<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 14D-1
TENDER OFFER STATEMENT PURSUANT TO SECTION 14(D)(1) OF THE
SECURITIES EXCHANGE ACT OF 1934
EIS INTERNATIONAL, INC.
(NAME OF SUBJECT COMPANY)
SERSYS ACQUISITION CORPORATION
SER SYSTEME AG
(BIDDERS)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
AND ASSOCIATED RIGHTS
(TITLE OF CLASS OF SECURITIES)
268539103
(CUSIP NUMBER OF CLASS OF SECURITIES)
DR. PHILIP A. STOREY
EXECUTIVE VICE PRESIDENT
SER SYSTEME AG
7200 WISCONSIN AVE.
SUITE 1001
BETHESDA, MD 20814
(301) 841-1190
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED TO
RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDER)
COPY TO:
JOHN L. SULLIVAN, III, ESQ.
VENABLE, BAETJER AND HOWARD, LLP
2010 CORPORATE RIDGE
SUITE 400
MCLEAN, VIRGINIA 22102
(703) 760-1600
CALCULATION OF FILING FEE
- --------------------------------------------- ----------------------------------
TRANSACTION VALUE* AMOUNT OF FILING FEE**
- --------------------------------------------- ----------------------------------
$69,183,550.00 $13,837.00
- --------------------------------------------- ----------------------------------
<PAGE> 2
* Based on the offer to purchase all of the outstanding Shares (as defined
below) of the subject company at a purchase price of $6.25 per share of which
10,593,869 Shares were issued and outstanding and to pay the Option
Consideration (as defined in Exhibit (a)(i) hereto) on outstanding options
(at varying exercise prices) with respect to 1,455,058 Shares, in each case as
of December 17, 1999.
** 1/50 of 1% of Transaction Value.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form or
schedule and the date of its filing.
Amount Previously Paid:
Form or Registration No.:
Filing Party:
Date Filed:
This Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1")
relates to the offer by SERSys Acquisition Corporation, a Delaware corporation
("Purchaser"), that is an indirect (through SER (USA), Inc. ("SER USA")) wholly
owned subsidiary of SER Systeme AG, a German corporation ("Parent"), to
purchase all of the outstanding shares of common stock of EIS, International,
Inc., a Delaware corporation ("Company"), par value $0.01 per share (the
"Common Stock") and their associated rights (the "Rights") to purchase Series A
Preferred Stock, par value $0.01 per share, pursuant to that certain Rights
Agreement, dated as of May 16, 1997 between Company and BankBoston N.A., as
amended (the "Rights Agreement") (such Rights, together with the Common Stock,
are collectively referred to herein as the "Shares"), at a purchase price of
$6.25 per Share, net to the seller in cash, without interest thereon, upon the
terms and subject to the conditions set forth in the Offer to Purchase dated
December 17, 1999 (the "Offer to Purchase"), a copy of which is attached hereto
as Exhibit (a)(1), and in the related Letter of Transmittal (which, together
with the Offer to Purchase, as may be amended from time to time, constitute the
"Offer"), a copy of which is attached hereto as Exhibit (a)(2).
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is EIS International, Inc., a
Delaware corporation ("Company"). The address of the Company's principal
executive offices is 555 Herndon Parkway, Herndon, Virginia 20170.
(b) The exact title of the Company's class of equity securities being
sought in the Offer is Common Stock, par value $0.01 per share, together with
their associated rights to purchase Series A Preferred Stock, par value $0.01
per share. The information set forth in the Introduction of the Offer to
Purchase is incorporated herein by reference. The Company has represented that,
as of December 17, 1999, there were 10,593,869 shares of Common Stock issued
and outstanding. Purchaser is seeking to acquire all outstanding shares of
Common Stock and associated Rights at a purchase price of $6.25 per share.
2
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(c) The information set forth in Section 6 ("Price Range of Shares;
Dividends") of the Offer to Purchase is incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a) - (d) and (g) This Statement is filed by Purchaser and Parent. The
information set forth in Section 8 ("Certain Information Concerning Purchaser
and Parent") of the Offer to Purchase and in Schedule I thereto is incorporated
herein by reference.
(e) and (f) During the last five years, neither Purchaser nor Parent
nor, to the best knowledge of Purchaser or Parent, any of the persons listed in
Schedule I to the Offer to Purchase (i) has been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting activities
subject to, federal or state securities laws or finding any violation of such
laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in Section 8 ("Certain Information
Concerning Purchaser and Parent"), Section 10 ("Background of the Offer;
Contacts with the Company"), Section 11 ("The Merger Agreement and Other
Agreements") and Section 12 ("Purpose of the Offer; Plans for the Company; The
Merger ") of the Offer to Purchase is incorporated herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) The information set forth in Section 9 ("Source and Amount of
Funds") of the Offer to Purchase is incorporated herein by reference.
(b) and (c) The information set forth in Section 9 ("Source and Amount
of Funds") of the Offer to Purchase is incorporated herein by reference.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a) - (g) The information set forth in the Introduction, Section 10
("Background of the Offer; Contacts with the Company"), Section 11 ("The Merger
Agreement and Other Agreements"), Section 12 ("Purpose of the Offer; Plans for
the Company; The Merger ") and Section 14 ("Effect of the Offer on the Market
for the Shares; Stock Exchange Listing and Exchange Act Registration") of the
Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
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(a) and (b) Not applicable.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the Introduction, Section 10 ("Background
of the Offer; Contacts with the Company"), Section 11 ("The Merger Agreement and
Other Agreements") and Section 12 ("Purpose of the Offer; Plans for the Company;
the Merger") of the Offer to Purchase is incorporated herein by reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the Introduction and Section 17 ("Fees and
Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
Not Applicable.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 11 ("The Merger Agreement and
Other Agreements") is incorporated herein by reference.
(b) and (c) The information set forth in Section 11 ("The Merger
Agreement and Other Agreements"), Section 12 ("Purpose of the Offer; Plans for
the Company; the Merger") and Section 16 ("Certain Legal Matters and Regulatory
Approvals") of the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 14 ("Effect of the Offer on the
Market for the Shares; Stock Exchange Listing and Exchange Act Registration") of
the Offer to Purchase is incorporated herein by reference.
(e) None.
(f) The information set forth in the Offer to Purchase and the Letter of
Transmittal is incorporated herein by reference.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a)(1) Offer to Purchase dated December 23, 1999.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
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(a)(4) Form of Letter from the Information Agent to Brokers, Dealers,
Commercial Banks, Trust Companies and Nominees.
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement as published on December 23, 1999.
(a)(8) Joint Press Release issued by Parent and the Company on December 20,
1999.
(b)(1) Letter Agreement, dated December 16, 1999, between Parent and IKB
International S.A.
(b)(2) Letter Agreement, dated December 15, 1999, between Parent and IKB
Deutsche Industriebank.
(b)(3) Letter Agreement, dated December 8, 1999, between Parent and
COMMERZBANK Aktiengesellschaft, Koblenz Branch.
(c)(1) Agreement and Plan of Merger, dated as of December 17, 1999, by and
among Parent, Purchaser and the Company.
(c)(2) Tender and Voting Agreement, dated as of December 17, 1999, among
Parent and certain officers and directors of the Company named
therein.
(c)(3) Employment Agreement between Purchaser and James E. McGowan, dated
as of December 17, 1999, and exhibits thereto.
(c)(4) Employment Agreement between Purchaser and Frederick C. Foley,
dated as of December 17, 1999, and exhibits thereto.
(c)(5) Confidential Mutual Non-Disclosure Agreement, dated October 15, 1999,
between Parent and the Company.
(c)(6) Stockholders Agreement, dated December 17, 1999, by and among
Parent, Purchaser and James E. McGowan.
(c)(7) Stockholders Agreement, dated December 17, 1999, by and among
Parent, Purchaser and Frederick C. Foley.
(c)(8) Form of Stock Option Plan of Purchaser.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
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SIGNATURES
After due inquiry and to the best of our knowledge and belief, we hereby
certify that the information set forth in this Statement is true, complete and
correct.
SER SYSTEME AG
By: Dr. Philip A. Storey
/s/ DR. PHILIP A. STOREY
----------------------------------
Name: Dr. Philip A. Storey
Title: Executive Vice President
SERSYS ACQUISITION CORPORATION
By: Dr. Philip A. Storey
/s/ DR. PHILIP A. STOREY
----------------------------------
Name: Dr. Philip A. Storey
Title: President
Date: December 23, 1999
6
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EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
- --------------------------------------------------------------------------------
(a)(1) Offer to Purchase dated December 23, 1999.
(a)(2) Form of Letter of Transmittal.
(a)(3) Form of Notice of Guaranteed Delivery.
(a)(4) Form of Letter from the Information Agent to Brokers, Dealers,
Commercial Banks, Trust Companies and Nominees.
(a)(5) Form of Letter to Clients for use by Brokers, Dealers, Commercial
Banks, Trust Companies and Nominees.
(a)(6) Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
(a)(7) Summary Advertisement as published on December 23, 1999.
(a)(8) Joint Press Release issued by Parent and the Company on December 20,
1999.
(b)(1) Letter Agreement, dated December 16, 1999, between Parent and IKB
International S.A.
(b)(2) Letter Agreement, dated December 15, 1999, between Parent and IKB
Deutsche Industriebank.
(b)(3) Letter Agreement, dated December 8, 1999, between Parent and
COMMERZBANK Aktiengesellschaft, Koblenz Branch.
(c)(1) Agreement and Plan of Merger, dated as of December 17, 1999, by and
among Parent, Purchaser and the Company.
(c)(2) Tender and Voting Agreement, dated as of December 17, 1999, among
Parent and certain officers and directors of the Company named
therein.
(c)(3) Employment Agreement between Purchaser and James E. McGowan, dated
as of December 17, 1999, and exhibits thereto.
(c)(4) Employment Agreement between Purchaser and Frederick C. Foley,
dated as of December 17, 1999, and exhibits thereto.
(c)(5) Confidential Mutual Non-Disclosure Agreement, dated October 15, 1999,
between Parent and the Company.
(c)(6) Stockholders Agreement, dated December 17, 1999, by and among
Parent, Purchaser and James E. McGowan.
(c)(7) Stockholders Agreement, dated December 17, 1999, by and among
Parent, Purchaser and Frederick C. Foley.
(c)(8) Form of Stock Option Plan of Purchaser.
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(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
8
<PAGE> 1
EXHIBIT (a)(i)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
EIS INTERNATIONAL, INC.
AT
$6.25 NET PER SHARE
BY
SERSYS ACQUISITION CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SER SYSTEME AG
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON JANUARY 24, 2000, UNLESS THE OFFER IS EXTENDED.
THE BOARD OF DIRECTORS OF EIS INTERNATIONAL, INC. (THE "COMPANY") HAS
UNANIMOUSLY (WITH MESSRS. MCGOWAN AND BURTON ABSTAINING) APPROVED THE AGREEMENT
AND PLAN OF MERGER (THE "MERGER AGREEMENT") AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE OFFER AND THE MERGER (AS SUCH TERMS ARE DEFINED IN THE
INTRODUCTION), AND DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE
ADVISABLE AND FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF THE SHARES
(AS DEFINED IN THE INTRODUCTION), AND RECOMMENDS THAT THE HOLDERS OF THE SHARES
TENDER THEIR SHARES PURSUANT TO THE OFFER.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY TENDERED
AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF SHARES
THAT CONSTITUTES MORE THAN FIFTY PERCENT (50%) OF THE VOTING POWER (DETERMINED
ON A FULLY DILUTED BASIS) ON THE DATE OF PURCHASE, OF ALL THE SECURITIES OF THE
COMPANY ENTITLED TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS OR IN A MERGER.
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
shares of common stock of the Company, par value $0.01 per share (the "Common
Stock") and their associated rights (the "Rights") to purchase Series A
Preferred Stock, par value $0.01 per share, pursuant to that certain Rights
Agreement, dated as of May 16, 1997, between the Company and BankBoston N.A., as
amended (the "Rights Agreement") (such Rights, together with the Common Stock,
are collectively referred to herein as the "Shares"), should either (1) complete
and sign the enclosed Letter of Transmittal (or a facsimile thereof) in
accordance with the instructions in the Letter of Transmittal, and mail or
deliver the Letter of Transmittal (or such facsimile) and any other required
documents to the Depositary (as defined in the Introduction), and either deliver
the certificates representing the tendered Shares and any other required
documents to the Depositary or tender such Shares pursuant to the procedure for
book-entry transfer set forth in Section 3, or (2) request such stockholder's
broker, dealer, commercial bank, trust company or other nominee to effect the
transaction for such stockholder. Stockholders having Shares registered in the
name of a broker, dealer, commercial bank, trust company or other nominee must
contact such broker, dealer, commercial bank, trust company or other nominee if
they desire to tender Shares so registered.
A stockholder who desires to tender Shares and whose certificates
representing such Shares are not immediately available, or who cannot deliver
the certificates for Shares and all other required documents to reach the
Depositary on or prior to the expiration of the Offer, or who cannot complete
the procedure for book-entry transfer on a timely basis, must tender such Shares
by following the procedures for guaranteed delivery set forth in Section 3.
Questions and requests for assistance may be directed to D. F. King & Co.,
Inc. (the "Information Agent") at its address and telephone number as set forth
on the back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
also be obtained from the Information Agent.
------------------------
THE INFORMATION AGENT FOR THE OFFER IS:
D. F. KING & CO., INC.
DECEMBER 23, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
Introduction....................................................... 1
The Tender Offer.................................................. 3
1. Terms of the Offer; Expiration Date......................... 3
2. Acceptance for Payment and Payment for Shares............... 4
3. Procedure for Tendering Shares.............................. 5
4. Withdrawal Rights........................................... 8
5. Certain United States Federal Income Tax Consequences....... 9
6. Price Range of Shares; Dividends............................ 9
7. Certain Information Concerning the Company.................. 10
8. Certain Information Concerning Purchaser and Parent......... 14
9. Source and Amount of Funds.................................. 15
10. Background of the Offer; Contacts with the Company.......... 16
11. The Merger Agreement and Other Agreements................... 18
12. Purpose of the Offer; Plans for the Company; The Merger..... 37
13. Dividends and Distributions................................. 39
14. Effect of the Offer on the Market for the Shares; Stock
Exchange Listing and Exchange Act Registration............ 39
15. Certain Conditions of the Offer............................. 40
16. Certain Legal Matters and Regulatory Approvals.............. 41
17. Fees and Expenses........................................... 43
18. Miscellaneous............................................... 43
Schedule I -- Directors and Executive Officers of Parent and
Purchaser........................................................ S-1
</TABLE>
<PAGE> 3
TO THE HOLDERS OF SHARES
OF EIS INTERNATIONAL, INC.:
INTRODUCTION
SERSys Acquisition Corporation, a Delaware corporation ("Purchaser"), that
is an indirect (through SER (USA), Inc. ("SER USA")) wholly owned subsidiary of
SER Systeme AG, a German corporation ("Parent"), hereby offers to purchase all
of the outstanding shares of common stock of EIS International, Inc., a Delaware
corporation ("Company"), par value $.01 per share (the "Common Stock") and their
associated rights (the "Rights") to purchase Series A Preferred Stock, par value
$0.01 per share, pursuant to that certain Rights Agreement, dated as of May 16,
1997, between the Company and BankBoston N.A., as amended (the "Rights
Agreement") (such Rights, together with the Common Stock, are collectively
referred to herein as the "Shares"), at a purchase price of $6.25 per Share, net
to the seller in cash, without interest thereon, upon the terms and subject to
the conditions set forth in this Offer to Purchase and in the related Letter of
Transmittal (which, as amended from time to time, together constitute the
"Offer"). The Offer is being made pursuant to the Agreement and Plan of Merger
dated as of December 17, 1999, by and among Parent, Purchaser and the Company
(the "Merger Agreement").
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, subject to Instruction 6 of the Letter of Transmittal, stock
transfer taxes on the transfer and sale of Shares pursuant to the Offer.
Purchaser will pay all fees and expenses incurred in connection with the Offer
by American Stock Transfer & Trust Company (the "Depositary"), which is acting
as the Depositary, and D. F. King & Co., Inc. (the "Information Agent"), which
is acting as the Information Agent.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "COMPANY BOARD") HAS UNANIMOUSLY
(WITH MESSRS. MCGOWAN AND BURTON ABSTAINING) APPROVED THE MERGER AGREEMENT AND
THE TRANSACTIONS CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER (AS
DEFINED BELOW), DETERMINED THAT THE TERMS OF THE OFFER AND THE MERGER ARE
ADVISABLE AND FAIR TO, AND IN THE BEST INTERESTS OF, THE HOLDERS OF SHARES AND
RECOMMENDS THAT THE HOLDERS OF SHARES TENDER THEIR SHARES TO PURCHASER PURSUANT
TO THE OFFER. THE FACTORS CONSIDERED BY THE COMPANY BOARD IN ARRIVING AT ITS
DECISION TO APPROVE THE MERGER AGREEMENT AND RELATED TRANSACTIONS AND TO
RECOMMEND THAT STOCKHOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR
SHARES ARE DESCRIBED IN THE COMPANY'S SOLICITATION/RECOMMENDATION STATEMENT ON
SCHEDULE 14D-9 (THE "SCHEDULE 14D-9").
The Company Board has received the written opinion, dated December 15,
1999, of Updata Capital, Inc. ("Updata"), financial advisor to the Company, to
the effect that, as of such date, and based upon and subject to certain matters
stated therein, the $6.25 per Share cash consideration to be received in the
Offer by holders of Shares (other than Parent and its "Affiliates," as such term
is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) is fair to such holders from a financial point of view. A copy
of the written opinion of Updata is attached to the Schedule 14D-9, which is
being distributed to the stockholders of the Company. STOCKHOLDERS ARE URGED TO
READ THE OPINION CAREFULLY IN ITS ENTIRETY FOR THE ASSUMPTIONS MADE, MATTERS
CONSIDERED AND LIMITATIONS ON THE REVIEW UNDERTAKEN BY UPDATA.
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn prior to the Expiration Date (as defined in Section 1
hereof) that number of Shares which constitutes more than fifty percent (50%) of
the voting power (determined on a fully diluted basis) on the date of purchase,
of all of the securities of the Company entitled to vote generally in the
election of directors or in a merger (the "Minimum Condition"), and (2) the
statutory waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the regulations thereunder (the "HSR Act") applicable
to the purchase of the Shares pursuant to the Offer having expired or been
terminated (the "HSR Approval"). The Offer is also subject to certain other
terms and conditions. See Sections 1, 11, 15 and 16.
Parent and Purchaser each reserves the right, subject only to the
applicable rules and regulations of the Securities and Exchange Commission (the
"Commission"), to waive each of the conditions (other than the Minimum
Condition) to the obligations of Purchaser to consummate the Offer.
<PAGE> 4
The Merger
The Offer is being made pursuant to the terms of the Merger Agreement,
which provides, among other things, that, following the completion of the Offer,
upon the terms and subject to the conditions of the Merger Agreement, and in
accordance with the Delaware General Corporation Law (the "DGCL"), Purchaser
will be merged with and into the Company (the "Merger"). Following the effective
time of the Merger (the "Effective Time"), the Company will continue as the
surviving corporation (the "Surviving Corporation") and become a wholly owned
subsidiary of SER USA and an indirect wholly owned subsidiary of Parent. At the
Effective Time, the separate corporate existence of Purchaser will cease.
At the Effective Time, each Share issued and outstanding immediately prior
to the Effective Time (other than (1) Shares held by the Company as treasury
stock or by Parent, Purchaser or any other wholly owned subsidiary of Parent or
the Company, such Shares to be canceled, and (2) Dissenting Shares (as defined
in Section 11), if any) will, by virtue of the Merger and without any action on
the part of the holders of the Shares, be converted into the right to receive in
cash the $6.25 per Share price paid in the Offer (the "Merger Consideration"),
payable to the holder thereof, without interest, upon surrender of the
certificate(s) formerly representing such Share(s), less any required
withholding taxes.
The affirmative vote of the holders of a majority of the voting power of
the then outstanding Shares (including Shares owned by the Purchaser) would be
required under the DGCL to approve the Merger. If the Purchaser acquires a
majority of the voting power of the outstanding Shares (on a fully diluted
basis) in the Offer, as would be the case upon satisfying the Minimum Condition,
it would have sufficient voting power to effect the Merger without the
affirmative vote of any other stockholder of the Company.
In the event that, in connection with the Offer, holders tender in excess
of ninety percent (90%) of the outstanding Shares, the Purchaser will be able,
and intends, to effect a "short-form" Merger, pursuant to Section 253 of the
DGCL, without prior notice to or a vote by any other stockholder of the Company.
The Merger Agreement is more fully described in Section 11. Certain federal
income tax consequences of the sale of the Shares pursuant to the Offer and the
exchange of Shares for the Merger Consideration pursuant to the Merger are
described in Section 5.
The Rights
The Company Board has made all determinations and taken all actions that
are required under the Rights Agreement so that the Rights will not separate
from the Company's Common Stock and become exercisable as a result of the Offer
and the Merger.
Intention of Officers and Directors to Tender Shares
All of the directors and executive officers of the Company holding Shares
(including vested Company Options (as defined below) and Company Options which
shall vest within sixty (60) days of the date of the Merger Agreement)
representing, as of the date hereof, approximately 11.5% of the issued and
outstanding Shares, on a fully diluted basis, have contractually agreed with
Parent, among other things, to tender their Shares in the Offer and otherwise to
support the Merger. See Section 11 for a discussion of the Tender and Voting
Agreement, dated as of December 17, 1999, among Parent and the Company's
directors and executive officers (the "Tender Agreement").
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
2
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THE TENDER OFFER
1. TERMS OF THE OFFER; EXPIRATION DATE.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of such extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered on or prior to the Expiration Date and not theretofore withdrawn as
permitted by Section 4. The term "Expiration Date" means 12:00 Midnight, New
York City time, on January 24, 2000, unless and until Purchaser, in its sole
discretion (but subject to the terms and conditions of the Merger Agreement),
extends the period during which the Offer is open, in which event the term
"Expiration Date" means the latest time and date at which the Offer, as so
extended by Purchaser, will expire.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition, receipt of the HSR Approval, and certain other conditions.
Holders of Shares should review Section 15, which sets forth in full the
conditions to the Offer (the "Offer Conditions"). Subject to the provisions of
the Merger Agreement and the applicable rules and regulations of the Commission,
Parent and Purchaser reserve the right to waive any or all Offer Conditions,
other than the Minimum Condition and, subject to the provisions described below,
to make any other changes to the terms of the Offer. Subject to the provisions
of the Merger Agreement, including the provisions described in the next
paragraph, and the applicable rules and regulations of the Commission if, by the
Expiration Date, any or all of such Offer Conditions have not been satisfied,
Parent and Purchaser each reserves the right (but will not be obligated) to (i)
terminate the Offer and return all tendered Shares to tendering stockholders,
(ii) waive such unsatisfied Offer Condition(s) (other than the Minimum
Condition) and purchase all Shares validly tendered, or (iii) extend the Offer
and, subject to the terms of the Offer (including the rights of stockholders to
withdraw their Shares), retain the Shares which have been tendered until the
termination of the Offer, as extended.
Subject to the applicable rules and regulations of the Commission and the
provisions of the Merger Agreement, Purchaser expressly reserves the right (but
shall not be obligated), at any time and from time to time, and regardless of
whether or not any of the events set forth in Section 15 have occurred or have
been determined by Purchaser to have occurred, to (i) extend the period of time
during which the Offer is open and thereby delay acceptance for payment of, and
payment for, any Shares, by giving oral or written notice of such extension to
the Depositary, or (ii) amend the Offer in any respect permitted by the Merger
Agreement by giving oral or written notice of such amendment to the Depositary.
During any such extension, all Shares previously tendered and not properly
withdrawn will remain subject to the Offer, subject to the right of a tendering
stockholder to withdraw such stockholder's Shares. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE MERGER CONSIDERATION TO BE RECEIVED IN THE OFFER FOR
TENDERED SHARES, WHETHER OR NOT PURCHASER EXERCISES ITS RIGHT TO EXTEND THE
OFFER.
Under the terms of the Merger Agreement, Parent and Purchaser have agreed
with the Company that neither shall, without the prior written consent of the
Company, (i) amend or waive the Minimum Condition, (ii) change the form of
consideration to be paid in the Offer (other than by adding cash consideration),
(iii) decrease the cash per Share price paid in the Offer, (iv) reduce the
number of Shares sought in the Offer, (v) impose additional conditions to the
Offer, or (vi) amend any other condition of the Offer in any manner adverse to
the holders of the Shares.
The Merger Agreement provides that Purchaser may, without the consent of
the Company, (i) extend the Offer on one or more occasions for up to ten (10)
Business Days (as defined below) for each such extension beyond the
then-scheduled Expiration Date if at any such date any of the Offer Conditions
to Purchaser's obligation to purchase Shares have not been satisfied or waived,
until such time as such conditions are satisfied or waived, but not later than
February 28, 2000 and, at the request of the Company, Purchaser will, subject to
Parent's right to terminate the Merger Agreement pursuant to Article VIII
thereof, extend the Offer for additional periods up to but not later than
February 28, 2000, if the only condition not satisfied or earlier waived on the
then-scheduled Expiration Date is the HSR Approval condition, (ii) extend the
Offer for any period required by any rule, regulation, interpretation or
position of the Commission or the staff thereof applicable to the Offer, and
(iii) provided that Parent and Purchaser irrevocably waive the Offer Conditions,
3
<PAGE> 6
other than the Minimum Condition, and agree not to assert such as a basis for
not consummating the Offer, extend the Offer for an aggregate period of not more
than ten (10) Business Days beyond the latest Expiration Date otherwise
permitted under clause (i) or (ii) above if the Minimum Condition has been
satisfied but there have not been tendered sufficient Shares so that the Merger
could be effected without a vote of the Company's stockholders in accordance
with Section 253 of the DGCL. The Offer Conditions other than the Minimum
Condition are solely for the benefit of Parent and its Affiliates and all Offer
Conditions may be asserted regardless of the circumstances resulting in a
condition not being satisfied (except for any action or inaction by Purchaser or
Parent constituting a breach of the Merger Agreement) and, except for the
Minimum Condition, may be waived by each of Parent and Purchaser, in whole or in
part at any time and from time to time.
There can be no assurance that Purchaser will exercise its right to extend
the Offer. Any extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by public announcement thereof, and such
announcement in the case of an extension will be made in accordance with Rule
14e-1(d) under the Exchange Act, no later than 9:00 a.m., New York City time, on
the next Business Day after the previously scheduled Expiration Date. Without
limiting the manner in which Purchaser may choose to make any public
announcement, except as provided by applicable law (including Rules 14d-4(c) and
14d-6(d) under the Exchange Act, which require that material changes be promptly
disseminated to holders of Shares), Purchaser will have no obligation to
publish, advertise or otherwise communicate any such public announcement.
If Purchaser makes a material change in the terms of the Offer or if it
waives a material condition of the Offer, Purchaser will disseminate additional
tender offer material and extend the Offer to the extent required by Rules
14d-4(c), 14d-6(d) and 14e-1 under the Exchange Act. The minimum period during
which an offer must remain open following material changes in the terms of the
Offer, other than a change in price or a change in the percentage of securities
sought, will depend upon the facts and circumstances, including the materiality
of the changes. With respect to a change in price or, subject to certain
limitations, a change in the percentage of securities sought, a minimum ten (10)
Business Day period from the day of such change is generally required to allow
for adequate dissemination to stockholders. For purposes of the Offer, a
"Business Day" means any day other than a Saturday, Sunday, or a federal holiday
and consists of the time period from 12:01 a.m. through 12:00 Midnight, New York
City time and includes the date of the event which begins the running of the
applicable time period.
The Company has provided Purchaser with the Company's stockholder list and
security position listings for the purpose of disseminating the Offer to holders
of Shares. This Offer to Purchase and the related Letter of Transmittal and
other relevant materials will be mailed by Purchaser to record holders of Shares
and furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and will purchase and pay for
all Shares validly tendered and not properly withdrawn commencing at the later
of (i) the Expiration Date, and (ii) the satisfaction or waiver of the Offer
Conditions set forth in Section 15, except to the extent, as described above in
Section 1, that Purchaser extends the Offer in an effort to satisfy the
requirements of Section 253 of the DGCL. Any such delays will be effected in
compliance with Rule 14e-1(c) under the Exchange Act (relating to a bidder's
obligation to pay for or return tendered securities promptly after the
termination or withdrawal of such bidder's offer).
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates representing Shares (the "Share Certificates"), or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of such
Shares into the Depositary's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedures set forth in Section
3, (ii) the Letter of Transmittal (or a facsimile thereof), properly completed
4
<PAGE> 7
and duly executed, with any required signature guarantees, or an Agent's Message
(as defined below) in connection with a book-entry transfer, and (iii) any other
documents required by the Letter of Transmittal.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to and received by the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-Entry Transfer Facility has
received an express acknowledgment from the participant in the Book-Entry
Transfer Facility tendering the Shares that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal and that Purchaser
may enforce such agreement against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn, if and when Purchaser gives oral or written notice to the Depositary
of Purchaser's acceptance for payment of such Shares pursuant to the Offer. Upon
the terms and subject to the conditions of the Offer, payment for Shares
accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payments from Purchaser and
transmitting such payments to stockholders whose Shares have been accepted for
payment.
If, for any reason whatsoever, acceptance for payment of or payment for any
Shares tendered pursuant to the Offer is delayed or Purchaser is unable to
accept for payment or pay for Shares tendered pursuant to the Offer then,
without prejudice to Purchaser's rights set forth herein, the Depositary may
nevertheless, on behalf of Purchaser and subject to Rule 14e-1(c) under the
Exchange Act, retain tendered Shares and such Shares may not be withdrawn except
to the extent that the tendering stockholder is entitled to exercise and duly
exercises withdrawal rights as described in Section 4.
If any tendered Shares are not accepted for payment for any reason or if
Share Certificates are submitted for more Shares than are tendered, Share
Certificates evidencing unpurchased or untendered Shares will be returned
without expense to the tendering stockholder (or, in the case of Shares tendered
by book-entry transfer into the Depositary's account at the Book-Entry Transfer
Facility pursuant to the procedures set forth in Section 3, such Shares will be
credited to an account maintained at the Book-Entry Transfer Facility), as
promptly as practicable following the expiration, termination or withdrawal of
the Offer.
Purchaser reserves the right to transfer or assign, in whole or from time
to time in part, to one or more of its Affiliates, the right to purchase all or
any portion of the Shares tendered pursuant to the Offer, but any such transfer
or assignment will not relieve Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
3. PROCEDURE FOR TENDERING SHARES.
Valid Tenders. Except as set forth below, in order for a stockholder to
tender validly Shares pursuant to the Offer, (i) the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message in connection with a
book-entry delivery of Shares, and any other documents required by the Letter of
Transmittal, must be received by the Depositary at one of its addresses set
forth on the back cover of this Offer to Purchase on or prior to the Expiration
Date, and either (a) Share Certificates evidencing tendered Shares must be
received by the Depositary at such address or such Shares must be tendered
pursuant to the procedure for book-entry transfer described below and a
Book-Entry Confirmation must be received by the Depositary, in each case on or
prior to the Expiration Date, or (b) the guaranteed delivery procedures
described below must be complied with. If Share Certificates are forwarded
separately in multiple deliveries to the Depositary, a properly completed and
duly executed Letter of Transmittal (or a facsimile thereof) must accompany each
such delivery. No alternative, conditional or contingent tenders will be
accepted and no fractional Shares will be purchased.
Book-Entry Transfer. The Depositary will make a request to establish
accounts with respect to the Shares at the Book-Entry Transfer Facility for
purposes of the Offer within two (2) Business Days after the date of this Offer
to Purchase. Any financial institution that is a participant in the system of
the Book-Entry Transfer Facility may make book-entry delivery of Shares by
causing the Book-Entry Transfer Facility to transfer such Shares into the
Depositary's account at the Book-Entry Transfer Facility in accordance with the
Book-Entry Transfer Facility's procedures for such transfer. However, although
delivery of Shares may be
5
<PAGE> 8
effected through book-entry transfer at the Book-Entry Transfer Facility, the
Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in connection with a book-entry transfer, and any other documents required by
the Letter of Transmittal, must in any case be received by the Depositary at one
of its addresses set forth on the back cover of this Offer to Purchase on or
prior to the Expiration Date, or the guaranteed delivery procedures described
below must be complied with.
THE LETTER OF TRANSMITTAL AND ANY OTHER REQUIRED DOCUMENTS MUST BE
TRANSMITTED TO AND RECEIVED BY THE DEPOSITARY AT ONE OF ITS ADDRESSES SET FORTH
ON THE BACK COVER OF THIS OFFER TO PURCHASE. DELIVERY OF DOCUMENTS TO THE
BOOK-ENTRY TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER
FACILITY'S PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL, SHARE CERTIFICATES AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER
FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND THE
DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Signature Guarantees. Signatures on Letters of Transmittal must be
guaranteed by a firm which is a bank, broker, dealer, credit union, savings
association or other entity which is a member in good standing of a recognized
Medallion Program approved by the Securities Transfer Association Inc.,
including the Securities Transfer Agents Medallion Program (STAMP), the Stock
Exchange Medallion Program (SEMP) and the New York Stock Exchange Medallion
Signature Program (MSP) or any other "eligible guarantor institution" (as such
term is defined in Rule 17Ad-15 under the Exchange Act) (each of the foregoing
being referred to as an "Eligible Institution"), except in cases where Shares
are tendered (i) by a registered holder of Shares who has not completed either
the box labeled "Special Payment Instructions" or the box labeled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. See Instructions 1 and 5 of the Letter of Transmittal.
If the Share Certificates are registered in the name of a person other than
the person signing of the Letter of Transmittal, or if payment is to be made, or
Share Certificates not accepted for payment or not tendered are to be returned,
to a person other than the registered holder, the Share Certificates must be
endorsed or accompanied by appropriate stock powers, in either case signed
exactly as the name of the registered holder appears on such certificates, with
the signatures on such certificates or stock powers guaranteed as described
above. See Instructions 1 and 5 of the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's Share Certificates are not immediately
available, or such stockholder cannot deliver the Share Certificates and all
other required documents to the Depositary on or prior to the Expiration Date,
or such stockholder cannot complete the procedure for delivery by book-entry
transfer on a timely basis, such Shares may nevertheless be tendered, provided
that all of the following conditions are satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is
received by the Depositary, as provided below, on or prior to the
Expiration Date; and
(iii) the Share Certificates (or a Book-Entry Confirmation),
representing all tendered Shares in proper form for transfer, together with
the Letter of Transmittal (or a facsimile thereof) properly completed and
duly executed, with any required signature guarantees (or, in the case of a
book-entry transfer, an Agent's Message) and any other documents required
by the Letter of Transmittal are received by the Depositary within three
(3) trading days after the date of execution of such Notice of Guaranteed
Delivery. A "trading day" is any day on which The Nasdaq Stock Market
("Nasdaq") is open for business.
6
<PAGE> 9
The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to the Depositary and must
include a guarantee by an Eligible Institution and a representation that the
stockholder owns the Shares tendered within the meaning of, and that the tender
of the Shares effected thereby complies with, Rule 14e-4 under the Exchange Act,
each in the form set forth in the Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) Share Certificates for, or of Book-Entry
Confirmation with respect to, such Shares, (b) a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof), together with any
required signature guarantees (or, in the case of a book-entry transfer, an
Agent's Message), and (c) any other documents required by the Letter of
Transmittal. Accordingly, payment might not be made to all tendering
stockholders at the same time and will depend upon when Share Certificates or
Book-Entry Confirmations with respect to such Shares are received into the
Depositary's account at a Book-Entry Transfer Facility.
Appointment as Proxy. By executing the Letter of Transmittal (including
delivery through an Agent's Message), a tendering stockholder irrevocably
appoints designees of Purchaser and each of them as such stockholder's agents,
attorneys-in-fact and proxies, with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such stockholder's
rights with respect to the Shares tendered by such stockholder and accepted for
payment by Purchaser (and with respect to any and all dividends, distributions,
rights, other Shares or other securities issued, paid or distributed or
issuable, payable or distributable in respect of such Shares on or after
December 17, 1999 and prior to the transfer to the name of Purchaser (or a
nominee or transferee of Purchaser) on the Company's stock transfer record of
such Shares (collectively, "Distributions")). All such powers of attorney and
proxies will be considered irrevocable and coupled with an interest in the
tendered Shares. Such appointment will be effective when, and only to the extent
that, Purchaser accepts such Shares for payment. Upon such appointment, all
prior powers of attorney, proxies and consents given by such stockholder with
respect to such Shares (and Distributions) will be revoked without further
action, and no subsequent powers of attorney and proxies may be given or any
subsequent written consents executed (and, if given or executed, will not be
deemed effective). The designees of Purchaser will, with respect to the Shares
(and Distributions) for which such appointment is effective, be empowered to
exercise all voting and other rights of such stockholder as they in their sole
discretion may deem proper at any annual or special meeting of the Company's
stockholders or any adjournment or postponement thereof, by written consent in
lieu of any such meeting, or otherwise. Purchaser reserves the right to require
that, in order for Shares to be deemed validly tendered, immediately upon
Purchaser's payment for such Shares, Purchaser must be able to exercise full
voting rights with respect to such Shares and all Distributions, including
voting at any meeting of stockholders or by consent in lieu of such meeting.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser in its sole discretion, which
determination will be final and binding. Purchaser reserves the absolute right
to reject any and all tenders determined by it not to be in proper form or the
acceptance for payment of which may, in the opinion of its counsel, be unlawful.
Purchaser also reserves the absolute right to waive any of the Offer Conditions
(subject to the provisions of the Merger Agreement and except for the Minimum
Condition) or any defect or irregularity in any tender of Shares of any
particular stockholder whether or not similar defects or irregularities are
waived in the case of other stockholders. No tender of Shares will be deemed to
have been validly made until all defects and irregularities have been cured or
waived. None of Purchaser, Parent, any of their Affiliates or assigns, the
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in tenders or will incur any
liability for failure to give any such notification. Purchaser's interpretation
of the terms and conditions of the Offer (including the Letter of Transmittal
and the instructions thereto) will be final and binding.
7
<PAGE> 10
Backup U.S. Federal Income Tax Withholding and Substitute Form W-9. Under
the "backup withholding" provisions of U.S. federal income tax law, the
Depositary may be required to withhold 31% of the amount of any cash payments
pursuant to the Offer or the Merger. In order to avoid backup withholding, each
stockholder surrendering Shares in the Offer must, unless an exemption applies,
provide the payor of such cash with such stockholder's correct taxpayer
identification number ("TIN") on a substitute Form W-9 and certify, under
penalties of perjury, that such TIN is correct and that such stockholder is not
subject to backup withholding. If a stockholder does not provide its correct TIN
or fails to provide the certifications described above, the Internal Revenue
Service ("IRS") may impose a penalty on such stockholder and payment of cash to
such stockholder pursuant to the Offer may be subject to backup withholding of
31%. All stockholders surrendering Shares pursuant to the Offer should complete
and sign the substitute Form W-9 included with the Letter of Transmittal to
provide the information and certification necessary to avoid backup withholding
(unless an applicable exemption exists and is proved in a manner satisfactory to
the Depositary). Certain stockholders (including, among others, all corporations
and certain foreign individuals and entities) are not subject to backup
withholding. Noncorporate foreign stockholders should complete and sign a Form
W-8, Certificate of Foreign Status, a copy of which may be obtained from the
Depositary, in order to avoid backup withholding. See Instruction 9 of the
Letter of Transmittal.
Other Requirements. Purchaser's acceptance for payment of Shares tendered
pursuant to any of the procedures described above will constitute a binding
agreement between the tendering stockholder and Purchaser upon the terms of and
subject to the Offer Conditions, including the tendering stockholder's
representation and warranty that the stockholder is the holder of the Shares
within the meaning of, and that the tender of the Shares complies with, Rule
14e-4 under the Exchange Act.
4. WITHDRAWAL RIGHTS.
Except as otherwise indicated in this Section 4, tenders of Shares made
pursuant to the Offer are irrevocable. Shares tendered pursuant to the Offer may
be withdrawn pursuant to the procedures below at any time on or prior to the
Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time after February 20,
2000. If Purchaser extends the Offer, is delayed in its acceptance for payment
of Shares, or is unable to purchase Shares validly tendered pursuant to the
Offer for any reason, then without prejudice to Purchaser's rights under the
Offer, the Depositary may nevertheless, on behalf of Purchaser, retain tendered
Shares and such Shares may not be withdrawn except to the extent that tendering
stockholders are entitled to withdrawal rights as described in this Section 4.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be received timely by the
Depositary at one of its addresses set forth on the back cover of this Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares. If Share Certificates to be withdrawn have been delivered
or otherwise identified to the Depositary, then prior to the physical release of
such certificates, the serial numbers shown on such certificates must be
submitted to the Depositary and the signatures on the notice of withdrawal must
be guaranteed by an Eligible Institution unless such Shares have been tendered
for the account of an Eligible Institution. If Shares have been tendered
pursuant to the procedure for book-entry transfer set forth in Section 3, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares, in which
case a notice of withdrawal will be effective if delivered to the Depositary by
any method of delivery described in the first sentence of this paragraph.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, which determination will be final and binding. Purchaser reserves
the absolute right to reject any and all withdrawals determined by it not to be
in proper form. Purchaser also reserves the absolute right to waive any defect
or irregularity in any withdrawal of Shares of any particular stockholder
whether or not similar defects or irregularities are waived in the case of other
stockholders. No withdrawal of Shares will be deemed to have been validly made
until all defects and irregularities have been cured or waived. None of
Purchaser, Parent, any of their Affiliates or assigns, the
8
<PAGE> 11
Depositary, the Information Agent or any other person will be under any duty to
give notification of any defects or irregularities in any notice of withdrawal
or incur any liability for failure to give any such notification.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn
will thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date by following one of the procedures described in Section 3.
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES.
The summary of tax consequences set forth below is for general information
only and is based on the law as currently in effect. The tax treatment of each
stockholder will depend in part upon such stockholder's particular situation.
Special tax consequences not described below may be applicable to particular
classes of taxpayers, such as financial institutions, broker-dealers, life
insurance companies, holders of Dissenting Shares, stockholders who hold their
Shares as part of a straddle, hedge, conversion or constructive sale
transaction, stockholders who acquired their Shares through the exercise of
employee stock options or otherwise as compensation, and persons who received
payments in respect of options to acquire Shares. This summary deals only with
stockholders who are "United States persons" (as defined below) and who hold
their Shares as capital assets. For purposes of this discussion (i) "United
States person" means a person who is (a) a citizen or resident of the United
States, (b) a corporation or partnership created or organized in the United
States or under the laws of the United States or any political subdivision
thereof, (c) an estate the income of which is subject to the United States
federal income taxation regardless of its source, or (d) a trust (x) that is
subject to the primary supervision of a court within the United States and the
control of one or more United States persons (as defined in Section 7701(a)(30)
of the Internal Revenue Code of 1986, as amended (the "Code") or (y) that has a
valid election in effect under applicable U.S. Treasury Regulations to be
treated as a United States person, and (ii) "Non-U.S. person" means a
stockholder who is not a United States person.
The receipt of cash pursuant to the Offer or the Merger in exchange for
Shares will be a taxable transaction for U.S. federal income tax purposes, and
may also be a taxable transaction under applicable state, local, foreign income
or other tax laws. Generally, for U.S. federal income tax purposes, a
stockholder will recognize gain or loss in an amount equal to the difference
between the cash received by the stockholder pursuant to the Offer or the Merger
and the stockholder's adjusted tax basis in the Shares exchanged. Gain or loss
will be calculated separately for each block of Shares tendered and purchased
pursuant to the Offer or exchanged pursuant to the Merger, as the case may be.
For U.S. federal income tax purposes, such gain or loss will be a capital gain
or loss if the Shares are a capital asset in the hands of the stockholder, and a
long-term capital gain or loss if the stockholder's holding period is more than
one year as of the date Purchaser accepts such Shares for payment pursuant to
the Offer or the effective date of the Merger, as the case may be. The long-term
capital gains of individuals are subject to U.S. federal income tax at a minimum
rate of 20%. The deductibility of capital losses is subject to limitations.
ALL STOCKHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISORS AS TO THE
PARTICULAR TAX CONSEQUENCES OF THE OFFER AND THE MERGER TO THEM, INCLUDING THE
APPLICABILITY AND EFFECT OF THE ALTERNATIVE MINIMUM TAX AND ANY STATE, LOCAL OR
FOREIGN INCOME AND OTHER TAX LAWS AND CHANGES IN SUCH TAX LAWS.
6. PRICE RANGE OF SHARES; DIVIDENDS.
The Shares are listed and traded on the Nasdaq National Market under the
symbol "EISI." The following table sets forth, for the quarters indicated, the
high and low sales prices per Share as reported by
9
<PAGE> 12
Nasdaq -- Amex Online(SM). The Company has not paid any dividends on its Shares
since its initial public offering in July of 1992.
<TABLE>
<CAPTION>
SALE PRICE
----------------
HIGH LOW
------- ------
<S> <C> <C>
Fiscal Year Ended December 31, 1997:
Fourth Quarter.............................................. $ 9.875 $5.219
Fiscal Year Ended December 31, 1998:
First Quarter............................................. $ 9.189 $5.625
Second Quarter............................................ $ 9.063 $4.938
Third Quarter............................................. $ 5.500 $1.188
Fourth Quarter............................................ $ 2.500 $1.406
Fiscal Year Ended December 31, 1999:
First Quarter............................................. $ 3.000 $1.750
Second Quarter............................................ $ 3.938 $2.250
Third Quarter............................................. $ 3.688 $2.688
Fourth Quarter (through December 17, 1999)................ $ 5.938 $2.188
</TABLE>
On December 17, 1999, the last full trading day prior to announcement of
the signing of the Merger Agreement, the closing price per Share quoted on the
Nasdaq National Market was $5.625. On December 21, 1999, two days prior to the
commencement of the Offer, the closing price per Share quoted on the Nasdaq
National Market was $5.875.
STOCKHOLDERS ARE URGED TO OBTAIN A CURRENT MARKET QUOTATION FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY.
The information concerning the Company in this Section 7 and elsewhere in
this Offer to Purchase is derived from the Company's Annual Report on Form 10-K
for its fiscal year ended December 31, 1998 (the "1998 Annual Report"), the
Company's Quarterly Reports on Form 10-Q for the quarters ended March 31, 1999,
June 30, 1999 and September 30, 1999 (the "Quarterly Reports") and other
publicly available information. The summary information set forth below is
qualified in its entirety by reference to such reports (which may be obtained
and inspected as described below) and should be considered in conjunction with
the more comprehensive financial and other information in such reports and other
publicly available reports and documents filed by the Company with the
Commission and other publicly available information. Although neither Purchaser
nor Parent has any knowledge that would indicate that any statements contained
herein based upon such reports are untrue, neither Purchaser nor Parent assumes
any responsibility for the accuracy or completeness of the information contained
therein, or herein based upon such reports, or for any failure by the Company to
disclose events that may have occurred and may affect the significance or
accuracy of any such information but which are unknown to Parent and Purchaser.
General. According to the 1998 Annual Report, the Company and its wholly
owned subsidiaries provide systems, software and services to businesses that use
the telephone in campaigns directed at large targeted audiences. The Company's
products improve the productivity and effectiveness of call centers (also known
as "contact centers"), including campaign management, staffing and technology
integration. The Company is a supplier of advanced technology for contact
centers and a leading provider of outbound and integrated inbound/outbound
technology.
The Company is a Delaware corporation organized in 1988. It is the
successor by merger to a Connecticut corporation founded in 1980 to engage in
software consulting. The Company sold its first contact center system in 1988
and became publicly traded in July of 1992. The Company's headquarters are
located at 555 Herndon Parkway, Herndon, VA 20170, and its telephone number is
(703) 478-9808.
Financial Information. Set forth below are certain selected consolidated
financial data which were derived from the Quarterly Report for the quarter
ended September 30, 1999. More comprehensive financial information (including
management's discussion and analysis of financial condition and results of
operations) is included in the reports and other documents filed by the Company
with the Commission, and the following financial data are qualified in their
entirety by reference to such reports and other documents, including the
financial information and related notes contained therein. Such reports and
other documents may be examined and copies thereof may be obtained from the
offices of the Commission in the manner set forth below.
10
<PAGE> 13
EIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
------------- ------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................................. $ 21,674 $ 28,194
Short-term investments.................................... 6,920 --
Accounts receivable, trade, less allowances for doubtful
accounts and sales returns of $3,031 in 1999 and $3,513
in 1998................................................ 10,344 8,727
Current portion of installment and lease receivables...... 769 857
Inventories............................................... 3,630 3,751
Deferred income taxes..................................... 1,223 2,446
Prepaids and other current assets......................... 1,096 922
Refundable income taxes................................... 230 200
-------- --------
Total current assets................................... 45,886 45,097
Capitalized software development costs, net................. 3,663 4,454
Property and equipment, net................................. 4,171 5,896
Installment and lease receivables, less current portion..... 287 402
Deferred income taxes....................................... 1,421 1,421
Other assets................................................ 115 429
-------- --------
Total assets........................................... $ 55,543 $ 57,699
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities.................. $ 7,696 $ 9,487
Deferred revenue.......................................... 2,593 3,058
-------- --------
Total current liabilities.............................. 10,289 12,545
Commitments and Contingencies
Stockholders' equity
Common Stock, $.01 par value, 15,000,000 shares
authorized, issued 11,759,212 shares in 1999 and
11,734,585 shares in 1998.............................. 118 117
Additional paid-in capital................................ 60,738 60,672
Accumulated translation adjustments....................... (295) (287)
Retained deficit.......................................... (11,831) (13,640)
Treasury stock, at cost -- 1,165,343 shares in 1999 and
512,725 shares in 1998................................. (3,476) (1,708)
-------- --------
Total stockholders' equity............................. 45,254 45,154
-------- --------
Total liabilities and stockholders' equity............. $ 55,543 $ 57,699
======== ========
</TABLE>
11
<PAGE> 14
EIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
-------------------- -------------------
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net revenues
Product and software............................... $ 6,675 $ 7,029 $21,901 $26,066
Service and other.................................. 5,603 6,321 17,698 19,603
------- ------- ------- -------
12,278 13,350 39,599 45,669
Cost of revenues
Cost of product and software sold.................. 3,558 3,822 10,940 11,997
Recovery of provision for contract losses.......... -- -- (250) (1,636)
Cost of service and other.......................... 2,483 3,611 8,308 10,420
------- ------- ------- -------
6,041 7,433 18,998 20,781
------- ------- ------- -------
Gross margin.................................... 6,237 5,917 20,601 24,888
------- ------- ------- -------
Operating cost and expense
Research and development cost...................... 1,835 2,282 5,649 7,361
Selling, general, and administrative............... 4,065 6,040 13,002 20,098
Restructuring costs................................ -- -- -- 543
------- ------- ------- -------
5,900 8,322 18,651 28,002
------- ------- ------- -------
Operating income (loss).............................. 337 (2,405) 1,950 (3,114)
Other income, net:................................. 373 324 1,082 983
------- ------- ------- -------
Income (loss) before income taxes.................... 710 (2,081) 3,032 (2,131)
Income tax expense................................. (284) (4) (1,223) (16)
------- ------- ------- -------
Net income (loss).................................... $ 426 $(2,085) $ 1,809 $(2,147)
======= ======= ======= =======
Basic earnings (loss) per share...................... $ 0.04 $ (0.18) $ 0.17 $ (0.19)
Diluted earnings (loss) per share.................... 0.04 (0.18) 0.17 (0.19)
Weighted average common and common equivalent shares
Basic......................................... 10,599 11,633 10,746 11,589
Diluted....................................... 10,744 11,633 10,859 11,589
</TABLE>
12
<PAGE> 15
EIS INTERNATIONAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
-------------------
1999 1998
-------- --------
<S> <C> <C>
Cash flows from operating activities
Net income (loss)......................................... $ 1,809 $(2,147)
Adjustments to reconcile net income (loss) to net cash
used in operating activities
Provision for doubtful accounts and sales returns...... 2,477 2,789
Recovery of provision for contract losses.............. (250) (1,636)
Depreciation and amortization.......................... 4,237 5,248
Deferred income taxes.................................. 1,223 --
Changes in assets and liabilities Accounts receivable,
trade.................................................. (4,094) (1,288)
Proceeds from sale of lease receivables................ -- 745
Installment and lease receivables...................... 203 651
Inventories............................................ 121 824
Prepaids and other current assets...................... (30) 94
Accounts payable and accrued expenses.................. (1,541) (5,387)
Deferred revenue....................................... (465) 142
Other.................................................. (186) (192)
------- -------
Net cash provided by (used in) operating activities......... 3,504 (157)
------- -------
Cash flows from investing activities
Additions to property and equipment....................... (688) (2,271)
Purchase of short-term investments........................ (6,920) --
Sales of short-term investments........................... -- 2,332
Capitalization of software development costs.............. (715) (1,617)
------- -------
Net cash used in investing activities....................... (8,323) (1,556)
------- -------
Cash flows from financing activities
Proceeds from exercise of stock options and warrants...... 67 315
Purchase of treasury stock................................ (1,768) --
------- -------
Net cash provided by (used in) financing activities......... (1,701) 315
------- -------
Net decrease in cash and cash equivalents................... (6,520) (1,398)
Cash and cash equivalents at beginning of period............ 28,194 22,525
------- -------
Cash and cash equivalents at end of period.................. $21,674 $21,127
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest............................................... $ 38 $ 68
Income taxes........................................... 217 362
</TABLE>
13
<PAGE> 16
Other Information. The Shares are registered under the Exchange Act.
Accordingly, the Company is subject to the informational filing requirements of
the Exchange Act and in accordance therewith is obligated to file periodic
reports, proxy statements and other information with the Commission relating to
its business, financial condition and other matters. Information as of
particular dates concerning the Company's directors and officers, their
remuneration, options granted to them, the principal holders of the Company's
securities and any material interest of such persons in transactions with the
Company is required to be disclosed in such reports, proxy statements and other
information distributed to the Company's stockholders and filed with the
Commission. Such reports, proxy statements and other information are available
for inspection at the public reference facilities of the Commission located at
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade Center, Suite
1300, New York, New York 10048. Such reports, proxy statements and other
information may also be obtained at the Web site maintained by the Commission at
http://www.sec.gov. Copies of this material may also be obtained by mail, upon
payment of the Commission's customary fees, from the Commission's principal
office at 450 Fifth Street, N.W., Washington, D.C. 20549. Except as otherwise
noted in this Offer to Purchase, all of the information with respect to the
Company set forth in this Offer to Purchase has been derived from publicly
available information.
8. CERTAIN INFORMATION CONCERNING PURCHASER AND PARENT.
Purchaser. Purchaser is a Delaware corporation that is a wholly owned
subsidiary of SER USA, which in turn is a wholly owned subsidiary of Parent.
Purchaser was incorporated on December 14, 1999, for the sole purposes of
entering into the Merger Agreement and consummating the transactions
contemplated thereby, including making the Offer. Purchaser has not carried on
any activities to date other than those incident to its formation, its entering
into the Merger Agreement and the agreements described in Section 11 hereof and
filed as exhibits with the Commission, and its commencement of the Offer.
Parent. Parent is a corporation organized under the laws of Germany.
Parent is a German public company, which has been traded on the Frankfurt Neuer
Markt since 1997 under the symbol "SES." Parent is Europe's largest supplier of
document management systems and workflow solutions, which are being implemented
in a broad range of industry sectors and applications. Parent conducts its
domestic and international businesses through various subsidiaries.
Parent's executive offices are located at Innovationspark Rahms, D-53577,
Neustadt/Wied, Germany. Parent's telephone number at such offices is 011 49 2683
984 0. The executive office of each of SER USA and Purchaser is located at 7200
Wisconsin Avenue, Suite 1001, Bethesda, MD 20814. The telephone number of both
Purchaser and SER USA at such office is (301) 841-1190.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the (i) members of the
supervisory board and board of managing directors of Parent, and (ii) directors
and executive officers of Purchaser are set forth on Schedule I hereto.
Certain Transactions. Except as set forth in this Offer to Purchase, none
of Parent or Purchaser or, to the best knowledge of Parent or Purchaser, any of
the persons listed on Schedule I hereto, or any associate or majority owned
subsidiary of Parent, Purchaser or any of such persons, beneficially owns, or
has a right to acquire directly or indirectly, any Shares, and none of Parent or
Purchaser or, to the best knowledge of Parent or Purchaser, any of the other
persons referred to above, or any of the respective directors, executive
officers or subsidiaries of any of the foregoing, has effected any transaction
in the Shares during the past sixty (60) days.
Except as set forth in this Offer to Purchase, none of Parent or Purchaser
or, to the best knowledge of Parent and Purchaser, any of the persons listed on
Schedule I hereto, has any contract, arrangement, understanding or relationship
with any other person with respect to any securities of the Company, including,
without limitation, any contract, arrangement, understanding or relationship
concerning the transfer or the voting of any securities of the Company, joint
ventures, loan or option arrangements, puts or calls, guaranties of loans,
guaranties against loss or the giving or withholding of proxies.
14
<PAGE> 17
Except as set forth in this Offer to Purchase, none of Parent or Purchaser
or, to the best knowledge of Parent and Purchaser, any of the persons listed on
Schedule I hereto, has had any transactions since January 1, 1995 with the
Company, or any of its executive officers, directors or affiliates that would be
required to be reported under the rules of the Commission.
Except as set forth in this Offer to Purchase, since January 1, 1995, there
have been no contacts, negotiations or transactions between Parent or Purchaser,
or their respective subsidiaries, or, to the best knowledge of Parent and
Purchaser, any of the persons listed on Schedule I hereto, on the one hand, and
the Company or its affiliates, on the other hand, concerning a merger,
consolidation or acquisition, a tender offer or other acquisition of securities,
an election of directors, or a sale or other transfer of a material amount of
assets. See Introduction and Sections 10 and 11.
9. SOURCE AND AMOUNT OF FUNDS.
Purchaser will require approximately $70,000,000 to (i) purchase the Shares
outstanding on the date hereof pursuant to the Offer and the Merger, and (ii)
pay fees and expenses to be incurred in connection with the completion of the
Offer and the Merger.
All of the funds required to finance the foregoing will be furnished to
Purchaser by Parent. Parent has entered into three separate loan agreements in
order to obtain a portion of the necessary funds to consummate the Offer and the
Merger. The remainder of the necessary funds will be provided by Parent from its
available cash and cash equivalents, including short term investments.
Pursuant to the terms of a loan agreement with IKB International S.A. (the
"IKB International Loan"), Parent shall borrow Swiss francs equivalent to
fifteen million four hundred thousand (15,400,000) euro (approximately
US$15,500,000). Such amount under the IKB International Loan, due on January 6,
2003, shall be payable as provided below and shall accrue interest at 4.05% per
annum. Interest due under the IKB International Loan shall be paid by Parent
quarterly, in Swiss francs, beginning on April 5, 2000 and continuing through
the term of the loan. Parent shall similarly make eight, equal quarterly
payments of the principal under the IKB International Loan beginning on April 5,
2001 and continuing through the term. The IKB International Loan provides for
increased interest payments should Parent fail to timely make the requisite
quarterly payments and security as provided therein.
Pursuant to the terms of a loan agreement between Parent and IKB Deutsche
Industriebank, dated as of December 15, 1999 (the "Industriebank Loan"), Parent
shall borrow ten million two hundred twenty-five thousand (10,225,000) euro
(approximately US$10,300,000). Such amount under the Industriebank Loan shall be
due and payable by Parent before April 5, 2000, in a single payment, and shall
accrue interest at 4.75% per annum, payable by Parent in arrears on a quarterly
basis. The Industriebank Loan provides for increased interest payments should
Parent fail to timely make the requisite quarterly payments and security as
provided therein.
Pursuant to the terms of a loan agreement with the Kolenz branch of
Commerzbank Aktiengesellschaft, dated as of December 8, 1999 (the "Commerzbank
Loan"), Parent shall borrow up to a maximum of twenty-five million (25,000,000
DM) deutsche marks (approximately US$12,900,000). The Commerzbank Loan provides
a cash credit facility which can be drawn down to the maximum amount provided
above and shall accrue interest payable by Parent at 6.25% per annum for any
cash draw down, and 0.5% on any unutilized portion of such credit facility from
January 5, 2000 to April 30, 2000. The Commerzbank Loan contains provisions
which permit the Parent, upon the satisfaction of certain preconditions, to
reschedule a portion of the cash credit facility above as a loan with a three
(3) year term. The Commerzbank Loan provides security in the form of a lien on
certain securities and chattels of Parent in connection with all existing,
future and contingent claims arising from the parties' banking relationship.
15
<PAGE> 18
10. BACKGROUND OF THE OFFER; CONTACTS WITH THE COMPANY.
Over the past several years, the management of the Company and the Company
Board have regularly reviewed the Company's performance, strategic direction and
prospects in light of changes in the contact center industry, including the
possibility of increased competition.
In May, 1999, Parent authorized its financial advisor, Broadview Int'l LLC
("Broadview"), to contact the Company regarding Parent's interest in exploring
the possibility of a business combination between the Company and Parent. Over
the course of the next several weeks, Mr. Kevin R. McClelland, a Principal of
Broadview, had multiple conversations with Mr. James E. McGowan, President and
Chief Executive Officer of the Company, regarding the potential benefits of a
strategic relationship or business combination.
On September 1, 1999, Dr. Philip A. Storey, Executive Vice President of
Parent, and Mr. McGowan held a meeting at Mr. McGowan's office in Herndon,
Virginia, the first informal senior executive discussion between the Company and
Parent. As a result of this meeting, representatives of Parent and Company
believed that there was potential for a good strategic fit between the two
organizations, along the lines of a business combination, OEM product agreement
or other strategic venture or transaction. A second meeting between Dr. Storey
and Mr. McGowan occurred on the afternoon of September 13, 1999. Prior to this
meeting, Parent and the Company entered into a mutual non-disclosure agreement,
which was amended and superseded by a confidential mutual non-disclosure
agreement on October 15, 1999 (the "Confidentiality Agreement"). At this
meeting, the parties discussed the Company's planned business direction in light
of changes in the contact center industry and Parent's technological
capabilities with respect to the Internet and process automation. As a result of
this meeting, and in light of the parties' strategies discussed thereat, Dr.
Storey and Mr. McGowan began to consider the prospect of a business combination
between the Company and Parent.
Following the meeting of September 13, 1999, Dr. Storey discussed the
possibility of a merger between the Company and Parent with other members of the
Management Board of Parent (the "Parent Board"), and Gert J. Reinhardt, Chief
Executive Officer of Parent, fully briefed the Parent's Supervisory Board about
the situation. In addition, on September 17, representatives from Broadview held
a conference call with Mr. McGowan and other representatives from the Company to
discuss the Company's strategy and its historical and projected financial
results. On September 23, 1999, Broadview and Parent outlined to the Company
preliminary proposed transaction terms for a merger of the Company and Parent.
On October 6, 1999, Mr. McGowan and Updata, the Company's financial
advisor, presented to the Company Board the preliminary proposed transaction
terms for a merger of the Company and Parent. At this meeting, the Company Board
considered the Company's business, financial condition, results of operations,
current business strategy and future prospects, recent and historical market
prices and trading ranges for the Shares and strategic and other potential
alternatives to a potential business combination.
After conferring with the Company Board, Mr. McGowan informed Dr. Storey,
in early October, that the Company Board had authorized him and Mr. Carl
Mergele, the Company's Corporate Counsel, to continue exploring a possible
transaction with Parent and to allow Parent to commence a preliminary due
diligence review of the Company. Representatives of Parent commenced the
preliminary due diligence investigation on October 15, 1999, and continued their
investigation during November, 1999, including holding meetings between certain
members of each of the Company's and Parent's senior management in Germany from
October 26 to 29, 1999. During this time, the senior management of each of
Parent and the Company discussed generally the possible structures and potential
synergies of a business combination.
In early November, 1999, the senior management and financial advisors of
each of the Company and Parent began to negotiate the amount and form of
consideration that would be payable to Company stockholders in connection with a
business combination. The parties also discussed various strategies for
retaining the services of key Company employees in the event of a business
combination.
During the negotiations of early November, and prior to the November 7,
1999 discussions described below, Dr. Storey fully informed the Parent Board of
the status of the discussions with the Company and
16
<PAGE> 19
obtained suitable authorizations to proceed on behalf of Parent. Also, during
this period, Mr. Reinhardt consulted fully with the supervisory board of Parent
regarding the status of the negotiations.
On November 7, 1999, following negotiations regarding the amount and form
of consideration, Dr. Storey called Mr. McGowan and informed him that a price of
$6.25, payable in cash for each outstanding Share, would be Parent's best and
highest proposal. Parent indicated that it would require Mr. McGowan and
Frederick C. Foley, the Company's Chief Financial Officer, to enter into
employment agreements and certain stockholders of the Company to enter into a
tender agreement, as conditions to its willingness to enter into a definitive
merger agreement. While these conversations were occurring, representatives of
Parent continued various aspects of their due diligence review.
On November 10, 1999, certain members of the Company Board met to discuss
Parent's final offer price and related matters. At this meeting, the Company
Board considered the Company's business, financial condition, results of
operations, current business strategy and future prospects, recent and
historical market prices and trading ranges for the Shares, strategic and other
potential alternatives to Parent's offer, and the relevant matters, including
information presented by senior management and by the Company's financial
advisors regarding the progress of the negotiations between Parent and the
Company over the terms of a definitive merger agreement. Senior management and
the Company's financial advisors discussed with the Company Board the proposed
terms of the merger agreement, which contemplated a cash tender offer followed
by a cash merger, and a tender agreement pursuant to which certain officers and
directors of the Company would agree to tender their Shares into the Offer and
vote in favor of the Merger. Based on the information presented at these and
previous meetings, and after extensive deliberation, the Company Board
authorized senior management of the Company to proceed with the negotiation of
definitive documentation relating to the proposed transaction. Also at this
meeting, the Company Board authorized Mr. McGowan and senior management of the
Company to enter into a non-solicitation and standstill agreement to be
negotiated by such management in consultation with legal and financial advisors
(the "Non-Solicitation and Standstill Agreement"). Senior management of the
Company and the Parent executed the Non-Solicitation and Standstill Agreement on
November 17, 1999.
From November 22, 1999 through December 15, 1999, Parent and its counsel
continued their due diligence review of the Company, and the parties and their
advisors negotiated the provisions of the Merger Agreement and the Tender
Agreement.
On the morning of December 16, 1999, the members of the Company's Board
received from the Company certain materials in preparation for deliberations
considering the proposed offer, including a summary of the Merger Agreement and
the transactions contemplated thereby, the final draft of the Merger Agreement,
a summary of the proposed terms of the employment agreements for Mr. McGowan and
Mr. Foley, drafts of the employment agreements, an outline of the Company
Board's duties under the DGCL and proposed resolutions with respect to the
Merger Agreement and the transactions contemplated thereby. Also on the morning
of December 16, 1999, the members of the Company's Board received from Updata,
the Company's financial advisors, a presentation and financial analysis
concerning the Merger Agreement and the transactions contemplated thereby.
After having been afforded the full business day to review their materials,
the Company Board held a meeting during the evening of December 16, 1999. At
that meeting, Mr. McGowan, other members of the Company's senior management and
the Company's financial and legal advisors presented to the Company Board the
terms of the proposed Merger Agreement and discussed with the Company Board
various business issues relating to the transactions contemplated thereby.
Updata presented a detailed financial analysis of the proposed transaction and
rendered its written opinion that, as of December 16, 1999, the $6.25 per Share
cash consideration to be received in the Offer and the Merger by holders of
Shares was fair to such holders (other than Parent and its Affiliates) from a
financial point of view. The Company's legal advisors discussed with the Company
Board the legal standards applicable to its decisions with respect to the
proposed transaction and reviewed the terms of the transaction documents. After
discussion and due consideration, including discussion while Mr. McGowan and Mr.
Foley excused themselves from the meeting, the Company Board unanimously
approved (with Messrs. McGowan and Burton abstaining) the Merger Agreement and
the transactions
17
<PAGE> 20
contemplated thereby, including the Offer and the Merger, and resolved to
recommend that holders of Shares tender their Shares in the Offer and vote in
favor of the Merger.
After execution and delivery of the Merger Agreement on the evening of
December 17, 1999, the parties issued a joint press release, before the opening
of Nasdaq on December 20, 1999, announcing the definitive agreement, including
the Offer and the Merger.
11. THE MERGER AGREEMENT AND OTHER AGREEMENTS.
The following is a summary of the Merger Agreement and certain related
agreements. This summary is qualified in its entirety by reference to the copies
of such agreements filed as exhibits to the Tender Offer Statement on Schedule
14D-1 of which this Offer to Purchase is a part.
The Merger Agreement
The Offer. The Merger Agreement provides that no later than five (5)
Business Days after the public announcement of the execution of the Merger
Agreement, Parent will cause Purchaser to, and Purchaser will, commence the
Offer. The parties to the Merger Agreement have agreed in the Merger Agreement
that the obligation of Purchaser to consummate the Offer, and to accept for
payment and pay for the Shares tendered pursuant to the Offer, is subject to the
Minimum Condition and the Offer Conditions described in Section 15 hereof. Under
the Merger Agreement, each of Parent and Purchaser has expressly reserved the
right, in its sole discretion, to waive any such condition and to make any other
changes to the terms of the Offer provided that, without the consent of the
Company, neither Parent nor Purchaser can (i) amend or waive the Minimum
Condition, (ii) change the form of consideration to be paid in the Offer (other
than by adding cash consideration) (iii) decrease the price per Share payable in
the Offer, (iv) reduce the number of Shares to be purchased in the Offer, (v)
impose additional conditions to the Offer, or (vi) amend any other condition of
the Offer in a manner adverse to the holders of Shares. The Merger Agreement
provides that the price per Share to be paid in the Offer will be net to the
sellers in cash, without interest, subject to reduction only for any applicable
withholding taxes.
