SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 26, 1999
ENTERPRISE SOFTWARE, INC.
(Exact name of Registrant as specified in its charter)
Delaware 0-18034 68-0158367
(State or Other (Commission File No.) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
8415 Explorer Drive, Colorado Springs, Colorado 80920
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (719) 265-3200
not applicable
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
ITEM 1. Change of Control of Registrant.
On July 26, 1999, Enterprise Software, Inc. ("Enterprise") and LiveWire
Acquisition Corporation ("LiveWire"), a wholly-owned subsidiary of LiveWire
Media, L.L.C., entered into an amended and restated Agreement and Plan of Merger
(the "Restated Agreement"), amending and restating that certain Agreement and
Plan of Merger, dated June 27, 1999, between Enterprise and LiveWire (the
"Original Agreement"). Subject to the terms and conditions set forth therein,
the Restated Agreement provides for LiveWire to be merged with and into
Enterprise with Enterprise being the surviving corporation (the "Merger"). In
order to structure the Merger as a recapitalization, approximately ninety-seven
(97%) of the outstanding common stock of the surviving corporation will be owned
by LiveWire and approximately three percent (3%) will be owned by current
stockholders of Enterprise (collectively the "Rollover Group").
Under the Restated Agreement, the Rollover Group will rollover between
125,000 and 175,000 shares of Enterprise common stock into shares of the
surviving corporation in order to structure the transaction as a
recapitalization. In addition, the following changes to the Original Agreement
are reflected in the Restated Agreement: (i) prior to the effective time of the
Merger, the stockholders will be asked, among other things, to approve an
amendment to the certificate of incorporation of Enterprise, authorizing the
issuance of a new class of common stock (the "Class B Common Stock"), and (ii)
at the effective time of the Merger (x) each share of outstanding Class A Common
Stock will be converted into the right to receive a payment of $9.25 in cash,
(y) all of the shares of Class B Common Stock held by the Rollover Group will be
left outstanding, and (z) each of the 1,000 shares of common stock of LiveWire
will be converted into 1,958.333 shares of Class B Common Stock and 28,885.417
shares of preferred stock. Accordingly, immediately following the effective
time, the only outstanding capital stock of the surviving corporation will be
the Class B Common Stock and preferred stock.
In connection with the execution of the Restated Agreement, Enterprise,
LiveWire and the Rollover Group have executed a voting and exchange agreement
dated July 22, 1999, pursuant to which, among other things, the Rollover Group
has agreed to vote their respective shares in favor of the Merger.
Consummation of the transactions contemplated by the Restated Agreement is
subject to the approval of the stockholders of Enterprise, regulatory approvals,
and the satisfaction or waiver of various other conditions as more fully
described in the Restated Agreement.
A copy of the Restated Agreement is attached as an exhibit hereto and is
incorporated herein by reference.
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
2.1 Amended and Restated Merger Agreement, dated as of July 26, 1999,
between Enterprise Software, Inc. and LiveWire Acquisition Corporation.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned there unto duly authorized.
Enterprise Software, Inc.
By: /s/ Richard Schleufer
Richard Schleufer
Chief Executive Officer
July 28, 1999
<PAGE>
EXHIBIT INDEX
Exhibit Reference
Number Exhibit Description
2.1 Amended and Restated Merger Agreement, dated as of July
26, 1999, between Enterprise Software, Inc. and
LiveWire Acquisition Corporation.
AGREEMENT AND PLAN OF MERGER
dated as of
June 27, 1999,
As Amended and Restated
as of
July 26, 1999,
between
ENTERPRISE SOFTWARE, INC.
and
LIVEWIRE ACQUISITION CORPORATION
<PAGE>
EXHIBIT A Amended and Restated Certificate of Incorporation
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of June 27, 1999, as amended and
restated as of July 26, 1999 (this "Agreement"), between Enterprise Software,
Inc., a Delaware corporation (the "Company"), and LiveWire Acquisition
Corporation, a Delaware corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, the Company and Buyer entered into an Agreement and Plan of
Merger dated as of June 27, 1999 (the "Merger Agreement");
WHEREAS, the parties hereto desire to amend and restate the Merger
Agreement as of July 26, 1999, as set forth herein;
WHEREAS, as of the date of execution of this Agreement, all of the
outstanding capital stock of Buyer is owned by LiveWire Media, L.L.C.;
WHEREAS, the Boards of Directors of LiveWire Media, L.L.C., Buyer and
the Company have approved and declared fair and advisable and in the best
interests of their respective companies, members and stockholders, that Buyer
and the Company combine pursuant to the Merger (as defined in Section 2.01
below) in which the Surviving Corporation (as defined in Section 2.01(a) below)
will become a subsidiary of LiveWire Media, L.L.C. and certain stockholders of
the Company will retain shares of common stock of the Surviving Corporation upon
the terms and subject to the conditions provided in this Agreement;
WHEREAS, in order to induce Buyer to enter into this Agreement,
contemporaneously with the execution and delivery of this Agreement, certain
holders of shares of common stock of the Company have entered into (or will
enter into) a Voting Agreement (together, the "Voting Agreements") providing for
certain actions relating to such shares;
WHEREAS, pursuant to the Voting and Exchange Agreement among Kimberlin
Family Partners, L.P., Oshkim Limited Partnership (collectively, the "Roll-over
Group"), the Company and Buyer, the Roll-over Group has agreed to exchange
between 125,000 and 175,000 of their Shares (as defined below) immediately prior
to the Merger for shares of Class B common stock, par value $0.001 per share, of
the Company (the "Class B Common Stock");
<PAGE>
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the Merger and also to
prescribe certain conditions to the Merger; and
WHEREAS, it is intended that the Merger be recorded as a
recapitalization for financial reporting purposes.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1. Definitions. (a) The following terms, as used herein, have the
following meanings:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control with
such Person. As used in this definition, "control" (including with its
correlative meanings, "controlled by" and "under common control with") shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person (whether through ownership
of securities or partnership or other ownership interests, by contract or
otherwise).
"Benefit Arrangement" means any employment, severance or similar
contract or arrangement (whether or not written) providing for compensation,
bonus, profit-sharing, stock option, or other stock-related rights or other
forms of incentive or deferred compensation, vacation benefits, insurance
coverage (including any self-insured arrangements), health or medical benefits,
disability benefits, worker's compensation, supplemental unemployment benefits,
severance benefits and post-employment or retirement benefits (including
compensation, pension, health, medical or life insurance or other benefits) that
(i) is not an U.S. Plan, (ii) is entered into, maintained, administered or
contributed to, as the case may be, by the Company or any Subsidiary and (iii)
covers any employee or former employee of the Company or any Subsidiary employed
in the United States.
"Code" means the Internal Revenue Code of 1986, as amended.
<PAGE>
"Common Stock" means (i) before the effectiveness of the Charter
Amendment, the common stock, $0.001 par value, of the Company and (ii) after the
effectiveness of the Charter Amendment, the class A common stock, $0.001 par
value, of the Company.
"Contemplated Transactions" means the transactions contemplated by this
Agreement, including the Charter Amendment.
"Disclosure Letter" means the disclosure letter dated as of the date of
this Agreement delivered by the Company to Buyer (as revised pursuant to Section
6.10).
"Environmental Laws" means any applicable federal, state, local or
foreign law (including, without limitation, common law), treaty, judicial
decision, regulation, rule, judgment, order, decree, injunction, permit or
governmental restriction or requirement or any agreement with any governmental
authority or other third party, relating to human health and safety, the
environment or to pollutants, contaminants, wastes or chemicals or any toxic,
radioactive, ignitable, corrosive, reactive or otherwise hazardous substances,
wastes or materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" of any entity means any other entity that, together
with such entity, would be treated as a single employer under Section 414 of the
Code.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976.
"International Plan" means any employment, severance or similar
contract or arrangement (whether or not written) or any plan, policy, fund,
program or arrangement or contract providing for severance, insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, pension or
retirement benefits or for deferred compensation, profit-sharing, bonuses, stock
options, stock appreciation rights or other forms of incentive compensation or
post-retirement insurance, compensation or benefits that (i) is not a U.S. Plan
or a Benefit Arrangement, (ii) is entered into, maintained, administered or
contributed to by the Company or any Subsidiary and (iii) covers any employee or
former employee of the Company or any Subsidiary who is not employed in the
United States.
<PAGE>
"Lien" means, with respect to any property or asset, any mortgage,
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such property or asset. For purposes of this Agreement, a
Person shall be deemed to own subject to a Lien any property or asset that it
has acquired or holds subject to the interest of a vendor or lessor under any
conditional sale agreement, capital lease or other title retention agreement
relating to such property or asset.
"Material Adverse Effect" means any material adverse effect on the
financial condition, business, assets or results of operations of the Company
and the Subsidiaries, taken as a whole, provided that (i) changes in the public
market price of the Common Stock will not be considered in determining whether
there has been a Material Adverse Effect and (ii) adverse effects that are
reflected in Updated Revenues pursuant to Section 2.02(e) will not be considered
in determining whether there has been a Material Adverse Effect. For purposes of
this Agreement and without limiting the generality of the foregoing, any facts
or circumstances that are not reflected in Updated Revenues and that have the
effect of reducing the value of the Company and its Subsidiaries, taken as a
whole, by more than $0.50 per fully diluted Share (or $2.98 million in the
aggregate) will be deemed to be a Material Adverse Effect.
"1933 Act" means the Securities Act of 1933.
"1934 Act" means the Securities Exchange Act of 1934.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Person" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization, including
a government or political subdivision or an agency or instrumentality thereof.
"SEC" means the Securities and Exchange Commission.
"Subsidiary" means any corporation or other business entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other body performing similar functions
are at any time directly or indirectly owned by the Company and/or one or more
of its subsidiaries.
<PAGE>
"Tax" means (i) any tax, governmental fee or other like assessment or
charge of any kind whatsoever (including, but not limited to, withholding on
amounts paid to or by any Person), together with any interest, penalty, addition
to tax or additional amount imposed by any Taxing Authority, (ii) in the case of
the Company or any Subsidiary, liability for the payment of any amount of the
type described in clause (i) as a result of being or having been before the
Closing Date a member of an affiliated, consolidated, combined or unitary group,
or a party to any agreement or arrangement, as a result of which liability of
the Company or any Subsidiary to a Taxing Authority is determined or taken into
account with reference to the liability of any other Person and (iii) liability
of the Company or any Subsidiary for the payment of any amount as a result of
being party to any Tax sharing agreement or with respect to the payment of any
amount of the type described in (i) or (ii) as a result of any existing express
or implied obligation.
"Taxing Authority" means any governmental authority responsible for the
imposition of any Tax (domestic or foreign).
"Tax Return" means any report, return, document, declaration or other
information or filing required to be supplied to any taxing authority or
jurisdiction (foreign or domestic) with respect to Taxes, including information
returns, any documents with respect to or accompanying payments of estimated
Taxes, or with respect to or accompanying requests for the extension of time in
which to file any such report, return, document, declaration or other
information.
"U.S. Plan" means any "employee benefit plan", as defined in Section
3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii) is
maintained, administered or contributed to by the Company or any Subsidiary and
(iii) covers any employee or former employee of the Company or any Subsidiary.
Any reference in this Agreement to a statute shall be to such statute,
as amended from time to time, and to the rules and regulations promulgated
thereunder.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
- ---- -------
Acquisition Proposals............................... 6.04(a)
Agreement........................................... preamble
Balance Sheet ...................................... 4.08(a)
Balance Sheet Date.................................. 4.08
Buyer............................................... preamble
Buyer Common Stock.................................. 2.02(c)
Buyer Disclosure Documents.......................... 7.01
Buyer Securities.................................... 5.07
Certificates........................................ 2.03(a)
Charter Amendment. . . . . . . . . . . . . . . . . . 2.01(d)
Class B Common Stock . . . . . . . . . . . . . . . preamble
Company............................................. preamble
Company Disclosure Documents........................ 4.09(a)
Company Proxy Statement............................. 4.09(a)
Company SEC Documents............................... 4.07(a)
Company Securities.................................. 4.05(b)
Company Stockholder Meeting......................... 6.02(a)
Company 10-K........................................ 4.06(a)
Confidentiality Agreement........................... 6.03
Current SEC Reports................................. 4.07(a)(ii)
Delaware Law........................................ 2.01(d)
Dissenting Shares................................... 2.04
Effective Time...................................... 2.01(b)
Employment Agreements............................... 4.17(k)
Exchange Agent...................................... 2.03(a)
Financing........................................... 5.06
Financing Agreement................................. 5.06
GAAP................................................ 4.08
Indemnified Party................................... 7.03
Intellectual Property Right......................... 4.22(a)
IRS................................................. 4.16(c)
Leases.............................................. 4.23
Material Contracts.................................. 4.12
Merger.............................................. 2.01
Merger Consideration................................ 2.02(d)
<PAGE>
Paragraph (f) Event................................. 2.02(f)
Payment Event....................................... 6.04(c)
Permits............................................. 4.21
Required Amounts.................................... 5.06
Roll-over Group..................................... Recital
Rule 145 Affiliate.................................. 6.09
Software............................................ 4.22(a)
Share............................................... 2.01(d)
Subsidiary Securities............................... 4.06(b)
Superior Proposal................................... 10.01(f)
Surviving Corporation............................... 2.01(a)
Surviving Corporation Preferred Share............... 2.02(c)
Surviving Corporation Share......................... 2.02(c)
System.............................................. 4.25
Third Party......................................... 6.04(a)
Transaction Statement............................... 7.01
Updated Budget...................................... 2.02(e)
Updated Revenues.................................... 2.02(e)
Voting Agreements................................... recital
Year 2000 Compliant................................. 4.25
(c) Except where the context otherwise requires, "as of the date
hereof" and "date of this Agreement" means June 27, 1999.
ARTICLE 2
THE MERGER
SECTION 2.1. The Merger. (a) Subject to the terms and conditions of
this Agreement, at the Effective Time, Buyer shall be merged (the "Merger") with
and into the Company in accordance with the Delaware Law, whereupon the separate
existence of Buyer shall cease, and the Company shall be the surviving
corporation (the "Surviving Corporation").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger, the Company and
Buyer will file a certificate of merger in accordance with Delaware Law with the
Delaware Secretary of State and make all other filings or recordings required by
Delaware Law in connection with the Merger. The Merger shall become effective at
such time as the certificate of merger is duly filed with the Delaware Secretary
of State (or at such later time as may be specified in the certificate of
merger) (the "Effective Time").
