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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
(AMENDMENT NO. )*
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ELITE INFORMATION GROUP, INC.
(Name of Subject Company [Issuer])
- --------------------------------------------------------------------------------
EIG ACQUISITION CORP.,
an indirect wholly-owned subsidiary of
SOLUTION 6 HOLDINGS LIMITED
(Bidders)
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Common Stock, $.01 Par Value Per Share
(Title of Class of Securities)
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28659M
(CUSIP Number of Class of Securities)
- --------------------------------------------------------------------------------
Copy To:
EIG Acquisition Corp. Richard F. Dahlson, Esquire
Town Hall House Jackson Walker L.L.P.
Level 21, 456 Kent Street 901 Main Street, Suite 6000
Sydney, New South Wales Dallas, Texas 75202-3797
Australia 2000 Telephone: (214) 953-6000
Telecopier No.: 011-612-9278-0702 Telecopier No.: (214) 953-5722
(Name, Address and Telephone Numbers of Person Authorized
to Receive Notices and Communications on Behalf of Bidder)
CALCULATION OF FILING FEE
Transaction Valuation* Amount of Filing Fee
$100,259,955 $20,052
* For the purpose of calculating the fee only. This amount assumes the purchase
of all of the issued and outstanding shares of Common Stock, par value $.01 per
share, of Elite Information Group, Inc. (the "Company") at $11.00 per share.
Such number of shares represents all of the shares of Common Stock outstanding
as of December 13, 1999, plus the number of shares of Common Stock issuable upon
the exercise of outstanding options to purchase 705,165 shares of Common Stock,
in each case as represented by the Company.
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[ ] 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.
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Amount Previously Paid........................................ Not Applicable
Form or Registration No. ..................................... Not Applicable
Filing Party:................................................. Not Applicable
Dated Filed:.................................................. Not Applicable
</TABLE>
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This Tender Offer Statement on Schedule 14D-1 (the "Statement") relates to a
tender offer by EIG Acquisition Corp., a Delaware corporation (the "Purchaser")
and an indirect wholly-owned subsidiary of Solution 6 Holdings Limited, a New
South Wales, Australia corporation (the "Parent"), to purchase all of the issued
and outstanding shares of the common stock, par value $.01 per share, of Elite
Information Group, Inc., a Delaware corporation (the "Company"), at a purchase
price of $11.00 per Share, net to the seller in cash, without interest thereon,
upon the terms and subject to the conditions set forth in the Offer to Purchase,
dated December 21, 1999 (the "Offer to Purchase"), and in the related Letter of
Transmittal, copies of which are filed as Exhibits (a)(1) and (a)(2) hereof,
respectively, and which are incorporated herein by reference. The outstanding
shares of the Company's common stock, par value $.01 per share, are referred to
herein collectively as "Shares" and individually as a "Share."
ITEM 1. SECURITY AND SUBJECT COMPANY.
(a) The name of the subject company is Elite Information Group, Inc.,
and the address of its principal executive offices is 5100 West Goldleaf Circle,
Suite 100, Los Angeles, California 90056.
(b) This Statement relates to the offer by the Purchaser to purchase
all of the issued and outstanding Shares, at a price of $11.00 per share, net to
the seller in cash, without interest, upon the terms and subject to the
conditions set forth in the Offer to Purchase and in the related Letter of
Transmittal (which, together with any amendments or supplements thereto,
collectively constitute the "Offer"). Information concerning the number of
outstanding Shares is set forth in the Introduction of the Offer to Purchase and
is incorporated herein by reference.
(c) Information concerning the principal markets in which the Shares
are traded, and the high and low sales price of the Shares for each quarterly
period during the past two years is set forth in Section 6 ("Price Range of the
Shares; Dividends on the Shares") of the Offer to Purchase and is incorporated
herein by reference.
ITEM 2. IDENTITY AND BACKGROUND.
(a)-(d) and (g) This Statement is being filed by the Purchaser and
Parent. Information concerning the principal business and the address of the
principal offices of the Purchaser and Parent is set forth in Section 9
("Certain Information Concerning the Purchaser and Parent") of the Offer to
Purchase and is incorporated herein by reference. This Statement shall not be
construed as an admission that Parent is, for purposes of Regulation 14D under
the Securities Exchange Act of 1934, as amended, a bidder on whose behalf this
tender offer is being made. The names, citizenship, business addresses, present
principal occupation or employment, material occupations, positions, offices or
employment during the last five years of the directors and executive officers of
the Purchaser and Parent are set forth in Schedule I of the Offer to Purchase
and are incorporated herein by reference.
(e) and (f) During the last five years, none of the Purchaser or
Parent, or, to the best knowledge of the Purchaser or Parent, any of the persons
listed in Schedule I of the Offer to Purchase, has (i) been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
activities subject to, federal or state securities laws or finding any violation
of such laws.
ITEM 3. PAST CONTACTS, TRANSACTIONS OR NEGOTIATIONS WITH THE SUBJECT COMPANY.
(a) and (b) The information set forth in the Introduction, Section 9
("Certain Information Concerning the Purchaser and Parent"), Section 11
("Contacts and Transactions with the Company; Background of the Offer") and
Section 12 ("Purpose of the Offer; the Merger Agreement; the Stockholders
Agreement; Other Agreements; Plans for the Company") of the Offer to Purchase is
incorporated herein by reference.
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ITEM 4. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a) and (b) The information set forth in the Introduction and Section
10 ("Source and Amount of Funds") 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) - (e) The information set forth in the Introduction and Section 12
("Purpose of the Offer; the Merger Agreement; the Stockholders Agreement; Other
Agreements; Plans for the Company") of the Offer to Purchase is incorporated
herein by reference.
(f) and (g) The information set forth in Section 7 ("Effect of the
Offer on the Market for the Shares; Stock Quotation; Registration Under the
Exchange Act; Margin Regulations") 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 9
("Certain Information Concerning the Purchaser and Parent"), Section 11
("Contacts and Transactions with the Company; Background of the Offer") and
Section 12 ("Purpose of the Offer; the Merger Agreement; the Stockholders
Agreement; Other Agreements; Plans for the Company") 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 9 ("Certain
Information Concerning the Purchaser and Parent"), Section 11 ("Contacts and
Transactions with the Company; Background of the Offer") and Section 12
("Purpose of the Offer; the Merger Agreement; the Stockholders Agreement; Other
Agreements; Plans for the Company") 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 in Section 16 ("Fees
and Expenses") of the Offer to Purchase is incorporated herein by reference.
ITEM 9. FINANCIAL STATEMENTS OF CERTAIN BIDDERS.
The information set forth in Section 9 ("Certain Information Concerning
the Purchaser and Parent") of the Offer to Purchase is incorporated herein by
reference.
ITEM 10. ADDITIONAL INFORMATION.
(a) The information set forth in Section 12 ("Purpose of the Offer; the
Merger Agreement; the Stockholders Agreement; Other Agreements; Plans for the
Company") of the Offer to Purchase is incorporated herein by reference.
(b) and (c) The information set forth in Section 15 ("Certain Legal
Matters and Regulatory Approvals") of the Offer to Purchase is incorporated
herein by reference.
(d) The information set forth in Section 7 ("Effect of the Offer on the
Market for the Shares; Stock Quotation; Registration Under the Exchange Act;
Margin Regulations") of the Offer to Purchase is incorporated herein by
reference.
(e) None.
(f) The information set forth in the Offer to Purchase, the Letter of
Transmittal, the Agreement and Plan of Merger dated as of December 14, 1999 by
and among the Parent, Purchaser and the Company
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(the "Merger Agreement") and the Stockholders Agreement dated as of December 14,
1999 by and among the Parent, Purchaser and certain stockholders of the Company,
copies of which are attached hereto as Exhibits (a)(1), (a)(2), (c)(1) and
(c)(2), respectively, is incorporated herein by reference. The Merger Agreement
provides that the Purchaser may assign, in its sole discretion, any and all of
its rights (including the right to purchase Shares in the Offer), interests and
obligations under the Merger Agreement to Parent or to any affiliate of Parent,
but no such assignment shall relieve the Purchaser of its obligations under the
Merger Agreement.
ITEM 11. MATERIAL TO BE FILED AS EXHIBITS.
(a) (1) Offer to Purchase, dated December 21, 1999.
(a) (2) Letter of Transmittal.
(a) (3) Letter from Dealer Manager to Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
(a) (4) Letter from Brokers, Dealers, Banks, Trust Companies and
Other Nominees to Clients.
(a) (5) Notice of Guaranteed Delivery.
(a) (6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a) (7) Press Release issued by Parent and Company on December 15,
1999.
(b) (1) Commitment Letter dated December 14, 1999 between Warburg
Dillon Read Australia Limited ("WDRAL") and Parent.
(b) (2) Commitment Letter dated December 17, 1999 between WDRAL and
Parent.
(b) (3) Committed Acquisition Bridge Facility Terms Sheet.
(c) (1) Agreement and Plan of Merger dated as of December 14, 1999 by
and among the Parent, Purchaser and the Company. *
(c) (2) Stockholders Agreement dated as of December 14, 1999 between
the Parent, Purchaser and certain stockholders of the Company.
(d) None.
(e) Not applicable.
(f) None.
* Schedules to this Agreement have been omitted but description of such
schedules may be found in the Agreement where referred to. The Company hereby
undertakes to provide copies of such omitted schedules to the staff of the
Securities and Exchange Commission upon request.
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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.
Dated: December 21, 1999
EIG ACQUISITION CORP.,
a Delaware corporation
By: /s/ Thomas A. Montgomery
-------------------------------------
Name: Thomas A. Montgomery
---------------------------------
Title: Vice President, Treasurer and
Secretary
---------------------------------
SOLUTION 6 HOLDINGS LIMITED,
a New South Wales, Australia corporation
By: /s/ Thomas A. Montgomery
-------------------------------------
Name: Thomas A. Montgomery
---------------------------------
Title: Chief Financial Officer
---------------------------------
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INDEX TO EXHIBITS
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EXHIBIT
NUMBER DESCRIPTION
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(a) (1) Offer to Purchase, dated December 21, 1999.
(a) (2) Letter of Transmittal.
(a) (3) Letter from Dealer Manager to Brokers, Dealers, Banks, Trust
Companies and Other Nominees.
(a) (4) Letter from Brokers, Dealers, Banks, Trust Companies and
Other Nominees to Clients.
(a) (5) Notice of Guaranteed Delivery.
(a) (6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9.
(a) (7) Press Release issued by Parent and Company on December 15,
1999.
(b) (1) Commitment Letter dated December 14, 1999 between Warburg
Dillon Read Australia Limited ("WDRAL") and Parent.
(b) (2) Commitment Letter dated December 17, 1999 between WDRAL and
Parent.
(b) (3) Committed Acquisition Bridge Facility Terms Sheet.
(c) (1) Agreement and Plan of Merger dated as of December 14, 1999 by
and among the Parent, Purchaser and the Company. *
(c) (2) Stockholders Agreement dated as of December 14, 1999 between
the Parent, Purchaser and certain stockholders of the Company.
(d) None.
(e) Not applicable.
(f) None.
</TABLE>
* Schedules to this Agreement have been omitted but description of such
schedules may be found in the Agreement where referred to. The Company hereby
undertakes to provide copies of such omitted schedules to the staff of the
Securities and Exchange Commission upon request.
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EXHIBIT 99(a)(1)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ELITE INFORMATION GROUP, INC.
AT
$11.00 NET PER SHARE
BY
EIG ACQUISITION CORP.,
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
SOLUTION 6 HOLDINGS LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 20, 2000, 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 OF THE OFFER SUCH NUMBER OF
SHARES OF COMMON STOCK THAT WOULD CONSTITUTE AT LEAST A MAJORITY OF ALL
OUTSTANDING SHARES ON A FULLY DILUTED BASIS AND (II) THE EXPIRATION OR
TERMINATION OF ALL APPLICABLE WAITING PERIODS UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED. THE OFFER IS ALSO SUBJECT TO
OTHER TERMS AND CONDITIONS.
THE BOARD OF DIRECTORS OF ELITE INFORMATION GROUP, INC. (THE "COMPANY") HAS
UNANIMOUSLY APPROVED THE OFFER AND MERGER REFERRED TO HEREIN AND DETERMINED THAT
THE OFFER AND MERGER, TAKEN TOGETHER, ARE FAIR TO, AND IN THE BEST INTERESTS OF,
THE STOCKHOLDERS OF THE COMPANY AND RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY
ACCEPT THE OFFER AND TENDER THEIR SHARES.
---------------------
IMPORTANT
Any stockholder desiring to tender all or any portion of such stockholder's
shares of common stock, par value $.01 per share, of the Company ("Shares")
should either (i) complete and sign the Letter of Transmittal or a facsimile
copy thereof in accordance with the instructions in the Letter of Transmittal,
have such stockholder's signature thereon guaranteed if required by Instruction
1 to the Letter of Transmittal, mail or deliver the Letter of Transmittal or
such facsimile, or, in the case of a book-entry transfer effected pursuant to
the procedure set forth in Section 2, an Agent's Message (as defined herein),
and any other required documents to the Depositary (as defined herein) and
either deliver the certificates for such Shares to the Depositary along with the
Letter of Transmittal or facsimile thereof or deliver such Shares pursuant to
the procedure for book-entry transfer set forth in Section 2 or (ii) request
such stockholder's broker, dealer, bank, trust company or other nominee to
effect the transaction for such stockholder. A stockholder having Shares
registered in the name of a broker, dealer, bank, trust company or other nominee
must contact such broker, dealer, bank, trust company or other nominee if such
stockholder desires to tender such Shares.
A stockholder who desires to tender Shares and whose certificates for such
Shares are not immediately available or who cannot comply in a timely manner
with the procedure for book-entry transfer, or who cannot deliver all required
documents to the Depositary prior to the expiration of the Offer, may tender
such Shares by following the procedure for guaranteed delivery set forth in
Section 2, including the Notice of Guaranteed Delivery.
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent or the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of this
Offer to Purchase.
December 21, 1999
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THE INFORMATION AGENT FOR THE OFFER IS: THE DEALER MANAGER FOR THE OFFER IS:
[MACKENZIE PARTNERS LOGO] [WARBURG DILLON READ LOGO]
</TABLE>
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TABLE OF CONTENTS
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1. Terms of the Offer....................................... 2
2. Procedure for Tendering Shares.......................... 4
3. Withdrawal Rights....................................... 7
4. Acceptance for Payment and Payment...................... 7
5. Certain Federal Income Tax Consequences................. 8
6. Price Range of the Shares; Dividends on the Shares...... 9
7. Effect of the Offer on the Market for the Shares; Stock
Quotation; Registration Under the Exchange Act; Margin
Regulations............................................. 10
8. Certain Information Concerning the Company.............. 11
9. Certain Information Concerning the Purchaser and
Parent.................................................. 14
10. Source and Amount of Funds.............................. 15
11. Contacts and Transactions with the Company; Background
of the Offer............................................ 17
12. Purpose of the Offer; the Merger Agreement; the
Stockholders Agreement; Other Agreements; Plans for the
Company................................................. 20
13. Dividends and Distributions............................. 30
14. Certain Conditions of the Offer......................... 30
15. Certain Legal Matters and Regulatory Approvals.......... 32
16. Fees and Expenses....................................... 33
17. Miscellaneous........................................... 34
</TABLE>
i
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To the Holders of Common Stock of Elite Information Group, Inc.:
INTRODUCTION
EIG Acquisition Corp., a Delaware corporation (the "Purchaser") and an
indirect wholly-owned subsidiary of Solution 6 Holdings Limited, a New South
Wales, Australia corporation (the "Parent"), hereby offers to purchase all
outstanding shares of common stock, par value $.01 per share, of Elite
Information Group, Inc., a Delaware corporation (the "Company"), at $11.00 per
share (the "Offer Price"), net to the seller in cash, without interest, upon the
terms and subject to the conditions set forth in this Offer to Purchase and in
the related Letter of Transmittal (which, together with any amendments or
supplements hereto or thereto, collectively constitute the "Offer"). The
outstanding shares of the Company's common stock, par value $.01 per share, are
referred to herein collectively as the "Shares" and individually as a "Share."
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of December 14, 1999 (the "Merger Agreement"), among Parent, the Purchaser
and the Company pursuant to which, as soon as practicable following the
consummation of the Offer and the satisfaction or waiver of certain conditions,
the Purchaser will be merged with and into the Company (the "Merger"), with the
Company (the "Surviving Corporation") surviving the Merger as an indirect
wholly-owned subsidiary of Parent. At the effective time of the Merger (the
"Effective Time"), each outstanding Share (other than the Shares held by
stockholders who perfect their appraisal rights under Delaware law, Shares owned
by the Company as treasury stock and Shares owned by Parent or any direct or any
indirect wholly-owned subsidiary of Parent or of the Company) will be converted
into the right to receive $11.00 in cash (the "Per Share Merger Consideration"),
without interest thereon. The Merger Agreement provides that the Purchaser may
assign, in its sole discretion, any and all of its rights (including the right
to purchase Shares in the Offer), interests and obligations under the Merger
Agreement to Parent or to any affiliate of Parent, but no such assignment shall
relieve the Purchaser of its obligations under the Merger Agreement. The Merger
is subject to a number of conditions, including the adoption of the Merger
Agreement by stockholders of the Company, if required by applicable law. In the
event the Purchaser acquires 90% or more of the outstanding Shares pursuant to
the Offer or otherwise, the Purchaser would be able to effect the Merger
pursuant to the short-form merger provisions of the Delaware General Corporation
Law (the "DGCL"), without prior notice to, or any action by, any other
stockholder of the Company. In such event, the Purchaser could, and intends to,
effect the Merger without prior notice to, or any action by, any other
stockholder of the Company. See Section 12.
Simultaneously with entering into the Merger Agreement, Parent and the
Purchaser entered into a Stockholders Agreement dated as of December 14, 1999
(the "Stockholders Agreement") with certain stockholders of the Company (the
"Stockholders"), pursuant to which each Stockholder has agreed, among other
things, to sell to the Purchaser all the Shares that he or it beneficially owns
at a price per Share equal to the Offer Price. The Stockholders have also agreed
to tender such Shares in the Offer at a price per Share equal to the Offer Price
if directed to do so by the Purchaser. The Stockholders collectively own
approximately 20% of all outstanding Shares.
Tendering stockholders will not be obligated to pay brokerage fees or
commissions or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of tendered Shares pursuant to the
Offer. Stockholders who own their Shares through their broker or bank should
consult with such institution as to whether there are any fees applicable to a
tender of Shares. Parent will pay all fees and expenses of Warburg Dillon Read
LLC, which is acting as Dealer Manager (the "Dealer Manager" or "Warburg Dillon
Read"), Citibank, N.A., which is acting as the Depositary (the "Depositary"),
and MacKenzie Partners, Inc., which is acting as the Information Agent (the
"Information Agent"), incurred in connection with the Offer. See Section 16.
THE BOARD OF DIRECTORS OF THE COMPANY (THE "BOARD") HAS UNANIMOUSLY
APPROVED THE OFFER AND THE MERGER AND DETERMINED THAT THE OFFER AND THE MERGER,
TAKEN TOGETHER, ARE FAIR TO, AND IN THE BEST INTERESTS OF, THE STOCKHOLDERS OF
THE COMPANY AND UNANIMOUSLY RECOMMENDS THAT STOCK-
1
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HOLDERS OF THE COMPANY ACCEPT THE OFFER AND TENDER THEIR SHARES PURSUANT TO THE
OFFER.
The factors considered by the Board in arriving at its decision to approve
the Offer and the Merger and to recommend that the Company's stockholders accept
the Offer and tender their Shares are described in the Company's
Solicitation/Recommendation Statement on Schedule 14D-9 (the "Schedule 14D-9"),
which is also being mailed to stockholders of the Company. The Company's
financial advisor, the Prudential Volpe Technology Group of Prudential
Securities Incorporated, formerly known as Volpe Brown Whelan & Company, LLC
("PVTG"), has delivered its opinion to the Board dated December 14, 1999 that,
as of such date, and subject to the conditions and limitations set forth
therein, the consideration to be received by holders of Shares in the Offer and
Merger is fair, from a financial point of view. Such opinion is set forth in
full as an exhibit to the Schedule 14D-9.
The Company has advised Parent and Purchaser that, to the best of its
knowledge, each member of the Board and each of the Company's executive officers
intend to tender all Shares owned by such persons pursuant to the Offer, except
to the extent of any restrictions created by Section 16(b) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
The Offer is conditioned, among other things, (a) there being validly
tendered and not withdrawn prior to the expiration of the Offer that number of
Shares which would represent at least a majority of all outstanding Shares on a
fully diluted basis (the "Minimum Condition") and (b) any waiting periods under
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), applicable to the purchase of Shares pursuant to the Offer having expired
or been terminated (the "HSR Act Condition"). The Purchaser reserves the right
(subject to the terms of the Merger Agreement and applicable rules and
regulations of the Securities and Exchange Commission (the "SEC")) to waive or
reduce the Minimum Condition and to elect to purchase, pursuant to the Offer,
fewer than the number of Shares necessary to satisfy the Minimum Condition. For
purposes herein, Shares on a fully diluted basis means all outstanding Shares,
after giving effect to the exercise or conversion of all options, warrants,
rights and securities exercisable or convertible into Shares. The Merger
Agreement provides that Purchaser may not waive the Minimum Condition without
the consent of the Company. See Sections 1 and 14.
The Company has represented to the Purchaser that, as of December 13, 1999,
there were 8,409,380 Shares issued and outstanding and 705,165 Shares authorized
for issuance pursuant to the exercise of outstanding options to purchase Shares
("Stock Options"). As a result, as of such date, the Minimum Condition would be
satisfied if the Purchaser acquired 4,566,388 shares.
Certain federal income tax consequences of the sale of Shares pursuant to
the Offer are described in Section 5.
THIS OFFER TO PURCHASE AND THE RELATED LETTER OF TRANSMITTAL CONTAIN
IMPORTANT INFORMATION AND SHOULD BE READ IN THEIR ENTIRETY BEFORE ANY DECISION
IS MADE WITH RESPECT TO THE OFFER.
1. TERMS OF THE OFFER
Upon the terms and subject to the conditions of the Offer, the 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 3. The
term "Expiration Date" means 12:00 Midnight, New York City time, on Thursday,
January 20, 2000, unless and until the Purchaser shall have extended the period
of time 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
the Purchaser, will expire.
The Purchaser expressly reserves the right to modify the terms of the
Offer, except that without the consent of the Company, the Purchaser shall not
(a) reduce the number of Shares to be subject to the Offer, (b) reduce the Offer
Price, (c) modify or add to the conditions to the Offer in any manner adverse to
the holders of the Shares, (d) except as provided in the next paragraph, extend
the Offer, (e) change the form of
2
<PAGE> 5
consideration payable in the Offer or (f) otherwise amend the Offer in any
manner adverse to the holders of Shares.
Notwithstanding the foregoing, the Purchaser may, without the consent of
the Company, (a) extend the Offer, if at the scheduled Expiration Date of the
Offer (the initial scheduled Expiration Date being 20 business days following
the commencement of the Offer), any of the conditions to the Purchaser's
obligation to accept for payment, and pay for, Shares are not satisfied, until
such time as such conditions are satisfied or waived; provided, however, that
the Expiration Date shall not be later than the Termination Date (as defined
herein) as a result of such extension, (b) extend the Offer for a period of not
more than 10 business days beyond the latest Expiration Date that would
otherwise be permitted under clause (a) of this sentence, if on the date of such
extension (x) less than 90% of the outstanding Shares have been validly tendered
and not properly withdrawn pursuant to the Offer and (y) the Purchaser has
permanently waived all of the conditions to the Offer (other than the conditions
that are not legally capable of being waived and conditions that have not been
satisfied because of the willful or intentional action or inaction of the
Company) and (c) extend the Offer for any period required by any rule,
regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer. If, on any scheduled Expiration Date, any of the
conditions of the Offer have not been satisfied or waived and such unsatisfied
conditions are still capable of being satisfied, the Company may require
Purchaser to extend the Expiration Date for a period of not more than 10
business days; provided, however, that Purchaser shall not be required to extend
the Expiration Date later than the Termination Date.
Subject to the terms of the Merger Agreement and applicable rules and
regulations of the SEC, 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 or facts set forth in Section 14 hereof shall have occurred,
to (a) extend the period of time during which the Offer is open and thereby
delay acceptance for payment of and the payment for any Shares, by giving oral
or written notice of such extension to the Depositary and (b) except as set
forth above, amend the Offer in any other respect by giving oral or written
notice of such amendment to the Depositary. 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.
If by 12:00 Midnight, New York City time, on Thursday, January 20, 2000 (or
any date or time then set as the Expiration Date), any of or all of the
conditions to the Offer have not been satisfied or waived, the Purchaser
reserves the right (but shall not be obligated), subject to the terms and
conditions contained in the Merger Agreement and to the applicable rules and
regulations of the SEC, to (a) terminate the Offer and not accept for payment or
pay for any Shares and return all tendered Shares to tendering stockholders, (b)
except as set forth above with respect to the Minimum Condition, waive all the
unsatisfied conditions and accept for payment and pay for all Shares validly
tendered prior to the Expiration Date and not theretofore withdrawn, (c) extend
the Offer and, subject to the right of stockholders to withdraw Shares until the
Expiration Date, retain the Shares that have been tendered during the period or
periods for which the Offer is extended or (d) amend the Offer.
There can be no assurance that the Purchaser will exercise its right to
extend the Offer, except if required to do so. Any extension, amendment or
termination will be followed as promptly as practicable by public announcement.
In the case of an extension, Rule 14e-1(d) under 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(c) under the Exchange
Act. Subject to applicable law (including Rules 14d-4(c) and 14d-6(d) under the
Exchange Act, which require that any material change in the information
published, sent or given to stockholders in connection with the Offer be
promptly disseminated to stockholders in a manner reasonably designed to inform
stockholders of such change), and without limiting the manner in which the
Purchaser may choose to make any public announcement, the Purchaser will not
have any obligation to publish, advertise or otherwise communicate any such
public announcement other than by making a release to the Dow Jones News
Service.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of Shares (whether before or after its acceptance for
payment of Shares) or it is unable to accept for payment or pay for
3
<PAGE> 6
Shares 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-1(c)
under the Exchange Act, which requires that a tender offeror pay the
consideration offered or return the tendered securities promptly after
termination or withdrawal of a tender offer, and the terms of the Merger
Agreement), the Depositary may nevertheless, on behalf of the Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 3.
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
(including, subject to the Merger Agreement, a waiver of the Minimum Condition),
the Purchaser will disseminate additional tender offer materials and extend the
Offer to the extent required by Rules 14d-4(c), 14d-6(d) and 14e-1 under the
Exchange Act. The minimum period during which an offer must remain open
following material changes in the terms of the Offer 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 or information. With
respect to a change in price or a change in the percentage of securities sought,
a minimum period of 10 business days is generally required to allow for adequate
dissemination to stockholders.
The Company has provided or will provide the Purchaser with the Company's
stockholder list and security position listings for the purpose of disseminating
the Offer to holders of Shares. This Offer to Purchase, the related Letter of
Transmittal and other relevant materials will be mailed by the Purchaser to
record holders of Shares and will be furnished to brokers, dealers, banks, trust
companies and similar persons whose names, or the names of whose nominees,
appear on the Company's stockholder list, or, if applicable, who are listed as
participants in a clearing agency's security position listing, for subsequent
transmittal to beneficial owners of Shares.
2. PROCEDURE FOR TENDERING SHARES
Valid Tender. For a stockholder validly to tender Shares pursuant to the
Offer, either (a) a properly completed and duly executed Letter of Transmittal
(or a facsimile thereof), together with any required signature guarantees and
any other required documents, must be received by the Depositary at one of its
addresses set forth on the back cover of this Offer to Purchase prior to the
Expiration Date and either certificates for tendered Shares must be received by
the Depositary at one of such addresses or such Shares must be delivered
pursuant to the procedures for book-entry transfer set forth below (and a
confirmation of such delivery, including an Agent's Message (as defined below),
must be received by the Depositary), in each case prior to the Expiration Date
or (b) the tendering stockholder must comply with the guaranteed delivery
procedures set forth below.
The Depositary will establish accounts with respect to the Shares at The
Depository Trust Company (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 Book-Entry Transfer
Facility's system may make book-entry delivery of Shares by causing the
Book-Entry Transfer Facility to transfer such Shares into the Depositary's
account 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 into the Depositary's account at the Book-Entry Transfer
Facility, the Letter of Transmittal (or a facsimile thereof), properly completed
and duly executed, with any required signature guarantees, or an Agent's
Message, and any other required documents, must, in any case, be transmitted to,
and received by, the Depositary at one of its addresses set forth on the back
cover of this Offer to Purchase prior to the Expiration Date, or the tendering
stockholder must comply with the guaranteed delivery procedures described below.
The confirmation of a book-entry transfer of Shares into the Depositary's
account at the Book-Entry Transfer Facility as described above is referred to
herein as a "Book-Entry Confirmation." DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY
TRANSFER FACILITY IN ACCORDANCE WITH THE BOOK-ENTRY TRANSFER FACILITY'S
PROCEDURES DOES NOT CONSTITUTE DELIVERY TO THE DEPOSITARY.
The term "Agent's Message" means a message transmitted by the Book-Entry
Transfer Facility to, and received by, the Depositary and forming a part of a
Book-Entry Confirmation, which states that the Book-
4
<PAGE> 7
Entry Transfer Facility has received an express acknowledgment from the
participant in the Book-Entry Transfer Facility tendering the Shares that such
participant has received and agrees to be bound by the terms of the Letter of
Transmittal and that the Purchaser may enforce such agreement against the
participant.
THE METHOD OF DELIVERY OF SHARES, THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS, INCLUDING DELIVERY THROUGH THE BOOK-ENTRY TRANSFER FACILITY,
IS AT THE ELECTION AND RISK OF THE TENDERING STOCKHOLDER. SHARES 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. No signature guarantee is required on the Letter of
Transmittal (a) if the Letter of Transmittal is signed by the registered
holder(s) of Shares (which term for purposes of this Section, includes any
participant in any of the Book-Entry Transfer Facility's system whose name
appears on a security position listing as the owner of the Shares) tendered
therewith and such registered holder has not completed either the box entitled
"Special Delivery Instructions" or the box entitled "Special Payment
Instructions" on the Letter of Transmittal or (b) if such Shares are tendered
for the account of a firm that is a participant in the Security Transfer Agents
Medallion Program or the New York Stock Exchange Guarantee Program or the Stock
Exchange Medallion Program or by any other "eligible guarantor institution," as
such term is defined in Rule 17Ad-15 under the Exchange Act (each, an "Eligible
Institution"). In all other cases, all signatures on the Letter of Transmittal
must be guaranteed by an Eligible Institution. See Instructions 1 and 5 to the
Letter of Transmittal. If the certificates for Shares are registered in the name
of a person other than the signer of the Letter of Transmittal, or if payment is
to be made or certificates for Shares not tendered or not accepted for payment
are to be returned to a person other than the registered holder of the
certificates surrendered, the tendered certificates must be endorsed or
accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered holders or owners appear on the certificates,
with the signatures on the certificates or stock powers guaranteed in the manner
described above. See Instructions 1 and 5 to the Letter of Transmittal.
Guaranteed Delivery. If a stockholder desires to tender Shares pursuant to
the Offer and such stockholder's certificates for Shares are not immediately
available or the procedure for book-entry transfer cannot be completed on a
timely basis or time will not permit all required documents to reach the
Depositary prior to the Expiration Date, such stockholder's tender may be
effected if all the following conditions are met:
(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 provided by the Purchaser, is received
by the Depositary, as provided below, prior to the Expiration Date; and
(iii) the certificates for 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
(or a 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 are received by the Depositary within three trading days
after the date of execution of such Notice of Guaranteed Delivery. A
"trading day" is any day on which the Nasdaq National Market (the "Nasdaq
National Market") operated by the National Association of Securities
Dealers, Inc. (the "NASD") is open for business.
The Notice of Guaranteed Delivery may be delivered by hand to the
Depositary or transmitted by telegram, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the form
set forth in such Notice of Guaranteed Delivery.
Notwithstanding any other provision hereof, payment for Shares accepted for
payment pursuant to the Offer will in all cases be made only after timely
receipt by the Depositary of (a) certificates for (or a timely
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<PAGE> 8
Book-Entry Confirmation with respect to) such tendered Shares, (b) a Letter of
Transmittal (or 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 (c) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders may be paid at different times
depending upon when certificates for Shares or Book-Entry Confirmations with
respect to such Shares are actually received by the Depositary. UNDER NO
CIRCUMSTANCES WILL ANY INTEREST BE PAID ON THE PURCHASE PRICE OF THE TENDERED
SHARES, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
The valid tender of Shares pursuant to one of the procedures described
above will constitute a binding agreement between the tendering stockholder and
the Purchaser upon the terms and subject to the conditions of the Offer.
Appointment. By executing a Letter of Transmittal as set forth above, the
tendering stockholder will irrevocably appoint designees of the Purchaser as
such stockholder's attorneys-in-fact and proxies in the manner set forth in the
Letter of Transmittal, each with full power of substitution, to the full extent
of such stockholder's rights with respect to the Shares tendered by such
stockholder and accepted for payment by the Purchaser and with respect to any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after December 14, 1999. All such proxies will be
considered coupled with an interest in the tendered Shares. Such appointment
will be effective when, and only to the extent that, the Purchaser accepts for
payment Shares tendered by such stockholder as provided herein. Upon such
appointment, all prior powers of attorney, proxies and consents given by such
stockholder with respect to such Shares or other securities or rights will,
without further action, be revoked and no subsequent powers of attorney,
proxies, consents or revocations may be given (and, if given, will not be deemed
effective). The designees of the Purchaser will thereby be empowered to exercise
all voting and other rights with respect to such Shares and other securities or
rights in respect of any annual, special or adjourned meeting of the Company's
stockholders, actions by written consent in lieu of any such meeting or
otherwise, as they in their sole discretion deem proper. The Purchaser reserves
the right to require that, in order for Shares 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, consent and other rights with
respect to such Shares and other securities or rights, including voting at any
meeting of stockholders.
Determination of Validity. All questions as to the validity, form,
eligibility (including time of receipt) and acceptance of any tender of Shares
will be determined by the Purchaser in its sole discretion, which determination
will be final and binding. The Purchaser reserves the absolute right to reject
any or all tenders determined by it not to be in proper form or the acceptance
for payment of or payment for which may, in the opinion of the Purchaser's
counsel, be unlawful. The Purchaser also reserves the absolute right to waive
any defect or irregularity in the tender of any Shares of any particular
stockholder, whether or not similar defects or irregularities are waived in the
case of other stockholders. No tender of Shares will be deemed to have been
validly made until all defects or irregularities relating thereto have been
cured or waived. None of the Purchaser, Parent, the Depositary, the Information
Agent, the Dealer Manager 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. The 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.
Backup Withholding. In order to avoid "backup withholding" of federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on a
Substitute Form W-9 and certify under penalties of perjury that such TIN is
correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide such stockholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding of 31%. All
stockholders surrendering Shares pursuant to the Offer should complete and sign
the Substitute Form W-9 included as part of the Letter of Transmittal to provide
the information and certification necessary to avoid backup withholding (unless
an applicable exemption exists and is proved in a manner
6
<PAGE> 9
satisfactory to the Purchaser and the Depositary). Certain stockholders
(including, among others, all corporations and certain foreign individuals and
entities) are not subject to backup withholding. Noncorporate foreign
stockholders should complete and sign a Form W-8, Certificate of Foreign Status,
a copy of which may be obtained from the Depositary, in order to avoid backup
withholding. See Instruction 9 to the Letter of Transmittal.
3. WITHDRAWAL RIGHTS
Except as otherwise provided in this Section 3, tenders of Shares are
irrevocable. Shares tendered pursuant to the Offer may be withdrawn pursuant to
the procedures set forth below at any time prior to the Expiration Date and,
unless theretofore accepted for payment and paid for by the Purchaser pursuant
to the Offer, may also be withdrawn at any time after February 18, 2000.
For a withdrawal to be effective, a written, telegraphic or facsimile
transmission notice of withdrawal must be timely received by the Depositary at
one of its addresses set forth on the back cover of this Offer to Purchase and
must specify the name of the person having tendered the Shares to be withdrawn,
the number of Shares to be withdrawn and the name of the registered holder of
the Shares to be withdrawn, if different from the name of the person who
tendered the Shares. If certificates for Shares 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, unless such Shares have been tendered by an Eligible
Institution, the signatures on the notice of withdrawal must be guaranteed by an
Eligible Institution. If Shares have been delivered pursuant to the procedure
for book-entry transfer as set forth in Section 2, any notice of withdrawal must
also specify the name and number of the account at the Book-Entry Transfer
Facility to be credited with the withdrawn Shares and otherwise comply with the
Book-Entry Transfer Facility's procedures. Withdrawals of tenders of Shares may
not be rescinded, and any Shares properly withdrawn will thereafter be deemed
not validly tendered for purposes of the Offer. However, withdrawn Shares may be
retendered by again following one of the procedures described in Section 2 at
any time prior to the Expiration Date.
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, which determination will be final and binding. None of the
Purchaser, Parent, the Depositary, the Information Agent, Dealer Manager 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.
4. ACCEPTANCE FOR PAYMENT AND PAYMENT
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 in
accordance with Section 3, promptly after the Expiration Date. All questions as
to the satisfaction of such terms and conditions will be determined by the
Purchaser in its sole discretion, which determination will be final and binding.
See Sections 1 and 14. The Purchaser expressly reserves the right, in its sole
discretion, to delay acceptance for payment of or payment for Shares in order to
comply in whole or in part with any applicable law, including, without
limitation, the HSR Act. Any such delays will be effected in compliance with
Rule 14e-1(c) under the Exchange Act, which requires that a tender offeror pay
the consideration offered or return the tendered securities promptly after
termination or withdrawal of a tender offer.
Parent will file a Notification and Report Form with respect to the Offer
under the HSR Act. The waiting period under the HSR Act with respect to the
Offer will expire at 11:59 p.m., New York City time, on the 15th day after day
such form is filed, unless early termination of the waiting period is granted.
However, the Antitrust Division of the Department of Justice (the "Antitrust
Division") or the Federal Trade Commission (the "FTC") may extend the waiting
period by requesting additional information or documentary material from Parent.
If such a request is made, such waiting period will expire at 11:59 p.m., New
York City time, on the 10th day after substantial compliance by Parent with such
request. See Section 15.
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<PAGE> 10
In all cases, payment for tendered Shares accepted for payment pursuant to
the Offer will be made only after timely receipt by the Depositary of (a)
certificates for (or a timely Book-Entry Confirmation with respect to) such
Shares, (b) a 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 (c) any other documents required by
the Letter of Transmittal. The per Share consideration paid to any stockholder
pursuant to the Offer will be the highest per Share consideration paid to any
other holder of Shares pursuant to the Offer.
For purposes of the Offer, the Purchaser will be deemed to have accepted
for payment, and thereby purchased, Shares properly tendered to the Purchaser
and not withdrawn as, if and when the Purchaser gives oral or written notice to
the Depositary of the Purchaser's acceptance for payment of such Shares. Payment
for Shares accepted for payment pursuant to the Offer will be made by deposit of
the purchase price therefor with the Depositary, which will act as agent for
tendering stockholders for the purpose of receiving payment from the Purchaser
and transmitting payment to tendering stockholders. UNDER NO CIRCUMSTANCES WILL
INTEREST BE PAID ON THE PURCHASE PRICE OF ANY TENDERED SHARES TO BE PAID BY THE
PURCHASER, REGARDLESS OF ANY EXTENSION OF THE OFFER OR ANY DELAY IN MAKING SUCH
PAYMENT.