Under the Merger Agreement, Purchaser may, without the consent of the
Company, (i) extend the Offer on one or more occasions for up to ten (10)
Business Days for each such extension beyond the then-scheduled Expiration Date,
if at such date any of the Offer Conditions has not been satisfied or waived,
until such time as such conditions are satisfied or waived, and, at the request
of the Company, Purchaser will, subject to Parent's right to terminate the
Merger Agreement pursuant to Article VIII thereof, extend the Offer for
additional periods up to but not later than February 28, 2000, if the only
condition not satisfied or earlier waived on the then-scheduled Expiration Date
is the HSR Approval condition, (ii) extend the Offer for any period required by
any rule, regulation, interpretation or position of the Commission or the staff
thereof applicable to the Offer, and (iii) provided that Parent and Purchaser
irrevocably waive the Offer Conditions (other than the Minimum Condition) and
agree not to assert such conditions as a basis for not consummating the Offer,
extend the Offer for an aggregate period of not more than ten (10) Business Days
beyond the latest Expiration Date otherwise permitted under clause (i) or (ii)
above if the Minimum Condition has been satisfied but there have not been
tendered sufficient Shares so that the Merger could be effected without a vote
of the Company's stockholders in accordance with Section 253 of the DGCL. The
Merger Agreement provides that, subject to the terms of the Offer, including the
Offer Conditions, Purchaser will accept for payment and pay for all Shares duly
tendered at the earliest time at which it is permitted to do so under applicable
law; provided that, as set forth above, Purchaser will have the right, in its
sole discretion, to extend the Offer for up to ten (10) Business Days
notwithstanding the prior satisfaction of the Offer Conditions, in order to
attempt to satisfy the requirements of Section 253 of the DGCL. The Merger
Agreement further provides that the Offer Conditions other than the Minimum
Condition are solely for the benefit of Parent and Purchaser and that all Offer
Conditions may be asserted by Parent and Purchaser, unless irrevocably waived,
regardless of the circumstances resulting in a condition not being satisfied
(except for any action or inaction by Purchaser or Parent constituting a breach
of the Merger Agreement) and, except with respect to the Minimum Condition, may
be waived by Parent or Purchaser, in whole or in part at any time and from time
to time in their sole discretion.
18
<PAGE> 21
Company Recommendation. The Merger Agreement provides that the Company
will file with the Commission and mail to its stockholders contemporaneously
with the commencement of the Offer a Solicitation/Recommendation Statement on
Schedule 14D-9. The Schedule 14D-9 shall reflect the actions of the Company
Board and comply in all material respects with the provisions of applicable
federal securities laws. Pursuant to the Merger Agreement, the Schedule 14D-9
will contain the Company Board Recommendation (as defined below). The Company
Board shall be permitted to withdraw, or modify in any manner, whether or not
adverse to Parent, the Company Board Recommendation, but only if (i) the Company
has complied with the terms of the Merger Agreement as summarized under the
heading "No Solicitation" below, including, without limitation, the requirement
that Company notify Parent promptly after its receipt of any Acquisition
Proposal (as defined under the heading "No Solicitation" below), (ii) a Superior
Proposal (as defined under the heading "No Solicitation" below) has been offered
and not withdrawn at the time the Company Board determines to take any such
action, (iii) the Company Board determines in good faith by a majority vote, on
the basis of the advice of its outside legal counsel, that its fiduciary duties
under applicable law require that it take such action and (iv) the Company shall
have delivered to Parent four (4) Business Days' prior written notice advising
Parent that it intends to take such action.
The Company Board, at a meeting duly called and held, has unanimously (with
Messrs. McGowan and Burton abstaining) (i) determined that the Merger Agreement
and the transactions contemplated thereby, including the Offer and the Merger,
are advisable and fair to and in the best interests of the holders of Shares,
(ii) duly approved and adopted the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Merger, prior to the execution
of such agreement (such approvals being sufficient to render the restrictions of
Section 203 of the DGCL inapplicable to the Merger Agreement, the Offer, the
Merger and the transactions contemplated thereby),(iii) resolved to recommend
that the holders of Shares accept the Offer, tender their Shares and vote to
approve the Merger, and (iv) took action sufficient to render the Rights
Agreement inapplicable to the Merger Agreement, the Offer and the Merger
(collectively, the "Company Board Recommendation").
Directors Following the Offer. The Merger Agreement provides that,
promptly upon the purchase of and payment for Shares which represent at least a
majority of the outstanding Shares, Parent is entitled to designate a number of
directors on the Company Board equal to the product (rounded up to the nearest
whole number) of the total number of the directors on the Company Board (after
giving effect to the directors elected pursuant to this sentence) multiplied by
the percentage that the number of Shares owned by Purchaser and its Affiliates
bears to the number of Shares outstanding. The Company will, upon request of
Parent, use its reasonable best efforts promptly either to increase the size of
the Company Board or, at the Company's election, to secure the resignations of
such number of its incumbent directors as is necessary to enable Parent's
designees to be so elected or appointed to the Company Board. The Merger
Agreement provides that the Company will use its reasonable best efforts to
cause directors designated by Parent to constitute the same percentage as they
represent on the Company Board (but in any event at least one Parent designee)
(i) of each committee of the Company Board, (ii) of the board of directors of
each of the Company's subsidiaries, and (iii) of each committee of each such
subsidiary's board of directors, in each case to the extent permitted by
applicable law. Notwithstanding the foregoing, provided that the number of
directors which Parent shall have the ability to designate shall constitute a
majority of the Company Board, until the Effective Time, the Company and Parent
have agreed to use all reasonable best efforts to retain as members of the
Company Board at least three (3) directors who are directors of the Company on
the date of the Merger Agreement and who were not designated by Parent or
employees of the Company or its subsidiaries (the "Independent Directors").
Following the election or appointment of Parent's designees to the Company Board
and prior to the Effective Time, the affirmative vote of a majority of the
Independent Directors will be required for the Company to take action to (i)
amend or terminate the Merger Agreement, (ii) exercise or waive any of the
Company's rights or remedies thereunder, (iii) extend the time for performance
of Parent's and Purchaser's respective obligations thereunder, or (iv) approve
any other action by the Company that would reasonably be expected to affect
adversely the interests of the stockholders of the Company (other than Parent,
Purchaser and their Affiliates) with respect to the transactions contemplated
thereby.
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<PAGE> 22
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof, and in accordance with the DGCL, at the Effective Time,
Purchaser will be merged with and into the Company. The Merger Agreement
provides that, as a result of the Merger, the separate corporate existence of
Purchaser will cease and the Company will continue as the Surviving Corporation.
The name of the Surviving Corporation initially shall be SERSys Acquisition
Corporation.
The Merger Agreement provides that at the Effective Time, the certificate
of incorporation of the Purchaser, as in effect immediately prior to the
Effective Time and as attached to the Merger Agreement as Annex II, will be the
certificate of incorporation of the Surviving Corporation until thereafter
amended as provided therein and by the DGCL. The Surviving Corporation's
certificate of incorporation shall be amended to increase the authorized capital
provided therein as noted under the heading "Conversion of Securities" above. At
the Effective Time, the bylaws of Purchaser, as in effect immediately prior to
the Effective Time and as attached to the Merger Agreement as Annex III, will be
the bylaws of the Surviving Corporation until thereafter amended as provided
therein and by the DGCL.
The Merger Agreement further provides that, at the Effective Time, the
directors and officers of Purchaser immediately prior to the Effective Time will
be the directors and officers, respectively, of the Surviving Corporation
following the Merger, to hold office in accordance with the Surviving
Corporation's bylaws and applicable law.
The Merger Agreement also provides that Parent may at any time change the
method of effecting the Offer including by providing that any other subsidiary
of Parent make the Offer, or effect the Merger, including by merging any direct
or indirect wholly owned subsidiary of Parent with and into the Company or by
merging the Company with and into any such direct or indirect wholly owned
subsidiary, and the Company will cooperate in such efforts, including by
entering into an appropriate amendment to the Merger Agreement; provided,
however, that such other subsidiary, if any, becomes a party to, and agrees to
be bound by, the terms of the Merger Agreement, and that any such actions not
(a) alter or change the amount or kind of consideration to be issued to the
Company's stockholders, (b) materially delay the receipt of any HSR Approval,
(c) materially delay the consummation of the transactions contemplated by the
Merger Agreement, or (d) adversely affect the interests of the stockholders of
the Company. The parties to the Merger Agreement have also agreed to take such
actions as Parent may reasonably request to provide for the merger or
consolidation of subsidiaries of the Company with other subsidiaries of the
Company or of Parent, to be effective at or following the Effective Time.
Conversion of the Company's Securities. The Merger Agreement provides
that at the Effective Time, by virtue of the Merger and without any action on
the part of Parent, Purchaser, Company or the holder of any of the following
securities: (i) each Share issued and outstanding immediately prior to the
Effective Time (other than (x) Shares canceled pursuant to clause (iii) below,
and (y) Dissenting Shares, as defined below), will be converted into the right
to receive the Merger Consideration; (ii) all of the Shares issued and
outstanding immediately prior to the Effective Time will no longer be
outstanding and will automatically be canceled and will cease to exist as of the
Effective Time, and each Share Certificate previously representing any such
Shares (other than Shares canceled pursuant to clause (iii) below) will
thereafter represent solely the right to receive the Merger Consideration into
which the Shares represented by such Share Certificate have been converted; and
(iii) at the Effective Time, all Shares that are held by the Company as treasury
stock or by Parent or any of the Company's or Parent's respective wholly owned
subsidiaries will automatically be canceled and will cease to exist and no cash
or other consideration will be delivered in exchange therefor.
Notwithstanding anything in the Merger Agreement to the contrary, Shares
issued and outstanding immediately prior to the Effective Time held by holders
(if any) who have not voted in favor of the Merger and who have demanded
appraisal rights with respect thereto in accordance with Section 262 of the DGCL
and, as of the Effective Time, have not failed to perfect or have not
effectively withdrawn or lost their rights to appraisal and payment under
Section 262 of the DGCL ("Dissenting Shares") will not be converted into the
right to receive the Merger Consideration. Holders of such Shares will be
entitled to receive payment of the appraised value of such Dissenting Shares in
accordance with the provisions of Section 262 of the DGCL, except that any
Dissenting Shares held by a holder who has failed to perfect or has effectively
withdrawn, or
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<PAGE> 23
lost its right to appraisal and payment under Section 262 of the DGCL will
thereupon be deemed to have been converted into the right to receive the Merger
Consideration and will no longer be considered Dissenting Shares. Under the
Merger Agreement, the Company will give Parent (i) prompt notice of any written
demands for appraisal of any Shares, attempted withdrawals of such demands, and
any other instruments served pursuant to the DGCL received by the Company
relating to stockholders' rights of appraisal, and (ii) the opportunity to
direct all negotiations and proceedings with respect to demands for appraisal
under the DGCL. The Company will not, except with the prior written consent of
Parent, voluntarily make any payment with respect to any demands for appraisals
of capital stock of the Company, offer to settle or settle any such demands or
approve any withdrawal of any such demands.
The Merger Agreement provides that all of the shares of capital stock of
Purchaser issued and outstanding immediately prior to the Effective Time will be
converted into a total of one million (1,000,000) shares of the capital stock of
the Surviving Corporation and, upon issuance at the Effective Time, will
constitute the only issued and outstanding capital stock of the Surviving
Corporation following the Effective Time.
The Merger Agreement provides that, at the Effective Time, each option to
purchase Shares, whether or not then vested or exercisable (each, a "Company
Option"), including without limitation Company Options granted under the
Company's Amended and Restated Stock Option(s) Plan, the 1998 Stock Incentive
Plan and the 1993 Stock Option Plan for Non-Employee Directors (the "Company
Stock Plans"), will, without any further action on the part of the holders
thereof, be converted, pursuant to the terms of the Company Stock Plans, into a
right to receive a payment in cash (the "Option Consideration") equal to the
product of (i) the number of Shares previously subject to the Company Option and
(ii) the excess, if any, of the Merger Consideration over the exercise price of
each Share under the Company Option, subject to withholding taxes and without
interest. As soon as practicable after the Effective Time, and in any event no
more than fifteen (15) calendar days following the Effective Time, the Surviving
Corporation shall instruct the Depositary to pay, and the Depositary shall pay,
all amounts due as Option Consideration to the former holders of Company Options
as required by the Merger Agreement. Options to purchase Common Stock issued
under the Company's 1993 Employee Stock Purchase Plan (the "Stock Purchase
Plan") shall be exercisable at the Exercise Date for such options (as defined in
the Stock Purchase Plan) for $6.25 in cash.
Representations and Warranties. The Merger Agreement contains various
customary representations and warranties of the parties thereto including,
without limitation, representations and warranties by the Company as to the
Company's organization, standing and corporate power, subsidiaries,
capitalization, authorization, board recommendation, noncontravention of any
governing instruments, laws or other agreements, regulatory and other
third-party consents and approvals, filings with the Commission, financial
statements, undisclosed liabilities, investment securities, licenses, compliance
with applicable laws, information provided in the Offer documents and Schedule
14D-9, absence of certain changes or events, legal proceedings, employee benefit
plans, intellectual property, labor and employment matters, taxes, environmental
matters, contracts, year 2000 matters, state takeover laws, Rights Agreement
compliance, insurance and brokers.
In addition, the Merger Agreement contains representations and warranties
of Parent and Purchaser concerning their organization and standing,
authorization, board recommendation, noncontravention of any governing
instruments, laws or other agreements, regulatory and other third party consents
and approvals, information provided in the Offer documents and Schedule 14D-9,
funds and brokers.
Interim Operations of the Company. In the Merger Agreement, the Company
has agreed that, among other things, from the date of the Merger Agreement to
the Effective Time, except as expressly required or permitted by the Merger
Agreement, the Company will, and will cause each of its subsidiaries to, (a)
conduct its business in the usual, regular and ordinary course consistent with
past practice and in compliance with applicable laws, (b) use reasonable best
efforts to maintain and preserve intact its business organization, employees and
business relationships and retain the services of its key officers and key
employees, and (c) take no action which would adversely affect or delay in any
material respect the ability of either Parent or the Company to obtain any
necessary approvals of any regulatory agency or other governmental entity
required
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<PAGE> 24
for the transactions contemplated by, or to perform its covenants and agreements
under, the Merger Agreement.
In addition, the Merger Agreement provides that, from the date of the
Merger Agreement to the Effective Time, except as expressly required or
permitted thereby, the Company will not, and will not permit any of its
subsidiaries, without the prior written consent of Parent, to:
(a) (i) incur any indebtedness for borrowed money (other than (A)
short-term indebtedness incurred (y) to refinance existing short-term
indebtedness or (z) pursuant to lines of credit and credit facilities
existing on the date of the Merger Agreement, (B) indebtedness incurred in
an aggregate amount not exceeding $100,000, and (C) indebtedness of Company
or any of its subsidiaries owed to Company or its other wholly owned
subsidiaries), assume, guarantee, endorse or otherwise as an accommodation
become responsible for the obligations of any other individual, corporation
or other entity, or make any loan, advance or capital contribution (other
than to Company or any of its wholly owned subsidiaries and other than in
the ordinary course of Company's business consistent with past practice) or
(ii) make or commit to make any capital expenditures in excess of $100,000
for any single capital expenditure;
(b) (i) adjust, split, combine or reclassify any of its capital stock;
(ii) make, declare, set aside or pay any dividend (except for dividends
paid in the ordinary course of business by any wholly owned subsidiaries of
Company to Company or to any other of its wholly owned subsidiaries) or
make any other distribution on, or directly or indirectly (other than in
connection with the surrender of Common Stock as full or partial payment of
the exercise price or withholding tax in connection with the exercise of
Company Options under the Company Stock Plans) redeem, purchase or
otherwise acquire, any shares of its capital stock or any securities or
obligations convertible into or exchangeable for any shares of its capital
stock; (iii) grant any individual, corporation or other entity any right to
acquire any shares of its capital stock or any stock appreciation or
similar rights except as permitted by Section (i) of the Merger Agreement
(described above); (iv) issue or authorize the issuance of, deliver, sell,
transfer, pledge or otherwise encumber any additional shares of capital
stock or any securities or obligations convertible into or exchangeable for
any shares of its capital stock, other than the issuance of Company Common
Stock pursuant to the exercise of Company Options disclosed to Parent as
being outstanding on the date of the Merger Agreement and granted pursuant
to the Company Stock Plans; or (v) enter into any agreement, understanding
or arrangement with respect to the sale or voting of its capital stock;
(c) sell, transfer, mortgage, encumber or otherwise dispose of any
significant portion of its properties or assets, including, without
limitation, capital stock in any subsidiaries of Company, to any
individual, corporation or other entity other than a direct or indirect
wholly owned subsidiary, or cancel, release or assign any indebtedness to
any such person or any claims held by any such person, except in the
ordinary course of business consistent with past practice;
(d) make any material investment, either by purchase of stock or other
equity or debt securities, contributions to capital, property transfers, or
purchase of any property or assets, of any other individual, corporation,
limited partnership or other entity, other than an investment in a wholly
owned subsidiary of Company existing prior to the date of the Merger
Agreement;
(e) acquire or agree to acquire, by merging or consolidating with, or
by purchasing a substantial portion of the stock or assets of, or by any
other manner, any business or any corporation, partnership, joint venture,
association or other business organization or division thereof;
(f) acquire or agree to acquire voting or non-voting equity securities
or similar ownership interests in any person (other than a subsidiary);
(g) commence, undertake or engage in any new line of business;
(h) enter into or terminate any significant lease, contract or
agreement, or make any change in any of its existing significant leases,
contracts or agreements, except in the ordinary course of business and
consistent with past practices of the Company;
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<PAGE> 25
(i) (i) grant to any employees any restricted stock or options to
purchase the Company's Common Stock, (ii) pay any bonus which is not
consistent with past practice or consistent with the plans, arrangements or
agreements in place prior to the date of the Merger Agreement or which,
when aggregated with all of the bonuses for 1999, exceed $900,000 (other
than the Company's 25% matching program for 401(k) contributions, payments
pursuant to which shall not exceed $175,000), (iii) hire new executive
officers or materially modify any compensation or severance package other
than in the ordinary course of business and consistent with past practice,
or (iv) enter into, establish, adopt or amend (except (A) as may be
required by applicable law, (B) to satisfy contractual obligations existing
as of the date of the Merger Agreement, or (C) as otherwise provided by the
Merger Agreement) any Employee Plan, as that term is defined in the Merger
Agreement, or any trust agreement (or similar arrangement) related thereto
in respect of any director, officer, consultant, independent contractor, or
employee of or with respect to Company or any of its subsidiaries;
(j) pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), except for the payment, discharge or satisfaction of current
liabilities or obligations, in accordance with their terms, in the ordinary
course of business consistent with past practice, or waive, release, grant,
or transfer any rights of material value or modify or change any existing
license, lease, contract or other document in any manner that would be
material to Company and its subsidiaries;
(k) settle or compromise any litigation (whether or not commenced
prior to the date of the Merger Agreement), other than settlements or
compromises of litigation where the amount paid by the Company (excluding
amounts paid by insurance providers on behalf of the Company) does not
exceed $50,000 for any single litigation matter or related group of
litigation matters (such limit including the monetary value of any
non-monetary obligations on the part of Company or any of its subsidiaries
other than, in the case of litigation not involving any governmental entity
or other regulatory agency, immaterial non-monetary obligations);
(l) change any accounting principle used by it, except for such
changes as may be required to be implemented pursuant to generally accepted
accounting principles or rules and regulations of the Commission as
concurred in by Company's independent auditors;
(m) change any material tax election, change any annual tax accounting
period, change any method of tax accounting in any material respect, file
any material amended tax return, enter into any closing agreement relating
to any material tax, settle any material tax claim or assessment, surrender
any right to claim a material tax refund or consent to any extension or
waiver of the limitations period applicable to any material tax claim or
assessment except as advised by the Company's independent auditors;
(n) adopt or implement any amendment to its charter or bylaws or enter
into any plan of consolidation, merger or reorganization with any person
other than a wholly owned subsidiary of Company;
(o) adopt a plan of complete or partial liquidation or resolutions
providing for or authorizing such a liquidation or a dissolution,
restructuring, recapitalization or reorganization;
(p) take any action that is intended or would reasonably be expected
to result in any of its representations and warranties set forth in the
Merger Agreement being or becoming untrue in any material respect, or in
any of the conditions to the Merger set forth under the heading
"Conditions" below or the Offer Conditions not being satisfied, or in a
violation of any provision of the Merger Agreement, except, in each case,
as may be expressly permitted by the Merger Agreement or as may be required
by applicable law; or
(q) agree to, or make any commitment to, take, or authorize, any of
the actions prohibited by clauses (a) through (p) above.
Access to Information. The Merger Agreement provides that, upon reasonable
notice and subject to applicable laws relating to the exchange of information,
the Company will, and will cause its subsidiaries to,
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<PAGE> 26
afford to the officers, employees, accountants, counsel and other
representatives of Parent reasonable access, during normal business hours during
the period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, the Company will, and will
cause its subsidiaries to, make available to Parent and its representatives (i)
a copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements of federal
securities laws or other federal or state laws (other than reports or documents
which the Company is not permitted to disclose under applicable law), and (ii)
all other information concerning its business, properties and personnel as
Parent may reasonably request, in all cases so that Parent may have reasonable
opportunity to make such investigations as it desires of the affairs and assets
of the Company. Neither the Company nor any of its subsidiaries will be required
to provide access to or to disclose information where such access or disclosure
would violate or prejudice the rights of its customers, unreasonably interfere
with the conduct of the business of the Company and its subsidiaries, jeopardize
the attorney-client privilege, to the extent applicable to such materials, or
contravene any law, rule, regulation, order, judgment, decree, or binding
agreement entered into prior to the date of the Merger Agreement. The parties to
the Merger Agreement have agreed to make appropriate substitute disclosure
arrangements under circumstances in which the restrictions of the preceding
sentence apply.
The Merger Agreement provides that Parent will hold all information
furnished by or on behalf of the Company or any of the Company's subsidiaries or
representatives pursuant to the Merger Agreement in confidence to the extent
required by, and in accordance with, the provisions of the Confidentiality
Agreement.
Reasonable Best Efforts. The Merger Agreement provides that each of the
Company and Parent will, and will cause their respective subsidiaries to, use
their reasonable best efforts to take, or cause to be taken, all actions
necessary, proper or advisable to comply promptly with all legal requirements
which may be imposed on it or any of its subsidiaries with respect to the Offer
and the Merger and, subject to the conditions set forth in "Conditions" below,
to consummate the transactions contemplated by the Merger Agreement. The parties
have agreed that such actions will include, using their respective reasonable
best efforts to (i) as promptly as practicable prepare and file all necessary
documentation, to effect all applications, notices, petitions and filings, to
obtain as promptly as practicable all permits, consents, approvals and
authorizations of all governmental entities and any other third parties which
are necessary or advisable to consummate the transactions contemplated by the
Merger Agreement or to prevent the termination of the Company's and its
subsidiaries' contracts as a result thereof, (ii) comply fully with the terms
and conditions of all such permits, consents, approvals and authorizations of
all such governmental entities, (iii) lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the parties
to consummate the transactions contemplated by the Merger Agreement, and (iv)
defend any litigation seeking to enjoin, prevent or delay the consummation of
the transactions contemplated by the Merger Agreement or seeking material
damages. Parent and the Company have the right to review in advance and, to the
extent practicable, each will consult with the other on (in each case subject to
applicable laws relating to the exchange of information) all the information
relating to the Company or Parent, as the case may be, and any of their
respective subsidiaries, which appear in any filing made with, or written
materials submitted to, any governmental entity or any other third party in
connection with the transactions contemplated by the Merger Agreement. In
exercising the foregoing right, each of the parties to the Merger Agreement will
act reasonably and as promptly as practicable. The Company, Parent and Purchaser
have agreed that they will consult with each other with respect to the obtaining
of all permits, consents, approvals and authorizations of all governmental
entities and other third parties necessary or advisable to consummate the
transactions contemplated by the Merger Agreement and each of the parties has
agreed to keep the other apprised of the status of matters relating to
completion of the transactions contemplated thereby.
Employee Matters. The Merger Agreement provides that the Company's Stock
Purchase Plan and any other stock or option based compensation plans of the
Company (other than the ITC Plan, as defined below) shall be terminated and any
shares of the Company's Common Stock purchased thereunder prior to the Effective
Time which continue to be held by participants under such plans at the Effective
Time shall be cancelled in accordance with the procedures set forth under the
heading "Conversion of Company's Securities." As provided in the Stock Purchase
Plan, each option outstanding at the Effective Time shall be
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<PAGE> 27
exercisable at the Exercise Date (as defined in the Stock Purchase Plan) for
$6.25 in cash. The Company shall use its reasonable best efforts prior to the
Effective Time to obtain the consent of the holders of all Company Options
outstanding under the International Telesystems Corporation Stock Option Plan
(the "ITC Plan") which Company Options are not automatically convertible
pursuant to the terms of the ITC Plan into the right to receive Option
Consideration. After the Effective Time, Parent will take, or will cause the
Company to take, all action necessary to carry out the provisions of the Stock
Purchase Plan.
Pursuant to the terms of the Merger Agreement, at the Effective Time, the
Parent will cause the Surviving Corporation to adopt the stock option plan in
substantially the form attached to the Merger Agreement as Annex IV and reserve
for issuance shares equal to seventeen percent (17%) of the issued and
outstanding shares of common stock of the Surviving Corporation at the Effective
Time, and such plan shall have been approved by Parent as the sole stockholder
of the Surviving Corporation.
Exclusive Negotiations. The Merger Agreement provides that Parent and
Purchaser will not, and will not permit any of their officers, directors,
employees, financial or legal advisors, agents or other representatives or those
of any of their respective Affiliates, from the date of the Merger Agreement
until the Effective Time or such earlier time as the Merger Agreement is
terminated pursuant to Article VIII thereof, directly or indirectly, to offer to
purchase, solicit proposals to sell, furnish information or engage in any
discussions or negotiations relating to the acquisition of all or any part of,
or any interest in, or any of the assets of certain competitors of the Company
(or Affiliates thereof) regardless of the form of the proposed transaction.
No Solicitation. The Merger Agreement provides that, from the date of the
Merger Agreement until the earlier of (x) the Effective Time, or (y) the
termination of the Merger Agreement pursuant to Article VIII thereof, the
Company shall not, shall not permit any of its subsidiaries to, and shall not
authorize or permit any of its or their respective officers, directors,
employees, representatives agents or Affiliates, directly or indirectly, to (i)
solicit, initiate or knowingly encourage or take any action to facilitate or
encourage any inquiries or the making of any proposal that constitutes, an
Acquisition Proposal (as defined below) or (ii) participate or engage in
discussions or negotiations with, or provide any information to any individual,
corporation, partnership, association, trust, unincorporated organization,
limited liability company or other entity or group, as defined in Section
13(d)(3) of the Exchange Act (each a, "Person"), concerning an Acquisition
Proposal or which might reasonably be expected to result in an Acquisition
Proposal (as such term is defined in the Merger Agreement and described below).
An "Acquisition Proposal" includes any inquiry, proposal or offer from any
Person (other than Parent, Purchaser or any of their Affiliates) made or
submitted prior to the termination of the Merger Agreement, relating to any (i)
merger, consolidation, recapitalization, liquidation or other direct or indirect
business combination, involving the Company or any subsidiary, (ii) issuance or
acquisition of shares of capital stock or other equity securities of the Company
or any subsidiary representing 40% or more (by voting power) of the outstanding
capital stock of the Company or such subsidiary (except for the issuance of
shares of Common Stock pursuant to employee stock options granted under any
Company Stock Plan and outstanding on the date of the Merger Agreement), (iii)
tender or exchange offer that if consummated would result in any Person,
together with all Affiliates thereof, beneficially owning shares of capital
stock or other equity securities of the Company or any subsidiary representing
40% or more (by voting power) of the outstanding capital stock of the Company or
such subsidiary, (iv) acquisition, license, assignment, purchase or other
disposition of a substantial portion of the technology, business or assets of
the Company or any subsidiary outside the ordinary course of business or
inconsistent with past practice, or (v) other transaction of similar
significance, the consummation of which would reasonably be expected to impede
materially, interfere with, prevent or delay materially the consummation of the
Offer, the Merger and the other transactions contemplated between the parties or
which would reasonably be expected to dilute materially the benefits to Parent
or Purchaser of the transactions contemplated in the Merger Agreement.
The Merger Agreement requires that the Company immediately cease, and cause
its subsidiaries, and its and their officers, directors, agents, representatives
and advisors, to cease, any and all existing activities, discussions or
negotiations with any parties conducted theretofore with respect to any of the
foregoing.
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The Merger Agreement further provides that, notwithstanding the limitations
on solicitations and related matters described above, the Company may
participate in discussions or negotiations with, or furnish information with
respect to the Company pursuant to a confidentiality agreement substantially
similar to the Confidentiality Agreement in effect between the Company and
Parent, to any Person if and only if such Person has submitted an unsolicited
written Acquisition Proposal to the Company Board and the Company Board (a)
believes in good faith based on such matters as it deems relevant, including the
advice of Company's financial advisor, that such Acquisition Proposal is a
Superior Proposal (as defined below); (b) receives the advice of outside counsel
to the Company that is reasonably competent to render such advice to the effect
that taking such action is required to satisfy the fiduciary duties of the
Company Board under the DGCL; and (c) determines in good faith that taking such
action is required to satisfy the fiduciary duties of the Company Board under
applicable Delaware law.
A "Superior Proposal" means, for purposes of the Merger Agreement, any bona
fide Acquisition Proposal to effect a tender offer, merger, consolidation or
sale of all or substantially all of the assets or capital stock of the Company,
which is on terms which the Company Board determines by a majority vote of its
directors in its good faith judgment (based upon the advice of Updata or another
financial advisor reasonably competent to render such advice) that the value of
the consideration provided in such Acquisition Proposal exceeds the value of the
consideration provided under the Merger Agreement, after taking into account all
relevant factors, including the form of consideration, any conditions to such
Acquisition Proposal, the timing of the closing thereof, the risk of
nonconsummation, the ability of the person making the Acquisition Proposal to
finance the transactions contemplated thereby and any required governmental or
other consents, filings and approvals to be more favorable to the Company's
stockholders than the transactions contemplated by the Merger Agreement, or any
revised offer submitted by Parent that is itself a Superior Proposal, and for
which financing, to the extent required, is then fully committed to the Person
making such Acquisition Proposal.
Pursuant to the Merger Agreement, the Company shall immediately advise
Parent orally and in writing of any request for information with respect to any
Acquisition Proposal, or an inquiry which could result in an Acquisition
Proposal. The Company shall advise Parent of the presence of an Acquisition
Proposal or inquiry, the material terms and conditions of such request, and the
identity of the person making the request or Acquisition Proposal. The Company
shall inform Parent on a prompt and current basis of the status and content of
any discussions regarding any Acquisition Proposal with third parties, including
prompt notice of any changes in the price, structure or form of the
consideration or material terms of and conditions regarding the Acquisition
Proposal.
Under the terms of the Merger Agreement, the Company Board shall be
permitted to withdraw, or modify in any manner, whether or not adverse to
Parent, the Company Board Recommendation, but only if (i) the Company has
complied with the limitations on solicitations and related matters contained in
the Merger Agreement and described above, (ii) a Superior Proposal has been
offered and not withdrawn at the time the Company Board determines to take any
such action, (iii) the Company Board determines in good faith by a majority
vote, on the basis of the advice of its outside legal counsel, that its
fiduciary duties under applicable law require that it must take such action, and
(iv) the Company shall have delivered to Parent four (4) Business Days' prior
written notice advising Parent that it intends to take such action.
Publicity. The Merger Agreement provides that the Company, Parent and
Purchaser will consult with each other before holding any press conferences,
analyst calls or other meetings or discussions and before issuing any press
releases or other public announcements regarding the transactions contemplated
hereby and by the Tender Agreement. The parties will provide each other the
reasonable opportunity to review and comment upon any press release or other
public announcement or statement with respect to the transactions contemplated
by the Merger Agreement and the Tender Agreement. Except as may be required by
applicable law, court process or by obligations pursuant to any listing
agreement with Nasdaq, any U.S. national securities exchange or the Frankfurt
Neuer Markt, no party to the Merger Agreement shall issue any such press release
or other public announcement or statement prior to such consultation. In
addition, Company is required to consult with Parent regarding written
communications with customers, stockholders and employees relating to the
transactions contemplated by the Merger Agreement.
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Directors' and Officers' Insurance and Indemnification. The Merger
Agreement provides that, for a period of six (6) years from the Effective Time,
the certificate of incorporation and bylaws of the Surviving Corporation will
contain, to the extent permitted by law, provisions with respect to
indemnification no less favorable to any Indemnified Party (as defined below)
than those set forth in the Company's certificate of incorporation and bylaws on
the date of the Merger Agreement.
The Merger Agreement further provides that Parent will, and will cause the
Surviving Corporation to, indemnify, defend and hold harmless the present and
former officers and directors of the Company or any of its subsidiaries in their
capacities as such (each, an "Indemnified Party") after the Effective Time
against all losses, expenses, claims, damages or liabilities arising out of
actions or omissions occurring on or prior to the Effective Time to the fullest
extent now provided in their respective certificates of incorporation or bylaws,
and permitted by applicable law.
Parent has also agreed to cause the persons serving as officers and
directors of the Company immediately prior to the Effective Time to be covered
for a period of six (6) years from the Effective Time by the directors' and
officers' liability insurance policy maintained by the Company (provided that
Parent may substitute therefor policies of at least the same coverage and
amounts containing terms and conditions which are not less advantageous than
such policy) with respect to acts or omissions occurring prior to the Effective
Time which were committed by such officers and directors in their capacity as
such; provided, however, that in no event will Parent be required to expend more
than 150% of the current amount expended by the Company ("the Insurance Amount")
to maintain or procure such insurance coverage and further provided, that if
Parent is unable to maintain or obtain the insurance described in this
paragraph, Parent will use its reasonable best efforts to obtain as much
comparable insurance as available for the Insurance Amount.
In the event Parent, the Surviving Corporation or any of their respective
successors or assigns (i) consolidates with or merges 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, the Merger Agreement requires that in each
such case, to the extent necessary, proper provision will be made so that the
successors and assigns of Parent or the Surviving Corporation, as the case may
be, assume the indemnification and insurance obligations described above. In
addition, the Merger Agreement provides that such provisions are intended to
benefit, and will be enforceable by, the Indemnified Parties and their
respective heirs and representatives.
Company Stockholders Meeting; Preparation of Proxy Statement. The Merger
Agreement provides that if the approval of the Company's stockholders is
required under the DGCL to consummate the Merger, (i) the Company will cause a
meeting of its stockholders (the "Company Stockholders Meeting") to be duly
called and held as soon as reasonably practicable after the date on which Shares
are purchased by Purchaser pursuant to the Offer for the purpose of voting on
the adoption of the Merger Agreement, and (ii) Parent and the Company will
prepare and file with the Commission a proxy statement in definitive form
relating to the Company Stockholders Meeting (the "Proxy Statement"). Each of
Parent and the Company has agreed to use all reasonable efforts to resolve any
comments of the Commission as promptly as practicable after such filing, and the
Company will thereafter mail or deliver the Proxy Statement to its stockholders
as promptly as practicable. The Company Board will (i) include in the Proxy
Statement the Company Board Recommendation and (ii) use its reasonable best
efforts to obtain the necessary vote in favor of the adoption of the Merger
Agreement by its stockholders.
Pursuant to the Merger Agreement, Parent has agreed that it will vote, or
cause to be voted, at the Company Stockholders Meeting, all Shares then owned by
it or by Purchaser in favor of the adoption of the Merger Agreement.
Notwithstanding the above described provisions of the Merger Agreement, the
Merger Agreement provides that in the event that Parent, Purchaser or any other
subsidiary of Parent acquires at least 90% of the outstanding Shares, the
parties will take all necessary and appropriate action, subject to applicable
laws relating to exchange of information, to cause a "short-form" merger to
become effective as soon as practicable after such acquisition, without a
meeting of stockholders of the Company, in accordance with Section 253 of the
DGCL.
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HSR Act. The Merger Agreement provides that each of Parent and the Company
shall, if applicable, promptly make or cause to be made the filings required of
such party or its Affiliates under the HSR Act with respect to the transactions
contemplated thereby. Each party agrees to cooperate with the other party in
connection with any such filing and in connection with resolving any
investigation or other inquiry of any such agency or other governmental entity
under the HSR Act, the Sherman Act, as amended, the Clayton Act, as amended, the
Federal Trade Commission Act, as amended, and any other Federal, state or
foreign statutes, rules, regulations, orders or decrees that are designed to
prohibit, restrict or regulate actions having the purpose or effect of
monopolization or restraint of trade (collectively, "Antitrust Laws"). Each of
Parent and the Company shall use all commercially reasonable efforts to resolve
such objections, if any, as may be asserted by any governmental entity with
respect to the transactions contemplated by the Merger Agreement under Antitrust
Laws. Each of Parent and the Company shall use all commercially reasonable
efforts to take such action as may be required to cause the expiration of the
notice periods under the HSR Act or other Antitrust Laws with respect to such
transactions as promptly as possible after the execution of the Merger
Agreement.
Conditions. The Merger Agreement provides that the obligations of the
Company, on the one hand, and Parent and Purchaser, on the other hand, to
consummate the Merger are subject to the satisfaction (or, if permissible,
waiver by the party for whose benefit such conditions exist) of the following
conditions: (1) Purchaser has purchased the Shares pursuant to the Offer; (2) if
required under the DGCL, the Company Stockholder Approval; (3) no order,
injunction or decree issued by any court or agency of competent jurisdiction
preventing the consummation of the Merger is in effect and no statute, rule,
regulation, order, injunction or decree has been enacted, entered, promulgated
or enforced by any governmental entity which prohibits, materially restricts or
makes illegal consummation of the Merger; and (4) any applicable waiting period
under the HSR Act shall have expired or been terminated.
Termination. The Merger Agreement provides that it may be terminated at
any time prior to the Effective Time, whether before or after approval by the
Company's stockholders of the matters presented in connection with the Merger:
(a) by mutual consent of Parent and Company;
(b) by either Parent or the Company Board if any governmental entity
which must grant the HSR Approval has denied approval of the Offer or the
Merger and such denial has become final and nonappealable, or any
governmental entity of competent jurisdiction shall have issued an order,
decree or ruling or taken any other action permanently restraining,
enjoining or otherwise prohibiting the transactions contemplated by the
Merger Agreement and such order, decree, ruling or other action shall have
become final and nonappealable; provided, however, that the right to
terminate the Merger Agreement as described in this clause (b) shall not be
available to any party whose failure to comply with the section "Reasonable
Best Efforts" above or any other provision of the Merger Agreement has been
a primary cause of such action;
(c) (i) by the Company Board, if, prior to the purchase of any Shares
by Purchaser pursuant to the Offer, Parent breaches any of its
representations, covenants or agreements contained in the Merger Agreement
(A) such that any of the Offer Conditions would not be satisfied, and (B)
such breach either cannot be cured or is not cured prior to the earlier of
(x) ten (10) days after Company has furnished Parent with written notice of
such breach and (y) two (2) Business Days prior to the date on which the
Offer is then scheduled to expire; or (ii) by Parent, if, prior to the
purchase of any Shares by Purchaser pursuant to the Offer, Company breaches
any of its representations, covenants or agreements contained in the Merger
Agreement (A) such that any of the Offer Conditions would not be satisfied,
and (B) such breach either cannot be cured or is not cured prior to the
earlier of (x) ten (10) days after Parent has furnished Company with
written notice of such breach and (y) two (2) Business Days prior to the
date on which the Offer is then scheduled to expire;
(d) by Parent, if, prior to the purchase of any Shares by Purchaser
pursuant to the Offer, Company or the Company Board shall have (i)
withdrawn, modified, amended or materially qualified in any respect adverse
to Parent the Company Board Recommendation, (ii) failed to mail the
Schedule 14D-9 as
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required under the Merger Agreement to its stockholders, or failed to
include in the Schedule 14D-9 the Company Board Recommendation, (iii)
entered into a definitive or binding agreement with respect to a Superior
Proposal, (iv) in response to the commencement of any tender offer or
exchange offer for 40% or more of the outstanding shares of Company Common
Stock, or the public announcement or disclosure of any other Acquisition
Proposal, or the commencement of negotiations or discussions with any third
party regarding an Acquisition Proposal in accordance with the "No
Solicitation" section hereof, failed, fully and unconditionally, to
recommend publicly rejection of such tender or exchange offer or reject
such other Acquisition Proposal (and publicly announce such rejection, in
the case of Acquisition Proposals which have been publicly disclosed or
become publicly known) within five (5) Business Days of such commencement,
announcement or disclosure, or (v) resolved to do any of the foregoing;
(e) by either Parent or the Company Board if (i) the Offer expires or
terminates in accordance with its terms without the purchase of any Shares
or (ii) Purchaser shall not have purchased Shares under the Offer prior to
February 28, 2000; provided, however, that the right to terminate the
Merger Agreement under this clause (e) shall not be available to any party
to the extent that such party's failure to comply with the section
regarding "Reasonable Best Efforts" or any other provision of the Merger
Agreement has resulted in the failure of any of the Offer Conditions; or
(f) by the Company, if (i) prior to the acceptance for payment of any
Shares pursuant to the Offer, (ii) the Company is in compliance with its
obligations as described under the heading "No Solicitation," (iii) the
Company Board shall have withdrawn or modified in a manner adverse to
Parent the Company Board Recommendation, (iv) the Company Board authorizes
the Company, subject to complying with the terms of the Merger Agreement,
to enter into a definitive agreement concerning a transaction that
constitutes a Superior Proposal and the Company notifies Parent in writing
that it intends to enter into such an agreement, attaching the most current
version of such agreement to such notice, (v) Parent does not make, within
four (4) Business Days of receipt of the Company's written notification of
its intention to enter into a definitive agreement for a Superior Proposal,
an offer that the Company Board determines, in good faith after
consultation with its financial advisors, is at least as favorable, from a
financial point of view, to the stockholders of the Company as the Superior
Proposal, and (vi) the Company agrees to pay the fees required to be paid
as described under the heading "Effect of Termination" below. The Company
agrees (x) that it will not enter into a binding agreement referred to in
clause (iv) above until at least the fifth Business Day after it has
provided the notice to Parent required hereby and (y) to notify Parent
promptly if its intention to enter into the written agreement referred to
in its notification shall change at any time after giving such
notification.
Effect of Termination. The Merger Agreement provides that in the event of
the termination of the Merger Agreement as described above, written notice will
forthwith be given to the other party or parties specifying the provision
pursuant to which such termination is made. At such time, the Merger Agreement
will forthwith become null and void, and there will be no liability on the part
of Parent, Purchaser, the Company or any of their respective subsidiaries or any
of the officers or directors of any of them, except that (i) among others, the
second paragraph under the section "Access to Information" above and the
provisions described in this paragraph will survive any termination of the
Merger Agreement, (ii) notwithstanding anything to the contrary contained in the
Merger Agreement, neither Parent nor the Company will be relieved or released
from any liabilities or damages arising out of its willful breach of any
provision of the Merger Agreement, and (iii) the Company will pay to Parent the
Termination Fee (as defined below), if applicable, in accordance with the terms
of the Merger Agreement described below.
In the event that the Merger Agreement is terminated (other than pursuant
to paragraphs (a), (b) or (c)(i) under the heading "Termination" above)
subsequent to the receipt of an Superior Proposal, and the Company within nine
(9) months of the date of the Merger Agreement, enters a definitive agreement
with respect to, or consummates, such Superior Proposal, the Company shall pay
to Parent within five (5) days following the execution of a definitive agreement
with respect to such Superior Proposal an amount equal to $3,000,000 (the
"Termination Fee"). If the Company wrongfully fails to pay Parent timely any
amounts due as a Termination Fee, the Company shall pay all reasonable costs and
expenses (including reasonable legal fees and expenses) incurred by Parent in
connection with any action or proceeding (including the filing of any
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lawsuit) taken by Parent to collect such unpaid amounts, together with interest
on such unpaid amounts at the publicly announced prime lending rate as published
in the Wall Street Journal from the date such amounts were required to be paid
until the date actually received by Parent.
Expenses. The Merger Agreement provides that, except as expressly
otherwise provided therein, all costs and expenses incurred in connection with
the Merger Agreement and the consummation of the transactions contemplated
thereby will be paid by the party incurring such expenses.
Amendment and Modification. The Merger Agreement provides that, subject to
compliance with applicable law, such agreement may be amended in writing by the
parties thereto, by action taken or authorized by their respective boards of
directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company; provided,
however, that after any such approval by the stockholders of the Company, there
may not be, without further approval of such stockholders, any amendment of the
Merger Agreement which changes the amount or the form of the consideration to be
delivered to the holders of Shares thereunder other than as contemplated by the
Merger Agreement.
Extension; Waiver. The Merger Agreement provides that at any time prior to
the Effective Time, the parties thereto, by action taken or authorized by their
respective boards of directors, may, to the extent legally allowed, (i) extend
the time for the performance of any of the obligations or other acts of the
other parties thereto, (ii) waive any inaccuracies in the representations and
warranties contained therein or in any document delivered pursuant thereto and
(iii) waive compliance with any of the agreements or conditions contained
therein; provided, however, that after any approval by the stockholders of the
Company, there may not be, without further approval of such stockholders, any
extension or waiver of the Merger Agreement or any portion thereof which reduces
the amount or changes the form of the consideration to be delivered to the
holders of Shares thereunder other than as contemplated by the Merger Agreement.
Any agreement on the part of a party to the Merger Agreement to any such
extension or waiver will be valid only if set forth in a written instrument
signed on behalf of such party, but such extension or waiver or failure to
insist on strict compliance with an obligation, covenant, agreement or condition
will not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure.
Tender Agreement
Concurrently with the execution and delivery of the Merger Agreement,
Parent entered into the Tender Agreement with all directors and executive
officers of the Company (each, a "Management Stockholder" and, together, the
"Management Stockholders") who together beneficially own 1,697,700 issued and
outstanding Shares (including vested Company Options and Company Options vesting
within sixty (60) days of the date of the Merger Agreement), representing
approximately 11.5% of the issued and outstanding Shares as of the date hereof
(the "Existing Shares" and, together with any other Shares of capital stock or
other voting securities of the Company or any of its subsidiaries beneficially
owned by them and any such shares of capital stock or other voting securities
acquired, directly or indirectly, after the date of the Tender Agreement and
prior to the termination thereof, whether upon the exercise of options,
conversion of convertible securities or otherwise, the "Subject Shares").
Pursuant to the Tender Agreement, each of the Management Stockholders has
agreed, among other things, to tender validly his or her Subject Shares to
Purchaser pursuant to the Offer within ten (10) Business Days of the
commencement thereof, and, once tendered not to withdraw or permit to be
withdrawn any such Subject Shares.
Additionally, pursuant to the Tender Agreement, each of the Management
Stockholders has agreed that, during the term of the Tender Agreement, at any
Company Stockholder Meeting, however called, such Management Stockholder will
appear, in person or by proxy, or otherwise cause his or her Subject Shares to
be counted as present thereat for purposes of establishing a quorum, and each
such Management Stockholder will vote (or cause to be voted) or act by written
consent with respect to all of the Subject Shares that are beneficially owned by
such Management Stockholder or its Affiliates or as to which such Management
Stockholder has, directly or indirectly, the right to vote or direct the voting,
(a) in favor of adoption and approval of the Merger Agreement and the Merger and
the approval of the terms thereof and each of the other actions contemplated by
the Merger Agreement and the Tender Agreement, and any other action requested
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by Parent in furtherance thereof, (b) against any action or agreement that would
result in a breach of any covenant, representation or warranty or any other
obligation or agreement of the Company contained in the Merger Agreement or of
any Management Stockholder contained in the Tender Agreement, (c) against any
Acquisition Proposal made by any person other than Parent or any of its
subsidiaries and (d) against any other action, agreement or transaction (other
than the Merger Agreement and the transactions contemplated thereby) that is
intended, or could reasonably be expected, to impede, interfere or be
inconsistent with, delay, postpone, discourage or materially adversely affect
the Offer or the Merger or the performance by each of the Management
Stockholders of its obligations under the Tender Agreement, including, but not
limited to: (i) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company or its
subsidiaries (other than the Offer and the Merger); (ii) a sale, lease or
transfer of a material amount of assets of the Company or any of its
subsidiaries or a reorganization, recapitalization or liquidation of the Company
or any of its subsidiaries; (iii) a material change in the policies or
management of the Company; (iv) an election of new members to the Company Board,
except where the vote is cast in favor of the nominees of a majority of the
existing directors; (v) any material change in the present capitalization or
dividend policy of the Company or any amendment or other change to the Company's
certificate of incorporation; or (vi) any other material change in the Company's
personnel, corporate structure or business.
Pursuant to the Tender Agreement, each Management Stockholder has also
agreed that it will not enter into any voting or other agreement or
understanding with any person or entity or grant a proxy or power of attorney
with respect to the Subject Shares prior to the termination of the Tender
Agreement or vote or give instructions in any manner inconsistent with clauses
(a), (b) or (c) of the preceding paragraph. Each Management Stockholder has also
agreed, during the term of the Tender Agreement, not to, and not to permit any
of its Affiliates to, vote or execute any written consent in lieu of a
stockholders meeting or vote, if such consent or vote by the stockholders of the
Company would be inconsistent with, impede or frustrate the purposes of the
other covenants of such Management Stockholder as described above.
The Tender Agreement provides that each Management Stockholder, during the
term of the Tender Agreement, will not (i) sell, transfer, pledge, encumber,
grant, assign or otherwise dispose of, enforce any redemption agreement with the
Company or enter into any contract, option or other arrangement or understanding
with respect to or consent to the offer for sale, sale, transfer, pledge,
encumbrance, grant, assignment or other disposition of, record or beneficial
ownership of any of the Subject Shares or any interest in any of the foregoing,
except to Parent, (ii) grant any proxies or powers of attorney, deposit any
Subject Shares into a voting trust or enter into a voting agreement with respect
to any Subject Shares, or any interest in any of the Subject Shares, except to
Parent or (iii) take any action that would make any representation or warranty
of such Management Stockholder contained therein untrue or incorrect or have the
effect of preventing or disabling such Management Stockholder from performing
such Management Stockholder's obligations under the Tender Agreement, or that
would otherwise hinder or delay Parent from acquiring a majority of the
outstanding Shares, determined on a fully diluted basis.
The Tender Agreement also provides that each Management Stockholder, except
with respect to Parent and its Affiliates, during the term of the Tender
Agreement, will not, and will not permit any of its Affiliates or any director,
officer, employee consultant, agent, advisor or representative of such
Management Stockholder or any of its Affiliates (collectively, the
"Representatives"), to initiate, solicit or encourage, directly or indirectly,
any inquiries or the making of any proposal with respect to any matter described
in the preceding paragraph or any Acquisition Proposal with respect to the
Company or any of its subsidiaries, participate in any negotiations concerning,
or provide to any other person any information or data relating to the Company
or any of its subsidiaries for the purpose of, or have any discussions with any
person relating to, or cooperate with or assist or participate in, or
facilitate, any inquiries or the making of any proposal which constitutes, or
would reasonably be expected to lead to, any effort or attempt by any other
person to seek to effect any matter described in the preceding paragraph or any
Acquisition Proposal with respect to the Company or any of its subsidiaries, or
agree to or endorse any or release any third party from any obligation under any
existing standstill agreement or arrangement relating to any such Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or implement
such an Acquisition Proposal. Each Management Stockholder has also
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agreed immediately to cease and cause to be terminated any existing activities,
discussions or negotiations with any parties that would violate this paragraph
or the immediately preceding paragraph.
Pursuant to the Tender Agreement, each Management Stockholder has agreed,
during the term of the Tender Agreement, to notify Parent promptly of (i) the
number of any additional Shares and the number and type of any other Shares
acquired by such Management Stockholder, if any, and (ii) any inquiries or
proposals that are received by, any such information that is requested from, or
any such negotiations or discussions that are sought to be initiated or
continued with, such Management Stockholder with respect to any matter described
above. Each Management Stockholder has also agreed to consent to the termination
of the Company Stock Plans and the Stock Purchase Plan and the conversion of
interests under such plans as contemplated by the Merger Agreement.
Employment Agreements with Certain Officers.
In connection with the Merger Agreement, the Purchaser has entered into
employment agreements with each of James E. McGowan and Frederick C. Foley that
become effective upon the consummation of the Offer.
Pursuant to the terms of his employment agreement (the "McGowan Employment
Agreement"), Mr. McGowan has agreed to serve as the Surviving Corporation's
President and Chief Executive Officer, on a full-time basis, for the period
commencing on the date the Offer is consummated and ending on December 31, 2001,
unless such term is extended or terminated as provided therein. Under the terms
of the McGowan Employment Agreement, Mr. McGowan shall receive an annual salary
of $325,000 and be eligible to receive stock options and an annual bonus not to
exceed fifty percent (50%) of his annual salary, and an additional fifty percent
(50%) of his salary for exceptional performance according to criteria set by the
board of directors of the Surviving Corporation each year.
Under the McGowan Employment Agreement, Mr. McGowan is entitled to certain
payments upon termination. If Mr. McGowan's employment is terminated by the
Surviving Corporation for any reason other than for "cause" (as such term is
defined in the McGowan Employment Agreement) or by Mr. McGowan for "good reason"
(as such term is defined in the McGowan Employment Agreement) the Surviving
Corporation shall (A) pay to Mr. McGowan (i) if such termination occurs before
January 1, 2001, one hundred percent (100%) of his annual salary for the
remainder of the term of the McGowan Employment Agreement, equal to at least
twelve (12) months, and (ii) if such termination occurs after January 1, 2001,
100% of his annual salary, with such amounts payable in equal installments over
a three (3) month period commencing on the date of termination; and (B) make
available to Mr. McGowan for a period of twelve (12) months following such
termination, the sickness, health and disability insurance programs to which Mr.
McGowan would have been entitled under the McGowan Employment Agreement if he
had remained in the employ of the Surviving Corporation for a twelve (12) month
period.
If Mr. McGowan's employment is terminated by the Surviving Corporation for
"cause," or by Mr. McGowan by resignation without "good reason," or upon the
death or due to Mr. McGowan's "total disability" (as defined in the McGowan
Employment Agreement), then the Surviving Corporation shall have no further
liability to Mr. McGowan under the McGowan Employment Agreement with respect to
periods following the date of such termination, except (1) the salary which has
accrued through the date of termination, which amount shall be paid by the
Surviving Corporation within thirty (30) days of such termination; and (2) such
other benefits as may be required to be provided by the Surviving Corporation
under the provisions of applicable law.
Under the McGowan Employment Agreement, Mr. McGowan has agreed to be bound
by certain restrictive covenants which limit his ability to compete with or to
interfere with the Surviving Corporation for a period of one (1) year after the
termination of his employment.
Pursuant to the terms of his employment agreement (the "Foley Employment
Agreement"), Mr. Foley has agreed to serve as the Surviving Corporation's Senior
Vice Present -- Finance, Treasurer and Chief Financial Officer, on a full-time
basis, for the period commencing on the date the Offer is consummated and
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ending on December 31, 2001, unless such term is extended or terminated as
provided therein. Under the terms of the Foley Employment Agreement, Mr. Foley
shall receive an annual salary of $200,000 and be eligible to receive stock
options and an annual bonus not to exceed thirty-five percent (35%) of his
annual salary, calculated against a sliding scale of seventy-five percent (75%)
to one hundred fifty percent (150%), depending on Mr. Foley's performance and
according to criteria set by the chief executive officer or the compensation
committee of the board of directors of the Surviving Corporation each year.
Under the Foley Employment Agreement, Mr. Foley is entitled to certain
payments upon termination. If Mr. Foley's employment is terminated by the
Surviving Corporation for any reason other than for "cause" (as such term is
defined in the Foley Employment Agreement) or by Mr. Foley for "good reason" (as
such term is defined in the Foley Employment Agreement) the Surviving
Corporation shall (A) pay to Mr. Foley (i) if such termination occurs before
January 1, 2001, one hundred percent (100%) of his annual salary for the
remainder of the term of the Foley Employment Agreement, equal to at least
twelve (12) months, and (ii) if such termination occurs after January 1, 2001,
100% of his annual salary, with such amounts payable in equal installments over
a three (3) month period commencing on the date of termination; and (B) make
available to Mr. Foley for a period of twelve (12) months following such
termination, the sickness, health and disability insurance programs to which Mr.
Foley would have been entitled under the Foley Employment Agreement if he had
remained in the employ of the Surviving Corporation for a twelve-month period.
If Mr. Foley's employment is terminated by the Surviving Corporation for
"cause," or by Mr. Foley by resignation without "good reason," or upon the death
or due to Mr. Foley's "total disability" (as defined in the Foley Employment
Agreement), then the Surviving Corporation shall have no further liability to
Mr. Foley under the Foley Employment Agreement with respect to periods following
the date of such termination, except (1) the salary which has accrued through
the date of termination, which amount shall be paid by the Surviving Corporation
within thirty (30) days of such termination; and (2) such other benefits as may
be required to be provided by the Surviving Corporation under the provisions of
applicable law.
Under the Foley Employment Agreement, Mr. Foley has agreed to be bound by
certain restrictive covenants which limit his ability to compete with or to
interfere with the Surviving Corporation for a period of one (1) year after the
termination of his employment.
The McGowan Employment Agreement and the Foley Employment Agreement provide
that the Surviving Corporation will grant Messrs. McGowan and Foley options to
acquire 50,000 and 10,000 shares, respectively, of the Surviving Corporation's
common stock at an exercise price of $69.20 per share (equivalent to the price
per share to be paid by Parent for the Shares). Under the stock option grant
agreements to be executed between the Messrs. McGowan and Foley and the
Surviving Corporation at the Effective Time, fifty percent (50%) of the options
will vest on the first anniversary of the grant date and the remainder will vest
on the second anniversary of the grant date. All of the options will vest
immediately upon the consummation of an initial public offering of the Surviving
Corporation's common stock. Mr. McGowan's options will vest immediately if he is
terminated without "cause" or if he terminates his employment with the Surviving
Corporation for "good reason." In addition, Parent has agreed to grant Mr.
Foley, at the Effective Time, options to acquire 5,000 shares of Parent's common
stock at an exercise price equal to 60% of the fair market value of those shares
on or about December 31, 1999.
Stockholders Agreement
Concurrently with the execution and delivery of the Merger Agreement,
Parent and Purchaser entered into a stockholders agreement (each a "Stockholders
Agreement" and collectively, the "Stockholders Agreements") with each of Messrs.
Foley and McGowan (each a "Stockholder" for purposes of this section). Pursuant
to each of the Stockholders Agreements, the term "Stock" includes, any and all
shares of common stock of the Surviving Corporation that are issued (now or in
the future) pursuant to the rights of the Stockholder under the grant agreements
attached as exhibits to each of the McGowan Employment Agreement and the Foley
Employment Agreement and under any other grant agreement issued under the
Surviving Corporation stock option plan and all other shares of common stock or
other equity securities of the Surviving Corporation or any successor
corporation which may be issued thereafter to the Stockholder in
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consequence of his ownership of such common stock of the Surviving Corporation
as the result of the exchange or reclassification of shares, corporate
reorganization, or any form of recapitalization, consolidation, merger, share
split, share dividend, or similar event.
Call Rights of the Corporation. Pursuant to each of the Stockholders
Agreements, for a period of three hundred sixty-five (365) days following the
death of the Stockholder or the termination of employment of the Stockholder
with the Surviving Corporation for any reason, the Surviving Corporation shall
have an option to purchase all or any of the authorized, issued and outstanding
shares of Stock, at the price and upon the terms described below.
Call Rights upon an Involuntary Transfer. If any portion of the
Stockholder's shares of Stock are attached or taken in execution, or if the
Stockholder applies for the benefit of, or files a case under, any provision of
the federal bankruptcy law or any other law relating to insolvency or relief of
debtors, or if a case or proceeding is brought against the Stockholder under any
provision of the federal bankruptcy law or any other law relating to insolvency
or relief of debtors which is not dismissed within sixty (60) days after the
commencement thereof, or if the Stockholder makes an assignment for the benefit
of creditors, or if any portion of the Stockholder's Stock is made subject to
charging order, or if any portion of the Stockholder's Stock is transferred
pursuant to a divorce decree (each such event shall be referred to as an
"Involuntary Transfer"), such Stockholder (the "Insolvent Stockholder") shall
give immediate written notice of the Involuntary Transfer to the Surviving
Corporation and the Surviving Corporation shall have the option to purchase any
or all of the shares of Stock of the Insolvent Stockholder at the price and upon
the terms described below.
Call Rights of the Parent. If a public offering of the common stock of the
Surviving Corporation that requires registration under the Securities Act of
1933, as amended (the "Act"), has not been consummated by January 1, 2005, the
Parent shall have an option for a period of three hundred sixty five (365) days
beginning thereon to purchase the Stock from the Stockholder at the price and
upon the terms described below.
Put Rights of the Stockholder. If, at January 1, 2003, (i) the fair market
value of the Stock is more than twice the price established by the Merger
Agreement and (ii) Parent has not within the preceding 120 days issued a public
statement, which is still applicable at such date, describing the firm intention
to cause a public offering of the common stock of the Surviving Corporation that
requires registration under the Act ("an IPO of the common stock") before
December 30, 2003, the Stockholder shall have an option for a period of three
hundred sixty five (365) days beginning on January 1, 2003, to sell the Stock to
the Parent at the price and upon the terms described below.
If (i) at January 1, 2004, the fair market value of the Stock is more than
twice the price established by the Merger Agreement, (ii) the put rights
described above did not arise solely because Parent issued a public statement
prior to January 1, 2003 of its intention to cause an IPO of the Common Stock
before December 30, 2003, and (iii) an IPO of the Common Stock does not in fact
occur prior to December 30, 2003, the Stockholder shall have an option for a
period of three hundred sixty-five (365) days beginning on January 1, 2004, to
sell the Stock to the Parent at the price and upon the terms described below.
If an IPO of the Common Stock has not been consummated by January 1, 2005,
the Stockholder shall have an option for a period of three hundred sixty five
(365) days beginning thereon to sell the Stock to the Parent at the price and
upon the terms described below. Notwithstanding anything to the contrary in the
grant agreements of the Stockholders and provided the stock options issued under
such grant agreements have not previously terminated or expired, the Stockholder
shall be permitted to exercise the vested portion of such stock options in
December 2004, conditional upon the Stockholder receiving sufficient
consideration from the Parent pursuant to the exercise of such put rights
effective as of January 1, 2005, with which to pay the exercise price under such
portion of the stock option issued under the grant agreements. The Stockholder
may specify in the notice of exercise pursuant to the preceding sentence that
the exercise price is to be paid from the proceeds of the sale to the Parent of
the respective portion of the Stock purchased pursuant to such exercise.
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Purchase Price of Stock. The purchase price of the Stock payable under the
Stockholder Agreements shall be the fair market value of such Stock as of the
"Disposition Date." The Disposition Date is the date on which Parent, the
Surviving Corporation or the Stockholder, as applicable, exercises the
respective option to purchase shares of Stock. For all purposes herein, the fair
market value of the Stock shall be the value as established by an appraisal of
the Purchaser by an appraisal firm that is selected by and mutually agreeable to
the chief executive officer of the Surviving Corporation and Parent. Such
appraisals shall not take into account any minority or liquidity discounts. At
the Surviving Corporation's expense, such appraiser shall conduct an appraisal
of the Surviving Corporation within four months after each of January 1, 2003,
January 1, 2004, and January 1, 2005, in order to assist in facilitating
exercise of the call and put rights described above, and as of such other dates
as are necessary to establish the value of the Stock on a Disposition Date.
Notwithstanding anything to the contrary herein, the appraisals conducted on
each of January 1, 2003, January 1, 2004, and January 1, 2005, shall apply for
purposes of determining the fair market value of the Stock that applies to the
exercise of the put rights described above, respectively, regardless of when the
put rights are exercised during the respective calendar year.
Voluntary Transfers of Stock. Each of the Stockholders agreed that, during
his lifetime, he will not transfer any of his shares of Stock, except (i) upon
the conditions set forth below; or (ii) with the prior written consent of the
Surviving Corporation. In the event that the Stockholder receives a bona fide
offer from an independent third party capable of consummating such a sale to
purchase all or any of the authorized, issued and outstanding shares of Stock
then registered in such Stockholder's name, such Stockholder shall first offer
in writing (the "Stockholder's Offer") to sell such shares of Stock (the
"Offered Stock") to the Surviving Corporation at the price and on the terms of
which such selling Stockholder proposes to transfer the Offered Stock to the
proposed third party transferee. The Stockholder's Offer shall set forth (i) the
number of shares of the Offered Stock, (ii) the name and address of the proposed
transferee, (iii) the amount of consideration to be received by the selling
Stockholder, and (iv) the method of proposed payment. The Surviving Corporation
shall have the option to acquire all or any of the Offered Stock at the price
and upon the terms provided in the Stockholder's Offer. The Surviving
Corporation shall have the right to exercise its option for a period of thirty
(30) days following its receipt of the Stockholder's Offer by notifying the
selling Stockholder in writing of its intention to purchase at Closing (as such
term is defined in the Stockholders Agreements) all or any of the Offered Stock
on the same terms and conditions set forth in the Stockholder's Offer.
In the event that (i) a Stockholder elects to transfer all or a portion of
his shares of Stock; (ii) the Stockholder strictly complies with the
Stockholders Agreement; (iii) the Purchaser fails to purchase all of such shares
of Offered Stock; and (iv) the Stockholder who desires to transfer such shares
of Stock complies with the terms of the Stockholders Agreement, then any such
shares of Stock which are not so purchased by the Purchaser may be sold by the
selling Stockholder to the third party named in the Stockholder's Offer within a
period of ninety (90) days after the expiration of the thirty (30) day period
provided above. Such Offered Stock may be transferred to the third party named
in the Stockholder's Offer provided that such shares are sold at the price and
on the terms set forth in the Stockholder's Offer. Any Offered Stock not
actually sold or transferred to such third party by the selling Stockholder
within such ninety (90) day period at the price and on the terms set forth in
the Stockholder's Offer shall remain subject to all of the provisions of the
Stockholders Agreement.
The restrictions set forth in the preceding paragraphs do not apply to
Stock of a Stockholder sold or otherwise transferred in connection with (i) the
closing of an underwritten public offering by the Surviving Corporation of its
Stock or any other securities pursuant to an effective registration statement
under the Act, (ii) a sale of the Surviving Corporation as a result of which
more than fifty percent (50%) of the total number of outstanding shares of its
common stock is sold, exchanged, conveyed, or otherwise transferred to a third
party in one or a series of related transactions, or (iii) a merger or
consolidation of the Surviving Corporation as a result of which the holders of
its common stock (immediately prior to such merger or consolidation) hold less
than fifty percent (50%) of the surviving or new entity, as the case may be.
Drag Along Rights. If at any time the holder(s) of a majority of the
shares of common stock of the Surviving Corporation desire to sell, exchange,
convey, or otherwise transfer, in one or a series of related transactions to an
independent third party in a bona fide arms length transaction, all of the
outstanding shares
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of common stock of the Surviving Corporation ("Selling Stockholder(s)") for
consideration which the Selling Stockholders in good faith believe in their sole
discretion to be adequate consideration for such shares, then the Selling
Stockholder(s) may require the Stockholder to sell, exchange, convey, or
otherwise transfer, and the Stockholder agrees to sell, exchange, convey, or
otherwise transfer all of the shares of Stock at the same price per share of
common stock (as set forth below) and on the same terms and conditions, as
received by the Selling Stockholder(s) from the independent third party for the
same class of shares.
The Stockholder's obligation to sell, exchange, convey or otherwise
transfer the Stock under such provisions is subject to the requirements that (i)
the Selling Stockholder(s) shall give notice to the Stockholder of such sale,
exchange, conveyance, or transfer at least 30 days prior to the proposed date of
such event, specifying the price and terms upon which shares of common stock are
to be sold, exchanged, conveyed, or transferred, and the proposed date of such
event, and (ii) upon the consummation of said sale, exchange, conveyance, or
transfer, the Stockholder will receive the same form and amount of consideration
per share of common stock as received by the Selling Stockholder(s) for the same
class of shares, or, if the Selling Stockholder(s) are given an option as to the
form and amount of consideration to be received, the Stockholder will be given
the same option.
Tag Along Rights. If at any time, in any transaction or transactions, the
Parent desires to sell, exchange, convey, or otherwise transfer any shares of
common stock of the Surviving Corporation owned by it, then the Parent shall
give notice of such intent to the Stockholder at least fifteen (15) days prior
to the proposed date of such sale. Such notice shall specify the number of
shares and the terms, including price, upon which such shares of common stock
are to be sold, exchanged, conveyed, or otherwise transferred and the proposed
date of such sale, exchange, conveyance, or transfer.
