Parent duly signed resignations, effective as of the Effective Time, of all
members of the board of directors of the Company (except those designated by
Parent to the Company in writing at least 10 days prior to the Closing).
7.18 Closing Certificate. The Company shall deliver to Parent at Closing a
certificate in form and substance reasonably satisfactory to Parent, duly
executed and acknowledged, certifying any facts that would exempt the
transactions contemplated hereby from withholding pursuant to Section 1445 of
the Code and the Treasury regulations thereunder.
ARTICLE 8
CONDITIONS TO CLOSING
8.1 Conditions Precedent to Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate the Merger are subject to the
fulfillment, on or prior to the Closing Date, of each of the following
conditions (any or all of which may be waived by Parent in whole or in part to
the extent permitted by applicable Law):
(a) the representations and warranties of the Company set forth in
this Agreement, which representations and warranties shall be deemed for
purposes of this Section 8.1(a) not to include any qualification or limitation
with respect to materiality (whether by reference to "Material Adverse Effect"
or otherwise), shall be true and correct at and as of the Closing except (with
respect to the representations and warranties of the Company set forth in this
Agreement other than in Sections 5.2 and 5.4) where the failure thereof to be
true and correct, individually or in the aggregate, would not
52
reasonably be expected to have a Material Adverse Effect, with the same effect
as though such representations and warranties were made at and as of the
Closing, and Parent shall have received a certificate signed by the Chief
Executive Officer of the Company, dated the Closing Date, to the foregoing
effect;
(b) the Company shall have performed and complied in all material
respects with all covenants required by this Agreement to be performed or
complied with by it on or prior to the Closing Date, and Parent shall have
received a certificate signed by the Chief Executive Officer of the Company,
dated the Closing Date, to the foregoing effect;
(c) there shall not be in effect any Law or Order restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby;
(d) the consents and/or approvals of Governmental Bodies and other
Persons listed on Schedule 8.1(d) shall have been obtained and evidence of such
consents and/or approvals shall have been made available to Parent; and
(e) the waiting period or required approval applicable to the
transactions contemplated by this Agreement under the HSR Act and the other
applicable Competition Laws set forth on Schedule 8.1(e) shall have expired (or
early termination shall have been granted) or been received.
8.2 Conditions Precedent to Obligations of the Company. The obligations of
the Company to consummate the Merger are subject to the fulfillment, on or prior
to the Closing Date, of each of the following conditions (any or all of which
may be waived by the Company in whole or in part to the extent permitted by
applicable Law):
(a) the representations and warranties of Parent and Merger Sub set
forth in this Agreement, which representations and warranties shall be deemed
for purposes of this Section 8.2(a) not to include any qualification or
limitation with respect to materiality, shall be true and correct at and as of
the Closing except (with respect to the representations and warranties of the
Company set forth in this Agreement other than in Section 6.2) where the failure
thereof to be true and correct, individually or in the aggregate, would not have
a material adverse effect on the ability of Parent or Merger Sub to consummate
the transactions contemplated by this Agreement, with the same effect as though
such representations and warranties were made at and as of the Closing, and the
Company shall have received a certificate signed by the President of Parent and
Merger Sub to the foregoing effect;
(b) Parent and Merger Sub shall have performed and complied in all
material respects with all covenants required by this Agreement to be performed
or complied with by Parent or Merger Sub on or prior to the Closing Date, and
the Company shall have received a certificate signed by the President of Parent
and Merger Sub, dated the Closing Date, to the foregoing effect;
53
(c) there shall not be in effect any Law or Order restraining,
enjoining or otherwise prohibiting the consummation of the transactions
contemplated hereby; and
(d) the waiting period or required approval applicable to the
transactions contemplated by this Agreement under the HSR Act and the other
applicable Competition Laws set forth on Schedule 8.1(e) shall have expired (or
early termination shall have been granted) or been received.
8.3 Frustration of Closing Conditions. None of the Company, Parent or
Merger Sub may rely on the failure of any condition set forth in Sections 8.1 or
8.2, as the case may be, if such failure was caused by such party's failure to
comply with any provision of this Agreement.
ARTICLE 9
MISCELLANEOUS
9.1 No Survival of Representations, Warranties and Covenants. The
representations, warranties, covenants and agreements of the parties contained
in this Agreement or in any agreement delivered pursuant to this Agreement shall
not survive beyond the Effective Time and there shall be no liability in respect
thereof, whether such liability has accrued prior to or after the Effective
Time, on the part of any party or any of its officers, directors, agents or
Affiliates, except for those covenants and agreements and other provisions
contained herein that by their terms apply or are to be performed in whole or in
part after the Effective Time and Articles 1 and 9.
9.2 Remedies.
(a) Parent's and Merger Sub's sole and exclusive remedy (1) for a
non-willful breach of any representation or warranty made by the Company herein
or in any document delivered pursuant hereto or (2) for a non-willful breach of
any covenant made by the Company herein or in any document delivered pursuant
hereto and required to be performed by the Company on or prior to the Closing
Date, shall, in either case, be limited to (x) Parent's right to terminate this
Agreement pursuant to and to the extent permitted by (i) Section 4.1(a) as a
result of the Closing not having occurred by the Outside Date due to such breach
or (ii) Section 4.1(d) and (y) Section 9.2(b); and Parent and Merger Sub hereby
waive and release the Company, the Stockholders and the Optionholders from any
and all other claims or causes of action (whether by statute or in contract or
tort) that may be based upon, arise out of, or relate to such breaches. The
Company acknowledges and agrees that its sole and exclusive remedy for any
breach of this Agreement (including any willful breach of this Agreement) will
be limited to (A) the Company's right to terminate the Agreement pursuant to
Section 4.1(e) or (f) and (B) to the payment of the Termination Fee under the
circumstances (and only under the circumstances) specified in Section 4.3(b) and
the Guarantee.
