<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
SCHEDULE 14D-1
TENDER OFFER STATEMENT
PURSUANT TO SECTION 14(d)(1) OF THE SECURITIES EXCHANGE ACT OF 1934
AND
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
EFFECTIVE MANAGEMENT SYSTEMS, INC.
(NAME OF SUBJECT COMPANY)
IFS ACQUISITION, INC.
IFS AMERICAS, INC.
INDUSTRIAL & FINANCIAL SYSTEMS, IFS AB
(BIDDERS)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
282017 10 2
(CUSIP NUMBER OF CLASS OF SECURITIES)
TERJE VANGBO
PRESIDENT AND CHIEF EXECUTIVE OFFICER
IFS ACQUISITION, INC. AND IFS AMERICAS, INC.
1900 EAST GOLF ROAD, SUITE 900
SCHAUMBURG, ILLINOIS 60173
(847) 995-9600
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF BIDDERS)
COPY TO:
CHRISTIAN J. HOFFMANN, III, ESQ.
STREICH LANG, P.A.
TWO NORTH CENTRAL AVENUE
PHOENIX, ARIZONA 85004
(602) 229-5200
CALCULATION OF FILING FEE:
<TABLE>
<S> <C>
============================================================================================
Transaction Valuation* Amount of Filing Fee**
- --------------------------------------------------------------------------------------------
$29,815,857 $5,964
============================================================================================
</TABLE>
<TABLE>
<S> <C>
* The Transaction Valuation is calculated by multiplying
$4.50, the per share tender offer price, by 6,625,746, the
sum of (i) 4,130,986 shares of Common Stock of Effective
Management Systems, Inc. ("EMS") outstanding and (ii)
2,494,760 shares of Common Stock of EMS subject to
outstanding options, outstanding warrants and underlying
EMS' Series B 8% Convertible Redeemable Preferred Stock.
** The amount of the filing fee calculated in accordance with
Regulation 240.0-11 of the Securities Exchange Act of 1934
equals 1/50th of 1% of the value of the shares to be
purchased.
[ ] Check box if any part of the fee is offset as provided by
Rule 0-11(a)(2) and identify the filing with which the
offsetting fee was previously paid. Identify the previous
filing by registration statement number, or the Form or
Schedule and the date of its filing.
</TABLE>
<TABLE>
<S> <C>
Amount Previously Paid: Not applicable. Filing Party: Not applicable.
Form or Registration No.: Not Date Filed: Not applicable.
applicable.
</TABLE>
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(Continued on following page(s))
(Page 1 of 11 Pages)
Exhibit Index is on Page 12
<PAGE> 2
SCHEDULE 14D-1
CUSIP NO. 282017 10 2 PAGE 2 OF 11 PAGES
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------
(1) Name of reporting persons:
Industrial & Financial Systems, IFS AB I.R.S. Identification
No. of above person (entities only): N/A
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(2) Check the appropriate box if a member of a group (see
instructions): (a) [ ] (b) [X]
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(3) SEC use only
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(4) Source of funds (see instructions): 00
- ---------------------------------------------------------------------------
(5) Check box if disclosure of legal proceedings is required
pursuant to Items 2(e) or 2(f) [ ]
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(6) Citizenship or place of organization: Sweden
- ---------------------------------------------------------------------------
(7) Aggregate amount beneficially owned by each reporting
person: 1,670,400 shares of common stock*
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(8) Check box if the aggregate amount in Row (7) excludes
certain shares (see instructions): [ ]
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(9) Percent of class represented by amount in Row (7): 40%*
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(10) Type of reporting person (see instructions): CO
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</TABLE>
*On September 1, 1999, IFS Acquisition, Inc. (the "Purchaser") and IFS
Americas, Inc. ("Parent") entered into Stockholder Agreements (the "Stockholder
Agreements") with certain shareholders (the "Selling Shareholders") of Effective
Management Systems, Inc. (the "Company") pursuant to which, upon
2
<PAGE> 3
the terms set forth therein, the Selling Shareholders have agreed to validly
tender (and not to withdraw), in accordance with the terms of the tender offer
described in this statement (the "Offer"), 1,670,400 shares (excluding shares
issuable upon the exercise of outstanding options) of common stock, $.01 par
value, of the Company (the "Common Stock"), owned (beneficially or of record) by
the Selling Shareholders.
On September 1, 1999, the Purchaser, Parent and the Company also entered
into a Stock Option Agreement (the "Stock Option Agreement") pursuant to which,
upon the terms set forth therein, the Company granted to the Purchaser an
irrevocable option (the "Stock Option") to purchase up to the number of shares
of Common Stock (the "Option Shares") that, when added to the number of shares
of Common Stock owned by the Purchaser and its affiliates immediately following
consummation of the Offer, would constitute 90% of the shares of Common Stock
then outstanding on a fully diluted basis (assuming the issuance of the Option
Shares).
The Stockholder Agreements and the Stock Option Agreement are described in
more detail in Section 11 of the Offer to Purchase dated September 8, 1998. The
Purchaser, Parent and Industrial & Financial Systems, IFS AB disclaim beneficial
ownership of the shares reflected in Rows 7 and 9 of the tables above.
3
<PAGE> 4
SCHEDULE 14D-1
CUSIP NO. 282017 10 2 PAGE 4 OF 11 PAGES
<TABLE>
<S> <C> <C>
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(1) Name of reporting persons:
IFS Americas, Inc. I.R.S. Identification No. of above person
(entities only):
36-431-4355
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(2) Check the appropriate box if a member of a group (see
instructions): (a) [ ] (b) [X]
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(3) SEC use only
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(4) Source of funds (see instructions): AF
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(5) Check box if disclosure of legal proceedings is required
pursuant to Items 2(e) or 2(f) [ ]
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(6) Citizenship or place of organization: Delaware
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(7) Aggregate amount beneficially owned by each reporting
person: 1,670,400 shares of common stock*
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(8) Check box if the aggregate amount in Row (7) excludes
certain shares (see instructions): [ ]
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(9) Percent of class represented by amount in Row (7): 40%*
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(10) Type of reporting person (see instructions): CO
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</TABLE>
*On September 1, 1999, IFS Acquisition, Inc. (the "Purchaser") and IFS
Americas, Inc. ("Parent") entered into Stockholder Agreements (the "Stockholder
Agreements") with certain shareholders (the "Selling Shareholders") of Effective
Management Systems, Inc. (the "Company") pursuant to which, upon
4
<PAGE> 5
the terms set forth therein, the Selling Shareholders have agreed to validly
tender (and not to withdraw), in accordance with the terms of the tender offer
described in this statement (the "Offer"), 1,670,400 shares (excluding shares
issuable upon the exercise of outstanding options) of common stock, $.01 par
value, of the Company (the "Common Stock"), owned (beneficially or of record) by
the Selling Shareholders.
On September 1, 1999, the Purchaser, Parent and the Company also entered
into a Stock Option Agreement (the "Stock Option Agreement") pursuant to which,
upon the terms set forth therein, the Company granted to the Purchaser an
irrevocable option (the "Stock Option") to purchase up to the number of shares
of Common Stock (the "Option Shares") that, when added to the number of shares
of Common Stock owned by the Purchaser and its affiliates immediately following
consummation of the Offer, would constitute 90% of the shares of Common Stock
then outstanding on a fully diluted basis (assuming the issuance of the Option
Shares).
The Stockholder Agreements and the Stock Option Agreement are described in
more detail in Section 11 of the Offer to Purchase dated September 8, 1998. The
Purchaser, Parent and Industrial & Financial Systems, IFS AB disclaim beneficial
ownership of the shares reflected in Rows 7 and 9 of the tables above.
5
<PAGE> 6
SCHEDULE 14D-1
CUSIP NO. 282017 10 2 PAGE 6 OF 11 PAGES
<TABLE>
<S> <C> <C>
- ---------------------------------------------------------------------------
(1) Name of reporting persons:
IFS Acquisition, Inc. I.R.S. Identification No. of above
person (entities only):
36-431-4350
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(2) Check the appropriate box if a member of a group (see
instructions): (a) [ ] (b) [X]
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(3) SEC use only
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(4) Source of funds (see instructions): AF
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(5) Check box if disclosure of legal proceedings is required
pursuant to Items 2(e) or 2(f) [ ]
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(6) Citizenship or place of organization: Wisconsin
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(7) Aggregate amount beneficially owned by each reporting
person: 1,670,400 shares of common stock*
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(8) Check box if the aggregate amount in Row (7) excludes
certain shares (see instructions): [ ]
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(9) Percent of class represented by amount in Row (7): 40%*
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(10) Type of reporting person (see instructions): CO
- ---------------------------------------------------------------------------
</TABLE>
*On September 1, 1999, IFS Acquisition, Inc. (the "Purchaser") and IFS
Americas, Inc. ("Parent") entered into Stockholder Agreements (the "Stockholder
Agreements") with certain shareholders (the "Selling Shareholders") of Effective
Management Systems, Inc. (the "Company") pursuant to which, upon
6
<PAGE> 7
the terms set forth therein, the Selling Shareholders have agreed to validly
tender (and not to withdraw), in accordance with the terms of the tender offer
described in this statement (the "Offer"), 1,670,400 shares (excluding shares
issuable upon the exercise of outstanding options) of common stock, $.01 par
value, of the Company (the "Common Stock"), owned (beneficially or of record) by
the Selling Shareholders.
On September 1, 1999, the Purchaser, Parent and the Company also entered
into a Stock Option Agreement (the "Stock Option Agreement") pursuant to which,
upon the terms set forth therein, the Company granted to the Purchaser an
irrevocable option (the "Stock Option") to purchase up to the number of shares
of Common Stock (the "Option Shares") that, when added to the number of shares
of Common Stock owned by the Purchaser and its affiliates immediately following
consummation of the Offer, would constitute 90% of the shares of Common Stock
then outstanding on a fully diluted basis (assuming the issuance of the Option
Shares).
The Stockholder Agreements and the Stock Option Agreement are described in
more detail in Section 11 of the Offer to Purchase dated September 8, 1998. The
Purchaser, Parent and Industrial & Financial Systems, IFS AB disclaim beneficial
ownership of the shares reflected in Rows 7 and 9 of the tables above.
7
<PAGE> 8
TENDER OFFER
This Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1")
relates to a tender offer by IFS Acquisition, Inc., a Wisconsin corporation
("Purchaser"), and a wholly-owned subsidiary of IFS Americas, Inc., a Delaware
corporation ("Parent"), to purchase all outstanding shares of common stock, par
value $.01 per share (the "Company Common Stock" or "Shares"), of Effective
Management Systems, Inc., a Wisconsin corporation (the "Company"), for a
purchase price of $4.50 per Share, net to the seller in cash, without interest
thereon, upon the terms and subject to the conditions set forth in the Offer to
Purchase dated September 8, 1999 (the "Offer to Purchase") and in the related
Letter of Transmittal (the "Letter of Transmittal" which, together with the
Offer to Purchase, as each may be amended and supplemented from time to time,
constitute the "Offer"), and is intended to satisfy the reporting requirements
of Section 14(d) of the Securities Exchange Act of 1934, as amended. Copies of
the Offer to Purchase and the related Letter of Transmittal are filed with this
Schedule 14D-1 as Exhibits (a)(1), and (a)(2) hereto, respectively. Parent is a
wholly-owned subsidiary of Industrial & Financial Systems, IFS AB, a corporation
organized under the laws of Sweden ("IFS AB").
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Effective Management Systems, Inc.,
a Wisconsin corporation, which has its principal executive and operating offices
at 12000 West Park Place, Milwaukee, Wisconsin 53224.
(b) The class of equity securities being sought is all the outstanding
Shares. The information set forth in the "INTRODUCTION" and Section 1 of the
Offer to Purchase is incorporated herein by reference.
(c) The information set forth in Section 6 of the Offer to Purchase is
incorporated herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) The information set forth in the "INTRODUCTION," Section 8
and Schedule I of the Offer to Purchase is incorporated herein by reference.
(e) and (f) During the last five years, none of Parent, Purchaser nor IFS
AB nor, to the best of knowledge of Parent, Purchaser or IFS AB, any executive
officer or director of Parent, Purchaser or IFS AB has been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
has been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person was or is subject to a
judgment, decree or final order enjoining future violations of, or, prohibiting
or mandating activities subject to Federal or state securities laws or finding
any violation of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in the "INTRODUCTION," Section 8,
Section 9, Section 10 and Section 11 of the Offer to Purchase is incorporated
herein by reference.
ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in Section 9 of the Offer to Purchase
is incorporated herein by reference.
(c) Not applicable.
ITEM 5. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE BIDDER.
(a) and (b) The information set forth in the "INTRODUCTION," Section 10,
Section 11 and Section 12 of the Offer to Purchase is incorporated herein by
reference.
(c) The information set forth in Section 11 of the Offer to Purchase is
incorporated herein by reference.
8
<PAGE> 9
(d) and (e) The information set forth in Section 10, Section 11, Section 12
and Section 13 of the Offer to Purchase is incorporated herein by reference.
(f) and (g) The information set forth in Section 12 and Section 14 of the
Offer to Purchase is incorporated herein by reference.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
(a) and (b) The information set forth in the "INTRODUCTION," Section 8 and
Section 9 of the Offer to Purchase is incorporated herein by reference.
ITEM 7. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE SUBJECT COMPANY'S SECURITIES.
The information set forth in the "INTRODUCTION," Section 8, Section 9,
Section 10 and Section 11 of the Offer to Purchase is incorporated herein by
reference.
ITEM 8. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the "INTRODUCTION" and Section 17 of the Offer
to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 8 of the Offer to Purchase is
incorporated herein by reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 7, Section 8, Section 11 and
Section 12 of the Offer to Purchase is incorporated herein by reference.
(b), (c) and (e) The information set forth in Section 11 and Section 16 of
the Offer to Purchase is incorporated herein by reference.
(d) The information set forth in Section 11, Section 12 and Section 14 of
the Offer to Purchase is incorporated herein by reference.
(f) The information set forth in the entire Offer to Purchase and the
Letter of Transmittal, copies of which are filed with this Schedule 14D-1 as
Exhibits (a)(1) and (a)(2), respectively, is incorporated herein by reference.
9
<PAGE> 10
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C> <C>
(a)(1) -- Form of Offer to Purchase.
(a)(2) -- Form of Letter of Transmittal.
(a)(3) -- Form of Notice of Guaranteed Delivery.
(a)(4) -- Form of Letter to Brokers, Dealers, Commercial Banks,
Companies and Other Nominees.
(a)(5) -- Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(a)(6) -- Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) -- Joint Press Release issued by Parent and Company on
September 1, 1999.
(a)(8) -- Summary Advertisement, dated September 8, 1999.
(b)(1) -- Underwriting Agreement between Industrial and Financial
Systems, IFS AB and Alfred Berg Fondkommission AB dated
August 30, 1999.
(c)(1) -- Agreement and Plan of Merger among Parent, Purchaser and the
Company dated September 1, 1999.
(c)(2) -- Stock Option Agreement among Parent, Purchaser and the
Company dated September 1, 1999.
(c)(3) -- Stockholder Agreement among Parent, Purchaser and Michael D.
Dunham dated September 1, 1999.
(c)(4) -- Stockholder Agreement among Parent, Purchaser and Thomas M.
Dykstra dated September 1, 1999.
(c)(5) -- Stockholder Agreement among Parent, Purchaser and Donald W.
Vahlsing dated September 1, 1999.
(c)(6) -- Stockholder Agreement among Parent, Purchaser and Robert E.
Weisenberg dated September 1, 1999.
(c)(7) -- Power of Attorney dated August 31, 1999.
(c)(8) -- Letter of Industrial & Financial Systems, IFS AB to
Effective Management Systems, Inc., dated September 1, 1999,
regarding funding for the Offer and the Merger.
(c)(9) -- Letter of Michael D. Dunham to IFS Americas, Inc., dated
August 31, 1999, regarding the purchase of shares of stock
of Industrial & Financial Systems, IFS AB.
(c)(10) -- Letter of Thomas M. Dykstra to IFS Americas, Inc., dated
August 31, 1999, regarding the purchase of shares of stock
of Industrial & Financial Systems, IFS AB.
(c)(11) -- Non-competition Agreement of Helmut M. Adam, dated September
1, 1999.
(c)(12) -- Non-competition Agreement of Scott J. Mermel, dated
September 1, 1999.
(c)(13) -- Mutual Nondisclosure Agreement, executed on or about May 24,
1999 by and between Effective Management Systems, Inc. and
IFS Americas, Inc.
(d) -- None.
(e) -- None.
(f) -- None.
</TABLE>
10
<PAGE> 11
SIGNATURES
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
INDUSTRIAL & FINANCIAL SYSTEMS, IFS AB
By: /s/ TERJE VANGBO*
------------------------------------
Name: Terje Vangbo
----------------------------------
Title: Area Manager, North America and
Director
-----------------------------------
IFS AMERICAS, INC.
By: /s/ TERJE VANGBO
------------------------------------
Name: Terje Vangbo
----------------------------------
Title: President
-----------------------------------
IFS ACQUISITION, INC.
By: /s/ TERJE VANGBO
------------------------------------
Name: Terje Vangbo
----------------------------------
Title: President
-----------------------------------
Dated: September 8, 1999
* The signatory has executed this Schedule 14D-1 pursuant to a Power of Attorney
filed with the Securities and Exchange Commission.
11
<PAGE> 12
EXHIBIT INDEX
<TABLE>
<S> <C> <C>
(a)(1) -- Form of Offer to Purchase.
(a)(2) -- Form of Letter of Transmittal.
(a)(3) -- Form of Notice of Guaranteed Delivery.
(a)(4) -- Form of Letter to Brokers, Dealers, Commercial Banks,
Companies and Other Nominees.
(a)(5) -- Form of Letter to Clients for use by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees.
(a)(6) -- Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a)(7) -- Joint Press Release issued by Parent and Company on
September 1, 1999.
(a)(8) -- Summary Advertisement, dated September 8, 1999.
(b)(1) -- Underwriting Agreement between Industrial and Financial
Systems, IFS AB and Alfred Berg Fondkommission AB dated
August 30, 1999.
(c)(1) -- Agreement and Plan of Merger among Parent, the Purchaser and
the Company dated September 1, 1999.
(c)(2) -- Stock Option Agreement among Parent, Purchaser and the
Company dated September 1, 1999.
(c)(3) -- Stockholder Agreement among Parent, Purchaser and Michael D.
Dunham dated September 1, 1999.
(c)(4) -- Stockholder Agreement among Parent, Purchaser and Thomas M.
Dykstra dated September 1, 1999.
(c)(5) -- Stockholder Agreement among Parent, Purchaser and Donald W.
Vahlsing dated September 1, 1999.
(c)(6) -- Stockholder Agreement among Parent, Purchaser and Robert E.
Weisenberg dated September 1, 1999.
(c)(7) -- Power of Attorney dated August 31, 1999.
(c)(8) -- Letter of Industrial & Financial Systems, IFS AB to
Effective Management Systems, Inc., dated September 1, 1999,
regarding funding for the Offer and the Merger.
(c)(9) -- Letter of Michael D. Dunham to IFS Americas, Inc., dated
August 31, 1999, regarding the purchase of shares of stock
of Industrial & Financial Systems, IFS AB.
(c)(10 -- Letter of Thomas M. Dykstra to IFS Americas, Inc., dated
August 31, 1999, regarding the purchase of shares of stock
of Industrial & Financial Systems, IFS AB.
(c)(11) -- Non-competition Agreement of Helmut M. Adam, dated September
1, 1999.
(c)(12) -- Non-competition Agreement of Scott J. Mermel, dated
September 1, 1999.
(c)(13) -- Mutual Nondisclosure Agreement, executed on or about May 24,
1999 by and between Effective Management Systems, Inc. and
IFS Americas, Inc.
(d) -- None.
(e) -- None.
(f) -- None.
</TABLE>
12
<PAGE> 1
EXHIBIT (a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
EFFECTIVE MANAGEMENT SYSTEMS, INC.
AT
$4.50 NET PER SHARE
BY
IFS ACQUISITION, INC.
A WHOLLY-OWNED SUBSIDIARY OF
IFS AMERICAS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
FRIDAY, OCTOBER 15, 1999 UNLESS THE OFFER IS EXTENDED.
THE OFFER IS BEING MADE PURSUANT TO AN AGREEMENT AND PLAN OF MERGER, DATED
AS OF SEPTEMBER 1, 1999 (THE "MERGER AGREEMENT"), BY AND AMONG IFS AMERICAS,
INC. ("PARENT"), IFS ACQUISITION, INC. (THE "PURCHASER") AND EFFECTIVE
MANAGEMENT SYSTEMS, INC. (THE "COMPANY"). THE BOARD OF DIRECTORS OF THE COMPANY
HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT, THE STOCK OPTION AGREEMENT
DESCRIBED BELOW, THE OFFER AND THE MERGER AND THE OTHER TRANSACTIONS
CONTEMPLATED THEREBY AND DETERMINED THAT THE OFFER PRICE TO BE RECEIVED FOR EACH
SHARE OF THE COMPANY'S COMMON STOCK IN THE OFFER AND THE MERGER IS FAIR TO THE
SHAREHOLDERS OF THE COMPANY, AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT
THE OFFER AND TENDER THEIR SHARES PURSUANT THERETO.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES OF COMMON STOCK, PAR VALUE $.01 PER SHARE (THE "COMPANY COMMON STOCK" OR
"SHARES"), OF THE COMPANY, THAT WILL REPRESENT AT LEAST 75% OF THE OUTSTANDING
SHARES ON A FULLY DILUTED BASIS (WITHOUT GIVING PRO FORMA EFFECT TO THE
POTENTIAL ISSUANCE OF ANY SHARES ISSUABLE UNDER THE STOCK OPTION AGREEMENT) ON
THE DATE OF PURCHASE (THE "MINIMUM CONDITION"), AND (2) THE EXPIRATION OR
TERMINATION OF ANY APPLICABLE WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED (THE "HSR CONDITION"). THE OFFER
IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS THAT ARE CONTAINED IN THIS OFFER
TO PURCHASE. SEE "SECTION 15. CERTAIN CONDITIONS OF THE OFFER."
THE OFFER IS NOT CONDITIONED ON PURCHASER OBTAINING FINANCING. THE
FINANCING IS BEING RAISED BY INDUSTRIAL & FINANCIAL SYSTEMS, IFS AB ("IFS AB")
PURSUANT TO A RIGHTS OFFERING TO ITS EXISTING SHAREHOLDERS AND IS GUARANTEED BY
AN UNCONDITIONAL AND IRREVOCABLE OBLIGATION BY ALFRED BERG FONDKOMMISSION AB, A
NORDIC INVESTMENT BANKING FIRM. SEE "SECTION 9. SOURCE AND AMOUNT OF FUNDS."
PARENT IS A WHOLLY-OWNED SUBSIDIARY OF IFS AB.
<PAGE> 2
IMPORTANT
Any shareholder desiring to tender all or any portion of such shareholder's
Shares should either (1) complete and sign the Letter of Transmittal (or a
facsimile thereof) in accordance with the instructions in the Letter of
Transmittal and mail or deliver it, together with the certificate(s) evidencing
tendered Shares and any other required documents, to the Depositary (as defined
herein) or tender such Shares pursuant to the procedures for book-entry transfer
set forth in "Section 3. Procedure for Tendering Shares" or (2) request such
shareholder's broker, dealer, commercial bank, trust company or other nominee to
effect the transaction for such shareholder. Any shareholder whose Shares are
registered in the name of a broker, dealer, commercial bank, trust company or
other nominee must contact such broker, dealer, commercial bank, trust company
or other nominee if such shareholder desires to tender such Shares.
A shareholder who desires to tender Shares and whose certificates
evidencing such Shares are not immediately available, or who cannot comply with
the procedure for book-entry transfer on a timely basis, may tender such Shares
by following the procedure for guaranteed delivery set forth in "Section 3.
Procedure for Tendering Shares."
Questions or requests for assistance may be directed to the Information
Agent (as defined herein) at its address and telephone number set forth on the
back cover of this Offer to Purchase. Additional copies of this Offer to
Purchase, the Letter of Transmittal and the Notice of Guaranteed Delivery may
also be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.
The Information Agent for the Offer is:
[MACKENZIE PARTNERS, INC. LOGO]
September 8, 1999
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<S> <C>
INTRODUCTION................................................ 1
THE OFFER................................................... 3
1. Terms of the Offer................................... 3
2. Acceptance for Payment and Payment for Shares........ 5
3. Procedure for Tendering Shares....................... 6
4. Withdrawal Rights.................................... 9
5. Certain United States Federal Income Tax
Consequences........................................... 9
6. Price Range of Shares; Dividends on the Shares....... 10
7. Certain Information Concerning the Company........... 11
8. Certain Information Concerning Parent and
Purchaser.............................................. 12
9. Source and Amount of Funds........................... 14
10. Background of the Offer.............................. 14
11. The Merger Agreement and Related Documents........... 16
12. Purpose of the Offer and the Merger; Plans for the
Company................................................ 24
13. Dividends and Distributions.......................... 26
14. Effect of the Offer on the Market for the Shares and
Exchange Act Registration............................ 26
15. Conditions of the Offer.............................. 26
16. Certain Regulatory and Legal Matters................. 27
17. Fees and Expenses.................................... 29
18. Miscellaneous........................................ 30
SCHEDULE I -- Directors and Executive Officers of IFS AB,
Parent and Purchaser
</TABLE>
<PAGE> 4
To the Holders of Common Stock of Effective Management Systems, Inc.:
INTRODUCTION
IFS Acquisition, Inc., a Wisconsin corporation ("Purchaser"), and a wholly
owned subsidiary of IFS Americas, Inc., a Delaware corporation ("Parent"),
hereby offers to purchase all outstanding shares of common stock, par value $.01
per share (the "Company Common Stock" or "Shares"), of Effective Management
Systems, Inc., a Wisconsin corporation (the "Company"), at a price of $4.50 per
Share (such price or any higher price per Share paid in the Offer (as defined
below), being hereinafter referred to as the "Offer Price"), net to the seller
in cash, without interest thereon, upon the terms and subject to the conditions
set forth in this Offer to Purchase (the "Offer to Purchase") and in the related
Letter of Transmittal (the "Letter of Transmittal," which, together with the
Offer to Purchase, as each may be amended and supplemented from time to time,
constitute the "Offer"). Parent is a wholly-owned subsidiary of Industrial &
Financial Systems, IFS AB, a corporation organized under the laws of Sweden
("IFS AB").
Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as otherwise provided in Instruction 5 of the Letter of
Transmittal, stock transfer taxes with respect to the purchase of Shares by
Purchaser pursuant to the Offer. However, any tendering shareholder or other
payee who fails to complete and sign the Substitute Form W-9 that is included in
the Letter of Transmittal may be subject to a required backup federal income tax
withholding of 31% of the gross proceeds payable to such shareholder or other
payee pursuant to the Offer. See "Section 3. Procedure for Tendering Shares."
The Purchaser will pay all charges and expenses of American Stock Transfer &
Trust Company, as Depositary (the "Depositary"), and MacKenzie Partners, Inc.,
as Information Agent (the "Information Agent"), incurred in connection with the
Offer. See "Section 17. Fees and Expenses."
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT (AS DEFINED BELOW), THE STOCK OPTION AGREEMENT (AS
DEFINED BELOW), THE OFFER AND THE MERGER (AS DEFINED BELOW) AND THE OTHER
TRANSACTIONS CONTEMPLATED THEREBY AND DETERMINED THAT THE OFFER PRICE TO BE
RECEIVED FOR EACH SHARE IN THE OFFER AND THE MERGER IS FAIR TO THE SHAREHOLDERS
OF THE COMPANY, AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER
AND TENDER THEIR SHARES PURSUANT THERETO.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (1) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE OFFER THAT NUMBER
OF SHARES WHICH WILL REPRESENT AT LEAST 75% OF THE OUTSTANDING SHARES ON A FULLY
DILUTED BASIS (WITHOUT GIVING PRO FORMA EFFECT TO THE POTENTIAL ISSUANCE OF ANY
SHARES ISSUABLE UNDER THE STOCK OPTION AGREEMENT) ON THE DATE OF PURCHASE (THE
"MINIMUM CONDITION") AND (2) THE EXPIRATION OR TERMINATION OF ANY APPLICABLE
WAITING PERIOD UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976,
AS AMENDED, AND THE REGULATIONS THEREUNDER (THE "HSR ACT" AND THE "HSR
CONDITION"). THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS DESCRIBED
IN SECTION 15. THE OFFER IS NOT CONDITIONED ON THE RECEIPT OF FINANCING. THE
FINANCING IS BEING RAISED BY IFS AB PURSUANT TO A RIGHTS OFFERING TO ITS
EXISTING SHAREHOLDERS AND IS GUARANTEED BY AN UNCONDITIONAL AND IRREVOCABLE
OBLIGATION BY ALFRED BERG FONDKOMMISSION AB, A NORDIC INVESTMENT BANKING FIRM.
SEE "SECTION 9. SOURCE AND AMOUNT OF FUNDS."
IN CONNECTION WITH THE MERGER AGREEMENT, PARENT AND THE PURCHASER ENTERED
INTO A STOCK OPTION AGREEMENT WITH THE COMPANY. UPON THE TERMS AND CONDITIONS
SET FORTH IN THE STOCK OPTION AGREEMENT, THE COMPANY GRANTED TO THE PURCHASER AN
IRREVOCABLE OPTION TO PURCHASE FROM THE
<PAGE> 5
COMPANY AT THE OFFER PRICE NEWLY ISSUED SHARES IN AN AMOUNT EQUAL TO
THE NUMBER OF SHARES THAT, WHEN ADDED TO THE NUMBER OF SHARES OWNED BY THE
PURCHASER AND ITS AFFILIATES IMMEDIATELY FOLLOWING CONSUMMATION OF THE OFFER,
SHALL CONSTITUTE 90% OF THE SHARES THEN OUTSTANDING ON A FULLY DILUTED BASIS
(GIVING EFFECT TO THE ISSUANCE OF SUCH SHARES). THE STOCK OPTION AGREEMENT IS
DESCRIBED MORE FULLY IN "SECTION 11. THE MERGER AGREEMENT AND RELATED
DOCUMENTS."
The Offer is being made pursuant to the Agreement and Plan of Merger, dated
as of September 1, 1999, by and among Parent, the Purchaser and the Company (the
"Merger Agreement"), which provides, among other things, for the commencement of
the Offer by the Purchaser and further provides that upon the terms and subject
to the satisfaction or waiver of the conditions of the Offer (including the
Minimum Condition and the HSR Condition), the Purchaser will purchase all Shares
validly tendered pursuant to the Offer. The Merger Agreement also provides that
following consummation of the Offer, and in accordance with the Wisconsin
Business Corporation Law ("WBC"), the Purchaser and the Company will be merged
(the "Merger"). Following consummation of the Merger, the surviving corporation
in the Merger (the "Surviving Corporation") will be a wholly owned subsidiary of
Parent. At the effective time of the Merger (the "Effective Time"), each Share
issued and outstanding immediately prior to the Effective Time (other than
Shares held by Parent, the Purchaser, any wholly owned subsidiary of Parent or
the Purchaser, in the treasury of the Company or by any wholly owned subsidiary
of the Company and other than Shares held by shareholders who shall have
properly exercised their dissenters' rights, if any, under the WBC) will be
converted into the right to receive in cash the Offer Price (the "Merger
Price"). The Merger Agreement is more fully described in "Section 11. The Merger
Agreement and Related Documents."
Tucker Anthony Cleary Gull, the Company's financial advisor, has delivered
to the Board of Directors of the Company its written opinion to the effect that,
as of the date of such opinion, the cash consideration to be received in the
Offer and the Merger, based upon and subject to the assumptions and limitations
set forth in such opinion, by the Company's shareholders is fair to such
shareholders from a financial point of view. Such opinion is set forth in full
as an annex to the Company's Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9"), which is being mailed to shareholders of the
Company herewith.
The consummation of the Merger is subject to the satisfaction or waiver of
certain conditions, including the approval of the Merger Agreement by the
requisite vote, if any, of the shareholders. See "Section 11. The Merger
Agreement and Related Documents" and "Section 12. Purpose of the Offer and the
Merger; Plans for the Company."
Pursuant to the Merger Agreement, the Company has agreed to take all action
necessary under the WBC and its Restated Articles of Incorporation and Bylaws to
convene a meeting of its shareholders promptly following consummation of the
Offer to consider and vote on the Merger. If the Purchaser owns at least 75% of
the outstanding Shares, approval of the Merger can be obtained without the
affirmative vote of any other shareholder of the Company. See "Section 11. The
Merger Agreement and Related Documents."
On September 1, 1999, Parent and the Purchaser entered into a Stock Option
Agreement with the Company. Pursuant to the Stock Option Agreement, if the
Purchaser owns at least 75% but less than 90% of the outstanding Shares, the
Purchaser may exercise an irrevocable option to purchase from the Company at the
Offer Price newly issued Shares in an amount equal to the number of shares that,
when added to the number of Shares owned by the Purchaser and its affiliates
immediately following consummation of the Offer, shall constitute 90% of the
Shares then outstanding on a fully diluted basis (giving effect to the issuance
of the Option Shares). The Stock Option Agreement is described more fully in
Section 11.
The Purchaser presently intends to seek to cause the Company to make an
application for the termination of the registration of the Shares under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), as soon as
possible after the purchase of all validly tendered Shares pursuant to the Offer
if the requirements for termination of registration are met. See "Section 14.
Effect of the Offer on the Market for the Shares and Exchange Act Registration."
2
<PAGE> 6
Concurrently with the execution of the Merger Agreement, and as an
inducement to Parent and the Purchaser to enter into the Merger Agreement,
Parent and the Purchaser executed the Stockholder Agreements, dated September 1,
1999 (the "Stockholder Agreements"), with certain shareholders (the "Selling
Shareholders"). Pursuant to the Stockholder Agreements, upon the terms set forth
therein, the Selling Shareholders have agreed to validly tender (and not to
withdraw), in accordance with the terms of the Offer, 1,670,400 Shares
(excluding Shares issuable upon the exercise of outstanding options) owned
(beneficially or of record) by the Selling Shareholders. The Shares subject to
the Stockholder Agreements represent approximately 40% of the Shares outstanding
(and approximately 25% of the Shares outstanding on a fully diluted basis). See
"Section 11. The Merger Agreement and Related Documents."
The Merger Agreement provides that, promptly upon payment by the Purchaser
for the tendered Shares, subject to certain limitations, the Purchaser shall be
entitled to designate such number of directors, rounded up to the next whole
number, on the Board as is equal to the product of the total number of directors
on the Board (determined after giving effect to the directors designated by the
Purchaser pursuant to the Merger Agreement) multiplied by the percentage that
the aggregate number of Shares beneficially owned by the Purchaser or its
affiliates bears to the total number of Shares then outstanding. In the Merger
Agreement, the Company has agreed, upon the request of the Purchaser, to
promptly take all actions necessary to cause the Purchaser's designees to be so
elected, including, if necessary, seeking the resignations of one or more
existing directors. If the Purchaser's designees are so elected, prior to the
Effective Time, the Board shall always have at least two members who are neither
officers, directors, shareholders or designees of the Purchaser or any of its
affiliates.
The Company has represented and warranted that, as of August 31, 1999,
there were (i) 4,130,986 shares of Common Stock issued and outstanding, (ii)
1,963.63 shares of Series B 8% Convertible Redeemable Preferred Stock (the
"Series B Stock") outstanding, and (iii) 2,494,760 Shares reserved for issuance
upon the exercise of outstanding stock options and warrants and upon conversion
of the Series B Stock. The Merger Agreement provides, among other things, that
the Company will not, without the prior written consent of Parent, issue any
additional Shares (except on the exercise or conversion of outstanding stock
options, warrants, the Series B Stock or pursuant to the Stock Option
Agreement).
Based on the foregoing and assuming no additional Shares (or options or
other rights exercisable for, or securities convertible into, Shares) have been
issued (other than Shares issued pursuant to the exercise or conversion of
outstanding stock options, warrants or the Series B Stock), if the Purchaser
were to purchase approximately 4,969,310 Shares (3,098,240 Shares assuming no
outstanding stock options, warrants or Series B Stock are exercised or
converted) pursuant to the Offer (including the 1,670,400 Shares held by the
Selling Shareholders who have agreed to tender such Shares), the Minimum
Condition would be satisfied. If the Minimum Condition is satisfied, the
Purchaser would be able to effect the Merger without the affirmative vote of any
other shareholder of the Company.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE
WITH RESPECT TO THE OFFER.
THE TENDER OFFER
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any extension or
amendment), Purchaser will accept for payment and pay for all Shares validly
tendered prior to the Expiration Date, and not theretofore withdrawn in
accordance with "Section 4. Withdrawal Rights" of this Offer to Purchase, as
soon as legally permitted and practicable after the commencement of the Offer.
The term "Expiration Date" means 5:00 p.m., New York City time, on Friday,
October 15, 1999, unless Purchaser shall have extended the period of time for
which the Offer is open, in which event the term "Expiration Date" shall mean
the latest time and date as of which the Offer, as so extended by Purchaser,
shall expire. UNDER NO CIRCUMSTANCES WILL ANY INTEREST BE
3
<PAGE> 7
PAID ON THE OFFER PRICE FOR TENDERED SHARES REGARDLESS OF ANY EXTENSION OF THE
OFFER OR ANY DELAY IN MAKING SUCH PAYMENT.
The Offer is conditioned upon, among other things, satisfaction of the
Minimum Condition and the HSR Condition. If any or all of such conditions are
not satisfied, or if any or all of the other events set forth in "Section 15.
Certain Conditions of the Offer" shall have occurred prior to the Expiration
Date, Purchaser reserves the right (but shall not be obligated) to (i) decline
to purchase any of the Shares tendered in the Offer and terminate the Offer and
return all tendered Shares to the tendering shareholders, subject to the terms
of the Merger Agreement, (ii) waive or amend any conditions to the Offer to the
extent permitted by applicable law and permitted under the Merger Agreement or
(iii) subject to the Merger Agreement and complying with applicable rules and
regulations of the Commission, purchase all Shares validly tendered, or extend
the Offer and, subject to the right of shareholders to withdraw Shares until the
Expiration Date, retain the Shares which have been tendered during the period or
periods for which the Offer is extended. The Merger Agreement provides that if
the conditions to the Offer are not satisfied, or waived by the Purchaser, as of
the initial Expiration Date (or any subsequently scheduled expiration date), the
Purchaser may extend the Offer at its discretion, from time to time, in
increments of up to ten business days, but in no event past October 31, 1999.
Subject to the Merger Agreement and the applicable rules and regulations of
the Commission, the Purchaser reserves the right, in its sole discretion, at any
time and from time to time, and regardless of whether or not any of the events
set forth in "Section 15. Certain Conditions of the Offer" hereof shall have
occurred or shall have been determined by the Purchaser to have occurred, to (i)
extend the period of time during which the Offer is open, and thereby delay
acceptance for payment of, or payment for, any Shares by giving oral or written
notice of such extension and delay to the Depositary or (ii) waive or reduce any
condition or amend the Offer in any other respect by giving oral or written
notice of such waiver or amendment to the Depositary. During any such extension,
all Shares previously tendered and not properly withdrawn will remain subject to
the Offer, subject to the right of a tendering shareholder to withdraw such
shareholder's Shares. See "Section 4. Withdrawal Rights." Under no circumstances
will interest be paid on the purchase price for tendered Shares, whether or not
the Purchaser exercises its right to extend the Offer. Without the prior written
consent of the Company, the Purchaser will not (i) decrease the Offer Price or
change the form of consideration payable in the Offer, (ii) decrease the number
of Shares sought to be purchased in the Offer, (iii) amend or waive satisfaction
of the Minimum Condition, or (iv) amend any other term of the Offer in any
manner adverse to the holders of any Shares, except that the Purchaser may, in
its discretion, extend each Expiration Date from time to time for up to ten
business days (but in no event past October 31, 1999) in the event that any
condition to the Offer set forth in "Section 15. Certain Conditions of the
Offer" of this Offer to Purchase is not satisfied or waived.
The rights reserved by the Purchaser in the two preceding paragraphs are in
addition to the Purchaser's rights pursuant to "Section 15. Certain Conditions
of the Offer." There can be no assurance that the Purchaser will exercise its
right to extend the Offer. Any extension, amendment, delay, waiver or
termination will be followed as promptly as practicable by public announcement.
In the case of an extension, Rule 14e-1(d) under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), requires that the announcement be issued
no later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date, in accordance with the public announcement
requirements of Rule 14d-4(w) under the Exchange Act. Without limiting the
obligation of the Purchaser under such Rule or the manner in which the Purchaser
may choose to make any public announcement, the Purchaser currently intends to
make announcements by issuing a release to the Dow Jones News Service.
If the Purchaser extends the Offer, or if the Purchaser (whether before or
after its acceptance for payment of Shares) is delayed in its purchase of or
payment for Shares or is unable to pay for Shares pursuant to the Offer for any
reason, then, without prejudice to the Purchaser's rights under the Offer, the
Depositary may retain tendered Shares on behalf of the Purchaser, and such
Shares may not be withdrawn except to the extent tendering shareholders are
entitled to withdrawal rights as described in "Section 4. Withdrawal Rights."
However, the ability of the Purchaser to delay the payment for Shares which the
Purchaser has accepted for payment is limited by Rule 14e-1(c) under the
Exchange Act, which requires that a bidder pay
4
<PAGE> 8
the consideration offered or return the securities deposited by or on behalf of
holders of securities promptly after the termination or withdrawal of the Offer.
If the Purchaser makes a material change in the terms of the Offer or the
information concerning the Offer or waives a material condition of the Offer,
the Purchaser will extend the Offer and disseminate additional tender offer
materials to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which the Offer must remain open
following material changes in the terms of the Offer or information concerning
the Offer, other than a change in price or a change in the percentage of
securities sought, will depend upon the facts and circumstances then existing,
including the relative materiality of the changed terms. In a public release,
the Commission has stated that in its view an offer must remain open for a
minimum period of time following a material change in the terms of the Offer and
that waiver of a material condition, such as the Minimum Condition, is a
material change in the terms of the Offer. The release states that an offer
should remain open for a minimum of five business days from the date a material
change is first published, sent or given to security holders and that, if
material changes are made with respect to information not materially less
significant than the offer price and the number of shares being sought, a
minimum of ten business days may be required to allow adequate dissemination and
investor response. The requirement to extend the Offer will not apply to the
extent that the number of business days remaining between the occurrence of the
change and the then-scheduled Expiration Date equal or exceed the minimum
extension period that would be required because of such amendment. As used in
this Offer to Purchase, "business day" has the meaning set forth in Rule 14d-1
under the Exchange Act.
The Company has provided the Purchaser with the Company's shareholder list
and security position listings for the purpose of disseminating the Offer to
holders of Shares and certain securities convertible into Shares. This Offer to
Purchase, the related Letter of Transmittal and other relevant materials will be
mailed to record holders of Shares and certain securities convertible into
Shares whose names appear on the Company's shareholder list and will be
furnished to brokers, dealers, commercial banks, trust companies and similar
persons whose names, or the names of whose nominees, appear on the shareholder
list, or, if applicable, who are listed as participants in a clearing agency's
security position listing, for subsequent transmittal to beneficial owners of
Shares and certain securities convertible into Shares.
2. ACCEPTANCE FOR PAYMENT AND PAYMENT FOR SHARES
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date, and not theretofore withdrawn in
accordance with "Section 4. Withdrawal Rights" of this Offer to Purchase,
promptly after the later to occur of (a) the Expiration Date, (b) the expiration
or termination of any applicable waiting period under the HSR Act and (c)
subject to compliance with the applicable rules and regulations of the
Commission, including Rule 14e-l(c) under the Exchange Act, the satisfaction or
waiver of the conditions set forth in "Section 15. Certain Conditions of the
Offer" of this Offer to Purchase. All questions as to the satisfaction of such
terms and conditions will be determined by the Purchaser, in its sole
discretion, whose determination will be final and binding on all parties.
Notwithstanding the immediately preceding sentence and subject to applicable
rules and regulations of the Commission and the terms of the Merger Agreement,
Purchaser expressly reserves the right to delay acceptance for payment of, or
payment for, Shares pending receipt of any regulatory approvals specified in
"Section 16. Certain Regulatory and Legal Matters" or in order to comply in
whole or in part with applicable laws. Any such delay will be effected in
compliance with Rule 14e-l(c) under the Exchange Act (which requires a bidder to
pay the consideration offered or return the securities deposited by or on behalf
of holders of securities promptly after the termination or withdrawal of such
bidder's offer).
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of (i) the
Share Certificates or timely confirmation (a "Book-Entry Confirmation") of a
book-entry transfer of such Shares into the Depositary's account at The
Depository Trust Company (the "Book-Entry Transfer Facility") pursuant to the
procedures set forth in "Section 3. Procedure for Tendering Shares," (ii) the
Letter of Transmittal (or a manually signed facsimile thereof), properly
completed and duly executed, with any required signature guarantees or, an
Agent's Message (as defined
5
<PAGE> 9
below) in the case of a book-entry transfer and (iii) any other documents
required under the Letter of Transmittal. The per Share consideration paid to
any shareholder pursuant to the Offer will be the highest per Share
consideration paid to any other shareholder pursuant to the Offer.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that such Book-Entry Transfer Facility has
received an express acknowledgment from the participant in such Book-Entry
Transfer Facility tendering the Shares that are the subject of such Book-Entry
Confirmation, that such participant has received and agrees to be bound by the
terms of the Letter of Transmittal and that Purchaser may enforce such agreement
against such participant.
For purposes of the Offer, Purchaser will be deemed to have accepted for
payment (and thereby purchased) Shares validly tendered and not properly
withdrawn as, if and when Purchaser gives oral or written notice to the
Depositary of Purchaser's acceptance for payment of such Shares pursuant to the
Offer. Upon the terms and subject to the conditions of the Offer, payment for
Shares accepted for payment pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for all
tendering shareholders for the purpose of receiving payments from Purchaser and
transmitting such payments to tendering shareholders whose Shares have been
accepted for payment. UNDER NO CIRCUMSTANCES WILL INTEREST BE PAID ON THE
PURCHASE PRICE FOR SHARES, REGARDLESS OF ANY DELAY IN MAKING SUCH PAYMENT.
If any tendered Shares are not accepted for payment for any reason pursuant
to the terms and conditions of the Offer, or if Share Certificates are submitted
evidencing more Shares than are tendered or accepted for payment, Share
Certificates evidencing unpurchased Shares will be returned, without expense to
the tendering shareholder (or, in the case of Shares tendered by book-entry
transfer into the Depositary's account at the Book-Entry Transfer Facility
pursuant to the procedure set forth in "Section 3. Procedure for Tendering
Shares," such Shares will be credited to an account maintained at the Book-Entry
Transfer Facility), as promptly as practicable following the expiration or
termination of the Offer.
Upon the deposit of funds with the Depositary for the purpose of making
payments to tendering shareholders, the Purchaser's obligation to make such
payments shall be satisfied and tendering shareholders must thereafter look
solely to the Depositary for payment of amounts owed to them by reason of the
acceptance for payment of Shares pursuant to the Offer. The Purchaser will pay
any stock transfer taxes with respect to the transfer and sale to it or its
order pursuant to the Offer, except as otherwise provided in Instruction 6 of
the Letter of Transmittal, as well as any charges and expenses of the Depositary
and the Information Agent.
If the Purchaser is delayed in its acceptance for payment of or payment for
Shares or is unable to accept for payment or pay for Share pursuant to the Offer
for any reason, then, without prejudice to the Purchaser's rights under the
Offer (but subject to compliance with Rule 14e-l(c) under the Exchange Act), the
Depositary may, nevertheless, on behalf of the Purchaser, retain tendered
Shares, and such Shares may not be withdrawn except to the extent tendering
Shareholders are entitled to exercise, and duly exercise, withdrawal rights as
described in "Section 4. Withdrawal Rights."
3. PROCEDURE FOR TENDERING SHARES
Valid Tender of Shares. Except as set forth below, in order for Shares to
be validly tendered pursuant to the Offer, the Letter of Transmittal (or a
facsimile thereof), properly completed and duly executed, together with any
required signature guarantees, or an Agent's Message in connection with a
book-entry delivery of Shares, and any other documents required by the Letter of
Transmittal, must be received by the Depositary at its address set forth on the
back cover of this Offer to Purchase on or prior to the Expiration Date and
either (i) Share Certificates, representing tendered Shares must be received by
the Depositary, or such Shares must be tendered pursuant to the procedure for
book-entry transfer set forth below and a Book-Entry Confirmation must be
received by the Depositary, in each case on or prior to the Expiration Date, or
(ii) the guaranteed delivery procedures set forth below must be complied with.
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<PAGE> 10
Book-Entry Transfer. The Depositary will establish accounts with respect
to the Shares at the Book-Entry Transfer Facility for purposes of the Offer
within two business days after the date of this Offer to Purchase. Any financial
institution that is a participant in the system of the Book-Entry Transfer
Facility may make a book-entry delivery of Shares by causing the Book-Entry
Transfer Facility to transfer such Shares into the Depositary's account at the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures for such transfer. However, although delivery of Shares
may be effected through book-entry transfer at the Book-Entry Transfer Facility,
the Letter of Transmittal (or a facsimile thereof), properly completed and duly
executed, together with any required signature guarantees, or an Agent's Message
in lieu of the Letter of Transmittal, and any other required documents, must, in
any case, be received by the Depositary at its address set forth on the back
cover of this Offer to Purchase prior to the Expiration Date, or the tendering
shareholder must comply with the guaranteed delivery procedure described below.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES NOT
CONSTITUTE DELIVERY TO THE DEPOSITARY.
THE METHOD OF DELIVERY OF SHARE CERTIFICATES, THE LETTER OF TRANSMITTAL AND
ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY TRANSFER
FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING SHAREHOLDER. SHARE
CERTIFICATES, THE LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS WILL BE
DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY (INCLUDING, IN
THE CASE OF A BOOK-ENTRY TRANSFER BY BOOK-ENTRY CONFIRMATION). IF DELIVERY IS BY
MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY
DELIVERY.
Signature Guarantees. Signatures on all Letters of Transmittal must be
guaranteed by a firm which is a member of the Medallion Signature Guarantee
Program, or by any other "eligible guarantor institution," as such term is
defined in Rule 17Ad-15 under the Exchange Act (each of the foregoing being
referred to as an "Eligible Institution"), except in cases where Shares are
tendered (i) by a registered holder of Shares who has not completed either the
box entitled "Special Payment Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution. If a Share Certificate is registered in the name of a
person other than the signer of the Letter of Transmittal, or if payment is to
be made, or a Share Certificate is not accepted for payment or not tendered is
to be returned, to a person other than the registered holder(s), then the
tendered certificates must be endorsed or accompanied by appropriate stock
powers, in either case signed exactly as the name(s) of the registered holder(s)
appear on the certificates, with the signature(s) on such certificates or stock
powers guaranteed by an Eligible Institution. See Instructions 1 and 5 of the
Letter of Transmittal.
Guaranteed Delivery. If a shareholder desires to tender Shares pursuant to
the Offer and such shareholder's Share Certificates are not immediately
available or such shareholder cannot deliver all required documents to the
Depositary prior to the Expiration Date, or such shareholder cannot complete the
procedure for delivery by book-entry transfer on a timely basis, such Shares may
nevertheless be tendered, provided that all the following conditions are
satisfied:
(i) such tender is made by or through an Eligible Institution;
(ii) a properly completed and duly executed Notice of Guaranteed
Delivery, substantially in the form made available by Purchaser, is
received prior to the Expiration Date by the Depositary as provided below;
and
(iii) the Share Certificates (or a Book-Entry Confirmation) evidencing
all tendered Shares, in proper form for transfer, in each case together
with the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees (or, in the case
of a book-entry transfer, an Agent's Message) and any other documents
required by the Letter of Transmittal are received by the Depositary within
three trading days of the date of execution of such Notice of
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<PAGE> 11
Guaranteed Delivery. A "trading day" is any day on which the New York Stock
Exchange is open for business.
The Notice of Guaranteed Delivery may be delivered by hand or mail or
transmitted by telegram or facsimile transmission to the Depositary and must
include a guarantee by an Eligible Institution in the form set forth in the form
of Notice of Guaranteed Delivery made available by Purchaser.
In all cases, payment for Shares tendered and accepted for payment pursuant
to the Offer will be made only after timely receipt by the Depositary of the
Share Certificates, evidencing such Shares, or a Book-Entry Confirmation of the
delivery of such Shares, and the Letter of Transmittal (or a facsimile thereof),
properly completed and duly executed, with any required signature guarantees
(or, in the case of a book-entry transfer, an Agent's Message), and any other
documents required by the Letter of Transmittal. Accordingly, tendering
shareholders may be paid at different times depending upon when Share
Certificates or Book-Entry Confirmations with respect to Shares are actually
received by the Depositary. Under no circumstances will interest be paid on the
purchase price of the Shares to be paid by the Purchaser, regardless of any
extension of the Offer or any delay in making such payment.