The Stockholder may elect to participate in such sale by giving notice to
the Parent at least ten (10) days prior to the date of the proposed sale. Such
notice from the Stockholder shall specify the number of shares of common stock
which it proposes to sell. If the Stockholder elects to participate in such
sale, and gives timely notice of such election, then the Parent shall not effect
such sale unless either (i) the proposed purchaser of such shares offers to
purchase from the Stockholder, at the same time and on the same terms (including
price) as shares of common stock that are being purchased from the Parent, that
number of shares of common stock owned by the Stockholder which bears the same
proportion to the total number of shares of Stock which he beneficially owns, as
the number of shares of Stock being sold by the Parent bears to the total number
of shares of Stock owned by the Parent, or (ii) to the extent the proposed
purchaser is unwilling to purchase shares of the Stockholders' common stock as
calculated above, then the number of shares of the Stockholders' common stock as
so calculated, and the number of shares of Stock of the Parent as otherwise to
be sold, shall each be reduced proportionately to equal the total number of
shares to be purchased by the proposed purchaser, who will thereupon offer to
purchase the number of shares of the Stockholders' common stock as so calculated
at the same time and on the same terms (including price) as the number of shares
of common stock to be sold by the Parent, as recalculated pursuant to this
paragraph.
The tag along provisions do not apply to (i) any pledge of common stock by
the Parent made pursuant to a bona fide loan transaction or (ii) any sale of the
shares of common stock to the public pursuant to a registration statement filed
under the Act.
Market Stand-Off Agreement. Each of the Stockholders agreed that he will
not, to the extent reasonably requested by the Surviving Corporation and an
underwriter of common stock (or other securities) of the Surviving Corporation,
sell or otherwise transfer or dispose (other than to donees who agree to be
similarly bound) of any Stock during the one hundred eighty (180)-day period
following the effective date of a registration statement of the Surviving
Corporation filed under the Act provided, however, that such agreement shall be
applicable only to the first such registration statement of the Surviving
Corporation which covers shares (or securities) to be sold on its behalf to the
public in an underwritten public offering. Such agreement shall be in writing in
a form satisfactory to the Surviving Corporation and such underwriter. In order
to enforce the foregoing covenant, the Purchaser may impose stop-transfer
instructions with respect to the Stock of the Surviving Corporation (and the
shares or securities of every other person subject to the foregoing restriction)
until the end of such one hundred eighty (180)-day period.
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12. PURPOSE OF THE OFFER; PLANS FOR THE COMPANY; THE MERGER.
Purpose. The purpose of the Offer and the Merger is to acquire the entire
equity interest in, and control of, the Company. The Offer is being made
pursuant to the Merger Agreement. As soon as practicable following consummation
of the Offer and after satisfaction or waiver of all conditions to the Merger
set forth in the Merger Agreement, Parent intends to acquire the remaining
equity interest in the Company not acquired in the Offer by consummating the
Merger.
Plans for the Company. Parent will continue to evaluate and review the
Company and its business, assets, corporate structure, capitalization,
operations, properties, policies, management and personnel with a view towards
determining how optimally to realize potential benefits arising from the
combination of the operations of the Company with those of Parent. Such
evaluation and review is ongoing and is not expected to be completed until after
the consummation of the Offer and the Merger. If, as and to the extent that
Purchaser acquires control of the Company, Parent and Purchaser will complete
such evaluation and review of the Company and will determine what, if any,
changes would be desirable in light of the circumstances which then exist. Such
changes could include, among other things, changes in the Company's business,
corporate structure, certificate of incorporation, bylaws, capitalization or
management or involve consolidating and streamlining certain operations,
reorganizing other businesses and operations and entering into new lines of
business.
Except as described in this Offer to Purchase, neither Parent nor Purchaser
has any present plans or proposals that would relate to or result in an
extraordinary corporate transaction such as a merger, reorganization or
liquidation involving the Company or any of its subsidiaries or a sale or other
transfer of a material amount of assets of the Company or any of its
subsidiaries, any material change in the capitalization or dividend policy of
the Company or any other material change in the Company's corporate structure or
business or the composition of the Company Board or management.
Vote Required to Approve the Merger. The Company Board has approved the
Merger Agreement in accordance with the DGCL. If required for approval of the
Merger, the Company has agreed, subject to the satisfaction of the conditions to
the Merger set forth in the Merger Agreement, in accordance with and subject to
the DGCL, duly to convene the Company Stockholders Meeting as promptly as
practicable following the purchase of Shares pursuant to the Offer for the
purpose of voting on the adoption of the Merger Agreement. If stockholder
approval is required, the Merger Agreement must generally be approved by the
vote of the holders of a majority of the outstanding Shares. As a result, if the
Minimum Condition is satisfied, Purchaser will have the power to approve the
Merger Agreement without the affirmative vote of any other stockholder. The
Offer is conditioned upon the Minimum Condition being satisfied.
The Merger Agreement provides that, notwithstanding the foregoing, in the
event Purchaser acquires at least 90% of the Shares outstanding (determined on a
fully diluted basis) in the Offer, Parent, Purchaser and the Company agree to
take all necessary and appropriate action to effect a "short-form" merger and
cause the Merger to become effective as soon as practicable after such
acquisition, without a meeting of stockholders of the Company, in accordance
with Section 253 of the DGCL.
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This Offer to Purchase does not constitute a solicitation of a proxy,
consent or authorization for or with respect to the annual meeting or any
special meeting of the Company's stockholders or any action in lieu thereof. Any
such solicitation which Purchaser may make will be made only by means of proxy
materials in compliance with the requirements of Section 14(a) of the Exchange
Act.
Appraisal Rights. Stockholders do not have appraisal rights as a result of
the Offer. However, if the Merger is consummated, stockholders of the Company at
the time of the Merger who do not vote in favor of, or consent to the Merger and
who comply with all statutory requirements will have the right under the DGCL to
demand appraisal of, and receive payment in cash of the fair value of, their
Shares outstanding immediately prior to the Effective Time in accordance with
Section 262 of the DGCL.
Under the DGCL, stockholders who properly demand appraisal and otherwise
comply with the applicable statutory procedures will be entitled to a judicial
determination of the fair value of their Shares (exclusive of any element of
value arising from the accomplishment or expectation of the Merger) and to
receive payment of such fair value in cash. Any such judicial determination of
the fair value of such Shares could be based upon considerations other than or
in addition to the price paid in the Offer and the Merger and the market value
of the Shares. In Weinberger v. UOP, Inc., the Delaware Supreme Court stated,
among other things, that "proof of value by any techniques or methods which are
generally considered acceptable in the financial community and otherwise
admissible in court" should be considered in an appraisal proceeding. However,
in Cede & Co. v. Technicolor, Inc., the Delaware Supreme Court stated that, in
the context of a two-step cash merger, "to the extent that value has been added
following a change in majority control before cash-out, it is still value
attributable to the going concern," to be considered in the appraisal process.
As a consequence, stockholders should recognize that the fair value so
determined in any appraisal proceeding could be equal to, higher or lower than
the price per Share paid pursuant to the Offer or the consideration per Share to
be paid in the Merger.
THE FOREGOING SUMMARY OF THE RIGHTS OF STOCKHOLDERS DOES NOT PURPORT TO BE
A COMPLETE STATEMENT OF THE PROCEDURES TO BE FOLLOWED BY STOCKHOLDERS DESIRING
TO EXERCISE ANY AVAILABLE APPRAISAL RIGHTS. THE PRESERVATION AND EXERCISE OF
APPRAISAL RIGHTS REQUIRE STRICT ADHERENCE TO THE APPLICABLE PROVISIONS OF
DELAWARE LAW.
THE FOREGOING DESCRIPTION OF CERTAIN PROVISIONS OF THE DGCL IS NOT
NECESSARILY COMPLETE AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE DGCL.
Rule 13e-3. The Commission has adopted Rule 13e-3 under the Exchange Act
which is applicable to certain "going private" transactions and which may under
certain circumstances be applicable to the Merger following the purchase of
Shares pursuant to the Offer in which Purchaser seeks to acquire any remaining
Shares. Rule 13e-3 should not be applicable to the Merger if the Merger is
consummated within one (1) year after the expiration or termination of the Offer
and the price paid in the Merger is not less than the per Share price paid
pursuant to the Offer. However, in the event that Purchaser is deemed to have
acquired control of the Company pursuant to the Offer and the Merger is
consummated more than one (1) year after completion of the Offer or an
alternative acquisition transaction is effected pursuant to which stockholders
of the Company receive consideration less than or in a different form from that
paid pursuant to the Offer, in either case at a time when the Shares are still
registered under the Exchange Act, Purchaser may be required to comply with Rule
13e-3. If applicable, Rule 13e-3 would require, among other things, that certain
financial information concerning the Company and certain information relating to
the fairness of the Merger or such alternative transaction and the consideration
offered to minority stockholders in the Merger or such alternative transaction,
be filed with the Commission and disclosed to stockholders prior to consummation
of the Merger or such alternative transaction. The purchase of a substantial
number of Shares pursuant to the Offer may result in the Company being able to
terminate its Exchange Act registration. See Section 14. If such registration
were terminated, Rule 13e-3 would be inapplicable to any such future Merger or
such alternative transaction.
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13. DIVIDENDS AND DISTRIBUTIONS.
If the Company should, on or after the date of the Merger Agreement, split,
combine or otherwise change the Shares or its capitalization, or disclose that
it has taken any such action, then without prejudice to Purchaser's rights as
described in Section 15, Purchaser may make such adjustments to the purchase
price and other terms of the Offer as it deems appropriate to reflect such
split, combination or other change.
If, on or after the date of the Merger Agreement (except as contemplated
thereby), the Company should declare or pay any cash or stock dividend or other
distribution on, or issue any right with respect to, the Shares that is payable
or distributable to stockholders of record on a date prior to the transfer to
the name of Purchaser or the nominee or transferee of Purchaser on the Company's
stock transfer records of such Shares that are purchased pursuant to the Offer
then, without prejudice to Purchaser's rights as described in Section 15, (i)
the purchase price payable per Share by Purchaser pursuant to the Offer will be
reduced to the extent any such dividend or distribution is payable in cash and
is not paid to, or at the direction of, Purchaser, and (ii) any non-cash
dividend, distribution (including additional Shares) or right received and held
by a tendering stockholder will be required to be promptly remitted and
transferred by the tendering stockholder to the Depositary for the account of
Purchaser, accompanied by appropriate documentation of transfer. Pending such
remittance or appropriate assurance thereof, Purchaser will, subject to
applicable law, be entitled to all rights and privileges as owner of any such
non-cash dividend, distribution or right and may withhold the entire purchase
price or deduct from the purchase price the amount or value thereof, as
determined by Purchaser in its sole discretion.
14. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK EXCHANGE LISTING
AND EXCHANGE ACT REGISTRATION.
Nasdaq Quotation. The purchase of Shares pursuant to the Offer will reduce
the number of Shares that might otherwise trade publicly and will reduce the
number of holders of Shares. This could adversely affect the liquidity and
market value of the remaining Shares held by the public. Depending upon the
number of Shares purchased pursuant to the Offer, the Shares may no longer meet
the requirements of the Nasdaq National Market for continued listing. If the
Shares no longer meet the requirements of the Nasdaq National Market for
continued listing and the listing of the Shares is discontinued, the market for
the Shares would be adversely affected.
If the Nasdaq National Market were to delist the Shares, it is possible
that the Shares would continue to trade in the over-the-counter market and that
price or other quotations would be reported by other sources. The extent of the
public market therefor and the availability of such quotations would depend,
however, upon such factors as the number of stockholders and/or the aggregate
market value of the Shares remaining at such time, the interest in maintaining a
market in the Shares on the part of securities firms, the possible termination
of registration under the Exchange Act as described below and other factors.
Purchaser cannot predict whether the reduction in the number of Shares that
might otherwise trade publicly would have an adverse or beneficial effect on the
market price for or marketability of the Shares or whether it would cause future
market prices to be higher or lower than the Merger Consideration to be paid in
the Offer.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. The purchase of Shares pursuant to the Offer may result in the
Shares becoming eligible for deregistration under the Exchange Act. Registration
of the Shares may be terminated upon application of the Company to the
Commission if the Shares are not listed on a national securities exchange or
Nasdaq and there are fewer than 300 record holders. The termination of the
registration of the Shares under the Exchange Act would substantially reduce the
information required to be furnished by the Company to holders of the Shares.
Deregistration would also make certain provisions of the Exchange Act, such as
the short-swing profit recovery provisions of Section 16(b), the requirement of
furnishing a proxy statement in connection with Company stockholders meetings
and the requirements of Rule 13e-3 under the Exchange Act with respect to "going
private" transactions, no longer applicable. Furthermore, Affiliates of the
Company and persons holding "restricted securities" of the Company may be
deprived of the ability to dispose of the securities pursuant to Rule 144 under
the Securities Act.
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Margin Securities. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of such Shares. Depending upon
factors similar to those described above regarding listing and market
quotations, it is possible that, following the Offer, the Shares would no longer
constitute "margin securities" for the purposes of the margin regulations of the
Federal Reserve Board and therefore could no longer be used as collateral for
loans made by brokers. If registration of Shares under the Exchange Act were
terminated, the Shares would no longer be "margin securities."
15. CERTAIN CONDITIONS OF THE OFFER.
Notwithstanding any other provisions of the Offer, and in addition to the
conditions that at the expiration of the Offer (i) there shall have been validly
tendered and not withdrawn prior to the expiration of the Offer, that number of
Shares, which, together with any other Shares beneficially owned by Parent or
its wholly owned subsidiaries, constitute satisfaction of the Minimum Condition,
(ii) the HSR Approval condition shall have been satisfied, and (iii) any other
approvals or consents of third parties required to consummate the transactions
contemplated by the Merger Agreement (including the Offer and the Merger), shall
have been obtained and shall remain in full force and effect, Purchaser shall
not be required to accept for payment or, subject to applicable rules and
regulations of the Commission, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered Shares
promptly after termination or withdrawal of the Offer), purchase or pay for any
Shares tendered pursuant to the Offer, may postpone the acceptance for payment
of Shares tendered and subject to the terms and conditions of the Merger
Agreement may terminate the Offer if, at any time on or after the date of the
Merger Agreement and at or before the time of payment for any such Shares, any
of the following conditions shall have occurred and shall have not been cured:
(a) (x) the representations and warranties of Company set forth in the
Merger Agreement, shall not have been true and correct in all respects as
of the date of the Merger Agreement, or shall not be true and correct in
all respects as of the Expiration Date as though made at and as of the
Expiration Date (except to the extent that such representations and
warranties speak as of another date which shall be required to be true and
correct as of such date) except where the failure to be true and correct
would not, individually or in the aggregate, have a Company Material
Adverse Effect (as such term is defined in the Merger Agreement) (ignoring
for purposes of this section all materiality or Material Adverse Effect
qualifiers contained in such representations and warranties) or prevent the
consummation of the Offer, or (y) Company shall have breached in any
material respect any of its material covenants or obligations contained in
the Merger Agreement;
(b) there shall have been any action or proceeding taken or instituted
and pending, or any statute, rule, regulation, judgment, order, injunction
or decree promulgated, entered, enforced, enacted, issued or deemed
applicable to the Offer or the Merger, or any other action taken, proposed
or threatened, by any domestic or foreign federal or state governmental,
regulatory or administrative agency or authority or court or legislative
body or commission which has or would reasonably be expected to have the
effect of (i) making the purchase of, or payment for, some or all of the
Shares by Parent or Purchaser or their Affiliates pursuant to the Offer or
the Merger illegal, (ii) otherwise directly or indirectly preventing the
making or consummation of the Offer, or the consummation of the Merger,
(iii) prohibiting the ownership or operation by Parent or any of its
subsidiaries of all or any material portion of the business or assets of
Company and its subsidiaries, taken as a whole, or Parent and its
subsidiaries, taken as a whole, (iv) imposing material limitations on the
ability of Parent, Purchaser or any of Parent's Affiliates effectively to
acquire or hold or to exercise full rights of ownership of the Shares,
including, without limitation, the right to vote any such Shares acquired
or owned by Parent or Purchaser or any of their Affiliates on all matters
properly presented to the stockholders of Company, including, without
limitation, the adoption of the Merger Agreement or the right to vote any
shares of capital stock of any Company subsidiary, (v) requiring
divestiture by Parent or Purchaser or any of their Affiliates of any Shares
or
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(vi) materially adversely affecting the business, financial condition,
prospects or results of operations of the Company and its Subsidiaries
taken as a whole;
(c) there shall have occurred after the execution of the Merger
Agreement (i) any general suspension in, or limitation on, or material
adverse decline in prices for securities on the New York Stock Exchange or
Nasdaq, (ii) any material adverse change or any condition, event or
development involving a prospective material adverse change in United
States or German currency exchange rates or a suspension of, or limitation
on the markets therefor, resulting in an increase of 20% or more in the
cost to Parent of the Merger Consideration, (iii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iv) a commencement of a war or armed hostilities or other
national or international calamity directly or indirectly involving the
United States that would prevent (or delay) the consummation of the Offer,
or (v) in the case of any of the foregoing existing at the time of
commencement of the Offer, material acceleration or worsening thereof;
(d) there shall have occurred any change in the business, properties
assets, liabilities, capitalization, stockholders equity, financial
condition, operations, results of operations or prospects of Company or any
of its Subsidiaries, that (i) was not disclosed in the Company's disclosure
schedules delivered to Parent and Purchaser in connection with the Merger
or in the Management's Discussion and Analysis of Financial Condition and
Results of Operations, Company, Business or Financial Statements sections
of the Company Reports filed prior to the date of the Merger Agreement
(other than information contained under any "Risk Factor," "Cautionary
Statements" or "Factors Affecting Future Results" heading contained
therein) and (ii) that would reasonably be expected to have a Company
Material Adverse Effect or materially adversely affect (or delay) the
consummation of the Offer;
(e) (A) the Company Board or any committee thereof shall have
withdrawn or modified in a manner adverse to Parent or Purchaser the
Company Board Recommendation, or approved or recommended any Acquisition
Proposal or other acquisition of Common Stock other than the Offer and the
Merger, (B) any such corporation, partnership, other entity or person shall
have entered into a definitive agreement or any agreement in principle with
the Company with respect to a tender offer or exchange offer for any Common
Stock or a merger, consolidation or other business combination with or
involving the Company or any of its subsidiaries or (C) the Company Board
or any committee thereof shall have resolved to do any of the foregoing;
(f) the Company Board shall have failed to take all action necessary
to render the rights issued pursuant to the Rights Agreement inapplicable
to the Merger Agreement, the Offer, the Merger and the transactions
contemplated thereby; or
(g) the Merger Agreement shall have been terminated by Company, Parent
or Purchaser in accordance with its terms.
The foregoing conditions (other than the Minimum Condition) are for the
sole benefit of Parent and its Affiliates and may be asserted by Parent or its
Affiliates regardless of the circumstances giving rise to such condition. The
foregoing conditions (other than the Minimum Condition) may be waived by Parent
or Purchaser in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
their rights in connection with the foregoing conditions shall not be deemed a
waiver of any such right, the waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances, and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
16. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS.
General. Except as set forth below, neither Purchaser nor Parent is aware
of any licenses or other regulatory permits that appear to be material to the
business of the Company and its subsidiaries, taken as a whole, that might be
adversely affected by Purchaser's acquisition of Shares (and the indirect
acquisition of the stock of the Company's subsidiaries) as contemplated herein
and by the Merger Agreement, or of any filings, approvals or other actions by or
with any domestic (federal or state), foreign governmental authority or
41
<PAGE> 44
administrative or regulatory agency that would be required prior to the
acquisition of Shares by Purchaser pursuant to the Offer as contemplated herein.
Should any such approval or other action be required, it is Parent's present
intention to seek such approval or action. There can be no assurance that any
such approval or other action, if needed, would be obtained.
Antitrust. Under the provisions of the HSR Act applicable to the Offer,
the acquisition of Shares under the Offer may be consummated following the
expiration of a fifteen (15) calendar day waiting period following the filing by
Parent of a Premerger Notification and Report Form with respect to the Offer,
unless Parent or the Company receives a request for additional information or
documentary material from the Antitrust Division of the Department of Justice
(the "Antitrust Division") or the Federal Trade Commission (the "FTC") or unless
early termination of the waiting period is granted. Parent and the Company
expect to file Notification and Report Forms promptly with respect to the Offer.
If, within the initial 15-day waiting period, either the Antitrust Division or
the FTC requests additional information or material from Parent or the Company
concerning the Offer, the waiting period will be extended and would expire at
11:59 p.m., New York City time, on the tenth calendar day after the date of
substantial compliance by Parent or the Company with such request. Only one
extension of the waiting period pursuant to a request for additional information
is authorized by the HSR Act. Thereafter, such waiting period may be extended
only by court order or with the consent of Parent and the Company. In practice,
complying with a request for additional information or material can take a
significant amount of time. In addition, if the Antitrust Division or the FTC
raises substantive issues in connection with a proposed transaction, the parties
frequently engage in negotiations with the relevant government agency concerning
possible means of addressing those issues and may agree to delay consummation of
the transaction while such negotiations continue. Expiration or termination of
the applicable waiting period under the HSR Act is a condition to the
Purchaser's obligation to accept for payment and pay for Shares tendered
pursuant to the Offer.
The Merger would not require an additional filing under the HSR Act if the
Purchaser owns 50% or more of the outstanding Shares at the time of the Merger
or if the Merger occurs within one year after the HSR Act waiting period
applicable to the Offer expires or is terminated.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's acquisition of
Shares pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the Antitrust Laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of the
Company or its subsidiaries or Parent or its subsidiaries. Private parties may
also bring legal action under the antitrust laws under certain circumstances.
There can be no assurance that a challenge to the Offer on antitrust grounds
will not be made or, if such a challenge is made, of the result thereof.
State Takeover Laws. A number of states have adopted takeover laws and
regulations which purport to varying degrees to be applicable to attempts to
acquire securities of corporations which are incorporated in such states or
which have or whose business operations have substantial economic effects in
such states, or which have substantial assets, security holders, principal
executive offices or principal places of business therein. In 1982, the Supreme
Court of the United States, in Edgar v. Mite Corp., invalidated on
constitutional grounds the Illinois Business Takeovers Act, which as a matter of
state securities law made takeovers of corporations meeting certain requirements
more difficult, and the reasoning in such decision is likely to apply to certain
other state takeover statutes. However, in 1987, in CTS Corp. v. Dynamics Corp.
of America, the Supreme Court of the United States held that, as a matter of
corporate law, and in particular, those laws concerning corporate governance, a
state may constitutionally disqualify an acquiror of "Control Shares" (ones
representing ownership in excess of certain voting power thresholds: e.g., 20%,
33% or 50%) of a corporation incorporated in its state and meeting certain other
jurisdictional requirements from exercising voting power with respect to those
shares without the approval of a majority of the disinterested stockholders. In
BNS Inc. v. Koppers Co., the United States District Court for the District of
Delaware upheld the constitutionality of Section 203 of the DGCL, finding that
it did not impermissibly impede interstate commerce in violation of the commerce
clause of the United States Constitution.
42
<PAGE> 45
In the Merger Agreement, the Company represents that the Company Board has
taken all actions necessary to render the provisions of Section 203 of the DGCL
inapplicable to the Merger Agreement, the Offer, the Merger, and the Tender
Agreement. Except as described herein, Purchaser has not attempted to comply
with any state takeover statutes in connection with the Offer. Purchaser
reserves the right to challenge the validity or applicability of any state law
allegedly applicable to the Offer and nothing in this Offer to Purchase nor any
action taken in connection herewith is intended as a waiver of that right. In
the event that any state takeover statute is found applicable to the Offer,
Purchaser might be unable to accept for payment or purchase Shares tendered
pursuant to the Offer or be delayed in continuing or consummating the Offer. In
such case, Purchaser may not be obligated to accept for purchase or pay for, any
Shares tendered. See Section 15.
17. FEES AND EXPENSES.
Purchaser has retained D. F. King & Co., Inc. to act as the Information
Agent and American Stock Transfer & Trust Company to act as the Depositary in
connection with the Offer. The Information Agent may contact holders of Shares
by mail, telephone, electronic mail, telecopy, telex, telegraph and personal
interview and may request brokers, dealers and other nominee stockholders to
forward the Offer materials to beneficial owners. The Information Agent and the
Depositary will receive reasonable and customary compensation for services
relating to the Offer and will be reimbursed for certain out-of-pocket expenses.
Purchaser and Parent have also agreed to indemnify the Information Agent and the
Depositary against certain liabilities and expenses in connection with the
Offer, including certain liabilities under the federal securities laws.
Purchaser will not pay any fees or commissions to any broker or dealer or
any other person for soliciting tenders of Shares pursuant to the Offer (other
than to the Information Agent and the Depositary). Brokers, dealers, commercial
banks and trust companies will, upon request, be reimbursed by Purchaser for
customary mailing and handling expenses incurred by them in forwarding offering
materials to their customers.
18. MISCELLANEOUS.
The Offer is being made solely by this Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. Purchaser is
not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good
faith effort to comply with any such state statute. If after such good faith
effort, Purchaser cannot comply with such state statute, the Offer will not be
made to and tenders will not be accepted from or on behalf of the holders of
Shares in such state.
Purchaser and Parent have filed with the Commission a Schedule 14D-1
(including exhibits) pursuant to Rule 14d-3 under the Exchange Act, furnishing
certain additional information with respect to the Offer. In addition, the
Company has filed a Schedule 14D-9 with the Commission pursuant to Rule 14d-9
under the Exchange Act, setting forth its Company Board Recommendation with
respect to the Offer and the Merger and the reasons for such recommendation and
furnishing certain additional related information. Such Schedules and any
amendments thereto, including exhibits, may be inspected and copies may be
obtained from the offices of the Commission (except that they will not be
available at the regional offices of the Commission) in the manner set forth in
Section 8 of this Offer to Purchase.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION ON BEHALF OF PURCHASER OR PARENT NOT CONTAINED HEREIN OR IN THE
LETTER OF TRANSMITTAL AND IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION
MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
SERSYS ACQUISITION CORPORATION
December 23, 1999
43
<PAGE> 46
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF
PARENT AND PURCHASER
1. DIRECTORS AND EXECUTIVE OFFICERS OF PARENT. The following table sets
forth the name and current principal occupation or employment of each member of
the Supervisory Board and the Board of Managing Directors and of each executive
officer of Parent. Unless otherwise indicated, all occupations, offices or
positions of employment listed opposite an individual's name were held by such
individual during the last five (5) years. Unless otherwise indicated, the
business address of each such director and executive officer is
c/o SER (USA), Inc., 7200 Wisconsin Avenue, Suite 1001, Bethesda, MD 20814.
Unless otherwise indicated, all such directors listed below are citizens of
Germany.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME ADDRESS EMPLOYMENT HELD DURING THE LAST FIVE YEARS
---- --------------------------------------------------
<S> <C>
SUPERVISORY BOARD
Roland H. Paule, Chairman Managing Partner of Paule & Partner GbR since April 1996.
Hans-Jurgen Heiser Managing Director of Salomon Brothers
Kapitalanlagegesellschaft mbH since January 1990.
Irmgard Penning Executive Vice President of SER Systeme AG since April
1998; Finance Manager of SER Systeme AG from June 1997 to
March 1998; Finance Manager of Reinhardt GmbH from May
1997 to October 1998.
Helmut Kroll System Support for SER Systeme AG since January 1995;
Network Administrator of Nissan Bank GmbH from January
1995 to November 1995.
BOARD OF MANAGING DIRECTORS
Gert J. Reinhardt Chief Executive Officer of SER Systeme AG since October
1984.
Dr. Philip A. Storey* Executive Vice President of SER Systeme AG since December
1997; Vice President of SER Systeme AG June 1997 to
December 1997; President of Plasmon Data Systems, Inc.
December 1994 to June 1997.
Irmgard Penning Executive Vice President of SER Systeme AG since April
1998; Finance Manager of SER Systeme AG from June 1997 to
March 1998; Finance Manager of Reinhardt GmbH from May
1997 to October 1998.
</TABLE>
- ---------------
* Dr. Storey is a citizen of the United Kingdom.
2. DIRECTORS AND EXECUTIVE OFFICERS OF PURCHASER. The following table
sets forth the name and current principal occupation or employment of the sole
director and executive officer of Purchaser. Unless otherwise indicated, all
occupations, offices or positions of employment listed opposite an individual's
name were held by such individual during the last five (5) years. Unless
otherwise indicated, the business address of such director and executive officer
is SERSys Acquisition Corporation, 7200 Wisconsin Avenue, Suite 1001, Bethesda,
MD 20814. The director listed below is a citizen of the United Kingdom.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT AND
NAME ADDRESS EMPLOYMENT HELD DURING THE LAST FIVE YEARS
---- --------------------------------------------------
<S> <C>
Dr. Philip A. Storey Executive Vice President of SER Systeme AG since December
1997; Vice President of SER Systeme AG June 1997 to
December 1997; President of Plasmon Data Systems, Inc.
December 1994 to June 1997.
</TABLE>
S-1
<PAGE> 47
Facsimiles of the Letter of Transmittal, properly completed and duly
executed, will be accepted. The Letter of Transmittal, Shares Certificates and
any other required documents should be sent or delivered by each stockholder of
the Company or his broker, dealer, commercial bank, trust company or other
nominee to the Depositary as follows:
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C>
By Mail: By Hand or Overnight Delivery:
40 Wall Street, 46th Floor 40 Wall Street, 46th Floor
New York, NY 10005 New York, NY 10005
Attn: Reorganization Department Attn: Reorganization Department
</TABLE>
By Facsimile Transmission (for Eligible Institutions Only):
(718) 234-5001
Confirm Receipt of Facsimile by Telephone Only:
(718) 921-8200
For Information Call:
(718) 921-8200
Any questions and requests for assistance may be directed to the
Information Agent at its telephone number and address. Additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may also be obtained from the Information Agent. You may also contact
your broker, dealer, commercial bank or trust company for assistance concerning
the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL FREE: (800) 994-3227
<PAGE> 1
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
EIS INTERNATIONAL, INC.
PURSUANT TO THE OFFER TO PURCHASE, DATED DECEMBER 23, 1999,
BY
SERSYS ACQUISITION CORPORATION,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SER SYSTEME AG
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JANUARY 24, 2000, UNLESS THE OFFER IS EXTENDED.
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C>
By Mail: By Hand or Overnight Delivery:
40 Wall Street, 46th Floor 40 Wall Street, 46th Floor
New York, NY 10005 New York, NY 10005
Attn: Reorganization Department Attn: Reorganization Department
</TABLE>
<TABLE>
<S> <C> <C>
By Facsimile Transmission Confirm Receipt of Facsimile For Information Call:
(for Eligible Institutions by Telephone Only: (718) 921-8200
Only): (718) 921-8200
(718) 234-5001
</TABLE>
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN
AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL IN THE APPROPRIATE SPACE PROVIDED THEREFOR, WITH SIGNATURE
GUARANTEE IF REQUIRED, AND COMPLETE THE SUBSTITUTE FORM W-9 SET FORTH BELOW. SEE
INSTRUCTION 1.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used, either if certificates for Shares
(as defined below) ("Share Certificates") are to be forwarded herewith or,
unless an Agent's Message (as defined in the Offer to Purchase, as referred to
below) is utilized, if tenders of Shares are to be made by book-entry transfer
into the account of American Stock Transfer & Trust Company, as Depositary (the
"Depositary"), at The Depository Trust Company (the "Book-Entry Transfer
Facility" or "DTC") pursuant to the procedures set forth in Section 3 of the
Offer to Purchase. Stockholders who tender Shares by book-entry transfer are
referred to herein as "Book-Entry Stockholders."
Holders of Shares whose Share Certificates are not immediately available or
who cannot deliver their Share Certificates and all other required documents to
the Depositary on or prior to the Expiration Date (as defined in Section 1 of
the Offer to Purchase), or who cannot complete the procedure for book-entry
transfer on a timely basis, must tender their Shares according to the guaranteed
delivery procedure set forth in Section 3 of the Offer to Purchase. See
Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
<PAGE> 2
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C> <C>
DESCRIPTION OF SHARES TENDERED
- ----------------------------------------------------------------------------------------------------------------
NAME(S) & ADDRESS(ES) OF REGISTERED HOLDERS(S) SHARE CERTIFICATE(S) AND SHARE(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS TENDERED (ATTACH ADDITIONAL
NAME(S) APPEAR(S) ON SHARE CERTIFICATE(S)) SIGNED LIST IF NECESSARY)
- ----------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
SHARE OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
---------------------------------------------
Total Shares
- ----------------------------------------------------------------------------------------------------------------
* Need not be completed by Book-Entry Stockholders.
** Unless otherwise indicated, all Shares represented by Share Certificates delivered to the Depositary will be
deemed to have been tendered. See Instruction 4.
- ------------------------------------------------------------
</TABLE>
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER MADE TO AN
ACCOUNT MAINTAINED BY THE DEPOSITARY WITH THE BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN THE BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER.):
Name of Tendering Institution:
DTC Account Number:
Transaction Code Number:
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s):
Window Ticket Number (if any):
Date of Execution of Notice of Guaranteed Delivery:
Name of Institution that Guaranteed Delivery:
DTC Account Number:
Transaction Code Number:
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to SERSys Acquisition Corporation, a
Delaware corporation ("Purchaser") that is an indirect (through SER (USA), Inc.
("SER USA")) wholly owned subsidiary of SER Systeme AG, a German corporation
("Parent "), the above-described shares of Common Stock, par value $0.01 per
share, and their associated rights (the "Rights") to purchase Series A Preferred
Stock, par value $0.01 per share, pursuant to that certain Rights Agreement,
dated as of May 16, 1997, between EIS International, Inc., a Delaware
corporation (the "Company") and BankBoston N.A., as amended (the "Rights
Agreement") (such Rights, together with the Common Stock, are collectively
referred to herein as the "Shares"), of the Company, at a purchase price of
$6.25 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in the Offer to Purchase dated December 23, 1999 (the
"Offer to Purchase") and in this Letter of Transmittal (which, as amended from
time to time, together constitute the "Offer"), receipt of which is hereby
acknowledged. The undersigned understands that Purchaser reserves the right to
transfer or assign, in whole or from time to time in part, to one or more of its
affiliates the right to purchase all or any portion of the Shares tendered
pursuant to the Offer.
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith in accordance with the terms of the Offer, the undersigned
hereby sells, assigns and transfers to, or upon the order of, Purchaser all
right, title and interest in and to all of the Shares that are being tendered
hereby and any and all dividends, distributions, rights, other Shares or other
securities issued, paid or distributed or issuable, payable or distributable in
respect of such Shares on or after December 17, 1999 and prior to the transfer
to the name of Purchaser (or a nominee or transferee of Purchaser) on the
Company's stock transfer records of the Shares tendered herewith (collectively,
"Distributions"), and irrevocably appoints the Depositary the true and lawful
agent, attorney-in-fact and proxy of the undersigned with respect to such Shares
(and any Distributions) with full power of substitution (such power of attorney
being deemed to be an irrevocable power coupled with an interest) to (a) deliver
the Share Certificates representing such Shares (and any Distributions) or
transfer ownership of such Shares (and any Distributions) on the account books
maintained by the Book-Entry Transfer Facility, together in either case with
appropriate evidences of transfer and authenticity, to the Depositary for the
account of or to the order of Purchaser, (b) present such Shares (and any
Distributions) for transfer on the books of the Company and (c) receive all
benefits and otherwise exercise all rights of beneficial ownership of such
Shares (and any Distributions), all in accordance with the terms and subject to
the conditions of the Offer.
The undersigned stockholder irrevocably appoints designees of Purchaser as
such undersigned's agents, attorneys-in-fact and proxies, with full power of
substitution, to the full extent of such stockholder's rights with respect to
the Shares tendered by such stockholder and accepted for payment by Purchaser
(and any Distributions). All such powers of attorney and proxies shall be
considered irrevocable and coupled with an interest. Such appointment will be
effective when, and only to the extent that, Purchaser accepts such Shares for
payment. Upon such acceptance for payment, all prior attorneys, proxies and
consents given by such stockholder with respect to such Shares (and any
Distribution) will be revoked without further action, and no subsequent powers
of attorney and proxies may be given or any subsequent written consents executed
(and, if given or executed, will not be deemed effective). The designees of
Purchaser will, with respect to the Shares (and Distributions) for which such
appointment is effective, be empowered to exercise all voting and other rights
of such stockholder as they in their sole discretion may deem proper at any
annual or special meeting of the Company's stockholders or any adjournment or
postponement thereof, by written consent in lieu of any such meeting, or
otherwise. Purchaser reserves the right to require that, in order for Shares to
be deemed validly tendered, immediately upon Purchaser's payment for such
Shares, Purchaser must be able to exercise full voting rights with respect to
such Shares and all Distributions including voting at any meeting of
stockholders or by written consent in lieu of any such meeting.
The undersigned hereby represents and warrants that (a) the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby (and any Distributions), and (b) when the Shares
<PAGE> 4
are accepted for payment by Purchaser, Purchaser will acquire good, marketable
and unencumbered title to the Shares (and any Distributions), free and clear of
all liens, restrictions, charges and encumbrances, and the same will not be
subject to any adverse claim and will not have been transferred to Purchaser in
violation of any contractual or other restriction on the transfer thereof. The
undersigned, upon request, will execute and deliver any additional documents
deemed by the Depositary or Purchaser to be necessary or desirable to complete
the sale, assignment and transfer of the Shares tendered hereby (and any
Distributions). In addition, the undersigned shall promptly remit and transfer
to the Depositary for the account of Purchaser any and all Distributions in
respect of the Shares tendered hereby, accompanied by appropriate documentation
of transfer and, pending such remittance or appropriate assurance thereof,
Purchaser will, subject to applicable law, be entitled to all rights and
privileges as owner of any such Distribution and may withhold the entire
purchase price or deduct from the purchase price the amount or value thereof, as
determined by Purchaser in its sole discretion.
All authority herein conferred or agreed to be conferred shall not be
affected by and shall survive the death or incapacity of the undersigned and any
obligation of the undersigned hereunder shall be binding upon the heirs,
personal representatives, successors and assigns of the undersigned.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time after February 20,
2000. See Section 4 of the Offer to Purchase.
The undersigned understands that tenders of Shares pursuant to any of the
procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute a binding agreement between the undersigned
and Purchaser upon the terms and subject to the conditions set forth in the
Offer, including the undersigned's representation that the undersigned owns the
Shares being tendered.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or issue or return any Share
Certificate(s) for Shares not tendered or not accepted for payment in the
name(s) of the registered holder(s) appearing under "Description of Shares
Tendered." Similarly, unless otherwise indicated herein under "Special Delivery
Instructions," please mail the check for the purchase price and/or any Share
Certificate(s) for Shares not tendered or not accepted for payment (and
accompanying documents, as appropriate) to the address(es) of the registered
holder(s) appearing under "Description of Shares Tendered." In the event that
both the Special Delivery Instructions and the Special Payment Instructions are
completed, please issue the check for the purchase price and/or any Share
Certificate(s) for Shares not tendered or accepted for payment in the name of,
and deliver such check and/or such Share Certificates to, the person or persons
so indicated. Unless otherwise indicated herein under "Special Payment
Instructions," please credit any Shares tendered herewith by book-entry transfer
that are not accepted for payment by crediting the account at the Book-Entry
Transfer Facility designated above. The undersigned recognizes that Purchaser
has no obligation, pursuant to the Special Payment Instructions, to transfer any
Shares from the name(s) of the registered holder(s) thereof if Purchaser does
not accept for payment any of the Shares so tendered.
[ ] CHECK HERE IF ANY SHARE CERTIFICATES REPRESENTING SHARES THAT YOU OWN HAVE
BEEN LOST, STOLEN OR DESTROYED AND SEE INSTRUCTION 11.
Number of Shares represented by lost, stolen or destroyed Share Certificates:
<PAGE> 5
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if Share Certificate(s) for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares accepted
for payment are to be issued in the name of someone other than the undersigned
or if Shares tendered by book-entry transfer which are not accepted for payment
are to be returned by credit to an account maintained at the Book-Entry Transfer
Facility other than that designated above.
Issue [ ] Check [ ] Certificate(s) to:
Name:
----------------------------------------------------------
(PLEASE PRINT)
Address: -----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
(INCLUDE ZIP CODE)
- ---------------------------------------------------------------
(TAX ID OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
[ ] Credit Shares tendered by book-entry transfer that are not accepted for
payment to DTC to the account set forth below:
- ------------------------------------------------------
(DTC ACCOUNT NO.)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificate(s) for Shares not tendered or not accepted
for payment and/or the check for the purchase price of Shares accepted for
payment are to be sent to someone other than the undersigned or to the
undersigned at an address other than that shown above.
Mail [ ] Check [ ] Certificate(s) to:
Name:
----------------------------------------------------------
(PLEASE PRINT)
Address: -----------------------------------------------------
-----------------------------------------------------
-----------------------------------------------------
(INCLUDE ZIP CODE)
- ---------------------------------------------------------------
(TAX ID OR SOCIAL SECURITY NO.)
(SEE SUBSTITUTE FORM W-9)
<PAGE> 6
SIGN HERE
AND COMPLETE SUBSTITUTE FORM W-9
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SIGNATURE(S) OF HOLDER(S)
Dated:
------------------------------------------------
(Must be signed by the registered holder(s) exactly as name(s) appear(s) on
Share Certificate(s) or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s):
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title):
-----------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Telephone Number (including Area Code):
Tax Identification or Social Security No.:
GUARANTEE OF SIGNATURE(S)
(SEE INSTRUCTIONS 1 AND 5)
Authorized Signature:
-----------------------------------------------------------
Name:
---------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Name of Firm:
-------------------------------------------------------------------
Address:
------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Telephone Number (including Area Code):
-----------------------------------------
Dated:
------------------------------------------------------------------
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Guarantee of Signatures. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) of Shares (which term, for purposes of this document, shall
include any participant in the Book-Entry Transfer Facility whose name appears
on a security position listing as the owner of Shares) tendered herewith, unless
such holder(s) has/have completed either the box entitled "Special Payment
Instructions" or the box entitled "Special Delivery Instructions," or (b) if
such Shares are tendered for the account of a firm which is a bank, broker,
dealer, credit union, savings association or other entity which is a member in
good standing of a recognized Medallion Program approved by the Securities
Transfer Association Inc., including the Securities Transfer Agents Medallion
Program (STAMP), the Stock Exchange Medallion Program (SEMP) and the New York
Stock Exchange Medallion Signature Program (MSP) or any other "eligible
guarantor institution" (as such term is defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended) (each of the foregoing being
referred to as an "Eligible Institution"). In all other cases, all signatures on
this Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 5.
2. Requirements of Tender. This Letter of Transmittal is to be completed
by stockholders either if Share Certificates are to be forwarded herewith or,
unless an Agent's Message is utilized, if tenders are to be made pursuant to the
procedure for tender by book-entry transfer set forth in Section 3 of the Offer
to Purchase. Share Certificates evidencing tendered Shares, or timely
confirmation (a "Book-Entry Confirmation") of a book-entry transfer of Shares
into the Depositary's account at the Book-Entry Transfer Facility, as well as
this Letter of Transmittal (or a facsimile hereof), properly completed and duly
executed, with any required signature guarantees, or an Agent's Message in
connection with a book-entry transfer, and any other documents required by this
Letter of Transmittal, must be received by the Depositary at one of its
addresses set forth herein on or prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase). Stockholders whose Share Certificates are
not immediately available or who cannot deliver their Share Certificates and all
other required documents to the Depositary on or prior to the Expiration Date or
who cannot complete the procedure for delivery by book-entry transfer on a
timely basis may tender their Shares by properly completing and duly executing a
Notice of Guaranteed Delivery pursuant to the guaranteed delivery procedure set
forth in Section 3 of the Offer to Purchase. Pursuant to such procedure: (i)
such tender must be made by or through an Eligible Institution; (ii) a properly
completed and duly executed Notice of Guaranteed Delivery, substantially in the
form made available by Purchaser, must be received by the Depositary on or prior
to the Expiration Date; and (iii) the Share Certificate(s) (or a Book-Entry
Confirmation) representing all tendered Shares in proper form for transfer, in
each case together with the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry delivery, an Agent's Message) and any other
documents required by this Letter of Transmittal, must be received by the
Depositary within three (3) Nasdaq Stock Market trading days after the date of
execution of such Notice of Guaranteed Delivery. If Share Certificates are
forwarded separately in multiple deliveries to the Depositary, a properly
completed and duly executed Letter of Transmittal (or a facsimile thereof) must
accompany each such delivery.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY
TRANSFER FACILITY, IS AT THE OPTION AND RISK OF THE TENDERING STOCKHOLDER AND
THE DELIVERY WILL BE DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION). IF
DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. All tendering stockholders, by execution of
this Letter of Transmittal (or a facsimile hereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
<PAGE> 8
3. Inadequate Space. If the space provided herein is inadequate, the Share
Certificate numbers and/or the number of Shares and any other required
information should be listed on a separate signed schedule attached hereto.
4. Partial Tenders. (Not Applicable to Book-Entry Stockholders.) If fewer
than all the Shares evidenced by any Share Certificate submitted are to be
tendered, fill in the number of Shares which are to be tendered in the box
entitled "Number of Shares Tendered." In such cases, new Share Certificates for
the Shares that were evidenced by your old Share Certificates, but were not
tendered by you, will be sent to you, unless otherwise provided in the
appropriate box on this Letter of Transmittal, as soon as practicable after the
Expiration Date. All Shares represented by Share Certificates delivered to the
Depositary will be deemed to have been tendered unless otherwise indicated.
5. Signatures On Letter of Transmittal, Stock Powers and Endorsements. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond exactly with the name(s) as
written on the face of the Share Certificate(s) without alteration, enlargement
or any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any of the tendered Shares are registered in different names on several
Share Certificates, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of Share
Certificates.
If this Letter of Transmittal or any Share Certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to Purchaser of their authority so to act must be submitted.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares listed and transmitted hereby, no endorsements of Share Certificates or
separate stock powers are required unless payment is to be made to, or Share
Certificates for Shares not tendered or not purchased are to be issued in the
name of, a person or persons other than the registered holder(s). In the latter
case, signatures on such Share Certificates or stock powers must be guaranteed
by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Share Certificate(s) listed, the Share
Certificate(s) must be endorsed or accompanied by appropriate stock powers, in
either case signed exactly as the name(s) of the registered holder(s) appear on
the Share Certificate(s). Signatures on such Share Certificates or stock powers
must be guaranteed by an Eligible Institution.
6. Stock Transfer Taxes. Except as otherwise provided in this Instruction
6, Purchaser will pay any stock transfer taxes with respect to the transfer and
sale of Shares to it or its order pursuant to the Offer. If, however, payment of
the purchase price is to be made to, or if Share Certificate(s) for Shares not
tendered or accepted for payment are to be registered in the name of, any person
other than the registered holder(s), or if tendered Share Certificate(s) are
registered in the name of any person other than the person(s) signing this
Letter of Transmittal, the amount of any stock transfer taxes (whether imposed
on the registered holder(s) or such person) payable on account of the transfer
to such person will be deducted from the purchase price unless satisfactory
evidence of the payment of such taxes or an exemption therefrom is submitted.
Except as otherwise provided in this Instruction 6, it will not be
necessary for transfer tax stamps to be affixed to the Share Certificate(s)
listed in this Letter of Transmittal.
7. Special Payment and Delivery Instructions. If a check is to be issued
in the name of, and/or Share Certificates for Shares not tendered or not
accepted for payment are to be issued or returned to, a person other than the
person(s) signing this Letter of Transmittal or if a check and/or such Share
Certificates are to be returned to a person other than the person(s) signing
this Letter of Transmittal or to an address other than that shown in this Letter
of Transmittal, the appropriate boxes on this Letter of Transmittal must be
completed. A Book-Entry Stockholder may request that Shares not accepted for
payment be credited to such
<PAGE> 9
account maintained at the Book-Entry Transfer Facility as such Book-Entry
Stockholder may designate under "Special Payment Instructions." If no such
instructions are given, such Shares not accepted for payment will be returned by
crediting the account at the Book-Entry Transfer Facility designated above.
8. Waiver Of Conditions. Subject to the terms and conditions of the Merger
Agreement (as defined in the Offer to Purchase), the conditions of the Offer
(other than the Minimum Condition, as defined in the Offer to Purchase) may be
waived by Purchaser in whole or in part at any time and from time to time in its
sole discretion.
9. 31% Backup Withholding; Substitute Form W-9. Under U.S. federal income
tax law, a stockholder who tenders Shares pursuant to the Offer is required to
provide the Depositary with his or her correct taxpayer identification number
("TIN") on Substitute Form W-9 and to certify that the TIN provided on
Substitute Form W-9 is correct (or that such stockholder is awaiting a TIN). If
such stockholder is an individual, the TIN is his or her social security number.
If the Depositary is not provided with the correct TIN, the stockholder may be
subject to a $50 penalty imposed by the Internal Revenue Service and payments
that are made to such stockholder with respect to Shares pursuant to the Offer
may be subject to backup withholding (See below.)
A stockholder who does not have a TIN may check the box in Part 3 of the
Substitute Form W-9 if the stockholder has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked, the stockholder
must also complete the Certificate of Awaiting Taxpayer Identification Number
below in order to avoid backup withholding. If the box is checked, payments made
will be subject to backup withholding unless the stockholder has furnished the
Depositary with his or her TIN within sixty (60) days. A stockholder who checks
the box in Part 3 in lieu of furnishing his or her TIN should furnish the
Depositary with his, her or its TIN as soon as it is received.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding requirements.
In order for a foreign individual to qualify as an exempt recipient, that
stockholder must submit a statement, signed under penalty of perjury, attesting
to that individual's exempt status. (Form W-8.) Forms for such statements can be
obtained from the Depositary. Stockholders are urged to consult their own tax
advisors to determine whether they are exempt from these backup withholding and
reporting requirements.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments to be made to the stockholder. Backup withholding is not an
additional tax. Rather, the tax liability of persons subject to backup
withholding will be reduced by the amount of tax withheld. If withholding
results in an overpayment of taxes, a refund may be obtained by filing a tax
return with the Internal Revenue Service. The Depositary cannot refund amounts
withheld by reason of backup withholding.
10. Requests For Assistance or Additional Copies. Questions or requests
for assistance may be directed to the Information Agent at its address and
telephone number set forth below. Additional copies of the Offer to Purchase,
this Letter of Transmittal and the Notice of Guaranteed Delivery may also be
obtained from the Information Agent or from brokers, dealers, commercial banks
or trust companies.
11. Lost, Destroyed or Stolen Certificates. If any Share Certificate has
been lost, destroyed or stolen, the stockholder should promptly notify the
Depositary. The stockholder will then be instructed as to the steps that must be
taken in order to replace the Share Certificate. This Letter of Transmittal and
related documents cannot be processed until the procedures for replacing lost or
destroyed Share Certificates have been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A FACSIMILE HEREOF), TOGETHER
WITH SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY TRANSFER OR THE NOTICE OF
GUARANTEED DELIVERY, AND ALL OTHER REQUIRED DOCUMENTS, MUST BE RECEIVED BY THE
DEPOSITARY ON OR PRIOR TO THE EXPIRATION DATE.
<PAGE> 10
IMPORTANT TAX INFORMATION
Under federal income tax law, a United States stockholder whose tendered
Shares are accepted for payment is required to provide the Depositary with such
stockholder's correct TIN on Substitute Form W-9. If such stockholder is an
individual, the TIN is his or her social security number. If a tendering
stockholder is subject to backup withholding, he or she must cross out item (2)
of the Certification box on the Substitute Form W-9. If the Depositary is not
provided with the correct TIN, the stockholder may be subject to a $50 penalty
imposed by the Internal Revenue Service. In addition, payments that are made to
such stockholder with respect to Shares purchased pursuant to the Offer may be
subject to backup withholding.
Certain stockholders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, that stockholder must submit a Form W-8, signed under penalties of
perjury, attesting to that individual's exempt status. Copies of Form W-8 are
available from the Depositary.
Exempt stockholders, other than foreign individuals, should furnish their
TIN, write "Exempt" on the face of the Substitute Form W-9 to the Depositary.
See the enclosed Guidelines for Certification of Taxpayer Identification Number
on Substitute Form W-9 for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of his or her correct TIN by completing the
Substitute Form W-9 certifying that the TIN provided on the Substitute Form W-9
is correct (or that such stockholder is awaiting a TIN).
PURPOSE OF FORM W-8
To prevent backup withholding on payments that are made to a foreign
stockholder with respect to Shares purchased pursuant to the Offer, the foreign
stockholder is required to submit an executed Form W-8 to the Depositary.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record owner of the Shares. If
the Shares are in more than one name or are not in the name of the actual owner,
consult the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional guidelines on which number to
report. If the tendering stockholder has not been issued a TIN and has applied
for a TIN or intends to apply for a TIN in the near future, the stockholder
should write "Applied For" in the space provided for the TIN in Part I, and sign
and date the Substitute Form W-9. If "Applied For" is written in Part I, the
Depositary will withhold 31% on all payments of the purchase price.
<PAGE> 11
<TABLE>
<C> <S> <C>
- -------------------------------------------------------------------------------------------------------------------------
PAYOR'S NAME: AMERICAN STOCK TRANSFER & TRUST COMPANY
- -------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX AT Social Security Number OR
RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. Employer Identification Number
FORM W-9
----------------------------------------
------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<C> <S> <C>
DEPARTMENT OF THE TREASURY For Payees exempt from backup withholding, see the PART 3 --
INTERNAL REVENUE SERVICE attached Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 and complete Awaiting TIN [ ]
as instructed therein.
PART 2 -- CERTIFICATION --
Under penalties of perjury, I certify that:
(1) the number shown on this form is my correct Taxpayer
Identification Number (or I am waiting for a number to
be issued to me), and
(2) I am not subject to backup withholding because (a) I
am exempt from backup withholding, or (b) I have not
been notified by the Internal Revenue Service (the
"IRS") that I am subject to backup withholding as a
result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding.
------------------------------------------------------------------------------------------
PAYOR'S REQUEST FOR TAXPAYER CERTIFICATE INSTRUCTIONS -- You must cross out item (2) above if you have been notified by
IDENTIFICATION NUMBER (TIN) the IRS that you are currently subject to backup withholding because of under-reporting
interest or dividends on your tax return. However, if after being notified by the IRS that
you were subject to backup withholding you received another notification from the IRS that
you are no longer subject to backup withholding, do not cross out such item (2).
SIGN HERE: Signature: ---------------------------------- Date:----------------------------------
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3 OF
SUBSTITUTE FORM W-9.
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all reportable payments made to me will be withheld.
Signature: Date:
----------------------------------------- ------------
<PAGE> 12
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL FREE: (800) 994-3227
DECEMBER 23, 1999
<PAGE> 1
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
TO
TENDER SHARES OF COMMON STOCK
OF
EIS INTERNATIONAL, INC.
As set forth in Section 3 of the Offer to Purchase described below, this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates for Shares (as defined below) are not immediately
available or the certificates for Shares and all other required documents cannot
be delivered to the Depositary (identified below) on or prior to the Expiration
Date (as defined in Section 1 of the Offer to Purchase) or if the procedure for
delivery by book-entry transfer cannot be completed on a timely basis. This form
may be delivered by hand or transmitted by facsimile transmission or mailed to
the Depositary and must include a guarantee by an Eligible Institution (as
defined in Section 3 of the Offer to Purchase).
The Depositary for the Offer is:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<CAPTION>
By Mail: By Hand or Overnight Delivery:
<S> <C>
40 Wall Street, 46th Floor 40 Wall Street, 46th Floor
New York, NY 10005 New York, NY 10005
Attn: Reorganization Department Attn: Reorganization Department
</TABLE>
By Facsimile Transmission
(for Eligible Institutions Only):
(718) 234-5001
Confirm Receipt of Facsimile by Telephone Only:
(718) 921-8200
For Information Call:
(718) 921-8200
------------------------
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER THAN AS SET FORTH
ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to SERSys Acquisition Corporation, a
Delaware corporation that is an indirect (through SER (USA), Inc.) wholly owned
subsidiary of SER Systeme AG, a German corporation, upon the terms and subject
to the conditions set forth in the Offer to Purchase dated December 23, 1999
(the "Offer to Purchase"), and in the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer"), receipt of which is
hereby acknowledged, the number of shares of common stock, par value $0.01 per
share (the "Common Stock"), and their associated rights (the "Rights") to
purchase Series A Preferred Stock, par value $0.01 per share, pursuant to that
certain Rights Agreement, dated as of May 16, 1997, between EIS International,
Inc., a Delaware corporation (the "Company") and BankBoston N.A., as amended
(such Rights, together with the Common Stock are collectively referred to as the
"Shares"), of the Company, indicated below pursuant to the guaranteed delivery
procedure set forth in Section 3 of the Offer to Purchase.
SIGN HERE:
----------------------------
Number of Shares:
--------------------------------------------------------------
Certificate Number(s) (If Available):
------------------------------------------
Check box if Shares will be tendered by book-entry transfer: [ ]
The Depository Trust Company Account Number:
-----------------------------------
Dated:
-------------------------------------------------------------------------
Name(s) of Record Holder(s):
---------------------------------------------------
- -------------------------------------------------------------------------------
(PLEASE PRINT)
Address(es):
-------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Telephone Number(s)
-----------------------------------------------------------
(INCLUDING AREA CODE(S))
Signature(s):
------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm which is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of a
recognized Medallion Program approved by the Securities Transfer Association
Inc., including the Securities Transfer Agents Medallion Program (STAMP), the
Stock Exchange Medallion Program (SEMP) and the New York Stock Exchange
Medallion Signature Program (MSP) or any other "eligible guarantor institution"
(as such term is defined in Rule 17Ad-15 under the Securities Exchange Act of
1934, as amended), (a) represents that the above named person(s) "own(s)" the
Shares tendered hereby within the meaning of Rule 14e-4 under the Securities
Exchange Act of 1934, as amended ("Rule 14e-4"), (b) represents that such tender
of Shares complies with Rule 14e-4, and (c) guarantees to deliver to the
Depositary either the certificates evidencing all tendered Shares, in proper
form for transfer, or a Book-Entry Confirmation (as defined in the Offer to
Purchase) with respect to such Shares, in either case together with the Letter
of Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees or an Agent's Message (as defined in the
Offer to Purchase) in the case of a book-entry delivery, and any other required
documents, all within three (3) Nasdaq Stock Market trading days after the date
hereof.
The Eligible Institution that completes this form must communicate this
guarantee to the Depositary and must deliver the Letter of Transmittal and Share
Certificates to the Depositary within the time period shown herein. Failure to
do so could result in a financial loss to such Eligible Institution.
Name of Firm:
------------------------------------------------------------------
Authorized Signature:
----------------------------------------------------------
Address:
-----------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Title:
-------------------------------------------------------------------------
Name:
---------------------------------------------------------------------------
(PLEASE PRINT OR TYPE)
Telephone Number (Including Area Code):
----------------------------------------
Dated: ____________________
(a) NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. CERTIFICATES FOR
SHARES SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
<PAGE> 1
EXHIBIT (a)(4)
D.F. KING & CO., INC.
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
EIS INTERNATIONAL, INC.
AT
$6.25 NET PER SHARE
BY
SERSYS ACQUISITION CORPORATION
AN INDIRECT WHOLLY OWNED SUBSIDIARY
OF
SER SYSTEME AG
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JANUARY 24, 2000 (THE "EXPIRATION DATE"), UNLESS THE OFFER IS
EXTENDED.
DECEMBER 23, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been engaged to act as Information Agent in connection with the
Offer by SERSys Acquisition Corporation, a Delaware corporation ("Purchaser")
that is an indirect (through SER (USA), Inc. ("SER USA") wholly owned subsidiary
of SER Systeme AG, a German corporation ("Parent"), to purchase for cash all of
the outstanding shares of common stock, par value $0.01 per share (the "Common
Stock"), and their associated rights (the "Rights") to purchase Series A
Preferred Stock, par value $0.01 per share, pursuant to that certain Rights
Agreement, dated as of May 16, 1997, between EIS International, Inc., a Delaware
corporation (the "Company") and BankBoston N.A., as amended, (the "Rights
Agreement") (such Rights, together with the Common Stock, are collectively
referred to herein as the "Shares"), of the Company, at a purchase price of
$6.25 per Share, net to the seller in cash, upon the terms and subject to the
conditions set forth in Purchaser's Offer to Purchase dated December 23, 1999
(the "Offer to Purchase"), and in the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") enclosed herewith.
Holders of Shares whose certificates for such Shares (the "Share Certificates")
are not immediately available or who cannot deliver their Share Certificates and
all other required documents to the Depositary (as defined below) on or prior to
the Expiration Date (as defined in the Offer to Purchase), or who cannot
complete the procedure for book-entry transfer on a timely basis, must tender
their Shares according to the guaranteed delivery procedures set forth in
Section 3 of the Offer to Purchase.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
Enclosed herewith for your information and forwarding to your clients are
copies of the following documents:
1. The Offer to Purchase, dated December 23, 1999;
2. The Letter of Transmittal to tender Shares for your use and for the
information of your clients. Facsimile copies of the Letter of
Transmittal may be used to tender Shares;
<PAGE> 2
3. The Notice of Guaranteed Delivery for Shares to be used to accept the
Offer if Share Certificates are not immediately available or if such
certificates and all other required documents cannot be delivered to
American Stock Transfer & Trust Company (the "Depositary") on or prior
to the Expiration Date or if the procedure for book-entry transfer
cannot be completed by the Expiration Date;
4. The Letter to Stockholders of the Company from the President and Chief
Executive Officer of the Company, accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9;
5. A form of Letter to Clients which may be sent to your clients for whose
accounts you hold Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions
with regard to the Offer;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. A return envelope addressed to American Stock Transfer & Trust Company,
as Depositary.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT
MIDNIGHT, NEW YORK CITY TIME, ON MONDAY, JANUARY 24, 2000, UNLESS THE OFFER IS
EXTENDED.
Upon the terms and subject to the satisfaction or waiver (where applicable)
of the conditions of the Offer, Purchaser will purchase, by accepting for
payment, and will pay for, all Shares validly tendered on or prior to the
Expiration Date promptly after the Expiration Date. For purposes of the Offer,
Purchaser will be deemed to have accepted for payment, and thereby purchased,
tendered Shares if, as and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance of such Shares for payment. In all cases,
payment for Shares accepted for payment pursuant to the Offer will be made only
after timely receipt by the Depositary of (i) Share Certificates or timely
confirmation of a book-entry transfer of such Shares, if such procedure is
available, into the Depositary's account at a Book-Entry Transfer Facility (as
defined in the Offer to Purchase) pursuant to the procedures set forth in
Section 2 of the Offer to Purchase, (ii) the Letter of Transmittal (or facsimile
thereof), properly completed and duly executed, or an Agent's Message (as
defined in the Offer to Purchase) and (iii) any other documents required by the
Letter of Transmittal.
The Offer is conditioned upon, among other things, (1) there being validly
tendered and not withdrawn prior to the expiration of the Offer a number of
Shares which constitutes more than 50% of the voting power (determined on a
fully diluted basis) on the date of purchase, of all securities of the Company
entitled to vote generally in the election of directors or in a merger, and (2)
the statutory waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the regulations thereunder (the "HSR Act")
applicable to the purchase of the Shares pursuant to the Offer having expired or
been terminated (the "HSR Approval"). The Offer is also subject to certain other
terms and conditions as disclosed in Sections 15 of the Offer to Purchase.
The Board of Directors of the Company has unanimously (with Messrs. McGowan
and Burton abstaining) approved the Merger Agreement (as defined below) and the
transactions contemplated thereby, including the Offer and the Merger (each as
defined below), determined that the terms of the Offer and the Merger are
advisable and fair to, and in the best interests of, the holders of Shares, and
recommends that the holders of Shares tender their Shares to Purchaser pursuant
to the Offer.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of December 17, 1999 (as it may be amended or supplemented from time to time,
the "Merger Agreement"), among Parent, Purchaser, and the Company. The Merger
Agreement provides, among other things, for the making of the Offer by
Purchaser, and further provides that, following the completion of the Offer,
upon the terms and subject to the conditions of the Merger Agreement, and in
accordance with the Delaware General Corporation Law (the "DGCL"), Purchaser
will be merged with and into the Company (the "Merger"). Following the effective
time of the Merger (the "Effective Time"), the Company will continue as the
surviving corporation
<PAGE> 3
and become a wholly owned subsidiary of SER USA and an indirect wholly owned
subsidiary of Parent, and the separate corporate existence of Purchaser will
cease.
At the Effective Time, each Share issued and outstanding immediately prior
to the Effective Time (other than (1) Shares held by the Company as treasury
stock or by Parent, Purchaser or any other direct or indirect wholly owned
subsidiary of Parent or the Company, which will be canceled and (2) Shares, if
any, held by stockholders who have properly exercised appraisal rights under
Section 262 of the DGCL) will, by virtue of the Merger and without any action on
the part of the holders of the Shares, be converted into the right to receive in
cash the per Share price paid in the Offer, payable to the holder thereof,
without interest, upon surrender of the Share Certificate formerly representing
such Share, less any required withholding taxes.
In order to take advantage of the Offer, (1) a duly executed and properly
completed Letter of Transmittal (or a facsimile thereof) and any required
signature guarantees, or an Agent's Message (as defined in the Offer to
Purchase) in connection with a book-entry delivery of Shares, and other required
documents should be sent to the Depositary, and (2) either Share Certificate(s)
representing the tendered Shares should be delivered to the Depositary or such
Shares should be tendered by book-entry transfer and a Book-Entry Confirmation
(as defined in the Offer to Purchase) with respect to such Shares should be
delivered to the Depositary, all in accordance with the instructions set forth
in the Letter of Transmittal and the Offer to Purchase.
Holders of Shares whose Share Certificates are not immediately available or
who cannot deliver their Share Certificates and all other required documents to
the Depositary on or prior the Expiration Date of the Offer, or who cannot
complete the procedure for delivery by book-entry transfer on a timely basis,
must tender their Shares according to the guaranteed delivery procedures set
forth in Section 3 of the Offer to Purchase.
Purchaser will not pay any commissions or fees to any broker, dealer or
other person (other than the Depositary and the Information Agent (as described
in the Offer to Purchase)) for soliciting tenders of Shares pursuant to the
Offer. Purchaser will, however, upon request, reimburse you for customary
clerical and mailing expenses incurred by you in forwarding any of the enclosed
materials to your clients. Purchaser also will pay or cause to be paid any stock
transfer taxes payable on the transfer of Shares to it, except as otherwise
provided in Instruction 6 of the Letter of Transmittal.
Any inquiries you may have with respect to the Offer should be addressed to
the Information Agent or the undersigned, at the respective addresses and
telephone numbers set forth on the back cover of the Offer to Purchase.
Additional copies of the enclosed materials may be obtained from the Information
Agent.
Very truly yours,
D.F. KING & CO., INC.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
OR ANY OTHER PERSON THE AGENT OF PURCHASER, PARENT, SER USA, THE COMPANY, THE
DEPOSITARY OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENT OR USE ANY DOCUMENT ON
BEHALF OF ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE ENCLOSED
DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.
<PAGE> 1
EXHIBIT (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
EIS INTERNATIONAL, INC.
AT
$6.25 NET PER SHARE
BY
SERSYS ACQUISITION CORPORATION,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SER SYSTEME AG
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON MONDAY, JANUARY 24, 2000, UNLESS THE OFFER IS EXTENDED.
DECEMBER 23, 1999
To Our Clients:
Enclosed for your consideration is an Offer to Purchase dated December 23,
1999 (the "Offer to Purchase"), and the related Letter of Transmittal, relating
to an offer by SERSys Acquisition Corporation, a Delaware corporation
("Purchaser") that is an indirect (through SER (USA), Inc.) ("SER USA")) wholly
owned subsidiary of SER Systeme AG, a German corporation ("Parent"), to purchase
all of the outstanding shares of Common Stock, par value $0.01 per share and
their associated rights (the "Rights") to purchase Series A Preferred Stock, par
value $0.01 per share, pursuant to that certain Rights Agreement, dated as of
May 16, 1997 between EIS International, Inc., a Delaware corporation (the
"Company") and BankBoston N.A., as amended, (the "Rights Agreement") (such
Rights, together with the Common Stock, are collectively referred to herein as
the "Shares"), of the Company, at a purchase price of $6.25 per Share, net to
the seller in cash, upon the terms and subject to the conditions set forth in
the Offer to Purchase and in the related Letter of Transmittal (which, as
amended from time to time, together constitute the "Offer") enclosed herewith.
Holders of Shares whose certificates for such Shares (the "Share Certificates")
are not immediately available or who cannot deliver their Share Certificates and
all other required documents to American Stock Transfer & Trust Company, the
Depositary, on or prior to the Expiration Date (as defined in the Offer to
Purchase), or who cannot complete the procedure for delivery by book-entry
transfer on a timely basis, must tender their Shares according to the guaranteed
delivery procedures set forth in Section 3 of the Offer to Purchase.
WE ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER
OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO
YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR YOUR
INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account, pursuant to the
terms and subject to the conditions set forth in the Offer.
Your attention is directed to the following:
1. The Offer price is $6.25 per Share, net to the seller in cash.
2. The Offer is being made for all of the outstanding Shares.
3. The Board of Directors of the Company has unanimously (with Messrs.
McGowan and Burton abstaining) approved Merger Agreement (as defined
below) and the transactions contemplated thereby, including the Offer
and the Merger (as defined below), determined that the terms of the
<PAGE> 2
Offer and the Merger are advisable and fair to, and in the best
interests of, the holders of Shares and recommends that the holders of
the Shares accept the Offer and tender their Shares.