54
(b) The parties hereto agree that irreparable damage would occur in
the event any provision of this Agreement were not performed by the Company in
accordance with the terms hereof and that, prior to the termination of this
Agreement pursuant to Section 4.1, Parent and Merger Sub shall be entitled to
specific performance of the terms hereof, in addition to any other remedy at law
or equity. The parties acknowledge that the Company shall not be entitled to an
injunction or injunctions to prevent breaches of this Agreement by Parent or
Merger Sub or to enforce specifically the terms and provisions of this Agreement
and that the Company's sole and exclusive remedy with respect to any such breach
shall be the remedy set forth in Section 4.3(b) and the Guarantee; provided,
however, the Company shall be entitled to seek specific performance to prevent
any breach by Parent or Merger Sub of Section 7.6.
9.3 Exclusivity of Agreement. The parties hereto have voluntarily agreed to
define their rights, liabilities and obligations respecting the subject matter
of this Agreement and the Guarantee exclusively in contract pursuant to the
express terms and provisions of this Agreement and the Guarantee; and the
parties hereto expressly disclaim that they are owed any duties not expressly
set forth in this Agreement and the Guarantee. Subject to the terms and
conditions of this Agreement, the sole and exclusive remedies for any breach of
the terms and provisions of this Agreement and the Guarantee (including any
representations and warranties set forth herein) shall be those remedies
available at law or in equity for breach of contract only (as such contract
remedies may be further limited or excluded pursuant to the express terms of
this Agreement (including the provisions of Sections 4.3, 9.2 and 9.12) and as
set forth in Section 9.2(d)); and the parties hereto hereby waive and release
any and all tort claims and causes of action that may be based upon, arise out
of or relate to this Agreement and the Guarantee, or the negotiation, execution
or performance of this Agreement and the Guarantee (including any tort claim or
clause of action based upon, arising out of or related to any representation or
warranty made in or in connection with this Agreement and the Guarantee or as an
inducement to enter into this Agreement and the Guarantee).
9.4 Payment of Sales, Use or Similar Taxes. All sales, use, transfer,
intangible, recordation, documentary stamp or similar Taxes or charges, of any
nature whatsoever, applicable to, or resulting from, the transactions
contemplated by this Agreement shall be borne by the Surviving Corporation.
9.5 Expenses. Except as otherwise provided in this Agreement, each of the
Company, Parent and Merger Sub shall bear its own expenses incurred in
connection with the negotiation and execution of this Agreement and each other
agreement, document and instrument contemplated by this Agreement and the
consummation of the transactions contemplated hereby and thereby.
9.6 Entire Agreement; Amendments and Waivers. This Agreement (including the
Exhibits and Schedules hereto) and the Confidentiality Agreement represent the
entire understanding and agreement between the parties hereto with respect to
the subject matter hereof. This Agreement can be amended, supplemented or
changed, and any provision hereof can be waived, only by written instrument
making specific reference to this
55
Agreement signed by the party against whom enforcement of any such amendment,
supplement, modification or waiver is sought. No action taken pursuant to this
Agreement, including any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representation, warranty, covenant or agreement contained herein. The waiver
by any party hereto of a breach of any provision of this Agreement shall not
operate or be construed as a further or continuing waiver of such breach or as a
waiver of any other or subsequent breach. No failure on the part of any party to
exercise, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of such
right, power or remedy by such party preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
9.7 Governing Law. This Agreement, and all claims or causes of action
(whether in contract or tort) that may be based upon, arise out of or relate to
this Agreement or the negotiation, execution or performance of this Agreement
(including any claim or cause of action based upon, arising out of or related to
any representation or warranty made in or in connection with this Agreement)
shall be governed by and construed in accordance with the internal Laws of the
State of Delaware applicable to agreements executed and performed entirely
within such State. Any action against any party relating to the foregoing shall
be brought in any federal or state court of competent jurisdiction located
within the State of Delaware, and the parties hereto hereby irrevocably submit
to the exclusive jurisdiction of any federal or state court located within the
State of Delaware over any such action. The parties hereby irrevocably waive, to
the fullest extent permitted by applicable Law, any objection that they may now
or hereafter have to the laying of venue of any such action brought in such
court or any defense of inconvenient forum for the maintenance of such action.
9.8 Waiver of Jury Trial. EACH OF THE COMPANY, PARENT AND MERGER SUB HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THE
ACTIONS OF THE COMPANY, PARENT OR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION,
PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT.
9.9 Notices. All notices and other communications under this Agreement
shall be in writing and shall be deemed given (a) when delivered personally by
hand (with written confirmation of receipt), (b) when sent by facsimile (with
written confirmation of transmission) or (c) one Business Day following the day
sent by overnight courier (with written confirmation of receipt), in each case
at the following addresses and facsimile numbers (or to such other address or
facsimile number as a party may have specified by notice given to the other
party pursuant to this provision):
56
If to the Company, to:
Activant Solutions Holdings Inc.
000 Xxx Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx X. Xxx XX, Esq.
with copies (which shall not constitute notice) to:
Hicks, Muse, Xxxx & Xxxxx Incorporated
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxx
and
Weil, Gotshal & Xxxxxx LLP
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxx, Esq.
Xxxxxxx X. Xxxx, Esq.
If to Parent or Merger Sub, to:
c/o Hellman & Xxxxxxxx LLC
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxx
Xxxxx Xxxx, Esq.
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
9.10 Severability. If any term or other provision of this Agreement is
invalid, illegal, or incapable of being enforced by any Law or public policy,
all other terms or provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in
57
any manner materially adverse to any party. Upon such determination that any
term or other provision is invalid, illegal, or incapable of being enforced, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner in order that the transactions contemplated hereby are
consummated as originally contemplated to the greatest extent possible.
9.11 Binding Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective successors and
permitted assigns. Nothing in this Agreement shall create or be deemed to create
any third party beneficiary rights in any Person not a party to this Agreement
except as contemplated by Section 7.7 and Section 9.12. No assignment of this
Agreement or of any rights or obligations hereunder may be made by the Company,
Parent or Merger Sub, directly or indirectly (by operation of law or otherwise),
without the prior written consent of the other parties hereto and any attempted
assignment without the required consents shall be void, except (a) Parent or
Merger Sub may assign their rights and obligations hereunder to any of their
Affiliates and (b) that at and after the Effective Time, Parent and Merger Sub
may collaterally assign their rights hereunder to any commercial lender or other
debt financing source of Parent and Merger Sub without the Company's consent. No
assignment of any obligations hereunder shall relieve such parties hereto of any
such obligations.