The Purchaser's acceptance for payment of Shares validly tendered pursuant
to the Offer will constitute a binding agreement between the tendering
shareholder and the Purchaser upon the terms and subject to the conditions of
the Offer.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance for payment of any tender
of Shares will be determined by Purchaser, in its sole discretion, which
determination shall be final and binding on all parties. Purchaser reserves the
absolute right to reject any and all tenders determined by it not to be in
proper form or the acceptance for payment of which may, in the opinion of its
counsel, be unlawful. Subject to the Merger Agreement, Purchaser also reserves
the absolute right to waive any condition of the Offer or any defect or
irregularity in the tender of any Shares of any particular shareholder, whether
or not similar defects or irregularities are waived in the case of other
shareholders. No tender of Shares will be deemed to have been validly made until
all defects and irregularities have been cured or waived. None of Purchaser,
Parent, IFS AB, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
Purchaser's interpretation of the terms and conditions of the Offer (including
the Letter of Transmittal and the instructions thereto) will be final and
binding.
Appointment as Proxy. By executing the Letter of Transmittal as set forth
above, a tendering shareholder irrevocably appoints designees of Purchaser as
such shareholder's proxies, each with full power of substitution, in the manner
set forth in the Letter of Transmittal, to the full extent of such shareholder's
rights with respect to the Shares tendered by such shareholder and accepted for
payment by Purchaser (and with respect to any and all other Shares or other
securities issued or issuable in respect of such Shares on or after the date of
this Offer to Purchase). All such proxies shall be considered coupled with an
interest in the tendered Shares. Such appointment will be effective when, and
only to the extent that, Purchaser accepts such Shares for payment. Upon such
acceptance for payment, all prior proxies given by such shareholder with respect
to such Shares (and such other Shares and securities) will be revoked without
further action, and no subsequent proxies may be given nor any subsequent
written consent executed by such shareholder (and, if given or executed, will
not be deemed to be effective) with respect thereto. The designees of Purchaser
will, with respect to the Shares for which the appointment is effective, be
empowered to exercise all voting and other rights of such shareholder as they in
their sole discretion may deem proper at any annual or special meeting of the
Company's shareholders or any adjournment or postponement thereof, by written
consent in lieu of any such meeting or otherwise. Purchaser reserves the right
to require that, in order for Shares to be deemed validly tendered, immediately
upon Purchaser's payment for such Shares, Purchaser must be able to exercise
full voting rights with respect to such Shares.
The foregoing proxies are effective only upon acceptance for payment of
Shares pursuant to the Offer. The Offer does not constitute a solicitation of
proxies, absent a purchase of Shares, for any meeting of the shareholders, which
will be made only pursuant to separate proxy solicitation materials complying
with the Exchange Act.
8
<PAGE> 12
Backup Federal Income Tax Withholding. Under the federal income tax laws,
unless an exception applies under the applicable rules and regulations, the
Depositary will be required to withhold 31% of the amount of any payments made
to shareholders pursuant to the Offer. To prevent backup federal income tax
withholding with respect to the payment of the Offer Price for Shares purchased
pursuant to the Offer, each tendering shareholder must generally provide the
Depositary with his or her correct taxpayer identification number ("TIN") and
certify that such shareholder is not subject to backup federal income tax
withholding by completing the Substitute Form W-9 included in the Letter of
Transmittal. See "Section 5. Certain United States Federal Income Tax
Consequences" of this Offer to Purchase and Instruction 10 to the Letter of
Transmittal. If the shareholder is a nonresident alien or foreign entity not
subject to back-up withholding, the shareholder must give the Depositary a
completed Form W-8 Certificate of Foreign Status prior to receipt of any
payments.
4. WITHDRAWAL RIGHTS
Tenders of Shares made pursuant to the Offer are irrevocable except that
such Shares may be withdrawn at any time prior to the Expiration Date and,
unless theretofore accepted for payment by Purchaser pursuant to the Offer, may
also be withdrawn at any time after November 6, 1999. If Purchaser extends the
Offer, is delayed in its acceptance for payment of Shares or is unable to accept
Shares for payment pursuant to the Offer for any reason, then, without prejudice
to Purchaser's rights under the Offer, the Depositary may, nevertheless, on
behalf of Purchaser, retain tendered Shares, and such Shares may not be
withdrawn except to the extent that tendering shareholders are entitled to
withdrawal rights as described in this "Section 4. Withdrawal Rights." Any such
delay will be by an extension of the Offer to the extent required by applicable
rules and regulations.
For a withdrawal to be effective, a written, telegraphic, telex or
facsimile transmission notice of withdrawal must be timely received by the
Depositary at one of its addresses set forth on the back cover page of this
Offer to Purchase. Any such notice of withdrawal must specify the name of the
person who tendered the Shares to be withdrawn, the number of Shares to be
withdrawn and the name of the registered holder of such Shares, if different
from that of the person who tendered such Shares. If certificates evidencing
Shares to be withdrawn have been delivered or otherwise identified to the
Depositary, then, prior to the physical release of such certificates, the serial
numbers shown on such certificates must be submitted to the Depositary and the
signature(s) on the notice of withdrawal must be guaranteed by an Eligible
Institution, unless such Shares have been tendered for the account of an
Eligible Institution. If Shares have been tendered pursuant to the procedures
for book-entry transfer as set forth in "Section 3. Procedure for Tendering
Shares," any notice of withdrawal must specify the name and number of the
account at the Book-Entry Transfer Facility to be credited with the withdrawn
Shares and must otherwise comply with such Book-Entry Transfer Facility's
procedures.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Purchaser, in its sole
discretion, whose determination will be final and binding. None of Purchaser,
Parent, IFS AB, the Depositary, the Information Agent or any other person will
be under any duty to give notification of any defects or irregularities in any
notice of withdrawal or incur any liability for failure to give any such
notification.
Any Shares properly withdrawn will thereafter be deemed not to have been
validly tendered for purposes of the Offer. However, withdrawn Shares may be
re-tendered at any time prior to the Expiration Date by following one of the
procedures described in "Section 3. Procedure for Tendering Shares."
5. CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES
The following discussion, subject to the limitations set forth herein,
describes the material federal income tax consequences of the Offer and the
Merger to holders of Shares who hold their Shares as capital assets and exchange
their Shares for cash pursuant to the Offer and the Merger. The tax consequences
to a specific shareholder may vary depending upon such shareholder's particular
tax situation, and the discussion set forth below may not apply to certain
categories of holders of Shares subject to special treatment under the
9
<PAGE> 13
Internal Revenue Code of 1986, as amended (the "Code"), such as foreign
shareholders, securities dealers, broker-dealers, insurance companies, financial
institutions, tax-exempt entities and shareholders who acquired their Shares
pursuant to an exercise of an employee stock option or otherwise as compensation
or who hold restricted stock. The discussion is based on the Code as in effect
on the date of this Offer to Purchase, as well as the rules and regulations
thereunder, existing administrative interpretations and court decisions
currently in effect, all of which are subject to change, retroactively or
prospectively, and to possibly differing interpretations and does not address
state, local or foreign tax laws. No ruling will be requested from the Internal
Revenue Service (the "IRS") regarding the tax consequences of the Offer and the
Merger and thus there can be no assurance that the IRS will agree with the
discussion set forth below.
The receipt of cash pursuant to the Offer or the Merger will be a taxable
transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local or foreign income or other tax laws.
Generally, for federal income tax purposes, a tendering shareholder will
recognize gain or loss equal to the difference between the amount of cash
received by the shareholder pursuant to the Offer or the Merger and the
aggregate tax basis in the Shares tendered by the shareholder and purchased
pursuant to the Offer or converted in the Merger, as the case may be. Gain or
loss will be calculated separately for each block of Shares tendered and
purchased pursuant to the Offer or converted in the Merger, as the case may be.
If Shares are held by a noncorporate shareholder as capital assets, gain or
loss recognized by such shareholder will be capital gain or loss, which would be
subject to federal income tax as short term capital gains (generally at ordinary
income tax rates) if the Shares were held for one year or less and at a maximum
tax rate of 20% if held for more than one year.
A shareholder (other than certain exempt shareholders including, among
others, all corporations and certain foreign individuals and entities) that
tenders Shares may be subject to 31% backup withholding unless the shareholder
provides TIN and certifies that such number is correct or properly certifies
that it is awaiting a TIN, or unless an exemption applies. A shareholder that
does not furnish its TIN may be subject to a penalty imposed by the IRS. See
"Section 3. Procedure for Tendering Shares."
If backup withholding applies to a shareholder, the Depositary is required
to withhold 31% from payments to such shareholder. Backup withholding is not an
additional tax. Rather, the amount of the backup withholding can be credited
against the Federal income tax liability of the person subject to the backup
withholding, provided that the required information is given to the IRS. If
backup withholding results in an overpayment of tax, a refund can be obtained by
the shareholder upon filing an income tax return.
THE FEDERAL INCOME TAX DISCUSSION SET FORTH ABOVE MAY NOT APPLY TO CERTAIN
CATEGORIES OF HOLDERS OF SHARES SUBJECT TO SPECIAL TREATMENT UNDER THE CODE,
SUCH AS FOREIGN HOLDERS AND HOLDERS WHOSE SHARES WERE ACQUIRED PURSUANT TO THE
EXERCISE OF AN EMPLOYEE STOCK OPTION OR OTHERWISE AS COMPENSATION, OR WHO HOLD
RESTRICTED STOCK. SHAREHOLDERS OF THE COMPANY ARE URGED TO CONSULT THEIR OWN TAX
ADVISORS TO DETERMINE THE SPECIFIC TAX CONSEQUENCES OF THE OFFER AND THE
PROPOSED MERGER, INCLUDING ANY STATE, LOCAL, FOREIGN OR OTHER TAX CONSEQUENCES
OF THE OFFER AND THE PROPOSED MERGER.
6. PRICE RANGE OF SHARES; DIVIDENDS ON THE SHARES
According to the Company's Form S-1 Registration Statement, dated April 15,
1999 (the "Form S-1"), the Shares currently are traded on the OTC Bulletin Board
under the symbol EMSI. The Shares were traded on the Nasdaq Stock Market for
fiscal 1997 and through November 6, 1998 for the fiscal year ended November 30,
1998 under the same symbol. The following table sets forth the range of high and
low bid closing quotations (and for periods prior to November 6, 1998, the high
and low sale prices) per Share for the periods indicated through August 31,
1999. The Company did not pay any dividends on the Common Stock during such
periods.
10
<PAGE> 14
<TABLE>
<CAPTION>
HIGH LOW
----- ------
<S> <C> <C>
1997:
First Quarter............................................. $7.75 $ 5.50
Second Quarter............................................ 7.50 6.50
Third Quarter............................................. 6.13 4.00
Fourth Quarter............................................ 6.50 4.00
1998:
First Quarter............................................. $4.38 $ 2.06
Second Quarter............................................ 5.88 3.00
Third Quarter............................................. 5.38 2.88
Fourth quarter............................................ 3.75 1.88
1999:
First Quarter............................................. $2.25 $ 1.31
Second Quarter............................................ 2.06 .88
Third Quarter............................................. 3.38 1.13
</TABLE>
On September 1, 1999, the last full trading day prior to Purchaser's first
public announcement of its intention to make the Offer, the closing quotation
per Share as reported on the OTC Bulletin Board was $3.4375. HOLDERS OF SHARES
ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
7. CERTAIN INFORMATION CONCERNING THE COMPANY
The information concerning the Company contained in this Offer to Purchase,
including financial information, has been taken from or is based upon publicly
available documents and records on file with the Commission and other public
sources. None of Parent, Purchaser or IFS AB assumes any responsibility for the
accuracy or completeness of the information concerning the Company contained in
such documents and records or for any failure by the Company to disclose events
which may have occurred or may affect the significance or accuracy of any such
information but which are unknown to Parent and Purchaser.
General. According to the Form S-1, the Company is a Wisconsin corporation
with its principal executive offices located at 12000 West Park Place,
Milwaukee, Wisconsin 53224. The Company develops, procures, markets and supports
integrated manufacturing and business management software. The Company also
provides services support for software products and sells computer hardware. The
software products the Company offers include: TCM(R), which is a pre-integrated
manufacturing execution system software program, meaning that it aids
enterprises in resource planning, accounting and executing and making
manufacturing decisions, and FACTORYnet(R) I/S, which is an integrated software
program providing production management, shop floor scheduling, and operations
support. The Company also offers the manufacturing software of the Baan Company,
which is an enterprise resource planning and accounting system.
Financial Information. Set forth below is selected consolidated financial
data with respect to the Company excerpted or derived in part from the audited
financial statements contained in the Company's Form S-1 and from the unaudited
financial statements contained in the Company's Quarterly Report on Form 10-Q
for the quarter ended May 31, 1999, in each case filed by the Company with the
Commission. More comprehensive financial information is included in such reports
and other documents filed by the Company with the Commission. For the periods
covered by such reports, the following summary is qualified in its entirety by
reference to such reports and such other documents and all the financial
information (including any related notes) contained therein. Such reports and
other documents should be available for inspection and copies thereof should be
obtainable in the manner set forth below.
11
<PAGE> 15
EFFECTIVE MANAGEMENT SYSTEMS, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA AND PERCENTAGES)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MAY 31, YEAR ENDED NOVEMBER 30,
----------------- ----------------------------
1999 1998 1998 1997 1996
------- ------- -------- ------- -------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA
Total Net Revenues................ $16,096 $19,594 $ 39,144 $42,645 $41,257
Total Costs of
Products/Services............... 10,401 10,578 22,776 22,860 21,163
Total Costs/Operation Expenses.... 19,922 28,174 49,147 45,046 40,874
Loss from Operations........................ (3,826) (8,580) (10,003) (2,401) 383
Net Income (loss)................. $(4,170) $(8,896) $(10,590) $(2,160) $ 153
======= ======= ======== ======= =======
PER SHARE DATA
Net Income (loss) Per Common
Share -- Basic and Diluted...... (1.01) (2.19) (2.59) (.53) .04
BALANCE SHEET DATA (AS OF THE DATES
INDICATED)
Total Current Assets.............. 7,725 11,280 13,818 13,726 14,109
Total Long Term Assets............ 10,459 10,348 10,342 15,071 13,337
Total Assets................................ $18,184 $21,628 $ 24,160 $28,797 $27,446
======= ======= ======== ======= =======
Total Current Liabilities......... 17,784 11,611 19,428 11,941 9,713
Total Liability and Shareholders' Equity.... $18,184 $21,628 $ 24,160 $28,797 $27,446
======= ======= ======== ======= =======
</TABLE>
The Company is subject to the informational filing requirements of the
Exchange Act and, in accordance therewith, is required to file periodic reports,
proxy statements and other information with the Commission relating to its
business, financial condition and other matters. Information as of particular
dates concerning the Company's directors and officers, their remuneration, stock
options granted to them, the principal holders of the Company's securities and
any material interest of such persons in transactions with the Company is
required to be disclosed in proxy statements distributed to the Company's
shareholders and filed with the Commission. Such reports, proxy statements and
other information should be available for inspection at the public reference
facilities maintained by the Commission at Room 1024, 450 Fifth Street, NW,
Washington, D.C. 20549, and also should be available for inspection at the
Commission's regional offices located at Seven World Trade Center, 13th Floor,
New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite
1400, Chicago, Illinois 60661-2511. The Commission also maintains an Internet
site on the World Wide Web at http://www.sec.gov that contains reports, proxy
statements and other information. Copies of such materials may also be obtained
by mail, upon payment of the Commission's customary fees, by writing to its
principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
8. CERTAIN INFORMATION CONCERNING PARENT AND PURCHASER
General. The Purchaser is a newly incorporated Wisconsin corporation and a
wholly owned subsidiary of the Parent organized in connection with the Offer and
the Merger that to date has not conducted any business other than in connection
with the Offer and the Merger. The principal executive offices of the Purchaser
are located at 1900 East Golf Road, Suite 900, Schaumburg, Illinois 60173.
Until immediately prior to the time that the Purchaser will purchase Shares
pursuant to the Offer, it is not anticipated that the Purchaser will have any
significant assets or liabilities or engage in activities other than those
incident to its formation and capitalization and the transactions contemplated
by the Offer and the Merger.
Parent is a Delaware corporation with its principal executive offices
located at 1900 East Golf Road, Suite 900, Schaumburg, Illinois 60173. Parent is
a newly incorporated corporation and a wholly owned
12
<PAGE> 16
subsidiary of IFS AB, organized in connection with the Offer and the Merger and
that to date has not conducted any business other than in connection with the
Offer and the Merger.
IFS AB is a corporation organized under the laws of Sweden. Its principal
offices are located at Teknikreingen 5, S58330 Linkoping, Sweden. IFS AB is a
public company, listed on the Stockholm Stock Exchange. IFS AB is engaged in the
business of developing and marketing industrial and financial systems
applications, including an enterprise resource planning system for business
processes relating to manufacturing, distribution, financial and office
functions.
IFS AB is not subject to the informational reporting requirements of the
Exchange Act, and, accordingly, does not file reports or other information with
the Commission relating to its business, financial condition and other matters.
Set forth below is certain selected consolidated financial information relating
to IFS AB and its subsidiaries for the fiscal years ended December 31, 1998 and
1997. The selected consolidated financial information is denominated in Swedish
Kroner and prepared in accordance with the Annual Accounts Act 1995: 1554 of
1995 of the Swedish Financial Accounting Standards Council (i.e., generally
accepted accounting principles in Sweden ("Swedish GAAP")). Although Swedish
GAAP differs in certain significant respects from generally accepted accounting
principles in the United States, Parent believes that the differences are not
material to a decision by a holder of Shares whether to sell, tender or hold any
Shares because any such differences would not affect the ability of the
Purchaser to obtain sufficient funds to pay for the Shares to be acquired
pursuant to the Offer. IFS AB has agreed, pursuant to a letter agreement with
the Company dated September 1, 1999, to transfer the funds necessary to complete
on a timely basis the transactions contemplated by the Merger Agreement.
INDUSTRIAL & FINANCIAL SYSTEMS, IFS AB
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN SWEDISH KRONER ("SEK"))
<TABLE>
<CAPTION>
AT OR FOR THE
YEAR ENDED
DECEMBER 31
-------------
1998 1997
----- ----
(IN MILLIONS)
<S> <C> <C>
INCOME STATEMENT DATA:
Amounts in accordance with Swedish GAAP:
Sales....................................................... 1,238 632
Net income.................................................. 6 (37)
BALANCE SHEET DATA:
Amounts in accordance with Swedish GAAP:
Current assets.............................................. 657 356
Total assets................................................ 1,167 687
Shareholders' equity........................................ 567 319
</TABLE>
The name, citizenship, business address, principal occupation or employment
and five-year employment history for each of the directors and executive
officers of the Parent, Purchaser and IFS AB and certain other information are
set forth in Schedule I hereto.
Except as described in this Offer to Purchaser, (i) none of Purchaser,
Parent, IFS AB, or, to the knowledge of the Purchaser, Parent, IFS AB, any of
the persons listed in Schedule I to this Offer to Purchase or any associate or
majority-owned subsidiary of such persons (collectively, the "Purchaser
Entities"), beneficially owns or has any right to acquire, directly or
indirectly, any equity security of the Company and (ii) no Purchaser Entity or,
to the knowledge of any Purchaser Entity, any of the persons or entities
referred to above nor any director, executive officer or subsidiary of any of
the foregoing has effected any transaction in any equity security of the Company
during the past 60 days.
13
<PAGE> 17
Except as provided in the Merger Agreement, the Stock Option Agreement and
the Stockholder Agreements and as otherwise described in this Offer to Purchase,
no Purchaser Entity or, to the knowledge of any Purchaser Entity, any of the
persons listed in Schedule I to this Offer to Purchase, has any contract,
arrangement, understanding or relationship with any other person with respect to
any securities of the Company, including, but not limited to, any contract,
arrangement, understanding or relationship concerning the transfer or voting of
such securities, joint ventures, loan or option arrangements, puts or calls,
guaranties of loans, guaranties against loss or the giving or withholding of
proxies. Except as set forth in this Offer to Purchase, no Purchaser Entity or,
to the best knowledge of any Purchaser Entity, any of the persons listed on
Schedule I hereto, has had any business relationship or transaction with the
Company or any of its executive officers, directors or affiliates that is
required to be reported under the rules and regulations of the Commission
applicable to the Offer. Except as set forth in this Offer to Purchase, there
have been no contacts, negotiations or transactions between any Purchaser
Entity, or any of their respective subsidiaries or, to the best knowledge of any
Purchaser Entity, any of the persons listed in Schedule I to this Offer to
Purchase, on the one hand, and the Company or its affiliates, on the other hand,
concerning a merger, consolidation or acquisition, tender offer or other
acquisition of securities, an election of directors or a sale or other transfer
of a material amount of assets.
9. SOURCE AND AMOUNT OF FUNDS
The total amount of funds required by the Purchaser to purchase all of the
Shares pursuant to the Offer and to pay fees and expenses related to the Offer
and the Merger is estimated to be approximately $30 million. The Purchaser will
obtain all funds needed for the Offer and the Merger through a capital
contribution from Parent. Parent will obtain all such funds through a capital
contribution from IFS AB. IFS AB is raising the funds by conducting a rights
offering (the "Rights Offering") of 8,268,066 shares (including exercisable
options) of IFS AB preferred stock to its existing shareholders. Each share of
preferred stock is priced at SEK50 per share (approximately $6.12, based on the
exchange rate as of September 7, 1999), and the Rights Offering is expected to
raise approximately SEK400 million (approximately $49 million, based on the
exchange rate as of September 7, 1999). The subscription period for the Rights
Offering concludes October 8, 1999. Alfred Berg Fondkommission AB ("Alfred
Berg") has unconditionally and irrevocably committed to purchase up to 8,000,000
shares of IFS AB preferred stock of any shares not purchased by the IFS AB
shareholders in the Rights Offering. If IFS AB or its subsidiaries fail to
commence a public tender offer for the Shares by September 16, 1999, or if it
appears that the conditions to the Offer as set forth in the Merger Agreement
will not be fulfilled, or if applicable, waived, Alfred Berg will not be
obligated to purchase any shares of IFS AB preferred stock. IFS AB agreed to pay
Alfred Berg a commission equal to 5% in consideration of its commitment. In the
event the Rights Offering is withdrawn or canceled on or before September 17,
1999, Alfred Berg is entitled to half its commission. IFS AB has agreed,
pursuant to a letter agreement with the Company dated September 1, 1999, to
transfer the funds necessary to complete on a timely basis the transactions
contemplated by the Merger Agreement.
10. BACKGROUND OF THE OFFER
In 1998, IFS AB and its affiliates completed a strategic review of the
opportunities and challenges facing them in the enterprise resources planning
("ERP") industry. As a result of this review, IFS AB determined that in order to
further its global growth opportunities, it would be desirable for IFS AB to
further establish a presence in the U.S. It was determined that the U.S.
marketplace would be a strategic location because the U.S. is the largest ERP
market in the world and an ERP technology leader.
Following the strategic review, IFS AB incorporated an acquisition strategy
into its business plan. In November 1998, the Board of Directors of IFS AB
appointed Mr. Terje Vangbo, one of the Parent's senior executives, as President
and Chief Executive Officer of IFS, Inc. ("IFS"), one of its U.S. subsidiaries,
to implement the growth and acquisition strategy. Under Mr. Vangbo's leadership,
IFS began to evaluate several potential business partners. On May 20, 1999,
Ascent Partners, Inc., financial advisor to the Company, contacted Mr. Vangbo by
telephone to ascertain whether IFS would be interested in acquiring the Company.
The parties agreed that Mr. Vangbo and Mr. Michael D. Dunham, President and
Chief Executive Officer of
14
<PAGE> 18
the Company, should meet. On May 24, 1999, Parent and the Company entered into a
confidentiality agreement, and Mr. Dunham and Mr. Vangbo met at IFS's offices in
Schaumburg, Illinois. At the meeting, Mr. Dunham provided Mr. Vangbo with
certain information regarding the Company to facilitate IFS's further review and
evaluation of the Company. At the end of the meeting, IFS indicated that it was
interested in pursuing a possible acquisition of the Company.
From May 24, 1999 to June 7, 1999, IFS conducted a limited review of the
Company. During this period and pursuant to various telephone conferences, the
parties discussed possible deal structures, and ultimately agreed that the deal
structure should be in the form of a cash tender offer.
On June 7, 1999, the Board of Directors of IFS AB authorized IFS and Mr.
Vangbo to pursue the acquisition of the Company. At this meeting, Mr. Vangbo was
authorized to retain the necessary legal and financial advisors to implement any
possible transaction, to conduct a more thorough review of the Company, and to
negotiate on behalf of IFS and IFS AB.
On June 17, 1999, representatives of IFS met with representatives of the
Company in Schaumburg, Illinois, to continue discussing the price of a possible
offer. IFS proposed a price of $4.00 per Share, subject to certain conditions,
including satisfactory conclusion of its due diligence review of the Company and
the securing of financing. Mr. Dunham indicated that the Company was not
interested in pursuing any potential transaction at that price, but noted that
he would initiate further discussion with the Company's Board of Directors. Mr.
Dunham subsequently indicated that the Company would consider a transaction at a
higher price per Share.
On July 1, 1999, the Board of Directors of IFS AB called an Extraordinary
General Meeting of the IFS AB's Board of Directors to be held on August 2, 1999
to authorize IFS AB to issue additional shares to finance the acquisition of the
Company. On July 5, 1999, Messrs. Vangbo and Dunham met in Chicago and
tentatively agreed to a price of $4.50 per Share, subject to certain conditions,
including satisfactory conclusion of Parent's due diligence review of the
Company and securing financing and subject to the negotiation of a definitive
Merger Agreement, Stock Option Agreement and Stockholder Agreements.
Drafts of the proposed transaction documents were subsequently prepared and
distributed to the parties and their advisors. During the next several weeks,
representatives of Parent's legal counsel and the Company's legal counsel
discussed various issues concerning the drafts of the Merger Agreement, Stock
Option Agreement and Stockholder Agreements and exchanged revised drafts of the
agreements. During this time, the Company indicated that a tender offer subject
to a financing contingency was not an acceptable condition to the consummation
of the transaction, and that financing must be obtained by Parent prior to
signing any documents. On August 9, 1999, IFS AB incorporated the Purchaser in
Wisconsin and on August 6, 1999 the Parent was incorporated in Delaware to
facilitate the transaction.
On August 27, 1999, IFS AB announced the commencement of a rights offering
(the "Rights Offering") of 8,268,066 shares (including exercisable options) of
IFS AB preferred stock to its existing shareholders. Each share of preferred
stock is priced at SEK50 (approximately $6.12, based on the exchange rate as of
September 7, 1999) per share, and the Rights Offering is expected to raise
approximately SEK400 million (approximately $49 million based on the exchange
rate as of September 7, 1999). The subscription period for the Rights Offering
concludes October 8, 1999. Alfred Berg Fondkommission AB ("Alfred Berg") has
unconditionally and irrevocably committed to purchase up to 8,000,000 shares of
IFS AB preferred stock of any shares not purchased by the IFS AB shareholders in
the Rights Offering, and IFS AB in turn has agreed to provide the funding to
Parent and Purchaser necessary to complete the Offer and the Merger. IFS AB
agreed to pay Alfred Berg a commission equal to 5% in consideration of its
commitment. In the event the Rights Offering is withdrawn or canceled on or
before September 17, 1999, Alfred Berg is entitled to half of its commission.
Throughout this period, the Company, IFS and their respective advisors
continued to negotiate the terms of the Merger Agreement, the Stock Option
Agreement and the Stockholder Agreements.
On September 1, 1999, the Company completed negotiating the Merger
Agreement and the Stock Option Agreement and presented them to the Board of
Directors. The Board of Directors of the Company
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received reports from the senior management of the Company and reviewed with
counsel the final terms of the Merger Agreement and the Stock Option Agreement.
Counsel also reviewed with the directors their fiduciary obligations in
connection with the consideration of a transaction such as the one proposed with
Parent. At this meeting, Tucker Anthony Cleary Gull, financial advisor to the
Company, delivered its written opinion to the Company's Board of Directors, to
the effect that, as of such date and based upon and subject to the various
considerations set forth in such opinion, the proposed cash purchase price of
$4.50 per share to be received by the shareholders of the Company in the Offer
and the Merger was fair to such shareholders from a financial point of view. The
Board of Directors then discussed the presentations it had received at this and
other Board meetings and unanimously approved the Merger Agreement and the Stock
Option Agreement and the transactions contemplated thereby, and authorized their
execution.
On September 1, 1999, the Board of Directors of Parent and Purchaser met
and unanimously approved the Merger Agreement, the Stock Option Agreement and
the transactions contemplated thereby, and authorized their execution. Following
approval thereof, the parties executed and delivered the Merger Agreement and
the Stock Option Agreement. Also on September 1, 1999, the Stockholder
Agreements were executed by Parent, the Purchaser and the other parties thereto.
Following execution of the foregoing documents, a joint press release
announcing the execution of the definitive agreements was issued by Parent and
the Company.
11. THE MERGER AGREEMENT AND RELATED DOCUMENTS
The following is a summary of certain provisions of the Merger Agreement,
the Stockholder Agreements and the Stock Option Agreement. This summary is
qualified in its entirety by reference to the Merger Agreement, the Stockholder
Agreements and the Stock Option Agreement, that are incorporated by reference in
this Offer to Purchase and copies of which have been filed with the Commission
as exhibits to the Schedule 14D-1. The Merger Agreement, the Stockholder
Agreements and the Stock Option Agreement may be examined and copies may be
obtained at the places set forth in Section 7 of the Offer to Purchase.
Capitalized terms used but not defined in this summary have the meanings given
to such terms in the respective agreement.
THE MERGER AGREEMENT
The Offer. The Merger Agreement provides for the commencement of the Offer
as promptly as practicable after the date thereof, but in any event not later
than September 8, 1999. The obligation of the Purchaser to, and of Parent to
cause the Purchaser to, commence the Offer and accept for payment, and pay for,
the Shares validly tendered pursuant to the Offer is subject to the satisfaction
of the Minimum Condition prior to the expiration of the Offer and certain other
conditions described in "Section 15. Certain Conditions of the Offer." The
Purchaser agrees to purchase all such Shares at a price of $4.50 per Share. The
Merger Agreement provides that, without the prior written consent of the
Company, the Purchaser will not (i) decrease the Offer Price or change the form
of consideration payable in the Offer, (ii) decrease the number of Shares sought
to be purchased in the Offer, (iii) amend or waive satisfaction of the Minimum
Condition, or (iv) amend any other term of the Offer in any manner adverse to
the holders of any Shares; provided, however, that if on the Expiration Date all
conditions to the Offer shall not have been satisfied or waived, the Purchaser
may, from time to time in its discretion extend the Expiration Date for up to
ten business days; provided further, that the Expiration Date is not extended
past October 31, 1999, without the written consent of the Company.
Recommendation. The Merger Agreement provides that the Board has
unanimously approved the Merger Agreement, the Stock Option Agreement, the Offer
and the Merger and the other transactions contemplated thereby and determined
that the Offer Price to be received for each Share in the Offer and the Merger
is fair to the shareholders of the Company and unanimously recommends that the
shareholders accept the Offer and tender their Shares pursuant thereto.
The Merger. The Merger Agreement provides that, subject to the terms and
conditions thereof and in accordance with the applicable provisions of the WBC,
at the Effective Time, the Purchaser will be merged
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with and into the Company. Following the Merger, the separate corporate
existence of the Purchaser will cease and the Company will continue as the
Surviving Corporation; provided, however, that upon the mutual agreement of
Parent and the Company, the Merger may be structured so that the Company will be
merged with and into the Purchaser, with Purchaser continuing as the Surviving
Corporation. The Merger will be effected by the filing at the time of the
Closing of appropriate articles of merger relating to the Merger with the
Department of Financial Institutions of the State of Wisconsin.
The Merger Agreement provides that, at the Effective Time, by virtue of the
Merger and without any action on the part of Parent, the Purchaser, the Company
or the holders thereof, the Shares will be converted into the right to receive
the Offer Price in cash, without interest thereon, as soon as is reasonably
practicable upon surrender of the certificate formerly representing such Shares
(other than any Shares held by Parent, the Purchaser, any wholly-owned
subsidiary of Parent or the Purchaser, in the treasury of the Company or by any
wholly-owned subsidiary of the Company, which Shares, by virtue of the Merger
and without any action on the part of the holder thereof, shall be cancelled and
retired and shall cease to exist with no payment being made with respect
thereto, and other than Dissenting Shares). At the Effective Time, each share of
common stock, par value $.001 per share, of the Purchaser issued and outstanding
immediately prior to the Effective Time will, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
become one validly issued, fully paid and nonassessable share of common stock of
the Surviving Corporation. Notwithstanding the foregoing, if Parent and the
Company agree to restructure the Merger (as described in the immediately
preceding paragraph), then the outstanding shares of the Purchaser's common
stock will not be affected in any manner by virtue of the Merger.
The Merger Agreement provides that the articles of incorporation of the
Purchaser, as in effect immediately prior to the Effective Time, will be the
articles of incorporation of the Surviving Corporation, until thereafter amended
in accordance with the provisions thereof and the WBC. The by-laws of the
Purchaser in effect at the Effective Time will be the by-laws of the Surviving
Corporation, until thereafter amended in accordance with the provisions thereof
and the WBC.
Vote Required to Approve the Merger. The Merger Agreement provides that if
required by the Company's articles of incorporation and/or applicable law in
order to consummate the Merger, the Company, acting through its Board of
Directors, will, in accordance with applicable law: (i) duly call, give notice
of, convene and hold a special meeting of the Company's shareholders as soon as
practicable following the Acceptance Date for the purpose of considering and
taking action upon the Merger Agreement; (ii) promptly prepare and file with the
Commission a preliminary information or proxy statement relating to the Merger
and the Merger Agreement and (x) obtain and furnish the information required to
be included by the Commission in the Proxy Statement (as hereinafter defined)
and, after consultation with Parent, respond promptly to any comments made by
the Commission with respect to the preliminary proxy statement and, subject to
compliance with Commission rules and regulations, cause a notice of a special
meeting and a definitive information or proxy statement (the "Proxy Statement")
to be mailed to the shareholders of the Company no later than the time required
by applicable law and the articles of incorporation and the by-laws of the
Company, and (y) to obtain the necessary approvals of the Merger and the Merger
Agreement by the shareholders of the Company; and (iii) subject to the
provisions of the Merger Agreement, include in the Proxy Statement the
recommendation of the Board of Directors of the Company that the shareholders of
the Company vote in favor of the approval of the Merger and the adoption of the
Merger Agreement. At any meeting or otherwise, Parent agreed that it will vote,
or cause to be voted, all of the Shares then owned by it, the Purchaser or any
of its subsidiaries in favor of the approval of the Merger and the adoption of
the Merger Agreement. Consequently, if the Minimum Condition is satisfied (i.e.,
the Purchaser owns at least 75% of the outstanding Shares on a fully diluted
basis), approval of the Merger can be obtained without the affirmative vote of
any other shareholder of the Company.
Pursuant to the Stock Option Agreement, if the Purchaser owns at least 75%
but less than 90% of the outstanding Shares, the Purchaser may exercise an
irrevocable option to purchase from the Company at the Offer Price newly issued
Shares in an amount equal to the number of Shares that, when added to the number
of Shares owned by the Purchaser and its affiliates immediately following
consummation of the officer, shall constitute 90% of the Shares then outstanding
on a fully diluted basis (giving effect to the issuance of the
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Option Shares). In the event that (i) Parent, the Purchaser or any other
subsidiary of Parent acquires in the aggregate at least 90% of the outstanding
Shares pursuant to the Offer (including as a result of the exercise of the Stock
Option Agreement) and prior transactions and (ii) Parent and the Company
restructure the Merger so that the Company will be merged with and into the
Purchaser, the parties to the Merger Agreement will, subject to certain
conditions, take all necessary and appropriate action to cause the Merger to
become effective as soon as practicable after the acceptance for payment of and
payment for Shares by the Purchaser pursuant to the Offer without the holding of
a meeting and without a vote of any other shareholder of the Company, in
accordance with Section 180.1104 of the WBC.
Conditions to the Merger. The respective obligations of Parent, the
Purchaser and the Company to consummate the Merger and the transactions
contemplated thereby, if the Offer shall have been consummated, are subject to
the satisfaction or waiver in writing, at or before the Effective Time, of
certain conditions, including: (i) to the extent required under the Company's
articles of incorporation or applicable law, the shareholders of the Company
shall have duly approved the Merger Agreement and the transactions contemplated
thereby; (ii) the consummation of the Merger shall not be restrained, enjoined
or prohibited by any order, judgment, decree, injunction or ruling of a court of
competent jurisdiction or any Governmental Entity, and there shall not have been
any statute, rule or regulation enacted, promulgated or deemed applicable to the
Merger by any Governmental Entity which prevents the consummation of the Merger;
and (iii) the Purchaser shall have accepted for payment and paid for Shares
tendered pursuant to the Offer in accordance with the terms of the Merger
Agreement (however, this condition is not applicable to the obligations of
Parent or the Purchaser if the Purchaser fails to accept for payment or pay for
Shares tendered pursuant to the Offer in violation of the terms of the Offer).
Representations and Warranties. The Merger Agreement contains various
representations and warranties of the parties. These include representations and
warranties by the Company with respect to, among other things, (i) organization
and qualification, (ii) subsidiaries, (iii) articles of incorporation and
by-laws, (iv) capitalization, (v) authority, (vi) no conflict, required filings
and consents, (vii) SEC reports and financial statements, (viii) information,
(ix) absence of certain material adverse changes, (x) undisclosed liabilities,
(xi) tax matters, (xii) owned real property, (xiii) no litigation, (xiv)
compliance with applicable laws, (xv) environmental matters, (xvi) employee
benefit plans and ERISA, (xvii) intellectual property, (xviii) certain events,
(xix) certain approvals, (xx) contracts, (xxi) employees, (xxii) books and
records, (xxiii) fairness opinion, (xxiv) brokers, (xxv) vote required, (xxvi)
warrants, (xxvii) Series B Preferred Stock, and (xviii) options.
Parent and the Purchaser have made certain representations and warranties
with respect to, among other things, (i) organization and qualification, (ii)
authority, (iii) no conflict, required filings and consents, (iv) information,
(v) financing, (vi) brokers, (vii) the Purchaser and (vii) share ownership.
Directors. The Merger Agreement provides that promptly upon the payment by
the Purchaser for Shares pursuant to the Offer, and from time to time
thereafter, the Purchaser will be entitled to designate such number of
directors, rounded up to the next whole number, on the Board as is equal to the
product of the total number of directors on the Board (determined after giving
effect to the directors designated by the Purchaser pursuant to this sentence)
multiplied by the percentage that the aggregate number of Shares beneficially
owned by the Purchaser or its affiliates bears to the total number of Shares
then outstanding, and the Company will, subject to compliance with Section 14(f)
of the Exchange Act and Rule 14f-1 promulgated thereunder, upon request of the
Purchaser, promptly take all actions necessary to cause the Purchaser's
designees to be so elected, including, if necessary, promptly increasing the
size of the Board or seeking the resignations of one or more existing directors,
or both; provided, however, that prior to the Effective Time, the Board will
always have at least two members who are neither officers, directors,
shareholders or designees of the Purchaser or any of its affiliates ("Purchaser
Insiders"). If the number of directors who are not Purchaser Insiders is reduced
below two for any reason prior to the Effective Time, then the remaining
directors who are not Purchaser Insiders (or if there is only one director who
is not a Purchaser Insider, the remaining director who is not a Purchaser
Insider) will be entitled to designate a person (or persons) to fill such
vacancy (or vacancies) who is not an officer, director, shareholder or designee
of the Purchaser or any of its affiliates and who will be a director not deemed
to be a Purchaser Insider for all purposes of the Merger Agreement. At
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such time, the Company will, if requested by the Purchaser, also cause persons
designated by the Purchaser to constitute at least the same percentage (rounded
up to the next whole number) as is on the Board of each committee of the Board;
provided, however, that prior to the Effective Time each committee of the Board
shall have at least one member who is not a Purchaser Insider. The Company's
obligation to appoint the Purchaser's designees to the Board is subject to
Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. The Company will
promptly take all actions required pursuant to such Section and Rule in order to
fulfill its obligations. From and after the election or appointment of the
Purchaser's designees and prior to the Effective Time, any amendment or
termination of the Merger Agreement by the Company, any extension by the Company
of the time for the performance of any of the obligations or other acts of
Parent or the Purchaser or waiver of any of the Company's rights under the
Merger Agreement, or any other action taken by the Board of Directors of the
Company in connection with the Merger Agreement, will require the concurrence of
a majority of the directors of the Company then in office who are not Purchaser
Insiders.
Covenants. The Merger Agreement contains various covenants of the parties
thereto, including covenants as to, among other things, the conduct of the
business of the Company, as described in further detail below, and the following
matters during the period from the date of the Merger Agreement to the
Acceptance Date:
(a) The Purchaser agreed to continue to make available to the Company a
$2,000,000 line of credit providing for borrowings by the Company ($350,000 of
which the Purchaser had provided to the Company as of September 1, 1999) and, as
necessary and in the Purchaser's sole discretion, to increase the line of
credit.
(b) The Company agreed to provide each holder of the warrants to purchase
shares of Common Stock issued by the Company in October 1998 to designees of
Taglich Brothers, D'Amadeo, Wagner & Company, Incorporated (the "Underwriter
Warrants"), which have an exercise price of $3.60 per Share, notice sufficient
to enable each holder to have a reasonable opportunity to exercise the holder's
Underwriter Warrants and receive the Offer Price for each Share underlying the
Underwriter Warrants (which, as of August 31, 1999, was 54,714 Shares). Pursuant
to the Merger Agreement, the Purchaser agreed to assume the obligations of the
Company under the Underwriter Warrants, if required thereby.
(c) The Company agreed to take all actions necessary, including providing
any notice required by the Company's Restated Articles of Incorporation, to
force the conversion of each outstanding share of its Series B Stock into Shares
prior to the Acceptance Date.
(d) The Company agreed to (i) provide each holder of the 401,440 Common
Stock warrants issued under the September 1995 warrant agreement with American
Stock Transfer & Trust Company, as warrant agent (the "Public Warrants"), each
of which is exercisable for one share of Common Stock at a current exercise
price of $6.75 per Share, notice sufficient to enable each holder to exercise
the holder's Public Warrants and participate in the Offer (the holders are not
entitled to participate in the Offer unless they exercise their Public Warrants)
and (ii) provide the warrant agent with notice of the Merger, so that the
warrant agent can provide each holder of Public Warrants notice sufficient to
enable each holder to exercise the holder's Public Warrants and participate in
the Merger. In addition, the Company will execute a supplemental warrant
agreement with the warrant agent to ensure that each holder of Public Warrants
will have the right following the Merger to exercise the holder's Public
Warrants and receive the Offer Price.
Conduct of Business of the Company. Except as required by the Merger
Agreement or with the prior written consent of Parent, during the period from
the date of the Merger Agreement to the Acceptance Date, the Company will and
will cause each of its subsidiaries to conduct its operations only in the
ordinary course of business. Without limiting the generality of the foregoing,
and except as otherwise required or contemplated by the Merger Agreement, the
Company will not, and will not permit any of its subsidiaries to, prior to the
Effective Time, without the prior written consent of Parent: (a) adopt any
amendment to its charter or by-laws or comparable organizational documents; (b)
issue, reissue or sell or authorize the issuance, reissuance or sale of
additional shares (whether through the issuance or granting of options,
warrants, commitments, subscriptions, rights to purchase or otherwise) of
capital stock of any class, or shares convertible into capital stock of any
class, or any rights, warrants or options to acquire any convertible shares or
capital stock, other than the issuance of Shares pursuant to the conversion or
exercise of Options, nonstatutory stock options,
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warrants or the Series B Stock outstanding on the date of the Merger Agreement
or pursuant to the Stock Option Agreement; (c) declare, set aside or pay any
dividend or other distribution (whether in cash, shares or property or any
combination thereof) in respect of any class or series of its capital stock,
except for (i) regular quarterly dividends payable on the Series B Stock with
usual record and payment dates for such dividends and (ii) dividends between the
Company and any Subsidiary that is wholly-owned by the Company; (d) split,
combine, subdivide, reclassify or directly or indirectly redeem, purchase or
otherwise acquire, recapitalize or reclassify, or propose to redeem or purchase
or otherwise acquire, any shares of its capital stock, or any of its other
shares or liquidate in whole or in part; (e) enter into, adopt or amend any
Employee Benefit Plan or any employment or severance agreement or arrangement or
increase in any manner the compensation or fringe benefits of, or modify the
employment terms of, its directors, officers or employees, generally or
individually, or pay any benefit not required by the terms in effect on
September 1, 1999 of any existing Employee Benefit Plan, other than in the
ordinary course of business consistent with past practice make normal merit
increases to employees of the Company; (f) create, incur or assume any debt not
outstanding as of September 1, 1999 (including obligations in respect of capital
leases); assume, guarantee, endorse or otherwise become liable or responsible
(whether directly, contingently or otherwise) for the obligations of any other
person or entity; or make any loans, advances or capital contributions to or
investments in, any other person or entity, except, in each case, in the
ordinary course of business; (g) change in any material respect its accounting
methods, principles or practices, except insofar as may be required by a change
in generally accepted accounting principles; (h) make any material tax election
or settle or compromise any material income tax liability; (i) acquire, sell,
lease, encumber or dispose of any assets or property (including without
limitation any shares or other equity interests in or securities of any
Subsidiary or any corporation, partnership, association or other business
organization or division thereof), other than purchases and sales of assets in
the ordinary course of business; (j) discharge or satisfy any Security Interest
or pay any obligation or liability other than in the ordinary course of
business; (k) mortgage or pledge any of its property or assets or subject any
such assets to any Security Interest other than in the ordinary course of
business; (l) sell, assign, transfer or license any Intellectual Property, other
than in the ordinary course of business; (m) enter into, amend, terminate, take
or omit to take any action that would constitute a material violation of or
default under, or waive, release or assign any material rights under, any
material contract or agreement; (n) make or commit to make any capital
expenditure in excess of $20,000 per item or in an aggregate in excess of
$50,000; (o) willfully take any action, or willfully fail to take any action
required or permitted by this Agreement with the intent that such action or
failure to take action could result in (i) any of the representations and
warranties of the Company set forth in the Merger Agreement becoming untrue or
(ii) any of the conditions to the Merger set forth in Article VII of the Merger
Agreement not being satisfied; (p) hire, terminate or discharge any key employee
or engage or terminate any key consultant, provided however that any such
employee or consultant may himself or herself terminate his or her relationship
with the Company in accordance with the terms of any applicable employment,
consulting or similar agreement; (q) commence after September 1, 1999 any
offerings of securities to employees pursuant to any new employee stock purchase
plans; or (r) agree in writing or otherwise to take any of the foregoing
actions.
No Solicitation. Pursuant to the Merger Agreement, the Company covenanted
and agreed with Parent and the Purchaser that the Company will, will cause its
subsidiaries to, and will use its commercially reasonable efforts to cause the
officers, directors, employees, investment bankers, attorneys and other agents
and representatives of the Company and its subsidiaries to, immediately cease
any existing activities, information exchanges, discussions or negotiations with
any person (including a "person" as defined in Section 13(d)(3) of the Exchange
Act) other than Parent or the Purchaser (a "Third Party") heretofore conducted
with respect to any Acquisition Transaction (as defined below). The Company also
agreed that it will not, will cause its subsidiaries not to, and will use its
commercially reasonable efforts to cause the officers, directors, employees,
investment bankers, attorneys and other agents and representatives of the
Company and its subsidiaries not to, directly or indirectly, (a) solicit,
initiate, continue or encourage (including by way of furnishing or disclosing
non-public information) any inquiries, proposals or offers from any Third Party
with respect to any acquisition or purchase of all or a material portion of the
assets or business of, or any significant equity interest in (including by way
of a tender offer), or any merger, consolidation or business combination with,
or any similar transaction involving, the Company (the foregoing being referred
to collectively as an
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"Acquisition Transaction"), or (b) negotiate or otherwise communicate in any way
with any Third Party with respect to any Acquisition Transaction or enter into,
approve or recommend any agreement, arrangement or understanding requiring the
Company to abandon, terminate or fail to consummate the Offer and/or the Merger
or any other transaction contemplated thereby. Additionally, the Company agreed
to terminate all letters of intent or agreements with respect to any Acquisition
Transaction outstanding as of September 1, 1999 and provide evidence of such
termination to Parent. Notwithstanding anything to the contrary in the
foregoing, the Company may in response to an unsolicited proposal with respect
to an Acquisition Transaction with a Third Party furnish or disclose non-public
information to such Third Party and negotiate or otherwise communicate with such
Third Party, in each case only if (i) the Board of Directors of the Company
(after consultation with its outside legal counsel and independent financial
advisors) reasonably determines in good faith that such proposal would be likely
to be more favorable to the Company and its shareholders than the transaction
contemplated by the Merger Agreement (the proposal with respect to an
Acquisition Transaction meeting the requirements of clause (i), a "Superior
Proposal"); and (ii) prior to furnishing or disclosing any non-public
information to, or entering into discussions or negotiations with, such Third
Party, the Company receives from such Third Party a customary confidentiality
agreement similar in all material respects to the confidentiality agreement
between Parent and the Company; provided, however, that the Company shall not
enter into a definitive agreement with respect to a Superior Proposal unless the
Company concurrently terminates the Merger Agreement in accordance with the
terms thereof.
The Merger Agreement also provides that the Company will notify Parent and
the Purchaser, no later than 24 hours after receipt by the Company, or any of
its advisors, of any proposal relating to an Acquisition Transaction or any
request for nonpublic information in connection with a proposed Acquisition
Transaction or for access to the properties, books or records of the Company by
any person or entity that informs the Company that it is considering making, or
has made, an Acquisition Transaction (the "Acquisition Proposal"). Such notice
to the Parent and Purchaser must be made orally and in writing and must indicate
in reasonable detail the identity of the person making the Acquisition Proposal
and the terms and conditions of such proposal, inquiry or contact. The Company
must give the Parent and the Purchaser at least seven business days advance
notice of any definitive agreement proposed to be entered into by the Company
with any person making a Superior Proposal.
Indemnification and Insurance. The Merger Agreement provides as follows:
(a) The Purchaser and Parent agree that for a period of six years from
the Effective Time, the Purchaser will maintain all rights to
indemnification now existing in favor of the current or former directors,
officers, employees, fiduciaries and agents of the Company as provided in
the Company's Restated Articles of Incorporation and Bylaws or otherwise in
effect under any agreement on September 1, 1999. In addition, the Purchaser
and Parent agree that the articles of incorporation and bylaws of the
Surviving Corporation shall contain the provisions with respect to
indemnification set forth in the Company's Restated Articles of
Incorporation and Bylaws on September 1, 1999, which provisions will not be
amended, repealed or otherwise modified for a period of six years after the
Acceptance Date in any manner that would adversely affect the rights
thereunder of individuals who at any time prior to the Effective Time were
directors or officers of the Company in respect of actions or omissions
occurring at or prior to the Effective Time (including without limitation,
the transactions contemplated by the Merger Agreement), unless such
modification is required by law. Notwithstanding the six-year period
specified in the foregoing sentences, in the event any claim or claims are
asserted or made within such six-year period, all rights to indemnification
in respect of any such claim or claims shall continue until disposition of
any and all such claims.
(b) The Surviving Corporation will at all times exercise the powers
granted to it by its articles of incorporation, its bylaws, and by
applicable law to indemnify and hold harmless to the fullest extent
possible present or former directors, officers, employees, fiduciaries and
agents of the Company against any threatened or actual claim, action, suit,
proceeding or investigation made against them arising from their service in
such capacities (or service in such capacities for another enterprise at
the request of the Company) prior to and including the Effective Time,
including, without limitation, with respect to matters relating to the
Merger Agreement.
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(c) In addition to the foregoing, Parent agrees that the Company and,
from and after the Effective Time, the Surviving Corporation, shall cause
to be maintained in effect for not less than six years from the Effective
Time, the current policies of the directors' and officers' liability
insurance, if any, maintained by the Company with respect to matters
occurring at or prior to the Effective Time (including, without limitation,
the transactions contemplated by the Merger Agreement); provided that the
Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are no less advantageous and
provided that such substitution shall not result in any gaps or lapses in
coverage with respect to matters occurring prior to the Effective Time; and
provided, further, that the Surviving Corporation will not be required to
pay an annual premium in excess of 200% of the last annual premium paid by
the Company prior to September 1, 1999 and if the Surviving Corporation is
unable to obtain the insurance required by this paragraph it will obtain as
much comparable insurance as possible for an annual premium equal to such
maximum amount.