4. The Offer is being made pursuant to an Agreement and Plan of Merger,
dated as of December 23, 1999 (as it may be amended or supplemented from
time to time, the "Merger Agreement"), among Parent, Purchaser, and the
Company. The Merger Agreement provides, among other things, for the
making of the Offer by Purchaser, and further provides that, following
the completion of the Offer, upon the terms and subject to the
conditions of the Merger Agreement, and in accordance with the Delaware
General Corporation Law (the "DGCL"), Purchaser will be merged with and
into the Company (the "Merger"). Following the effective time of the
Merger (the "Effective Time"), the Company will continue as the
surviving corporation and become a wholly owned subsidiary of SER USA
and an indirect wholly owned subsidiary of Parent, and the separate
corporate existence of Purchaser will cease. At the Effective Time, each
Share issued and outstanding immediately prior to the Effective Time
(other than (1) Shares held by the Company as treasury stock or by
Parent, Purchaser or any other direct or indirect wholly owned
subsidiary of Parent or the Company, which will be canceled and (2)
Shares, if any, held by stockholders who have properly exercised
appraisal rights under Section 262 of the DGCL) will, by virtue of the
Merger and without any action on the part of the holders of the Shares,
be converted into the right to receive in cash the per Share price paid
in the Offer, payable to the holder thereof, without interest, upon
surrender of the certificate formerly representing such Share, less any
required withholding taxes.
5. The Offer and withdrawal rights will expire at 12:00 Midnight, New York
City time, on January 24, 2000, unless the Offer is extended.
6. Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, stock transfer taxes on the purchase of Shares pursuant to
the Offer.
7. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn prior to the Expiration Date a number
of shares which constitutes more than 50% of the voting power
(determined on a fully diluted basis) on the date of purchase, of all of
the securities of the Company entitled to vote generally in the election
of directors or in a merger, and (2) the statutory waiting period under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
and the regulations thereunder (the "HSR Act") applicable to the
purchase of the Shares pursuant to the Offer having expired or been
terminated (the "HSR Approval"). The Offer is also subject to certain
other terms and conditions as more fully disclosed in Sections 15 of the
Offer to Purchase.
The Offer is being made solely by the Offer to Purchase and the related
Letter of Transmittal and is being made to all holders of Shares. Purchaser is
not aware of any state where the making of the Offer is prohibited by
administrative or judicial action pursuant to any valid state statute. If
Purchaser becomes aware of any valid state statute prohibiting the making of the
Offer or the acceptance of Shares pursuant thereto, Purchaser will make a good
faith effort to comply with any such state statute. If, after such good faith
effort, Purchaser cannot comply with such state statute, the Offer will not be
made to and tenders will not be accepted from or on behalf of the holders of
Shares in such state. In any jurisdiction where the securities, "blue sky" or
other laws require the Offer to be made by a licensed broker dealer, the Offer
shall be deemed to be made on behalf of Purchaser by one or more registered
brokers or dealers licensed under the laws of such jurisdiction.
IF YOU WISH TO HAVE US TENDER ANY OR ALL OF THE SHARES HELD BY US FOR YOUR
ACCOUNT, PLEASE INSTRUCT US BY COMPLETING, EXECUTING AND RETURNING TO US THE
INSTRUCTION FORM CONTAINED IN THIS LETTER. IF YOU AUTHORIZE A TENDER OF YOUR
SHARES, ALL SUCH SHARES WILL BE TENDERED UNLESS OTHERWISE SPECIFIED IN SUCH
INSTRUCTION FORM. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO
PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF ON OR PRIOR TO THE EXPIRATION OF THE
OFFER.
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
EIS INTERNATIONAL, INC.
AT
$6.25 PER SHARE
BY
SERSYS ACQUISITION CORPORATION
The undersigned acknowledge(s) receipt of your letter enclosing the Offer
to Purchase dated December 23, 1999 (the "Offer to Purchase") and the related
Letter of Transmittal pursuant to an offer by Sersys Acquisition corporation, a
Delaware corporation that is an indirect wholly owned subsidiary of SER Systeme
AG, a German corporation, to purchase all of the outstanding shares of Common
Stock, par value $0.01 per share, together with their associated rights to
purchase Series A Preferred Stock, par value $0.01 per share (collectively, the
"Shares"), of EIS International, Inc., a Delaware corporation.
This will instruct you to tender the number of Shares indicated below (or,
if no number is indicated below, all Shares) which are held by you for the
account of the undersigned, upon the terms and subject to the conditions set
forth in the Offer to Purchase and in the related Letter of Transmittal
furnished to the undersigned.
<TABLE>
<S> <C>
Number of Shares to be Tendered* SIGN HERE:
- ------------------------------------ --------------------------------------------------------
Account Number: ---------------- --------------------------------------------------------
SIGNATURE(S)
Dated: ---------------------------- PLEASE PRINT NAME(S):
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
ADDRESS:
--------------------------------------------------------
--------------------------------------------------------
--------------------------------------------------------
Telephone Number(s) (including Area Code):
--------------------------------------------------------
TAX IDENTIFICATION OR SOCIAL SECURITY NUMBER
</TABLE>
- ---------------
* Unless otherwise indicated, it will be assumed that all of your Shares held by
us for your account are to be tendered.
<PAGE> 1
EXHIBIT (a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER FOR THE PAYEE (YOU)
TO GIVE THE PAYOR -- Social Security numbers have nine digits separated by two
hyphens: i.e., 000-00-0000. Employer identification numbers have nine digits
separated by only one hyphen: i.e., 00-0000000. The table below will help
determine the number to give the payor. All "Section" references are to the
Internal Revenue Code of 1986, as amended. "IRS" is the Internal Revenue
Service.
<TABLE>
<CAPTION>
- ---------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE
SOCIAL SECURITY
NUMBER OF --
- ---------------------------------------------------------
<C> <S> <C>
1. Individual The individual
2. Two or more individuals The actual owner of
(joint account) the account or, if
combined funds, the
first individual on
the account(1)
3. Husband and wife (joint The actual owner of
account) the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gifts to Minors
Act)
5. Adult and minor (joint The adult, or if the
account) minor is the only
contributor, the
minor(4)
a. The usual revocable The grantor-
savings trust account trustee(1)
(grantor is also trustee)
b. So-called trust account The actual owner(1)
that is not a legal or
valid trust under state
law
- ---------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------
FOR THIS TYPE OF ACCOUNT: GIVE THE
EMPLOYER
IDENTIFICATION
NUMBER OF --
- ---------------------------------------------------------
<C> <S> <C>
6. Sole proprietorship The owner(3)
7. A valid trust, estate, or The legal entity(4)
pension trust
8. Corporate The corporation
9. Association, club, The organization
religious, charitable,
educational, or other
tax-exempt organization
account
10. Partnership The partnership
11. A broker or registered The broker or nominee
nominee
12. Account with the Department The public entity
of Agriculture in the name
of a public entity (such as
a state or local government,
school district, or prison)
that receives agricultural
program payments
- ---------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has a social security number, that
person's number must be furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) You must show your individual name, but you may also enter your business or
"doing business as" name. You may use either your social security number or
your employer identification number (if you have one).
(4) List first and circle the name of the legal trust, estate, or pension trust.
(Do not furnish the taxpayer identification number of the personal
representative or trustee unless the legal entity itself is not designated
in the account title.)
NOTE:If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Card, at the local
Social Security Administration office, or Form SS-4, Application for Employer
Identification Number, by calling 1 (800) TAX-FORM, and apply for a number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from withholding include:
- An organization exempt from tax under section 501(a), an individual
retirement account (IRA), or a custodial account under Section 403(b)(7), if
the account satisfies the requirements of Section 401(f)(7).
- The United States or a state thereof, the District of Columbia, a possession
of the United States, or a political subdivision or wholly owned agency or
instrumentality of any one or more of the foregoing.
- An international organization or any agency or instrumentality thereof.
- A foreign government and any political subdivision, agency or instrumentality
thereof.
Payees that may be exempt from backup withholding include:
- A corporation.
- A financial institution.
- A dealer in securities or commodities required to register in the United
States, the District of Columbia, or a possession of the United States.
- A real estate investment trust.
- A common trust fund operated by a bank under Section 584(a).
- An entity registered at all times during the tax year under the Investment
Company Act of 1940.
- A middleman known in the investment community as a nominee or who is listed
in the most recent publication of the American Society of Corporate
Secretaries, Inc., Nominee List.
- A futures commission merchant registered with the Commodity Futures Trading
Commission.
- A foreign central bank of issue.
Payments of dividends and patronage dividends generally exempt from backup
withholding include:
- Payments to nonresident aliens subject to withholding under Section 1441.
- Payments to partnerships not engaged in a trade or business in the United
States and that have at least one nonresident alien partner.
- Payments of patronage dividends not paid in money.
- Payments made by certain foreign organizations.
- Section 404(k) payments made by an ESOP.
Payments of interest generally exempt from backup withholding include:
- Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and you have
not provided your correct taxpayer identification number to the payer.
- Payments of tax-exempt interest (including exempt-
interest dividends under Section 852).
- Payments described in Section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Mortgage interest paid to you.
Certain payments, other than payments of interest, dividends, and patronage
dividends, that are exempt from information reporting are also exempt from
backup withholding. For details, see Sections 6041, 6041A, 6042, 6044, 6045,
6049, 6050A and 6050N.
Exempt payees described above must file Form W-9 or a substitute Form W-9 to
avoid possible erroneous backup withholding. FILE THIS FORM WITH THE PAYOR.
FURNISH YOUR TAXPAYER IDENTIFICATION NUMBER, WRITE "EXEMPT" IN PART 2 OF THE
FORM, AND RETURN TO THE PAYOR IF THE PAYMENTS ARE OF INTEREST, DIVIDENDS, OR
PATRONAGE DIVIDENDS. ALSO SIGN AND DATE THE FORM.
PRIVACY ACT NOTICE -- Section 6109 requires you to provide your correct taxpayer
identification number to payors, who must report the payments to the IRS. The
IRS uses the number for identification purposes and may also provide this
information to various government agencies for tax enforcement or litigation
purposes. Payors must be given the numbers whether or not recipients are
required to file tax returns. Payors must generally withhold 31% of taxable
interest, dividend, and certain other payments to a payee who does not furnish a
taxpayer identification number to a payor. Certain penalties may also apply.
PENALTIES
(1) FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER -- If you fail to furnish
your taxpayer identification number to a payor, you are subject to a penalty of
$50 for each such failure unless your failure is due to reasonable cause and not
to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING -- If you
make a false statement with no reasonable basis that results in no backup
withholding, you are subject to a $500 penalty.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION -- Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
EXHIBIT (a)(7)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares (as defined below). The Offer (as defined below) is made solely
by the Offer to Purchase dated December 23, 1999, and the related Letter of
Transmittal, and any amendments or supplements thereto, and is being made to all
holders of Shares. Purchaser (as defined below) is not aware of any state where
the making of the Offer is prohibited by administrative or judicial action
pursuant to any valid state statute. If Purchaser becomes aware of any valid
state statute prohibiting the making of the Offer, Purchaser will make a good
faith effort to comply with such statute. If, after such good faith effort,
Purchaser cannot comply with such state statute, the Offer will not be made to
and tenders will not be accepted from or on behalf of the holders of Shares in
such state. In any jurisdiction where the securities, "blue sky" or other laws
require the Offer to be made by a licensed broker or dealer, the Offer shall be
deemed to be made on behalf of Purchaser by one or more registered brokers or
dealers licensed under the laws of such jurisdiction.
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
EIS INTERNATIONAL, INC.
AT
$6.25 NET PER SHARE
BY
SERSYS ACQUISITION CORPORATION,
AN INDIRECT WHOLLY OWNED SUBSIDIARY OF
SER SYSTEME AG
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON JANUARY 24, 2000, UNLESS THE OFFER IS EXTENDED. SHARES THAT ARE
TENDERED PURSUANT TO THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE
EXPIRATION DATE.
SERSys Acquisition Corporation, a Delaware corporation ("Purchaser") that
is an indirect (through SER (USA), Inc. ("SER USA")) wholly owned subsidiary of
SER Systeme AG, a German corporation ("Parent"), hereby offers to purchase all
of the outstanding shares of Common Stock, par value $0.01 per share and their
associated rights (the "Rights") to purchase Series A Preferred Stock, par value
$.01, pursuant to that certain Rights Agreement, dated as of May 16, 1997
between EIS International, Inc., a Delaware corporation (the "Company"), and
BankBoston N.A., as amended, (the "Rights Agreement") (such Rights, together
with the Common Stock, are collectively referred to herein as the "Shares"), of
the Company, at a purchase price of $6.25 per Share, net to the seller in cash,
upon the terms and subject to the conditions set forth in the Offer to Purchase
dated December 23, 1999 (the "Offer to Purchase"), and in the related Letter of
Transmittal (which, as amended or supplemented from time to time, together
constitute the "Offer").
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE OFFER A NUMBER OF
SHARES WHICH CONSTITUTES MORE THAN 50% OF THE VOTING POWER (DETERMINED ON A
FULLY DILUTED BASIS) ON THE DATE OF PURCHASE, OF ALL OF THE SECURITIES OF THE
COMPANY ENTITLED TO VOTE GENERALLY IN THE ELECTION OF DIRECTORS OR IN A MERGER,
AND (2) THE STATUTORY WAITING PERIOD, UNDER THE HART-SCOTT-RODINO ANTITRUST
IMPROVEMENTS ACT OF 1976, AS AMENDED, AND THE REGULATIONS THEREUNDER (THE "HSR
ACT") APPLICABLE TO THE PURCHASE OF THE SHARES PURSUANT TO THE OFFER HAVING
EXPIRED
<PAGE> 2
OR BEEN TERMINATED (THE "HSR APPROVAL"). THE OFFER IS ALSO SUBJECT TO CERTAIN
OTHER TERMS AND CONDITIONS AS DISCLOSED IN SECTION 15 OF THE OFFER TO PURCHASE.
THE OFFER IS NOT CONDITIONED ON SECURING FINANCING.
The purpose of the Offer is to acquire control of, and the entire equity
interest in, the Company. As promptly as practicable following consummation of
the Offer and after satisfaction or waiver of all conditions to the Merger (as
defined below) set forth in the Merger Agreement (as defined below), Purchaser
intends to acquire the remaining equity interest in the Company not acquired in
the Offer by consummating the Merger.
The Offer is being made pursuant to an Agreement and Plan of Merger, dated
as of December 17, 1999 (the "Merger Agreement"), among Parent, Purchaser and
the Company. The Merger Agreement provides, among other things, for the making
of the Offer by Purchaser, and further provides that, following the completion
of the Offer, upon the terms and subject to the conditions of the Merger
Agreement and in accordance with the Delaware General Corporation Law ("DGCL"),
Purchaser will be merged with and into the Company (the "Merger"). Following the
effective time of the Merger (the "Effective Time"), the Company will continue
as the surviving corporation (the "Surviving Corporation") and become a wholly
owned subsidiary of SER USA and an indirect wholly owned subsidiary of Parent,
and the separate corporate existence of Purchaser will cease. At the Effective
Time, each Share issued and outstanding immediately prior to the Effective Time
(other than (1) Shares held by the Company as treasury stock or by Parent,
Purchaser or any other wholly owned direct or indirect subsidiary of Parent or
the Company, which will be canceled and (2) Shares, if any, held by stockholders
who have properly exercised appraisal rights under Section 262 of the DGCL)
will, by virtue of the Merger and without any action on the part of the holders
of the Shares, be converted into the right to receive in cash the per Share
price paid in the Offer, payable to the holder thereof, without interest, upon
surrender of the certificate formerly representing such Share, less any required
withholding taxes. The Merger Agreement is more fully described in Section 11 of
the Offer to Purchase.
Parent has entered into a Tender and Voting Agreement dated as of December
17, 1999 (the "Tender Agreement") with certain officer and director stockholders
of the Company (the "Management Stockholders") holding in the aggregate
1,697,700 Shares (including vested Company Options (as such term is defined in
the Offer to Purchase) and Company Options that will vest within sixty (60) days
of the date of the Merger Agreement), representing approximately 11.5% of the
issued and outstanding Shares. Pursuant to the Tender Agreement, each Management
Stockholder has agreed, provided the Merger Agreement has not been terminated,
to tender to Purchaser all Shares beneficially owned by such Management
Stockholder, agreed to vote such Shares in favor of approval of the Merger
Agreement and the transactions contemplated thereby and granted an irrevocable
proxy to Parent with respect to such Shares.
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY (WITH MESSRS. MCGOWAN
AND BURTON ABSTAINING) APPROVED THE MERGER AGREEMENT AND THE TRANSACTIONS
CONTEMPLATED THEREBY, INCLUDING THE OFFER AND THE MERGER, DETERMINED THAT THE
TERMS OF THE OFFER AND THE MERGER ARE ADVISABLE AND FAIR TO, AND IN THE BEST
INTERESTS OF, THE HOLDERS OF SHARES AND RECOMMENDS THAT THE HOLDERS OF SHARES
ACCEPT THE OFFER AND TENDER THEIR SHARES.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to American
Stock Transfer & Trust Company (the "Depositary") of Purchaser's acceptance for
payment of such Shares pursuant to the Offer. Upon the terms and subject to the
conditions of the Offer, payment for Shares accepted for payment pursuant to the
Offer will be made by deposit of the purchase price therefor with the
Depositary, which will act as agent for tendering stockholders for the purpose
of receiving payments from Purchaser and transmitting such payments to
stockholders whose Shares have been accepted for payment. Under no circumstances
will interest on the purchase price for Shares be paid by Purchaser, regardless
of any extension of the Offer or any delay in making such payment. In all cases,
payment for Shares tendered and accepted for payment pursuant to the Offer will
be made only after timely receipt by the Depositary of (i) certificates
representing such Shares, or timely confirmation of a book-entry transfer of
such Shares into the Depositary's account at the Book-Entry Transfer Facility
(as such term is defined in the Offer to Purchase) pursuant to the procedures
set forth in Section 3 of the Offer to Purchase, (ii) the Letter of Transmittal
(or a facsimile thereof), properly completed and duly executed, with any
required signature
<PAGE> 3
guarantees, or an Agent's Message (as such term is defined in the Offer to
Purchase) in connection with a book-entry transfer, and (iii) any other
documents required by the Letter of Transmittal. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID BY PURCHASER ON THE PURCHASE PRICE OF THE SHARES ACCEPTED FOR
PAYMENT, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
Subject to the provisions of the Merger Agreement and the applicable rules
and regulations of the Securities and Exchange Commission (the "Commission"),
each of Parent and Purchaser reserves the right to waive any or all conditions
to the Offer (other than the Minimum Condition) and to make any other changes in
the terms and conditions of the Offer. Subject to the provisions of the Merger
Agreement and the applicable rules and regulations of the Commission if, by the
Expiration Date, any or all of the conditions to the Offer have not been
satisfied, Purchaser reserves the right (but will not be obligated) to (i)
terminate the Offer and return all tendered Shares to tendering stockholders,
(ii) waive such unsatisfied conditions (other than the Minimum Condition) and
purchase all Shares validly tendered or (iii) extend the Offer and, subject to
the terms of the Offer (including the rights of stockholders to withdraw their
Shares), retain the Shares which have been tendered, until the termination of
the Offer, as extended.
Subject to the provisions of the Merger Agreement and the applicable rules
and regulations of the Commission, Purchaser expressly reserves the right, in
its sole discretion, at any time and from time to time, and regardless of
whether or not any of the events set forth in Section 15 of the Offer to
Purchase have occurred or have been determined by Purchaser to have occurred, to
(i) extend the period of time during which the Offer is open and thereby
postpone acceptance for payment of, and payment for, any Shares, by giving oral
or written notice of such extension to the Depositary and (ii) amend the Offer
in any respect permitted by the Merger Agreement by giving oral or written
notice of such amendment to the Depositary.
Any extension, delay, termination, waiver or amendment will be followed as
promptly as practicable by public announcement thereof to be made no later than
9:00 A.M., New York City time, on the next business day after the previously
scheduled Expiration Date. During any such extension, all Shares previously
tendered and not properly withdrawn will remain subject to the Offer, subject to
the rights of a tendering stockholder to withdraw such stockholder's Shares. The
term "Expiration Date" means 12:00 Midnight, New York City time, on Monday,
January 24, 2000, unless and until the Purchaser, in its sole discretion (but
subject to the terms and conditions of the Merger Agreement), has extended the
period during which the Offer is open, in which event the term "Expiration Date"
means the latest time and date at which the Offer, as so extended by the
Purchaser, will expire. Purchaser shall not have any obligation to pay interest
on the purchase price for tendered Shares, whether or not Purchaser exercises
its right to extend the Offer.
Tenders of Shares made pursuant to the Offer are irrevocable, except that
Shares tendered pursuant to the Offer may be withdrawn at any time on or prior
to the Expiration Date and, unless theretofore accepted for payment by Purchaser
pursuant to the Offer, may also be withdrawn at any time after February 20,
2000. For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover of the Offer to
Purchase. Any notice of withdrawal must specify the name of the person who
tendered the Shares to be withdrawn, the number of Shares to be withdrawn and
the name of the registered holder, if different from that of the person who
tendered such Shares. If certificates for the Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then prior to the physical
release of the certificates, the serial numbers shown on such certificates must
be submitted to the Depositary and the signatures on the notice of withdrawal
must be guaranteed by an Eligible Institution (as such term is defined in the
Offer to Purchase) unless such Shares have been tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at the
Book-Entry Transfer Facility to be credited with the withdrawn Shares (and
otherwise comply with the Book-Entry Transfer Facility's procedures), in which
case a notice of withdrawal will be effective if delivered to the Depositary by
any method of delivery described in the second sentence of this paragraph.
Withdrawals of Shares may not be rescinded. Any Shares properly withdrawn will
thereafter be deemed not to have been validly tendered for purposes of the
Offer. However, withdrawn Shares may be re-tendered at any time prior to the
Expiration Date by following one of the procedures described in Section 3 of the
Offer to Purchase. All questions as to the form and validity (including
<PAGE> 4
time of receipt) of any notice of withdrawal will be determined by Purchaser, in
its sole discretion, and any such determination will be final and binding. None
of Purchaser, Parent, any of their affiliates or assigns, the Depositary, the
Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in any notice of withdrawal or
incur any liability for failure to give such notification.
The information required to be disclosed by Rule 14d-6(e)(1)(vii) of the
General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Offer to Purchase and is incorporated herein by
reference.
The Offer to Purchase and the related Letter of Transmittal and other
relevant materials will be mailed by Purchaser to record holders of Shares and
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the stockholder
list or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares.
THE OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION WHICH SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
Questions and requests for assistance may be directed to the Information
Agent as set forth below. Requests for copies of the Offer to Purchase and the
related Letter of Transmittal and all other tender offer materials may be
directed to the Information Agent and copies will be furnished promptly at
Purchaser's expense. Purchaser will not pay any fees or commissions to any
broker or dealer or any other person (other than the Information Agent) for
soliciting tenders of Shares pursuant to the Offer.
The Information Agent for the Offer is:
D.F. KING & CO., INC.
77 Water Street
New York, New York 10005
Banks and Brokers Call Collect: (212) 269-5550
ALL OTHERS CALL TOLL FREE: (800) 994-3227
December 23, 1999
<PAGE> 1
Exhibit (a)(8)
MONDAY, DECEMBER 20, 1999
JOINT PRESS RELEASE
EIS INTERNATIONAL, INC. TO BE ACQUIRED BY SER SYSTEME AG
HERNDON, Va., Dec. 20, 1999 / -- EIS International, Inc. (Nasdaq: EISI), a
leading provider of call center technology, and SER Systeme AG (Frankfurt Neuer
Markt: SES), Europe's largest supplier of document management systems and
workflow solutions, today jointly announced the signing of a definitive
agreement under which an SER subsidiary will make a tender offer to acquire all
of EIS' outstanding shares of common stock at $6.25 per share. The value of the
transaction is approximately $69 million and is expected to close during the
first quarter of 2000, subject to EIS shareholder and regulatory approvals.
"This transaction brings together two complementary organizations," said James
E. McGowan, EIS President and CEO. "EIS has strong telephony technology that
complements the Internet and process automation technologies of SER." Mr.
McGowan also stated, "Current customers will continue to be critical to EIS'
success, and we plan to enhance and support our current advanced solutions for
outbound, inbound, and blended applications for the call center industry. EIS
will continue operating out of its Virginia offices with existing management."
Under the agreement, SER will begin a tender offer for all of the Company's
outstanding common stock on or before Thursday, December 23, 1999. The tender
offer is expected to close at the end of January 2000 and will be followed by a
merger of a subsidiary of SER into EIS. As a result of the merger, EIS will
become a wholly owned subsidiary of SER. EIS shareholders would receive $6.25
per share in cash for their shares in the merger.
About EIS
EIS International, Inc., headquartered in Herndon, Virginia, is a leading
provider of systems, software, and services for the call center industry. With
approximately 77,000 workstations in 1,300 locations worldwide, EIS provides
systems for telemarketing, customer service, fund-raising, market research, and
collections. EIS systems increase productivity, enhance operational efficiency,
and improve agent effectiveness in contact centers. Additional information about
EIS is available by calling 800-274-5676, via email at [email protected], or by
visiting the company's web site at http://www.eisi.com .
<PAGE> 2
About SER
SER, headquartered in Neustadt/Wied, Germany, is Europe's largest supplier of
document management systems and workflow solutions. The company has 1,100
employees worldwide, with strong direct sales and support organizations in the
U.S., Germany, the U.K., France, Austria, and Switzerland. Additional
information is available on the company's web site at http://www.ser.com.
Cautionary Statement
This release may contain certain "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, and is subject to the safe harbors
created thereby. All statements included herein regarding the proposed
transaction with SER, EIS' financial position, business strategy and plans,
objectives for future operations, market and industry conditions, new business
and other market opportunities, product development, and market acceptance of
new and existing products and technology -- other than statements of historical
facts -- are "forward-looking statements." While those statements reflect EIS'
reasonable assumptions, based upon management's beliefs and information
currently available to it, EIS can give no assurance that such statements will
prove correct.
Those statements reflect the current risk, uncertainties, and assumptions
related to certain factors including, without limitation, the ability of SER and
EIS to satisfy the conditions precedent to the closing of the tender offer
included in the agreement, competitive factors, general economic conditions,
marketplace fluctuations, customer relations, technological change, product
introductions and acceptance, distribution networks, changes in industry
practices, one-time events, and other factors described herein and under the
heading "Factors Affecting Future Results" in EIS' quarterly reports on Form
10-Q and its annual report on Form 10-K. Based upon changing conditions, should
any one or more of these risks or uncertainties materialize, or should any
underlying assumptions prove incorrect, EIS may experience material fluctuations
in future quarterly and annual operating results that may vary materially from
those described herein and that could materially and adversely affect its
business, financial condition, operating results, and stock price. EIS may not
update its forward-looking statements.
<PAGE> 1
Exhibit (b)(1)
Mr. Gert J. Reinhardt IKB INTERNATIONAL
SER Systeme AG Societe Anonyme
Innovationspark Rahms
D-53577 Neustadt
Germany
December 16, 1999
Dear Sirs,
Following our mutual discussions we herewith offer you the following CHF-
fixed-rate credit (IN 1):
Debtor: SER Systeme AG
Produkte und Anwendungen der
Datenverarbeitung D-53577 Neustadt
Credit amount: Swiss Francs to the equivalent of EUR
15,400,000.00 (in words: Euro fifteen million
four hundred thousand)
The EUR/CHFdrawing rate will be determined
bindingly based on the reference quotation of
the public banks in Frankfurt (Reuter's page
"EUROFX/1") 2 bank working days prior to
payout and you will be informed about the
same.
Interest rate: 4.05 % p.a. from the day of payout until
06.01.2003
Payout ratio: 100%
Utilization of the credit: The credit is used to co-finance the purchase
price of the company:
EIS International, Inc.
555 Herndon Parkway
556 Herndon
Virginia 20170, U.S.A.;
Redemption: in eight equal quarterly rates in Swiss
Francs on 1/05, 4/05, 7/05, and 10/05,
respectively, of each year, beginning on
4/05/01 and ending on 1/06/03. We will inform
you about the amounts of redemption
separately after payout.
<PAGE> 2
Payment of interest: quarterly, supplementary on 1/05, 4/05,7/05
and on 10/05 of each year, starting on
4/05/00 and ending on 1/06/03; interest has
to be paid at the end of each interest period
in Swiss Francs;
Method of interest calculation: Euro-method (elapsed calendar days divided by
360 days);
Accounting connection: Payments to us may please be directed to our
account at UBS AG, CH-Zurich, account No.
230-60798.05Q in Swiss Francs.
Further you have the possibility to carry out
EUR/CHF cash bargains or futures tradings
with us for the settlement of the interest
and amounts for redemption.
After the completion of such a currency
exchange transaction with us you have the
possibility to take part in our cost-free
debit transfer order collection by signing
and returning the enclosed direct debiting
authorization.
Damages for delayed payment: For all amounts which do not reach us on the
due date we will charge interest amounting to
the respective Bank Rate of Schweizer
Nationalbank plus 5% p.a. or, in case of an
order for currency exchange transactions or
the enclosed direct debiting authorization
amounting to the respective basic interest
rate according to Section 1 of the Bank Rate
Transitional Act plus 5% p.a.
Allowance for basic agreement: We grant this credit in allowance for the
basic agreement of IKB Deutsche Industriebank
AG, Dusseldorf dated 12/08/99;
Security: The security for our commitment as well as
that of IKB Deutsche Industriebank AG,
Dusseldorf and Berlin, thereafter referred to
as 'IKB', including the currency risk in
connection with the CHF-credit is:
a negative/positive declaration according to
the enclosed draft.
No further securities are intended.
This willingness depends on the condition
that you have not offered further securities
to other creditors. If you grant securities
to other creditors, we will also be conceded
securities which are acceptable to us.
<PAGE> 3
Trust obligation: The securities are held in trust and are
administrated by IKB for us.
Payout procedure: The payout of the credit takes place as soon
as the following documents are available to
IKB:
declaration of agreement on the enclosed copy
of this letter;
negative/positive declaration according to
the enclosed draft;
Purchase contract with EIS International,
Inc., Virginia, USA, which should not result
in any reservations from our side;
Interim figures which are not older than 5
months and which do not show a deterioration
of the credit status.
Applicable law: Federal Republic of Germany;
Further parts of the contract: Our enclosed 'general terms and conditions';
Our advice on currency risks of this
financing includes the enclosed indicative
break-even-analysis which we will be glad to
supply in the respective current version at
the time of payout and on request.
The information brochure which has to be
legally binding signed bearing the title
'Important information about loss risks with
futures tradings'.
Place of jurisdiction: The courts of local jurisdiction
Compulsory registration: We wish to point out your obligation of
registration according to Section 26 of the
foreign trade and payments act and Section 59
and possibly Section 62 of the foreign trade
and payments order (payment and stock report
on claims and obligations.
The LZB (clearing bank) which is responsible
for you will inform you about the formalities
of registration and will provide you with the
necessary forms and documents with
explanations.
Obligation of information, For the duration of our business connection
right of inspection and you will provide us with your annual balance
examination: sheet with profit and loss account and will
permit us the inspection of your business
records and your firm. If the completion of
an annual financial statement is
<PAGE> 4
delayed, you will supply us with the
preliminary figures.
Reservation period: Our obligation of payment ends if the
conditions for payout are not met by 2/29/00;
Commission for appropriation: 0.375% p.m. on all credit amounts which are
not paid out beginning from 1/05/00;
Acceptance: by signing and returning the copy of this
letter within two weeks.
We are happy to help you with this credit.
Yours faithfully
IKB International
/s/ Illegible
Enclosures
Important information: We kindly request you to direct all
correspondence concerning the securities
directly to our branch with the following
address:
IKB Deutsche Industriebank AG
Niederlassung Hessen, Rheinland Pfalz,
Saarland
Postfach 90 05 64
D-60445 Frankfurt/Main
<PAGE> 1
Exhibit (b)(2)
The Board of Management IKB Deutsche Industriebank
SER Systeme AG
Innovationspark Rahms
D-53577 Neustadt/Wied
December 15, 1999
Dear Sirs,
Following our discussions, we are pleased to offer you a credit (Credit 4) as
follows:
Nominal amount of credit EUR 10,225,000.00
Disbursement rate 100%
Interest rate 4.75% p.a.
Method of computing interest 360 days divided by 360
Interest payment date Payable quarterly in arrears by 15 March,
15 June, 15 September and 15 December of
each year
Repayment of principal By 5 April 2000 in one sum.
Prolongation We are prepared to prolong the credit
beyond 5 April 2000 for periods of at least
3 months each. We would submit proposals in
good time on the conditions, which would
then apply (discount, interest and
repayment terms), whereby we are
tentatively proceeding on a term up to 30
November 2000.
Compensation for late payment On sums not received by us on time, we will
charge interest at the base rate valid at
such time pursuant to Section 1 Discount
Rate Transition Act plus 5% p.a.
Validity of disbursement commitment Our disbursement commitment will lapse if
the preconditions for disbursement are not
fulfilled by 28 February 2000.
Granting under our commitment in We are granting this credit within the
principle scope of our commitment in principle of 8
December 1999.
Application of the credit The credit is to be put towards funding the
purchase price for
<PAGE> 2
the company:
EIS International, Inc.
555 Herndon Parkway, Herndon
Virginia 20170, USA
Security for our overall commitment Negative/positive declaration as per the
and that of IKB International attached draft.
Luxembourg
Other security is not envisaged.
Our willingness to grant this credit is
subject to the proviso that you have also
not given any other security to other
lenders.
Should you give securities to other
lenders, we shall also be given securities
of our choice.
Preconditions for disbursement Disbursement of the credit will be effected
as soon as we are in possession of:
Declaration of consent as per the attached
draft;
Negative/positive declaration as per the
attached draft;
Purchase agreement with EIS International,
Inc., with which we must be fully
satisfied;
Interim figures which must be not more than
5 months old and which do not indicate any
deterioration in creditworthiness.
Additionally, your existing credit with us,
Credit 2, with a current value of EUR
10,225,837.62, must have been repaid.
Other contractual documents
Our attached "General Terms and
Conditions."
Duties of information
Right to inspect and view During the term of our business
relationship, you will regularly provide us
with your annual financial statements and
consolidated accounts and the audit report
if necessary and allow us to inspect your
business records and accounts and to view
your premises. Should there be a delay in
preparing your annual financial statements,
you will initially provide us with your
provisional figures.
Acceptance By 21 December 1999 using the attached
declaration of consent.
We look forward to being able to assist your investments with this credit.
IKB Deutsche Industriebank AG
/s/DELHEY /s/ POHLMANN
Delhey Pohlmann
<PAGE> 1
EXHIBIT (b)(3)
[COMMERZBANK letterhead]
Company Management
SER Systeme AG Produkte und
Anwendungen der Datenverarbeitung
SER Systems Engineering GmbH
SER Software Engineering GmbH
Innovationspark Rahms
53577 Neustadt/Wied
December 8, 1999
Dear Sir or Madam,
With reference to the conversations held with you, we are pleased to confirm the
agreements made. As discussed, we shall make a cash credit facility available to
you to co-finance the acquisition of the company "EIS International Inc.,
Herndon, Virginia/USA" (hereinafter named "EIS") in the amount of
DM 25,000,000.00
(in words: twenty five million Deutsche Mark)
under your liability as joint and several debtors according to Section 421 of
the German Civil Code, limited until April 30, 2000. As agreed, the credit
facility will be utilised by SER Systeme AG Produkte und Anwendungen der
Datenverarbeitung, Neustadt/Wied. You will be liable to us as joint and several
debtors for all utilisations under this credit facility, without our being
obliged to report to you any limit overdrafts or account balances. On your
request, we are prepared any time to inform you of the balances in all credit
accounts.
Currently and until further notice, we charge you 6.25% interest p.a. on each
drawdown for utilizations on current account, for which you will receive monthly
closing statements. In addition, we shall charge a commitment fee of 0.5% p.a.
on the unutilized portion of this credit facility for the period from January 5,
2000 to April 30, 2000.
We are gladly prepared to extend to you cash advances under the above-mentioned
cash credit facility. The term and the conditions will be agreed with you
separately in each case. On this occasion, we point out that cash advances are
traded two days in advance according to the European market practice.
<PAGE> 2
Blatt - 2 - zum Brief vom 8. Dezember 1999
Our credit confirmation is subject to the following conditions:
1. The due diligence report has been submitted to us only in draft form to
date. The final report may not include any further risks.
2. You will undertake irrevocably to use these credit balances maintained by
EIS for the respective repayment of the interim loans.
3. Exclusion of any liability or warranties whatsoever by SER, for instance
towards the existing shareholders or the staff of EIS, beyond the payment
of the purchase price.
4. You will undertake not to sell the shares in EIS without giving us prior
notice thereof and obtaining our express consent thereto, or not to
dispose thereof otherwise. At the request of Commerzbank AG which shall be
permissible at all times, you will further undertake to pledge all rights
and claims to the shares to which you are entitled.
Subject to unchanged financial circumstances, we already agree today to
reschedule the above-mentioned cash credit facility for DM 13 million with a
term of 3 years, if the following preconditions are met:
- - Submission of the annual accounts of all three borrowers, SER Group and EIS
as of December 31, 1999, at least in provisional form. In this connection
we assume that no restructuring losses are expected from the acquisition of
EIS and that favourable balance sheet and income figures will be further
shown.
- - Submission of balance sheet and profitability plans for the SER Group, both
under inclusion of and for EIS alone, which evidence a continuing positive
development.
- - Submission of the final acquisition agreement for the purpose of having it
checked by our own specialized departments.
In addition, the following shall be deemed agreed for the duration of the credit
relationship:
- - You will treat us pari passu with other lenders granting credits with equal
terms as regards the provision of credit collateral and the agreement of
special credit conditions.
- - The consolidated equity of the SER Group does not fall below a ratio of at
least 20% in the consolidated total assets.
The ratio is calculated as follows:
<PAGE> 3
Blatt - 3 - zum Brief vom 8. Dezember 1999
consolidated equity of the SER Group
(= nominal capital + capital reserves + other revenue reserves + net
income ./. net loss + profits carried forward ./. loss carried
forward)
+ shareholder loans
./. goodwill
./. claims on shareholders
----------------------------
total assets ./. goodwill ./. claims on shareholders
The ratios are calculated based on the balance sheets as of December 31 of each
year which are to be submitted by April 30 of the following year. If the
above-mentioned obligations or ratios are not complied with or attained, or if
the result of the calculation of the ratio is not notified to the bank, or not
notified to the bank in due time, or if the obligation is not complied with, the
bank will set a date to remedy this breach, if a remedy appears possible at
short notice. Otherwise, and if the date so set expires without result, the bank
shall be entitled to terminate the credit facility and to declare the
outstanding balance due for immediate repayment without a notice period.
Independently of the term of these credits, this financial covenant shall apply
also to the cash credit facility for DM 10 million confirmed by our letter dd.
October 30, 1998.
In addition, our General Business Conditions shall apply in the January 1998
version which is enclosed herewith.
Other assets shall be liable to us as pledge as per no. 14 of our General
Business Conditions.
With respect to your being year 2000 compliant, we would kindly ask you to make
the following confirmation:
"We confirm that our computer systems (both hardware and software) and other
equipment, appliances and installations which (may) contain electronic parts
have been listed in detail and checked as to their year 2000 compliance. For
this purpose we have also obtained - to the extent feasible - the statements of
the producers regarding the year 2000 compliance of their products.
We further confirm to you that we completed all required conversion activities
and all required tests (including integration tests, system tests and future
tests) by September 30, 1999 and that we asked all our important suppliers,
customers and business partners about their year 2000 compliance by September
30, 1999.
We undertake that, by December 31, 1999 at the latest, we shall have prepared
and tested contingency plans for the event of disruption or defective function
of our essential systems and business processes, and, for the period directly
following the turn of the year, we shall have
<PAGE> 4
Blatt - 4 - zum Brief vom 8. Dezember 1999
taken corresponding precautions so that any occurring disruptions or defects can
be immediately recognized, examined and remedied."
With reference to the provisions of the German Banking Act, we would ask you to
keep us informed of the financial situation of your company group promptly and
provide us with your annual accounts and auditor's reports as soon as they have
been completed.
Under the requirements of the Federal Banking Supervisory Office we must reserve
the right to terminate credits, should any borrowers fail to comply with their
disclosure obligation. This shall not affect our rights of termination which
result from our "General Business Conditions" or any other agreement.
In conclusion, we ask you to consent to the disclosure of information in
connection with our refinancing. If the credit claims arising from this
agreement (including any future cash advances) are transferred or pledged by the
bank to a central bank or other credit institution (hereinafter generally named
refinancing institution) in connection with its own refinancing or used for
refinancing purposes by means of another legal instrument, the borrowers agree
in such cases that the bank may disclose their names and addresses to the
refinancing institution, in addition to the other information required (e.g.
credit amount, maturity, (partial) repayments and renewals).
Please confirm your agreement to the contents of this letter and the receipt of
our "General Business Conditions" in the January 1998 version by signing the
enclosed copy hereof in a legally binding manner and returning it to us.
We are pleased to be able to make this credit facility available to you and hope
to continue our pleasant cooperation.
Yours sincerely,
C O M M E R Z B A N K
Aktiengesellschaft
Koblenz Branch
/s/ SCHNUR /s/ ADAM
(Schnur) (Adam)
We declare that we agree to the contents of this letter in all its parts. At the
same time we acknowledge the receipt of your "General Business Conditions" in
the January 1998 version. We
<PAGE> 5
Blatt - 5 - zum Brief vom 8. Dezember 1999
further authorise Commerzbank AG to inspect any public registers (commercial
register, land register, etc.) which may concern us.
We also give the above declaration concerning the millenium change and consent
to the disclosure of information in connection with the refinancing.
................................... ...................................
Place/date (SER Systeme AG Produkte und
Anwendungen der Datenverarbeitung)
................................... ...................................
Place/date (SER Systems Engineering GmbH)
................................... ...................................
Place/date (SER Software Engineering GmbH)
<PAGE> 1
EXHIBIT (c)(1)
AGREEMENT AND PLAN OF MERGER
by and among
SER SYSTEME AG
SERSYS ACQUISITION CORPORATION
and
EIS INTERNATIONAL, INC.
Dated as of December 17, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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Page
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ARTICLE I THE OFFER AND THE MERGER..................................................1
1.1 The Offer................................................................1
1.2 Company Action...........................................................3
1.3 Directors................................................................3
1.4 The Merger...............................................................4
1.5 Closing..................................................................5
1.6 Effective Time...........................................................5
1.7 Effects of the Merger....................................................5
1.8 Conversion of Company Common Stock.......................................5
1.9 Options..................................................................6
1.10 Certificate of Incorporation.............................................6
1.11 Bylaws...................................................................6
1.12 Directors and Officers of Surviving Corporation..........................7
1.13 Alternate Transaction Structures, Etc....................................7
ARTICLE II EXCHANGE OF SHARES.......................................................7
2.1 Establishment of Exchange Fund...........................................7
2.2 Exchange of Shares.......................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF COMPANY...............................9
3.1 Corporate Organization...................................................9
3.2 Capitalization..........................................................10
3.3 Authority; No Violation.................................................11
3.4 Consents and Approvals..................................................12
3.5 Regulatory Reports......................................................12
3.6 Broker's Fees...........................................................12
3.7 Absence of Certain Changes or Events....................................13
3.8 Legal Proceedings.......................................................13
3.9 Taxes and Tax Returns...................................................13
3.10 ERISA and Employee Matters..............................................14
3.11 SEC Reports.............................................................17
3.12 Financial Statements....................................................17
3.13 Licenses; Compliance with Applicable Law................................17
3.14 Certain Contracts.......................................................17
3.15 [Reserved]..............................................................18
3.16 Investment Securities...................................................18
3.17 [Reserved]..............................................................18
3.18 Undisclosed Liabilities.................................................18
3.19 Environmental Liability.................................................18
3.20 Information Supplied....................................................19
3.21 State Takeover Laws; Rights Agreement...................................19
3.22 Insurance...............................................................19
</TABLE>
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<TABLE>
<S> <C>
3.23 Year 2000 Compliance....................................................19
3.24 Intellectual Property...................................................20
3.25 Opinion of the Company's Financial Advisor..............................22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB........................22
4.1 Corporate Organization..................................................22
4.2 Authority; No Violation.................................................23
4.3 Consents and Approvals..................................................23
4.4 Broker's Fees...........................................................24
4.5 Funds...................................................................24
4.6 Information Supplied....................................................24
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS................................24
5.1 Conduct of Company Businesses Prior to the Effective Time...............24
5.2 Forbearances of Company.................................................24
ARTICLE VI ADDITIONAL AGREEMENTS...................................................27
6.1 Company Stockholders Meeting; Preparation of Proxy Statement............27
6.2 Reasonable Best Efforts.................................................27
6.3 Access to Information...................................................28
6.4 Indemnification; Directors' and Officers' Insurance.....................29
6.5 Employee Benefits.......................................................29
6.6 Advice of Changes.......................................................30
6.7 Exclusive Negotiations..................................................30
6.8 No Solicitation.........................................................30
6.8 Publicity...............................................................32
6.9 State Takeover Statutes.................................................32
6.10 Payment of Bonuses......................................................32
ARTICLE VII CONDITIONS PRECEDENT...................................................33
7.1 Conditions to Each Party's Obligation To Effect the Merger..............33
ARTICLE VIII TERMINATION AND AMENDMENT.............................................34
8.1 Termination.............................................................34
8.2 Effect of Termination...................................................35
8.3 Amendment...............................................................36
8.4 Extension; Waiver.......................................................36
ARTICLE IX GENERAL PROVISIONS......................................................36
9.1 Nonsurvival of Representations, Warranties and Agreements...............36
9.2 Expenses................................................................36
9.3 Notices.................................................................37
9.4 Interpretation..........................................................38
</TABLE>
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<TABLE>
<S> <C>
9.5 Counterparts............................................................38
9.6 Entire Agreement........................................................38
9.7 Governing Law, Jurisdiction and Venue...................................38
9.8 Severability............................................................38
9.9 Assignment; Third Party Beneficiaries...................................38
9.10 Enforcement.............................................................39
Annex I - Conditions of the Offer
Annex II - Certificate if Incorporation of Surviving Corporation
Annex III - Bylaws of Surviving Corporation
Annex IV - Stock Option Plan
</TABLE>
iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of December 17, 1999 (this
"Agreement") is entered into by and among SER SYSTEME AG, a German corporation
("Parent"), SERSYS ACQUISITION CORPORATION ("Sub"), a Delaware corporation that
is a wholly owned subsidiary of SER (USA), INC. ("SER USA"), a Delaware
corporation that is a wholly owned subsidiary of Parent, and EIS INTERNATIONAL,
INC., a Delaware corporation ("Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and Company
have determined that the Offer (as defined in Section 1.1) and (ii) the merger
of Sub with and into Company (the "Merger") following the consummation of the
Offer, with Company as the surviving corporation (the "Surviving Corporation"),
each upon the terms and subject to the conditions set forth in this Agreement,
are advisable and fair to, and in the best interests of, their respective
stockholders;
WHEREAS, as an inducement and condition to Parent and Sub entering into
this Agreement, and concurrently with the execution of this Agreement, certain
entities, individuals, directors and executive officers of Company are executing
and delivering to Parent a Tender and Voting Agreement (the "Support Agreement")
dated as of the date hereof, which provides, among other things that such
parties agree to tender their shares of Company Common Stock in the Offer and,
to vote such shares in favor of the Merger and the approval and adoption of this
Agreement;
WHEREAS, as an inducement and condition to Parent and Sub entering into
this Agreement, and concurrently with the execution of this Agreement, James E.
McGowan and Frederick C. Foley are each executing and delivering to Parent an
employment agreement dated as of the date hereof and to be effective from and
after the consummation of the Offer; and
WHEREAS, the parties desire to make certain representations, warranties
and agreements in connection with the Offer and the Merger and also to prescribe
certain conditions therefor.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained herein, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
THE OFFER AND THE MERGER
1.1 The Offer. (a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.1, Parent shall cause Sub to, and Sub
shall, as soon as practicable after the date hereof, but in any event within
five (5) business days after the public announcement of the execution hereof,
commence (within the meaning of Rule 14d-2(a) under the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), a tender offer (the "Offer") for all
of the issued and outstanding shares of common stock, par value $0.01 per share,
of Company (the "Company Common Stock") at a price of $6.25 per share (the "Per
Share Price"), net to the sellers in cash, subject to the conditions set forth
in Annex I hereto and incorporated herein by reference (the "Offer Conditions")
including the Minimum Condition (as defined therein).
(b) The Offer shall be made by means of an offer to purchase
which shall contain as conditions only the Offer Conditions and, subject to the
next succeeding sentence, shall otherwise contain, and be consistent with, the
terms and conditions of the Offer as described in this Agreement. Each of Sub
and Parent expressly
<PAGE> 6
reserves the right, in its sole discretion, to waive any such condition and make
any other changes to the terms of the Offer; provided, that, without the consent
of Company, neither Parent nor Sub shall amend or waive the Minimum Condition,
change the form of consideration to be paid in the Offer, decrease the Per Share
Price or the number of shares of Company Common Stock sought, impose additional
conditions to the Offer, or amend any other condition of the Offer in any manner
adverse to the holders of the shares of Company Common Stock. The Per Share
Price shall be net to the sellers in cash, without interest, subject to
reduction only for any applicable withholding taxes. Notwithstanding the
foregoing, Sub may, without the consent of Company, (i) extend the Offer on one
or more occasions for up to ten (10) business days for each such extension
beyond the then-scheduled expiration date (the initial scheduled expiration date
being twenty (20) business days following commencement of the Offer), if at the
then-scheduled expiration date of the Offer any of the conditions to Sub's
obligation to accept for payment and pay for the shares of Company Common Stock
shall not be satisfied or waived, but not later than February 28, 2000, until
such time as such conditions are satisfied or waived, and, at the request of
Company, Sub shall, subject to Parent's right to terminate this Agreement
pursuant to Article VIII, extend the Offer for additional periods ending up to,
but not later than, February 28, 2000, if the only condition not satisfied or
earlier waived on the then-scheduled expiration date is the HSR Approval
Condition (as defined in Annex I hereto), (ii) extend the Offer for any period
required by any rule, regulation, interpretation or position of the Securities
and Exchange Commission (the "SEC") or the staff thereof applicable to the Offer
and (iii) provided that Parent and Sub irrevocably waive the conditions, other
than the Minimum Condition, to the Offer set forth in Annex I and agree not to
assert such conditions as a basis for not consummating the Offer, extend the
Offer for an aggregate period of not more than ten (10) business days beyond the
latest expiration date that would otherwise be permitted under clause (i) or
(ii) of this sentence if the Minimum Condition shall have been satisfied but
there shall not have been tendered sufficient shares of Company Common Stock so
that the Merger could be effected without a vote of Company's stockholders in
accordance with Section 253 of the Delaware General Corporation Law (the
"DGCL"). Subject to the terms of the Offer, including the Offer Conditions, Sub
shall accept for payment and pay for all shares of Company Common Stock duly
tendered, and not withdrawn, at the earliest time at which it is permitted to do
so under applicable law; provided, that, as set forth above, Sub shall have the
right, in its sole discretion, to extend the Offer for up to ten (10) business
days notwithstanding the prior satisfaction or waiver of the Offer Conditions,
in order to attempt to permit the tender of sufficient shares of Company Common
Stock to effect the Merger pursuant to Section 253 of the DGCL. It is agreed
that the Offer Conditions other than the Minimum Condition are solely for the
benefit of Parent and Sub and that all Offer Conditions may be asserted by
Parent or Sub, unless irrevocably waived, regardless of the circumstances
resulting in a condition not being satisfied (except for any action or inaction
by Sub or Parent constituting a breach of this Agreement) and, except with
respect to the Minimum Condition, may be waived by Parent or Sub, in whole or in
part at any time and from time to time, in their sole discretion.
(c) As soon as practicable on the date of commencement of
the Offer (within the meaning of Rule 14d-2(a) under the Exchange Act), Parent
and Sub, with the cooperation of, and subject to the prior review thereof by,
Company, shall file with the SEC a Schedule 14D-1 (the "Schedule 14D-1") with
respect to the Offer that will contain or will incorporate by reference the
Offer (or portions thereof) and forms of the related letter of transmittal and
summary advertisement (which documents, together with any supplements or
amendments thereto, and together with the Schedule 14D-1, are referred to herein
collectively as the "Offer Documents"). Each of Parent, Sub and Company, with
respect to information supplied by it for use in the Offer Documents, agrees
promptly to correct the Offer Documents if and to the extent that any of them
shall have become false or misleading in any material respect or any event
occurs which should be set forth in an amendment or supplement to the Offer
Documents, and Sub shall take all steps necessary to cause the Offer Documents
as so corrected or supplemented to be filed with the SEC and such Offer
Documents as so corrected to be disseminated to holders of shares of Company
Common Stock, in each case as and to the extent required by applicable federal
securities laws. The Company and its counsel shall be given the reasonable
2
<PAGE> 7
opportunity to review and comment on the Offer Documents and any amendments
thereto prior to the filing thereof with the SEC. Parent and Sub shall provide
promptly the Company and its counsel with a copy of any written comments or
telephonic notification of any oral comments Parent or Sub may receive from the
SEC or its staff with respect to the Offer Documents promptly after the receipt
thereof. Parent and Sub shall use their reasonable best efforts to provide the
Company and counsel with a reasonable opportunity to participate in all
nonconfidential and substantive communications with the SEC and its staff,
including any nonconfidential and substantive meetings and telephone
conferences, relating to the Offer or this Agreement.
(d) Parent shall provide to Sub all funds reasonably
necessary to consummate the Offer, the Merger and any other transactions
contemplated by this Agreement.
1.2 Company Action. (a) Subject to Section 1.2(b) below, Company
hereby consents to the inclusion in the Offer Documents of the Company Board
Recommendation (as defined in Section 3.21).
(b) On the same day Parent and Sub first file the Schedule
14D-1 with the SEC, Company shall file with the SEC and mail to its stockholders
a Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") which shall comply in all material respects with the provisions of
applicable federal securities laws. Each of Company, Parent and Sub, with
respect to information supplied by it for use in the Schedule 14D-9, agrees
promptly to correct the Schedule 14D-9 if and to the extent that it shall have
become false or misleading in any material respect, and Company shall take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and mailed to holders of shares of Company Common Stock to the extent
required by applicable federal securities laws. The Schedule 14D-9 shall contain
the Company Board Recommendation recommending that the holders of shares of
Company Common Stock accept the Offer, which recommendation shall not be
withdrawn, amended, modified or materially qualified in a manner adverse to
Parent (nor shall the Board of Directors of Company publicly announce its
intention to do so) except pursuant to Section 6.8(g) hereof. The Parent and its
counsel shall be given the reasonable opportunity to review and comment on the
Schedule 14D-9 and any amendments thereto prior to the filing thereof with the
SEC. Company shall provide promptly the Parent and its counsel with a copy of
any written comments or telephonic notification of any oral comments Parent or
Sub may receive from the SEC or its staff with respect to the Schedule 14D-9
promptly after the receipt thereof. Company shall use its reasonable best
efforts to provide Parent and its counsel with a reasonable opportunity to
participate in all nonconfidential and substantive communications with the SEC
and its staff, including any nonconfidential and substantive meetings and
telephone conferences, relating to the 14D-9.
(c) Company shall promptly furnish, or cause its transfer
agent to furnish, to Parent or Sub a list of the record holders of shares of
Company Common Stock and their addresses, as well as mailing labels containing
the names and addresses of the record holders of such shares, lists of any
non-objecting beneficial owners of such shares and lists of securities positions
of such shares held in stock depositories, each as of the most recent
practicable date, and shall furnish Parent or Sub with such additional
information, including updated lists of holders of such shares, mailing labels
and lists of securities positions, and other assistance as Parent, Sub or their
agents may reasonably request for the purpose of disseminating the Offer
Documents and communicating with the record and beneficial holders of shares of
Company Common Stock with respect thereto.
1.3 Directors. (a) Promptly upon the purchase of and payment for
shares of Company Common Stock by Sub which represent at least a majority of the
shares of Company Common Stock then outstanding, Parent shall be entitled to
designate a number of directors on the Board of Directors of Company equal to
the product (rounded up to the nearest whole number) of the total number of the
directors on such Board (after giving effect to the directors
3
<PAGE> 8
elected pursuant to this sentence) multiplied by the percentage that such number
of shares owned by Sub and its Affiliates (as defined in Rule 12b-2 of the
regulations promulgated under the Exchange Act, "Affiliates") bears to the
number of shares of Company Common Stock outstanding. Company shall, to the
extent permitted under its Certificate of Incorporation and Bylaws, designate
such directors for election to such class of the Company's Board of Directors
standing for election on the furthest date from the date of such nomination.
Company's obligations under this Section 1.3(a) shall be subject to Section
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder. Parent or Sub
will supply Company with, and be solely responsible for, any information with
respect to either of them and their nominees, officers, directors and Affiliates
required by Section 14(f) and Rule 14f-1. Upon receipt of such information from
Parent or Sub, Company shall include in the Schedule 14D-9 (as an annex or
otherwise) or a separate Rule 14f-1 information statement mailed to stockholders
of Company promptly after the commencement of the Offer the information required
by Section 14(f) and Rule 14f-1 as is necessary to enable Parent's designees to
be elected to the Board of Directors of Company.
(b) At the time specified in the first sentence of Section
1.3(a), Company shall, upon request of Parent, use its reasonable best efforts
promptly either to increase the size of the Board of Directors of Company or, at
Company's election, secure the resignations of such number of its incumbent
directors as is necessary to enable Parent's designees pursuant to Section
1.3(a) to be so elected or appointed to Company's Board of Directors, and shall
cause Parent's designees to be so elected or appointed. Company will use its
reasonable best efforts to cause directors designated by Parent to constitute
the same percentage as their percentage on the full Board (i) of each committee
of its Board of Directors, (ii) of the board of directors of each of its
Subsidiaries (as defined in Section 3.1) and (iii) of each committee of each
such board, to the extent applicable, provided that in any event, at least one
(1) Parent designee shall be designated to serve on each such Board or
committee. Notwithstanding the foregoing, provided that the number of directors
which the Parent shall have the ability to designate shall constitute a majority
of the board of directors, until the Effective Time (as defined in Section 1.6),
Company and Parent shall use reasonable best efforts to retain as members of
Company's Board of Directors at least three (3) directors who are directors of
Company on the date hereof and who are not designated by Parent or employees of
Company or its Subsidiaries (the "Independent Directors"); provided that in the
event that the number of Independent Directors shall be reduced below three for
any reason whatsoever (other than to allow the Parent the ability to designate a
majority of the members of the board of directors), any remaining Independent
Directors (or Independent Director, if there shall be only one remaining) shall
be entitled to designate persons to fill such vacancies who shall be deemed to
be Directors for purposes of this Agreement.
(c) Notwithstanding anything in this Agreement to the
contrary, following the election or appointment of Parent's designees to
Company's Board of Directors and prior to the Effective Time, the affirmative
vote of a majority of the Independent Directors shall be required for Company to
take action to (i) amend or terminate this Agreement, (ii) exercise or waive any
of Company's rights or remedies hereunder, (iii) extend the time for performance
of Parent's and Sub's respective obligations hereunder, or (iv) approve any
other action by Company that would reasonably be expected to affect adversely
the interests of the stockholders of Company (other than Parent, Sub and their
Affiliates) with respect to the transactions contemplated hereby.
1.4 The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the DGCL, at the Effective Time (as defined in
Section 1.6), Sub shall merge with and into Company. Company shall be the
Surviving Corporation in the Merger, and shall continue its corporate existence
under the laws of the State of Delaware. Upon consummation of the Merger, the
separate corporate existence of Sub shall terminate and the name of the
Surviving Corporation shall initially be SERSYS Acquisition Corporation.
4
<PAGE> 9
1.5 Closing. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 8.1, the closing of the Merger (the "Closing") will take place at 10:00
a.m., Washington, D.C. time, on the second (2nd) business day after satisfaction
or waiver of the conditions (excluding conditions that, by their terms, cannot
be satisfied until the Closing Date (as defined below), but subject to
satisfaction or waiver of such conditions on the Closing Date) set forth in
Article VII (the "Closing Date"), at the offices of Venable, Baetjer, Howard &
Civiletti, LLP, 1201 New York Ave, N.W., Suite 1000, Washington, D.C. 20005,
unless another date, time or place is agreed to in writing by the parties
hereto. Each of the parties undertakes to use its reasonable best efforts to
ensure that the Merger occurs as soon as practicable following the date on which
Sub consummates the Offer.
1.6 Effective Time. Upon the Closing, the parties shall file a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware and shall make all other filings or recordings required
under the DGCL. The Merger shall become effective at such time as the
Certificate of Merger shall have been duly filed with the Secretary of State of
the State of Delaware, or at such later time as is agreed by Parent and Company
and specified in the Certificate of Merger (the time the Merger becomes
effective being the "Effective Time").
1.7 Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in Sections 259, 260 and 261 of the
DGCL.
1.8 Conversion of Company Common Stock. At the Effective Time by
virtue of the Merger and without any action on the part of Parent, Sub, Company
or the holder of any of the following securities:
(a) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than (x) shares of
Company Common Stock canceled pursuant to Section 1.8(c), and (y) Dissenting
Shares, as defined in Section 1.8(d)) together with the associated right, if
any, to purchase Series A Shares or other securities of the Company pursuant to
the Rights Agreement, dated as of May 16, 1997 between Company and BankBoston
N.A. as rights agent thereunder (the "Rights Agreement") shall be converted into
the right to receive cash in an amount equal to the Per Share Price or any
higher per share price as may be paid in the Offer, payable to the holder
thereof, without interest thereon (the "Merger Consideration").
(b) All of the shares of Company Common Stock issued and
outstanding immediately prior to the Effective Time shall no longer be
outstanding and shall automatically be canceled and shall cease to exist as of
the Effective Time, and each certificate (each a "Common Certificate")
previously representing any such shares of Company Common Stock (other than
shares canceled pursuant to Section 1.8(c) and Dissenting Shares) shall
thereafter represent solely the right to receive the Merger Consideration into
which the shares of Company Common Stock represented by such Common Certificate
have been converted pursuant to this Section 1.8.
(c) All shares of Company Common Stock that are held by
Company as treasury stock or by any of Company's wholly owned Subsidiaries shall
automatically be canceled and shall cease to exist and no cash or other
consideration shall be delivered in exchange therefor.
(d) Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock issued and outstanding immediately
prior to the Effective Time held by holders (if any) who have not voted in favor
of the Merger or consented thereto in writing and who have demanded appraisal
rights with respect thereto in accordance with Section 262 of the DGCL and, as
of the Effective Time, have not failed to perfect or have not effectively
withdrawn or lost their rights to appraisal and payment under Section 262 of the
DGCL ("Dissenting
5
<PAGE> 10
Shares") shall not be converted into the right to receive the Merger
Consideration as described in Section 1.8(a), but holders of such shares shall
be entitled to receive payment of the appraised value of such Dissenting Shares
in accordance with the provisions of such Section 262, except that any
Dissenting Shares held by a holder who shall have failed to perfect or shall
have effectively withdrawn or lost its right to appraisal and payment under
Section 262 of the DGCL shall thereupon be deemed to have been converted into
the right to receive the Merger Consideration and shall no longer be considered
Dissenting Shares. Company shall give Parent (i) prompt notice of any written
demands for appraisal of any shares, attempted withdrawals of such demands, and
any other instruments served pursuant to the DGCL received by Company relating
to stockholders' rights of appraisal and (ii) the opportunity to direct all
negotiations and proceedings with respect to demands for appraisal under the
DGCL. Company shall not, except with the prior written consent of Parent,
voluntarily make any payment with respect to any demands for appraisals of
capital stock of Company, offer to settle or settle any such demands or approve
any withdrawal of any such demands.
(e) All of the shares of capital stock of Sub issued and
outstanding immediately prior to the Effective Time shall be converted into a
total of 1,000,000 shares of the capital stock of the Surviving Corporation,
with such shares to be issued at the Effective Time, and shall constitute the
only issued and outstanding capital stock of the Surviving Corporation following
the Effective Time.
1.9 Options. At the Effective Time, each then outstanding option to
purchase Company Common Stock, whether or not then vested or exercisable, (each
a "Company Option") including without limitation such Company Options granted
under the Company's Amended and Restated Stock Option(s) Plan, the 1998 Stock
Incentive Plan and the 1993 Stock Option Plan for Non-Employee Directors ( each
a "Company Stock Plan" and collectively, the "Company Stock Plans") shall be
converted pursuant to the terms of the Company Stock Plan into a right to
receive a payment in cash (the "Option Consideration") equal to the product of
(i) the number of shares previously subject to the Company Option and (ii) the
excess, if any, of the Merger Consideration over the exercise price of each
share of Company Common Stock under the Company Option, subject to withholding
taxes and without interest. As soon as practicable after the Effective Time, and
in any event no more than fifteen (15) calendar days following the Effective
Time, the Surviving Corporation shall instruct the Exchange Agent (as defined in
Section 2.1) to pay, and the Exchange Agent shall so pay, all amounts due as
Option Consideration to the former holders of Company Options as required by
this Agreement. Notwithstanding the foregoing, the Parent, Merger Sub and
Company acknowledge that there are 7,666 Company Options outstanding under the
International Telesystems Corporation ("ITC") Stock Option Plan (the "ITC Plan")
which was assumed by the Company in connection with its acquisition of ITC on
November 30, 1993) which are not automatically convertible pursuant to the terms
of the ITC Plan into the right to receive Option Consideration. The treatment of
options under the ITC Plan and the 1993 Employee Stock Purchase Plan ("Stock
Purchase Plan") shall be pursuant to section 6.5 hereof.
1.10 Certificate of Incorporation. Subject to the terms and
conditions of this Agreement, at the Effective Time, the Certificate of
Incorporation of Sub, substantially in the form attached hereto as Annex II
(provided that such plan shall be amended to increase the number of authorized
shares required to adopt the stock option plan pursuant to Section 6.5(b) of
this Agreement), shall be the certificate of incorporation of the Surviving
Corporation until thereafter amended as provided therein and by the DGCL.
1.11 Bylaws. Subject to the terms and conditions of this Agreement,
at the Effective Time, the Bylaws of Sub, substantially in the form attached
hereto as Annex III, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided therein and by the DGCL.
6
<PAGE> 11
1.12 Directors and Officers of Surviving Corporation. At the
Effective Time, the directors and officers of Sub immediately prior to the
Effective Time shall be the directors and officers, respectively, of the
Surviving Corporation following the Merger, to hold office in accordance with
the Surviving Corporation's Bylaws and applicable law.
1.13 Alternate Transaction Structures, Etc. The parties agree that
Parent may at any time change the method of effecting the Offer, including by
providing that any other Subsidiary of Parent shall make the Offer, or effect
the Merger by merging any direct or indirect wholly owned Subsidiary of Parent
with and into Company, or by merging Company with and into such direct or
indirect wholly owned Subsidiary, and Company shall cooperate in such efforts,
including by entering into any appropriate amendment(s) to this Agreement;
provided, however, that such other Subsidiary, if any, shall become a party to,
and shall agree to be bound by, the terms of this Agreement, and that any such
actions shall not (a) alter or change the amount or kind of consideration to be
issued to holders of Company Common Stock as provided for in this Agreement, or
(b) materially delay the receipt of any HSR Approval (as defined in Annex I
hereto) or the consummation of the transactions contemplated by this Agreement
or otherwise adversely affect the interests of the stockholders of the Company
(other than Parent, Sub and their affiliates) with respect to the transactions
contemplated by this Agreement. The parties also agree to take such actions as
Parent may reasonably request to provide for the merger or consolidation of
Subsidiaries of Company with other Subsidiaries of Company or of Parent, to be
effective at or following the Effective Time.
ARTICLE II
EXCHANGE OF SHARES
2.1 Establishment of Exchange Fund. Prior to the Effective Time,
Parent shall designate a bank or trust company, to act as exchange agent (the
"Exchange Agent") for the payment of the Merger Consideration (including any and
all Option Consideration). At or prior to the Effective Time, Parent shall
deposit, or shall cause to be deposited, with the Exchange Agent, for the
benefit of the holders of certificates representing the Shares (the "Common
Certificates"), for exchange in accordance with this Article II, cash (such cash
being hereinafter referred to as the "Exchange Fund") to be paid pursuant to
Section 2.2(a) in exchange for outstanding shares of Company Common Stock and
cancellation of the Company Options pursuant to Section 1.9.
2.2 Exchange of Shares. (a) Within ten (10) days after the Effective
Time, the Exchange Agent shall mail to each holder of record as of the Effective
Time of one or more Common Certificates (other than with respect to shares of
Company Common Stock canceled pursuant to Section 1.8(c)) a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Common Certificates shall pass, only upon delivery of the
Common Certificates to the Exchange Agent) and instructions for use in effecting
the surrender of the Common Certificates in exchange for the Merger
Consideration. Upon proper surrender of a Common Certificate for exchange and
cancellation to the Exchange Agent, together with such properly completed letter
of transmittal, duly executed, covering such Common Certificate, the holder of
such Common Certificate shall be entitled to receive in exchange therefor a
check representing the amount of the Merger Consideration, and the Common
Certificate so surrendered shall forthwith be canceled. No interest will be paid
or accrued on the Merger Consideration payable to holders of Common
Certificates. As soon as practicable after the Effective Time, and the
cancellation of such Company Options pursuant to Section 1.9, the Exchange Agent
shall provide for payment by check of the Option Consideration to such former
holders of Company Options cancelled pursuant to Section 1.9. No interest will
be paid or accrued on the Option Consideration payable to the former holders of
Company Options.
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(b) If the payment of the Merger Consideration is to be made
to a person other than the registered holder of the Common Certificate
surrendered in exchange therefor, it shall be a condition to the payment thereof
that the Common Certificate so surrendered shall be properly endorsed (or
accompanied by an appropriate instrument of transfer) and otherwise in proper
form for transfer, and that the person requesting such exchange shall pay to the
Exchange Agent in advance any transfer or other taxes required by reason of the
issuance, delivery or payment of such Merger Consideration to any person other
than the registered holder of the Common Certificate surrendered, or required
for any other reason, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable.