If the Purchaser extends the Offer or if the Purchaser is delayed in its
acceptance for payment of or payment for Shares (whether before or after its
acceptance for payment of Shares) or it is unable to accept for payment or pay
for Shares 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-1(c)
under the Exchange Act, which requires that a tender offeror pay the
consideration offered or return the tendered securities promptly after
termination or withdrawal of a tender offer, and the terms of the Merger
Agreement), the Depositary may, nevertheless, on behalf of the Purchaser, retain
tendered Shares, and such Shares may not be withdrawn except to the extent
tendering stockholders are entitled to exercise, and duly exercise, withdrawal
rights as described in Section 3.
If any tendered Shares are not purchased pursuant to the Offer for any
reason, certificates for any such Shares will be returned without expense to the
tendering stockholder (or, in the case of Shares delivered by book-entry
transfer of such Shares into the Depositary's account at the Book-Entry Transfer
Facility pursuant to the procedure set forth in Section 2, such Shares will be
credited to an account maintained at the Book-Entry Transfer Facility) as
promptly as practicable after the expiration or termination of the Offer.
The Purchaser reserves the right to transfer or assign, in whole or from
time to time in part, to Parent, or to an affiliate of Parent, the right to
purchase Shares tendered pursuant to the Offer, but any such transfer or
assignment will not relieve the Purchaser of its obligations under the Offer and
will in no way prejudice the rights of tendering stockholders to receive payment
for Shares validly tendered and accepted for payment pursuant to the Offer.
5. CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of certain United States federal
income tax consequences of the receipt of cash by a holder of Shares pursuant to
the Offer or the Merger. Except as specifically noted, this discussion applies
only to a U.S. Holder.
A "U.S. Holder" means a holder of Shares that is (i) a citizen or resident
of the United States, (ii) a corporation or other entity taxable as a
corporation created or organized in or under the laws of the United States or
any political subdivision thereof or therein, (iii) an estate the income of
which is subject to United States federal income taxation regardless of its
source or (iv) a trust if (x) a court within the United States is able to
exercise primary supervision over the administration of the trust and (y) one or
more United States fiduciaries have the authority to control all substantial
decisions of the trust. A "Non-U.S. Holder" is a holder of Shares that is not a
U.S. Holder.
The receipt of cash for Shares pursuant to the Offer or the Merger will be
a taxable transaction for federal income tax purposes under the Internal Revenue
Code of 1986, as amended (the "Code"), and may also be a
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<PAGE> 11
taxable transaction under applicable state, local or foreign income or other tax
laws. Generally, for federal income tax purposes, a U.S. Holder will recognize
gain or loss equal to the difference between the amount of cash received by the
U.S. Holder pursuant to the Offer or the Merger and the aggregate tax basis in
the Shares purchased pursuant to the Offer (or canceled pursuant to the Merger).
Gain or loss will be calculated separately for each block of Shares purchased
pursuant to the Offer (or canceled pursuant to the Merger).
Gain (or loss) will be capital gain (or loss), assuming that such Shares
are held as a capital asset. Capital gains of individuals, estates and trusts
generally are subject to a maximum federal income tax rate of (i) 39.6% if, at
the time the Purchaser accepts the Shares for payment (or the Shares are
canceled pursuant to the Merger) the stockholder held the Shares for not more
than one year and (ii) 20% if the stockholder held such Shares for more than one
year at such time. Capital gains of corporations generally are taxed at the
federal income tax rates applicable to corporate ordinary income. In addition,
under present law, the ability to use capital losses to offset ordinary income
is limited.
A stockholder that tenders Shares pursuant to the Offer or surrenders
Shares pursuant to the Merger may be subject to 31% backup withholding unless
the stockholder provides its TIN and certifies that such number is correct or
properly certifies that it is awaiting a TIN, or unless an exemption applies. A
stockholder that does not furnish its TIN may be subject to a penalty imposed by
the IRS. See "-- Backup Withholding" under Section 2.
If backup withholding applies to a stockholder, the Depositary is required
to withhold 31% from payments to such stockholder. 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 stockholder upon filing an income tax return.
THE FOREGOING DISCUSSION MAY NOT BE APPLICABLE WITH RESPECT TO SHARES
RECEIVED PURSUANT TO THE EXERCISE OF EMPLOYEE STOCK OPTIONS OR OTHERWISE AS
COMPENSATION OR WITH RESPECT TO HOLDERS OF SHARES WHO ARE SUBJECT TO SPECIAL TAX
TREATMENT UNDER THE CODE, SUCH AS NON-U.S. HOLDERS, LIFE INSURANCE COMPANIES,
TAX-EXEMPT ORGANIZATIONS, FINANCIAL INSTITUTIONS, DEALERS IN SECURITIES OR
CURRENCIES, PERSONS WHO HOLD SHARES AS A POSITION IN A "STRADDLE" OR AS PART OF
A "HEDGING" OR "CONVERSION" TRANSACTION AND PERSONS THAT HAVE A FUNCTIONAL
CURRENCY OTHER THAN THE U.S. DOLLAR, AND MAY NOT APPLY TO A HOLDER OF SHARES IN
LIGHT OF INDIVIDUAL CIRCUMSTANCES. STOCKHOLDERS ARE URGED TO CONSULT THEIR OWN
TAX ADVISORS TO DETERMINE THE PARTICULAR TAX CONSEQUENCES TO THEM (INCLUDING THE
APPLICATION AND EFFECT OF ANY STATE, LOCAL OR FOREIGN INCOME AND OTHER TAX LAWS)
OF THE OFFER AND THE MERGER.
6. PRICE RANGE OF THE SHARES; DIVIDENDS ON THE SHARES
The Shares are traded on the Nasdaq National Market ("NNM") under the
symbol "ELTE." The following table sets forth, for each of the periods
indicated, the range of reported high and low sales prices per
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<PAGE> 12
Share as reported on the NNM as stated in the Company's documents filed with the
SEC ("Commission Documents").
<TABLE>
<CAPTION>
SALES PRICE
---------------
LOW HIGH
------ ------
<S> <C> <C>
1997
First Quarter............................................. $10.38 $13.25
Second Quarter............................................ $10.67 $13.13
Third Quarter............................................. $ 9.50 $14.38
Fourth Quarter............................................ $ 7.38 $11.75
1998
First Quarter............................................. $ 7.13 $ 9.06
Second Quarter............................................ $ 5.25 $ 8.00
Third Quarter............................................. $ 3.25 $ 7.63
Fourth Quarter............................................ $ 2.25 $ 3.75
1999
First Quarter............................................. $ 2.25 $ 4.00
Second Quarter............................................ $ 3.63 $ 5.94
Third Quarter............................................. $ 4.94 $ 6.44
Fourth Quarter (through December 17, 1999)................ $ 4.66 $10.31
</TABLE>
On December 14, 1999, the last full day of trading before the public
announcement of the execution of the Merger Agreement, the reported closing
sales price of the Shares on the NNM was $8.375 per Share. The Offer Price of
$11.00 represents a 31% premium over this closing price. On December 20, 1999,
the last full day of trading before commencement of the Offer, the reported
closing sales price of the Shares on the NNM was $10.25 per Share. STOCKHOLDERS
ARE URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE SHARES.
The Purchaser has been advised by the Company that the Company has never
paid any cash dividends on the Shares, and has no present plans to make any
distributions to its stockholders.
7. EFFECT OF THE OFFER ON THE MARKET FOR THE SHARES; STOCK QUOTATION;
REGISTRATION UNDER THE EXCHANGE ACT; MARGIN REGULATIONS
Market for Shares. The purchase of 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.
Stock Quotation. Depending upon the number of Shares purchased pursuant to
the Offer, the Shares may no longer meet the requirements of the NASD for
continued inclusion in the NNM, which among other things require that an issuer
have either (i) at least 750,000 publicly held shares, held by at least 400
stockholders of round lots, with a market value of at least $5,000,000 and net
tangible assets of at least $4,000,000 and at least two registered and active
market makers for the shares or (ii) at least 1,100,000 publicly held shares,
held by at least 400 stockholders of round lots, with a market value of at least
$15,000,000 and either (x) a market capitalization of at least $50,000,000 or
(y) total assets and total revenue of at least $50,000,000 each for the most
recently completed fiscal year or two of the last three most recently completed
fiscal years and at least four registered and active market markers. The Shares
might nevertheless continue to be included in the NASD's Nasdaq Stock Market
(the "Nasdaq Stock Market") with quotations published in the Nasdaq "additional
list" or in one of the "local lists," but if the number of holders of the Shares
were to fall below 300, or if the number of publicly held Shares were to fall
below 500,000 or if the market value of the Shares were to fall below $1,000,000
or there were not at least two registered and active market makers for the
Shares, the NASD's rules provide that the Shares would no longer be "qualified"
for Nasdaq Stock Market reporting and the Nasdaq Stock Market would cease to
provide any quotations. Shares held directly or indirectly by directors,
officers or beneficial owners of more than 10% of the Shares are not
10
<PAGE> 13
considered as being publicly held for this purpose. If, as a result of the
purchase of Shares pursuant to the Offer or otherwise, the Shares no longer meet
the requirements of the NASD for continued inclusion in the NNM or in any other
tier of the Nasdaq Stock Market and the Shares are no longer included in the NNM
or in any other tier of the Nasdaq Stock Market, as the case may be, the market
for Shares could be adversely affected.
In the event that the Shares no longer meet the requirements of the NASD
for continued inclusion in any tier of the Nasdaq Stock Market, it is possible
that the Shares would continue to trade in the over-the-counter market and that
price quotations would be reported by other sources. The extent of the public
market for the Shares and the availability of such quotations would, however,
depend upon the number of holders of Shares remaining at such time, the interest
in maintaining a market in Shares on the part of securities firms, the possible
termination of registration of the Shares under the Exchange Act, as described
below, and other factors.
Registration Under the Exchange Act. 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 SEC if the Shares are not
listed on a national securities exchange, quoted on an automated inter-dealer
quotation system or 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 stockholders and to
the SEC 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
stockholders' meetings and the related requirement of furnishing an annual
report to stockholders 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 (the "Securities Act"), may be
impaired or eliminated. The Purchaser intends to seek to cause the Company to
apply for termination of 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 public quotation and registration of the Shares is not terminated prior
to the Merger, then the Shares will no longer be quoted and the registration of
the Shares under the Exchange Act will be terminated following the consummation
of the Merger.
Margin Regulations. The Shares are currently "margin securities" under the
regulations of the Board of Governors of the Federal Reserve System (the
"Federal Reserve Board"), which has the effect, among other things, of allowing
brokers to extend credit on the collateral of the Shares. Depending upon factors
similar to those described above regarding listing and market quotations, it is
possible that, following the Offer, the Shares would no longer constitute
"margin securities" for the purposes of the margin regulations of the Federal
Reserve Board and therefore could no longer be used as collateral for loans made
by brokers. In any event, the Shares will cease to be "margin securities" if
registration of the Shares under the Exchange Act is terminated.
8. CERTAIN INFORMATION CONCERNING THE COMPANY
General. Except as otherwise set forth herein, the information concerning
the Company contained in this Offer to Purchase, including financial
information, has been furnished by the Company or has been taken from or based
upon publicly available documents and records on file with the SEC and other
public sources. Although neither the Purchaser nor Parent has any knowledge that
would indicate that statements contained herein based upon such documents are
untrue, none of the Purchaser or Parent assume any responsibility for the
accuracy or completeness of the information concerning the Company or for any
failure by the Company to disclose events that may have occurred or may affect
the significance or accuracy of any such information but that are unknown to the
Purchaser or Parent.
According to the Company's Quarterly Report on Form 10-Q for the quarter
ended September 30, 1999, the Company is a Delaware corporation and provides
integrated solutions to the financial, legal and
11
<PAGE> 14
professional services markets in the computer software product and services
industry. The Company primarily supplies an integrated suite of practice
management software for the legal and professional services markets, and is
focused primarily on time tracking, billing, internal accounting and other
administrative functions, including marketing, records management, case
management and conflicts of interest prevention. The Company's software products
are often sold with related services to aid the customer in implementation, data
conversion, user training, support and maintenance of those products. The
Company's principal executive offices are located at 5100 West Goldleaf Circle,
Suite 100, Los Angeles, California 90056.
Financial Information. Set forth below is certain selected consolidated
financial information with respect to the Company and its subsidiaries, which is
excerpted from the information contained in the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1998, the Company's Quarterly Report
on Form 10-Q for the nine months ended September 30, 1999, the Company's
Quarterly Report on Form 10-Q for the nine months ended September 30, 1998, and
the Company's Current Report on Form 8-K dated May 19, 1999. More comprehensive
financial information is included in such reports and other documents filed by
the Company with the SEC, and 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 under "Available Information."
ELITE INFORMATION GROUP, INC.
SELECTED CONSOLIDATED FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
NINE MONTHS
ENDED SEPTEMBER 30,
(UNAUDITED) YEAR ENDED DECEMBER 31,
------------------- ---------------------------------------
RESTATED
1999 1998 1998(A) 1998 1997 1996
-------- -------- -------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Net revenue........................ $43,770 $31,578 $45,062 $69,035 $79,559 $89,351
Operating costs and expenses....... 40,700 33,463 45,416 82,948 76,208 99,609
------- ------- ------- ------- ------- -------
Operating income (loss)............ 3,070 (1,885) (354) (13,913) 3,351 (10,258)
Gain (loss) on disposition of
non-strategic business unit...... (295) -- -- 1,917 1,155 9,652
Net interest income (expense)...... 777 730 857 857 832 (187)
------- ------- ------- ------- ------- -------
Income (loss) from continuing
operations before income taxes... 3,552 (1,155) 503 (11,139) 5,338 (793)
Income tax (provision) benefit for
continuing operations............ (1,548) 80 (425) 3,542 (2,399) (1,455)
------- ------- ------- ------- ------- -------
Income (loss) from continuing
operations....................... 2,004 (1,075) -- -- -- --
------- ------- ------- ------- ------- -------
Income (loss) from discontinued
operations....................... (382) (4,304) -- -- -- --
------- ------- ------- ------- ------- -------
Gain on sale of discontinued
operations net of tax
provision........................ 4,919 -- -- -- -- --
------- ------- ------- ------- ------- -------
Net income (loss)........ $ 6,541 $(5,379) $ 78 $(7,597) $ 2,939 $(2,248)
======= ======= ======= ======= ======= =======
Net income (loss) per common
share -- basic................... $ 0.79 $ (0.60) $ 0.01 $ (0.86) $ 0.32 $ (0.25)
Net income (loss) per common
share -- diluted................. $ 0.77 $ (0.60) $ 0.01 $ (0.86) $ 0.32 $ (0.25)
Total assets....................... $63,178 $56,007 (b) $65,096 $67,343 $66,474
Total liabilities.................. $30,289 $28,770 (b) $40,077 $29,970 $34,284
Total stockholders' equity......... $32,889 $27,237 (b) $25,019 $37,373 $32,190
</TABLE>
12
<PAGE> 15
- ---------------
(a) Restated 1998 results reflect the Company's sale during the second quarter
of 1999 of its Customer Relationship Management business ("CRM") and
elimination of certain overhead costs along with estimated income tax
effects, as disclosed by the Company in its Current Report on Form 8-K
dated May 19, 1999. The operating results for CRM are presented in the
table above for the nine months ended September 30, 1999 as discontinued
operations and the prior period has been restated to reflect the Company's
continued operations. The results above for the years ended 1996, 1997 and
1998 (before restatement) do not reflect any adjustment for the sale of
CRM.
(b) Not available in the Company's SEC filings.
Available Information. The Company is currently subject to the reporting
requirements of the Exchange Act and, in accordance therewith, is required to
file reports and other information with the SEC 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 and other matters, 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
stockholders and filed with the SEC. Such reports, proxy statements and other
information should be available for inspection at the public reference
facilities of the SEC located at 450 Fifth Street, N.W., Washington, D.C. 20549,
and at the regional offices of the SEC located in the Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661 and Seven World Trade
Center, 13th Floor, New York, New York 10049. Copies of such information should
be obtainable, by mail, upon payment of the SEC's customary charges, by writing
to the SEC's principal office at 450 Fifth Street, N.W., Washington, D.C. 20549.
Such material should also be available for inspection at the offices of Nasdaq
Operations, 1735 K Street, N.W., Washington, D.C. 20006. The SEC maintains a web
site that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC. Such
reports, proxy and information statements and other information may be found on
the SEC's web site address, http://www.sec.gov.
Except as otherwise stated in this Offer to Purchase, the information
concerning the Company contained herein has been taken from or based upon
publicly available documents on file with the SEC and other publicly available
information. Although the Purchaser and Parent do not have any knowledge that
any such information is untrue, none of the Purchaser or Parent takes any
responsibility for the accuracy or completeness of such information or for any
failure by the Company to disclose events that may have occurred and may affect
the significance or accuracy of any such information.
Certain Company Projections. During the course of discussions between
representatives of Parent and the Company, the Company provided Parent or its
representatives with certain non-public business and financial information about
the Company. The following is a summary of selected projected financial
information provided by the Company.
<TABLE>
<CAPTION>
PROJECTIONS FOR YEAR
ENDING DECEMBER 31,
---------------------
1999 2000
--------- ---------
(IN THOUSANDS)
<S> <C> <C>
Total revenue............................................... $57,325 $61,751
Cost of revenue............................................. 31,813 34,001
Net earnings................................................ 6,863 9,150
</TABLE>
The Company has advised the Purchaser and Parent that it does not as a
matter of course make public any projections as to future performance or
earnings, and the projections set forth above are included in this Offer to
Purchase only because the information was provided to Parent. The projections
were not prepared with a view to public disclosure or compliance with the
published guidelines of the SEC or the guidelines established by the American
Institute of Certified Public Accountants regarding projections or forecasts.
The Company's internal operating projections are, in general, prepared solely
for internal use and capital budgeting and other management decisions and are
subjective in many respects and thus susceptible to various interpretations and
periodic revision based on actual experience and business developments. The
projections
13
<PAGE> 16
were based on a number of assumptions that are beyond the control of the
Company, the Purchaser or Parent or their respective financial advisors,
including economic forecasting (both general and specific to the Company's
business), which is inherently uncertain and subjective. None of the Purchaser
or Parent or their respective financial advisors assumes any responsibility for
the accuracy of any of the projections. The inclusion of the foregoing
projections should not be regarded as an indication that the Company, the
Purchaser or Parent or any other person who received such information considers
it an accurate prediction of future events. None of the Company, the Purchaser
or Parent intends to update, revise or correct such projections if they become
inaccurate (even in the short term).
9. CERTAIN INFORMATION CONCERNING THE PURCHASER AND PARENT
Purchaser. The Purchaser, a Delaware corporation, was recently incorporated
for the purpose of acting as an acquisition vehicle. It has not conducted any
unrelated activities since its incorporation. The principal executive office of
the Purchaser is located at Town Hall House, Level 21, 456 Kent Street, Sydney,
New South Wales, Australia 2000. All outstanding shares of common stock of
Purchaser are owned by Solution 6 US Inc., which is 100% owned by Parent.
Parent. The principal executive office of Parent, a corporation organized
under the laws of New South Wales, Australia, is located at Town Hall House,
Level 21, 456 Kent Street, Sydney, New South Wales, Australia 2000. Parent, its
subsidiaries and associated companies are principally engaged in the provision
and support of software and related services to the accounting profession
worldwide and Applications Service Provider ("ASP") services.
The name, citizenship, business address, present principal occupation or
employment and five-year employment history of each of the directors and
executive officers of the Purchaser and Parent are set forth in Schedule I
hereto.
Parent currently beneficially owns and has sole voting and dispositive
power of 147,200 Shares, and such Shares are held in the name of Linwar
Nominees. In addition, Parent may be deemed to beneficially own an additional
2,001,588 Shares by virtue of its entering into the Stockholders Agreement. Such
2,001,558 Shares may also be deemed to be beneficially owned by Purchaser. See
Section 12 for a description of the terms and conditions of the Stockholders
Agreement. No other person is known to have the right to receive or the power to
direct the receipt of dividends from or the proceeds from the sale of, the
Shares beneficially owned by Parent and Purchaser.
Since October 21, 1999, Parent purchased the Shares set forth below through
BNP Equities (Australia) Limited in broker's transactions. These shares are held
in the name of Linwar Nominees.
<TABLE>
<CAPTION>
DATE OF TRANSACTION NUMBER OF SHARES PRICE PER SHARE
- ------------------- ---------------- ---------------
<S> <C> <C>
November 11, 1999...................................... 16,400 $7.36737
November 8, 1999....................................... 22,000 $ 7.375
November 5, 1999....................................... 1,000 $ 7.375
November 4, 1999....................................... 4,100 $ 7.375
November 3, 1999....................................... 1,000 $ 7.375
November 2, 1999....................................... 2,300 $ 7.375
October 25, 1999....................................... 2,000 $ 5.75
October 22, 1999....................................... 5,300 $ 5.75
</TABLE>
Except as set forth above or described elsewhere in this Offer to Purchase,
none of the Purchaser or Parent (together, the "Corporate Entities") or, to the
best knowledge of the Corporate Entities, any of the persons listed in Schedule
I or any associate or majority-owned subsidiary of the Corporate Entities or any
of the persons so listed, beneficially owns any equity security of the Company,
and none of the Corporate Entities or, to the best knowledge of the Corporate
Entities, any of the other persons referred to above, or any of the respective
directors, executive officers or subsidiaries of any of the foregoing, has
effected any transaction in any equity security of the Company during the past
60 days. See Section 11.
14
<PAGE> 17
Except as described in this Offer to Purchase, (a) there have not been any
contacts, transactions or negotiations between the Corporate Entities, any of
their respective subsidiaries or, to the best knowledge of the Corporate
Entities, any of the persons listed in Schedule I, on the one hand, and the
Company or any of its directors, officers or affiliates, on the other hand, that
are required to be disclosed pursuant to the rules and regulations of the SEC
and (b) none of the Corporate Entities or, to the best knowledge of the
Corporate Entities, any of the persons listed in Schedule I has any contract,
arrangement understanding or relationship with any person with respect to any
securities of the Company.
Financial Information. Because the Purchaser was recently organized to
acquire the Company and has not conducted any unrelated activities since its
organization, selected financial information regarding the Purchaser is
unavailable. Because the only consideration in the Offer and Merger is cash and
the Offer covers all outstanding Shares, the Purchaser believes the financial
condition of Parent and its affiliates is not material to a decision by a holder
of Shares whether to sell, tender or hold Shares pursuant to the Offer.
10. SOURCE AND AMOUNT OF FUNDS
The Purchaser estimates that the amount of funds required to purchase all
outstanding Shares pursuant to the Offer, to pay cash to holders of Stock
Options pursuant to the Merger Agreement and to pay fees and expenses related to
the Offer will be approximately $9.8 million. The Purchaser will obtain funds
directly or indirectly from Parent. Such funds will be obtained from Parent from
existing cash resources (including proceeds from the Private Placement (as
discussed below)), proceeds from the exercise of an option held by Telstra Corp.
("Telstra") and from borrowings pursuant to an acquisition bridge facility by
and among Warburg Dillon Read Australia Limited ("WDRAL") and Parent.
WDRAL has committed to provide Parent with a maximum of US$60 million as an
acquisition bridge facility (the "Facility") pursuant to an amended term sheet
dated December 17, 1999. If drawn upon, the maturity date for the Facility will
be the earlier of July 31, 2000 or 14 days after the consummation of the Merger.
The Parent plans to repay the Facility from the proceeds from the first US$20
million received pursuant to the Private Placement (as discussed below), up to
US$30 million pursuant to a dividend, return of capital or loan from the Company
immediately upon consummation of the Merger and from working capital. WDRAL's
commitment to provide the Facility will expire if the Minimum Condition has not
been reached by May 2, 2000 and Purchaser has not terminated the Offer and
accepted Shares for payment by that date. Additionally, WDRAL may terminate the
commitment if Parent and WDRAL have not entered into definitive documentation
and executed the Facility by February 15, 2000, and Purchaser may terminate the
Facility at any time, with or without cause.
The base interest rate (the "Base Rate") on the Facility shall be the
average rate as displayed on Reuters screen LIBO for the relevant Interest
Period (as defined below) set to London business days prior to drawing. In
addition to the Base Rate, amounts drawn under the Facility will be subject to
an additional 2.0% interest from the date of the draw until 45 days thereafter,
and an additional 4.0% from 45 days after the date of the draw until July 31,
2000. Furthermore, interest shall be payable on any undrawn amounts under the
Facility at 1.0% from March 31, 2000 until July 31, 2000, calculated on a daily
basis and payable quarterly in arrears. Interest Periods shall be 30, 60 or 90
days, or as otherwise agreed. Interest is payable on the Facility at the end of
the Interest Period.
The Facility is secured by a first priority lien, unless a first priority
lien is already in place in which case the Facility shall be secured by a second
priority lien with second priority liens capped at A$10 million, on most of
Parent's assets, proceeds from the issuances of Parent's securities, proceeds
from any sale of the Shares or the Company's assets once the acquisition of the
Company has been completed.
Parent is obligated to pay certain fees in connection with the Facility.
Upon execution of the commitment letter and the announcement of the Merger, an
aggregate amount of US$523,000 as a commitment fee for the Facility was payable
by Parent. A restructure fee in the amount of $78,000 was also payable by Parent
in connection with an amendment to the facility on December 17, 1999. When
Parent draws upon the Facility, an amount equal to 1.0% of the amount drawn will
be payable to WDRAL as an additional fee. However,
15
<PAGE> 18
WDRAL will rebate an amount equal to 0.5% of the amounts drawn if the Facility
is repaid within 45 days of such draw down.
As required as a condition to the Facility, Parent undertook a private
placement of A$120 million of its ordinary shares at a price of A$9.75 per share
(the "Private Placement"). Subscriptions for A$120 million were received on
December 17, 1999 with settlement to occur on December 22, 1999. The joint lead
managers of the Private Placement have assumed the underwriting risk from
December 17, 1999 through the settlement date.
Mandatory prepayment or reduction of outstanding commitments under the
Facility will occur from funds received by Parent from any of the following
sources:
(1) the first US$20 million received pursuant to the Private
Placement;
(2) the placement of any other of Parent's securities (excluding the
A$50 million issuance of shares to Telstra and any other share issuances to
vendors used to fund acquisitions approved by WDRAL);
(3) the sale of any of Parent's assets;
(4) any return of capital or loan from the Company; and
(5) the sale of any Shares of the Company.
Additionally, if the transaction involving a specific potential acquisition
candidate is not announced by January 31, 2000 and is not pursuant to the
conditions required by WDRAL in the Facility, or if the offer to purchase that
acquisition candidate is withdrawn, a further mandatory prepayment or reduction
of US$13 million will be required at that time. Mandatory prepayments and
reduced commitments cannot be redrawn and will be converted to US dollars at the
exchange rate prevailing at the time of the prepayment or commitment reduction
and as advised in good faith by WDRAL to Parent.
There are several conditions precedent that Parent must satisfy prior to
making any draws upon the Facility. All loan and security documentation must be
completed to WDRAL's satisfaction, the fees described above must have been paid
and Parent must have received at least A$50 million in connection with the
issuance of shares to Telstra pursuant to the exercise of an option. The Telstra
option has been exercised and the A$50 has been received by the Parent.
Additionally, at least 50.1% of the Company's Shares must have been tendered to
Parent at a cost to Purchaser of US$62.6 million for the Shares.
With respect to the Facility, Parent has agreed to the following:
(1) Parent shall not enter into an amendment or waive any conditions
to the Offer or the Merger Agreement without the consent of WDRAL;
(2) Parent shall not enter into a material amendment or waive any
material conditions to the specific acquisition candidate's transaction
without the consent of WDRAL;
(3) Upon acquiring at least 50.1% of the Shares, Parent shall take
control of the Company's board of directors, use its best efforts to
acquire 100% of the Shares as soon as practicable and in any event by July
16, 2000;
(4) Immediately upon the consummation of the Merger, Parent shall
cause the Company to make a payment of at least US$30 million to Parent by
way of a dividend, return of capital or loan and cause the Company to
provide a guarantee and provide a lien over its assets in favor of WDRAL;
(5) Upon the reasonable request from WDRAL, Parent shall enter into
currency hedging arrangements acceptable to WDRAL with respect to the
acquisition of the Company;
(6) Parent has agreed to restrictions on any capital reductions
(except in respect of an agreed level of ordinary dividends);
16
<PAGE> 19
(7) Parent has agreed to restrictions on disposal of assets or
undertakings other than disposals in the ordinary course of business
(except as reasonably agreed to by WDRAL) and disposals for good value
applied in prepayment of the Facility;
(8) Parent has agreed to restrictions on further acquisitions in
excess of A$5 million in the aggregate (except as reasonably agreed to by
WDRAL);
(9) Parent has agreed to restrictions on incurring further financial
indebtedness or providing financial accommodation or guarantees (except as
reasonably agreed with WDRAL);
(10) Parent has agreed that it will have no dealings with any party
except on arms length terms in the ordinary course of business; and
(11) Parent has agreed to restrictions on the creations of security
interests.
11. CONTACTS AND TRANSACTIONS WITH THE COMPANY; BACKGROUND OF THE OFFER
In March 1999, the Company engaged PVTG to provide financial advisory
services in connection with a variety of strategic initiatives, including, but
not limited to, possible business combinations. In the spring and summer of
1999, the Company had informal contacts and introductory meetings with various
parties, but did not entertain serious discussions regarding an acquisition of
the Company.
In early August 1999, Mr. Chris Tyler, Chief Executive Officer of Parent,
left a phone message for Mr. Barry Emerson, Chief Financial Officer of the
Company, regarding Parent's interest in a possible business combination with the
Company. On September 5, 1999, Mr. Tyler and Mr. Christopher K. Poole, Chairman
and Chief Executive Officer of the Company, had an initial meeting in Santa
Monica, California in which they exchanged general information and Mr. Tyler
expressed Parent's general interest in a possible merger with the Company. At
about that same time, the Company also had preliminary discussions with a
prospective financial buyer (the "First Financial Bidder"), which signed a
confidentiality agreement and received certain financial information regarding
the Company.
On September 8, 1999, Mr. Tyler sent a message to Mr. Poole proposing a
possible merger transaction in which Parent and the Company would exchange stock
at "current market rates." On September 16, 1999, the Company held a Board
meeting at which Mr. Poole provided an update on two possible interested
parties. The Company's Board authorized Mr. Poole to proceed with discussions
and provide further updates as discussions progressed. Following this Board
meeting, additional financial information was provided to the First Financial
Bidder.
On September 18, 1999, Mr. Tyler sent a message to Mr. Poole at the Company
indicating Parent's desire to proceed with a possible merger transaction and to
discuss maximizing stockholder value.
On October 1, 1999, Mr. Poole met with Mr. Tyler at the Company's offices
in Los Angeles to further discuss Parent's interest in an acquisition. Later
that day, Mr. Poole met in the Company's offices with a representative of a
second prospective financial buyer (the "Second Financial Bidder").
On October 8, 1999, a conference call was held between Parent, Company and
the respective advisors to discuss a possible transaction. Parent suggested an
"at-market" bid of approximately $5.00 per share. The Company rejected this
suggestion as inadequate, and negotiations between Parent and the Company
stalled.
On October 15, 1999, Mr. Tyler sent a message to PVTG revising Parent's
indication of interest to $7.50 per share. On October 19, 1999, Mr. Poole sent
the Board of Directors an update about the status of Parent's and the First
Financial Bidder's expressions of interest in the range of $7.00 to $8.00.
On October 27, 1999, the company's Board of Directors met to consider the
status of discussions with potential buyers. The Board concluded that the
indications of interest received to date were not high enough and that contacts
with other potential buyers might yield higher values. The Board then directed
PVTG to attempt to elicit higher price per share indications of interest from
currently interested parties and to contact other potentially interested
parties. Following this meeting, PVTG contacted a total of nine additional
possible buyers.
17
<PAGE> 20
On November 1, 1999, PVTG sent a message to Mr. Tyler stating that the
Company was uncomfortable with Parent's proposed valuation and was unlikely to
proceed unless Parent could propose a price that approached multiples paid in
Parent's recent acquisition transactions.
On November 1, 1999, representatives of PVTG also had a conversation with
the First and Second Financial Bidders and instructed them that the Company was
unlikely to proceed with the transaction unless these parties were able to
significantly raise their indications of interest.
On November 2, 1999, the Company received a written expression of interest
from the Second Financial Bidder, raising its price per share to a range of
$8.50 to $9.50.
On November 2, 1999, Mr. Tyler sent a message to PVTG with an in indication
of interest at $10.80 and sent the Company a revised letter proposing a merger
transaction at $10.80 a share, consisting of 50% stock and 50% cash
consideration.
On November 4, 1999, PVTG sent Parent a confidentiality agreement for
execution.
On November 9, 1999, the Company received a revised expression of interest
from the Second Financial Bidder proposing a price range of approximately $9.00
to $10.00 per share.
On or about November 9, 1999, PVTG invited Parent and both Financial
Bidders to set up due diligence visits. Parent proposed scheduling meetings
immediately. Both Financial Bidders proposed scheduling meetings for late
November. The Company and Parent entered into a confidentiality agreement on
November 11, 1999.
On November 15, 1999, the Company furnished certain due diligence documents
to Parent. On November 17 though 19, 1999, Parent conducted due diligence in Los
Angeles. The Company and Parent continued to negotiate price based on due
diligence proceedings. On November 21, 1999, Mr. Tyler sent a message to PVTG
indicating his interest in proceeding with an all-cash transaction at $10.80 per
share and proposing other key terms.
On November 22, 1999, the Company, together with PVTG, and Parent, together
with its financial advisor and legal counsel, met in Los Angeles to discuss
general terms regarding a possible merger transaction. The parties were unable
to agree on certain material points. However, prior to leaving the meeting,
Parent presented to the Company a draft of the Merger Agreement and the
Stockholders Agreement. Over the next several days, Parent and the Company and
their representatives exchanged numerous messages and had numerous discussions
concerning price and other terms. On November 28, 1999, Mr. Tyler notified PVTG
of Parent's proposal of an all-cash transaction at $11.00 per share.
On November 29, 1999, the Company's Board of Directors held a telephonic
meeting at which Parent's proposal was discussed. The Board discussed the
specifics of Parent's proposal, and directed PVTG to reject certain aspects of
Parent's proposal and to propose modifications to others. The Board was also
updated on the status of discussions with the Financial Bidders, and directed
its financial advisors to give guidance to the Financial Bidders regarding the
type of bid necessary to stay competitive with Parent's proposal.
On November 30, 1999, Mr. Poole, Mr. Emerson and other representatives of
the Company met with a potential strategic buyer in the Company's offices in Los
Angeles, at which time the potential strategic buyer executed a Confidentiality
Agreement. On December 1, 1999, representatives of the First Financial Bidder
conducted due diligence visits and met with Messrs. Poole and Emerson and
representatives of PVTG. PVTG informed the First Financial Bidder that
discussions between the Company and another bidder had progressed to an advanced
stage and urged the First Financial Bidder to respond quickly with a firm
proposal if it was interested in acquiring the Company. Later on December 1,
1999, the Company shipped due diligence materials to the strategic buyer it had
met on November 30, 1999 and to the First Financial Bidder.
On December 2, 1999, the First Financial Bidder sent the Company a letter
stating an indication of interest, subject to due diligence and other
conditions, of $11.00 per share. On December 3, 1999, a representative of PVTG
left a message with a representative of the First Financial Bidder acknowledging
the
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December 2, 1999 letter and advising that the Company needed to see a formal
proposal quickly in order to determine how to proceed with the First Financial
Bidder.
From December 2 through December 8, 1999, the Company and PVTG (together
and alone) had numerous conversations with Parent and its financial advisors
(together and alone) concerning the unresolved issues related to the possible
transaction. During this period, several written demands, conditions, proposals
and alternatives were exchanged. On December 3, 1999, counsel for Parent
disseminated a revised daft of the Merger Agreement and Stockholders Agreement
to all involved parties.
On December 6, 1999, the Company's Board held a telephonic meeting, at
which time it was updated on the status of discussion with all parties. Mr.
Poole informed the Board that he had received a letter on December 6, 1999 from
Mr. Tyler stating that Parent was prepared to withdraw its proposal unless the
Company agreed to enter into exclusive negotiations with Parent within 24 hours.
The Board of Directors weighed the relative merits and likelihood of completion
of the transactions with Parent and the other interested buyers, including the
Financial Bidders, and authorized the grant of a week-long exclusivity period to
Parent.
On December 6, 1999, Company and Parent signed a letter providing that the
parties would negotiate exclusively until midnight December 14, 1999, Los
Angeles, California time in order to reach a definitive agreement. From December
7 to December 14, 1999, Parent conducted due diligence on site in Los Angeles.
During this time, Parent and their counsel also met in Los Angeles to negotiate
the terms of the Merger Agreement.
On December 9, 1999, the Second Financial Bidder sent Mr. Poole a letter
expressing frustration at the Company's having entered into an exclusivity
period with another bidder and stating that, subject to conducting its due
diligence, it was interested in presenting an offer in a price range of $12.00
to $13.00 per share.
On December 9 and 10, 1999, a representative from the Company met with
representatives of the Parent in Sydney, Australia, while other representatives
of the Company and their legal counsel met with a representative of the Parent
and its legal counsel in Los Angeles to continue to negotiate terms of a
possible transaction. On December 10, 1999, the representative of the Company
who was in Sydney, Australia, flew back to Los Angeles and joined the meetings
being held in Los Angeles.
On December 11, 1999, counsel to the Purchaser circulated revised drafts of
the Merger Agreement and the Stockholders Agreement.
On December 12, 1999, the Company's Board of Directors held a telephonic
meeting to discuss the status of negotiations with Parent and the receipt of the
Second Financial Bidder's December 9, 1999 letter. The Board reviewed with
counsel and representatives of PVTG the terms of this letter and weighed the
relative risks of delaying negotiations with Parent, which had already
threatened to withdraw its offer if the Company further delayed negotiations, to
pursue the Second Financial Bidder's indication of interest, which included a
due diligence contingency, at $12.00 to $13.00 per share. The Board considered
the relative likelihood of completion of Parent's and the Second Financial
Bidder's proposed transactions, noting that Parent's proposal did not include a
due diligence contingency, and the potential effect on any proposal from the
Second Bidder if the Company entered into a definitive agreement with Parent.
The Board also considered, and concluded, that Parent's proposed termination fee
of $3.0 million (or approximately $0.34 per fully diluted share (including "in
the money" options)), coupled with the provision in the Merger Agreement
allowing the Company to (i) respond to acquisition proposals offering greater
consideration than $11.00 per share and (ii) terminate the Merger Agreement in
favor of such a proposal if required by the fiduciary duties of the Board of
Directors, should not preclude any bidder from making a superior proposal for
the Board's consideration. The Board was also advised that negotiations with
Parent had progressed to the level where only a few open negotiating points
remained. The Board gave direction to counsel and PVTG regarding the open
negotiating points and authorized management to proceed with negotiations with
Parent in an effort to reach a definitive agreement.
On December 13, 1999, Second Financial Bidder sent a second letter to
members of the Company's Board of Directors indicating that, subject to due
diligence review, it was prepared to offer a price of
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<PAGE> 22
$12.00 per share. The letter indicated that if the Company did not respond by
December 14, 1999, the Second Financial Bidder would consider other alternatives
for addressing its interest in the Company.