Waiver. At any time prior to the Effective Time, a party may (i) extend
the time for performance of any obligations or other acts of any other party,
(ii) waive any inaccuracies in the representations and warranties contained in
the Merger Agreement by any other party or (iii) subject to Section 8.03 of the
Merger Agreement, waive compliance by any other party with any of the agreements
or conditions contained in the Merger Agreement.
Termination. The Merger Agreement provides that the Merger Agreement may
be terminated and the Merger contemplated thereby may be abandoned at any time
prior to the Effective Time, whether or not approval thereof by the shareholders
has been obtained:
(a) by the mutual written consent of Parent and the Company; or
(b) by either the Company or Parent if the Offer has not been
consummated by December 31, 1999 and the terminating party is not in
material breach of its obligations under the Merger Agreement; or
(c) by Parent or the Company if there is any law or regulation that
makes consummation of the Offer or the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining Parent
or the Company from consummating the Offer or the Merger is entered and
such judgment, decree, injunction, ruling or other action becomes final and
nonappealable; or
(d) by Parent and the Purchaser by giving written notice to the
Company if the Company is in breach, and by the Company by giving written
notice to Parent and the Purchaser in the event that Parent or the
Purchaser in breach, of any material representation, warranty, or covenant
contained in this Agreement, and such breach is not remedied within ten
days of delivery of written notice thereof; or
(e) by either the Company or Parent, if the Board (i) withdraws or
modifies in a manner adverse to Parent and the Purchaser its approval or
recommendation of the Offer or the Merger; (ii) approves or recommends any
Acquisition Transaction in respect of the Company in compliance with the
provisions of the Merger Agreement (see "No Solicitation" above) and makes
the payments referred to under "Fees and Expenses" below or (iii) resolves
to take any of the foregoing actions.
Fees and Expenses. The Merger Agreement provides that, except as described
below, whether or not the Merger is consummated, all costs and expenses incurred
in connection with the Offer, the Merger Agreement, the Stock Option Agreement
and the transactions contemplated thereby shall be paid by the party incurring
such expenses.
In the event the Merger Agreement is terminated by Parent pursuant to
subsection (e) under "Termination" above, or by the Company pursuant to
subsection (e) under "Termination" above, the Company must pay in cash to Parent
a termination fee equal to $1,000,000 (the "Company Termination Fee"). The
Company Termination Fee will be paid in cash in immediately available funds.
Half of such fee will be paid prior to and as a condition precedent to the
effectiveness of termination of the Merger Agreement, and the other half will be
paid upon consummation of the Superior Proposal or termination or withdrawal of
the Superior Proposal. In no event will the Company be required to pay Parent
any Company Termination
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Fee, if, immediately prior to the applicable termination of the Merger
Agreement, Parent was in material breach of any of its material obligations
under the Merger Agreement.
The Stockholder Agreements
Concurrently with the execution of the Merger Agreement, Parent and the
Purchaser entered into Stockholder Agreements with each of the Selling
Shareholders with respect to, in the aggregate, 1,670,400 Shares (excluding
Shares issuable upon the exercise of stock options) owned by such Selling
Shareholders representing approximately 40% of the Shares (and approximately 25%
of the Shares outstanding on a fully diluted basis) outstanding on August 31,
1999. The Selling Shareholders are Donald W. Vahlsing, Robert E. Weisenberg,
Thomas M. Dykstra, the Vice President, Secretary and Treasurer of the Company,
and Michael D. Dunham, the President and Chief Executive Officer of the Company.
Pursuant to the Stockholder Agreements, each of the Selling Shareholders has
agreed to validly tender, in accordance with the terms of the Offer, all Shares
subject to the Stockholder Agreements. Each of the Selling Shareholders has
agreed not to withdraw his shares subject to the Stockholder Agreements unless
the Stockholder Agreements are terminated in accordance with the terms of such
Stockholder Agreements.
Each of the Selling Shareholders has agreed that, except as necessary to
exercise a Selling Shareholder's fiduciary duties as a director of the Company
with respect to a Superior Proposal and except as contemplated by the
Stockholder Agreements and the Merger Agreement, he shall not (i) transfer, or
consent to the transfer of, any or all of the Shares or any interest therein,
(ii) enter into any contract, option, or other agreement or understanding with
respect to any transfer of any or all of the Shares or any interest therein,
(iii) grant any proxy, power-of-attorney or other authorization in or with
respect to the Shares, (iv) deposit the Shares into a voting trust or enter into
a voting agreement or arrangement with respect to the Shares or (v) take any
other action that would in any way restrict, limit or interfere with the
performance of his obligations under the Stockholder Agreement or the Merger
Agreement or the Stock Option Agreement.
The covenants and agreements contained in the Shareholder Agreements will
terminate upon the earlier of (i) the Effective Time, (ii) one year following
the execution of the Stockholder Agreements or (iii) the termination of the
Merger Agreement in certain circumstances.
In connection with the execution of the Stockholder Agreements, Michael D.
Dunham and Thomas M. Dykstra agreed to (a) use $1,000,000 and $815,000,
respectively, of the proceeds they receive from the sale of their Shares in the
Offer to purchase in the open market shares of stock of IFS AB and (b) retain
the shares of IFS AB stock they purchase for a minimum of six months. The
Company has agreed to reimburse (including with respect to the taxes incurred as
a result of such reimbursement) Messrs. Dunham and Dykstra for any brokerage
commissions they incur in connection with both the purchase and subsequent sale
of the shares of IFS AB stock.
THE STOCK OPTION AGREEMENT
Purchase of Shares. On the terms and subject to the conditions set forth
in the Stock Option Agreement, the Company agreed to issue and sell to the
Purchaser that number of newly issued Shares (the "Option Shares") equal to the
number of Shares that, when added to the number of Shares owned by the Purchaser
and its affiliates immediately following the consummation of the Offer,
constitutes 90% of the outstanding Shares on a fully diluted basis (giving
effect to the issuance of the Option Shares), at a per share purchase price
equal to the Offer Price. The closing of such sale of Shares shall occur at any
one time after the acceptance for payment by Purchaser of the Shares
constituting at least 75% but less than 90% of the Shares then outstanding on a
fully diluted basis (the "Exercise Event") but prior to the earliest to occur of
(x) the Effective Time, (y) ten business days after the occurrence of the
Exercise Event and (z) the termination of the Merger Agreement in accordance
with the terms thereof.
Conditions to Closing. The obligation of the Company to deliver the Option
Shares upon the Purchaser's exercise of its option is subject to the following
conditions: (a) all waiting periods under the HSR Act applicable to the issuance
and delivery of the Option Shares pursuant to the Stock Option Agreement shall
have expired or been terminated and (b) there shall be no preliminary or
permanent injunction or other
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final, nonappealable judgment by any court of competent jurisdiction
restricting, preventing or prohibiting the issuance and delivery of the Option
Shares.
Covenants of the Company. Pursuant to the Stock Option Agreement, the
Company covenanted and agreed to use its commercially reasonable efforts to
take, or cause to be taken, all appropriate action, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws to
consummate and make effective the transactions contemplated thereunder,
including, without limitation, using all reasonable efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Entities.
Certain Representations and Warranties. In connection with the Stock
Option Agreement, the Company made certain customary representations and
warranties to Parent and the Purchaser, including with respect to (i)
authorization, reservation and validity of the issuance of the Option Shares
pursuant to such agreement and the absence of encumbrances on and in respect of
such Shares and (ii) the Company's valid existence and requisite corporate
powers. In connection with the Stock Option Agreement, Parent and the Purchaser
made certain customary representations and warranties to the Company, including
with respect to (i) authority to enter into and perform their obligations under
the Stock Option Agreement, (ii) due organization, valid existence and requisite
corporate powers and (iii) the investment intent of Parent and the Purchaser.
12. PURPOSE OF THE OFFER AND THE MERGER; PLANS FOR THE COMPANY
Purpose of the Offer. The purpose of the Offer and the Merger is to enable
Parent to acquire control of, and the entire equity interest in, the Company.
The Offer, as the first step in the acquisition of the Company, is intended to
facilitate the acquisition of all the Shares. Parent will consummate, as soon as
practicable following the consummation of the Offer, the Merger. The purpose of
the Merger is to acquire all Shares not purchased pursuant to the Offer or
otherwise. Pursuant to the Merger, each then outstanding Share (other than
Shares held by Parent or the Purchaser, any wholly owned subsidiary of Parent or
the Purchaser, in the treasury of the Company or by any wholly owned subsidiary
of the Company or held by shareholders who perfect any applicable dissenters'
rights under the WBC) will be converted into the right to receive the amount in
cash equal to the Offer Price paid by the Purchaser pursuant to the Offer. Upon
consummation of the Merger, the Company will become a wholly owned subsidiary of
Parent.
Plans for the Company. It is expected that, initially following the
Merger, the business and operations of the Company will, except as set forth in
this Offer to Purchase, be continued by the Company substantially as they are
currently being conducted. Parent will continue to evaluate the business and
operations of the Company during the pendency of the Offer and after the
consummation of the Offer and the Merger, and will take such actions as it deems
appropriate under the circumstances then existing. Parent intends to seek
additional information about the Company during this period. Thereafter, Parent
intends to seek information as part of a comprehensive review of the Company's
business, operations, capitalization and management with a view to optimizing
exploitation of the Company's potential in conjunction with Parent's businesses.
Except as indicated in this Offer to Purchase, Parent does not have any
present plans or proposals which relate to or would result in an extraordinary
corporate transaction, such as a merger, reorganization or liquidation,
involving the Company or any of its subsidiaries, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries or any
material change in the Company's capitalization or dividend policy or any other
material changes in the Company's corporate structure or business, or the
composition of the Company's management.
Shareholder Approval. Under the WBC and the Company's Restated Articles of
Incorporation, the approval of the Board and the affirmative vote of the holders
of a majority of the voting power of the outstanding Shares are required to
approve and adopt the Merger Agreement and the transactions contemplated
thereby, including the Merger.
The Company's Board of Directors has unanimously approved the Offer, the
Merger and the Merger Agreement and the transactions contemplated thereby.
Unless the Merger is consummated pursuant to the
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short form merger provisions under the WBC described below (in which case no
further corporate action by the shareholders of the Company will be required to
complete the Merger), the only remaining required corporate action of the
Company will be the approval and adoption of the Merger Agreement and the
transactions contemplated thereby by the affirmative vote of the holders of a
majority of the voting power of the outstanding Shares, subject to Section
180.1150 of the WBC.
Pursuant to the Merger Agreement, the Company has agreed to take all action
necessary under the WBC and its Restated Articles of Incorporation and Bylaws to
convene a meeting of its shareholders promptly following consummation of the
Offer to consider and vote on the Merger. If the Purchaser owns at least 75% of
the outstanding Shares, approval of the Merger can be obtained without the
affirmative vote of any other shareholder of the Company.
Short Form Merger. If the Purchaser owns at least 75% but less than 90% of
the outstanding Shares, pursuant to the Stock Option Agreement, the Purchaser
may exercise an option to purchase from the Company at the Offer Price newly
issued Shares in an amount equal to the number of Shares that, when added to the
number of Shares owned by the Purchaser and its affiliates immediately following
consummation of the Offer, shall constitute 90% of the Shares then outstanding
on a fully diluted basis (giving effect to the issuance of such Shares).
Pursuant to the Merger Agreement, upon the mutual agreement of Parent and the
Company, the Merger may be structured so that the Company will be merged with
and into the Purchaser, with the Purchaser continuing as the Surviving
Corporation. If the Merger is so structured, under Section 180.1104 of the WBC,
and the Purchaser owns at least 90% of the outstanding Shares, the Purchaser
will be able to approve the Merger without a vote of the Company's shareholders
(a "Short Form Merger"). In such event, the Purchaser anticipates that it will
take all necessary and appropriate action to cause the Merger to become
effective as soon as reasonably practicable after such acquisition without a
meeting of the Company's shareholders.
Dissenters' Rights. While no dissenters' rights are available in
connection with the Offer, Section 180.1301 through 180.1331 of the WBC may
provide dissenters' rights to holders of the Shares, subject to the procedures
described therein, to object to the Merger and demand payment of the "fair
value" of their Shares in cash in connection with the consummation of the
Merger. Dissenters' rights are available if the Merger is a "business
combination" (as defined in Section 180.1130(3) of the WBC), or if the Shares
are not registered on a national securities exchange or quoted on the National
Association of Securities Dealers, Inc. automated quotations system on the
record date for notice of the shareholders' meeting held to vote on the Merger.
The Merger will not be a "business combination" if it is consummated as a Short
Form Merger or, if at the time of the Merger, the Company does not have a class
of equity securities held of record by 500 or more persons or there are less
than 100 Wisconsin residents who are shareholders of record with unlimited
voting rights. If the Merger is not a "business combination" and dissenters'
rights are available because the Shares are not registered on an exchange or
quoted on Nasdaq, the "fair value" of the Shares will be determined as of the
time immediately prior to the Merger and will exclude, if equitable, any
appreciation or depreciation in the value of the Shares in anticipation of the
Merger. If the Merger is a "business combination" and dissenters' rights are
available, the "fair value" of the Shares will be determined pursuant to Section
180.l130(9)(a) of the WBC with reference to the public market price of the
Shares if available, or otherwise as determined in good faith by the Company's
Board of Directors. The "fair value," as so determined, could be more or less
than the value per Share to be paid pursuant to the Offer and the Merger.
The foregoing summary of the rights of dissenting shareholders does not
purport to be a complete statement of the procedures to be followed by
shareholders desiring to exercise their dissenters' rights in connection with
the Merger. The preservation and exercise of dissenters' rights are conditioned
on strict adherence to the applicable provisions of the WBC.
Rule 13e-3. The Merger would have to comply with any applicable federal
law operative at the time. Rule 13e-3 under the Exchange Act is applicable to
certain "going private" transactions. The Purchaser does not believe that Rule
13e-3 will be applicable to the Merger. Rule 13e-3 requires, among other things,
that certain financial information concerning the Company, and certain
information relating to the fairness of the
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proposed transaction and the consideration offered to minority shareholders in
such a transaction, be filed with the Commission and disclosed to minority
shareholders prior to consummation of the transaction.
13. DIVIDENDS AND DISTRIBUTIONS
The Merger Agreement provides that prior to the Acceptance Date, without
the prior written consent of Parent, the Company will not, and will not permit
any of its subsidiaries to, (i) declare, set aside or pay any dividend or other
distribution on its capital stock except for regular quarterly dividends payable
on the Series B Stock with usual record and payment dates for such dividends and
dividends between the Company and any Subsidiary which is wholly-owned by the
Company, (ii) except as explicitly permitted by the Merger Agreement, issue,
sell or authorize the issuance or sale of any additional shares of its capital
stock or securities convertible into shares of its capital stock or (iii) split,
combine, redeem, purchase or otherwise acquire, or propose to redeem or purchase
or otherwise acquire, any shares of its capital stock.
14. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES AND EXCHANGE ACT
REGISTRATION
The Purchaser intends to seek to cause the Company to terminate the
registration of the Shares under the Exchange Act as soon after the completion
of the Offer as the requirements for such termination are met. if registration
of the Shares is not terminated prior to the Merger, the registration of the
Shares under the Exchange Act will be terminated following the consummation of
the Merger.
Market for the Shares. The purchase of the Shares pursuant to the Offer
will reduce the number of holders of Shares and the number of Shares that might
otherwise trade publicly and could adversely affect the liquidity and market
value of the remaining Shares held by the public. The extent of the public
market for Shares and availability of quotations will depend upon the number of
holders of Shares remaining at such time, the interest in maintaining a market
in the Shares on the part of securities firms, the possible termination of
registration under the Exchange Act, as described below, and other factors.
Exchange Act Registration. The Shares are currently registered under the
Exchange Act. Registration of the Shares under the Exchange Act may be
terminated upon application of the Company to the Commission if the Shares are
neither listed on a national securities exchange nor held by 300 or more holders
of record. Termination of registration of the Shares under the Exchange Act
would substantially reduce the information required to be furnished by the
Company to its shareholders and to the Commission and would make certain
provisions of the Exchange Act no longer applicable to the Company, such as the
short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the
requirement of furnishing a proxy statement pursuant to Section 14(a) of the
Exchange Act in connection with shareholders' meetings and the related
requirement of furnishing an annual report to shareholders and the requirements
of Rule 13e-3 under the Exchange Act with respect to "going private"
transactions. Furthermore, the ability of "affiliates" of the Company and
persons holding "restricted securities" of the Company to dispose of such
securities pursuant to Rule 144 or 144A promulgated under the Securities Act of
1933, as amended, may be impaired or eliminated. If registration of the Shares
is not terminated prior to the Merger, then the registration of the Shares under
the Exchange Act will be terminated following the consummation of the Merger.
15. CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, the Purchaser shall not
be required to accept for payment or pay for any tendered Shares, unless the
Minimum Condition has been satisfied. Furthermore, notwithstanding any other
provisions of the Offer, the Purchaser shall not be required to accept for
payment or pay for any tendered Shares until expiration or termination of any
applicable waiting period under the HSR Act and may, subject to the terms of the
Merger Agreement, amend the Offer or postpone the acceptance for payment of
tendered Shares if at any time on or after the commencement of the Offer and
before the Acceptance Date, any of the following occur:
(a) there shall have been instituted an injunction or other order,
decree, judgment or final ruling by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission of
competent jurisdiction or a statute, rule, regulation, executive order or
other action shall
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have been promulgated, or enacted, by a Governmental Entity or a
governmental, regulatory or administrative agency or commission of
competent jurisdiction which in any such case (i) restrains or prohibits
the making or consummation of the Offer or the consummation of the Merger;
(ii) prohibits or restricts the ownership or operation by Parent (or any of
its affiliates or subsidiaries including the Purchaser) of all or a
material portion of the Company's business or assets; or (iii) imposes
material limitations on the ability of the Purchaser effectively to acquire
or to hold or to exercise rights of ownership of the Shares, including,
without limitation, the right to vote the Shares purchased by the Purchaser
on all matters properly presented to the shareholders of the Company;
(b) the Company shall have entered into an agreement concerning any
Superior Proposal, or the Board or any committee thereof shall have
resolved to enter into such an agreement;
(c) any Person or group (as defined in Section 13(d)(3) of the
Exchange Act) (other than Parent, the Purchaser or any affiliate thereof)
shall have become the beneficial owner (as defined in Rule 13d-3
promulgated under the Exchange Act) of Shares representing a majority of
the total votes represented by all the Shares then outstanding on a fully
diluted basis;
(d) the Merger Agreement shall have been terminated in accordance with
its terms;
(e) there shall have occurred any event which would reasonably be
expected to have a Material Adverse Effect on the Company, except for
general economic changes, changes that affect the industry of the Company
or any Subsidiary generally and changes in the Company's business
attributable solely to actions taken by Parent or the Purchaser;
(f) the Company shall have breached or failed to perform in any
material respect any of its obligations, covenants or agreements under the
Merger Agreement and such breach or failure to perform is not curable, or
if curable, is not cured within ten (10) business days after written notice
of such breach or failure is given by Parent to the Company; or
(g) any of the representations and warranties of the Company set forth
in the Merger Agreement are not materially true and correct at the date of
the Merger Agreement and at the scheduled expiration of the Offer (as
though made as of such date, except that those representations and
warranties that address matters only as of a particular date shall remain
materially true and correct as of such date);
which, in the reasonable judgment of Parent and regardless of the circumstances
giving rise to any such condition, makes it inadvisable to proceed with the
Offer or with such acceptance for payment, purchase of, or payment for Shares.
16. CERTAIN REGULATORY AND LEGAL MATTERS
Except as described in this Section 16, based on information provided by
the Company, none of the Company, the Purchaser or Parent is aware of any
license or regulatory permit that appears to be material to the business of the
Company and its subsidiaries, taken as a whole, that might be adversely affected
by the Purchaser's acquisition of Shares as contemplated herein or of any
approval or other action by a domestic or foreign governmental, administrative
or regulatory agency or authority that would be required or desirable for the
acquisition and ownership of the Shares by the Purchaser as contemplated herein.
Should any such approval or other action be required or desirable, the Purchaser
and Parent presently contemplate that such approval or other action will be
sought, except as described below under "State Takeover Laws." While, except as
otherwise described in this Offer to Purchase, the Purchaser does not presently
intend to delay the acceptance for payment of or payment for Shares tendered
pursuant to the Offer pending the outcome of any such matter, there can be no
assurance that any such approval or other action, if needed, would be obtained
or would be obtained without substantial conditions or that failure to obtain
any such approval or other action might not result in consequences adverse to
the Company's business or that certain parts of the Company's business might not
have to be disposed of or other substantial conditions complied with in the
event that such approvals were not obtained or such other actions were not taken
or in order to obtain any such approval or other action. If certain types of
adverse action are taken with respect to the matters discussed below, the
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Purchaser could decline to accept for payment or pay for any Shares tendered.
See Section 15 for certain conditions to the Offer, including conditions with
respect to governmental actions.
State Takeover Laws. A number of states within the United States have
enacted takeover statutes that purport, in varying degrees, to be applicable to
attempts to acquire securities of corporations that are incorporated or have
assets, shareholders, executive offices or places of business in such states. In
Edgar v. MITE Corp., the Supreme Court of the United States held that the
Illinois Business Takeover Act, which involved state securities laws that made
the takeover of certain corporations more difficult, imposed a substantial
burden on interstate commerce and therefore was unconstitutional. In CTS Corp.
v. Dynamics Corp. of America, however, the Supreme Court of the United States
held that a state may, as a matter of corporate law and, in particular, with
respect to those aspects of corporate law concerning corporate governance,
constitutionally disqualify a potential acquiror from voting on the affairs of a
target corporation without prior approval of the remaining shareholders,
provided that such laws were applicable only under certain conditions.
Sections 180.1140 through 108.1144 of the WBC (the "Wisconsin Business
Combination Law") prohibit certain business combinations between a resident
domestic corporation (such as the Company) and an "interested stockholder"
(defined generally as any person who beneficially owns, directly or indirectly,
10% or more of the outstanding voting stock of a domestic corporation or who is
an affiliate or associate of the corporation and beneficially owned 10% or more
of the voting stock within the last three years) for a period of three years
after the date on which the person became an interested stockholder unless,
among other exceptions, the acquisition of the shares or the business
combination has been approved by the board of directors of the resident domestic
corporation prior to the date on which the interested stockholder became an
interested stockholder. Although the acquisition of the Shares pursuant to the
Merger after the purchase of Shares in the Offer would involve a business
combination between a resident domestic corporation and an interested
stockholder, the Company's execution of the Merger Agreement, which provides for
the Offer and the Merger, was unanimously approved by the Board of Directors of
the Company prior to the date on which the Purchaser will become an interested
stockholder. Accordingly, the Wisconsin Business Combination Law is inapplicable
to the Offer, the Merger and the exercise of the option under the Stock Option
Agreement.
Section 180.1150 of the WBC contains "Control Share" provisions limiting,
under certain circumstances, the voting power of a shareholder that holds in
excess of 20% of the voting power of certain corporations. As a result, Shares
purchased by the Purchaser from shareholders that constitute in excess of 20% of
the voting power in the election of directors of the Company will be limited to
10% of the full voting power of such Shares (Shares acquired from the Company
are not so limited). However, since the Minimum Condition is 75% of the Shares
outstanding on a fully diluted basis, if the Minimum Condition is met, the
Control Share provision of the WBC will not affect the Purchaser's ability to
approve the Merger.
Sections 180.1130 through 180.1134 of the WBC (the "Wisconsin Fair Price
Law") generally provide, with certain exceptions, that "business combinations"
involving a resident domestic corporation that has a class of voting stock
registered or traded on a national securities exchange or that is registered
under Section 12(g) of the Exchange Act (such as the Company) and a "significant
shareholder" (defined generally as any person that is the beneficial owner,
either directly or indirectly, of 10% or more of the voting power of the
outstanding voting shares of the resident domestic corporation) be approved by
the affirmative vote of at least 80% of the voting power of the resident
domestic corporation's stock and at least 66 2/3% of the voting power of the
corporation's stock not beneficially owned by the significant shareholder, in
each case voting together as a group, unless certain "fair price" conditions set
forth in Section 180.1132 of the WBC are satisfied. The amount to be paid for
each Share in both the Offer and pursuant to the Merger currently satisfies each
of the conditions of Section 180.1132 of the WBC. Accordingly, the restrictions
contained in the Wisconsin Fair Price Law are not currently applicable to the
Merger. Further, if the Merger is consummated as a Short-Form Merger, the Merger
will not be a "business combination" under, and will not be subject to the
provisions of, the Wisconsin Fair Price Law.
Based on information supplied by the Company's representations in the
Merger Agreement, the Purchaser does not believe that any other state takeover
statutes apply to the Offer or the Merger. Neither the
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Purchaser nor Parent has currently complied with any such state takeover statute
or regulation. The Purchaser reserves the right to challenge the applicability
or validity of any state law purportedly applicable to the Offer or the Merger
and nothing in this Offer to Purchase or any action taken in connection with the
Offer or the Merger is intended as a waiver of such right. If it is asserted
that any state takeover statute is applicable to the Offer or the Merger and an
appropriate court does not determine that it is inapplicable or invalid as
applied to the Offer or the Merger, the Purchaser might be required to file
certain information with, or to receive approvals from, the relevant state
authorities, and the Purchaser might be unable to accept for payment or pay for
Shares tendered pursuant to the Offer, or be delayed in consummating the Offer
or the Merger. In such case, the Purchaser may not be obligated to accept for
payment or pay for any Shares tendered pursuant to the Offer.
Antitrust. Under the HSR Act, and the rules and regulations that have been
promulgated thereunder by the Federal Trade Commission (the "FTC"), certain
acquisition transactions may not be consummated unless certain information has
been furnished to the Antitrust Division of the Department of Justice (the
"Antitrust Division") and the FTC and certain waiting period requirements have
been satisfied. The acquisition of Shares by the Purchaser pursuant to the Offer
and the Stock Option Agreement are subject to such requirements.
Under the provisions of the HSR Act applicable to the Offer, the purchase
of Shares under the Offer may not be consummated until the expiration of a
15-calendar day waiting period following the filing. Such filing is expected to
be made on or about September 15, 1999. Assuming such filing is made on
September 15, 1999, the waiting period with respect to the Offer would expire at
11:59 p.m., New York City time, on September 30, 1999 unless a request for
additional information or documentary material is received or the Antitrust
Division and the FTC terminates the waiting period prior thereto. If, within
such 15-day period, either the Antitrust Division or the FTC requests additional
information or material concerning the Offer, the waiting period will be
extended and would expire at 11:59 p.m., New York City time, on the tenth
calendar day after the date of substantial compliance with such request. Only
one extension of the waiting period pursuant to a request for additional
information is authorized by the HSR Act. Thereafter, such waiting period may be
extended only by court order or with consent. The Purchaser will not accept for
payment Shares tendered pursuant to the Offer unless and until the waiting
period requirements imposed by the HSR Act with respect to the Offer have been
satisfied. See "Section 15. Certain Conditions of the Offer."
The FTC and the Antitrust Division frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's acquisition of Shares
pursuant to the Offer and the Merger. At any time before or after the
Purchaser's acquisition of Shares, either the Antitrust Division or the FTC
could take such action under the antitrust laws as it deems necessary or
desirable in the public interest, including seeking to enjoin the acquisition of
Shares pursuant to the Offer or otherwise or seeking divestiture of Shares
acquired by the Purchaser or divestiture of substantial assets of IFS AB, Parent
or its affiliates. Private parties and state attorneys general may also bring
action under the antitrust laws under certain circumstances. Based upon an
examination of publicly available information relating to the businesses in
which IFS AB, Parent and the Company are engaged, IFS AB, Parent and the
Purchaser believe that the acquisition of Shares by the Purchaser will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer or other acquisition of Shares by the Purchaser on
antitrust grounds will not be made or, if such a challenge is made, of the
result.
17. FEES AND EXPENSES
Except as set forth below, Purchaser will not pay any fees or commissions
to any broker, dealer or other person for soliciting tenders of Shares pursuant
to the Offer.
Purchaser has retained MacKenzie Partners, Inc. ("MacKenzie") as the
Information Agent, and American Stock Transfer & Trust Company as the
Depositary, in connection with the Offer. The Information Agent may contact
holders of Shares by mail, telephone, telex, telecopy, telegraph and personal
interview and may request banks, brokers, dealers and other nominee shareholders
to forward materials relating to the Offer to beneficial owners.
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As compensation for acting as Information Agent in connection with the
Offer, MacKenzie will receive reasonable and customary compensation, plus
reimbursement for certain out-of-pocket expenses and will be indemnified against
certain liabilities and expenses in connection with the Offer, including certain
liabilities under the federal securities laws. As compensation for acting as
Depositary in connection with the Offer, American Stock Transfer & Trust Company
will receive reasonable and customary compensation for its services in
connection with the Offer, plus reimbursement for out-of-pocket expenses, and
will be indemnified against certain liabilities and expenses in connection with
the Offer, including certain liabilities under the federal securities laws.
Brokers, dealers, commercial banks and trust companies will be reimbursed by
Purchaser for customary handling and mailing expenses incurred by them in
forwarding material to their customers.
18. MISCELLANEOUS
Purchaser is not aware of any jurisdiction where the making of the Offer is
prohibited by any administrative or judicial action pursuant to any valid state
statute. If Purchaser becomes aware of any valid state statute prohibiting the
making of the Offer or the acceptance of Shares pursuant thereto, Purchaser will
make a good faith effort to comply with such state statute. If, after such good
faith effort, Purchaser cannot comply with any such state statute, the Offer
will not be made to (nor will tenders be accepted from or on behalf of) the
holders of Shares in such state. In any jurisdiction where the securities, blue
sky or other laws require the Offer to be made by a licensed broker or dealer,
the Offer is being made on behalf of Purchaser by one or more registered brokers
or dealers licensed under the laws of such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF PARENT OR PURCHASER NOT CONTAINED IN THIS OFFER TO
PURCHASE OR IN THE LETTER OF TRANSMITTAL, AND IF GIVEN OR MADE, SUCH INFORMATION
OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.
Pursuant to Rule 14d-3 of Regulation 14D under the Exchange Act, IFS AB,
Parent and Purchaser have filed with the Commission a Schedule 14D-1, together
with exhibits, furnishing certain additional information with respect to the
Offer. The Schedule 14D-1 and any amendments thereto, including exhibits, may be
inspected at, and copies may be obtained from, the same places and in the same
manner as set forth in "Section 7. Certain Information Regarding the Company,"
except that they will not be available at the regional offices of the
Commission.
IFS ACQUISITION, INC.
September 8, 1999
30
<PAGE> 34
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF IFS AB, PARENT AND PURCHASER
The following table sets forth the name, current business address,
citizenship and present principal occupation or employment and material
occupations, positions, offices or employments for the past five years of each
director and executive officer of IFS AB, Parent and Purchaser. Except for Mr.
Terje Vangbo, the current business address of each such person is c/o Industrial
& Financial Systems, IFS AB, Teknikringen 5 SE-583 30 Linkoping Sweden. Mr.
Vangbo's current business address is c/o IFS Americas, Inc., 900 East Golf Road,
Suite 900, Schaumberg, IL 60173. Unless otherwise indicated, each person is a
citizen of Sweden and has held his present position as indicated below for the
past five years. Unless otherwise indicated, each occupation set forth opposite
an individual's name refers to employment with IFS AB.
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION AND
NAME TITLE FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------ ----------- ----------------------------------------------------------
<S> <C> <C>
Terje Vangbo............ Area Mr. Vangbo has served as a Director of IFS AB since 1992
Manager, and was Chairman of the Board from 1992 to 1997. Mr.
North Vangbo has served as Area Manager, North America and
America and President of IFS, Inc. since February 1, 1999. Prior
Director thereto, and since 1994, Mr. Vangbo served as Chief
Executive Officer of IFS Norway, a wholly-owned subsidiary
of IFS AB. Mr. Vangbo is a citizen of Norway.
Bengt Nilsson........... President, Mr. Nilsson has served as a Director, President and Chief
Chief Executive Officer of IFS AB since 1983. Mr. Nilsson is
Executive also a director of BLN Forvaltnings AB, Nocom AB and
Officer and LinkTech AB.
Director
Jan Danielsson.......... Chairman Mr. Danielsson has served as a Director of IFS AB since
1997. Mr. Danielsson has served as a professional director
to certain companies during the last five years and in
such capacity was a member of Volvo Group Management. Mr.
Danielsson is also a director of Nordfalks AB, A-Banan
Projekt AB, Ekman & Co AB and AH Chalmerinvest.
Rolf Erichs............. Director Mr. Erichs has served as a Director of IFS AB since 1997.
For the last five years, Mr. Erichs has served as
President of Erichs Communication AB. Prior thereto, he
was Vice President-Information at Saab-Scania AB and at
Industrigruppen JAS AB. Mr. Erichs is also a director of
Erichs Communication AB.
Ake Fredriksson......... Director Mr. Fredriksson has served as a Director of IFS AB since
1998. During the last five years, Mr. Fredriksson has been
the President and Chief Executive Officer of Perstorp AB.
Mr. Fredriksson is also a director of Kemikontoret.
Lars Karlsson........... Director Mr. Karlsson has served as a Director of IFS AB since
1983. Mr. Karlsson is currently the President of Arnek
Advertising, AB. Until September of 1998, Mr. Karlsson was
the President and a director of Meson Capital AB. Mr.
Karlsson is also a director of Agaricus AB, LinkTech AB
and Mjardevi Science Park AB.
</TABLE>
I-1
<PAGE> 35
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION AND
NAME TITLE FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------ ----------- ----------------------------------------------------------
<S> <C> <C>
Bo Lerenius............. Director Mr. Lerenius has served as a Director of IFS AB since
1998. Mr. Lerenius has been responsible for the venture
capital operations for Stena AB since May 1999. For the
last five years, until August 1998, Mr. Lerenius served as
Chief Executive Officer of Stena Line AB. Mr. Lerenius is
also a director of Addum Industri AB, International Duty
Free Association, Skeppshypotekskassan, Stena Line AB,
Swedish Shipping Association, West Sweden Chamber of
Commerce and Swedish Fair.
Michael Hallen.......... President, Mr. Hallen has been President of IFS R&D since 1994.
IFS R&D
Sverker Lundberg........ Financial Mr. Lundberg has been the Financial Manager of IFS AB
Manager since 1994.
Jan Moodh............... Manager, Mr. Moodh has been Manager, Nordic Region of IFS AB since
Nordic 1985.
Region
Thomas Pettersson....... Manager, Mr. Pettersson has been Manager, EMEA Region of IFS AB
EMEA Region since 1985.
Manni Svensson.......... Marketing Mr. Svensson has been Marketing Manager of IFS AB since
Manager 1983.
Ulf Annas............... Manager, Mr. Annas has been Manager, Market Development of IFS AB
Market since 1985.
Development
</TABLE>
The name and position with Parent and Purchaser of each director and
officer of Parent and Purchaser are set forth below. The business address is 900
East Golf Road, Suite 900, Schaumberg, IL 60173. The five-year employment
history and citizenship of each person is set forth above.
<TABLE>
<CAPTION>
NAME TITLE
- ------------------------------ ------------------------------------------------------------
<S> <C>
Terje Vangbo.................. Sole Director, President and Secretary of IFS Americas, Inc.
Terje Vangbo.................. Sole Director, President and Secretary of IFS Acquisition,
Inc.
</TABLE>
I-2
<PAGE> 36
Facsimile copies (with manual signatures) of the Letter of Transmittal will be
accepted. The Letter of Transmittal and certificates for Shares and any other
required documents should be sent or delivered by each shareholder of the
Company or such shareholder's broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of the addresses set forth below:
THE DEPOSITARY FOR THE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Delivery:
40 Wall Street, 46th Floor (Eligible Institutions Only) 40 Wall Street, 46th Floor
New York, NY 10005 (718) 234-5001 New York, NY 10005
(Attention: Reorganization (Attention: Reorganization
Department) Confirm by Telephone: Department)
(718) 921-8200
For Information Call:
(718) 921-8200
</TABLE>
CONFIRM RECEIPT OF FACSIMILE BY TELEPHONE:
Any questions or requests for assistance or additional copies of the Offer
to Purchase and the related Letter of Transmittal, and other tender offer
materials, may be directed to the Information Agent at its address and telephone
number listed below. Shareholders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Offer.
The Information Agent for the Offer is:
[MACKENZIE PARTNERS, INC. LOGO]
156 FIFTH AVENUE
NEW YORK, NY 10010
(212) 929-5500
OR
1-800-322-2885
<PAGE> 1
EXHIBIT (a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
EFFECTIVE MANAGEMENT SYSTEMS, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED SEPTEMBER 8, 1999
BY
IFS ACQUISITION, INC.
A WHOLLY-OWNED SUBSIDIARY OF
IFS AMERICAS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK
CITY TIME, ON FRIDAY, OCTOBER 15, 1999, UNLESS THE OFFER IS EXTENDED.
THE DEPOSITARY FOR THE OFFER IS:
AMERICAN STOCK TRANSFER & TRUST COMPANY
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Delivery:
40 Wall Street, 46th Floor (Eligible Institutions Only) 40 Wall Street, 46th Floor
New York, NY 10005 (718) 234-5001 New York, NY 10005
(Attention: Reorganization (Attention: Reorganization
Department) Confirm by Telephone: Department)
(718) 921-8200
For Information Call:
(718) 921-8200
</TABLE>
CONFIRM RECEIPT OF FACSIMILE BY TELEPHONE:
- --------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) APPEAR(S) SHARE CERTIFICATE(S) AND SHARES TENDERED
ON SHARE CERTIFICATE(S) TENDERED) (ATTACH ADDITIONAL LIST, IF NECESSARY)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES
SHARE REPRESENTED NUMBER OF
CERTIFICATE BY SHARE SHARES
NUMBER(S)* CERTIFICATE(S)* TENDERED**
<S> <C> <C> <C>
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Total Shares:
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by stockholders delivering Shares by book-entry
transfer.
** Unless otherwise indicated, it will be assumed that all Shares evidenced by
each Share Certificate delivered to the Depositary are being tendered
hereby. See Instruction 4.
- --------------------------------------------------------------------------------
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET
FORTH ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION OTHER
THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY. YOU MUST SIGN THIS
LETTER OF TRANSMITTAL WHERE INDICATED BELOW AND COMPLETE THE SUBSTITUTE FORM W-9
PROVIDED BELOW.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
<PAGE> 2
This Letter of Transmittal is to be completed by stockholders either if
certificates evidencing Shares (as defined below) are to be forwarded herewith
or if delivery of Shares is to be made by book-entry transfer to the
Depositary's account at the Depository Trust Company ("DTC" or the "Book-Entry
Transfer Facility") pursuant to the book-entry transfer procedure described in
Section 3 of the Offer to Purchase (as defined below).
Stockholders whose certificates evidencing Shares (the "Share
Certificates") are not immediately available or who cannot deliver their Share
Certificates and all other documents required hereby to the Depositary prior to
the Expiration Date (as defined in Section 1 of the Offer to Purchase) or who
cannot complete the procedure for delivery by book-entry transfer on a timely
basis and who wish to tender their Shares must do so pursuant to the guaranteed
delivery procedure described in Section 3 of the Offer to Purchase. See
Instruction 2. DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY DOES
NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
[ ] CHECK HERE IF SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER TO THE
DEPOSITARY'S ACCOUNT AT THE BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE
FOLLOWING:
Name of Tendering Institution: --------------------------------------------
Account Number: ----------------- Transaction Code Number: ----------------
[ ] CHECK HERE IF SHARES ARE BEING TENDERED PURSUANT TO A NOTICE OF GUARANTEED
DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY AND COMPLETE THE FOLLOWING.
PLEASE ENCLOSE A PHOTOCOPY OF SUCH NOTICE OF GUARANTEED DELIVERY.
Name(s) of Registered Holder(s): -------------------------------------------
Window Ticket Number (if any): ------------------------------------
Date of Execution of Notice of Guaranteed Delivery: ------------------------
Name of Institution which Guaranteed Delivery: -----------------------------
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE INSTRUCTIONS SET FORTH IN THIS
LETTER OF TRANSMITTAL CAREFULLY.
Ladies and Gentlemen:
The undersigned hereby tenders to IFS Acquisition, Inc., a Wisconsin
corporation (the "Purchaser"), and a wholly-owned subsidiary of IFS Americas, a
Delaware corporation (the "Parent"), the above-described shares of common stock,
$.01 par value per share (the "Shares"), of Effective Management Systems, Inc.,
a Wisconsin corporation (the "Company"), pursuant to the Purchaser's offer to
purchase all outstanding Shares, at $4.50 per Share (the "Offer Price"), net to
the seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated September 8, 1999 (the
"Offer to Purchase"), receipt of which is hereby acknowledged, and in this
Letter of Transmittal (which, as amended from time to time, together constitute
the "Offer").
Subject to, and effective upon, acceptance for payment of the Shares
tendered herewith, in accordance with the terms of the Offer (including, if the
Offer is extended or amended, the terms and conditions of any such extension or
amendment), the undersigned hereby sells, assigns and transfers to, or upon the
order of, the Purchaser all right, title and interest in and to all the Shares
that are being tendered hereby and all dividends, distributions (including,
without limitation, distributions of additional Shares) and rights declared,
paid or distributed in respect of such Shares on or after September 1, 1999
(collectively, "Distributions"), and irrevocably appoints the Depositary the
true and lawful agent and attorney-in-fact of the undersigned with respect to
such Shares and all Distributions, with full power of substitution (such power
of attorney being deemed to be an irrevocable power coupled with an interest),
to (i) deliver Share Certificates evidencing such Shares and all Distributions,
or transfer ownership of such Shares and all Distributions on the account books
maintained by a Book-Entry Transfer Facility, together, in either case, with all
accompanying evidences of transfer and authenticity, to or upon the order of the
Purchaser, (ii) present such Shares and all Distributions for transfer on the
books of the Company and (iii) receive all benefits and otherwise exercise all
rights of beneficial ownership of such Shares and all Distributions, all in
accordance with the terms of the Offer.
By executing this Letter of Transmittal, the undersigned irrevocably
appoints designees of Purchaser as the attorneys and proxies of the undersigned,
each with full power of substitution, to the full extent of the undersigned's
rights with respect to the Shares tendered by the undersigned and accepted for
payment by the Purchaser (and any and all Distributions). All such proxies shall
be considered coupled with an interest in the tendered Shares. This appointment
will be effective if, when, and only to the extent that, the Purchaser accepts
such Shares for payment pursuant to the Offer. Upon such acceptance for payment,
all prior proxies given by the undersigned with respect to such Shares (and such
other Shares and securities) will, without further action, be revoked, and no
subsequent proxies may be given nor any subsequent written consent executed by
the undersigned (and, if given or executed, will not be deemed to be effective)
with respect thereto. The designees of the Purchaser will, with respect to the
Shares and other securities for which the appointment is effective, be empowered
to exercise all voting and other rights of the undersigned as they in their sole
discretion may deem proper at any annual or special meeting of the stockholders
of the Company or any adjournment or postponement thereof, by written consent in
lieu of any such meeting or otherwise, and the Purchaser reserves the right to
require that, in order for Shares or other securities to be deemed validly
tendered, immediately upon the Purchaser's acceptance for payment of such
Shares, the Purchaser must be able to exercise full voting rights with respect
to such Shares.
<PAGE> 4
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the Shares
tendered hereby and all Distributions, and that when such Shares are accepted
for payment by the Purchaser, the Purchaser will acquire good, marketable and
unencumbered title thereto and to all Distributions, free and clear of all
liens, restrictions, charges and encumbrances, and that none of such Shares and
Distributions will be subject to any adverse claim. The undersigned, upon
request, shall execute and deliver all additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the Shares tendered hereby and all Distributions. In
addition, the undersigned shall remit and transfer promptly to the Depositary
for the account of the Purchaser all Distributions in respect of the Shares
tendered hereby, accompanied by appropriate documentation of transfer, and,
pending such remittance and transfer or appropriate assurance thereof, the
Purchaser shall be entitled to all rights and privileges as owner of each such
Distribution and may withhold the entire purchase price of the Shares tendered
hereby or deduct from such purchase price, the amount or value of such
Distribution as determined by the Purchaser in its sole discretion.
No authority herein conferred or agreed to be conferred shall be affected
by, and all such authority shall survive, the death or incapacity of the
undersigned. All obligations of the undersigned hereunder shall be binding upon
the heirs, personal representatives, successors and assigns of the undersigned.
Except as otherwise stated in the Offer to Purchase, this tender is irrevocable.
The undersigned understands that tenders of Shares pursuant to any one of
the procedures described in Section 3 of the Offer to Purchase and in the
instructions hereto will constitute the undersigned's acceptance of the terms
and conditions of the Offer. The Purchaser's acceptance of such Shares for
payment will constitute a binding agreement between the undersigned and the
Purchaser upon the terms and subject to the conditions of the Offer, including,
without limitation, the undersigned's representation and warranty that the
undersigned owns the Shares being tendered. The undersigned acknowledges that no
interest will be paid on the Offer Price for tendered Shares regardless of an
extension of the Offer or any delay in making such payment.
Unless otherwise indicated herein in the box entitled "Special Payment
Instructions," please issue the check for the purchase price of all Shares
purchased, and return all Share Certificates evidencing Shares not purchased or
not tendered, in the name(s) of the registered holder(s) appearing above under
"Description of Shares Tendered." Similarly, unless otherwise indicated in the
box entitled "Special Delivery Instructions," please mail the check for the
purchase price of all Shares purchased and all Share Certificates evidencing
Shares not tendered or not purchased (and accompanying documents, as
appropriate) to the address(es) of the registered holder(s) appearing above
under "Description of Shares Tendered." In the event that the boxes entitled
"Special Payment Instructions" and "Special Delivery Instructions" are both
completed, please issue the check for the purchase price of all Shares purchased
and return all Share Certificates evidencing Shares not purchased or not
tendered in the name(s) of, and mail such check and Share Certificates to, the
person(s) so indicated. The undersigned recognizes that the Purchaser has no
obligation, pursuant to the Special Payment Instructions, to transfer any Shares
from the name of the registered holder(s) thereof if the Purchaser does not
purchase any of the Shares tendered hereby.
<PAGE> 5
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares not tendered or not purchased
are to be issued in the name of someone other than the undersigned.
Issue: [ ] Check [ ] Share Certificate(s) to:
Name
- --------------------------------------------------------------------------------
(Print)
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(ZIP Code)
- --------------------------------------------------------------------------------
(Taxpayer Identification or Social Security Number)
(See Substitute Form W-9 on reverse side)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if the check for the purchase price of Shares
purchased or Share Certificates evidencing Shares not tendered or not purchased
are to be mailed to someone other than the undersigned, or to the undersigned at
an address other than that shown under "Description of Shares Tendered."
Issue: [ ] Check [ ] Share Certificate(s) to:
Name
- --------------------------------------------------------------------------------
(Print)
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(ZIP Code)
<PAGE> 6
IMPORTANT
STOCKHOLDERS: SIGN HERE
(ALSO PLEASE COMPLETE SUBSTITUTE FORM W-9 INCLUDED HEREIN)
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
Signature(s) of Stockholder(s)
Dated:
- ------------------------------------, 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on
Share Certificates or on a security position listing or by person(s) authorized
to become registered holder(s) by certificates and documents transmitted
herewith. If signature is by trustee, executor, administrator, guardian,
attorney-in-fact, officer of a corporation or other person acting in a fiduciary
or representative capacity, please provide the following information. See
Instruction 5 hereof.)
Name(s):
- --------------------------------------------------------------------------------
(Please Print)
Capacity (full title):
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(Zip Code)
Area Code and Telephone No.:
- --------------------------------------------------------------------------------
Tax Identification or Social Security No.:
- ---------------------------------------------------------------------------
(See substitute Form W-9 included herein)
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5 HEREOF)
FOR USE BY FINANCIAL INSTITUTIONS ONLY.
PLACE MEDALLION GUARANTEE IN THE SPACE BELOW.
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. All signatures on this Letter of Transmittal
must be guaranteed by a firm which is a member of a registered national
securities exchange or of the National Association of Securities Dealers, Inc.,
or by a financial institution (including most commercial banks, savings and loan
associations and brokerage houses) that is a bank, broker, dealer, credit union,
savings association or other entity which is a member in good standing of the
Securities Transfer Agents Medallion Program or by any other bank, broker,
dealer, credit union, savings association or other entity which is an "eligible
guarantor institution," as such term is defined in Rule 17Ad-15 under the
Securities Exchange Act of 1934, as amended (each of the foregoing constituting
an "Eligible Institution"), unless (i) this Letter of Transmittal is signed by
the registered holder(s) of the Shares (which term, for purposes of this
document includes any participant in a Book-Entry Transfer Facility system whose
name appears on a security position listing as the owner of the Shares) tendered
hereby and such registered holder(s) has (have) completed neither the box
entitled "Special Payment Instructions" nor the box entitled "Special Delivery
Instructions" on the reverse hereof or (ii) such Shares are tendered for the
account of an Eligible Institution. See Instruction 5.
2. DELIVERY OF LETTER OF TRANSMITTAL AND SHARE CERTIFICATES. This Letter
of Transmittal is to be used if Share Certificates are to be forwarded herewith,
if Shares are to be delivered by book-entry transfer pursuant to the procedure
set forth in Section 3 of the Offer to Purchase. Share Certificates evidencing
all physically tendered Shares, or a confirmation of a book-entry transfer into
the Depositary's account at a Book-Entry Transfer Facility of all Shares
delivered by book-entry transfer, together in each case with a properly
completed and duly executed Letter of Transmittal (or a manually signed
facsimile thereof), or an Agent's Message in connection with a book-entry
transfer, and any other documents required by this Letter of Transmittal, must
be received by the Depositary at one of its addresses set forth herein prior to
the Expiration Date (as defined in the Offer to Purchase). If Share Certificates
are forwarded to the Depositary in multiple deliveries, a properly completed and
duly executed Letter of Transmittal must accompany each such delivery.
Stockholders whose Share Certificates are not immediately available, who cannot
deliver their Share Certificates and all other required documents to the
Depositary prior to the Expiration Date or who cannot complete the procedure for
delivery by book-entry transfer on a timely basis may tender their Shares
pursuant to the guaranteed delivery procedure described in Section 3 of the
Offer to Purchase. Pursuant to such procedure: (i) such tender must be made by
or through an Eligible Institution; (ii) a properly completed and duly executed
Notice of Guaranteed Delivery, substantially in the form made available by the
Purchaser, must be received by the Depositary prior to the Expiration Date; and
(iii) the Share Certificates, representing all tendered Shares, in proper form
for transfer (or a Book-Entry Confirmation with respect to all such Shares),
together with a properly completed and duly executed Letter of Transmittal for
(or a manually signed facsimile thereof), with any required signature
guarantees, or, in the case of a book-entry transfer, an Agent's Message, and
any other required documents must be received by the Depositary within three New
York Stock Exchange trading days after the date of execution of such Notice of
Guaranteed Delivery, all as described in Section 3 of the Offer to Purchase.
THE METHOD OF DELIVERY OF THIS LETTER OF TRANSMITTAL, SHARE CERTIFICATES
AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH ANY BOOK-ENTRY
TRANSFER FACILITY, IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER.
SHARE CERTIFICATES, THIS LETTER OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS
WILL BE DEEMED DELIVERED ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY
(INCLUDING, IN THE CASE OF A BOOK-ENTRY TRANSFER, BY BOOK-ENTRY CONFIRMATION).
IF DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
No alternative, conditional or contingent tenders will be accepted and no
fractional Shares will be purchased. By execution of this Letter of Transmittal
(or a manually signed facsimile hereof), all tendering stockholders waive any
right to receive any notice of the acceptance of their Shares for payment.
3. INADEQUATE SPACE. If the space provided herein under "Description of
Shares Tendered" is inadequate, the Share Certificate numbers, the number of
Shares evidenced by such Share Certificates and the number of Shares tendered
should be listed on a separate schedule and attached hereto.
<PAGE> 8
4. PARTIAL TENDERS (NOT APPLICABLE TO STOCKHOLDERS WHO TENDER BY
BOOK-ENTRY TRANSFER). If fewer than all the Shares evidenced by any Share
Certificate delivered to the Depositary herewith are to be tendered hereby, fill
in the number of Shares which are to be tendered in the box entitled "Number of
Shares Tendered." In such cases, new Share Certificate(s) evidencing the
remainder of the Shares that were evidenced by the Share Certificates delivered
to the Depositary herewith will be sent to the person(s) signing this Letter of
Transmittal, unless otherwise provided in the box entitled "Special Delivery
Instructions" on the reverse hereof, as soon as practicable after the expiration
or termination of the Offer. All Shares evidenced by Share Certificates
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated.