9.12 Non-Recourse. Except to the extent otherwise set forth in the
Guarantee, this Agreement may only be enforced against, and any claim or clause
of action based upon, arising out of, or related to this Agreement may only be
brought against the entities that are expressly named as parties hereto and then
only with respect to the specific obligations set forth herein with respect to
such party. Except to the extent a named party to this Agreement or the
Guarantee (and then only to the extent of the specific obligations undertaken by
such named party in this Agreement or the Guarantee and not otherwise), no past,
present or future director, officer, employee, incorporator, member, partner,
stockholder, Affiliate, agent, attorney or representative of any party hereto
shall have any liability for any obligations or liabilities of any party hereto
under this Agreement or for any claim based on, in respect of, or by reason of,
the transactions contemplated hereby and thereby.
9.13 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
58
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first written above.
PARENT:
LONE STAR HOLDING CORP.
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
----------------------------------
Title: President
---------------------------------
MERGER SUB:
LONE STAR MERGER CORP.
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
----------------------------------
Title: President
---------------------------------
COMPANY:
ACTIVANT SOLUTIONS HOLDINGS INC.
By: /s/ A. Xxxxxxxx Xxxxx
------------------------------------
Name: A. Xxxxxxxx Xxxxx
----------------------------------
Title: President and Chief Executive
Officer
---------------------------------
SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
PAGE
----
ARTICLE 1 DEFINITIONS.................................................... 2
1.1 Certain Definitions............................................... 2
ARTICLE 2 THE MERGER..................................................... 10
2.1 The Merger....................................................... 10
2.2 Closing.......................................................... 11
2.3 Effective Time................................................... 11
2.4 Effects of the Merger............................................ 11
2.5 Certificate of Incorporation and Bylaws.......................... 11
2.6 Directors........................................................ 11
2.7 Officers......................................................... 12
ARTICLE 3 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES......................... 12
3.1 Effect on Capital Stock.......................................... 12
3.2 Appraisal Rights................................................. 13
3.3 Payment of Merger Consideration; Exchange of Certificates........ 14
3.4 Withholding Taxes................................................ 15
ARTICLE 4 TERMINATION.................................................... 15
4.1 Termination of Agreement......................................... 15
4.2 Procedure upon Termination....................................... 16
4.3 Effect of Termination............................................ 16
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................. 17
5.1 Organization and Good Standing................................... 17
5.2 Authorization of Agreement....................................... 17
5.3 Conflicts; Consents of Third Parties............................. 18
5.4 Capitalization................................................... 19
5.5 Subsidiaries..................................................... 20
5.6 Financial Statements............................................. 21
5.7 No Undisclosed Liabilities....................................... 21
i
TABLE OF CONTENTS
PAGE
----
5.8 Absence of Certain Developments.................................. 21
5.9 Taxes............................................................ 22
5.10 Real Property.................................................... 24
5.11 Tangible Personal Property....................................... 24
5.12 Intellectual Property............................................ 24
5.13 Material Contracts............................................... 27
5.14 Employee Benefits Plans.......................................... 29
5.15 Labor............................................................ 31
5.16 Litigation....................................................... 32
5.17 Compliance with Laws; Permits.................................... 32
5.18 Environmental Matters............................................ 32
5.19 Insurance........................................................ 33
5.20 Transactions with Related Person; Affiliates..................... 34
5.21 Books and Records................................................ 34
5.22 Financial Advisors............................................... 34
5.23 SEC Filings...................................................... 34
5.24 No Other Representations or Warranties; Schedules................ 35
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB........ 35
6.1 Organization and Good Standing................................... 35
6.2 Authorization of Agreement....................................... 35
6.3 Conflicts; Consents of Third Parties............................. 36
6.4 Litigation....................................................... 36
6.5 Financial Advisors............................................... 37
6.6 Financing........................................................ 37
6.7 Solvency......................................................... 37
6.8 No Prior Activities.............................................. 38
6.9 Condition of the Business........................................ 38
ARTICLE 7 COVENANTS...................................................... 39
7.1 Access to Information............................................ 39
ii
TABLE OF CONTENTS
PAGE
----
7.2 Conduct of the Business Pending the Closing...................... 39
7.3 Consents......................................................... 42
7.4 Regulatory Approvals............................................. 43
7.5 Further Assurances............................................... 44
7.6 Confidentiality.................................................. 44
7.7 Indemnification, Exculpation and Insurance....................... 44
7.8 Preservation of Records.......................................... 46
7.9 Publicity........................................................ 47
7.10 Employment and Employee Benefits................................. 47
7.11 Form S-1......................................................... 49
7.12 Financing Assistance............................................. 49
7.13 Debt Tender Offers............................................... 50
7.14 Termination of Senior Indebtedness............................... 51
7.15 Termination of Affiliate Arrangements............................ 51
7.16 Exclusivity...................................................... 51
7.17 Resignations..................................................... 52
7.18 Closing Certificate.............................................. 52
ARTICLE 8 CONDITIONS TO CLOSING.......................................... 52
8.1 Conditions Precedent to Obligations of Parent and Merger Sub..... 52
8.2 Conditions Precedent to Obligations of the Company............... 53
8.3 Frustration of Closing Conditions................................ 54
ARTICLE 9 MISCELLANEOUS.................................................. 54