On December 13 and 14, 1999, the Company, its legal advisors and PVTG, and
Parent and its financial and legal advisors met together or individually with
each other throughout these days and nights to finalize the terms of the Merger
Agreement and Stockholders Agreement.
On December 14, 1999, the Company's Board of Directors held a telephonic
meeting at which they reviewed the status of all interested parties and
proposals received to date. The Board considered whether to proceed with
Parent's proposal in light of the Second Financial Bidder's renewed statement of
interest, subject to due diligence, in presenting an offer at a higher price
than Parent. After discussion, the Company's Board concluded, for the same
reasons discussed at the December 12, 1999, meeting, that the preliminary nature
of the Second Financial Bidder's stated interest did not warrant risking the
loss of reaching a definitive agreement with Parent at $11.00 per share and that
entering a definitive agreement with Parent on the terms proposed would not
preclude the Second Financial Bidder from making a proposal superior to Parent's
if it was indeed serious about its stated indication of interest in an
acquisition at $12.00 per share.
The Company's Board then reviewed in detail, with counsel, the proposed
terms of the Merger Agreement and Stockholders Agreement with Parent. The Board
also received a financial presentation regarding Parent's proposal from PVTG.
The Board adjourned the meeting to review materials presented by PVTG and
reconvened later that afternoon. PVTG presented these materials and at the
conclusion, gave the Board its oral opinion (which was subsequently confirmed in
writing later that day). The Board then approved the execution of the Merger
Agreement and Stockholders Agreement and the proposed transactions with Parent.
The Board also approved an amendment to the Company's Rights Agreement to exempt
Purchaser, Parent and the transactions contemplated by the Merger Agreement and
the Stockholders Agreement from the application of the Rights Agreement. On
December 14, 1999, upon being advised that the Company's Board of Directors had
approved the Merger, the Offer and the other transactions contemplated by the
Merger Agreement, Parent's and Purchaser's Boards of Directors approved the
Merger Agreement and Stockholders Agreement. Late in the evening of December 14,
1999, Parent, Purchaser and the Company executed the Merger Agreement and the
Stockholders Agreement, and on the morning of December 15, 1999, the parties
issued a press release announcing the transaction.
On December 15, 1999, following the public announcement of the Offer and
the Merger, a representative of the Second Financial Bidder called to
congratulate Mr. Poole and indicated that the Second Financial Bidder had no
interest in pursuing an offer to the Company.
12. PURPOSE OF THE OFFER; THE MERGER AGREEMENT; THE STOCKHOLDERS AGREEMENT;
OTHER AGREEMENTS; PLANS FOR THE COMPANY
Purpose. The purpose of the Offer is to acquire control of and the entire
equity interest in the Company. Following the Offer, the Purchaser and Parent
intend to acquire any remaining equity interest in the Company not acquired in
the Offer by consummating the Merger.
The Merger Agreement. The Merger Agreement provides that following the
satisfaction of the conditions described below under "Conditions to the Merger,"
the Purchaser will be merged with and into the Company, and each outstanding
Share (other than Shares held by stockholders who perfect their appraisal rights
under Delaware law, Shares owned by the Company as treasury stock and Shares
owned by Parent or any direct or indirect wholly-owned subsidiary of Parent or
of the Company) will be converted into the right to receive the Per Share Merger
Consideration, without interest.
(a) Vote Required to Approve Merger. The DGCL requires, among other things,
that the adoption of any plan of merger or consolidation of the Company be
approved by the Board and generally by a majority of the holders of the
Company's outstanding voting securities. The Board has approved the Offer and
the Merger. Consequently, the only additional action of the Company that may be
necessary to effect the Merger is approval by such stockholders if the
"short-form" merger procedure described below is not available. Under the DGCL,
the affirmative vote of holders of a majority of the outstanding Shares
(including any Shares owned by the Purchaser), is generally required to approve
the Merger. If the Purchaser acquires, through the Offer or otherwise, voting
power with respect to at least a majority of the outstanding Shares (which would
be
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<PAGE> 23
the case if the Minimum Condition were satisfied and the Purchaser were to
accept for payment Shares tendered pursuant to the Offer), it would have
sufficient voting power to effect the Merger without the vote of any other
stockholder of the Company. However, the DGCL also provides that if a parent
company owns at least 90% of each class of stock of a subsidiary, the parent
company can effect a short-form merger with that subsidiary without the action
of the other stockholders of the subsidiary. Accordingly, if, as a result of the
Offer or otherwise, the Purchaser acquires or controls the voting power of at
least 90% of the outstanding Shares, the Purchaser could, and intends to, effect
the Merger without prior notice to, or any action by, any other stockholder of
the Company.
(b) Conditions to Obligations of Each Party Under The Merger Agreement. The
respective obligations of Parent, Purchaser and the Company to effect the Merger
under the Merger Agreement are subject to the satisfaction at or prior to the
Effective Time of the following conditions, any or all of which may be waived by
each party, in whole or in part, to the extent permitted by applicable law: (a)
the Merger Agreement and the Merger shall have been approved and adopted by the
requisite vote of the stockholders of the Company, if required by applicable
law; (b) no court of competent jurisdiction or governmental authority shall have
enacted, issued, promulgated, enforced or entered any law or order (whether
temporary, preliminary or permanent) which is in effect and which has the effect
of making the Merger illegal or otherwise prohibiting consummation of the
Merger; (c) the applicable waiting period under the HSR Act shall have expired
or been terminated; and (d) the Purchaser, Parent or their affiliates shall have
accepted for payment and purchased Shares pursuant to and subject to the
conditions of the Offer.
(c) Termination of the Merger Agreement. The Merger Agreement may be
terminated and the Offer and the Merger may be abandoned at any time
(notwithstanding approval of the Merger by the stockholders of the Company)
prior to the Effective Time: (a) by mutual written consent of Parent, the
Purchaser and the Company; (b) by Parent, the Purchaser or the Company if any
court of competent jurisdiction or other governmental authority shall have
issued a final order or taken any other final action restraining, enjoining or
otherwise prohibiting the consummation of the Offer or the Merger and such order
or other action is or shall have become nonappealable; (c) by Parent or the
Purchaser if due to an occurrence or circumstance which would result in a
failure to satisfy any of the conditions set forth in Section 14, the Purchaser
shall have (i) failed to commence the Offer within the time required by
Regulation 14D under the Exchange Act, (ii) terminated the Offer without
purchasing any Shares pursuant to the Offer or (iii) failed to accept for
payment Shares pursuant to the Offer prior to May 1, 2000, (the "Termination
Date"); (d) by the Company if (i) there shall not have been (x) any breach or
breaches of any representation or warranty or (y) any breach or breaches of a
covenant or agreement on the part of the Company under this Agreement that,
individually or in the aggregate, materially adversely affect (or materially
delay) the consummation of the Offer and the Purchaser shall have (A) failed to
commence the Offer within the time required by Regulation 14D under the Exchange
Act, (B) terminated the Offer without purchasing any Shares pursuant to the
Offer or (C) failed to accept for payment Shares pursuant to the Offer prior to
the Termination Date, or (ii) prior to the payment for Shares pursuant to the
Offer, concurrently with the execution of an Acquisition Agreement (as defined
herein) under the circumstances described below under "Acquisition Proposals,"
provided that such termination under this clause (ii) shall not be effective
unless the Company and the Board shall have complied with all their obligations
described below under "Acquisition Proposals" and until payment of the
Termination Fee (as defined herein); (e) by Parent or the Purchaser prior to the
purchase of Shares pursuant to the Offer, if (i) the Purchaser is entitled to
terminate the Offer pursuant to clause (a) under Section 14 ("Certain Conditions
of the Offer"), (ii) there shall have been any breach of any covenant or
agreement on the part of the Company under this Agreement which materially
adversely affects (or materially delays) the consummation of the Offer, which
shall not have been cured prior to the earlier of (A) 10 days following notice
of such breach and (B) two business days prior to the date on which the Offer
expires; provided, however, that the Company shall have no right to cure any
breach of the provisions described below under "Acquisition Proposals," (iii)
the Board or any committee thereof shall have withdrawn or modified (including
by amendment of the Schedule 14D-9) in a manner adverse to the Purchaser its
approval or recommendation of the Offer, the Merger or the Merger Agreement or
shall have recommended to the Company's stockholders a Third Party Acquisition
(as defined herein), or (iv) there shall not have been validly tendered and not
withdrawn prior to the expiration of the Offer at least a majority of the Shares
on a
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<PAGE> 24
fully diluted basis; or (f) by the Company prior to the purchase of any Shares
pursuant to the Offer if (i) there shall have been a breach of any
representation or warranty in the Merger Agreement on the part of Parent or the
Purchaser which materially adversely affects (or materially delays) the
consummation of the Offer or the Merger or (ii) there shall have been a breach
of any covenant or agreement in the Merger Agreement on the part of Parent or
the Purchaser which materially adversely affects (or materially delays) the
consummation of the Offer or the Merger which shall not have been cured prior to
the earlier of (A) 10 days following notice of such breach and (B) two business
days prior to the date on which the Offer expires.
(d) Acquisition Proposals. Pursuant to the Merger Agreement, the Company
has agreed that it will not, and will not permit any of its subsidiaries, or any
of its or their officers, directors, employees, representatives, agents or
affiliates, including any investment banker, attorney or accountant retained by
the Company or any of its subsidiaries (collectively, "Representatives") to,
directly or indirectly, (a) initiate, solicit or encourage (including by way of
furnishing information) or take any other action to facilitate, any inquiries
with respect to or the making of any proposal or offer that constitutes, or may
reasonably be expected to lead to, an Acquisition Proposal (as defined herein),
(b) enter into or maintain or continue discussions or negotiate with any person
regarding an Acquisition Proposal or in furtherance of such inquiries with
respect to or to obtain an Acquisition Proposal, or (c) agree to, approve,
recommend or endorse any Acquisition Proposal, or authorize or permit any of the
Representatives of the Company or any of its subsidiaries to take any such
action, and the Company shall promptly notify Parent of any such inquiries and
proposals hereafter received by the Company or any of its subsidiaries or by any
such Representative, relating to any of such matters; provided, however, that
nothing contained in the Merger Agreement shall prohibit the Board, at any time
prior to the payment of Shares pursuant to the Offer, from furnishing
information (pursuant to a customary confidentiality agreement not materially
more favorable to the party receiving information than the Confidentiality
Agreement (as defined herein) and consistent with the Company's disclosure and
other obligations under the Merger Agreement) to, or engaging in discussions or
negotiations with, any person in response to an unsolicited (and the existence
of discussions or negotiations with a person prior to the date of the Merger
Agreement does not create a presumption that a proposal from a person was
solicited) bona fide Acquisition Proposal of such person that the Board
determines is reasonably likely to result in a Qualifying Proposal (as defined
herein), if, and only to the extent that, (i) the Board, after consultation with
outside legal counsel to the Company, determines in good faith that failure to
do so would result in a breach of the fiduciary duty of the Board to the
stockholders of the Company under applicable law, and (ii) prior to furnishing
such information to, or entering into discussions or negotiations with, such
person the Company provides written notice to Parent to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such person and the Company complies with certain notification provisions of the
Merger Agreement. The Company has also agreed to cease and terminate any
existing solicitation, initiation, encouragement, activity, discussion or
negotiation with any persons conducted heretofore by it or its Representatives
with respect to any Acquisition Proposal. It is understood that any violation of
the restrictions described above by any Representative of the Company or any of
its subsidiaries, whether or not such person is purporting to act on behalf of
the Company or otherwise, shall be deemed to be a breach of the Merger Agreement
by the Company.
The Merger Agreement provides further that, except as described below (i)
neither the Board nor any committee thereof shall (a) withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Parent or the
Purchaser, the approval or recommendation by the Board of the Offer or the
Merger, (b) approve or recommend, or propose publicly to approve or recommend,
any Acquisition Proposal, or (c) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement or other similar agreement
(each, an "Acquisition Agreement") related to any Acquisition Proposal and (ii)
the Company shall not enter into any Acquisition Agreement with respect to any
Acquisition Proposal. Notwithstanding the foregoing, prior to the payment of
Shares pursuant to the Offer, the Board may terminate the Merger Agreement but
only (a) if the Board, after consultation with outside legal counsel to the
Company, determines in good faith that failure to do so would result in a breach
of the fiduciary duty of the Board to the stockholders of the Company under
applicable law, (b) if the Company and the Board have complied with all the
provisions described in this subsection on "Acquisition Proposals," (c) after
the second business day following Parent's receipt of written notice advising
Parent that the Board is prepared to accept a Qualifying Proposal, and after
having received from the Company sufficient and accurate guidance in order to
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<PAGE> 25
enable Parent to make a bona fide counter proposal, it being understood and
agreed that nothing contained in this paragraph shall require the Company to
provide to Parent any of the details of such Qualifying Proposal, including the
identity of the person making such Qualifying Proposal and the specific terms of
such Qualifying Proposal (during which two day period the Company will negotiate
in good faith with Parent or Purchaser concerning any amendments proposed by
Parent or Purchaser) and (d) if concurrently with such termination, the Company
enters into an Acquisition Agreement with respect to such Qualifying Proposal
and pays to Parent the Termination Fee.
In addition, under the Merger Agreement the Company has agreed to promptly
advise Parent, orally and in writing, of any request for information or of any
Acquisition Proposal.
Nothing contained in the Merger Agreement shall prohibit the Company from
taking and disclosing to the stockholders a position contemplated by Rule 14d-9,
Rule 14e-2(a) promulgated under the Exchange Act or from making any disclosure
to the Company's stockholders which the Board, after consultation with outside
legal counsel to the Company, determines in good faith is required by applicable
law; provided that neither the Board nor any committee thereof approves or
recommends, or publicly proposes to approve or recommend, an Acquisition
Proposal unless the Company and the Board have complied with the terms of the
Merger Agreement. Notwithstanding anything to the contrary, if the Purchaser has
accepted for payment of, and paid for, any Shares pursuant to the Offer, the
Company will duly call, give notice and hold the stockholders meeting, if
required by the DGCL, for the purpose of considering and taking action upon the
Merger Agreement and the Merger whether or not the Board has determined at any
time after the date hereof it is no longer advisable for the stockholders of the
Company to adopt the Merger Agreement.
"Acquisition Proposal" means an inquiry, offer or proposal that is made
after the date of the Merger Agreement regarding any of the following (other
than the transactions contemplated by the Merger Agreement) involving the
Company: (a) any merger, consolidation, share exchange, recapitalization,
liquidation, dissolution, business combination or other similar transaction; (b)
any sale, lease, exchange, mortgage, pledge, transfer or other disposition of a
substantial portion of the assets of the Company and its subsidiaries, taken as
a whole, or of any Material Business (as defined herein) or of any subsidiary or
subsidiaries responsible for a Material Business in a single transaction or
series of related transactions; (c) any acquisition of 20% or more of the
outstanding shares of capital stock of the Company or the filing of a
registration statement under the Securities Act in connection therewith or any
other acquisition or disposition the consummation of which would prevent or
materially diminish the benefits to Parent of the Merger; or (d) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing. "Qualifying Proposal" means any
written proposal made by a third party after the date of the Merger Agreement to
acquire, directly or indirectly, including pursuant to a tender offer, exchange
offer, merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or other similar transaction, all the
Shares then outstanding or all or substantially all of the assets of the Company
and its Subsidiaries as an entirety which the Board determines in good faith (x)
(based on the advice of PVTG or another financial advisor of nationally
recognized reputation) that such proposal has a reasonable likelihood of being
consummated and (y) (based on the advice of PVTG or another financial advisor of
nationally recognized reputation) that such proposal would, if consummated, be
superior to the Company's stockholders from a financial point of view (taking
into account any changes to the financial terms of the Merger Agreement proposed
by Parent or Purchaser in response to such proposal) when compared to the Offer,
the Merger and the transactions contemplated by the Merger Agreement, taken as a
whole. "Material Business" means any business (or the assets needed to carry out
such business) that contributed or represented 15% or more of the net sales, the
net income or the assets (including equity securities) of the Company and its
subsidiaries taken as a whole. "Third Party Acquisition" means (a) the
acquisition of the Company by merger, consolidation, share exchange,
recapitalization, liquidation, dissolution, business combination or other
similar transaction by any person (which includes for these purposes a "person"
as defined in Section 13(d)(3) of the Exchange Act) other than Parent, the
Purchaser or any affiliate thereof (a "Third Party"); (b) the acquisition by a
Third Party of more than 50% of the assets of the Company and its subsidiaries,
taken as a whole; (c) the acquisition by a Third Party of 50% or more of the
outstanding Shares or 50% or more of the aggregate ordinary voting power
represented by the issued and outstanding capital stock
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<PAGE> 26
of the Company; (d) the adoption by the Company of a plan of liquidation or the
declaration or payment of an extraordinary dividend; or (e) the purchase by the
Company or any of its subsidiaries of more than 30% of the outstanding Shares.
(e) Fees and Expenses. Except with respect to the circumstances described
below, the Merger Agreement provides that each of Parent, the Purchaser and the
Company will bear its own fees and expenses in connection with the Merger
Agreement.
The Merger Agreement provides that (a) if Parent or the Purchaser
terminates the Merger Agreement pursuant to the provisions described above under
clause (e)(i) of "Termination of the Merger Agreement" (other than a termination
resulting from an event or circumstance that causes a material adverse effect
with respect to the Company after the date of the Merger Agreement, which event
or circumstance was not caused by the willful or intentional action or inaction
by the Company), the provisions described above under clause (e)(ii) of
"Termination of the Merger Agreement" (other than as a result of a breach of the
provisions described above under "Acquisition Proposals"), and in any such case,
any proposal for a Third Party Acquisition shall have been made on or prior to
the date of such termination and in any such case, within 12 months thereafter
the Company enters into an agreement with respect to the consummation of, or
otherwise consummates, a Third Party Acquisition, (b) Parent or the Purchaser
terminates the Merger Agreement pursuant to the provisions described above under
clause (e)(ii) of "Termination of the Merger Agreement" as a result of a breach
of the provisions described above under "Acquisition Proposals" or pursuant to
the provisions described above under clause (e)(iii) of "Termination of the
Merger Agreement," (c) the Company terminates the Merger Agreement pursuant to
the provisions described above under clause (d)(ii) of "Termination of the
Merger Agreement" or (d) if Parent or Purchaser terminates, or does not purchase
any Shares under, the Offer, and prior to such termination an Acquisition
Proposal is publicly announced, and within twelve months, after such
termination, the transactions contemplated by such Acquisition Proposal (as may
be modified or amended) are consummated, then, in each case, the Company shall
pay to Parent, within two business days following the execution and delivery of
such agreement or such occurrence, as the case may be, or simultaneously with
such termination pursuant to the provisions described above under clause (d)(ii)
of "Termination of the Merger Agreement," a fee, in cash, of $3 million (a
"Termination Fee").
(f) Conduct of Business of the Company. Pursuant to the Merger Agreement,
the Company has agreed that, prior to the Effective Time, unless otherwise
expressly contemplated by the Merger Agreement or consented to in writing by
Parent and, after such date on which Purchaser's designees constitute a majority
of the Company's Board of Directors (the "Control Date"), also by a majority of
the Independent Directors (defined below), it will and will cause each of its
subsidiaries to: (a) operate its business in the usual and ordinary course
consistent with past practices; (b) use reasonable efforts to preserve intact
its business organization, maintain its material rights and franchises, retain
the services of its respective key employees and maintain its relationships with
its respective customers and suppliers and others having business dealings with
it; (c) maintain and keep its properties and assets in as good repair and
condition as at present, ordinary wear and tear excepted, and maintain supplies
and inventories in quantities consistent with its customary business practice;
and (d) use reasonable efforts to keep in full force and effect insurance and
bonds comparable in amount and scope of coverage to that currently maintained.
(g) Prohibited Actions by the Company. Under the Merger Agreement, the
Company has agreed that, except as expressly contemplated by the Merger
Agreement or otherwise consented to in writing by Parent and after the Control
Date, also by a majority of the Independent Directors, which consents shall not
be unreasonably withheld or delayed, from the date of the Merger Agreement until
the Effective Time, it will not do, and will not permit any of its subsidiaries
to do, any of the following: (a)(i) increase the compensation payable to or to
become payable to any director or employee, except for increases in salary or
wages of employees in the ordinary course of business and consistent with past
practice or as required under any existing employment agreements, and except
that the Company may pay annual bonuses for fiscal year 1999 as provided in the
Company's disclosure letter (the "Disclosure Letter"); (ii) grant any severance
or termination pay (other than pursuant to any existing employment agreements or
the normal severance policy or practice of the Company or its subsidiaries as in
effect on the date of the Merger Agreement) to, or enter
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<PAGE> 27
into or amend in any material respect any employment or severance agreement
with, any employee; (iii) establish, adopt, enter into or amend in any material
respect any collective bargaining agreement or Benefit Plan (as defined in the
Merger Agreement) of the Company or its subsidiaries except as required by
applicable law; or (iv) take any action to accelerate any rights or benefits, or
make any material determinations not in the ordinary course of business
consistent with past practice, under any collective bargaining agreement or
Benefit Plan of the Company or its subsidiaries; (b) declare, set aside or pay
any dividend on, or make any other distribution in respect of (whether in cash,
stock or property), outstanding shares of capital stock, except for dividends by
a wholly-owned subsidiary of the Company to the Company or another wholly-owned
subsidiary of the Company; (c) redeem, purchase or otherwise acquire, or offer
to redeem, purchase or otherwise acquire any outstanding shares of capital stock
of, or other equity interests in, or any securities that are convertible into or
exchangeable for any shares of capital stock of, or other equity interests in,
or any outstanding options, warrants or rights of any kind to acquire any shares
of capital stock of, or other equity interests in, the Company or any of its
subsidiaries (other than (i) any such acquisition by the Company or any of its
wholly-owned subsidiaries directly from any wholly-owned subsidiary of the
Company in exchange for capital contributions or loans to such subsidiary or
(ii) any purchase, forfeiture or retirement of Shares or the Stock Options
occurring pursuant to the terms (as in effect on the date of the Merger
Agreement) of any existing Benefit Plan of the Company or any of its
subsidiaries); (d) effect any reorganization or recapitalization, or split,
combine or reclassify any of the capital stock of, or other equity interests in,
the Company or any of its subsidiaries or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of such capital stock or such equity interests; (e) offer, sell,
issue or grant, or authorize the offering, sale, issuance or grant of, any
shares of capital stock of, or other equity interests in, any securities
convertible into or exchangeable for any shares of capital stock of, or other
equity interests in, or any options, warrants or rights of any kind to acquire
any shares of capital stock of, or other equity interests in, or any bonds,
debentures, notes or other indebtedness of the Company having the right to vote
(or convertible into, or exchangeable for, securities having the right to vote)
on any matters on which stockholders of the Company may vote or other voting
securities, of the Company or any of its subsidiaries, or any "phantom" stock,
"phantom" stock rights, stock appreciation rights or stock-based performance
units, other than issuances of Shares upon the exercise of the Stock Options
outstanding at the date of the Merger Agreement in accordance with the terms
thereof (as in effect on the date of the Merger Agreement); (f) change the terms
of any Stock Option; (g) acquire or agree to acquire by merging or consolidating
with, by purchasing an equity interest in or a portion of the assets of, or in
any other manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire any assets
of any other person (other than the purchase of assets from suppliers or vendors
in the ordinary course of business and consistent with past practice); (h) sell,
lease, exchange or otherwise dispose of, or grant any lien with respect to, any
of the properties or assets (including technological assets) of the Company or
any of its subsidiaries, except for dispositions of excess or obsolete assets,
sales of inventories in the ordinary course of business and consistent with past
practice and the licensing of software to customers consistent with past
practice; (i) adopt any amendments to its certificate of incorporation or bylaws
or other organizational documents; (j) effect any change in any accounting
methods, principles or practices of the Company, except as may be required by a
change in generally accepted accounting principles, or any change in tax
accounting; (k) (i) incur any indebtedness, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or any of
its subsidiaries, guarantee any debt securities of another person, enter into
any "keep well" or other agreement to maintain any financial statement condition
of another person or enter into any arrangement having the economic effect of
any of the foregoing, except for short-term borrowings pursuant to existing
lines of credit incurred in the ordinary course of business consistent with past
practice, or (ii) make any loans, advances or capital contributions to, or
investments in, any other person other than to or in the Company or any direct
or indirect wholly-owned subsidiary of the Company; (l) enter into any contract
which, if such contract is entered into, would be a material contract; (m) make
or agree to make any new capital expenditure or expenditures other than the
capital expenditures contemplated by the Company's annual operating plan for
1999, a copy of which was furnished to Parent prior to the execution of the
Merger Agreement, and except for capital expenditures from January 1, 2000
through May 1, 2000 not to exceed $732,335 in the aggregate, and the capital
expenditures described in the Disclosure Letter; (n) make any non-routine tax
election or settle or compromise any material tax liability or refund, except as
provided in
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the Disclosure Letter; (o) (i) pay, discharge or satisfy any claims, liabilities
or obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the ordinary
course of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated by, the
most recent consolidated financial statements (or the notes thereto) of the
Company included in the documents filed with the SEC prior to the date of the
Merger Agreement or incurred in the ordinary course of business consistent with
past practice or (ii) cancel any material indebtedness (individually or in the
aggregate) or waive any claims or rights of substantial value; (p) enter into
any new agreements with, or commitments to, insurance brokers or advisers
extending beyond one year or extend any insurance policy beyond one year
(including, for the avoidance of doubt, the directors' and officers' liability
insurance policies described under "In demnification of Directors"); or (q)
agree in writing or otherwise to do any of the foregoing.
(h) Directors. The Merger Agreement provides that promptly upon the
acceptance for payment of, and payment by the Purchaser for, any Shares pursuant
to the Offer, the Purchaser shall be entitled to designate such number of
directors on the Board as will give the Purchaser, subject to compliance with
Section 14(f) of the Exchange Act, representation on the Board equal to at least
that number of directors, rounded up to the next whole number, which is the
product of (a) the total number of directors on the Board (giving effect to the
directors elected pursuant to this sentence) multiplied by (b) the percentage
that (i) such number of Shares so accepted for payment and paid for by the
Purchaser plus the number of Shares otherwise owned by the Purchaser or any
other subsidiary of Parent bears to (ii) the number of such Shares outstanding,
and the Company shall, at such time, cause the Purchaser's designees to be so
elected; provided, however, that in the event that the Purchaser's designees are
appointed or elected to the Board, until the Effective Time the Board shall have
at least two directors who are directors on the date of the Merger Agreement
(the "Independent Directors"); and provided further that, in such event, if the
number of Independent Directors shall be reduced below two for any reason
whatsoever, the remaining Independent Director shall be entitled to designate a
person to fill such vacancy who shall be deemed to be an Independent Director
for purposes of the Merger Agreement or, if no Independent Directors then
remain, the other directors promptly shall designate two persons to fill such
vacancies who shall not be officers, employees, stockholders or affiliates of
Parent or the Purchaser, and such persons shall be deemed to be Independent
Directors for purposes of the Merger Agreement. Subject to applicable law, the
Company has agreed to take all action requested by Parent necessary to effect
any such election, including mailing to its stockholders the information
statement required under Rule l4f-1 containing the information required by
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, which
information statement is attached as Schedule I to the Schedule 14D-9. Purchaser
shall supply to the Company in a timely manner, and shall be solely responsible
for, any information with respect to Purchaser's nominees, officers, directors
and affiliates required by such Section 14(f) and 14f-1. The Purchaser's
designees shall be divided between the classes of directors as necessary to
comply with the requirements of the Company's bylaws. In connection with the
foregoing, the Company shall, at the option of the Purchaser, either increase
the size of the Board or obtain the resignation of such number of its current
directors as is necessary to enable Purchaser's designees to be elected or
appointed to the Board as provided above.
(i) Stock Options. The Merger Agreement provides that upon consummation of
the Merger, all then outstanding Stock Options and all Shares subject to a
vesting requirement ("Restricted Stock") shall be canceled in exchange for a
cash payment to the holder of a Stock Option or Restricted Stock award equal to
(a) in the case of Stock Options, the product of (x) the difference between the
Per Share Merger Consideration and the per share exercise price of the holder's
Stock Option multiplied by (y) the number of Shares subject to the holder's
Stock Option and (b) in the case of Restricted Stock, the number of shares of
the holder's Restricted Stock multiplied by the Per Share Merger Consideration.
Except as provided in the Merger Agreement or as otherwise agreed to by the
parties, (a) the Stock Option Plans shall terminate as of the Effective Time and
the provisions in any other plan, program or arrangement providing for the
issuance or grant by the Company or any of its subsidiaries of any interest in
respect of the capital stock of the Company or any of its subsidiaries shall be
terminated as of the Effective Time, and (b) following the Effective Time no
holder of Stock Options or Restricted Stock or any participant in such plans,
programs or arrangements shall have any right thereunder to acquire any equity
securities of the Company, the Surviving Corporation or any
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<PAGE> 29
subsidiary thereof. Notwithstanding the first sentence of this paragraph or the
section above entitled "Prohibited Actions by the Company," upon the acceptance
of, and payment by Purchaser for, any Shares pursuant to the Offer, the Company
shall redeem any Stock Options for the cash payment provided in the first
sentence of this paragraph (assuming an agreement of redemption is made with the
applicable option holder).
(j) Indemnification of Directors and Officers. In the Merger Agreement, the
Purchaser has agreed that all rights to indemnification or exculpation (to the
extent provided in the certificate of incorporation of the Company) for acts or
omissions occurring prior to the Effective Time in favor of the current or
former directors, officers or employees of the Company and its subsidiaries as
provided in their respective certificates of incorporation or bylaws shall
survive the Merger and shall continue in full force and effect in accordance
with their terms for a period of six years from the Effective Time. In addition,
until the sixth anniversary of the Effective Time, Parent shall cause the
Surviving Corporation to maintain in effect with respect to matters occurring
prior to the Effective Time, to the extent available at less than 300% of
current premiums, the policies of directors' and officers' liability insurance
currently maintained by the Company (or policies substantially similar in amount
and coverage) or, in the alternative, may cause similar coverage to be included
in Parent's directors' and officers' liability coverage (if available). The
Company shall not increase, amend or change any rights to indemnification or
exculpation after the date hereof. If any claims for indemnification as provided
in above cannot be satisfied by the Surviving Corporation (through its own means
and/or directors' and officers' liability insurance) and the Surviving
Corporation has distributed assets to Parent or any of Parent's affiliates or
has otherwise transferred any assets to or for the benefit of Parent or any of
Parent's affiliates (whether by loan, asset sale or otherwise), then Parent
shall be liable for such unsatisfied indemnification claims to the extent of up
to the fair market value of any such distributions or transfers (less, in the
case of any transfer, the fair market value of any consideration received by the
Company in such transfer). The Merger Agreement provides that if any claim or
claims are made in writing subsequent to the Effective Time and within six years
thereafter against any present or former director, officer or employee of the
Company based on or arising out of the services of such person prior to the
Effective Time in the capacity of such person as a director, officer or employee
(and such director, officer or employee shall have given Parent written notice
of such claim or claims within such six year period), the provision of the
previous sentence respecting the rights to indemnity for current or former
directors, officers or employees under the respective certificates of
incorporation or bylaws of the Company and its subsidiaries shall continue in
effect until the final disposition of all such claims. Notwithstanding anything
to the contrary contained in the Merger Agreement, neither Parent nor the
Surviving Corporation shall be liable for any settlement effected without its
written consent, which shall not be unreasonably withheld.
(k) Reasonable Efforts. The Merger Agreement provides that, subject to the
terms of the Merger Agreement, each of the parties has agreed to use all
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things reasonably necessary, proper or advisable under
applicable laws to consummate and make effective as soon as reasonably
practicable the transactions contemplated by the Merger Agreement.
(l) Directors and Officers. The directors of the Purchaser immediately
prior to the Effective Time and/ or any individuals designated by Parent shall
be the directors of the Surviving Corporation, each to hold office in accordance
with the certificate of incorporation and bylaws of the Surviving Corporation,
and the officers of the Company immediately prior to the Effective Time and/or
any individuals designated by Parent shall be the officers of the Surviving
Corporation, in each case until the earlier of their resignation or removal or
until their respective successors are duly elected or appointed and qualify.
(m) Employment Agreements. Pursuant to the Merger Agreement, Parent
acknowledged and agreed that all employment agreements, severance agreements,
deferred compensation agreements and supplemental retirement agreements with
employees of the Company and its subsidiaries set forth in the Disclosure Letter
will be binding and enforceable obligations of the Surviving Corporation to the
same extent as they were binding and enforceable obligations of the Company and
its subsidiaries as of the date of the Merger, except as the parties to the
Merger Agreement may otherwise agree or as required by applicable law.
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<PAGE> 30
(n) Rights Agreement. Pursuant to the Merger Agreement, the Board has
amended the Company's Rights Agreement dated as of April 14, 1999 between the
Company and EquiServe Trust Company, N.A. (the "Rights Agreement") so that (i)
none of the execution or delivery of this Agreement or the Stockholders
Agreement or the making of the Offer or the exercise of Purchaser's rights under
the Stockholders Agreement will cause (A) the "Rights" (as defined in the Rights
Agreement) to become exercisable under the Rights Agreement, (B) Parent or
Purchaser or any of their affiliates to be deemed an "Acquiring Person" (as
defined in the Rights Agreement) or (C) the "Stock Acquisition Date" (as defined
in the Rights Agreement) to occur upon any such event, (ii) none of the
acceptance for payment or payment for Shares by Purchaser pursuant to the Offer,
the consummation of the Merger or the exercise of Purchaser's rights under the
Stockholders Agreement will cause (A) the Rights to become exercisable under the
Rights Agreement or (B) Parent or Purchaser or any of their affiliates to be
deemed an Acquiring Person or (C) the Stock Acquisition Date to occur upon any
such event, and (iii) the "Expiration Date" (as defined in the Rights Agreement)
shall occur no later than immediately prior to the purchase of shares pursuant
to the Offer.
(o) Representations and Warranties. The Merger Agreement contains various
customary representations and warranties.
(p) Procedure for Termination, Amendment, Extension or Waiver. The Merger
Agreement provides that following the Control Date but prior to the Effective
Time: (i) no amendment or waiver of the Merger Agreement on the Company's
behalf, and no termination of this Agreement as described in subsection (a)
under "Termination of the Merger Agreement" shall be valid; (ii) there shall be
no amendment to the certificate of incorporation or bylaws of the Company; (iii)
there shall be no extension of the time for the performance of any of the
obligations or other acts of Parent or Purchaser (including any extension of the
Closing pursuant to the Merger Agreement or the Effective Time of the Merger
beyond filing of the Certificate of Merger); and (iv) no waiver of any provision
in favor of the Company in the Confidentiality Agreement (defined below),
unless, in each such case, there are Independent Directors in office and a
majority of such Independent Directors approve such amendment, waiver,
termination or action, as the case may be.
The Stockholders Agreement. Pursuant to the Stockholders Agreement, each
Stockholder has agreed, among other things, to sell to the Purchaser all the
Shares that he or it beneficially owns at a price per Share equal to the Offer
Price. The Stockholders have also agreed to tender such Shares in the Offer at a
price per Share equal to the Offer Price if directed to do so by the Purchaser.
In addition, each Stockholder has granted the Purchaser an option to purchase
all his Shares at a price per Share equal to the Offer Price under certain
circumstances and subject to certain conditions.
Each Stockholder severally has agreed that: (a) such Stockholder will not
(i) sell, transfer, pledge, assign or otherwise dispose of, or enter into any
contract, option or other arrangement (including any profit sharing arrangement)
or understanding with respect to the sale, transfer, pledge, assignment or other
disposition of such Stockholder's Shares to any person other than the Purchaser
or the Purchaser's designee, (ii) enter into any voting arrangement, whether by
proxy, voting agreement, voting trust, power-of-attorney or otherwise, with
respect to such Stockholder's Shares or (iii) take any other action that would
in any way restrict, limit or interfere with the performance of its obligations
under the Stockholders Agreement or the transactions contemplated thereby, (b)
until the Merger is consummated or the Merger Agreement is terminated, such
Stockholder will not, nor will such Stockholder permit any investment banker,
financial adviser, attorney, accountant or other representative or agent of such
Stockholder to, directly or indirectly (i) solicit, initiate or encourage
(including by way of furnishing information), or take any other action designed
or reasonably likely to facilitate, any inquiries or the making of any proposal
which constitutes, or may reasonably be expected to lead to, any Acquisition
Proposal or (ii) participate in any discussions or negotiations regarding any
Acquisition Proposal, (c) at any meeting of stockholders of the Company called
to vote upon the Merger and the Merger Agreement or at any adjournment thereof
or in any other circumstances upon which a vote, consent or other approval
(including by written consent) with respect to the Merger and the Merger
Agreement is sought, such Stockholder will, including by initiating a written
consent solicitation if requested by Parent, vote (or cause to be voted) such
Stockholder's Shares in favor of the Merger, the adoption by the Company of the
Merger Agreement and the approval of the other transactions contemplated by the
Merger
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Agreement and (d) at any meeting of stockholders of the Company or at any
adjournment thereof or in any other circumstances upon which such Stockholder's
vote, consent or other approval is sought, such Stockholder will vote (or cause
to be voted) such Stockholder's Shares against (i) any merger agreement or
merger (other than the Merger Agreement and the Merger), consolidation,
combination, sale of substantial assets, reorganization, recapitalization,
dissolution, liquidation or winding up of or by the Company or any other
Acquisition Proposal (collectively, "Alternative Transactions") or (ii) any
amendment of the Company's certificate of incorporation or bylaws or other
proposal or transaction involving the Company or any of its subsidiaries, which
amendment or other proposal or transaction would in any manner impede,
frustrate, prevent or nullify the Offer, the Merger, the Merger Agreement or any
of the other transactions contemplated by the Merger Agreement (collectively,
"Frustrating Transactions"). The Stockholders Agreement provides that each
Stockholder executed the Stockholders Agreement solely in his or her capacity as
the beneficial owner of such Stockholder's Shares and nothing therein shall
limit or affect any actions taken by a Stockholder in its capacity as an officer
or director of the Company or any subsidiary of the Company to the extent
specifically permitted by the Merger Agreement. Under the Stockholders Agreement
each Stockholder has irrevocably granted to, and appointed, Chris Tyler and
Thomas A. Montgomery and any other individual who shall thereafter be designated
by Parent, and each of them, such Stockholder's proxy and attorney-in-fact (with
full power of substitution), for and in the name, place and stead of such
Stockholder, to vote such Stockholder's Shares, or grant a consent or approval
in respect of such Shares, at any meeting of stockholders of the Company or at
any adjournment thereof or in any other circumstances upon which their vote,
consent or other approval is sought, in favor of the Merger, the adoption by the
Company of the Merger Agreement and the approval of the terms thereof and each
of the other transactions contemplated by the Merger Agreement and against any
Alternative Transaction or Frustrating Transaction.
Confidentiality Agreement. Pursuant to the Confidentiality Agreement dated
November 11, 1999, between Parent and the Company (the "Confidentiality
Agreement"), the Company and Parent agreed to keep confidential certain
information exchanged between such parties. The Confidentiality Agreement also
contains customary non-solicitation and standstill provisions. The Merger
Agreement provides that the provisions of the Confidentiality Agreement shall
remain binding and in full force and effect and that the parties shall comply
with and shall cause their respective representatives to comply with, all of
their respective obligations under the Confidentiality Agreement until the
Purchaser purchases a majority of the outstanding Shares pursuant to the Offer.