5. SIGNATURES ON LETTER OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder(s) of the Shares
tendered hereby, the signature(s) must correspond with the name(s) as written on
the face of the Share Certificates evidencing such Shares without alteration,
enlargement or any other change whatsoever.
If any Share tendered hereby is owned of record by two or more persons, all
such persons must sign this Letter of Transmittal.
If any of the Shares tendered hereby are registered in the names of
different holders, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations of such
Share.
If this Letter of Transmittal is signed by the registered holder(s) of the
Shares tendered hereby, no endorsements of Share Certificates or separate stock
powers are required, unless payment is to be made to, or Share Certificates
evidencing the Shares not tendered or not purchased are to be issued in the name
of, a person other than the registered holder(s), in which case, the Share
Certificate(s) evidencing the Shares tendered hereby must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name(s) of the registered holder(s) appear(s) on such Share Certificate(s).
Signatures on such Share Certificate(s) and stock powers must be guaranteed by
an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Shares tendered hereby, Share Certificate(s)
evidencing the Shares tendered hereby must be endorsed or accompanied by
appropriate stock powers, in either case signed exactly as the name(s) of the
registered holder(s) appear(s) on such Share Certificate(s). Signatures on such
Share Certificate(s) and stock powers must be guaranteed by an Eligible
Institution.
If this Letter of Transmittal or any Share Certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity for the registered holder, such person should so indicate when signing,
and proper evidence satisfactory to the Purchaser of such person's authority so
to act must be submitted.
6. STOCK TRANSFER TAXES. Except as otherwise provided in this Instruction
6, the Purchaser will pay all stock transfer taxes with respect to the sale and
transfer of any Shares to it or its order pursuant to the Offer. If, however,
payment of the purchase price of any Shares purchased is to be made to, or Share
Certificate(s) evidencing Shares not tendered or not purchased are to be issued
in the name of, a person other than the registered holder(s), the amount of any
stock transfer taxes (whether imposed on the registered holder(s), such other
person or otherwise) payable on account of the transfer to such other person
will be deducted from the purchase price of such Shares purchased, unless
evidence satisfactory to the Purchaser of the payment of such taxes, or
exemption therefrom is submitted. Except as provided in this Instruction 6, it
will not be necessary for transfer tax stamps to be affixed to the Share
Certificates evidencing the Shares tendered hereby.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check for the purchase
price of any Shares tendered hereby is to be issued, or Share Certificate(s)
evidencing Shares not tendered or not purchased are to be issued, in the name of
a person other than the person(s) signing this Letter of Transmittal or if such
check or any such Share Certificate is to be sent to someone other than the
person(s) signing this Letter of Transmittal or to the person(s) signing this
Letter of Transmittal but at an address other than that shown in the box
entitled "Description of Shares Tendered" set forth herein, the appropriate
boxes set forth on this Letter of Transmittal must be completed. Stockholders
tendering Shares by book-entry transfer may request that Shares not purchased be
credited to such account at the Book-Entry Transfer Facility as such stockholder
may designate in the box entitled "Special Payment Instructions." If no such
instructions are given, any such Shares not purchased will be returned by
crediting the account at the Book-Entry Transfer Facility.
8. WAIVER OF CONDITIONS. The conditions to the Offer may be waived by the
Purchaser in whole or in part at any time and from time to time in its sole
discretion.
9. QUESTIONS AND REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions
and requests for assistance may be directed to the Information Agent at the
address or telephone numbers set forth herein. Additional copies of the Offer to
Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be obtained from the Information Agent or from brokers, dealers, commercial
banks or trust companies.
<PAGE> 9
10. SUBSTITUTE FORM W-9. Each tendering stockholder is required to
provide the Depositary with a correct Taxpayer Identification Number ("TIN") on
the Substitute Form W-9 which is provided under "Important Tax Information"
below, and to certify, under penalties of perjury, that such number is correct
and that such stockholder is not subject to backup withholding of federal income
tax. If a tendering stockholder has been notified by the Internal Revenue
Service that such stockholder is subject to back-up withholding, such
stockholder must cross out item (2) of the Certification box of the Substitute
Form W-9, unless such stockholder has since been notified by the Internal
Revenue Service that such stockholder is no longer subject to backup
withholding. Failure to provide the information on the Substitute Form W-9 may
subject the tendering stockholder to 31% federal income tax withholding on the
payment of the purchase price of all Shares purchased from such stockholder. If
the tendering stockholder has not been issued a TIN and has applied for one or
intends to apply for one in the near future, such stockholder should write
"Applied For" in the space provided for the TIN in Part I of the Substitute Form
W-9, and sign and date the Substitute Form W-9. If "Applied For" is written in
Part I and the Depositary is not provided with a TIN within 60 days, the
Depositary will withhold 31% on all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE
HEREOF), PROPERLY COMPLETED AND DULY EXECUTED (TOGETHER WITH ANY REQUIRED
SIGNATURE GUARANTEES AND SHARE CERTIFICATES OR CONFIRMATION OF BOOK-ENTRY
TRANSFER AND ALL OTHER REQUIRED DOCUMENTS) OR A PROPERLY COMPLETED AND DULY
EXECUTED NOTICE OF GUARANTEED DELIVERY MUST BE RECEIVED BY THE DEPOSITARY ON OR
PRIOR TO THE EXPIRATION DATE (AS DEFINED IN THE OFFER TO PURCHASE).
IMPORTANT TAX INFORMATION
Under the federal income tax law, a stockholder whose tendered Shares are
accepted for payment is required by law to provide the Depositary (as payor)
with such stockholder's correct TIN on Substitute Form W-9 below. If such
stockholder is an individual, the TIN is such stockholder's social security
number. If the Depositary is not provided with the correct TIN, the stockholder
may be subject to a $50 penalty imposed by the Internal Revenue Service. In
addition, payments that are made to such stockholder with respect to Shares
purchased pursuant to the Offer may be subject to backup withholding of 31%.
Certain stockholders (including, among others, corporations and certain
foreign individuals) are not subject to these backup withholding and reporting
requirements. In order for a foreign individual to qualify as an exempt
recipient, such individual must submit a statement, signed under penalties of
perjury, attesting to such individual's exempt status. Forms of such statements
can be obtained from the Depositary. See the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 for
additional instructions. A stockholder should consult his or her tax advisor as
to such stockholder's qualification for exemption from backup withholding and
the procedure for obtaining such exemption.
If backup withholding applies, the Depositary is required to withhold 31%
of any payments made to the stockholder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will be
reduced by the amount of tax withheld. If withholding results in an overpayment
of taxes, a refund may be obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments that are made to a stockholder
with respect to Shares purchased pursuant to the Offer, the stockholder is
required to notify the Depositary of such stockholder's correct TIN by
completing the form below certifying (i) that the TIN provided on Substitute
Form W-9 is correct (or that such stockholder is awaiting a TIN), and (ii) that
(y) such stockholder has not been notified by the Internal Revenue Service that
such stockholder is subject to backup withholding as a result of a failure to
report all interest or dividends or (z) the Internal Revenue Service has
notified such stockholder that such stockholder is no longer subject to backup
withholding.
WHAT NUMBER TO GIVE THE DEPOSITARY
The stockholder is required to give the Depositary the social security
number or employer identification number of the record holder of the Shares
tendered hereby. If the Shares are in more than one name or are not in the name
of the actual owner, consult the enclosed Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9 for additional guidance on
which number to report. If the tendering stockholder has not been issued a TIN
and has applied for a number or intends to apply for a number in the near
future, the stockholder should write "Applied For" in the space provided for the
TIN in Part I, and sign and date the Substitute Form W-9. If "Applied For" is
written in Part I and the Depositary is not provided with a TIN within 60 days,
the Depositary will withhold 31% of all payments of the purchase price to such
stockholder until a TIN is provided to the Depositary.
<PAGE> 10
ALL TENDERING STOCKHOLDERS MUST COMPLETE THE FOLLOWING:
PAYOR'S NAME:
<TABLE>
<S> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
SUBSTITUTE PART I -- Taxpayer Identification Number -- For PART III --
FORM W-9 all accounts, enter your taxpayer -------------------------------
DEPARTMENT OF THE identification number in Part III below. (For Social Security Number
TREASURY most individuals, this is your social security or
INTERNAL REVENUE SERVICE number. If you do not have a number, see
Obtaining a Number in the enclosed Guidelines -------------------------------
PAYER'S REQUEST FOR TAXPAYER and complete as instructed.) Certify by signing Employee ID Number
IDENTIFICATION NUMBER ("TIN") and dating below. Note: If the account is in (If awaiting TIN write "Applied For")
more than one name, see the chart in the
enclosed Guidelines to determine which number
to give the payor.
----------------------------------------------------------------------------------------
PART II -- For Payees exempt from backup withholding, see the enclosed Guidelines and
complete as instructed therein.
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
CERTIFICATION -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number
(or I am waiting for a number to be issued to me); and
(2) I am not subject to backup withholding either because I have not been
notified by the Internal Revenue Service (the "IRS") that I am subject to
backup withholding as a result of a failure to report all interest or
dividends, or the IRS has notified me that I am no longer subject to
backup withholding.
CERTIFICATE INSTRUCTIONS -- You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of under reporting interest or dividends on your tax return. However, if after
being notified by the IRS that you were subject to backup withholding you
received another notification from the IRS that you are no longer subject to
backup withholding, do not cross out such item (2). (Also see instructions in
the enclosed Guidelines.)
- --------------------------------------------------------------------------------
Signature Date
--------------------------------------------- --------------
- --------------------------------------------------------------------------------
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU ARE AWAITING (OR WILL
SOON APPLY FOR) A TAXPAYER IDENTIFICATION NUMBER
- --------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification
number has not been issued to me and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office or
(b) I intend to mail or deliver an application in the near future. I
understand that, notwithstanding the information I provided in Part I of the
Substitute Form W-9 (and the fact that I have completed this Certificate of
Awaiting Taxpayer Identification Number), if I do not provide a correct
taxpayer identification number to the Depositary within thirty (30) days, 31%
of all reportable payments made to me thereafter may be withheld.
-------------------------------------------------------------------------------
Signature Date
--------------------------------------------- --------------
- --------------------------------------------------------------------------------
THE INFORMATION AGENT FOR THE OFFER IS:
[MACKENZIE PARTNERS, INC. LOGO]
156 Fifth Avenue
New York, NY 10010
Banks and Brokers Call Collect: (212) 929-5500
All Others Call Toll-Free: (800) 322-2885
September 8, 1999
<PAGE> 1
EXHIBIT (a)(3)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
EFFECTIVE MANAGEMENT SYSTEMS, INC.
TO IFS ACQUISITION, INC.
A WHOLLY-OWNED SUBSIDIARY OF
IFS AMERICAS, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
This Notice of Guaranteed Delivery, or one substantially in the form
hereof, must be used to accept the Offer (as defined below) if (i) certificates
(the "Share Certificates") evidencing shares of common stock, $.01 par value per
share (the "Shares"), of Effective Management Systems, Inc., a Wisconsin
corporation, are not immediately available, (ii) time will not permit all
required documents to reach American Stock Transfer & Trust Company, as
Depositary (the "Depositary"), prior to the Expiration Date (as defined in
Section 1 of the Offer to Purchase (as defined below)) or (iii) the procedure
for book-entry transfer cannot be completed on a timely basis. This Notice of
Guaranteed Delivery may be delivered by hand or transmitted by telegram,
facsimile transmission or mail to the Depositary. See Section 3 of the Offer to
Purchase.
THE DEPOSITARY FOR THE OFFER IS:
American Stock Transfer & Trust Company
<TABLE>
<S> <C> <C>
By Mail: By Facsimile Transmission: By Hand or Overnight Delivery:
40 Wall Street, 46th Floor (Eligible Institutions Only) 40 Wall Street, 46th Floor
New York, New York 10005 (718) 234-5001 New York, New York 10005
Attn: Reorganization Department Attn: Reorganization Department
Confirm by Telephone:
(718) 921-8200
For Information Call:
(718) 921-8200
</TABLE>
DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN AS
SET FORTH ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE TRANSMISSION
OTHER THAN AS SET FORTH ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY.
THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO GUARANTEE
SIGNATURES. IF A SIGNATURE ON A LETTER OF TRANSMITTAL IS REQUIRED TO BE
GUARANTEED BY AN "ELIGIBLE INSTITUTION" UNDER THE INSTRUCTIONS THERETO, SUCH
SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE PROVIDED IN THE
SIGNATURE BOX ON THE LETTER OF TRANSMITTAL.
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to IFS Acquisition Inc., a Wisconsin
corporation, and a wholly owned subsidiary of IFS Americas, Inc., a Delaware
corporation, upon terms and subject to the conditions set forth in the Offer to
Purchase, dated September 8, 1999 (the "Offer to Purchase"), and the related
Letter of Transmittal, receipt of each of which is hereby acknowledged, the
number of Shares specified below pursuant to the guaranteed delivery procedures
described in Section 3 of the Offer to Purchase.
<TABLE>
<S> <C>
Number of Shares: Name(s) of Record Holder(s):
- --------------------------------------------------- ---------------------------------------------------
Certificate Nos. (if available): ---------------------------------------------------
- --------------------------------------------------- Please Print
If Shares will be delivered by book-entry transfer, Address:
provide the following information: ---------------------------------------------------
Account Number: ------------------------------- ---------------------------------------------------
Zip Code
Area Code and Tel. No.: -----------------------
Signature(s): ------------------------------------
---------------------------------------------------
Dated: ------------------------------------, 1999
</TABLE>
2
<PAGE> 3
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
The undersigned, a bank, broker, dealer, credit union, savings association
or other entity which is a member in good standing of the Securities Transfer
Agents Medallion Program or a bank, broker, dealer, credit union, savings
association or other entity which is an "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934,
as amended (each of the foregoing constituting an "Eligible Institution"),
guarantees the delivery to the Depositary of the Shares tendered hereby, in
proper form of transfer, or a Book-Entry Confirmation (as defined in the Offer
to Purchase), together with a properly completed and duly executed Letter of
Transmittal (or a manually signed facsimile thereof) with any required signature
guarantees, or an Agent's Message (as defined in the Offer to Purchase) in the
case of a book-entry delivery, and any other required documents within three New
York Stock Exchange trading days of the date hereof.
The Eligible Institution that completes this form must communicate the
guarantee to the Depositary and must deliver the Letter of Transmittal and
certificates representing Shares to the Depositary within the time period set
forth herein. Failure to do so could result in financial loss to such Eligible
Institution.
<TABLE>
<S> <C>
- --------------------------------------------------- ---------------------------------------------------
Name of firm Authorized Signature
- --------------------------------------------------- ---------------------------------------------------
Address Title
- --------------------------------------------------- Name: -------------------------------------------
Zip Code Please Type or Print
Area Code and Tel. No.: ----------------------- Date: ------------------------------------, 1999
DO NOT SEND SHARE CERTIFICATES WITH THIS NOTICE OF GUARANTEED
DELIVERY. SHARE CERTIFICATES SHOULD BE SENT WITH YOUR
LETTER OF TRANSMITTAL.
</TABLE>
3
<PAGE> 1
EXHIBIT (a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
EFFECTIVE MANAGEMENT SYSTEMS, INC.
AT
$4.50 NET PER SHARE OF COMMON STOCK
BY
IFS ACQUISITION, INC.
A WHOLLY-OWNED SUBSIDIARY OF
IFS AMERICAS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
FRIDAY, OCTOBER 15, 1999, UNLESS THE OFFER IS EXTENDED.
September 8, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
We have been appointed by IFS Acquisition, Inc., a Wisconsin corporation
(the "Purchaser") and a wholly-owned subsidiary of IFS Americas, Inc., a
Delaware corporation ("Parent"), to act as Information Agent, in connection with
the Purchaser's offer to purchase all outstanding shares of common stock, $.01
par value per share (the "Shares"), of Effective Management Systems, Inc., a
Wisconsin corporation (the "Company"), at a price of $4.50 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated September 8, 1999 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which, as
amended from time to time, together with the Offer to Purchase, constitute the
"Offer") enclosed herewith. Parent is a wholly-owned subsidiary of Industrial &
Financial Systems, IFS AB, a corporation organized under the laws of Sweden
("IFS AB").
THE OFFER IS BEING MADE PURSUANT TO THE AGREEMENT AND PLAN OF MERGER, DATED
AS OF SEPTEMBER 1, 1999 (THE "MERGER AGREEMENT"), BY AND AMONG PARENT, THE
PURCHASER AND THE COMPANY. THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY
APPROVED THE MERGER AGREEMENT, THE STOCK OPTION AGREEMENT DESCRIBED IN THE OFFER
TO PURCHASE, THE OFFER AND THE MERGER AND THE OTHER TRANSACTIONS CONTEMPLATED
THEREBY AND DETERMINED THAT THE OFFER PRICE TO BE RECEIVED FOR EACH SHARE IN THE
OFFER AND THE MERGER IS FAIR TO THE SHAREHOLDERS OF THE COMPANY, AND UNANIMOUSLY
RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT
THERETO.
Also enclosed is the letter to stockholders of the Company from the
President and Chief Executive Officer of the Company accompanied by the
Company's Solicitation/Recommendation Statement on Schedule 14D-9.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION DATE OF THE
<PAGE> 2
OFFER THAT NUMBER OF SHARES WHICH WILL REPRESENT AT LEAST 75% OF THE OUTSTANDING
SHARES ON A FULLY DILUTED BASIS (WITHOUT GIVING PRO FORMA EFFECT TO THE
POTENTIAL ISSUANCE OF ANY SHARES ISSUABLE UNDER THE STOCK OPTION AGREEMENT) ON
THE DATE OF PURCHASE. THE PURCHASER WILL NOT BE REQUIRED TO ACCEPT FOR PAYMENT
OR PAY FOR TENDERED SHARES UNTIL THE EXPIRATION OF ALL APPLICABLE WAITING
PERIODS UNDER THE HART-SCOTT-RODINO ANTITRUST IMPROVEMENTS ACT OF 1976, AS
AMENDED (THE "HSR ACT"). THE OFFER IS ALSO SUBJECT TO OTHER TERMS AND CONDITIONS
DESCRIBED IN SECTION 15 OF THE OFFER TO PURCHASE. THE OFFER IS NOT CONDITIONED
ON THE RECEIPT OF FINANCING. THE FINANCING IS BEING RAISED BY IFS AB, PURSUANT
TO A RIGHTS OFFERING TO ITS EXISTING STOCKHOLDERS AND IS GUARANTEED BY AN
UNCONDITIONAL AND IRREVOCABLE OBLIGATION BY THE INVESTMENT BANKING FIRM, ALFRED
BERG FONDKOMMISSION AB. SEE SECTION 9 OF THE OFFER TO PURCHASE.
Please furnish copies of the enclosed materials to those of your clients
for whose accounts you hold Shares registered in your name or in the name of
your nominee.
For your information and for forwarding to your clients for whom you hold
Shares registered in your name or in the name of your nominee, or who hold
Shares registered in their own names, we are enclosing the following documents:
1. The Offer to Purchase dated September 8, 1999.
2. The Company's Solicitation/Recommendation Statement on Schedule
14D-9.
3. The Letter of Transmittal to be used by holders of Shares in
accepting the Offer and tendering Shares. Facsimile copies of the Letter of
Transmittal (with manual signatures) may be used to tender Shares.
4. The Notice of Guaranteed Delivery to be used to accept the Offer if
the certificates evidencing such Shares (the "Share Certificates") are not
immediately available or time will not permit all required documents to
reach the Depositary (as defined in the Offer to Purchase) prior to the
Expiration Date (as defined in the Offer to Purchase) or the procedure for
book-entry transfer cannot be completed by the Expiration Date.
5. A printed form of letter which may be sent to your clients for
whose accounts you hold Shares registered in your name or in the name of
your nominee, with space provided for obtaining such clients' instructions
with regard to the Offer.
6. Guidelines of the Internal Revenue Service for Certification of
Taxpayer Identification Number on Substitute Form W-9 providing information
relating to backup federal income tax withheld.
7. A return envelope addressed to the Depositary (as defined in the
Offer to Purchase).
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment), the Purchaser will accept for payment and will pay for all Shares
validly tendered prior to the Expiration Date and not properly withdrawn
promptly after the latest to occur of (i) the Expiration Date, (ii) the
expiration of all applicable waiting periods under the HSR Act and (iii) the
satisfaction or waiver of the conditions to the Offer set forth in Section 15 of
the Offer to Purchase. For purposes of the Offer, the Purchaser will be deemed
to have accepted for payment, and thereby purchased, validly tendered Shares as,
if and when the Purchaser gives oral or written notice to the Depositary of its
acceptance of such Shares for payment pursuant to the Offer. In all cases,
payment for Shares purchased pursuant to the Offer will be made only after
timely receipt by the Depositary of (i) Share Certificates or a timely
confirmation of a book-entry transfer of Shares into the Depositary's account at
the Book-Entry Transfer Facility (as defined in Section 3 of the Offer to
Purchase) pursuant to the procedures set forth in Section 3 of the Offer to
Purchase, (ii) the Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, with any required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message (as
defined in Section 3 of the Offer to Purchase), and (iii) all other
2
<PAGE> 3
documents required by the Letter of Transmittal. Under no circumstances will
interest on the purchase price for Shares be paid by the Purchaser, regardless
of any delay in making such payment.
The Purchaser will not pay any fees or commissions to any broker or dealer
or any other person (other than the Information Agent and the Depositary as
described in Section 17 of the Offer to Purchase) in connection with the
solicitation of tenders of Shares pursuant to the Offer. Purchaser will,
however, upon request, reimburse you for customary mailing and handling expenses
incurred by you in forwarding the enclosed materials to your clients.
The Purchaser will pay any stock transfer taxes with respect to the
transfer and sale to it or its order pursuant to the Offer, except as otherwise
provided in Instruction 6 of the Letter of Transmittal, as well as any charges
and expenses of the Depositary and the Information Agent.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON FRIDAY, OCTOBER 15, 1999 UNLESS THE OFFER IS EXTENDED.
In order to take advantage of the Offer, a duly executed and properly
completed Letter of Transmittal (or a manually signed facsimile thereof), with
any required signature guarantees and any other required documents, should be
sent to the Depositary, and Share Certificates should be delivered or such
Shares should be tendered by book-entry transfer, all in accordance with the
Instructions set forth in the Letter of Transmittal and the Offer to Purchase.
If holders of Shares wish to tender Shares, but it is impracticable for
them to forward their Share Certificates or other required documents to the
Depositary prior to the Expiration Date or to comply with the procedures for
book-entry transfer on a timely basis, a tender may be effected by following the
guaranteed delivery procedures specified under Section 3 of the Offer to
Purchase.
Any inquiries you may have with respect to the Offer should be addressed
to, and additional copies of the enclosed materials may be obtained from the
undersigned at the address and telephone number set forth on the back cover of
the Offer to Purchase.
Very truly yours,
[MACKENZIE PARTNERS, INC. LOGO]
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
OTHER PERSON AS AN AGENT OF PARENT, THE PURCHASER, THE COMPANY, THE DEPOSITARY
OR THE INFORMATION AGENT, OR ANY AFFILIATE OF ANY OF THE FOREGOING, OR AUTHORIZE
YOU OR ANY OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF
ANY OF THEM IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED AND
THE STATEMENTS CONTAINED THEREIN.
3
<PAGE> 1
EXHIBIT (a)(5)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
EFFECTIVE MANAGEMENT SYSTEMS, INC.
AT
$4.50 NET PER SHARE
BY
IFS ACQUISITION, INC.
A WHOLLY-OWNED SUBSIDIARY OF
IFS AMERICAS, INC.
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME ON FRIDAY, OCTOBER 15, 1999,
UNLESS THE OFFER IS EXTENDED.
September 8, 1999
To Our Clients:
Enclosed for your consideration are the Offer to Purchase, dated September
8, 1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
as amended from time to time, together with the Offer to Purchase, constitute
the "Offer") in connection with the Offer by IFS Acquisition, Inc., a Wisconsin
corporation (the "Purchaser"), and a wholly-owned subsidiary of IFS Americas,
Inc., a Delaware corporation ("Parent"), to purchase all outstanding shares of
common stock, $.01 par value per share (the "Shares"), of Effective Management
Systems, Inc., a Wisconsin corporation (the "Company"), at a price of $4.50 per
Share, net to the seller in cash, without interest thereon, upon the terms and
subject to the conditions set forth in the Offer to Purchase. Unless the context
indicates otherwise, "Shareholders" shall mean holders of Shares. Parent is a
wholly-owned subsidiary of Industrial & Financial Systems, IFS AB, a corporation
organized under the laws of Sweden.
Also enclosed is the letter to shareholders of the Company from the
President and Chief Executive Officer of the Company accompanied by the
Company's Solicitation/Recommendation Statement on Schedule 14D-9.
Shareholders whose certificates evidencing Shares (the "Share
Certificates") are not immediately available or who cannot deliver their Share
Certificates and all other documents required by the Letter of Transmittal to
the Depositary prior to the Expiration Date (as such terms are defined in the
Offer to Purchase) or who cannot complete the procedure for delivery by
book-entry transfer to the Depositary's account at the Book-Entry Transfer
Facility (as defined in Section 3 of the Offer to Purchase) on a timely basis
and who wish to tender their Shares must do so pursuant to the guaranteed
delivery procedure described in Section 3 of the Offer to Purchase. See
Instruction 2 of the Letter of Transmittal. Delivery of documents to the
Book-Entry Transfer Facility in accordance with the Book-Entry Transfer
Facility's procedures does not constitute delivery to the Depositary.
THIS MATERIAL IS BEING SENT TO YOU AS THE BENEFICIAL OWNER OF SHARES HELD
BY US FOR YOUR ACCOUNT BUT NOT REGISTERED IN YOUR NAME. WE ARE THE HOLDER OF
RECORD OF SHARES HELD BY US FOR YOUR ACCOUNT. A TENDER OF SUCH SHARES CAN BE
MADE ONLY BY US AS THE HOLDER OF RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE
LETTER OF TRANSMITTAL IS BEING FURNISHED TO YOU
<PAGE> 2
'FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER SHARES HELD BY US
FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender on your
behalf any or all of the Shares held by us for your account upon the terms and
subject to the conditions set forth in the Offer to Purchase and the related
Letter of Transmittal.
Please note the following:
1. The tender price is $4.50 per Share (the "Offer Price"), net to you
in cash, without interest thereon, upon the terms and subject to the
conditions of the Offer.
2. The Offer and withdrawal rights will expire at 5:00 p.m., New York
City time, on Friday, October 15, 1999, unless the Offer is extended.
3. The Offer is being made pursuant to the Agreement and Plan of
Merger, dated as of September 1, 1999 (the "Merger Agreement"), by and
among Parent, the Purchaser and the Company, which provides, among other
things, for the commencement of the Offer by the Purchaser and further
provides that after the purchase of the Shares pursuant to the Offer,
subject to the satisfaction or waiver of certain conditions, the Purchaser
and the Company will be merged (the "Merger"). Following consummation of
the Merger, the surviving corporation in the Merger will be a wholly-owned
subsidiary of Parent. At the effective time of the Merger (the "Effective
Time"), each Share issued and outstanding immediately prior to the
Effective Time (other than Shares held by Parent, the Purchaser, any
wholly-owned subsidiary of Parent or the Purchaser, in the treasury of the
Company or by any wholly-owned subsidiary of the Company and other than
Shares held by shareholders who shall have properly exercised their
dissenters' rights, if any, under Wisconsin law), will be converted into
the right to receive $4.50 in cash or any greater amount paid pursuant to
the Offer without interest.
4. The Board of Directors of the Company (the "Board") has unanimously
approved the Merger Agreement, the Stock Option Agreement (as defined in
the Offer to Purchase), the Offer and the Merger and the other transactions
contemplated thereby and determined that the Offer Price to be received for
each Share in the Offer and the Merger is fair to the shareholders of the
Company, and unanimously recommends that shareholders accept the Offer and
tender their Shares pursuant thereto.
5. The Offer is being made for all outstanding Shares.
6. The Offer is conditioned upon, among other things, there being
validly tendered and not withdrawn prior to the expiration date of the
Offer that number of Shares which will represent at least 75% of the
outstanding Shares on a fully diluted basis (without giving pro forma
effect to the potential issuance of any Shares issuable under the Stock
Option Agreement) on the date of purchase (the "Minimum Condition"). The
Purchaser will not be required to accept for payment or pay for tendered
Shares until the expiration of any applicable waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. The Offer
is also subject to other terms and conditions described in Section 15 of
the Offer to Purchase. The Offer is not conditioned on the receipt of
financing. The financing is being raised by IFS AB, pursuant to a rights
offering to its existing stockholders and is guaranteed by an unconditional
and irrevocable obligation by the investment banking firm, Alfred Berg
Fondkommission AB. See Section 9 of the Offer to Purchase.
7. Tendering shareholders will not be obligated to pay brokerage fees
or commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the
Offer.
The Offer is made solely by the Offer to Purchase and the related Letter of
Transmittal and any amendments or supplements thereto, and is being made to all
holders of all Shares. The Offer is not being made to (nor will tenders be
accepted from or on behalf of) holders of Shares in any jurisdiction in which
the
<PAGE> 3
making of the Offer or the acceptance thereof would not be in compliance with
the laws of such jurisdiction. Neither the Purchaser nor Parent is aware of any
jurisdiction in which the making of the Offer or the acceptance thereof would
not be in compliance with the laws of such jurisdiction. To the extent the
Purchaser or Parent becomes aware of any state law that would limit the class of
offerees in the Offer, the Purchaser will amend the Offer and, depending on the
timing of such amendment, if any, will extend the Offer to provide adequate
dissemination of such information to such holders of Shares prior to the
expiration of the Offer. In any jurisdiction where securities, blue sky or other
laws require the Offer to be made by a licensed broker or dealer, the Offer
shall be deemed to be made on behalf of the Purchaser by one or more registered
brokers or dealers that are licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of your Shares, please so instruct
us by completing, executing and returning to us the instruction form contained
in this letter. An envelope in which to return your instructions to us is
enclosed. If you authorize the tender of your Shares, all such Shares will be
tendered unless otherwise specified on the instruction form contained in this
letter. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO PERMIT US
TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE OFFER. If
holders of Shares wish to tender Shares, but it is impracticable for them to
forward their Share Certificates or other required documents to the Depositary
prior to the Expiration Date or to comply with the procedures for book-entry
transfer on a timely basis, a tender may be effected by following the guaranteed
delivery procedures specified under Section 3 of the Offer to Purchase.
<PAGE> 4
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
EFFECTIVE MANAGEMENT SYSTEMS, INC
The undersigned acknowledge(s) receipt of your letter and the enclosed
Offer to Purchase, dated September 8, 1999, and the related Letter of
Transmittal (which, as amended from time to time, together with the Offer to
Purchase, constitute the "Offer"), in connection with the Offer by IFS
Acquisition, Inc., a Wisconsin corporation (the "Purchaser"), and a wholly-owned
subsidiary of IFS Americas, Inc., a Delaware corporation, to purchase all
outstanding shares of common stock, $.01 par value per share (the "Shares"), of
Effective Management Systems, Inc., a Wisconsin corporation, at a price equal to
$4.50 per Share, net to the seller in cash, without interest thereon.
This will instruct you to tender to the Purchaser the number of Shares
indicated below (or, if no number is indicated below, all Shares) held by you
for the account of the undersigned, upon the terms and subject to the conditions
set forth in the Offer.
Number of Shares to be Tendered:
--------------------------- Shares*
SIGN HERE
Account Number:
- -------------------------------- Signature(s):
---------------------------------
Dated:
------------------------- , 1999
- --------------------------------------------------------------------------------
Please type or print name(s)
- --------------------------------------------------------------------------------
Please type or print address(es) here
- --------------------------------------------------------------------------------
Area Code and Telephone Number
- --------------------------------------------------------------------------------
Taxpayer Identification or Social Security Number(s)
* Unless otherwise indicated, it will be assumed that all Shares held by us for
your account are to be tendered.
<PAGE> 1
EXHIBIT(a)(6)
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER--Social Security numbers have nine digits separated by two hyphens: i.e.
000-00-0000. Employer identification numbers have nine digits separated by only
one hyphen: i.e. 00-0000000. The table below will help determine the number to
give the payer.
<TABLE>
<C> <S> <C>
- ------------------------------------------------------------
GIVE THE TAXPAYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of
account) the account or, if
combined funds, the
first individual on
the account(1)
3. Husband and wife (joint account) The actual owner of
the account or, if
joint funds, either
person(1)
4. Custodian account of a minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if
the minor is the
only contributor,
the minor(1)
6. Account in the name of guardian or The ward, minor, or
committee for a designated ward, incompetent
minor, or incompetent person person(3)
7. a. The usual revocable savings The grantor-
trust account (grantor is also trustee(1)
trustee)
b. So-called trust account that is The actual owner(1)
not a legal or valid trust
under State law
8. Sole proprietorship account The owner(4)
- ------------------------------------------------------------
- ------------------------------------------------------------
GIVE THE TAXPAYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
9. A valid trust, estate, or pension The legal entity
trust (do not furnish the
identifying number
of the personal
representative or
trustee unless the
legal entity itself
is not designated
in the account
title)(5)
10. Corporate account The corporation
11. Religious, charitable, or The organization
educational organization account
12. Partnership account held in the The partnership
name of the business
13. Association, club, or other tax- The organization
exempt organization
14. A broker or registered nominee The broker or
nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State or
local government, school district,
or prison) that receives
agricultural program payments
- ------------------------------------------------------------
</TABLE>
(1) List first and circle the name of the person whose number you furnish.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show your individual name. You may also enter your business name. You may
use either your social security number or your employer identification
number.
(5) List first and circle the name of the legal trust, estate or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 2
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you do not have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card (for
individuals), or Form SS-4, Application for Employer Identification Number (for
businesses and all other entities), at the local office of the Social Security
Administration or the Internal Revenue Service (the "IRS") and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments by brokers
include the following:
- A corporation
- A financial institution
- An organization exempt from a tax under Section 501(a), or an individual
retirement plan or a custodial account under Section 403(b)(7) if the
account satisfies the requirements of Section 401(F)(2)
- The United States or any agency or instrumentality thereof
- A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof
- A foreign government, a political subdivision of a foreign government, or
any agency or instrumentality thereof
- An international organization or any agency or instrumentality thereof
- A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- A real estate investment trust
- A common trust fund operated by a bank under Section 584(a)
- An entity registered at all times under the Investment Company Act of 1940
- A foreign central bank of issue
- A futures commission merchant registered with the Commodity Futures Trading
Commission
- A person registered under the Investment Advisors Act of 1940 who regularly
acts as a broker
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- Payments to nonresident aliens subject to withholding under Section 1441 of
the Code
- Payments to partnerships not engaged in a trade or business in the US and
which have at least one nonresident partner
- Payments of patronage dividends where the amount received is not paid in
money
- Payments made by certain foreign organizations
- Payments made to a nominee
Payments of interest not generally subject to backup withholding include the
following:
- Payments of interest on obligations issued by individuals. NOTE: You may be
subject to backup withholding if this interest is $600 or more and is paid
in the course of the payer's trade or business and you have not provided
your correct taxpayer identification number to the payer
- Payments of tax-exempt interest (including exempt-interest dividends under
Section 852 of the Code)
- Payments described in Section 6049(b)(5) of the Code to non-resident aliens
- Payments on tax-free covenant bonds under Section 1451 of the Code
- Payments made by certain foreign organizations
- Payments of mortgage interest to you
- Payments made to an appropriate nominee
Exempt payees described above should file substitute Form W-9 to avoid possible
erroneous backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR
TAXPAYER IDENTIFICATION NUMBER, CHECK "EXEMPT" IN PART II OF THE FORM, SIGN AND
DATE THE FORM AND RETURN IT TO THE PAYER. IF YOU ARE A NON-RESIDENT ALIEN OR A
FOREIGN ENTITY NOT SUBJECT TO BACKUP WITHHOLDING, FILE WITH PAYER A COMPLETED
INTERNAL REVENUE FORM W-8 (CERTIFICATE OF FOREIGN STATUS).
Certain payments other than interest, dividends, and patronage dividends, that
are not subject to information reporting are also not subject to backup
withholding. For details, see Sections 6041, 6041A(a), 6045, 6050A and 6050N of
the Code and the regulations promulgated thereunder.
PRIVACY ACT NOTICE--Section 6109 requires most recipients of dividend, interest,
or other payments to give taxpayer identification numbers to payers who must
report the payments to the IRS.
The IRS uses the numbers for identification purposes. payers must be given the
numbers whether or not recipients are required to file tax returns. Payers must
generally withhold 31% of taxable interest, dividend, and certain other payments
to a payee who does not furnish a taxpayer identification number to a payer.
Certain penalties may also apply.
PENALTIES
(1) PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER--If you fail
to furnish your correct taxpayer identification number to a payer, you are
subject to a penalty of $50 for each such failure unless your failure is due to
reasonable cause and not to willful neglect.
(2) CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING--If you make
a false statement with no reasonable basis which results in no imposition of
backup withholding, you are subject to a penalty of $500.
(3) CRIMINAL PENALTY FOR FALSIFYING INFORMATION--Willfully falsifying
certifications or affirmations may subject you to criminal penalties including
fines and/or imprisonment.
(4) FAILURE TO REPORT CERTAIN DIVIDEND AND INTEREST PAYMENTS--If you fail to
include any portion of an includible payment for interest, dividends, or
patronage dividends in gross income, such failure will be treated as being due
to negligence and will be subject to penalty of 5% on any portion of an under-
payment attributable to that failure unless there is clear and convincing
evidence to the contrary.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE.
<PAGE> 1
EXHIBIT (a)(7)
P R E S S R E L E A S E
FOR IMMEDIATE RELEASE
IFS Americas, Inc. Signs Definitive Agreement to Acquire
Effective Management Systems, Inc.
IFS Americas, Inc. to Commence Tender Offer at $4.50 Per Share In Cash
TUCSON, ARIZONA, AND MILWAUKEE, WISCONSIN, SEPTEMBER 1, 1999 - IFS Americas,
Inc. ("IFS") (a Delaware Corporation) and Effective Management Systems, Inc.
(OTC:EMSI) ("EMS" or the "Company") today announced a definitive merger
agreement for IFS to acquire all of the outstanding common stock of EMS at $4.50
per share.
Under the terms of the merger agreement, IFS will promptly commence a cash
tender offer for all outstanding EMS shares at a price of $4.50 per share, net
in cash. Shares not purchased in the tender offer will be acquired in a
subsequent merger at the same price as soon as practicable after completion of
the tender offer. The tender offer is subject to a number of conditions
including customary regulatory approvals and IFS getting control over at least
75% of the shares of EMS. The transaction has been approved by the Boards of
Directors of both companies. The merger agreement is not subject to a financing
contingency.
IFS also entered into agreements with the founders and key members of executive
management of EMS who agreed to tender their shares in EMS.
The merger with EMS, a leader in enterprise software, strengthens IFS' position
in the U.S. with a strong sales and service staff, experienced in supporting
manufacturing companies, while providing IFS with the additional infrastructure
necessary to keep pace with its rapid growth. In addition, EMS' strength in shop
floor business solutions, further extends the IFS product offering to more
diverse markets.
Terje Vangbo, president and CEO of IFS, Inc., commented, "IFS is experiencing
record growth this year, and our future growth plans are even more aggressive.
Since the U.S. market is critical to maintaining our momentum, we believe
strategic acquisitions are necessary. It might have taken years to build an
experienced pool of industry-knowledgeable professionals who know and understand
our U.S. target market - mid-size manufacturers. The EMS acquisition gives us
immediate access to some of the finest manufacturing software talent in the
industry."
EMS president and CEO, Michael D. Dunham, stated, "Our customers will now have
the support and stability of a large, global organization that can provide a
greater level of product development and support. Another plus is the strong
cultural fit between the two companies, since, like IFS, we have built a large,
satisfied customer base by establishing long-term relationships one by one. This
acquisition is a great marriage that will increase the overall level of service
to both EMS and IFS customers."
<PAGE> 2
Page 2
ABOUT EFFECTIVE MANAGEMENT SYSTEMS
Effective Management Systems, Inc. (EMS), with headquarters in Milwaukee,
Wisconsin, is a provider of Enterprise Resource Planning (ERP) and Manufacturing
Execution System (MES) software that helps companies optimize their
manufacturing operations and coordinate those operations with all aspects of
their business. EMS customers quickly and affordably integrate their entire
enterprises to reduce lead times, increase throughput, improve customer service,
and maintain their competitive positions. From small, single-location companies
to mid-size manufacturing companies with multiple plants and relatively complex
business management needs, over 21 years, EMS has delivered pre-integrated,
comprehensive solutions within its TCM(TM) (Time Critical Manufacturing)
software suite to over 800 discrete manufacturing facilities in the U.S.,
Canada, Europe and Asia.
EMS's Intercim Division, based in Minneapolis, specializes in providing
factory-floor manufacturing-software solutions to Fortune 500 companies,
including Boeing Co. and Eastman Kodak Co., with complex production challenges.
Intercim has been providing information-management solutions for more than 15
years and has over 700 installations worldwide.
ABOUT IFS AND IFS APPLICATIONS
Industrial & Financial Systems, IFS AB, develops and supplies IFS
Applications(TM), which is a complete Enterprise Resource Planning (ERP) system
for business processes in medium-to large-sized companies. It covers
manufacturing, distribution, financials, maintenance management, resource
management, engineering and the front office.
The IFS business concept is to increase the freedom of action and
competitiveness of companies by offering standardized business systems based on
leading technologies.
IFS Applications is one of the first business systems in the market developed
entirely using a component-based architecture, which means that it can be
readily adapted to the needs of individual customers. This comprehensive,
web-enabled solution ties front and back offices together, creating a true
backbone for e-commerce.
IFS is the world's fastest-growing company in the ERP and maintenance software
market. The company has 2,500 employees and its products are sold in 34
countries around the world. Some of the more than 1,600 major customers include
Volvo, NEC, Akzo Nobel, Caterpillar, Saab, Nikon, Kimball, AlliedSignal,
Ericsson, International Paper, Sundstrand Corporation and Rover Group.
# # #
This news release does not constitute an offer to purchase any securities, nor a
solicitation of a proxy, consent, authorization or agent designation with
respect to a meeting of the EMS stockholders. The tender offer will be made only
pursuant to separate materials in compliance with the requirements of applicable
federal and state law. IFS has retained MacKenzie Partners, Inc. as Information
Agent for the Offer.
<PAGE> 3
Page 3
INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release, including, without
limitation, statements containing the words "believes," "expects," and words of
similar import, constitute "forward-looking" statements within the meaning of
Section 21E of the Securities Exchange Act of 1934, as amended. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company or industry results to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among others, the following;
recent poor financial results, financial covenants and limitations, lack of
liquidity, recent restructuring of the Company, dependence on principal
products, the Company's relationship with Baan, dependence on third party
software, dependence on key employees, new products and technical change,
intellectual property and property rights, variability of quarterly operating
results, limited back log, competition, expansion plans, and control by
management. Given these uncertainties, prospective investors are cautioned not
to place undue reliance on such forward-looking statements. IFS and EMS disclaim
any obligation to update any such factors or to publicly announce the results of
any revisions to any of the forward-looking statements contained herein to
reflect future events or developments.
IFS Applications (TM) is a trademark of IFS Industrial and Financial Systems.
EMS, TCM, and FACTORYnet are trademarks or registered trademarks of Effective
Management Systems, Inc. or its subsidiaries. All other referenced company or
product names are trademarks or registered trademarks of their respective
owners.
<PAGE> 4
Page 4
FOR ADDITIONAL INFORMATION, CONTACT:
TERJE VANGBO, PRESIDENT & CEO
IFS, INC.
847/995-9600 phone
847/995-9607 fax
[email protected]
http://www.ifsab.com
MICHAEL D. DUNHAM, PRESIDENT & CEO
EMS
414/359-9800 phone
414/359-9801 fax
[email protected]
http://www.ems.com
<PAGE> 1
Exhibit (a)(8)
This announcement is neither an offer to purchase nor a solicitation of an offer
to sell Shares. The Offer is made solely by the Offer to Purchase, dated
September 8, 1999, and the related Letter of Transmittal (and any amendments or
supplements thereto) and is being made to all holders of Shares. The Offer is
not being made to (nor will tenders be accepted from or on behalf of) holders of
Shares in any jurisdiction in which the making of the Offer or the acceptance
thereof would not be in compliance with the laws of such jurisdiction. In any
jurisdiction where securities, blue sky or other laws require the Offer to be
made by a licensed broker or dealer, the Offer shall be deemed to be made on
behalf of IFS Acquisition, Inc. by one or more registered brokers or dealers
that are licensed under the laws of such jurisdiction.
NOTICE OF OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
EFFECTIVE MANAGEMENT SYSTEMS, INC.
AT
$4.50 NET PER SHARE
BY
IFS ACQUISITION, INC.
A WHOLLY-OWNED SUBSIDIARY OF
IFS AMERICAS, INC.
IFS Acquisition, Inc., a Wisconsin corporation (the "Purchaser") and a
wholly-owned subsidiary of IFS Americas, Inc., a Delaware corporation
("Parent"), is offering to purchase all outstanding shares of common stock, $.01
par value per share (the "Shares"), of Effective Management Systems, Inc., a
Wisconsin corporation (the "Company"), at a price of $4.50 per Share, net to the
seller in cash, without interest thereon, upon the terms and subject to the
conditions set forth in the Offer to Purchase, dated September 8, 1999 (the
"Offer to Purchase"), and in the related Letter of Transmittal (which, together
with any amendments or supplements thereto, collectively constitute the
"Offer"). Tendering shareholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares pursuant to the Offer. The
purpose of the Offer is to acquire for cash as many outstanding Shares as
possible as a first step in acquiring the entire equity interest in the Company.
Following the consummation of the Offer, the Purchaser intends to effect the
Merger as described below. Parent is a subsidiary of Industrial & Financial
Systems, IFS AB, a corporation organized under the laws of Sweden ("IFS AB").
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
FRIDAY, OCTOBER 15, 1999, UNLESS THE OFFER IS EXTENDED.
The Offer is conditioned upon, among other things, (i) there being
validly tendered and not withdrawn prior to the expiration date of the Offer
that number of Shares which will represent at least 75% of the outstanding
Shares on a fully diluted basis (other than Shares subject to an option granted
by the Company to the Purchaser) and (ii) the expiration or termination of any
applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended. The Offer is also subject to other terms and conditions
described in Section 15 of the Offer to Purchase. The Offer is not conditioned
on the receipt of financing. The financing is being raised by IFS AB, pursuant
to a rights offering to its existing stockholders and is guaranteed by an
unconditional and irrevocable obligation by the investment banking firm, Alfred
Berg Fondkommission AB. See Section 9 of the Offer to Purchase.
The Offer is being made pursuant to the Agreement and Plan of Merger,
dated September 1, 1999 (the "Merger Agreement"), by and among Parent, the
Purchaser and the Company, which provides, among other things, for the
commencement of the Offer by the Purchaser and further provides that after the
purchase of the Shares pursuant to the Offer, subject to the satisfaction or
waiver of certain conditions, the Purchaser and the Company will be merged (the
"Merger"). Following consummation of the Merger, the surviving corporation in
the Merger will be a wholly-owned subsidiary of Parent. At the effective time of
the Merger, each Share issued and outstanding immediately prior to the effective
time (other than Shares held by Parent, the Purchaser, any wholly-owned
subsidiary of Parent or the Purchaser, in the treasury of the Company or by any
wholly-owned subsidiary of the Company, and shareholders who perfect their
dissenters' rights, if any, under Wisconsin law) will be converted into the
right to receive $4.50 in cash or any greater amount paid pursuant to the Offer,
without interest thereon.
Concurrently with the execution and delivery of the Merger Agreement
and as an inducement to Parent and the Purchaser to enter into the Merger
Agreement, Parent and the Purchaser executed Stockholder Agreements, dated
September 1, 1999 (the "Stockholder Agreements"), with certain shareholders of
the Company (the "Selling Stockholders"), pursuant to which such Selling
Stockholders have agreed to validly tender (and not to withdraw) approximately
40% of the Shares in the Offer (25% on a fully diluted basis).
THE BOARD OF DIRECTORS OF THE COMPANY HAS UNANIMOUSLY APPROVED THE
MERGER AGREEMENT, THE OFFER AND THE MERGER AND THE OTHER TRANSACTIONS
CONTEMPLATED THEREBY AND DETERMINED THAT THE CONSIDERATION TO BE RECEIVED FOR
EACH SHARE IN THE OFFER AND THE MERGER IS FAIR TO THE SHAREHOLDERS OF THE
COMPANY, AND UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS ACCEPT THE OFFER AND
TENDER THEIR SHARES PURSUANT THERETO.
For purposes of the Offer, the Purchaser will be deemed to have
accepted for payment, and thereby purchased, validly tendered Shares as, if and
when the Purchaser gives oral or written notice to the Depositary (as defined in
the Offer to Purchase) of its acceptance of such Shares for payment pursuant to
the Offer. Upon the terms and subject to the conditions of the Offer, payment
for Shares purchased pursuant to the Offer will be made by deposit of the
purchase price therefor with the Depositary, which will act as agent for
tendering shareholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering shareholders whose Shares have theretofore
been accepted for payment. In all cases, payment for Shares purchased pursuant
to the Offer will be made only after timely receipt by the Depositary of (i)
certificates evidencing such Shares (the "Share Certificates") or timely
confirmation of a book-entry transfer of Shares into the Depositary's account at
the Book-Entry Transfer Facility (as defined in Section 2 of the Offer to
Purchase) pursuant to the procedures set forth in Section 3 of the Offer to
Purchase, (ii) the Letter of Transmittal (or a manually signed facsimile
thereof), properly completed and duly executed, with any required signature
guarantees or, in the case of a book-entry transfer, an Agent's Message (as
defined in Section 2 of the Offer to Purchase) and (iii) all other documents
required by the Letter of Transmittal. Under no circumstances will interest on
the purchase price for Shares be paid by the Purchaser, regardless of any delay
in making such payment.
<PAGE> 2
The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
Friday, October 15, 1999, unless and until Purchaser, in accordance with the
terms of the Offer and Merger Agreement, shall have extended the period during
which the Offer is open in which event the term "Expiration Date" shall mean the
latest time and date at which the Offer, as so extended by Purchaser, shall
expire. Subject to the terms of the Merger Agreement and applicable law, the
Purchaser expressly reserves the right, at any time or from time to time, to
extend the period of time during which the Offer is open, and thereby delay
acceptance of payment of, or payment for, any Shares by giving oral or written
notice of such extension to the Depositary. During any such extension, all
Shares previously tendered and not withdrawn will remain subject to the Offer,
subject to the rights of a tendering stockholder to withdraw his Shares. The
Purchaser will not have any obligation to pay interest on the purchase price for
tendered Shares whether or not the Purchaser exercises its right to extend the
period of time during which the Offer is open. Any such extension will be
followed as promptly as practicable by public announcement thereof, such
announcement to be made no later than 9:00 a.m., New York City time, on the next
business day after the previously scheduled expiration date of the Offer.
Without limiting the manner in which the Purchaser may choose to make an public
announcement, the Purchaser will have no obligation to publish, advertise or
otherwise communicate any such announcement other than be issuing a release to
the Dow Jones News Service or as otherwise may be required by law.
Tenders of Shares made pursuant to the Offer are irrevocable except
that such Shares may be withdrawn at any time prior to 5:00 p.m., New York City
time, on Friday, October 15, 1999 (or, if the Purchaser shall have extended the
period of time for which the Offer is open, the latest time and date at which
the Offer, as so extended by the Purchaser, shall expire) and, unless
theretofore accepted for payment by the Purchaser pursuant to the Offer, may
also be withdrawn at any time after November 6, 1999.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
its address set forth on the back cover of the Offer to Purchase. Any such
notice of withdrawal must specify the name of the person who tendered the Shares
to be withdrawn, the number of Shares to be withdrawn and the name of the
registered holder, if different from that of the person who tendered such
Shares. If Share Certificates evidencing Shares to be withdrawn have been
delivered or otherwise identified to the Depositary, then, prior to the release
of such Share Certificates, the tendering shareholders must also submit the
serial numbers shown on the particular Share Certificates evidencing the Shares
to be withdrawn and the signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution (as defined in Section 3 of the Offer to
Purchase), unless such Shares have been tendered for the account of an Eligible
Institution. If Shares have been tendered pursuant to the procedure for
book-entry transfer as set forth in Section 3 of the Offer to Purchase, any
notice of withdrawal must specify the name and number of the account at the
applicable Book-Entry Transfer Facility to be credited with the withdrawn Shares
and otherwise comply with such Book-Entry Transfer Facility procedures. All
questions as to the form and validity (including time of receipt) of notices of
withdrawal will be determined by the Purchaser, in its sole discretion, whose
determination will be final and binding on all parties. Any Shares properly
withdrawn will be deemed not validly tendered for purposes of the Offer, but may
be tendered at any subsequent time prior to the Expiration Date by following any
of the procedures described in Section 3 of the Offer to Purchase.