9.1 No Survival of Representations, Warranties and Covenants......... 54
9.2 Remedies......................................................... 54
9.3 Exclusivity of Agreement......................................... 55
9.4 Payment of Sales, Use or Similar Taxes........................... 55
9.5 Expenses......................................................... 55
9.6 Entire Agreement; Amendments and Waivers......................... 55
9.7 Governing Law.................................................... 56
iii
TABLE OF CONTENTS
PAGE
----
9.8 Waiver of Jury Trial............................................. 56
9.9 Notices.......................................................... 56
9.10 Severability..................................................... 57
9.11 Binding Effect; Assignment....................................... 58
9.12 Non-Recourse..................................................... 58
9.13 Counterparts..................................................... 58
iv
SCHEDULES
Schedule 1.1(a) Knowledge of the Company
Schedule 1.1(b) Optionholders
Schedule 5.3(a) No Conflicts
Schedule 5.3(b) Consents
Schedule 5.4(a) Stockholders
Schedules 5.4(b)(i) and (ii) Capitalization
Schedule 5.4(c) Company Stock Awards
Schedule 5.5(a) Subsidiaries
Schedule 5.5(b) Subsidiary Liens
Schedule 5.7(a) and (b) No Undisclosed Liabilities
Schedules 5.8(a) and (b) Absence of Certain Developments
Schedule 5.9 Taxes
Schedule 5.10 Real Property
Schedule 5.11 Tangible Personal Property
Schedules 5.12(a)(i), (a)(ii), (d), (e), Intellectual Property
(h), (i), (l) and (m)
Schedule 5.13(a) and (b) Material Contracts
Schedule 5.14(a), (c), (f), (g) and (h) Employee Benefit Plans
Schedule 5.15(b) Labor
Schedule 5.16 Litigation
Schedule 5.18 Environmental Matters
Schedule 5.19 Insurance
Schedule 5.20 Affiliate Obligations
Schedule 5.21 Books and Records
Schedule 5.22 Financial Advisors
Schedule 6.5 Financial Advisors
Schedules 7.2(a) and (b) Conduct of Business Pending Closing
Schedule 7.7(e) Existing Policy Premium
Schedule 7.13 Terms of Debt Tender Offers
Schedule 7.15 Affiliate Arrangements
Schedule 8.1(d) Required Consents
Schedule 8.1(e) Applicable Competition Laws
EXHIBITS
Exhibit A - Form of Guarantee
Exhibit B - Form of Termination and Release Agreement - Stockholders Agreement
Exhibit C - Form of Termination and Release Agreement - M&O and FAA
v
EXHIBIT A
FORM OF
LIMITED GUARANTEE
OF
XXXXXXX & XXXXXXXX CAPITAL PARTNERS V, L.P.
Limited Guarantee, dated as of March ___, 2006 (this "Limited Guarantee"), by
Xxxxxxx & Xxxxxxxx Capital Partners V, L.P., a Delaware limited partnership (the
"Guarantor"), in favor of Activant Solutions Holdings Inc., a Delaware
corporation (the "Guaranteed Party").
1. LIMITED GUARANTEE. To induce the Guaranteed Party to enter into an
Agreement and Plan of Merger dated as of March 12, 2006 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "Merger
Agreement"), among Lone Star Holding Corp., a Delaware corporation ("Parent"),
Lone Star Merger Corp., a wholly-owned subsidiary of Parent and a Delaware
corporation ("Merger Sub"), and the Guaranteed Party, Guarantor unconditionally
and irrevocably guarantees to the Guaranteed Party, the due and punctual
observance, performance and discharge of [___]% of the payment obligations of
the Parent under Section 4.3(b) of the Merger Agreement (such percentage of the
payment obligations, the "Obligations"); provided that, subject to the proviso
set forth in the last sentence of Section 8 hereof, the maximum amount payable
by the Guarantor hereunder shall not exceed $[___] (the "Cap"). The parties
agree that this Limited Guarantee may not be enforced without giving effect to
the Cap. The Guaranteed Party may, in its sole discretion, bring and prosecute a
separate action or actions against the Guarantor for the full amount of the
Obligations (subject to the Cap), regardless of whether action is brought
against Parent or any other guarantor pursuant to a Limited Guarantee dated as
of the date hereof to be entered into between the Guaranteed Party and such
other guarantors (the "Other Guarantors") or whether Parent or any Other
Guarantor is joined in any such action or actions.
2. NATURE OF GUARANTEE. The Guaranteed Party shall not be obligated to file
any claim relating to the Obligations in the event that Parent becomes subject
to a bankruptcy, reorganization or similar proceeding, and the failure of the
Guaranteed Party to so file shall not affect the Guarantor's obligations
hereunder. In the event that any payment to the Guaranteed Party in respect of
the Obligations is rescinded or must otherwise be returned, restored or reduced
for any reason whatsoever, this Limited Guarantee shall continue to be effective
or be reinstated, as the case may be, and the Guarantor shall remain liable
hereunder with respect to such Obligations as if such payment had not been made.
This is an unconditional guarantee of payment and not of collectability.
3. CHANGES IN OBLIGATIONS, CERTAIN WAIVERS. The Guarantor agrees that the
Guaranteed Party may at any time and from time to time, without notice to or
further consent of the Guarantor, extend the time of payment of any of the
Obligations, and may also enter into any agreement with the Parent or with any
other person (including any Other Guarantor) interested in the transactions
contemplated by the Merger Agreement, for the extension, renewal, payment,
compromise, discharge or release thereof, in whole or in part, or for any
modification of the terms of the Merger Agreement or of any agreement between
the
Guaranteed Party and Parent or any such other person without in any way
impairing or affecting the Guarantor's obligations under this Limited Guarantee.
The Guarantor agrees that the obligations of the Guarantor hereunder shall not
be released or discharged, in whole or in part, or otherwise affected by (a) the
failure of the Guaranteed Party to assert any claim or demand or to enforce any
right or remedy against Parent or any other person interested in the
transactions contemplated by the Merger Agreement (including any Other
Guarantor); (b) any change in the time, place or manner of payment of any of the
Obligations or any rescission, waiver, compromise, consolidation or other
amendment or modification of any of the terms or provisions of the Merger
Agreement or any other agreement evidencing, securing or otherwise executed in
connection with any of the Obligations; (c) the addition, substitution or
release of any entity or other person interested in the transactions
contemplated by the Merger Agreement (including any Other Guarantor); (d) any
change in the corporate existence, structure or ownership of Parent or any other
person interested in the transactions contemplated by the Merger Agreement
(including any Other Guarantor); (e) any insolvency, bankruptcy, reorganization
or other similar proceeding affecting Parent or any other person interested in
the transactions contemplated by the Merger Agreement (including any Other
Guarantor); (f) the existence of any claim, set-off or other right which the
Guarantor may have at any time against Parent or the Guaranteed Party, whether
in connection with the Obligations or otherwise; or (g) the adequacy of any
other means the Guaranteed Party may have of obtaining repayment of any of the
Obligations. To the fullest extent permitted by law, the Guarantor hereby
expressly waives any and all rights or defenses arising by reason of any law
which would otherwise require any election of remedies by the Guaranteed Party.