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, powers, privileges and franchises and be subject to all
of the obligations, liabilities, restrictions and disabilities of the Company
and Buyer, all as provided under Delaware Law.
<PAGE>
(d) The Company hereby represents that its Board of Directors, at one
or more meetings duly called and held, has unanimously (i) determined, among
other things, that this Agreement, the Voting Agreements and the Contemplated
Transactions, including the Merger, are fair to and in the best interest of the
Company's stockholders, (ii) approved this Agreement and the Contemplated
Transactions, including the Merger, which approval satisfies in full the
requirements of the General Corporation Law of the State of Delaware (the
"Delaware Law") (including, without limitation, Section 203 thereof), other than
the requirement to obtain stockholder approval set forth in Section 251(c) of
the Delaware Law and (iii) resolved to recommend to its stockholders approval
and adoption of this Agreement and the Merger and the amendment of the Articles
of Incorporation of the Company contemplated by Section 6.06 (the "Charter
Amendment") by its stockholders. The Company further represents that its
financial advisor, Schroder & Co. Inc., has delivered to the Company's Board of
Directors its oral opinion (such oral opinion to be followed with a written
opinion within three business days following the date hereof) that the
consideration to be paid in the Merger (except to members of the Roll-over
Group) is in the range of consideration which Schroder & Co. Inc. deems to be
fair to the holders of shares (each, a "Share") of Common Stock, except for
members of the Roll-over Group, from a financial point of view. The Company has
been advised that all of its directors and executive officers intend to vote all
of their Shares in favor of approval and adoption of this Agreement and the
Merger and the Charter Amendment.
SECTION 2.2. Conversion (or Retention) of Shares. At the Effective Time:
(a) each Share held by the Company as treasury stock or owned by Buyer
immediately prior to the Effective Time shall be canceled, and no payment shall
be made with respect thereto;
(b) each share of Class B Common Stock outstanding immediately prior
to the Effective Time shall remain outstanding with the same rights, powers and
privileges as such shares had immediately prior to the Effective Time;
(c) each of the 1,000 shares of common stock, par value $0.001 per
share, of Buyer ("Buyer Common Stock") outstanding immediately prior to the
Effective Time shall be converted into and become (i) 1,778.3780 shares (each, a
"Surviving Corporation Share") of Class B common stock, par value $0.001 per
share, of the Surviving Corporation with the same rights, powers and privileges
as the shares so converted (except that they shall have a liquidation preference
of $0.10 per share) and (ii) 30,550 shares (each, a "Surviving Corporation
Preferred Share") of preferred stock, par value $0.001 per share, of the
Surviving Corporation having the terms set forth in paragraph (g) below;
(d) each Share outstanding immediately prior to the Effective Time
shall, except as otherwise provided in Section 2.02(a) or as provided in Section
2.04 with respect to Shares as to which appraisal rights have been exercised, be
converted into the right to receive in cash an amount equal to $9.25, as such
amounts may be reduced pursuant to paragraphs (e) and (f) below (as adjusted,
the "Merger Consideration").
<PAGE>
(e) Prior to the Effective Time, the Company will deliver to Buyer an
updated budget (the "Updated Budget") for the fiscal year ended March 31, 2000.
The Updated Budget will be prepared in the ordinary course of business
consistent with past practice and present (i) the actual combined unaudited
results of the Company and its Subsidiaries for the period from April 1, 1999
through the month end date immediately preceding the date the Updated Budget is
delivered to Buyer and (ii) a reasonable forecast of the results for the Company
and its Subsidiaries for the remainder of the fiscal year. If the aggregate
gross revenues of the Company and its Subsidiaries in the Updated Budget for the
fiscal year ended March 31, 2000 (the "Updated Revenues") are less than
$35,467,000, then the Merger Consideration will be reduced (rounded to the
nearest cent) by an amount equal to the following formula:
(2.0)*(35,467,000 - Updated Revenues)
-------------------------------------
5,956,428
(f) The Merger Consideration may be further reduced if after the date
hereof there is (i) an adverse effect on the financial condition, business,
assets or results of operations of the Company and its Subsidiaries, taken as a
whole or (ii) a breach of a representation or warranty made by the Company
pursuant to Article 4, provided that such adverse effect or breach (a "Paragraph
(f) Event") (A) is not reflected in Updated Revenues pursuant to Paragraph (e)
above and (B) causes a reduction in the enterprise value of the Company (e.g.,
an undisclosed liability). The first $1,000,000 in reduced value arising from a
Paragraph (f) Event will be absorbed by Buyer and will not reduce the Merger
Consideration. If, however, there is a reduction in the Company's enterprise
value in excess of $1,000,000 ("Excess Amount") that arises from a Paragraph (f)
Event (and is not reflect in Updated Revenues), then the Merger Consideration
will be reduced (rounded to the nearest cent) by an amount equal to the Excess
Amount divided by 5,956,428.
(g) The Surviving Corporation Preferred Shares will pay no dividend,
have a liquidation preference of $1,000.00 per share, will not be convertible
into Surviving Corporation Shares, will have no voting rights except as required
by law and will be redeemable by the Company at a redemption price equal to the
liquidation preference. After the date hereof and prior to the mailing of the
Company Proxy Statement (as defined in Section 4.09), Buyer will deliver a
certificate of designations for the Surviving Corporation Preferred Shares.
<PAGE>
SECTION 2.3. Surrender and Payment. (a) Prior to the mailing of the
Company Proxy Statement, Buyer shall appoint an agent reasonably acceptable to
the Company (the "Exchange Agent") for the purpose of exchanging certificates
(the "Certificates") representing Shares for the Merger Consideration. Prior to
or at the Effective Time, Buyer shall deposit with the Exchange Agent, for the
benefit of the holders of Shares, for exchange in accordance with this Article
2, the Merger Consideration. For purposes of determining the Merger
Consideration to be made available, Buyer shall assume that no holder of Shares
will perfect his right to appraisal of his Shares. Promptly after the Effective
Time, the Surviving Corporation will use its reasonable best efforts to send or
cause the Exchange Agent to send, within 5 business days thereafter, to each
holder of Shares at the Effective Time a letter of transmittal and instructions
for use in such exchange (which shall specify that the delivery shall be
effected, and risk of loss and title shall pass, only upon proper delivery of
the Certificates to the Exchange Agent).
(b) Each holder of Shares that have been converted into the right to
receive the Merger Consideration will be entitled to receive and the Exchange
Agent shall deliver, upon surrender to the Exchange Agent of a Certificate or
Certificates representing such Shares, together with a properly completed letter
of transmittal covering such Shares, the Merger Consideration payable in respect
of such Shares. The Merger Consideration shall not be used for any other
purpose. Until so surrendered, each such Certificate shall, after the Effective
time, represent for all purposes, only the right to receive such Merger
Consideration. No interest will be paid or will accrue on any cash payable as
Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a
Person other than the registered holder of the Shares represented by the
Certificate or Certificates surrendered in exchange therefor, it shall be a
condition to such payment that the Certificate or Certificates so surrendered
shall be properly endorsed or otherwise be in proper form for transfer and that
the Person requesting such payment shall pay to the Exchange Agent any transfer
or other taxes required as a result of such payment to a Person other than the
registered holder of such Shares or establish to the reasonable satisfaction of
the Exchange Agent that such tax has been paid or is not payable.
(d) After the Effective Time, there shall be no further registration
of transfers of Shares. If, after the Effective Time, Certificates are presented
to the Surviving Corporation, they shall be canceled and exchanged for the
Merger Consideration provided for, and in accordance with the procedures set
forth, in this Article 2.
<PAGE>
(e) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.03(a) that remains unclaimed by the holders
of Shares six months after the Effective Time shall be returned to the Surviving
Corporation, upon demand, and any such holder who has not exchanged his or her
Shares for the Merger Consideration in accordance with this Section 2.03 prior
to that time shall thereafter look only to the Surviving Corporation for payment
of the Merger Consideration in respect of his or her Shares. Notwithstanding the
foregoing, neither the Surviving Corporation nor the Company shall be liable to
any holder of Shares for any amount paid to a public official pursuant to
applicable abandoned property, escheat or similar laws. Any amounts remaining
unclaimed by holders of Shares two years after the Effective Time (or such
earlier date immediately prior to such time when such amounts would otherwise
escheat to or become the property of any governmental authority) shall become,
to the extent permitted by applicable law, the property of the Surviving
Corporation free and clear of any claims or interest of any Person previously
entitled thereto.
(f) Any portion of the Merger Consideration made available to the
Exchange Agent pursuant to Section 2.03(a) to pay for Shares for which appraisal
rights have been perfected shall be returned to the Company, upon demand.
SECTION 2.4. Dissenting Shares. Notwithstanding Section 2.02, Shares
which are issued and outstanding immediately prior to the Effective Time and
which are held by a holder who has not voted such Shares in favor of the Merger,
who shall have delivered a written demand for appraisal of such Shares in the
manner provided by the Delaware Law and who, as of the Effective Time, shall not
have effectively withdrawn such demand or lost such right to appraisal and
payment therefor under the Delaware Law ("Dissenting Shares") shall not be
converted into a right to receive the Merger Consideration. The holders thereof
shall be entitled only to such rights as are granted by Section 262 of the
Delaware Law. Each holder of Dissenting Shares who becomes entitled to payment
for such Shares pursuant to Section 262 of the Delaware Law shall receive
payment therefor from the Surviving Corporation in accordance with the Delaware
Law; provided, however, that (i) if any such holder of Dissenting Shares shall
have failed to establish his or her entitlement to appraisal rights as provided
in Section 262 of the Delaware Law, (ii) if any such holder of Dissenting Shares
shall have effectively withdrawn his or her demand for appraisal of such Shares
or lost his or her right to appraisal and payment for his or her Shares under
Section 262 of the Delaware Law or (iii) if neither any holder of Dissenting
Shares nor the Surviving Corporation shall have filed a petition demanding a
determination of the value of all Dissenting Shares within the time provided in
Section 262 of the Delaware Law, such holder shall forfeit the right to
appraisal of such Shares and each such Share shall be treated as if it had been,
as of the Effective Time, converted into a right to receive the Merger
Consideration, without interest thereon, from the Surviving Corporation as
provided in Section 2.02 hereof. The Company shall give Buyer notice as promptly
as practicable of any demands received by the Company for appraisal of Shares,
and Buyer shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Buyer, make any payment with respect to, or settle or
offer to settle, any such demands.
<PAGE>
SECTION 2.5. Stock Options. (a At or immediately prior to the Effective
Time, the Company shall use its reasonable best efforts to cause each employee
stock option to purchase Shares outstanding under any employee stock option or
compensation plan or arrangement of the Company to be canceled, and the Company
shall pay each holder of any such option at or within five business days after
the Effective Time for each such option an amount in cash determined by
multiplying (i) the excess, if any, of the Merger Consideration per Share over
the applicable exercise price of such option by (ii) the number of Shares such
holder could have purchased (assuming full vesting of all options) had such
holder exercised such option in full immediately prior to the Effective Time.
(b Prior to the Effective Time, the Company shall use its reasonable
efforts to (i) obtain any consents from holders of options to purchase Shares
granted under the Company's stock option or compensation plans or arrangements
and (ii) make any amendments to the terms of such stock option or compensation
plans or arrangements or warrants that, in the case of either clauses (i) or
(ii), are necessary to give effect to the transactions contemplated by Section
2.05(a). Notwithstanding any other provision of this Section 2.05, payment may
be withheld in respect of any employee stock option until such necessary
consents are obtained.
SECTION 2.6. Withholding Rights. The Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable to any
Person pursuant to this Article 2 such amounts as it is required to deduct and
withhold with respect to the making of such payment under any provision of
federal, state, local or foreign tax law. If the Surviving Corporation so
withholds amounts, such amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares in respect of which
the Surviving Corporation made such deduction and withholding.
SECTION 2.7. Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
Person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such Person of a bond, in
such reasonable amount as the Surviving Corporation may direct, as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue, in exchange for such lost, stolen or destroyed
Certificate, the Merger Consideration to be paid in respect of the Shares
represented by such Certificate, as contemplated by this Article 2.
<PAGE>
SECTION 2.8. Recapitalization. Each of the Company and Buyer shall use
commercially reasonable efforts to cause the transactions contemplated by this
Agreement, including the Merger, to be accounted for as a recapitalization, and
neither the Company nor Buyer shall take any action that would be reasonably
likely to cause such accounting treatment not to be obtained.
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation. The certificate of
incorporation of Buyer in effect immediately prior to the Effective Time shall
be amended as of the Effective Time as set forth in Exhibit A, and, as so
amended, shall be the certificate of incorporation of the Surviving Corporation
until amended in accordance with the terms thereof and applicable law.
SECTION 3.2. Bylaws. The bylaws of Buyer in effect immediately prior to
the Effective Time shall be the bylaws of the Surviving Corporation from and
after the Effective Time until amended in accordance with the terms thereof and
applicable law.
SECTION 3.3. Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance with
applicable law or until their earlier death, resignation or removal in
accordance with the Surviving Corporation's certificate of incorporation and
bylaws, (i) the directors of Buyer at the Effective Time shall be the directors
of the Surviving Corporation, and (ii) the officers of the Company at the
Effective Time shall be the officers of the Surviving Corporation.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Buyer that:
<PAGE>
SECTION 4.1. Corporate Existence and Power. The Company is a
corporation duly incorporated, validly existing, in good standing under the laws
of the State of Delaware, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted except for those licenses, authorizations,
permits, consents and approvals the absence of which would not have,
individually or in the aggregate, a Material Adverse Effect. Except as set forth
in Section 4.01 of the Disclosure Letter, the Company is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where the character of the property owned or leased by it or the nature of its
activities makes such qualification necessary, except for those jurisdictions
where the failure to be so qualified would not, individually or in the
aggregate, be reasonably likely to have a Material Adverse Effect. The Company
has heretofore made available to Buyer or its representative true and complete
copies of the Company's certificate of incorporation and bylaws as currently in
effect.
SECTION 4.2. Corporate Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the Contemplated Transactions are within the Company's corporate powers and,
except for any required approvals of the Company's stockholders in connection
with the consummation of the Merger and the Charter Amendment, have been duly
authorized by all necessary corporate action on the part of the Company. The
affirmative vote of the holders of a majority of the outstanding Shares is the
only vote of the holders of any of the Company's capital stock necessary in
connection with the consummation of the Merger. This Agreement constitutes a
valid and binding agreement of the Company enforceable against the Company in
accordance with its terms, except as the same may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws now or
hereafter in effect, affecting the enforcement of creditors' rights generally
and general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.