Appraisal Rights. Holders of Shares do not have dissenters' rights as a
result of the Offer. However, if the Merger is consummated, holders of Shares
will have certain rights pursuant to the provisions of Section 262 of the DGCL
to dissent and demand appraisal of, and to receive payment in cash of the fair
value of, their Shares. If the statutory procedures were complied with, such
rights could lead to a judicial determination of the fair value required to be
paid in cash to such dissenting holders for their Shares. Any such judicial
determination of the fair value of Shares could be based upon considerations
other than or in addition to the Offer Price or the market value of the shares,
including asset values and the investment value of the Shares. The fair value so
determined could be more or less than the Offer Price or the Per Share Merger
Consideration.
If any holder of shares who demands appraisal under Section 262 of the DGCL
fails to perfect, or effectively withdraws or loses his right to appraisal, as
provided in the DGCL, the Shares of such holder will be converted into the Per
Share Merger Consideration in accordance with the Merger Agreement.
The foregoing discussion is not a complete statement of law pertaining to
appraisal rights under the DGCL and is qualified in its entirety by the full
text of Section 262 of the DGCL.
Failure to follow the steps required by Section 262 of the DGCL for
perfecting appraisal rights may result in the loss of such rights.
Going Private Transactions. The Merger would have to comply with any
applicable federal law operative at the time of its consummation. 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
unless the Merger is consummated more than one year after the termination of the
Offer. If applicable, Rule 13e-3
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would require, among other things, that certain financial information concerning
the Company and certain information relating to the fairness of the Merger and
the consideration offered to minority stockholders be filed with the SEC and
disclosed to minority stockholders prior to consummation of the Merger.
Plans for the Company. Parent intends to conduct a detailed review of the
Company and its assets, corporate structure, dividend policy, capitalization,
operations, properties, policies, management and personnel and to consider,
subject to the terms of the Merger Agreement, what, if any, changes would be
desirable in light of the circumstances then existing, and reserves the right to
take such actions or effect such changes as it deems desirable. Such changes
could include changes in the Company's business, corporate structure,
capitalization, management or dividend policy. Except as otherwise described in
this Offer to Purchase, none of the Purchaser or Parent have any current plans
or proposals that would relate to, or result in, any extraordinary corporate
transaction involving the Company or any of its subsidiaries, such as a merger,
reorganization or liquidation involving the Company, a sale or transfer of a
material amount of assets of the Company or any of its subsidiaries, any change
in the Company's capitalization or dividend policy or any other material change
in the Company's business, corporate structure or personnel.
13. DIVIDENDS AND DISTRIBUTIONS
Pursuant to the terms of the Merger Agreement, from the date of the Merger
Agreement to the Effective Time, neither the Company nor any of its subsidiaries
will (a) declare, set aside or pay any dividend on, or make any other
distribution in respect of (whether in cash, stock or property), outstanding
shares of capital stock, except for dividends by a wholly-owned subsidiary of
the Company to the Company or another wholly-owned subsidiary of the Company;
(b) redeem, purchase or otherwise acquire, or offer to redeem, purchase or
otherwise acquire any outstanding shares of capital stock of, or other equity
interests in, or any securities that are convertible into or exchangeable for
any shares of capital stock of, or other equity interests in, or any outstanding
options, warrants or rights of any kind to acquire any shares of capital stock
of, or other equity interests in, the Company or any of its subsidiaries (other
than (i) any such acquisition by the Company or any of its wholly-owned
subsidiaries directly from any wholly-owned subsidiary of the Company in
exchange for capital contributions or loans to such subsidiary or (ii) any
purchase, forfeiture or retirement of Shares or the Stock Options occurring
pursuant to the terms (as in effect on the date of the Merger Agreement) of any
existing Benefit Plan of the Company or any of its subsidiaries); (c) effect any
reorganization or recapitalization, or split, combine or reclassify any of the
capital stock of, or other equity interests in, the Company or any of its
subsidiaries or issue or authorize or propose the issuance of any other
securities in respect of, in lieu of or in substitution for, shares of such
capital stock or such equity interests; (d) offer, sell, issue or grant, or
authorize the offering, sale, issuance or grant of, any shares of capital stock
of, or other equity interests in, any securities convertible into or
exchangeable for any shares of capital stock of, or other equity interests in,
or any options, warrants or rights of any kind to acquire any shares of capital
stock of, or other equity interests in, or any bonds, debentures, notes or other
indebtedness of the Company having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on which
stockholders of the Company may vote or other voting securities, of the Company
or any of its subsidiaries, or any "phantom" stock, "phantom" stock rights,
stock appreciation rights or stock-based performance units, other than issuances
of Shares upon the exercise of the Stock Options outstanding at the date of the
Merger Agreement in accordance with the terms thereof (as in effect on the date
of the Merger Agreement).
14. CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the Offer, the Purchaser will not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act (relating
to the Purchaser's obligation to pay for or return tendered Shares promptly
after the termination or withdrawal of the Offer), to pay for any Shares
tendered pursuant to the Offer unless the Minimum Condition and the HSR Act
Condition shall have been satisfied. Furthermore, notwithstanding any other term
of the Offer or the Merger Agreement, the Purchaser shall not be required to
commence the Offer, accept for payment, or subject as aforesaid, pay for any
Shares not theretofore accepted for payment or paid for, and may terminate or
amend the Offer, (i) with the consent of the Company or (ii) if, at any time on
or
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after the date of the Merger Agreement and before the acceptance of Shares for
payment or the payment therefor, any of the following conditions exists:
(a) any representation and warranty of the Company in the Merger
Agreement that is qualified as to materiality shall not be true and correct
or any such representation and warranty that is not so qualified shall not
be true and correct in any material respect, as of the date of the Merger
Agreement and as of such time, except to the extent such representation and
warranty expressly relates to an earlier date (in which case on and as of
such earlier date);
(b) the Company shall have breached any of its covenants or agreements
contained in the Merger Agreement which breaches, individually or in the
aggregate, materially adversely affects (or materially delays) the
consummation of the Offer;
(c) there shall be threatened or pending any suit, action or
proceeding by any governmental authority, or any suit, action or proceeding
by any other person that has a reasonable likelihood of success, (i)
challenging the acquisition by Parent or the Purchaser of any Shares,
seeking to restrain or prohibit the making or consummation of the Offer or
the Merger, or seeking to obtain from the Company, Parent or any of their
respective subsidiaries or affiliates any damages in an amount that would
result in a material adverse effect in respect of the Company, taken as a
whole, and in the case of Parent or any of its subsidiaries or affiliates
relating to the transactions contemplated by the Merger Agreement, (ii)
seeking to prohibit or limit the ownership or operation by the Company,
Parent or any of their respective subsidiaries or affiliates of any
material portion of the business or assets of the Company, Parent or any of
their respective subsidiaries or affiliates, or to compel the Company,
Parent or any of their respective subsidiaries or affiliates to dispose of
or hold separate any material portion of the business or assets of the
Company, Parent or any of their respective subsidiaries or affiliates, as a
result of the Offer, the Merger or any of the other transactions
contemplated by the Merger Agreement or (iii) which otherwise is reasonably
likely to have a material adverse effect on the Company;
(d) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction threatened, proposed, sought,
enacted, entered, enforced, promulgated, amended or issued with respect to,
or deemed applicable to, or any consent or approval withheld with respect
to, (i) Parent, the Company or any of their respective subsidiaries or
affiliates or (ii) the Offer or the Merger by any governmental authority
that has or is reasonably likely to result, directly or indirectly, in any
of the consequences referred to in paragraph (c) above;
(e) since the date of the Merger Agreement there shall have occurred
any event, change, effect or development that, individually or in the
aggregate, has had or is reasonably likely to have, a material adverse
effect on the Company;
(f) there shall have occurred and be continuing (i) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States or in Australia (excluding any coordinated trading halt
triggered solely as a result of a specified decrease in a market index),
(ii) a declaration of a banking moratorium by any governmental authority or
any suspension of payments by any governmental authority in respect of
banks in the United States or in Australia, (iii) any general limitation
(whether or not mandatory) by any governmental authority in the United
States or in Australia on the extension of credit by banks or other lending
institutions or (iv) in the case of any of the foregoing existing on the
date of the Merger Agreement, a material acceleration or worsening thereof;
(g) any person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than the Purchaser, any of its
affiliates, or any group of which any of them is a member shall have
acquired beneficial ownership of more than 20% of the outstanding Shares or
shall have entered into a definitive agreement or any agreement in
principle with the Company with respect to a tender offer or exchange offer
for any Shares or a merger, consolidation or other business combination
with or involving the Company or any of its subsidiaries; or
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(h) the Merger Agreement shall have been terminated in accordance with
its terms; which, in the sole judgment of the Purchaser or Parent, in any
such case, and regardless of the circumstances giving rise to any such
condition (including any action or inaction by Parent or any of its
affiliates), makes it inadvisable to proceed with such acceptance for
payment or payment.
The foregoing conditions are for the sole benefit of the Purchaser and
Parent and may be asserted by the Purchaser or Parent regardless of the
circumstances giving rise to such condition or may be waived by the Purchaser
and Parent in whole or in part at any time and from time to time in their sole
and reasonable judgment; provided that the Minimum Condition may be waived or
modified only by the mutual written consent of the Purchaser and the Company.
The failure by Parent, the Purchaser or any other affiliate of Parent at any
time to exercise any of the foregoing rights shall not be deemed a waiver of any
such right, the waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances and each such right shall be deemed an ongoing right that may be
asserted at any time and from time to time.
15. CERTAIN LEGAL MATTERS AND REGULATORY APPROVALS
Except as described in this Section 15, based on a review of publicly
available filings made by the Company with the SEC and other publicly available
information concerning the Company, none of 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, and the indirect acquisition
of the stock of the Company's subsidiaries, taken as a whole, that might be
adversely affected by the Purchaser's acquisition of Shares (and the indirect
acquisition of the stock of the Company's subsidiaries) as contemplated herein
or of any approval or other action by any governmental entity that would be
required for the acquisition or ownership of Shares by the Purchaser as
contemplated herein. Should any such approval or other action be required, the
Purchaser and Parent currently contemplate that such approval or the action will
be sought, except as described below under "State Takeover Laws." While, except
as otherwise expressly described in this Section 15, 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 if 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 Purchaser could, subject to the terms and
conditions of the Merger Agreement, decline to accept for payment or pay for any
Shares tendered. See Section 14 for certain conditions to the Offer.
State Takeover Laws. A number of states throughout 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, stockholders, 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 make
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, those
laws concerning corporate governance, constitutionally disqualify a potential
acquiror from voting on the affairs of a target corporation without prior
approval of the remaining stockholders, provided that such laws were applicable
only under certain circumstances. Subsequently, a number of federal courts ruled
that various state takeover statutes were unconstitutional insofar as they apply
to corporations incorporated outside the state of enactment.
Section 203 of the DGCL limits the ability of a Delaware corporation to
engage in business combinations with "interested stockholders" (defined
generally as any beneficial owner of 15% or more of the outstanding voting stock
of the corporation) for a period of three years from the time such interested
stockholders became the holders of 15% or more of such Shares unless, among
other things, the corporation's board of directors had
32
<PAGE> 35
given its prior approval to either the business combination or the transaction
which resulted in the stockholder becoming an "interested stockholder." The
Board has approved the Merger Agreement, the Stockholders Agreement, the
Purchaser's acquisition of Shares pursuant to the Offer and the transactions
contemplated by the Merger Agreement, the Stockholders Agreement and the Offer
and, therefore, Section 203 of the DGCL is inapplicable to the Merger.
Except as described herein, the Purchaser has not attempted to comply with
any state takeover statutes in connection with the Offer. The Purchaser reserves
the right to challenge the validity of applicability of any state law allegedly
applicable to the Offer and nothing in this Offer to Purchaser nor any action
taken in connection with the Offer or the Merger is intended as a waiver of that
right. In the event that any state takeover statute is found applicable to the
Offer or the Merger, the Purchaser might be unable to accept for payment or pay
for Shares tendered pursuant to the Offer or be delayed in continuing or
consummating the Offer or the Merger. In such case, the Purchaser might not be
obligated to accept for payment or pay for any Shares tendered. See Section 14.
United States Antitrust Law. Under the provisions of the HSR applicable to
the Offer, the acquisition of Shares under the Offer may be consummated
following the expiration of a 15-calendar day waiting period following the
filing by Parent of a Notification and Report Form with respect to the Offer,
unless Parent receives a request for additional information or documentary
material from the Antitrust Division or the FTC or unless early termination of
the waiting period is granted. Parent is in the process of making such filing.
If, within the initial 15-day waiting period, either the Antitrust Division or
the FTC requests additional information or material from Parent concerning the
Offer, the waiting will be extended and would expire at 11:59 p.m., New York
City time, on the tenth calendar day after the date of substantial compliance by
Parent with such request. Only one extension of the waiting period pursuant to a
request for additional information is authorized by the HSR Act. Thereafter,
such waiting period may be extended only by court order or with the consent of
Parent. In practice, complying with a request for additional information or
material can take a significant amount of time. In addition, if the Antitrust
Division or the FTC raises substantive issues in connection with a proposed
transaction, the parties frequently engage in negotiations with the relevant
governmental agency concerning possible means of addressing those issues and may
agree to delay consummation of the transaction which such negotiations continue.
Expiration or termination of the applicable waiting period under the HSR Act is
a condition to the Purchaser's obligation to accept for payment and pay for
Shares tendered pursuant to the Offer.
The Antitrust Division and the FTC frequently scrutinize the legality under
the antitrust laws of transactions such as the Purchaser's proposed acquisition
of the Company. At any time before or after the Purchaser's acquisition of
Shares pursuant to the Offer, the Antitrust Division or the FTC could take such
action under the antitrust laws as it deems necessary or desirable in the public
interest, including seeking to enjoin the purchase of Shares pursuant to the
Offer or the consummation of the Merger or seeking the divestiture of Shares
acquired by the Purchaser or the divestiture of substantial assets of the
Company or its subsidiaries or Parent or its subsidiaries. Private parties may
also bring legal action under the antitrust laws under certain circumstances.
Based upon a preliminary examination of information provided by the Company
relating to the businesses in which Parent and the Company are engaged, Parent
and the Purchaser believe that the acquisition of Shares by Purchaser will not
violate the antitrust laws. Nevertheless, there can be no assurance that a
challenge to the Offer on antitrust grounds will not be made or, if such a
challenge is made, of the result thereof.
16. FEES AND EXPENSES
Warburg Dillon Read is acting as Dealer Manager in connection with the
Purchaser's acquisition of the Company and is acting as financial advisor to
Parent in connection with the Offer. Warburg Dillon Read will receive customary
compensation for its services as financial advisor and Dealer Manager in
connection with the Offer. Parent has also agreed to reimburse Warburg Dillon
Read for its reasonable out-of-pocket expenses related to such services,
including the reasonable fees and expenses of its counsel, and to indemnify
Warburg Dillon Read and certain related persons against certain liabilities and
expenses, including certain liabilities and expenses under the federal
securities laws.
33
<PAGE> 36
The Purchaser has retained MacKenzie Partners, Inc. to act as the
Information Agent and Citibank, N.A. to serve as the Depositary in connection
with the Offer. The Information Agent and the Depositary each will receive
reasonable and customary compensation for their services, be reimbursed for
certain reasonable out-of-pocket expenses and be indemnified against certain
liabilities and expenses in connection therewith, including certain liabilities
and expenses under the federal securities laws.
None of the Purchaser or Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager and the
Information Agent) in connection with the solicitation of tenders of Shares
pursuant to the Offer. Brokers, dealers, banks and trust companies will be
reimbursed by the Purchaser upon request for customary mailing and handling
expenses incurred by them in forwarding material to their customers.
17. MISCELLANEOUS
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. 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 reserves
the right to 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 holders of Shares prior to the expiration of the Offer. In any jurisdiction
the securities, blue sky or other laws of which require the Offer to be made by
a licensed broker or dealer, the Offer is being made on behalf of the Purchaser
by the Dealer Manager or one or more registered brokers or dealers licensed
under the laws of such jurisdiction.
No person has been authorized to give any information or to make any
representation on behalf of the Purchaser or Parent 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.
The Purchaser and Parent have filed with the SEC the Schedule 14D-1 pursuant to
Rule 14d-3 under the Exchange Act, together with exhibits, furnishing certain
additional information with respect to the Offer, and may file amendments
thereto. In addition, the Company has filed the Schedule 14D-9 pursuant to Rule
14d-9 under the Exchange Act, together with exhibits, setting forth its
recommendation with respect to the Offer and the reasons for such recommendation
and furnishing such additional related information. Such Schedules and any
amendments thereto, including exhibits, should be available for inspection and
copies should be obtainable in the manner set forth in Section 8 (except that
such material will not be available at the regional offices of the SEC).
EIG ACQUISITION CORP.
34
<PAGE> 37
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS OF PARENT AND THE PURCHASER
DIRECTORS AND EXECUTIVE OFFICERS OF SOLUTION 6 HOLDINGS LIMITED.
The following table sets forth the name, business address, present
principal occupation or employment and five-year employment history of each of
the directors and executive officers of Solution 6 Holdings Limited. All of the
directors and officers listed below are citizens of Australia, except for Chris
Tyler and Thomas A. Montgomery, who are citizens of the United States, and Kent
Duston, David Maire and Richard McLean who are citizens of New Zealand.
Directors are indicated by an asterisk.
<TABLE>
<CAPTION>
POSITION WITH PURCHASER; PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
- ------------------------- ------------------------------------------------------------
<S> <C>
Brian Beattie Mr. Beattie has held the position of Chief Executive Officer
London Meridien House, of Europe Solution 6 (UK) since September 10, 1999. Prior to
100 Hanger Lane that Mr. Beattie was the General Manager International Field
Ealing, London W5 1EZ Operations Solution 6 from January 1995 through July 1998
and the National Sales Manager Solution 6 Australia from
November 1994 through January 1995 (London Meridien House,
100 Hanger Lane, Ealing, London).
Anthony Cianciolo Mr. Cianciolo has held the position Secretary of Solution 6
Level 21 Holdings Limited for the past 5 years (Level 21, 456 Kent
456 Kent Street Street, Sydney, New South Wales, Australia).
Sydney, New South Wales, Australia
Michael Fitzgerald Clarkin* Since July 1991 Mr. Clarkin has been the Managing Director
28 Tabalum Road of Assured Systems Australia, Ltd. and the Chairman Assured
Clontare, New South Wales, Australia Systems New Zealand, Ltd. (28 Tabalum Road, Clontare, New
2093 South Wales, Australia).
Andrew Morrison Day* Since September 1999 Mr. Day has been the Chief Executive
Building 3 Officer of Pacific Access. From January 1998 through
Greenwood Office Park September 1999 Mr. Day was the managing director of
301 Burwood Highway Commercial and Consumer Sales, Telstra, from September 1996
Burwood, Victoria 3125 through December 1998 the managing director of Telstra
Operator Services and from July 1994 through September 1996
the NGM of Telstra Platform Technologies (Telstra's address
is 231 Elizabeth Street, Sydney, New South Wales,
Australia).
Kent Duston Mr. Duston currently serves as the General Manager -- ASP
Level 21 Services of Solution 6 Pty Ltd. From September 1996 through
456 Kent Street October 1999 Mr. Duston served as the Manager of Business to
Sydney, New South Wales, Australia Business E-commerce at Telecom New Zealand (Manners St.,
Wellington, New Zealand), and from April 1996 through
September 1996, as the Corporate Communications Manager of
Melco Sales New Zealand Ltd. (Pharazyn St., Wellington, New
Zealand).
Martin Greenlees Mr. Greenless has served as the General Manager -- Products
Level 21 of Solution 6 Holdings Limited since September 1997. From
456 Kent Street April 1990 through September 1997 Mr. Greenlees served as
Sydney, New South Wales, Australia Development Manager -- CABS (234 Sussex Street, Sydney, New
South Wales, Australia).
David Maire Mr. Maire has served as the General Manager -- Internet of
Level 21 Solution 6 Holdings Limited since September 1998. From
456 Kent Street September 1995 through September 1998. Mr. Maire was
Sydney, New South Wales, Australia employed by Telecom New Zealand (Manners St., Wellington,
New Zealand).
Richard McLean Mr. McLean has been the General Manager of Sales and
Level 21 Marketing of Solution 6 Holdings Limited since May 1998 and
456 Kent Street the President of Solution 6 North America since October
Sydney, New South Wales, Australia 1999. Prior to that Mr. McLean was in Sales Management and
Marketing Strategy at Telecom New Zealand Ltd. (Manners St.,
Wellington, New Zealand).
</TABLE>
S-1
<PAGE> 38
<TABLE>
<CAPTION>
POSITION WITH PURCHASER; PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
- ------------------------- ------------------------------------------------------------
<S> <C>
Graham Mirabito Mr. Mirabito has been the Global General
Level 21 Manager -- Enterprises of Solution 6 Pty Ltd. since October
456 Kent Street 1, 1999. From March 1999 through September 1999 Mr. Mirabito
Sydney, New South Wales, Australia served as Chief Operating Officer of Ross Group (14 Martin
Place, Sydney, New South Wales, Australia); from August 1998
through February 1999 as Vice President of Global Sales and
Operations of Telstra Corporation (231 Elizabeth Street,
Sydney, New South Wales, Australia); and from March 1995
through July 1998 the Chief Executive Officer of Telstra
Europe, Telstra Corporation (14 Paul Street, London,
England, United Kingdom).
Thomas A. Montgomery Mr. Montgomery has served at the Chief Financial Officer of
5220 Spring Valley Rd. Solution 6 Holdings Limited since October, 1999. Mr.
Suite 600 Montgomery has also been a general partner of Montgomery
Dallas, Texas 75240 Baggett & Drews, LLP from November 1990 through the present.
(5220 Spring Valley Road, Suite 600, Dallas, Texas 75240).
Brendan Redden* For the past five years Mr. Redden has served as the
Level 21 Chairman of the Board of Directors of Solution 6 Holdings
456 Kent Street Limited, Pracom Limited, and Mandata Investments Pty Ltd.
Sydney, New South Wales, Australia Mr. Redden's business address is Level 21, 456 Kent Street,
Sydney, New South Wales, Australia.
Robert Lisle Stovold* Mr. Stovold has served as a non-executive director of the
Level 10 following companies during the periods indicated: Blackmores
167 Macquaris Street Limited (1996 to present); Nuance Global Traders
Sydney, New South Wales, Australia (1993-present); Port Douglas Reef Resorts (1997-present); DC
2000 International Limited (1994-present); Balfours PTY Limited
(1996-present); Solution 6 Holdings Limited (1995-present).
Mr. Stovold's private office address is Level 10, 167
Macquearie St., Sydney, New South Wales, Australia 2000.
Telstra Corporation Limited Telstra Corporation Limited is organized under the laws of
242 Exhibition Street Australia and its principal business is the provision of
Melbourne, Victoria, Australia, 3000 full service telecommunications in Australia.
Chris Tyler* Mr. Tyler has served as the Chief Executive Officer and
Level 21 Managing Director of Solution 6 Holdings Limited since April
456 Kent Street 1997. From 1995 through March 1997 Mr. Tyler served as the
Sydney, New South Wales, Australia Managing Director -- of Extra Telecom New Zealand (Manners
St., Wellington, New Zealand).
Frank Woods Mr. Woods currently serves as the General Manager Asia
Level 21 Pacific of Solution 6 Pty Ltd. and has been employed with
456 Kent Street Solution 6 Pty Ltd since January 1990 (456 Kent Street,
Sydney, New South Wales, Australia Sydney, New South Wales, Australia).
Lindsay Yelland* Mr. Yelland became the General Managing Director of Telstra
Telstra Corporation Business Solutions during 1999. Prior to that time, from
L14/231 Elizabeth St. 1996 to 1999 Mr. Yelland served as the General Managing
Sydney, Australia Director of Telstra Products and Marketing and from 1992 to
1996 as the managing director of Telstra Corporate and
Government. The address for Telstra is L14/231 Elizabeth
St., Sydney, New South, Australia.
</TABLE>
S-2
<PAGE> 39
DIRECTORS AND EXECUTIVE OFFICERS OF EIG ACQUISITION CORP.
The following table sets forth the name, business address, present
principal occupation or employment and five-year employment history of each of
the directors and executive officers of EIG Acquisition Corp. All of the
directors and officers listed below are citizens of the United States. Directors
are indicated by an asterisk.
<TABLE>
<CAPTION>
POSITION WITH PURCHASER; PRINCIPAL OCCUPATION OR EMPLOYMENT;
NAME AND BUSINESS ADDRESS 5-YEAR EMPLOYMENT HISTORY
- ------------------------- ------------------------------------------------------------
<S> <C>
Thomas A. Montgomery Mr. Montgomery has served at the Chief Financial Officer of
5220 Spring Valley Rd. Solution 6 Holdings Limited since October, 1999. Mr.
Suite 600 Montgomery has also been a general partner of Montgomery
Dallas, Texas 75240 Baggett & Drews, LLP from November 1990 through the present.
(5220 Spring Valley Road, Suite 600, Dallas, Texas 75240).
Chris Tyler* Mr. Tyler has served as the Chief Executive Officer and
Level 21 Managing Director of Solution 6 Holdings Limited since April
456 Kent Street 1997. From 1995 through March 1997 Mr. Tyler served as the
Sydney, New South Wales, Australia Managing Director -- of Extra Telecom New Zealand (Manners
St., Wellington, New Zealand).
</TABLE>
S-3
<PAGE> 40
Manually signed facsimile copies of the Letter of Transmittal, properly
completed and duly signed, will be accepted. The Letter of Transmittal,
certificates for Shares and any other required documents should be sent or
delivered by each stockholder of the Company or such stockholder's broker,
dealer, bank, trust company or other nominee to the Depositary at one of its
addresses set forth below.
The Depositary for the Offer is:
Citibank, N.A.
<TABLE>
<CAPTION>
<S> <C> <C>
By Overnight Courier: By Mail Delivery: By Hand:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
915 Broadway P.O. Box 685 Corporate Trust Window
5th Floor Old Chelsea Station 111 Wall Street, 5th Floor
New York, New York 10010 New York, New York 10113 New York, New York 10043
</TABLE>
By Facsimile
(for Eligible Institutions Only):
(212) 505-2248
Confirmation by Telephone:
(800) 270-0808
Questions and requests for assistance or for additional copies of this
Offer to Purchase, the Letter of Transmittal and the Notice of Guaranteed
Delivery may be directed to the Information Agent or the Dealer Manager at their
respective telephone numbers listed below. You may also contact your broker,
dealer, bank, trust company or other nominee for assistance concerning the
Offer.
The Information Agent for the Offer is:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
Call Collect: (212) 929-5500
(800) 322-2885
The Dealer Manager for the Offer is:
Warburg Dillon Read LLC
299 Park Avenue
New York, New York 10171
Call: (212) 821-2881
<PAGE> 1
EXHIBIT 99(a)(2)
LETTER OF TRANSMITTAL
TO TENDER SHARES OF COMMON STOCK
OF
ELITE INFORMATION GROUP, INC.
PURSUANT TO THE OFFER TO PURCHASE
DATED DECEMBER 21, 1999
BY
EIG ACQUISITION CORP.,
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
SOLUTION 6 HOLDINGS LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 20, 2000, UNLESS EXTENDED.
The Depositary for the Offer is:
Citibank, N.A.
<TABLE>
<S> <C> <C>
By Overnight Courier: By Mail Delivery: By Hand:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
915 Broadway P.O. Box 685 Corporate Trust Window
5th Floor Old Chelsea Station 111 Wall Street, 5th Floor
New York, New York 10010 New York, New York 10113 New York, New York 10043
</TABLE>
By Facsimile
(for Eligible Institutions Only):
(212) 505-2248
Confirmation by Telephone:
(800) 270-0808
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS, OR TRANSMISSION OF
INSTRUCTIONS VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT
CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS SET FORTH IN THIS LETTER OF
TRANSMITTAL SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS
COMPLETED.
This Letter of Transmittal is to be used either if certificates for Shares
(as defined below) are to be forwarded herewith or, unless an Agent's Message
(as defined Section on 2 of the Offer to Purchase (as defined below)) is
utilized, if delivery of Shares is to be made by book-entry transfer to an
account maintained by the Depositary at the Book-Entry Transfer Facility (as
defined in and pursuant to the procedures set forth in Section 2 of the Offer to
Purchase). Stockholders who deliver Shares by book-entry transfer are referred
to herein as "Book-Entry Stockholders" and other stockholders are referred to
herein as "Certificate Stockholders." Stockholders whose certificates for Shares
are not immediately available or who cannot deliver either the certificates for,
or a Book-Entry Confirmation (as defined in of the Offer to Purchase) with
respect to, their Shares and all other documents required hereby to the
Depositary prior to the Expiration Date (as defined in the Offer to Purchase)
must tender their Shares in accordance with the guaranteed delivery procedures
set forth in Section 2 of the Offer to Purchase. See Instruction 2. Deliver of
documents to a Book-Entry Transfer Facility does not constitute delivery to the
Depositary.
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED BY BOOK-ENTRY TRANSFER
MADE TO AN ACCOUNT MAINTAINED BY THE DEPOSITARY, ENCLOSE A PHOTOCOPY OF
SUCH NOTICE OF GUARANTEED DELIVERY WITH THE BOOK-ENTRY TRANSFER FACILITY
AND COMPLETE THE FOLLOWING (ONLY PARTICIPANTS IN BOOK-ENTRY TRANSFER
FACILITY MAY DELIVER SHARES BY BOOK-ENTRY TRANSFER):
1
<PAGE> 2
Name of Tendering Institution
- ---------------------------------------------------
Account Number
--------------------------------------------------------------
Transaction Code Number
---------------------------------------------------------
[ ] CHECK HERE IF TENDERED SHARES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY SENT TO THE DEPOSITARY, ENCLOSE A PHOTOCOPY
OF SUCH NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:
Name(s) of Registered Owner(s)
-----------------------------------------------
Window Ticket Number (if any)
-----------------------------------------------
Date of Execution of Notice of Guaranteed Delivery
--------------------------
Name of Institution That Guaranteed Delivery
------------------------------------
Account Number
--------------------------------------------------------------
Transaction Code Number
---------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF SHARES TENDERED
- ------------------------------------------------------------------------------------------------------------------------
NAME(S) AND ADDRESS(ES) OF REGISTERED HOLDER(S)
(PLEASE FILL IN, IF BLANK, EXACTLY AS NAME(S) SHARES TENDERED
APPEAR(S) ON CERTIFICATE(S)) (ATTACH ADDITIONAL SIGNED LIST IF NECESSARY)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL NUMBER
OF SHARES NUMBER
CERTIFICATE REPRESENTED BY OF SHARES
NUMBER(S)(1) CERTIFICATE(S)(1) TENDERED(2)
<S> <C> <C> <C>
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
Total Shares
- ------------------------------------------------------------------------------------------------------------------------
(1) Need not be completed by Book-Entry Stockholders.
(2) Unless otherwise indicated, it will be assumed that all Shares described herein are being tendered. See Instruction
4.
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE> 3
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to EIG Acquisition Corp., a Delaware
corporation (the "Purchaser") and an indirect wholly-owned subsidiary of
Solution 6 Holdings Limited, a New South Wales, Australia corporation (the
"Parent"), the above described shares of common stock, par value $.01 per share
(collectively, the "Shares"), of Elite Information Group, Inc., a Delaware
corporation (the "Company"), upon the terms and subject to the conditions set
forth in the Purchaser's Offer to Purchase dated December 21, 1999 (the "Offer
to Purchase"), and this Letter of Transmittal (which, together with any
amendments or supplements thereto or hereto, collectively constitute the
"Offer"), receipt of which is hereby acknowledged.
Upon the terms of the Offer, subject to, and effective upon, acceptance for
payment of, and payment for, the Shares tendered herewith in accordance with the
terms of the Offer (including, if the Offer is extended or amended, the terms or
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 any
and all other Shares or other securities or rights issued or issuable in respect
of such Shares on or after December 14, 1999) and irrevocably constitutes and
appoints Citibank, N.A. ("the Depositary") the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Shares (and any such
other Shares or securities or rights), with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to (a) deliver certificates for such Shares (and any such other
Shares or securities or rights) or transfer ownership of such Shares (and any
such other Shares or securities or rights) on the account books maintained by
the Book-Entry Transfer Facility together, in any such case, with all
accompanying evidences of transfer and authenticity to, or upon the order of,
the Purchaser, (b) present such Shares (and any such other Shares or securities
or rights) for transfer on the Company's books and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Shares (and any
such other Shares or securities or rights), all in accordance with the terms of
the Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, sell, assign and transfer the tendered
Shares (and any and all other Shares or other securities or rights issued or
issuable in respect of such Shares on or after December 14, 1999) and, when the
same are accepted for payment by the Purchaser, the Purchaser will acquire good
title thereto, free and clear of all liens, restrictions, claims and
encumbrances and the same will not be subject to any adverse claim. The
undersigned will, upon request, execute any additional documents deemed by the
Depositary or the Purchaser to be necessary or desirable to complete the sale,
assignment and transfer of the tendered Shares (and any such other Shares or
other securities or rights).
All authority conferred or agreed to be conferred pursuant to this Letter
of Transmittal shall be binding upon the successors, assigns, heirs, executors,
administrators, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned. Except as stated in the Offer to Purchase, this
tender is irrevocable.
The undersigned hereby irrevocably appoints Chris Tyler and Thomas A.
Montgomery, and each of them, and any other designees of the Purchaser, the
attorneys-in-fact and proxies of the undersigned, each with full power of
substitution, to vote at any annual, special or adjourned meeting of the
Company's stockholders or otherwise in such manner as each such attorney-in-fact
and proxy or his substitute shall in his sole discretion deem proper with
respect to, to execute any written consent concerning any matter as each such
attorney-in-fact and proxy or his substitute shall in his sole discretion deem
proper with respect to, and to otherwise act as each such attorney-in-fact and
proxy or his substitute shall in his sole discretion deem proper with respect
to, all the Shares tendered hereby that have been accepted for payment by the
Purchaser prior to the time any such action is taken and with respect to which
the undersigned is entitled to vote (and with respect to any and all other
Shares or other securities or rights issued or issuable in respect of such
Shares on or after December 14, 1999). This appointment is effective when, and
only to the extent that, the Purchaser accepts for payment such Shares as
provided in the Offer to Purchase. This power of attorney and proxy are
irrevocable and are granted in consideration of the acceptance for payment of
such Shares in accordance with the terms of the Offer. Such acceptance for
payment shall, without further action, revoke all prior powers of attorney and
proxies appointed by the undersigned at any time with respect to such Shares
(and any such other Shares or securities or rights) and no
3
<PAGE> 4
subsequent powers of attorney, proxies, consent or revocations may be given
(and, if given, will not be deemed effective) by the undersigned.
The undersigned understands that the valid tender of Shares pursuant to any
one of the procedures described in Section 2 of the Offer to Purchase and in the
Instructions hereto will constitute a binding agreement between the undersigned
and the Purchaser upon the terms and subject to the conditions of the Offer.
Unless otherwise indicated herein under "Special Payment Instructions,"
please issue the check for the purchase price and/or return any certificates for
Shares not tendered or accepted for payment in the name(s) of the registered
holder(s) appearing under "Description of Shares Tendered." Similarly, unless
otherwise indicated under "Special Delivery Instructions," please mail the check
for the purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and accompanying documents, as appropriate) to the
address(es) of the registered holder(s) appearing under "Description of Shares
Tendered." In the event that both the Special Delivery Instructions and the
Special Payment Instructions are completed, please issue the check for the
purchase price and/or return any certificates for Shares not tendered or
accepted for payment (and any accompanying documents, as appropriate) in the
name of, and deliver such check and/or return such certificates (and any
accompanying documents, as appropriate) to, the person or persons so indicated.
Please credit any Shares tendered herewith by book-entry transfer that are not
accepted for payment by crediting the account at the Book-Entry Transfer
Facility designated above. The undersigned recognizes that the Purchaser has no
obligation pursuant to the "Special Payment Instructions" to transfer any Shares
from the name of the registered holder thereof if the Purchaser does not accept
for payment any of the Shares so tendered.
4
<PAGE> 5
------------------------------------------------------------
SPECIAL PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be issued in the name of someone other than
the undersigned, or if Shares delivered by book-entry transfer that are
not accepted for payment are to be returned by credit to an account
maintained at the Book-Entry Transfer Facility other than the account
indicated above.
Issue check and/or certificate(s) to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
------------------------------------------------------------
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 1, 5, 6 AND 7)
To be completed ONLY if certificates for Shares not tendered or not
accepted for payment and/or the check for the purchase price of Shares
accepted for payment are to be sent to someone other than the undersigned
or to the undersigned at an address other than that indicated above.
Issue check and/or certificates to:
Name
----------------------------------------------------
(PLEASE PRINT)
Address
--------------------------------------------------
------------------------------------------------------------
(INCLUDE ZIP CODE)
------------------------------------------------------------
5
<PAGE> 6
SIGN HERE
(ALSO COMPLETE SUBSTITUTE FORM W-9 BELOW)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(SIGNATURE(S) OF STOCKHOLDER(S))
Dated:
- ------------------------
(Must be signed by registered holder(s) as name(s) appear(s) on the
certificate(s) for the Shares or on a security position listing or by person(s)
authorized to become registered holder(s) by certificates and documents
transmitted herewith. If signature is by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, please provide the following information
and see Instruction 5.)
Name(s)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Capacity (full title)
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
Area Code and Telephone No.
- --------------------------------------------------------------------------------
GUARANTEE OF SIGNATURE(S)
(IF REQUIRED -- SEE INSTRUCTIONS 1 AND 5)
Authorized Signature
- --------------------------------------------------------------------------------
(PLEASE PRINT)
Address
- --------------------------------------------------------------------------------
(INCLUDE ZIP CODE)
- --------------------------------------------------------------------------------
Area Code and Telephone No.
- --------------------------------------------------------------------------------
Dated:
- ------------------------
6
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. GUARANTEE OF SIGNATURES. No signature guarantee is required on this
Letter of Transmittal (a) if this Letter of Transmittal is signed by the
registered holder(s) (which term, for purposes of this Instruction, includes any
participant in the Book-Entry Transfer Facilities' system whose name appears on
a security position listing as the owner of the Shares) of Shares tendered
herewith, unless such registered holder(s) has completed either the box entitled
"Special Payment Instructions" or the box entitled "Special Delivery
Instructions" on this Letter of Transmittal or (b) if such Shares are tendered
for the account of a firm that is a participant in the Security Transfer Agents
Medallion Program or the New York Stock Exchange Guarantee Program or the Stock
Exchange Medallion Program or by any other "eligible guarantor institution," as
such term is defined in Rule 17-Ad-15 under the Securities Exchange Act of 1934,
as amended (each, an "Eligible Institution"). In all other cases, all signatures
on this Letter of Transmittal must be guaranteed by an Eligible Institution. See
Instruction 5.
2. REQUIREMENTS OF TENDER. This Letter of Transmittal is to be completed by
stockholders either if certificates are to be forwarded herewith or, unless an
Agent's Message (as defined below) is utilized, if delivery of Shares is to be
made pursuant to the procedures for book-entry transfer set forth in Section 2
of the Offer to Purchase. For a stockholder validly to tender Shares pursuant to
the Offer, either (a) a Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, together 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 at one of its addresses set forth
herein prior to the Expiration Date (as defined in the Offer to Purchase) and
either certificates for tendered Shares must be received by the Depositary at
one of such addresses or Shares must be delivered pursuant to the procedures for
book-entry transfer set forth herein (and a Book-Entry Confirmation (as defined
in the Offer to Purchase) must be received by the Depositary), in each case,
prior to the Expiration Date, or (b) the tendering stockholder must comply with
the guaranteed delivery procedures set forth below and in Section 2 of the Offer
to Purchase.