(c) After the Effective Time, there shall be no transfers on
the stock transfer books of Company of the shares of Company Common Stock which
were issued and outstanding immediately prior to the Effective Time. If, after
the Effective Time, Common Certificates representing such shares are presented
for transfer to the Exchange Agent, they shall be canceled and exchanged for the
applicable Merger Consideration as provided in this Article II.
(d) Any portion of the Exchange Fund that remains unclaimed
by the stockholders of Company on or after the six (6) month anniversary of the
Effective Time shall be paid to Parent. Any stockholders of Company who have not
theretofore complied with this Article II shall thereafter look only to Parent
for payment of the Merger Consideration, without any interest thereon.
Notwithstanding the foregoing, none of the Surviving Corporation, Parent, the
Exchange Agent or any other person shall be liable to any former holder of
shares of Company Common Stock for any Merger Consideration delivered to a
public official pursuant to applicable abandoned property, escheat or similar
laws.
(e) In the event any Common Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Common Certificate to be lost, stolen or destroyed and, if
reasonably required by Parent, the posting by such person of a bond in such
amount as Parent may determine is reasonably necessary as indemnity against any
claim that may be made against it with respect to such Common Certificate, the
Exchange Agent will issue in exchange for such lost, stolen or destroyed Common
Certificate the Merger Consideration.
(f) All cash paid upon the surrender of the Common
Certificates and the Rights associated therewith under the Rights Agreement and
the cancellation of the Company Options in accordance with the terms of Articles
I and II shall be deemed to have been paid in full satisfaction of all rights
pertaining to the shares of the Company Common Stock theretofore represented by
such Common Certificates and the Company Options; subject, however, to the
Surviving Corporation's obligation, with respect to shares of Company Common
Stock outstanding immediately prior to the Effective Time, to pay any dividends
or make any other distributions with a record date prior to the Effective Time
which may have been declared or made by Company on such shares of Company Common
Stock prior to the date of this Agreement and which remain unpaid at the
Effective Time.
(g) The Exchange Agent shall invest the Exchange Fund as
directed by Parent. Any interest and other income resulting from such
investments shall be paid to Parent.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company hereby represents and warrants to Parent and Sub, except as set
forth in the Company disclosure schedule delivered to Parent concurrently
herewith (the "Company Disclosure Schedule"), as follows:
3.1 Corporate Organization. (a) Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Company has all requisite corporate power and authority to own or
lease all of its properties and assets and to carry on its business as it is now
being conducted, and is duly licensed or qualified to do business and in good
standing in each jurisdiction (whether federal, state, local or foreign), in
which the nature of the business conducted by it or the character or location of
the properties and assets owned or leased by it makes such licensing or
qualification necessary except where failure to be so qualified or in good
standing would not have a Company Material Adverse Effect (as defined below) on
the Company. As used in this Agreement, (i) the term "Subsidiary" when used with
respect to any party means any corporation or other organization, whether
incorporated or unincorporated, (x) of which such party or any other Subsidiary
of such party is a general partner (excluding partnerships, the general
partnership interests of which held by such party or any Subsidiary of such
party do not have a majority of the voting interests in such partnership), or
(y) a majority of the securities or other interests of which having by their
terms ordinary voting power to elect a majority of the board of directors or
other body performing similar functions with respect to such corporation or
other organization is directly or indirectly owned or controlled by such party
or by any one or more of its Subsidiaries, or by such party and one or more of
its Subsidiaries, and (ii) the term "Company Material Adverse Effect" means, a
material adverse effect on the business, assets, liabilities, financial
condition or results of operations of the Company and its Subsidiaries taken as
a whole as of the date of this Agreement (other than any change, event,
occurrence or effect (A) disclosed in the Company Disclosure Schedule or in the
Management's Discussion and Analysis of Financial Condition and Results of
Operations, Company, Business or Financial Statements Sections of the Company
Reports filed prior to the date hereof (other than information contained under
any "Risk Factor," "Cautionary Statements" or "Factors Affecting Future Results"
heading contained therein) or (B) relating to (x) the United States or global
economy or securities markets in general, (y) the contact center industry and
not specifically relating to the Company or (z) this Agreement or the
transactions contemplated hereby or the announcement thereof) or on the ability
of the Company to perform its obligations under and to consummate the
transactions contemplated by this Agreement on a timely basis. Section 3.1(a) of
the Company Disclosure Schedule contains true and complete copies of the
Certificate of Incorporation and Bylaws of Company, as in effect as of the date
of this Agreement. Such organizational documents are in full force and effect
and other than the Rights Agreement no other organizational documents are
applicable to or binding upon Company. Company is not in violation of any of the
provisions of its Certificate of Incorporation or Bylaws.
(b) Part I of Section 3.1(b) of the Company Disclosure
Schedule sets forth a complete and correct list of all of Company's Subsidiaries
(each a "Company Subsidiary" and collectively the "Company Subsidiaries") and
indicates, as to each such Subsidiary the extent to which each Subsidiary is
owned by the Company and other Persons. There are no issued and outstanding
options, warrants, stock appreciation rights, scrip, rights to subscribe to,
calls or commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of any capital stock or
other equity securities of each such Subsidiary, nor any contracts, commitments,
understandings or arrangements by which such Subsidiary may become bound to
issue additional shares of its capital stock or other equity securities, or
options, warrants, scrip on rights to purchase, acquire, subscribe to, calls on
or commitments for any shares of its capital stock or other equity securities
and the identity of the parties to any such agreements or arrangements. All of
the outstanding shares of capital stock or other securities evidencing
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<PAGE> 14
ownership of the Company Subsidiaries have been duly authorized and validly
issued and are fully paid and non-assessable with no personal liability
attaching to the ownership thereof and such shares or other securities are owned
by Company or its wholly-owned Subsidiaries except as noted on the Company
Disclosure Schedule free and clear of any lien, claim, charge, option,
encumbrance, mortgage, pledge or security interest (a "Lien") with respect
thereto. Except where to be so, or have such, would not have a Company Material
Adverse Effect, each Company Subsidiary (i) is a duly organized and validly
existing corporation, partnership or limited liability company or other legal
entity under the laws of its jurisdiction of organization, (ii) is duly licensed
or qualified to do business and in good standing in all jurisdictions (whether
federal, state, local or foreign) where its ownership or leasing of property or
the conduct of its business requires it to be so qualified, and (iii) has all
requisite corporate power and authority to own or lease all of its properties
and assets and to carry on its business as now conducted. Except for the
ownership interests in its Subsidiaries disclosed in Part I of Section 3.1(b) of
the Company Disclosure Schedule, Company does not own, directly or indirectly,
any capital stock or other ownership interest, and does not have any option or
similar right to acquire any equity or other ownership interest, in any entity.
The Company and its Subsidiaries do not hold any partnership, joint venture and
similar investments, including, without limitation, all such investments in
which any Company employee or Affiliate serves as a director. Company has
provided to Parent a complete and accurate copy of all such partnership, joint
venture or similar agreements to which Company or any Company Subsidiary is a
party. Except as disclosed on Section 3.1(b) of the Company Disclosure Schedule,
neither Company nor any Company Subsidiary is subject to any obligation or
requirement to provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any entity.
(c) Except as required by law, neither the Certificate of
Incorporation nor the Bylaws of the Company contains any provision that would
require a vote of the Company's stockholders in excess of a majority of the
outstanding shares of Company Common Stock in order to approve the Merger in
accordance with the terms of this Agreement.
3.2 Capitalization. The authorized capital stock of Company consists
of 2,000,000 shares of preferred stock, $.10 par value per share, 15,000,000
shares of Company Common Stock, of which, as of the date of this Agreement,
10,593,869 shares were issued and outstanding. All of the issued and outstanding
shares of Company Common Stock have been duly authorized and validly issued and
are fully paid, non-assessable and free of preemptive rights, with no personal
liability attaching to the ownership thereof. The shares of Company Common Stock
which are issuable upon exercise of Company Options have been duly authorized
and reserved for issuance and, if and when issued pursuant to the terms thereof,
will be validly issued, fully paid and non-assessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. Part I of
Section 3.2 of the Company Disclosure Schedule sets forth, in each case as of
the date of this Agreement, (i) the number of shares of Company Common Stock
that were reserved for issuance upon the exercise of authorized but unissued
stock options pursuant to the Company Stock Plans, and (ii) the number of shares
of Company Common Stock issuable upon the exercise of outstanding Company
Options pursuant to the Company Stock Plans. Except as set forth in Part I of
Section 3.2 of the Company Disclosure Schedule, no other shares of Company
Common Stock or other equity or voting securities of Company were outstanding or
reserved for issuance as of the date of this Agreement. Part II of Section 3.2
of the Company Disclosure Schedule sets forth a list, as of the date of this
Agreement, of the holders of Company Options, the date of grant of each Company
Option granted and outstanding, the number of shares subject to each such
option, the expiration date of each such option, the vesting schedule of each
such option and the price at which each such option may be exercised under the
applicable Company Stock Plan. Except as set forth in Part III of Section 3.2 of
the Company Disclosure Schedule, the Company has not (i) issued any shares of
its capital stock or other equity or voting securities or any securities
convertible into or exercisable or exchangeable for any shares of its capital
stock or other equity or voting securities, other than shares of Company Common
Stock issued upon the exercise or conversion of Company Options outstanding
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<PAGE> 15
as of the date hereof, or (ii) taken any actions which would cause an
antidilution adjustment under any outstanding options of Company. There are no
outstanding bonds, debentures, notes or other indebtedness or other securities
of Company having the right to vote (or convertible into, or exchangeable or
exercisable for, securities having the right to vote) on any matters on which
stockholders of Company may vote. Except as set forth above, there are no
outstanding securities, options, warrants, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which Company or any of
its Subsidiaries is a party or by which any of them is bound obligating Company
or any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares or shares of capital stock or other equity
or voting securities of Company or of any of its Subsidiaries or obligating
Company or any of its Subsidiaries to issue, grant, extend or enter into any
such security, option, warrant, call, right, commitment, agreement, arrangement
or undertaking. There are no outstanding contractual obligations, commitments,
understandings or arrangements of Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of capital stock of Company
or any of its Subsidiaries, other than in connection with the surrender of
Company Common Stock as full or partial payment of the exercise price or
withholding tax in connection with the exercise of Company Options under the
Company Stock Plans. Except as set forth above, there are no agreements or
arrangements pursuant to which Company is or could be required to register
shares of Company Common Stock or other securities under the Securities Act of
1933, as amended (the "Securities Act"), or other agreements or arrangements
with or among any security holders of Company with respect to securities of
Company. Except as set forth above, there are no voting, sale, transfer or other
similar agreements to which Company or any of its Subsidiaries is a party with
respect to the capital stock of Company or its Subsidiaries or any other
securities of Company or its Subsidiaries which are convertible or exchangeable
into or exercisable for shares of the capital stock of Company or its
Subsidiaries. None of the shares of Company Common Stock are held, directly or
indirectly, by any of the Company Subsidiaries. Each purchase by the Company or
any Subsidiary of any shares of the Company's capital stock has been made in
compliance with applicable securities laws and any rules and regulations
promulgated thereunder, and no such purchase by the Company has occurred since
September 20, 1999.
3.3 Authority; No Violation. (a) Company has full corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly and
validly authorized by the Board of Directors of Company. Except for the adoption
of this Agreement by the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock entitled to vote thereon in
connection with the Merger (the "Company Stockholder Approval") as may be
required under DGCL and as contemplated by this Agreement, no other corporate
proceedings on the part of Company and no other votes or consents of any holders
of Company securities are necessary to approve this Agreement and to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Company and (assuming due authorization, execution and
delivery by Parent and Sub) constitutes the valid and binding obligation of
Company, enforceable against Company in accordance with its terms, subject to
the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors' rights
generally, and general equitable principles (whether considered in a proceeding
in equity or at law).
(b) Except as set forth in Section 3.3(b) of the Company
Disclosure Schedule, none of the execution and delivery of this Agreement by
Company, the consummation by Company of the transactions contemplated hereby, or
compliance by Company with any of the terms or provisions hereof, will (i)
violate any provision of the Certificate of Incorporation or Bylaws of Company
or any Company Subsidiary or (ii) assuming that the consents and approvals
referred to in Section 3.4 are duly obtained (A) violate any statute, code,
ordinance, rule, regulation, judgment, order, writ, decree or injunction
applicable to Company or any of its Subsidiaries or any of their
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<PAGE> 16
respective properties or assets, or (B) violate, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by or rights or obligations under, or result
in the creation of any Lien upon any of the respective properties or assets of
Company or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, permit,
concession, franchise, license, lease, agreement, contract, or other instrument
or obligation to which Company or any of its Subsidiaries is a party, or by
which they or any of their respective properties, assets or business activities
may be bound or affected except, with respect to either (A) or (B), as would not
have a Company Material Adverse Effect.
3.4 Consents and Approvals. Except for (i) the filing of any
required applications or notices with other applicable federal, state or foreign
governmental agencies or authorities as set forth in Section 3.4 of the Company
Disclosure Schedule and approval of such applications and notices (the
"Additional Regulatory Approvals"), (ii) the filing with the SEC of a proxy
statement, if any, in definitive form relating to the meeting of Company's
stockholders to be held in connection with the Merger and as contemplated by
this Agreement (the "Proxy Statement"), (iii) the filing with the SEC of the
Offer Documents and the Schedule 14D-9, (iv) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware pursuant to the
DGCL, (v) the expiration of any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (vi) the Company Stockholder Approval, and (vii) the filing with the SEC
of such reports under the Exchange Act, as may be required in connection with
the execution and delivery of this Agreement and the transactions contemplated
by this Agreement, no consents or approvals of or filings or registrations with
any court, administrative agency or commission or other governmental or
regulatory authority or instrumentality (each a "Governmental Entity"), are
necessary in connection with the execution and delivery by Company of this
Agreement and the consummation by Company of the transactions contemplated by
this Agreement. Company has no reason to believe that the HSR Approval (as
defined in Annex I hereto) will not be obtained on a timely basis.
3.5 Regulatory Reports. Except as disclosed in Section 3.5 of the
Company Disclosure Schedule, or where failure to do so would not have a Company
Material Adverse Effect, Company and each of its Subsidiaries have timely filed
all regulatory reports, schedules, forms, registrations and other documents,
together with any amendments required to be made with respect thereto, that they
were required to file since January 1, 1997 with any federal, state or foreign
Governmental Entity (collectively, with the SEC and the Nasdaq Stock Market
("Nasdaq"), "Regulatory Agencies"), and have paid all fees and assessments due
and payable in connection therewith. Except as disclosed in Section 3.5 of the
Company Disclosure Schedule, and for normal examinations conducted by a
Regulatory Agency in the regular course of the business of Company and its
Subsidiaries, to the knowledge of Company, no Regulatory Agency has initiated
any proceeding or investigation into the business or operations of Company or
any of its Subsidiaries since January 1, 1997. Except as set forth in Section
3.5 of the Company Disclosure Schedule, there is no unresolved violation,
criticism, or exception by any Regulatory Agency with respect to any report or
statement relating to any examinations of Company or any of its Subsidiaries
except for violations, criticisms or exceptions that would not have a Company
Material Adverse Effect.
3.6 Broker's Fees. Except for the employment of and payments to
Updata Capital, Inc. and Innovative Software Engineering Practices, Inc.
described in Section 3.6 of the Company Disclosure Schedule, none of Company,
any Company Subsidiary or any of their respective officers or directors has
employed any broker or finder or incurred any liability for any broker's fees,
commissions or finder's fees in connection with the transactions contemplated by
this Agreement.
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3.7 Absence of Certain Changes or Events. (a) Except as set forth in
Section 3.7(a) of the Company Disclosure Schedule or as disclosed in the Company
Reports (as defined herein) filed prior to the date hereof, since September 30,
1999, no event, change or circumstance has occurred which has had, or would
reasonably be expected to result in, individually or in the aggregate, a Company
Material Adverse Effect.
(b) Since September 30, 1999, other than actions that are
not reasonably expected to have a Company Material Adverse Effect, Company and
its Subsidiaries have carried on their respective businesses only in the
ordinary and usual course consistent with their past practices.
(c) Except as disclosed in Section 3.7(c) of the Company
Disclosure Schedule, or as disclosed in the Company Reports (as defined herein)
filed prior to the date hereof, since September 30, 1999, there has not occurred
any event which, if it had taken place following the execution of this
Agreement, would not have been permitted by Section 5.2 without the prior
consent of Parent.
3.8 Legal Proceedings. Except as set forth in Section 3.8 of the
Company Disclosure Schedule, there are no suits, actions, counterclaims,
proceedings (whether judicial, arbitral, administrative or other) or
governmental, or regulatory investigations pending or, to the knowledge of
Company, threatened against or affecting Company or any of its Subsidiaries
except as would not have a Company Material Adverse Effect. There is not any
judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against Company or any of its Subsidiaries.
3.9 Taxes and Tax Returns. Except as set forth in Section 3.9 of the
Company Disclosure Schedule:
(a) Company and each of its Subsidiaries, and any
consolidated, combined or unitary group for tax purposes of which Company or any
of its Subsidiaries is or has been a member, has timely and accurately filed all
Tax Returns (as defined below) required to be filed by it in the manner provided
by law and all such Tax Returns are true, correct and complete in all material
respects. Company and each of its Subsidiaries has paid all Taxes (as defined
below) due and payable whether or not shown on a Tax Return to be due, other
than Taxes which are being contested in good faith and for which an adequate
reserve has been provided in accordance with generally accepted accounting
principles ("GAAP"). None of the Company and its Subsidiaries currently is the
beneficiary of any extension of time within which to file any Tax Return and no
claim has been made by any Taxing authority in a jurisdiction where any of
Company or its Subsidiaries does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction.
(b) Except as set forth in Section 3.9 of the Company
Disclosure Schedule, there are no audits or disputes pending, or claims
asserted, for Taxes (as defined below) upon Company (or any of its predecessors)
or any of its Subsidiaries (or any of their respective predecessors). No closing
agreements, private letter rulings, technical advice memoranda or similar
agreements or rulings have been entered into or issued by any Taxing authority
with respect to Company or any of its Subsidiaries that have a continuing
material impact on any Taxes. The Company has delivered to Parent correct and
complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by any of the Company
and its Subsidiaries since December 31, 1994. Except as set forth in Section 3.9
of the Company Disclosure Schedule, none of the Company and its Subsidiaries has
waived any statute of limitations in respect of Taxes or agreed to any extension
of time with respect to a Tax assessment or deficiency. None of the Company and
its Subsidiaries has made any payments, is obligated to make any payments, or is
a party to any agreement that under certain circumstances could obligate it to
make any payments that will not be deductible under Section 280G of the Internal
Revenue Code of 1986, as amended (the "Code"). Section 3.9 of the Company
Disclosure Schedule sets forth the amount of any net operating loss, net capital
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<PAGE> 18
loss, unused investment or other credit, unused foreign tax, or excess
charitable contribution allocable to the Company or Subsidiary.
(c) All Taxes required to have been withheld have properly
and accurately been withheld by Company and its Subsidiaries from their
employees' compensation in compliance with the tax withholding provisions of
applicable federal, state and local laws and have been paid over to the
appropriate taxing authorities when due, except where the failure to do so would
not have a Company Material Adverse Effect.
(d) There are no Tax liens upon any property or assets of
Company or any of its Subsidiaries except liens for Taxes not yet due and
payable.
(e) None of Company and its Subsidiaries has filed a consent
under Code Section 341(f) concerning collapsible corporations. None of Company
and its Subsidiaries has been required to include any amount in income from any
adjustment pursuant to section 481 of the Code (or any similar provision of
state, local or foreign tax law) by reason of a voluntary change in accounting
method initiated by Company or any of its Subsidiaries, and to the knowledge of
the Company, the Internal Revenue Service has not initiated or proposed any such
adjustment or change in accounting method.
(f) Neither Company nor any of its Subsidiaries (i) has been
a member of an affiliated group filing consolidated federal income tax return
(other than a group the common parent of which was or is the Company), (ii) is a
party to a Tax allocation or Tax sharing agreement (other than an agreement
solely among members of a group the common parent of which is Company), or (iii)
has any liability for the Taxes of any person (other than any of Company or its
Subsidiaries) including, but not limited to, (x) under Treasury Regulation
section 1.1502-6 (or any similar provision of state, local or foreign law), (y)
as a transferee or successor or (z) by contract.
For purposes of this Agreement, "Taxes" shall mean any taxes of
any kind, including but not limited to those on or measured by or referred to as
income, gross receipts, capital, sales, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, value added, property or windfall profits taxes, customs, duties or
similar fees, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any governmental authority, domestic or foreign. For purposes of this Agreement,
"Tax Return" shall mean any return, report or statement required to be filed
with any governmental authority with respect to Taxes, including any schedule or
attachment thereto or amendment thereof.
3.10 ERISA and Employee Matters. An "Employee Plan" is: (i)(A) each
"employee benefit plan" (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, and the rules and regulations
promulgated thereunder ("ERISA")), whether or not such plan is, or is intended
to be, qualified under Section 401(a) of the Code and whether or not such plan
is subject to Title I of ERISA, (B) each employment, collective bargaining,
severance, compensation upon reduction in hours, change in control, change in
employment category, or similar event, or similar contract or arrangement
(whether or not written), and (C) each plan, policy, fund, program, contract or
arrangement (whether or not written) providing for compensation, bonus,
profit-sharing, stock or equity options, other stock or equity related rights,
other forms of incentive or deferred compensation, paid time off (including, but
not limited to, holiday pay, sick leave, vacation, leave of absence, or
disability), other fringe benefits (including, but not limited to, company cars,
relocation assistance, free or reduced cost products or services, service
awards, tuition payments, or reimbursement for scholarships), insurance coverage
(including any self-insured arrangements), health or medical benefits,
disability benefits, life or accidental death or dismemberment benefits,
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workers' compensation, supplemental unemployment benefits, severance benefits,
or post-employment or retirement benefits that (ii)(A) is, or has been at any
time within the last five (5) years, maintained, administered or contributed to
by Company, any of its Subsidiaries, or any entity which, together with Company
or any of its Subsidiaries, would be treated as a single employer under Section
414 of the Code (each such entity, an "ERISA Affiliate") and (B) covers or
covered any current or former employee, consultant, independent contractor or
director of or with respect to Company or any of its Subsidiaries (each, an
"Employee Plan").
(b) Company has supplied to Parent a true and correct copy
of: all of the Employee Plans, and any amendments thereto (or if no written plan
document exists, a written description thereof); (2) the summary plan
description and any material employee communication which describes the terms or
operation of the Employee Plans; (3) all trust agreements, insurance contracts
or other funding arrangements related to the Employee Plans; (4) the most recent
annual report (Form 5500)(including the accountant's report) for the Employee
Plans; (5) the most recent actuarial valuation; and (6) any collective
bargaining agreement or other contract requiring or providing for contributions
to an Employee Plan.
(c) Except as set forth in Section 3.10(c) of the Company
Disclosure Schedule, none of Company, any of its Subsidiaries or any ERISA
Affiliate has at any time during the last six years (i) maintained or
contributed to any plan subject to Title IV of ERISA or Section 412 of the Code,
(ii) been required to contribute to any multiemployer plan (as defined in
Section 3(37) of ERISA), or (iii) incurred any current or projected liability in
respect of post-employment or post-retirement health, medical or life insurance
benefits for current, former or retired employees of Company or any of its
Subsidiaries, except as required to avoid an excise tax under Section 4980B of
the Code.
(d) Each Employee Plan that is intended to be qualified
under Section 401(a) of the Code is so qualified and has been so qualified in
form and operation during the period since its adoption; each trust created
under any such Plan is exempt from tax under Section 501(a) of the Code and has
been so exempt since its creation. Company has made available to Parent a true
and correct copy of the most recent determination letter issued by the Internal
Revenue Service relating to each such Employee Plan and any subsequent
determination letters issued with respect to Employee Plan amendments. Each
Employee Plan has been maintained in compliance with its terms and with the
requirements prescribed by any and all applicable statutes, orders, rules and
regulations, including but not limited to ERISA and the Code and has been
maintained in good standing with applicable regulatory authorities, and is not
"top-heavy."
(e) There has been no amendment to, written interpretation
of or announcement (whether or not written) by Company or any of its
Subsidiaries or ERISA Affiliates relating to, or any change in employee
participation or coverage under, any Employee Plan that would increase the
expense of maintaining such Employee Plan above the level of the expense
incurred in respect thereof for the most recent fiscal year ended prior to the
date hereof. There have been no material changes in the financial condition of
the Employee Plans from that stated in the annual report (as described in
Section 103 of ERISA) most recently filed, as applicable, for each Employee
Plan.
(f) With respect to any Employee Plan that is unfunded,
Company has adequately provided for, and its financial statements accurately
reflect (in accordance with GAAP), the amount of all accrued benefits and
obligations under such Employee Plan.
(g) Except as set forth in Section 3.10(g) of the Company
Disclosure Schedule, there is no contract, plan or arrangement (written or
otherwise) covering any employee or former employee of Company or any of
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its Subsidiaries that, individually or collectively, could give rise to the
payment of any amount that would not be deductible pursuant to the terms of
Section 162 or 280G of the Code.
(h) Except as provided in this Agreement or as set forth in
Section 3.10(h) of the Company Disclosure Schedule, (i) no employee or former
employee of Company or any of its Subsidiaries will become entitled to any
bonus, retirement, severance, job security or similar benefit or enhancement
thereof (including acceleration of vesting or exercise of an incentive award) as
a result of the transactions contemplated by this Agreement, and (ii) any
Company Stock Plan may be terminated by the Company in accordance with this
Agreement without the consent of such Plan's participants except for such
consents required by Regulatory Agencies.
(i) Except as set forth in Section 3.10(i) of the Company
Disclosure Schedule, no Employee Plan is maintained outside the jurisdiction of
the United States, or covers any employee residing or working outside the United
States.
(j) Except as would not have a Company Material Adverse
Effect, there are no actions, lawsuits, arbitrations, audits, inquires,
investigations, proceedings or claims (other than routine claims for benefits
made in the ordinary course and qualified domestic relations or medical child
support orders) pending or, to the knowledge of the Company, threatened with
respect to any Employee Plan or the operation thereof (whether brought or
threatened to be brought by or against a participant or beneficiary, a trustee,
a plan administrator, Company or any director, officer or employee thereof and
including matters pending before or threatened by the Internal Revenue Service,
United States Department of Labor, or other governmental agency), and Company
does not have knowledge of any facts which could give rise to any such action,
lawsuit, arbitration, audit, inquiry, investigation, proceeding or claim.
(k) Labor and Employment Matters. (i) None of Company or any
of its Subsidiaries is the subject of any suit, action or proceeding which is
pending or, to the knowledge of the Company, threatened, asserting that the
Company or any of its Subsidiaries has committed an unfair labor practice or
seeking to compel the Company or any of its Subsidiaries to bargain with any
labor organization as to wages and conditions of employment, in any such case;
(ii) no strike or other labor dispute involving the Company or any of its
Subsidiaries is pending or, to the knowledge of the Company, threatened, and, to
the knowledge of the Company, there is no activity involving any employees of
the Company or any of its Subsidiaries seeking to certify a collective
bargaining unit or engaging in any other organizational activity; (iii) except
where such noncompliance would not have a Company Material Adverse Effect, the
Company and each of its Subsidiaries is and has been, to the knowledge of the
Company, in compliance with all applicable laws respecting employment and
employment practices, terms and conditions of employment and wages and hours,
including, without limitation, any such laws respecting minimum wage and
overtime payments, employment discrimination, civil rights, workers'
compensation, family and medical leave, administration of leave, rights under
the Consolidated Omnibus Budget Reconciliation Act of 1985, the Immigration
Reform and Control Act, occupational safety and health requirements, collective
bargaining, the Worker Adjustment and Retraining Notification Act and the
payment of social security and similar taxes; and (iv) no person has, to the
knowledge of the Company, asserted or threatened to assert that the Company or
any of its Subsidiaries is liable for any arrears in wages or taxes or damages,
penalties, or other relief, equitable or otherwise, for failure to comply with
any of the foregoing, except where such claims would not have a Company Material
Adverse Effect.
3.11 SEC Reports. Company has made available to Parent an accurate
and complete copy of each (a) final registration statement, prospectus, report,
schedule, form and definitive proxy statement filed since November 1, 1996 by
Company with the SEC pursuant to the Securities Act or the Exchange Act
(collectively, and in each case
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including all exhibits and schedules thereto and documents incorporated by
reference therein, the "Company Reports"), and (b) communication mailed by
Company to its stockholders since November 1, 1996. As of their respective dates
of filing or mailing, as the case may be, each Company Report and each such
communication complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Company Report
or communication, and as of such dates no such Company Report or communication
(including any and all financial statements included therein) contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading.
Since November 1, 1996, Company and each of its Subsidiaries has filed all
reports and other documents required to be filed by them under the Securities
Act and the Exchange Act on a timely basis.
3.12 Financial Statements. Each of the consolidated financial
statements (including the notes thereto) included in the Company Reports
complied as to form, as of their respective dates of filing with the SEC, in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with GAAP (except, in the case of unaudited consolidated quarterly
statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto)
and fairly present the consolidated financial position of Company and its
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended. The books and records of
Company and its Subsidiaries have been, and are being, maintained in all
respects in accordance with GAAP and any other applicable legal and accounting
requirements.
3.13 Licenses; Compliance with Applicable Law. (a) Except as set
forth in Section 3.13(a) of the Company Disclosure Schedule, Company and its
Subsidiaries (i) hold, and have been and are in compliance with, all permits,
licenses, exemptions, orders and approvals ("Permits") of all Governmental
Entities necessary for the operation of their respective businesses, and (ii)
the transfer of such permits upon the Effective Time shall not limit, restrict
or cause the termination such Permits at the Effective Time, except with respect
to both (i) and (ii) above as would not have a Company Material Adverse Effect,
and there are no proceedings pending or, to the knowledge of Company, threatened
or contemplated by any Governmental Entity seeking to terminate, revoke or limit
any such permit, license, exemption, order or approval, nor, to the knowledge of
Company, do adequate grounds exist for any such action by any Governmental
Entity.
(b) To the knowledge of the Company, none of Company, any of
its Subsidiaries or the conduct of any of their respective businesses is in
default or violation of, any statutes, laws, regulations, ordinances, permits,
rules, judgments, orders, decrees or arbitration awards of any Governmental
Entity applicable to Company or any of its Subsidiaries or by which its or any
of their respective properties are bound or affected.
3.14 Certain Contracts. Except as set forth in Section 3.14 of the
Company Disclosure Schedule or as expressly permitted by Section 5.2, neither
Company nor any of its Subsidiaries is a party to or bound by any contract,
arrangement, commitment or understanding (i) with respect to the employment of
any directors, executive officers or key employees, or with any consultants
involving the payment of $150,000 or more per annum, (ii) which is a "material
contract" (as such term is defined in Item 601(b)(10) of Regulation S-K of the
SEC) that has not been filed as an exhibit to or incorporated by reference in
the Company Reports, (iii) which limits in any way the ability of Company or any
of its Subsidiaries to compete in any line of business, in any geographic area
or with any person, or which requires referrals of any business or requires
Company or any of its affiliates to make available investment opportunities to
any person on a priority, equal or exclusive basis, (iv) with or to a labor
union or guild (including any collective bargaining agreement), (v) any of the
benefits of which will be materially increased, or the vesting of the benefits
of which will be
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materially accelerated, by the occurrence of any of the transactions
contemplated by this Agreement, or the value of any of the benefits of which
will be calculated on the basis of any of the transactions contemplated by this
(other than those agreements and arrangements disclosed in Section 3.11 of the
Company Disclosure Schedule), or (vi) which would prohibit or materially delay
the consummation of any of the transactions contemplated by this Agreement.
Company has previously made available to Parent complete and accurate copies of
all Company Contracts (as defined below). Each contract, arrangement, commitment
or understanding of the type described in this Section 3.14, whether or not set
forth in Section 3.14 of the Company Disclosure Schedule, is referred to herein
as a "Company Contract," and neither Company nor any of its Subsidiaries knows
of, or has received notice of, any violation or default of the above by any of
the other parties thereto. All contracts, agreements, arrangements or
understandings of any kind between any Affiliate of Company (other than any
wholly owned Subsidiary of Company), on the one hand, and Company or any
Subsidiary of Company, on the other hand, are on terms no less favorable to
Company or to such Subsidiary of Company than would be obtained with an
unaffiliated third party on an arm's length basis.
3.15 [RESERVED].
3.16 Investment Securities. Each of Company and its Subsidiaries has
good and marketable title to all securities held by it, free and clear of any
Lien, except to the extent such securities are pledged in the ordinary course of
business consistent with prudent business practices to secure obligations of
Company or any of its Subsidiaries. Such securities are valued on the books of
Company in accordance with GAAP.
3.17 [RESERVED]
3.18 Undisclosed Liabilities. Except for (i) those liabilities that
are fully reflected or reserved for in the consolidated balance sheet of Company
included in its Quarterly Report on Form 10-Q for the three-month period ended
September 30, 1999, as filed with the SEC, (ii) liabilities disclosed in Section
3.18 of the Company Disclosure Schedule, (iii) liabilities incurred since
September 30, 1999 in the ordinary course of business consistent with past
practice, and (iv) liabilities or obligations that would not have, individually
or in the aggregate, a Company Material Adverse Effect, at September 30, 1999,
neither Company nor any of its Subsidiaries had, and since such date none of
them has incurred, any liabilities or obligations of any nature whatsoever
(whether accrued, absolute, contingent or otherwise) that would be required to
be reflected in Company's financial statements in accordance with GAAP.
3.19 Environmental Liability. There are no legal, administrative,
arbitral or other proceedings, claims, actions, causes of action, private
environmental investigations or remediation activities or governmental
investigations of any nature seeking to impose, or that could reasonably result
in the imposition, on Company or any of its Subsidiaries of any liability or
obligation arising under common law or under any local, state or federal
environmental statute, regulation or ordinance including, without limitation,
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA"), pending or, to the Company's knowledge, threatened
against Company or any of its Subsidiaries which could result in a Company
Material Adverse Effect. To the knowledge of Company, there is no reasonable
basis for any such proceeding, claim, action or governmental investigation that
would impose any liability or obligation.
3.20 Information Supplied. None of the information supplied or to be
supplied by Company for inclusion or incorporation by reference in the Offer
Documents or the Schedule 14D-9 will, at the time such documents are filed with
the SEC or distributed to Company's stockholders, or at the consummation of the
Offer, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The Schedule
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14D-9 will comply as to form in all material respects with the requirements of
the Exchange Act and the rules and regulations of the SEC thereunder. No
representation is made by Company with respect to statements made or
incorporated by reference in the Offer Documents or the Schedule 14D-9, based on
information supplied by Parent or Sub in writing for inclusion or incorporation
by reference in such documents. Company shall promptly inform Parent of the
discovery of any information which should be set forth in a corrected Schedule
14D-9 or a supplement to the Offer Documents.
3.21 State Takeover Laws; Rights Agreement. (a) The Board of
Directors of Company, at a meeting duly called and held, at which a quorum was
present, has unanimously (the "Company Board Recommendation") (i) determined
that this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, are advisable and fair to and in the best interests of the
holders of shares of Company Common Stock, (ii) duly approved and adopted this
Agreement and approved the transactions contemplated hereby, including the
Merger and the Offer, in each case prior to the execution of such agreement
(such approvals being sufficient to render the restrictions of Section 203 of
the DGCL inapplicable to this Agreement, the Offer and the Merger and the
transactions contemplated hereby and thereby) and (iii) resolved to recommend
that the holders of shares of Company Common Stock accept the Offer, tender
their shares of Company Common Stock pursuant thereto and vote to approve and
adopt this Agreement (to the extent required by applicable law) provided that,
subject to Section 6.8 hereof, the Board of Directors of the Company may
withdraw, modify or amend such recommendation consistent with Section 6.8(g)
hereof.
(b) The Board of Directors of Company, at a meeting duly
called and held in connection with its authorization and approval noted above
has taken all action necessary to render the rights issued pursuant to the
Rights Agreement inapplicable to this Agreement, the Offer, the Merger and the
transactions contemplated thereby.
3.22 Insurance. Company and its Subsidiaries maintain insurance
policies and performance bonds on their respective properties and assets, and
with respect to their employees and operations, with reputable insurance
carriers, and such insurance policies provide coverage for risks incident to the
business of Company and its Subsidiaries and their respective properties and
assets and are in character and amount which the Company reasonably considers to
be reasonable and customary for persons engaged in similar businesses as the
Company. Company and its Subsidiaries are not in default under any of their
insurance policies and have paid all premiums owed thereunder since January 1,
1999, and no claims for coverage thereunder have been denied, except where being
in default or failing to pay such premiums would not have a material adverse
effect on the coverage provided by such policies and the Company.
3.23 Year 2000 Compliance. The occurrence of the year 2000 will not
affect the Company's computer hardware, software, databases, systems and other
computer equipment (collectively, "Computer Equipment") in a manner that would
have a Company Material Adverse Effect and no material expenditures in excess of
currently budgeted items will be required in order to cause such Computer
Equipment to operate properly following the change of the year 1999 to 2000. The
Company's Year 2000 Readiness Disclosure Statement provided to Parent and the
Company's customers contains an accurate assessment of the Company's Year 2000
compliance program.
3.24 Intellectual Property. The Company has provided to Parent true
and complete copies of all United States and foreign (a) patents and patent
applications; (b) trademark registrations (including Internet domain
registrations) and applications and material unregistered trademarks; (c)
copyright registrations and applications.
(b) The Company has provided Parent access to its records and files
containing all written license agreements which involve aggregate payments or
receipts in excess of $100,000 granting any right to use or practice any rights
under any Intellectual Property (as defined below), whether the Company or any
of its Subsidiaries is the licensee or
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licensor thereunder, and any assignments, consents, forbearances to sue,
judgments, orders, settlements or similar obligations relating to any
Intellectual Property to which the Company or any of its Subsidiaries is a party
or otherwise bound (other than off-the-shelf or other mass-market software
applications programs) (collectively, the "License Agreements"). Except as would
not have a Company Material Adverse Effect, the License Agreements are valid and
binding obligations of Company or its Subsidiaries, enforceable in accordance
with their terms, and, to the Company's knowledge, there exists no event or
condition which will result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default by the Company or its
Subsidiaries under any such License Agreement. "Intellectual Property" shall
mean " trademarks, service marks, trade names, URLs and Internet domain names
and applications therefor (and all interest therein), designs, slogans and
general intangibles of like nature, patents (including any registrations,
continuations, continuations in part, renewals and applications for any of the
foregoing); copyrights (including any registrations and applications for any of
the foregoing); computer programs and other computer software; databases;
technology, trade secrets and other confidential information, know-how,
proprietary technology, processes, formulae, algorithms, models, user
interfaces, customer lists, inventions, source codes and object codes and
methodologies, architecture, structure, display screens, layouts, development
tools, instructions, templates, marketing materials, inventions, trade dress,
logos and designs and all documentation and media constituting, describing or
relating to the foregoing (collectively, "Trade Secrets"), used in or necessary
for the conduct of Company's and each of its Subsidiaries' business as currently
conducted or contemplated to be conducted.
(c) No material royalties, honoraria or other fees are payable to any third
parties for the use of or right to use any Intellectual Property except pursuant
to the License Agreements.
(d) Except as has not had, nor is reasonably likely to have, a Company
Material Adverse Effect, and except as set forth in Section 3.24(d) of the
Company Disclosure Schedule:
(i) the Company or its Subsidiaries exclusively own, free and clear
of all Liens, all owned Intellectual Property, and have a valid,
enforceable right to use all of the Intellectual Property
licensed by the Company from third parties;
(ii) the Company has taken reasonable steps to protect the owned
Intellectual Property;
(iii) to the knowledge of the Company, the conduct of the Company's
and its Subsidiaries' businesses as currently conducted does not
infringe upon any Intellectual Property rights of or controlled
by any third party;
(iv) there is no litigation pending, or to the Company's knowledge,
threatened (A) alleging that the Company's activities or the
conduct of its businesses or that of any of its Subsidiaries
infringes upon, violates, or constitutes the unauthorized use of
the Intellectual Property rights of any third party or (B)
challenging the ownership, use, validity or enforceability of
any Intellectual Property;
(v) to the knowledge of the Company, no third party is
misappropriating, infringing, diluting, or violating any
Intellectual Property owned by the Company or any of its
Subsidiaries and no such claims have been brought against any
third party by the Company or any of its Subsidiaries; and
(vi) the consummation of the transactions contemplated hereby will
not result in the loss or impairment of the Company's or any of
its Subsidiaries' right to own or use any of the
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Intellectual Property listed on Sections 3.24(a) and (b) of the
Company Disclosure Schedule, nor will they require the consent
of any Governmental Entity or third party in respect of any such
Intellectual Property.
(e) Section 3.24(e)(i) of the Company Disclosure Schedule lists all material
Software contained in products, sold, licensed, leased or otherwise distributed
to third parties by the Company or any of its Subsidiaries (other than
off-the-shelf or mass-market software applications programs). Section
3.24(e)(ii) of the Company Disclosure Schedule lists all Software material to
the business of Company (other than off-the-shelf or other mass-market software
applications programs) that is owned, licensed to or by the Company or any of
its Subsidiaries, leased to or by the Company or any of its Subsidiaries, or
otherwise used by the Company or any of its Subsidiaries, and not included under
Section 3.24(d)(i) of the Company Disclosure Schedule. The Software set forth in
Sections 3.24(e)(i) and (ii) of the Company Disclosure Schedule which the
Company or any of its Subsidiaries purports to own and that is or could
reasonably be expected to be material to the conduct of the business of the
Company, was either developed (i) by employees of Company or any of its
Subsidiaries within the scope of their employment; (ii) by independent
contractors who have assigned their rights to Company or any of its Subsidiaries
pursuant to enforceable written agreements or by operation of law; or (iii) has
otherwise been rightfully assigned to the Company or one of its Subsidiaries.
For purposes of Section 3.24(e) and (h), "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, (iv)
all documentation, including user manuals and training materials, relating to
any of the foregoing.
(f) All of the Company's registered trademarks and material unregistered
trademarks have been in continuous use by the Company or its Subsidiaries except
where failure to be in such continuous use would not have a Company Material
Adverse Effect. To the knowledge of the Company, there has been no prior use of
such trademarks by any third party which would confer upon said third party
superior rights in such trademarks; and the registered trademarks have been
continuously used in the form appearing in, and in connection with the goods and
services listed in, their respective registration certificates or identified in
their respective pending applications.
(g) The Company has taken reasonable steps in accordance with normal industry
practice to protect the Company's rights in Trade Secrets of the Company.
Without limiting the foregoing, the Company (A) has a policy of requiring
employees, consultants and contractors with access to such Trade Secrets to
execute proprietary information, confidentiality and assignment agreements
substantially consistent with the Company's standard forms thereof (complete and
current copies of which have been delivered to the Parent), (B) has requested
that all existing employees sign such agreements and (C) has required all
employees hired since November 30, 1998 to sign such an agreement. To the
knowledge of the Company, except as subject to confidentiality agreements or
confidentiality provisions in other agreements, there has been no material
disclosure of any Company or Subsidiary confidential information or Trade
Secrets. Section 3.24(g) of the Company Disclosure Schedule, sets forth a list
of all current employees and employees who have been employed by the Company
subsequent to January 1, 1998, consultants and contractors with access to Trade
Secrets who have not executed proprietary information, confidentiality and
assignment agreements.
(h) Except as would not have a Company Material Adverse Effect, all Software
owned by the Company or any of its Subsidiaries operates and runs in a manner
adequate to operate the business of the Company as presently conducted, and, to
the knowledge of the Company conforms to the specifications thereof. The Company
has or at the Effective Time will have all material documentation relating to
use, maintenance and operation of the material Software used in the conduct of
business of the Company to the extent such documentation exists.
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3.25 Opinion of the Company's Financial Advisor. The Board of
Directors of the Company has received a written opinion from Updata Capital,
Inc. (addressed to such Board) to the effect that, as of the date of such
opinion, the consideration to be received in the Offer and the Merger by the
holders of Company Common Stock is fair to such holders (other than Parent and
Sub) from a financial point of view.
3.26 Disclosure. Disclosure in any of the documents set forth on
Section 3.26 of the Company Disclosure Schedule that would reasonably put Parent
or Sub on notice of an item required to be listed under any heading in the
Company Disclosure Schedule or an exception to any of the Company's
representations and warranties will be deemed to have been disclosed under the
appropriate heading of the Company Disclosure Schedule.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB
Parent and, with respect to Sections 4.1 and 4.2, Sub, hereby represent
and warrant to Company that:
4.1 Corporate Organization. Parent is a corporation duly organized,
validly existing and in good standing under the laws of Germany. Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of Parent and Sub has all requisite corporate
power and authority to own or lease all of its properties and assets and to
carry on its business as it is now being conducted, and is duly licensed or
qualified to do business and in good standing in each jurisdiction in which the
nature of the business conducted by it or the character or location of the
properties and assets owned or leased by it makes such licensing or
qualification necessary except where failure to be so qualified or in good
standing would not have a Parent Material Adverse Effect (as defined below). The
term "Parent Material Adverse Effect" means a material adverse effect on the
business, assets, liabilities, financial condition or results of operations of
the Parent and its Subsidiaries taken as a whole as of the date of this
Agreement (other than any change, event, occurrence or effect relating to (x)
the United States or global economy or securities markets in general, (y) the
document and data storage management industry and not specifically relating to
the Parent or (z) this Agreement or the transactions contemplated hereby or the
announcement thereof) or on the ability of the Parent to perform its obligations
under and to consummate the transactions contemplated by this Agreement on a
timely basis. Parent owns all of the issued and outstanding capital stock of Sub
and all such capital stock has been validly issued, is fully paid and
nonassessable and is owned by Parent free and clear of all Liens.
4.2 Authority; No Violation. (a) Each of Parent and Sub has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by Parent and Sub and the consummation of the transactions
contemplated hereby have been duly and validly authorized by the Board of
Directors of each of Parent and Sub and by Parent in its capacity as sole
stockholder of Sub. No other corporate proceedings on the part of Parent or Sub
and no other votes or consents of any holders of Parent securities are necessary
on the part of Parent or Sub to approve this Agreement and to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Sub and (assuming due
authorization, execution and delivery by Company) constitutes a valid and
binding obligation of Parent and Sub, enforceable against each of them in
accordance with its respective terms, subject to the effects of bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally, and general equitable
principles (whether considered in a proceeding in equity or at law).
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(b) None of the execution and delivery of this Agreement by
Parent or Sub, or the consummation by Parent or Sub of the transactions
contemplated hereby, or compliance by Parent or Sub with any of the terms or
provisions hereof will (i) violate any provision of the Certificate of
Incorporation or Bylaws of Parent or Sub, as applicable, or (ii) assuming that
the consents and approvals referred to in Section 4.3 are duly obtained, (A)
violate any statute, code, ordinance, rule, regulation, judgment, order, writ,
decree or injunction applicable to Parent or any of its Subsidiaries or any of
their respective properties or assets, or (B) violate, result in a breach of any
provision of or the loss of any benefit under, constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default) under,
result in the termination of or a right of termination or cancellation under,
accelerate the performance required by or rights or obligations under, or result
in the creation of any Lien upon any of the respective properties or assets of
Parent or any of its Subsidiaries under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, deed of trust, permit,
concession, franchise, license, lease, agreement, contract, or other instrument
or obligation to which Parent or any of its Subsidiaries is a party, or by which
they or any of their respective properties, assets or business activities may be
bound or affected, except with respect to either (A) or (B), as would not have a
Parent Material Adverse Effect.
4.3 Consents and Approvals. Except for (i) the filing with the SEC
of the Proxy Statement, as may be required under applicable law, (ii) the filing
with the SEC of the Offer Documents and the Schedule 14D-9, (iii) the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware
pursuant to the DGCL, (iv) the expiration of any applicable waiting period under
the HSR Act, (v) the Company Stockholder Approval, and (vi) the filing with the
SEC of such reports under the Exchange Act as may be required in connection with
the execution and delivery of this Agreement and the transactions contemplated
hereby, no consents or approvals of or filings or registrations with any
Governmental Entity, or of or with any third party, are necessary in connection
with the execution and delivery by Parent of this Agreement and the consummation
by Parent of the transactions contemplated hereby. Parent has no reason to
believe that the HSR Approval will not be obtained on a timely basis.
4.4 Broker's Fees. Except for Broadview International, LLC, neither
Parent nor any Parent Subsidiary nor any of their respective officers or
directors has employed any broker or finder or incurred any liability for any
broker's fees, commissions or finder's fees in connection with the transactions
contemplated by this Agreement. Parent is solely liable for the fees of
Broadview International, LLC.
4.5 Funds. Either Parent or Sub has, or will have prior to the
consummation of the Offer, and will have at the Effective Time, sufficient funds
available to satisfy the obligation to pay for shares of Company Common Stock in
the Offer, to pay the Option Consideration and to pay Merger Consideration in
the Merger.
4.6 Information Supplied. None of the information supplied or to be
supplied by Parent for inclusion or incorporation by reference in the Offer
Documents or the Schedule 14D-9 will, at the time such documents are filed with
the SEC or distributed to Company's stockholders, or at the consummation of the
Offer, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The Offer Documents will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations of the
SEC thereunder, except that no representation is made by Parent with respect to
statements made or incorporated by reference therein based on information
supplied by Company for inclusion or incorporation by reference in such
documents. Parent shall promptly inform Company of the discovery by it or Sub of
any information which should be set forth in a corrected Schedule 14D-9 or a
supplement to the Offer Documents or any Proxy Statement.
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ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
5.1 Conduct of Company Businesses Prior to the Effective Time.
During the period from the date of this Agreement to the Effective Time, except
as expressly required or permitted by this Agreement, Company shall, and shall
cause each of its Subsidiaries to, (a) conduct its business in the usual,
regular and ordinary course consistent with past practice and in compliance with
applicable laws, (b) use reasonable best efforts to maintain and preserve intact
its business organization, employees and business relationships and retain the
services of its key officers and key employees and (c) take no action which
would adversely affect or delay in any material respect the ability of either
Parent or Company to obtain any necessary approvals of any Regulatory Agency or
other Governmental Entity required for the transactions contemplated hereby or
to perform its covenants and agreements under this Agreement.
5.2 Forbearances of Company. During the period from the date of this
Agreement to the Effective Time, except as set forth in Section 5.2 of the
Company Disclosure Schedule and except as expressly required or permitted by
this Agreement, Company shall not, and shall not permit any of its Subsidiaries
to, without the prior written consent of Parent:
(a) (i) incur any indebtedness for borrowed money (other
than (A) short-term indebtedness incurred (y) to refinance existing
short-term indebtedness or (z) pursuant to lines of credit and credit
facilities existing on the date of this Agreement, (B) indebtedness
incurred in an aggregate amount not exceeding $100,000, and (C)
indebtedness of Company or any of its Subsidiaries owed to Company or
any of its other wholly owned Subsidiaries), assume, guarantee, endorse
or otherwise as an accommodation become responsible for the obligations
of any other individual, corporation or other entity, or make any loan,
advance or capital contribution (other than to Company or any of its
wholly-owned Subsidiaries and other than in the ordinary course of
Company's business consistent with past practice) or (ii) make or commit
to make any capital expenditures in excess of $100,000 for any single
capital expenditure;
(b) (i) adjust, split, combine or reclassify any of its
capital stock; (ii) make, declare, set aside or pay any dividend (except
for dividends paid in the ordinary course of business by any
wholly-owned Subsidiaries of Company to Company or to any other of its
wholly-owned Subsidiaries) or make any other distribution on, or
directly or indirectly (other than in connection with the surrender of
Company Common Stock as full or partial payment of the exercise price or
withholding tax in connection with the exercise of Company Options under
the Company Stock Plans) redeem, purchase or otherwise acquire, any
shares of its capital stock or any securities or obligations convertible
into or exchangeable for any shares of its capital stock; (iii) grant
any individual, corporation or other entity any right to acquire any
shares of its capital stock or any stock appreciation or similar rights
except as permitted by Section 5.2(i); (iv) issue or authorize the
issuance of, deliver, sell, transfer, pledge or otherwise encumber any
additional shares of capital stock or any securities or obligations
convertible into or exchangeable for any shares of its capital stock,
other than the issuance of Company Common Stock pursuant to the exercise
of stock options disclosed in Section 3.2 of the Company Disclosure
Schedule as being outstanding on the date of this Agreement and granted
pursuant to the Company Stock Plans; or (v) enter into any agreement,
understanding or arrangement with respect to the sale or voting of its
capital stock;
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(c) sell, transfer, mortgage, encumber or otherwise dispose
of any significant portion of its properties or assets, including,
without limitation, capital stock in any Subsidiaries of Company, to any
individual, corporation or other entity other than a direct or indirect
wholly owned Subsidiary, or cancel, release or assign any indebtedness
to any such person or any claims held by any such person, except in the
ordinary course of business consistent with past practice;
(d) make any material investment, either by purchase of
stock or other equity or debt securities, contributions to capital,
property transfers, or purchase of any property or assets, of any other
individual, corporation, limited partnership or other entity, other than
an investment in a wholly owned Subsidiary of Company existing prior to
the date hereof;
(e) acquire or agree to acquire, by merging or consolidating
with, or by purchasing a substantial portion of the stock or assets of,
or by any other manner, any business or any corporation, partnership,
joint venture, association or other business organization or division
thereof;
(f) acquire or agree to acquire voting or non-voting equity
securities or similar ownership interests in any person (other than a
Subsidiary);
(g) commence, undertake or engage in any new line of
business;
(h) enter into or terminate any significant lease, contract
or agreement, or make any change in any of its existing significant
leases, contracts or agreements, except in the ordinary course of
business and consistent with the past practices of the Company;
(i) (i) grant to any employees any restricted stock or
options to purchase the Company's common stock, (ii) pay any bonus which
is not consistent with past practices or consistent with the plans,
arrangements or agreements in place prior to the date hereof or which,
when aggregated with all of the bonuses for 1999, exceed $900,000,
(other than the Company's 25% matching program for 401K contributions,
payments pursuant to which shall not exceed $175,000), (iii) hire new
executive officers or materially modify any compensation or severance
package other than in the ordinary course of business and consistent
with past practice, or (iv) enter into, establish, adopt or amend
(except (A) as may be required by applicable law, (B) to satisfy
contractual obligations existing as of the date of this Agreement or (C)
as otherwise provided by this Agreement) any Employee Plan, as that term
is defined in Section 3.10(a) of this Agreement, or any trust agreement
(or similar arrangement) related thereto in respect of any director,
officer, consultant, independent contractor, or employee of or with
respect to Company or any of its Subsidiaries;
(j) pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), except for the payment, discharge or
satisfaction of current liabilities or obligations, in accordance with
their terms, in the ordinary course of business consistent with past
practice, or waive, release, grant, or transfer any rights of material
value or modify or change any existing license, lease, contract or other
document in any manner that would be material to Company and its
Subsidiaries;
(k) settle or compromise any litigation (whether or not
commenced prior to the date of this Agreement), other than settlements
or compromises of litigation where the amount paid by the Company
(excluding amounts paid by insurance providers on behalf of the Company)
does not exceed $50,000 for any
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single litigation matter or related group of litigation matters (such
limit including the monetary value of any non-monetary obligations on
the part of Company or any of its Subsidiaries other than, in the case
of litigation not involving any Governmental Entity or other Regulatory
Agency, immaterial non-monetary obligations);
(l) change any accounting principle used by it, except for
such changes as may be required to be implemented pursuant to generally
accepted accounting principles or rules and regulations of the SEC as
concurred in by Company's independent auditors;
(m) change any material Tax election, change any annual Tax
accounting period, change any method of Tax accounting in any material
respect, file any material amended Tax return, enter into any closing
agreement relating to any material Tax, settle any material Tax claim or
assessment, surrender any right to claim a material Tax refund or
consent to any extension or waiver of the limitations period applicable
to any material Tax claim or assessment except as advised by the
Company's independent auditors;
(n) adopt or implement any amendment to its charter or
bylaws or enter into any plan of consolidation, merger or reorganization
with any person other than a wholly-owned Subsidiary of Company;
(o) [RESERVED].
(p) adopt a plan of complete or partial liquidation or
resolutions providing for or authorizing such a liquidation or a
dissolution, restructuring, recapitalization or reorganization;
(q) take any action that is intended or would reasonably be
expected to result in any of its representations and warranties set
forth in this Agreement being or becoming untrue in any material
respect, or in any of the conditions to the Merger set forth in Article
VII or to the Offer set forth in Annex I not being satisfied or in a
violation of any provision of this Agreement, except, in each case, as
may be expressly permitted by this Agreement or as may be required by
applicable law; or
(r) agree to, or make any commitment to, take, or authorize,
any of the actions prohibited by this Section 5.2.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Company Stockholders Meeting; Preparation of Proxy Statement.
(a) If Company Stockholder Approval is required under the
DGCL to consummate the Merger, (i) Company shall cause a meeting of its
stockholders (the "Company Stockholders Meeting") to be duly called and held as
soon as reasonably practicable after the date on which shares of Company Common
Stock are purchased by Sub pursuant to the Offer for the purpose of voting on
the adoption of this Agreement, and (ii) Parent and Company shall prepare and
file with the SEC the Proxy Statement. Each of Parent and Company shall use all
reasonable efforts to resolve any comments of the SEC as promptly as practicable
after such filing, and Company shall thereafter mail or deliver the Proxy
Statement to its stockholders as promptly as practicable. The Board of Directors
of Company shall (i) include in the Proxy Statement the Company Board
Recommendation and (ii) use its reasonable best efforts to obtain
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the necessary vote in favor of the adoption of this Agreement by its
stockholders. Subject to the fiduciary duties of the Board of Directors as
advised by outside counsel, following the consummation of the Offer, the Board
of Directors of Company shall not withdraw, amend, modify or materially qualify
in a manner adverse to Parent the Company Board Recommendation (or announce
publicly its intention to do so).
(b) Parent agrees that it will vote, or cause to be voted,
at the Company Stockholders Meeting, all shares of Company Common Stock then
owned by it or Sub in favor of the adoption of this Agreement.
(c) Notwithstanding this Section 6.1, in the event that
Parent, Sub or any other Subsidiary of Parent shall acquire at least 90% of the
outstanding shares of each class of capital stock of Company, the parties hereto
agree to take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after such acquisition, without a meeting of
stockholders of Company, in accordance with Section 253 of the DGCL, in each
case subject to applicable laws relating to exchange of information.
6.2 Reasonable Best Efforts. (a) Each of Parent and Company shall,
and shall cause their respective Subsidiaries and Affiliates to, use their
reasonable best efforts to take, or cause to be taken, all actions necessary,
proper or advisable to comply promptly with all legal requirements which may be
imposed on such party or any of its Subsidiaries or Affiliates with respect to
the Offer and the Merger and, subject to the conditions set forth in Article VII
hereof, to consummate the transactions contemplated by this Agreement.
(b) The parties hereto shall cooperate with each other and
use their reasonable best efforts to as promptly as practicable prepare and file
all necessary documentation, to effect all applications, notices, petitions and
filings, to obtain as promptly as practicable all permits, consents, approvals
and authorizations of all Governmental Entities and any other third parties
which are necessary or advisable to consummate the transactions contemplated by
this Agreement (including, without limitation, the Offer and the Merger) or to
prevent the termination of Company's and its Subsidiaries' contracts as a result
thereof, to comply fully with the terms and conditions of all such permits,
consents, approvals and authorizations of all such Governmental Entities, to
lift or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions contemplated
hereby, and to defend any litigation seeking to enjoin, prevent or delay the
consummation of the transactions contemplated hereby or seek material damages.
Parent and Company shall have the right to review in advance and, to the extent
practicable, each will consult with the other on, in each case subject to
applicable laws relating to the exchange of information, all the information
relating to Company or Parent, as the case may be, and any of their respective
Subsidiaries, which appear in any filing made with, or written materials
submitted to, any Governmental Entity or any other third party in connection
with the transactions contemplated by this Agreement. In exercising the
foregoing right, each of the parties hereto shall act reasonably and as promptly
as practicable. The parties hereto agree that they will consult with each other
with respect to the obtaining of all permits, consents, approvals and
authorizations of all Governmental Entities and other third parties necessary or
advisable to consummate the transactions contemplated by this Agreement and each
party will keep the other apprised of the status of matters relating to
completion of the transactions contemplated hereby.
(c) Parent and Company shall, upon request, furnish each
other with all information concerning themselves, their Subsidiaries, directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with the Offer Documents, the Schedule 14D-9 or the
Proxy Statement or any other statement, filing, notice or application made by or
on behalf of Parent, Company or any of their respective Subsidiaries to any
Governmental Entity in connection with the Offer, the Merger and the other
transactions contemplated by this Agreement.
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6.3 Access to Information. (a) Upon reasonable notice and subject to
applicable laws relating to the exchange of information, Company shall, and
shall cause its Subsidiaries to, afford to the officers, employees, accountants,
counsel and other representatives of Parent, reasonable access, during normal
business hours during the period prior to the Effective Time, to all its
properties, books, contracts, commitments and records and, during such period,
Company shall, and shall cause its Subsidiaries to, provide to Parent and such
representatives (i) a copy of each report, schedule, registration statement and
other document filed or received by it during such period pursuant to the
requirements of federal securities laws or other federal or state laws (other
than reports or documents which Company is not permitted to disclose under
applicable law) and (ii) all other information concerning its business,
properties and personnel as Parent may reasonably request, in all cases so that
Parent or its representatives, as the case may be, may have reasonable
opportunity to make such investigations as it desires of the affairs and assets
of Company. Neither Company nor any of its Subsidiaries shall be required to
provide access to or to disclose information where such access or disclosure
would (i) violate or prejudice the rights of its customers, (ii) interfere
unreasonably with the conduct of the business of the Company and its
Subsidiaries, (iii) jeopardize the attorney-client privilege to the extent
applicable to the Company's or any of its Subsidiary's materials, or (iv)
contravene any law, rule, regulation, order, judgment, decree or binding
agreement entered into prior to the date of this Agreement. The parties hereto
will make appropriate substitute disclosure arrangements under circumstances in
which the restrictions of the preceding sentence apply.
(b) Parent shall hold all information furnished by or on
behalf of Company or any of Company's Subsidiaries or representatives in
confidence, to the extent required by, and in accordance with, the provisions of
the confidentiality agreement, dated October 15, 1999 between Parent and Company
(the "Confidentiality Agreement").
(c) No investigation by Parent or its representatives shall
affect the representations and warranties of Company set forth herein.
6.4 Indemnification; Directors' and Officers' Insurance. (a) For a
period of six (6) years after the Effective Time, the Certificate of
Incorporation and Bylaws of the Surviving Corporation shall contain, to the
extent permitted by law, provisions with respect to indemnification that are no
less favorable to the Indemnified Party (as defined below) then set forth in the
Certificate of Incorporation and Bylaws of Company on the date hereof.
(b) Parent shall, and shall cause the Surviving Corporation
to, indemnify, defend and hold harmless the present and former officers and
directors of Company or any of Company's Subsidiaries in their capacities as
such (each an "Indemnified Party") after the Effective Time against all losses,
expenses, claims, damages or liabilities arising out of actions or omissions
occurring on or prior to the Effective Time to the fullest extent now provided
in their respective Certificates of Incorporation or Bylaws, and as permitted by
applicable law.
(c) Parent shall cause the persons serving as officers and
directors of Company immediately prior to the Effective Time to be covered for a
period of six years from the Effective Time by the directors' and officers'
liability insurance policy maintained by Company (provided that Parent may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are not less advantageous than such
policy) with respect to acts or omissions occurring prior to the Effective Time
which were committed by such officers and directors in their capacity as such;
provided, however, that in no event shall Parent be required to expend more than
150% of the current amount expended by Company (the "Insurance Amount") to
maintain or procure insurance coverage pursuant hereto and further provided,
that if Parent is unable to maintain or obtain the insurance called for by this
Section 6.4(c),
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Parent shall use its reasonable best efforts to obtain as much comparable
insurance as available for the Insurance Amount.
(d) In the event Parent, the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then, and in each
such case, to the extent necessary, proper provision shall be made so that the
successors and assigns of Parent or the Surviving Corporation, as the case may
be, assume the obligations set forth in this section.
(e) The provisions of this Section 6.4 are intended to be
for the benefit of, and shall be enforceable by, each Indemnified Party and his
or her heirs and representatives.
6.5 Employee Benefits. (a)The Company Stock Plans and the 1993
Employee Stock Purchase Plan of the Company (the "Stock Purchase Plan"), and any
other stock or option based compensation plans of the Company, shall be
terminated prior to the Closing Date and any shares of Company Common Stock
purchased thereunder prior to the Closing Date which continue to be held by
participants under such plans at the Effective Time shall be cancelled in
accordance with the procedures set forth in Section 1.8(b) of this Agreement. As
provided in the Stock Purchase Plan, each option outstanding thereunder at the
Effective Time shall be exercisable at the Exercise Date (as defined in the
Stock Purchase Plan) for $6.25 in cash. After the Effective Time, Parent will
take, or will cause the Company to take, all action necessary to carry out the
provisions of Section 16 and 19 of the Stock Purchase Plan. The Company shall
use its reasonable best efforts prior to the Effective Time to obtain the
consent of the holders of all Company Options outstanding under the ITC Plan to
the conversion of such options into the right to receive the Option
Consideration in exchange therefor at the Effective Time. Section 3.2 of the
Company Disclosure Schedule includes a complete and accurate list of such
holders.
(b) At the Effective Time, the Parent will cause the
Surviving Corporation to adopt the stock option plan in substantially the form
attached hereto as Annex IV and reserve for issuance shares equal to 17% of the
issued and outstanding shares of Common Stock of the Surviving Corporation at
the Effective Time, and such plan shall have been approved by Parent as the sole
stockholder of the Surviving Corporation.
6.6 Advice of Changes. Parent and Company shall promptly advise the
other party of any change or event having or reasonably likely to have a Company
Material Adverse Effect or Parent Material Adverse Effect, as the case may be,
on it or which it believes would or would be reasonably likely to cause or
constitute a material breach of any of its representations or warranties or
covenants contained herein; provided, however, that the delivery of any notice
pursuant to this Section 6.6 shall not limit or otherwise affect the remedies
available hereunder to any party receiving such notice.
6.7 Exclusive Negotiations. Parent and Sub undertake and agree that
they will not, and will not permit any of their officers, directors, employees,
financial or legal advisors, agents or other representatives or those of any of
its Affiliates to, after the date of this Agreement, and until the Effective
Time or such earlier time as this Agreement is terminated pursuant to Article
VIII, directly or indirectly, offer to purchase, solicit proposals to sell,
furnish information or engage in any discussions or negotiations relating to the
acquisition of all or any part of, or any interest in, or any of the assets of
Davox Corporation, E-share Technologies, Inc., E-share.com, Inc., Melita
International Corporation (or affiliates thereof) regardless of the form of the
proposed transaction.
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6.8 No Solicitation. (a) From the date of this Agreement until the
earlier of (x) the Effective Time, or (y) the termination of this Agreement
pursuant to Article VIII hereof, the Company shall not, shall not permit any of
its Subsidiaries to, and shall not authorize or permit any of its or their
respective officers, directors, employees, representatives, agents or
Affiliates, directly or indirectly, to:
(i) solicit, initiate or knowingly encourage or take any action to
facilitate or encourage any inquiries or the making of any proposal that
constitutes, an Acquisition Proposal (as defined below); or
(ii) participate or engage in discussions or negotiations with, or provide
any information to any individual, corporation, partnership, association, trust,
unincorporated organization, limited liability company or other entity or group,
as defined in Section 13(d)(3) of the Exchange Act (each a, "Person") concerning
an Acquisition Proposal or which might reasonably be expected to result in an
Acquisition Proposal.
(b) Acquisition Proposal. For purposes of this Agreement,
the term "Acquisition Proposal" shall mean any inquiry, proposal or offer from
any Person (other than Parent, Sub or any of their Affiliates, including, but
not limited to any subsidiary created in order to consummate the Merger) made or
submitted prior to the termination of this Agreement, relating to any merger,
consolidation, recapitalization, liquidation or other direct or indirect
business combination, involving the Company or any Subsidiary or the issuance or
acquisition of shares of capital stock or other equity securities of the Company
or any Subsidiary representing 40% or more (by voting power) of the outstanding
capital stock of the Company or such Subsidiary (except for the issuance of
shares of Common Stock pursuant to employee stock options granted under any
Company Stock Plan and outstanding on the date of this Agreement) or any tender
or exchange offer that if consummated would result in any Person, together with
all Affiliates thereof, beneficially owning shares of capital stock or other
equity securities of the Company or any Subsidiary representing 40% or more (by
voting power) of the outstanding capital stock of the Company or such
Subsidiary, or the acquisition, license, assignment, purchase or other
disposition of a substantial portion of the technology, business or assets of
the Company or any Subsidiary outside the ordinary course of business or
inconsistent with past practice, or any other transaction of similar
significance, the consummation of which would reasonably be expected to impede
materially, to interfere with, to prevent or to delay materially the
consummation of the Offer, the Merger and such other transactions contemplated
between the parties or which would reasonably be expected to dilute materially
the benefits to Parent or Sub of the transactions contemplated hereby.
(c) Termination of Negotiation with Persons. The Company
shall immediately cease and cause to be terminated and shall cause its
Affiliates and Subsidiaries and its or their respective officers, directors,
employees, representatives or agents, to terminate all existing discussions or
negotiations with any Persons conducted heretofore with respect to, or that
would reasonably be expected to lead to, an Acquisition Proposal.