SECTION 4.3. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the Company
of the Contemplated Transactions require no action by or in respect of, or
filing with, any governmental body, agency, official or authority, domestic or
foreign, other than (i) the filing of a certificate of merger with respect to
the Merger with the Delaware Secretary of State and the United States Copyright
Office and appropriate documents with the relevant authorities of other states
in which the Company is qualified to do business, (ii) compliance with any
applicable requirements of the HSR Act, (iii) compliance with any applicable
requirements of the 1933 Act, the 1934 Act, the rules and regulations
promulgated by the Nasdaq Stock Market and any other applicable securities laws,
whether state or foreign and (iv) any actions or filings the absence of which
would not be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company or materially impair the ability of the
Company to consummate the Contemplated Transactions.
<PAGE>
SECTION 4.4. Non-contravention. Except as set forth in Section 4.04 of
the Disclosure Letter, the execution, delivery and performance by the Company of
this Agreement and the consummation of the Contemplated Transactions do not and
will not (i) contravene, conflict with, or result in any violation or breach of
any provision of the certificate of incorporation or bylaws of the Company, (ii)
assuming compliance with the matters referred to in Section 4.03, contravene,
conflict with or result in a violation or breach of any provision of any
applicable law, statute, ordinance, rule, regulation, judgment, injunction,
order, or decree binding upon or applicable to the Company or any Subsidiary or
any of their properties or assets, (iii) require any consent or other action by
any Person who is not a party to this Agreement under, constitute a default
under, or cause or permit the termination, cancellation, acceleration or other
change of any right or obligation of the Company or any Subsidiary or the loss
of any benefit to which the Company or any Subsidiary is entitled under, any
provision of any agreement, contract or other instrument binding upon the
Company or any Subsidiary or any license, franchise, Permit other similar
authorization held by the Company or any Subsidiary that is necessary for the
continued operation of its business or (iv) result in the creation or imposition
of any Lien on any asset of the Company or any Subsidiary, except in the case of
clauses (ii), (iii) and (iv), for any such violation, failure to obtain any such
consent or other action, default, right, loss or Lien that would not,
individually or in the aggregate, be reasonably expected to have a Material
Adverse Effect.
<PAGE>
SECTION 4.5. Capitalization. (a The authorized capital stock of the
Company consists of (i) 100,000,000 Shares, of which as of June 24, 1999, there
were outstanding 5,406,496 Shares, employee stock options to purchase an
aggregate of not more than 244,125 Shares, and options and warrants to purchase
an aggregate of not more than 302,557 Shares (all of which were exercisable) and
conversion rights granted to each of Robert McConnell and George Beattie
pursuant to certain promissory notes issued by the Company were exercisable for
an aggregate of 1,075 Shares and (ii) 10,000,000 shares of voting preferred
stock, par value $0.001 per share, of which none are issued, and all outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable. Section 4.05(a) of the Disclosure
Letter lists, with respect to each option to purchase Shares outstanding as of
the date of this Agreement: (i) the name of the holder of each such option, (ii)
the number of Shares subject to each such option, (iii) the per Share exercise
price of each such option and (iv) the expiration date of each such option.
Other than the options listed in Section 4.05(a) of the Disclosure Letter, no
current or former employee, director or consultant of the Company or any
Subsidiary has any right or claim of right against the Company or any Subsidiary
relating to or arising from any Share-related plan, policy or arrangement,
including, without limitation, any Share purchase option, stock appreciation
right or similar right with respect to the Shares or any other Share-related
compensation arrangement.
(b)Except as set forth in Section 4.05(a) and Sections 4.05(a) and
(b) of the Disclosure Letter and for changes since June 24, 1999 resulting from
the exercise of employee stock options outstanding on such date, and except for
the issuance of shares of Class B Common Stock contemplated by Section 6.06 ,
there are no outstanding (i) shares of capital stock or voting securities of the
Company, (ii) securities of the Company convertible into or exchangeable for
shares of capital stock or voting securities of the Company or (iii) options or
other rights to acquire from the Company, or other obligations of the Company to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of the Company (the items in
clauses (i), (ii) and (iii) being referred to collectively as the "Company
Securities"). Except as set forth in Section 4.05(a) and in Sections 4.05(a) and
(b) of the Disclosure Letter, there are no outstanding obligations of the
Company or any Subsidiary to repurchase, redeem or otherwise acquire any Company
Securities.
SECTION 4.6. Subsidiaries. (a Each Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization, has all powers and all material
governmental licenses, authorizations, permits, consents and approvals required
to carry on its business as now conducted except for those licenses,
authorizations, permits, consents and approvals the absence of which would not
have, individually or in the aggregate, a Material Adverse Effect. Each
Subsidiary is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where the character of the property owned or
leased by it or the nature of its activities makes such qualifications
necessary, except for those jurisdictions where the failure to be in good
standing or to be so qualified would not, individually or in the aggregate, be
reasonably likely to have a Material Adverse Effect. All Subsidiaries and their
respective jurisdictions of incorporation or organization are identified in the
Company's report on Form 10-K for the year ended March 31, 1999 (the "Company
10-K").
<PAGE>
(b Except as set forth in Section 4.06(b) of the Disclosure Letter,
all of the outstanding capital stock of, or other voting securities or ownership
interests in, each Subsidiary, is owned by the Company, directly or indirectly,
free and clear of any Lien and free of any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such capital stock or other voting securities or ownership interests). All such
capital stock, other voting securities or ownership interests has been duly
authorized and validly issued and is fully paid and non-assessable. There are no
outstanding (i) securities of the Company or any Subsidiary convertible into or
exchangeable for shares of capital stock or other voting securities or ownership
interests in any Subsidiary or (ii) options or other rights to acquire from the
Company or any Subsidiary, or other obligations of the Company or any Subsidiary
to issue, any capital stock or other voting securities or ownership interest in,
or any securities convertible into or exchangeable for any capital stock or
other voting securities or ownership interests in, any Subsidiary (the items in
clauses (i) and (ii) being referred to collectively as the "Subsidiary
Securities"). There are no outstanding obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any outstanding Subsidiary
Securities.
SECTION 4.7. SEC Filings. (a The Company has delivered or made
available to Buyer (i) the Company 10-K, (ii) its quarterly reports on Form 10-Q
for its fiscal quarters ended June 30, 1998, September 30, 1998 and December 31,
1998 (together with the Company 10-K, the "Current SEC Reports"), (iii) its
proxy or information statements relating to meetings of, or actions taken
without a meeting by, the stockholders of the Company held since January 1,
1998, and (iv) all of its other reports, statements, schedules and registration
statements filed with the SEC since January 1, 1998 (the documents referred to
in this Section 4.07(a), collectively, the "Company SEC Documents".)
(b) As of its respective filing date, each Company SEC Document filed
pursuant to the 1934 Act did not contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading.
(c) Each Company SEC Document that is a registration statement, as
amended or supplemented, if applicable, filed pursuant to the 1933 Act as of the
date such registration statement or amendment became effective did not 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 not
misleading.
<PAGE>
SECTION 4.8. Financial Statements. (a The audited consolidated
financial statements and unaudited consolidated interim financial statements of
the Company included in the Company SEC Documents fairly present, in all
material respects, in conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates thereof and the consolidated results
of operations and cash flows for the periods then ended (subject to normal
year-end adjustments in the case of any unaudited interim financial statements).
For purposes of this Agreement, "Balance Sheet" means the consolidated balance
sheet of the Company and the Subsidiaries as of March 31, 1999 set forth in the
Company 10-K and "Balance Sheet Date" means March 31, 1999.
(b)Section 4.08 of the Disclosure Letter sets forth a list of all notes
payable by the Company and the Subsidiaries (and the amounts outstanding
thereunder) as of June 27, 1999.
SECTION 4.9. Disclosure Documents. (a Each document required to be
filed by the Company with the SEC in connection with the Contemplated
Transactions (the "Company Disclosure Documents"), including, without
limitation, the proxy or information statement of the Company containing
information required by Regulation 14A under the 1934 Act, and, if applicable,
Rule 13e-3 and Schedule 13E-3 under the 1934 Act (the "Company Proxy
Statement"), to be filed with the SEC in connection with the Merger and the
Charter Amendment, and any amendments or supplements thereto will, when filed,
comply as to form in all material respects with the applicable requirements of
the 1934 Act. The representations and warranties contained in this Section 4.09
will not apply to statements or omissions included in the Company Disclosure
Documents based upon information furnished to the Company in writing by Buyer or
its representatives specifically for use therein.
(b)At the time the Company Proxy Statement or any amendment or
supplement thereto is first mailed to stockholders of the Company, at the time
such stockholders vote on adoption of this Agreement and at the Effective Time,
the Company Proxy Statement, as supplemented or amended, if applicable, will not
contain any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements made therein, in the light of the
circumstances under which they were made, not misleading. At the time of the
filing of any Company Disclosure Document other than the Company Proxy Statement
and at the time of any distribution thereof, such Company Disclosure Document
will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not misleading. The
representations and warranties contained in this Section 4.09(b) will not apply
to statements or omissions included in the Company Disclosure Documents based
upon information furnished to the Company in writing by Buyer or its
representatives specifically for use therein.
<PAGE>
(c)The information with respect to the Company or any Subsidiary that
the Company furnishes to Buyer in writing specifically for use in the Buyer
Disclosure Documents will not, at the time of the filing thereof, at the time of
any distribution thereof and at the time of the meeting of the Company's
stockholders, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading.
SECTION 4.10. Absence of Certain Changes. Except as set forth in the
Current SEC Reports, Section 4.10 of the Disclosure Letter or as contemplated by
this Agreement, since the Balance Sheet Date, the Company and the Subsidiaries
have conducted their respective businesses in the ordinary course consistent
with past practices and there has not been:
(a)any event, occurrence, development or state of circumstances or
facts that has had or reasonably could be expected to have, individually or in
the aggregate, a Material Adverse Effect;
(b)any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company or any
repurchase, redemption or other acquisition by the Company or any Subsidiary of
any outstanding shares of capital stock or other securities of, or other
ownership interests in, the Company or any Subsidiary;
(c) any amendment of any material term of any outstanding security of
the Company or any Subsidiary;
(d) any incurrence, assumption or guarantee by the Company or any
Subsidiary of any indebtedness for borrowed money other than in the ordinary
course of business and in amounts and on terms consistent with past practices,
but not in any event in excess of $100,000 and any amounts up to $425,000
required to pay Andre Blay pursuant to the settlement agreement between the
Company and Andre Blay approved by the Company's board of directors on June 27,
1999;
(e) any creation or other incurrence by the Company or any Subsidiary
of any Lien on any material asset other than in the ordinary course of business
consistent with past practices;
(f) any making of any material loan, advance or capital contributions
to or investment in any Person other than loans, advances or capital
contributions to or investments in any Subsidiary in the ordinary course of
business consistent with past practices;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or any assets of the Company or any
Subsidiary that has had or reasonably could be expected to have, individually or
in the aggregate, a Material Adverse Effect;
<PAGE>
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any Subsidiary relating to its material assets
or business (including the acquisition or disposition of any material assets) or
any relinquishment or modification by the Company or any Subsidiary of any
contract or other right, in either case, material to the Company and the
Subsidiaries, taken as a whole, other than transactions and commitments in the
ordinary course of business consistent with past practices and the Contemplated
Transactions;
(i)(i) any material change in any method of accounting, method of tax
accounting or accounting principles or practice by the Company or any
Subsidiary, or (ii) any reevaluation in any material respect of any of the
material assets of the Company or any Subsidiary, except in the case of either
clause (i) or (ii) for any such change required by reason of a concurrent change
in GAAP;
(j)any (i) grant of any severance or termination pay to (or amendment
to any existing arrangement with) any director, officer or employee of the
Company or any Subsidiary, (ii) increase in benefits payable under any existing
severance or termination pay policies or employment agreements, (iii) entering
into any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any director, officer or employee
of the Company or any Subsidiary (other than employment agreements with
non-executive employees specifically required under the laws of the United
Kingdom, which provide not more than the minimum severance and redundancy
benefit required by law), (iv) establishment, adoption or amendment (except as
required by applicable law) of any collective bargaining, bonus, profit-sharing,
thrift, pension, retirement, deferred compensation, compensation, stock option,
restricted stock or other benefit plan or arrangement covering any director,
officer or employee of the Company or any Subsidiary or (v) increase in the
compensation, bonus or other benefits payable to any director, officer or
employee of the Company or any Subsidiary, other than increases in non-executive
employee compensation in the ordinary course of business consistent with past
practice;
(k) any cancellation of any material licenses, sublicenses,
franchises, permits or agreements to which the Company or any Subsidiary is a
party, or to the knowledge of the Company any notification to the Company or any
Subsidiary that any party to any such arrangements intends to cancel or not
renew such arrangements beyond its expiration date as in effect on the date of
this Agreement, which cancellation or notification, individually or in the
aggregate, has had or reasonably could be expected to have a Material Adverse
Effect; or
<PAGE>
(l) any material labor dispute, other than routine individual
grievances, or any activity or proceeding by a labor union or representative
thereof to organize any employees of the Company or any Subsidiary, which
employees were not subject to a collective bargaining agreement at the Balance
Sheet Date, or any material lockouts, strikes, slowdowns, work stoppages or
threats thereof by or with respect to such employees.
SECTION 4.11. No Undisclosed Material Liabilities. Except as set forth
in Section 4.11 of the Disclosure Letter, there are no liabilities or
obligations of the Company or any Subsidiary of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, and there
is no existing condition, situation or set of circumstances that could
reasonably be expected to result in such a liability or obligation which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, other than:
(a) liabilities or obligations disclosed or provided for in the
Balance Sheet;
(b) liabilities or obligations incurred in the ordinary course of
business consistent with past practice since the Balance Sheet Date; and
(c) liabilities under this Agreement.