Stockholders whose certificates for Shares are not immediately available or
who cannot deliver their certificates and all other required documents to the
Depositary or complete the procedures for book-entry transfer prior to the
Expiration Date may tender their Shares by properly completing and duly
executing the Notice of Guaranteed Delivery pursuant to the guaranteed delivery
procedures set forth in Section 2 of the Offer to Purchase. Pursuant to such
procedures, (a) such tender must be made by or through an Eligible Institution,
(b) a properly completed and duly executed Notice of Guaranteed Delivery
substantially in the form provided by the Purchaser must be received by the
Depositary prior to the Expiration Date and (c) the certificates for all
tendered Shares in proper form for transfer (or a Book-Entry Confirmation with
respect to all such Shares), together with a Letter of Transmittal (or 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 required documents, must be received by the Depositary within three
trading days after the date of execution of such Notice of Guaranteed Delivery
as provided in Section 2 of the Offer to Purchase. A "trading day" is any day on
which the Nasdaq National Market operated by the National Association of
Securities Dealers, Inc. is open for business.
"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, that 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 such participant has received and agrees to be bound
by the terms of the Letter of Transmittal and that the Purchaser may enforce
such agreement against such participant.
The method of delivery of Shares, this 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 stockholder. Shares 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. All tendering stockholders, by execution of
this Letter of Transmittal (or facsimile thereof), waive any right to receive
any notice of the acceptance of their Shares for payment.
7
<PAGE> 8
3. INADEQUATE SPACE. If the space provided herein is inadequate, the
certificate numbers and/or the number of Shares should be listed on a separate
schedule attached hereto.
4. PARTIAL TENDERS (APPLICABLE TO CERTIFICATE STOCKHOLDERS ONLY). If fewer
than all the Shares evidenced by any certificate submitted are to be tendered,
fill in the number of Shares that are to be tendered in the box entitled "Number
of Shares Tendered." In any such case, new certificate(s) for the remainder of
the Shares that were evidenced by the old certificate(s) will be sent to the
registered holder, unless otherwise provided in the appropriate box on this
Letter of Transmittal as soon as practicable after the acceptance of payment of,
and payment for the Shares tendered herewith. All Shares represented by
certificates delivered to the Depositary will be deemed to have been tendered
unless otherwise indicated.
5. SIGNATURES ON LETTERS OF TRANSMITTAL; STOCK POWERS AND ENDORSEMENTS. If
this Letter of Transmittal is signed by the registered holder of the Shares
tendered hereby, the signature must correspond with the name written on the face
of the certificate(s) without any change whatsoever.
If any of the Shares tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any tendered Shares are registered in different names on several
certificates, it will be necessary to complete, sign and submit as many separate
Letters of Transmittal as there are different registrations of certificates.
If this Letter of Transmittal or any certificates or stock powers are
signed by trustees, executors, administrators, guardians, attorneys-in-fact,
officers of corporations or others acting in a fiduciary or representative
capacity, such persons should so indicate when signing, and proper evidence
satisfactory to the Purchaser of their authority so to act must be submitted.
When this Letter of Transmittal is signed by the registered holder(s) of
the Shares listed and transmitted hereby, no endorsements of certificates or
separate stock powers are required unless payment is to be made to or
certificates for Shares not tendered or accepted for payment are to be issued to
a person other than the registered holder(s). Signatures on such certificates or
stock powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of certificates listed, the certificates must be endorsed
or accompanied by appropriate stock powers, in either case signed exactly as the
name or names of the registered owner or owners appear on the certificates.
Signatures on such certificates or stock powers must be guaranteed by an
Eligible Institution.
6. STOCK TRANSFER TAXES. The Purchaser will pay any stock transfer taxes
with respect to the transfer and sale of Shares to it or its order pursuant to
the Offer. If, however, payment of the purchase price is to be made to, or if
certificates for Shares not tendered or accepted for payment are to be
registered in the name of, any persons other than the registered holder(s), or
if tendered certificates are registered in the name of any person other than the
person(s) signing this Letter of Transmittal, the amount of any stock transfer
taxes (whether imposed on the registered owner(s) or such person(s)) payable on
account of the transfer to such person(s) will be deducted from the purchase
price unless satisfactory evidence of the payment of such taxes or exemption
therefrom is submitted.
EXCEPT PROVIDED IN THIS INSTRUCTION 6, IT WILL NOT BE NECESSARY FOR
TRANSFER TAX STAMPS TO BE AFFIXED TO THE CERTIFICATES LISTED IN THIS LETTER OF
TRANSMITTAL.
7. SPECIAL PAYMENT AND DELIVERY INSTRUCTIONS. If a check is to be issued in
the name of, and/or certificates for Shares not tendered or not accepted for
payment are to be returned to, a person other than the signer of this Letter of
Transmittal or if a check is to be sent and/or such certificates are to be
returned to a person other than the signer of this Letter of Transmittal or to
an address other than that shown above, the appropriate boxes on this Letter of
Transmittal should be completed.
8. WAIVER OF CONDITIONS. The Purchaser reserves the absolute right in its
sole discretion to waive any of the specified conditions of the Offer, in whole
or in part, in the case of any Shares tendered.
9. 31% BACKUP WITHHOLDING. In order to avoid backup withholding of federal
income tax on payments of cash pursuant to the Offer, a stockholder surrendering
Shares in the Offer must, unless an exemption applies, provide the Depositary
with such stockholder's correct taxpayer identification number ("TIN") on
Substitute Form W-9 below in
8
<PAGE> 9
this Letter of Transmittal and certify under penalties of perjury that such TIN
is correct and that such stockholder is not subject to backup withholding. If a
stockholder does not provide such stockholder's correct TIN or fails to provide
the certifications described above, the Internal Revenue Service (the "IRS") may
impose a $50 penalty on such stockholder and payment of cash to such stockholder
pursuant to the Offer may be subject to backup withholding of 31%.
Backup withholding is not an additional income 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 stockholder upon filing an income tax
return.
The stockholder is required to give the Depositary the TIN (i.e., social
security number or employer identification number) of the record owner of the
Shares. If the Shares are held 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.
The box in Part 3 of the Substitute Form W-9 may be checked if the
tendering stockholder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is checked,
the stockholder or other payee must also complete the Certificate of Awaiting
Taxpayer Identification Number below in order to avoid backup withholding.
Notwithstanding that the box in Part 3 is checked and the Certificate of
Awaiting Taxpayer Identification Number is completed, the Depositary will
withhold 31% on all payments made prior to the time a properly certified TIN is
provided to the Depositary. However, such amounts will be refunded to such
stockholder if a TIN is provided to the Depositary within 60 days.
Certain stockholders (including, among others, all corporations and certain
foreign individuals and entities) are not subject to backup withholding.
Noncorporate foreign stockholders should complete and sign the main signature
form and a Form W-8, Certificate of Foreign Status, a copy of which may be
obtained from the Depositary, in order to avoid backup withholding. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for more instructions.
10. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests
for assistance or additional copies of the Offer to Purchase, this Letter of
Transmittal, the Notice of Guaranteed Delivery and the Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9 may be
directed to the Information Agent or the Dealer Manager at their respective
addresses set forth below.
11. LOST, DESTROYED OR STOLEN CERTIFICATES. If any certificate representing
Shares has been lost, destroyed or stolen, the stockholder should promptly
notify the Depositary by checking the box immediately preceding the special
payment/special delivery instructions and indicating the number of Shares so
lost, destroyed or stolen, or call the Company's Transfer Agent, EquiServe Trust
Company, N.A., at (800) 633-4236. The stockholder will then be instructed by the
Depositary as to the steps that must be taken in order to replace the
certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates have
been followed.
IMPORTANT: THIS LETTER OF TRANSMITTAL (OR A MANUALLY SIGNED FACSIMILE
THEREOF) TOGETHER WITH ANY 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 PRIOR TO THE EXPIRATION DATE AND EITHER CERTIFICATES FOR
TENDERED SHARES MUST BE RECEIVED BY THE DEPOSITARY OR SHARES MUST BE DELIVERED
PURSUANT TO THE PROCEDURES FOR BOOK- ENTRY TRANSFER, IN EACH CASE PRIOR TO THE
EXPIRATION DATE, OR THE TENDERING STOCKHOLDER MUST COMPLY WITH THE PROCEDURES
FOR GUARANTEED DELIVERY.
9
<PAGE> 10
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUBSTITUTE PART 1 -- PLEASE PROVIDE YOUR TIN IN THE BOX ---------------------------------
FORM W-9 AT RIGHT AND CERTIFY BY SIGNING AND DATING Social Security Number or
BELOW Employer Identification Number
--------------------------------------------------------------------------------------
PART 2 -- CERTIFICATION -- Under penalties of perjury, I certify that:
DEPARTMENT OF THE TREASURY
INTERNAL REVENUE SERVICE (1) The number shown on this form is my correct Taxpayer Identification Number (or I
am waiting for a number to be issued for me) and
PAYER'S REQUEST FOR TAXPAYER
IDENTIFICATION NUMBER (TIN) (2) I am not subject to backup withholding either because: (a) I am exempt from backup
withholding or (b) I have not been notified by the Internal Revenue Service (the
"IRS") that I am subject to the backup withholding as a result of a failure to report
all interest or dividends or (c) the IRS has notified me that I am no longer subject
to backup withholding
--------------------------------------------------------------------------------------
PART 3: Awaiting TIN
- ------------------------------------------------------------------------------------------------------------------------
CERTIFICATION 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 underreporting interest or dividends on your tax return. However, if
after being notified by the IRS that you are subject to backup withholding, you received another notification from IRS
that you are no longer subject to backup withholding, do not cross out such item (2).
Signature: Date:
-----------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED "GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9" FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF SUBSTITUTE FORM W-9.
10
<PAGE> 11
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (1) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration Office, or (2)
I intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number by the time of payment, 31%
of all reportable payments made to me will be withheld, but that such amounts
will be refunded to me if I then provide a Taxpayer Identification Number within
sixty (60) days.
Signature
- ------------------------------------------- Date
- ------------------------------------------------
Manually signed facsimile copies of the Letter of Transmittal will be
accepted. The Letter of Transmittal, certificates for Shares and any other
required documents should be sent or delivered by each stockholder of the
Company or such stockholder's broker, dealer, commercial bank, trust company or
other nominee to the Depositary at one of its addresses set forth below.
The Depositary for the Offer is:
Citibank, N.A.
<TABLE>
<S> <C> <C>
By Overnight Courier: By Mail Delivery: By Hand:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
915 Broadway P.O. Box 685 Corporate Trust Window
5th Floor Old Chelsea Station 111 Wall Street, 5th Floor
New York, New York 10010 New York, New York 10113 New York, New York 10043
</TABLE>
By Facsimile
(for Eligible Institutions Only):
(212) 505-2248
Confirmation by Telephone:
(800) 270-0808
Questions and requests for assistance or additional copies of the Offer to
Purchase, this Letter of Transmittal and the Notice of Guaranteed Delivery may
be directed to the Information Agent or the Dealer Manager at their respective
telephone numbers and locations listed below. You may also contact your broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
The Information Agent for the Offer is:
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
Call Collect: (212) 929-5500
(800) 322-2885
The Dealer Manager for the Offer is:
Warburg Dillon Read LLC
299 Park Avenue
New York, New York 10171
Call: (212) 821-2881
11
<PAGE> 1
EXHIBIT 99(a)(3)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ELITE INFORMATION GROUP, INC.
AT
$11.00 NET PER SHARE
BY
EIG ACQUISITION CORP.,
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
SOLUTION 6 HOLDINGS LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 20, 2000, UNLESS THE OFFER IS EXTENDED
December 21, 1999
To Brokers, Dealers, Banks,
Trust Companies and Other Nominees:
We have been engaged by EIG Acquisition Corp., a Delaware corporation (the
"Purchaser") and an indirect wholly-owned subsidiary of Solution 6 Holdings
Limited, a corporation organized under the laws of New South Wales, Australia
("Parent"), and Parent, to act as Dealer Manager in connection with the
Purchaser's offer to purchase all outstanding shares of common stock, par value
$.01 per share (the "Shares"), of Elite Information Group, Inc., a Delaware
corporation (the "Company"), at $11.00 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 Purchaser's Offer to Purchase dated December 21,
1999 (the "Offer to Purchase"), and in the related Letter of Transmittal (which,
together with any supplements or amendments thereto, collectively constitute the
"Offer").
Please furnish copies of the enclosed materials to those of your clients
for whom you hold Shares registered in your name or in the name of your nominee.
Enclosed herewith are copies of the following documents:
1. Offer to Purchase dated December 21, 1999;
2. Letter of Transmittal to be used by stockholders of the Company in
accepting the Offer;
3. The letter to stockholders of the Company from the Chairman of the
Board of the Company accompanied by the Company's
Solicitation/Recommendation Statement on Schedule 14D-9;
4. A printed form of letter that may be sent to your clients for whose
account you hold Shares in your name or in the name of a nominee, with
space provided for obtaining such client's instructions with regard to the
Offer;
5. Notice of Guaranteed Delivery;
6. Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9; and
7. Return envelope addressed to the Depositary.
THE OFFER IS CONDITIONED UPON, AMONG OTHER THINGS, (A) THERE BEING VALIDLY
TENDERED AND NOT WITHDRAWN PRIOR TO THE EXPIRATION OF THE OFFER THAT NUMBER OF
SHARES THAT WOULD CONSTITUTE AT LEAST A MAJORITY OF ALL OUTSTANDING SHARES ON A
FULLY DILUTED BASIS AND (B) ANY WAITING PERIOD UNDER THE HART-SCOTT-RODINO
ANTITRUST IMPROVEMENTS ACT OF 1976, AS AMENDED, APPLICABLE TO THE PURCHASE OF
SHARES PURSUANT TO THE OFFER HAVING EXPIRED OR BEEN TERMINATED.
1
<PAGE> 2
WE URGE YOU TO CONTACT YOUR CLIENTS PROMPTLY. PLEASE NOTE THAT THE OFFER
AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON
THURSDAY, JANUARY 20, 2000, UNLESS EXTENDED.
The Board of Directors of the Company has unanimously approved the Offer
and Merger and determined that the Offer and Merger, taken together, are fair
to, and in the best interests of, the stockholders of the Company and recommends
that stockholders of the Company accept the Offer and tender their Shares
pursuant to the Offer.
The Offer is being made pursuant to the Agreement and Plan of Merger dated
as of December 14, 1999 (the "Merger Agreement"), among Parent, Purchaser and
the Company pursuant to which, as soon as practicable following the consummation
of the Offer and the satisfaction or waiver of certain conditions, the Purchaser
shall be merged with and into the Company (the "Merger"), with the Company
surviving the Merger as an indirect wholly-owned subsidiary of Parent. At the
effective time of the Merger, each outstanding Share (other than Shares held by
stockholders who perfect their appraisal rights under Delaware law, Shares owned
by the Company as treasury stock and Shares owned by the Parent or any direct or
indirect wholly-owned subsidiary of Parent or the Company) will be converted
into the right to receive $11.00 in cash, without interest thereon, as set forth
in the Merger Agreement and described in the Offer to Purchase. The Merger
Agreement provides that the Purchaser may assign any or all of its rights and
obligations (including the right to purchase Shares in the Offer) to any
affiliate of Parent, but no such assignment shall relieve the Purchaser of its
obligations under the Merger Agreement.
In all cases, payment for Shares accepted for payment pursuant to the Offer
will be made only after timely receipt by the Depositary of (a) certificates for
(or a timely Book-Entry Confirmation (as defined in the Offer to Purchase) with
respect to) such Shares, (b) a 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 effected pursuant to the procedure set
forth in Section 2 of the Offer to Purchase, an Agent's Message (as defined in
the Offer to Purchase) and (c) any other documents required by the Letter of
Transmittal. Accordingly, tendering stockholders may be paid at different times
depending upon when certificates for Shares or Book-Entry Confirmations with
respect to Shares are actually received by the Depositary. Under no
circumstances will interest by 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.
None of the Purchaser or Parent will pay any fees or commissions to any
broker or dealer or other person (other than the Dealer Manager, the Depositary
and the Information Agent as described in the Offer to Purchase) in connection
with the solicitation of tenders of Shares pursuant to the Offer. You will be
reimbursed by the Purchaser upon request for customary mailing and handling
expenses incurred by you in forwarding the enclosed offering materials to your
customers.
Questions and requests for additional copies of the enclosed material may
be directed to the Information Agent or to the Dealer Manager at their
respective addresses and telephone numbers set forth on the back cover of the
enclosed Offer to Purchase.
Very truly yours,
WARBURG DILLON READ LLC
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL RENDER YOU OR
ANY OTHER PERSON THE AGENT OF THE PURCHASER, PARENT, THE DEPOSITARY, THE
INFORMATION AGENT OR THE DEALER MANAGER OR ANY AFFILIATE OF ANY OF THEM, OR
AUTHORIZE YOU OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR MAKE ANY
REPRESENTATION ON BEHALF OF ANY OF THEM WITH RESPECT TO THE OFFER NOT CONTAINED
IN THE OFFER TO PURCHASE OR THE LETTER OF TRANSMITTAL.
2
<PAGE> 1
EXHIBIT 99(a)(4)
OFFER TO PURCHASE FOR CASH
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ELITE INFORMATION GROUP, INC.
AT
$11.00 NET PER SHARE
BY
EIG ACQUISITION CORP.,
AN INDIRECT WHOLLY-OWNED SUBSIDIARY OF
SOLUTION 6 HOLDINGS LIMITED
THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW YORK CITY
TIME, ON THURSDAY, JANUARY 20, 2000, UNLESS THE OFFER IS EXTENDED.
To Our Clients:
Enclosed for your consideration is the Offer to Purchase dated December 21,
1999 (the "Offer to Purchase"), and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Offer") relating to the offer by EIG Acquisition Corp., a Delaware corporation
(the "Purchaser") and an indirect wholly-owned subsidiary of Solution 6 Holdings
Limited, a corporation organized under the laws of New South Wales, Australia
(the "Parent"), to purchase all outstanding shares of common stock, par value
$.01 per share (the "Shares"), of Elite Information Group, Inc., a Delaware
corporation (the "Company"), at $11.00 per Share (the "Offer Price"), net to the
seller in cash, without interest, upon the terms and subject to the conditions
set forth in the Offer. Also enclosed is the Letter to Stockholders of the
Company from the Chairman of the Board of the Company accompanied by the
Company's Solicitation/Recommendation Statement on Schedule 14D-9.
WE (OR OUR NOMINEES) ARE THE HOLDER OF RECORD OF SHARES HELD BY US FOR YOUR
ACCOUNT. A TENDER OF SUCH SHARES CAN BE MADE ONLY BY US AS THE HOLDER OF RECORD
AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED TO YOU
FOR YOUR INFORMATION ONLY AND CANNOT BE USED TO TENDER SHARES HELD BY US FOR
YOUR ACCOUNT.
We request instructions as to whether you wish to tender any of or all the
Shares held by us for your account pursuant to the terms and conditions set
forth in the Offer.
Your attention is invited to the following:
1. The offer price is $11.00 per Share, net to the seller in cash,
without interest thereon, upon the terms and subject to the conditions of
the Offer.
2. The Offer is being made for all outstanding Shares.
3. The Board of Directors of the Company has unanimously approved the
Offer and the Merger (as defined below) and determined that the terms of
the Offer and the Merger, taken together, are fair to, and in the best
interests of, the stockholders of the Company and recommends that the
stockholders of the Company accept the Offer and tender their Shares.
4. The Offer is being made pursuant to the Agreement and Plan of
Merger dated as of December 14, 1999 (the "Merger Agreement"), among
Parent, the Purchaser and the Company pursuant to which, as soon as
practicable following the consummation of the Offer and the satisfaction or
waiver of certain conditions, the Purchaser will be merged with and into
the Company with the Company surviving the merger as an indirect
wholly-owned subsidiary of Parent (the "Merger"). At the effective time of
the Merger, each outstanding Share (other than Shares held by stockholders
who perfect their appraisal rights under Delaware law, Shares owned by the
Company as treasury stock
1
<PAGE> 2
and Shares owned by Parent or any direct or indirect wholly owned
subsidiary of Parent or the Company) will be converted into the right to
receive $11.00 in cash, without interest, as set forth in the Merger
Agreement and described in the Offer to Purchase. The Merger Agreement
provides that the Purchaser may assign any or all of its rights and
obligations (including the right to purchase Shares in the Offer) to any
affiliate of Parent, but no such assignment shall relieve the Purchaser of
its obligations under the Merger Agreement.
5. THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 12:00 MIDNIGHT, NEW
YORK CITY TIME, ON THURSDAY, JANUARY 20, 2000 (THE "EXPIRATION DATE"),
UNLESS THE OFFER IS EXTENDED BY THE PURCHASER, IN WHICH EVENT THE TERM
"EXPIRATION DATE" SHALL MEAN THE LATEST TIME ON WHICH THE OFFER, AS SO
EXTENDED BY THE PURCHASER, WILL EXPIRE.
6. The Offer is conditioned upon, among other things, (1) there being
validly tendered and not withdrawn prior to the Expiration Date such number
of Shares that would constitute at least a majority of all outstanding
Shares on a fully diluted basis and (2) any waiting period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended,
applicable to the purchase of Shares pursuant to the Offer having expired
or been terminated.
7. Any stock transfer taxes applicable to a sale of Shares to the
Purchaser will be borne by the Purchaser, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
8. Tendering stockholders will not be obligated to pay brokerage fees
or commissions to the Dealer Manager, the Depositary or the Information
Agent or, except as set forth in Instruction 6 of the Letter of
Transmittal, transfer taxes on the purchase of Shares by Purchaser pursuant
to the Offer. However, federal income tax backup withholding at a rate of
31% may be required, unless an exemption is provided or unless the required
taxpayer identification information is provided. See Instruction 9 of the
Letter of Transmittal.
Your instructions to us should be forwarded promptly to permit us to submit
a tender on your behalf prior to the Expiration Date.
If you wish to have us tender any of or all the Shares held by us for your
account, please so instruct us by completing. executing, detaching and returning
to us the instruction form on the detachable part hereof. An envelope 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 detachable
part hereof. Your instructions should be forwarded to us in ample time to permit
us to submit a tender on your behalf prior to the Expiration Date.
Payment for Shares accepted for payment pursuant to the Offer will in all
cases be made only after timely receipt by Citibank, N.A. (the "Depositary") of
(a) certificates for (or a timely Book-Entry Confirmation (as defined in the
Offer to Purchase) with respect to) such Shares, (b) a 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 effected pursuant
to the procedure set forth in Section 2 of the Offer to Purchase, an Agent's
Message and (c) any other documents required by the Letter of Transmittal.
Accordingly, tendering stockholders may be paid at different times depending
upon when certificates for Shares 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 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. 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 reserves
the right to 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 holders of Shares prior to the expiration of the Offer. 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 the Purchaser by
Warburg Dillon Read LLC, the Dealer Manager for the Offer, or one or more
registered brokers or dealers that are licensed under the laws of such
jurisdiction.
2
<PAGE> 3
INSTRUCTIONS WITH RESPECT TO THE OFFER TO PURCHASE
ALL OUTSTANDING SHARES OF COMMON STOCK
OF
ELITE INFORMATION GROUP, INC.
The undersigned acknowledge(s) receipt of your letter, the Offer to
Purchase of EIG Acquisition Corp. dated December 21, 1999 (the "Offer to
Purchase"), and the related Letter of Transmittal relating to shares of common
stock, par value $.01 per share (the "Shares"), of Elite Information Group,
Inc., a Delaware corporation.
This will instruct you to tender the number of Shares indicated below held
by you for the account of the undersigned, on the terms and subject to the
conditions set forth in the Offer to Purchase and the related Letter of
Transmittal.
Dated:
- -----------------------------------------------------
NUMBER OF SHARES TO BE TENDERED*
------------ SHARES
--------------------------------------
--------------------------------------
SIGNATURE(S)
--------------------------------------
--------------------------------------
PLEASE PRINT NAME(S)
--------------------------------------
--------------------------------------
ADDRESS (INCLUDE ZIP CODE)
--------------------------------------
--------------------------------------
AREA CODE AND TELEPHONE NO.
--------------------------------------
--------------------------------------
TAXPAYER IDENTIFICATION OR SOCIAL
SECURITY NO.
--------------------------------------
DATE
- ---------------
* Unless otherwise indicated, it will be assumed that all your Shares are to be
tendered.
3
<PAGE> 1
EXHIBIT 99(a)(5)
NOTICE OF GUARANTEED DELIVERY
FOR
TENDER OF SHARES OF COMMON STOCK
OF
ELITE INFORMATION GROUP, INC.
(NOT TO BE USED FOR SIGNATURE GUARANTEES)
As set forth in Section 2 of the Offer to Purchase (as defined below), this
form or one substantially equivalent hereto must be used to accept the Offer (as
defined below) if certificates representing shares of common stock, par value
$.01 per share (the "Shares"), of Elite Information Group, Inc., a Delaware
corporation (the "Company"), are not immediately available or if the procedures
for book-entry transfer cannot be completed on a timely basis or time will not
permit all required documents to reach the Depositary prior to the Expiration
Date (as defined in the Offer to Purchase). This form may be delivered by hand
to the Depositary or transmitted by telegram, facsimile transmission or mail to
the Depositary and must include a guarantee by an Eligible Institution (as
defined in the Offer to Purchase). See Section 2 of the Offer to Purchase.
The Depositary for the Offer is:
Citibank, N.A.
<TABLE>
<S> <C> <C>
By Overnight Courier: By Mail Delivery: By Hand:
Citibank, N.A. Citibank, N.A. Citibank, N.A.
915 Broadway P.O. Box 685 Corporate Trust Window
5th Floor Old Chelsea Station 111 Wall Street, 5th Floor
New York, New York 10010 New York, New York 10113 New York, New York 10043
</TABLE>
By Facsimile
(for Eligible Institutions Only):
(212) 505-2248
Confirmation by Telephone:
(800) 270-0808
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS, OR TRANSMISSION OF INSTRUCTIONS
VIA A FACSIMILE NUMBER, OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A
VALID DELIVERY.
This form is not to be used to guarantee signatures. If a signature on a
Letter of Transmittal is required to be guaranteed by an Eligible Institution
under the instructions thereto, such signature guarantee must appear in the
applicable space provided in the signature box on the Letter of Transmittal.
1
<PAGE> 2
Ladies and Gentlemen:
The undersigned hereby tenders to EIG Acquisition Corp., a Delaware
corporation (the "Purchaser") and an indirect wholly-owned subsidiary of
Solution 6 Holdings Limited, a New South Wales, Australia corporation
("Parent"), upon the terms and subject to the conditions set forth in the
Purchaser's Offer to Purchase dated December 21, 1999 (the "Offer to Purchase"),
and in the related Letter of Transmittal (which, together with any amendments or
supplements thereto, collectively constitute the "Offer"), receipt of which is
hereby acknowledged, the number of Shares set forth below, all pursuant to the
guaranteed delivery procedures set forth in Section 2 of the Offer to Purchase.
Number of Shares:
- ---------------------------------
Name(s) of Record Holder(s):
- -------------------
- ------------------------------------------------------
(PLEASE PRINT)
Certificate Nos. (if available):
- ------------------------------------------------------
- ------------------------------------------------------
Address(es):
- ---------------------------------------
ZIP CODE
Area Code and Tel. No.:
- --------------------------
If Shares will be tendered by book-entry transfer,
Account Number:
- ----------------------------------
Signature(s):
- ---------------------------------------
- ------------------------------------------------------
Dated:
- ----------------------------------------------
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a firm that is a participant in the Security Transfer
Agents Medallion Program or the New York Stock Exchange Guarantee Program or the
Stock Exchange Medallion Program or an "eligible guarantor institution," as such
term is defined in Rule 17Ad-15 under the Securities Exchange Act of 1934, as
amended, hereby guarantees to deliver to the Depositary either the certificates
representing the Shares tendered hereby, in proper form for transfer, or a
Book-Entry Confirmation (as defined in Section 2 of the Offer to Purchase) with
respect to such Shares, in any such case 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), and any other required documents within three trading days
(as defined in the Offer to Purchase) after the date hereof.
Name of Firm:
- -------------------------------------
Address:
- --------------------------------------------
- ------------------------------------------------------
ZIP CODE
Area Code and Tel. No.:
- --------------------------
- ------------------------------------------------------
(AUTHORIZED SIGNATURE)
Title:
- -----------------------------------------------
Dated:
- ----------------------------------------------
NOTE: DO NOT SEND CERTIFICATES FOR SHARES WITH THIS NOTICE. SHARE CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
2
<PAGE> 1
EXHIBIT 99(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
FOR THIS TYPE OF ACCOUNT: SOCIAL SECURITY
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, any
one of the
individuals(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 EMPLOYER
FOR THIS TYPE OF ACCOUNT: IDENTIFICATION
NUMBER OF--
- ------------------------------------------------------------
9. A valid trust, estate, or pension Legal entity (Do
trust 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 the name of the owner.
(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.
1
<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, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- A corporation.
- A financial institution.
- An organization exempt from tax under section 501(a), or an individual
retirement plan.
- 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 exempt charitable remainder trust or a non-exempt trust described in
section 4947(a)(1).
- An entity registered at all times under the Investment Company Act of 1940.
- A foreign central bank of issue.
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.
- Payments to partnerships not engaged in a trade or business in the U.S. 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).
- Payments described in section 6049(b)(5) to nonresident aliens.
- Payments on tax-free covenant bonds under section 1451.
- Payments made by certain foreign organizations.
- Payments made to a nominee.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
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 the regulations under sections 6041, 6041(a), 6045
and 6050A.
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. Beginning January 1, 1984, payers must generally
withhold 20% 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 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. Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment.
FOR ADDITIONAL INFORMATION CONTACT YOUR TAX
CONSULTANT OR THE INTERNAL REVENUE SERVICE
2
<PAGE> 1
EXHIBIT 99(a)(7)
[MACKENZIE PARTNERS, INC. LOGO]
NEWS RELEASE:
15 DECEMBER 1999
OFFER BY SOLUTION 6 HOLDINGS LIMITED FOR ELITE INFORMATION GROUP, INC.
The boards of Solution 6 Holdings Limited (SOH:ASX) and Elite Information Group,
Inc. (Nasdaq: ELTE) announced today that they have entered into a merger
agreement pursuant to which Solution 6 will acquire Elite for US$11.00 per share
in cash. The merger will reinforce Solution 6's position as the world's largest
player in practice management software for the time-based professional services
industry.
BACKGROUND ON ELITE
Elite (formerly Broadway & Seymour, Inc.) is a software product and services
company providing integrated solutions to the financial, legal and professional
services market. Elite's products are focused primarily on time tracking,
billing, internal accounting and other administrative functions including
marketing, records management, case management and conflicts of interest
prevention.
Elite is a market leader in financial and practice management software for law
firms in the US. Elite is increasingly expanding beyond the legal industry, and
in 1998 approximately 10% of its new customers were other professional time
based firms such as accounting firms, consulting practices and public relations
organisations. In 1999, Elite introduced Elite.com, an internet-based provider
of time and billing services to the professional services market. Elite is also
a founding partner in Serengeti, the world's first application service provider
(ASP) dedicated to serving the legal profession.
THE OFFER
A cash tender offer will be made by Solution 6 for all of the outstanding shares
of common stock of Elite. The offer will be on the basis of US$11.00 in cash for
each share in Elite. The offer is conditioned upon, among other things, Solution
6 acquiring a majority of the fully diluted share capital of Elite, and
expiration of certain regulatory waiting periods.
The transaction values Elite at approximately US$95.6 million (A$150.5 million),
representing a 44% premium for Elite shareholders based on the average closing
price of Elite over the last thirty trading days prior to the announcement of
the transaction.
Elite directors and officers representing approximately 20% of the fully diluted
share capital of Elite have irrevocably agreed to tender their shares in the
offer, vote in favour of the merger and have granted an option to Solution 6 to
acquire their shares under certain circumstances.
ACQUISITION FUNDING
Telstra has advised it intends to invest a further A$50 million (US$31.7
million) in Solution 6 as a partial exercise of its option to acquire 25% of
Solution 6. In addition to these funds, the transaction will be funded by
Solution 6 cash reserves and a bridge facility provided by Warburg Dillon Read
for US$60 million (A$95.2 million).
<PAGE> 2
RATIONALE
This transaction represents a major step forward in the implementation of
Solution 6's strategy of becoming a market leader in the provision of software
solutions to the time-based professional. Elite's operations will:
o with the convergence of the accounting, legal and consulting industries,
position Solution 6 as a global leader in the supply of practice management
software to the time based professional services market;
o strengthen Solution 6's position in the provision of legal practice
management software in the US, to provide a market leading position in
North America;
o provide an opportunity for Solution 6 to leverage its legal practice
management software leadership in the US into Australia, Asia and Europe.
Elite has 25 employees in London and will be opening an office in Brussels
in January 2000. Europe is Elite's primary focus outside of the United
States;
o provide a substantial distribution channel in the attractive North American
market, as Elite derives 80% of its revenue from North America;
o strengthen Solution 6's ASP strategy through Elite.com and through Elite's
partnership with Serengeti, the world's first ASP dedicated to the legal
profession; and
o provide leading edge technology. R&D spending in the last three years has
exceeded historical levels and has produced significant enhancements to the
features and functionality of its product offerings.
Warburg Dillon Read is acting as financial adviser to Solution 6 in relation to
the acquisition of Elite. Elite is being advised by Volpe Brown & Whelan.
ENQUIRIES
SOLUTION 6
Chris Tyler, Chief Executive Officer 011 612 9278 6000
Tom Montgomery, Chief Financial Officer
WARBURG DILLON READ
Robert Rankin (Australia) 011 612 9324 2508
John McElroy (US) 212 821 2873
ELITE INFORMATION GROUP INC
Christopher Poole, Chief Executive Officer 323 642 5270
VOLPE BROWN WHELAN & CO
Bill Ruckelshaus 415 274 7913
<PAGE> 3
INFORMATION ON ELITE
BACKGROUND
Established in 1947, Elite is the premier supplier of financial and practice
management systems for legal professional services with installations in more
than 650 firms internationally. Elite's business focus is to develop
high-performance client/server software for law firm, financial, and practice
management applications.
For the past decade, Elite's focus has been on meeting the information needs of
the legal industry, and more recently the professional service firm environment.
In 1981, Elite Data Processing was formed to specialize in law firm accounting
applications. From 1981 until 1988, Elite specialized in a timesharing solution
that connected law firms online with Elite's central computer system. Thus,
Elite gained valuable experience in installing and supporting a substantial
number of legal systems in a wide range of practice areas.
During 1989, the market shift to Open Systems Technology coupled with the
expanding power of relational databases, offered a unique opportunity to provide
a system designed to harness these powerful 4GL tools. Elite created a system
based on these new tools and introduced the system throughout the United States
in the early 1990s.
In addition to strong product development, Elite's personnel contribute to the
success of the company. Elite strives to hire and retain quality employees. As a
result, the staff has the highest level of expertise of any company serving the
legal market. Many of Elite's employees hold advanced accounting and technical
degrees and approximately two-thirds of the employees are devoted to the
support, training and the installation side of the business. Virtually all
employees have prior law firm, accounting and/or technical experience, and
understand the pressures, deadlines and requirements of professional service
firms.
In February 1994, Broadway & Seymour acquired Elite Data Processing and the
company name was changed to Elite Information Systems, Inc. In April 1999, Elite
became a wholly owned subsidiary of Elite Information Group, Inc., which was
formerly called Broadway & Seymour. Elite Information Group is traded on the
NASDAQ stock market under the symbol ELTE.
Elite is committed to leading edge technology. Its R&D spending over the last 3
years has exceeded historical levels and has produced significant enhancements
of the features and functionality of its product offerings. This has resulted in
Microsoft SQL Server compatible versions and Microsoft Windows NT compatible
versions of its product offerings. In addition, Elite has recently introduced
Microsoft Outlook capabilities, Elite WebView, an Intranet product and
TimeTrax(TM) a remote-entry and expense tracking product. Elite has also
developed Elite Enterprise, its 32-bit version of the suite of practice
management applications, which recently commenced beta testing.
GLOBAL CORPORATION
Elite has built strong European and Canadian operations and plans to further
broaden its international operations. It has among its clients, several of the
largest law firms in the United Kingdom, the largest law firm in Continental
Europe and some of the largest law firms in Canada. Approximately 18% of total
Elite revenue is generated from clients outside of the United States and
therefore the importance of markets beyond the United States is crucial in
developing future marketing and product strategies.
<PAGE> 4
INTERNET / ASP STRATEGY
Elite has formed Elite.com to provide web-based solutions to small professional
service firms. Elite.com provides an opportunity to extend the services and
value Elite provides to its large clients to clients of all sizes. Through
Elite.com, it is proposed that Elite will move to the next level to be at the
forefront of web initiatives, hosted applications and e-commerce developments.
Elite, in conjunction with ELF, MeltingPoint and Punch Networks announced in
September 1999 that it will offer software products and services on Serengeti,
the world's only ASP dedicated to serving the legal profession. Software in
categories such as case management, time and billing, electronic invoicing and
litigation support will be provided through the Internet for a usage or flat
fee.
FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Consolidated Statement of Operations
- -----------------------------------------------------------------------------------------------------------
Year ended 31 December RESTATED
US$mm 1996 1997 1998 1998 (a)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net revenue 89.4 79.6 69.0 45.1
Operating expenses:
Cost of revenue 68.0 49.8 50.5 28.7
Research and development 5.8 5.9 7.5 3.1
Sales and marketing 12.3 11.1 13.2 8.9
General and administrative 11.2 10.2 11.1 4.8
Restructuring and impairment 2.3 (0.7) 0.6 --
------ ------ ------ ------
Total operating expenses 99.6 76.2 82.9 45.4
Operating income (loss) (10.3) 3.4 (13.9) (0.4)
Gain on disposition of non-strategic business units 9.7 1.2 1.9 --
Interest income 0.3 0.9 0.9 0.9
Interest expense (0.5) (0.1) (0.1) (0.1)
------ ------ ------ ------
Income (loss) before income taxes (0.8) 5.3 (11.1) 0.5
Income tax (provision) benefit (1.5) (2.4) 3.5 (0.4)
------ ------ ------ ------
Net income (loss) (2.2) 2.9 (7.6) 0.1
- -----------------------------------------------------------------------------------------------------------
</TABLE>
(a) Restated 1998 results reflect the sale of Elite's CRM business and
elimination of certain overhead costs along with estimated income tax effects,
as disclosed by Elite on Form 8-K dated May 19, 1999.
<PAGE> 5
<TABLE>
<CAPTION>
Consolidated Statement of Operations
- -----------------------------------------------------------------------------------
Nine Months ended 30 September
US$mm 1998 1999
- -----------------------------------------------------------------------------------
<S> <C> <C>
Net Revenue 31.6 43.8
Operating expenses:
Cost of revenue 20.6 25.3
Research and development 2.0 3.1
Sales and marketing 5.9 7.0
General and administrative 4.9 5.2
Restructuring and impairment -- --
------ ------
Total operating expenses 33.5 40.7
Operating income (loss) (1.9) 3.1
Loss on disposition of non-strategic business unit -- (0.3)
Interest income, net 0.7 0.8
------ ------
Income (loss) from continuing operations before tax (1.2) 3.6
Income tax (provision) benefit for continuing operations 0.1 (1.5)
------ ------
Income (loss) from continuing operations net of tax (1.1) 2.0
Discontinued operations:
Income (loss) from discontinued operations net of tax (4.3) (0.4)
(provision) benefit
Gain on sale of discontinued operations net of tax -- 4.9
------ ------
Net income (loss) (5.4) 6.5
- -----------------------------------------------------------------------------------
</TABLE>
For the nine month results and restated 1998 results presented, the consolidated
financial statements of Elite Information Group reflect as continuing
operations, the results of operations and financial position of Elite
Information Group's wholly owned subsidiary, Elite Information Systems, Inc.