(d) Unsolicited Acquisition Proposals. Notwithstanding the
foregoing, the Company may participate in discussions or negotiations with, or
furnish information with respect to the Company pursuant to a confidentiality
agreement substantially similar to the Confidentiality Agreement in effect
between the Company and Parent, to any Person if and only if such Person has
submitted an unsolicited written Acquisition Proposal to the Board of Directors
of the Company and such Board of Directors:
(i) believes in good faith based on such matters as it deems relevant,
including the advice of Company's financial advisor, that such Acquisition
Proposal is a Superior Proposal (as defined below);
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(ii) receives the advice of Hunton & Williams or other outside counsel to the
Company that is reasonably competent to render such advice, to the effect that
taking such action is required to satisfy the fiduciary duties of such Board of
Directors under DGCL; and
(iii) determines in good faith that taking such action is required to satisfy
the fiduciary duties of the Company's Board of Directors under applicable
Delaware Law.
(e) Superior Proposal. For purposes of this Agreement, the
term "Superior Proposal" means any bona fide Acquisition Proposal to effect a
tender offer, merger, consolidation or sale of all or substantially all of the
assets or capital stock of the Company, which is on terms which the Board of
Directors of the Company determines by a majority vote of its directors in its
good faith judgment (based upon the advice of Updata Capital, Inc. or other a
financial advisor reasonably competent to render such advice that the value of
the consideration provided in such Acquisition Proposal exceeds the value of the
consideration provided hereunder, after taking into account all relevant
factors, including, the form of consideration, any conditions to such
Acquisition Proposal, the timing of the closing thereof, the risk of
nonconsummation, the ability of the person making the Acquisition Proposal to
finance the transaction contemplated thereby and any required governmental or
other consents, filings and approvals) to be more favorable to the Company's
stockholders than the transactions contemplated by this Agreement, or any
revised offer submitted by Parent that is itself a Superior Proposal, and for
which financing, to the extent required, is then fully committed to the Person
making such Acquisition Proposal.
(f) Notice to Parent in connection with Acquisition
Proposal. Company shall immediately advise Parent orally and in writing of any
request for information with respect to any Acquisition Proposal, or any inquiry
with respect to or which could result in an Acquisition Proposal, the material
terms and conditions of such request, Acquisition Proposal or inquiry, and the
identity of the person making the same. The Company shall inform Parent on a
prompt and current basis of the status and content of any discussions regarding
any Acquisition Proposal with a third party and as promptly as practicable of
any change in the price, structure or form of the consideration or material
terms of and conditions regarding the Acquisition Proposal.
(g) Board Recommendation. The Board of Directors of the
Company shall be permitted to withdraw, or modify in any manner, whether or not
adverse to Parent, the Company Board Recommendation, but only if (i) the Company
has complied with the terms of this Section 6.8, including, without limitation,
the requirement that it notify Parent promptly after its receipt of any
Acquisition Proposal, (ii) a Superior Proposal has been offered and not
withdrawn at the time the Company's Board of Directors determines to take any
such action, (iii) the Company's Board of Directors determines in good faith by
a majority vote, on the basis of the advice of its outside legal counsel, that
its fiduciary duties under applicable law so require that it must take such
action and (iv) the Company shall have delivered to Parent four business days'
prior written notice advising Parent that it intends to take such action.
6.9 Publicity. Company, on the one hand, and Parent and Sub, on the
other hand, will consult with each other before holding any press conferences,
analyst calls or other meetings or discussions and before issuing any press
releases or other public announcements or statements regarding the transactions
contemplated hereby and by the Support Agreement. The parties will provide each
other the reasonable opportunity to review and comment upon any press release or
other public announcement or statement with respect to the transactions
contemplated by this Agreement and the Support Agreement, including the Offer
and the Merger, and shall not issue any such press release or other public
announcement or statement prior to such consultation, except as may be required
by applicable law, court process or by obligations pursuant to any listing
agreement with Nasdaq, any U.S. national securities exchange or the German Neuer
Market Exchange. The parties agree that the initial press release or releases to
be issued with respect
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to the transactions contemplated by this Agreement shall be mutually agreed upon
prior to the issuance thereof. In addition, Company shall, and shall cause its
Subsidiaries to consult with Parent regarding written communications with
customers, stockholders and employees relating to the transactions contemplated
hereby.
6.10 State Takeover Statutes. Each party will take all steps
necessary to exempt (or continue the exemption of) the Offer, the Merger and the
other transactions contemplated hereby and by the Support Agreement from any
applicable state takeover law (including Section 203 of the DGCL), as now or
hereafter in effect.
6.11 Payment of Bonuses. Company has delivered to Parent a copy of
all Company's bonus plans or programs in effect prior to the date of this
Agreement. Subject to Section 5.2(i) hereof, Parent and Sub agree to cause the
Company to comply with all terms and conditions of the Company's bonus plans or
programs in effect prior to the date of this Agreement and to make all payments
pursuant to such plans or programs for periods prior to the Effective Time.
6.12 HSR Act Filings. (a) Each of Parent and the Company shall, if
applicable, (i) promptly make or cause to be made the filings required of such
party or any of its subsidiaries under the HSR Act with respect to the
transactions contemplated by this Agreement, (ii) comply at the earliest
practicable date with any request under the HSR Act for additional information,
documents, or other material received by such party or any of its subsidiaries
from the Federal Trade Commission or the Department of Justice or any other
Governmental Entity in respect of such filings or such transactions, and (iii)
cooperate with the other party in connection with any such filing and in
connection with resolving any investigation or other inquiry of any such agency
or other Governmental Entity under any Antitrust Laws (defined below) with
respect to any such filing or any such transaction. Each party shall promptly
inform the other party of any communication with, and any proposed
understanding, undertaking, or agreement with, any Governmental Entity regarding
any such filings or any such transaction.
(b) Each of Parent and the Company shall use all commercially reasonable
efforts to resolve such objections, if any, as may be asserted by any
Governmental Entity with respect to the transactions contemplated by this
Agreement under the HSR Act, the Sherman Act, as amended, the Clayton Act, as
amended, the Federal Trade Commission Act, as amended, and any other Federal,
state or foreign statutes, rules, regulations, orders or decrees that are
designed to prohibit, restrict or regulate actions having the purpose or effect
of monopolization or restraint of trade (collectively, "Antitrust Laws"). In
connection therewith, if any administrative or judicial action or proceeding is
instituted (or threatened to be instituted) challenging any transaction
contemplated by this Agreement as violative of any Antitrust Law, and, if by
mutual agreement, Parent and the Company decide that litigation is in their best
interests, each of Parent and the Company shall cooperate and use all reasonable
efforts vigorously to contest and resist any such action or proceeding and to
have vacated, lifted, reversed, or overturned any decree, judgment, injunction
or other order, whether temporary, preliminary or permanent, that is in effect
and that prohibits, prevents, or restricts consummation of any such transaction.
Each of Parent and the Company shall use all commercially reasonable efforts to
take such action as may be required to cause the expiration of the notice
periods under the HSR Act or other Antitrust Laws with respect to such
transactions as promptly as possible after the execution of this Agreement.
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<PAGE> 37
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions:
(a) Consummation of the Offer. Sub shall have purchased all
shares of Company Common Stock duly tendered pursuant to the Offer.
(b) Company Stockholder Approval. If required under the
DGCL, the Company Stockholder Approval shall have been obtained.
(c) No Injunctions or Restraints; Illegality. No order,
injunction or decree issued by any court or agency of competent jurisdiction
or other legal restraint or prohibition (an "Injunction") preventing the
consummation of the Merger shall be in effect. No statute, rule, regulation,
order, injunction or decree shall have been enacted, entered, promulgated or
enforced by any Governmental Entity which prohibits, materially restricts or
makes illegal consummation of the Merger.
(d) HSR Act. Any applicable waiting period under the HSR Act
shall have expired or been terminated.
ARTICLE VIII
TERMINATION AND AMENDMENT
8.1 Termination. This Agreement may be terminated at any time prior
to the Effective Time, whether before or after approval by the stockholders of
Company of the matters presented in connection with the Merger:
(a) by mutual consent of Parent and Company;
(b) by either Parent or the Board of Directors of Company if
any Governmental Entity which must grant the HSR Approval has denied
approval of the Offer or the Merger and such denial has become final and
nonappealable, or any Governmental Entity of competent jurisdiction shall
have issued an order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and nonappealable; provided, however, that
the right to terminate this Agreement under this Section 8.1(b) shall not be
available to any party whose failure to comply with Section 6.2 or any other
provision of this Agreement has been a primary cause of such action;
(c) (i) by the Board of Directors of Company, if, prior to
the purchase of any shares of Company Common Stock by Sub pursuant to the
Offer, Parent breaches any of its representations, covenants or agreements
contained in this Agreement (A) such that any of the conditions set forth in
Annex I would not be
33
<PAGE> 38
satisfied, and (B) such breach either cannot be cured or is not cured prior
to the earlier of (x) ten (10) days after Company has furnished Parent with
written notice of such breach and (y) two (2) business days prior to the
date on which the Offer is then scheduled to expire; or (ii) by Parent, if,
prior to the purchase of any shares of Company Common Stock by Sub pursuant
to the Offer, Company breaches any of its representations, covenants or
agreements contained in this Agreement (A) such that any of the conditions
set forth in Annex I would not be satisfied, and (B) such breach either
cannot be cured or is not cured prior to the earlier of (x) ten (10) days
after Parent has furnished Company with written notice of such breach and
(y) two (2) business days prior to the date on which the Offer is then
scheduled to expire;
(d) by Parent, if, prior to the purchase of any shares of
Company Common Stock by Sub pursuant to the Offer, Company or its Board of
Directors shall have (i) withdrawn, modified, amended or materially
qualified in any respect adverse to Parent the Company Board Recommendation,
(ii) failed to mail the Schedule 14D-9 as required by Section 1.2(b) to its
stockholders, or failed to include in the Schedule 14D-9 the Company Board
Recommendation, (iii) entered into a definitive or binding agreement with
respect to a Superior Proposal, (iv) in response to the commencement of any
tender offer or exchange offer for 40% or more of the outstanding shares of
Company Common Stock, or the public announcement or disclosure of any other
Acquisition Proposal (as defined in Section 6.8 hereof), or the commencement
of negotiations or discussions with any third party regarding an Acquisition
Proposal in accordance with the terms of Section 6.8, failed, fully and
unconditionally, to recommend publicly rejection of such tender or exchange
offer or reject such other Acquisition Proposal (and publicly announce such
rejection, in the case of Acquisition Proposals which have been publicly
disclosed or become publicly known) within five business days of such
commencement, announcement or disclosure, or (v) resolved to do any of the
foregoing; or
(e) by either Parent or the Board of Directors of Company if
(i) the Offer expires or terminates in accordance with the terms hereof
without the purchase of any shares of Company Common Stock thereunder or
(ii) Sub shall not have purchased Shares under the Offer prior to February
28, 2000; provided, however, that the right to terminate this Agreement
under this Section 8.1(e) shall not be available to any party to the extent
that such party's failure to comply with Section 6.2 or any other provision
of this Agreement has resulted in the failure of any of the conditions set
forth on Annex I hereto.
(f) by the Company, if (i) prior to the acceptance for
payment of any shares of Company Common Stock pursuant to the Offer, (ii)
the Company is in compliance with Section 6.8, (iii) the Board of Directors
of the Company shall have withdrawn or modified in a manner adverse to
Parent the Company Board Recommendation, (iv) the Board of Directors of the
Company authorizes the Company, subject to complying with the terms of this
Agreement, to enter into a definitive agreement concerning a transaction
that constitutes a Superior Proposal and the Company notifies Parent in
writing that it intends to enter into such an agreement, attaching the most
current version of such agreement to such notice, (v) Parent does not make,
within four business days of receipt of the Company's written notification
of its intention to enter into a definitive agreement for a Superior
Proposal, an offer that the Board of Directors of the Company determines, in
good faith after consultation with its financial advisors, is at least as
favorable, from a financial point of view, to the stockholders of the
Company as the Superior Proposal and (vi) the Company agrees to pay the fees
required to be paid pursuant to Section 8.2(b) hereof. The Company agrees
(x) that it will not enter into a binding agreement referred to in clause
(iv) above until at least the fifth business day after it has provided the
notice to Parent required hereby and (y) to notify Parent promptly if its
intention to enter into the written agreement referred to in its
notification shall change at any time after giving such notification.
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<PAGE> 39
8.2 Effect of Termination. (a) In the event of termination of this
Agreement by either Parent or Company as provided in Section 8.1, written notice
thereof shall forthwith be given to the other party or parties specifying the
provision hereof pursuant to which such termination is made, and this Agreement
shall forthwith become void and have no effect, and none of Parent, Company, any
of their respective Subsidiaries or any of the officers or directors of any of
them shall have any liability of any nature whatsoever hereunder, or in
connection with the transactions contemplated hereby, except that (i) Section
6.3(b), this Section 8.2 and Article IX shall survive any termination of this
Agreement, (ii) notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor Company shall be relieved or released from any
liabilities or damages arising out of its intentional breach of any provision of
this Agreement, and (iii) Company shall pay to Parent the Termination Fee (as
defined below), if applicable, in accordance with this Section 8.2.
(b) In the event that this Agreement is terminated (other than
pursuant to Section 8.1(a), 8.1(b), or 8.1(c)(i), subsequent to the receipt of a
Superior Proposal, and Company within nine (9) months of the date hereof enters
a definitive agreement with respect to, or consummates, such Superior Proposal,
Company shall pay to Parent by wire transfer of immediately available funds to
an account designated by Parent within five days subsequent to the execution of
a definitive agreement with respect to such Superior Proposal an amount equal to
$3 million (the "Termination Fee").
(c) If Company wrongfully fails to pay Parent any amounts due to
Parent under this Section 8.2 within the time periods specified herein, Company
shall pay all reasonable costs and expenses (including reasonable legal fees and
expenses) incurred by Parent in connection with any action or proceeding
(including the filing of any lawsuit) taken by Parent to collect such unpaid
amounts, together with interest on such unpaid amounts at the publicly announced
prime lending rate as published in the Wall Street Journal from the date such
amounts were required to be paid until the date actually received by Parent.
8.3 Amendment. Subject to compliance with applicable law, this
Agreement may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors, at any time before or after approval of
the matters presented in connection with the Merger by the stockholders of
Company; provided, however, that after any approval of the transactions
contemplated by this Agreement by the stockholders of Company, there may not be,
without further approval of such stockholders, any amendment of this Agreement
which changes the amount or the form of the consideration to be delivered to the
holders of Company Common Stock hereunder other than as contemplated by this
Agreement. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
8.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions contained herein; provided, however,
that after any approval of the transactions contemplated by this Agreement by
the stockholders of Company, there may not be, without further approval of such
stockholders, any extension or waiver of this Agreement or any portion thereof
which reduces the amount or changes the form of the consideration to be
delivered to the holders of Company Common Stock hereunder other than as
contemplated by this Agreement. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only if set forth in a written
instrument signed on behalf of such party, but such extension or waiver or
failure to insist on strict compliance with an obligation, covenant, agreement
or condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure.
35
<PAGE> 40
ARTICLE IX
GENERAL PROVISIONS
9.1 Nonsurvival of Representations, Warranties and Agreements. None
of the representations, warranties, covenants and agreements in this Agreement
or in any instrument delivered pursuant to this Agreement (other than pursuant
to the Support Agreement, which shall terminate in accordance with its terms)
shall survive the Effective Time, except for those covenants and agreements
contained herein and therein which by their terms apply in whole or in part
after the Effective Time.
9.2 Expenses. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such expense; provided, however, that the costs and expenses of
printing and mailing the Offer Documents, the Schedule 14D-9 and the Proxy
Statement, and all filing and other fees paid to the SEC in connection with the
Offer and the Merger, shall be borne equally by Parent and Company.
9.3 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation), mailed by registered or certified mail (return receipt requested)
or delivered by an express courier (with confirmation) to the parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Parent, to:
Gert J. Reinhardt
SER Systeme AG
Innovationspark Rahms
D-53577 Neustadt/Wied
Germany
Fax number: 011 49 2683 984299
Philip Storey
SER Systeme AG
9943 Lawyers Road
Vienna, VA 22181
Fax number: (703) 319-3665
with a copy to:
John L. Sullivan, III
Venable, Baetjer and Howard, LLP
2010 Corporate Ridge
Suite 400
McLean, VA 22102
Fax number: 703 821 8949
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<PAGE> 41
(b) if to Company, to:
James McGowan
EIS International, Inc.,
555 Herndon Parkway
Herndon, VA 20170
Fax number: 703 326 8320
with a copy to:
Randall S. Parks
Hunton & Williams
951 East Byrd Street
Richmond, VA 23219
Fax number: 804 788 8218
9.4 Interpretation. When a reference is made in this Agreement to
Sections or Schedules, such reference shall be to a Section of or Schedule to
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." No provision of this
Agreement shall be construed to require Company, Parent or any of their
respective Subsidiaries or affiliates to take any action which would violate any
applicable law, rule or regulation. The recitals set forth in this Agreement are
incorporated into this Agreement by reference and made a part hereof.
9.5 Counterparts. This Agreement may be executed in counterparts,
each of which, when so executed and delivered, shall constitute an original, and
all of which counterparts, taken together, shall constitute one and the same
instrument, with the same effect as if all signatures were on the same
instrument.
9.6 Entire Agreement. This Agreement (including the documents and
the instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof other than the Support
Agreement, the Confidentiality Agreement dated October 15, 1999, and Article 2
of the Non-Solicitation and Standstill Agreement dated November 17, 1999 between
Parent and Company.
9.7 Governing Law, Jurisdiction and Venue. This Agreement shall be
governed and construed in accordance with the laws of the Commonwealth of
Virginia. Each party to this Agreement: (a) agrees that any legal action or
proceeding under this Agreement shall be brought in the United States District
Court for the Eastern District of Virginia sitting in Alexandria, Virginia; or
if such court does not have jurisdiction over a particular matter, in the
appropriate state court of the Commonwealth of Virginia; (b) irrevocably submits
to the jurisdiction of such courts; (c) agrees not to assert any claim or
defense that it is not personally subject to the jurisdiction of such courts,
that any such forums are not convenient or the venues thereof are improper, or
that this Agreement or the subject matter hereof may not be enforced in such
courts; and (d) agrees to accept service of process on it by certified or
registered mail or by any other method authorized by law.
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<PAGE> 42
9.8 Severability. If any term or provision of this Agreement, or the
application thereof to any person(s) or in any circumstance(s) is found by a
court of competent jurisdiction to be invalid, illegal or unenforceable, for any
reason, in any jurisdiction, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby and thereby is not
affected in any manner materially adverse to any party to this Agreement. Upon
such a determination that any term(s) or other provision(s) is or are invalid,
illegal or incapable of being enforced, the parties shall negotiate in good
faith to modify such 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. In the event that such modification is not
possible or is not achieved for any reason, then the term(s) or provision(s)
found invalid, illegal or incapable of being enforced such term(s) or
provision(s) shall be deemed to be deleted or excluded from the affected
Agreement as if never included therein to the extent that such deemed deletion
or exclusion does not affect the economic or legal substance of the transactions
contemplated in a manner materially adverse to any party to this Agreement.
9.9 Assignment; Third Party Beneficiaries. Subject to Section 1.13,
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned by either of the parties hereto (whether by operation of law
or otherwise) without the prior written consent of the other party. Subject to
the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns. Except as otherwise specifically provided in Section 6.5, this
Agreement (including the documents and instruments referred to herein) is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.
9.10 Enforcement. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, this being in addition to any other
remedy to which they are entitled at law or in equity.
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<PAGE> 43
IN WITNESS WHEREOF, Parent, Sub and Company have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of the
date first above written.
SER SYSTEME AG
By: /s/ GERT J. REINHARDT
--------------------------
Name: Gert J. Reinhardt
Title: Chief Executive Officer
SERSYS ACQUISITION CORPORATION
By: /s/ DR. PHILIP A. STOREY
--------------------------
Name: Dr. Philip A. Storey
Title: President
EIS INTERNATIONAL, INC.
By: /s/ JAMES E. McGOWAN
--------------------------
Name: James E. McGowan
Title: President and Chief Executive
Officer
<PAGE> 44
ANNEX I
CONDITIONS OF THE OFFER
The capitalized terms used in this Annex I have the meanings set forth
in the attached Agreement, except that the term "Merger Agreement" shall be
deemed to refer to the attached Agreement.
Notwithstanding any other provisions of the Offer, and in addition to
the conditions that at the expiration of the Offer (i) there shall have been
validly tendered and not withdrawn prior to the expiration of the Offer a number
of shares of Company Common Stock which, together with any other shares
beneficially owned by Parent or its wholly-owned Subsidiaries, constitute more
than 50% of the voting power (determined on a fully-diluted basis) on the date
of purchase of all the securities of Company entitled to vote generally in the
election of directors or in a merger (the "Minimum Condition"), (ii) the
applicable waiting period under the HSR Act (the "HSR Approval") shall have
expired or been terminated (the expiration of such waiting period being referred
to as the "HSR Approval Condition"), and (iii) any other approvals or consents
of third parties required to consummate the transactions contemplated by the
Merger Agreement (including the Offer and the Merger), shall have been obtained
and shall remain in full force and effect, Sub shall not be required to accept
for payment, or subject to applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to Sub's obligation to
pay for or return tendered Shares promptly after termination or withdrawal of
the Offer), purchase or pay for any shares tendered pursuant to the Offer, may
postpone the acceptance for payment of shares tendered, and subject to the terms
and conditions of the Merger Agreement may terminate the Offer, if at any time
on or after the date of the Merger Agreement and at or before the time of
payment for any such shares any of the following conditions shall have occurred
and shall have not been cured:
(a) (x) the representations and warranties of Company set forth in
the Merger Agreement, shall not have been true and correct in all respects
as of the date of the Merger Agreement, or shall not be true and correct in
all respects as of the expiration of the Offer as though made at and as of
the expiration of the Offer (except to the extent that such representations
and warranties speak as of another date which shall be required to be true
and correct as of such date) except where the failure to be true and correct
would not, individually or in the aggregate, have a Company Material Adverse
Effect (ignoring for purposes of this section all materiality or Material
Adverse Effect qualifiers contained in such representations and warranties)
or prevent the consummation of the Offer, or (y) Company shall have breached
in any material respect any of its material covenants or obligations
contained in the Merger Agreement;
(b) there shall have been any action or proceeding taken or
instituted and pending, or any statute, rule, regulation, judgment, order,
injunction or decree promulgated, entered, enforced, enacted, issued or
deemed applicable to the Offer or the Merger, or any other action taken,
proposed or threatened, by any domestic or foreign federal or state
governmental, regulatory or administrative agency or authority or court or
legislative body or commission which has or would reasonably be expected to
have the effect of (i) making the purchase of, or payment for, some or all
of the shares of Company Common Stock by Parent or Sub or their Affiliates
pursuant to the Offer or the Merger illegal, (ii) otherwise directly or
indirectly preventing the making or consummation of the Offer, or the
consummation of the Merger, (iii) prohibiting the ownership or operation by
Parent or any of its Subsidiaries of all or any material portion of the
business or assets of Company and its Subsidiaries, taken as a whole, or
Parent and its Subsidiaries, taken as a whole, (iv) imposing material
limitations on the ability of Parent, Sub or any of Parent's Affiliates
effectively to acquire or hold or to exercise full rights of ownership of
the shares of Company Common Stock, including, without limitation, the right
to vote any such shares acquired or owned by Parent or Sub or any of their
Affiliates on all matters properly presented to the stockholders of Company,
including, without limitation, the adoption of the Merger Agreement or the
right to vote any shares of capital stock of any Company Subsidiary, (v)
requiring divestiture by Parent or
<PAGE> 45
Sub or any of their Affiliates of any shares of Company Common Stock or (vi)
materially adversely affecting the business, financial condition, prospects
or results of operations of the Company and its Subsidiaries taken as a
whole; or
(c) there shall have occurred after the execution of this Agreement
(i) any general suspension in, or limitation on, or material adverse decline
in prices for securities on the New York Stock Exchange or Nasdaq, (ii) any
material adverse change or any condition, event or development involving a
prospective material adverse change in United States or German currency
exchange rates or a suspension of, or limitation on the markets therefor,
resulting in an increase of 20% or more in the cost to Parent of the Merger
Consideration (iii) a declaration of a banking moratorium or any suspension
of payments in respect of banks in the United States, (iv) a commencement of
a war or armed hostilities or other national or international calamity
directly or indirectly involving the United States that would prevent (or
delay) the consummation of the Offer, or (v) in the case of any of the
foregoing existing at the time of commencement of the Offer, material
acceleration or worsening thereof;
(d) there shall have occurred any change in the business, properties
assets, liabilities, capitalization, stockholders equity, financial
condition, operations, results of operations or prospects of Company or any
of its Subsidiaries, that (i) was not disclosed in the Company Disclosure
Schedule or in the Management's Discussion and Analysis of Financial
Condition and Results of Operations, Company, Business or Financial
Statements Sections of the Company Reports filed prior to the date hereof
(other than information contained under any "Risk Factor," "Cautionary
Statements" or "Factors Affecting Future Results" heading contained therein)
and (ii) that would reasonably be expected to have a Company Material
Adverse Effect or materially adversely affect (or delay) the consummation of
the Offer;
(e) (A) the Board of Directors of the Company or any committee
thereof shall have withdrawn or modified in a manner adverse to Parent or
Sub the Company Board Recommendation, or approved or recommended any
Acquisition Proposal or other acquisition of Company Common Stock other than
the Offer and the Merger, (B) any such corporation, partnership, other
entity or person shall have entered into a definitive agreement or any
agreement in principle with the Company with respect to a tender offer or
exchange offer for any Company Common Stock or a merger, consolidation or
other business combination with or involving the Company or any of its
Subsidiaries or (C) the Board of Directors of the Company or any committee
thereof shall have resolved to do any of the foregoing; or
(f) the Company's Board of Directors shall have failed to take all
action necessary to render the rights issued pursuant to the Rights
Agreement inapplicable to this Agreement, the Offer, the Merger and the
transactions contemplated thereby; or
(g) this Agreement shall have been terminated by Company, Parent or
Sub in accordance with its terms.
The foregoing conditions (other than the Minimum Condition) are for the
sole benefit of Parent and its Affiliates and may be asserted by Parent or its
Affiliates regardless of the circumstances giving rise to such condition. The
foregoing conditions (other than the Minimum Condition) may be waived by Parent
in whole or in part at any time and from time to time in its sole discretion.
The failure by Parent at any time to exercise any of its rights in connection
with the foregoing conditions shall not be deemed a waiver of any such right,
the waiver of any such right with respect to particular facts and other
circumstances shall not be deemed a waiver with respect to any other facts and
2
<PAGE> 46
circumstances, and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
3
<PAGE> 1
Exhibit (c)(2)
TENDER AND VOTING AGREEMENT
This TENDER AND VOTING AGREEMENT, dated as of December 17,
1999 (this "Agreement"), is entered into by and between SER SYSTEME AG, a German
corporation ("Parent"), and each stockholder of EIS INTERNATIONAL, INC., a
Delaware corporation ("Company"), whose name and signature are set forth on the
signature page(s) hereof (collectively, the "Stockholders" and, individually, a
"Stockholder").
WHEREAS, Company, Parent and Sersys Acquisition Corporation
("Sub"), a Delaware corporation that is a wholly owned subsidiary of SER (USA),
Inc., a Delaware corporation that is a wholly owned subsidiary of Parent, are,
concurrently with the execution hereof, entering into an Agreement and Plan of
Merger, dated as of December 17, 1999 (the "Merger Agreement"), pursuant to
which Sub will make an offer to purchase (the "Offer") all of the issued and
outstanding shares of common stock, par value $0.01 per share, of Company (the
"Company Common Stock"), at a price of $6.25 per share, net in cash, the
consummation of which will be followed by the merger of Sub with and into
Company, with Company being the surviving corporation (the "Merger");
WHEREAS, each Stockholder is the record and/or beneficial
owner (for purposes of this Agreement, "beneficial owner" and correlatives
having the meaning set forth in Rule 13d-3 under the Exchange Act) of that
number of shares of Company Common Stock set forth opposite his or her name on
Schedule I hereto and incorporated herein by reference (collectively, the
"Existing Shares" and, with respect to any Stockholder, the "Stockholder's
Existing Shares");
WHEREAS, each of the parties hereto desires to enter into this
Agreement to provide for, among other things, (1) the obligation of each
Stockholder to tender, or cause the record holder of all such Stockholder's
Existing Shares, together with all other shares of capital stock or other voting
securities of Company with respect to which such Stockholder has beneficial
ownership as of the date of this Agreement and any shares of capital stock or
other voting securities of Company, beneficial ownership of which is directly or
indirectly acquired by such Stockholder after the date hereof (including,
without limitation, shares received pursuant to any stock splits, stock
dividends or distributions, shares acquired by purchase or upon the exercise,
conversion or exchange of any option, warrant or convertible security or
otherwise, and shares or any voting securities of Company received pursuant to
any change in the capital stock of Company by reason of any recapitalization,
merger, reorganization, consolidation, combination, exchange of shares or the
like (collectively, the "Shares" and with respect to any Stockholder, the
"Stockholder's Shares") to tender such Stockholder's Shares (collectively, the
"Tender Shares" and with respect to any Stockholder, the "Stockholder's Tender
Shares") in the Offer, (2) the obligation of each Stockholder to
<PAGE> 2
vote such Stockholder's Shares, or to cause the record holder of the
Stockholder's Shares to vote, such Shares (collectively, the "Voting Shares" and
with respect to any Stockholder, the "Stockholder's Voting Shares") in the
manner specified herein and (3) certain restrictions on the sale or the transfer
of record and beneficial ownership, by any Stockholder, of any such
Stockholder's Shares; and
WHEREAS, each Stockholder acknowledges that Parent is entering
into the Merger Agreement in reliance on the representations, warranties,
covenants and other agreements of such Stockholder set forth in this Agreement
and that the Parent would not enter into the Merger Agreement if such
Stockholder did not enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein and in the Merger Agreement, and intending to be legally bound hereby,
Parent and each Stockholder severally agree as follows:
1. Incorporation by Reference; Defined Terms. The Recitals set
forth above are incorporated into this Agreement by reference and made a part
hereof. Capitalized terms used herein without definition shall have the meanings
assigned to such terms in the Merger Agreement.
2. Agreement to Tender. Subject to the terms of this Agreement
and provided this Agreement is not terminated pursuant to Section 20 hereof,
each Stockholder hereby agrees to validly tender, or cause the record owner to
validly tender, all of such Stockholder's Tender Shares pursuant to and in
accordance with the terms of the Offer within ten (10) business days of the
commencement thereof and, once tendered, not to withdraw or permit to be
withdrawn any Shares therefrom unless the Offer has expired and not been
extended or been terminated without the purchase of any shares as so permitted
in the Merger Agreement.
3. Agreement to Vote. Each Stockholder hereby agrees that,
from and after the date hereof and until the Termination Date (as defined in
Section 20), such Stockholder shall (i) appear at each and any meeting of the
stockholders of the Company, however called, in person or by proxy, or otherwise
shall cause all such Stockholder's Voting Shares, or Shares as to which such
Stockholder has, directly or indirectly, the right to vote or direct the voting,
to be counted as present thereat for purposes of establishing a quorum, and (ii)
at each such meeting or in connection with any written consent of the
stockholders of Company, such Stockholder shall vote (or cause to be voted) or
act by written consent with respect to all such Stockholder's Voting Shares or
Shares as to which such Stockholder has, directly or indirectly, the right to
vote or direct the voting, (a) in favor of adoption and approval of the Merger
Agreement and the Merger and the approval of the terms thereof and each of the
other actions contemplated by the Merger Agreement and this Agreement, and any
other action requested by Parent in furtherance thereof; (b) against any action
or agreement that would result in a breach of any covenant, representation or
warranty or any other obligation or agreement of
2
<PAGE> 3
Company contained in the Merger Agreement or of any Stockholder contained in
this Agreement; (c) against any Acquisition Proposal made by any person (for
purposes of this Agreement, "person" having the meaning specified in Sections
3(a)(9) and 13(d)(3) of the Exchange Act) other than Parent or any of its
Subsidiaries; and (d) against any other action, agreement or transaction (other
than the Merger Agreement and the transactions contemplated thereby) that is
intended, or could reasonably be expected, to impede, or interfere or be
inconsistent with, delay, postpone, discourage or materially adversely affect
the Offer or the Merger or the performance by each of the Stockholders of such
Stockholder's obligations under this Agreement, including, but not limited to:
(i) any extraordinary corporate transaction, such as a merger, consolidation or
other business combination involving Company or its Subsidiaries (other than the
Offer and the Merger); (ii) a sale, lease or transfer of a material amount of
assets of Company or any of its Subsidiaries (other than in the ordinary course
of business) or a reorganization, recapitalization or liquidation of Company or
any of its Subsidiaries; (iii) a material change in the policies or management
of Company; (iv) an election of new members to the board of directors of
Company, except where the vote is cast in favor of the candidates nominated by a
majority of the existing directors; (v) any material change in the
capitalization or dividend policy of Company as in effect on the date hereof or
any amendment or other change to Company's certificate of incorporation as in
effect on such date; or (vi) any other material change in Company's personnel,
corporate structure or business. Each Stockholder hereby agrees not to enter
into any voting or other agreement or understanding with any person or entity or
grant a proxy or power of attorney with respect to any Shares prior to the
Termination Date (other than a proxy or power of attorney to an officer of
Company that may be exercised solely in accordance with this Section 3 and
except as provided in Section 4 below) or vote or give instructions in any
manner inconsistent with clauses (a), (b) or (c) of the preceding sentence. Each
Stockholder hereby agrees, during the period commencing on the date hereof and
ending on the Termination Date, not to, and not to permit any of its affiliates
(for purposes of this Agreement, "affiliate" has the definition set forth in
Rule 12b-2 of the Exchange Act) to, vote or execute any written consent in lieu
of a stockholders meeting, if such consent or vote by the stockholders of
Company would be inconsistent with, impede or frustrate the purposes of the
other covenants of such Stockholder pursuant to this Agreement including,
without limitation, the purposes and covenants of this Section 3. The provisions
of this Agreement, including but not limited to this Section 3, should not be
construed to prevent a Stockholder, acting in his capacity as a director of the
Company, from exercising his fiduciary duties as a director, including with
respect to the matters set forth in Section 6.7(g) of the Merger Agreement.
4. PROXY. SUBJECT TO SECTION 20 HEREOF, EACH STOCKHOLDER
HEREBY GRANTS TO, AND APPOINTS, GERT J. REINHARDT AND PHILIP A. STOREY, IN THEIR
RESPECTIVE CAPACITIES AS OFFICERS OF PARENT, AND ANY INDIVIDUAL (S) WHO SHALL
HEREAFTER SUCCEED TO THE CORPORATE OFFICE OF EITHER SUCH OFFICER OF PARENT, AND
ANY OTHER PERSON(S) DESIGNATED IN WRITING BY PARENT, EACH OF THEM INDIVIDUALLY,
SUCH STOCKHOLDER'S PROXY AND ATTORNEY-IN-FACT
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<PAGE> 4
(WITH FULL POWER OF SUBSTITUTION) TO VOTE OR ACT BY WRITTEN CONSENT ON MATTERS
REFERRED TO IN, AND IN ACCORDANCE WITH, SECTION 3 HEREOF, WITH RESPECT TO SUCH
STOCKHOLDER'S SHARES. THIS PROXY IS COUPLED WITH AN INTEREST AND SHALL BE
IRREVOCABLE. SUCH STOCKHOLDER WILL TAKE SUCH FURTHER ACTION OR EXECUTE SUCH
OTHER INSTRUMENTS AS PARENT MAY DEEM NECESSARY TO EFFECTUATE THE INTENT OF THIS
PROXY AND HEREBY REVOKES ANY PROXY PREVIOUSLY GRANTED BY SUCH STOCKHOLDER WITH
RESPECT TO SUCH SHARES. NOTWITHSTANDING THE FOREGOING, NEITHER PARENT NOR ANY OF
THE AFORENAMED PROXIES SHALL EXERCISE THE POWERS SET FORTH IN THIS SECTION 4
UNLESS AND UNTIL THE HSR APPROVAL CONDITION HAS BEEN SATISFIED.
5. Representations and Warranties of Parent. Parent represents
and warrants to each Stockholder as follows:
(a) Parent is a corporation duly organized, validly
existing and in good standing under the laws of Germany.
(b) Parent has the requisite corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by Parent's Board
of Directors and no other corporate proceedings on the part of Parent are
necessary to authorize the execution and delivery of this Agreement by Parent
and the consummation by it of the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Parent and (assuming the valid
authorization, execution and delivery of this Agreement by each Stockholder) is
a valid and binding obligation of Parent, enforceable in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws relating
to or affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law).
(c) The execution and delivery of this Agreement by
Parent do not, and the performance of this Agreement by Parent will not, (i)
violate the certificate of incorporation or by-laws of Parent, (ii) violate any
law, rule, regulation or order applicable to Parent or by which any of its
properties is bound, or (iii) result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or require payment under, or result in the creation of any Lien
on the properties or assets of Parent pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent is a party or by which Parent or any of
its properties is bound, except those that would not reasonably be expected to
impair materially the ability of Parent to perform its obligations hereunder or
to consummate the transactions contemplated hereby on a timely basis.
4
<PAGE> 5
6. Representations and Warranties of the Stockholders. Each
Stockholder represents and warrants to Parent as follows:
(a) If such Stockholder is a corporation, limited
liability company, partnership or trust (i) such Stockholder has been duly
organized and is validly existing and in good standing under the laws of the
jurisdiction of its organization and (ii) such Stockholder has all necessary
corporate authority to enter into this Agreement, to perform its obligations
hereunder and to consummate the transactions contemplated hereby, and the
execution, delivery and performance of this Agreement by such Stockholder and
the consummation by such Stockholder of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of such
Stockholder.
(b) This Agreement has been duly executed and delivered
by such Stockholder and (assuming the valid authorization, execution and
delivery of this Agreement by Parent) is a valid and binding obligation of such
Stockholder, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws relating to or affecting
creditors' rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law).
(c) The execution and delivery of this Agreement by such
Stockholder do not, and the performance of this Agreement by such Stockholder
will not, (i) if such Stockholder is a corporation, limited liability company,
partnership or trust, violate the certificate of incorporation or by-laws, or
other organizational documents, of such Stockholder, (ii) violate any law, rule,
regulation or order applicable to such Stockholder or by which any of its
properties is bound, or (iii) result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or require payment under, or result in the creation of any Lien
on the properties or assets of such Stockholder pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which such Stockholder is a party or by which
such Stockholder or any of its properties is bound, except for those that would
not result in the imposition of a Lien on such Stockholder's Shares and would
not reasonably be expected to materially impair the ability of such Stockholder
to perform its obligations hereunder or to consummate the transactions
contemplated hereby on a timely basis.
(d) The execution and delivery of this Agreement by such
Stockholder do not, and the performance by such Stockholder of its obligations
hereunder will not, require such Stockholder to obtain any consent, approval,
authorization or permit of, or to make any filing with or notification to, any
Governmental Entity.
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<PAGE> 6
(e) There is no suit, action, investigation or proceeding
pending or, to the knowledge of such Stockholder, threatened against such
Stockholder at law or in equity before or by any Governmental Entity that would
reasonably be expected to materially impair the ability of such Stockholder to
perform its obligations hereunder on a timely basis, and there is no agreement,
commitment or law to which such Stockholder is subject that would reasonably be
expected to impair materially the ability of such Stockholder to perform its
obligations hereunder on a timely basis.
(f) Such Stockholder's Existing Shares are owned
beneficially and of record by such Stockholder except as indicated on Schedule
I. Such Stockholder's Existing Shares constitute all of the shares of Company
Common Stock owned of record or beneficially by such Stockholder. All of such
Existing Shares are issued and outstanding and, except as indicated on Schedule
I, such Stockholder does not own, of record or beneficially, any warrants,
options, convertible securities or other rights to acquire any shares of Company
Common Stock. Such Stockholder has not appointed or granted any proxy which is
still effective with respect to any Shares other than as provided in this
Agreement. Except as indicated on Schedule I, such Stockholder has sole voting
power and sole power of disposition with respect to all of such Stockholder's
Existing Shares, and there are no restrictions on such Stockholder's rights of
disposition pertaining thereto.
7. Agreements of the Stockholders.
(a) Each Stockholder hereby agrees, while this Agreement
is in effect, and except as expressly contemplated hereby or by the Merger
Agreement, not to (i) sell, transfer, pledge, encumber, grant, assign or
otherwise dispose of, enforce any redemption agreement with Company or enter
into any contract, option or other arrangement or understanding with respect to
or consent to the offer for sale, sale, transfer, pledge, encumbrance, grant,
assignment or other disposition of, record or beneficial ownership of any of the
Shares or any interest in any of the foregoing, except to Parent, (ii) grant any
proxies or powers of attorney, deposit any Shares into a voting trust or enter
into a voting agreement with respect to any Shares, or any interest in any of
the Shares, except to Parent or (iii) take any action that would make any
representation or warranty of such Stockholder contained herein untrue or
incorrect or have the effect of preventing or disabling such Stockholder from
performing such Stockholder's obligations under this Agreement, or that would
otherwise hinder or delay Parent from acquiring a majority of the outstanding
Company Common Stock, determined on a fully diluted basis.
(b) Each Stockholder hereby agrees, while this Agreement
is in effect, and except with respect to Parent and its affiliates and except
for actions that, if taken by the Company, would be permitted pursuant to the
Merger Agreement, such Stockholder shall not, and shall not permit any of its
affiliates or any director, officer, employee consultant, agent, advisor or
representative of such Stockholder or any of its affiliates (collectively, the
"Representatives") to initiate, solicit or knowingly encourage,
6
<PAGE> 7
directly or indirectly, any inquiries or the making of any proposal with respect
to any matter described in Section 7(a) hereof or any Acquisition Proposal,
participate in any negotiations concerning, or provide to any other person any
information or data relating to Company or any of its Subsidiaries for the
purpose of, or have any discussions with any person relating to, or cooperate
with or assist or participate in, or facilitate, any inquiries or the making of
any proposal which constitutes, or would reasonably be expected to lead to, any
effort or attempt by any other person to seek to effect any matter described in
Section 7(a) hereof or any Acquisition Proposal with respect to Company or any
of its Subsidiaries, or agree to or endorse any or release any third party from
any obligation under any existing standstill agreement or arrangement relating
to any such Acquisition Proposal, or otherwise facilitate any effort or attempt
to make or implement such an Acquisition Proposal. Each Stockholder agrees
immediately to cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore by it that
would violate Section 7(a) or 7(b) hereof, and will take the necessary steps
promptly to inform its Representatives of the obligations undertaken by such
Stockholder in this Section 7.
(c) Each Stockholder hereby agrees, while this Agreement
is in effect, to notify Parent promptly of (i) the number of any additional
shares of Company Common Stock and the number and type of any other Shares
acquired by such Stockholder, after the date hereof and (ii) any inquiries or
proposals that are received by, any information that is requested from, or any
negotiations or discussions that are sought to be initiated or continued with,
such Stockholder with respect to any matter described in Section 7(a) or Section
7(b).
(d) Each Stockholder consents to the termination of the
Company Stock Plans and the Stock Purchase Plan (all as defined in the Merger
Agreement) and the conversion of interests under such plans pursuant to Sections
1.9 and 6.5 of the Merger Agreement.
8. Record Ownership. Each Stockholder agrees to use its
reasonable best efforts such that within ten (10) business days after receiving
a request therefor from Parent, such Stockholder will no longer hold any Shares
in "street name" or in the name of any nominee.
9. Further Assurances. From time to time, at the request of
Parent, on the one hand, and any Stockholder, on the other, each Stockholder or
the Company, as the case may be, without further consideration, shall execute
and deliver such additional documents and take all such further action as may be
necessary or desirable, in the reasonable discretion of the party making the
request, to consummate and make effective, as expeditiously as reasonably
practicable, the transactions contemplated by this Agreement. Without limiting
the generality of the foregoing, none of the parties hereto shall enter into an
agreement or arrangement (or alter, amend or terminate any existing agreement or
arrangement) if such action would materially impair the ability of such party to
effectuate, carry out or comply with all the terms of this Agreement.
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<PAGE> 8
10. Survival. None of the representations, warranties,
covenants and agreements of the parties herein shall survive beyond the
Termination Date.
11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (1) on the date of delivery
if delivered personally, or by facsimile, upon confirmation of receipt, (2) on
the first (1st) business day following the date of dispatch if delivered by a
recognized next-day courier service, or (3) on the tenth (10th) business day
following the date of dispatch if mailed by registered or certified mail, return
receipt requested, postage prepaid. All notices hereunder shall be given the
party at its address stated on the signature page(s) of this Agreement or at any
other address as the Company or a Stockholder may specify for this purpose by
notice to the Stockholders or the Company, as the case may be, pursuant to this
Section 11.
12. No Waivers. No failure or delay by any party in exercising
any right, power or privilege under this Agreement or any other agreements,
instruments and other documents executed and delivered by each Stockholder in
connection with this Agreement (collectively, the "Support Documents") shall
operate as a waiver of that right, power or privilege. A single or partial
exercise of any right, power or privilege shall not preclude any other or
further exercise of that right, power or privilege or the exercise of any other
right, power or privilege. The rights and remedies provided in the Support
Documents shall be cumulative and not exclusive of any rights or remedies
provided by law.
13. Amendments, Etc. No amendment, modification, termination
or waiver of any provision of any Support Document, and no consent to any
departure by any Stockholder or Parent from any provision of any Support
Document, shall be effective unless it shall be in writing and signed and
delivered by each Stockholder and Parent, and then it shall be effective only in
the specific instance and for the specific purpose for which it is given.
14. Successors and Assigns; Third Party Beneficiaries. (a) No
party shall assign any of its rights or remedies or delegate any of its
obligations or liabilities, in whole or in part, under any Support Document. Any
assignment or delegation in contravention of this Section 14 shall be void ab
initio and shall not relieve the assigning or delegating party of any obligation
under any Support Document.
(b) The provisions of each Support Document shall be
binding upon and inure solely to the benefit of the parties hereto and their
respective permitted heirs, executors, legal representatives, successors and
assigns, and no other person.
15. Governing Law. This Agreement and each other Support
Document, and all rights, remedies, liabilities, powers and duties of the
parties hereto and
8
<PAGE> 9
thereto, shall be governed by and construed in accordance with the laws of the
Commonwealth of Virginia without regard to the principles of conflicts of laws
thereof.
16. Severability of Provisions. If any one or more of the
terms or other provisions of any Support Document, or the application thereof to
any person(s) or in any circumstance(s) is found by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced, for any
reason, all other terms and provisions of such Support Document and of each
other Support Document shall nevertheless remain in full force and effect so
long as the economic and legal substance of the transactions contemplated hereby
and thereby is not affected in any manner materially adverse to any party to
this Agreement. Upon such a determination that any term(s) or other provision(s)
is or are invalid, illegal or incapable of being enforced, the parties to the
affected Support Document shall negotiate in good faith to modify such Support
Document 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. In the event that such modification is not possible or is not achieved
for any reason, then the term(s) or provision(s) found invalid, illegal or
incapable of being enforced shall be deemed to be deleted or excluded from the
affected Support Agreement as if never included therein to the extent that such
deemed deletion or exclusion does not affect the economic or legal substance of
the transactions contemplated in a manner materially adverse to any party to
this Agreement.
17. Headings and References. Article and section headings in
any Support Document are included for only for the convenience of reference of
the parties, do not constitute a part of the Support Document for any other
purpose and shall not be used in the construction of any Support Document or any
provision thereof. References to articles and sections in any Support Document
are references to the sections of the Support Document in which such reference
appears, unless the context shall require otherwise. Any term used in any
Support Agreement in the singular shall extend to and include the plural, any
term used in the plural shall extend to and include the singular and any term
used in either gender or the neuter shall extend to and include the other gender
or be neutral, unless the context otherwise requires.
The use in this Agreement of the word "include" or
"including," when following any general statement, term or matter, shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.
18. Entire Agreement. The Support Documents (including the
Merger Agreement to the extent referenced herein) embody the entire agreement
and understanding of each of the parties hereto with respect to the subject
matter thereof, and
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<PAGE> 10
supersede all other written or oral prior agreements or understandings, with
respect to such subject matter.
19. Enforcement. The parties agree that irreparable damage
would occur in the event that any of the provisions of any Support Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the Company, on the one hand, and the
Stockholders, on the other hand, hall be entitled to an injunction or
injunctions to prevent breaches of the Support Agreements and to enforce
specifically the terms and provisions of the Support Agreements in any federal
court sitting in the Commonwealth of Virginia or Virginia State court, this
being in addition to any other remedy to which such party are entitled at law or
in equity.
20. Termination. This Agreement and the proxy set forth in
Section 4 shall terminate upon the earliest of the following dates (such date is
referred to herein as the "Termination Date"): (i) the date on which the Merger
Agreement is terminated in accordance with Article VIII thereof; (ii) the date
on which Parent terminates this Agreement upon written notice to each of the
Stockholders, which termination may be effected by Parent at any time, in its
sole discretion; and (iii) the Effective Time.
21. Counterparts. This Agreement may be executed in any number
of counterparts, each of which, when so executed and delivered, shall constitute
an original, and all of which counterparts, taken together, shall constitute one
and the same instrument, with the same effect as if all signatures were on the
same instrument.
10
<PAGE> 11
IN WITNESS WHEREOF, Parent and each of the undersigned
Stockholders have caused this Agreement to be duly executed as of the day and
year first above written.
SER SYSTEME AG
By: /s/ GERT J. REINHARDT
---------------------
Name: Gert J. Reinhardt
Title: Chief Executive Officer
STOCKHOLDERS
/s/ JAMES E. McGOWAN
------------------------
(Signature)
James E. McGowan
------------------------
(Print Name)
Address: Foxwood Lane
Bluemount, VA 20135
/s/ ROBERT M. JESURUM
------------------------
(Signature)
Robert M. Jesurum
------------------------
(Print Name)
Address: 11 Harborview Drive
Rye, NH 03870
/s/ CHARLES W. McCALL
------------------------
(Signature)
Charles W. McCall
------------------------
(Print Name)
Address: Illegible
11
<PAGE> 12
/s/ JOHN F. BURTON
------------------------
(Signature)
John F. Burton
------------------------
(Print Name)
Address: P.O. Box 850
McLean, VA 22101
/s/ PETER B. FOREMAN
------------------------
(Signature)
Peter B. Foreman
------------------------
(Print Name)
Address:
/s/ KENT M. KLINEMAN
------------------------
(Signature)
Kent M. Klineman
------------------------
(Print Name)
Address: 1720 Ave. of the Americas
NY, NY
/s/ ROBERT J. CRESCI
------------------------
(Signature)
Robert J. Cresci
------------------------
(Print Name)
Address:
12
<PAGE> 13
/s/ FREDERICK C. FOLEY
------------------------
(Signature)
Frederick C. Foley
------------------------
(Print Name)
Address: 1414 Esplanade Ct.
Apt 448
Reston, VA 20194
/s/ EDWARD J. SARKISIAN
------------------------
(Signature)
Edward J. Sarkisian
------------------------
(Print Name)
Address: 6507 Rock Crystal Dr.
Clifton, VA 20124
/s/ JONATHAN M. WINEBERG
------------------------
(Signature)
Jonathan M. Wineberg
------------------------
(Print Name)
Address: 17676 Artist View Ct.
Round Hill, VA 20141
13
<PAGE> 1
Exhibit (c)(3)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of December 17, 1999 between SERSys
Acquisition Corporation, a Delaware corporation (the "Company," which term shall
refer to EIS International, Inc. ("EIS") after the Effective Time, as defined
below), and James E. McGowan (the "Executive"). In consideration of the mutual
covenants and representations herein contained and the mutual benefits derived
herefrom, the parties, intending to be legally bound, covenant and agree as
follows:
1. PURPOSE. The Company is engaged in the business of software solutions
(the "Business"). The Company has entered into an Agreement and Plan of Merger
dated as of the date hereof (the "Merger Agreement"), pursuant to which the
Company shall merge with and into EIS International, Inc., following the
completion of the tender offer described in the Merger Agreement (the "Tender
Offer"). The Company wishes to employ the Executive, and the Executive has
agreed to be employed by the Company, on the terms and conditions herein
provided, to be effective at the Effective Time of the Merger (as defined in the
Merger Agreement). If, after consummation of the Tender Offer, the Effective
Time does not occur promptly as contemplated by the Merger Agreement, the
Company shall cause EIS to enter into an employment agreement with Executive,
and Executive agrees to enter into such employment agreement, on terms identical
to those contained herein and each shall take such other actions as shall be
necessary to provide Executive and EIS with all of the benefits contemplated by
this Agreement, including, without limitation, preparing and executing
additional agreements in place of those contemplated by this Agreement.
2. FULL-TIME EMPLOYMENT OF EXECUTIVE - DUTIES AND STATUS.
(a) The Company hereby engages the Executive as a full-time
executive employee to hold the office of President and Chief Executive Officer,
and shall nominate him for election to the board of directors of the Company,
for the period (the "Employment Period") specified in Section 4(a) hereof with
such duties and responsibilities as Executive has performed in the past for EIS
International, Inc., and the Executive accepts such employment, on the terms and
conditions set forth in this Agreement. Throughout the Employment Period, the
Executive shall faithfully exercise such authority and perform such executive
duties as are commensurate with the authority and duties of Chief Executive
Officer of the Company. Executive shall perform such duties in the same fashion,
at the same locations, and with the same general amount of travel, as has
historically been the case in connection with Executive's prior work for the
Business.
(b) Throughout the Employment Period, the Executive shall devote
his full business time and efforts to the business of the Company and will not
engage in consulting work or any trade or business for his own account or for or
on behalf of any other person, firm or corporation which competes, conflicts or
interferes with the performance of his duties hereunder in any way, excepting
that (i) the Executive shall be
<PAGE> 2
entitled to accept such additional office or offices to which he may be
appointed by the Company, provided that the performance of the duties of such
office or offices shall generally be consistent with the scope of the duties
provided for in Section 2(a) hereof and (ii) subject to the provisions of
Section 5 hereof and the approval of the Board of Directors of the Company, the
Executive will be permitted to serve as a director of one or more corporations
not affiliated with the Company.
(c) The Executive agrees to execute the Employee Proprietary
Information and Inventions Agreement (the "Proprietary Rights Agreement"),
attached hereto as EXHIBIT A, and to comply with the provisions thereof. The
Executive understands that both entering into and complying with the terms of
the Proprietary Rights Agreement is a condition to the Executive's continued
employment with the Company and that Executive's material breach of his
obligations under Sections 1 and 2 of the Proprietary Rights Agreement will, if
not cured within thirty (30) days after written notice of such breach is
delivered by the Company to Executive, constitute "cause" for purposes of this
Agreement. The Executive further represents and warrants that his employment by
the Company, and the performance by the Executive of his duties hereunder, will
not violate any of the terms and conditions of any agreement with any previous
employer.
3. COMPENSATION AND GENERAL BENEFITS. As full compensation for his
services to the Company, the Executive shall, during the Employment Period, be
compensated as follows:
(a) The Company shall pay to the Executive a salary (the
"Salary") based upon a per annum rate of three hundred and twenty-five thousand
dollars ($325,000.00). The Salary shall be payable in periodic equal
installments on a monthly basis, less such sums as may be required to be
deducted or withheld under applicable provisions of federal, state and local
law.
In addition to salary, the Executive shall be eligible for bonuses. A bonus up
to but not exceeding fifty percent (50%) of the Salary per calendar year shall
be payable in the case of good performance. Furthermore, an additional bonus up
to but not exceeding fifty percent (50%) of the Salary per calendar year shall
be payable in the case of exceptional performance. The objectives to achieve
such bonuses will be defined by the compensation committee of the board before
January 15 of the relevant year.
The total compensation shall be increased after December 30, 2001 and the salary
and bonuses shall be reviewed as part of the total increase in compensation.
(b) Throughout the Employment Period and to the extent
commensurate with the Executive's level of responsibility within the Company,
the Executive shall be entitled to participate in such pension, profit sharing,
bonus or incentive compensation, incentive, group and individual disability,
group and individual life, survivor income, sickness, accident, dental, medical
and health benefits and other
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plans of the Company or additional benefit programs, which may be established by
the Company for its executive officers, as and to the extent any such benefit
programs, plans and arrangements are or may from time to time be in effect, to
the extent that the Executive is eligible to participate in such plans under the
terms of such plans. Notwithstanding the above, the Executive shall be entitled
to participate in the stock option plan that shall be adopted by the Company at
the Effective Time in the form attached hereto as Exhibit B at levels
commensurate with his position in the Company and with industry practices
generally (with such plan to be registered under the Securities Act of 1933 on
Form S-8 as soon as practicable following the initial public offering of the
Company's common stock, subject to the discretion of the managing underwriter of
such offering), and the Company shall retain the existing life insurance policy
on Executive. The Company shall enter into the Stock Option Grant Agreement and
the Stockholders Agreement in the form attached hereto as Exhibits C and D
effective as of the Effective Time. The Stock Option Agreement shall provide for
the issuance to Executive of options to acquire shares of the Company's common
stock equal to 5% of the number of shares issued and outstanding immediately
following the Effective Time. The Company shall take all action necessary to
authorize such number of shares for issuance. The death benefit of such policy
shall be payable to any beneficiary as designated by the Executive.
(c) The Company shall reimburse the Executive from time to time
for all reasonable and customary business expenses incurred by him in the
performance of his duties hereunder, provided that the Executive shall submit
vouchers and other supporting data to substantiate the amount of said expenses
in accordance with Company policy from time to time in effect.
(d) Throughout the Employment Period, the Executive shall be
entitled to four (4) weeks of annual vacation. In addition, Executive shall be
entitled to leave of absence and leave for illness or temporary disability in
accordance with the policies of the Company in effect from time to time for its
executive officers or, if more generous, the policy in effect for its employees
generally. Vacation leave and leave of absence, if taken by the Executive, shall
be taken at such times as are reasonably acceptable to the Company. Any leave on
account of illness or temporary disability which is short of Total Disability
(as defined in Section 4(c)(ii) hereof) shall not constitute a breach by the
Executive of his agreements hereunder even though leave on account of a Total
Disability may be deemed to result in a termination of the Employment Period
under the applicable provisions of this Agreement.
(e) If the Company purchases and maintains at any time during the
term of this Agreement one or more life insurance policies on the life of the
Executive, in addition to any policies purchased pursuant to Section 3(b)
hereof, in whatever amount or amounts which the Company deems desirable, the
Company shall be the beneficiary of such policy or policies and the Executive
shall cooperate with the Company and submit to such reasonable medical
examinations as are necessary to enable the Company to purchase and maintain in
full force and effect such additional insurance policy or policies.
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(f) During the term of this Agreement, the Company shall pay to
the Executive an automobile allowance of $600 per month.
4. EMPLOYMENT PERIOD.
(a) Duration. The Employment Period shall commence on the date of
this Agreement and shall continue until the close of business on December 30,
2001, unless earlier terminated for "cause" (as defined in Section 4(c)(i)
hereof). Thereafter, the Employment Period shall continue until the earlier of
(i) termination by the Company without "cause", or (ii) termination of this
Agreement by the Company for "cause" (as defined in Section 4(c)(i) hereof), or
(iii) the Executive's resignation for "good reason" (as defined in Section
4(c)(iii)), or (iv) the Executive's resignation without "good reason", provided
that the Executive provides no less than three (3) months notice to the Company
of such resignation, or (v) the death or Total Disability of the Executive.
(b) Payments Upon Termination.
(i) Except as otherwise provided herein, if the
Executive's employment is terminated by the Company for any reason other than
"cause" (as defined in Section 4(c)(i) hereof), or by the Executive for "good
reason" (as defined in Section 4(c)(iii) hereof), at any time during the
Employment Period, the Company shall pay to, or provide at the Company's expense
for, as the case may be, the Executive:
(A) (i)if such termination occurs before January 1,
2001, 100% of his Salary for the remainder of the term of this Agreement, equal
to at least 12 months and (ii) if such termination occurs after January 1, 2001,
100% of his annual Salary, with such amounts payable in equal installments over
a three (3) month period commencing on the date of termination; and
(B) for a period of twelve (12) months following
such termination, the sickness, health and disability insurance programs to
which he would have been entitled under this Agreement if he had remained in the
employ of the Company for such twelve-month period.
(ii) If the Executive's employment is terminated (A) by
the Company for "cause", or (B) by the Executive by resignation without "good
reason", or (C) upon the death or due to the "Total Disability" (as defined in
Section 4(c)(ii) hereof) of the Executive, then the Company shall have no
further liability to the Executive hereunder with respect to periods following
the date of such termination, except (1) for the Salary which has accrued
through the date of termination, which amounts shall be paid by the Company
within thirty (30) days of such termination; and (2) for such other benefits as
may be required to be provided by the Company under the provisions of applicable
law.
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(c) Definitions. When used in this Agreement, the words "cause",
"Total Disability" and "good reason" shall have the respective meanings set
forth below:
(i) The term "cause" means: (A) the Executive's failure
to devote his full business time and efforts to the business of the Company as
required by Section 2(b) after reasonable notice to the Executive by the Board
specifying such failure and providing the Executive with a reasonable
opportunity to cure such failure given the context of the circumstances, (B) the
Executive's material breach of the covenants or agreements contained in Sections
1 and 2 of the Proprietary Rights Agreement, if not cured within thirty (30)
days after written notice of such breach is delivered by the Company to
Executive, (C) the commission by Executive of an intentional tort causing
material loss or damage to the Company, (D) the commission by Executive of any
crime or act of fraud or material dishonesty against Company and/or its
subsidiaries and affiliates causing material loss or damage to the Company, or
(E) the commission by Executive of any serious felony (not involving motor
vehicles) evidencing moral turpitude. Notwithstanding the foregoing, or anything
else in this Agreement to the contrary, no termination by Company of Executive's
employment hereunder for Cause shall occur, and Executive's full salary and
benefits shall continue, until the existence of Cause (or other reason for
termination permitted hereunder) is finally determined by final and binding
adjudication pursuant to an arbitration proceeding taking place in the Northern
Virginia area under the then applicable rules of the American Arbitration
Association. Both parties consent to such arbitration as the required method of
dispute resolution with respect to such issues.
(ii) To the extent permitted by applicable law, the term
"Total Disability" means total disability as defined in the Company's group and
individual disability plans, if any. If the Company does not have in existence
such plans, then "Total Disability" shall mean:
(y) The inability to perform the duties required
hereunder for a continuous period of six (6) months during the Employment Period
due to "mental incompetence" or "physical disability" as hereinafter defined.
The Executive shall be considered to be mentally incompetent and/or physically
disabled: (A) if he is under a legal decree of incompetency (the date of such
decree being deemed the date on which such mental incompetence occurred for
purposes of this Section 4(c)); or (B) because of a "Medical Determination of
Mental and/or Physical Disability." A Medical Determination of Mental and/or
Physical Disability shall mean the written determination by: (1) the physician
regularly attending the Executive, and (2) a physician selected by the Company,
that because of a medically determinable mental and/or physical disability the
Executive is unable to perform each of the essential functions of the Executive,
and such mental and/or physical disability is determined or reasonably expected
to last twelve (12) months or longer after the date of determination, based on
medically available information. If the two physicians do not agree, they shall
jointly choose a third consulting physician and the written opinion of the
majority of these three (3) physicians shall be conclusive as to such mental
and/or physical disability and shall be binding on
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the parties. The date of any written opinion which is conclusive as to the
mental and/or physical disability shall be deemed the date on which such mental
and/or physical disability commenced for purposes of this Section 4(c), if the
written opinion concludes that the Executive is mentally and/or physically
disabled. In conjunction with determining mental and/or physical disability for
purposes of this Agreement, the Executive consents to any such examinations
which are relevant to a determination of whether he is mentally and/or
physically disabled, and which is required by any two (2) of the aforesaid
physicians, and to furnish such medical information as may be reasonably
requested, and to waive any applicable physician patient privilege that may
arise because of such examination. All physicians selected hereunder shall be
Board-certified in the specialty most closely related to the nature of the
mental and/or physical disability alleged to exist.
(z) For purposes of determining whether the
Executive is mentally incompetent or physically disabled for the continuous six
(6) month period specified in this Section 4(c), such disability shall be deemed
to continue from the date of any legal decree of incompetency, or written
opinion which is conclusive as to the mental and/or physical disability, through
the date the legal decree expires or is otherwise revoked or removed, or the
date on which the mental and/or physical disability has ceased, as the case may
be, as set forth in a written opinion prepared by the physicians described in
this Section 4(c) pursuant to the procedures provided herein.
(iii) The term "resignation for good reason" or "good
reason" means any of the following:
(A) the failure of the Company within ten (10)
days written notice by the Executive to the Board to make any payment due to the
Executive hereunder;
(B) without the express written consent of the
Executive, any change by the Company in the Executive's function, duties, or
responsibilities not generally consistent with those contemplated in Section 2
hereof, which is not rescinded within thirty (30) days after the Executive has
given the Board written notice of such change which notice specifies in detail
the change;
(C) any decrease in the Executive's base salary,
life or disability insurance coverage or benefits payable to the Executive or to
which he is entitled other than a decrease in benefits which is part of a
general decrease in benefits provided or payable to officers and other salaried
employees of the Company;
(D) any material failure (other than a failure to
make payments) by the Company to comply with any of the provisions of this
Agreement, which change or failure, as the case may be, continues unremedied for
thirty (30) days after Executive has given the Board written notice of such
change or failure which notice specifies in detail the change or failure, as the
case may be;
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(E) upon (i) any sale, exchange or other
disposition of substantially all of the Company's assets or over 50% of its
Common Stock; or (ii) any merger, share exchange, consolidation or other
reorganization or business combination in which the Company is not the surviving
or continuing corporation, or in which the Company's stockholders become
entitled to receive cash, securities of the Company other than voting common
stock, or securities of another issuer;
(F) upon the Executive's assignment to an office of
the Company located more than twenty-five (25) miles from its existing facility
in Herndon, Virginia; and
(G) Executive's failure to be elected to, or his
removal from, the Board of Directors.
(d) Disparaging Remarks. Throughout the Employment Period and
during any period subsequent to the termination of the Employment Period during
which the Executive receives any form of compensation from the Company, each of
the Company and the Executive covenants to not make any disparaging remarks
concerning the other, its or his operations, or its or his attorneys, relatives,
employees, officers or directors to any persons either publicly or in private
whether or not such disparaging remarks may be found to adversely affect the
Executive or the Company, its employees, officers, or directors, as the case may
be.
5. AGREEMENT NOT TO COMPETE OR HIRE THE COMPANY'S EMPLOYEES AFTER
TERMINATION.
(a) The Executive agrees with the Company that the services that
the Executive shall render during the Employment Period are unique, special and
of extraordinary character and that the Company shall be substantially dependent
upon such services to develop and market its products and to earn a profit.
Accordingly, in consideration for employment by the Company and compensation and
other benefits, during the Employment Period, and for a period of one (1) year
after the Executive's employment is terminated (the "Restricted Period"), the
Executive shall not directly or indirectly compete or interfere with the Company
(or any division, subsidiary or other affiliate of the Company) in the provision
of, development of, or marketing of the Business.
(b) The term "compete" as used herein means to engage directly or
indirectly either as a proprietor, partner, employee, agent, consultant,
director, officer, stockholder or in any other capacity or manner whatsoever.
The phrase "interfere with" includes, but is not limited to, soliciting or
selling services or products which provide similar functions to any of the
Company's services or products to any current or potential customer of the
Company (it being understood that the Company refers to EIS(as the surviving
corporation of the Merger, and not SER Systeme AG). The
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provisions of this Section shall not prevent the Executive from investing any
assets in securities of any corporation provided that such investments do not,
directly or indirectly, result in the Executive, family members and other
affiliates, collectively (i) owning beneficially at any time five percent (5%)
or more of the equity securities of any corporation engaged in a business
competitive with the Company, or (ii) otherwise being able to control or
actively participate in the business decisions of such competing business.
(c) The Executive agrees not to employ or call upon any employee
of the Company during the Restricted Period with the intent of enticing the
employee away or out of the employ of the Company for any reason whatsoever.
(d) The provisions of this Section 5 shall be enforced to the
fullest extent permissible under the laws and public policies applied to each
jurisdiction which enforcement is sought. If any particular provision or portion
of this Section shall be adjudicated to be invalid or unenforceable, this
Section shall be deemed amended to interpret such provision or portion thereof
so adjudicated to be invalid or unenforceable to extend only over the maximum
period of time, range of activities or geographic area as to which it may be
enforceable, such amendment to apply only with respect to the operation of this
Section in the particular jurisdiction in which such adjudication is made.
6. NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address he has filed
in writing with the Company.
7. BINDING AGREEMENT; ASSIGNMENT. This Agreement shall be effective
as of the date hereof and shall be binding upon and inure to the benefit of,
the parties and their respective heirs, successors, assigns, and personal
representatives, as the case may be. The Executive may not assign any rights or
duties under this Agreement. The Company may not assign this Agreement, or its
rights hereunder, except to a successor of the Company. As used herein, the
successors of the Company shall include, but not be limited to, any successor
by way of merger, consolidation, sale of all or substantially all of the
assets, or similar reorganization or change in control.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the Executive and the Company with respect to the subject
matter hereof and supersede any and all prior understandings written or oral.
This Agreement may not be changed, modified or discharged orally, but only by
an instrument in writing signed by the parties.
9. ENFORCEABILITY. This Agreement has been duly authorized,
executed and delivered and constitutes the valid and binding obligations of the
parties hereto, enforceable in accordance with its terms. The undertakings
herein shall not be construed as any limitation upon the remedies either party
might, in the absence of this Agreement,
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have at law or in equity for any wrongs of the other party.