The Guarantor waives promptness, diligence, notice of the acceptance of this
Limited Guarantee and of the Obligations, presentment, demand for payment,
notice of non-performance, default, dishonor and protest, notice of any
Obligations incurred and all other notices of any kind (except for notices to be
provided to Parent and its counsel in accordance with the Merger Agreement), all
defenses which may be available by virtue of any valuation, stay, moratorium law
or other similar law now or hereafter in effect, any right to require the
marshalling of assets of Parent or any other person interested in the
transactions contemplated by the Merger Agreement (including any Other
Guarantor), and all suretyship defenses generally (other than fraud or willful
misconduct by the Guaranteed Party or any of its subsidiaries, defenses to the
payment of the Obligations that are available to Parent under the Merger
Agreement or breach by the Guaranteed Party of this Limited Guarantee). The
Guarantor acknowledges that it will receive substantial direct and indirect
benefits from the transactions contemplated by the Merger Agreement and that the
waivers set forth in this Limited Guarantee are knowingly made in contemplation
of such benefits.
The Guaranteed Party hereby covenants and agrees that it shall not
institute, and shall cause its respective affiliates not to institute, any
proceeding or bring any other claim arising under, or in connection with, the
Merger Agreement or the transactions contemplated thereby, against Guarantor or
any Other Guarantor or Parent Affiliate (as defined below) except for claims
against Guarantor under this Limited Guarantee and against Other Guarantors
under their written limited guarantees, and Guarantor hereby covenants and
agrees that it shall not institute, and shall cause its respective affiliates
not to institute, any proceeding asserting that this Limited Guarantee is
illegal, invalid or unenforceable in accordance with its terms, subject to the
effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar
2
laws affecting creditors' rights generally, and general equitable principles
(whether considered in a proceeding in equity or at law).
The Guarantor hereby unconditionally and irrevocably agrees not to exercise
any rights that it may now have or hereafter acquire against Parent or any other
person interested in the transactions contemplated by the Merger Agreement
((including any Other Guarantor) that arise from the existence, payment,
performance, or enforcement of the Guarantor's Obligations under or in respect
of this Limited Guarantee or any other agreement in connection therewith,
including, without limitation, any right of subrogation, reimbursement,
exoneration, contribution or indemnification and any right to participate in any
claim or remedy of the Guaranteed Party against Parent or such other person,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or
receive from Parent or such other person, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim, remedy or right, unless and until all of the Obligations
and all other amounts payable under this Limited Guarantee shall have been paid
in full in cash. If any amount shall be paid to the Guarantor in violation of
the immediately preceding sentence at any time prior to the payment in full in
cash of the Obligations and all other amounts payable under this Limited
Guarantee, such amount shall be received and held in trust for the benefit of
the Guaranteed Party, shall be segregated from other property and funds of the
Guarantor and shall forthwith be paid or delivered to the Guaranteed Party in
the same form as so received (with any necessary endorsement or assignment) to
be credited and applied to the Obligations and all other amounts payable under
this Limited Guarantee, in accordance with the terms of the Merger Agreement,
whether matured or unmatured, or to be held as collateral for any Obligations or
other amounts payable under this Limited Guarantee thereafter arising.
Notwithstanding anything to the contrary contained in this Limited Guarantee,
the Guaranteed Party hereby agrees that to the extent Parent is relieved of its
obligations under Section 4.3(b) of the Merger Agreement, the Guarantor shall be
similarly relieved of its Obligations under this Limited Guarantee.
4. NO WAIVER; CUMULATIVE RIGHTS. No failure on the part of the Guaranteed
Party to exercise, and no delay in exercising, any right, remedy or power
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise by the Guaranteed Party of any right, remedy or power hereunder
preclude any other or future exercise of any right, remedy or power. Each and
every right, remedy and power hereby granted to the Guaranteed Party or allowed
it by law or other agreement shall be cumulative and not exclusive of any other,
and may be exercised by the Guaranteed Party at any time or from time to time.
5. REPRESENTATIONS AND WARRANTIES. The Guarantor hereby represents and
warrants that:
a. the execution, delivery and performance of this Limited Guarantee
have been duly authorized by all necessary action and do not
contravene any provision of the Guarantor's charter, partnership
agreement, operating agreement or similar organizational
documents or any law, regulation, rule, decree, order, judgment
or contractual restriction binding on the Guarantor or its
assets;
3
b. all consents, approvals, authorizations, permits of, filings with
and notifications to, any governmental authority necessary for
the due execution, delivery and performance of this Limited
Guarantee by the Guarantor have been obtained or made and all
conditions thereof have been duly complied with, and no other
action by, and no notice to or filing with, any governmental
authority or regulatory body is required in connection with the
execution, delivery or performance of this Limited Guarantee;
c. this Limited Guarantee constitutes a legal, valid and binding
obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms, subject to (i) the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws affecting creditors' rights
generally, and (ii) general equitable principles (whether
considered in a proceeding in equity or at law); and
d. the Guarantor has the financial capacity to pay and perform its
obligations under this Limited Guarantee, and all funds necessary
for the Guarantor to fulfill its Obligations under this Limited
Guarantee shall be available to the Guarantor for so long as this
Limited Guarantee shall remain in effect in accordance with
Section 8 hereof.