The Company has provided the Purchaser with the Company's shareholder
list and security position listings for the purpose of disseminating the Offer
to the holders of Shares and certain securities convertible into Shares. The
Offer to Purchase, the related Letter of Transmittal and, if required, other
relevant materials will be mailed to record holders of Shares and certain
securities convertible into Shares whose names appear on the Company's
shareholder list and will be furnished to brokers, dealers, commercial banks,
trust companies and similar persons whose names, or the names of whose nominees,
appear on the shareholder list or, if applicable, who are listed as participants
in a clearing agency's security position listing for subsequent transmittal to
beneficial owners of Shares and certain securities convertible into Shares.
The information required to be disclosed by paragraph (e)(1)(vii) of
Rule 14d-6 of the General Rules and Regulations under the Securities Exchange
Act of 1934, as amended, is contained in the Offer to Purchase and is
incorporated herein by reference.
The Offer to Purchase and the related Letter of Transmittal contain
important information which should be read carefully before any decision is made
with respect to the Offer.
Questions and requests for assistance may be directed to the
Information Agent at the address and telephone numbers as set forth below. The
Purchaser will not pay any fees or commissions to any broker or dealer or to any
other person (other than the Information Agent) for soliciting tenders of Shares
pursuant to the Offer. Additional copies of the Offer to Purchase, the Letter of
Transmittal and all other tender offer materials may be obtained from the
Information Agent or from brokers, dealers, commercial banks and trust
companies, and will be furnished promptly at the Purchaser's expense. Neither
Parent nor the Purchaser will pay any fees or commissions to any broker or
dealer or other person (other than the Depositary or the Information Agent) in
connection with the solicitation of tenders of Shares pursuant to the Offer.
The Information Agent For The Offer Is:
[MACKENZIE LOGO]
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (Call Collect)
or
CALL TOLL-FREE (800) 322-2885
September 8, 1999
<PAGE> 1
EXHIBIT (b)(1)
UNDERWRITING AGREEMENT
The following agreement has today been entered into between
Industrial and Financial Systems, IFS AB
(hereinafter the "Company" or "IFS")
and
Alfred Berg Fondkommission AB
(hereinafter the "Underwriter")
in connection with an issue of shares with preferential rights for existing
shareholders in IFS.
1. BACKGROUND
On August 2, 1999 an Extraordinary General Meeting of IFS shareholders
authorised the Board of Directors to decide on a new share issue comprising a
maximum of 9,000,000 shares in the company to finance a major acquisition in the
USA. On August 27, 1999 the Board of Directors decided to increase the share
capital of IFS by 7,912,816 shares through an underwritten rights issue of one
new share in IFS for each four shares held at a price of SEK 50 per share (the
"Rights Issue"). The Rights Issue will raise approximately SEK 400 million
before costs of the issue. The subscription period for the Rights Issue runs
from September 27 to October 8, 1999 (the "Subscription Period"). Subscription
for shares with primary preferential rights will be made by paying the
subscription amount.
The number of shares in the Rights Issue is based upon the current number of IFS
shares in issue. The size of the Rights Issue could increase to a maximum of
8.268.066 shares in the event that the Company receives subscriptions due to
exercise of outstanding options, as shares issued under the options could give
entitlement to subscribe in the Rights Issue.
The Rights Issue will be underwritten by the Underwriter in respect of
subscription of 8,000,000 shares.
2. UNDERWRITING OBLIGATION
The Underwriter shall have an unconditional and irrevocable obligation for
fulfilment of the Underwriter's Commitment as set out on page 4 of this
Agreement. The Underwriter shall be responsible to subscribe or
1
<PAGE> 2
procure subscribers for, and to pay or procure payment for, any unallotted
series A shares and any unallotted series B shares. In the event that the size
of the Rights Issue exceeds 8,000,000 shares (as a consequence of shares being
subscribed due to the exercise of options), any shares in excess of 8,000,000
will be deducted from the total number of unallotted shares for the purpose of
determining the obligation of the Underwriter under this Agreement.
The Underwriter is not responsible for non-payment for shares, which have been
subscribed for without preferential rights and allotted in the Rights Issue by
anybody other than the Underwriter. The Underwriter is, however, responsible for
its obligation, even if the Underwriter's Commitment is sub-underwritten
pursuant to Clause 5.
3. CONDITIONS
The Underwriter's Commitment is conditional upon that on or before September 16,
1999 the Company, through a wholly owned subsidiary in the USA, shall have
commenced a public tender offer (the "Offer") for all shares of Effective
Management Systems, Inc., and that on September 16, 1999 no information shall
have come to hand that makes it obvious that the conditions for the Offer, set
forth in Annex A of the Agreement and Plan of Merger, by and among IFS Americas,
Inc., IFS Acquisition, Inc. and Effective Management Systems, Inc., will not be
fulfilled or, if applicable, waived, and that IFS thus will not proceed with the
Offer.
4. ALLOTMENT TO AND PAYMENT BY THE UNDERWRITER
The Underwriter will be informed of any allotment of shares in respect of its
Commitment and the date for payment for such shares as soon as the allotment of
shares subscribed for in the Subscription Period is completed and no later than
when the notice of allotment is sent to subscribers in the Rights Issue who have
subscribed for shares without preferential rights.
Interest at a rate of 12% p.a. will accrue on any overdue payment.
5. SUB-UNDERWRITING
The Underwriter may have all or part of the Underwriter's Commitment
sub-underwritten. However, such sub-underwriting will not affect the
Underwriter's liability to the Company.
6. LEGAL REQUIREMENTS
2
<PAGE> 3
The Underwriter shall be responsible for observing all existing legal
requirements, including laws, regulations and corporate requirements. To the
extent that the Underwriter's obligation under its Commitment cannot be
fulfilled, as a result of breach of such legal requirements, the Underwriter
shall be responsible for any economic loss suffered by the Company as a result
of such breach.
7. DURATION OF THE UNDERWRITING COMMITMENT
The Underwriter's Commitment shall be valid from the signing of this Agreement
until the earlier of:
(i) the day when the Rights Issue has been fully subscribed for,
not taking into account any underwriting referred to in this
Agreement; or
(ii) such time as the Company may announce the postponement or
cancellation of the Rights Issue; or
(iii) such time as payment has been made for the shares by the
Underwriter (or sub-underwriters) under the Underwriter's
Commitment in compliance with this Agreement.
8. COMMISSION
The Company shall pay to the Underwriter a commission equal to 5.00 - five - %
in consideration of the Underwriter's Commitment. The commission shall be paid
to the Underwriter no later than 7 - seven - days after all shares in the Rights
Issue have been allotted.
In the event that the Rights Issue is withdrawn or cancelled on or before
September 17, 1999, the Underwriter will be entitled to half the commission
payable under this Agreement.
9. GOVERNING LAW
This Agreement shall be governed by Swedish law, and any dispute, controversy or
claim arising out of or in connection with this Agreement, or the breach,
termination or invalidity thereof and which cannot be solved through
negotiations between the parties, shall be settled by arbitration in accordance
with the rules of the Arbitration Institute of the Stockholm Chamber of
Commerce. The place of arbitration shall be Stockholm, Sweden.
3
<PAGE> 4
*********
THE UNDERWRITER'S COMMITMENT
Subject to the conditions set out in this Agreement the Underwriter commits to
subscribe or procure subscribers for, and to pay or procure payment at the
Subscription Price for, 8,000,000 shares in the Rights Issue which are not
otherwise subscribed for within the Subscription Period. The Underwriter's
maximum liability so to subscribe or procure subscribers and to pay or procure
payment shall be limited to a payment of (and therefore to shares having a value
at the subscription price of) SEK 400,000,000.
This Underwriting Agreement is executed in two originals, one for each of the
parties.
Linkoping and Stockholm, August 30, 1999
The Company The Underwriter
/s/ Bengt Nilsson /s/ Signature Illegible
- ----------------------- -----------------------
for and on behalf of for and on behalf of
Industrial and Financial Alfred Berg
Systems, IFS AB (publ) Fondkommission AB
4
<PAGE> 1
Exhibit (c)(1)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
IFS AMERICAS, INC.,
IFS ACQUISITION, INC.
AND
EFFECTIVE MANAGEMENT SYSTEMS, INC.
SEPTEMBER 1, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I. THE OFFER.................................................................................... 2
SECTION 1.01 The Offer..................................................................... 2
SECTION 1.02 Company Actions............................................................... 3
SECTION 1.03 Directors..................................................................... 4
SECTION 2.01 The Merger.................................................................... 6
SECTION 2.02 Effective Time; Closing....................................................... 6
SECTION 2.03 Effects of the Merger......................................................... 6
SECTION 2.04 Additional Action............................................................. 6
SECTION 2.05 Articles of Incorporation and By-Laws of the Surviving Corporation ........... 6
SECTION 2.06 Directors..................................................................... 6
SECTION 2.07 Officers...................................................................... 7
SECTION 2.08 Conversion of Shares.......................................................... 7
SECTION 2.09 Purchaser Common Stock........................................................ 7
SECTION 2.10 Company Options............................................................... 7
SECTION 2.11 shareholders' Meeting......................................................... 7
SECTION 2.12 Merger Without Meeting of shareholders........................................ 8
SECTION 2.13 Earliest Consummation......................................................... 9
ARTICLE III. DISSENTING SHARES; PAYMENT FOR SHARES....................................................... 9
SECTION 3.01 Dissenting Shares............................................................. 9
SECTION 3.02 Payment for Shares............................................................ 9
SECTION 3.03 No Further Rights or Transfers; Cancellation of Treasury Shares............... 11
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................... 11
SECTION 4.01 Organization and Qualification................................................ 11
SECTION 4.02 Subsidiaries.................................................................. 12
SECTION 4.03 Articles of Incorporation and By-Laws......................................... 12
SECTION 4.04 Capitalization................................................................ 13
SECTION 4.05 Authority..................................................................... 13
SECTION 4.06 No Conflict; Required Filings and Consents.................................... 14
SECTION 4.07 SEC Reports and Financial Statements.......................................... 15
SECTION 4.08 Information................................................................... 15
SECTION 4.09 Absence of Certain Material Adverse Changes................................... 15
SECTION 4.10 Undisclosed Liabilities....................................................... 15
SECTION 4.11 Tax Matters................................................................... 16
SECTION 4.12 Owned Real Property........................................................... 17
SECTION 4.13 No Litigation................................................................. 17
SECTION 4.14 Compliance With Applicable Laws............................................... 17
SECTION 4.15 Environmental Matters......................................................... 17
SECTION 4.16 Benefit Plans; ERISA.......................................................... 18
SECTION 4.17 Intellectual Property......................................................... 20
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C>
SECTION 4.18 Certain Events................................................................ 22
SECTION 4.19 Certain Approvals............................................................. 23
SECTION 4.20 Contracts..................................................................... 23
SECTION 4.21 Employees..................................................................... 23
SECTION 4.22 Books and Records............................................................. 24
SECTION 4.23 Fairness Opinion.............................................................. 24
SECTION 4.24 Brokers....................................................................... 24
SECTION 4.25 Vote Required................................................................. 24
SECTION 4.26 Underwriter Warrants.......................................................... 24
SECTION 4.27 Series B Stock................................................................ 25
SECTION 4.28 Public Warrants............................................................... 25
ARTICLE V. REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER ................................. 26
SECTION 5.01 Organization and Qualification................................................ 26
SECTION 5.02 Authority..................................................................... 26
SECTION 5.03 No Conflict; Required Filings and Consents.................................... 26
SECTION 5.04 Information................................................................... 27
SECTION 5.05 Financing..................................................................... 27
SECTION 5.06 Brokers....................................................................... 27
SECTION 5.07 Purchaser..................................................................... 27
SECTION 5.08 Share Ownership............................................................... 28
ARTICLE VI. COVENANTS................................................................................... 28
SECTION 6.01 Conduct of Business of the Company............................................ 28
SECTION 6.02 Access to Information......................................................... 30
SECTION 6.03 Commercially Reasonable Efforts............................................... 31
SECTION 6.04 Consents...................................................................... 31
SECTION 6.05 Public Announcements.......................................................... 32
SECTION 6.06 Disclosure Statements......................................................... 32
SECTION 6.07 No Solicitation............................................................... 32
SECTION 6.08 Notification of Certain Matters............................................... 33
SECTION 6.09 Indemnification and Insurance................................................. 33
SECTION 6.10 Performance by the Purchaser.................................................. 34
SECTION 6.12 Deliveries of Information..................................................... 35
SECTION 6.13 Underwriter Warrants.......................................................... 35
SECTION 6.14 Series B Stock................................................................ 35
SECTION 6.15 Public Warrants............................................................... 35
ARTICLE VII. CONDITIONS TO CONSUMMATION OF THE MERGER................................................... 35
SECTION 7.01 Conditions to Each Party's Obligation to Effect the Merger if the
Offer Shall Have Been Consummated............................................. 36
SECTION 7.02 Conditions to Obligation of Parent and the Purchaser to Effect the
Merger........................................................................ 36
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C>
ARTICLE VIII. TERMINATION; AMENDMENTS; WAIVER........................................................... 36
SECTION 8.01 Termination................................................................... 36
SECTION 8.02 Effect of Termination......................................................... 37
SECTION 8.03 Amendment..................................................................... 38
SECTION 8.04 Extension; Waiver............................................................. 38
SECTION 8.05 Procedure for Termination, Extension or Waiver................................ 38
ARTICLE IX. MISCELLANEOUS............................................................................... 38
SECTION 9.01 Non-Survival of Representations and Warranties................................ 38
SECTION 9.02 Entire Agreement; Assignment.................................................. 38
SECTION 9.03 Validity...................................................................... 39
SECTION 9.04 Notices....................................................................... 39
SECTION 9.05 Governing Law................................................................. 39
SECTION 9.06 Descriptive Headings.......................................................... 40
SECTION 9.07 Counterparts.................................................................. 40
SECTION 9.08 Obligation of Parent.......................................................... 40
SECTION 9.09 Fees and Expenses............................................................. 40
SECTION 9.10 Certain Definitions........................................................... 40
SECTION 9.11 Specific Performance.......................................................... 41
SECTION 9.12 Interpretation................................................................ 41
SECTION 9.13 No Third Party Beneficiary.................................................... 41
</TABLE>
iii
<PAGE> 5
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 1, 1999 (this
"Agreement"), by and among IFS AMERICAS, INC., a Delaware corporation
("Parent"), IFS ACQUISITION, INC., a Wisconsin corporation and a wholly-owned
subsidiary of Parent (the "Purchaser"), and EFFECTIVE MANAGEMENT SYSTEMS, INC.,
a Wisconsin corporation (the "Company").
WHEREAS, as a condition and inducement to Parent's willingness to enter
into this Agreement, Parent has entered into Stockholder Agreements, dated the
date hereof, with certain holders of capital stock of the Company (the
"Stockholder Agreements"); and
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the acquisition of the Company by the Purchaser on
the terms and subject to the conditions set forth in this Agreement; and
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
the Purchaser to commence a cash tender offer (as it may be amended or
supplemented as permitted under this Agreement, the "Offer") to purchase all of
the issued and outstanding shares of the common stock, $.01 par value per share,
of the Company (the "Shares"), at a price per Share of Four Dollars and 50/100
Dollars ($4.50) net to each seller in cash (such price, or any higher price per
Share paid in the Offer, the "Offer Price"); in each case, upon the terms and
subject to the conditions set forth in this Agreement and the Offer; and
WHEREAS, the Board of Directors of the Company has approved this
Agreement, the Offer and the Merger (as hereinafter defined), has determined
that the consideration to be paid for each share in the Offer and the Merger is
fair to the Company's shareholders, and has resolved to recommend that the
shareholders of the Company accept the Offer and tender all their Shares
pursuant to the Offer and approve and adopt this Agreement and the Merger upon
the terms and subject to the conditions set forth herein; and
WHEREAS, the respective Boards of Directors of Parent, the Purchaser
and the Company have approved the merger of the Purchaser with and into the
Company, subject to the Purchaser purchasing the Shares tendered in response to
the Offer and as further set forth below (the "Merger"), in accordance with the
Wisconsin Business Corporation Law ("WBC") and upon the terms and subject to the
conditions set forth in this Agreement, whereby each issued and outstanding
Share not owned directly or indirectly by Parent, the Purchaser or the Company
will be converted into the right to receive the Offer Price in cash; and
WHEREAS, as a further inducement to the parties to enter into this
Agreement, Parent, the Purchaser and the Company have entered into a Stock
Option Agreement, dated as the date hereof (the "Stock Option Agreement"),
pursuant to which the Company has granted to the Purchaser an option to purchase
newly issued Shares under certain circumstances; and
<PAGE> 6
WHEREAS, Parent, the Purchaser and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to the Offer and
the Merger.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, Parent,
the Purchaser and the Company hereby agree as follows:
ARTICLE I.
THE OFFER
SECTION 1.01 The Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Section 8.01 hereof and none of the events set
forth in clauses (a) through (g) of Annex I hereto shall have occurred or exist,
the Purchaser shall, and Parent shall cause the Purchaser to, commence (within
the meaning of Rule 14d-2(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act")) the Offer as promptly as practicable after the date
hereof, but in any event not later than five (5) business days following the
date hereof. The initial expiration date for the Offer shall be October 15, 1999
(the "Expiration Date"). As promptly as practicable, the Purchaser shall file
with the Securities and Exchange Commission (the "SEC") the Purchaser's Tender
Offer Statement on Schedule 14D-1 (the "Schedule 14D-1" and together with the
documents therein pursuant to which the Offer will be made, and with any
supplements or amendments thereto, the "Offer Documents"), which shall contain
(as an exhibit thereto) the Purchaser's Offer to Purchase (the "Offer to
Purchase") that shall be mailed to the holders of Shares with respect to the
Offer. The obligation of Parent and the Purchaser to accept for payment or pay
for any Shares tendered pursuant to the Offer will be subject only to there
being validly tendered and not withdrawn prior to the expiration of the Offer,
that number of Shares which represents at least seventy-five percent of the
Shares entitled to vote that are outstanding on a fully diluted basis (without
giving pro forma effect to the potential issuance of any Shares issuable under
the Stock Option Agreement) (the "Minimum Condition"), and to the satisfaction
or waiver of each condition set forth in Annex I hereto (the term "fully diluted
basis" in reference to the Shares means all outstanding securities entitled
generally to vote in the election of directors of the Company on a fully diluted
basis, after giving effect to the exercise or conversion of all options,
warrants, rights and securities exercisable or convertible into such voting
securities). Without the prior written consent of the Company, the Purchaser
shall not (i) decrease the Offer Price or change the form of consideration
payable in the Offer, (ii) decrease the number of Shares sought to be purchased
in the Offer; (iii) amend or waive satisfaction of the Minimum Condition; or
(iv) amend any other term of the Offer in any manner adverse to the holders of
any Shares; provided, however, that if on the Expiration Date all conditions to
the Offer shall not have been satisfied or waived, the Purchaser may, from time
to time in its sole discretion, extend the Expiration Date (each extension to be
for ten business days or less); provided, further, that the Expiration Date
shall in no event be extended past October 31, 1999 without the written consent
of the Company. The Purchaser shall, on the terms and subject to the prior
satisfaction or waiver of the conditions of the Offer, accept for payment and
purchase, as soon as practicable after the expiration of the Offer, all Shares
validly tendered and not withdrawn prior to the expiration of the
2
<PAGE> 7
Offer; provided, however, that the Purchaser may extend the Expiration Date
(including as it may be extended) for up to ten (10) business days in connection
with an increase in the consideration to be paid pursuant to the Offer so as to
comply with applicable rules and regulations of the SEC; and provided further
that, if on the Expiration Date (including as it may be extended) the sole
condition remaining to be satisfied is the expiration or termination of any
applicable waiting period under the HSR Act (as defined herein), the Purchaser
shall, and Parent shall cause the Purchaser to, extend the Offer from time to
time, subject to the rights to terminate this Agreement provided in Section
8.01, until two (2) business days after the expiration or termination date of
the waiting period under the HSR Act.
(b) The Offer Documents will comply in all material respects
with the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading. No representation, warranty or covenant is made
or shall be made herein by the Company with respect to information contained in
the Offer Documents other than information supplied by the Company in writing
expressly for inclusion in the Offer Documents. Each of Parent and the
Purchaser, on the one hand, and the Company, on the other hand, agrees promptly
to correct any information provided by it for use in the Offer Documents if and
to the extent that it shall have become false or misleading in any material
respect and the Purchaser further agrees to take all steps necessary to cause
the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to the Company's shareholders, in each case as and to the extent
required by applicable federal securities laws. Each of Parent and the Purchaser
agrees to give the Company a reasonable opportunity to review and comment upon
any Offer Document to be filed with the SEC prior to any such filing and to
provide in writing any comments each may receive from the SEC or its staff with
respect to the Offer Documents promptly after the receipt of such comments.
SECTION 1.02 Company Actions.
(a) Concurrently with the commencement of the Offer, the
Company shall file with the SEC and mail to the holders of Shares a
Solicitation/Recommendation Statement on Schedule 14D-9 with respect to the
Offer (together with any amendments or supplements thereto, the "Schedule
14D-9"). The Schedule 14D-9 will set forth, and the Company hereby represents,
that the Board of Directors of the Company, at a meeting duly called and held,
has unanimously (i) determined that the consideration to be paid for each Share
in the Offer and the Merger is fair to the Company's shareholders; (ii) approved
this Agreement, the Stock Option Agreement and the transactions contemplated
hereby and thereby, including the Offer and the Merger, in accordance with the
applicable provisions of the WBC; and (iii) resolved to recommend that the
Company's shareholders accept the Offer, tender their Shares thereunder to the
Purchaser and approve and adopt this Agreement and the Merger; provided,
however, that such recommendation may be withdrawn, modified or amended to the
extent that the Board of Directors of the Company determines in good faith,
after consultation with outside counsel, that such action is consistent with its
fiduciary obligations under applicable laws, ordinances, rules or regulations
(collectively, "Laws").
3
<PAGE> 8
(b) The Schedule 14D-9 will comply in all material respects
with the provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by the
Company with respect to information supplied by Parent or the Purchaser in
writing for inclusion in the Schedule 14D-9. No representation, warranty or
covenant is made or shall be made herein by Parent or the Purchaser with respect
to information contained in the Schedule 14D-9 other than information supplied
by Parent and/or the Purchaser in writing expressly for inclusion in the
Schedule 14D-9. Each of the Company, on the one hand, and Parent and the
Purchaser, on the other hand, agree promptly to correct any information provided
by either of them for use in the Schedule 14D-9 if and to the extent that it
shall have become false or misleading, and the Company further agrees to take
all steps necessary to cause the Schedule 14D-9 as so corrected to be filed with
the SEC and to be disseminated to the shareholders, in each case as and to the
extent required by applicable federal securities laws. The Company agrees to
give each of Parent and the Purchaser a reasonable opportunity to review and
comment upon the Schedule 14D-9 to be filed with the SEC prior to such filing
and to provide in writing any comments the Company may receive from the SEC or
its staff with respect to the Schedule 14D-9 promptly upon receipt of such
comments.
(c) In connection with the Offer, the Company will promptly
furnish the Purchaser with such information and assistance as the Purchaser or
its agents or representatives may reasonably request in connection with
communicating the Offer to the record and beneficial holders of the Shares,
including, without limitation, mailing labels, its shareholders list, security
position listings and non-objecting beneficial owners list, if any, or a
computer file containing the names and addresses of all record holders of Shares
as of a recent date, and shall furnish the Purchaser with such additional
information (including, but not limited to, updated lists of holders of Shares
and their addresses, mailing labels and lists of security positions). Subject to
the requirements of applicable Law, and except for such actions as are necessary
to disseminate the Offer Documents and any other documents necessary to
consummate the Offer and the Merger, Parent and the Purchaser and each of their
affiliates, associates, partners, employees, agents and advisors shall hold in
confidence the information contained in such labels, shareholders list, security
position listings, non-objecting beneficial owners list and the information
referred to in the preceding sentence, shall use such information only in
connection with the Offer and the Merger, and, if this Agreement is terminated
in accordance with its terms, shall deliver promptly to the Company all copies
of such information (and any copies, compilations or extracts thereof or based
thereon) then in their possession or under their control.
SECTION 1.03 Directors.
(a) Promptly upon the Purchaser's payment for Shares pursuant
to the Offer, and from time to time thereafter as the Purchaser acquires Shares,
the Purchaser shall be entitled to designate such number of directors, rounded
up to the next whole number, on the Board of Directors of the Company as is
equal to the product of the total number of directors on the Board of Directors
of the Company (determined after giving effect to the directors designated by
the Purchaser pursuant
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to this sentence) multiplied by the percentage that the aggregate number of
Shares beneficially owned by the Purchaser or its affiliates bears to the total
number of Shares entitled to vote then outstanding on a fully diluted basis, and
the Company shall, subject to compliance with Section 14(f) of the Exchange Act
and Rule 14f-1 promulgated thereunder and other applicable Law (including
applicable fiduciary duties), upon request of the Purchaser, promptly take all
actions necessary to cause the Purchaser's designees to be so elected,
including, if necessary, promptly increasing the size of the Board of Directors
of the Company or seeking the resignations of one or more existing directors, or
both; provided, however, that prior to the Effective Time (as defined in Section
2.02) the Board of Directors of the Company shall always have at least two (2)
members who are neither officers, directors, shareholders or designees of the
Purchaser or any of its affiliates ("Purchaser Insiders"). If the number of
directors who are not Purchaser Insiders is reduced below two (2) for any reason
prior to the Effective Time, then the remaining director who is not a Purchaser
Insider shall be entitled to designate a person to fill such vacancy who is not
a Purchaser Insider and who shall be a director not deemed to be a Purchaser
Insider for all purposes of this Agreement. At such time, the Company shall, if
requested by the Purchaser, also cause persons designated by the Purchaser to
constitute at least the same percentage (rounded up to the next whole number) as
is on the Board of Directors of the Company of each committee of the Board of
Directors of the Company; provided, however, that prior to the Effective Time
each committee of the Board of Directors of the Company shall have at least one
(1) member who is not a Purchaser Insider.
(b) The Company's obligation to appoint the Purchaser's
designees to the Board of Directors of the Company shall be subject to Section
14(f) of the Exchange Act and Rule 14f-1 thereunder and other applicable Law
(including applicable fiduciary duties). The Company shall promptly take all
actions required pursuant to such Section and Rule in order to fulfill its
obligations under this Section 1.03, including mailing to the shareholders of
the Company the information required by Section 14(f) and Rule 14f-1 as is
necessary to enable the Purchaser's designees to be elected to the Board of
Directors of the Company, and shall include in the Schedule 14D-9 such
information with respect to the Company and its officers and directors as is
required under such Section and Rule in order to fulfill its obligations under
this Section 1.03. Parent will supply in writing any information with respect to
itself and its officers, directors and affiliates required by such Section and
Rule to the Company.
(c) From and after the election or appointment of the
Purchaser's designees pursuant to this Section 1.03 and prior to the Effective
Time, any amendment or termination of this Agreement by the Company, any
extension by the Company of the time for the performance of any of the
obligations or other acts of Parent or the Purchaser or waiver of any of the
Company's rights hereunder, or any other action taken by the Board of Directors
of the Company in connection with this Agreement, will require the concurrence
of a majority of the directors of the Company then in office who are not
Purchaser Insiders.
ARTICLE II.
THE MERGER
SECTION 2.01 The Merger. Upon the terms and subject to the satisfaction
or waiver of the conditions hereof, and in accordance with the applicable
provisions of this Agreement and the
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WBC, at the Effective Time, the Purchaser shall be merged with and into the
Company. Following the Merger, the separate corporate existence of the Purchaser
shall cease and the Company shall continue as the surviving corporation (the
"Surviving Corporation"). Upon the mutual agreement of Parent and the Company,
the Merger may be structured so that the Company shall be merged with and into
the Purchaser, with the Purchaser continuing as the Surviving Corporation;
provided, however, that the Company shall be deemed not to have breached any of
its representations, warranties or covenants herein if and to the extent such
breach would have been attributable to such agreement.
SECTION 2.02 Effective Time; Closing. As soon as practicable after the
satisfaction or waiver of the conditions set forth in Article VII hereof, the
appropriate parties hereto shall execute in the manner required by the WBC and
file with the Wisconsin Department of Financial Institutions appropriate
articles of merger relating to the Merger, and the parties shall take such other
and further actions as may be required by Law to make the Merger effective. The
time the Merger becomes effective in accordance with applicable Law is referred
to as the "Effective Time." On the business day immediately preceding such
filing, a closing (the "Closing") shall be held at the offices of Streich Lang,
Two North Central Avenue, Phoenix, Arizona 85004, unless another date or place
is agreed to in writing by the parties hereto, for the purpose of confirming the
satisfaction or waiver, as the case may be, of the conditions set forth in
Article VII.
SECTION 2.03 Effects of the Merger. The Merger shall have the effects
set forth in Section 180.1106 of the WBC.
SECTION 2.04 Additional Action. The Surviving Corporation may, at any
time after the Effective Time, take any action, including executing and
delivering any document, in the name and on behalf of either the Company or the
Purchaser, in order to consummate the transactions contemplated by this
Agreement.
SECTION 2.05 Articles of Incorporation and By-Laws of the Surviving
Corporation.
(a) Subject to Section 6.09(a) hereof, the articles of
incorporation of the Purchaser, as in effect immediately prior to the Effective
Time, shall be the articles of incorporation of the Surviving Corporation until
thereafter amended in accordance with the provisions thereof and hereof and
applicable Law.
(b) Subject to Section 6.09(a) hereof, the by-laws of the
Purchaser, as in effect immediately prior to the Effective Time, shall be the
by-laws of the Surviving Corporation until thereafter amended in accordance with
the provisions thereof and hereof and applicable Law.
SECTION 2.06 Directors. Subject to applicable Law, the directors of the
Purchaser immediately prior to the Effective Time, shall be the initial
directors of the Surviving Corporation and shall hold office until their
respective successors are duly elected and qualified, or their earlier death,
resignation or removal.
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SECTION 2.07 Officers. The officers of the Company immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation
and shall hold office until their respective successors are duly elected and
qualified, or their earlier death, resignation or removal.
SECTION 2.08 Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of the holders thereof, each Share
issued and outstanding immediately prior to the Effective Time (other than any
Shares held by Parent, the Purchaser, any wholly-owned subsidiary of Parent or
the Purchaser, in the treasury of the Company or by any wholly-owned subsidiary
of the Company, which Shares, by virtue of the Merger and without any action on
the part of the holder thereof, shall be canceled and retired and shall cease to
exist with no payment being made with respect thereto, and other than Dissenting
Shares (as defined in Section 3.01)) shall be converted into the right to
receive in cash the Offer Price (the "Merger Price"), payable to the holder
thereof, without interest thereon, in accordance with Article III.
SECTION 2.09 Purchaser Common Stock. Each share of common stock, par
value $.001 per share, of the Purchaser issued and outstanding immediately prior
to the Effective Time shall, by virtue of the Merger and without any action on
the part of the holder thereof, be converted into one share of common stock of
the Surviving Corporation. Each certificate evidencing ownership of any such
shares shall, following the Merger, evidence ownership of the same number of
shares of common stock of the Surviving Corporation. Notwithstanding the
foregoing, if Parent and the Company agree to restructure the Merger as provided
in Section 2.01 hereof, then the Purchaser's common stock shall not be affected
in any manner by virtue of the Merger.
SECTION 2.10 Company Options. At or prior to the Closing, all
outstanding stock options of the Company (the "Options") shall be adjusted to
provide that each Option will thereafter be a right to receive the Merger Price
in lieu of any shares of Common Stock upon the exercise of the Option and
payment of the required exercise price of the Option. No other terms of the
Options shall be affected by the foregoing adjustment.
SECTION 2.11 shareholders' Meeting.
(a) If required by the Company's articles of incorporation
and/or applicable Law in order to consummate the Merger, the Company, acting
through its Board of Directors, shall, in accordance with applicable Law:
(i) duly call, give notice of, convene and hold a
special meeting of the Company's shareholders (the "shareholders'
Meeting") as soon as practicable following the acceptance of and
payment for Shares by the Purchaser pursuant to the Offer, which shall
in no event be more than ninety (90) days after such acceptance and
payment, for the purpose of considering and taking action upon this
Agreement;
(ii) promptly prepare and file with the SEC a
preliminary information or proxy statement relating to the Merger and
this Agreement and (x) obtain and furnish the information required to
be included by the SEC in the Proxy Statement (as hereinafter
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<PAGE> 12
defined) and, after consultation with Parent, respond promptly to any
comments made by the SEC with respect to the preliminary information or
proxy statement and, subject to compliance with SEC rules and
regulations, cause a notice of a special meeting and a definitive
information or proxy statement (the "Proxy Statement") to be mailed to
the shareholders of the Company no later than the time required by
applicable Law and the articles of incorporation and the by-laws of the
Company, and (y) to obtain the necessary approvals of the Merger and
this Agreement by the shareholders of the Company; and
(iii) subject to Section 1.02(a), include in the
Proxy Statement the recommendation of the Board of Directors of the
Company that the shareholders of the Company vote in favor of the
approval of the Merger and the adoption of this Agreement.
(b) Parent and the Purchaser will furnish to the Company the
information relating to Parent and the Purchaser required under the Exchange Act
and the rules and regulations thereunder to be set forth in the Proxy Statement.
(c) The Company shall consult with Parent and the Purchaser
with respect to the Proxy Statement (and any amendments or supplements thereto)
and shall afford Parent and the Purchaser reasonable opportunity to comment
thereon prior to its finalization. If, at any time prior to the shareholder's
Meeting, any event shall occur relating to the Company or the transactions
contemplated by this Agreement which should be set forth in an amendment or a
supplement to the Proxy Statement, the Company will promptly notify in writing
Parent and the Purchaser of such event. In such case, the Company, with the
cooperation of Parent and the Purchaser, will promptly prepare and mail such
amendment or supplement and the Company shall consult with Parent and the
Purchaser with respect to such amendment or supplement and shall afford Parent
and the Purchaser reasonable opportunity to comment thereon prior to such
mailing. The Company agrees to notify Parent and the Purchaser at least three
(3) days prior to the mailing of the Proxy Statement (or any amendment or
supplement thereto) to the shareholders of the Company.
(d) Parent agrees that it will (i) vote, or cause to be voted,
all of the Shares then owned by it, the Purchaser or any of its other
subsidiaries in favor of the approval of the Merger and the adoption of this
Agreement and (ii) take or cause to be taken all additional corporate actions
necessary for the Purchaser to adopt and approve this Agreement and the
transactions contemplated hereby.
SECTION 2.12 Merger Without Meeting of shareholders. Notwithstanding
Section 2.11, in the event that (i) Parent, the Purchaser or any other
subsidiary of Parent shall have acquired in the aggregate at least 90% of the
outstanding Shares pursuant to the Offer (including as a result of the exercise
of the Stock Option Agreement) and prior transactions and (ii) Parent and the
Company agree to restructure the Merger as provided in Section 2.01, the parties
hereto agree, subject to Article VII, to take all necessary and appropriate
action to cause the Merger to become effective as soon as practicable after the
acceptance for payment of and payment for Shares by the Purchaser pursuant to
the Offer without a meeting of the Company's shareholders, in accordance with
Section 180.1104 of the WBC.
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SECTION 2.13 Earliest Consummation. Each party hereto shall use its
commercially reasonable efforts to consummate the Merger as soon as practicable.
ARTICLE III.
DISSENTING SHARES; PAYMENT FOR SHARES
SECTION 3.01 Dissenting Shares. Notwithstanding anything in this
Agreement to the contrary, Shares outstanding immediately prior to the Effective
Time that are held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who has demanded payment for such Shares in
accordance with Sections 180.1301 to 180.1331 of the WBC ("Dissenting Shares"),
shall not be converted into the right to receive the Merger Price as provided in
Section 2.08, unless and until such holder fails to perfect or withdraws or
otherwise loses his or her right to dissent and demand payment under the WBC.
If, after the Effective Time, any such holder fails to perfect or withdraws or
loses his or her right to demand payment, then such Dissenting Shares shall
thereupon be treated as if they had been converted as of the Effective Time into
the right to receive the Merger Price, if any, to which such holder is entitled,
without interest or dividends thereon, and such Shares shall no longer be
Dissenting Shares. The Company shall give Parent prompt notice of any demands
received by the Company for payment of Shares and, prior to the Effective Time,
Parent shall have the right to participate in all negotiations and proceedings
with respect to such demands. Prior to the Effective Time, the Company shall
not, except with the prior written consent of Parent, make any payment with
respect to or settle or offer to settle, any such demands.
SECTION 3.02 Payment for Shares.
(a) Prior to the commencement of the Offer, the Purchaser
shall appoint a United States bank, company or other entity mutually acceptable
to the Company and Parent to act as paying agent (the "Paying Agent") for the
payment of the Offer Price and the Merger Price. Prior to the payment time
thereof, Parent shall deposit or shall cause to be deposited with the Paying
Agent in a separate fund established for the benefit of the holders of Shares,
for payment upon surrender of the certificates for exchange in accordance with
this Article III, through the Paying Agent (the "Payment Fund"), immediately
available funds in amounts necessary to make the payments pursuant to the Offer,
Section 2.08 and this Section 3.02 to holders (other than Shares held by the
Company or any subsidiary of the Company or Parent, the Purchaser or any other
subsidiary of Parent, or holders of Dissenting Shares). The Paying Agent shall
pay the Offer Price and the Merger Price out of the Payment Fund.
(b) From time to time at or after the Effective Time, Parent
shall take all lawful action necessary to make the appropriate cash payments, if
any, to holders of Dissenting Shares. Prior to the Effective Time, Parent shall
enter into appropriate commercial arrangements to ensure effectuation of the
immediately preceding sentence. The Paying Agent shall invest the Payment Fund
as directed by Parent or the Purchaser in obligations of, or guaranteed by, the
United States of America, in commercial paper obligations rated A-1 or P-1 or
better by Moody's Investor Services or Standard & Poor's Corporation,
respectively, or in certificates of deposit, bank repurchase agreements or
bankers' acceptances of commercial banks with capital exceeding $300 million, in
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each case with maturities not exceeding seven days. Parent shall cause the
Payment Fund to be promptly replenished to the extent of any losses incurred as
a result of the aforementioned investments. All earnings thereon shall inure to
the benefit of Parent. If for any reason (including losses) the Payment Fund is
inadequate to pay the amounts to which holders of Shares shall be entitled under
Section 2.08 and this Section 3.02, Parent shall in any event be liable for
payment thereof. The Payment Fund shall not be used for any purpose except as
expressly provided in this Agreement.
(c) Promptly after the Effective Time, the Paying Agent shall
mail to each record holder of certificates (the "Certificates") that immediately
prior to the Effective Time represented Shares entitled to payment of the Merger
Price pursuant to Section 2.08 (other than Certificates representing Dissenting
Shares and Certificates representing Shares held by Parent or the Purchaser, any
wholly-owned subsidiary of Parent or the Purchaser, in the treasury of the
Company or by any wholly-owned subsidiary of the Company) (i) a form of letter
of transmittal which shall (x) specify that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon proper delivery of
the Certificates to the Paying Agent; (y) contain a representation in a form
reasonably satisfactory to Parent as to the good and marketable title of the
Shares held by such holder free and clear of liens, claims, options, charges,
security interests, limitations, encumbrances and restrictions of any kind
("Liens"); and (z) contain such other customary provisions as the Company and
Parent may reasonably specify; and (ii) instructions for use in surrendering
such Certificates and receiving the aggregate Merger Price, in respect thereof.
Upon the surrender of each such Certificate and subject to applicable
withholding, the Paying Agent shall (subject to applicable abandoned property,
escheat and similar Laws) pay the holder of such Certificate in respect of
Shares, the Merger Price multiplied by the number of Shares formerly represented
by such Certificate, and such Certificate shall forthwith be canceled. Until so
surrendered, each such Certificate (other than Certificates representing
Dissenting Shares and Certificates representing Shares held by Parent or the
Purchaser, any wholly-owned subsidiary of Parent or the Purchaser, in the
treasury of the Company or by any wholly-owned subsidiary of the Company) shall
represent solely the right to receive the aggregate Merger Price relating
thereto. No interest or dividends shall be paid or accrued on the Merger Price.
If the Merger Price (or any portion thereof) is to be delivered to any person
other than the person in whose name the Certificate formerly representing such
Shares is registered, it shall be a condition to such right to receive such
Merger Price, as applicable, that the Certificate so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
person surrendering such Certificates shall pay to the Paying Agent any transfer
or other taxes required by reason of the payment of the Merger Price to a person
other than the registered holder of the Certificate surrendered, or shall
establish to the satisfaction of the Paying Agent that such tax has been paid or
is not applicable.
(d) Promptly following the first anniversary of the Effective
Time, the Paying Agent shall deliver to the Surviving Corporation all cash,
Certificates and other documents in its possession relating to the transactions
described in this Agreement, and the Paying Agent's duties shall terminate.
Thereafter, each holder of a Certificate formerly representing a Share may
surrender such Certificate to the Surviving Corporation and (subject to
applicable abandoned property, escheat and similar laws) receive in
consideration therefor the aggregate Merger Price, without any interest or
dividends thereon.
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(e) After the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of any Shares that were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates formerly representing Shares are presented to the Surviving
Corporation or the Paying Agent, they shall be surrendered and canceled in
return for the payment of the aggregate Merger Price relating thereto, as
provided in this Article III, subject to applicable Law in the case of
Dissenting Shares.
(f) Neither the Paying Agent nor any party to this Agreement
shall be liable to any shareholder or warrant holder of the Company or Option
holder for any Shares, any Options, the Merger Price or cash delivered to a
public official pursuant to and in accordance with any abandoned property,
escheat or similar Law.
(g) The Paying Agent shall be entitled to deduct and withhold
from the consideration otherwise payable pursuant to this Agreement to any
shareholder of the Company or Option holder such amounts as the Company
reasonably and in good faith determines are required to be deducted and withheld
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "Code"), or any provision of state, local or foreign tax
Law. To the extent that amounts are so withheld by the Paying Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the shareholder or Option holder in respect of which such deduction
and withholding was made by the Paying Agent.
SECTION 3.03 No Further Rights or Transfers; Cancellation of Treasury
Shares. Except for the surrender of the Certificate(s) or the perfection of
dissenters' rights with respect to the Dissenting Shares, at and after the
Effective Time, the holder of Shares shall cease to have any rights as a
shareholder of the Company, and no transfer of Shares shall thereafter be made
on the stork transfer books of the Surviving Corporation. Each Share held in the
Company's treasury immediately prior to the Effective Time shall, by virtue of
the Merger, be canceled and retired and cease to exist without any conversion
thereof.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and the Purchaser
as follows (with such exceptions thereto as are set forth in the disclosure
statement delivered by the Company to Parent on the date hereof (the "Company
Disclosure Statement")):
SECTION 4.01 Organization and Qualification. The Company is a
corporation duly organized and validly existing under the laws of the State of
Wisconsin. The Company has the requisite corporate power and authority to own,
operate or lease its properties and to carry on its business as it is now being
conducted, and is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction in which the nature of its business or the
properties owned, operated or leased by it makes such qualification, licensing
or good standing necessary except where the failures to have such power or
authority, or the failures to be so qualified, licensed or in good standing,
individually, and in the aggregate, would not have a Material Adverse Effect on
the Company. The term "Material Adverse Effect on the Company," as used in this
Agreement, means
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any change in or effect on the business, results of operations, assets or
condition of the Company or any of the Subsidiaries that would be materially
adverse to the Company and its Subsidiaries taken as a whole, except for any
change or effect resulting from general economic or financial market conditions.
SECTION 4.02 Subsidiaries. Except as disclosed by the Company in its
most recent Annual Report on Form 10-K as required by Item 601 of Regulation
S-K, and except as set forth in Section 4.02 of the Company Disclosure
Statement, the Company does not have the power, directly or indirectly, to vote
or direct the voting of, securities sufficient to elect the majority of the
directors of any corporation (a "Subsidiary") and does not control, directly or
indirectly, or have any direct or indirect controlling equity interest, or any
commitment to acquire any such direct or indirect controlling equity interest,
in any corporation, partnership, joint venture, association, trust, or other
business organization. Except as set forth in Section 4.02 of the Company
Disclosure Schedule, each Subsidiary is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorporation. Each
Subsidiary has the requisite corporate power and authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified or licensed to do business, and is in good standing, in
each jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary, except where the failures to have such power or authority, or the
failures to be so qualified, licensed or in good standing, individually, and in
the aggregate, would not have a Material Adverse Effect on the Company. The
Company has delivered or made available to the Purchaser correct and complete
copies of the charter of each Subsidiary, as amended to date, and prior to
Closing will deliver or make available to the Purchaser correct and complete
copies of the bylaws of each Subsidiary, as amended to date. No Subsidiary is in
default under or in violation of any provision of its charter or by-laws. All of
the issued and outstanding shares of capital stock of each Subsidiary are duly
authorized, validly issued, fully paid, nonassessable (except as otherwise
provided in Section 108.0622(2)(b) of the WBC) and free of preemptive rights.
Except as disclosed in Section 4.02 of the Company Disclosure Statement, all
shares of each Subsidiary that are held of record or owned beneficially by
either the Company or any Subsidiary or any nominee are held or owned free and
clear of any restrictions on transfer (other than restrictions under the
Securities Act, state securities laws or foreign securities laws), written
claims, Security Interests (as hereinafter defined), options, warrants, rights,
contracts and calls. There are no outstanding or authorized options, warrants,
rights, agreements or commitments to which the Company or any Subsidiary is a
party or which are binding on any of them providing for the issuance,
disposition or acquisition of any capital stock of any Subsidiary. There are no
outstanding stock appreciation, phantom stock or similar rights with respect to
any Subsidiary.
SECTION 4.03 Articles of Incorporation and By-Laws. The Company has
heretofore made available to Parent and the Purchaser a complete and correct
copy of the Company's articles of incorporation and the by-laws, each as amended
to the date hereof and a copy of which is set forth in Section 4.03 of the
Company Disclosure Statement. The Company is not in violation of any provision
of its articles of incorporation or by-laws.
SECTION 4.04 Capitalization. The authorized capital stock of the
Company consists of 20,000,000 shares of common stock and 3,000,000 shares of
preferred stock. As of the close of
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business on August 31, 1999, there were 4,130,986 shares of the Company's common
stock, $.01 par value per share (the "Common Stock"), outstanding and 1,936.63
shares of the Company's Series B 8% Convertible Redeemable Preferred Stock (the
"Series B Stock") outstanding. The Company has no shares of capital stock
reserved for issuance, except that, as of August 31, 1999, there were 2,494,760
shares of the Common Stock reserved for issuance pursuant to (i) Options granted
pursuant to the Company's employee stock purchase and stock option plans, (ii)
nonstatutory stock option agreements, (iii) Public Warrants (as defined below)
and Underwriter Warrants (as defined below) and (iv) the Series B Stock. Except
as set forth in Section 4.04 of the Company Disclosure Statement, no Shares are
held by the Company as treasury shares and no Shares have been acquired by the
Company that are subject to outstanding pledges to secure future payment of the
purchase price therefor. All outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
non-assessable (except as otherwise provided in Section 180.0622(2)(b) of the
WBC). Except as set forth in this Section 4.04 or in Section 4.04 of the Company
Disclosure Statement and except for changes since May 31, 1999 resulting from
the exercise of Options, nonstatutory stock options or warrants, the conversion
of the Series B Stock outstanding on such date, or the Company's obligations
under the Stock Option Agreement, there are outstanding (a) no shares of capital
stock or other voting securities of the Company, (b) no securities of the
Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company, and (c) no options or other rights to acquire from
the Company, and no obligation 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 (a), (b) and (c)
being referred to collectively as the "Company Securities"). There are no
outstanding obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any Company Securities. To the knowledge of the Company,
other than the Stockholder Agreements, there are no voting trusts, proxies or
other agreements or understandings with respect to the voting of the capital
stock of the Company.
SECTION 4.05 Authority. The Company has all necessary corporate power
and authority to execute and deliver this Agreement and the Stock Option
Agreement and to consummate the transactions contemplated hereby and thereby.
The execution and delivery of this Agreement and the Stock Option Agreement by
the Company and the consummation by the Company of the transactions contemplated
hereby and thereby have been duly and validly authorized and approved by the
Board of Directors of the Company and no other corporate proceedings on the part
of the Company are necessary to authorize or approve this Agreement or the Stock
Option Agreement or to consummate the transactions contemplated hereby and
thereby (other than, with respect to the Merger, the approval and adoption of
the Merger and this Agreement by holders of the Shares and the Series B Stock to
the extent required by the Company's articles of incorporation and by applicable
Law). This Agreement and the Stock Option Agreement have been duly and validly
executed and delivered by the Company and, assuming the due and valid
authorization, execution and delivery of this Agreement and the Stock Option
Agreement by Parent and the Purchaser, constitute valid and binding obligations
of the Company enforceable against the Company in accordance with their
respective terms, except as such enforceability (a) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors' rights generally and (b) is subject to general
principles of equity. The Board of Directors of the Company has, at a meeting of
such Board duly held on September 1, 1999,
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unanimously approved and adopted this Agreement, the Stock Option Agreement, the
Offer and the Merger and the other transactions contemplated hereby and thereby,
determined that the Offer Price to be received by the holders of Shares pursuant
to the Offer and the Merger is fair to the holders of the Shares and recommends
that the holders of Shares tender their Shares pursuant to the Offer and approve
and adopt this Agreement and the Merger, subject to the Board's rights under
Section 6.07 hereof.
SECTION 4.06 No Conflict; Required Filings and Consents.
(a) Except as disclosed in Section 4.06 of the Company
Disclosure Statement, none of the execution and delivery of this Agreement by
the Company, the consummation by the Company of the transactions contemplated
hereby or the compliance by the Company with any of the provisions hereof will
(i) conflict with or violate the articles of incorporation or by-laws of the
Company or the comparable organizational documents of any of the Subsidiaries;
(ii) conflict with or violate any statute, ordinance, rule, regulation, order,
judgment or decree applicable to the Company or the Subsidiaries, or by which
any of them or any of their respective properties or assets may be bound or
affected, or (iii) result in a violation or breach of or constitute a default
(or an event which with notice or lapse of time or both would become a default)
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in any loss of any material benefit, or the creation
of any Lien on any of the property or assets of the Company or any of the
Subsidiaries (any of the foregoing referred to in clause (ii) or this clause
(iii) being a "Violation") pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of the Subsidiaries is a party or by
which the Company or any of the Subsidiaries or any of their respective
properties may be bound or affected, except in the case of the foregoing clauses
(ii) or (iii) for any Violation which, individually and in the aggregate, would
not have a Material Adverse Effect on the Company.
(b) Except as disclosed in Section 4.06 of the Company
Disclosure Statement, none of the execution and delivery of this Agreement by
the Company, the consummation by the Company of the transactions contemplated
hereby or the compliance by the Company with any of the provisions hereof will
require any consent, waiver, approval, authorization or permit of, or
registration or filing with or notification to (any of the foregoing being a
"Consent"), any government or subdivision thereof, or any administrative,
governmental or regulatory authority, agency, commission, tribunal or body,
domestic, foreign or supranational (a "Governmental Entity"), except for (i)
compliance with any applicable requirements of the Exchange Act; (ii) the filing
of articles of merger pursuant to the WBC; (iii) compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"); and (iv) such filings and approvals as may be required by any foreign
jurisdiction or under applicable state securities, "blue sky" or takeover Laws;
and (v) other Consents or filings the failure of which to obtain or make,
individually and in the aggregate, would not have a Material Adverse Effect on
the Company.
SECTION 4.07 SEC Reports and Financial Statements. The Company has
filed with the SEC all forms, reports, schedules, registration statements and
definitive proxy statements required to be filed by the Company with the SEC
from November 30, 1997 until the date hereof (the "SEC Reports"). As of their
respective dates or, if amended, as of the date of the last such
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amendment, the SEC Reports, including, without limitation, any financial
statements or schedules included therein, complied in all material respects with
the requirements of the Exchange Act or the Securities Act of 1933, as amended
(the "Securities Act"), and the rules and regulations of the SEC promulgated
thereunder applicable, as the case may be, to such SEC Reports, and none of the
SEC Reports (as of the date of filing or effectiveness, as the case may be)
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading. The audited financial statements and unaudited interim financial
statements of the Company included in the SEC Reports comply as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principles (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial condition of the
Company and the Subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended (subject,
in the case of unaudited statements, to normal year-end audit adjustments).