10. GOVERNING LAW. The validity and construction of this Agreement or
any of its provisions shall be determined under the internal laws of the
Commonwealth of Virginia, without giving effect to its conflicts of laws
provisions, and without regard to its place of execution or its place of
performance. The parties irrevocably consent and agree to the exclusive
jurisdiction of the courts of the Commonwealth of Virginia and the Federal
courts of the United States of America located in the Commonwealth of Virginia.
11. SEVERABILITY. If any one or more of the terms or provisions of
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable, in whole or in part, or in any respect or in the event that any
one or more of the provisions of this Agreement operated or would prospectively
operate to invalidate this Agreement, then and in either of those events, such
provision or provisions only shall be deemed null and void and shall not affect
any other provision of this Agreement and the remaining provisions of this
Agreement shall remain operative and in full force and effect and shall in no
way be affected, prejudiced or disturbed thereby.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one Agreement.
13. AMENDMENTS AND WAIVERS. This Agreement may, to the maximum extent
permitted by applicable law, be amended by the parties, which amendment shall be
set forth in an instrument executed by all of the parties. Any term, provision
or condition of this Agreement (other than as prohibited by applicable law) may
be waived in writing at any time by the party which is entitled to the benefits
thereof. No waiver by either party of any breach of this Agreement shall be a
waiver of any preceding or succeeding breach. No waiver by the either party of
any right under this Agreement shall be construed as a waiver of any other
right.
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IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the date first above written.
For the Company: By the Executive:
By: /s/ DR. PHILIP A. STOREY /s/ JAMES E. McGOWAN
-------------------------- ----------------------------
Title: President
--------------------------
During the Employment Term, SER Systeme AG agrees to vote, or cause to
be voted, all of voting shares of the Company beneficially owned by it from time
to time for the election of Executive to the Board of Directors and against any
proposal to remove Executive from the Board of Directors, and for any amendment
to the Company's Certificate of Incorporation necessary for the adoption by the
Company of the Stock Option Plan and the issuance of the options referred to in
Section 3(b) of this Agreement.
For SER Systeme AG:
By: /s/ GERT J. REINHARDT
-----------------------------
Title: Chief Executive Officer
---------------------------
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SERSYS ACQUISITION CORPORATION
STOCK OPTION PLAN
STOCK OPTION GRANT AGREEMENT
This Grant Agreement (the "Agreement") is entered into this day of
__________ 2000, by and between SERSys Acquisition Corporation (the
"Corporation"), a Delaware corporation, and James E. McGowan ("Grantee").
Grantee and the Corporation agree that, until such time as securities
issuable pursuant to the Plan become registered under the Securities Act of
1933, the grant of options hereunder and the purchase and sale of Common Stock
upon exercise thereof are intended to comply with the exemption from
registration provided by Rule 701 of the Securities Act of 1933 and each party
hereto shall use his or its best efforts to comply with such Rule 701. To the
extent that an exemption from registration under the Securities Act provided by
Rule 701 is unavailable, the grant of options hereunder and the sale of Common
Stock upon exercise thereof are intended to be exempt from registration under
the Securities Act in reliance upon the private offering exemption contained in
Section 4(2) of the Securities Act, or other available exemption.
ARTICLE 1
GRANT OF OPTION
SECTION 1.1 GRANT OF OPTIONS. Subject to the provisions of the Agreement,
and pursuant to the provisions of the SERSys Acquisition Corporation Stock
Option Plan (the "Plan"), Corporation hereby grants to Grantee, as of the Grant
Date specified in Attachment A, a Stock Option (the "Option") of the type stated
in Attachment A to purchase all or any part of the number and class of shares of
Common Stock set forth on Attachment A at the exercise price per share ("Option
Price") set forth on Attachment A.
SECTION 1.2 TERM OF OPTIONS. Unless the Option granted pursuant to Section
1.1 terminates earlier pursuant to other provisions of the Agreement, including
the expiration date specified in Attachment A, the Option shall expire on the
day prior to the tenth (10th) anniversary of its Grant Date.
ARTICLE 2
VESTING
SECTION 2.1 VESTING SCHEDULE. Unless the Option has earlier terminated
pursuant to the provisions of the Agreement, Grantee shall become vested on the
dates specified on Attachment A in a portion of the Option with respect to a
percentage or number of the underlying shares in accordance with the vesting
schedule specified on Attachment A; provided that Grantee shall have been in the
continuous employ of or affiliation (as a consultant or director) with the
Corporation from the Grant Date through any such date.
<PAGE> 12
ARTICLE 3
EXERCISE OF OPTION
SECTION 3.1 EXERCISABILITY OF OPTION. No portion of the Option granted to
Grantee shall be exercisable by Grantee prior to the time such portion of the
Option has vested.
SECTION 3.2 MANNER OF EXERCISE. The Option may be exercised, in whole or in
part, by delivering written notice to the Committee in the form attached hereto
as Attachment B or in such other form as the Committee may require from time to
time. Such notice shall specify the number of shares of Common Stock subject to
the Option as to which the Option is being exercised, and shall be accompanied
by full payment of the Option Price of the shares of Common Stock as to which
the Option is being exercised. Payment of the Option Price shall be made in cash
(or cash equivalents acceptable to the Committee in the Committee's discretion).
In the Committee's sole and absolute discretion, the Committee may authorize
payment of the Option Price to be made, in whole or in part, by such other means
as the Committee may prescribe. The Option may be exercised only in multiples of
whole shares and no partial shares shall be issued.
SECTION 3.3 ISSUANCE OF SHARES AND PAYMENT OF CASH UPON EXERCISE. Upon
exercise of the Option, in whole or in part, in accordance with the terms of the
Agreement and upon payment of the Option Price for the shares of Common Stock as
to which the Option is exercised, the Corporation shall issue to Grantee or, in
the event of Grantee's death, to Grantee's executor, personal representative or
the person to whom the Option shall have been transferred by will or the laws of
descent and distribution, as the case may be, the number of shares of Common
Stock so paid for, in the form of fully paid and nonassessable Common Stock. The
stock certificates for any shares of Common Stock issued hereunder shall, unless
such shares are registered or an exemption from registration is available under
applicable federal and state law, bear a legend restricting transferability of
such shares.
ARTICLE 4
TERMINATION OF EMPLOYMENT
SECTION 4.1 UNVESTED PORTION. Unless the Option has earlier terminated
pursuant to the provisions of this Agreement, the unvested portion of the Option
shall terminate upon termination of Grantee's employment or affiliation (as a
consultant or director) with the Corporation for any reason.
SECTION 4.2 TERMINATION OF EMPLOYMENT OR AFFILIATION FOR REASON OTHER THAN
DEATH OR DISABILITY. Unless the Option has earlier terminated pursuant to the
provisions of the Agreement, the Option granted to Grantee shall terminate in
its entirety, regardless of whether the Option is vested in whole or in part,
six (6) months after the date Grantee is no longer employed by, nor affiliated
(as a consultant or director) with, the Corporation for any reason other than
Grantee's death or Disability. Notwithstanding the foregoing, the Option granted
to Grantee shall terminate in its entirety, regardless of whether the Option is
vested in whole or in part, upon the termination of the Grantee's employment or
affiliation (as a consultant or director)
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with the Corporation by resignation or by the Corporation for "cause". If
Grantee is a party to a written employment agreement with the Corporation which
contains a definition of "cause", "termination for cause" or any other similar
term or phrase, whether such Grantee is terminated for "cause" pursuant to this
Section 4.2 shall be determined according to the terms of and in a manner
consistent with the provisions of such written employment agreement. If Grantee
is not party to such a written employment agreement with the Corporation, then
for purposes of this Section 4.2, "cause" shall mean the failure by the Grantee
to perform his or her duties as assigned by the Corporation in a reasonable
manner; any act by the Grantee of dishonesty or bad faith with respect to the
Corporation; chronic addiction to alcohol, drugs or other similar substances
affecting the Grantee's work performance; or the commission by the Grantee of
any act, misdemeanor, or crime reflecting unfavorably upon the Grantee or the
Corporation. The good faith determination by the Committee of whether the
Grantee's employment was terminated by the Corporation for "cause" pursuant to
the preceding sentence shall be final and binding for all purposes hereunder.
SECTION 4.3 UPON GRANTEE'S DEATH. Unless the Option has earlier terminated
pursuant to the provisions of the Agreement, upon Grantee's death Grantee's
executor, personal representative or the person to whom the Option shall have
been transferred by will or the laws of descent and distribution, as the case
may be, may exercise all or any part of the vested portion of the Option,
provided such exercise occurs within twelve (12) months after the date Grantee
dies, but not later than the end of the stated term of the Option.
SECTION 4.4 TERMINATION OF EMPLOYMENT OR AFFILIATION BY REASON OF
DISABILITY. Unless the Option has earlier terminated pursuant to the provisions
of the Agreement, in the event that Grantee ceases, by reason of Disability, to
be an employee of or affiliated (as a consultant or director) with the
Corporation, the vested portion of the Option may be exercised in whole or in
part at any time within twelve (12) months after the date of Disability, but not
later than the end of the stated term of the Option. For purposes of this
Agreement, Disability shall be as defined in Code Section 22(e)(3) and shall be
determined by the Committee, with its determination on the matter being final
and binding.
ARTICLE 5
MISCELLANEOUS
SECTION 5.1 NON-GUARANTEE OF EMPLOYMENT. Nothing in the Plan or the
Agreement shall be construed as a contract of employment between the Corporation
(or an affiliate) and Grantee, or as a contractual right of Grantee to continue
in the employ of the Corporation or an affiliate, or as a limitation of the
right of the Corporation or an affiliate to discharge Grantee at any time.
SECTION 5.2 NO RIGHTS OF STOCKHOLDER. Grantee shall not have any of the
rights of a stockholder with respect to the shares of Common Stock that may be
issued upon the exercise of the Option until such shares of Common Stock have
been issued to him upon the due exercise of the Option.
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SECTION 5.3 NOTICE OF DISQUALIFYING DISPOSITION. If Grantee makes a
disposition (as that term is defined in Section 424(c) of the Code) of any
shares of Common Stock acquired pursuant to the exercise of an Incentive Stock
Option within two (2) years of the Grant Date or within one (1) year after the
shares of Common Stock are transferred to Grantee, Grantee shall notify the
Committee of such disposition in writing.
SECTION 5.4 WITHHOLDING OF TAXES. The Corporation or any affiliate shall
have the right to deduct from any compensation or any other payment of any kind
(including withholding the issuance of shares of Common Stock) due Grantee the
amount of any federal, state or local taxes required by law to be withheld as
the result of the exercise of the Option or the disposition (as that term is
defined in Section 424(c) of the Code) of shares of Common Stock acquired
pursuant to the exercise of the Option; provided, however, that the value of the
shares of Common Stock withheld may not exceed the statutory minimum withholding
amount required by law. In lieu of such deduction, the Committee may require
Grantee to make a cash payment to the Corporation or an affiliate equal to the
amount required to be withheld. If Grantee does not make such payment when
requested, the Corporation may refuse to issue any Common Stock certificate
under the Plan until arrangements satisfactory to the Committee for such payment
have been made.
SECTION 5.5 NONTRANSFERABILITY OF OPTION. The Option shall be
nontransferable otherwise than by will or the laws of descent and distribution.
During the lifetime of Grantee, the Option may be exercised only by Grantee or,
during the period Grantee is under a legal disability, by Grantee's guardian or
legal representative.
SECTION 5.6 AGREEMENT SUBJECT TO CHARTER AND BYLAWS. This Agreement is
subject to the Charter and Bylaws of the Corporation in effect as of the date
hereof, and any applicable Federal or state laws, rules or regulations,
including without limitation, the laws, rules, and regulations of the State of
Delaware.
SECTION 5.7 GENDER. As used herein the masculine shall include the feminine
as the circumstances may require.
SECTION 5.8 HEADINGS. The headings in the Agreement are for reference
purposes only and shall not affect the meaning or interpretation of the
Agreement.
SECTION 5.9 NOTICES. All notices and other communications made or given
pursuant to the Agreement shall be in writing and shall be sufficiently made or
given if hand delivered or mailed by certified mail, addressed to Grantee at the
address contained in the records of the Corporation, or addressed to the
Committee, care of the Corporation for the attention of its Secretary at its
principal office or, if the receiving party consents in advance, transmitted and
received via telecopy or via such other electronic transmission mechanism as may
be available to the parties.
SECTION 5.10 ENTIRE AGREEMENT; MODIFICATION. The Agreement contains the
entire agreement between the parties with respect to the subject matter
contained herein and may not be
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modified, except as provided in the Plan or in a written document signed by each
of the parties hereto.
SECTION 5.11 CONFORMITY WITH PLAN. This Agreement is intended to conform in
all respects with, and is subject to all applicable provisions of, the Plan,
which is incorporated herein by reference. Unless stated otherwise herein,
capitalized terms in this Agreement shall have the same meaning as defined in
the Plan. Inconsistencies between this Agreement and the Plan shall be resolved
in accordance with the terms of the Plan. In the event of any ambiguity in the
Agreement or any matters as to which the Agreement is silent, the Plan shall
govern including, without limitation, the provisions thereof pursuant to which
the Committee has the power, among others, to (i) interpret the Plan and Grant
Agreements related thereto, (ii) prescribe, amend and rescind rules and
regulations relating to the Plan, and (iii) make all other determinations deemed
necessary or advisable for the administration of the Plan. The Grantee
acknowledges by signing this Agreement that he or she has received and reviewed
a copy of the Plan.
IN WITNESS WHEREOF, the parties have executed the Agreement as of the date
first above written.
ATTEST: SERSYS ACQUISITION CORPORATION
By:
- ------------------------ ---------------------------------------
WITNESS: GRANTEE
- ------------------------ ------------------------------------------
5
<PAGE> 16
ATTACHMENT A
STOCK OPTION GRANTED TO JAMES E. MCGOWAN
TYPE OF OPTION: ISO TO THE MAXIMUM EXTENT PERMITTED BY LAW WITH
ANY EXCESS CONSTITUTING A NONQUALIFIED STOCK OPTION.
GRANT DATE: EFFECTIVE TIME
NUMBER AND CLASS
OF SHARES: 50,000 SHARES OF COMMON STOCK
EXERCISE PRICE PER SHARE: $69.20 PER SHARE
EXPIRATION DATE:
The Option shall expire on January 1, 2005, if a public offering of the Common
Stock that requires registration under the Securities Act (an "IPO") has not
been consummated by that date. If an IPO of the Common Stock has been
consummated by January 1, 2005, the Option shall not expire until the 10th
anniversary of the Grant Date.
VESTING SCHEDULE:
A. Regular Vesting. The Option shall be vested as to:
1. 50% of the underlying shares subject to the Option on the first anniversary
of the Grant Date; and an additional
2. 50% of the underlying shares subject to the Option on the second anniversary
of the Grant Date.
B. Accelerated Vesting. The Option shall become vested as to 100% of the
underlying shares subject to the Option in the event of the following:
1. A termination by the Corporation without "cause" or by the Grantee for "good
reason," as defined in Section 4 of the Employment Agreement between the Company
and Grantee of even date herewith, of Grantee's employment or affiliation (as a
consultant or director) with the Corporation.
2. The consummation of an IPO of the Common Stock.
<PAGE> 17
ATTACHMENT B
EXERCISE FORM
SERSys Acquisition Corporation
[Address]
[Address]
Gentlemen:
1. Exercise of Stock Option. I hereby exercise the [Insert Type]
______________Stock Option (the "Stock Option") granted to me on
____________________, 199____, by SERSys Acquisition Corporation (the
"Corporation"), subject to all the terms and provisions thereof and of the
SERSys Acquisition Corporation Stock Option Plan (the "Plan"), and notify you of
my desire to purchase ____________ shares (the "Shares") of Common Stock of the
Corporation at a price of $___________ per share pursuant to the exercise of
said Stock Option.
2. Information about the Corporation. I am aware of the Corporation's
business affairs and financial condition and have acquired sufficient
information about the Corporation to reach an informed and knowledgeable
decision to acquire the Shares.
3. Tax Consequences. I am not relying upon the Corporation for any tax
advice in connection with this option exercise, but rather am relying on my own
personal tax advisors in connection with the exercise of the Stock Option and
any subsequent disposition of the Shares.
4. Tax Withholding. I understand that, in the case of a nonqualified
stock option, I must submit upon demand from the Corporation an amount in cash
or cash equivalents sufficient to satisfy any federal, state or local tax
withholding applicable to this Stock Option exercise, in addition to the
purchase price enclosed, or make such other arrangements for such tax
withholding that are satisfactory to the Corporation, in its sole discretion, in
order for this exercise to be effective.
5. Unregistered Shares. The following shall apply in the event the Shares
purchased herein are not registered under the Securities Exchange Act of 1933,
as amended:
(a) I am acquiring the Shares for my own account for investment with
no present intention of dividing my interest with others or of reselling or
otherwise disposing of any of the Shares.
(b) The Shares are being issued without registration under the
Securities Act of 1933, as amended (the "Act"), in reliance upon the exemption
provided by Section 3(b) of the Act for employee benefit plans, contained in
Rule 701 promulgated thereunder, or in lieu thereof
<PAGE> 18
upon the private offering exemption contained in Section 4(2) of the Act, and
such reliance is based in part on the above representation.
(c) Since the Shares have not been registered under the Act, they
must be held indefinitely until an exemption from the registration requirements
of the Act is available or they are subsequently registered, in which event the
representation in Paragraph (a) hereof shall terminate. As a condition to any
transfer of the Shares, I understand that the Corporation will require an
opinion of counsel satisfactory to the Corporation to the effect that such
transfer does not require registration under the Act or any state securities
law.
(d) The issuer is not obligated to comply with the registration
requirements of the Act or with the requirements for an exemption under
Regulation A under the Act for my benefit.
(e) The certificates for the shares to be issued to me shall contain
appropriate legends to reflect the restrictions on transferability imposed by
the Act.
Total Amount Enclosed: $
----------
Date:
------------------------ ---------------------------------------------
(Optionee)
Received by SERSys Acquisition Corporation
On: , 19
------------------------- ------
By:
-----------------------------------
8
<PAGE> 1
Exhibit (c)(4)
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT, dated as of December 17, 1999 between SERSys
Acquisition Corporation, a Delaware corporation (the "Company," which term shall
refer to EIS International, Inc. ("EIS") after the Effective Time, as defined
below), and Frederick C. Foley (the "Executive"). In consideration of the mutual
covenants and representations herein contained and the mutual benefits derived
herefrom, the parties, intending to be legally bound, covenant and agree as
follows:
1. PURPOSE. The Company is engaged in the business of software
solutions (the "Business"). The Company has entered into an Agreement and Plan
of Merger dated as of the date hereof (the "Merger Agreement"), pursuant to
which the Company shall merge with and into EIS International, Inc., following
the completion of the tender offer described in the Merger Agreement (the
"Tender Offer"). The Company wishes to employ the Executive, and the Executive
has agreed to be employed by the Company, on the terms and conditions herein
provided, to be effective at the Effective Time of the Merger (as defined in the
Merger Agreement). If, after consummation of the Tender Offer, the Effective
Time does not occur promptly as contemplated by the Merger Agreement, the
Company shall cause EIS to enter into an employment agreement with Executive,
and Executive agrees to enter into such employment agreement, on terms identical
to those contained herein and each shall take such other actions as shall be
necessary to provide Executive and EIS with all of the benefits contemplated by
this Agreement, including, without limitation, preparing and executing
additional agreements in place of those contemplated by this Agreement.
2. FULL-TIME EMPLOYMENT OF EXECUTIVE - DUTIES AND STATUS.
(a) The Company hereby engages the Executive as a full-time
executive employee to hold the office of Senior Vice President - Finance,
Treasurer and Chief Financial Officer for the period (the "Employment Period")
specified in Section 4(a) hereof with such duties and responsibilities as
Executive has performed in the past for EIS International, Inc, and the
Executive accepts such employment, on the terms and conditions set forth in this
Agreement. Throughout the Employment Period, the Executive shall faithfully
exercise such authority and perform such executive duties as are commensurate
with the authority and duties of his office. Executive shall perform such duties
in the same fashion, at the same locations, and with the same general amount of
travel, as has historically been the case in connection with Executive's prior
work for the Business.
(b) Throughout the Employment Period, the Executive shall
devote his full business time and efforts to the business of the Company and
will not engage in consulting work or any trade or business for his own account
or for or on behalf of any other person, firm or corporation which competes,
conflicts or interferes with the performance of his duties hereunder in any way,
excepting that (i) the Executive shall be
<PAGE> 2
entitled to accept such additional office or offices to which he may be
appointed by the Company, provided that the performance of the duties of such
office or offices shall generally be consistent with the scope of the duties
provided for in Section 2(a) hereof and (ii) subject to the provisions of
Section 5 hereof and the approval of the Board of Directors of the Company, the
Executive will be permitted to serve as a director of one or more corporations
not affiliated with the Company.
(c) The Executive agrees to execute the Employee Proprietary
Information and Inventions Agreement (the "Proprietary Rights Agreement"),
attached hereto as EXHIBIT A, and to comply with the provisions thereof. The
Executive understands that both entering into and complying with the terms of
the Proprietary Rights Agreement is a condition to the Executive's continued
employment with the Company and that Executive's material breach of his
obligations under Sections 1 and 2 of the Proprietary Rights Agreement will, if
not cured within thirty (30) days after written notice of such breach is
delivered by the Company to Executive, constitute "cause" for purposes of this
Agreement. The Executive further represents and warrants that his employment by
the Company, and the performance by the Executive of his duties hereunder, will
not violate any of the terms and conditions of any agreement with any previous
employer.
3. COMPENSATION AND GENERAL BENEFITS. As full compensation for his
services to the Company, the Executive shall, during the Employment Period, be
compensated as follows:
(a) The Company shall pay to the Executive a salary (the
"Salary") based upon a per annum rate of Two Hundred Thousand dollars
($200,000). The Salary shall be payable in periodic equal installments on a
monthly basis, less such sums as may be required to be deducted or withheld
under applicable provisions of federal, state and local law.
In addition to salary, the Executive shall be eligible for bonuses. The bonus
amount shall be determined on a base of 35% of Executive's salary calculated
against a sliding scale of 75% to 150% depending on the Executive's performance.
The objectives to achieve such bonus will be defined by the Chief Executive
Officer or compensation committee of the board before January 15 of the relevant
year.
The total compensation shall be increased after December 30, 2000 and the salary
and bonuses shall be reviewed as part of the total increase in compensation.
(b) Throughout the Employment Period and to the extent
commensurate with the Executive's level of responsibility within the Company,
the Executive shall be entitled to participate in such pension, profit sharing,
bonus or incentive compensation, incentive, group and individual disability,
group and individual life, survivor income, sickness, accident, dental, medical
and health benefits and other plans of the Company or additional benefit
programs, which may be established by the
2
<PAGE> 3
Company for its executive officers, as and to the extent any such benefit
programs, plans and arrangements are or may from time to time be in effect, to
the extent that the Executive is eligible to participate in such plans under the
terms of such plans. Notwithstanding the above, the Executive shall be entitled
to participate in the stock option plan that shall be adopted by the Company at
the Effective Time in the form attached hereto as Exhibit B at levels
commensurate with his position in the Company and with industry practices
generally (with such plan to be registered under the Securities Act of 1933 on
Form S-8 as soon as practicable following the initial public offering of the
Company's common stock, subject to the discretion of the managing underwriter of
such offering), and the Company shall retain the existing life insurance policy
on Executive. The Company shall enter into the Stock Option Grant Agreement and
the Stockholders Agreement in the form attached hereto as Exhibits C and D
effective as of the Effective Time. The Stock Option Agreement shall provide for
the issuance to Executive of options to acquire shares of the Company's common
stock equal to one percent (1%) of the number of shares issued and outstanding
immediately following the Effective Time. The Company shall take all action
necessary to authorize such number of shares for issuance. The death benefit of
such policy shall be payable to any beneficiary as designated by the Executive.
(c) The Company shall reimburse the Executive from time to
time for all reasonable and customary business expenses incurred by him in the
performance of his duties hereunder, provided that the Executive shall submit
vouchers and other supporting data to substantiate the amount of said expenses
in accordance with Company policy from time to time in effect.
(d) Throughout the Employment Period, the Executive shall be
entitled to four (4) weeks of annual vacation. In addition, Executive shall be
entitled to leave of absence and leave for illness or temporary disability in
accordance with the policies of the Company in effect from time to time for its
executive officers or, if more generous, the policy in effect for its employees
generally. Vacation leave and leave of absence, if taken by the Executive, shall
be taken at such times as are reasonably acceptable to the Company. Any leave on
account of illness or temporary disability which is short of Total Disability
(as defined in Section 4(c)(ii) hereof) shall not constitute a breach by the
Executive of his agreements hereunder even though leave on account of a Total
Disability may be deemed to result in a termination of the Employment Period
under the applicable provisions of this Agreement.
(e) If the Company purchases and maintains at any time during
the term of this Agreement one or more life insurance policies on the life of
the Executive, in addition to any policies purchased pursuant to Section 3(b)
hereof, in whatever amount or amounts which the Company deems desirable, the
Company shall be the beneficiary of such policy or policies and the Executive
shall cooperate with the Company and submit to such reasonable medical
examinations as are necessary to enable the Company to purchase and maintain in
full force and effect such additional insurance policy or policies.
3
<PAGE> 4
(f) During the term of this Agreement, the Company shall pay
to the executive an automobile allowance of six hundred dollars ($600.00) per
month.
4. EMPLOYMENT PERIOD.
(a) Duration. The Employment Period shall commence on the date
of this Agreement and shall continue until the close of business on December 30,
2001, unless earlier terminated for "cause" (as defined in Section 4(c)(i)
hereof). Thereafter, the Employment Period shall continue until the earlier of
(i) termination by the Company without "cause", or (ii) termination of this
Agreement by the Company for "cause" (as defined in Section 4(c)(i) hereof), or
(iii) the Executive's resignation for "good reason" (as defined in Section
4(c)(iii)), or (iv) the Executive's resignation without "good reason", provided
that the Executive provides no less than three (3) months notice to the Company
of such resignation, or (v) the death or Total Disability of the Executive.
(b) Payments Upon Termination.
(i) Except as otherwise provided herein, if the Executive's
employment is terminated by the Company for any reason other than "cause" (as
defined in Section 4(c)(i) hereof), or by the Executive for "good reason" (as
defined in Section 4(c)(iii) hereof), at any time during the Employment Period,
the Company shall pay to, or provide at the Company's expense for, as the case
may be, the Executive:
(A) (i)if such termination occurs before January 1, 2001,
100% of his Salary for the remainder of the term of this Agreement, equal to at
least twelve (12) months and (ii) if such termination occurs after January 1,
2001, 100% of his annual Salary, with such amounts payable in equal installments
over a three (3) month period commencing on the date of termination; and
(B) for a period of twelve (12) months following such
termination, the sickness, health and disability insurance programs to which he
would have been entitled under this Agreement if he had remained in the employ
of the Company for such twelve-month period.
(ii) If the Executive's employment is terminated (A)
by the Company for "cause", or (B) by the Executive by resignation without "good
reason", or (C) upon the death or due to the "Total Disability" (as defined in
Section 4(c)(ii) hereof) of the Executive, then the Company shall have no
further liability to the Executive hereunder with respect to periods following
the date of such termination, except (1) for the Salary which has accrued
through the date of termination, which amounts shall be paid by the Company
within thirty (30) days of such termination; and (2) for such other benefits as
may be required to be provided by the Company under the provisions of applicable
law.
4
<PAGE> 5
(c) Definitions. When used in this Agreement, the words "cause",
"Total Disability" and "good reason" shall have the respective meanings set
forth below:
(i) The term "cause" means: (A) the Executive's failure to
devote his full business time and efforts to the business of the Company as
required by Section 2(b) after reasonable notice to the Executive by the Board
specifying such failure and providing the Executive with a reasonable
opportunity to cure such failure given the context of the circumstances, (B) the
Executive's material breach of the covenants or agreements contained in Sections
1 and 2 of the Proprietary Rights Agreement, if not cured within thirty (30)
days after written notice of such breach is delivered by the Company to
Executive, (C) the commission by Executive of an intentional tort causing
material loss or damage to the Company, (D) the commission by Executive of any
crime or act of fraud or material dishonesty against Company and/or its
subsidiaries and affiliates causing material loss or damage to the Company, or
(E) the commission by Executive of any serious felony (not involving motor
vehicles) evidencing moral turpitude. Notwithstanding the foregoing, or anything
else in this Agreement to the contrary, no termination by Company of Executive's
employment hereunder for Cause shall occur, and Executive's full salary and
benefits shall continue, until the existence of Cause (or other reason for
termination permitted hereunder) is finally determined by final and binding
adjudication pursuant to an arbitration proceeding taking place in the Northern
Virginia area under the then applicable rules of the American Arbitration
Association. Both parties consent to such arbitration as the required method of
dispute resolution with respect to such issues.
(ii) To the extent permitted by applicable law, the term
"Total Disability" means total disability as defined in the Company's group
and individual disability plans, if any. If the Company does not have in
existence such plans, then Total Disability shall mean:
(y) The inability to perform the duties required hereunder
for a continuous period of six (6) months during the Employment Period due to
"mental incompetence" or "physical disability" as hereinafter defined. The
Executive shall be considered to be mentally incompetent and/or physically
disabled: (A) if he is under a legal decree of incompetency (the date of such
decree being deemed the date on which such mental incompetence occurred for
purposes of this Section 4(c)); or (B) because of a "Medical Determination of
Mental and/or Physical Disability." A Medical Determination of Mental and/or
Physical Disability shall mean the written determination by: (1) the physician
regularly attending the Executive, and (2) a physician selected by the Company,
that because of a medically determinable mental and/or physical disability the
Executive is unable to perform each of the essential functions of the
Executive, and such mental and/or physical disability is determined or
reasonably expected to last twelve (12) months or longer after the date of
determination, based on medically available information. If the two physicians
do not agree, they shall jointly choose a third consulting physician and the
written opinion of the majority of these three (3) physicians shall be
conclusive as to such mental and/or physical disability and shall be binding on
5
<PAGE> 6
the parties. The date of any written opinion which is conclusive as to the
mental and/or physical disability shall be deemed the date on which such mental
and/or physical disability commenced for purposes of this Section 4(c), if the
written opinion concludes that the Executive is mentally and/or physically
disabled. In conjunction with determining mental and/or physical disability for
purposes of this Agreement, the Executive consents to any such examinations
which are relevant to a determination of whether he is mentally and/or
physically disabled, and which is required by any two (2) of the aforesaid
physicians, and to furnish such medical information as may be reasonably
requested, and to waive any applicable physician patient privilege that may
arise because of such examination. All physicians selected hereunder shall be
Board-certified in the specialty most closely related to the nature of the
mental and/or physical disability alleged to exist.
(z) For purposes of determining whether the Executive is
mentally incompetent or physically disabled for the continuous six (6) month
period specified in this Section 4(c), such disability shall be deemed to
continue from the date of any legal decree of incompetency, or written opinion
which is conclusive as to the mental and/or physical disability, through the
date the legal decree expires or is otherwise revoked or removed, or the date on
which the mental and/or physical disability has ceased, as the case may be, as
set forth in a written opinion prepared by the physicians described in this
Section 4(c) pursuant to the procedures provided herein.
(iii) The term "resignation for good reason" or "good reason"
means any of the following:
(A) the failure of the Company within ten (10) days
written notice by the Executive to the Board to make any payment due to the
Executive hereunder;
(B) without the express written consent of the
Executive, any change by the Company in the Executive's function, duties, or
responsibilities not generally consistent with those contemplated in Section 2
hereof, which is not rescinded within thirty (30) days after the Executive has
given the Board written notice of such change which notice specifies in detail
the change;
(C) any decrease in the Executive's base salary, life
or disability insurance coverage or benefits payable to the Executive or to
which he is entitled other than a decrease in benefits which is part of a
general decrease in benefits provided or payable to officers and other salaried
employees of the Company;
(D) any material failure (other than a failure to make
payments) by the Company to comply with any of the provisions of this
Agreement, which change or failure, as the case may be, continues unremedied
for thirty (30) days after Executive has given the Board written notice of
such change or failure which notice specifies in detail the change or failure,
as the case may be;
6
<PAGE> 7
(E) upon (i) any sale, exchange or other disposition of
substantially all of the Company's assets or over 50% of its Common Stock; or
(ii) any merger, share exchange, consolidation or other reorganization or
business combination in which the Company is not the surviving or continuing
corporation, or in which the Company's stockholders become entitled to receive
cash, securities of the Company other than voting common stock, or securities
of another issuer;
(F) upon the Executive's assignment to an office of the
Company located more than twenty-five (25) miles from its existing facility in
Herndon, Virginia; and
(G) Executive's failure to be elected to, or his removal
from, the Board of Directors.
(d) Disparaging Remarks. Throughout the Employment Period and
during any period subsequent to the termination of the Employment Period during
which the Executive receives any form of compensation from the Company, each of
the Company and the Executive covenants to not make any disparaging remarks
concerning the other, its or his operations, or its or his attorneys, relatives,
employees, officers or directors to any persons either publicly or in private
whether or not such disparaging remarks may be found to adversely affect the
Executive or the Company, its employees, officers, or directors, as the case may
be.
5. AGREEMENT NOT TO COMPETE OR HIRE THE COMPANY'S EMPLOYEES AFTER
TERMINATION.
(a) The Executive agrees with the Company that the services
that the Executive shall render during the Employment Period are unique, special
and of extraordinary character and that the Company shall be substantially
dependent upon such services to develop and market its products and to earn a
profit. Accordingly, in consideration for employment by the Company and
compensation and other benefits, during the Employment Period, and for a period
of one (1) year after the Executive's employment is terminated (the "Restricted
Period"), the Executive shall not directly or indirectly compete or interfere
with the Company (or any division, subsidiary or other affiliate of the Company)
in the provision of, development of, or marketing of the Business.
(b) The term "compete" as used herein means to engage directly
or indirectly either as a proprietor, partner, employee, agent, consultant,
director, officer, stockholder or in any other capacity or manner whatsoever.
The phrase "interfere with" includes, but is not limited to, soliciting or
selling services or products which provide similar functions to any of the
Company's services or products to any current or potential customer of the
Company (it being understood that the Company refers to EIS, as the surviving
corporation of the Merger, and not SER Systeme AG). The
7
<PAGE> 8
provisions of this Section shall not prevent the Executive from investing any
assets in securities of any corporation provided that such investments do not,
directly or indirectly, result in the Executive, family members and other
affiliates, collectively (i) owning beneficially at any time five percent (5%)
or more of the equity securities of any corporation engaged in a business
competitive with the Company, or (ii) otherwise being able to control or
actively participate in the business decisions of such competing business.
(c) The Executive agrees not to employ or call upon any
employee of the Company during the Restricted Period with the intent of enticing
the employee away or out of the employ of the Company for any reason whatsoever.
(d) The provisions of this Section 5 shall be enforced to the
fullest extent permissible under the laws and public policies applied to each
jurisdiction which enforcement is sought. If any particular provision or portion
of this Section shall be adjudicated to be invalid or unenforceable, this
Section shall be deemed amended to interpret such provision or portion thereof
so adjudicated to be invalid or unenforceable to extend only over the maximum
period of time, range of activities or geographic area as to which it may be
enforceable, such amendment to apply only with respect to the operation of this
Section in the particular jurisdiction in which such adjudication is made.
6. NOTICES. Any notices, requests, demands and other communications
provided for by this Agreement shall be sufficient if in writing and if sent by
registered or certified mail to the Executive at the last address he has filed
in writing with the Company.
7. BINDING AGREEMENT; ASSIGNMENT. This Agreement shall be effective as
of the date hereof and shall be binding upon and inure to the benefit of, the
parties and their respective heirs, successors, assigns, and personal
representatives, as the case may be. The Executive may not assign any rights or
duties under this Agreement. The Company may not assign this Agreement, or its
rights hereunder, except to a successor of the Company. As used herein, the
successors of the Company shall include, but not be limited to, any successor by
way of merger, consolidation, sale of all or substantially all of the assets, or
similar reorganization or change in control.
8. ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding of the Executive and the Company with respect to the subject
matter hereof and supersede any and all prior understandings written or oral.
This Agreement may not be changed, modified or discharged orally, but only by an
instrument in writing signed by the parties.
9. ENFORCEABILITY. This Agreement has been duly authorized, executed
and delivered and constitutes the valid and binding obligations of the parties
hereto, enforceable in accordance with its terms. The undertakings herein shall
not be construed as any limitation upon the remedies either party might, in the
absence of this Agreement,
8
<PAGE> 9
have at law or in equity for any wrongs of the other party.
10. GOVERNING LAW. The validity and construction of this Agreement or
any of its provisions shall be determined under the internal laws of the
Commonwealth of Virginia, without giving effect to its conflicts of laws
provisions, and without regard to its place of execution or its place of
performance. The parties irrevocably consent and agree to the exclusive
jurisdiction of the courts of the Commonwealth of Virginia and the Federal
courts of the United States of America located in the Commonwealth of Virginia.
11. SEVERABILITY. If any one or more of the terms or provisions of this
Agreement shall for any reason be held to be invalid, illegal or unenforceable,
in whole or in part, or in any respect or in the event that any one or more of
the provisions of this Agreement operated or would prospectively operate to
invalidate this Agreement, then and in either of those events, such provision or
provisions only shall be deemed null and void and shall not affect any other
provision of this Agreement and the remaining provisions of this Agreement shall
remain operative and in full force and effect and shall in no way be affected,
prejudiced or disturbed thereby.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one Agreement.
13. AMENDMENTS AND WAIVERS. This Agreement may, to the maximum extent
permitted by applicable law, be amended by the parties, which amendment shall be
set forth in an instrument executed by all of the parties. Any term, provision
or condition of this Agreement (other than as prohibited by applicable law) may
be waived in writing at any time by the party which is entitled to the benefits
thereof. No waiver by either party of any breach of this Agreement shall be a
waiver of any preceding or succeeding breach. No waiver by the either party of
any right under this Agreement shall be construed as a waiver of any other
right.
9
<PAGE> 10
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement on the date first above written.
For the Company: By the Executive:
By: /s/ DR. PHILIP A. STOREY /s/ FREDERICK C. FOLEY
------------------------ ------------------------
Title: PRESIDENT
------------------------
During the Employment Term, SER Systeme AG agrees to vote, or cause to
be voted, all of voting shares of the Company beneficially owned by it from time
to time for any amendment to the Company's Certificate of Incorporation
necessary for the adoption by the Company of the Stock Option Plan and the
issuance of the options referred to in Section 3(b) of this Agreement.
For SER Systeme AG:
By: /s/ GERT J. REINHARDT
----------------------
Title: CHIEF EXECUTIVE OFFICER
-------------------
464626
10
<PAGE> 11
SERSYS ACQUISITION CORPORATION
STOCK OPTION PLAN
STOCK OPTION GRANT AGREEMENT
This Grant Agreement (the "Agreement") is entered into this day of
__________ 2000, by and between SERSys Acquisition Corporation (the
"Corporation"), a Delaware corporation, and Frederick C. Foley ("Grantee").
Grantee and the Corporation agree that, until such time as securities
issuable pursuant to the Plan become registered under the Securities Act of
1933, the grant of options hereunder and the purchase and sale of Common Stock
upon exercise thereof are intended to comply with the exemption from
registration provided by Rule 701 of the Securities Act of 1933 and each party
hereto shall use his or its best efforts to comply with such Rule 701. To the
extent that an exemption from registration under the Securities Act provided by
Rule 701 is unavailable, the grant of options hereunder and the sale of Common
Stock upon exercise thereof are intended to be exempt from registration under
the Securities Act in reliance upon the private offering exemption contained in
Section 4(2) of the Securities Act, or other available exemption.
ARTICLE 1
GRANT OF OPTION
SECTION 1.1 GRANT OF OPTIONS. Subject to the provisions of the Agreement,
and pursuant to the provisions of the SERSys Acquisition Corporation Stock
Option Plan (the "Plan"), Corporation hereby grants to Grantee, as of the Grant
Date specified in Attachment A, a Stock Option (the "Option") of the type stated
in Attachment A to purchase all or any part of the number and class of shares of
Common Stock set forth on Attachment A at the exercise price per share ("Option
Price") set forth on Attachment A.
SECTION 1.2 TERM OF OPTIONS. Unless the Option granted pursuant to Section
1.1 terminates earlier pursuant to other provisions of the Agreement, including
the expiration date specified in Attachment A, the Option shall expire on the
day prior to the tenth (10th) anniversary of its Grant Date.
ARTICLE 2
VESTING
SECTION 2.1 VESTING SCHEDULE. Unless the Option has earlier terminated
pursuant to the provisions of the Agreement, Grantee shall become vested on the
dates specified on Attachment A in a portion of the Option with respect to a
percentage or number of the underlying shares in accordance with the vesting
schedule specified on Attachment A; provided that Grantee shall have been in the
continuous employ of or affiliation (as a consultant or director) with the
Corporation from the Grant Date through any such date.
<PAGE> 12
ARTICLE 3
EXERCISE OF OPTION
SECTION 3.1 EXERCISABILITY OF OPTION. No portion of the Option granted to
Grantee shall be exercisable by Grantee prior to the time such portion of the
Option has vested.
SECTION 3.2 MANNER OF EXERCISE. The Option may be exercised, in whole or in
part, by delivering written notice to the Committee in the form attached hereto
as Attachment B or in such other form as the Committee may require from time to
time. Such notice shall specify the number of shares of Common Stock subject to
the Option as to which the Option is being exercised, and shall be accompanied
by full payment of the Option Price of the shares of Common Stock as to which
the Option is being exercised. Payment of the Option Price shall be made in cash
(or cash equivalents acceptable to the Committee in the Committee's discretion).
In the Committee's sole and absolute discretion, the Committee may authorize
payment of the Option Price to be made, in whole or in part, by such other means
as the Committee may prescribe. The Option may be exercised only in multiples of
whole shares and no partial shares shall be issued.
SECTION 3.3 ISSUANCE OF SHARES AND PAYMENT OF CASH UPON EXERCISE. Upon
exercise of the Option, in whole or in part, in accordance with the terms of the
Agreement and upon payment of the Option Price for the shares of Common Stock as
to which the Option is exercised, the Corporation shall issue to Grantee or, in
the event of Grantee's death, to Grantee's executor, personal representative or
the person to whom the Option shall have been transferred by will or the laws of
descent and distribution, as the case may be, the number of shares of Common
Stock so paid for, in the form of fully paid and nonassessable Common Stock. The
stock certificates for any shares of Common Stock issued hereunder shall, unless
such shares are registered or an exemption from registration is available under
applicable federal and state law, bear a legend restricting transferability of
such shares.
ARTICLE 4
TERMINATION OF EMPLOYMENT
SECTION 4.1 UNVESTED PORTION. Unless the Option has earlier terminated
pursuant to the provisions of this Agreement, the unvested portion of the Option
shall terminate upon termination of Grantee's employment or affiliation (as a
consultant or director) with the Corporation for any reason.
SECTION 4.2 TERMINATION OF EMPLOYMENT OR AFFILIATION FOR REASON OTHER THAN
DEATH OR DISABILITY. Unless the Option has earlier terminated pursuant to the
provisions of the Agreement, the Option granted to Grantee shall terminate in
its entirety, regardless of whether the Option is vested in whole or in part,
six (6) months after the date Grantee is no longer employed by, nor affiliated
(as a consultant or director) with, the Corporation for
2
<PAGE> 13
any reason other than Grantee's death or Disability. Notwithstanding the
foregoing, the Option granted to Grantee shall terminate in its entirety,
regardless of whether the Option is vested in whole or in part, upon the
termination of the Grantee's employment or affiliation (as a consultant or
director) with the Corporation by resignation or by the Corporation for "cause".
If Grantee is a party to a written employment agreement with the Corporation
which contains a definition of "cause", "termination for cause" or any other
similar term or phrase, whether such Grantee is terminated for "cause" pursuant
to this Section 4.2 shall be determined according to the terms of and in a
manner consistent with the provisions of such written employment agreement. If
Grantee is not party to such a written employment agreement with the
Corporation, then for purposes of this Section 4.2, "cause" shall mean the
failure by the Grantee to perform his or her duties as assigned by the
Corporation in a reasonable manner; any act by the Grantee of dishonesty or bad
faith with respect to the Corporation; chronic addiction to alcohol, drugs or
other similar substances affecting the Grantee's work performance; or the
commission by the Grantee of any act, misdemeanor, or crime reflecting
unfavorably upon the Grantee or the Corporation. The good faith determination by
the Committee of whether the Grantee's employment was terminated by the
Corporation for "cause" pursuant to the preceding sentence shall be final and
binding for all purposes hereunder.
SECTION 4.3 UPON GRANTEE'S DEATH. Unless the Option has earlier terminated
pursuant to the provisions of the Agreement, upon Grantee's death Grantee's
executor, personal representative or the person to whom the Option shall have
been transferred by will or the laws of descent and distribution, as the case
may be, may exercise all or any part of the vested portion of the Option,
provided such exercise occurs within twelve (12) months after the date Grantee
dies, but not later than the end of the stated term of the Option.
SECTION 4.4 TERMINATION OF EMPLOYMENT OR AFFILIATION BY REASON OF
DISABILITY. Unless the Option has earlier terminated pursuant to the provisions
of the Agreement, in the event that Grantee ceases, by reason of Disability, to
be an employee of or affiliated (as a consultant or director) with the
Corporation, the vested portion of the Option may be exercised in whole or in
part at any time within twelve (12) months after the date of Disability, but not
later than the end of the stated term of the Option. For purposes of this
Agreement, Disability shall be as defined in Code Section 22(e)(3) and shall be
determined by the Committee, with its determination on the matter being final
and binding.
ARTICLE 5
MISCELLANEOUS
SECTION 5.1 NON-GUARANTEE OF EMPLOYMENT. Nothing in the Plan or the
Agreement shall be construed as a contract of employment between the Corporation
(or an affiliate) and Grantee, or as a contractual right of Grantee to continue
in the employ of the Corporation or an affiliate, or as a limitation of the
right of the Corporation or an affiliate to discharge Grantee at any time.
3
<PAGE> 14
SECTION 5.2 NO RIGHTS OF STOCKHOLDER. Grantee shall not have any of the
rights of a stockholder with respect to the shares of Common Stock that may be
issued upon the exercise of the Option until such shares of Common Stock have
been issued to him upon the due exercise of the Option.
SECTION 5.3 NOTICE OF DISQUALIFYING DISPOSITION. If Grantee makes a
disposition (as that term is defined in Section 424(c) of the Code) of any
shares of Common Stock acquired pursuant to the exercise of an Incentive Stock
Option within two (2) years of the Grant Date or within one (1) year after the
shares of Common Stock are transferred to Grantee, Grantee shall notify the
Committee of such disposition in writing.
SECTION 5.4 WITHHOLDING OF TAXES. The Corporation or any affiliate shall
have the right to deduct from any compensation or any other payment of any kind
(including withholding the issuance of shares of Common Stock) due Grantee the
amount of any federal, state or local taxes required by law to be withheld as
the result of the exercise of the Option or the disposition (as that term is
defined in Section 424(c) of the Code) of shares of Common Stock acquired
pursuant to the exercise of the Option; provided, however, that the value of the
shares of Common Stock withheld may not exceed the statutory minimum withholding
amount required by law. In lieu of such deduction, the Committee may require
Grantee to make a cash payment to the Corporation or an affiliate equal to the
amount required to be withheld. If Grantee does not make such payment when
requested, the Corporation may refuse to issue any Common Stock certificate
under the Plan until arrangements satisfactory to the Committee for such payment
have been made.
SECTION 5.5 NONTRANSFERABILITY OF OPTION. The Option shall be
nontransferable otherwise than by will or the laws of descent and distribution.
During the lifetime of Grantee, the Option may be exercised only by Grantee or,
during the period Grantee is under a legal disability, by Grantee's guardian or
legal representative.
SECTION 5.6 AGREEMENT SUBJECT TO CHARTER AND BYLAWS. This Agreement is
subject to the Charter and Bylaws of the Corporation in effect as of the date
hereof, and any applicable Federal or state laws, rules or regulations,
including without limitation, the laws, rules, and regulations of the State of
Delaware.
SECTION 5.7 GENDER. As used herein the masculine shall include the feminine
as the circumstances may require.
SECTION 5.8 HEADINGS. The headings in the Agreement are for reference
purposes only and shall not affect the meaning or interpretation of the
Agreement.
SECTION 5.9 NOTICES. All notices and other communications made or given
pursuant to the Agreement shall be in writing and shall be sufficiently made or
given if hand delivered or mailed by certified mail, addressed to Grantee at the
address contained in the records of the Corporation, or addressed to the
Committee, care of the Corporation for the attention of its Secretary at its
principal office or, if the receiving party consents in
4
<PAGE> 15
advance, transmitted and received via telecopy or via such other electronic
transmission mechanism as may be available to the parties.
SECTION 5.10 ENTIRE AGREEMENT; MODIFICATION. The Agreement contains the
entire agreement between the parties with respect to the subject matter
contained herein and may not be modified, except as provided in the Plan or in a
written document signed by each of the parties hereto.
SECTION 5.11 CONFORMITY WITH PLAN. This Agreement is intended to conform in
all respects with, and is subject to all applicable provisions of, the Plan,
which is incorporated herein by reference. Unless stated otherwise herein,
capitalized terms in this Agreement shall have the same meaning as defined in
the Plan. Inconsistencies between this Agreement and the Plan shall be resolved
in accordance with the terms of the Plan. In the event of any ambiguity in the
Agreement or any matters as to which the Agreement is silent, the Plan shall
govern including, without limitation, the provisions thereof pursuant to which
the Committee has the power, among others, to (i) interpret the Plan and Grant
Agreements related thereto, (ii) prescribe, amend and rescind rules and
regulations relating to the Plan, and (iii) make all other determinations deemed
necessary or advisable for the administration of the Plan. The Grantee
acknowledges by signing this Agreement that he or she has received and reviewed
a copy of the Plan.
IN WITNESS WHEREOF, the parties have executed the Agreement as of the date
first above written.
ATTEST: SERSYS ACQUISITION CORPORATION
By:
- ------------------------ ------------------------------------
WITNESS: GRANTEE
- ------------------------ ---------------------------------------
5
<PAGE> 16
ATTACHMENT A
STOCK OPTION GRANTED TO FREDERICK C. FOLEY
TYPE OF OPTION: ISO TO THE MAXIMUM EXTENT PERMITTED BY LAW WITH
ANY EXCESS CONSTITUTING A NONQUALIFIED STOCK OPTION.
GRANT DATE: EFFECTIVE TIME
NUMBER AND CLASS
OF SHARES: 10,000 SHARES OF COMMON STOCK
EXERCISE PRICE PER SHARE: $69.20 PER SHARE
EXPIRATION DATE:
The Option shall expire on January 1, 2005, if a public offering of the Common
Stock that requires registration under the Securities Act (an "IPO") has not
been consummated by that date. If an IPO of the Common Stock has been
consummated by January 1, 2005, the Option shall not expire until the 10th
anniversary of the Grant Date.
VESTING SCHEDULE:
A. Regular Vesting. The Option shall be vested as to:
1. 50% of the underlying shares subject to the Option on the first anniversary
of the Grant Date; and an additional
2. 50% of the underlying shares subject to the Option on the second anniversary
of the Grant Date.
B. Accelerated Vesting. The Option shall become vested as to 100% of the
underlying shares subject to the Option in the event of the consummation of an
IPO of the Common Stock.
<PAGE> 17
ATTACHMENT B
EXERCISE FORM
SERSys Acquisition Corporation
[Address]
[Address]
Gentlemen:
1. Exercise of Stock Option. I hereby exercise the [Insert Type]
______________Stock Option (the "Stock Option") granted to me on
____________________, 199____, by SERSys Acquisition Corporation (the
"Corporation"), subject to all the terms and provisions thereof and of the
SERSys Acquisition Corporation Stock Option Plan (the "Plan"), and notify you of
my desire to purchase ____________ shares (the "Shares") of Common Stock of the
Corporation at a price of $___________ per share pursuant to the exercise of
said Stock Option.
2. Information about the Corporation. I am aware of the Corporation's
business affairs and financial condition and have acquired sufficient
information about the Corporation to reach an informed and knowledgeable
decision to acquire the Shares.
3. Tax Consequences. I am not relying upon the Corporation for any tax
advice in connection with this option exercise, but rather am relying on my own
personal tax advisors in connection with the exercise of the Stock Option and
any subsequent disposition of the Shares.
4. Tax Withholding. I understand that, in the case of a nonqualified
stock option, I must submit upon demand from the Corporation an amount in cash
or cash equivalents sufficient to satisfy any federal, state or local tax
withholding applicable to this Stock Option exercise, in addition to the
purchase price enclosed, or make such other arrangements for such tax
withholding that are satisfactory to the Corporation, in its sole discretion, in
order for this exercise to be effective.
5. Unregistered Shares. The following shall apply in the event the Shares
purchased herein are not registered under the Securities Exchange Act of 1933,
as amended:
(a) I am acquiring the Shares for my own account for investment with
no present intention of dividing my interest with others or of reselling or
otherwise disposing of any of the Shares.
(b) The Shares are being issued without registration under the
Securities Act of 1933, as amended (the "Act"), in reliance upon the exemption
provided by Section
<PAGE> 18
3(b) of the Act for employee benefit plans, contained in Rule 701 promulgated
thereunder, or in lieu thereof upon the private offering exemption contained in
Section 4(2) of the Act, and such reliance is based in part on the above
representation.
(c) Since the Shares have not been registered under the Act, they
must be held indefinitely until an exemption from the registration requirements
of the Act is available or they are subsequently registered, in which event the
representation in Paragraph (a) hereof shall terminate. As a condition to any
transfer of the Shares, I understand that the Corporation will require an
opinion of counsel satisfactory to the Corporation to the effect that such
transfer does not require registration under the Act or any state securities
law.
(d) The issuer is not obligated to comply with the registration
requirements of the Act or with the requirements for an exemption under
Regulation A under the Act for my benefit.
(e) The certificates for the shares to be issued to me shall contain
appropriate legends to reflect the restrictions on transferability imposed by
the Act.
Total Amount Enclosed: $
----------
Date:
------------------------ -------------------------------------------
(Optionee)
Received by SERSys Acquisition Corporation
On: , 19
------------------------- ------
By:
-----------------------------------
8
<PAGE> 1
Exhibit(c)(5)
CONFIDENTIAL
MUTUAL NON-DISCLOSURE AGREEMENT
This Agreement is entered into effective as of the 15 day of October, 1999
by and between SER Systeme AG, a German corporation ("SER") and EIS
International, Inc., a Delaware corporation ("EIS").
WHEREAS, in order to enable the parties to evaluate the merits of a
possible business transaction between them (the "Transaction"), each party may
furnish to the other certain information.
NOW, THEREFORE, to induce EIS and SER to disclose such information, the
parties agree as follows:
1. Each party agrees that all information disclosed by a party (the
"Disclosing Party"), including without limitation information acquired by the
other party (the "Receiving Party") from Disclosing Party's employees or upon
inspection of Disclosing Party's property, relating (without limitation) to
Disclosing Party's products, designs, business opportunities, plans (business,
marketing or otherwise), strategies, budgets, finance, customer lists,
contracts, research and development, software programs, trade secrets, know-how,
techniques, inventions, processes, distribution methods, schematics and
personnel disclosed to Disclosing Party by third parties, shall be considered
"Confidential Information".
2. Confidential Information shall not include information which recipient
is able to prove by documentary evidence (a) is now or subsequently becomes
generally known or available by publication, commercial or otherwise, through no
fault of the Receiving Party, (b) was known by the recipient at the time of the
disclosure or was independently developed by the Receiving Party without the use
of any Confidential Information, or (c) must be disclosed pursuant to applicable
legal disclosure requirements or legal process. Confidential Information shall
also not include information that the parties agree in writing may be disclosed
by Receiving Party.
3. The Receiving Party expressly agrees not to use the Confidential
Information for purposes other than those necessary to consider whether to enter
into a Transaction and shall strictly limit its disclosure to such of its
employees, directors and advisors having a need to know such information, which
parties shall be advised that such information is Confidential Information and
subject to the terms of this Agreement. Except as set forth herein, the
Receiving Party shall hold all information received in confidence and not sell,
assign, transfer, release or otherwise disclose the Confidential Information, or
material derived therefrom, to any third party, or to its other employees,
officers, directors, shareholders, agents or consultants. Notwithstanding the
termination of this Agreement for any reason, the Receiving Party shall not use
the Confidential Information for purposes of competing with the Disclosing
Party.
1
<PAGE> 2
4. Except as must be disclosed pursuant to applicable legal disclosure
requirements or legal process, neither party nor any of its respective
representatives may, without the prior written consent of the other party,
disclose to any person (other than to its employees, directors and advisors
having a need to know such information) that the parties have exchanged
confidential information, are engaged in negotiations for a Transaction, or the
proposed terms of a Transaction (collectively, the "Negotiations") until such
information has been disclosed by an appropriate legal filing and/or press
release mutually agreed upon by SER and EIS. Each party shall undertake all
necessary and reasonable steps to ensure that the Negotiations remain secret and
confidential.
5. In the event that the Receiving Party or anyone to whom the Receiving
Party transmits the Disclosing Party's Confidential Information pursuant to this
Agreement becomes legally compelled to disclose all or any portion of the
Disclosing Party's Confidential Information or to disclose the existence of
Negotiations, the Receiving Party will provide the Disclosing Party with prompt
notice thereof, so that the Disclosing Party may seek a protective order or
other appropriate remedy. In the event that such protective order or other
remedy is not obtained, the Receiving Party or the recipient of such Disclosing
Party's Confidential Information will furnish only that portion of the
Disclosing Party's Confidential Information or aspect of the Negotiations which
is legally required to be disclosed and the Receiving Party, upon the written
request of the Disclosing Party, will exercise its reasonable efforts to obtain
reliable assurances that confidential treatment will be afforded such portion of
the Disclosing Party's Confidential Information.
6. The Receiving Party shall immediately notify the Disclosing Party in
writing of any unauthorized use or disclosure of the Confidential Information or
the Negotiations, and shall provide a detailed description of the circumstances
of the disclosure and the parties involved, and shall cooperate in any
reasonable efforts to limit or respond to such disclosure.
7. The Receiving Party agrees that all Confidential Information provided
by the Disclosing Party shall remain the property of the Disclosing Party and no
license or other rights in the Confidential Information is granted hereby. The
Receiving Party will not disclose the existence, content and/or substance of any
of the Confidential Information to any third party; nor develop, manufacture,
produce and/or distribute any software product(s) derived from or which
otherwise use any of the Confidential Information. The Disclosing Party agrees
to return (and have any third party to who it supplied the Confidential
Information return) to the Receiving Party, immediately upon notification by the
Disclosing Party in writing, all Confidential Information, including but not
limited to all computer programs, documentation, notes, plans, drawings, and
copies or reproductions thereof, in any form or medium whatsoever, and not to
retain any copies thereof.
8. The Receiving Party will, to the maximum extent permitted by applicable
law, refrain from disassembling or decompiling software, or otherwise attempting
to reverse engineer the design and function of any of the Confidential
Information. The Receiving Party will not remove any copyright notice, trademark
notice and/or other proprietary legend or indication of confidentiality set
forth on or contained in any of the Confidential Information.
2
<PAGE> 3
9. The parties agree that any product, plan, strategy or other thing or
concept jointly developed as a result of, or during, the Negotiations, shall be
the joint property of both parties hereto. Neither party shall use, license or
otherwise exploit such jointly developed item(s) without the express prior
written consent of the other party hereto, which consent shall not be
unreasonably withheld or delayed. Notwithstanding the above, any product, plan,
strategy or other thing or concept that a party can prove was known by the
recipient at the time of the development with the other party or was
independently developed shall not be considered a jointly developed item(s).
10. Each party hereby acknowledges that unauthorized disclosure or use of
Confidential Information or the Negotiations could cause irreparable harm and
significant injury, the extent of which may be difficult to ascertain.
Accordingly, each party agrees that each party shall have the right to seek and
obtain immediate injunctive relief from breaches of this Agreement, in addition
to any other rights and remedies each party may have.
11. Although the Disclosing Party shall endeavor to provide the other
party with information relevant for an evaluation of a Transaction, the
Disclosing Party and its advisors have not made, and will not make, any
representation or warranty, express or implied, as to the accuracy or
completeness of the information being provided. Any and all such representations
and warranties shall be only as specifically set forth in a definitive
agreement, if one is hereafter executed and delivered in connection with a
Transaction.
12. Without the written consent of the other party, neither party nor its
affiliates shall not solicit for employment, nor shall it employ or retain or
enter into any contract for the provision of personal services during the two
(2) year period commencing on the date hereof any person who is employed by the
other party as of the date hereof.
13. The Receiving Party agrees to indemnify and hold the Disclosing Party
harmless from and against all claims, losses, liabilities, damages, expenses and
costs (including, without limitation, reasonable fees for attorneys, expert
witnesses and court costs) which result from a breach or threatened breach of
this Agreement by the Receiving Party.
14. (a) This Agreement shall be governed by and interpreted in accordance
with the laws of the Commonwealth of Virginia, excluding its choice of law
rules, and the courts of Fairfax County (if under State law) or the Eastern
District of Virginia (if under Federal law) shall have exclusive jurisdiction
and venue of such actions; (b) the prevailing party, as determined by the court,
in any action between the parties arising from this Agreement shall be entitled
to recover, in addition to any other relief awarded, its costs and expenses
incurred in any such proceeding, including reasonable fees for attorneys, expert
witnesses and court costs; (c) the Receiving Party's rights under this Agreement
may not be assigned to any third party without the Disclosing Party's prior
written consent and any attempted or purported assignment of this Agreement
without such party's consent shall be void; and (d) this Agreement constitutes
the entire agreement and understanding between the parties with respect to the
subject matter hereof, and supersedes all prior and contemporaneous
negotiations, discussions and understandings of the parties.
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<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
written above.
SER SYSTEME AG EIS INTERNATIONAL, INC.
By: /s/ DR. PHILLIP A. STOREY By: /s/ JAMES E. MCGOWAN
------------------------- -------------------------
Name: Dr. Phillip A. Storey Name: James E. MCGOWAN
Title: VORSTAND (EXEC. VP) Title: Pres/CEO
4
<PAGE> 1
EXHIBIT (c)(6)
STOCK OPTION PLAN
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT, executed this 17th day of December, 1999, by
and among SER Systeme AG, a German Corporation (the "Parent"), SERSys
Acquisition Corporation, a Delaware corporation (the "Corporation") which is a
wholly owned subsidiary of SER (USA), Inc., a Delaware Corporation which is
wholly owned by the Parent, and James E. McGowan (the "Stockholder"). As used in
this Agreement, the term "Stockholder" shall include the permitted successors,
assigns, transferees (whether by sale, gift, or other disposition), heirs, and
personal representatives of the Stockholder.
WHEREAS, shares, or option(s) to acquire shares, of the Common Stock of the
Corporation have been issued to the Stockholder pursuant to a grant agreement
executed this date issued under a Corporation stock option plan (the "Grant
Agreement"); and
WHEREAS, the Parent, the Corporation and the Stockholder desire to assure
continuity and to perpetuate harmony in the Corporation's management, policies
and operations; and
WHEREAS, the Stockholder desires to facilitate the prompt liquidation of
his Stock in the event of his death, or, if necessary, during his lifetime; and
WHEREAS, the Parent, the Corporation and the Stockholder deem it in their
best interests to impose certain restrictions and obligations on themselves in
order to effectuate their foregoing purposes.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is agreed as follows:
1. RECITALS. The foregoing recitals and statements are made a part of this
Agreement.
2. PURCHASE AND SALE OF THE STOCK.
(a) Stock Covered. Except as otherwise provided herein, all of the
provisions of this Agreement shall apply to, and the term "Stock" shall include,
any and all shares of Common Stock of the Corporation that are issued (now or in
the future) pursuant to the rights of the Stockholder under the Grant Agreement
and under any other grant agreement issued under the same Corporation stock
option plan and all other shares of common stock or other equity securities of
the Corporation or any successor corporation which may be issued hereafter to
the Stockholder in consequence of his ownership of such Common Stock of the
Corporation as the result of the exchange or reclassification of shares,
corporate reorganization, or any form of recapitalization, consolidation,
merger, share split, share dividend, or similar event.
<PAGE> 2
(b) Purchase and Sale. The Parent and the Corporation agree to purchase
and redeem, and the Stockholder agrees to sell and transfer, in the manner and
upon the terms provided in this Agreement, the shares of Stock of the
Corporation. No purchase, sale, gift, endorsement, assignment, transfer, pledge,
encumbrance or other disposition, whether voluntary, involuntary or by operation
of law, including, without limitation, any transfer pursuant to a divorce
decree, (hereinafter collectively referred to as "Transfer") of any shares of
Stock of the Stockholder shall be valid and binding except as provided in, and
in accordance with, the terms and conditions of this Agreement.
3. CALL RIGHTS OF THE CORPORATION.
(a) For a period of three hundred sixty-five (365) days following the
death of the Stockholder or the termination of employment of the Stockholder
with the Corporation for any reason, the Corporation shall have an option to
purchase all or any of the authorized, issued and outstanding shares of Stock,
at the price and upon the terms provided in Sections 7 and 8 of this Agreement.
The Stockholder hereby agrees that in the event the Corporation exercises its
option pursuant to this Section 3(a), the Stockholder and/or his personal
representative shall be bound to take any and all action necessary to enable the
Corporation to purchase said Stock in accordance with this Agreement.
(b) If, for any reason, the Corporation (pursuant to Section 3(a)) does
not purchase all of the authorized, issued and outstanding shares of Stock, such
shares of Stock not purchased shall continue to be subject to the terms and
conditions of this Agreement.
4. CALL RIGHTS UPON AN INVOLUNTARY TRANSFER.
(a) If any portion of the Stockholder's shares of Stock are attached or
taken in execution, or if the Stockholder applies for the benefit of, or files a
case under, any provision of the federal bankruptcy law or any other law
relating to insolvency or relief of debtors, or if a case or proceeding is
brought against the Stockholder under any provision of the federal bankruptcy
law or any other law relating to insolvency or relief of debtors which is not
dismissed within sixty (60) days after the commencement thereof, or if the
Stockholder makes an assignment for the benefit of creditors, or if any portion
of the Stockholder's shares of Stock are made subject to charging order, or if
any portion of the Stockholder's shares of Stock are transferred pursuant to a
divorce decree (each such event shall be referred to as an "Involuntary
Transfer"), such Stockholder (the "Insolvent Stockholder") shall give immediate
written notice of the Involuntary Transfer to the Corporation and the
Corporation shall have the option to purchase any or all of the shares of Stock
of the Insolvent Stockholder at the price and upon the terms provided in
Sections 7 and 8 in accordance with the provisions of this Section 4.
(b) The Corporation shall have the option, exercisable upon written notice
to the Insolvent Stockholder, for a period of one hundred twenty (120) days
following receipt by the Corporation of the written notice of such Involuntary
Transfer, to acquire all or any of the shares of Stock of the Insolvent
Stockholder which are subject to such Involuntary Transfer.
-2-
<PAGE> 3
(c) If the Corporation has actual knowledge of an Insolvent Stockholder's
Involuntary Transfer, the Corporation shall give written notice to such effect
to the Insolvent Stockholder, and giving such written notice shall constitute
the Insolvent Stockholder's giving written notice to the Corporation for
purposes of this Section 4.
(d) The Corporation shall settle with an assignee, trustee in bankruptcy,
attaching court or officer or successor in interest holding shares of Stock
received in an Involuntary Transfer by taking any or all such shares in
execution and paying to them the purchase price for each share as provided in
Section 7, but not exceeding the Insolvent Stockholder's indebtedness and proper
items of expense. The balance of the value of such shares of Stock shall be
distributable to the Insolvent Stockholder in accordance with the provisions of
Section 8.
5. CALL RIGHTS OF THE PARENT.
(a) If a public offering of the Common Stock of the Corporation that
requires registration under the Securities Act of 1933 has not been consummated
by January 1, 2005, the Parent shall have an option for a period of three
hundred sixty five (365) days beginning thereon to purchase the Stock from the
Stockholder at the price and upon the terms provided in Sections 7 and 8 of this
agreement. The Stockholder hereby agrees that in the event the Parent exercises
its option pursuant to this Section 5(a), the Stockholder and/or his personal
representative shall be bound to take any and all action necessary to enable the
Parent to purchase said Stock in accordance with this Agreement.
(b) If, for any reason, the Parent does not exercise the option provided
under Section 5(a), such shares of Stock not purchased shall continue to be
subject to the terms and conditions of this Agreement.
6. PUT RIGHTS OF THE STOCKHOLDER.
(a) If, at January 1, 2003, (i) the fair market value of the Stock is more
than twice the price established by the Merger Agreement by and among SER
Systeme AG, SERSYS Acquisition Corporation and EIS International, Inc., dated as
of December 17, 1999, and (ii) Parent has not within the preceding 120 days
issued a public statement, which is still applicable at such date, describing
the firm intention to cause a public offering of the Common Stock of the
Corporation that requires registration under the Securities Act of 1933 ("an IPO
of the Common Stock") before December 30, 2003, the Stockholder shall have an
option for a period of three hundred sixty five (365) days beginning on January
1, 2003, to sell the Stock to the Parent at the price and upon the terms
provided in Sections 7 and 8 of this agreement. The Parent hereby agrees that in
the event the Stockholder exercises his option pursuant to this Section 6(a),
the Parent shall be bound to take any and all action necessary to enable the
Stockholder to sell said Stock to Parent and to enable Parent to purchase said
Stock.