<PAGE>
SECTION 4.12. Material Contracts. Section 4.12 of the Disclosure Letter
lists the software license agreements of the Company and the Subsidiaries with
the following customers of the Company or the Subsidiaries: (i) Enterprise
Systems Group, Inc.'s top ten revenue generating relationships with broadcasting
owners, (ii) Cable Computerized Management System's top ten revenue generating
relationships with broadcasting owners, (iii) Enterprise Air-Time Systems
Limited's top five revenue generating relationships with broadcasting owners and
(iv) between Enterprise Air-Time Systems Limited and Enterprise Systems Limited,
on the one hand, and Television New Zealand Limited, on the other hand, (the
"Material Contracts") and sets forth for each such Material Contract: (a) the
name of the licensor and the licensee, (b) the commencement date and scheduled
expiration date and (c) the monthly fee payable to the licensor thereunder. Each
Material Contract is a valid and binding agreement of the Company or one of the
Subsidiaries and is in full force and effect, and none of the Company, the
Subsidiaries nor, to the knowledge of the Company and the Subsidiaries, any
other party thereto is in default or breach in any material respect under the
terms of any such Material Contract, and, to the knowledge of the Company and
the Subsidiaries, no event or circumstance has occurred that, with notice or
lapse of time or both, would constitute a material event of default thereunder.
True and complete copies of each such Material Contract have been made available
to Buyer or its representatives.
SECTION 4.13. Compliance with Laws and Court Orders. The Company and
each Subsidiary is and since the Balance Sheet Date has been in compliance with,
and to the knowledge of the Company is not under investigation by any
governmental authority with respect to and has not been threatened to be charged
with or given notice of any violation of, any applicable law, statute,
ordinance, rule, regulation, judgment, injunction, order or decree, except for
failures to comply or violations that have not had and could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 4.14. Litigation. Except as set forth in the Current SEC
Reports and in Section 4.14 of the Disclosure Letter, there is no action, suit,
investigation or proceeding (or to the knowledge of the Company any basis
therefor) pending against, or to the knowledge of the Company threatened against
or affecting, the Company or any Subsidiary, any present or former officer,
director or employee of the Company or any Subsidiary who is or may be entitled
to indemnity under the Company's certificate of incorporation or bylaws or the
Delaware Corporate Law or any other Person for whom the Company or any
Subsidiary may be liable or any of their respective properties before any court
or arbitrator or before or by any governmental body, agency or official,
domestic or foreign, that, if determined or resolved adversely to the Company or
any Subsidiary in accordance with the plaintiff's demands, could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect or
that in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the Merger or any of the other Contemplated Transactions.
SECTION 4.15. Finders' Fees; Transaction Expenses. (a) With the
exception of fees payable to Schroder & Co. Inc., a copy of whose engagement
agreement has been provided to Buyer or its representatives, there is no
investment banker, broker, finder or other intermediary that has been retained
by or is authorized to act on behalf of the Company or any Subsidiary who is
entitled to any fee or commission from the Company or any of its Affiliates in
connection with the Contemplated Transactions.
<PAGE>
(b)The expenses payable by the Company and the Subsidiaries in
connection with the consummation of the Contemplated Transactions (excluding
expenses of Buyer and its Affiliates or any expenses associated with the
Financing) will not exceed the following: (i) $500,000 in legal fees and
expenses for work performed after the date of this Agreement, (ii) $950,000 in
management bonuses as described in Section 4.15(b) of the Disclosure Letter and
(iii) up to $1,250,000 in fees (plus out of pocket expenses) payable to Schroder
& Co. Inc. pursuant to the arrangement described in Section 4.15(a).
SECTION 4.16. Taxes. (a The Company and each Subsidiary and each
affiliated combined, consolidated or unitary group of which the Company or any
Subsidiary is or has been a member, has timely filed (or has had timely filed on
its behalf) or will file or cause to be timely filed all material Tax Returns
required by applicable law to be filed by it prior to or as of the Effective
Time, and all material Tax Returns are, or will be at the time of filing, true
and complete in all material respects. Except as set forth in Section 4.16(a) of
the Disclosure Letter, the Company and each Subsidiary has not granted any
extension or waiver of the statute of limitations applicable to any Tax Return,
which period (after giving effect to such extension or waiver) has not yet
expired.
(b)The Company and each Subsidiary has paid (or has had paid on its
behalf), or, where payment is not yet due, has established (or has had
established on its behalf and for its sole benefit and recourse) or will
establish or cause to be established in accordance with GAAP on or before the
Effective Time an adequate accrual for the payment of, all material Taxes due
with respect to any period ending prior to or as of the Effective Time.
(c) Except as set forth in Section 4.16(c) of the Disclosure Letter,
the Company and the Subsidiaries have never been audited by the Internal Revenue
Service (the "IRS") or by any foreign Taxing Authority.
(d)There are no material Liens or encumbrances for Taxes on any of
the assets of Company or any Subsidiary.
(e) The Company and the Subsidiaries have complied in all material
respects with all applicable laws, rules and regulations relating to the payment
and withholding of Taxes.
(f) Except as set forth in Section 4.16(f) of the Disclosure Letter,
no federal, state, local or foreign audits or administrative proceedings are
pending with regard to any material Taxes or Tax Return of the Company or the
Subsidiaries and none of them has received a written notice of any proposed
audit or proceeding regarding any pending audit or proceeding. The Company and
the Subsidiaries have no knowledge of any requests for rulings or determinations
in respect of any Tax pending between the Company or any Subsidiary and any Tax
Authority.
<PAGE>
SECTION 4.17. Employee Benefit Plans. (a Section 4.17(a) of the Disclosure
Letter lists each U.S. Plan. The Company has provided or made available to Buyer
copies of the U.S. Plans (and, if applicable, related trust agreements) and all
amendments thereto together with the most recent annual reports (Form 5500
including, if applicable, Schedule B thereto).
(b) Neither the Company nor any ERISA Affiliate presently sponsors
maintains, contributes to or is required to contribute to any plan subject to
Title IV of ERISA, nor has the Company or any ERISA Affiliate sponsored,
maintained, contributed to or been required to contribute to any such plan at
any time in the past.
(c) Neither the Company nor any ERISA Affiliate presently contributes
to or is required to contribute to any "multiemployer plan" as defined in
Section 3(37) of ERISA, nor has the Company or any ERISA Affiliate contributed
to any such plan at any time in the past, and neither the Company nor any ERISA
Affiliate has any actual or potential withdrawal liability under any such plan.
(d) Each U.S. Plan that is intended to be qualified under Section
401(a) of the Code is so qualified and has been so qualified 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. The
Company has provided or made available to Buyer the most recent determination
letter of the IRS relating to each such U.S. Plan, if applicable.
(e) Section 4.17(e) of the Disclosure Letter lists each Benefit
Arrangement. The Company has provided or made available to Buyer copies or
descriptions of each Benefit Arrangement (and, if applicable, related trust
agreements) and all amendments thereto.
(f) Except as provided in Section 4.17(f) of the Disclosure Letter,
neither the Company nor any Subsidiary provides or has made any commitment to
provide any post-employment or post-retirement health or medical or life
insurance benefits to any current or former employee, consultant or director of
the Company or any Subsidiary and neither the Company nor any Subsidiary has any
current or projected liability in respect of post-employment or post-retirement
health or medical or life insurance benefits for retired, former or current
employees of the Company or any Subsidiary, except as required to avoid excise
tax under Section 4980B of the Code.
(g) There have been no material failures of any U.S. Plan or any
group health plan (as defined in Section 5000(b)(1) of the Code) to meet the
requirements of Code Section 4980B(f) with respect to a qualified beneficiary
(as defined in Code Section 4980B(g)).
<PAGE>
(h) Section 4.17(h) of the Disclosure Letter lists each International
Plan. The Company has provided or made available to Buyer a list and copies of
each International Plan. No International Plan is a "defined benefit plan"
within the meaning of Section 3(35) of ERISA (whether or not such plan is
subject to ERISA). According to the actuarial assumptions and valuations most
recently used for the purpose of funding each International Plan (or, if the
same has no such assumptions and valuations or is unfunded, according to
actuarial assumptions and valuations in use by the PBGC on the date of this
Agreement), as of the date of this Agreement and as of the Effective Time, the
total amount or value of the funds available under such International Plan to
pay benefits accrued thereunder or segregated in respect of such accrued
benefits, together with any reserve or accrual with respect thereto, exceeds the
present value of all benefits (actual or contingent) accrued as of such date of
all participants and past participants therein in respect of which the Company
or any Subsidiary has or would have after the Effective Time any obligation.
From and after the Effective Time, Buyer and its Affiliates will get the full
benefit of any such funds, accruals or reserves.
(i) Each U.S. Plan, Benefit Arrangement and International Plan has
been maintained in substantial compliance with its terms and with the
requirements prescribed by any and all applicable statutes, orders, rules and
regulations (including any special rules relating to qualification or
registration where any such plan arrangement is intended to be so qualified or
registered) and has been maintained in good standing with applicable regulatory
authorities.
(j) All contributions and payments required under each U.S. Plan,
Benefit Arrangement and International Plan determined in accordance with prior
funding and accrual practices have been timely made or have been reflected on
the Balance Sheet, will be discharged and paid or accrued on or prior to the
Effective Time. There has been no amendment to, written interpretation of or
announcement (whether or not written) by the Company or any Subsidiary relating
to, or change in employee participation or coverage under, any U.S. Plan,
Benefit Arrangement or International Plan that would increase materially the
expense of maintaining such U.S. Plan, Benefit Arrangement or International Plan
above the level of the expense incurred in respect thereof for the most recent
fiscal year ended prior to the date of this Agreement.
<PAGE>
(k) Except as set forth in Section 4.17(k) of the Disclosure Letter,
the execution and performance of the Contemplated Transactions will not (either
alone or upon the occurrence of any additional or subsequent events) constitute
an event under any U.S. Plan, Benefit Arrangement or International Plan or any
trust or loan that will or may result in any payment (whether of severance pay
or otherwise), acceleration, forgiveness of indebtedness, vesting, distribution,
increase in benefits or obligation to increase benefits or obligation to fund
benefits with respect to any current or former employee, consultant or director
of the Company or any Subsidiary. Section 4.17(k) of the Disclosure Letter lists
each employee agreement or similar Benefit Arrangement which provides a
severance or redundancy benefit to any employee (or former employee if such
liability has not been fully discharged) of the Company or any Subsidiary in
excess of three months base salary (the "Employment Agreements") and itemizes
for each such agreement or Benefit Arrangement: (i) the name of the employee or
former employee covered thereby, (ii) the agreement or Benefit Arrangement
covering such employee or former employee and (iii) the maximum amount for the
severance or redundancy payments and benefits that are or would be payable to
such employee or former employee upon a qualifying termination of employment.
Except as described in Section 4.17(k) of the Disclosure Letter, no U.S. Plan,
Benefit Arrangement or International Plan provides to any employee or former
employee of the Company or any Subsidiary an employment severance or redundancy
benefit in an amount in excess of three months base salary. Except as described
in Section 4.17(k) of the Disclosure Letter, there is no contract, plan or
arrangement (written or otherwise) covering any employee or former employee of
the Company or any Subsidiary that, individually or collectively, could give
rise to the payment of any amount that would not be deductible pursuant to the
terms of Sections 280G of the Code. To the knowledge of the Company, all
payments made to employees have been deductible under Section 162(m) of the
Code.
SECTION 4.18. Employees. Section 4.18 of the Disclosure Letter sets
forth a true and complete list of names, titles, annual salaries and other
material compensation of all employees of the Company and the Subsidiaries whose
base compensation, together with any other cash compensation (excluding sales
commissions), is in excess of $100,000 per annum and a description of all cash
bonuses and other cash incentives payable to any employee of the Company or the
Subsidiaries (including the name of each such employee and the amount of bonus
or incentive payable to each such employee where such information is
determinable or the formula for determining such amounts where such amounts are
not determinable). Except as described therein, none of the employees listed in
Section 4.18 of the Disclosure Letter has indicated to the Company as of the
date of this Agreement that he or she intends to resign or retire as a result of
the Contemplated Transactions or otherwise within six months after the Effective
Time.
<PAGE>
SECTION 4.19. Labor Matters. Neither the Company nor any Subsidiary is
a party to any collective bargaining agreement or work council agreement
covering any employee and no employee or former employee of the Company or any
Subsidiary is or was represented by a labor union organization or works council
in connection with his or her employment with the Company or any Subsidiary.
Each of the Company and the Subsidiaries is in substantial compliance in all
material respects with all currently applicable laws respecting employment
practices, terms and conditions of employment and wages and hours, and is not
engaged in any unfair labor practice. Except as set forth in Section 4.19 of the
Disclosure Letter, there is no unfair labor practice complaint or other
employment-related claim or dispute pending or, to the knowledge of the Company,
threatened against the Company or any Subsidiary.
SECTION 4.20. Environmental Matters. (a) Except as could not reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect:
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been
filed, no penalty has been assessed, and no investigation, action,
claim, suit, proceeding or review (or any basis therefor) is pending
or, to the knowledge of the Company, is threatened by any governmental
entity or other Person relating to or arising out of any Environmental
Law; and
(ii) there are no liabilities of or relating to the Company or
any Subsidiary of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise arising under or
relating to any Environmental Law and there are no facts, conditions,
situations or set of circumstances that could reasonably be expected to
result in or be the basis for any such liability.
(b) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which the Company has knowledge in
relation to the current or prior business of the Company or any Subsidiary or
any property or facility now or previously owned, leased or operated by the
Company or any Subsidiary that has not been provided to Buyer or its
representatives at least five days prior to the date of this Agreement.
(c) Neither the Company nor any Subsidiary owns or leases or has owned
or leased any real property in New Jersey or Connecticut.
(d) For the purposes of this Section 4.20, the terms "Company" and
"Subsidiary" shall include any entity that is, in whole or in part, a
predecessor of the Company or any Subsidiary.
<PAGE>
SECTION 4.21. Licenses and Permits. Section 4.21 of the Disclosure
Letter correctly describes each license, franchise, permit, certificate,
approval or other similar authorization held by the Company or the Subsidiaries
with respect to the assets or business of the Company and the Subsidiaries (the
"Permits"), together with the name of the government agency or entity issuing
such Permit, which the failure to possess could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. Except as set forth
in Section 4.21 of the Disclosure Letter, (i) the Permits are valid and in full
force and effect, (ii) neither the Company nor any Subsidiary is in default in
any material respect under, and no condition exists that with notice or lapse of
time or both would constitute a default in any material respect under, the
Permits.