SECTION 4.08 Information. None of the information supplied by the
Company in writing specifically for inclusion or incorporation by reference in
(i) the Offer Documents; (ii) the Schedule 14D-9; (iii) the Proxy Statement; or
(iv) any other document to be filed with the SEC or any other Governmental
Entity in connection with the transactions contemplated by this Agreement (the
"Other Filings") will, at the respective times filed with the SEC or other
Governmental Entity and, in addition, in the case of the Proxy Statement, at the
date it or any amendment or supplement is mailed to the shareholders of the
Company, at the time of the shareholders' Meeting and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
SECTION 4.09 Absence of Certain Material Adverse Changes. Since May 31,
1999, there has not been any change in the assets, business, financial condition
or results of operations of the Company and its Subsidiaries (taken as a whole)
that would have a Material Adverse Effect on the Company, nor has there occurred
any event which should reasonably be foreseen to result in such a Material
Adverse Effect on the Company.
SECTION 4.10 Undisclosed Liabilities. Except where any such
liabilities, individually or in the aggregate, would not have a Material Adverse
Effect on the Company, neither the Company nor its Subsidiaries has any
liability (whether known or unknown, whether absolute or contingent, whether
liquidated or unliquidated and whether due or to become due), except for (a)
liabilities accrued or reserved against the May 31, 1999 unaudited consolidated
balance sheet of the Company and its Subsidiaries ("Company Most Recent Balance
Sheet") or incurred in the ordinary course of business since May 31, 1999, (b)
contractual or statutory liabilities incurred in the ordinary course of business
which are not required by GAAP to be reflected on a balance sheet, (c)
liabilities disclosed in Section 4.10 of the Company Disclosure Statement, and
(d) liabilities adequately reserved against or disclosed in writing.
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SECTION 4.11 Tax Matters.
(a) Except as set forth in Section 4.11 of the Company
Disclosure Statement, for all years where the statute of limitations has not
expired, the Company and its Subsidiaries have filed all Tax Returns (as defined
below) that each was required to file and all such Tax Returns were correct and
complete in all material respects, except where the failure to file such Tax
Returns, individually or in the aggregate, would not have a Material Adverse
Effect on the Company. Each of the Company and its Subsidiaries has paid or will
pay all Taxes (as defined below) that are due on or before the Closing Date,
whether or not shown on any such Tax Returns, except such as are being contested
in good faith by appropriate proceedings (to the extent any such proceedings are
required) and with respect to which the Company is maintaining reserves adequate
for their payment and except where the failure to pay such Taxes, individually
or in the aggregate, would not have a Material Adverse Effect on the Company.
The accrued but unpaid Taxes of the Company and its Subsidiaries for Tax Periods
through the date of the Company Most Recent Balance Sheet do not exceed the
accruals and reserves for Taxes (other than deferred Taxes) set forth on the
Company Most Recent Balance Sheet. Neither the Company nor any of its
Subsidiaries has any actual or, to their knowledge, potential liability for any
Tax obligation of any taxpayer (including without limitation any affiliated
group or corporations or other entities that included the Company during a prior
period) other than the Company. All Taxes that the Company or any of its
Subsidiaries is or was required by law to withhold or collect have been duly
withheld or collected and, to the extent required, have been paid to the proper
Governmental Entity, except where the failure to withhold or collect Taxes,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company.
(i) For purposes of this Agreement, "Taxes" means all
taxes, charges, levies or other similar assessments or liabilities,
including without limitation income, gross receipts, ad valorem,
premium, value-added, excise, real property, personal property, sales,
use, transfer, withholding, employment, payroll and franchise taxes
imposed by the United States of America or any state, local or foreign
government, or any agency thereof, or other political subdivision of
the United States or any such government, and any interest, fines,
penalties, assessments or additions to tax resulting from, attributable
to or incurred in connection with any tax or any contest or dispute
thereof and any amounts of Taxes of another person that the Company or
any of its Subsidiaries is liable to pay by Law.
(ii) For purposes of this Agreement, "Tax Returns"
means all reports, returns, declarations, statements or other
information required to be supplied to a taxing authority in connection
with Taxes.
(iii) For purposes of determining the amount of Taxes
attributable to a specified period (e.g., the period from the date of
the Company Most Recent Balance Sheet through the Closing) other than a
Tax Period, each Tax shall be computed as if the specified period were
a Tax Period. For purposes of this paragraph (iii), a Tax Period means
a period for which a Tax is required to be computed under applicable
statutes and regulations.
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(b) No examination or audit of any Tax Returns of the Company
or any of its Subsidiaries by any Governmental Entity that would have a Material
Adverse Effect on the Company is currently in progress or, to the knowledge of
the Company, threatened or contemplated. The Company has not waived any statute
of limitations with respect to taxes or agreed to an extension of time with
respect to a tax assessment or deficiency.
SECTION 4.12 Owned Real Property. Neither the Company nor any of its
Subsidiaries owns any real property.
SECTION 4.13 No Litigation. Except as disclosed in Section 4.13 of the
Company Disclosure Statement or in the SEC Reports, there is no (i) unsatisfied
judgment, order, decree, award, stipulation or injunction or (ii) private or
governmental claims, complaint, action, suit, arbitration, proceeding, hearing,
rule, law, regulation or investigation affecting the Company to which the
Company, or its Subsidiaries, or to the Company's knowledge, any officer,
director, employee or agent of the Company or any of its Subsidiaries is or was
a party or is threatened to be made a party that would have a Material Adverse
Effect on the Company. Other than as set forth in Section 4.13 of the Company
Disclosure Statement, none of the complaints, actions, suits, arbitrations,
proceedings, hearings, rules, laws, regulations or investigations set forth in
Section 4.13 of the Company Disclosure Statement, if determined adversely to the
Company or any of its Subsidiaries, could have a Material Adverse Effect on the
Company.
SECTION 4.14 Compliance With Applicable Laws. Except as set forth in
Section 4.14 of the Company Disclosure Statement, the Company and the
Subsidiaries are in material compliance with all applicable Laws and orders,
writs, injunctions, judgments, plans or decrees (collectively, "Orders")
(except, in each case, with respect to environmental matters which are governed
by Section 4.15 hereof) of any Governmental Entity, including any COBRA and any
applicable employee wage and hour requirements, except where failure to be in
compliance would not have a Material Adverse Effect on the Company.
SECTION 4.15 Environmental Matters.
(a) Each of the Company and its Subsidiaries has complied in
all material respects with all applicable Environmental Laws (as defined below).
Except as disclosed in the Company SEC Reports and since May 31, 1999, there is
no pending or, to the knowledge of the Company, threatened civil or criminal
litigation, written notice of violation, formal administrative proceeding, or
investigation, inquiry or information request by any Governmental Entity,
relating to any Environmental Law involving the Company or any of its
Subsidiaries. For purposes of this Agreement, "Environmental Law" means any
federal, state or local law, statute, rule or regulation or the common law
relating to the environment or occupational health and safety, including without
limitation any statute, regulation or order pertaining to (i) treatment,
storage, disposal, generation and transportation of toxic or hazardous
substances or solid or hazardous waste; (ii) air, water and noise pollution;
(iii) groundwater and soil contamination; (iv) the release or threatened release
into the environment of toxic or hazardous substances, or solid or hazardous
waste, including without limitation emissions, discharges, injections, spills,
escapes or dumping of pollutants, contaminants or chemicals; (v) the protection
of wild life, marine sanctuaries and wetlands, including without
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limitation all endangered and threatened species; (vi) storage tanks, vessels
and containers; (vii) underground and other storage tanks or vessels, abandoned,
disposed or discarded barrels, containers and other closed receptacles; (viii)
health and safety of employees and other persons; and (ix) manufacture,
processing, use, distribution, treatment, storage, disposal, transportation or
handling of pollutants, contaminants, chemicals or industrial, toxic or
hazardous substances or oil or petroleum products or solid or hazardous waste.
As used above, the terms "release" and "environment" shall have the meaning set
forth in the federal Comprehensive Environmental Compensation, Liability and
Response Act of 1980 ("CERCLA").
(b) There have been no releases of any Materials of
Environmental Concern (as defined below) into the environment (i) at any parcel
of real property or any facility when owned, operated or controlled by the
Company or any of its Subsidiaries for which the Company or any of its
Subsidiaries should have material liability under the Environmental Laws or,
(ii) to the Company's knowledge, with respect to any property at or to which
Materials of Environmental Concern were generated, manufactured, refined,
transferred, improved, used or processed by the Company. The Company is not
aware of any other releases of Materials of Environmental Concern that could
reasonably be expected to have a material impact on the real property or
facilities owned, operated or controlled by the Company or a Subsidiary. For
purposes of this Agreement, "Materials of Environmental Concern" means any
chemicals, pollutants or contaminants, hazardous substances (as such term is
defined under CERCLA), solid wastes and hazardous wastes (as such terms are
defined under the federal Resources Conservation and Recovery Act), toxic
materials, oil or petroleum and petroleum products, or any other material
subject to regulation under any Environmental Law.
SECTION 4.16 Benefit Plans; ERISA.
(a) Section 4.16 of the Company Disclosure Statement contains
a complete and accurate list of all Employee Benefit Plans maintained, or
contributed to, by the Company or any Subsidiary. Complete and accurate copies
of (i) all Employee Benefit Plans which have been reduced to writing, (ii)
written summaries of all unwritten Employee Benefit Plans, if any, (iii) all
related trust agreements, insurance contracts and summary plan descriptions, and
(iv) all annual reports filed on IRS Form 5500, 5500C or 5500R for the last two
plan years for each Employee Benefit Plan, have been delivered or made available
to the Purchaser. Each Employee Benefit plan has been administered in all
material respects in accordance with its terms and each of the Company and the
Subsidiaries has met its obligations with respect to such Employee Benefit Plan
and has made all required contributions thereto. The Company and all Employee
Benefit Plans are in all material respects in compliance with the currently
applicable provisions of ERISA and the Code and the regulations thereunder.
(b) Except as disclosed on Section 4.16 of the Company
Disclosure Statement, there are no investigations by a Governmental Entity,
termination proceedings or other claims (except claims for benefits payable in
the normal operation of the Employee Benefit Plans and proceedings with respect
to qualified domestic relations orders), suits or proceedings against or
involving any Employee Benefit Plan or asserting any rights or claims to
benefits under any Employee Benefit Plan that could give rise to any liability.
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(c) All the Employee Benefit Plans that are intended to be
qualified under Section 401(a) of the Code have received determination, opinion
or notification letters from the Internal Revenue Service to the effect that
such Employee Benefit Plans are qualified and the plans and the trust related
thereto are exempt from federal income taxes under Sections 401(a) and 501(a),
respectively, of the Code, no such determination, opinion or notification letter
has been revoked and revocation has not been threatened, and no such Employee
Benefit Plan has been amended since the date of its most recent determination,
opinion or notification letter or application therefor in any respect, and no
act or omission has occurred, that would adversely affect its qualification or
increase its cost.
(d) Neither the Company nor any Subsidiary has ever maintained
an Employee Benefit Plan subject to Section 412 of the Code or Title IV of
ERISA.
(e) At no time has the Company or any Subsidiary been
obligated to contribute to any "multi-employer plan" (as defined in Section
4001(a)(3) of ERISA).
(f) There are no unfunded obligations under any Employee
Benefit Plan providing benefits after termination of employment to any employee
of the Company (or to any beneficiary of any such employee), including but not
limited to retiree health coverage and deferred compensation, but excluding
continuation of health coverage required to be continued under Section 4980B of
the Code, any applicable state health insurance continuation law and any state
insurance conversion privileges law.
(g) No act or omission has occurred and no condition exists
with respect to any Employee Benefit Plan maintained by the Company or any
Subsidiary that would subject the Company or any Subsidiary to any fine,
penalty, tax or liability of any kind imposed under ERISA or the Code.
(h) No Employee Benefit Plan is funded by, associated with, or
related to "voluntary employee's beneficiary association" within the meaning of
Section 501(c)(9) of the Code.
(i) No Employee Benefit Plan, plan documentation or agreement,
summary plan description or other written communication distributed generally to
employees by its terms prohibits the Company from amending or terminating any
such Employee Benefit Plan.
(j) Except as set forth in Section 4.16 of the Company's
Disclosure Statement, there is no: (i) written agreement with any director,
executive officer or other key employee of the Company or any of its
Subsidiaries which has not been terminated in accordance with its terms (A) the
benefits of which are contingent, or the terms of which are altered, upon
occurrence of a transaction involving the Company or any of its Subsidiaries of
the nature of any of the transactions contemplated by this Agreement, (B)
providing any term of employment or compensation guarantee or (C) providing
severance benefits or other benefits after the termination of employment of such
director, executive officer or key employee; (ii) agreement, plan or arrangement
under which any person may receive payments from the Company or any of its
Subsidiaries that may be subject to the tax imposed by Section 4999 of the Code
or included in the determination of such person's
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"excess parachute payment" under Section 280G of the Code; and (iii) agreement
or plan binding the Company or any of its Subsidiaries, including without
limitation any stock option plan, stock appreciation right plan, restricted
stock plan, stock purchase plan, severance benefit plan, or any Employee Benefit
Plan, any of the benefits of which will be increased, or the vesting of the
benefits of which will be accelerated, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement.
SECTION 4.17 Intellectual Property.
(a) Each of the Company and its Subsidiaries owns, or is
licensed or otherwise possesses legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights, and any applications for
such patents, trademarks, trade names, service marks, and copyrights, and all
trade secrets, schematics, technology, know-how, computer software and tangible
or intangible proprietary information or material (collectively, "Intellectual
Property") that are necessary or used to conduct their businesses as currently
conducted, except where any failure to own, license or otherwise possess any
such Intellectual Property, individually or in the aggregate, would not have a
Material Adverse Effect on the Company. The Company and its Subsidiaries have
taken all reasonable measures necessary to protect the proprietary nature of
each item of Intellectual Property that they and each of them consider
confidential, and to maintain in confidence all trade secrets and confidential
information that they and each of them presently own or use.
(i) Section 4.17 (a)(i) of the Company Disclosure
Statement lists all patents and patent applications and all trademarks,
registered copyrights, know-how, technology, schematics, computer
software or tangible or intangible proprietary information or material,
trade names and service marks owned by the Company or any Subsidiary
and which are currently necessary or used in connection with the
businesses of the Company and its Subsidiaries, including the
jurisdictions in which each such Intellectual Property right has been
created, recognized, issued or registered or in which any such
application for such creation, recognition, issuance or registration
has been filed.
(ii) Section 4.17(a)(ii) of the Company Disclosure
Statement lists all written licenses, sublicenses and other agreements
to which the Company or any of its Subsidiaries is a party and pursuant
to which any person is authorized to use any Intellectual Property
rights.
(iii) Section 4.17(a)(iii) of the Company Disclosure
Statement lists all written licenses, sublicenses and other agreements
to which the Company or any of its Subsidiaries is a party and pursuant
to which the Company is authorized to use any third party patents,
patent applications, trademarks, service marks, trade names, know-how,
schematics, technology trade secrets or copyrights, including all
software ("Third Party Intellectual Property Rights") which are
incorporated in, or used in the development or operation of, any
existing product or service of the Company.
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(iv) Section 4.17(a)(iv) of the Company Disclosure
Statement lists all written agreements or other arrangements under
which the Company or any of its Subsidiaries has provided or agreed to
provide source code of any Company or Subsidiary product to any third
party, except for software development kits provided to agent
integration providers.
The Company and each of its Subsidiaries has made available to
Purchaser correct and complete copies of all such patents, registrations,
applications (owned by the Company or any of its Subsidiaries), and all
licenses, sublicenses and agreements referred to above and as amended to date.
Except for retail purchases of software, neither the Company nor any of its
Subsidiaries is a party to any oral license, sublicense or agreement which, if
reduced to written form, would be required to be listed in Section 4.17(a)(i)
through (iv) of the Company Disclosure Statement under the terms of this Section
4.17.
(b) With respect to each item of Intellectual Property that
the Company or any of its Subsidiaries owns: (i) other than Intellectual
Property subject to joint development rights or other rights that will not
materially interfere with the conduct of the business of the Company or any of
its Subsidiaries, and subject to such rights as have been granted by the Company
or any of its Subsidiaries under license agreements entered into by the Company
or any of its Subsidiaries, (which have been identified in Section 4.17(a)(i)
through (iv) of the Company Disclosure Statement and copies of which have
previously been made available, or the contents of which have been disclosed in
writing to the Purchaser), the Company or its Subsidiaries possesses all right,
title and interest in and to each such item; and (ii) each such item is not
subject to any outstanding judgment, order, decree, stipulation or injunction
that materially interferes with the conduct of the Company's or any of its
Subsidiaries' business as currently conducted, except where any instance of
non-compliance with subsections (i) and/or (ii) above, individually or in the
aggregate, would not have a Material Adverse Effect on the Company. With respect
to each item of Third Party Intellectual Property Rights: (i) the license,
sublicense or other agreement covering such item is legal, valid, binding,
enforceable and in full force and effect with respect to the Company or its
Subsidiaries, and to the Company's knowledge is legal, valid, binding,
enforceable and in full force and effect with respect to each other party
thereto; (ii) neither the Company nor any of its Subsidiaries is in breach or
default thereunder, and to the Company's knowledge no other party to such
license, sublicense or other agreement is in breach or default thereunder, and
no event has occurred which with notice or lapse of time would constitute a
breach or default by the Company or any of its Subsidiaries or permit
termination, modification or acceleration thereunder by any party thereto; and
(iii) the underlying item of Third Party Intellectual Property is not subject to
any outstanding judgment, order, arbitration award, decree, stipulation,
injunction or governmental rule, law or regulation to which the Company or any
of its Subsidiaries is a part or has been specifically named that materially
interferes with the conduct of the Company's business or the business of any of
its Subsidiaries as currently conducted, nor subject to any other outstanding
judgment, order, decree, arbitration award, stipulation, injunction or
governmental rule, law or regulation that materially interferes with the conduct
of the Company's business or the business of any of its Subsidiaries as
currently conducted, except where any instance of non-compliance with
subsections (i), (ii) and/or (iii) above, individually or in the aggregate,
would not have a Material Adverse Effect on the Company.
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(c) Except as set forth in Section 4.17 of the Company
Disclosure Statement, neither the Company nor any of its Subsidiaries (i) has
been named in any suit, action, arbitration or other proceeding which involves a
claim of infringement or misappropriation of any patent, trademark, service
mark, trade name, copyright, trade secret, schematic, technology, know-how,
computer software, tangible or intangible proprietary information of any third
party or breach of any license, sublicense or other agreement relating to such
intellectual property or (ii) has received any written notice alleging any such
claim of infringement, breach or misappropriation where the events described in
subsections (i) and (ii) would have a Material Adverse Effect on the Company.
The Company has made available to the Purchaser correct and complete copies of
all pleadings and papers from such suits, actions, arbitrations, or proceedings
and written notices to the extent the Company is not prohibited from disclosing
the same under applicable court orders. The manufacturing, marketing, licensing
or sale of the products or performance of the service offerings of the Company
and its Subsidiaries do not currently infringe and have not, within the six
years prior to the date of this Agreement, infringed any patent, trademark,
service mark, trade name, copyright, trade secret, schematic, technology,
know-how, computer software, tangible or intangible proprietary information or
material right of any third party, except where such infringement would not have
a Material Adverse Effect on the Company; and to the knowledge of the Company,
the Intellectual Property rights of the Company and its Subsidiaries are not
being materially infringed by activities, products or services of any third
party.
SECTION 4.18 Certain Events. Except as disclosed in Section 4.18 of the
Company Disclosure Statement or the SEC Reports or as contemplated by this
Agreement, since May 31, 1999 until the commencement of the Offer, there has not
been any event, occurrence or development which has had or would be reasonably
likely to result in a Material Adverse Effect on the Company, except for general
economic changes, changes that affect the industry of the Company or any
Subsidiary generally, and changes in the Company's business after the date
hereof attributable solely to actions taken by Parent or the Purchaser. Except
as disclosed in the SEC Reports, or as provided for in this Agreement, since May
31, 1999, there has not been (a) any declaration, setting aside or payment of
any dividend or other distribution in respect of the capital stock of the
Company or any redemption or other acquisition by the Company of any Shares; (b)
any split, combination or reclassification of the Company's capital stock or any
issuance or the authorization of any issuance of any other securities in respect
of, in lieu of or in substitution for shares of its capital stock; (c) (i) any
granting by the Company or any of the Subsidiaries to any officer or key
employee of the Company or any of the Subsidiaries of any increase in
compensation, except in the ordinary course of business or as was required under
employment agreements in effect as of the date of the most recent financial
statements included in the SEC Reports or (ii) any entry by the Company or any
Subsidiary into any employment, severance or termination agreement with any such
officer or key employee or granting by the Company or any Subsidiary to any such
officer or key employee of any increase in severance or termination pay, except
as was required under employment, severance or termination agreements in effect
as of the date of the most recent financial statements included in the SEC
Reports; (d) any damage, destruction or loss, whether or not covered by
insurance, that has or would be reasonably likely to have a Material Adverse
Effect on the Company; (e) any change in accounting methods, principles or
practices by the Company or any Subsidiary materially affecting its assets,
liabilities or business, except insofar as may have been required by a change in
generally accepted accounting principles; or (f) any adoption or increase in
payments to or benefits
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under any Company Benefit Plan; or (g) any agreement or commitment to do any of
the things described in the preceding clauses (a) through (f).
SECTION 4.19 Certain Approvals. The Board of Directors of the Company
has taken appropriate action such that, assuming the accuracy of Parent's and
the Purchaser's representations in Sections 5.08 of this Agreement, the
provisions of Section 180.1140 to 180.1144 of the WBC will not apply to any of
the transactions contemplated by this Agreement and the Stock Option Agreement.
SECTION 4.20 Contracts. Since May 31, 1999, neither the Company nor any
of its Subsidiaries has breached, or received in writing any claim or threat
that it has breached, any of the terms or conditions of any material agreement,
contract or commitment to which it is a party or by which any of its assets are
bound ("Company Material Contracts") in such a manner as would permit any other
party to cancel or terminate the same prior to its stated term or would permit
any other party to collect material damages from the Company under any Company
Material Contract, other than those Company Material Contracts that if
terminated prior to the stated term, or that if material damages were collected
under such Company Material Contracts such damages, individually or in the
aggregate, would not have a Material Adverse Effect on the Company. Each Company
Material Contract that has not expired or been terminated, is in full force and
effect, and is not subject to any material default thereunder by any party
obligated to the Company pursuant to such Company Material Contract, other than
those Company Material Contracts the failure of which to be in full force and
effect or not subject to any material default, individually or in the aggregate,
would not have a Material Adverse Effect on the Company. There are no
outstanding powers of attorney executed on behalf of the Company or any of its
Subsidiaries.
SECTION 4.21 Employees. Except as disclosed in Section 4.21 of the
Company Disclosure Statement, each employee who performs work on the development
of Company Intellectual Property or has access to material confidential
information of the Company or any of its Subsidiaries entered into a
confidentiality/ assignment of inventions agreement with the Company or such
Subsidiary, a copy of which has previously been delivered or made available to
the Purchaser. To the knowledge of the Company, no key employee or group of
employees has any current plans to terminate employment with the Company or any
of its Subsidiaries, except where any such termination, individually or in the
aggregate, would not have a Material Adverse Effect on the Company. Neither the
Company nor any of its Subsidiaries is a party to or bound by any collective
bargaining agreement, nor has any of them experienced any strikes, formal
grievances, claims of unfair labor practices or other collective bargaining
disputes. The Company has no knowledge of any organizational effect made or
threatened, either currently or within the past two years, by or on behalf of
any labor union with respect to employees of the Company or its Subsidiaries.
SECTION 4.22 Books and Records. The minute books of the Company and
each of its Subsidiaries contain true and complete records of all actions taken
at any meetings of the Company's or such Subsidiary's shareholders, Board of
Directors or any committee thereof and of all written consents executed in lieu
of the holding of any such meeting. The financial books and records of the
Company and each of its Subsidiaries accurately reflect in all material respects
the
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assets, liabilities, business, financial condition and results of operations of
the Company or such Subsidiary.
SECTION 4.23 Fairness Opinion. The Company has received a written
fairness opinion from Tucker Anthony Cleary Gull, its financial advisor, to the
effect that the Offer Price and the Merger Price is fair to the shareholders
from a financial point of view, and the Company has delivered a true and
complete copy of such opinion to the Parent.
SECTION 4.24 Brokers. Except for Ascent Partners, none of the Company,
the Subsidiaries, or any of their respective officers, directors or employees
has employed any broker or finder or incurred any liability for any brokerage
fees, commission or finder's fees in connection with the transactions
contemplated by this Agreement.
SECTION 4.25 Vote Required. Assuming the accuracy of Parent's and the
Purchaser's representations in Section 5.08 of this Agreement and subject to
Sections 180.1130- 180.1133 of the WBC and assuming the forced conversion of the
Series B Stock as contemplated by Section 4.27 hereof, the affirmative vote of
the holders of a majority of the voting power of the outstanding Common Stock
entitled to vote with respect to the Merger is the only vote of the holders of
any class or series of the Company's capital stock necessary to approve the
Merger, this Agreement and the transactions contemplated hereby.
SECTION 4.26 Underwriter Warrants. The Company issued Common Stock
Purchase Warrants (the "Underwriter Warrants") to designees of Taglich Brothers,
D'Amadeo, Wagner & Company, Incorporated on October 27, 1998 and October 30,
1998. The Underwriter Warrants will expire on October 31, 2003 and, as of August
31, 1999, the exercise price of each such Underwriter Warrant is $3.60 per
Share, subject to adjustment. As of August 31, 1999, the Underwriter Warrants
are exercisable for 54,714 shares of Common Stock. Upon the Effective Time and
provided that the Company is the surviving corporation in the Merger, holders of
Underwriter Warrants will be entitled to, with respect to each Underwriter
Warrant and upon exercise and the payment of the $3.60 exercise price to the
Company, only the Merger Price. In compliance with the terms of the Underwriter
Warrants, the Company must give each holder of Underwriter Warrants a reasonable
opportunity to exercise such holder's Underwriter Warrants and receive the
Merger Price for each Underwriter Warrant. Other than as set forth in this
Section 4.26, under the terms of the Underwriter Warrants and assuming that the
Company is the surviving corporation in the Merger, the Company will have no
further obligations to the holders of the Underwriter Warrants.
SECTION 4.27 Series B Stock. There are 5,000 authorized shares of
Series B Stock, of which 1,936,63 shares are issued and outstanding as of the
date of this Agreement. The Company has made each dividend payment since January
2, 1999 in compliance with, and as required by, the Company's articles of
incorporation and there are no accrued and unpaid dividends due holders of the
Series B Stock, other than for dividends accrued since the last dividend payment
date. Under the terms of the Company's articles of incorporation, the Company
has, subject to compliance with the terms of such articles, the right to force
conversion of the Series B Stock into Shares effective immediately prior to the
date that the Shares are purchased by Parent or the Purchaser in the Offer (the
"Acceptance Date"). Pursuant to the terms of the Company's articles of
incorporation and
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assuming compliance with the provisions governing a forced conversion of the
Series B Stock thereunder, holders of Series B Stock do not have the right to
vote on whether to approve the Offer or the Merger and, in the event that the
provisions of said articles are not sufficient to eliminate the voting rights of
holders of the Series B Stock, such holders will be deemed to have granted an
irrevocable proxy to the President and Secretary of the Company with respect to
the approval of the Offer or the Merger as specified in the Company's articles
of incorporation.
SECTION 4.28 Public Warrants. On September 6, 1995, the Company entered
into a Warrant Agreement (the "Warrant Agreement") with American Stock Transfer
& Trust Company, as Warrant Agent under which the Company issued 401,440 Common
Stock Warrants (the "Public Warrants"). The Public Warrants will expire on
September 5, 2005 and as of August 31, 1999, the exercise price of each Public
Warrant is $6.75. Each Public Warrant is exercisable for one share of Common
Stock. Other than the adjustment necessary so that each holder of a Public
Warrant will be entitled to the Offer Price upon the Effective Time, neither the
Offer, the Merger nor the issuance of shares under the Stock Option Agreement
will require an adjustment to the exercise price or the number of shares of
Common Stock issuable upon the exercise of each Public Warrant. Pursuant to the
Warrant Agreement, following commencement of the Offer, the Company must give
the holders of the Public Warrants notice of the Offer, as soon as practicable,
by (i) mailing notice of the Offer by first class mail, postage prepaid, to each
holder and (ii) publishing a notice of such Offer on at least two consecutive
business days in at least two newspapers of general circulation distributed at
least daily, one of which shall be The Wall Street Journal, and shall state that
the holder shall not be entitled to participate in the Offer unless they
exercise their Public Warrants in advance of or within the period specified in
the Offer. Pursuant to the terms of the Public Warrants, the Company is required
to provide notice in writing of the Merger to the Warrant Agent sufficient to
allow the Warrant Agent to notify the warrant holders of the Merger and enable
the warrant holders to participate in the Merger. Such notice to the Warrant
Agent is to be completed at least forty (40) days prior to, and notice to the
warrant holders to be completed at least thirty (30) days prior to, the record
date for the determination of shareholders entitled to vote on the Merger. In
addition, pursuant to the terms of the Public Warrants, the Company shall
execute a supplemental warrant agreement with the Warrant Agent (the
"Supplemental Warrant Agreement") and mail by first class mail, postage prepaid,
to each warrant holder, notice of the execution of the Supplemental Warrant
Agreement. Other than as set forth in this Section 4.28, under the terms of the
Warrant Agreement, the Company has no further obligations to the holders of the
Public Warrants.
SECTION 4.29 Options. Except as listed on Schedule 4.29, there are, and
as of the Closing Date there will be, no outstanding options, warrants, rights,
calls, commitments, conversion rights, plans or other agreements of any
character providing for the purchase, issuance or sale of, or any securities
convertible into, capital stock of the Company, whether issued, unissued or held
in its treasury.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser jointly and severally represent and warrant to
the Company as follows:
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SECTION 5.01 Organization and Qualification. Parent is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware. The Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of the State of Wisconsin. Each of Parent and the
Purchaser has the requisite corporate power and authority to own, operate or
lease its properties and to carry on its business as it is now being conducted,
and is duly qualified or licensed to do business, and is in good standing, in
each jurisdiction in which the nature of its business or the properties owned,
operated or leased by it makes such qualification, licensing or good standing
necessary except where the failures to have such power or authority, or the
failures to be so qualified, licensed or in good standing, individually, and in
the aggregate, would not have a Material Adverse Effect on Parent. The term
"Material Adverse Effect on Parent," as used in this Agreement, means any change
in or effect on the business, results of operations, assets or condition of
Parent or any of its subsidiaries taken as a whole, that would be materially
adverse to Parent and its subsidiaries taken as a whole, except for any change
or effect resulting from general economic or financial market conditions.
SECTION 5.02 Authority. Each of Parent and the Purchaser has all
necessary corporate power and authority to execute and deliver this Agreement
and the Stock Option Agreement and to consummate the transactions contemplated
hereby and thereby. The execution and delivery of this Agreement and the Stock
Option Agreement by Parent and the Purchaser and the consummation by Parent and
the Purchaser of the transactions contemplated hereby and thereby have been duly
and validly authorized and approved by the Boards of Directors of Parent and the
Purchaser and by the sole shareholder of the Purchaser and no other corporate
proceedings on the part of Parent or the Purchaser are necessary to authorize or
approve this Agreement or the Stock Option Agreement or to consummate the
transactions contemplated hereby or thereby. Each of this Agreement and the
Stock Option Agreement has been duly executed and delivered by each of Parent
and the Purchaser and, assuming the due and valid authorization, execution and
delivery by the Company, constitutes a valid and binding obligation of each of
Parent and the Purchaser enforceable against each of them in accordance with its
respective terms, except that such enforceability (i) may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to the enforcement of creditors, rights generally and (ii) is subject to general
principles of equity.
SECTION 5.03 No Conflict; Required Filings and Consents.
(a) Except as disclosed in Section 5.03 of the Purchaser
Disclosure Statement, none of the execution and delivery of this Agreement by
Parent or the Purchaser, the consummation by Parent or the Purchaser of the
transactions contemplated hereby or the compliance by Parent or the Purchaser
with any of the provisions hereof will (i) conflict with or violate the
organizational, documents of Parent or the Purchaser; (ii) conflict with or
violate any statute, ordinance, rule, regulation, order, judgment or decree
applicable to Parent or the Purchaser, or any of their subsidiaries, or by which
any of them or any of their respective properties or assets may be bound or
affected; or (iii) result in a Violation pursuant to any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or the Purchaser, or any of their
respective subsidiaries, is a party or by which any of their respective
properties or assets may be bound or affected, except in the case of the
foregoing clauses (ii) and (iii)
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for any such Violation which, individually and in the aggregate, would not have
a Material Adverse Effect on Parent.
(b) Except as disclosed in Section 5.03 of the Purchaser
Disclosure Statement, none of the execution and delivery of this Agreement by
Parent and the Purchaser, the consummation by Parent and the Purchaser of the
transactions contemplated hereby or the compliance by Parent and the Purchaser
with any of the provisions hereof will require any Consent of any Governmental
Entity, except for (i) compliance with any applicable requirements of the
Exchange Act; (ii) the filing of articles of merger pursuant to the WBC; (iii)
compliance with the HSR Act; and (iv) such filings and approvals as may be
required by any applicable state securities, "blue sky" or takeover Laws, and
(v) other Consents or filings the failure of which to obtain or make,
individually and in the aggregate, would not have a Material Adverse Effect on
Parent.
SECTION 5.04 Information. None of the information supplied or to be
supplied by Parent and the Purchaser in writing specifically for inclusion in
(i) the Offer Documents; (ii) the Schedule 14D-9; (iii) the Proxy Statement; or
(iv) the Other Filings will, at the respective times filed with the SEC or such
other Governmental Entity and, in addition, in the case of the Proxy Statement,
at the date it or any amendment or supplement is mailed to shareholders of the
Company, at the time of the shareholders' Meeting and at the Effective Time,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
SECTION 5.05 Financing. Parent or the Purchaser will have available at
the Acceptance Date, the funds necessary to consummate the Offer and the Merger
and the transactions contemplated hereby.
SECTION 5.06 Brokers. None of Parent, the Purchaser, or any of their
respective subsidiaries, officers, directors or employees, has employed any
broker or finder or incurred any liability for any brokerage fees, commissions
or finder's fees in connection with the transactions contemplated by this
Agreement for or with respect to which the Company is or might be liable.
SECTION 5.07 Purchaser.
(a) Parent owns all of the outstanding capital stock of the
Purchaser. At all times prior to the Merger, no person other than Parent has
owned, or will own, any of the outstanding capital stock of the Purchaser. The
Purchaser was formed by Parent solely for the purpose of engaging in the
transactions contemplated by this Agreement. Parent is a wholly owned subsidiary
of Industrial and Financial Systems, Inc., a corporation incorporated under the
laws of Sweden ("IFS").
(b) There are not as of the date of this Agreement, and there
will not be at the Effective Time, any outstanding or authorized options,
warrants, calls, rights, commitments or any other agreements of any character
which the Purchaser is a party to, or may be bound by, requiring it to issue,
transfer, sell, purchase, redeem or acquire any shares of its capital stock or
any securities
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or rights convertible into, exchangeable for, or evidencing the right to
subscribe for or acquire, any shares of its capital stock.
(c) As of the date of this Agreement and the Effective Time,
except for obligations incurred in connection with this Agreement or the
transactions contemplated hereby, the Purchaser has not and will not have
incurred, directly or indirectly through any other corporation, any obligations
or liabilities of any kind or engaged in any activities of any type or kind
whatsoever or entered into any arrangement or arrangements with any person or
entity.
SECTION 5.08 Share Ownership. During the period from September 10, 1987
to the date hereof, neither Parent, the Purchaser nor any of their subsidiaries
was an "interested shareholder" as such term is defined in Section 180.1141 of
the WBC.
ARTICLE VI.
COVENANTS
SECTION 6.01 Conduct of Business of the Company. Except as required by
this Agreement or with the prior written consent of Parent, during the period
from the date of this Agreement to the Acceptance Date, the Company will and
will cause each of the Subsidiaries to conduct its operations only in the
ordinary course of business. Without limiting the generality to the foregoing,
and except as otherwise required or contemplated by this Agreement or as set
forth in Section 6.01 of the Company Disclosure Statement, the Company will not,
and will not permit any of the Subsidiaries to, prior to the Acceptance Date,
without the prior written consent of Parent, not to be unreasonably withheld:
(a) adopt any amendment to its charter or by-laws or
comparable organizational documents;
(b) issue, reissue or sell or authorize the issuance,
reissuance or sale of additional shares (whether through the issuance or
granting of options, warrants, commitments, subscriptions, rights to purchase or
otherwise) of capital stock of any class, or shares convertible into capital
stock of any class, or any rights, warrants or options to acquire any
convertible shares or capital stock, other than the issuance of Shares pursuant
to the conversion or exercise of Options, nonstatutory stock options, warrants
or the Series B Stock outstanding on the date of this Agreement or pursuant to
the Stock Option Agreement;
(c) declare, set aside or pay any dividend or other
distribution (whether in cash, shares or property or any combination thereof) in
respect of any class or series of its capital stock, except for (i) regular
quarterly dividends payable on the Series B Stock with usual record and payment
dates for such dividends and (ii) dividends between the Company and any
Subsidiary which is wholly-owned by the Company;
(d) split, combine, subdivide, reclassify or directly or
indirectly redeem, purchase or otherwise acquire, recapitalize or reclassify, or
propose to redeem or purchase or otherwise acquire, any shares of its capital
stock, or any of its other shares or liquidate in whole or in part;
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(e) enter into, adopt or amend any Employee Benefit Plan or
any employment or severance agreement or arrangement or increase in any manner
the compensation or fringe benefits of, or modify the employment terms of, its
directors, officers or employees, generally or individually, or pay any benefit
not required by the terms in effect on the date hereof of any existing Employee
Benefit Plan, other than in the ordinary course of business consistent with past
practice make normal merit increases to employees of the Company;
(f) create, incur or assume any debt not currently outstanding
(including obligations in respect of capital leases); assume, guarantee, endorse
or otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person or entity; or make any loans,
advances or capital contributions to or investments in, any other person or
entity, except, in each case, in the ordinary course of business;
(g) change in any material respect its accounting methods,
principles or practices, except insofar as may be required by a change in
generally accepted accounting principles,
(h) make any material tax election or settle or compromise any
material income tax liability;
(i) acquire, sell, lease, encumber or dispose of any assets or
property (including without limitation any shares or other equity interests in
or securities of any Subsidiary or any corporation, partnership, association or
other business organization or division thereof), other than purchases and sales
of assets in the ordinary course of business;
(j) discharge or satisfy any Security Interest or pay any
obligation or liability other than in the ordinary course of business;
(k) mortgage or pledge any of its property or assets or
subject any such assets to any Security Interest other than in the ordinary
course of business;
(l) sell, assign, transfer or license any Intellectual
Property, other than in the ordinary course of business;
(m) enter into, amend, terminate, take or omit to take any
action that would constitute a material violation of or default under, or waive,
release or assign any material rights under, any material contract or agreement;
(n) make or commit to make any capital expenditure in excess
of $20,000 per item or in an aggregate in excess of $50,000;
(o) willfully take any action, or willfully fail to take any
action required or permitted by this Agreement with the intent that such action
or failure to take action could result in (i) any of the representations and
warranties of the Company set forth in this Agreement becoming untrue or (ii)
any of the conditions to the Merger set forth in Article VII not being
satisfied;
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(p) hire, terminate or discharge any key employee or engage or
terminate any key consultant, provided however that any such employee or
consultant may himself or herself terminate his or her relationship with the
Company in accordance with the terms of any applicable employment, consulting or
similar agreement;
(q) commence after the date hereof any offerings of securities
to employees pursuant to any new employee stock purchase plans; or
(r) agree in writing or otherwise to take any of the foregoing
actions.
SECTION 6.02 Access to Information. From the date hereof until the
Effective Time and subject to applicable Law, the Company will, and will cause
the Subsidiaries, and each of its and their respective officers, directors,
employees, counsel, advisors and representatives (collectively, the "Company
Representatives") to (i) provide Parent and the Purchaser and their respective
officers, employees, counsel, advisors and representatives (collectively, the
"Parent Representatives") access, during normal business hours and upon
reasonable notice, to the offices and other facilities and to the books,
records, financial statements and other documents and materials relating to the
financial condition, assets and liabilities of the Company and the Subsidiaries,
and will permit Parent and the Purchaser to make inspections of such as either
of them may reasonably require; (ii) cause the Company Representatives and the
Subsidiaries to furnish Parent, the Purchaser and the Parent Representatives to
the extent available with such other information with respect to the business of
the Company and the Subsidiaries as Parent and the Purchaser may from time to
time reasonably request; and (iii) confer and consult with the Parent
Representatives, as Parent may reasonably request, to report on operational
matters, financial matters and the general status of ongoing business operations
of the Company; provided, however, that all requests for such access,
inspection, information or consultations pursuant to this Section 6.02 shall be
made through Michael D. Dunham of the Company or such other person as he shall
designate in writing to Parent. Unless otherwise required by Law and except as
is necessary to disseminate the Offer Documents, Parent and the Purchaser will,
and will cause the Parent Representatives to hold any such information in
confidence until such time as such information otherwise becomes publicly
available through no wrongful act of Parent, the Purchaser or the Parent
Representative, all as specifically provided in the Confidentiality Agreement,
executed on or about May 24, 1999, between Parent and the Company (the
"Confidentiality Agreement").
SECTION 6.03 Commercially Reasonable Efforts. Subject to the term and
conditions herein provided and to applicable legal requirements, so long as this
Agreement has not been terminated according to its terms, each of the parties
hereto agrees to use its commercially reasonable efforts to take, or cause to be
taken, all action, and to do, or cause to be done, consistent with the fiduciary
duties of such party's respective Board of Directors, and to assist and
cooperate with the other parties hereto in doing, as promptly as practicable,
all things necessary, proper or advisable under applicable Laws and regulations
to ensure that the conditions set forth in Annex I and Article VII are satisfied
and to consummate and make effective the transactions contemplated by the Offer,
the Merger and this Agreement, including, without limitation, to make promptly
their respective filings and thereafter to make any other submissions required
under applicable Laws. In addition, if at any time prior to the Effective Time
any event or circumstance relating to either the
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Company or Parent or the Purchaser or any of their respective subsidiaries
should be discovered by the Company or Parent, as the case may be, and which
should be set forth in an amendment to the Offer Documents or Schedule 14D-9,
the discovering party will promptly inform the other party of such event or
circumstance and promptly take all steps necessary to cause the Offer Documents
or the Schedule 14D-9, as the case may be, as so corrected to be filed with the
SEC and to be disseminated to the shareholders of the Company, in each case as
to the extent required by applicable Law. If at any time after the Effective
Time any further action is necessary or desirable to carry out the purposes of
this Agreement, including the execution of additional instruments, the proper
officers and directors of each party to this Agreement, as the case may be,
shall take all such necessary action.
SECTION 6.04 Consents.
(a) Each of the parties will use its commercially reasonable
efforts to obtain as promptly as practicable all Consents of any Governmental
Entity or any other person required in connection with the consummation of the
transactions contemplated by the Offer, the Merger, this Agreement and the Stock
Option Agreement.
(b) Any party hereto shall promptly inform the others of any
material communication from the United States Federal Trade Commission, the
Department of Justice or any other domestic or foreign government or
governmental authority regarding any of the transactions contemplated by this
Agreement or the Stock Option Agreement. If any party or any affiliate thereof
receives a request for additional information or documentary material from any
such government or authority with respect to the transactions contemplated by
this Agreement or the Stock Option Agreement, then such party will endeavor in
good faith to make, or cause to be made, as soon as reasonably practicable and
after consultation with the other party, an appropriate response in compliance
with such request. Parent will advise the Company promptly in respect of any
understandings, undertakings or agreements (oral or written) which Parent
proposes to make or enter into with the Federal Trade Commission, the Department
of Justice or any other domestic or foreign government or governmental or
multinational authority in connection with the transactions contemplated by this
Agreement or the Stock Option Agreement.
SECTION 6.05 Public Announcements. Subject to applicable Law, so long
as this Agreement is in effect, Parent, the Purchaser and the Company agree to
consult with each other before issuing any press release or otherwise making any
public statement (including any statements included in any filing with the SEC)
with respect to the Offer, the Merger and the other transactions contemplated by
this Agreement.
SECTION 6.06 Disclosure Statements. Each of the Company and the
Purchaser has delivered to the other party its Disclosure Statement which shall
be accompanied by a certificate stating that its Disclosure Statement was
delivered pursuant to this Agreement and is the Disclosure Statement referred to
in this Agreement. The Disclosure Statements are deemed to constitute an
integral part of this Agreement and to modify the representations, warranties,
covenants or agreements of the Company, the Parent and the Purchaser contained
in this Agreement.
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SECTION 6.07 No Solicitation.
(a) The Company shall, shall cause the Subsidiaries to, and
shall use its commercially reasonable efforts to cause the officers, directors,
employees, investment bankers, attorneys and other agents and representatives of
the Company and the Subsidiaries to, immediately cease any existing activities,
information exchanges, discussions or negotiations with any person (including a
"person" as defined in Section 13(d)(3) of the Exchange Act) other than Parent
or the Purchaser (a "Third Party") heretofore conducted with respect to any
Acquisition Transaction (as hereinafter defined). The Company shall not, shall
cause the Subsidiaries not to, and shall use its commercially reasonable efforts
to cause the officers, directors, employees, investment bankers, attorneys and
other agents and representatives of the Company and the Subsidiaries not to,
directly or indirectly, (i) solicit, initiate, continue, or encourage (including
by way of furnishing or disclosing non-public information) any inquiries,
proposals or offers from any Third Party with respect to any acquisition or
purchase of all or a material portion of the assets or business of, or any
significant equity interest in (including by way of a tender offer), or any
merger, consolidation or business combination with, or any similar transaction
involving, the Company (the foregoing being referred to collectively as an
"Acquisition Transaction"), or (ii) negotiate or otherwise communicate in any
way with any Third Party with respect to any Acquisition Transaction or enter
into, approve or recommend any agreement, arrangement or understanding requiring
the Company to abandon, terminate or fail to consummate the Offer and/or the
Merger or any other transaction contemplated hereby. Additionally, the Company
shall terminate all letters of intent or agreements with respect to any
Acquisition Transaction outstanding as of the date hereof and shall provide
evidence of such termination to Parent. Notwithstanding anything to the contrary
in the foregoing, the Company may in response to an unsolicited proposal with
respect to an Acquisition Transaction with a Third Party furnish or disclose
non-public information to such Third Party and negotiate or otherwise
communicate with such Third Party, in each case only if (A) the Board of
Directors of the Company (after consultation with its outside legal counsel and
independent financial advisors) reasonably determines in good faith that such
proposal would be likely to be more favorable to the Company and its
shareholders than the transactions contemplated hereby (the proposal with
respect to an Acquisition Transaction meeting the requirements of clause (A), a
"Superior Proposal"); and (B) prior to furnishing or disclosing any non-public
information to, or entering into discussions or negotiations with, such Third
Party, the Company receives from such Third Party a customary confidentiality
agreement similar in all material respects to the Confidentiality Agreement;
provided, however, that the Company shall not enter into a definitive agreement
with respect to a Superior Proposal unless the Company concurrently terminates
this Agreement in accordance with the terms hereof.
(b) Nothing contained in this Section 6.07 shall prohibit the
Company from disclosing to its shareholders a position contemplated by Rules
14d-9 and 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to its shareholders if, in the good faith judgment of its Board of
Directors, after consultation with outside legal counsel, failure to so disclose
may result in a violation of applicable Law,
(c) The Company shall notify the Parent and the Purchaser no
later than 24 hours after receipt by the Company (or its advisors), of any
proposal with respect to an Acquisition
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Transaction or any request for nonpublic information in connection with a
proposed Acquisition Transaction or for access to the properties, books or
records of the Company by any person or entity that informs the Company that it
is considering making, or has made, an Acquisition Transaction (the "Acquisition
Proposal"). Such notice to the Parent and Purchaser shall be made orally and in
writing and shall indicate in reasonable detail the identity of the person
making the Acquisition Proposal and the terms and conditions of such proposal,
inquiry or contact. The Company shall give the Parent and the Purchaser at least
seven business days advance notice of any definitive agreement proposed to be
entered into by the Company with any person making a Superior Proposal.
SECTION 6.08 Notification of Certain Matters. Parent and the Company
shall promptly notify each other of (a) the occurrence or non-occurrence of any
fact or event which would be reasonably likely (i) to cause any representation
or warranty contained in this Agreement or the Stock Option Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof to
the Effective Time or (ii) to cause any covenant, condition or agreement
hereunder not to be compiled with or satisfied in all material respects; and (b)
any failure of the Company, Parent or the Purchaser, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder in any material respect; provided, however, that no
such notification shall affect the representations or warranties of any party or
the conditions to the obligations of any party hereunder.
SECTION 6.09 Indemnification and Insurance.
(a) The Purchaser and Parent agree that for a period of six
years from the Effective Time, the Purchaser will maintain all rights to
indemnification now existing in favor of the current or former directors,
officers, employees, fiduciaries and agents of the Company as provided in the
Company's articles of incorporation and by-laws or otherwise in effect under any
agreement on the date of this Agreement. In addition, the Purchaser and Parent
agree that the articles of incorporation and by-laws of the Surviving
Corporation shall contain the provisions with respect to indemnification set
forth in the Company's articles of incorporation and by-laws on the date hereof,
which provisions shall not be amended, repealed or otherwise modified for a
period of six years after the Acceptance Date in any manner that would adversely
affect the rights thereunder of individuals who at any time prior to the
Effective Time were directors or officers of the Company in respect of actions
or omissions occurring at or prior to the Effective Time (including, without
limitation, the transactions contemplated by this Agreement), unless such
modification is required by Law. Notwithstanding the six-year period specified
in the foregoing sentences, in the event any claim or claims arc asserted or
made within such six-year period, all rights to indemnification in respect of
any such claim or claims shall continue until disposition of any and all such
claims.
(b) The Surviving Corporation will at all times exercise the
powers granted to it by its articles of incorporation, its by-laws, and by
applicable Law to indemnify and hold harmless to the fullest extent possible
present or former directors, officers, employees, fiduciaries and agents of the
Company against any threatened or actual claim, action, suit, proceeding or
investigation made against them arising from their service in such capacities
(or service in such capacities for another enterprise at the request of the
Company) prior to and including the Effective Time, including, without
limitation, with respect to matters relating to this Agreement.
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(c) Parent agrees that the Company and, from and after the
Effective Time, the Surviving Corporation, shall cause to be maintained in
effect for not less than six years from the Effective Time the current policies
of the directors' and officers' liability insurance, if any, maintained by the
Company with respect to matters occurring at or prior to the Effective Time
(including, without limitation, the transactions contemplated by this
Agreement); provided that the Surviving Corporation may substitute therefor
policies of at least the same coverage containing terms and conditions which are
no less advantageous and provided that such substitution shall not result in any
gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time; and provided, further, that the Surviving Corporation shall not
be required to pay an annual premium in excess of 200% of the last annual
premium paid by the Company prior to the date hereof and if the Surviving
Corporation is unable to obtain the insurance required by this Section 6.09(c)
it shall obtain as much comparable insurance as possible for an annual premium
equal to such maximum amount.
(d) This Section 6.09 is intended to benefit the current and
former directors, officers, employees, fiduciaries and agents of the Company and
shall be binding on all successors and assigns of Parent, the Purchaser, the
Company and the Surviving Corporation.
SECTION 6.10 Performance by the Purchaser. Parent hereby agrees to
cause the Purchaser to comply with its obligations hereunder and under the Offer
and to cause the Purchaser to consummate the Merger as contemplated herein.
SECTION 6.11 Line of Credit. Purchaser has extended to the Company a
$2,000,000 line of credit (the "Line of Credit") providing for borrowings by the
Company. As of the date of this Agreement, the Purchaser has provided the
Company with $350,000 under the Line of Credit. This Line of Credit will
continue to be available to the Company, and, as necessary, will be increased
above the $2,000,000 limit at the Purchaser's sole discretion.
SECTION 6.12 Deliveries of Information. From time to time after the
date of this Agreement and prior to the Effective Time (unless this Agreement is
terminated), the Company shall furnish promptly to Parent:
(a) a copy of each report, schedule and other document filed
by the Company or received by the Company after the date of this Agreement
pursuant to the requirements of federal or state securities Laws promptly after
such documents are available, and
(b) the monthly consolidated financial statements of the
Company (as prepared by the Company in accordance with its normal accounting
procedures) promptly after such financial statements are available.