6. ASSIGNMENT. Neither the Guarantor nor the Guaranteed Party may assign
their respective rights, interests or obligations hereunder to any other person
(except by operation of law) without the prior written consent of the Guaranteed
Party or the Guarantor, as the case may be. Notwithstanding the foregoing, (i)
in the event that one or more affiliated investment funds that is advised either
by the investment manager of the Guarantor or any affiliate thereof, provides to
the Guaranteed Party a guarantee that all or part of the Obligations for the
benefit of the Guaranteed Party on the terms and conditions set forth in this
Limited Guarantee, the Guarantor shall be fully and unconditionally released
from its obligations hereunder to the extent of such guarantee and the Guarantor
shall have no liability with respect to such obligations and (ii) in the event
that any single third party (or group of affiliated investment funds) (a "Third
Party Assignee") assumes a portion of the Guarantor's obligations under the
Equity Commitment Letter (as defined in the Merger Agreement), if such Third
Party Assignee provides to the Guaranteed Party a guarantee that a portion (not
to exceed ___%) of the Obligations for the benefit of the Guaranteed Party on
the terms and conditions set forth in this Limited Guarantee, the Guarantor
shall be fully and unconditionally released from its obligations hereunder to
the extent of such guarantee and the Guarantor shall have no liability with
respect to such obligations.
7. NOTICES. All notices and other communications hereunder shall be in
writing in the English language and shall be given (a) on the date of delivery
if delivered personally, (b) on the first business day following the date of
dispatch if delivered by a nationally recognized next day courier service, (c)
on the fifth business day following the date of mailing if delivered by
registered or certified mail (postage prepaid, return receipt requested) or (d)
if sent by facsimile
4
transmission, when transmitted and receipt is confirmed. All notices to the
Guarantor hereunder shall be delivered as set forth below or to such other
address or facsimile number as the Guarantor shall have notified the Guaranteed
Party in a written notice delivered to the Guaranteed Party in accordance with
the Merger Agreement:
Xxxxxxx & Xxxxxxxx LLC
Xxx Xxxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx Xxxxxxx
Xxxxx Xxxx, Esq.
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxxxx & Xxxxxxxx LLP
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
8. CONTINUING GUARANTEE. This Limited Guarantee shall remain in full force
and effect and shall be binding on the Guarantor, its successors and assigns
until all of the Obligations and all amounts payable under this Limited
Guarantee have been indefeasibly paid, observed, performed or satisfied in full.
Notwithstanding the foregoing, this Limited Guarantee shall terminate and the
Guarantor shall have no further obligations under this Limited Guarantee as of
the earlier of (i) the Closing and the payment of the Merger Consideration (each
as defined in the Merger Agreement), (ii) receipt in full by the Guaranteed
Party or its affiliates of the payment obligations of Parent pursuant to Section
4.3(b) of the Merger Agreement, (iii) termination pursuant to Section 6 hereof,
and (iv) termination of the Merger Agreement pursuant to Section 4.1 thereof
under circumstances that do not give rise to any payment obligations of Parent
pursuant to Section 4.3(b) of the Merger Agreement. Notwithstanding the
foregoing, in the event that the Guaranteed Party or any of its affiliates
asserts in any litigation or other proceeding that the provisions of Section 1
hereof limiting the Guarantor's liability to the Cap or the provisions of this
Section 8 or Section 9 hereof are illegal, invalid or unenforceable in whole or
in part, or asserting any theory of liability against the Guarantor or any
Guarantor or Parent Affiliates with respect to the transactions contemplated by
the Merger Agreement other than liability of the Guarantor under this Limited
Guarantee (as limited by the provisions of Section 1), then (A) the obligations
of the Guarantor under this Limited Guarantee shall terminate ab initio and be
null and void, (B) if the Guarantor has previously made any payments under this
Limited Guarantee, it shall be entitled to recover such payments, and (C)
neither the Guarantor nor any Guarantor or Parent Affiliate shall have any
liability to the Guaranteed Party with respect to the transactions contemplated
by the Merger Agreement under this Limited Guarantee or otherwise; provided,
however, that if the Guarantor asserts in any litigation or other proceeding
that this Limited Guarantee is illegal, invalid or unenforceable in accordance
with its terms, subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws affecting
creditors' rights generally, and general equitable
5
principles (whether considered in a proceeding in equity or at law), then, to
the extent the Guaranteed Party prevails in such litigation or proceeding, the
Guarantor shall pay on demand all reasonable fees and out of pocket expenses of
the Guaranteed Party in connection with such litigation or proceeding.
9. NO RECOURSE. The Guaranteed Party acknowledges that the sole asset of
Parent is $10.00, and that no additional funds are expected to be contributed to
Parent unless and until the Closing (as defined in the Merger Agreement) occurs.
Notwithstanding anything that may be expressed or implied in this Limited
Guarantee or any document or instrument delivered contemporaneously herewith,
and notwithstanding the fact that the Guarantor may be a partnership or limited
liability company, by its acceptance of the benefits of this Limited Guarantee,
the Guaranteed Party acknowledges and agrees that it has no right of recovery
against, and no personal liability shall attach to, the Guarantor or the former,
current or future stockholders, controlling persons, directors, officers,
employees, agents, affiliates, members, managers, general or limited partners or
assignees of the Guarantor or Parent or any former, current or future
stockholder, controlling person, director, officer, employee, general or limited
partner, member, manager, affiliate, agent or assignee of any of the foregoing
(collectively, but not including Parent, any holding company owning Parent or
subsidiary of Parent or any other Guarantor, each a "Guarantor or Parent
Affiliate"), through the Parent or otherwise, whether by or through attempted
piercing of the corporate veil, by or through a claim by or on behalf of the
Parent against any Guarantor or Parent Affiliate, by the enforcement of any
assessment or by any legal or equitable proceeding, by virtue of any statute,
regulation or applicable law, or otherwise, except for its rights to recover
from the Guarantor (but not any Guarantor or Parent Affiliate (including any
general partner or managing member)) under and to the extent provided in this
Limited Guarantee and subject to the Cap and the other limitations described
herein, and its rights against Other Guarantors pursuant to the terms of their
written limited guarantees delivered contemporaneously herewith. Recourse
against the Guarantor under this Limited Guarantee and against Other Guarantors
pursuant to the terms of their written limited guarantees delivered
contemporaneously herewith shall be the sole and exclusive remedy of the
Guaranteed Party and all of its affiliates against the Guarantor and Guarantor
or Parent Affiliates in respect of any liabilities or obligations arising under,
or in connection with, the Merger Agreement or the transactions contemplated
thereby. Nothing set forth in this Limited Guarantee shall affect or be
construed to affect any liability of Parent to the Guaranteed Party or shall
confer or give or shall be construed to confer or give to any Person other than
the Guaranteed Party (including any Person acting in a representative capacity)
any rights or remedies against any Person other than the Guarantor as expressly
set forth herein.