SECTION 4.22. Intellectual Property. (a) The Company and the
Subsidiaries own or possess adequate licenses or other rights to use all
Intellectual Property Rights necessary to conduct the business now operated by
them, except where the failure to own or possess such licenses or rights would
not be reasonably likely to have a Material Adverse Effect. To the knowledge of
the Company, (i) the Intellectual Property Rights of the Company and the
Subsidiaries do not now and shall not in the future infringe upon or violate any
present Intellectual Property Rights of others to the extent that, if sustained,
such conflict or infringement would be reasonably likely to have a Material
Adverse Effect, and (ii) there has been no claim or assertion by or on behalf of
any third party that the use of the Software constitutes unfair competition or
infringes or interferes with, or is likely to infringe or interfere with, any
Intellectual Property Right of any third party and, furthermore, the Company
does not know of any basis for any such claim. For purposes of this Agreement,
"Intellectual Property Right" means any trademark, service mark, trade name,
mask work, copyright, patent, software license, other data base, invention,
trade secret, know-how (including any registrations or applications for
registration of any of the foregoing) or any other similar type of proprietary
intellectual property right. For purposes of this Agreement, "Software" means
all computer software programs, source code and object code, portions of code,
scripts and subroutines, including all works in progress relating to
corrections, modifications or enhancements thereto as well as all current and
prior versions of such software and user manuals constituting the material
software used in the business of the Company and the Subsidiaries.
(b) None of the Intellectual Property Rights owned, licensed to, or
held by the Company and the Subsidiaries have been canceled, and the Company is
not aware of any facts which would invalidate or render unenforceable any of the
Intellectual Property Rights. Except as set forth in Section 4.22(b) of the
Disclosure Letter, there are no licenses now outstanding or other rights granted
to third parties under any of the Intellectual Property Rights, and neither the
Company nor any Subsidiary is a party to any other agreement or understanding
with respect to any Intellectual Property Rights relating to the Software.
<PAGE>
(c) The Company and the Subsidiaries have taken all commercially
reasonable steps to maintain the source code versions of the Software as a trade
secret. To the knowledge of the Company, the Software is not subject to any
legal or contractual restriction that would prevent the Software from being
licensed, sublicensed, marketed, incorporated in other software, modified, or
otherwise sold by the Company without restriction. To the knowledge of the
Company, no one has disputed the rights, title or interest of the Company or the
Subsidiaries in or to any of the Software or related materials. All licenses to
use or sublicense the Software granted by the Company or any of its related
entities to third parties require the licensees thereunder to maintain the
confidentiality thereof. All such licensees are, to the best of the knowledge of
the Company, in full compliance with such confidentiality obligations and there
are no defaults or breaches thereunder. Except as set forth in Section 4.22(c)
of the Disclosure Letter, all employees or third parties of the Company, past
and present, who had access to any of the Software have executed and delivered
to the Company confidentiality agreements regarding the protection of the
Software and assigning any claims of ownership in the Software to the Company.
No claim of ownership or legal title or interest with respect to the Software by
or against any employees or third parties who had access to any of the Software
have been made or now exist and the Company does not know of any basis for any
such claims. The Company is not aware of any breach of any confidentiality
agreement in favor of the Company relating to the Software either by its
employees or third parties. Except as set forth in Section 4.22(c) of the
Disclosure Letter, the Company has not (i) conveyed any proprietary rights to
the Software, or (ii) granted or provided, and is not obligated to grant or
provide, any rights to license, sublicense, market, incorporate in other
software, sell or otherwise use any of the Software.
SECTION 4.23. Leases. Section 4.23 of the Disclosure Letter lists all
leases of real property of the Company and the Subsidiaries (the "Leases"). Each
Lease is a valid and binding agreement of the Company or one of the Subsidiaries
and is in full force and effect, and none of the Company, the Subsidiaries nor,
to the knowledge of the Company and the Subsidiaries, any other party thereto,
is in default or breach in any material respect under the terms of any such
Lease, and, to the knowledge of the Company and the Subsidiaries, no event or
circumstance has occurred that, with notice or lapse of time or both, would
constitute a material event of default thereunder on the part of the Company or
the applicable Subsidiary. True and complete copies of each such Lease have been
made available to Buyer or its representatives.
<PAGE>
SECTION 4.24. Inapplicability of Certain Restrictions. Section 203 of
the Delaware Law "Business Combinations With Interested Stockholders" does not
in any way restrict the consummation of the Merger or the other Contemplated
Transactions. The adoption of this Agreement by the affirmative vote of the
holders of Shares entitling such holders to exercise at least a majority of the
voting power of the Shares is the only vote of holders of any class or series of
the capital stock of the Company required to adopt this Agreement or to approve
the Merger or any of the other Contemplated Transactions and no higher or
additional vote is required pursuant to the Company's certificate of
incorporation or otherwise.
SECTION 4.25. Year 2000 Compliance. Other than the Software listed in
Section 4.25 of the Disclosure Letter, each item of hardware, Software or
firmware (a "System") that is, or is part of, a material asset of, or any
product or service designed, manufactured, sold or provided by, or that is used
in connection with, the business of, the Company or the Subsidiaries, is in all
material respects Year 2000 Compliant except to the extent it could not
reasonably be expected to have a Material Adverse Effect. For purposes of this
Section 4.25, "Year 2000 Compliant" means that all date-related functions of the
System will accurately reflect the change from the year 1999 to the year 2000
and beyond, including leap year calculations, and the System will: (i) properly
calculate, display, enter, store, manipulate and otherwise include symbols,
numbers and words that represent dates, including dates prior to, during and
after the year 2000, in all computations, reports and displays involving dates,
and are able and shall remain able to accurately process date data (including,
but not limited to, calculating, comparing and sequencing) from, into and
between the twentieth and twenty-first centuries, (ii) resolve any ambiguities
as to century date data in input and output without abnormal endings, user
intervention or change in operations, and (iii) include an indication of century
in all date-related user and data interface functionalities, and all
date-related data fields, generated by or embodied in the System. Neither the
Company nor any Subsidiary knows of any inability on the part of any of its
suppliers, customers or service providers to timely ensure that the Systems of
any such Person are Year 2000 Compliant, which inability, individually or in the
aggregate, reasonably could be expected to have a Material Adverse Effect.
SECTION 4.26. No Viruses Warranty. The Software does not and will not
contain, as delivered by the Company, any viruses, time bombs, or other devices
capable of disabling or interfering with Buyer's other systems, except to the
extent such viruses, time bombs, or other devices could not reasonably be
expected to have a Material Adverse Effect.
SECTION 4.27. Export Warranty. The Company and the Subsidiaries are in
compliance with any laws, rules, or regulations governing the export of the
Software, including without limitation the procurement and renewal of all export
or import licenses required under U.S. or any foreign law for the export or
import of the Software.
<PAGE>
SECTION 4.28. Rights Plan. Neither the Company nor any Subsidiary has
any rights plan or similar common stock or preferred stock purchase plan or
similar arrangement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company that:
SECTION 5.1. Corporate Existence and Power. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all corporate powers and all governmental
licenses, authorizations, consents and approvals required to carry on its
business as now conducted. Since the date of its incorporation, Buyer has not
engaged in any activities other than in connection with or as contemplated by
this Agreement and the Merger or in connection with arranging any financing
required to consummate the Contemplated Transactions.
SECTION 5.2. Corporate Authorization. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the
Contemplated Transactions are within the corporate powers of Buyer and have been
duly authorized by all necessary corporate action on the part of Buyer. This
Agreement constitutes a valid and binding agreement of Buyer enforceable against
Buyer in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or similar laws affecting the enforcement of creditors' rights
generally and general equitable principles regardless of whether such
enforceability is considered in a proceeding at law or in equity.
SECTION 5.3. Governmental Authorization. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the
Contemplated Transactions require no action by or in respect of, or filing with,
any governmental body, agency, official or authority, domestic or foreign, other
than (i) the filing of a certificate of merger with respect to the Merger with
the Delaware Secretary of State and the United States Copyright Office, (ii)
compliance with any applicable requirements of the HSR Act, and (iii) compliance
with any applicable requirements of the 1933 Act, the 1934 Act and any other
securities laws, whether state or foreign.
<PAGE>
SECTION 5.4. Non-contravention. The execution, delivery and performance
by Buyer of this Agreement and the consummation by Buyer of the Contemplated
Transactions do not and will not (i) contravene, conflict with, or result in any
violation or breach of any provision of the certificate of incorporation or
bylaws of Buyer, (ii) assuming compliance with the matters referred to in
Section 5.03, contravene, conflict with or result in a violation or breach of
any provision of, any applicable law, statute, ordinance, rule, regulation,
judgment, injunction, order or decree binding upon or applicable to the Company
or any Subsidiary, (iii) require any consent or other action by any Person
under, constitute a default under, or cause or permit the termination,
cancellation, acceleration or other change of any right or obligation or the
loss of any benefit to which Buyer is entitled under, any provision of any
agreement or other instrument binding upon Buyer or any license, franchise,
Permit or other similar authorization held by Buyer.
SECTION 5.5. Disclosure Documents. (a) The information with respect to
Buyer that Buyer furnishes to the Company in writing specifically for use in any
Company Disclosure Document will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading (i) in the case of the Company Proxy Statement, at the time
the Company Proxy Statement or any amendment or supplement thereto is first
mailed to stockholders of the Company, at the time the stockholders vote on
adoption of this Agreement and at the Effective Time, and (ii) in the case of
any Company Disclosure Document other than the Company Proxy Statement, at the
time of the filing of such Company Disclosure Document or any supplement or
amendment thereto and at the time of any distribution thereof.
(b) The Buyer Disclosure Documents, when filed, will comply as to form
in all material respects with the applicable requirements of the 1934 Act and
will not at the time of the filing thereof, at the time of any distribution
thereof or at the time of the meeting of the Company's stockholders, contain any
untrue statement of a material fact or omit to state any material fact necessary
to make the statements made therein, in the light of the circumstances under
which they were made, not misleading, provided, that this representation and
warranty will not apply to statements or omissions in the Buyer Disclosure
Documents based upon information furnished to Buyer in writing by the Company
specifically for use therein.
<PAGE>
SECTION 5.6. Financing. The Company has received copies of (a)
commitment letters from various equity investors pursuant to which each of the
foregoing has committed, subject to the terms and conditions set forth therein,
to purchase securities of Buyer for an aggregate purchase price equal to
$46,250,000 and (b) a commitment letter dated June 25, 1999 from DLJ Capital
Funding, Inc. pursuant to which it, BankBoston, N.A. and The Chase Manhattan
Bank has committed, subject to the terms and conditions set forth therein, to
lend the Surviving Corporation up to $40,000,000. The aforementioned commitments
shall be referred to as the "Financing Agreements", and the financing referred
to therein and under the arrangements described above shall be referred to as
the "Financing." The aggregate proceeds of the Financing are in an amount
sufficient to pay the Merger Consideration, to repay all of the Company's and
its Subsidiaries' indebtedness together with any interest, premium or penalties
payable in connection therewith, to provide a reasonable amount of working
capital financing and to pay related fees and expenses (collectively, the
"Required Amounts"). As of the date of this Agreement, none of the Financing
Agreements referred to above has been withdrawn and each is in full force and
effect without modification and Buyer does not know of any facts or
circumstances that may reasonably be expected to result in any of the conditions
set forth in the Financing Agreements not being satisfied.
SECTION 5.7. Capitalization. The authorized capital stock of Buyer
consists of 1,000 shares of Buyer Common Stock, of which as of the date of this
Agreement, there were outstanding 1,000 shares. All outstanding shares of
capital stock of Buyer have been duly authorized and validly issued and are
fully paid and nonassessable. As of the moment immediately prior to the
Effective Time, 1,000 shares of Buyer Common Stock will be outstanding; except
as set forth in this Section 5.07, there will be, at the Effective Time, (a) no
shares of capital stock or other voting securities of Buyer, (b) no securities
of Buyer convertible into or exchangeable for shares of capital stock or voting
securities of Buyer and (c) no options or other rights to acquire from Buyer,
and no obligation of Buyer to issue any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of Buyer (the items referred to in clauses (a), (b) and (c) being
referred to collectively as the "Buyer Securities"). There are no outstanding
obligations of Buyer to repurchase, redeem or otherwise acquire any Buyer
Securities.
ARTICLE 6
COVENANTS OF THE COMPANY
The Company agrees that:
<PAGE>
SECTION 6.1. Conduct of the Company. Except as otherwise specifically
provided in this Agreement or as approved in writing by Buyer, which approval
shall not be unreasonably withheld, from the date hereof to the Effective Time,
the Board of Directors of the Company shall not approve or authorize any action
that would allow the Company and the Subsidiaries to carry on their respective
businesses other than in the ordinary and usual course of business and
consistent with past practice or any action that would prevent the Company and
the Subsidiaries from (i) preserving intact its present business organization,
(ii) keeping available the services of its key officers and employees and (iii)
maintaining satisfactory relationships with its material customers, lenders,
suppliers and others having business relationships with it. Without limiting the
generality of the foregoing, and except as otherwise specifically provided in
this Agreement, without the prior written consent of Buyer, prior to the
Effective Time, the Board of Directors of the Company shall not, nor shall it
authorize or direct the Company or any Subsidiary, directly or indirectly, to:
(a) adopt or propose any change in its certificate of incorporation or
bylaws, except as provided in Section 6.06;
(b) except pursuant to existing agreements or arrangements (i) acquire
(by merger, consolidation or acquisition of stock or assets) any material
corporation, partnership or other business organization or division thereof, or
sell, lease or otherwise dispose of a material subsidiary or a material amount
of assets or securities; (ii) waive, release, grant, or transfer any rights of
material value; (iii) modify or change in any material respect any existing
material license, lease, contract, or other document; (iv) except to refund or
refinance commercial paper, incur, assume or prepay an amount of long-term or
short-term debt in excess of $100,000 in the aggregate; (v) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other Person which, are in
excess of $100,000 in the aggregate; (vi) make any loans, advances or capital
contributions to, or investments in, any other Person which are in excess of
$100,000 in the aggregate, or purchase for an amount in excess of $100,000 in
the aggregate any property or assets of any other Person; (vii) authorize any
new capital expenditures which, individually, is in excess of $100,000 or, in
the aggregate, are in excess of $100,000; or (viii) enter into any material
interest rate, currency or other swap or derivative transaction;
(c) take any action that would make any representation and warranty of
the Company hereunder inaccurate in any material respect at, or as of any time
prior to, the Effective Time, or omit to take any action necessary to prevent
any such representation or warranty from being inaccurate in any material
respect at any such time;
<PAGE>
(d) enter into any agreement or commitment relating to the sale of
products if any such agreement or commitment involves the expenditure by the
Company of amounts in excess of $100,000; provided that in respect of
expenditures in excess of such amount, Buyer's consent to such excess
expenditures shall not be unreasonably withheld;
(e) split, combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
other than cash dividends and distributions by a wholly-owned Subsidiary to the
Company or to a Subsidiary all of the capital stock of which is owned directly
or indirectly by the Company, or redeem, repurchase or otherwise acquire or
offer to redeem, repurchase, or otherwise acquire any of its securities or any
Subsidiary Securities;
(f) adopt or amend any bonus, profit sharing, compensation, severance,
termination, stock option, pension, retirement, deferred compensation,
employment or employee benefit plan, agreement, trust, plan, fund or other
arrangement for the benefit and welfare of any director, officer or employee, or
(except for normal increases in the ordinary course of business that are
consistent with past practices and that, in the aggregate, do not result in a
material increase in benefits or compensation expense to the Company or any
Subsidiary or as otherwise required by law) increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any existing plan or arrangement (including, without
limitation, the granting of stock options or stock appreciation rights or the
removal of existing restrictions in any benefit plans or agreements, except for
normal increases in non-executive employee compensation in the ordinary course
of business that are consistent with past practices and that, in the aggregate,
do not result in a material increase in benefits or compensation expense to the
Company or any Subsidiary or as otherwise required by law);
(g) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory in any material manner
or write-off of notes or accounts receivable in any material manner;
(h) pay, discharge or satisfy any material claims, liabilities or
obligations (whether absolute, accrued, asserted or unasserted, contingent or
otherwise) other than the payment, discharge or satisfaction in the ordinary
course of business, consistent with past practices, of liabilities reflected or
reserved against in the consolidated financial statements of the Company or
incurred in the ordinary course of business, consistent with past practices;
(i) make any tax election or settle or compromise any material income
tax liability;
<PAGE>
(j) take any action other than in the ordinary course of business and
consistent with past practices with respect to accounting policies or
procedures; or
(k) agree or commit to do any of the foregoing.