SECTION 6.13 Underwriter Warrants. Following commencement of the Offer,
and in compliance with its obligations pursuant to the terms of the Underwriter
Warrants, the Company shall provide each holder of Underwriter Warrants
appropriate notice so that each holder shall have a reasonable opportunity to
exercise such holder's Underwriter Warrants and receive the Offer Price for each
Underwriter Warrant. To the extent required by the Underwriter Warrants,
Purchaser agrees
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<PAGE> 39
to assume the obligations of the Company under the Underwriter Warrants as
contemplated by Section 4(iv) of the Underwriter Warrants.
SECTION 6.14 Series B Stock. The Company shall take all action
necessary to force the conversion of each issued and outstanding share of Series
B Stock into shares of Common Stock prior to the Acceptance Date, including
providing any notice to the holders of Series B Stock as required by the
Company's articles of incorporation.
SECTION 6.15 Public Warrants. As soon as practicable following
commencement of the Offer, the Company shall give the holders of the Public
Warrants notice of the Offer by (i) mailing notice of the Offer by first class
mail, postage prepaid, to each holder and (ii) publishing a notice of such Offer
on at least two consecutive business days in at least two newspapers of general
circulation distributed at least daily, one of which shall be The Wall Street
Journal, and shall state that the holder shall not be entitled to participate in
the Offer unless they exercise their Public Warrants in advance of or within the
period specified in the Offer.
SECTION 6.16 Options. The Company shall take all action necessary to
adjust the Options to provide that upon the exercise of each such Option and
payment of the required exercise price, each holder shall have the right to
receive the Merger Price in lieu of any shares of Common Stock.
ARTICLE VII.
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 7.01 Conditions to Each Party's Obligation to Effect the Merger
if the Offer Shall Have Been Consummated. The respective obligations of Parent,
the Purchaser and the Company to consummate the Merger if the Offer shall have
been consummated are subject to the satisfaction or waiver in writing by each
Party hereto at or before the Effective Time of each of the following
conditions:
(a) shareholder Approval. The shareholders of the Company
shall have duly approved and adopted this Agreement and the transactions
contemplated hereby to the extent required pursuant to the requirements of the
Company's articles of incorporation and applicable Law.
(b) Purchase of Shares. The Purchaser shall have accepted for
payment and paid for Shares pursuant to the Offer in accordance with the terms
hereof, provided, that this condition shall be deemed to have been satisfied
with respect to Parent and the Purchaser if the Purchaser fails to accept for
payment or pay for Shares pursuant to the Offer in violation of the terms of the
Offer.
(c) Injunctions; Illegality. The consummation of the Merger
shall not be restrained, enjoined or prohibited by any order, judgment, decree,
injunction or ruling of a court of competent jurisdiction or any Governmental
Entity, and there shall not have been any statute, rule or regulation enacted,
promulgated or deemed applicable to the Merger by any Governmental Entity that
prevents the consummation of the Merger.
35
<PAGE> 40
SECTION 7.02 Conditions to Obligation of Parent and the Purchaser to
Effect the Merger. The obligations of the Parent and the Purchaser to consummate
the Merger are further subject to the fulfillment of the condition that all
actions contemplated by Section 2.11 hereto shall have been taken, which may be
waived in whole or in part by Parent or the Purchaser.
ARTICLE VIII.
TERMINATION; AMENDMENTS; WAIVER
SECTION 8.01 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time (notwithstanding approval thereof by the shareholders of the Company):
(a) by mutual written consent of the Company and Parent;
(b) by either the Company or Parent, if the Offer has not been
consummated by December 31, 1999 and the terminating party is not in material
breach of its obligations hereunder;
(c) by either the Company or Parent, if there shall be any Law
or regulation that makes consummation of the Offer or the Merger illegal or
otherwise prohibited or if any judgment, injunction, order or decree enjoining
Parent or the Company from consummating the Offer or the Merger is entered and
such judgment, injunction, order or decree shall become final and unappealable;
(d) Parent and the Purchaser may terminate this Agreement by
giving written notice to the Company if the Company is in breach, and the
Company may terminate this Agreement by giving written notice to Parent and the
Purchaser in the event that Parent or the Purchaser in breach, of any material
representation, warranty, or covenant contained in this Agreement, and such
breach is not remedied within ten days of delivery of written notice thereof;
(e) by either the Company or Parent, if the Board of Directors
of the Company shall have (i) withdrawn or modified in a manner adverse to
Parent and the Purchaser its approval or recommendation of the Offer or the
Merger; (ii) approved or recommended any Acquisition Transaction in respect of
the Company in compliance with the provisions contained in Section 6.07 and
making the payments referred to in Section 8.02(c) hereof; or (iii) resolved to
take any of the foregoing actions.
SECTION 8.02 Effect of Termination.
(a) Subject to Section 8.02(c), whether or not the Merger is
consummated, all costs and expenses incurred in connection with the Offer, this
Agreement, the Stock Option Agreement and the transactions contemplated by this
Agreement and the Stock Option Agreement shall be paid by the party incurring
such expenses.
(b) In the event of termination of this Agreement by either
Parent or the Company as provided in Section 8.01, this Agreement shall
forthwith become void and have no effect, without
36
<PAGE> 41
any liability on the part of any party or its directors, officers or
shareholders, other than the provisions of this Section 8.02, Section 9.09 and
the Confidentiality Agreement, which provisions will survive such termination.
(c) If this Agreement is terminated (i) by Parent pursuant to
Section 8.01(e), or (ii) by the Company pursuant to Section 8.01(e), the Company
shall pay in cash to Parent a termination fee equal to $1,000,000 (the "Company
Termination Fee"), to be paid as set forth below.
(d) The Company Termination Fee shall be paid in cash in
immediately available funds. Half of such fee shall be paid prior to and as a
condition precedent to the effectiveness of termination of this Agreement, and
the other half shall be paid upon consummation of the Superior Proposal or
termination or withdrawal of the Superior Proposal.
(e) In no event shall the Company be required to pay Parent
any Company Termination Fee, if, immediately prior to the applicable termination
of this Agreement, Parent was in material breach of any of its material
obligations under this Agreement.
(f) If the Company fails to promptly pay any fee or expense
due hereunder, the Company shall pay the costs and expenses (including
reasonable documented legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee at the publicly
announced prime rate of Citibank, N.A. from the date such fee was required to be
paid.
SECTION 8.03 Amendment. To the extent permitted by applicable Law, this
Agreement may be amended by the parties at any time before or after approval of
this Agreement by the shareholders of the Company; provided, however, that after
any such shareholder approval, no amendment shall be made which by law requires
further approval of the Company's shareholders without the approval of such
shareholders. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties.
SECTION 8.04 Extension; Waiver. At any time prior to the Effective
Time, a party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto by any other party or (c) subject to Section
8.03, waive compliance by any other party with any of the agreements or
conditions contained herein. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
SECTION 8.05 Procedure for Termination, Extension or Waiver. A
termination of this Agreement pursuant to Section 8.01, an amendment of this
Agreement pursuant to Section 8.03 or an extension or waiver pursuant to Section
8.04 in order to be effective shall require, in the case of Parent or the
Company, action by its Board of Directors or, with respect to any amendment of
this Agreement, a duly authorized committee of its Board of Directors.
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<PAGE> 42
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01 Non-Survival of Representations and Warranties. None of
the representations and warranties made in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 9.01 shall not limit any covenant or agreement of the parties hereto
which by its terms contemplates performance after the Effective Time.
SECTION 9.02 Entire Agreement; Assignment.
(a) This Agreement (including the Stock Option Agreement, the
Stockholder Agreements and the other documents and the instruments referred to
herein) and the Confidentiality Agreement constitute the entire agreement and
supersede all prior agreements and understandings, both written and oral, among
the parties with respect to the subject matter hereof and thereof.
(b) Neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
party. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns. This Agreement is not intended to confer upon any person
other than Parent, the Purchaser and the Company any rights or remedies
hereunder.
SECTION 9.03 Validity. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, each of which shall remain in full force
and effect.
SECTION 9.04 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given when delivered in person, by overnight courier or facsimile to the
respective parties as follows:
If to Parent or the Purchaser: IFS Americas, Inc.
1900 East Golf Road, Suite 900
Schaumburg, Illinois 60173
Attention: Terje Vangbo, President and Chief
Executive Officer
Fax: (847) 995-9607
with a copy to: Streich Lang, PA
Two North Central Avenue
Phoenix, Arizona 85004
Attention: Christian J. Hoffmann, III, Esq.
Fax: (602) 420-5008
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<PAGE> 43
If to the Company: Effective Management Systems, Inc.
1200 West Park Place
Milwaukee, Wisconsin 53224-3026
Attention: Michael D. Dunham, President and
Chief Executive Officer
Fax: (414) 359-9011
with a copy to: Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Phillip J. Hanrahan
Jay O. Rothman
Fax: (414) 297-4900
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
SECTION 9.05 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Wisconsin, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.06 Descriptive Headings. The descriptive headings herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
SECTION 9.07 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which shall constitute one and the same agreement.
SECTION 9.08 Obligation of Parent. Whenever this Agreement requires the
Purchaser or the Surviving Corporation to take any action, such requirement
shall be deemed to include an undertaking on the part of Parent to cause the
Purchaser or the Surviving Corporation to take such action and a guarantee of
the performance thereof.
SECTION 9.09 Fees and Expenses. Except as provided in Section 8.02, all
fees, costs and expenses incurred in connection with the transactions
contemplated by this Agreement shall be paid by the party incurring such fees
and expenses, whether or not the Offer or the Merger is consummated.
SECTION 9.10 Certain Definitions. As used in this Agreement:
(a) the term "affiliate," as applied to any person shall mean
any other person directly or indirectly controlling, controlled by, or under
common control with, that person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling,"
39
<PAGE> 44
"controlled by" and "under common control with"), as applied to any person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of that person, whether through the
ownership of voting shares, by contract or otherwise;
(b) the term "person" shall include individuals, corporations,
partnerships, trusts, other entities and groups (which term shall include a
"group" as such term is defined in Section 13(d)(3) of the Exchange Act);
(c) the term "subsidiary" or "subsidiaries" means, with
respect to Parent, the Company or any other person, any corporation,
partnership, joint venture or other legal entity of which Parent, the Company or
such other person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, stock or other equity
interests the holders of which are generally entitled to more than 50% of the
vote for the election of the board of directors or other governing body of such
corporation or other legal entity; and
(d) the term "knowledge" shall mean the actual knowledge of
the executive officers of the Company after reasonable investigation, including
consultation with the principal executive officers of each of the operating
Subsidiaries.
(e) the term "Security Interests," as used in this Agreement,
means interests in personal property or fixtures which secure payment or
performance of an obligation.
SECTION 9.11 Specific Performance. THE PARTIES HERETO AGREE THAT
IRREPARABLE DAMAGE WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS
AGREEMENT WERE NOT PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE
OTHERWISE BREACHED. IT IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE ENTITLED
TO AN INJUNCTION OR INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO
ENFORCE SPECIFICALLY THE TERMS AND PROVISIONS HEREOF IN ANY COURT OF THE UNITED
STATES OR ANY STATE HAVING JURISDICTION, THIS BEING IN ADDITION TO ANY OTHER
REMEDY TO WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY.
SECTION 9.12 Interpretation. Unless the context requires otherwise, all
words used in this Agreement in the singular number shall extend to and include
the plural, all words in the plural number shall extend to and include the
singular, and all words in any gender shall extend to and include all genders.
SECTION 9.13 No Third Party Beneficiary. Except as provided pursuant to
Section 6.09 hereof, the terms and provisions of this Agreement are intended
solely for the benefit of the parties hereto and their respective successors and
assigns and it is not the intention of the parties to confer third-party
beneficiary rights upon any other person.
40
<PAGE> 45
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed on its behalf by its respective officer thereunto duly authorized, all
as of the day and year first above written.
IFS AMERICAS, INC.
("Parent")
By:/s/ Terje Vangbo
________________________________
Name: Terje Vangbo
______________________________
Title: President
_____________________________
IFS ACQUISITION, INC.
(the "Purchaser")
By: /s/ Terje Vangbo
________________________________
Name: Terje Vangbo
______________________________
Title: President
_____________________________
EFFECTIVE MANAGEMENT SYSTEMS, INC.
(the "Company")
By: /s/ Michael D. Dunham
________________________________
Name: Michael D. Dunham
______________________________
Title: President
_____________________________
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<PAGE> 46
ANNEX I
CONDITIONS TO THE OFFER
Capitalized terms used in this Annex which are not otherwise defined
herein shall have the meanings assigned to them in the Agreement.
Notwithstanding any other provision of the Offer, the Purchaser shall not be
obligated to accept for payment or pay for, subject to Rule 14e-l(c) of the
Exchange Act, any Shares not theretofore accepted for payment, and may terminate
or amend the Offer if (i) that number of Shares which would represent at least
seventy-five percent (75%) of the voting power represented by the Shares and
other securities entitled generally to vote in the election of directors of the
Company outstanding on a fully diluted basis after giving effect to the exercise
or conversion of all options, rights and securities exercisable or convertible
into or exchangeable for Shares or such voting securities shall not have been
validly tendered and not withdrawn immediately prior to the expiration of the
Offer (the "Minimum Condition"), (ii) any applicable waiting period under the
HSR Act shall not have expired or been terminated prior to the expiration of the
Offer or (iii) at any time on or after the date of commencement of the Offer and
before the acceptance of such Shares for payment or the payment therefor, any of
the following conditions exist or shall occur:
(a) there shall have been instituted an injunction or other
order, decree, judgment or final ruling by a court of competent jurisdiction or
by a governmental, regulatory or administrative agency or commission of
competent jurisdiction or a statute, rule, regulation, executive order or other
action shall have been promulgated, or enacted, by a Governmental Entity or a
governmental, regulatory or administrative agency or commission of competent
jurisdiction which in any such case (i) restrains or prohibits the making or
consummation of the Offer or the consummation of the Merger; (ii) prohibits or
restricts the ownership or operation by Parent (or any of its affiliates or
subsidiaries including the Purchaser) of all or a material portion of the
Company's business or assets; or (iii) imposes material limitations on the
ability of the Purchaser effectively to acquire or to hold or to exercise rights
of ownership of the Shares, including, without limitation, the right to vote the
Shares purchased by the Purchaser on all matters properly presented to the
shareholders of the Company;
(b) the Company shall have entered into an agreement
concerning any Superior Proposal, or the Board of Directors of the Company or
any committee thereof shall have resolved to enter into such an agreement;
(c) any Person or group (as defined in Section 13(d)(3) of the
Exchange Act) (other than Parent, the Purchaser or any affiliate thereof) shall
have become the beneficial owner (as defined in Rule 13d-3 promulgated under the
Exchange Act) of Shares representing a majority of the total votes represented
by all the Shares then outstanding on a fully diluted basis;
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<PAGE> 47
(d) the Merger Agreement shall have been terminated in
accordance with its terms;
(e) there shall have occurred any event which would reasonably
be expected to have a Material Adverse Effect on the Company, except for general
economic changes, changes that affect the industry of the Company or any
Subsidiary generally and changes in the Company's business attributable solely
to actions taken by Parent or the Purchaser;
(f) the Company shall have breached or failed to perform in
any material respect any of its obligations, covenants or agreements under the
Merger Agreement and such breach or failure to perform is not curable, or if
curable, is not cured within ten (10) business days after written notice of such
breach or failure is given by Parent to the Company; or
(g) any of the representations and warranties of the Company
set forth in the Merger Agreement are not materially true and correct at the
date of the Merger Agreement and at the scheduled expiration of the Offer (as
though made as of such date, except that those representations and warranties
that address matters only as of a particular date shall remain materially true
and correct as of such date);
which, in the reasonable judgment of Parent and regardless of the circumstances
giving rise to any such condition, makes it inadvisable to proceed with the
Offer or with such acceptance for payment, purchase of, or payment for Shares.
2
<PAGE> 1
Exhibit (c)(2)
STOCK OPTION AGREEMENT
STOCK OPTION AGREEMENT, dated as of September 1, 1999 (this
"Agreement"), by and among IFS AMERICAS, INC., a Delaware corporation
("Parent"), IFS ACQUISITION, INC., a Wisconsin corporation and a wholly-owned
subsidiary of Parent (the "Purchaser"), and EFFECTIVE MANAGEMENT SYSTEMS, INC.,
a Wisconsin corporation (the "Company").
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, the Purchaser and the Company are entering into an Agreement
and Plan of Merger (as such agreement may hereafter be amended from time to
time, the "Merger Agreement"; capitalized terms used but not defined in this
Agreement shall have the meanings ascribed to them in the Merger Agreement),
which provides, upon the terms and subject to the conditions thereof, for (i)
the commencement by the Purchaser of a tender offer (the "Offer") to purchase,
among other things, all of the issued and outstanding shares of the common
stock, $.01 par value, of the Company ("Common Stock"), at a price per share
equal to the Offer Price and (ii) the subsequent merger of the Purchaser and the
Company (the "Merger"), whereby each share of Common Stock, other than shares
owned directly or indirectly by Parent, the Purchaser or the Company and other
than Dissenting Shares, will be converted into the right to receive in cash the
Offer Price applicable thereto; and
WHEREAS, as a condition to the willingness of the parties to enter into
the Merger Agreement, Parent and the Purchaser have required that the Company
agree, and in order to induce Parent and the Purchaser to enter into the Merger
Agreement, the Company has agreed, to grant the Purchaser an option to purchase
shares of Common Stock, upon the terms and subject to the conditions of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement and in the Merger Agreement, the parties hereto agree as follows:
ARTICLE I
THE STOCK OPTION
SECTION 1.1 Grant of Stock Option. Subject to the terms and conditions
set forth herein, the Company hereby grants to the Purchaser an irrevocable
option (the "Stock Option") to purchase that number of newly issued shares of
Common Stock (the "Option Shares") equal to the number of shares of Common Stock
that, when added to the number of shares of Common Stock owned by the Purchaser
and its affiliates immediately following consummation of the Offer, shall
constitute 90% of the shares of Common Stock then outstanding on a fully diluted
basis (giving effect to the issuance of the Option Shares) at a purchase price
per Option Share equal to the Offer Price.
<PAGE> 2
SECTION 1.2 Exercise of Stock Option.
(a) Subject to the conditions set forth in Section 2.1, the
Stock Option may be exercised by the Purchaser, in whole but not in part, at any
one time after the occurrence of the Exercise Event (as defined below) and prior
to the Termination Date (as defined below).
(b) The "Exercise Event" shall occur for purposes of this
Agreement upon the Purchaser's acceptance for payment pursuant to the Offer of
shares of Common Stock constituting at least 75% but less than 90% of the shares
of Common Stock then outstanding on a fully diluted basis (not giving effect to
the Stock Option).
(c) Except as provided in the last sentence of this Section
1.2(c), the "Termination Date" shall occur for purposes of this Agreement upon
the earliest to occur of:
(i) the Effective Time;
(ii) the date that is ten (10) business days after
the occurrence of the Exercise Event; or
(iii) the termination of the Merger Agreement in
accordance with the terms and conditions thereof.
Notwithstanding the occurrence of the Termination Date, the Purchaser shall be
entitled to purchase the Option Shares if it has exercised the Stock Option in
accordance with the terms hereof prior to such occurrence, and the occurrence of
the Termination Date shall not affect any rights hereunder which by their terms
do not terminate or expire prior to or as of such date.
(d) In the event the Purchaser wishes to exercise the Stock
Option, the Purchaser shall send to the Company a written notice (an "Exercise
Notice," the date of which notice is referred to herein as the "Notice Date")
specifying the denominations of the certificate or certificates evidencing the
Option Shares which the Purchaser wishes to receive, the place for the closing
of the purchase and sale pursuant to the Stock Option (the "Closing") and a date
not earlier then three (3) business days nor later then ten (10) business days
from the Notice Date for the Closing (the "Closing Date"); provided, however,
that (i) if the Closing cannot be consummated by reason of any applicable Laws
or orders, the period of time that otherwise would run pursuant to this sentence
shall run instead from the date on which such restriction on consummation has
expired or been terminated and (ii) without limiting the foregoing, if prior
notification to or approval of any Governmental Entity is required in connection
with such purchase, the Purchaser and the Company shall promptly file the
required notice or application for approval and shall cooperate in the
expeditious filing of such notice or application, and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which, as the case may be, (A) any required notification period has expired or
been terminated or (B) any required approval has been obtained, and in either
event, any requisite waiting period has expired or been terminated. The Company
shall, within two (2)
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<PAGE> 3
business days after receipt of the Exercise Notice, deliver written notice to
the Purchaser specifying the number of Option Shares and the aggregate purchase
price therefor.
ARTICLE II
CLOSING
SECTION 2.1 Conditions to Closing. The obligation of the Company to
deliver Option Shares upon the exercise of the Stock Option is subject to the
following conditions:
(a) All waiting periods, if any, under the HSR Act applicable
to the issuance and delivery of the Option Shares hereunder shall have
expired or have been terminated; and
(b) There shall be no preliminary or permanent injunction or
other final, non-appealable judgment by a court of competent
jurisdiction preventing or prohibiting the exercise of the Stock Option
or the issuance and delivery of the Option Shares in respect of such
exercise.
SECTION 2.2 Closing.
(a) At the Closing, (i) the Company shall deliver to the
Purchaser a certificate or certificates evidencing the applicable number of
Option Shares (in the denominations specified in the Exercise Notice), each such
certificate or certificates being duly executed by the Company and registered in
the name of the Purchaser, and (ii) the Purchaser shall purchase each such
Option Share from the Company at the Offer Price. Payment by the Purchaser of
the Offer Price for each of the Option Shares shall be made by wire transfer of
immediately available funds to an account designated by the Company, in an
amount equal to the sum of the product of (i) the Offer Price and (ii) the total
number of Option Shares delivered at the Closing.
(b) The Company shall pay all expenses, and any and all
Federal, state and local taxes and other charges, that may be payable in
connection with the preparation, issuance and delivery of stock certificates
under this Section 2.2.
(c) Certificates evidencing Option Shares delivered hereunder
may include legends legally required including the legend in substantially the
following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY BE REOFFERED OR SOLD ONLY IF SO REGISTERED OR IF AN
EXEMPTION FROM SUCH REGISTRATION IS AVAILABLE.
-3-
<PAGE> 4
It is understood and agreed that the foregoing legend shall be removed by
delivery of substitute certificate(s) without such legend upon the sale of the
Option Shares pursuant to a registered public offering or Rule 144 under the
Securities Act of 1933, as amended (the "Securities Act"), or any other sale as
a result of which such legend is no longer required.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and the Purchaser
(except as otherwise disclosed in writing on the date hereof) as follows:
SECTION 3.1 Organization; Authority Relative to this Agreement. The
Company is a corporation validly existing under the laws of the State of
Wisconsin. The Company has all requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company. This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due and
valid authorization, execution and delivery by Parent and the Purchaser,
constitutes a valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally, and by general
equitable principles.
SECTION 3.2 Authority to Issue Shares. The Company has taken all
necessary corporate action to authorize and reserve and permit it to issue, and
at all times from the date hereof through the Termination Date shall have
reserved, all the Option Shares issuable pursuant to this Agreement. All of the
shares of Common Stock issuable under the Stock Option, upon their issuance and
delivery in accordance with the terms of this Agreement, will be duly
authorized, validly issued, fully paid and nonassessable (except as otherwise
provided in Section 180.0622(2)(b) of the WBC), will be delivered free and clear
of all security interests, liens, claims, pledges, options, rights of first
refusal, agreements, limitations on the Purchaser's voting rights, charges,
adverse rights and other encumbrances of any nature whatsoever (other than this
Agreement) and will not be subject to any preemptive rights. Upon the delivery
to the Purchaser by the Company of a certificate or certificates evidencing the
Option Shares, the Purchaser will receive good, valid and marketable title to
the Option Shares.
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<PAGE> 5
ARTICLE IV
COVENANTS OF THE COMPANY
SECTION 4.1 Further Action. The Company shall use its commercially
reasonable efforts to take, or cause to be taken, all appropriate action, and to
do, or cause to be done, all things necessary, proper or advisable under
applicable Laws to consummate and make effective the transactions contemplated
hereunder, including, without limitation, using all reasonable efforts to obtain
all licenses, permits, consents, approvals, authorizations, qualifications and
orders of Governmental Entities.
ARTICLE V
REPRESENTATIONS AND
WARRANTIES OF PARENT AND THE PURCHASER
Parent and the Purchaser hereby represent and warrant to the Company as
follows:
SECTION 5.1 Organization; Authority Relative to this Agreement. Each of
Parent and the Purchaser is a corporation duly organized and validly existing
under the laws of the jurisdiction of its incorporation. Each of Parent and the
Purchaser has all requisite corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
by Parent and the Purchaser and the consummation by Parent and the Purchaser of
the transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of Parent and the Purchaser. This
Agreement has been duly and validly executed and delivered by Parent and the
Purchaser and, assuming the due and valid authorization, execution and delivery
by the Company, constitutes a valid and binding obligation of Parent and the
Purchaser, enforceable against each of Parent and the Purchaser in accordance
with its terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally, and by general equitable principles.
SECTION 5.2 Distribution. Any Option Shares the Purchaser purchases
pursuant to this Agreement are being purchased for investment purposes only and
not with a view to any public distribution thereof.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1 Amendment. This Agreement may not be amended except by an
instrument in writing signed by the parties hereto.
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<PAGE> 6
SECTION 6.2 Waiver. Any party hereto may (a) extend the time for or
waive compliance with the performance of any obligation or other act of any
other party hereto or (b) waive any inaccuracy in the representations and
warranties contained herein or in any document delivered pursuant hereto. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the party or parties to be bound thereby. The failure of any
party to this Agreement to assert any of its rights under this Agreement or
otherwise shall not constitute a waiver of those rights.
SECTION 6.3 Fees and Expenses. Except as otherwise provided herein or
in Section 8.02 of the Merger Agreement, all costs, fees and expenses incurred
in connection with this Agreement shall be paid by the party incurring such
expenses.
SECTION 6.4 Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or sent by telecopy or by overnight courier (providing
proof of delivery) to the respective parties at their addresses as specified in
Section 9.04 of the Merger Agreement.
SECTION 6.5 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of Law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner to the fullest extent permitted by applicable Law in order that the
transactions contemplated hereby may be consummated as originally contemplated
to the fullest extent possible.
SECTION 6.6 Assignment; Binding Effect; Benefit. Neither this Agreement
nor any of the rights, interests or obligations hereunder shall be assigned, in
whole or in part, by operation of law or otherwise, by any of the parties hereto
without the prior written consent of the other parties. This Agreement shall be
binding upon, inure to the benefit of, and be enforceable by, the parties hereto
and their respective successors and permitted assigns. Notwithstanding anything
contained in this Agreement to the contrary, nothing in this Agreement, express
or implied, is intended to confer on any person other than the parties hereto or
their respective successors and permitted assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
SECTION 6.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Wisconsin, without giving
effect to the principles of conflicts of laws thereof.
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<PAGE> 7
SECTION 6.8 Enforcement. THE PARTIES AGREE THAT IRREPARABLE DAMAGE
WOULD OCCUR IN THE EVENT THAT ANY OF THE PROVISIONS OF THIS AGREEMENT WERE NOT
PERFORMED IN ACCORDANCE WITH THEIR SPECIFIC TERMS OR WERE OTHERWISE BREACHED. IT
IS ACCORDINGLY AGREED THAT THE PARTIES SHALL BE ENTITLED TO AN INJUNCTION OR
INJUNCTIONS TO PREVENT BREACHES OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY
THE TERMS AND PROVISIONS OF THIS AGREEMENT IN ANY COURT OF THE UNITED STATES OR
ANY STATE HAVING JURISDICTION, THIS BEING IN ADDITION TO ANY OTHER REMEDY TO
WHICH THEY ARE ENTITLED AT LAW OR IN EQUITY.
SECTION 6.9 Headings. The descriptive headings contained in this
Agreement are included for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement.
SECTION 6.10 Counterparts. This Agreement may be executed and delivered
(including by facsimile transmission) in one or more counterparts, all of which
shall be considered one and the same agreement and shall become effective when
one or more counterparts have been signed by each of the parties and delivered
to the other parties, it being understood that all parties need not sign the
same counterpart.
SECTION 6.11 Entire Agreement. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, both written
and oral, among the parties with respect to the subject matter of this
Agreement.
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<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, all as of the
date first written above.
IFS AMERICAS, INC.
("Parent")
By: /s/ Terje Vangbo
------------------------------------
Name: Terje Vangbo
Title: President
IFS ACQUISITION, INC.
(the "Purchaser")
By: /s/ Terje Vangbo
------------------------------------
Name: Terje Vangbo
Title: President
EFFECTIVE MANAGEMENT SYSTEMS, INC.
(the "Company")
By: /s/ Michael D. Dunham
------------------------------------
Name: Michael D. Dunham
Title: President
-8-
<PAGE> 1
Exhibit (c)(3)
STOCKHOLDER AGREEMENT
AGREEMENT, dated September 1, 1999, among IFS Americas, Inc., a
Delaware corporation ("Parent"), IFS Acquisition, Inc., a Wisconsin corporation
and a wholly-owned subsidiary of Parent (the "Purchaser"), and Michael D. Dunham
(the "Stockholder").
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, the Purchaser and Effective Management Systems, Inc., a
Wisconsin corporation (the "Company"), have entered into an Agreement and Plan
of Merger (as such agreement may hereafter be amended from time to time, the
"Merger Agreement"), pursuant to which the Purchaser will be merged with and
into the Company (the "Merger"); and
WHEREAS, in furtherance of the Merger, Parent and the Company desire
that as soon as practicable (and not later than five business days) after the
announcement of the execution of the Merger Agreement, the Purchaser shall
commence a cash tender offer (the "Offer") to purchase at the Offer Price all
outstanding shares of Common Stock (each as defined in Section 1 hereof),
including all of the Securities (as defined in Section 2 hereof) beneficially
owned by the Stockholder; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholder agree, and the Stockholder
has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Owned" or "Beneficial Ownership" with
respect to any securities shall mean having "beneficial ownership" of such
securities (as determined pursuant to Rule 13d-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), including pursuant to any
agreement, arrangement or understanding, whether or not in writing. Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a Person (as hereinafter defined) shall include securities
Beneficially Owned by all other Persons with whom such Person would constitute a
"group" within the meaning of Section 13(d)(3) of the Exchange Act.
(b) "Common Stock" shall mean the Common Stock, $.01 par value
per share, of the Company.
(c) "Offer Price" shall mean cash in the amount of $4.50 per
share of Common Stock or, if greater, the price per share paid by the Purchaser
in the Offer.
<PAGE> 2
(d) "Person" shall mean an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity.
(e) Capitalized terms used and not defined herein shall have
the respective meanings ascribed to them in the Merger Agreement.
2. Tender of Shares.
(a) In order to induce Parent and the Purchaser to enter into
the Merger Agreement, the Stockholder hereby agrees to validly tender (or cause
the record owner of such shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
tenth business day after commencement of the Offer pursuant to Section 1.01 of
the Merger Agreement and Rule 14d-2 under the Exchange Act, the number of shares
of Common Stock set forth opposite the Stockholder's name on Schedule I hereto
(the "Existing Securities," and together with any shares of Common Stock
acquired by the Stockholder in any capacity after the date hereof and prior to
the termination of this Agreement by means of purchase, dividend, distribution,
exercise of options or other rights to acquire Common Stock or in any other way,
the "Securities"), all of which are Beneficially Owned by the Stockholder. The
Stockholder hereby acknowledges and agrees that Parent's and the Purchaser's
obligation to accept for payment and pay for the Securities in the Offer,
including the Securities Beneficially Owned by the Stockholder, is subject to
the terms and conditions of the Offer.
(b) The Stockholder hereby permits Parent and the Purchaser to
publish and disclose in the Offer Documents and, if approval of the Company's
stockholders is required under applicable law, the Proxy Statement (including
all documents and schedules filed with the SEC) its identity and ownership of
the Securities and the nature of its commitments, arrangements and
understandings under this Agreement; provided that the Stockholder shall have a
right to review and comment on such disclosure a reasonable time before it is
publicly disclosed.
3. Additional Agreements.
(a) No Inconsistent Arrangements. Except as necessary to
exercise Stockholder's fiduciary duties as a director of the Company with
respect to a Superior Proposal, the Stockholder hereby covenants and agrees
that, except as contemplated by this Agreement and the Merger Agreement, it
shall not (i) transfer (which term shall include, without limitation, any sale,
gift, pledge (other than a pledge which does not impair the Stockholder's
ability to perform under this Agreement) or other disposition), or consent to
any transfer of, any or all of the Securities or any interest therein, (ii)
enter into any contract, option or other agreement or understanding with respect
to any transfer of any or all of the Securities or any interest therein, (iii)
grant any proxy, power-of-attorney or other authorization in or with respect to
the Securities, (iv) deposit the Securities into a voting trust or enter into a
voting agreement or arrangement with respect to the Securities or (v) take any
other action that would in any way restrict, limit or interfere with the
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<PAGE> 3
performance of its obligations hereunder or the transactions contemplated hereby
or by the Merger Agreement or the Stock Option Agreement.
(b) No Solicitation. The Stockholder hereby agrees, in the
capacity as a stockholder of the Company, that neither the Stockholder nor any
affiliates, representatives or agents shall (and, if the Stockholder is a
corporation, partnership, trust or other entity, the Stockholder shall cause its
officers, directors, partners, and employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent,
the Purchaser or any of their respective affiliates or representatives)
concerning any proposal relating to an Acquisition Transaction. The Stockholder
shall notify the Parent and the Purchaser no later than 24 hours after receipt
by the Stockholder (or its advisors), of any proposal with respect to an
Acquisition Transaction or any request for non-public information in connection
with a proposed Acquisition Transaction or for access to the properties, books
or records of the Company by any person or entity that informs the Company that
it is considering making, or has made, an Acquisition Transaction (as defined in
Section 6.07 of the Merger Agreement). Such notice to the Parent and Purchaser
shall be made orally and in writing and shall indicate in reasonable detail the
identity of the person making the Acquisition Proposal (as defined in Section
6.07 of the Merger Agreement) and the terms and conditions of such proposal,
inquiry or contact. Any action taken by the Company or any member of the Board
of Directors of the Company in accordance with Section 6.07 of the Merger
Agreement shall be deemed not to violate this Section 3(b).
(c) Reasonable Efforts. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use all 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 to consummate and
make effective the transactions contemplated by this Agreement. Each party shall
promptly consult with the other and provide any necessary information and
material with respect to all filings made by such party with any Governmental
Entity in connection with this Agreement and the transactions contemplated
hereby.
(d) Waiver of Appraisal Rights. The Stockholder hereby waives
any rights of appraisal or rights to dissent from the Merger that it may have.
4. Representations and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to Parent and the Purchaser as follows:
(a) Ownership of Securities. The Stockholder is the record and
Beneficial Owner of the Existing Securities, as set forth on Schedule I. On the
date hereof, the Existing Securities constitute all of the Securities owned of
record or Beneficially Owned by the Stockholder. Except as set forth on Schedule
I, the Stockholder has sole voting power and sole power to issue instructions
with respect to the matters set forth in Sections 2 and 3 hereof, sole power of
disposition, sole power to demand appraisal rights and sole power to agree to
all of the matters set forth in this Agreement,
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<PAGE> 4
in each case with respect to all of the Existing Securities with no limitations,
qualifications or restrictions on such rights, subject to applicable securities
laws and the terms of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the power
and authority to enter into and perform all of the Stockholder's obligations
under this Agreement. The execution, delivery and performance of this Agreement
by the Stockholder will not violate any other agreement to which the Stockholder
is a party including, without limitation, any voting agreement, proxy
arrangement, pledge agreement, stockholders agreement or voting trust. This
Agreement has been duly and validly executed and delivered by the Stockholder
and constitutes a valid and binding agreement of the Stockholder, enforceable
against the Stockholder in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which the Stockholder is a trustee, or any party to any other agreement
or arrangement, whose consent is required for the execution and delivery of this
Agreement or the consummation by the Stockholder of the transactions
contemplated hereby.
(c) No Conflicts. Except for filings under the HSR Act, other
applicable Antitrust Laws and the Exchange Act (i) no filing with, and no
permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution and delivery of this Agreement by the Stockholder,
the consummation by the Stockholder of the transactions contemplated hereby and
the compliance by the Stockholder with the provisions hereof and (ii) none of
the execution and delivery of this Agreement by the Stockholder, the
consummation by the Stockholder of the transactions contemplated hereby or
compliance by the Stockholder with any of the provisions hereof, except in cases
in which any conflict, breach, default or violation described below would not
interfere with the ability of such Stockholder to perform such Stockholder's
obligations hereunder, shall (A) conflict with or result in any breach of any
organizational documents applicable to the Stockholder, (B) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, modification or acceleration) under, any of the terms, conditions
or provisions of any note, loan agreement, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which the Stockholder is a party or by which the
Stockholder or any of its properties or assets may be bound, or (C) violate any
order, writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to the Stockholder or any of such Stockholder's properties or assets.
(d) No Liens. Except as permitted by this Agreement, the
Existing Securities and the certificates representing such securities are now,
and at all times during the term hereof will be, held by the Stockholder, or by
a nominee or custodian for the benefit of the Stockholder, free and clear of all
Liens, proxies, voting trusts or agreements, understandings or arrangements or
any other rights whatsoever, except for any such Liens or proxies arising
hereunder.
4
<PAGE> 5
(e) No Finder's Fees. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the
Stockholder.
(f) Reliance by Parent. The Stockholder understands and
acknowledges that Parent is entering into, and causing the Purchaser to enter
into, the Merger Agreement in reliance upon the Stockholder's execution and
delivery of this Agreement.
5. Representations and Warranties of Parent and the Purchaser. Each of
Parent and the Purchaser hereby represents and warrants to the Stockholder as
follows:
(a) Power; Binding Agreement. Parent and the Purchaser each
has the corporate power and authority to enter into and perform all of its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by each of Parent and the Purchaser will not violate any other
agreement to which either of them is a party. This Agreement has been duly and
validly executed and delivered by each of Parent and the Purchaser and
constitutes a valid and binding agreement of each of Parent and the Purchaser,
enforceable against each of Parent and the Purchaser in accordance with its
terms, except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to the
enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
(b) No Conflicts. Except for filings under the HSR Act, other
applicable Antitrust Laws and the Exchange Act, (i) no filing with, and no
permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution of this Agreement by each of Parent and the
Purchaser, the consummation by each of Parent and the Purchaser of the
transactions contemplated hereby and the compliance by Parent and the Purchaser
with the provisions hereof and (ii) none of the execution and delivery of this
Agreement by each of Parent and the Purchaser, the consummation by each of
Parent and the Purchaser of the transactions contemplated hereby or compliance
by each of Parent and the Purchaser with any of the provisions hereof, except in
cases in which any conflict, breach, default or violation described below would
not interfere with the ability of Parent or the Purchaser to perform their
respective obligations hereunder, shall (A) conflict with or result in any
breach of any organizational documents applicable to either of Parent or the
Purchaser, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, modification or acceleration) under,
any of the terms, conditions or provisions of any note, loan agreement, bond,
mortgage, indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which either of
Parent or the Purchaser is a party or by which either of Parent or the Purchaser
or any of their properties or assets may be bound, or (C) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to either of Parent or the Purchaser or any of their properties or
assets.
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<PAGE> 6
6. Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further lawful action as may be
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
7. Stop Transfer. The Stockholder shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Securities, unless such transfer
is made in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Common Stock by reason of any stock dividend,
split-up, recapitalization, combination, exchange of shares or the like, the
term "Securities" shall refer to and include the Securities as well as all such
stock dividends and distributions and any shares into which or for which any and
all of the Securities may be changed or exchanged.
8. Termination. The covenant and agreements contained herein with
respect to the Securities shall terminate upon the earlier of (a) the Effective
Time, (b) the first anniversary of the date hereof, or (c) the termination of
the Merger Agreement pursuant to (i) Section 8.01(a), (ii) Section 8.01(b),
(iii) Section 8.01(c), (iv) by the Company pursuant to Section 8.01(d) thereof
or (v) Section 8.01(e).
9. No Limitation. Nothing in this Agreement shall be construed to
prohibit the Stockholder who is a member of the Board of Directors of the
Company from exercising his fiduciary duties as a member of such Board of
Directors.
10. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) Binding Agreement. This Agreement and the obligations
hereunder shall attach to the Securities and shall be binding upon any person or
entity to which legal or beneficial ownership of the Securities shall pass,
whether by operation of law or otherwise, including, without limitation, the
Stockholder's administrators or successors. Notwithstanding any transfer of
Securities, the transferor shall remain liable for the performance of all
obligations of the transferor under this Agreement.
(c) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the
Stockholder or Parent and the Purchaser, as the case may be, provided that
Parent or the Purchaser may assign, in its respective sole discretion, its
rights and obligations hereunder to any direct or indirect subsidiary of Parent,
but no such assignment shall relieve Parent or the Purchaser of its obligations
hereunder if such assignee does not perform such obligations.
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<PAGE> 7
(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy (with a
confirmation copy sent for next day delivery via courier service, such as
Federal Express), or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the Stockholder:
Michael D. Dunham
c/o Effective Management Systems, Inc.
1200 West Park Place
Milwaukee, Wisconsin 53224-3026
Telephone No.: (414) 359-9800
Telecopy No.: (414) 359-9011
Copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Phillip J. Hanrahan
Jay O. Rothman
Telephone No.: (414) 271-2400
Telecopy No.: (414) 297-4900
If to Parent or the Purchaser:
IFS Americas, Inc.
1900 East Golf Road, Suite 900
Schaumburg, Illinois 60173
Attention: Terje Vangbo, Chief Executive
Officer and President
Telephone No.: (847) 995-9600
Telecopy No.: (847) 995-9607
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Copy to:
Streich Lang, PA
Two North Central Avenue
Phoenix, Arizona 85004
Attention: Christian J. Hoffmann, III, Esq.
Telephone No.: (602) 229-5336
Telecopy No.: (602) 420-5008
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein. Notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor the Purchaser shall be deemed to be the owner, nor
shall Parent or the Purchaser have the power to vote for the election of
directors, with respect to some or all of the Securities for purposes of the WBC
until the purchase of, and payment for, such Securities is actually consummated.
The rights of Parent and the Purchaser hereunder shall be limited as provided in
the preceding sentence.
(g) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore in the event of any such breach the aggrieved party shall be entitled
to the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any
rights, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
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(j) No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Wisconsin, without giving
effect to the principles of conflicts of law thereof.
(l) Waiver of Jury Trial. Each party hereto hereby waives any
right to a trial by jury in connection with any action, suit or proceeding
brought in connection with this Agreement.
(m) Descriptive Headings. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same agreement.
9
<PAGE> 10
IN WITNESS WHEREOF, Parent, the Purchaser and the Stockholder have
caused this Agreement to be duly executed as of the day and year first above
written.
IFS AMERICAS, INC.
By: /s/ Terje Vangbo
------------------------------------
Name: Terje Vangbo
----------------------------------
Its: President
-----------------------------------
IFS ACQUISITION, INC.
By: /s/ Terje Vangbo
------------------------------------
Name: Terje Vangbo
----------------------------------
Its: President
-----------------------------------
STOCKHOLDER
/s/ Michael D. Dunham
---------------------------------------
MICHAEL D. DUNHAM
10
<PAGE> 11
SCHEDULE I
<TABLE>
<CAPTION>
NAME OF STOCKHOLDER NUMBER OF SHARES OF COMMON STOCK
BENEFICIALLY OWNED
<S> <C>
Michael D. Dunham 637,300
</TABLE>
<PAGE> 1
Exhibit (c)(4)
STOCKHOLDER AGREEMENT
AGREEMENT, dated September 1, 1999, among IFS Americas, Inc., a
Delaware corporation ("Parent"), IFS Acquisition, Inc., a Wisconsin corporation
and a wholly-owned subsidiary of Parent (the "Purchaser"), and Thomas M. Dykstra
(the "Stockholder").
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, the Purchaser and Effective Management Systems, Inc., a
Wisconsin corporation (the "Company"), have entered into an Agreement and Plan
of Merger (as such agreement may hereafter be amended from time to time, the
"Merger Agreement"), pursuant to which the Purchaser will be merged with and
into the Company (the "Merger"); and
WHEREAS, in furtherance of the Merger, Parent and the Company desire
that as soon as practicable (and not later than five business days) after the
announcement of the execution of the Merger Agreement, the Purchaser shall
commence a cash tender offer (the "Offer") to purchase at the Offer Price all
outstanding shares of Common Stock (each as defined in Section 1 hereof),
including all of the Securities (as defined in Section 2 hereof) beneficially
owned by the Stockholder; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholder agree, and the Stockholder
has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Owned" or "Beneficial Ownership" with
respect to any securities shall mean having "beneficial ownership" of such
securities (as determined pursuant to Rule 13d-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), including pursuant to any
agreement, arrangement or understanding, whether or not in writing. Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a Person (as hereinafter defined) shall include securities
Beneficially Owned by all other Persons with whom such Person would constitute a
"group" within the meaning of Section 13(d)(3) of the Exchange Act.
(b) "Common Stock" shall mean the Common Stock, $.01 par value
per share, of the Company.
(c) "Offer Price" shall mean cash in the amount of $4.50 per
share of Common Stock or, if greater, the price per share paid by the Purchaser
in the Offer.
<PAGE> 2
(d) "Person" shall mean an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity.
(e) Capitalized terms used and not defined herein shall have
the respective meanings ascribed to them in the Merger Agreement.
2. Tender of Shares.
(a) In order to induce Parent and the Purchaser to enter into
the Merger Agreement, the Stockholder hereby agrees to validly tender (or cause
the record owner of such shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
tenth business day after commencement of the Offer pursuant to Section 1.01 of
the Merger Agreement and Rule 14d-2 under the Exchange Act, the number of shares
of Common Stock set forth opposite the Stockholder's name on Schedule I hereto
(the "Existing Securities," and together with any shares of Common Stock
acquired by the Stockholder in any capacity after the date hereof and prior to
the termination of this Agreement by means of purchase, dividend, distribution,
exercise of options or other rights to acquire Common Stock or in any other way,
the "Securities"), all of which are Beneficially Owned by the Stockholder. The
Stockholder hereby acknowledges and agrees that Parent's and the Purchaser's
obligation to accept for payment and pay for the Securities in the Offer,
including the Securities Beneficially Owned by the Stockholder, is subject to
the terms and conditions of the Offer.
(b) The Stockholder hereby permits Parent and the Purchaser to
publish and disclose in the Offer Documents and, if approval of the Company's
stockholders is required under applicable law, the Proxy Statement (including
all documents and schedules filed with the SEC) its identity and ownership of
the Securities and the nature of its commitments, arrangements and
understandings under this Agreement; provided that the Stockholder shall have a
right to review and comment on such disclosure a reasonable time before it is
publicly disclosed.
3. Additional Agreements.
(a) No Inconsistent Arrangements. Except as necessary to
exercise Stockholder's fiduciary duties as a director of the Company with
respect to a Superior Proposal, the Stockholder hereby covenants and agrees
that, except as contemplated by this Agreement and the Merger Agreement, it
shall not (i) transfer (which term shall include, without limitation, any sale,
gift, pledge (other than a pledge which does not impair the Stockholder's
ability to perform under this Agreement) or other disposition), or consent to
any transfer of, any or all of the Securities or any interest therein, (ii)
enter into any contract, option or other agreement or understanding with respect
to any transfer of any or all of the Securities or any interest therein, (iii)
grant any proxy, power-of-attorney or other authorization in or with respect to
the Securities, (iv) deposit the Securities into a voting trust or enter into a
voting agreement or arrangement with respect to the Securities or (v) take any
other action that would in any way restrict, limit or interfere with the
2
<PAGE> 3
performance of its obligations hereunder or the transactions contemplated hereby
or by the Merger Agreement or the Stock Option Agreement.
(b) No Solicitation. The Stockholder hereby agrees, in the
capacity as a stockholder of the Company, that neither the Stockholder nor any
affiliates, representatives or agents shall (and, if the Stockholder is a
corporation, partnership, trust or other entity, the Stockholder shall cause its
officers, directors, partners, and employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent,
the Purchaser or any of their respective affiliates or representatives)
concerning any proposal relating to an Acquisition Transaction. The Stockholder
shall notify the Parent and the Purchaser no later than 24 hours after receipt
by the Stockholder (or its advisors), of any proposal with respect to an
Acquisition Transaction or any request for non-public information in connection
with a proposed Acquisition Transaction or for access to the properties, books
or records of the Company by any person or entity that informs the Company that
it is considering making, or has made, an Acquisition Transaction (as defined in
Section 6.07 of the Merger Agreement). Such notice to the Parent and Purchaser
shall be made orally and in writing and shall indicate in reasonable detail the
identity of the person making the Acquisition Proposal (as defined in Section
6.07 of the Merger Agreement) and the terms and conditions of such proposal,
inquiry or contact. Any action taken by the Company or any member of the Board
of Directors of the Company in accordance with Section 6.07 of the Merger
Agreement shall be deemed not to violate this Section 3(b).
(c) Reasonable Efforts. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use all 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 to consummate and
make effective the transactions contemplated by this Agreement. Each party shall
promptly consult with the other and provide any necessary information and
material with respect to all filings made by such party with any Governmental
Entity in connection with this Agreement and the transactions contemplated
hereby.
(d) Waiver of Appraisal Rights. The Stockholder hereby waives
any rights of appraisal or rights to dissent from the Merger that it may have.
4. Representations and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to Parent and the Purchaser as follows:
(a) Ownership of Securities. The Stockholder is the record and
Beneficial Owner of the Existing Securities, as set forth on Schedule I. On the
date hereof, the Existing Securities constitute all of the Securities owned of
record or Beneficially Owned by the Stockholder. Except as set forth on Schedule
I, the Stockholder has sole voting power and sole power to issue instructions
with respect to the matters set forth in Sections 2 and 3 hereof, sole power of
disposition, sole power to demand appraisal rights and sole power to agree to
all of the matters set forth in this Agreement,
3
<PAGE> 4
in each case with respect to all of the Existing Securities with no limitations,
qualifications or restrictions on such rights, subject to applicable securities
laws and the terms of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the power
and authority to enter into and perform all of the Stockholder's obligations
under this Agreement. The execution, delivery and performance of this Agreement
by the Stockholder will not violate any other agreement to which the Stockholder
is a party including, without limitation, any voting agreement, proxy
arrangement, pledge agreement, stockholders agreement or voting trust. This
Agreement has been duly and validly executed and delivered by the Stockholder
and constitutes a valid and binding agreement of the Stockholder, enforceable
against the Stockholder in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which the Stockholder is a trustee, or any party to any other agreement
or arrangement, whose consent is required for the execution and delivery of this
Agreement or the consummation by the Stockholder of the transactions
contemplated hereby.
(c) No Conflicts. Except for filings under the HSR Act, other
applicable Antitrust Laws and the Exchange Act (i) no filing with, and no
permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution and delivery of this Agreement by the Stockholder,
the consummation by the Stockholder of the transactions contemplated hereby and
the compliance by the Stockholder with the provisions hereof and (ii) none of
the execution and delivery of this Agreement by the Stockholder, the
consummation by the Stockholder of the transactions contemplated hereby or
compliance by the Stockholder with any of the provisions hereof, except in cases
in which any conflict, breach, default or violation described below would not
interfere with the ability of such Stockholder to perform such Stockholder's
obligations hereunder, shall (A) conflict with or result in any breach of any
organizational documents applicable to the Stockholder, (B) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, modification or acceleration) under, any of the terms, conditions
or provisions of any note, loan agreement, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which the Stockholder is a party or by which the
Stockholder or any of its properties or assets may be bound, or (C) violate any
order, writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to the Stockholder or any of such Stockholder's properties or assets.
(d) No Liens. Except as permitted by this Agreement, the
Existing Securities and the certificates representing such securities are now,
and at all times during the term hereof will be, held by the Stockholder, or by
a nominee or custodian for the benefit of the Stockholder, free and clear of all
Liens, proxies, voting trusts or agreements, understandings or arrangements or
any other rights whatsoever, except for any such Liens or proxies arising
hereunder.
4
<PAGE> 5
(e) No Finder's Fees. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the
Stockholder.
(f) Reliance by Parent. The Stockholder understands and
acknowledges that Parent is entering into, and causing the Purchaser to enter
into, the Merger Agreement in reliance upon the Stockholder's execution and
delivery of this Agreement.