During the third quarter of 1999, the Company began start-up operations of its
new Elite.com subsidiary, the results for which are included in the Consolidated
Statement of Operations for the nine months ended September 30, 1999. During the
second quarter of 1999, the Company sold its Customer Relationship Management
business ("CRM"). The operating results for CRM are presented in the
Consolidated Statement of Operations for the nine months ended September 30,
1999 as discontinued operations and the prior period has been restated to
reflect the Company's continuing operations. The Consolidated Statement of
Operations for the years ended 1996, 1997 and 1998 (before restatement) do not
reflect any adjustment for the sale of CRM. Also, effective March 5,1999 the
Company sold all of the outstanding shares of The Minicomputer Company of
Maryland, Inc. ("TMC") to a holding company owned by TMC management.
Revenue growth during the 3rd quarter of 1999 and the first 9 months of 1999 was
greatly influenced by the higher levels of orders received during 1998 which
were 67% above the amount of orders signed during 1997. Elite management
attributed the increase in contract signings in part to Elite's introduction of
products utilising a wider variety of database platforms and enhancements to
existing product functionality. Year 2000 considerations may have also focused
an increasing number of professional services firms on replacing their existing
systems by the end of 1999.
Elite's signed contract backlog totalled US$13.7 million as of 30 September
1999, compared to a record US$26.4 million as of 31 December 1998. Backlog
represents the amount of unearned software license and implementation revenue on
signed customer contracts.
Research and development expenses for the nine months ended 30 September 1999,
increased US$1.1 million to US$3.1 million. Research and development expenses
consist primarily of salaries and expenses of Elite's development personnel and
outside consultants. The third quarter 1999 increase over the same
<PAGE> 6
period can be attributed primarily to start-up costs related to Elite.com. The
higher expenses also reflect ongoing efforts to develop the next version of the
Elite suite of products based on an advanced object-oriented architecture with
enhanced usability features. During the nine months to 30 September 1999, no
software developments were capitalised.
<TABLE>
<CAPTION>
Balance Sheet
- ----------------------------------------------
US$mm AS AT 30/9/99
- ----------------------------------------------
<S> <C>
ASSETS
Current Assets:
Cash 30.4
Receivables 21.1
Deferred income taxes 4.2
Other current assets 0.8
---------
Total current assets 56.6
Property and equipment 1.6
Software costs 1.0
Intangibles 3.8
Other 0.2
---------
TOTAL ASSETS 63.2
LIABILITIES
Current Liabilities:
Accounts payable - trade 4.7
Accrued compensation 2.9
Other accrued liabilities 4.9
Deferred revenue 15.9
Income taxes payable 0.8
---------
Total current liabilities 29.1
Deferred income taxes 0.9
Other liabilities 0.2
---------
TOTAL LIABILITIES 30.3
---------
SHAREHOLDERS' EQUITY 32.9
- ----------------------------------------------
</TABLE>
ABOUT SOLUTION 6
Solution 6 is the world's leading supplier of business systems to the accounting
profession. The company is a market leader in Australia, New Zealand, South
Africa and the UK in the practice management, client accounting and taxation
markets and it also has a strong presence in the US and Continental Europe.
Solution 6 primarily focuses on practice management accounting, client
accounting, taxation, accounting for business and insolvency software. Solution
6 is currently leading the market with its new application service provider
(ASP) business. An ASP enables customers to operate business software via the
Internet or through private networks. In this model, customers will rent the
applications from Solution 6, and access the applications through a browser,
rather than incurring substantial hardware costs to run full applications
onsite. Solution 6 was established in 1981, became a publicly listed company in
1987 and currently has approximately 1,200 employees in 13 countries. Additional
information on Solution 6 is available at http://www.solution6.com or by sending
email to [email protected].
<PAGE> 7
FORWARD-LOOKING STATEMENTS
Certain of the above statements are forward-looking statements, which involve
risks and uncertainties. Actual results could differ materially as a consequence
of a number of factors including: uncertainties relating to acquisitions,
including operational disruptions, unexpected operating expenses and losses, and
expenses associated with the integration of such acquisitions; fluctuations in
the company's operating results due to product demand, length of sales cycle,
size and timing of individual customer transactions and similar matters, changes
in the client/server application software market including technology change,
changes in customer requirements, frequent new product introductions by
competitors and emerging standards; dependence on the legal services market;
reliance on third-party resellers; dependence on Solution 6 and Elite key
management and other factors set forth in the Australian Stock Exchange and
Securities and Exchange Commission reports and filings of Solution 6 and Elite
respectively.
# # #
<PAGE> 1
EXHIBIT 99(b)(1)
[WARBURG DILLON READ AUSTRALIA LIMITED LETTERHEAD]
14 December 1999
Mr Chris Tyler
Chief Executive Officer
Solution 6 Holdings Limited
Level 21 Town Hall House
456 Kent Street
SYDNEY NSW 2000
STRICTLY PRIVATE & CONFIDENTIAL
Dear Chris
OFFER TO PROVIDE BRIDGE FACILITY FOR ACQUISITION OF ELITE INFORMATION GROUP,
INC.
INTRODUCTION
We refer to our ongoing discussions regarding financing the acquisition of
Elite Information Group, Inc. ("THE BUSINESS") by Solution 6 Holdings Limited
("SOLUTION 6").
COMMITMENT
Warburg Dillon Read Australia Limited ("WDRAL") is pleased to confirm its
commitment to Solution 6 to offer to provide an acquisition bridge facility
(THE "FACILITY") of up to US$60 million, substantially in accordance with the
terms of this letter and of the Terms Sheet accompanying this letter as
Annexure A. All monetary amounts referred to in our proposal are in Australian
dollars unless otherwise stated. All terms not specifically defined herein have
the meaning assigned to them in the Terms Sheet.
NATURE OF THE COMMITMENT
The commitment contained herein is subject to:
o The conditions set out in the attached Terms Sheet; and
o The completion of documentation satisfactory to WDRAL. WDRAL and
Solution 6 will negotiate such documentation in good faith on terms
consistent with the attached Terms Sheet.
It is not currently WDRAL's intention to syndicate the Facility to other
financial institutions. However, WDRAL reserves the right to sell-syndicate the
Facility to other financial institutions in consultation with Solution 6 once
the transaction has been announced to the Australian Stock Exchange, subject to
the provisions contained in the Terms Sheet.
This commitment will lapse if not accepted by 11 pm on 14 December 1999 (in
Sydney).
<PAGE> 2
APPOINTMENT
In making the commitment set out in this letter, we do so on the basis that
WDRAL will have access to the services of any specialist consultants that are
engaged by Solution 6 or the Borrower, including taxation, legal, accounting
and other advisers. WDRAL will be entitled to rely on the accuracy and
completeness of the material provided by these consultants and on the expertise
of each. Costs of these consultants will be for the account of the Borrower.
PROJECT TEAM
The assignment will be conducted by WDRAL and any written or oral
communications will be that of WDRAL itself and not that of individuals
assisting WDRAL. The persons principally involved in the assignment will be
Robert Rankin, Steve Bennett, Sarah Rennie and Kevin Bush. However, this may
vary by other specialist persons being seconded and utilised as required.
BASIS OF REMUNERATION
As per the Terms Sheet.
INDEMNITY
The Company agrees with WDRAL (for itself and on trust for each other member of
UBS AG, and its subsidiaries, branches and affiliates ("THE UBS GROUP") and all
directors, officers, employees and agents of the UBS Group ("INDEMNIFIED
PERSONS")) that:
(a) the Company will indemnify and hold harmless the Indemnified Persons
from and against all claims, actions, proceedings, demands,
liabilities, losses, damages, costs and expenses arising out of, or in
connection with, the Engagement or any other matter or activity
referred to or contemplated by this letter which any Indemnified
Person may suffer or incur in any jurisdiction;
(b) all costs and expenses incurred by any Indemnified Person are to be
reimbursed by the Company promptly on demand, including those incurred
in connection with the investigation of, preparation for or defence
of, any pending or threatened litigation or claim within the terms of
this Indemnity or any matter incidental thereto; and
(c) no Indemnified Person will have any liability whatsoever to the
Company for or in connection with things done or omitted to be done
pursuant to the Engagement;
other than in respect of any liabilities, losses, damages, costs or expenses
which are determined by a judgement of a court of competent jurisdiction to
have resulted from the wilful default or gross negligence on the part of the
Indemnified Person. Sums already paid by the Company under this Indemnity but
which fall within this proviso will be reimbursed in full.
The Company will notify WDRAL if the Company becomes aware of any claim which
may give rise to a liability under this indemnity.
Without prejudice to any claim the Company may have against the UBS Group, no
proceedings may be taken against any director, officer, employee or agent of
the UBS Group in respect of any claim the Company may have against the UBS
Group.
<PAGE> 3
TERMINATION
WDRAL's commitment to provide the Facility may be terminated immediately with
or without cause by Solution 6 or the Borrower at any time or by WDRAL in the
event that the Borrower and WDRAL have not entered into definitive
documentation and executed the Facility by 15 February 2000 (in each case by
notice in writing to the other party hereto). Upon termination, this letter
shall from that date have no further force or effect (except in the case of
termination by you or the Borrower without reasonable cause, for WDRAL's right
to fees and reimbursement of WDRAL's reasonable costs and expenses). It is
agreed that WDRAL will be entitled to the Commitment Fee upon execution of this
letter and announcement of the Merger Agreement despite such termination by you
or the Borrower.
COMPLETE AGREEMENT
This letter and other terms as may be agreed in writing constitute the complete
agreement between the parties and no duties or obligations of WDRAL, other than
those agreed in writing between the parties, shall be implied. This letter is
intended to constitute a legally binding and enforceable obligation of Solution
6 and WDRAL. This letter may be executed in any number of counterparts, with
all such counterparts taken together to constitute the agreement.
APPLICABLE LAW
This agreement shall be governed in accordance with the laws of New South Wales
and the parties to it submit to the exclusive jurisdiction of the courts of
that State.
CONFIRMATION OF ACCEPTANCE
We trust that the arrangements proposed in this letter are acceptable to you.
If so, would you please indicate your acceptance by signing the enclosed or
faxed copy of this letter and returning it to this office 11 pm on 14 December
1999 (Sydney time).
CONCLUSION
If you would like to discuss any aspect of this letter, or if you require any
further information, please do not hesitate to contact us on 9324 2575.
We look forward to the successful completion of this transaction.
Best regards,
Warburg Dillon Read Australia Limited
Robert Rankin Steve Bennett
Executive Director Executive Director
Encl.
<PAGE> 4
Accepted for and on behalf of SOLUTION 6 HOLDINGS LIMITED
Signature:
Title:
Date:
(The signatory warrants that he/she is duly authorised by Solution 6 Holdings
Limited to enter into this agreement on its behalf).
<PAGE> 1
EXHIBIT 99(b)(2)
[WARBURG DILLON READ AUSTRALIA LIMITED LETTERHEAD]
17 December 1999
Mr Tom Montgomery
Chief Financial Officer
Solution 6 Holdings Limited
Level 21 Town Hall House
456 Kent Street
SYDNEY NSW 2000
STRICTLY PRIVATE & CONFIDENTIAL
WARBURG DILLON READ AUSTRALIA LIMITED
Dear Tom
AMENDMENT OF BRIDGE FACILITY FOR ACQUISITION OF ELITE INFORMATION GROUP, INC.
INTRODUCTION
We refer to the Commitment Letter dated 14 December 1999, pursuant to which
Warburg Dillon Read Australia Limited ("WDRAL") offered to provide, and
Solution 6 Holdings Limited ("SOLUTION 6") accepted, an acquisition bridge
facility (the "FACILITY") of up to US$60 million. Solution 6 has now requested
that the terms of the Facility be amended.
AMENDMENT OF THE COMMITMENT
WDRAL agrees to amend the terms of the Facility in accordance with the terms of
this letter and of the Terms Sheet accompanying this letter as Annexure A.
Except where amended by this letter and the attached Terms Sheet, all other
terms remain the same as previously.
RESTRUCTURE FEE
A Restructure Fee of 0.60% of US$13 million will be payable by Solution 6 upon
its written acceptance of the amended Facility terms as set out in this letter
and the attached Terms Sheet.
<PAGE> 2
TERMINATION
WDRAL's commitment to provide the Facility may be terminated immediately with
or without cause by Solution 6 or the Borrower at any time or by WDRAL in the
event that the Borrower and WDRAL have not entered into definitive
documentation and executed the Facility by 15 February 2000 (in each case by
notice in writing to the other party hereto). Upon termination, this letter
shall from that date have no further force or effect (except in the case of
termination by you without reasonable cause, for WDRAL's right to fees and
reimbursement of WDRAL's reasonable costs and expenses). It is agreed that
WDRAL will be entitled to the Commitment Fee and Restructure Fee despite such
termination by you.
COMPLETE AGREEMENT
This letter, the letter dated 14 December 1999, and other terms as may be
agreed in writing constitute the complete agreement between the parties and no
duties or obligations of WDRAL, other than those agreed in writing between the
parties, shall be implied. This letter is intended to constitute a legally
binding and enforceable obligation of Solution 6 and WDRAL. This letter may be
executed in any number of counterparts, with all such counterparts taken
together to constitute the agreement.
APPLICABLE LAW
This agreement shall be governed in accordance with the laws of New South Wales
and the parties to it submit to the exclusive jurisdiction of the courts of
that State.
CONFIRMATION OF ACCEPTANCE
We trust that the arrangements proposed in this letter are acceptable to you.
If so, would you please indicate your acceptance by signing the enclosed or
faxed copy of this letter and returning it to this office 1 pm on 17 December
1999 (Sydney time).
CONCLUSION
If you would like to discuss any aspect of this letter, or if you require any
further information, please do not hesitate to contact us on 9324 2575.
We look forward to the successful completion of this transaction.
Best regards,
Warburg Dillon Read Australia Limited
Robert Rankin Steve Bennett
Executive Director Executive Director
Encl.
Accepted for and on behalf of SOLUTION 6 HOLDINGS LIMITED
Signature:
Title:
Date:
(The signatory warrants that he/she is duly authorised by Solution 6 Holdings
Limited to enter into this agreement on its behalf).
<PAGE> 1
EXHIBIT 99(b)(3)
COMMITTED ACQUISITION BRIDGE FACILITY TERMS SHEET
ACQUISITION OF ELITE INFORMATION GROUP, INC. BY SOLUTION 6 HOLDINGS LIMITED
- --------------------------------------------------------------------------------
BORROWER: Solution 6 Holdings Limited
GUARANTORS: Material Entities
LENDER: Warburg Dillon Read Australia Limited ("WDRAL") or
such other entity agreed by the Borrower
PURPOSE: To contribute finance for the acquisition of all of
the shares of Elite Information Group, Inc.
("Elite")
<TABLE>
<S> <C> <C> <C>
ASSUMED FUNDING
STRUCTURE FOR
ACQUISITION: A$ MILLION US$ MILLION
Solution 6 Existing Cash Reserves 16.0 10.2
Proceeds from Telstra Share Issue 50.0 31.8
WDRAL Bridge Facility (US$) 92.6 58.8
--------- ---------
Total Funding for Acquisition 158.6 100.8
The above assumes a purchase price of US$95.6
million (A$150.6 million) and US$5.1 million (A$8
million) transaction costs, based on an A$:US$
exchange rate of 0.635.
</TABLE>
FACILITY: Committed Acquisition Bridge Facility
FACILITY AMOUNT: The Facility amount will be capped at US$60
million, with the resultant currency exposure being
the responsibility of the Borrower.
DRAWINGS: US$
AGENT AND SECURITY AGENT: WDRAL or any associate of WDRAL
MATURITY DATE: Earlier of 31 July 2000 and 14 days after
consummation of the merger.
COMMITMENT EXPIRY: The Facility commitment will expire if the 50.1%
bid acceptance level in respect of Elite's fully
diluted share capital has not been reached by 2 May
2000 and Solution 6 has not terminated the offer
and accepted shares for payment by that date.
MANDATORY PREPAYMENT: Mandatory prepayment of and/or reduction of
outstanding commitments under the Bridge Facility
will occur from:
1. The first US$20.0 million equivalent of the
share placement referred to in point 1 of
Security Issues below (with the converted A$
amount converted to US$ at the exchange rate
prevailing at the time as advised in good
faith by the Lender);
2. Any other Securities Issue (except the A$50
million issue of shares to Telstra and any
share issues to vendors used to fund
acquisitions agreed by the Lender, such
agreement not to be unreasonably withheld);
3. Other asset sales;
4. Any return of capital or loan from Elite; or
5. Sale of shares in Elite.
If the Hercules cash offer is not announced by
31 January 2000 or if the offer is withdrawn a
further mandatory prepayment/reduction of US$13
million will be required at that time.
Prepaid amounts and reduced commitments can not be
redrawn.
Prepayment and commitment reduction amounts will be
converted to US$ as required at the exchange rate
prevailing at the time of the prepayment or
commitment reduction and as advised in good faith
by the Lender to the Borrower.
PREPAYMENTS: Permitted without penalty but subject to break
costs if not at the end of an Interest Period.
Amounts prepaid under the Bridge Facility cannot be
redrawn.
<PAGE> 2
SECURITIES ISSUES: 1. Solution 6 agrees that immediately following
announcement of the Merger Agreement to the
ASX, it will undertake a private placement of
at least A$120 million of ordinary shares at a
price of A$9.75 per share ("Offer Price") on a
best endeavours basis. Solution 6 agrees that
its management will assist with and be
available for the roadshow. Solution 6 will
accept all allottees for shares at or above
the Offer Price put forward by WDRAL, BNP or
Salomon Smith Barney.
2. At any time after the Merger Agreement has
been entered into, and Solution 6 has not
agreed a repayment plan acceptable to the
Lender, the Lender will have the right to
cause Solution 6 to undertake, via WDRAL, the
following Securities issues:
[ ] Up to the Australian dollar equivalent of
US$33 million of Securities in the event
that the private placement referred to in
paragraph (1) above has not settled or is
unlikely to settle by 24 December 1999 in
the reasonable opinion of the Lender; and
[ ] An additional amount of up to the
Australian dollar equivalent of US$40
million of Securities if the Lender
reasonably and in its sole discretion
forms the opinion that the Facility is
unlikely to be repaid from cash available
within Elite and/or other sources of
refinancing proposed by the Borrower; and
[ ] In any event, the Securities issues will
in total be of sufficient size to effect
a repayment of the Facility.
3. The Securities issues referred to in paragraph
(2) above will either comprise:
[ ] a pro rata rights issue of ordinary
equity or variable priced options at up
to a 20% discount to the VWAP on the
preceding day;
[ ] a placement of ordinary equity at up to a
20% discount to the VWAP on the preceding
day; or
[ ] in the event that the above does not
raise sufficient funds to repay the
Facility, Solution 6 shall issue
securities determined by WDRAL which may
include amongst others the issuance of
high yield notes or mezzanine notes in
the Australian, US or European markets.
4. The Underwriting Agreements for such
Securities issues referred to in paragraph (2)
above will be executed as a condition
precedent to execution of the Facility.
COMMITMENT FEE: The sum of 1.0% of US$45.8 million and 0.5% of
US$13 million will be payable upon execution of the
Commitment Letter and announcement of the Merger
Agreement.
DRAWDOWN FEE: 1.0% of the drawndown amount will be payable upon
drawdown of the Facility. The Lender will rebate an
amount equivalent to 0.5% of the drawndown amount
if the Facility is repaid within 45 days of
drawdown.
RESTRUCTURE FEE: 0.60% of US$13 million will be payable upon
solution 6's written acceptance of the amended
terms of the Facility.
BASE INTEREST RATE: The average rate as displayed on Reuters screen
LIBO for the relevant Interest Period set to London
Business days prior to drawing.
INTEREST PERIODS: 30, 60 or 90 days, or as otherwise agreed.
INTEREST PAYMENT DATE: At maturity of the Interest Period.
<PAGE> 3
<TABLE>
<S> <C> <C>
INTEREST MARGINS: DRAWN MARGIN (payable in respect of the drawn % Per Annum
amount) -----------
[ ] From Drawdown until 45 day thereafter 2.0% plus Base Interest Rate
[ ] From 45 days after drawdown until 31 July 2000 4.0% plus Base Interest Rate
UNDRAWN COMMITMENT FEE (payable from 31 March 2000 1.0%
on any undrawn portion of the Facility and
calculated on a daily basis and payable quarterly
in arrears)
</TABLE>
HERCULES TRANSACTION: In respect of Solution 6's acquisition of Hercules,
this Facility will be conditional upon:
1. The total acquisition cost being no more than
A$80 million;
2. To the extent necessary, a share placement to
bring the total amount received by Solution 6
from share placements (including the share
placement mentioned in point 1 of Securities
Issues) to at least A$120 million; and
3. The Lender's satisfaction with the terms of
the Hercules acquisition including its impact
on Solution 6.
SECURITY: Security to be to the reasonable satisfaction of
the Lender and to be supported by a satisfactory
legal opinion.
Security to include:
1. First ranking charge over the assets, goodwill
and undertakings of Solution 6 and its
Material Entities except in instances where
first ranking charges already exist in which
case second ranking charges will be taken.
First ranking charges ranking in priority to
the Lender will be capped at A$10 million
excluding the A$4 million Bill Facility
secured by cash.
2. Sole first ranking charge over the proceeds of
any Securities issues;
3. Sole first ranking charge over proceeds from
the sale of the Elite shares acquired;
4. Sole first ranking charge over the proceeds of
any return of capital or loan from Elite; and
5. Security and charge over Elite's and Hercules'
assets and undertakings once the acquisitions
have been completed.
MATERIAL ENTITY: Elite, Hercules and any subsidiary of Solution 6
that contributes more than 5% of consolidated
revenue or represents more than 5% of consolidated
assets and any other subsidiaries necessary to
ensure that security is provided by subsidiaries
that represent at least 95% of consolidated revenue
and more than 95% of consolidated assets.
CLAIMS UNDER THE
GUARANTEE: The Lender will be able to claim under the
guarantee upon non-payment of a due amount by
presentation of a notice to the guarantor.
<PAGE> 4
CONDITIONS PRECEDENT: Conditions Precedent to drawdown of the Bridge
Facility are as follows:
1. Satisfactory loan and security documentation,
stamped and registered (as applicable) including
the executed Securities underwriting agreements and
supported by satisfactory legal opinions;
2. Receipt by Solution 6 of at least A$50 million in
respect of the issuance of shares to Telstra;
3. Acquisition of at least 50.1% of Elite's fully
diluted share capital by Solution 6;
4. Payment by Solution 6 of US$62.6 million for Elite
shares; and
5. Receipt of fees as agreed in writing.
SPECIFIC UNDERTAKINGS 1. No amendment of the Hercules Offer or Merger
FROM AND RESTRICTIVE Agreement or waiver to the conditions of either
COVENANTS IN RESPECT document without the consent of the Lender (such
OF SOLUTION 6 AND ALL consent not to be unreasonable withheld);
SUBSIDIARIES
2. No amendment of the Hercules or waiver to the
conditions of such without the consent of the
Lender (such consent not to be unreasonable
withheld);
3. Solution 6's agreement that upon acquiring 50.1%
of the fully diluted share capital of Elite it
will:
[ ] Promptly take board control of Elite;
[ ] Use its best endeavours to proceed to
compulsorily acquire 100% of Elite's share
capital as soon as practicable thereafter and
in any event by 16 July 2000;
And immediately upon consummation of the merger:
[ ] Cause Elite to make a payment of at least
US$30 million to Solution 6 by way of
dividend, return of capital or loan; and
[ ] Cause Elite to provide a guarantee and charge
over its assets and undertakings to the
Lender;
4. Solution 6's agreement that upon the reasonable
request of the Lender it will enter into currency
hedging arrangements acceptable to the Lender in
respect of the US$ acquisition commitment;
5. Restrictions on any capital reductions (except in
respect of an agreed level of ordinary dividends);
6. Restrictions on disposal of assets or undertakings
other than disposals in the ordinary course of the
business (except as reasonably agreed with the
Lender) and disposals for good value applied in
prepayment of the Bridge Facility;
7. Restrictions on further acquisitions in aggregate
in excess of A$5 million (except as reasonably
agreed with the Lender). The Lender will give
consideration to agreeing to the LP and AW
acquisitions upon the Lender's acceptable review
of the terms of the acquisitions, the funding of
such and due diligence materials;
8. Restrictions on incurring further financial
indebtedness or providing financial accommodation
or guarantees (except as reasonably agreed with
the Lender and except in respect of funding under
the Hercules transaction which ranks pari passu
with the Lender as set out previously in this
Terms Sheet);
9. No dealings with any party except on arms length
terms in the ordinary course of business; and
10. Restrictions on creation of security interests.
<PAGE> 5
OTHER CONDITIONS: Representations and Warranties, Undertakings,
Events of Default, Increased Costs, Illegality and
Yield Protection customary for Facilities of this
nature.
GST on any taxable supplies by the Lender or its
affiliates will be for the account of the
Borrower.
FEES AND EXPENSES: If any amount is borrowed under the Bridge
Facility (or legal documents including the terms
sheets and commitment letter are instructed by
Solution 6 to be prepared), agreed legal expenses,
fees and reasonable out-of-pocket expenses
incurred in connection with the implementation of
the Bridge Facility will be for the account of the
Borrower.
ASSIGNMENT: The Lender will be able to assign rights and
substitute other debt providers into the Bridge
Facility subject to (i) approval by the Borrower
(such approval not to be unreasonably withheld);
and (ii) 10 business days' notice is given to the
Borrower (iii) the bid having been announced to
the Australian Stock Exchange.
The Borrower and Solution 6 will assist with
provision of information reasonably requested by
the Lender for achieving such syndication,
including assistance with the preparation of, and
approval for the release of, an Information
Memorandum.
Note: It is not the Lender's current intention to
syndicate the Bridge Facility although it retains
the right to do so.
GOVERNING LAW: Law of New South Wales.
<PAGE> 1
EXHIBIT 99(c)(1)
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SOLUTION 6 HOLDINGS LIMITED,
EIG ACQUISITION CORP.
AND
ELITE INFORMATION GROUP, INC.
DATED AS OF DECEMBER 14, 1999
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<C> <S> <C>
ARTICLE I Definitions................................................ 1
1.1. Definitions................................................. 1
1.2. Rules of Construction....................................... 1
ARTICLE II The Offer................................................. 1
2.1. The Offer................................................... 1
2.2. Company Actions............................................. 2
2.3. Stockholder Lists........................................... 3
2.4. Composition of the Board of Directors; Section 14(f)........ 3
ARTICLE III The Merger............................................... 4
3.1. The Merger.................................................. 4
3.2. Effective Time.............................................. 4
3.3. Effect of the Merger........................................ 4
3.4. Certificate of Incorporation; Bylaws........................ 4
3.5. Directors and Officers...................................... 5
3.6. Stock Options............................................... 5
3.7. Stockholders' Meeting....................................... 5
ARTICLE IV Conversion of Securities; Exchange of Certificates........ 6
4.1. Merger Consideration; Conversion and Cancellation of
Securities.................................................. 6
4.2. Exchange of Certificates.................................... 6
4.3. Dissenting Shares........................................... 7
4.4. Closing..................................................... 8
4.5. Stock Transfer Books........................................ 8
ARTICLE V Representations and Warranties of the Company.............. 8
5.1. Organization and Qualification; Subsidiaries................ 8
5.2. Certificate of Incorporation and Bylaws..................... 8
5.3. Capitalization.............................................. 8
5.4. Authorization of Agreement.................................. 9
5.5. Approvals................................................... 10
5.6. No Violation................................................ 10
5.7. Reports and Financial Statements............................ 10
5.8. No Undisclosed Liabilities.................................. 11
5.9. No Material Adverse Effect; Conduct......................... 11
5.10. Schedule 14D-9; Offer Documents; Proxy Statement............ 12
5.11. Properties and Assets....................................... 12
5.12. Contracts................................................... 12
5.13. Litigation; Compliance with Laws............................ 12
5.14. Employee Benefit Plans...................................... 13
5.15. Labor Matters............................................... 14
5.16. Taxes....................................................... 14
5.17. Environmental Matters....................................... 15
5.18. Intellectual Property....................................... 16
5.19. Brokers..................................................... 17
5.20. Opinion of Financial Advisor................................ 17
5.21. Year 2000................................................... 18
5.22. Insurance................................................... 18
ARTICLE VI Representations and Warranties of the Parent Companies.... 18
6.1. Organization and Qualification; Subsidiaries................ 18
6.2. Authorization of Agreement.................................. 18
</TABLE>
i
<PAGE> 3
<TABLE>
<C> <S> <C>
6.3. Approvals................................................... 18
6.4. No Violation................................................ 19
6.5. Proxy Statement; Schedule 14D-9............................. 19
6.6. Sufficient Funds............................................ 19
6.7. Brokers..................................................... 19
6.8. DGCL 203.................................................... 19
ARTICLE VII Covenants................................................ 20
7.1. Conduct of Business of the Company.......................... 20
7.2. Prohibited Actions by the Company........................... 20
7.3. No Solicitation............................................. 22
7.4. Access to Information....................................... 24
7.5. Confidentiality Agreement................................... 24
7.6. Reasonable Efforts.......................................... 24
7.7. Public Announcements........................................ 24
7.8. Employee Agreements......................................... 24
7.9. State Takeover Statutes..................................... 24
7.10. Rights Plan................................................. 25
7.11. Employee Benefit Plans...................................... 25
7.12. Indemnification of Directors and Officers................... 25
7.13. Event Notices and Other Actions............................. 26
7.14. Third Party Standstill Agreements; Tortious Interference.... 26
7.15. Payment of Certain Fees..................................... 26
ARTICLE VIII Closing Conditions...................................... 27
8.1. Closing Conditions.......................................... 27
ARTICLE IX Termination, Amendment and Waiver......................... 27
9.1. Termination................................................. 27
9.2. Effect of Termination....................................... 28
9.3. Amendment................................................... 28
9.4. Extension; Waiver........................................... 28
9.5. Fees, Expenses and Other Payments........................... 28
ARTICLE X General Provisions......................................... 29
10.1. Nonsurvival of Representations, Warranties and Agreements... 29
10.2. Notices..................................................... 29
10.3. Headings.................................................... 30
10.4. Severability................................................ 30
10.5. Entire Agreement............................................ 30
10.6. Assignment.................................................. 30
10.7. Parties in Interest......................................... 30
10.8. Failure or Indulgence Not Waiver; Remedies Cumulative....... 30
10.9. Governing Law............................................... 30
10.10. Enforcement................................................. 30
10.11. Counterparts................................................ 31
</TABLE>
ii
<PAGE> 4
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger, dated as of December 14, 1999 (this
"Agreement"), is by and among Solution 6 Holdings Limited, a New South Wales,
Australia corporation ("Parent"), EIG Acquisition Corp., a Delaware corporation
and an indirect wholly-owned subsidiary of Parent ("Purchaser"), and Elite
Information Group, Inc., a Delaware corporation (the "Company"). Parent and
Purchaser are sometimes referred to herein as the "Parent Companies."
W I T N E S S E T H
WHEREAS the respective Boards of Directors of the Company, Parent, and
Purchaser have unanimously approved the acquisition of the Company by Parent on
the terms and subject to the conditions set forth in this Agreement.
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Purchaser to make a tender offer (as it may be amended from time to time as
permitted under this Agreement, the "Offer") to purchase all the issued and
outstanding shares of common stock, par value $0.01 per share, of the Company
("Company Common Stock") at a price per share of Company Common Stock of $11.00,
net to the seller in cash, upon the terms and subject to the conditions set
forth in this Agreement.
WHEREAS, upon the terms and subject to the conditions of this Agreement and
in accordance with the General Corporation Law of the State of Delaware,
Purchaser will merge with and into the Company and the Company will be the
Surviving Corporation (as defined below).
WHEREAS, concurrently with the execution and delivery of this Agreement,
Parent and Purchaser, on the one hand, and certain stockholders of the Company
are entering into an agreement dated the date hereof (the "Stockholders
Agreement") pursuant to which such stockholders have agreed to take specified
actions in furtherance of the transactions contemplated by this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. Definitions. Certain capitalized and other terms used in this
Agreement are defined in Annex A hereto and are used herein with the meanings
ascribed to them therein.
1.2. Rules of Construction. When a reference is made in this Agreement to a
Section, such reference shall be to a Section of this Agreement unless otherwise
indicated. Unless the context otherwise requires, as used in this Agreement: (a)
a term has the meaning ascribed to it; (b) "or" is not exclusive; (c) whenever
the words "include," "includes" or "including" are used, they shall be deemed to
be followed by the words "without limitation"; and (d) words in the singular
include the plural and words in the plural include the singular.
ARTICLE II
THE OFFER
2.1. The Offer.
(a) Subject to the conditions of this Agreement including those set forth
in Annex B hereto, as promptly as practicable but in no event later than five
Business Days after the date of this Agreement, Purchaser shall, and Parent
shall cause Purchaser to, commence the Offer within the meaning of the
applicable Regulations of the SEC. The obligation of Purchaser to, and of Parent
to cause Purchaser to, commence the Offer or accept for payment, or pay for, any
shares of Company Common Stock tendered pursuant to the Offer shall be
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<PAGE> 5
subject to the conditions set forth in Annex B (any of which may be waived by
Purchaser in its sole and reasonable judgment provided that, without the consent
of the Company, Purchaser may not waive the Minimum Tender Condition) and to the
other provisions of this Agreement. The initial expiration date of the Offer
shall be the 20th Business Day following the commencement of the Offer
(determined using Rule 14d-1(e)(6) under the Exchange Act).
Purchaser expressly reserves the right to modify the terms of the Offer,
except that, without the consent of the Company, Purchaser shall not (i) reduce
the number of shares of Company Common Stock subject to the Offer, (ii) reduce
the price per share of Company Common Stock to be paid pursuant to the Offer,
(iii) modify or add to the conditions set forth in Annex B in any manner adverse
to the holders of shares of Company Common Stock, (iv) except as provided in the
next sentence, extend the Offer, (v) change the form of consideration payable in
the Offer or (vi) otherwise amend the Offer in any manner adverse to the holders
of shares of Company Common Stock. Notwithstanding the foregoing, Purchaser may,
without the consent of the Company, (i) extend the Offer, if at the scheduled
expiration date of the Offer any of the conditions to Purchaser's obligation to
purchase shares of Company Common Stock are not satisfied, until such time as
such conditions are satisfied or waived; provided, however, that the expiration
date shall not be later than the Termination Date as a result of such extension,
(ii) extend the Offer for a period of not more than 10 Business Days beyond the
expiration date that would otherwise be permitted under clause (i) of this
sentence, if on the date of such extension (x) less than 90% of the Company
Common Stock have been validly tendered and not properly withdrawn pursuant to
the Offer and (y) Purchaser has permanently waived all of the conditions to the
Offer set forth in Annex B (other than conditions that are not legally capable
of being satisfied and conditions that have not been satisfied because of the
willful or intentional action or inaction of the Company), and (iii) extend the
Offer for any period required by any Regulation, interpretation or position of
the SEC or the staff thereof applicable to the Offer. If, on any scheduled
expiration date of the Offer, any of the conditions set forth in Annex B have
not been satisfied or waived and such unsatisfied conditions are still capable
of being satisfied, the Company may require Purchaser to extend the expiration
date of the Offer for a period of not more than 10 Business Days; provided,
however, that Purchaser shall not be required to extend the expiration date
later than the Termination Date. On the terms and subject to the conditions of
the Offer and this Agreement, Purchaser shall, and Parent shall cause Purchaser
to, pay for all shares of Company Common Stock validly tendered and not
withdrawn pursuant to the Offer that Purchaser becomes obligated to purchase
pursuant to the Offer as soon as practicable after the expiration of the Offer.
(b) Notwithstanding anything to the contrary contained in this Agreement,
Parent and Purchaser shall not be required to commence the Offer in any
jurisdiction other than the United States of America.
(c) On the date of the commencement of the Offer, Purchaser shall file with
the SEC a Tender Offer Statement on Schedule 14D-1 with respect to the Offer
("Schedule 14D-1") which will contain an offer to purchase and form of the
related letter of transmittal (the Schedule 14D-1 and the documents included
therein pursuant to which the Offer will be made, together with any supplements
or amendments thereto, collectively, the "Offer Documents"). Parent, Purchaser,
and the Company each agrees promptly to correct any information provided by it
for use in the Offer Documents if and to the extent that it shall have become
false or misleading in any material respect and Parent and Purchaser further
agree to take all steps necessary to cause the Offer Documents as so corrected
to be filed with the SEC and be disseminated to holders of shares of Company
Common Stock, in each case, as and to the extent required by applicable federal
securities Laws.
(d) Subject to the terms and conditions of this Agreement, Parent shall
provide or cause to be provided to Purchaser on a timely basis the funds
necessary to purchase any shares of Company Common Stock that Purchaser becomes
obligated to purchase pursuant to the Offer.
2.2. Company Actions. The Company hereby consents to the Offer and
represents that its Board of Directors (at a meeting duly called and held) has
(a) determined that the Offer and the Merger are fair to the stockholders of the
Company and are in the best interests of the stockholders of the Company, (b)
approved this Agreement, the Offer, the Merger and the other Transaction
Agreements, which approval (assuming the accuracy of the representations and
warranties in Section 6.8) constitutes approval of each of the Transactions
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<PAGE> 6
for purposes of the applicable provisions of the DGCL, including Section 203 of
the DGCL, and (c) resolved to recommend acceptance of the Offer and approval and
adoption of this Agreement and the Merger by the stockholders of the Company.
The Financial Advisor has delivered to the Board of Directors of the Company its
opinion that the consideration to be received by the holders of shares of
Company Common Stock in the Offer and the Merger is fair to the holders of
shares of Company Common Stock from a financial point of view. The Company
hereby agrees to file a Solicitation/Recommendation Statement on Schedule 14D-9
(together with any amendments or supplements thereto, the "Schedule 14D-9")
containing such recommendation with the SEC (and the information required by
Section 14(f) of the Exchange Act) and to mail such Schedule 14D-9 to the
stockholders of the Company; provided that such recommendation may be withdrawn,
modified or amended by the Company's Board of Directors only to the extent
permitted by Section 7.3(b). The Company shall use its reasonable best efforts
to cause such Schedule 14D-9 to be filed on the same date as Purchaser's
Schedule 14D-1 is filed and mailed together with the Offer Documents. Purchaser
agrees to give the Company and its counsel a reasonable opportunity to review
and comment on the Schedule 14D-1 prior to Purchaser's filing of the Schedule
14D-1 with the SEC. Purchaser agrees to provide the Company and its counsel in
writing with any comments Purchaser or its counsel may receive from the SEC or
its staff with respect to the Schedule 14D-1 promptly after the receipt thereof.