SECTION 6.2. Stockholder Meeting; Proxy Material. (a) The Company shall
cause a meeting of its stockholders (the "Company Stockholder Meeting") to be
duly called and held as soon as reasonably practicable for the purpose of voting
on the approval and adoption of this Agreement and the Merger and the Charter
Amendment. The Board of Directors of the Company shall recommend approval and
adoption of this Agreement and the Merger and the Charter Amendment by the
Company's stockholders and shall not subject to Section 6.04 withdraw such
recommendation, save to the extent that the Board of Directors shall have
concluded in good faith on the basis of written advice from outside counsel that
failure to withdraw such recommendation would constitute a breach of the
fiduciary duties of the Board of Directors. In any event a resolution to approve
and adopt this Agreement and the Merger shall be submitted to the Company's
stockholders.
(b) In connection with the Company Stockholder Meeting, the Company
and Buyer (i) will as promptly as practicable prepare and file with the SEC,
will use its commercially reasonable efforts to have cleared by the SEC and will
thereafter mail to its stockholders as promptly as practicable the Company Proxy
Statement and all other proxy materials for such meeting, (ii) will use its best
efforts to obtain the necessary approvals by its stockholders of this Agreement
and the Contemplated Transactions and the Charter Amendment and (iii) will
otherwise comply with all legal requirements applicable to the Company
Stockholder Meeting. Buyer shall furnish all information concerning Buyer and
its Affiliates as the Company may reasonably request in connection with the
Company Proxy Statement.
<PAGE>
SECTION 6.3. Access to Information. From the date of this Agreement
until the Effective Time, the Company will (i) give Buyer, its counsel,
financial advisors, auditors and other authorized representatives reasonable
access during normal business hours to the offices, properties, books and
records of the Company and the Subsidiaries, (ii) furnish to Buyer, its counsel,
financial advisors, auditors and other authorized representatives such financial
and operating data and other information as such persons may reasonably request
and (iii) instruct the Company's employees, counsel and financial advisors to
cooperate with Buyer in its investigation of the business of the Company and the
Subsidiaries; provided that no investigation pursuant to this Section 6.03 shall
affect any representation or warranty given by the Company to Buyer hereunder;
and provided, further that any information provided to Buyer pursuant to this
Section 6.03 shall be subject to the Confidentiality Agreement dated as of April
15, 1999 between the Company and LiveWire Ventures L.L.C. (the "Confidentiality
Agreement").
SECTION 6.4. Other Offers. (a) Neither the Company nor any Subsidiary
shall (whether directly or indirectly through advisors, agents or other
intermediaries), nor shall the Company or any Subsidiary authorize or permit any
of its or their officers, directors, agents, representatives, advisors or
subsidiaries to,
(A) solicit, initiate or take any action knowingly to facilitate
the submission of inquiries, proposals or offers from any
Third Party (other than Buyer) relating to (i) any
acquisition or purchase of 20% or more of the consolidated
assets of the Company and the Subsidiaries or of over 20% of
any class of equity securities of the Company or any
Subsidiary, (ii) any tender offer (including a self tender
offer) or exchange offer that if consummated would result in
any Third Party beneficially owning 20% or more of any class
of equity securities of the Company or any Subsidiary, (iii)
any merger, consolidation, business combination, sale of
substantially all assets, recapitalization, liquidation,
dissolution or similar transaction involving the Company or
any Subsidiary whose assets, individually or in the
aggregate, constitute more than 20% of the consolidated
assets of the Company and the Subsidiaries, other than the
Contemplated Transactions, or (iv) any other transaction the
consummation of which would or could reasonably be expected
to impede, interfere with, prevent or materially delay the
Merger or which would or could reasonably be expected to
materially dilute the benefits to Buyer of the Contemplated
Transactions (collectively, "Acquisition Proposals"), or
agree to or endorse any Acquisition Proposal,
(B) enter into, entertain or participate in any discussions or
negotiations regarding any of the foregoing, or furnish to
any Third Party any information with respect to its
business, properties or assets in order to facilitate or
encourage any effort or attempt by any Third Party to do or
seek any of the foregoing, or otherwise cooperate in any way
with, or knowingly assist or participate in, facilitate or
encourage, any effort or attempt by any Third Party to do or
seek any of the foregoing, or
<PAGE>
(C) grant any waiver or release under any standstill or similar
agreement with respect to any class of equity securities of
the Company or any Subsidiary;
provided, however, that the foregoing shall not prohibit the Company (either
directly or indirectly through advisors, agents or other intermediaries) from
(v) furnishing information, including, without limitation, nonpublic
information, pursuant to an appropriate confidentiality letter (which letter
shall not be on terms less favorable to the Company in any material respect than
those contained in the Confidentiality Agreement, and a copy of which shall
promptly be provided for informational purposes only to Buyer) concerning the
Company and its businesses, properties or assets to a Third Party who, without
prior solicitation by or negotiation with the Company, has made a bona fide
Acquisition Proposal, (w) engaging in discussions or negotiations with such a
Third Party who has made such a bona fide Acquisition Proposal, (x) following
receipt of such a bona fide Acquisition Proposal, taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) or Rule 14d-9 under the
1934 Act or otherwise making disclosures to its stockholders, (y) following
receipt of such a bona fide Acquisition Proposal, failing to make or withdrawing
or modifying its recommendation referred to in Section 6.02 and/or (z) taking
any non-appealable, final action ordered to be taken by the Company by any court
of competent jurisdiction, but in each case referred to in the foregoing clauses
(v) through (z) only to the extent that the Board of Directors of the Company
shall have concluded in good faith on the basis of written advice from outside
counsel that such action is required to prevent the Board of Directors of the
Company from breaching its fiduciary duties to the stockholders of the Company
under applicable law; and provided, further, that the Board of Directors of the
Company shall not take any of the foregoing actions referred to in clauses (v)
through (y) until after reasonable notice to Buyer with respect to such action
and the Board of Directors shall continue to advise Buyer after taking such
action and, in addition, if the Board of Directors of the Company receives an
Acquisition Proposal, then the Company shall promptly inform Buyer of the terms
and conditions of such proposal and the identity of the Person making it. The
Company will immediately cease and cause its advisors, agents and other
intermediaries to cease any and all existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing, and shall use its reasonable best efforts to cause any such parties
in possession of confidential information about the Company that was furnished
by or on behalf of the Company to return or destroy all such information in the
possession of any such party or in the possession of any agent or advisor of any
such party. As used in this Agreement, the term "Third Party" means any person,
corporation, entity or "group" as defined in Section 13(d) of the Exchange Act,
other than Buyer or any of its Affiliates.
<PAGE>
(b) If a Payment Event occurs, the Company shall pay to Buyer, within
two business days following such Payment Event, a fee of $2,500,000.
(c) "Payment Event" shall mean: (i) this Agreement shall have been
terminated pursuant to any of Sections 10.01(e) or 10.01(f); (ii) the
termination of this Agreement by Buyer pursuant to Section 10.01(c), but only if
the breach of covenant or warranty or misrepresentation in question arises out
of the bad faith or wilful misconduct of the Company; or (iii) (A) a Third Party
shall have made (whether orally or in writing) an Acquisition Proposal prior to
the Company Stockholder Meeting, (B) this Agreement shall have been terminated
pursuant to Section 10.01(g) and (C) the Company shall have entered into a
binding written agreement in connection with any Acquisition Proposal (whether
or not proposed prior to the Company Stockholder Meeting and whether or not it
involves the Third Party making the Acquisition Proposal referred to in Section
6.04(c)(iii)(A) above) within twelve months after the termination of this
Agreement.
(d) Upon (i) the occurrence of a Payment Event provided that Buyer is
not then in material breach of this Agreement or (ii) a termination by Buyer
that follows a failure of the conditions set forth in Sections 9.01(a), 9.02(a),
9.02(f) or 9.02(g) to be satisfied, (iii) a failure by the Company to deliver
the documents described in Section 6.10 (excluding clauses (a)(i) and (a)(ii)
thereof) or (iv) a termination pursuant to Section 10.01(h), the Company shall
reimburse Buyer and its Affiliates not later than ten business days after
submission of reasonable documentation thereof for 100% of their documented
reasonable out-of-pocket fees and expenses (including the reasonable fees and
expenses of their counsel) up to $1,500,000 in the aggregate, in each case,
actually incurred or payable by any of them or on their behalf in connection
with this Agreement and the Contemplated Transactions (including the Merger).
(e) The Company acknowledges that the agreements contained in this
Section 6.04 are an integral part of the Contemplated Transactions, and that,
without these agreements, Buyer would not enter into this Agreement;
accordingly, if the Company fails promptly to pay any amount due pursuant to
this Section 6.04, and, in order to obtain such payment, the other party
commences a suit which results in a judgment against the Company for the fee or
fees and expenses set forth in this Section 6.04, the Company shall also pay to
Buyer its costs and expenses incurred in connection with such litigation.
(f) This Section 6.04 shall survive any termination of this Agreement,
however caused.
<PAGE>
SECTION 6.5. Resignation of Directors. Prior to the Effective Time, the
Company shall deliver to Buyer evidence satisfactory to Buyer of the resignation
of all directors of the Company (except as requested by Buyer) effective at the
Effective Time.
SECTION 6.6. Amendment to Articles of Incorporation. Prior to the
Effective Time, the Company shall amend its Articles of Incorporation to
authorize the issuance of 5,000,000 shares of Class B Common Stock that shall
have the same rights and privileges as the Shares, except that they shall have a
liquidation preference of $0.10 per share.
SECTION 6.7. Exchange for Class B Common Stock. Immediately prior to
the Effective Time, the Company shall issue to the Roll-over Group an aggregate
number of shares of Class B Common Stock determined by Buyer, by written notice
to the Company and to each member of the Roll-over Group no later than five (5)
business days prior to the Effective Time. Such shares of Class B Common Stock
shall be issued in exchange for the Shares owned by such member of the Roll-over
Group, at a ratio of one share of Class B Common Stock for each Share so
exchanged. Such number of Shares so exchanged shall not, in the aggregate,
exceed 175,000 and shall not, in the aggregate be fewer than 125,000. Such
shares of Class B Common Stock shall be issued in a ratio of 20% for Kimberlin
Family Partners, L.P. and 80% for Oshkim Limited Partnership, or in such other
ratio agreed by the Roll-over Group.
SECTION 6.8. Outstanding Debt Securities. The Company shall (or shall
cause the relevant Subsidiary to) take such steps as are necessary to take the
following actions as of the Effective Time: (i) call for repayment and repay all
outstanding amounts (including interest) under the Company's Credit Agreement
dated as of June 5, 1998, as amended, with Bank One Corp., (ii) call for
prepayment and prepay all outstanding amounts (including any prepayment penalty)
under the Company's $9 million subordinated debenture dated March 26, 1998 and
$6 million subordinated debenture dated September 1, 2008, each held by Allied
Capital Corporation and (iii) call for redemption and redeem (w) the unsecured
loan notes aggregating $908,044 issued by Enterprise Broadcast Systems Limited
to Martin D. Welch and Colin S. K. Walls, (x) the secured promissory notes
aggregating $34,063 issued by the Company to Robert F. McConnell and George T.
Beattie and (y) the promissory notes aggregating $171,114 issued by the Company
to Peter Wouters and William Scheer, so that, as promptly as practicable after
the Effective Time, all such debentures or notes shall be redeemed or repaid.
<PAGE>
SECTION 6.9. Transfers by Affiliates. The Company shall use its
reasonable best efforts to obtain and provide to Buyer prior to the Effective
Time undertakings in writing from each Person, if any, who according to counsel
for the Company might reasonably be considered "affiliates" of the Company
within the meaning of Rule 145(c) of the SEC pursuant to the Securities Act
(each, a "Rule 145 Affiliate"), in each case in form and substance reasonably
satisfactory to counsel for Buyer providing (i) such Rule 145 Affiliate will
notify Buyer in writing before offering for sale or selling or otherwise
disposing of any Surviving Corporation Shares owned by such Rule 145 Affiliate
and (ii) no such sale or other disposition shall be made unless and until the
Rule 145 Affiliate has supplied to Buyer an opinion of counsel for the Rule 145
Affiliate (which opinion and counsel shall be reasonably satisfactory to Buyer)
to the effect that such transfer is not in violation of the 1933 Act.
SECTION 6.10. Post-signing Deliveries. (a) The Company will use its
best efforts to deliver to Buyer the following within 10 days after the date
hereof:
(i) a settlement agreement between Andre Blay and the Company
substantially similar to the draft previously furnished to Buyer;
(ii) a voting agreement from Andre Blay on terms similar to the
draft agreement but without the restrictions set forth in paragraph 12
thereof; and
(iii) a revised disclosure letter that provides information in
respect of intellectual property, material contracts and employee
benefits matters that is consistent with the information previously
disclosed to Buyer.