(b) If (i) at January 1, 2004, the fair market value of the Stock is more
than twice the price established by the Merger Agreement by and among SER
Systems AG, SERSYS
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<PAGE> 4
Acquisition Corporation and EIS International, Inc., dated as of December 17,
1999, (ii) the Put Rights under Section 6(a) did not arise solely because Parent
issued a public statement prior to January 1, 2003 of its intention to cause an
IPO of the Common Stock before December 30, 2003, and (iii) an IPO of the Common
Stock does not in fact occur prior to December 30, 2003, the Stockholder shall
have an option for a period of three hundred sixty-five (365) days beginning on
January 1, 2004, to sell the Stock to the Parent at the price and upon the terms
provided in Sections 7 and 8 of this agreement. The Parent hereby agrees that in
the event the Stockholder exercises his option pursuant to this Section 6(b),
the Parent shall be bound to take any and all action necessary to enable the
Stockholder to sell said Stock to Parent and to enable Parent to purchase said
Stock.
(c) If an IPO of the Common Stock has not been consummated by January 1,
2005, the Stockholder shall have an option for a period of three hundred sixty
five (365) days beginning thereon to sell the Stock to the Parent at the price
and upon the terms provided in Sections 7 and 8 of this agreement. The Parent
hereby agrees that in the event the Stockholder exercises his option pursuant to
this Section 6(c), the Parent shall be bound to take any and all action
necessary to enable the Stockholder to sell said Stock to Parent and to enable
Parent to purchase said Stock. Notwithstanding anything to the contrary in the
Grant Agreement, provided the stock option issued under the Grant Agreement has
not previously terminated or expired, the Grantee shall be permitted to exercise
the vested portion of such stock option in December 2004, conditional upon the
Grantee receiving sufficient consideration from the Parent pursuant to the
exercise of the Put Rights under this Section 6(c) effective as of January 1,
2005, with which to pay the exercise price under such portion of the stock
option issued under the Grant Agreement. The Stockholder may specify in the
notice of exercise pursuant to the preceding sentence that the exercise price is
to be paid from the proceeds of the sale to the Parent of the respective portion
of the Stock purchased pursuant to such exercise.
(d) If, for any reason, the Stockholder does not exercise the options
provided under Sections 6(a), 6(b) or 6(c), such shares of Stock not purchased
shall continue to be subject to the terms and conditions of this Agreement.
7. PURCHASE PRICE OF STOCK.
(a) Agreement of Parties. The purchase price of the Stock payable under
Sections 3, 4, 5 and 6 shall be the fair market value of such Stock as of the
"Disposition Date". The Disposition Date is the date on which the Parent, the
Corporation or the Stockholder, as applicable, exercises the respective option
to purchase shares of Stock.
(b) Fair Market Value. For all purposes herein, the fair market value of
the Stock shall be the value as established by an appraisal of the Corporation
by an appraisal firm that is selected by and mutually agreeable to the Chief
Executive Officer of the Corporation and the Parent. Such appraisals shall not
take into account any minority or liquidity discounts. At the Corporation's
expense such appraiser shall conduct an appraisal of the Corporation within four
months after each of January 1, 2003, January 1, 2004, and January 1, 2005, in
order to assist in facilitating exercise of the Call and Put Rights in Sections
5 and 6, and as of such other dates as
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<PAGE> 5
are necessary to establish the value of the Stock on a Disposition Date.
Notwithstanding anything to the contrary herein, the appraisals conducted on
each of January 1, 2003, January 1, 2004, and January 1, 2005, shall apply for
purposes of determining the fair market value of the Stock that applies to the
exercise of the Put Rights in Section 6(a), 6(b) and 6(c), respectively,
regardless of when the Put Rights are exercised during the respective calendar
year.
8. PAYMENT OF PURCHASE PRICE. The payment of the purchase price for the shares
of Stock as determined pursuant to Section 7 or 9(b), as applicable, shall be
made as follows:
(a) Cash Portion. In the event of any transfer pursuant to Sections 3, 4,
5 and 6 hereof, the total purchase price of the Stock shall be paid by check by
the Parent or the Corporation, as applicable, at the Closing Date, as defined in
Section 8(d) hereof. In the event of any purchase by the Corporation pursuant to
Section 9(b) hereof, the purchase price shall be paid on the terms set forth in
the Stockholder's Offer.
(b) Debt Due From Stockholder. Any debt due by the Stockholder to the
Corporation shall be payable according to its terms, as shall any debt due by
the Corporation to the Stockholder; except, however, that, regardless of the
terms of any such debt due by the Stockholder to the Corporation (including
without limitation any unpaid portion of the exercise price under the exercised
portion of the respective grant agreement under the Plan pursuant to which the
Stock was issued and any unpaid tax withholding due as the result of such
exercise), any cash payment due under Section 8(a) with respect to the purchase
of the Stock shall, instead of being paid to the Stockholder, be first applied
to the discharge of any such indebtedness, until all such indebtedness is fully
discharged.
(c) Involuntary Transfers. The Corporation shall settle with an assignee,
trustee in bankruptcy, attaching court or officer or successor in interest
holding Stock received in an Involuntary Transfer by taking any or all such
Stock in execution and paying to them the purchase price for each share of such
Stock as provided in this Section 8, but not exceeding the Stockholder's
indebtedness and proper items of expense. The balance of the value of such
Stock, if any, shall be distributable to the Stockholder in accordance with the
provisions of this Section 8.
(d) Closing. Closing on the sale of any shares of Stock sold pursuant to
this Agreement shall, unless otherwise agreed to in writing by the parties, be
held at the principal place of business of the Corporation thirty (30) days from
the date of the last to occur of (i) the date of notice to the other party by
the Parent, the Corporation or the Stockholder, as applicable, that an option is
being exercised hereunder to purchase the Stock or (ii) if applicable, the
receipt by the Stockholder, the Corporation and/or the Parent, as applicable, of
the determination of the fair market value of the Stock as provided in Section
7(b) hereof (the "Closing Date"). At the Closing, upon payment of the purchase
price, the certificates representing the Stock to be purchased and sold
hereunder shall be delivered by the Stockholder to the Corporation or the
Parent, as applicable, appropriately endorsed in blank for transfer. If the
certificates representing any shares of Stock to be so transferred have not been
surrendered by the Stockholder, all rights
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<PAGE> 6
of the holder thereof with respect to said Stock (including voting rights)
nonetheless shall cease and terminate.
9. VOLUNTARY TRANSFERS OF STOCK.
(a) The Stockholder agrees that, during his lifetime, he will not Transfer
any of his shares of Stock, except (i) upon the conditions set forth in this
Section 9; or (ii) with the prior written consent of the Corporation.
(b) Offer From Third Party. In the event that the Stockholder receives a
bona fide offer from an independent third party capable of consummating such a
sale to purchase all or any of the authorized, issued and outstanding shares of
Stock then registered in such Stockholder's name, such Stockholder shall first
offer in writing (the "Stockholder's Offer") to sell such shares of Stock (the
"Offered Stock") to the Corporation at the price and on the terms of which such
selling Stockholder proposes to transfer the Offered Stock to the proposed third
party transferee. The Stockholder's Offer shall set forth (i) the number of
shares of the Offered Stock, (ii) the name and address of the proposed
transferee, (iii) the amount of consideration to be received by the selling
Stockholder, and (iv) the method of proposed payment. The Corporation shall have
the option to acquire all or any of the shares of Offered Stock at the price and
upon the terms provided in the Stockholder's Offer. The Corporation shall have
the right to exercise its option for a period of thirty (30) days following its
receipt of the Stockholder's Offer by notifying the selling Stockholder in
writing of its intention to purchase at Closing (as defined in Section 8(d)
hereof) all or any shares of the Offered Stock on the same terms and conditions
set forth in the Stockholder's Offer.
(c) Transfers to Third Parties. In the event that (i) a Stockholder elects
to transfer all or a portion of his shares of Stock; (ii) said Stockholder
strictly complies with the provisions of Section 9(b); (iii) the Corporation
fails to purchase all of such shares of Offered Stock; and (iv) the Stockholder
who desires to transfer such shares of Stock complies with the terms of this
Section 9(c), then any such shares of Stock which are not so purchased by the
Corporation may be sold by the selling Stockholder to the third party named in
the Stockholder's Offer within a period of ninety (90) days after the expiration
of the thirty (30) day period provided in Section 9(b). Such shares of Offered
Stock may be transferred to the third party named in the Stockholder's Offer
provided that such shares are sold at the price and on the terms set forth in
the Stockholder's Offer. Any shares of Offered Stock not actually sold or
transferred to such third party by the selling Stockholder within such ninety
(90) day period at the price and on the terms set forth in the Stockholder's
Offer shall remain subject to all of the provisions of this Agreement.
(d) Sale of Corporation. Notwithstanding the provisions of this Section 9
to the contrary, the restrictions set forth in this Section 9 shall not apply to
shares of a Stockholder sold or otherwise transferred in connection with (i) the
closing of an underwritten public offering by the Corporation of its Stock or
any other securities pursuant to an effective registration statement under the
Securities Act of 1933, as amended, (ii) a sale of the Corporation as a result
of which more than fifty percent (50%) of the total number of outstanding shares
of its Common Stock is
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<PAGE> 7
sold, exchanged, conveyed, or otherwise transferred to a third party in one or a
series of related transactions, or (iii) a merger or consolidation of the
Corporation as a result of which the holders of its Common Stock (immediately
prior to such merger or consolidation) hold less than fifty percent (50%) of the
surviving or new entity, as the case may be.
10. DRAG ALONG RIGHTS
(a) Generally. If at any time the holder(s) of a majority of the shares of
Common Stock of the Corporation desire to sell, exchange, convey, or otherwise
transfer, in one or a series of related transactions to an independent third
party in a bona fide arms length transaction, all of the outstanding shares of
Common Stock of the Corporation ("Selling Stockholder(s)") for consideration
which the Selling Stockholders in good faith believe in their sole discretion to
be adequate consideration for such shares, then the Selling Stockholder(s) may
require the Stockholder to sell, exchange, convey, or otherwise transfer, and
the Stockholder agrees to sell, exchange, convey, or otherwise transfer all of
the shares of Stock at the same price per share of Common Stock (as set forth
below) and on the same terms and conditions, as received by the Selling
Stockholder(s) from the independent third party for the same class of shares.
(b) Conditions to Obligation. The Stockholder's obligation to sell,
exchange, convey or otherwise transfer the Stock under the provisions of this
Section 10 is subject to the requirements that (i) the Selling Stockholder(s)
shall give notice to the Stockholder of such sale, exchange, conveyance, or
transfer at least 30 days prior to the proposed date of such event, specifying
the price and terms upon which shares of Common Stock are to be sold, exchanged,
conveyed, or transferred, and the proposed date of such event, and (ii) upon the
consummation of said sale, exchange, conveyance, or transfer, the Stockholder
will receive the same form and amount of consideration per share of Common Stock
as received by the Selling Stockholder(s) for the same class of shares, or, if
the Selling Stockholder(s) are given an option as to the form and amount of
consideration to be received, the Stockholder will be given the same option.
11. TAG ALONG RIGHTS.
(a) Notice. If at any time, in any transaction or transactions, the
Parent desires to sell, exchange, convey, or otherwise transfer any shares of
Common Stock owned by it, then the Parent shall give notice of such intent to
the Stockholder at least fifteen (15) days prior to the proposed date of such
sale. Such notice shall specify the number of shares and the terms, including
price, upon which such shares of Common Stock are to be sold, exchanged,
conveyed, or otherwise transferred and the proposed date of such sale, exchange,
conveyance, or transfer.
(b) Participation. The Stockholder may elect to participate in such
sale by giving notice to the Parent at least ten (10) days prior to the date of
the proposed sale. Such notice from the Stockholder shall specify the number of
shares of Common Stock which it proposes to sell. If the Stockholder elects to
participate in such sale, and gives timely notice of such election, then the
Parent shall not effect such sale unless either (i) the proposed purchaser of
such shares offers to purchase from the Stockholder, at the same time and on the
same terms
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<PAGE> 8
(including price) as shares of Common Stock that are being purchased from the
Parent, that number of shares of Common Stock owned by the Stockholder which
bears the same proportion to the total number of shares of Stock which he/she
beneficially owns, as the number of shares of Stock being sold by the Parent
bears to the total number of shares of Stock owned by the Parent, or (ii) to the
extent the proposed purchaser is unwilling to purchase shares of the
Stockholders' Common Stock as calculated in Section 11(b)(i) hereof, then the
number of shares of the Stockholders' Common Stock as so calculated, and the
number of shares of Stock of the Parent as otherwise to be sold, shall each be
reduced proportionately to equal the total number of shares to be purchased by
the proposed purchaser, who will thereupon offer to purchase the number of
shares of the Stockholders' Common Stock as so calculated at the same time and
on the same terms (including price) as the number of shares of Common Stock to
be sold by the Parent, as recalculated pursuant to this Section 11(b)(ii).
(c) Exempt Transfers. Notwithstanding the foregoing, the provisions
of this Section 11 shall not apply to (i) any pledge of Common Stock by the
Parent made pursuant to a bona fide loan transaction or (ii) any sale of the
shares of Common Stock to the public pursuant to a registration statement filed
under the Securities Act of 1933.
12. MARKET STAND-OFF AGREEMENT. The Stockholder hereby agrees that he or she
shall not, to the extent reasonably requested by the Corporation and an
underwriter of Common Stock (or other securities) of the Corporation, sell or
otherwise transfer or dispose (other than to donees who agree to be similarly
bound) of any Stock during the one hundred eighty (180)-day period following the
effective date of a registration statement of the Corporation filed under the
Securities Act of 1933; provided, however, that such agreement shall be
applicable only to the first such registration statement of the Corporation
which covers shares (or securities) to be sold on its behalf to the public in an
underwritten public offering. Such agreement shall be in writing in a form
satisfactory to the Corporation and such underwriter. In order to enforce the
foregoing covenant, the Corporation may impose stop-transfer instructions with
respect to the Stock of the Stockholder (and the shares or securities of every
other person subject to the foregoing restriction) until the end of such one
hundred eighty (180)-day period.
13. SEVERABILITY. It is the express intention of the parties that the
agreements contained herein shall have the widest application possible. If any
agreement contained herein is found by a court having jurisdiction to be
unreasonable in scope or character, the agreement shall not be rendered
unenforceable thereby, but rather the scope or character of such agreement shall
be deemed reduced or modified with retroactive effect to render such agreement
reasonable and such agreement shall be enforced as thus modified. If the court
having jurisdiction will not review the agreement, then the parties shall
mutually agree to a revision having an effect as close as permitted by law to
the provision declared unenforceable. The parties further agree that in the
event a court having jurisdiction determines, despite the express intent of the
parties, that any portion of any covenant or agreement contained herein is not
enforceable, the remaining provisions of this Agreement shall nonetheless remain
valid and enforceable.
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<PAGE> 9
14. ENDORSEMENT OF CERTIFICATE. Upon the execution of this Agreement, each
certificate of shares of Stock of the Corporation registered in the name of the
Stockholder and subject hereto shall be endorsed by the Secretary of the
Corporation as follows:
"This certificate is transferable only upon compliance with the
provisions of a restrictive Stockholders Agreement by and among SERSys
Acquisition Corporation and the stockholder, a copy of which is on file in
the office of the Secretary of the Corporation and is available upon
request of the stockholder without charge."
15. TERM. Anything contained herein to the contrary notwithstanding, this
Agreement shall terminate, and all rights and obligations hereunder shall cease
upon the occurrence of any of the following events:
(a) The written agreement of each of the then parties hereto;
(b) The cessation of the Corporation's business;
(c) The bankruptcy, liquidation, receivership, or dissolution of, or
assignment for the benefit of creditors by, the Corporation; or
(d) Except as to Section 12 hereof, the consummation of an initial public
offering of the Corporation's Common Stock pursuant to the filing of an
effective registration statement with the U.S. Securities and Exchange
Commission.
16. NOTICES. All notices, offers, acceptances, requests and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered or mailed by certified or registered mail to the
Stockholder, at his address on the Corporation records, and to the Corporation
and/or the Parent at the Corporation's principal place of business. Any party
hereto may change his or its address for notice by giving notice thereof in the
manner hereinabove provided.
17. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding among the parties hereto with respect to the subject matter hereof
and may be amended, modified or canceled only by written agreement of the
parties hereto.
18. SUCCESSORS. This Agreement shall be binding upon, and inure to the benefit
of, and shall be enforceable by, the heirs, successors, assigns, and personal
representatives of the parties hereto.
19. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the state of Delaware without regard to principles
of conflict of laws. In case any term of this Agreement shall be held invalid,
illegal or unenforceable in whole or in part, neither the validity of the
remaining part of such term nor the validity of the remaining terms of this
Agreement shall in any way be affected thereby. Each of the parties agrees that
he
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<PAGE> 10
will consent to and approve any amendments of the Charter or By-Laws of the
Corporation which may be necessary or advisable in order to conform any of the
provisions of this Agreement or any amendments hereto to the applicable laws of
the state of Delaware as now or hereafter enacted, including, without
limitation, the Delaware Corporation Law. The Stockholder further agrees to
execute and deliver such documents as may be necessary in order to implement the
provisions of the preceding sentence.
20 SPECIFIC PERFORMANCE. Because the shares of Stock cannot be readily
purchased or sold in the open market, irreparable damage would result in the
event this Agreement is not specifically enforced. Therefore, the rights to, or
obligations of, the Parent, the Corporation and the Stockholder shall be
enforceable in a court by a decree of specific performance, and appropriate
injunctive relief may be applied for and granted in connection therewith. Such
remedies, and all other remedies provided for in this Agreement, shall, however,
be cumulative and not exclusive and shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.
21. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be considered an original and all of which taken together
shall constitute one and the same instrument.
22. GENDER. The use of the singular shall include the plural, and the use of
the masculine gender shall include the feminine and neutral genders and vice
versa.
IN WITNESS WHEREOF, the parties have executed this agreement the day and
year first above written.
ATTEST: SERSYS ACQUISITION CORPORATION
/s/ PAULA R. SULLIVAN By: /s/ DR. PHILIP A. STOREY
- -------------------------- --------------------------------------
Name: Dr. Philip A. Storey
-----------------------------------
Title: President
-----------------------------------
WITNESS: STOCKHOLDER:
/s/ PAULA R. SULLIVAN /s/ JAMES E MCGOWAN
- -------------------------- -----------------------------------------
Name: James E McGowan
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<PAGE> 1
EXHIBIT (c)(7)
STOCK OPTION PLAN
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT, executed this 17th day of December, 1999, by
and among SER Systeme AG, a German Corporation (the "Parent"), SERSys
Acquisition Corporation, a Delaware corporation (the "Corporation") which is a
wholly owned subsidiary of SER (USA), Inc., a Delaware Corporation which is
wholly owned by the Parent, and Frederick C. Foley (the "Stockholder"). As used
in this Agreement, the term "Stockholder" shall include the permitted
successors, assigns, transferees (whether by sale, gift, or other disposition),
heirs, and personal representatives of the Stockholder.
WHEREAS, shares, or option(s) to acquire shares, of the Common Stock of the
Corporation have been issued to the Stockholder pursuant to a grant agreement
executed this date issued under a Corporation stock option plan (the "Grant
Agreement"); and
WHEREAS, the Parent, the Corporation and the Stockholder desire to assure
continuity and to perpetuate harmony in the Corporation's management, policies
and operations; and
WHEREAS, the Stockholder desires to facilitate the prompt liquidation of
his Stock in the event of his death, or, if necessary, during his lifetime; and
WHEREAS, the Parent, the Corporation and the Stockholder deem it in their
best interests to impose certain restrictions and obligations on themselves in
order to effectuate their foregoing purposes.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth below and other good and valuable consideration, the receipt of which is
hereby acknowledged, it is agreed as follows:
1. RECITALS. The foregoing recitals and statements are made a part of this
Agreement.
2. PURCHASE AND SALE OF THE STOCK.
(a) Stock Covered. Except as otherwise provided herein, all of the
provisions of this Agreement shall apply to, and the term "Stock" shall include,
any and all shares of Common Stock of the Corporation that are issued (now or in
the future) pursuant to the rights of the Stockholder under the Grant Agreement
and under any other grant agreement issued under the same Corporation stock
option plan and all other shares of common stock or other equity securities of
the Corporation or any successor corporation which may be issued hereafter to
the Stockholder in consequence of his ownership of such Common Stock of the
Corporation as the result of the exchange or reclassification of shares,
corporate reorganization, or any form of recapitalization, consolidation,
merger, share split, share dividend, or similar event.
<PAGE> 2
(b) Purchase and Sale. The Parent and the Corporation agree to purchase
and redeem, and the Stockholder agrees to sell and transfer, in the manner and
upon the terms provided in this Agreement, the shares of Stock of the
Corporation. No purchase, sale, gift, endorsement, assignment, transfer, pledge,
encumbrance or other disposition, whether voluntary, involuntary or by operation
of law, including, without limitation, any transfer pursuant to a divorce
decree, (hereinafter collectively referred to as "Transfer") of any shares of
Stock of the Stockholder shall be valid and binding except as provided in, and
in accordance with, the terms and conditions of this Agreement.
3. CALL RIGHTS OF THE CORPORATION.
(a) For a period of three hundred sixty-five (365) days following the
death of the Stockholder or the termination of employment of the Stockholder
with the Corporation for any reason, the Corporation shall have an option to
purchase all or any of the authorized, issued and outstanding shares of Stock,
at the price and upon the terms provided in Sections 7 and 8 of this Agreement.
The Stockholder hereby agrees that in the event the Corporation exercises its
option pursuant to this Section 3(a), the Stockholder and/or his personal
representative shall be bound to take any and all action necessary to enable the
Corporation to purchase said Stock in accordance with this Agreement.
(b) If, for any reason, the Corporation (pursuant to Section 3(a)) does
not purchase all of the authorized, issued and outstanding shares of Stock, such
shares of Stock not purchased shall continue to be subject to the terms and
conditions of this Agreement.
4. CALL RIGHTS UPON AN INVOLUNTARY TRANSFER.
(a) If any portion of the Stockholder's shares of Stock are attached or
taken in execution, or if the Stockholder applies for the benefit of, or files a
case under, any provision of the federal bankruptcy law or any other law
relating to insolvency or relief of debtors, or if a case or proceeding is
brought against the Stockholder under any provision of the federal bankruptcy
law or any other law relating to insolvency or relief of debtors which is not
dismissed within sixty (60) days after the commencement thereof, or if the
Stockholder makes an assignment for the benefit of creditors, or if any portion
of the Stockholder's shares of Stock are made subject to charging order, or if
any portion of the Stockholder's shares of Stock are transferred pursuant to a
divorce decree (each such event shall be referred to as an "Involuntary
Transfer"), such Stockholder (the "Insolvent Stockholder") shall give immediate
written notice of the Involuntary Transfer to the Corporation and the
Corporation shall have the option to purchase any or all of the shares of Stock
of the Insolvent Stockholder at the price and upon the terms provided in
Sections 7 and 8 in accordance with the provisions of this Section 4.
(b) The Corporation shall have the option, exercisable upon written notice
to the Insolvent Stockholder, for a period of one hundred twenty (120) days
following receipt by the Corporation of the written notice of such Involuntary
Transfer, to acquire all or any of the shares of Stock of the Insolvent
Stockholder which are subject to such Involuntary Transfer.
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<PAGE> 3
(c) If the Corporation has actual knowledge of an Insolvent Stockholder's
Involuntary Transfer, the Corporation shall give written notice to such effect
to the Insolvent Stockholder, and giving such written notice shall constitute
the Insolvent Stockholder's giving written notice to the Corporation for
purposes of this Section 4.
(d) The Corporation shall settle with an assignee, trustee in bankruptcy,
attaching court or officer or successor in interest holding shares of Stock
received in an Involuntary Transfer by taking any or all such shares in
execution and paying to them the purchase price for each share as provided in
Section 7, but not exceeding the Insolvent Stockholder's indebtedness and proper
items of expense. The balance of the value of such shares of Stock shall be
distributable to the Insolvent Stockholder in accordance with the provisions of
Section 8.
5. CALL RIGHTS OF THE PARENT.
(a) If a public offering of the Common Stock of the Corporation that
requires registration under the Securities Act of 1933 has not been consummated
by January 1, 2005, the Parent shall have an option for a period of three
hundred sixty five (365) days beginning thereon to purchase the Stock from the
Stockholder at the price and upon the terms provided in Sections 7 and 8 of this
agreement. The Stockholder hereby agrees that in the event the Parent exercises
its option pursuant to this Section 5(a), the Stockholder and/or his personal
representative shall be bound to take any and all action necessary to enable the
Parent to purchase said Stock in accordance with this Agreement.
(b) If, for any reason, the Parent does not exercise the option provided
under Section 5(a), such shares of Stock not purchased shall continue to be
subject to the terms and conditions of this Agreement.
6. PUT RIGHTS OF THE STOCKHOLDER.
(a) If, at January 1, 2003, (i) the fair market value of the Stock is more
than twice the price established by the Merger Agreement by and among SER
Systeme AG, SERSYS Acquisition Corporation and EIS International, Inc., dated as
of December 17, 1999 and (ii) Parent has not within the preceding 120 days
issued a public statement, which is still applicable at such date, describing
the firm intention to cause a public offering of the Common Stock of the
Corporation that requires registration under the Securities Act of 1933 ("an IPO
of the Common Stock") before December 30, 2003, the Stockholder shall have an
option for a period of three hundred sixty five (365) days beginning on January
1, 2003, to sell the Stock to the Parent at the price and upon the terms
provided in Sections 7 and 8 of this agreement. The Parent hereby agrees that in
the event the Stockholder exercises his option pursuant to this Section 6(a),
the Parent shall be bound to take any and all action necessary to enable the
Stockholder to sell said Stock to Parent and to enable Parent to purchase said
Stock.
(b) If (i) at January 1, 2004, the fair market value of the Stock is more
than twice the price established by the Merger Agreement by and among SER
Systems AG, SERSYS
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<PAGE> 4
Acquisition Corporation and EIS International, Inc., dated as of December 17,
1999, (ii) the Put Rights under Section 6(a) did not arise solely because Parent
issued a public statement prior to January 1, 2003 of its intention to cause an
IPO of the Common Stock before December 30, 2003, and (iii) an IPO of the Common
Stock does not in fact occur prior to December 30, 2003, the Stockholder shall
have an option for a period of three hundred sixty-five (365) days beginning on
January 1, 2004, to sell the Stock to the Parent at the price and upon the terms
provided in Sections 7 and 8 of this agreement. The Parent hereby agrees that in
the event the Stockholder exercises his option pursuant to this Section 6(b),
the Parent shall be bound to take any and all action necessary to enable the
Stockholder to sell said Stock to Parent and to enable Parent to purchase said
Stock.
(c) If an IPO of the Common Stock has not been consummated by January 1,
2005, the Stockholder shall have an option for a period of three hundred sixty
five (365) days beginning thereon to sell the Stock to the Parent at the price
and upon the terms provided in Sections 7 and 8 of this agreement. The Parent
hereby agrees that in the event the Stockholder exercises his option pursuant to
this Section 6(c), the Parent shall be bound to take any and all action
necessary to enable the Stockholder to sell said Stock to Parent and to enable
Parent to purchase said Stock. Notwithstanding anything to the contrary in the
Grant Agreement, provided the stock option issued under the Grant Agreement has
not previously terminated or expired, the Grantee shall be permitted to exercise
the vested portion of such stock option in December 2004, conditional upon the
Grantee receiving sufficient consideration from the Parent pursuant to the
exercise of the Put Rights under this Section 6(c) effective as of January 1,
2005, with which to pay the exercise price under such portion of the stock
option issued under the Grant Agreement. The Stockholder may specify in the
notice of exercise pursuant to the preceding sentence that the exercise price is
to be paid from the proceeds of the sale to the Parent of the respective portion
of the Stock purchased pursuant to such exercise.
(d) If, for any reason, the Stockholder does not exercise the options
provided under Sections 6(a), 6(b) or 6(c), such shares of Stock not purchased
shall continue to be subject to the terms and conditions of this Agreement.
7. PURCHASE PRICE OF STOCK.
(a) Agreement of Parties. The purchase price of the Stock payable under
Sections 3, 4, 5 and 6 shall be the fair market value of such Stock as of the
"Disposition Date". The Disposition Date is the date on which the Parent, the
Corporation or the Stockholder, as applicable, exercises the respective option
to purchase shares of Stock.
(b) Fair Market Value. For all purposes herein, the fair market value of
the Stock shall be the value as established by an appraisal of the Corporation
by an appraisal firm that is selected by and mutually agreeable to the Chief
Executive Officer of the Corporation and the Parent. Such appraisals shall not
take into account any minority or liquidity discounts. At the Corporation's
expense such appraiser shall conduct an appraisal of the Corporation within four
months after each of January 1, 2003, January 1, 2004, and January 1, 2005, in
order to assist in facilitating exercise of the Call and Put Rights in Sections
5 and 6, and as of such other dates as
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are necessary to establish the value of the Stock on a Disposition Date.
Notwithstanding anything to the contrary herein, the appraisals conducted on
each of January 1, 2003, January 1, 2004, and January 1, 2005, shall apply for
purposes of determining the fair market value of the Stock that applies to the
exercise of the Put Rights in Section 6(a), 6(b) and 6(c), respectively,
regardless of when the Put Rights are exercised during the respective calendar
year.
8. PAYMENT OF PURCHASE PRICE. The payment of the purchase price for the shares
of Stock as determined pursuant to Section 7 or 9(b), as applicable, shall be
made as follows:
(a) Cash Portion. In the event of any transfer pursuant to Sections 3, 4,
5 and 6 hereof, the total purchase price of the Stock shall be paid by check by
the Parent or the Corporation, as applicable, at the Closing Date, as defined in
Section 8(d) hereof. In the event of any purchase by the Corporation pursuant to
Section 9(b) hereof, the purchase price shall be paid on the terms set forth in
the Stockholder's Offer.
(b) Debt Due From Stockholder. Any debt due by the Stockholder to the
Corporation shall be payable according to its terms, as shall any debt due by
the Corporation to the Stockholder; except, however, that, regardless of the
terms of any such debt due by the Stockholder to the Corporation (including
without limitation any unpaid portion of the exercise price under the exercised
portion of the respective grant agreement under the Plan pursuant to which the
Stock was issued and any unpaid tax withholding due as the result of such
exercise), any cash payment due under Section 8(a) with respect to the purchase
of the Stock shall, instead of being paid to the Stockholder, be first applied
to the discharge of any such indebtedness, until all such indebtedness is fully
discharged.
(c) Involuntary Transfers. The Corporation shall settle with an assignee,
trustee in bankruptcy, attaching court or officer or successor in interest
holding Stock received in an Involuntary Transfer by taking any or all such
Stock in execution and paying to them the purchase price for each share of such
Stock as provided in this Section 8, but not exceeding the Stockholder's
indebtedness and proper items of expense. The balance of the value of such
Stock, if any, shall be distributable to the Stockholder in accordance with the
provisions of this Section 8.
(d) Closing. Closing on the sale of any shares of Stock sold pursuant to
this Agreement shall, unless otherwise agreed to in writing by the parties, be
held at the principal place of business of the Corporation thirty (30) days from
the date of the last to occur of (i) the date of notice to the other party by
the Parent, the Corporation or the Stockholder, as applicable, that an option is
being exercised hereunder to purchase the Stock or (ii) if applicable, the
receipt by the Stockholder, the Corporation and/or the Parent, as applicable, of
the determination of the fair market value of the Stock as provided in Section
7(b) hereof (the "Closing Date"). At the Closing, upon payment of the purchase
price, the certificates representing the Stock to be purchased and sold
hereunder shall be delivered by the Stockholder to the Corporation or the
Parent, as applicable, appropriately endorsed in blank for transfer. If the
certificates representing any shares of Stock to be so transferred have not been
surrendered by the Stockholder, all rights
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<PAGE> 6
of the holder thereof with respect to said Stock (including voting rights)
nonetheless shall cease and terminate.
9. VOLUNTARY TRANSFERS OF STOCK.
(a) The Stockholder agrees that, during his lifetime, he will not Transfer
any of his shares of Stock, except (i) upon the conditions set forth in this
Section 9; or (ii) with the prior written consent of the Corporation.
(b) Offer From Third Party. In the event that the Stockholder receives a
bona fide offer from an independent third party capable of consummating such a
sale to purchase all or any of the authorized, issued and outstanding shares of
Stock then registered in such Stockholder's name, such Stockholder shall first
offer in writing (the "Stockholder's Offer") to sell such shares of Stock (the
"Offered Stock") to the Corporation at the price and on the terms of which such
selling Stockholder proposes to transfer the Offered Stock to the proposed third
party transferee. The Stockholder's Offer shall set forth (i) the number of
shares of the Offered Stock, (ii) the name and address of the proposed
transferee, (iii) the amount of consideration to be received by the selling
Stockholder, and (iv) the method of proposed payment. The Corporation shall have
the option to acquire all or any of the shares of Offered Stock at the price and
upon the terms provided in the Stockholder's Offer. The Corporation shall have
the right to exercise its option for a period of thirty (30) days following its
receipt of the Stockholder's Offer by notifying the selling Stockholder in
writing of its intention to purchase at Closing (as defined in Section 8(d)
hereof) all or any shares of the Offered Stock on the same terms and conditions
set forth in the Stockholder's Offer.
(c) Transfers to Third Parties. In the event that (i) a Stockholder elects
to transfer all or a portion of his shares of Stock; (ii) said Stockholder
strictly complies with the provisions of Section 9(b); (iii) the Corporation
fails to purchase all of such shares of Offered Stock; and (iv) the Stockholder
who desires to transfer such shares of Stock complies with the terms of this
Section 9(c), then any such shares of Stock which are not so purchased by the
Corporation may be sold by the selling Stockholder to the third party named in
the Stockholder's Offer within a period of ninety (90) days after the expiration
of the thirty (30) day period provided in Section 9(b). Such shares of Offered
Stock may be transferred to the third party named in the Stockholder's Offer
provided that such shares are sold at the price and on the terms set forth in
the Stockholder's Offer. Any shares of Offered Stock not actually sold or
transferred to such third party by the selling Stockholder within such ninety
(90) day period at the price and on the terms set forth in the Stockholder's
Offer shall remain subject to all of the provisions of this Agreement.
(d) Sale of Corporation. Notwithstanding the provisions of this Section 9
to the contrary, the restrictions set forth in this Section 9 shall not apply to
shares of a Stockholder sold or otherwise transferred in connection with (i) the
closing of an underwritten public offering by the Corporation of its Stock or
any other securities pursuant to an effective registration statement under the
Securities Act of 1933, as amended, (ii) a sale of the Corporation as a result
of which more than fifty percent (50%) of the total number of outstanding shares
of its Common Stock is
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<PAGE> 7
sold, exchanged, conveyed, or otherwise transferred to a third party in one or a
series of related transactions, or (iii) a merger or consolidation of the
Corporation as a result of which the holders of its Common Stock (immediately
prior to such merger or consolidation) hold less than fifty percent (50%) of the
surviving or new entity, as the case may be.
10. DRAG ALONG RIGHTS
(a) Generally. If at any time the holder(s) of a majority of the shares of
Common Stock of the Corporation desire to sell, exchange, convey, or otherwise
transfer, in one or a series of related transactions to an independent third
party in a bona fide arms length transaction, all of the outstanding shares of
Common Stock of the Corporation ("Selling Stockholder(s)") for consideration
which the Selling Stockholders in good faith believe in their sole discretion to
be adequate consideration for such shares, then the Selling Stockholder(s) may
require the Stockholder to sell, exchange, convey, or otherwise transfer, and
the Stockholder agrees to sell, exchange, convey, or otherwise transfer all of
the shares of Stock at the same price per share of Common Stock (as set forth
below) and on the same terms and conditions, as received by the Selling
Stockholder(s) from the independent third party for the same class of shares.
(b) Conditions to Obligation. The Stockholder's obligation to sell,
exchange, convey or otherwise transfer the Stock under the provisions of this
Section 10 is subject to the requirements that (i) the Selling Stockholder(s)
shall give notice to the Stockholder of such sale, exchange, conveyance, or
transfer at least 30 days prior to the proposed date of such event, specifying
the price and terms upon which shares of Common Stock are to be sold, exchanged,
conveyed, or transferred, and the proposed date of such event, and (ii) upon the
consummation of said sale, exchange, conveyance, or transfer, the Stockholder
will receive the same form and amount of consideration per share of Common Stock
as received by the Selling Stockholder(s) for the same class of shares, or, if
the Selling Stockholder(s) are given an option as to the form and amount of
consideration to be received, the Stockholder will be given the same option.
11. TAG ALONG RIGHTS.
(a) Notice. If at any time, in any transaction or transactions, the Parent
desires to sell, exchange, convey, or otherwise transfer any shares of Common
Stock owned by it, then the Parent shall give notice of such intent to the
Stockholder at least fifteen (15) days prior to the proposed date of such sale.
Such notice shall specify the number of shares and the terms, including price,
upon which such shares of Common Stock are to be sold, exchanged, conveyed, or
otherwise transferred and the proposed date of such sale, exchange, conveyance,
or transfer.
(b) Participation. The Stockholder may elect to participate in such sale
by giving notice to the Parent at least ten (10) days prior to the date of the
proposed sale. Such notice from the Stockholder shall specify the number of
shares of Common Stock which it proposes to sell. If the Stockholder elects to
participate in such sale, and gives timely notice of such election, then the
Parent shall not effect such sale unless either (i) the proposed purchaser of
such shares offers to purchase from the Stockholder, at the same time and on the
same terms
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<PAGE> 8
(including price) as shares of Common Stock that are being purchased from the
Parent, that number of shares of Common Stock owned by the Stockholder which
bears the same proportion to the total number of shares of Stock which he/she
beneficially owns, as the number of shares of Stock being sold by the Parent
bears to the total number of shares of Stock owned by the Parent, or (ii) to the
extent the proposed purchaser is unwilling to purchase shares of the
Stockholders' Common Stock as calculated in Section 11(b)(i) hereof, then the
number of shares of the Stockholders' Common Stock as so calculated, and the
number of shares of Stock of the Parent as otherwise to be sold, shall each be
reduced proportionately to equal the total number of shares to be purchased by
the proposed purchaser, who will thereupon offer to purchase the number of
shares of the Stockholders' Common Stock as so calculated at the same time and
on the same terms (including price) as the number of shares of Common Stock to
be sold by the Parent, as recalculated pursuant to this Section 11(b)(ii).
(c) Exempt Transfers. Notwithstanding the foregoing, the provisions of
this Section 11 shall not apply to (i) any pledge of Common Stock by the Parent
made pursuant to a bona fide loan transaction or (ii) any sale of the shares of
Common Stock to the public pursuant to a registration statement filed under the
Securities Act of 1933.
12. MARKET STAND-OFF AGREEMENT. The Stockholder hereby agrees that he or she
shall not, to the extent reasonably requested by the Corporation and an
underwriter of Common Stock (or other securities) of the Corporation, sell or
otherwise transfer or dispose (other than to donees who agree to be similarly
bound) of any Stock during the one hundred eighty (180)-day period following the
effective date of a registration statement of the Corporation filed under the
Securities Act of 1933; provided, however, that such agreement shall be
applicable only to the first such registration statement of the Corporation
which covers shares (or securities) to be sold on its behalf to the public in an
underwritten public offering. Such agreement shall be in writing in a form
satisfactory to the Corporation and such underwriter. In order to enforce the
foregoing covenant, the Corporation may impose stop-transfer instructions with
respect to the Stock of the Stockholder (and the shares or securities of every
other person subject to the foregoing restriction) until the end of such one
hundred eighty (180)-day period.
13. SEVERABILITY. It is the express intention of the parties that the
agreements contained herein shall have the widest application possible. If any
agreement contained herein is found by a court having jurisdiction to be
unreasonable in scope or character, the agreement shall not be rendered
unenforceable thereby, but rather the scope or character of such agreement shall
be deemed reduced or modified with retroactive effect to render such agreement
reasonable and such agreement shall be enforced as thus modified. If the court
having jurisdiction will not review the agreement, then the parties shall
mutually agree to a revision having an effect as close as permitted by law to
the provision declared unenforceable. The parties further agree that in the
event a court having jurisdiction determines, despite the express intent of the
parties, that any portion of any covenant or agreement contained herein is not
enforceable, the remaining provisions of this Agreement shall nonetheless remain
valid and enforceable.
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<PAGE> 9
14. ENDORSEMENT OF CERTIFICATE. Upon the execution of this Agreement, each
certificate of shares of Stock of the Corporation registered in the name of the
Stockholder and subject hereto shall be endorsed by the Secretary of the
Corporation as follows:
"This certificate is transferable only upon compliance with the
provisions of a restrictive Stockholders Agreement by and among SERSys
Acquisition Corporation and the stockholder, a copy of which is on file in
the office of the Secretary of the Corporation and is available upon
request of the stockholder without charge."
15. TERM. Anything contained herein to the contrary notwithstanding, this
Agreement shall terminate, and all rights and obligations hereunder shall cease
upon the occurrence of any of the following events:
(a) The written agreement of each of the then parties hereto;
(b) The cessation of the Corporation's business;
(c) The bankruptcy, liquidation, receivership, or dissolution of, or
assignment for the benefit of creditors by, the Corporation; or
(d) Except as to Section 12 hereof, the consummation of an initial public
offering of the Corporation's Common Stock pursuant to the filing of an
effective registration statement with the U.S. Securities and Exchange
Commission.
16. NOTICES. All notices, offers, acceptances, requests and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered or mailed by certified or registered mail to the
Stockholder, at his address on the Corporation records, and to the Corporation
and/or the Parent at the Corporation's principal place of business. Any party
hereto may change his or its address for notice by giving notice thereof in the
manner hereinabove provided.
17. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding among the parties hereto with respect to the subject matter hereof
and may be amended, modified or canceled only by written agreement of the
parties hereto.
18. SUCCESSORS. This Agreement shall be binding upon, and inure to the benefit
of, and shall be enforceable by, the heirs, successors, assigns, and personal
representatives of the parties hereto.
19. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the state of Delaware without regard to principles
of conflict of laws. In case any term of this Agreement shall be held invalid,
illegal or unenforceable in whole or in part, neither the validity of the
remaining part of such term nor the validity of the remaining terms of this
Agreement shall in any way be affected thereby. Each of the parties agrees that
he
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<PAGE> 10
will consent to and approve any amendments of the Charter or By-Laws of the
Corporation which may be necessary or advisable in order to conform any of the
provisions of this Agreement or any amendments hereto to the applicable laws of
the state of Delaware as now or hereafter enacted, including, without
limitation, the Delaware Corporation Law. The Stockholder further agrees to
execute and deliver such documents as may be necessary in order to implement the
provisions of the preceding sentence.
20 SPECIFIC PERFORMANCE. Because the shares of Stock cannot be readily
purchased or sold in the open market, irreparable damage would result in the
event this Agreement is not specifically enforced. Therefore, the rights to, or
obligations of, the Parent, the Corporation and the Stockholder shall be
enforceable in a court by a decree of specific performance, and appropriate
injunctive relief may be applied for and granted in connection therewith. Such
remedies, and all other remedies provided for in this Agreement, shall, however,
be cumulative and not exclusive and shall be in addition to any other remedies
which any party may have under this Agreement or otherwise.
21. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be considered an original and all of which taken together
shall constitute one and the same instrument.
22. GENDER. The use of the singular shall include the plural, and the use of
the masculine gender shall include the feminine and neutral genders and vice
versa.
IN WITNESS WHEREOF, the parties have executed this agreement the day and
year first above written.
ATTEST: SERSYS ACQUISITION CORPORATION
/s/ JAMES E. McGOWAN By: /s/ DR. PHILIP A. STOREY
- -------------------------- ---------------------------------------
Name: Dr. Philip A. Storey
------------------------------------
Title: President
------------------------------------
WITNESS: STOCKHOLDER:
/s/ JAMES E. McGOWAN /s/ FREDERICK C. FOLEY
- -------------------------- ------------------------------------------
Name: Frederick C. Foley
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<PAGE> 1
EXHIBIT (c)(8)
FORM OF
SERSYS ACQUISITION CORPORATION
STOCK OPTION PLAN
1. ESTABLISHMENT, PURPOSE AND TYPES OF AWARDS
SERSys Acquisition Corporation hereby establishes the SERSys Acquisition
Corporation Stock Option Plan (the "Plan"). The purpose of the Plan is to
promote the long-term growth and profitability of SERSys Acquisition Corporation
(the "Corporation") by (i) providing key people with incentives to improve
stockholder value and to contribute to the growth and financial success of the
Corporation, and (ii) enabling the Corporation to attract, retain and reward the
best available persons for positions of substantial responsibility.
The Plan permits the granting of stock options (including nonqualified
stock options and incentive stock options qualifying under Section 422 of the
Code) and stock appreciation rights (including free-standing, tandem and limited
stock appreciation rights) or any combination of the foregoing (collectively,
"Awards").
The Plan is a compensatory benefit plan within the meaning of Rule 701
under the Securities Act of 1933 (the "Securities Act"). Except to the extent
any other exemption from the Securities Act is expressly relied upon in
connection with any agreement entered into pursuant to the Plan or the
securities issuable hereunder are registered under the Securities Act, the
issuance of Common Stock pursuant to the Plan is intended to qualify for the
exemption from registration under the Securities Act provided by Rule 701. To
the extent that an exemption from registration under the Securities Act provided
by Rule 701 is unavailable, all unregistered offers and sales of Awards and
shares of Common Stock issuable upon exercise of an Award are intended to be
exempt from registration under the Securities Act in reliance upon the private
offering exemption contained in Section 4(2) of the Securities Act, or other
available exemption, and the Plan shall be so administered.
2. DEFINITIONS
Under this Plan, except where the context otherwise indicates, the
following definitions apply:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Change in Control" shall mean: (i) any sale, exchange or other
disposition of substantially all of the Corporation's assets or over 50% of its
Common Stock; or (ii) any merger, share exchange, consolidation or other
reorganization or business combination in which the Corporation is not the
surviving or continuing corporation, or in which the Corporation's stockholders
become entitled to receive cash, securities of the Corporation other than voting
common stock, or securities of another issuer.
(c) "Code" shall mean the Internal Revenue Code of 1986, as amended, and
any regulations issued thereunder.
<PAGE> 2
(d) "Committee" shall mean the Board or committee of Board members
appointed pursuant to Section 3 of the Plan to administer the Plan.
(e) "Common Stock" shall mean shares of the Corporation's common stock.
(f) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(g) "Fair Market Value" of a share of the Corporation's Common Stock for
any purpose on a particular date shall be determined in a manner such as the
Committee shall in good faith determine to be appropriate.
(h) "Grant Agreement" shall mean a written agreement between the
Corporation and a grantee memorializing the terms and conditions of an Award
granted pursuant to the Plan.
(i) "Grant Date" shall mean the date on which the Committee formally acts
to grant an Award to a grantee or such other date as the Committee shall so
designate at the time of taking such formal action.
(j) "Parent" shall mean a corporation, whether now or hereafter existing,
within the meaning of the definition of "parent corporation" provided in Section
424(e) of the Code, or any successor thereto of similar import.
(k) "Rule 16b-3" shall mean Rule 16b-3 as in effect under the Exchange Act
on the effective date of the Plan, or any successor provision prescribing
conditions necessary to exempt the issuance of securities under the Plan (and
further transactions in such securities) from Section 16(b) of the Exchange Act.
(l) "Subsidiary" and "subsidiaries" shall mean only a corporation or
corporations, whether now or hereafter existing, within the meaning of the
definition of "subsidiary corporation" provided in Section 424(f) of the Code,
or any successor thereto of similar import.
3. ADMINISTRATION
(a) Procedure. The Plan shall be administered by the Board. In the
alternative, subsequent to the date the Common Stock or any other capital stock
of the Corporation becomes registered under Section 12 of the Exchange Act, the
Board may appoint a Committee consisting of not less than two (2) members of the
Board to administer the Plan on behalf of the Board, subject to such terms and
conditions as the Board may prescribe. Once appointed, the Committee shall
continue to serve until otherwise directed by the Board. From time to time, the
Board may increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in
substitution therefor, fill vacancies, however caused, and remove all members of
the Committee and, thereafter, directly administer the Plan. In the event that
the Board is the administrator of the Plan in lieu of a Committee, the term
"Committee" as used herein shall be deemed to mean the Board.
Members of the Board or Committee who are either eligible for Awards
or have been granted Awards may vote on any matters affecting the administration
of the Plan or the
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<PAGE> 3
grant of Awards pursuant to the Plan, except that no such member shall act upon
the granting of an Award to himself or herself, but any such member may be
counted in determining the existence of a quorum at any meeting of the Board or
the Committee during which action is taken with respect to the granting of an
Award to him or her.
The Committee shall meet at such times and places and upon such notice
as it may determine. A majority of the Committee shall constitute a quorum. Any
acts by the Committee may be taken at any meeting at which a quorum is present
and shall be by majority vote of those members entitled to vote. Additionally,
any acts reduced to writing or approved in writing by all of the members of the
Committee shall be valid acts of the Committee.
(b) Procedure After Registration of Common Stock. Upon and after the point
in time that the Common Stock or any other capital stock of the Corporation
becomes registered under Section 12 of the Exchange Act, the Board shall take
all action necessary to cause the Plan to be administered in accordance with the
then effective provisions of Rule 16b-3, provided that any amendment to the Plan
required for compliance with such provisions shall be made in accordance with
Section 11 of the Plan.
(c) Powers of the Committee. The Committee shall have all the powers
vested in it by the terms of the Plan, such powers to include authority, in its
sole and absolute discretion, to grant Awards under the Plan, prescribe Grant
Agreements evidencing such Awards and establish programs for granting Awards.
The Committee shall have full power and authority to take all other actions
necessary to carry out the purpose and intent of the Plan, including, but not
limited to, the authority to:
(i) determine the eligible persons to whom, and the time or times at
which Awards shall be granted,
(ii) determine the types of Awards to be granted,
(iii) determine the number of shares to be covered by or used for
reference purposes for each Award,
(iv) impose such terms, limitations, restrictions and conditions upon
any such Award as the Committee shall deem appropriate,
(v) modify, extend or renew outstanding Awards, accept the surrender
of outstanding Awards and substitute new Awards, provided that no such
action shall be taken with respect to any outstanding Award which would
adversely affect the grantee without the grantee's consent, and
(vi) accelerate or otherwise change the time in which an Award may be
exercised or becomes payable and to waive or accelerate the lapse, in whole
or in part, of any restriction or condition with respect to such Award,
including, but not limited to, any restriction or condition with respect to
the vesting or exercisability of an Award following termination of any
grantee's employment.
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<PAGE> 4
The Committee shall have full power and authority to administer and interpret
the Plan and to adopt such rules, regulations, agreements, guidelines and
instruments for the administration of the Plan and for the conduct of its
business as the Committee deems necessary or advisable and to interpret same,
all within the Committee's sole and absolute discretion.
(d) Limited Liability. To the maximum extent permitted by law, no member
of the Board or Committee shall be liable for any action taken or decision made
in good faith relating to the Plan or any Award thereunder.
(e) Indemnification. To the maximum extent permitted by law, the members
of the Board and Committee shall be indemnified by the Corporation in respect of
all their activities under the Plan.
(f) Effect of Committee's Decision. All actions taken and decisions and
determinations made by the Committee on all matters relating to the Plan
pursuant to the powers vested in it hereunder shall be in the Committee's sole
and absolute discretion and shall be conclusive and binding on all parties
concerned, including the Corporation, its stockholders, any participants in the
Plan and any other employee of the Corporation, and their respective successors
in interest.
4. SHARES AVAILABLE FOR THE PLAN; MAXIMUM AWARDS
Subject to adjustments as provided in Section 10 of the Plan, the shares of
stock that may be delivered or purchased or used for reference purposes (with
respect to stock appreciation rights) under the Plan, including with respect to
incentive stock options intended to qualify under Section 422 of the Code, shall
not exceed an aggregate of 170,000 shares of Common Stock of the Corporation and
the Corporation shall reserve said number of shares of Common Stock for issuance
pursuant to the Plan. If any Award, or portion of an Award, under the Plan
expires or terminates unexercised, becomes unexercisable or is forfeited or
otherwise terminated, surrendered or canceled as to any shares, the shares
subject to such Award shall thereafter be available for further Awards under the
Plan.
5. PARTICIPATION
Participation in the Plan shall be open to all employees, officers,
directors and consultants of the Corporation, or of any Parent or Subsidiary of
the Corporation, as may be selected by the Committee from time to time.
Notwithstanding the foregoing, participation in the Plan with respect to Awards
of incentive stock options shall be limited to employees of the Corporation, or
of any Parent or Subsidiary of the Corporation.
Awards may be granted to such eligible persons and for or with respect to
such number of shares of Common Stock as the Committee shall determine, subject
to the limitations in Section 4 of the Plan. A grant of any type of Award made
in any one year to an eligible person shall neither guarantee nor preclude a
further grant of that or any other type of Award to such person in that year or
subsequent years.
6. STOCK OPTIONS
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<PAGE> 5
Subject to the other applicable provisions of the Plan, the Committee may
from time to time grant to eligible participants nonqualified stock options or
incentive stock options as that term is defined in Section 422 of the Code. The
stock options granted shall be subject to the following terms and conditions.
(a) Grant of Option. The grant of a stock option shall be evidenced by a
Grant Agreement, executed by the Corporation and the grantee, stating the number
of shares of Common Stock subject to the stock option evidenced thereby and the
terms and conditions of such stock option, in such form as the Committee may
from time to time determine.
(b) Price. The price per share payable upon the exercise of each stock
option ("exercise price") shall be determined by the Committee.
(c) Payment. Stock options may be exercised in whole or in part by payment
of the exercise price of the shares to be acquired in accordance with the
provisions of the Grant Agreement, and/or such rules and regulations as the
Committee may have prescribed, and/or such determinations, orders, or decisions
as the Committee may have made. Payment may be made in cash (or cash equivalents
acceptable to the Committee) or, unless otherwise determined by the Committee,
in shares of Common Stock or a combination of cash and shares of Common Stock,
or by such other means as the Committee may prescribe. The Fair Market Value of
shares of Common Stock delivered on exercise of stock options shall be
determined as of the date of exercise. Shares of Common Stock delivered in
payment of the exercise price may be previously owned shares or, if approved by
the Committee, shares acquired upon exercise of the stock option. Any fractional
share will be paid in cash. The Corporation may make or guarantee loans to
grantees to assist grantees in exercising stock options and satisfying any
related withholding tax obligations.
If the Common Stock is registered under Section 12(b) or 12(g) of the
Exchange Act, the Committee, subject to such limitations as it may determine,
shall, to the extent practicable, authorize payment of the exercise price, in
whole or in part, by delivery of a properly executed exercise notice, together
with irrevocable instructions, to: (i) a brokerage firm designated by the
Corporation to deliver promptly to the Corporation the aggregate amount of sale
or loan proceeds to pay the exercise price and any withholding tax obligations
that may arise in connection with the exercise, and (ii) the Corporation to
deliver the certificates for such purchased shares directly to such brokerage
firm.
(d) Terms of Options. The term during which each stock option may be
exercised shall be determined by the Committee; provided, however, that in no
event shall a stock option be exercisable more than ten years from the date it
is granted. Prior to the exercise of the stock option and delivery of the shares
certificates represented thereby, the grantee shall have none of the rights of a
stockholder with respect to any shares represented by an outstanding stock
option.
(e) Restrictions on Incentive Stock Options. Incentive Stock Options
granted under the Plan shall comply in all respects with Code Section 422 and,
as such, shall meet the following additional requirements.
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(i) Grant Date. An incentive stock option must be granted within 10
years of the earlier of the Plan's adoption by the Board of Directors or
approval by the Corporation's shareholders.
(ii) Exercise Price and Term. The exercise price of an incentive stock
option shall not be less than 100% of the Fair Market Value of the shares
on the date the stock option is granted and the term of the stock option
shall not exceed ten years. Also, the exercise price of any incentive stock
option granted to a grantee who owns (within the meaning of Section
422(b)(6) of the Code, after the application of the attribution rules in
Section 424(d) of the Code) more than 10% of the total combined voting
power of all classes of shares of the Corporation or its Parent or
Subsidiary corporations (within the meaning of Sections 422 and 424 of the
Code) shall be not less than 110% of the Fair Market Value of the Common
Stock on the grant date and the term of such stock option shall not exceed
five years.
(iii) Maximum Grant. The aggregate Fair Market Value (determined as of
the Grant Date) of shares of Common Stock with respect to which all
incentive stock options first become exercisable by any grantee in any
calendar year under this or any other plan of the Corporation and its
Parent and Subsidiary corporations may not exceed $100,000 or such other
amount as may be permitted from time to time under Section 422 of the Code.
To the extent that such aggregate Fair Market Value shall exceed $100,000,
or other applicable amount, such stock options shall be treated as
nonqualified stock options. In such case, the Corporation may designate the
shares of Common Stock that are to be treated as stock acquired pursuant to
the exercise of an incentive stock option by issuing a separate certificate
for such shares and identifying the certificate as incentive stock option
shares in the stock transfer records of the Corporation.
(iv) Grantee. Incentive stock options shall only be issued to
employees of the Corporation, or of a Parent or Subsidiary of the
Corporation.
(v) Designation. No stock option shall be an incentive stock option
unless so designated by the Committee at the time of grant or in the Grant
Agreement evidencing such stock option.
(vi) Stockholder Approval. No stock option issued under the Plan shall
be an incentive stock option unless the Plan is approved by the
shareholders of the Corporation within 12 months of its adoption by the
Board in accordance with the Bylaws and Articles of the Corporation and
governing law relating to such matters.
(f) Other Terms and Conditions. Stock options may contain such other
provisions, not inconsistent with the provisions of the Plan, as the Committee
shall determine appropriate from time to time.
7. STOCK APPRECIATION RIGHTS
(a) Award of Stock Appreciation Rights. Subject to the other applicable
provisions of the Plan, the Committee may at any time and from time to time
grant stock appreciation rights
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("SARs") to eligible participants, either on a free-standing basis (without
regard to or in addition to the grant of a stock option) or on a tandem basis
(related to the grant of an underlying stock option), as it determines. SARs
granted in tandem with or in addition to a stock option may be granted either at
the same time as the stock option or at a later time; provided, however, that a
tandem SAR shall not be granted with respect to any outstanding incentive stock
option Award without the consent of the grantee. SARs shall be evidenced by
Grant Agreements, executed by the Corporation and the grantee, stating the
number of shares of Common Stock subject to the SAR evidenced thereby and the
terms and conditions of such SAR, in such form as the Committee may from time to
time determine. The term during which each SAR may be exercised shall be
determined by the Committee. In no event shall a SAR be exercisable more than
ten years from the date it is granted. The grantee shall have none of the rights
of a stockholder with respect to any shares of Common Stock represented by a
SAR.
(b) Restrictions of Tandem SARs. No incentive stock option may be
surrendered in connection with the exercise of a tandem SAR unless the Fair
Market Value of the Common Stock subject to the incentive stock option is
greater than the exercise price for such incentive stock option. SARs granted in
tandem with stock options shall be exercisable only to the same extent and
subject to the same conditions as the stock options related thereto are
exercisable. The Committee may, in its discretion, prescribe additional
conditions to the exercise of any such tandem SAR.
(c) Amount of Payment Upon Exercise of SARs. A SAR shall entitle the
grantee to receive, subject to the provisions of the Plan and the Grant
Agreement, a payment having an aggregate value equal to the product of (i) the
excess of (A) the Fair Market Value on the exercise date of one share of Common
Stock over (B) the base price per share specified in the Grant Agreement, times
(ii) the number of shares specified by the SAR, or portion thereof, which is
exercised. In the case of exercise of a tandem SAR, such payment shall be made
in exchange for the surrender of the unexercised related stock option (or any
portion or portions thereof which the grantee from time to time determines to
surrender for this purpose).
(d) Form of Payment Upon Exercise of SARs. Payment by the Corporation of
the amount receivable upon any exercise of a SAR may be made by the delivery of
Common Stock or cash, or any combination of Common Stock and cash, as determined
in the sole discretion of the Committee from time to time. If upon settlement of
the exercise of a SAR a grantee is to receive a portion of such payment in
shares of Common Stock, the number of shares shall be determined by dividing
such portion by the Fair Market Value of a share of Common Stock on the exercise
date. No fractional shares shall be used for such payment and the Committee
shall determine whether cash shall be given in lieu of such fractional shares or
whether such fractional shares shall be eliminated.
8. WITHHOLDING OF TAXES
The Corporation may require, as a condition to the grant of any Award under
the Plan or exercise pursuant to such Award or to the delivery of certificates
for shares issued or payments of cash to a grantee pursuant to the Plan or a
Grant Agreement (hereinafter collectively referred to as a "taxable event"),
that the grantee pay to the Corporation, in cash or, unless otherwise
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determined by the Corporation, in shares of Common Stock, including shares
acquired upon grant of the Award or exercise of the Award, valued at Fair Market
Value on the date as of which the withholding tax liability is determined, any
federal, state or local taxes of any kind required by law to be withheld with
respect to any taxable event under the Plan. The Corporation, to the extent
permitted or required by law, shall have the right to deduct from any payment of
any kind (including salary or bonus) otherwise due to a grantee any federal,
state or local taxes of any kind required by law to be withheld with respect to
any taxable event under the Plan, or to retain or sell without notice a
sufficient number of the shares to be issued to such grantee to cover any such
taxes.
9. TRANSFERABILITY
No Award granted under the Plan shall be transferable by a grantee
otherwise than by will or the laws of descent and distribution. Unless otherwise
determined by the Committee in accord with the provisions of the immediately
preceding sentence, an Award may be exercised during the lifetime of the
grantee, only by the grantee or, during the period the grantee is under a legal
disability, by the grantee's guardian or legal representative.
10. ADJUSTMENTS; BUSINESS COMBINATIONS
In the event of a reclassification, recapitalization, stock split, stock
dividend, combination of shares, or other similar event, subsequent to the
effective date of the Plan, the maximum number and kind of shares reserved for
issuance or with respect to which Awards may be granted under the Plan as
provided in Section 4 shall be adjusted to reflect such event, and the Committee
shall make such adjustments as it in good faith deems appropriate and equitable
to effectuate the purposes of this Plan and to protect the grantees of Awards in
the number, kind and price of shares covered by outstanding Awards made under
the Plan, and in any other matters which relate to Awards and which are affected
by the changes in the Common Stock referred to above.
In the event of any proposed Change in Control subsequent to the effective
date of the Plan, the Committee shall take such action as it in good faith deems
appropriate and equitable to effectuate the purposes of this Plan and to protect
the grantees of Awards, which action may include, but without limitation, any
one or more of the following: (i) acceleration or change of the exercise and/or
expiration dates of any Award to require that exercise be made, if at all, prior
to the Change of Control; (ii) cancellation of any Award upon payment to the
holder in cash of the Fair Market Value of the Common Stock subject to such
Award as of the date of (and, to the extent applicable, as established for
purposes of) the Change in Control, less the aggregate exercise price, if any,
of the Award; and (iii) in any case where equity securities of another entity
are proposed to be delivered in exchange for or with respect to Common Stock of
the Corporation, arrangements to have such other entity replace the Awards
granted hereunder with awards with respect to such other securities, with
appropriate adjustments in the number of shares subject to, and the exercise
prices under, the award.
In the event the Corporation dissolves and liquidates (other than pursuant
to a plan of merger or reorganization), then notwithstanding any restrictions on
exercise set forth in this Plan or any Grant Agreement, or other agreement
evidencing a stock option or stock appreciation
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right: (i) each grantee shall have the right to exercise his stock option or
stock appreciation right at any time up to ten (10) days prior to the effective
date of such liquidation and dissolution; and (ii) the Committee may make
arrangements with the grantees for the payment of appropriate consideration to
them for the cancellation and surrender of any stock option or stock
appreciation right that is so canceled or surrendered at any time up to ten (10)
days prior to the effective date of such liquidation and dissolution. The
Committee shall establish a different period (and different conditions) for such
exercise, delivery, cancellation, or surrender if the Committe deems such action
to be necessary to avoid subjecting the grantee to liability under Section 16(b)
of the Exchange Act. Any stock option or stock appreciation right not so
exercised, canceled, or surrendered shall terminate on the last day for exercise
prior to such effective date.
11. TERMINATION AND MODIFICATION OF THE PLAN
The Board, without further approval of the stockholders, may modify or
terminate the Plan or any portion thereof at any time, except that no
modification shall become effective without prior approval of the stockholders
of the Corporation to increase the number of shares of Common Stock subject to
the Plan or if stockholder approval is necessary to comply with any tax or
regulatory requirement or rule of any exchange or Nasdaq System upon which the
Common Stock is listed or quoted (including for this purpose stockholder
approval that is required for continued compliance with Rule 16b-3 or
stockholder approval that is required to enable the Committee to grant incentive
stock options pursuant to the Plan).
The Committee shall be authorized to make minor or administrative
modifications to the Plan as well as modifications to the Plan that may be
dictated by requirements of federal or state laws applicable to the Corporation
or that may be authorized or made desirable by such laws. The Committee may
amend or modify the grant of any outstanding Award in any manner to the extent
that the Committee would have had the authority to make such Award as so
modified or amended. No modification or termination may be made that would
materially adversely affect any Award previously made under the Plan without the
approval of the grantee.
12. NON-GUARANTEE OF EMPLOYMENT
Nothing in the Plan or in any Grant Agreement thereunder shall confer any
right on an employee to continue in the employ of the Corporation or shall
interfere in any way with the right of the Corporation to terminate an employee
at any time.
13. TERMINATION OF EMPLOYMENT
For purposes of maintaining a grantee's continuous status as an employee
and accrual of rights under any Award, transfer of an employee among the
Corporation and the Corporation's Parent or Subsidiaries shall not be considered
a termination of employment. Nor shall it be considered a termination of
employment for such purposes if an employee is placed on military or sick leave
or such other leave of absence which is considered as continuing intact the
employment relationship; in such a case, the employment relationship shall be
continued until the date when an employee's right to reemployment shall no
longer be guaranteed either by law or contract.
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14. WRITTEN AGREEMENT
Each Grant Agreement entered into between the Corporation and a grantee
with respect to an Award granted under the Plan shall incorporate the terms of
this Plan and shall contain such provisions, consistent with the provisions of
the Plan, as may be established by the Committee.
15. NON-UNIFORM DETERMINATIONS
The Committee's determinations under the Plan (including without limitation
determinations of the persons to receive Awards, the form, amount and timing of
such Awards, the terms and provisions of such Awards and the agreements
evidencing same) need not be uniform and may be made by it selectively among
persons who receive, or are eligible to receive, Awards under the Plan, whether
or not such persons are similarly situated.
16. LIMITATION ON BENEFITS
With respect to persons subject to Section 16 of the Exchange Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3. To the extent any provision of the Plan or action by
the Committee fails to so comply, it shall be deemed null and void, to the
extent permitted by law and deemed advisable by the Committee.
17. COMPLIANCE WITH SECURITIES LAW
The Corporation may require that a grantee, as a condition to exercise of
an Award, and as a condition to the delivery of any share certificate, provide
to the Corporation, at the time of each such exercise and each such delivery, a
written representation that the shares of Common Stock being acquired shall be
acquired by the grantee solely for investment and will not be sold or
transferred without registration or the availability of an exemption from
registration under the Securities Act and applicable state securities laws. The
Corporation may also require that a grantee submit other written representations
which will permit the Corporation to comply with federal and applicable state
securities laws in connection with the issuance of the Common Stock, including
representations as to the knowledge and experience in financial and business
matters of the grantee and the grantee's ability to bear the economic risk of
the grantee's investment. The Corporation may require that the grantee obtain a
"purchaser representative" as that term is defined in applicable federal and
state securities laws. The stock certificates for any shares of Common Stock
issued pursuant to this Plan may bear a legend restricting transferability of
the shares of Common Stock unless such shares are registered or an exemption
from registration is available under the Securities Act and applicable state
securities laws. The Corporation may notify its transfer agent to stop any
transfer of shares of Common Stock not made in compliance with these
restrictions. Common Stock shall not be issued with respect to an Award granted
under the Plan unless the exercise of such Award and the issuance and delivery
of share certificates for such Common Stock pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, the Securities
Act, the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any national securities exchange or Nasdaq System upon which the
Common Stock may then be listed or quoted, and shall be further subject to the
approval of counsel for the Corporation with respect to such compliance to the
extent such approval is sought by the Committee.
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18. GOVERNING LAW
The validity, construction and effect of the Plan, of Grant Agreements
entered into pursuant to the Plan, and of any rules, regulations, determinations
or decisions made by the Board or Committee relating to the Plan or such Grant
Agreements, and the rights of any and all persons having or claiming to have any
interest therein or thereunder, shall be determined exclusively in accordance
with applicable federal laws and the laws of the State of Delaware without
regard to its conflict of laws rules and principles.
19. PLAN SUBJECT TO ARTICLES AND BY-LAWS
This Plan is subject to the Articles and By-Laws of the Corporation, as
they may be amended from time to time.
20. EFFECTIVE DATE; TERMINATION DATE
The Plan is effective as of the Effective Time, as defined in the Agreement
and Plan of Reorganization, dated as of December __, 1999, by and among SER
Systeme AG, SERSys Acquisition Corporation and EIS International, Inc. No Award
shall be granted under the Plan after the close of business on the day
immediately preceding the tenth anniversary of the effective date of the Plan.
Subject to other applicable provisions of the Plan, all Awards made under the
Plan prior to such termination of the Plan shall remain in effect until such
Awards have been satisfied or terminated in accordance with the Plan and the
terms of such Awards.
Date Approved by the Board:
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Date Approved by the Shareholders:
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