Each of the Company, Parent, and Purchaser agrees promptly to correct any
information provided by it for use in the Schedule 14D-9 if and to the extent
that it shall have become false or misleading in any material respect, 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 disseminated to the holders of
shares of Company Common Stock, in each case, as and to the extent required by
applicable federal securities Laws. The Company agrees to give Purchaser and its
counsel a reasonable opportunity to review and comment on the Schedule 14D-9
prior to the Company's filing of the Schedule 14D-9 with the SEC. The Company
agrees to provide Purchaser and its counsel in writing with any comments the
Company or its counsel may receive from the SEC or its staff with respect to the
Schedule 14D-9 promptly after the receipt thereof.
2.3. Stockholder Lists. In connection with the Offer, the Company will
promptly furnish Purchaser with mailing labels, security position listings and
any available listing or computer file containing the names and addresses of the
record holders of shares of Company Common Stock as of a recent date and of
those Persons becoming record holders subsequent to such date (to the extent
available), together with all other information in the Company's possession or
control regarding the beneficial owners of shares of Company Common Stock and
shall furnish Purchaser with such information and assistance (including, to the
extent available, updated lists of stockholders, security position listings and
computer files) as Purchaser or its agents may reasonably request in
communicating the Offer to the record and beneficial holders of shares of
Company Common Stock. Subject to the requirements of applicable law, and except
for such steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate this Agreement, Parent and Purchaser shall
hold in confidence the information contained in any such labels, listings and
files, shall use such information only in connection with the Offer and the
Merger and, if this Agreement is terminated, shall, upon request, deliver to the
Company or destroy all copies of such information then in their possession,
followed promptly by written certification of copies destroyed, if any.
2.4. Composition of the Board of Directors; Section 14(f). Promptly upon
the acceptance for payment of, and payment by Purchaser for, any shares of
Company Common Stock pursuant to the Offer, Purchaser shall be entitled to
designate such number of directors on the Board of Directors of the Company as
will give Purchaser, subject to compliance with Section 14(f) of the Exchange
Act, representation on the Board of Directors of the Company equal to at least
that number of directors, rounded up to the next whole number, which is the
product of (a) the total number of directors on the Company's Board of Directors
(giving effect to the directors elected pursuant to this sentence) multiplied by
(b) the percentage that (i) such number of shares of Company Common Stock so
accepted for payment and paid for by Purchaser plus the number of shares of
Company Common Stock otherwise owned by Purchaser or any other Subsidiary of
Parent bears to (ii) the number of such shares outstanding, and the Company
shall, at such time, cause Purchaser's designees to be so elected; provided,
however, that in the event that Purchaser's designees are appointed or elected
to the Board of Directors of the Company, until the Effective Time the Board of
the Directors of the Company shall have at least two directors who are directors
on the date of this Agreement (the "Independent Directors");
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<PAGE> 7
and provided further that, in such event, if the number of Independent Directors
shall be reduced below two for any reason whatsoever, the remaining Independent
Director shall be entitled to designate a person to fill such vacancy who shall
be deemed to be an Independent Director for purposes of this Agreement or, if no
Independent Director then remains, the other directors promptly shall designate
two persons to fill such vacancies who shall not be officers, employees,
stockholders or Affiliates of Parent or Purchaser, and such persons shall be
deemed to be Independent Directors for purposes of this Agreement. Subject to
applicable Law, the Company shall take all action reasonably requested by Parent
necessary to effect any such election, including mailing to its stockholders the
information statement required under Rule 14f-1 containing the information
required by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated
thereunder, and the Company shall make such mailing with the mailing of the
Schedule 14D-9. Purchaser shall supply to the Company in a timely manner, and
shall be solely responsible for, any information with respect to Purchaser's
nominees, officers, directors and affiliates required by such Section 14(f) and
14f-1. Purchaser's designees shall be divided between the classes of directors
as necessary to comply with the requirements of the Company's bylaws. In
connection with the foregoing, the Company shall promptly, at the option of
Purchaser, either increase the size of the Board of Directors of the Company or
obtain the resignation of such number of its current directors as is necessary
to enable Purchaser's designees to be elected or appointed to the Board of
Directors of the Company as provided above. The date on which Purchaser's
designees constitute a majority of the Company's Board of Directors is herein
referred to as the "Control Date." Following the Control Date but prior to the
Effective Time: (i) no amendment or waiver of this Agreement on the Company's
behalf pursuant to Sections 9.03 and 9.04, respectively, and no termination of
this Agreement pursuant to Section 9.01(a) shall be valid; (ii) there shall be
no amendment to the certificate of incorporation or bylaws of the Company; (iii)
there shall be no extension of the time for the performance of any of the
obligations or other acts of Parent or Purchaser (including any extension of the
Closing pursuant to Section 4.4 or the Effective Time of the Merger beyond
filing of the Certificate of Merger); and (iv) no waiver of any provision in
favor of the Company in the Confidentiality Agreement, unless, in each such
case, there are Independent Directors in office and a majority of such
Independent Directors approve such amendment, waiver, termination or action, as
the case may be.
ARTICLE III
THE MERGER
3.1. The Merger. Subject to the terms and conditions set forth herein,
Purchaser shall merge with and into the Company at the Effective Time (the
"Merger"). The terms and conditions of the Merger and the mode of carrying the
same into effect shall be as set forth in this Agreement. As a result of the
Merger, the separate corporate existence of Purchaser shall cease and the
Company shall continue as the Surviving Corporation. At the election of Parent,
subject to Section 10.6, Parent or any Affiliate of Parent may be substituted
for Purchaser as a constituent corporation in the Merger.
3.2. Effective Time. As soon as practicable after the satisfaction or, if
permissible, waiver of the conditions set forth in Article VIII, the parties
hereto shall cause the Merger to be consummated by filing a certificate of
merger (the "Certificate of Merger") with the Secretary of State of the State of
Delaware, in such form as required by, and executed in accordance with the
relevant provisions of, the DGCL.
3.3. Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of the DGCL. Without limiting
the generality of the foregoing, and subject thereto, at the Effective Time,
except as otherwise provided herein, all the property, rights, privileges,
powers and franchises of Purchaser and the Company shall vest in the Surviving
Corporation, and all debts, liabilities and duties of Purchaser and the Company
shall become the debts, liabilities and duties of the Surviving Corporation.
3.4. Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of the
Surviving Corporation shall be amended to read in its entirety the same as the
certificate of incorporation of Purchaser in effect immediately
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<PAGE> 8
prior to the Effective Time, until further amended in accordance with applicable
law; provided that the name of the Surviving Corporation shall continue to be
Elite Information Group, Inc.
(b) The Bylaws of Purchaser as in effect immediately prior to the Effective
Time shall be the bylaws of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable Law; provided, however, that the
Bylaws of Purchaser shall be amended prior to the Effective Time to the extent
necessary to comply with Purchaser's obligations under the first sentence of
Section 7.12(a).
3.5. Directors and Officers. The directors of Purchaser immediately prior
to the Effective Time and/or any individuals designated by Parent shall be the
directors of the Surviving Corporation, each to hold office in accordance with
the certificate of incorporation and bylaws of the Surviving Corporation, and
the officers of the Company immediately prior to the Effective Time and/or any
individuals designated by Parent shall be the officers of the Surviving
Corporation, in each case until the earlier of their resignation or removal or
until their respective successors are duly elected or appointed and qualify.
3.6. Stock Options.
(a) Except as provided herein, upon consummation of the Merger, all then
outstanding vested and unvested Company Stock Options and all Company Common
Stock subject to a vesting requirement ("Restricted Stock") shall be cancelled
in exchange for a cash payment from the Company to the holder of a Company Stock
Option or Restricted Stock equal to (i) in the case of Company Common Stock
Options, the product of (x) the difference between the Per Share Merger
Consideration and the per share exercise price of the holder's Company Stock
Option multiplied by (y) the number of shares of Company Common Stock subject to
the holder's Company Stock Option and (ii) in the case of Restricted Stock, the
number of shares of the holder's Restricted Stock multiplied by the per share
Merger Consideration. All applicable Taxes shall be withheld from any proceeds
payable under this Section 3.6(a).
(b) Except as provided herein or as otherwise agreed to by the parties, (i)
the Company Option Plans shall terminate as of the Effective Time and the
provisions in any other plan, program or arrangement providing for the issuance
or grant by the Company or any of its Subsidiaries of any interest in respect of
the capital stock of the Company or any of its Subsidiaries shall be terminated
as of the Effective Time, and (ii) following the Effective Time no holder of
Company Stock Options or any participant in the Company Option Plans or any
other such plans, programs or arrangements shall have any right thereunder to
acquire any equity securities of the Company, the Surviving Corporation or any
Subsidiary thereof.
(c) Notwithstanding subparagraph (a) above or Section 7.2, upon the
acceptance of, and payment by Purchaser for, any shares of Company Common Stock
pursuant to the Offer, the Company shall redeem any Company Stock Options for
the cash payment provided in subparagraph (a) above (assuming an agreement of
redemption is made with the applicable optionholder).
3.7. Stockholders' Meeting.
(a) If the adoption of this Agreement by the Company's stockholders is
required by Law, the Company shall, at Parent's request, as soon as practicable
following the expiration of the Offer, prepare and file with the SEC the Proxy
Statement in preliminary form, and each of the Company and Parent shall use its
reasonable best efforts to respond as promptly as practicable to any comments of
the SEC or its staff with respect thereto. The Company shall notify Parent
promptly of the receipt of any comments from the SEC or its staff and of any
request by the SEC or its staff for amendments or supplements to the Proxy
Statement or for additional information and shall supply Parent with copies of
all correspondence between the Company or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement. If at any time prior to receipt of the Company Stockholder Approval
there shall occur any event that should be set forth in an amendment or
supplement to the Proxy Statement, the Company shall promptly prepare and mail
to its stockholders such an amendment or supplement. The Company shall not mail
any Proxy Statement, or any amendment or supplement thereto, to which Parent
reasonably objects, unless such mailing is required by Law. The Company shall
use its reasonable best efforts to cause the Proxy Statement to be mailed to the
Company's stockholders as promptly as practicable after filing and clearance
with the SEC.
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<PAGE> 9
(b) If the adoption of this Agreement by the Company's stockholders is
required by Law, the Company shall, at Parent's request, as soon as practicable
following the expiration of the Offer and the purchase of Shares pursuant
thereto, duly call, give notice of, convene and hold a meeting of its
stockholders (the "Company Stockholders' Meeting") for the purpose of seeking
the Company Stockholder Approval. The Company shall, through the Board of
Directors of the Company, give the recommendation referred to in Section 2.2.
Notwithstanding the foregoing, (i) if Purchaser or any other Subsidiary of
Parent shall acquire at least 90% of the outstanding shares of Company Common
Stock, the parties shall, at the request of Parent, take all necessary and
appropriate action to cause the Merger to become effective as soon as
practicable after the expiration of the Offer without a stockholders meeting in
accordance with Section 253 of the DGCL and (ii) the parties shall, at the
request of Parent, take all necessary and appropriate action to effect the
Merger through a written consent in lieu of the Company Stockholders' Meeting to
the extent permitted by, and in accordance with, applicable Law.
(c) Parent will provide the Company with the information concerning Parent
and Purchaser required to be included in the Proxy Statement and will vote, or
cause to be voted, all shares of Company Common Stock owned by it or its
Subsidiaries in favor of the adoption of this Agreement.
ARTICLE IV
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
4.1. Merger Consideration; Conversion and Cancellation of Securities. At
the Effective Time, by virtue of the Merger and without any action on the part
of the Parent Companies, the Company or the holders of any of the following
securities:
(a) Subject to Section 4.3, each share of Company Common Stock issued
and outstanding immediately prior to the Effective Time (excluding any
shares of Company Common Stock described in Section 4.1(c)) shall be
converted into the right to receive $11.00 in cash, without interest
thereon (the "Per Share Merger Consideration").
(b) All shares of Company Common Stock converted pursuant to Section
4.1(a) shall cease to be outstanding and shall automatically be canceled
and retired, and each holder of a Certificate previously evidencing such
shares of Company Common Stock shall cease to have any rights as a
stockholder of the Company, except the right to receive the Per Share
Merger Consideration for each such share.
(c) Each share of Company Common Stock that is owned by the Company,
Parent or Purchaser immediately prior to the Effective Time shall be
cancelled and retired and shall cease to exist and no consideration shall
be delivered in exchange therefor. Each share of Company Common Stock owned
by any Subsidiary of the Company or Parent (other than Purchaser)
immediately prior to the Effective Time shall remain outstanding without
change.
(d) Each share of common stock, par value $.01 per share, of Purchaser
issued and outstanding immediately prior to the Effective Time shall
continue to be issued and outstanding as one fully paid and nonassessable
share of common stock, par value $.01 per share, of the Surviving
Corporation.
4.2. Exchange of Certificates.
(a) Exchange Fund. Parent shall deposit, or cause to be deposited, on a
timely basis immediately after the Effective Time with the Paying Agent in the
Exchange Fund, for the payment of the Merger Consideration through the Paying
Agent upon surrender of Certificates in accordance with Section 4.2(c), cash in
an amount sufficient to make the cash payments due under Section 4.1(a). The
Exchange Fund shall not be used for any other purpose except as specified in
this Section 4.2.
(b) Letter of Transmittal. As soon as reasonably practicable after the
Effective Time, Parent will cause the Paying Agent to send a letter of
transmittal (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Paying Agent and shall be in a form and have such other
provisions as Parent may reasonably specify) to each record holder of shares
6
<PAGE> 10
of Company Common Stock immediately prior to the Effective Time, along with
other appropriate materials for use in surrendering Certificates to the Paying
Agent.
(c) Exchange Procedures. Promptly after the Effective Time, the Paying
Agent shall distribute to each former holder of shares of Company Common Stock,
upon surrender to the Paying Agent for cancellation of one or more Certificates,
the Merger Consideration. If the Merger Consideration is to be paid to a Person
other than the Person in whose name the surrendered Certificate or Certificates
are registered, it shall be a condition of payment of the Merger Consideration
that the surrendered Certificate or Certificates shall be properly endorsed,
with signatures guaranteed, or otherwise in proper form for transfer and that
the Person requesting such payment shall pay any transfer or other Taxes
required by reason of the payment of the Merger Consideration to a Person other
than the registered holder of the surrendered Certificate or Certificates or
such Person shall establish to the reasonable satisfaction of Parent that such
Tax has been paid or is not applicable. Until surrendered as contemplated by
this Section 4.2(c), each Certificate shall be deemed from and after the
Effective Time to represent only the right to receive upon such surrender the
Per Share Merger Consideration for each share of Company Common Stock evidenced
by such Certificate. In no event shall the holder of any such surrendered
Certificate be entitled to receive interest on any cash to be received in the
Merger. Neither the Paying Agent nor any party hereto shall be liable to a
holder of shares of Company Common Stock for any amount paid to a public
official or Governmental Authority pursuant to any applicable abandoned
property, escheat, or similar Law. If any Certificate has not been surrendered
prior to the date which is five years after the Effective Time (or immediately
prior to such earlier date on which Merger Consideration in respect of such
Certificate would otherwise escheat to or become the property of any
Governmental Authority), any such cash in respect of such Certificate shall, to
the extent permitted by applicable Law, become the property of the Surviving
Corporation, free and clear of all claims or interest of any Person previously
entitled thereto.
(d) Termination of Exchange Fund. Any portion of the Exchange Fund which
remains unclaimed by the former holders of shares of Company Common Stock for
six months after the Effective Time shall be delivered to Parent, upon demand,
and any former holders of shares of Company Common Stock who have not
theretofore complied with this Article IV shall thereafter look only to Parent
for any cash payment to which they are entitled.
(e) Investment of Exchange Fund. The Paying Agent shall invest any cash
included in the Exchange Fund, as directed by Parent, on a daily basis. Any
interest and other income resulting from such investments shall be paid to
Parent.
(f) Withholding of Tax. Parent or any of its Affiliates shall be entitled
to deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any former holder of shares of Company Common Stock such amounts as
Parent (or any Affiliate thereof) is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of state,
local or foreign Tax Law. To the extent that amounts are so withheld by Parent
and paid by Parent to the applicable taxing authority, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
former holder of shares of Company Common Stock in respect of which such
deduction and withholding was made by Parent.
4.3. Dissenting Shares. Notwithstanding anything in this Agreement to the
contrary, shares of Company Common Stock ("Dissenting Shares") which are issued
and outstanding immediately prior to the Effective Time and that are held by any
Person who is entitled to demand and properly demands appraisal of such
Dissenting Shares pursuant to, and who complies in all respects with, Section
262 of the DGCL ("Section 262") shall not be converted as provided in Section
4.1(a), but rather the holders of Dissenting Shares shall be entitled only to
payment of the fair value of such Dissenting Shares in accordance with Section
262; provided, however, that if any such holder shall fail to perfect or
otherwise shall waive, withdraw or lose the right to appraisal under Section
262, then the right of such holder to be paid the fair value of such holder's
Dissenting Shares shall cease and such Dissenting Shares shall be treated as if
they had been converted as of the Effective Time into the Merger Consideration
as provided in Section 4.1(a). The Company shall serve prompt notice to Parent
of any demands received by the Company for appraisal of any shares of Company
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<PAGE> 11
Common Stock, and Parent shall have the right to participate in and direct all
negotiations and proceedings with respect to such demands. The Company shall
not, except with the prior written consent of Parent, make any payment with
respect to, or settle or offer to settle, any such demands, or agree to do any
of the foregoing.
4.4. Closing. The closing (the "Closing") of the Merger shall take place at
the offices of Jackson Walker L.L.P., 901 Main Street, Suite 6000, Dallas, Texas
75202 at 10 a.m. (Dallas time) on a date as soon as practicable following the
date on which the conditions to the Closing (other than those that, by their
terms, are to be satisfied at the Closing) have been satisfied or waived, or at
such other place, time and date as the parties hereto may agree. At the
conclusion of the Closing on the Closing Date, the parties hereto shall cause
the Certificate of Merger to be filed with the Secretary of State of the State
of Delaware.
4.5. Stock Transfer Books. At the Effective Time, the stock transfer books
of the Company shall be closed and there shall be no further registration of
transfers of shares of Company Common Stock thereafter on the records of the
Company.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Company's Disclosure Letter that specifically
relates to such Section, the Company hereby represents and warrants to the
Parent Companies that:
5.1. Organization and Qualification; Subsidiaries. The Company and each
Subsidiary of the Company are legal entities duly organized, validly existing
and in good standing under the Laws of their respective jurisdictions of
incorporation or organization, have all requisite power and authority and
possess all governmental franchises and Permits necessary to enable them to own,
lease and operate their respective properties and assets and to carry on their
business as it is now being conducted and are duly qualified and in good
standing to do business in each jurisdiction in which the nature of the business
conducted by them or the ownership or leasing of their respective properties and
assets makes such qualification necessary, other than such franchises and
Permits and qualifications the lack of which, individually or in the aggregate,
has not had and would not reasonably be expected to have a Material Adverse
Effect on the Company. Section 5.01 of the Company's Disclosure Letter sets
forth, as of the date of this Agreement, a true and complete list of all the
Company's directly or indirectly owned Subsidiaries, together with the
jurisdiction of incorporation of each Subsidiary and the percentage of each
Subsidiary's outstanding capital stock or other equity interests owned of record
or beneficially by the Company or another Subsidiary of the Company. Except for
such Subsidiaries and as disclosed in Section 5.01 of the Company's Disclosure
Letter, neither the Company nor any of its Subsidiaries owns an equity interest
in any partnership or joint venture arrangement or other business entity.
5.2. Certificate of Incorporation and Bylaws. The Company has heretofore
furnished or made available to Parent complete and correct copies of the
certificate of incorporation and the bylaws or the equivalent organizational
documents, in each case as amended or restated to the date hereof, of the
Company. Neither the Company nor any of its Subsidiaries is in violation of any
of the provisions of its certificate of incorporation or bylaws (or equivalent
organizational documents).
5.3. Capitalization.
(a) The authorized capital stock of the Company consists of (i) 20,000,000
shares of Company Common Stock of which, as of December 13, 1999, 8,409,380
shares were issued and outstanding, all of which are duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights, and
(ii) 2,000,000 shares of preferred stock, 400,000 of which are designated Series
A Junior Participating Preferred Stock, but none of which are issued and
outstanding. As of the date hereof, there were 705,165 shares of Company Common
Stock reserved for future issuance pursuant to outstanding Company Stock Options
granted pursuant to the Company Option Plans, and the exercise price for each of
such Company Stock Options is set forth in the Company's Disclosure Letter.
(b) Except as set forth in Section 5.3(a), no shares of Company Common
Stock are reserved for issuance, and, except for the Company Stock Options, as
listed in Section 5.3(b) of the Company's Disclosure
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Letter, there are no options, warrants, rights, convertible or exchangeable
securities, "phantom" stock rights, stock appreciation rights, stock-based
performance units, contracts, agreements, commitments or arrangements obligating
the Company (i) to offer, sell, issue or grant any shares of, or any options,
warrants or rights of any kind to acquire any shares of, or any securities that
are convertible into or exchangeable for any shares of, capital stock of the
Company, (ii) to redeem, purchase or acquire, or offer to purchase or acquire,
any outstanding shares of, or any outstanding options, warrants or rights of any
kind to acquire any shares of, or any outstanding securities that are
convertible into or exchangeable for any shares of, capital stock of the Company
or (iii) to grant any Lien on any shares of capital stock of the Company.
(c) Except as set forth in Section 5.3(c) of the Company's Disclosure
Letter, (i) the issued and outstanding shares of capital stock of, or other
equity interests in, each of the Subsidiaries of the Company that are owned by
the Company or any of its Subsidiaries have been duly authorized and are validly
issued, and, with respect to capital stock, are fully paid and nonassessable,
and were not issued in violation of any preemptive or similar rights of any past
or present equity holder of such Subsidiary; (ii) all such issued and
outstanding shares, or other equity interests, that are indicated as owned by
the Company or one of its Subsidiaries in Section 5.3(c) of the Company's
Disclosure Letter are owned (A) beneficially as set forth therein and (B) free
and clear of all Liens except as described therein; (iii) no shares of capital
stock of, or other equity interests in, any Subsidiary of the Company are
reserved for issuance, and there are no options, warrants, rights, convertible
or exchangeable securities, "phantom" stock rights, stock appreciation rights,
stock-based performance units, contracts, agreements, commitments or
arrangements obligating the Company or any of its Subsidiaries (A) to offer,
sell, issue, grant, pledge, dispose of or encumber any shares of capital stock
of, or other equity interests in, or any options, warrants or rights of any kind
to acquire any shares of capital stock of, or other equity interests in, or any
securities that are convertible into or exchangeable for any shares of capital
stock of, or other equity interests in, any of the Subsidiaries of the Company
or (B) to redeem, purchase or acquire, or offer to purchase or acquire, any
outstanding shares of capital stock of, or other equity interests in, or any
outstanding options, warrants or rights of any kind to acquire any shares of
capital stock of, other equity interests in, or any outstanding securities that
are convertible into or exchangeable for, any shares of capital stock of, or
other equity interests in, any of the Subsidiaries of the Company or (C) to
grant any Lien on any outstanding shares of capital stock of, or other equity
interests in, any of the Subsidiaries of the Company.
(d) Except for the Company Option Plans listed in Section 5.3(b) of the
Company's Disclosure Letter, there are no voting trusts, proxies or other
agreements, commitments or understandings of any character to which the Company
or any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries is bound with respect to the voting of any shares of capital stock
of the Company or any of its Subsidiaries or with respect to the future
registration of the offering, sale or delivery of any shares of capital stock of
the Company or any of its Subsidiaries under the Securities Act.
(e) There are not any bonds, debentures, notes or other indebtedness of the
Company having the right to vote (or convertible into, or exchangeable for,
securities having the right to vote) on any matters on which stockholders of the
Company may vote ("Voting Company Debt").
5.4. Authorization of Agreement.
(a) The Company has all requisite corporate power and authority to execute
and deliver each Transaction Agreement to which it is a party and each
instrument required hereby to be executed and delivered by it prior to or at the
Closing, to perform its obligations hereunder and thereunder and to consummate
the Transactions. The execution and delivery by the Company of each Transaction
Agreement to which it is a party and each instrument required hereby to be
executed and delivered by it prior to or at the Closing and the performance of
its obligations hereunder and thereunder have been duly and validly authorized
by all requisite corporate action on the part of the Company (other than,
assuming the accuracy of the representations and warranties in Section 6.8, with
respect to the Merger, the adoption of this Agreement by the holders of a
majority of the outstanding shares of Company Common Stock in accordance with
the DGCL). Each Transaction Agreement to which it is a party has been duly
executed and delivered by the Company and (assuming due authorization, execution
and delivery hereof by the other parties hereto)
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constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, except as the same may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar Laws relating to creditors' rights generally, and
(ii) legal principles of general applicability governing the application and
availability of equitable remedies.
(b) Assuming the accuracy of the representations and warranties contained
in Section 6.8: (i) the only vote of holders of any class or series of capital
stock of the Company necessary to adopt or approve this Agreement and the Merger
is the adoption of this Agreement by the holders of a majority of the
outstanding shares of Company Common Stock (the "Company Stockholder Approval");
and (ii) the affirmative vote of the holders of any capital stock of the
Company, or any of them, is not necessary to consummate the Offer or any other
Transaction, other than the Merger.
5.5. Approvals. Except for the applicable requirements, if any, of (a) the
Exchange Act, (b) state securities Laws or blue sky Laws, (c) the HSR Act, (d)
the filing and recordation of appropriate merger documents as required by the
DGCL and (e) those Laws and Orders noncompliance with which would not reasonably
be expected to have a material adverse effect on the ability of the Company to
perform its obligations under each Transaction Agreement to which it is a party
or to have a Material Adverse Effect on the Company, no filing or registration
with, no waiting period imposed by and no Permit or Order of, any Governmental
Authority is required under any Law or Order applicable to the Company or any of
its Subsidiaries to permit the Company to execute, deliver or perform each
Transaction Agreement to which it is a party or any instrument required hereby
or thereby to be executed and delivered by it prior to or at the Closing.
5.6. No Violation. Except as set forth in Section 5.6 of the Company's
Disclosure Letter, assuming effectuation of all filings and registrations with,
termination or expiration of any applicable waiting periods imposed by and
receipt of all Permits and Orders of, Governmental Authorities indicated as
required in Section 5.5 and adoption of this Agreement by the stockholders of
the Company as required by the DGCL, neither the execution and delivery by the
Company of any Transaction Agreement to which it is a party or any instrument
required hereby or thereby to be executed and delivered by it prior to or at the
Closing nor the performance by the Company of its obligations hereunder or
thereunder will (a) conflict with, or result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or to loss
of a Material benefit under, or to increased, additional, accelerated or
guaranteed rights or entitlements of any Person under, or result in the creation
of any Lien upon any of the properties or assets of the Company or any
Subsidiary of the Company under, any provision of (i) any Law or Order
applicable to the Company, (ii) the certificate of incorporation or bylaws of
the Company or (iii) any contract or agreement to which the Company or any of
its Subsidiaries is a party or by which the Company or any of its Subsidiaries
or any of their respective properties or assets is bound, or (b) with the
passage of time, the giving of notice or the taking of any action by a third
Person, have any of the effects set forth in clause (a) of this Section, except
in any such case for any matters described in this Section that would not
reasonably be expected to have a Material Adverse Effect on the Company. Prior
to the execution of this Agreement, assuming the accuracy of the representations
and warranties contained in Section 6.8, the Board of Directors of the Company
has taken all necessary action to cause this Agreement and the other Transaction
Agreements and the Transactions to be exempt from the provisions of Section 203
of the DGCL No other state takeover statute or similar Law or Regulation applies
to the Company with respect to this Agreement, the other Transaction Agreements,
the Offer, the Merger or any other Transaction. The Company has been advised by
each of its directors and executive officers that each such Person currently
intends to tender all shares of Company Common Stock owned by such Person
pursuant to the Offer.
5.7. Reports and Financial Statements.
(a) The Company has filed all SEC Reports required to be filed by the
Company with the SEC (the "Company SEC Documents"). As of its respective date,
each Company SEC Document complied in all material respects with the
requirements of the Exchange Act or the Securities Act, as the case may be,
applicable to such Company SEC Document, and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein,
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in light of the circumstances under which they were made, not misleading. Except
to the extent that information contained in any Company SEC Document has been
revised or superseded by a later filed Company SEC Document, none of the Company
SEC Documents contains any untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading. No Subsidiaries of the Company are SEC reporting
companies.
(b) The Company and its Subsidiaries have filed all Reports required to be
filed with any Governmental Authorities other than the SEC, including state
securities administrators, except where the failure to file any such Reports of
the Company would not reasonably be expected to have a Material Adverse Effect
on the Company. Such Reports of the Company, including all those filed after the
date of this Agreement and prior to the Effective Time, were or will be prepared
in all material respects in accordance with the requirements of applicable Law.
(c) The Company Consolidated Financial Statements and any consolidated
financial statements of the Company (including any related notes thereto)
contained in any SEC Reports of the Company filed with the SEC (i) have been or
will have been prepared in accordance with applicable accounting requirements
and the published Regulations of the SEC and/or in accordance with GAAP
consistently applied (except (A) to the extent required by changes in GAAP and
(B) with respect to SEC Reports of the Company filed prior to the date of this
Agreement, as may be indicated in the notes thereto) and (ii) fairly present the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the respective dates thereof and the consolidated results of their
operations and cash flows for the periods indicated (and include, in the case of
any unaudited interim financial statements, reasonable accruals for normal
year-end adjustments).
5.8. No Undisclosed Liabilities. Except as set forth in Section 5.8 of the
Company's Disclosure Letter, there exist no liabilities or obligations of the
Company and its Subsidiaries, whether accrued, absolute, contingent or
otherwise, which would be required to be reflected, reserved for or disclosed
under GAAP in consolidated financial statements of the Company (including the
notes thereto) as of and for the most recent period ended prior to the date this
representation and warranty is given or required to be true to satisfy any
condition to the Offer or the Merger, other than (a) liabilities or obligations
that are adequately reflected, reserved for or disclosed in the Company's
Consolidated Financial Statements and (b) liabilities or obligations incurred in
the ordinary course of business of the Company since the Balance Sheet Date of
similar nature and amount as the liabilities and obligations of the Company as
of the Balance Sheet Date.
5.9. No Material Adverse Effect; Conduct. Except as disclosed in the
Company SEC Documents filed and publicly available prior to the date of this
Agreement (the "Filed Company SEC Documents") or in Section 5.9 of the Company's
Disclosure Letter, from the date of the most recent audited financial statements
included in the Filed Company SEC Documents, the Company has conducted its
business only in the ordinary course, and during such period there has not been:
(a) any event, change, effect or development that, individually or in
the aggregate, has had or could reasonably be expected to have a Material
Adverse Effect on the Company;
(b) any declaration, setting aside or payment of any dividend on, or
other distribution in respect of (whether in cash, stock or property), any
capital stock of the Company or any repurchase for value by the Company of
any capital stock of the Company;
(c) any split, combination or reclassification of any capital stock of
the Company or of any other equity interests in the Company, 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 capital stock of
the Company or of any other equity interests in the Company;
(d) (i) any granting by the Company or any Subsidiary of the Company
to any director or executive officer of the Company or any Subsidiary of
the Company of any increase in compensation, except in the ordinary course
of business consistent with past practice or as was required under
employment agreements in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC Documents, (ii) any
granting by the Company or any Subsidiary of the Company to any
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such director or executive officer of any increase in severance or
termination pay, except as was required under any employment, severance or
termination agreements in effect as of the date of the most recent audited
financial statements included in the Filed Company SEC Documents, or (iii)
any entry by the Company or any Subsidiary of the Company into any
employment, severance or termination agreement with any such director or
executive officer; or
(e) any change in accounting methods, principles or practices by the
Company or any Subsidiary of the Company materially affecting the
consolidated assets, liabilities or results of operations of the Company.
5.10. Schedule 14D-9; Offer Documents; Proxy Statement. None of the
information supplied or to be supplied by or on behalf of the Company for
inclusion or incorporation by reference in the Offer Documents, the Schedule
14D-9 or the Proxy Statement, including any amendments or supplements thereto,
at the time such document is filed with the SEC, at any time it is amended or
supplemented or at the time it is first published or sent or given to holders of
shares of Company Common Stock, and, in the case of the Proxy Statement, at the
time that it or any amendment or supplement thereto is mailed to the Company's
stockholders, at the time of the Company Stockholders' Meeting or at the
Effective Time, will 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 therein, in light of the circumstances under which they are
made, not misleading; provided, that the foregoing shall not apply to
information supplied by or on behalf of Parent or the Purchaser specifically for
inclusion or incorporation by reference in any such document. Schedule 14D-9
will comply as to form in all material respects with the provisions of the
Exchange Act, except that no representation is made by the Company with respect
to statements made or incorporated by reference therein based on information
supplied by Parent or Purchaser for inclusion or incorporation by reference
therein.
5.11. Properties and Assets. Except as set forth in Section 5.11 of the
Company's Disclosure Letter, the Company and its Subsidiaries own or have rights
to use all properties and assets necessary to permit the Company and its
Subsidiaries to continue to conduct their businesses as currently being
conducted except where the failure to own or have the right to use such
properties and assets would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company. Except as set forth
in Section 5.11 of the Company's Disclosure Letter, each of the Company and its
Subsidiaries has good and indefeasible fee title to, or valid leasehold
interests in, all its material real property, free and clear of all Liens,
except for Permitted Liens. As of the date of this Agreement, the Company had
cash of over $30 million. There are no Liens on the Company's cash, nor are
there any contractual restrictions on the use or distribution of the Company's
cash.
5.12. Contracts. Section 5.12(a) of the Company's Disclosure Letter
contains a true and complete list of all "Company Contracts". All Company
Contracts are in full force and effect, the Company or the Subsidiary of the
Company that is a party to or bound by such Company Contract has performed its
obligations thereunder to date and, to the Knowledge of the Company, each other
party thereto has performed its obligations thereunder to date. Except as set
forth in Section 5.12(b) of the Company's Disclosure Letter, neither the Company
nor any of its Subsidiaries has received any written notice of the intention of
any party to terminate any Company Contract, whether as a termination for
convenience or for default of the Company or any Subsidiary thereunder.
5.13. Litigation; Compliance with Laws. There are no actions, suits,
investigations or proceedings (including any proceedings in arbitration) pending
or, to the Knowledge of the Company, threatened against the Company or any of
its Subsidiaries, at law or in equity, except actions, suits or proceedings that
are set forth in Section 5.13 of the Company's Disclosure Letter. Except as set
forth in Section 5.13 of the Company's Disclosure Letter, the Company and its
Subsidiaries are in compliance with all applicable Laws and Regulations and are
not in default with respect to any Order applicable to the Company or any of its
Subsidiaries, except such events of noncompliance or defaults that, individually
or in the aggregate would not reasonably be expected to have a Material Adverse
Effect on the Company. Since January 1, 1994, to the date hereof, neither the
Company nor any Subsidiary of the Company has received any written notice of any
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administrative or civil or criminal investigation or audit (other than Tax
audits) by any Governmental Authority.
5.14. Employee Benefit Plans.
(a) Each Benefit Plan of the Company and its Subsidiaries is listed in
Section 5.14(a) of the Company's Disclosure Letter, including, with respect to
Terminated Benefit Plans, the date of termination.
(b) Except as set forth in Section 5.14(b) of the Company's Disclosure
Letter, no event has occurred and, to the Knowledge of the Company, there exists
no condition or set of circumstances in connection with which the Company or any
of its Subsidiaries could be subject to any liability under the terms of any
Benefit Plan, or under ERISA, or, with respect to any Benefit Plan, under the
Code or any other applicable Law. Each of the Benefit Plans has been
administered in material compliance with its terms and with the applicable
provisions of ERISA, the Code and any other applicable Law.
(c) Except as set forth in Section 5.14(c) of the Company's Disclosure
Letter, as to any Benefit Plan of the Company intended to be qualified under
Section 401 of the Code, such Benefit Plan has been determined by the IRS to
satisfy in form the requirements of such Section, no event has occurred that,
individually or in the aggregate, could be reasonably expected to result in the
disqualification of such Benefit Plan (disregarding correction methods under the
Employee Plans Compliance Resolution System) and there has been no termination
or partial termination of such Benefit Plan within the meaning of Section
411(d)(3) of the Code.
(d) As to any Terminated Benefit Plan intended to have been qualified under
Section 401 of the Code, such Terminated Benefit Plan received a favorable
determination letter from the IRS with respect to its termination, all
liabilities with respect to each such plan have been satisfied by the purchase
of annuities or otherwise, and each Terminated Benefit Plan has been terminated
in accordance with the requirements of law and the terms of the plan.
(e) There are no investigations, audits, actions, suits or claims pending
(other than routine claims for benefits) or, to the Knowledge of the Company,
threatened against, or with respect to, any Benefit Plan or its assets.
(f) To the Knowledge of the Company, there is no matter pending (other than
routine qualification determination filings) with respect to any Benefit Plan
before the IRS, the Department of Labor or the PBGC.
(g) All contributions required to be made by the Company or the Company's
Subsidiaries to any Benefit Plan pursuant to its terms and provisions have been
timely made.
(h) Neither the Company or any of its subsidiaries maintain any Current
Benefit Plan subject to Title IV of ERISA.
(i) Except as set forth in Section 5.14(i) of the Company's Disclosure
Letter, no employee of the Company or any Subsidiary of the Company or any
fiduciary of a Benefit Plan has a material liability with respect to a Benefit
Plan.
(j) In connection with the consummation of the Transactions, no payments
have been or will be made under any Current Benefit Plan or any other program,
agreement, policy or arrangement which would be nondeductible under Section 280G
of the Code.
(k) Except as set forth in Section 5.14(k) of the Company's Disclosure
Letter, the execution and delivery of this Agreement and the consummation of the
Transactions will not (i) require the Company or any of its Subsidiaries to pay
greater compensation or make a larger contribution to, or pay greater benefits
or accelerate payment or vesting of a benefit under, any Current Benefit Plan or
any other program, agreement, policy or arrangement or (ii) create or give rise
to any additional vested rights or service credits under any Current Benefit
Plan or any other program, agreement, policy or arrangement.
(l) Except as set forth in Section 5.14(l) of the Company's Disclosure
Letter, neither the Company nor any of its Subsidiaries is a party to or is
bound by any severance agreement, program or policy. True and
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correct copies of all employment agreements with officers of the Company and its
Subsidiaries, and all vacation, overtime and other compensation policies of the
Company and its Subsidiaries relating to their employees have been made
available to Parent.
(m) No Benefit Plan provides retiree medical or retiree life insurance
benefits to any Person and neither the Company nor any of its Subsidiaries is
contractually or otherwise obligated (whether or not in writing) to provide any
Person with life insurance or medical benefits upon retirement or termination of
employment, other than as required by the provisions of Sections 601 through 608
of ERISA and Section 4980B of the Code.
(n) Neither the Company nor any of its Subsidiaries contributes or has an
obligation to contribute, and neither has within six years prior to the date of
this Agreement contributed or had an obligation to contribute, to a
multiemployer plan within the meaning of Section 3(37) of ERISA.
(o) No compensation payable by the Company or any of its Subsidiaries to
any of their employees under any Current Benefit Plan or other program,
agreement, policy or arrangement is subject to disallowance under Section 162(m)
of the Code.
(p) All liabilities of Benefit Plans required to be included in the
Company's financial statements under financial accounting standards has been so
included in the Financial statements.
(q) The Company or a Subsidiary of the Company has retained the right to
terminate, suspend or amend any Benefit Plan.