(b) Promptly after filing with the SEC, the Company will deliver to
Buyer the Company 10-K, which will be substantially similar to the draft Company
10-K previously delivered to Buyer.
(c) Within three business days of the date hereof, the Company will
deliver to Buyer the written opinion of Schroder & Co. contemplated by Section
2.01(d).
ARTICLE 7
COVENANTS OF BUYER
Buyer agrees that:
<PAGE>
SECTION 7.1. SEC Filings. As soon as practicable after the date of
announcement of the execution of the Merger Agreement, Buyer shall file
(separately, or as part of the Company Proxy Statement) with the SEC, if
required, a Rule 13E-3 Transaction Statement (the "Transaction Statement") with
respect to the Merger (together with any supplements or amendments thereto,
collectively the "Buyer Disclosure Documents"). Buyer and the Company each agree
to correct any information provided by it for use in the Buyer Disclosure
Documents if and to the extent that it shall become aware that such information
has become false or misleading in any material respect. Buyer agrees to take all
steps necessary to cause the Buyer Disclosure Documents as so corrected to be
filed with the SEC and to be disseminated to holders of Shares, in each case as
and to the extent required by applicable federal securities laws. The Company
and its counsel shall be given at least 3 business days opportunity to review
and comment on each Buyer Disclosure Document prior to its being filed with the
SEC along with any amendments thereto that are subsequently filed with the SEC.
SECTION 7.2. Voting of Shares. Buyer agrees to vote all Shares
beneficially owned by it in favor of adoption of this Agreement at the Company
Stockholder Meeting.
<PAGE>
SECTION 7.3. Director and Officer Liability. (a) For a period of six
years after the Effective Time, the Surviving Corporation shall indemnify,
defend and hold harmless each Person who is now, or has been at any time prior
to the date of this Agreement or who becomes prior to the Effective Time, an
officer or director of the Company or any Subsidiary (each such Person, an
"Indemnified Party") against all losses, claims, damages, liabilities, fees and
expenses (including reasonable fees and disbursements of counsel and judgments,
fines, losses, claims, liabilities and amounts paid in settlement (provided that
any such settlement is effected with the prior written consent of the Surviving
Corporation)) arising in whole or in part out of acts or omissions existing or
occurring on or prior to the Effective Time to the full extent provided under
applicable law or the Company's certificate of incorporation and bylaws in
effect on the date of this Agreement and the Company's written indemnification
agreements in effect on the date of this Agreement, including provisions therein
relating to the advancement of expenses incurred in the defense of any action or
suit; provided that (i) such indemnification shall be subject to any limitation
imposed from time to time under applicable law, (ii) in the event any claim or
claims are asserted or made within such Indemnification Period, all rights to
indemnification in respect of any such claim or claims shall continue until
disposition of any and all such claims, (iii) any determinations required to be
made with respect to whether an indemnified party's conduct complies with the
standards set forth under the Delaware Law, the Company's certificate of
incorporation or bylaws or such agreements, as the case may be, shall be made by
independent counsel mutually acceptable to the Surviving Corporation and the
Indemnified Party, and (iv) nothing herein shall impair any rights or
obligations of any Indemnified Party under the Company's certificate of
incorporation or bylaws as in effect immediately prior to the Effective Time, or
otherwise. In the event that any claim or claims are brought against any
Indemnified Party (whether arising before or after the Effective Time), such
Indemnified Party may select counsel for the defense of such claim, which
counsel shall be reasonably acceptable to the Company and Buyer (if selected
prior to the Effective Time) and the Surviving Corporation (if selected after
the Effective Time);
(b) Prior to the Effective Time, Buyer will purchase, or cause the
Surviving Corporation to purchase, a "run-off" officers' and directors'
liability insurance in respect of acts or omissions occurring prior to the
Effective Time covering each such person currently covered by the Company's
officers' and directors' liability insurance policy on terms with respect to
coverage and amounts no less favorable than those of such policy in effect on
the date of this Agreement, such "run-off" policy to be in effect for a period
of six years following the Effective Time.
(c) In the event that the Surviving Corporation or any of its
respective successors and assigns 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 transfers and conveys substantially all of its
properties and assets to any Person, then, and in each case, proper provisions
shall be made so that the successors and assigns of the Surviving Corporation,
as applicable, assume the obligations set forth in this Section 7.03.
(d) The rights under this Section 7.03 are intended to benefit the
Company and each Indemnified Party hereunder, shall be binding on all successors
and assigns of the Surviving Corporation and shall be enforceable by each
Indemnified Party and his or her heirs and representatives. The parties hereto
acknowledge and agree that the remedy at law for any breach of the obligations
of the Surviving Corporation under this Section 7.03 is and will be insufficient
and inadequate and that the Indemnified Parties, in addition to any remedies at
law, shall be entitled to equitable relief (including specific performance). The
Surviving Corporation shall pay all reasonable expenses, including reasonable
attorneys' fees, in each case, as incurred, incurred by an Indemnified Party in
enforcing the indemnity and other obligations set forth in this Section 7.03.
SECTION 7.4. Financing. Buyer shall use its commercially reasonable
efforts to obtain the Financing. In the event that any portion of such Financing
becomes unavailable, regardless of the reason therefor, Buyer will use its
commercially reasonable efforts to obtain alternative financing on substantially
comparable or more favorable terms from other sources.
<PAGE>
SECTION 7.5. Employee Benefits. (a) Buyer shall maintain, or shall
cause the Company to maintain, for a period of at least one year after the
Effective Time, without interruption, employee compensation and benefit plans,
programs and policies and fringe benefits that will provide benefits to
employees of the Company and the Subsidiaries that are no less favorable in the
aggregate than those provided immediately prior to the Effective Time (other
than any equity or other stock-based benefits provided to employees). Employees
shall be given credit for all service with the Company or the Subsidiaries (or
service credited by the Company or the Subsidiaries for similar plans, programs
or policies) under any plans, policies or programs established by Buyer or the
Company, as the case may be, following the Effective Time, except for defined
benefit pension or retirement benefit plans and except to the extent that the
crediting of such service would result in any duplication of benefits.
(b) Buyer acknowledges that as of the Effective Time, the Surviving
Corporation shall assume all of the obligations under the Employment Agreements
listed in Section 4.17 (e) of the Disclosure Letter and the Surviving
Corporation hereby agrees to discharge all obligations under each such
Employment Agreement.
SECTION 7.6. Non-Interference. Buyer will not willfully take any direct
or indirect action that Buyer knows or should reasonably know would materially
and adversely affect or delay the ability of Buyer or the Surviving Corporation
to perform any of their respective obligations under this Agreement.
ARTICLE 8
COVENANTS OF BUYER AND THE COMPANY
The parties hereto agree that:
<PAGE>
SECTION 8.1. Further Assurances. (a) Subject to the terms and
conditions of this Agreement, each party will use all commercially reasonable
efforts to take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate the Contemplated Transactions, including delivering
such documents relating to corporate existence and authority as the other party
may reasonably request. Each party shall also refrain from taking, directly or
indirectly, any action contrary to or inconsistent with the provisions of this
Agreement, including action which would impair such party's ability to
consummate the Merger and the Contemplated Transactions. Without limiting the
foregoing, the Company and the Board of Directors of the Company shall use their
commercially reasonable efforts to (i) take all action reasonably necessary so
that no state takeover statute or similar statute or regulation is or becomes
applicable to the Merger or any of the other Contemplated Transactions and (ii)
if any state takeover statute or similar statute or regulation becomes
applicable to any of the foregoing, take all action reasonably necessary so that
the Merger and the other Contemplated Transactions may be consummated as
promptly as practicable on the terms contemplated by this Agreement and
otherwise to minimize the effect of such statute or regulation on the Merger and
the other Contemplated Transactions.
SECTION 8.2. Notices of Certain Events. Each party shall promptly
notify the other of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
Contemplated Transactions;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the Contemplated Transactions;
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating to or
involving or otherwise affecting such party (or in the case of the Company only,
any Subsidiary) or Buyer (in the case of Buyer), which, if pending on the date
of this Agreement, would have resulted in a breach of Section 4.14 (in the case
of the Company or any Subsidiary only) or which relate to the consummation of
the Contemplated Transactions; and
(d) any other fact or circumstance which, if existing on the date of
this Agreement, would have resulted in a breach of any of the representations
and warranties of such party, contained herein.
SECTION 8.3. Certain Filings. (a) The Company and Buyer shall use their
respective commercially reasonable efforts to take or cause to be taken, (i) all
actions necessary, proper or advisable by such party with respect to the prompt
preparation and filing with the SEC of the Company Disclosure Documents and the
Buyer Disclosure Documents, (ii) such actions as may be reasonably required to
have the Company Proxy Statement cleared by the SEC, and (iii) such actions as
may be reasonably required to have to be taken under state securities or
applicable Blue Sky laws in connection with the issuance of the securities
contemplated hereby, in each case as promptly as practicable.
<PAGE>
(b) The Company agrees to provide, and will cause the Subsidiaries and
its and their respective officers, employees and advisors to provide, all
reasonably necessary cooperation in connection with the arrangement of any
financing to be consummated contemporaneous with or at or after the Effective
Time in respect of the Contemplated Transactions, including without limitation,
(x) participation in meetings, due diligence sessions and road shows, (y) the
preparation of offering memoranda, private placement memoranda, prospectuses and
similar documents, and (z) the execution and delivery of any commitment letters,
underwriting or placement agreements, pledge and security documents, other
definitive financing documents, or other requested certificates or documents,
including a certificate of the chief financial officer of the Company with
respect to solvency matters, comfort letters of accountants and legal opinions
as may be reasonably requested by Buyer; provided that the form and substance of
any of the material documents referred to in clause (y) and the terms and
conditions of any of the material agreements and other documents referred to in
clause (z), shall be substantially consistent with the terms and conditions of
the financing required to satisfy the condition precedent set forth in Section
9.02(d).
(c) The Company and Buyer shall cooperate with one another (i) in
determining whether any action by or in respect of, or filing with, any
governmental body, agency or official, or authority is required, or any actions,
consents, approvals or waivers are required to be obtained from parties to any
material contracts, in connection with or as a result of the consummation of the
Contemplated Transactions and (ii) in seeking any such actions, consents,
approvals or waivers or making any such filings, furnishing information required
in connection therewith or with the Company Disclosure Documents and Buyer
Disclosure Documents and seeking timely to obtain any such actions, consents,
approvals or waivers.
SECTION 8.4. Public Announcements. Buyer and the Company will consult
with each other and give due consideration to such comments as the other party
may have before issuing any press release or making any public statement or
announcement with respect to this Agreement or the Contemplated Transactions
and, except as may be required by applicable law or any listing agreement with
any national securities exchange or the Nasdaq Stock Market, will not issue any
such press release or make any such public statement prior to such consultation.
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.1. Conditions to the Obligations of Each Party. The
obligations of the Company and Buyer to consummate the Merger are subject to the
satisfaction of the following conditions:
<PAGE>
(a) this Agreement and the Charter Amendment shall have been approved
and adopted by the stockholders of the Company in accordance with the Delaware
Law;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or been terminated;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger; and
(d) All consents, approvals and licenses of any governmental or other
regulatory body required in connection with the execution, delivery and
performance of this Agreement and for the Surviving Corporation to conduct the
business of the Company and the Subsidiaries in substantially the manner now
conducted, shall have been obtained, unless the failure to obtain such consents,
authorizations, orders or approvals could not reasonably be expected to have a
Material Adverse Effect after giving effect to the Contemplated Transactions
(including the Financing).
SECTION 9.2. Conditions to the Obligations of Buyer. The obligations of
Buyer to consummate the Merger are subject to the satisfaction of the following
further conditions:
(a) (i) the Company shall have performed in all material respects all
of its obligations hereunder required to be performed by it at or prior to the
Effective Time, (ii) the representations and warranties of the Company contained
in this Agreement and in any certificate or other writing delivered by the
Company pursuant hereto (x) that are qualified by materiality or Material
Adverse Effect shall be true at and as of the Effective Time as if made at and
as of such time, and (y) that are not qualified by materiality or Material
Adverse Effect shall be true in all material respects at and as of the Effective
Time as if made at and as of such time and (iii) Buyer shall have received a
certificate signed by the Chief Executive Officer of the Company to the
foregoing effect;
<PAGE>
(b) There shall not be instituted or pending any action or proceeding
by any government or governmental authority or agency or any other person, that
has a reasonable likelihood of success, before any court or governmental
authority or agency, (i) challenging or seeking to make illegal, to delay
materially or otherwise directly or indirectly to restrain or prohibit the
consummation of the Merger or seeking to obtain material damages directly or
indirectly relating to the Contemplated Transactions, (ii) seeking to restrain
or prohibit the Surviving Corporation's (including its subsidiaries' and
Affiliates') ownership or operation of all or any material portion of the
business or assets of the Company and the Subsidiaries, taken as a whole, or to
compel the Surviving Corporation or any of its subsidiaries or Affiliates to
dispose of or hold separate all or any material portion of the business or
assets of the Company and the Subsidiaries, taken as a whole, (iii) seeking to
impose or confirm material limitations on the ability of the Surviving
Corporation or any of its subsidiaries or Affiliates to effectively control the
business or operations of the Company and the Subsidiaries, taken as a whole, or
the ability of LiveWire Media, L.L.C. or any of its Affiliates effectively to
exercise full rights of ownership of any Surviving Corporation Shares or any
shares of the Surviving Corporation's subsidiaries or Affiliates prior to the
Effective Time on all matters properly presented to the Surviving Corporation's
stockholders, or (iv) seeking to require divestiture by LiveWire Media, L.L.C.
or any of its Affiliates of any Surviving Corporation Shares, and no court,
arbitrator or governmental body, agency or official shall have issued any
judgment, order, decree or injunction, and there shall not be any statute, rule
or regulation, that, in the sole judgment of Buyer is likely, directly or
indirectly, to result in any of the consequences referred to in the preceding
clauses (i) through (iv);
(c) Buyer shall have received all documents it may reasonably request
relating to the organization of the Company and the Subsidiaries as in effect
immediately prior to the Effective Time and the authority of the Company for
this Agreement, all in form and substance satisfactory to Buyer;
(d) The funds in an amount at least equal to the Required Amounts shall
have been made available to Buyer as contemplated in Section 5.06;
(e) The holders of not more than 1% of the outstanding Shares shall
have demanded appraisal of their Shares in accordance with Delaware Law;
(f) Since the date of this Agreement, there shall not have been any
event, occurrence, development or state of circumstance which, individually or
in the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect;
(g) Buyer (at its own expense) shall have received a certificate from
an independent third party confirming, to the reasonable satisfaction of Buyer,
that the following products are Year 2000 Complaint: BMS, Landmark Air-time
Sales, Vision, Novar, Equinox Traffic, ENS, AMS and the Boss II and the Boss
Joint Scheduling System and any hardware having a value in excess of $250,000;
and
(h) the Charter Amendment shall have become effective under Delaware
Law and the exchange contemplated by Section 6.07 shall have occurred.