10. GOVERNING LAW. This Limited Guarantee shall be governed by and
construed in accordance with, the laws of the State of New York applicable to
contracts executed in and to be performed in that State. All actions arising out
of or relating to this Limited Guarantee shall be heard and determined
exclusively in any New York state or federal court sitting in the Borough of
Manhattan of The City of New York. The parties hereto hereby (a) submit to the
exclusive jurisdiction of any state or federal court sitting in the Borough of
Manhattan of The City of New York for the purpose of any action arising out of
or relating to this Limited Guarantee brought by any party hereto, and (b)
irrevocably waive, and agree not to assert by way of motion, defense, or
otherwise, in any such action, any claim that it is not subject
6
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that the action is brought in an
inconvenient forum, that the venue of the action is improper, or that this
Limited Guarantee or the transactions contemplated hereby may not be enforced in
or by any of the above-named courts.
11. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS LIMITED GUARANTEE OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY.
12. COUNTERPARTS. This Limited Guarantee may be executed and delivered
(including by facsimile transmission) in one or more counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same instrument.
7
IN WITNESS WHEREOF, the Guarantor has caused this Limited Guarantee to
be executed and delivered as of the date first written above by its officer
thereunto duly authorized.
XXXXXXX & XXXXXXXX CAPITAL
PARTNERS V, L.P.
By: Xxxxxxx & Xxxxxxxx Investors V, LLC,
its General Partner
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
IN WITNESS WHEREOF, the Guaranteed Party has caused this Limited
Guarantee to be executed and delivered as of the date first written above by its
officer thereunto duly authorized.
ACTIVANT SOLUTIONS HOLDINGS INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
EXHIBIT B
FORM OF
TERMINATION AND RELEASE AGREEMENT
This TERMINATION AND RELEASE AGREEMENT (this "Agreement") is entered into
as of __________, 2006, by and among Activant Solutions Holdings Inc., formerly
known as Cooperative Computing Holding Company, Inc., a Delaware corporation
(the "Company"), and the stockholders listed on the signature page hereto
(collectively, the "Stockholders").
WHEREAS, the Stockholders and the Company are the sole remaining parties to
that certain Stockholders Agreement and sole remaining successors to parties,
dated as of May 26, 1999 (the "Stockholders' Agreement");
WHEREAS, the Company has entered into that certain Agreement and Plan of
Merger, dated as of March 12, 2006, by and among the Company, Lone Star Holding
Corp., a Delaware corporation ("Parent"), and Lone Star Merger Corp., a Delaware
corporation and wholly-owned subsidiary of Parent ("Merger-Sub"), whereby
Merger-Sub shall be merged with and into the Company (the "Merger") and the
Company shall continue as the surviving entity following the Merger; and
WHEREAS, the Stockholders and the Company desire to terminate the
Stockholders' Agreement upon the effectiveness of the Merger (the "Effective
Time").
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Termination of Stockholders' Agreement. The Stockholders and the Company
hereby agree that, as of the Effective Time, the Stockholders' Agreement and any
exhibits thereto shall terminate and be of no further force and effect, and no
party thereto shall have any surviving obligations, rights or duties thereunder.
2. Release.
(a) Each of the Stockholders hereby irrevocably and unconditionally
releases, acquits and forevers discharge the Company, and each of its past,
present or future successors, assigns, employees, agents, stockholders,
partners, subsidiaries, parent companies, other affiliates (corporate or
otherwise) and legal representatives, including their past, present or future
officers and directors, of and from any and all Released Claims (as defined
herein) arising out of, based upon, resulting from or relating to the
negotiation, execution, performance, breach or otherwise related to or arising
out of the Stockholders' Agreement. "Released Claims" as used herein shall mean
any and all charges, complaints, claims, causes of action, promises, agreements,
rights to payment, rights to any equitable remedy, rights to any equitable
subordination, demands, debts, liabilities, express or implied contracts,
obligations of payment or performance, rights of offset or recoupment, accounts,
damages, costs, losses or expenses (including attorneys' and other professional
fees and expenses) held by any party hereto, whether known or unknown, matured
or unmatured, suspected or unsuspected, liquidated or unliquidated, absolute or
contingent, direct or derivative.
(b) The Company hereby irrevocably and unconditionally releases,
acquits and forever discharges each of the Stockholders, and each of their past,
present or future successors, assigns, employees, agents, stockholders,
partners, subsidiaries, parent companies, other affiliates (corporate or
otherwise) and legal representatives, including their past, present or future
officers and directors, of and from any and all Released Claims arising out of,
based upon, resulting from or relating to the negotiation, execution,
performance, breach or otherwise related to or arising out of the Stockholders'
Agreement.
3. Amendments. No amendment, change, modification or termination of this
Agreement or any part hereof shall be effective or binding unless made in
writing and signed by each party hereto.
4. Binding Effect. This Agreement shall be binding upon and shall inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
5. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an original,
and all of which when taken together shall constitute one and the same
instrument as if the parties hereto had executed the same instrument.
6. Entire Agreement. This Agreement constitutes the entire agreement among
the parties hereto with respect to the subject matter hereof and supersedes any
and all prior agreements, understandings and representations, whether written or
oral, related to the subject matter hereof.
7. Governing Law. This Agreement and the rights and obligations hereunder
shall be governed in all respects by the laws of the State of Delaware, without
giving effect to the conflicts of law principles thereof.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first above written.
ACTIVANT SOLUTIONS HOLDINGS INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
NAME OF STOCKHOLDER:
HICKS, MUSE, XXXX & XXXXX EQUITY FUND
III, L.P.