5. Representations and Warranties of Parent and the Purchaser. Each of
Parent and the Purchaser hereby represents and warrants to the Stockholder as
follows:
(a) Power; Binding Agreement. Parent and the Purchaser each
has the corporate power and authority to enter into and perform all of its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by each of Parent and the Purchaser will not violate any other
agreement to which either of them is a party. This Agreement has been duly and
validly executed and delivered by each of Parent and the Purchaser and
constitutes a valid and binding agreement of each of Parent and the Purchaser,
enforceable against each of Parent and the Purchaser in accordance with its
terms, except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to the
enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
(b) No Conflicts. Except for filings under the HSR Act, other
applicable Antitrust Laws and the Exchange Act, (i) no filing with, and no
permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution of this Agreement by each of Parent and the
Purchaser, the consummation by each of Parent and the Purchaser of the
transactions contemplated hereby and the compliance by Parent and the Purchaser
with the provisions hereof and (ii) none of the execution and delivery of this
Agreement by each of Parent and the Purchaser, the consummation by each of
Parent and the Purchaser of the transactions contemplated hereby or compliance
by each of Parent and the Purchaser with any of the provisions hereof, except in
cases in which any conflict, breach, default or violation described below would
not interfere with the ability of Parent or the Purchaser to perform their
respective obligations hereunder, shall (A) conflict with or result in any
breach of any organizational documents applicable to either of Parent or the
Purchaser, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, modification or acceleration) under,
any of the terms, conditions or provisions of any note, loan agreement, bond,
mortgage, indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which either of
Parent or the Purchaser is a party or by which either of Parent or the Purchaser
or any of their properties or assets may be bound, or (C) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to either of Parent or the Purchaser or any of their properties or
assets.
5
<PAGE> 6
6. Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further lawful action as may be
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
7. Stop Transfer. The Stockholder shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Securities, unless such transfer
is made in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Common Stock by reason of any stock dividend,
split-up, recapitalization, combination, exchange of shares or the like, the
term "Securities" shall refer to and include the Securities as well as all such
stock dividends and distributions and any shares into which or for which any and
all of the Securities may be changed or exchanged.
8. Termination. The covenant and agreements contained herein with
respect to the Securities shall terminate upon the earlier of (a) the Effective
Time, (b) the first anniversary of the date hereof, or (c) the termination of
the Merger Agreement pursuant to (i) Section 8.01(a), (ii) Section 8.01(b),
(iii) Section 8.01(c), (iv) by the Company pursuant to Section 8.01(d) thereof
or (v) Section 8.01(e).
9. No Limitation. Nothing in this Agreement shall be construed to
prohibit the Stockholder who is a member of the Board of Directors of the
Company from exercising his fiduciary duties as a member of such Board of
Directors.
10. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) Binding Agreement. This Agreement and the obligations
hereunder shall attach to the Securities and shall be binding upon any person or
entity to which legal or beneficial ownership of the Securities shall pass,
whether by operation of law or otherwise, including, without limitation, the
Stockholder's administrators or successors. Notwithstanding any transfer of
Securities, the transferor shall remain liable for the performance of all
obligations of the transferor under this Agreement.
(c) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the
Stockholder or Parent and the Purchaser, as the case may be, provided that
Parent or the Purchaser may assign, in its respective sole discretion, its
rights and obligations hereunder to any direct or indirect subsidiary of Parent,
but no such assignment shall relieve Parent or the Purchaser of its obligations
hereunder if such assignee does not perform such obligations.
6
<PAGE> 7
(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy (with a
confirmation copy sent for next day delivery via courier service, such as
Federal Express), or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the Stockholder:
Thomas M. Dykstra
c/o Effective Management Systems, Inc.
1200 West Park Place
Milwaukee, Wisconsin 53224-3026
Telephone No.: (414) 359-9800
Telecopy No.: (414) 359-9011
Copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Phillip J. Hanrahan
Jay O. Rothman
Telephone No.: (414) 271-2400
Telecopy No.: (414) 297-4900
If to Parent or the Purchaser:
IFS Americas, Inc.
1900 East Golf Road, Suite 900
Schaumburg, Illinois 60173
Attention: Terje Vangbo, Chief Executive Officer and
President
Telephone No.: (847) 995-9600
Telecopy No.: (847) 995-9607
7
<PAGE> 8
Copy to:
Streich Lang, PA
Two North Central Avenue
Phoenix, Arizona 85004
Attention: Christian J. Hoffmann, III, Esq.
Telephone No.: (602) 229-5336
Telecopy No.: (602) 420-5008
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein. Notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor the Purchaser shall be deemed to be the owner, nor
shall Parent or the Purchaser have the power to vote for the election of
directors, with respect to some or all of the Securities for purposes of the WBC
until the purchase of, and payment for, such Securities is actually consummated.
The rights of Parent and the Purchaser hereunder shall be limited as provided in
the preceding sentence.
(g) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore in the event of any such breach the aggrieved party shall be entitled
to the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any
rights, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
8
<PAGE> 9
(j) No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Wisconsin, without giving
effect to the principles of conflicts of law thereof.
(l) Waiver of Jury Trial. Each party hereto hereby waives any
right to a trial by jury in connection with any action, suit or proceeding
brought in connection with this Agreement.
(m) Descriptive Headings. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same agreement.
9
<PAGE> 10
IN WITNESS WHEREOF, Parent, the Purchaser and the Stockholder have
caused this Agreement to be duly executed as of the day and year first above
written.
IFS AMERICAS, INC.
By: /s/ Terje Vangbo
------------------------------------
Name: Terje Vangbo
----------------------------------
Its: President
-----------------------------------
IFS ACQUISITION, INC.
By: /s/ Terje Vangbo
------------------------------------
Name: Terje Vangbo
----------------------------------
Its: President
-----------------------------------
STOCKHOLDER
/s/ Thomas M. Dykstra
---------------------------------------
THOMAS M. DYKSTRA
10
<PAGE> 11
SCHEDULE I
<TABLE>
<CAPTION>
NAME OF STOCKHOLDER NUMBER OF SHARES OF COMMON STOCK
BENEFICIALLY OWNED
<S> <C>
Thomas M. Dykstra - 410,000 shares owned through the
Thomas M. and Lorna J. Dykstra
Trust. Mr. Dykstra has sole voting
and dispositive power with respect
to the shares held by the Trust.
- 150,000 shares owned through the
Dykstra Family Limited Partnership.
Mr. Dykstra is the sole managing
partner of the Partnership. Mr.
Dykstra and his wife, Lorna J.
Dykstra, have voting and
dispositive power with respect to
the shares held by the Partnership.
</TABLE>
<PAGE> 1
Exhibit (c)(5)
STOCKHOLDER AGREEMENT
AGREEMENT, dated September 1, 1999, among IFS Americas, Inc., a
Delaware corporation ("Parent"), IFS Acquisition, Inc., a Wisconsin corporation
and a wholly-owned subsidiary of Parent (the "Purchaser"), and Donald W.
Vahlsing (the "Stockholder").
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, the Purchaser and Effective Management Systems, Inc., a
Wisconsin corporation (the "Company"), have entered into an Agreement and Plan
of Merger (as such agreement may hereafter be amended from time to time, the
"Merger Agreement"), pursuant to which the Purchaser will be merged with and
into the Company (the "Merger"); and
WHEREAS, in furtherance of the Merger, Parent and the Company desire
that as soon as practicable (and not later than five business days) after the
announcement of the execution of the Merger Agreement, the Purchaser shall
commence a cash tender offer (the "Offer") to purchase at the Offer Price all
outstanding shares of Common Stock (each as defined in Section 1 hereof),
including all of the Securities (as defined in Section 2 hereof) beneficially
owned by the Stockholder; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholder agree, and the Stockholder
has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Owned" or "Beneficial Ownership" with
respect to any securities shall mean having "beneficial ownership" of such
securities (as determined pursuant to Rule 13d-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), including pursuant to any
agreement, arrangement or understanding, whether or not in writing. Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a Person (as hereinafter defined) shall include securities
Beneficially Owned by all other Persons with whom such Person would constitute a
"group" within the meaning of Section 13(d)(3) of the Exchange Act.
(b) "Common Stock" shall mean the Common Stock, $.01 par value
per share, of the Company.
<PAGE> 2
(c) "Offer Price" shall mean cash in the amount of $4.50 per
share of Common Stock or, if greater, the price per share paid by the Purchaser
in the Offer.
(d) "Person" shall mean an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity.
(e) Capitalized terms used and not defined herein shall have
the respective meanings ascribed to them in the Merger Agreement.
2. Tender of Shares.
(a) In order to induce Parent and the Purchaser to enter into
the Merger Agreement, the Stockholder hereby agrees to validly tender (or cause
the record owner of such shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
tenth business day after commencement of the Offer pursuant to Section 1.01 of
the Merger Agreement and Rule 14d-2 under the Exchange Act, the number of shares
of Common Stock set forth opposite the Stockholder's name on Schedule I hereto
(the "Existing Securities," and together with any shares of Common Stock
acquired by the Stockholder in any capacity after the date hereof and prior to
the termination of this Agreement by means of purchase, dividend, distribution,
exercise of options or other rights to acquire Common Stock or in any other way,
the "Securities"), all of which are Beneficially Owned by the Stockholder. The
Stockholder hereby acknowledges and agrees that Parent's and the Purchaser's
obligation to accept for payment and pay for the Securities in the Offer,
including the Securities Beneficially Owned by the Stockholder, is subject to
the terms and conditions of the Offer.
(b) The Stockholder hereby permits Parent and the Purchaser to
publish and disclose in the Offer Documents and, if approval of the Company's
stockholders is required under applicable law, the Proxy Statement (including
all documents and schedules filed with the SEC) its identity and ownership of
the Securities and the nature of its commitments, arrangements and
understandings under this Agreement; provided that the Stockholder shall have a
right to review and comment on such disclosure a reasonable time before it is
publicly disclosed.
3. Additional Agreements.
(a) No Inconsistent Arrangements. Except as necessary to
exercise Stockholder's fiduciary duties as a director of the Company with
respect to a Superior Proposal, the Stockholder hereby covenants and agrees
that, except as contemplated by this Agreement and the Merger Agreement, it
shall not (i) transfer (which term shall include, without limitation, any sale,
gift, pledge (other than a pledge which does not impair the Stockholder's
ability to perform under this Agreement) or other disposition), or consent to
any transfer of, any or all of the Securities or any interest therein, (ii)
enter into any contract, option or other agreement or understanding with respect
to any transfer of any or all of the Securities or any interest therein, (iii)
grant any proxy, power-of-attorney or other authorization in or with respect to
the Securities, (iv) deposit the
2
<PAGE> 3
Securities into a voting trust or enter into a voting agreement or arrangement
with respect to the Securities or (v) take any other action that would in any
way restrict, limit or interfere with the performance of its obligations
hereunder or the transactions contemplated hereby or by the Merger Agreement or
the Stock Option Agreement.
(b) No Solicitation. The Stockholder hereby agrees, in the
capacity as a stockholder of the Company, that neither the Stockholder nor any
affiliates, representatives or agents shall (and, if the Stockholder is a
corporation, partnership, trust or other entity, the Stockholder shall cause its
officers, directors, partners, and employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent,
the Purchaser or any of their respective affiliates or representatives)
concerning any proposal relating to an Acquisition Transaction. The Stockholder
shall notify the Parent and the Purchaser no later than 24 hours after receipt
by the Stockholder (or its advisors), of any proposal with respect to an
Acquisition Transaction or any request for non-public information in connection
with a proposed Acquisition Transaction or for access to the properties, books
or records of the Company by any person or entity that informs the Company that
it is considering making, or has made, an Acquisition Transaction (as defined in
Section 6.07 of the Merger Agreement). Such notice to the Parent and Purchaser
shall be made orally and in writing and shall indicate in reasonable detail the
identity of the person making the Acquisition Proposal (as defined in Section
6.07 of the Merger Agreement) and the terms and conditions of such proposal,
inquiry or contact. Any action taken by the Company or any member of the Board
of Directors of the Company in accordance with Section 6.07 of the Merger
Agreement shall be deemed not to violate this Section 3(b).
(c) Reasonable Efforts. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use all 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 to consummate and
make effective the transactions contemplated by this Agreement. Each party shall
promptly consult with the other and provide any necessary information and
material with respect to all filings made by such party with any Governmental
Entity in connection with this Agreement and the transactions contemplated
hereby.
(d) Waiver of Appraisal Rights. The Stockholder hereby waives
any rights of appraisal or rights to dissent from the Merger that it may have.
4. Representations and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to Parent and the Purchaser as follows:
(a) Ownership of Securities. The Stockholder is the record and
Beneficial Owner of the Existing Securities, as set forth on Schedule I. On the
date hereof, the Existing Securities constitute all of the Securities owned of
record or Beneficially Owned by the Stockholder. Except as set forth on Schedule
I, the Stockholder has sole voting power and sole power to issue instructions
3
<PAGE> 4
with respect to the matters set forth in Sections 2 and 3 hereof, sole power of
disposition, sole power to demand appraisal rights and sole power to agree to
all of the matters set forth in this Agreement, in each case with respect to all
of the Existing Securities with no limitations, qualifications or restrictions
on such rights, subject to applicable securities laws and the terms of this
Agreement.
(b) Power; Binding Agreement. The Stockholder has the power
and authority to enter into and perform all of the Stockholder's obligations
under this Agreement. The execution, delivery and performance of this Agreement
by the Stockholder will not violate any other agreement to which the Stockholder
is a party including, without limitation, any voting agreement, proxy
arrangement, pledge agreement, stockholders agreement or voting trust. This
Agreement has been duly and validly executed and delivered by the Stockholder
and constitutes a valid and binding agreement of the Stockholder, enforceable
against the Stockholder in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which the Stockholder is a trustee, or any party to any other agreement
or arrangement, whose consent is required for the execution and delivery of this
Agreement or the consummation by the Stockholder of the transactions
contemplated hereby.
(c) No Conflicts. Except for filings under the HSR Act, other
applicable Antitrust Laws and the Exchange Act (i) no filing with, and no
permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution and delivery of this Agreement by the Stockholder,
the consummation by the Stockholder of the transactions contemplated hereby and
the compliance by the Stockholder with the provisions hereof and (ii) none of
the execution and delivery of this Agreement by the Stockholder, the
consummation by the Stockholder of the transactions contemplated hereby or
compliance by the Stockholder with any of the provisions hereof, except in cases
in which any conflict, breach, default or violation described below would not
interfere with the ability of such Stockholder to perform such Stockholder's
obligations hereunder, shall (A) conflict with or result in any breach of any
organizational documents applicable to the Stockholder, (B) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, modification or acceleration) under, any of the terms, conditions
or provisions of any note, loan agreement, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which the Stockholder is a party or by which the
Stockholder or any of its properties or assets may be bound, or (C) violate any
order, writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to the Stockholder or any of such Stockholder's properties or assets.
(d) No Liens. Except as permitted by this Agreement, the
Existing Securities and the certificates representing such securities are now,
and at all times during the term hereof will be, held by the Stockholder, or by
a nominee or custodian for the benefit of the Stockholder, free and clear of all
Liens, proxies, voting trusts or agreements, understandings or arrangements or
any other rights whatsoever, except for any such Liens or proxies arising
hereunder.
4
<PAGE> 5
(e) No Finder's Fees. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the
Stockholder.
(f) Reliance by Parent. The Stockholder understands and
acknowledges that Parent is entering into, and causing the Purchaser to enter
into, the Merger Agreement in reliance upon the Stockholder's execution and
delivery of this Agreement.
5. Representations and Warranties of Parent and the Purchaser. Each of
Parent and the Purchaser hereby represents and warrants to the Stockholder as
follows:
(a) Power; Binding Agreement. Parent and the Purchaser each
has the corporate power and authority to enter into and perform all of its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by each of Parent and the Purchaser will not violate any other
agreement to which either of them is a party. This Agreement has been duly and
validly executed and delivered by each of Parent and the Purchaser and
constitutes a valid and binding agreement of each of Parent and the Purchaser,
enforceable against each of Parent and the Purchaser in accordance with its
terms, except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to the
enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
(b) No Conflicts. Except for filings under the HSR Act, other
applicable Antitrust Laws and the Exchange Act, (i) no filing with, and no
permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution of this Agreement by each of Parent and the
Purchaser, the consummation by each of Parent and the Purchaser of the
transactions contemplated hereby and the compliance by Parent and the Purchaser
with the provisions hereof and (ii) none of the execution and delivery of this
Agreement by each of Parent and the Purchaser, the consummation by each of
Parent and the Purchaser of the transactions contemplated hereby or compliance
by each of Parent and the Purchaser with any of the provisions hereof, except in
cases in which any conflict, breach, default or violation described below would
not interfere with the ability of Parent or the Purchaser to perform their
respective obligations hereunder, shall (A) conflict with or result in any
breach of any organizational documents applicable to either of Parent or the
Purchaser, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, modification or acceleration) under,
any of the terms, conditions or provisions of any note, loan agreement, bond,
mortgage, indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which either of
Parent or the Purchaser is a party or by which either of Parent or the Purchaser
or any of their properties or assets may be bound, or (C) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to either of Parent or the Purchaser or any of their properties or
assets.
5
<PAGE> 6
6. Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further lawful action as may be
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
7. Stop Transfer. The Stockholder shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Securities, unless such transfer
is made in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Common Stock by reason of any stock dividend,
split-up, recapitalization, combination, exchange of shares or the like, the
term "Securities" shall refer to and include the Securities as well as all such
stock dividends and distributions and any shares into which or for which any and
all of the Securities may be changed or exchanged.
8. Termination. The covenant and agreements contained herein with
respect to the Securities shall terminate upon the earlier of (a) the Effective
Time, (b) the first anniversary of the date hereof, or (c) the termination of
the Merger Agreement pursuant to (i) Section 8.01(a), (ii) Section 8.01(b),
(iii) Section 8.01(c), (iv) by the Company pursuant to Section 8.01(d) thereof
or (v) Section 8.01(e).
9. No Limitation. Nothing in this Agreement shall be construed to
prohibit the Stockholder who is a member of the Board of Directors of the
Company from exercising his fiduciary duties as a member of such Board of
Directors.
10. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) Binding Agreement. This Agreement and the obligations
hereunder shall attach to the Securities and shall be binding upon any person or
entity to which legal or beneficial ownership of the Securities shall pass,
whether by operation of law or otherwise, including, without limitation, the
Stockholder's administrators or successors. Notwithstanding any transfer of
Securities, the transferor shall remain liable for the performance of all
obligations of the transferor under this Agreement.
(c) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the
Stockholder or Parent and the Purchaser, as the case may be, provided that
Parent or the Purchaser may assign, in its respective sole discretion, its
rights and obligations hereunder to any direct or indirect subsidiary of Parent,
but no such assignment shall relieve Parent or the Purchaser of its obligations
hereunder if such assignee does not perform such obligations.
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<PAGE> 7
(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy (with a
confirmation copy sent for next day delivery via courier service, such as
Federal Express), or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the Stockholder:
Donald W. Vahlsing
c/o Effective Management Systems, Inc.
1200 West Park Place
Milwaukee, Wisconsin 53224-3026
Telephone No.: (414) 359-9800
Telecopy No.: (414) 359-9011
Copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Phillip J. Hanrahan
Jay O. Rothman
Telephone No.: (414) 271-2400
Telecopy No.: (414) 297-4900
If to Parent or the Purchaser:
IFS Americas, Inc.
1900 East Golf Road, Suite 900
Schaumburg, Illinois 60173
Attention: Terje Vangbo, Chief Executive
Officer and President
Telephone No.: (847) 995-9600
Telecopy No.: (847) 995-9607
7
<PAGE> 8
Copy to:
Streich Lang, PA
Two North Central Avenue
Phoenix, Arizona 85004
Attention: Christian J. Hoffmann, III, Esq.
Telephone No.: (602) 229-5336
Telecopy No.: (602) 420-5008
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein. Notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor the Purchaser shall be deemed to be the owner, nor
shall Parent or the Purchaser have the power to vote for the election of
directors, with respect to some or all of the Securities for purposes of the WBC
until the purchase of, and payment for, such Securities is actually consummated.
The rights of Parent and the Purchaser hereunder shall be limited as provided in
the preceding sentence.
(g) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore in the event of any such breach the aggrieved party shall be entitled
to the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any
rights, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
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<PAGE> 9
(j) No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Wisconsin, without giving
effect to the principles of conflicts of law thereof.
(l) Waiver of Jury Trial. Each party hereto hereby waives any
right to a trial by jury in connection with any action, suit or proceeding
brought in connection with this Agreement.
(m) Descriptive Headings. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same agreement.
9
<PAGE> 10
IN WITNESS WHEREOF, Parent, the Purchaser and the Stockholder have
caused this Agreement to be duly executed as of the day and year first above
written.
IFS AMERICAS, INC.
By: /s/ Terje Vangbo
------------------------------------
Name: Terje Vangbo
----------------------------------
Its: President
-----------------------------------
IFS ACQUISITION, INC.
By: /s/ Terje Vangbo
------------------------------------
Name: Terje Vangbo
----------------------------------
Its: President
-----------------------------------
STOCKHOLDER
/s/ Donald W. Vahlsing
---------------------------------------
Donald W. Vahlsing
10
<PAGE> 11
SCHEDULE I
<TABLE>
<CAPTION>
NAME OF STOCKHOLDER NUMBER OF SHARES OF COMMON STOCK
BENEFICIALLY OWNED
<S> <C>
Donald W. Vahlsing 229,900
</TABLE>
<PAGE> 1
Exhibit (c)(6)
STOCKHOLDER AGREEMENT
AGREEMENT, dated September 1, 1999, among IFS Americas, Inc., a
Delaware corporation ("Parent"), IFS Acquisition, Inc., a Wisconsin corporation
and a wholly-owned subsidiary of Parent (the "Purchaser"), and Robert E.
Weisenberg (the "Stockholder").
WITNESSETH:
WHEREAS, concurrently with the execution and delivery of this
Agreement, Parent, the Purchaser and Effective Management Systems, Inc., a
Wisconsin corporation (the "Company"), have entered into an Agreement and Plan
of Merger (as such agreement may hereafter be amended from time to time, the
"Merger Agreement"), pursuant to which the Purchaser will be merged with and
into the Company (the "Merger"); and
WHEREAS, in furtherance of the Merger, Parent and the Company desire
that as soon as practicable (and not later than five business days) after the
announcement of the execution of the Merger Agreement, the Purchaser shall
commence a cash tender offer (the "Offer") to purchase at the Offer Price all
outstanding shares of Common Stock (each as defined in Section 1 hereof),
including all of the Securities (as defined in Section 2 hereof) beneficially
owned by the Stockholder; and
WHEREAS, as an inducement and a condition to entering into the Merger
Agreement, Parent has required that the Stockholder agree, and the Stockholder
has agreed, to enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto agree as follows:
1. Definitions. For purposes of this Agreement:
(a) "Beneficially Owned" or "Beneficial Ownership" with
respect to any securities shall mean having "beneficial ownership" of such
securities (as determined pursuant to Rule 13d-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act")), including pursuant to any
agreement, arrangement or understanding, whether or not in writing. Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a Person (as hereinafter defined) shall include securities
Beneficially Owned by all other Persons with whom such Person would constitute a
"group" within the meaning of Section 13(d)(3) of the Exchange Act.
(b) "Common Stock" shall mean the Common Stock, $.01 par value
per share, of the Company.
(c) "Offer Price" shall mean cash in the amount of $4.50 per
share of Common Stock or, if greater, the price per share paid by the Purchaser
in the Offer.
<PAGE> 2
(d) "Person" shall mean an individual, corporation,
partnership, limited liability company, joint venture, association, trust,
unincorporated organization or other entity.
(e) Capitalized terms used and not defined herein shall have
the respective meanings ascribed to them in the Merger Agreement.
2. Tender of Shares.
(a) In order to induce Parent and the Purchaser to enter into
the Merger Agreement, the Stockholder hereby agrees to validly tender (or cause
the record owner of such shares to validly tender), and not to withdraw,
pursuant to and in accordance with the terms of the Offer, not later than the
tenth business day after commencement of the Offer pursuant to Section 1.01 of
the Merger Agreement and Rule 14d-2 under the Exchange Act, the number of shares
of Common Stock set forth opposite the Stockholder's name on Schedule I hereto
(the "Existing Securities," and together with any shares of Common Stock
acquired by the Stockholder in any capacity after the date hereof and prior to
the termination of this Agreement by means of purchase, dividend, distribution,
exercise of options or other rights to acquire Common Stock or in any other way,
the "Securities"), all of which are Beneficially Owned by the Stockholder. The
Stockholder hereby acknowledges and agrees that Parent's and the Purchaser's
obligation to accept for payment and pay for the Securities in the Offer,
including the Securities Beneficially Owned by the Stockholder, is subject to
the terms and conditions of the Offer.
(b) The Stockholder hereby permits Parent and the Purchaser to
publish and disclose in the Offer Documents and, if approval of the Company's
stockholders is required under applicable law, the Proxy Statement (including
all documents and schedules filed with the SEC) its identity and ownership of
the Securities and the nature of its commitments, arrangements and
understandings under this Agreement; provided that the Stockholder shall have a
right to review and comment on such disclosure a reasonable time before it is
publicly disclosed.
3. Additional Agreements.
(a) No Inconsistent Arrangements . Except as necessary to
exercise Stockholder's fiduciary duties as a director of the Company with
respect to a Superior Proposal, the Stockholder hereby covenants and agrees
that, except as contemplated by this Agreement and the Merger Agreement, it
shall not (i) transfer (which term shall include, without limitation, any sale,
gift, pledge (other than a pledge which does not impair the Stockholder's
ability to perform under this Agreement) or other disposition), or consent to
any transfer of, any or all of the Securities or any interest therein, (ii)
enter into any contract, option or other agreement or understanding with respect
to any transfer of any or all of the Securities or any interest therein, (iii)
grant any proxy, power-of-attorney or other authorization in or with respect to
the Securities, (iv) deposit the Securities into a voting trust or enter into a
voting agreement or arrangement with respect to the Securities or (v) take any
other action that would in any way restrict, limit or interfere with the
2
<PAGE> 3
performance of its obligations hereunder or the transactions contemplated hereby
or by the Merger Agreement or the Stock Option Agreement.
(b) No Solicitation. The Stockholder hereby agrees, in the
capacity as a stockholder of the Company, that neither the Stockholder nor any
affiliates, representatives or agents shall (and, if the Stockholder is a
corporation, partnership, trust or other entity, the Stockholder shall cause its
officers, directors, partners, and employees, representatives and agents,
including, but not limited to, investment bankers, attorneys and accountants,
not to), directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent,
the Purchaser or any of their respective affiliates or representatives)
concerning any proposal relating to an Acquisition Transaction. The Stockholder
shall notify the Parent and the Purchaser no later than 24 hours after receipt
by the Stockholder (or its advisors), of any proposal with respect to an
Acquisition Transaction or any request for non-public information in connection
with a proposed Acquisition Transaction or for access to the properties, books
or records of the Company by any person or entity that informs the Company that
it is considering making, or has made, an Acquisition Transaction (as defined in
Section 6.07 of the Merger Agreement). Such notice to the Parent and Purchaser
shall be made orally and in writing and shall indicate in reasonable detail the
identity of the person making the Acquisition Proposal (as defined in Section
6.07 of the Merger Agreement) and the terms and conditions of such proposal,
inquiry or contact. Any action taken by the Company or any member of the Board
of Directors of the Company in accordance with Section 6.07 of the Merger
Agreement shall be deemed not to violate this Section 3(b).
(c) Reasonable Efforts. Subject to the terms and conditions of
this Agreement, each of the parties hereto agrees to use all 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 to consummate and
make effective the transactions contemplated by this Agreement. Each party shall
promptly consult with the other and provide any necessary information and
material with respect to all filings made by such party with any Governmental
Entity in connection with this Agreement and the transactions contemplated
hereby.
(d) Waiver of Appraisal Rights. The Stockholder hereby waives
any rights of appraisal or rights to dissent from the Merger that it may have.
4. Representations and Warranties of the Stockholder. The Stockholder
hereby represents and warrants to Parent and the Purchaser as follows:
(a) Ownership of Securities. The Stockholder is the record and
Beneficial Owner of the Existing Securities, as set forth on Schedule I. On the
date hereof, the Existing Securities constitute all of the Securities owned of
record or Beneficially Owned by the Stockholder. Except as set forth on Schedule
I, the Stockholder has sole voting power and sole power to issue instructions
with respect to the matters set forth in Sections 2 and 3 hereof, sole power of
disposition, sole power to demand appraisal rights and sole power to agree to
all of the matters set forth in this Agreement,
3
<PAGE> 4
in each case with respect to all of the Existing Securities with no limitations,
qualifications or restrictions on such rights, subject to applicable securities
laws and the terms of this Agreement.
(b) Power; Binding Agreement. The Stockholder has the power
and authority to enter into and perform all of the Stockholder's obligations
under this Agreement. The execution, delivery and performance of this Agreement
by the Stockholder will not violate any other agreement to which the Stockholder
is a party including, without limitation, any voting agreement, proxy
arrangement, pledge agreement, stockholders agreement or voting trust. This
Agreement has been duly and validly executed and delivered by the Stockholder
and constitutes a valid and binding agreement of the Stockholder, enforceable
against the Stockholder in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity. There is no
beneficiary or holder of a voting trust certificate or other interest of any
trust of which the Stockholder is a trustee, or any party to any other agreement
or arrangement, whose consent is required for the execution and delivery of this
Agreement or the consummation by the Stockholder of the transactions
contemplated hereby.
(c) No Conflicts. Except for filings under the HSR Act, other
applicable Antitrust Laws and the Exchange Act (i) no filing with, and no
permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution and delivery of this Agreement by the Stockholder,
the consummation by the Stockholder of the transactions contemplated hereby and
the compliance by the Stockholder with the provisions hereof and (ii) none of
the execution and delivery of this Agreement by the Stockholder, the
consummation by the Stockholder of the transactions contemplated hereby or
compliance by the Stockholder with any of the provisions hereof, except in cases
in which any conflict, breach, default or violation described below would not
interfere with the ability of such Stockholder to perform such Stockholder's
obligations hereunder, shall (A) conflict with or result in any breach of any
organizational documents applicable to the Stockholder, (B) result in a
violation or breach of, or constitute (with or without notice or lapse of time
or both) a default (or give rise to any third party right of termination,
cancellation, modification or acceleration) under, any of the terms, conditions
or provisions of any note, loan agreement, bond, mortgage, indenture, license,
contract, commitment, arrangement, understanding, agreement or other instrument
or obligation of any kind to which the Stockholder is a party or by which the
Stockholder or any of its properties or assets may be bound, or (C) violate any
order, writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to the Stockholder or any of such Stockholder's properties or assets.
(d) No Liens. Except as permitted by this Agreement, the
Existing Securities and the certificates representing such securities are now,
and at all times during the term hereof will be, held by the Stockholder, or by
a nominee or custodian for the benefit of the Stockholder, free and clear of all
Liens, proxies, voting trusts or agreements, understandings or arrangements or
any other rights whatsoever, except for any such Liens or proxies arising
hereunder.
4
<PAGE> 5
(e) No Finder's Fees. No broker, investment banker, financial
advisor or other person is entitled to any broker's, finder's, financial
adviser's or other similar fee or commission in connection with the transactions
contemplated hereby based upon arrangements made by or on behalf of the
Stockholder.
(f) Reliance by Parent. The Stockholder understands and
acknowledges that Parent is entering into, and causing the Purchaser to enter
into, the Merger Agreement in reliance upon the Stockholder's execution and
delivery of this Agreement.
5. Representations and Warranties of Parent and the Purchaser. Each of
Parent and the Purchaser hereby represents and warrants to the Stockholder as
follows:
(a) Power; Binding Agreement. Parent and the Purchaser each
has the corporate power and authority to enter into and perform all of its
obligations under this Agreement. The execution, delivery and performance of
this Agreement by each of Parent and the Purchaser will not violate any other
agreement to which either of them is a party. This Agreement has been duly and
validly executed and delivered by each of Parent and the Purchaser and
constitutes a valid and binding agreement of each of Parent and the Purchaser,
enforceable against each of Parent and the Purchaser in accordance with its
terms, except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to the
enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
(b) No Conflicts. Except for filings under the HSR Act, other
applicable Antitrust Laws and the Exchange Act, (i) no filing with, and no
permit, authorization, consent or approval of, any Governmental Entity is
necessary for the execution of this Agreement by each of Parent and the
Purchaser, the consummation by each of Parent and the Purchaser of the
transactions contemplated hereby and the compliance by Parent and the Purchaser
with the provisions hereof and (ii) none of the execution and delivery of this
Agreement by each of Parent and the Purchaser, the consummation by each of
Parent and the Purchaser of the transactions contemplated hereby or compliance
by each of Parent and the Purchaser with any of the provisions hereof, except in
cases in which any conflict, breach, default or violation described below would
not interfere with the ability of Parent or the Purchaser to perform their
respective obligations hereunder, shall (A) conflict with or result in any
breach of any organizational documents applicable to either of Parent or the
Purchaser, (B) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, modification or acceleration) under,
any of the terms, conditions or provisions of any note, loan agreement, bond,
mortgage, indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind to which either of
Parent or the Purchaser is a party or by which either of Parent or the Purchaser
or any of their properties or assets may be bound, or (C) violate any order,
writ, injunction, decree, judgment, order, statute, rule or regulation
applicable to either of Parent or the Purchaser or any of their properties or
assets.
5
<PAGE> 6
6. Further Assurances. From time to time, at the other party's request
and without further consideration, each party hereto shall execute and deliver
such additional documents and take all such further lawful action as may be
necessary or desirable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement.
7. Stop Transfer. The Stockholder shall not request that the Company
register the transfer (book-entry or otherwise) of any certificate or
uncertificated interest representing any of the Securities, unless such transfer
is made in compliance with this Agreement. In the event of a stock dividend or
distribution, or any change in the Common Stock by reason of any stock dividend,
split-up, recapitalization, combination, exchange of shares or the like, the
term "Securities" shall refer to and include the Securities as well as all such
stock dividends and distributions and any shares into which or for which any and
all of the Securities may be changed or exchanged.
8. Termination. The covenant and agreements contained herein with
respect to the Securities shall terminate upon the earlier of (a) the Effective
Time, (b) the first anniversary of the date hereof, or (c) the termination of
the Merger Agreement pursuant to (i) Section 8.01(a), (ii) Section 8.01(b),
(iii) Section 8.01(c), (iv) by the Company pursuant to Section 8.01(d) thereof
or (v) Section 8.01(e).
9. No Limitation. Nothing in this Agreement shall be construed to
prohibit the Stockholder who is a member of the Board of Directors of the
Company from exercising his fiduciary duties as a member of such Board of
Directors.
10. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) Binding Agreement. This Agreement and the obligations
hereunder shall attach to the Securities and shall be binding upon any person or
entity to which legal or beneficial ownership of the Securities shall pass,
whether by operation of law or otherwise, including, without limitation, the
Stockholder's administrators or successors. Notwithstanding any transfer of
Securities, the transferor shall remain liable for the performance of all
obligations of the transferor under this Agreement.
(c) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the
Stockholder or Parent and the Purchaser, as the case may be, provided that
Parent or the Purchaser may assign, in its respective sole discretion, its
rights and obligations hereunder to any direct or indirect subsidiary of Parent,
but no such assignment shall relieve Parent or the Purchaser of its obligations
hereunder if such assignee does not perform such obligations.
6
<PAGE> 7
(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated,
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if given) by hand delivery or telecopy (with a
confirmation copy sent for next day delivery via courier service, such as
Federal Express), or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to the Stockholder:
Robert E. Weisenberg
c/o Effective Management Systems, Inc.
1200 West Park Place
Milwaukee, Wisconsin 53224-3026
Telephone No.: (414) 359-9800
Telecopy No.: (414) 359-9011
Copy to:
Foley & Lardner
777 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
Attention: Phillip J. Hanrahan
Jay O. Rothman
Telephone No.: (414) 271-2400
Telecopy No.: (414) 297-4900
If to Parent or the Purchaser:
IFS Americas, Inc.
1900 East Golf Road, Suite 900
Schaumburg, Illinois 60173
Attention: Terje Vangbo, Chief Executive
Officer and President
Telephone No.: (847) 995-9600
Telecopy No.: (847) 995-9607
7
<PAGE> 8
Copy to:
Streich Lang, PA
Two North Central Avenue
Phoenix, Arizona 85004
Attention: Christian J. Hoffmann, III, Esq.
Telephone No.: (602) 229-5336
Telecopy No.: (602) 420-5008
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable law or rule in any jurisdiction such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein. Notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor the Purchaser shall be deemed to be the owner, nor
shall Parent or the Purchaser have the power to vote for the election of
directors, with respect to some or all of the Securities for purposes of the WBC
until the purchase of, and payment for, such Securities is actually consummated.
The rights of Parent and the Purchaser hereunder shall be limited as provided in
the preceding sentence.
(g) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore in the event of any such breach the aggrieved party shall be entitled
to the remedy of specific performance of such covenants and agreements and
injunctive and other equitable relief in addition to any other remedy to which
it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any
rights, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
8
<PAGE> 9
(j) No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Wisconsin, without giving
effect to the principles of conflicts of law thereof.
(l) Waiver of Jury Trial. Each party hereto hereby waives any
right to a trial by jury in connection with any action, suit or proceeding
brought in connection with this Agreement.
(m) Descriptive Headings. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
(n) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same agreement.
9
<PAGE> 10
IN WITNESS WHEREOF, Parent, the Purchaser and the Stockholder have
caused this Agreement to be duly executed as of the day and year first above
written.
IFS AMERICAS, INC.
By: /s/ Terje Vangbo
------------------------------------
Name: Terje Vangbo
----------------------------------
Its: President
-----------------------------------
IFS ACQUISITION, INC.
By: /s/ Terje Vangbo
------------------------------------
Name: Terje Vangbo
----------------------------------
Its: President
-----------------------------------
STOCKHOLDER
/s/ Robert E. Weisenberg
---------------------------------------
ROBERT E. WEISENBERG
10
<PAGE> 11
SCHEDULE I
<TABLE>
<CAPTION>
NAME OF STOCKHOLDER NUMBER OF SHARES OF COMMON STOCK
BENEFICIALLY OWNED
<S> <C>
Robert E. Weisenberg 243,200
</TABLE>
<PAGE> 1
Exhibit (c)(7)
POWER OF ATTORNEY
In accordance with a decision by the Board of Directors, Industrial and
Financial Systems, IFS AB (publ) hereby authorises Mr Terje Vangbo to act on our
behalf in all respects regarding the acquisition of EMS and to sign on our
behalf all documents and agreements in connection therewith.
Linkoping 31 August 1999
Industrial and Financial Systems, IFS AB (publ)
/s/ Sverker Lundberg
----------------
Sverker Lundberg
<PAGE> 1
EXHIBIT (c)(8)
September 1, 1999
Effective Management Systems, Inc.
12000 West Park Place
Milwaukee, WI 53224
Re: Agreement and Plan of Merger, dated September 1, 1999, by and among
IFS Americas, Inc., IFS Acquisition, Inc. and Effective Management
Systems, Inc. (the "Merger Agreement")
Gentlemen:
As consideration for Effective Management Systems, Inc. entering into the Merger
Agreement, we hereby agree to transfer to our affiliates, IFS Americas, Inc. and
IFS Acquisition, Inc., the funds necessary to complete on a timely basis the
transactions contemplated by the Merger Agreement. We understand that Effective
Management Systems, Inc. intends to rely on this agreement and that the
foregoing is binding upon us and will be enforceable by Effective Management
Systems, Inc.
Very truly yours,
Industrial and Financial Systems, IFS AB
By: /s/ Bengt Nilsson
-------------------------------
CEO
<PAGE> 1
EXHIBIT (c)(9)
August 31, 1999
VIA FACSIMILE
Mr. Terje Vangbo
President and CEO
IFS, Inc.
1900 East Golf Road, Suite 900
Schaumburg, Illinois 60173
Mr. Carl-Johan Pousette
Alfred Berg Fondkommission, AB
Re: IFS Americas, Inc. and IFS Acquisition, Inc. (the "Companies")
Dear Sirs:
In order to help induce Alfred Berg Fondkommission, AB ("Alfred Berg")
to underwrite a certain rights issue of Industrial and Financial Systems, IFS AB
("IFS"), the proceeds of which will be used to finance, in part, the acquisition
of Effective Management Systems, Inc. ("EMS") by the Companies, I agree to the
following matters.
1. I will allocate $1,000,000 of the proceeds I receive from any
purchase of my shares of EMS by the Companies to purchase shares of IFS through
Alfred Berg in open market transactions, at the prevailing prices for IFS stock,
within five business days of my receipt of such proceeds or within a
commercially reasonable period of time but not later than thirty (30) days.
2. I will pay reasonable commissions to Alfred Berg in connection with
such purchase.
3. I will retain the IFS shares I purchase for a minimum of six months.
Sincerely yours,
/s/ Michael D. Dunham
---------------------
Michael D. Dunham
<PAGE> 1
EXHIBIT (c)(10)
August 31, 1999
VIA FACSIMILE
Mr. Terje Vangbo
President and CEO
IFS, Inc.
1900 East Golf Road, Suite 900
Schaumburg, Illinois 60173
Mr. Carl-Johan Pousette
Alfred Berg Fondkommission, AB
Re: IFS Americas, Inc. and IFS Acquisition, Inc. (the "Companies")
Dear Sirs:
In order to help induce Alfred Berg Fondkommission, AB ("Alfred Berg")
to underwrite a certain rights issue of Industrial and Financial Systems, IFS AB
("IFS"), the proceeds of which will be used to finance, in part, the acquisition
of Effective Management Systems, Inc. ("EMS") by the Companies, I agree to the
following matters.
1. I or my affiliates will allocate $815,000 of the proceeds I or my
affiliates receive from any purchase of my or their shares of EMS by the
Companies to purchase shares of IFS through Alfred Berg in open market
transactions, at the prevailing prices for IFS stock, within five business days
of my or their receipt of such proceeds or within a commercially reasonable
period of time but not later than thirty (30) days.
2. I will pay reasonable commissions to Alfred Berg in connection with
such purchase.
3. I will retain the IFS shares I purchase for a minimum of six months.
Sincerely yours,
/s/ Thomas M. Dykstra
---------------------
Thomas M. Dykstra
<PAGE> 1
EXHIBIT (c)(11)
Non-competition Agreement
(AGREEMENT)
1. Recitations and Date. This Agreement is entered into as of the 1st day of
September, 1999 by and between Effective Management Systems, Inc. (EMS) and
Helmut M. Adam, a member of its Board of Directors (Director) effective
upon the termination of his position as a director of EMS for any reason
(Separation) following completion of a transaction contemplated with IFS
Industrial and Financial Systems, Inc. (IFS).
2. Compensation. In consideration for Director's agreement as set forth
herein, he shall be paid a lump sum fee of $7,000 within 10 days of
Termination.
3. Confidentiality Commitment. Director acknowledges the ongoing obligation
he has to EMS to maintain the confidentiality of proprietary and sensitive
business information.
4. No Prior Agreements. The parties acknowledge that this is the sole
agreement between them with respect to this subject matter and, to the
extent any such prior agreements exist, whether verbal or written, they are
hereby revoked.
5. Non-Solicitation of Employees. For a period equal to the longer of one
year from the Separation date, regardless of cause or initiating party,
Director shall not, directly or indirectly, induce or attempt to induce any
employee of EMS, including its presently existing Affiliates (at least 50%
of the voting stock owned by EMS), to leave the employ of EMS.
6. Non-competition Period. Following Separation, and for a period of six
months thereafter, Director shall not directly or indirectly, serve as a
member of the Board of Directors of any business which is planning,
considering, or does develop, market, or service ERP software anywhere in
the United States in the mid-market segment (businesses with up to $100
million in annual revenue).
7. Legal Interpretation. If any provision of this Agreement is found to be in
conflict with provisions of any applicable law, the parties desire that
such conflict not invalidate the entire Agreement and that it be construed
to invalidate only the conflicting provisions and, where possible, to
reduce the duration or scope of a conflicting provision to the maximum
permitted by law. This Agreement shall be governed by the laws of the
State of Wisconsin without giving effect to any choice of law or conflict
of law rules or provisions.
8. Other Terms. Both parties agree that any public announcement of any
Separation, shall require their mutual consent as to the content, subject
only to SEC or equivalent requirements. The parties also agree not to, at
any time, make any comments concerning the other to media, prospective or
actual employers, employees, customers, or prospects which could be
reasonably construed as being in any way derogatory or negative of the
other.
9. Costs of Enforcement. In an enforcement action relating to this Agreement,
the prevailing party, whether claimant or respondent, following a final
non-appealable decision, shall be immediately reimbursed by the other party
for all its reasonable out-of-pocket costs incurred during such action
including attorneys' fees.
10. Successors. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns, heirs, executors, and administrators of
the parties except that Director may not assign or delegate his duties
hereunder.
11. Termination. This Agreement may be terminated only upon mutual written
agreement of the parties.
Signed at Milwaukee, WI upon the date set forth above.
Effective Management Systems, Inc. Director: Helmut M. Adam
By: /s/ Michael D. Dunham, President By: /s/ Helmut M. Adam
-------------------------------- --------------------------
Title an individual
Witness: /s/ R T Koenings Witness: /s/ Thomas M. Dykstra
--------------------------- ---------------------
<PAGE> 1
EXHIBIT (c)(12)
Non-competition Agreement
(AGREEMENT)
1. Recitations and Date. This Agreement is entered into as of the 1st day of
September, 1999 by and between Effective Management Systems, Inc. (EMS) and
Scott J. Mermel, a member of its Board of Directors (Director) effective
upon the termination of his position as a director of EMS for any reason
(Separation) following completion of a transaction contemplated with IFS
Industrial and Financial Systems, Inc. (IFS).
2. Compensation. In consideration for Director's agreement as set forth
herein, he shall be paid a lump sum fee of $7,000 within 10 days of
Termination.
3. Confidentiality Commitment. Director acknowledges the ongoing obligation
he has to EMS to maintain the confidentiality of proprietary and sensitive
business information.
4. No Prior Agreements. The parties acknowledge that this is the sole
agreement between them with respect to this subject matter and, to the
extent any such prior agreements exist, whether verbal or written, they are
hereby revoked.
5. Non-Solicitation of Employees. For a period equal to the longer of one
year from the Separation date, regardless of cause or initiating party,
Director shall not, directly or indirectly, induce or attempt to induce any
employee of EMS, including its presently existing Affiliates (at least 50%
of the voting stock owned by EMS), to leave the employ of EMS.
6. Non-competition Period. Following Separation, and for a period of six
months thereafter, Director shall not directly or indirectly, serve as a
member of the Board of Directors of any business which is planning,
considering, or does develop, market, or service ERP software anywhere in
the United States in the mid-market segment (businesses with up to $100
million in annual revenue).
7. Legal Interpretation. If any provision of this Agreement is found to be in
conflict with provisions of any applicable law, the parties desire that
such conflict not invalidate the entire Agreement and that it be construed
to invalidate only the conflicting provisions and, where possible, to
reduce the duration or scope of a conflicting provision to the maximum
permitted by law. This Agreement shall be governed by the laws of the
State of Wisconsin without giving effect to any choice of law or conflict
of law rules or provisions.
8. Other Terms. Both parties agree that any public announcement of any
Separation, shall require their mutual consent as to the content, subject
only to SEC or equivalent requirements. The parties also agree not to, at
any time, make any comments concerning the other to media, prospective or
actual employers, employees, customers, or prospects which could be
reasonably construed as being in any way derogatory or negative of the
other.
9. Costs of Enforcement. In an enforcement action relating to this Agreement,
the prevailing party, whether claimant or respondent, following a final
non-appealable decision, shall be immediately reimbursed by the other party
for all its reasonable out-of-pocket costs incurred during such action
including attorneys' fees.
10. Successors. This Agreement shall inure to the benefit of and be binding
upon the successors and assigns, heirs, executors, and administrators of
the parties except that Director may not assign or delegate his duties
hereunder.
11. Termination. This Agreement may be terminated only upon mutual written
agreement of the parties.
Signed at Milwaukee, WI upon the date set forth above.
Effective Management Systems, Inc. Director: Scott J. Mermel
By: /s/ Michael D. Dunham, President By: /s/ Scott J. Mermel
-------------------------------- --------------------------
Title an individual
Witness: /s/ R T Koenings Witness: /s/ Thomas M. Dykstra
--------------------------- ---------------------
<PAGE> 1
EXHIBIT (c)(13)
MUTUAL NONDISCLOSURE AGREEMENT
THIS IS AN AGREEMENT made by and between Effective Management Systems, Inc.
("EMS") and Industrial Financial Systems, Inc. ("IFS") relating to disclosure,
orally and/or in tangible form, of certain confidential and proprietary
information by each party to the other for the purpose of furthering a mutual
business relationship.
1. Each party understands that the confidential information received from
the disclosing party is regarded by the disclosing party as valuable,
and in consideration of the disclosure of such information by the
disclosing party and of the mutual promises herein, the receiving party
agrees:
(a) to use such information only for the purpose of furthering its
business relationship between the parties and to limit access
to such information to those of its employees who have a need
to know for such purpose;
(b) to take all reasonable precautions to maintain the
confidentiality of such information for a period of five (5)
years from the date of receipt, using at least the same degree
of care as the undersigned employs with respect to its own
confidential and proprietary information of like nature, and
to take appropriate action, by instruction, agreement or
otherwise, with any person permitted access to such
information to ensure that the undersigned will be able to
satisfy its obligations under this Agreement; and
(c) not to copy such information and, at the request of the
disclosing party, promptly to destroy or return any media
containing such information.
For the purpose of this Agreement, the term "confidential information"
shall mean any financial, technical, commercial or other information,
verbal, visual or written, disclosed to the receiving party or any of
its directors, officers, employees, advisors or representatives on or
after the date hereof and in accordance with this Agreement by the
disclosing party that was originated by the disclosing party and
relates to the disclosing party's business and affairs (including
information concerning any business or assets of any third party), and
is not generally available to others. "Confidential information" shall
be deemed to include the fact that any investigations, discussions or
negotiations are taking or have taken place regarding a possible
transaction or that either party has requested or received confidential
information from the other party, or any of the terms, conditions or
other facts with respect to any proposed transaction, including the
status thereof or make any public statement concerning a proposed
transaction.
2. The undersigned shall have no obligation under Paragraph 1 with respect
to information which is:
(a) previously and legally in the possession of or independently
developed by the receiving party, generally available to the
public, or disclosed to the undersigned by a third party
having no obligation of confidentiality with respect thereto;
or
(b) not identified by the disclosing party in writing as
proprietary and confidential and which is not otherwise
reasonably understood to be proprietary and confidential by
its nature.
<PAGE> 2
3. For a period of eighteen (18) months from the date of this Agreement,
IFS, or any of its subsidiaries, will not initiate any discussions with
respect to the prospective employment of EMS' employees with whom it
has had contact or who became known to it in connection with its
consideration of a possible transaction with IFS; provided, however,
that the foregoing provision will not prohibit a general, non-targeted
solicitation of employment in the ordinary course of business or
prevent IFS from employing any employee of EMS who contacts such party
at his or her own initiative without any direct or indirect
solicitation by or encouragement from such party.
4. Neither the confidential information nor the act of disclosure thereof
shall constitute a grant of any license under any trademark, patent or
copyright or application for same, nor shall they constitute any
representation or warranty by the disclosing party with respect to the
infringement of any right of third persons.
5. A breach of this Agreement would cause irreparable harm to either party
which may not be adequately compensated for by monetary damages alone.
The undersigned therefore agrees that, in the event of such breach or
threatened breach of this Agreement, the non-defaulting party shall be
entitled to injunctive and/or other preliminary or equitable relief, in
addition to any other remedies available at law.
6. Nothing contained in this Agreement or any discussions undertaken or
disclosures made pursuant hereto shall either be deemed a commitment to
engage in any business relationship, contract, or future dealing with
the other party, or limit either party's right to conduct similar
discussions or perform similar work to that undertaken pursuant hereto,
so long as said discussions or work do not violate this agreement.
7. This Agreement shall be binding on the undersigned and its successors
and assigns. In the event of a disagreement between the two parties
arising out of this Agreement, such dispute shall be settled by
arbitration held in a neutral location mutually agreed upon in
accordance with the commercial rules or the American Arbitration
Association. This Agreement shall remain effective with respect to any
confidential and proprietary information which is disclosed to the
undersigned within one (1) year of the date of execution.
IFS Inc. Effective Management Systems, Inc.
----------------------------- ----------------------------------
Company Company
/s/ Terje Vangbo /s/ Michael D. Dunham
----------------------------- ----------------------------------
Authorized Signature Authorized Signature
Terje Vangbo, President & CEO Michael D. Dunham, President & CEO
----------------------------- ----------------------------------
Name, Title (Printed) Name, Title (Printed)
-2-