<PAGE>
SECTION 9.3. Conditions to the Obligation of the Company. The
obligation of the Company to consummate the Merger is subject to the
satisfaction of the following further conditions:
(a) (i) Buyer shall have performed in all material respects all of its
obligations hereunder required to be performed by it at or prior to the
Effective Time, (ii) the representations and warranties of Buyer contained in
this Agreement and in any certificate or other writing delivered by Buyer
pursuant hereto (x) that are qualified by materiality or Material Adverse Effect
shall be true at and as of the Effective Time as if made at and as of such time,
and (y) that are not qualified by materiality or Material Adverse Effect shall
be true in all material respects at and as of the Effective Time as if made at
and as of such time and (iii) the Company shall have received a certificate
signed by the President of Buyer to the foregoing effect.
(b) There shall not be issued and in effect by or before any court or
other Governmental Authority having jurisdiction, an order or injunction
restraining or prohibiting the Contemplated Transactions.
(c) Buyer shall have delivered to the Company (i) copies of its
organizational documents as in effect immediately prior to the Effective Time,
(ii) copies of resolutions adopted by the Board of Directors of Buyer
authorizing the Contemplated Transactions, and (iii) a certificate of good
standing of Buyer issued by the Delaware Secretary of State as of a date not
more than five business days prior to the Effective Time, certified in each case
as of the Effective Time by an authorized officer of Buyer as being true,
correct and complete.
(d) The Company shall have received such other documents, instruments
and certificates incidental to the Contemplated Transaction as are reasonably
requested by it.
ARTICLE 10
TERMINATION
SECTION 10.1. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):
(a) by mutual written consent of the Company on the one hand and Buyer
on the other hand;
<PAGE>
(b) by either the Company or Buyer, if the Merger has not been
consummated by November 1, 1999, provided that the party seeking to exercise
such right is not then in breach in any material respect of any of its
obligations under this Agreement;
(c) by either the Company or Buyer, if (i) Buyer (in the case of
termination by the Company), or the Company (in the case of termination by
Buyer) shall have breached (so long as such terminating party is not then in
breach in any material respect of its obligations under this Agreement) in any
material respect any of its obligations under this Agreement, which breach shall
not be remedied within 10 business days of written notice specifying such breach
in reasonable detail and demanding that the same be remedied or (ii) any
representation and warranty of Buyer (in the case of termination by the Company)
or the Company (in the case of termination by Buyer) shall have been incorrect
in any material respect when made or at any time prior to the Effective Time;
(d) by either the Company or Buyer, if there shall be any applicable
law or regulation that makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining Buyer or
the Company from consummating the Merger is entered and such judgment,
injunction, order or decree shall become final and nonappealable;
(e) by Buyer (so long as it is not then in material breach of its
obligations under this Agreement) if the Board of Directors of the Company shall
have withdrawn or modified or amended its approval or recommendation of this
Agreement and the Merger and the Charter Amendment or its recommendation that
stockholders of the Company adopt and approve this Agreement and the Merger and
the Charter Amendment, or approved, recommended or endorsed any Acquisition
Proposal, or if the Company has failed to call the Company Stockholder Meeting
or failed as promptly as practicable to cause to be mailed the Company Proxy
Statement to its stockholders or failed to include in such statement the
recommendation referred to above;
<PAGE>
(f) by the Company, if (i) the Board of Directors of the Company
authorizes the Company, subject to complying with the terms of this Agreement,
to enter into a binding written agreement concerning a transaction that
constitutes a Superior Proposal and the Company notifies Buyer in writing that
it intends to enter into such an agreement, attaching the most current version
of such agreement (or a description of all material terms and conditions
thereof) to such notice, (ii) Buyer does not make, within three business days of
receipt of the Company's written notification of its intention to enter into a
binding agreement for a Superior Proposal, an offer that is at least as
favorable to the shareholders of the Company as the Superior Proposal, it being
understood that the Company shall not enter into any such binding agreement
during such three-day period and (iii) the Company prior to such termination
pursuant to this clause 10.01(f) pays to Buyer in immediately available funds
the fees required to be paid pursuant to Section 6.04. The Company agrees to
notify Buyer promptly if its intention to enter into a written agreement
referred to in its notification shall change at any time after giving such
notification. "Superior Proposal" means any bona fide Acquisition Proposal for
or in respect of at least a majority of the outstanding Shares on terms that are
more favorable to all of the Company's shareholders than the Merger (it being
understood that, for this purpose, if it is the judgment of the Company's Board
of Directors and Schroder & Co. Inc. that such Acquisition Proposal is superior,
from a financial point of view, to the Company's shareholders, applicable
fiduciary duties may require that such Board of Directors not reject such
proposal);
(g) by either the Company or Buyer if, at a duly held stockholders
meeting of the Company or any adjournment thereof at which this Agreement and
the Merger and the Charter Amendment are voted upon, the requisite stockholder
adoption and approval shall not have been obtained; and
(h) by the Company or Buyer if the Merger Consideration is less than
$8.85 per share, provided that if the Company seeks to terminate the Agreement
pursuant to this Section 10.01(h), Buyer may, within three business days of
receiving the Company's notice pursuant to this paragraph (h), revoke such
termination by delivery of a notice agreeing that the Merger Consideration will
be equal to $8.85 per share.
The party desiring to terminate this Agreement pursuant to Sections
10.01(b)-(i) shall give written notice of such termination to the other party in
accordance with Section 11.01.
SECTION 10.2. Effect of Termination. If this Agreement is terminated
pursuant to Sections 10.01, this Agreement shall become void and of no effect
without liability of any party (or any stockholder, director, officer, employee,
agent, consultant or representative of such party) to the other party hereto,
except that the agreements contained in Sections 6.04 and 11.04 shall survive
any termination hereof pursuant to Section 10.01.
<PAGE>
ARTICLE 11
MISCELLANEOUS
SECTION 11.1. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to Buyer, to:
LiveWire Acquisition Corporation
711 Westchester Avenue
White Plains, NY 10604
Attention: Steven Price
Telephone: (914) 422-0800
Fax: (914) 289-1344
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: John Buttrick
Fax: (212) 450-4800
if to the Company, to:
Enterprise Software, Inc.
8415 Explorer Drive
Colorado Springs, CO 80920
Attention: Richard Schleufer
Telephone: (719) 548-1812
Fax: (719) 548-1818
with a copy to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
590 Madison Avenue
New York, New York 10022
Attention: Alan Siegel, Esq.
Telephone: (212) 872-1000
Fax: (212) 872-1002
<PAGE>
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m., and such day is a
business day, in the place of receipt. Otherwise, any such notice, request or
communication shall be deemed not to have been received until the next
succeeding business day in the place of receipt.
SECTION 11.2. Survival of Representations, Warranties and Covenants .
(a) The representations and warranties contained herein and in any certificate
or other writing delivered pursuant hereto shall not survive the Effective Time
or the termination of this Agreement.
(b) The covenants and agreements of the parties to be performed after
the Effective Time contained in this Agreement shall survive the Effective Time.
SECTION 11.3. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, but only if,
such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement or, in the case of a waiver, by each
party against whom the waiver is to be effective, provided that, after the
adoption of this Agreement by the stockholders of the Company and without their
further approval, no such amendment or waiver shall alter or change (i) the
amount or kind of consideration to be received in exchange for any shares of
capital stock of the Company or (ii) any of the terms or conditions of this
Agreement if such alteration or change would adversely affect the holders of any
shares of capital stock of the Company.
(b) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.4. Expenses. (a) Except as otherwise provided in Sections
6.04 and 11.04(b) or agreed in writing by the parties, all costs and expenses
incurred in connection with this Agreement shall be paid by the party incurring
such cost or expense.
<PAGE>
(b) If, notwithstanding the satisfaction or waiver of each of the
conditions set forth in Sections 9.01 and 9.02, Buyer fails to consummate the
Merger, Buyer shall pay to the Company an amount in liquidated damages equal to
$2,500,000. The payment made by Buyer pursuant to this Section 11.04(b) shall be
the sole remedy available to the Company in the event that, notwithstanding the
satisfaction or waiver of each of the conditions set forth in Section 9.01 and
9.02, Buyer fails to consummate the Merger. The payment of such amount by Buyer
shall be guaranteed by LiveWire Corporation.
SECTION 11.5. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Buyer may transfer
or assign, in whole or from time to time in part, to one or more of its
Affiliates, the right to enter into the Contemplated Transactions.
SECTION 11.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
SECTION 11.7. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the Contemplated Transactions may be brought in any
federal court located in the State of Delaware or any Delaware state court, and
each of the parties hereby consents to the jurisdiction of such courts (and of
the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
form. Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party agrees that service of process
on such party as provided in Section 11.01 shall be deemed effective service of
process on such party.
SECTION 11.8. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE CONTEMPLATED TRANSACTIONS.
<PAGE>
SECTION 11.9. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto. No provision of
this Agreement is intended to confer any rights, benefits, remedies, obligations
or liabilities hereunder upon any Person other than the parties hereto and their
respective successors and assigns.
SECTION 11.10. Entire Agreement. Except for the Confidentiality
Agreement, the Voting Agreements, this Agreement and the Disclosure Letter
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersede all prior agreements and understandings,
both oral and written, between the parties with respect to the subject matter of
this Agreement.
SECTION 11.11. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
SECTION 11.12. Specific Performance. The parties hereto agree that
irreparable damage would occur if any provision of this Agreement were not
performed in accordance with the terms hereof and that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
or to enforce specifically the performance of the terms and provisions hereof in
any federal court located in the State of Delaware or any Delaware state court,
in addition to any other remedy to which they are entitled at law or in equity.
SECTION 11.13. Disclosure Schedules. The inclusion of any matter in the
Disclosure Letter will not be deemed an admission by any party that such listed
matter is material or that such listed matter has or would have a Material
Adverse Effect on the Company and its Subsidiaries.
SECTION 11.14. Severability. If any provision of this Agreement shall
be declared to be invalid or unenforceable, in whole or in part, such invalidity
or unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
ENTERPRISE SOFTWARE, INC.
By: /s/Richard Schleufer
Name: Richard Schleufer
Title: Chairman and Chief Executive
LIVEWIRE ACQUISITION CORPORATION
By: /s/ Steven Price
Name: Steven Price
Title: President
<PAGE>
EXHIBIT A
FIRST: The name of the Corporation is Enterprise Software, Inc.
SECOND: The address of its registered office in the State of Delaware
is 1013, Centre Road, Wilmington, Delaware 19805. The name of its registered
agent at such address is Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware as the same exists or may hereafter be amended
("Delaware Law").
FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 155,000,000, consisting of (i) 100,000,000 shares of
Class A Common Stock, par value $0.001 per share, (ii) 5,000,000 shares of Class
B Common Stock, par value $0.001 per share and (iii) 50,000,000 shares of
Preferred Stock, par value $0.001 per share. The shares of Class B Common Stock
shall be identical to the shares of Class A Common Stock in all respects except
that each share of Class B Common Stock will have a liquidation preference of
$0.10 per share. The Board of Directors is hereby empowered to authorize by
resolution or resolutions from time to time the issuance of one or more classes
or series of Preferred Stock and fix the designations, powers, preferences and
relative, participating, optional or other rights, if any, and the
qualifications, limitations or restrictions thereof, if any, with respect to
each such class or series of Preferred Stock and the number of shares
constituting each such class or series, and to increase or decrease the number
of shares of any such class or series to the extent permitted by Delaware Law.
FIFTH: The Board of Directors shall have the power to adopt, amend or
repeal the bylaws of the Corporation.
SIXTH: Election of directors need not be by written ballot unless the
bylaws of the Corporation so provide.
SEVENTH: (1) A director of the Corporation shall not be liable to the
Corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director to the fullest extent permitted by Delaware Law.
<PAGE>
(2) (a) Each person (and the heirs, executors or administrators of
such person) who was or is a party or is threatened to be made a party to, or is
involved in any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that such person is or was a director or officer of the Corporation or is or was
serving at the request of the Corporation as a director or officer of another
corporation, partnership, joint venture, trust or other enterprise, shall be
indemnified and held harmless by the Corporation to the fullest extent permitted
by Delaware Law. The right to indemnification conferred in this ARTICLE SEVENTH
shall also include the right to be paid by the Corporation the expenses incurred
in connection with any such proceeding in advance of its final disposition to
the fullest extent authorized by Delaware Law. The right to indemnification
conferred in this ARTICLE SEVENTH shall be a contract right.
(b) The Corporation may, by action of its Board of Directors, provide
indemnification to such of the officers, employees and agents of the Corporation
to such extent and to such effect as the Board of Directors shall determine to
be appropriate and authorized by Delaware Law.
(3) The Corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is or was serving at the request of the Corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any expense, liability or loss
incurred by such person in any such capacity or arising out of his status as
such, whether or not the Corporation would have the power to indemnify him
against such liability under Delaware Law.
(4) The rights and authority conferred in this ARTICLE SEVENTH shall
not be exclusive of any other right which any person may otherwise have or
hereafter acquire.
(5) Neither the amendment nor repeal of this ARTICLE SEVENTH, nor the
adoption of any provision of this Certificate of Incorporation or bylaws of the
Corporation, nor, to the fullest extent permitted by Delaware Law, any
modification of law, shall eliminate or reduce the effect of this ARTICLE
SEVENTH in respect of any acts or omissions occurring prior to such amendment,
repeal, adoption or modification.
EIGHTH: The Corporation reserves the right to amend this Certificate of
Incorporation in any manner permitted by Delaware Law and, with the sole
exception of those rights and powers conferred under the above ARTICLE SEVENTH,
all rights and powers conferred herein on stockholders, directors and officers,
if any, are subject to this reserved power.
<PAGE>
NINTH: The name and mailing address of the incorporator is as follows:
Roger V. Davidson, Esq., 1375 Walnut, Suite 2000, Boulder, Colorado 80302.