By: HM3/GP Partners III, L.P., its
general partner
By: Xxxxx, Muse GP Partners, L.P., its
general partner
By: Xxxxx, Muse Fund III Incorporated,
its general partner
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
HM3 COINVESTORS, L.P.
By: Xxxxx Muse GP Partners III, L.P.,
its general partner
By: Xxxxx, Muse Fund III Incorporated,
its general partner
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
NAME OF STOCKHOLDER:
----------------------------------------
A. Xxxxxxxx Xxxxx
EXHIBIT C
FORM OF
TERMINATION AND RELEASE AGREEMENT
This TERMINATION AND RELEASE AGREEMENT (this "Agreement") is made and
entered into as of __________, 2006, by and among Activant Solutions Holdings
Inc., formerly known as Cooperative Computing Holding Company, Inc., a Delaware
corporation ("ASHI"), Activant Solutions Inc., formerly known as Cooperative
Computing, Inc., a Delaware corporation (together with ASHI, the "Clients"), and
Xxxxx, Muse & Co. Partners, L.P., a Texas limited partnership (together with its
successors, "HMCo").
WHEREAS, the Clients and HMCo are parties to (i) that certain
Monitoring and Oversight Agreement, dated as of February 27, 1997, among the
Clients and HMCo, attached hereto as Exhibit A (the "M&O Agreement"), and (ii)
that certain Financial Advisory Agreement, dated as of February 27, 1997, among
the Clients and HMCo, attached hereto as Exhibit B (the "Financial Advisory
Agreement" and, together with the M&O Agreement, the "Financial Services
Agreements");
WHEREAS, ASHI has entered into that certain Agreement and Plan of
Merger (the "Merger Agreement"), dated as of March 12, 2006, by and among ASHI,
Lone Star Holding Corp., a Delaware corporation ("Parent"), and Lone Star Merger
Corp., a Delaware corporation and wholly-owned subsidiary of Parent
("Merger-Sub"), whereby Merger-Sub shall be merged with and into ASHI (the
"Merger") and ASHI shall continue as the surviving entity following the Merger;
WHEREAS, HMCo has entered into a letter agreement (the "Letter
Agreement") with Parent and ASHI with respect to certain matters regarding
certain aspects of the Merger not contained in the Merger Agreement; and
WHEREAS, the Clients and HMCo desire to terminate the Financial
Services Agreements upon the effectiveness of the Merger (the "Effective Time").
NOW, THEREFORE, intending to be legally bound and in consideration for
the mutual covenants and agreements contained in this Agreement and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. The Clients and HMCo hereby agree that the Financial Services
Agreements and any exhibits thereto shall terminate and be of no further force
and effect as to any of the parties thereto, effective as of the Effective Time;
provided, however, that (i) Section 5, Indemnification, of each of the Financial
Services Agreements shall survive the termination of such agreements, subject to
the terms and conditions of such Section 5, with respect to any services
rendered by HMCo prior to the Effective Time in accordance with the terms of
such agreements and (ii) Section 6, Confidentiality, of each of the Financial
Services Agreements shall survive the termination of such agreements.
2. Except for any claim that the Clients or their respective
successors or assigns may in the future have against HMCo under Section 6 of
each of the Financial Services Agreements, each of the Clients hereby
irrevocably and unconditionally releases, acquits and forever discharges HMCo,
and each of its past, present or future successors, assigns, employees, agents,
stockholders, partners, subsidiaries, parent companies, other affiliates
(corporate or otherwise) and legal representatives, including their past,
present or future officers and directors, of and from any and all Released
Claims (as defined herein), arising out of, based upon, resulting from or
relating to the negotiation, execution, performance, breach or otherwise related
to or arising out of each of the Financial Services Agreements. "Released
Claims" as used herein shall mean any and all charges, complaints, claims,
causes of action, promises, agreements, rights to payment, rights to any
equitable remedy, rights to any equitable subordination, demands, debts,
liabilities, express or implied contracts, obligations of payment or
performance, rights of offset or recoupment, accounts, damages, costs, losses or
expenses (including attorneys' and other professional fees and expenses) held by
any party hereto, whether known or unknown, matured or unmatured, suspected or
unsuspected, liquidated or unliquidated, absolute or contingent, direct or
derivative.
3. Except to the extent that Section 5 of each of the Financial
Services Agreements survives the termination of such agreements as provided in
clause (i) of Paragraph 1 hereof, HMCo hereby irrevocably and unconditionally
releases, acquits and forever discharges the Clients, and each of their
respective past, present or future successors, assigns, employees, agents,
stockholders, partners, subsidiaries, parent companies, other affiliates
(corporate or otherwise) and legal representatives, including their past,
present or future officers and directors, and each of them, of and from any and
all Released Claims arising out of, based upon, resulting from or relating to
the negotiation, execution, performance, breach or otherwise related to or
arising out of each of the Financial Services Agreements.
4. At the Effective Time, the Clients shall pay to HMCo a one-time,
lump sum cash payment (the "Final Payment") of $[__________]. Such Final Payment
shall be reduced, however, in an amount equal to the excess of the Company's
aggregate Transaction Fees and Expenses (as defined in the Letter Agreement)
incurred over $13.5 million, as provided in the Letter Agreement.
5. Should any provision of this Agreement be declared or be determined
to be illegal, invalid or otherwise unenforceable, the validity of the remaining
parts, terms and provisions hereof will not be affected thereby but such will
remain valid and enforceable, and said illegal or invalid parts, terms or
provisions shall be deemed not to be a part of this Agreement.
6. This Agreement shall be construed, interpreted and enforced in
accordance with the laws of the State of Delaware, excluding any choice-of-law
provisions thereof.
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7. This Agreement may be executed in any number of counterparts, each
of which shall be deemed to be an original, but all of which together shall
constitute one and the same instrument, and the signature of any party to any
counterpart shall be deemed a signature to, and may be appended to, any other
counterpart.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed, all as of the date first written above.
ACTIVANT SOLUTIONS HOLDINGS INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
ACTIVANT SOLUTIONS INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
XXXXX, MUSE & CO. PARTNERS, L.P
By: HM Partners Inc., its general partner
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------