5.15. Labor Matters. No collective bargaining agreement to which the
Company or any of its Subsidiaries is a party is currently in effect or is being
negotiated by the Company or any of its Subsidiaries. There is no pending or, to
the Knowledge of the Company, threatened labor dispute, strike or work stoppage
against the Company or any of its Subsidiaries. Neither the Company or any of
its Subsidiaries nor any representative or employee of the Company or any of its
Subsidiaries has committed any unfair labor practices in connection with the
operation of the business of the Company and its Subsidiaries, and there is no
pending or, to the Knowledge of the Company, threatened charge or complaint
against the Company or any of its Subsidiaries by the National Labor Relations
Board or any comparable agency of any state of the United States. The Company
and its Subsidiaries are in compliance with all applicable federal, state, local
or foreign labor Laws.
5.16. Taxes.
(a) Except as disclosed in Section 5.16(a) of the Company's Disclosure
Letter, (i) the Company and each Subsidiary of the Company, and any affiliated
group, within the meaning of Section 1504 of the Code, of which the Company or
any Subsidiary of the Company is or has been a member, has filed or will file in
a timely manner (within any applicable extension periods) all material Tax
Returns required to be filed by the Code or by applicable state, local or
foreign tax Laws, and all such Tax Returns are or will be true, complete and
accurate in all material respects, (ii) all Taxes with respect to taxable
periods covered by such Tax Returns, and all other Taxes for which the Company
or any Subsidiary of the Company is or might otherwise be liable, have been
timely paid in full or will be timely paid in full by the due date thereof and
the most recent audited financial statements contained in the Filed Company SEC
Documents for the Company reflect an adequate reserve for all Taxes accruing or
payable by the Company and its Subsidiaries for all taxable periods and portions
thereof through the date of such financial statements, and (iii) there are no
material liens for Taxes with respect to any of the assets or properties of the
Company or any Subsidiary of the Company.
(b) Except as disclosed in Section 5.16(b) of the Company's Disclosure
Letter, no Tax Return of the Company or of any Subsidiary of the Company is
under examination by the Internal Revenue Service, and no written notice of such
an audit or examination has been received by the Company or any Subsidiary of
the Company.
(c) Each deficiency resulting from any audit or examination relating to
Taxes by any Taxing Authority has been timely paid. No material issues relating
to Taxes were raised by the relevant Taxing Authority in any completed audit or
examination that can reasonably be expected to recur in a later taxable period.
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(d) Neither the Company nor any Subsidiary of the Company is party to or
bound by any tax sharing agreement, tax indemnity obligation or similar
agreement, arrangement or practice with respect to Taxes (including any advance
pricing agreement, closing agreement or other agreement relating to Taxes with
any Taxing Authority).
(e) Except as disclosed in Section 5.16(e) of the Company's Disclosure
Letter or as disclosed in the most recent audited financial statements included
in the Filed Company SEC Documents, neither the Company nor any Subsidiary of
the Company shall be required to include in a taxable period ending after the
Effective Time taxable income attributable to income that accrued in a
Pre-Effective Time Tax period but that was not recognized in any Pre-Effective
Time Tax period as a result of the installment method of accounting, the
completed contract or percentage contract methods of accounting (including the
look-back method under Section 460(b)(2) of the Code), the cash method of
accounting or Section 481 of the Code or any comparable provision of state,
local, or foreign Tax law, or for any other reason.
(f) Except as disclosed in Section 5.16(f) of the Company's Disclosure
Letter, (i) there are no outstanding agreements or waivers extending, or having
the effect of extending, the statutory period of limitation applicable to any
Tax Returns required to be filed with respect to the Company or any Subsidiary
of the Company, (ii) neither the Company nor any Subsidiary of the Company, nor
any affiliated group, within the meaning of Section 1504 of the Code, of which
the Company or any Subsidiary of the Company is or has ever been a member, has
requested any extension of time within which to file any Tax Return, which
return has not yet been filed , and (iii) no power of attorney with respect to
any Taxes has been executed or filed with any Taxing Authority by or on behalf
of the Company or any Subsidiary of the Company.
(g) The Company and its Subsidiaries have complied in all material respects
with all applicable Laws relating to the payment and withholding of Taxes
(including withholding of Taxes pursuant to Sections 1441, 1442, 3121 and 3402
of the Code or any comparable provision of any state, local or foreign Laws) and
have, within the time and in the manner prescribed by applicable Law, withheld
from and paid over to the proper Taxing Authorities all amounts required to be
so withheld and paid over under applicable Laws.
(h) To the Company's knowledge, no person who holds five percent or more of
the stock of the Company is a "foreign person" as defined in Section 1445 of the
Code.
(i) None of the Company and its Subsidiaries, has been a member of an
affiliated group filing a consolidated Federal income Tax Return other than the
affiliated group of which the Company is the common parent corporation.
5.17. Environmental Matters. The properties, operations and activities of
the Company and its Subsidiaries are in compliance with all material
Environmental Laws. The Company and its Subsidiaries and the properties,
operations and activities of the Company and its Subsidiaries are not subject
to, and have not received written notice of, any existing, pending or, to the
Knowledge of the Company, threatened action, suit, investigation, inquiry or
proceeding by or before any Court or Governmental Authority under any
Environmental Law. All material Permits or applications therefor required to be
obtained or filed by the Company or any of its Subsidiaries under any
Environmental Law in connection with the properties, operations and activities
of the Company and its Subsidiaries have been obtained or filed and are valid
and currently in full force and effect, and, to the Company's Knowledge, there
are no facts or circumstances that would cause such Permits to be revoked,
modified or not renewed under current conditions or in connection with the
transactions contemplated by this Agreement. There has been no material release
of any hazardous substance, pollutant or contaminant into the environment by the
Company or its Subsidiaries or in connection with their properties, operations
or activities. There has been no exposure (attributable to the action of the
Company or its Subsidiaries) of any Person or property to any hazardous
substance, pollutant or contaminant in connection with the properties,
operations and activities of the Company and its Subsidiaries in such quantities
or of such type as would reasonably be expected to give rise to a claim, demand
or suit. Neither the Company nor its Subsidiaries have assumed, whether by
contract, operation of Law or otherwise, any liabilities or obligations arising
under Environmental Laws in connection with their respective formerly owned
properties, businesses, divisions, Subsidiaries, companies or other entities.
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5.18. Intellectual Property. Section 5.18 of the Company's Disclosure
Letter contains a complete list of all Patents and Trademarks which are owned by
the Company or its Subsidiaries. Except as set forth in Sections 5.6 and 5.18 of
the Company's Disclosure Letter:
(a) The rights of the Company in and to each item of Intellectual
Property are owned or licensed by the Company, free and clear of any Liens
(except, in the case of licensed Intellectual Property, as set forth in the
license therefor). All of the Company's rights in and to such Intellectual
Property owned by the Company are freely assignable by it or its
Subsidiaries. As of the date of this Agreement, the Company is under no
obligation to pay any royalty, license fee or other similar consideration
to any third party or to obtain any approval or consent for use of any of
the Intellectual Property (except, in the case of licensed Intellectual
Property, as set forth in the license therefor). None of the Intellectual
Property owned by the Company or its Subsidiaries is subject to any
outstanding judgment, order, decree, or injunction issued by a court of
competent jurisdiction; no complaint, action, suit, proceeding, or hearing,
is pending or, to the Knowledge of the Company, no charge, investigation,
claim or demand, is threatened, which challenges the legality, validity,
enforceability, or ownership of any of the Intellectual Property owned and
currently used by the Company or its Subsidiaries.
(b) No breach or default (or event which with notice or lapse of time
or both would result in an event of default) by the Company exists or has
occurred, but not been cured, under any License-In or other agreement
pursuant to which the Company uses any Intellectual Property, and the
consummation of the transactions contemplated by this Agreement will not
violate or conflict with or constitute a default (or an event which, with
notice or lapse of time or both, would constitute a default) or result in a
forfeiture under, or constitute a basis for termination of, any such
License-In or other agreement, except for such breaches, defaults,
violations or conflicts which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on the Company.
(c) The Company owns or has the right to use all the Intellectual
Property necessary to provide, produce, sell or license the services and
products currently provided, produced, sold or licensed by the Company and
conduct the Company's business as presently conducted, and the consummation
of the transactions contemplated hereby will not impair any such rights,
including any right of the Company to use or sublicense any Intellectual
Property owned by others. The Intellectual Property covers all rights that
are necessary to operate the business of the Company as it is presently
conducted and to satisfy and perform the contracts, commitments,
arrangements and understandings with customers of the Company. The Company
has no Knowledge of any reason the Company will not be able to continue to
own, use, license or sub-license all Intellectual Property without
infringing any enforceable intellectual property rights of any third party.
(d) Except for Licensed-In Intellectual Property, no Intellectual
Property owned or used by the Company, and no product or service licensed
or sold by the Company, infringes any trademark, trade name, copyright or
patent, or misappropriates any trade secret, right of publicity, right of
privacy or other proprietary right of any Person or would give rise to an
obligation to render an accounting to any Person as a result of
co-authorship or co-invention; provided, however, that as to Licensed-In
Intellectual Property of a third party, such representation is qualified by
"to the Knowledge of the Company." The Company has received no written
notice of any adversely held patent, trademark, copyright, service mark,
trade name or trade secret of any other Person alleging or threatening to
assert that the Company's use of any of the Intellectual Property infringes
upon or is in conflict with any intellectual property or proprietary rights
of any third party. The Company has no Knowledge of any basis for any
charge, claim, suit or action asserting any such infringement or asserting
that the Company does not have the legal right to use any such Intellectual
Property.
(e) All the Company's Patents and registered Trademarks listed in
Section 5.18 of the Company's Disclosure Schedule as having been filed in,
issued by or registered with the United States Patent and Trademark Office
or the corresponding offices of other countries have been so duly filed,
registered or issued, as the case may be, and have been properly maintained
and renewed in accordance with all applicable provisions of law and
administrative regulations in the United States and each such other
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country. The Company has used reasonable efforts to diligently protect its
rights in such Intellectual Property, and, to the Knowledge of the Company,
there have been no acts or omissions by the Company, the result of which
would be to compromise the rights of the Company to apply for or enforce
appropriate legal protection of such Intellectual Property in the United
States or in such countries as the Company has done business within the
past year.
(f) Each of the Company's employees and those independent contractors
retained by the Company who, either alone or in concert with others,
created or creates, developed or develops, invented or invents, discovered
or discovers, derived or derives, programmed or programs or designed or
designs any of the Intellectual Property, has entered into a written
agreement with the Company providing, in substance, that all such
Intellectual Property shall be owned by, or otherwise assigned to, the
Company and that the Company's Proprietary Information shall not be used,
or disclosed to any third party except as authorized by the Company. No
former employees or independent contractors of the Company have any claim
or right to any of the Intellectual Property necessary for the lawful
conduct of the Company's business as now conducted. To the Knowledge of the
Company, no employee of the Company is a party to or otherwise bound by any
agreement with or obligated to any other Person (including, any former
employer) which prevents such employee from performing any material
obligation or commitment of such employee to the Company under any
agreement to which he or she is currently a party.
(g) The Company and each of its Subsidiaries has used its reasonable
best efforts to protect the proprietary and, as appropriate, confidential
nature of all Proprietary Information that it presently owns or uses.
For purposes of this Agreement, "Intellectual Property" means all of the
following which is owned by, licensed by, licensed to, or used by the Company
and its Subsidiaries (including all authorized copies and embodiments thereof
that are fixed in a tangible media or form): (i) all registered and unregistered
trademarks, service marks, logos, trade names, and other indications of origin,
the goodwill associated with the foregoing and registrations in any
jurisdiction, and applications in any jurisdiction to register (the
"Trademarks"); (ii) all issued U.S. and foreign patents and pending patent
applications (including, without limitation, divisionals, continuation,
continuation in part, continuing and renewal applications) (the "Patents");
(iii) all registered and unregistered copyrights and all applications to
register the same (the "Copyrights"), (iv) all protectable items of trade dress
used by the Company and its Subsidiaries, (v) all computer software and
protectable databases owned by the Company or under development by, or
specifically on behalf of, the Company (the "Software"); (vi) all licenses and
agreements pursuant to which the Company has acquired rights in or to the
Trademarks, Patents, Copyrights or Software (excluding software and databases
licensed to the Company under standard (except for immaterial deviations),
nonexclusive software licenses granted to end-user customers by third parties in
the ordinary course of such third parties' business) ("Licenses-In"), (vii) all
licenses and agreements pursuant to which the Company has licensed or
transferred the rights in and to Company Intellectual Property (excluding
software licensed by the Company under standard (except for immaterial
deviations) non-exclusive software licenses granted to end-user customers by the
Company as part of the sale of the Company's products) ("Licenses Out"); and
(viii) all confidential and proprietary trade secrets, know-how, processes,
procedures, drawings, specifications, designs, plans, proposals, or technical
data. ("Proprietary Information").
5.19. Brokers. Except as set forth in Section 5.19 of the Company's
Disclosure Letter, no broker, finder or investment banker (other than the
Financial Advisor) is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of the Company. The estimated fees and expenses incurred and to be
incurred by the Company in connection with the Offer, the Merger and the other
Transactions (including the fees of the Financial Adviser and the fees of the
Company's legal counsel) are set forth in Section 5.19 of the Company's
Disclosure Letter. The Company has furnished to Parent a true and complete copy
of all agreements between the Company and the Financial Advisor relating to the
Merger and the other Transactions.
5.20. Opinion of Financial Advisor. The Company has received the opinion of
the Financial Advisor in customary form, dated the date of this Agreement, to
the effect that, as of such date, the consideration to be
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received in the Offer and the Merger by the Company's stockholders is fair to
the Company's stockholders from a financial point of view.
5.21. Year 2000. The disclosures in the Company's Form 10-Q for the period
ending September 30, 1999 regarding the status of "Year 2000 Issues" are true,
correct and complete in all material respects as if made on the date of this
Agreement.
5.22. Insurance. The Company and its Subsidiaries maintain policies of fire
and casualty, liability and other forms of insurance in such amounts, with such
deductibles and against such risks and losses as are reasonable for the assets
and properties of the Company and its Subsidiaries and as are customary in the
Company's industry. As of the date of this Agreement all such policies are in
full force and effect, all premiums due and payable thereon have been paid, and
no notice of cancellation or termination has been received with respect to any
such policy.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PARENT COMPANIES
The Parent Companies hereby represent and warrant to the Company that:
6.1. Organization and Qualification; Subsidiaries. Parent and Purchaser are
legal entities duly organized, validly existing and in good standing under the
Laws of their respective jurisdictions of incorporation or organization, have
all requisite power and authority to own, lease and operate their respective
properties and assets and to carry on their business as it is now being
conducted and are duly qualified and in good standing to do business in each
jurisdiction in which the nature of the business conducted by them or the
ownership or leasing of their respective properties and assets makes such
qualification necessary, other than such qualifications the lack of which,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect on Parent.
6.2. Authorization of Agreement. Each of Parent and Purchaser has all
requisite corporate power and authority to execute and deliver, each Transaction
Agreement to which it is a party and each instrument required hereby to be
executed and delivered by it prior to or at the Closing, to perform its
obligations hereunder and thereunder and to consummate the Transactions. The
execution and delivery by Parent and Purchaser of each Transaction Agreement to
which it is a party and each instrument required hereby to be executed and
delivered by Parent or Purchaser prior to or at the Closing and the performance
of their respective obligations hereunder and thereunder have been duly and
validly authorized by all requisite corporate action on the part of Parent and
Purchaser, respectively. Each Transaction Agreement to which it is a party has
been duly executed and delivered by Parent and Purchaser and (assuming due
authorization, execution and delivery hereof by the other party hereto)
constitutes a legal, valid and binding obligation of Parent and Purchaser,
enforceable against Parent and Purchaser in accordance with its terms, except as
the same may be limited by (a) bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance or other similar Laws relating to creditors'
rights generally and (b) legal principles of general applicability governing the
application and availability of equitable remedies.
6.3. Approvals. Except for the applicable requirements, if any, of (a) the
Exchange Act, (b) state securities Laws or blue sky Laws, (c) the HSR Act, (d)
the filing and recordation of appropriate merger documents as required by the
DGCL (and other state Laws where Purchaser or the Company are qualified to do
business) and (e) those Laws and Orders noncompliance with which would not
reasonably be expected to have a material adverse effect on the ability of
Parent or Purchaser to perform its obligations under each Transaction Agreement
to which it is a party, no filing or registration with, no waiting period
imposed by and no Permit or Order of, any Governmental Authority is required
under any Law or Order applicable to Parent or Purchaser to permit Parent or
Purchaser to execute, deliver or perform each Transaction Agreement to which it
is a party or any instrument required hereby or thereby to be executed and
delivered by it prior to or at the Closing.
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6.4. No Violation. Assuming effectuation of all filings and registrations
with, termination or expiration of any applicable waiting periods imposed by and
receipt of all Permits and Orders of, Governmental Authorities indicated as
required in Section 6.3, neither the execution and delivery by Parent or
Purchaser of any Transaction Agreement to which it is a party or any instrument
required hereby or thereby to be executed and delivered by Parent or Purchaser
prior to or at the Closing nor the performance by Parent or Purchaser of their
respective obligations hereunder or thereunder will (a) conflict with, or result
in any violation of or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a Material benefit under, or to
increased, additional, accelerated or guaranteed rights or entitlements of any
Person under, or result in the creation of any Lien upon any of the properties
or assets of Parent or any Subsidiary of Parent under, any provision of (i) any
Law or Order applicable to Parent or Purchaser, (ii) the certificate of
incorporation or bylaws of Parent or Purchaser or (iii) any contract or
agreement to which Parent or any of its Subsidiaries is a party or by which it
or any of its properties or assets is bound, or (b) with the passage of time,
the giving of notice or the taking of any action by a third Person, have any of
the effects set forth in clause (a) of this Section, except in any such case for
any matters described in this Section that would not reasonably be expected to
have a material adverse effect upon the ability of Parent or Purchaser to
perform its obligations under this Agreement or any other Transaction Agreement.
6.5. Proxy Statement; Schedule 14D-9. None of the information supplied or
to be supplied by or on behalf of Parent or Purchaser for inclusion or
incorporation by reference in the Offer Documents, the Schedule 14D-9 or the
Proxy Statement, including any amendments or supplements thereto, incorporation
by reference in the Offer Documents, the Schedule 14D-9 or the Proxy Statement,
including any amendments or supplements thereto, at the time such document is
filed with the SEC, at any time it is amended or supplemented or at the time it
is first published or given to holders of shares of Company Common Stock, and,
in the case of the Proxy Statement, at the time that it or any amendment or
supplement thereto is mailed to the Company's stockholders, at the time of the
Company Stockholders' Meeting or at the Effective Time, will 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; provided
that the foregoing shall not apply to information supplied by or on behalf of
the Company specifically for inclusion or incorporation by reference in any such
document. The Offer Documents will contain (or will be amended in a timely
manner so as to contain) all information which is required to be included
therein in accordance with the Exchange Act and the rules and regulations
thereunder and any other applicable law, and will comply as to form in all
material respects with the provisions of the Exchange Act and any other
applicable law, except that no representations is made by Parent or Purchaser
with respect to statements made or incorporated by reference therein based on
information supplied by the Company for inclusion or incorporation by reference
therein.
6.6. Sufficient Funds. Parent and Purchaser have access to sufficient funds
to consummate the Offer and the Merger on the terms contemplated by this
Agreement and to pay related fees and expenses, the evidence of which
sufficiency has been provided in Section 6.6 of the Purchaser's Disclosure
Letter.
6.7. Brokers. Except for Warburg Dillon Read, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
and on behalf of Parent or Purchaser.
6.8. DGCL 203. At no time during the three (3) years prior to the date of
this Agreement has Parent, Purchaser, or any of their respective Affiliates,
been an "interested stockholder" within the meaning of, and as defined in,
Section 203 of the DGCL.
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ARTICLE VII
COVENANTS
7.1. Conduct of Business of the Company. The Company hereby covenants and
agrees that, prior to the Effective Time, unless otherwise expressly
contemplated by this Agreement or consented to in writing by Parent and, after
the Control Date, also by a majority of the Independent Directors, it will and
will cause each of its Subsidiaries to:
(a) operate its business in the usual and ordinary course consistent
with past practices;
(b) use reasonable efforts to preserve intact its business
organization, maintain its material rights and franchises, retain the
services of its respective key employees and maintain its relationships
with its respective customers and suppliers and others having business
dealings with it;
(c) maintain and keep its properties and assets in as good repair and
condition as at present, ordinary wear and tear excepted, and maintain
supplies and inventories in quantities consistent with its customary
business practice; and
(d) use reasonable efforts to keep in full force and effect insurance
and bonds comparable in amount and scope of coverage to that currently
maintained.
7.2. Prohibited Actions by the Company. Without limiting the generality of
Section 7.1, the Company covenants and agrees that, except as expressly
contemplated by this Agreement or otherwise consented to in writing by Parent
and after the Control Date, also by a majority of the Independent Directors,
which consents shall not be unreasonably withheld or delayed, from the date of
this Agreement until the Effective Time, it will not do, and will not permit any
of its Subsidiaries to do, any of the following:
(a) (i) increase the compensation payable to or to become payable to
any director or employee, except for increases in salary or wages of
employees in the ordinary course of business and consistent with past
practice or as required under any existing employment agreements, and
except that the Company may pay annual bonuses for fiscal year 1999 as
provided in Item 7 of Section 5.14(a) of the Company's Disclosure Letter;
(ii) grant any severance or termination pay (other than pursuant to any
existing employment agreements or the normal severance policy or practice
of the Company or its Subsidiaries as in effect on the date of this
Agreement) to, or enter into or amend in any material respect any
employment or severance agreement with, any employee; (iii) establish,
adopt, enter into or amend in any material respect any collective
bargaining agreement or Benefit Plan of the Company or its Subsidiaries
except as required by applicable Law or (iv) take any action to accelerate
any rights or benefits, or make any material determinations not in the
ordinary course of business consistent with past practice, under any
collective bargaining agreement or Benefit Plan of the Company or its
Subsidiaries;
(b) declare, set aside or pay any dividend on, or make any other
distribution in respect of (whether in cash, stock or property),
outstanding shares of capital stock, except for dividends by a wholly owned
Subsidiary of the Company to the Company or another wholly owned Subsidiary
of the Company;
(c) redeem, purchase or otherwise acquire, or offer to redeem,
purchase or otherwise acquire, any outstanding shares of capital stock of,
or other equity interests in, or any securities that are convertible into
or exchangeable for any shares of capital stock of, or other equity
interests in, or any outstanding options, warrants or rights of any kind to
acquire any shares of capital stock of, or other equity interests in, the
Company or any of its Subsidiaries (other than (i) any such acquisition by
the Company or any of its wholly owned Subsidiaries directly from any
wholly owned Subsidiary of the Company in exchange for capital
contributions or loans to such Subsidiary or (ii) any purchase, forfeiture
or retirement of shares of Company Common Stock or the Company Stock
Options occurring pursuant to the terms (as in effect on the date of this
Agreement) of any existing Benefit Plan of the Company or any of its
Subsidiaries);
(d) effect any reorganization or recapitalization; or split, combine
or reclassify any of the capital stock of, or other equity interests in,
the Company or any of its Subsidiaries or issue or authorize or
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propose the issuance of any other securities in respect of, in lieu of or
in substitution for, shares of such capital stock or such equity interests;
(e) offer, sell, issue or grant, or authorize the offering, sale,
issuance or grant of, any shares of capital stock of, or other equity
interests in, any securities convertible into or exchangeable for any
shares of capital stock of, or other equity interests in, or any options,
warrants or rights of any kind to acquire any shares of capital stock of,
or other equity interests in, or any Voting Company Debt or other voting
securities of, the Company or any of its Subsidiaries, or any "phantom"
stock, "phantom" stock rights, stock appreciation rights or stock-based
performance units, other than issuances of shares of Company Common Stock
upon the exercise of the Company Stock Options outstanding at the date of
this Agreement in accordance with the terms thereof (as in effect on the
date of this Agreement);
(f) change the terms of any Company Stock Option;
(g) acquire or agree to acquire, by merging or consolidating with, by
purchasing an equity interest in or a portion of the assets of, or in any
other manner, any business or any corporation, partnership, association or
other business organization or division thereof or otherwise acquire any
assets of any other Person (other than the purchase of assets from
suppliers or vendors in the ordinary course of business and consistent with
past practice);
(h) sell, lease, exchange or otherwise dispose of, or grant any Lien
with respect to, any of the properties or assets (including technological
assets) of the Company or any of its Subsidiaries, except for (i)
dispositions of excess or obsolete assets, (ii) sales of inventories in the
ordinary course of business and consistent with past practice and (iii) the
licensing of software to customers consistent with past practice;
(i) adopt any amendments to its certificate of incorporation or bylaws
or other organizational documents;
(j) effect any change in any accounting methods, principles or
practices of the Company, except as may be required by a change in GAAP, or
any change in Tax accounting;
(k) (i) incur any indebtedness, issue or sell any debt securities or
warrants or other rights to acquire any debt securities of the Company or
any of its Subsidiaries, guarantee any debt securities of another Person,
enter into any "keep well" or other agreement to maintain any financial
statement condition of another Person or enter into any arrangement having
the economic effect of any of the foregoing, except for short-term
borrowings pursuant to existing lines of credit incurred in the ordinary
course of business consistent with past practice or (ii) make any loans,
advances or capital contributions to, or investments in, any other Person,
other than to or in the Company or any direct or indirect wholly owned
Subsidiary of the Company;
(l) enter into any contract which, if such contract is entered into,
would be a Material Contract;
(m) make or agree to make any new capital expenditure or expenditures
other than the capital expenditures contemplated by the Company's annual
operating plan for 1999, copy of which has been furnished to Parent prior
to the execution of this Agreement and except for capital expenditures from
January 1, 2000 through May 1, 2000 not to exceed $732,335 in the
aggregate, and capital expenditures described in Section 7.2(m) of the
Company's Disclosure Letter;
(n) make any nonroutine Tax election or settle or compromise any Tax
liability or refund, except as provided in Section 7.2(n) of the Company's
Disclosure Letter;
(o) (i) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in the
ordinary course of business consistent with past practice or in accordance
with their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent consolidated financial statements (or the
notes thereto) of the Company included in the Filed SEC Documents or
incurred in the ordinary course of business consistent with past practice
or (ii) cancel any Material indebtedness (individually or in the aggregate)
or waive any claims or rights of substantial value;
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(p) enter into any new agreements with, or commitments to, insurance
brokers or advisers extending beyond one year or extend any insurance
policy beyond one year (including, for the avoidance of doubt, the
directors' and officers' liability insurance policies referred to in
Section 7.11); or
(q) agree in writing or otherwise to do any of the foregoing.
7.3. No Solicitation.
(a) From the date of this Agreement until the Effective Time or the
termination of this Agreement pursuant to Section 9.1, the Company agrees that
it will not, and will not permit any of its Subsidiaries, or any of its or their
officers, directors, employees, representatives, agents, or Affiliates,
including any investment banker, attorney, or accountant retained by the Company
or any of its Subsidiaries (collectively, "Representatives"), to, directly or
indirectly (i) initiate, solicit or encourage (including by way of furnishing
information), or take any other action to facilitate, any inquiries with respect
to or the making of any proposal or offer that constitutes, or may reasonably be
expected to lead to, an Acquisition Proposal, (ii) enter into or maintain or
continue discussions or negotiate with any Person regarding an Acquisition
Proposal or in furtherance of such inquiries with respect to or to obtain an
Acquisition Proposal, or (iii) agree to, approve, recommend or endorse any
Acquisition Proposal, or authorize or permit any of the Representatives of the
Company or any of its Subsidiaries to take any such action, and the Company
shall promptly notify Parent of any such inquiries and proposals hereafter
received by the Company or any of its Subsidiaries or by any such
Representative, relating to any of such matters. Any violation of the
restrictions set forth in this Section 7.3 by any Representative of the Company
or any of its Subsidiaries, whether or not such Person is purporting to act on
behalf of the Company or otherwise, shall be deemed to be a breach of this
Section 7.3 by the Company. Notwithstanding the foregoing, the Board of
Directors of the Company may, at any time prior to the payment of shares of
Company Common Stock pursuant to the Offer, furnish information (pursuant to a
customary confidentiality agreement not materially more favorable to the party
receiving information than the Confidentiality Agreement and consistent with the
Company's disclosure and other obligations under this Agreement, including
Section 7.3(c)) to, or engage in discussions or negotiations with, any Person in
response to an unsolicited (and the existence of discussions or negotiations
with a Person prior to the date of this Agreement shall not create a presumption
that a proposal from a Person was solicited) bona fide Acquisition Proposal of
such Person that the Board of Directors of the Company determines is reasonably
likely to result in a Qualifying Proposal, if, and only to the extent that, (A)
the Board of Directors of the Company, after consultation with outside legal
counsel to the Company, determines in good faith that failure to do so would
result in a breach of the fiduciary duty of the Board of Directors of the
Company to the stockholders of the Company under applicable Law, and (B) prior
to furnishing such information to, or entering into discussions or negotiations
with, such Person the Company provides written notice to Parent to the effect
that it is furnishing information to, or entering into discussions or
negotiations with, such Person and the Company complies with Section 7.3(c). The
Company shall immediately cease and terminate any existing solicitation,
initiation, encouragement, activity, discussion or negotiation with any Persons
conducted heretofore by it or its Representatives with respect to any
Acquisition Proposal.
(b) Except as expressly permitted by this Section 7.3, (i) neither the
Board of Directors of the Company nor any committee thereof shall (A) withdraw
or modify, or propose publicly to withdraw or modify, in a manner adverse to
Parent or Purchaser, the approval or recommendation by such Board of the Offer
or the Merger as set forth in Section 2.02, (B) approve or recommend, or propose
publicly to approve or recommend, any Acquisition Proposal, or (C) cause the
Company to enter into any letter of intent, agreement in principle, acquisition
agreement or other agreement (each, an "Acquisition Agreement") related to any
Acquisition Proposal and (ii) the Company shall not enter into any Acquisition
Agreement with respect to any Acquisition Proposal. Notwithstanding the
foregoing, prior to the payment of shares of Company Common Stock pursuant to
the Offer, the Board of Directors of the Company may terminate this Agreement
but only (A) if the Board of Directors of the Company, after consultation with
outside legal counsel to the Company, determines in good faith that failure to
do so would result in a breach of the fiduciary duty of the Board of Directors
to the stockholders of the Company under applicable Law, (B) if the Company and
the Board of Directors of the Company have complied with all the provisions of
this Section 7.3, (C) after the second Business Day
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following Parent's receipt of written notice advising Parent that the Board of
Directors of the Company is prepared to accept a Qualifying Proposal, and after
having received from the Company sufficient and accurate guidance in order to
enable Parent to make a bona fide counter proposal, it being understood and
agreed that nothing contained in this paragraph shall require the Company to
provide to Parent any of the details of such Qualifying Proposal, including the
identity of the Person making such Qualifying Proposal and the specific terms of
such Qualifying Proposal (during which two day period the Company will negotiate
in good faith with Parent or Purchaser concerning any amendments proposed by
Parent or Purchaser) and (D) if concurrently with such termination, the Company
enters into an Acquisition Agreement with respect to such Qualifying Proposal
and pays to Parent the Termination Fee.
(c) In addition to the obligations of the Company set forth in paragraphs
(a) and (b) of this Section 7.3, the Company shall promptly advise Parent,
orally and in writing, of any request for information or of any Acquisition
Proposal.
(d) "Acquisition Proposal" means an inquiry, offer or proposal that is made
after the date of this Agreement regarding any of the following (other than the
Transactions) involving the Company: (i) any merger, consolidation, share
exchange, recapitalization, liquidation, dissolution, business combination or
other similar transaction; (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of a substantial portion of the assets of the
Company and its Subsidiaries, taken as a whole, or of any Material Business or
of any Subsidiary or Subsidiaries responsible for a Material Business in a
single transaction or series of related transactions; (iii) any acquisition of
20% or more of the outstanding shares of capital stock of the Company or the
filing of a registration statement under the Securities Act in connection
therewith or any other acquisition or disposition the consummation of which
would prevent or materially diminish the benefits to Parent of the Merger; or
(iv) any public announcement of a proposal, plan or intention to do any of the
foregoing or any agreement to engage in any of the foregoing.
"Qualifying Proposal" means any written proposal made by a third party
after the date of this Agreement to acquire, directly or indirectly, including
pursuant to a tender offer, exchange offer, merger, consolidation, share
exchange, business combination, recapitalization, liquidation, dissolution or
other similar transaction all the shares of Company Common Stock then
outstanding or all or substantially all of the assets of the Company and its
Subsidiaries which the Board of Directors of the Company determines in good
faith (x) (based on the advice of the Financial Advisor or another financial
advisor of nationally recognized reputation) that such proposal has a reasonable
likelihood of being consummated and (y) (based on the advice of the Financial
Advisor or another financial advisor of nationally recognized reputation) that
such proposal would, if consummated, be superior to the Company's stockholders
from a financial point of view (taking into account any changes to the financial
terms of this Agreement proposed by Parent or Purchaser in response to such
proposal) when compared to the Offer, the Merger and the other Transactions,
taken as a whole.
"Material Business" means any business (or the assets needed to carry out
such business) that contributed or represented 15% or more of the net sales, the
net income or the assets (including equity securities) of the Company and its
Subsidiaries taken as a whole.
(e) Nothing contained in this Section 7.3 shall prohibit the Company from
taking and disclosing to its stockholders a position contemplated by Rule 14d-9
or Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders which the Board of Directors of the
Company, after consultation with outside legal counsel to the Company,
determines in good faith is required by applicable Law; provided that neither
the Board of Directors of the Company nor any committee thereof approves or
recommends, or publicly proposes to approve or recommend, an Acquisition
Proposal unless the Company and the Board of Directors of the Company have
complied with all the provisions of this Section 7.3. Notwithstanding anything
to the contrary, if the Purchaser has accepted for payment of, and paid for, any
shares of Company Common Stock pursuant to the Offer, the Company will duly
call, give notice and hold the Stockholders Meeting, if required by the DGCL,
for the purpose of considering and taking action upon this Agreement and the
Merger whether or not the Board of Directors of the Company has determined at
any time after the date hereof it is no longer advisable for the stockholders of
the Company to adopt this Agreement.
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7.4. Access to Information. Between the date of this Agreement and the
Effective Time, the Company shall, and shall cause its Subsidiaries to: (a)
afford to Parent and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives full reasonable
access during normal business hours and at all other reasonable times to the
officers, employees, agents, properties, offices and other facilities of the
Company and its Subsidiaries and to their books and records and (b) furnish
promptly to Parent and its representatives a copy of each report, schedule,
registration statement and other document filed by it during such period
pursuant to the requirements of federal or state securities Laws and such other
information concerning the business, properties, contracts, records and
personnel of the Company and its Subsidiaries (including financial, operating
and other data and information) as may be reasonably requested, from time to
time, by or on behalf of Parent.
7.5. Confidentiality Agreement. Subject to Section 7.7, the parties agree
that the provisions of the Confidentiality Agreement shall remain binding and in
full force and effect and that the terms of the Confidentiality Agreement are
incorporated herein by reference; provided, however, that any consents from the
Company necessary under the Confidentiality Agreement for Parent and Purchaser
to consummate the Transactions shall be deemed to have been made. The parties
shall comply with, and shall cause their respective representatives to comply
with, all of their respective obligations under the Confidentiality Agreement
until the Effective Time.
7.6. 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 action, and to do, or cause to be done, all
things reasonably necessary, proper or advisable under applicable Laws to
consummate and make effective as soon as reasonably practicable the Transactions
including: (a) cooperating in the preparation and filing of all applications,
requests, consents and other filings required by applicable Governmental
Authorities or Courts, including filings required by the HSR Act, the Offer
Documents, the Schedule 14D-9, the Proxy Statement and any amendments and
supplements to any thereof; (b) taking all action reasonably necessary, proper
or advisable to secure any necessary consents, approvals or waivers from third
parties; (c) contesting any pending legal proceeding, whether judicial or
administrative, relating to the Offer or the Merger, including seeking to have
any stay or temporary restraining order entered by any Court or other
Governmental Authority vacated or reversed; and (d) executing any additional
instruments necessary to consummate the Transactions. In case at any time after
the Effective Time any further action is necessary to carry out the purposes of
this Agreement, the proper officers and directors of each party hereto shall use
all reasonable efforts to take all such necessary action.
7.7. Public Announcements. Parent, Purchaser and the Company will consult
with each other before issuing any press release or otherwise making any public
statements with respect to the Offer or the Merger or this Agreement and shall
not issue any such press release or make any such public statement prior to such
consultation (and affording the other party or parties an opportunity to comment
thereon), except as may be required by applicable Law or Court process or by
obligations pursuant to any listing agreement with the NASD or any securities
exchange.
7.8. Employee Agreements. Parent acknowledges and agrees that all
employment agreements, severance agreements, deferred compensation agreements,
and supplemental retirement agreements with the employees of the Company and its
Subsidiaries that are listed in Section 7.8 of the Company's Disclosure Letter
will be binding and enforceable obligations of the Surviving Corporation to the
same extent as they were binding and enforceable obligations of the Company and
its Subsidiaries as of the date of this Agreement, except as the parties thereto
may otherwise agree or as required by applicable law.
7.9. State Takeover Statutes. Assuming the accuracy of the representations
and warranties in Section 6.8, the Company has taken all steps necessary (a) to
exempt the Transactions from Section 203 of the DGCL, (b) to ensure that no
other state takeover statute or similar Law or Regulation is or becomes
applicable to any Transaction Agreement and (c) if any state takeover statute or
similar Law or Regulation becomes applicable to any Transaction Agreement, to
ensure that the Offer, the Merger and the other Transactions may be consummated
as promptly as practicable on the terms contemplated by the Transaction
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Agreements and otherwise to minimize the effect of such Law or Regulation on the
Offer, the Merger and the other Transactions.
7.10. Rights Plan. The Board has amended the Rights Agreement so that (i)
none of the execution or delivery of this Agreement or the Stockholders
Agreement or the making of the Offer or the exercise of Purchaser's rights under
the Stockholders Agreement will cause (A) the "Rights" (as defined in the Rights
Agreement) to become exercisable under the Rights Agreement, (B) Parent or
Purchaser or any of their affiliates to be deemed an "Acquiring Person" (as
defined in the Rights Agreement) or (C) the "Stock Acquisition Date" (as defined
in the Rights Agreement) to occur upon any such event, (ii) none of the
acceptance for payment or payment for Shares by Purchaser pursuant to the Offer,
the consummation of the Merger or the exercise of Purchaser's rights under the
Stockholders Agreement will cause (A) the Rights to become exercisable under the
Rights Agreement or (B) Parent or Purchaser or any of their affiliates to be
deemed an Acquiring Person or (C) the Stock Acquisition Date to occur upon any
such event, and (iii) the "Expiration Date" (as defined in the Rights Agreement)
shall occur no later than immediately prior to the purchase of shares pursuant
to the Offer, a copy of which amendment is attached to Section 7.10 of the
Company's Disclosure Letter.
7.11. Employee Benefit Plans. Following the Effective Time, Parent intends
to continue the Benefit Plans until it has evaluated the Benefit Plans, market
conditions and other factors. However, Parent reserves the right to cancel any
and all Benefit Plans at any time, in which event, as to any such cancelled
Benefit Plan, Parent shall grant all employees of the Surviving Corporation and
its Subsidiaries on the date of such cancellation credit for vesting and
eligibility purposes for all service with the Surviving Corporation and any
Subsidiary of the Surviving Corporation prior to the date of such cancellation
under all Benefit Plans of Parent or its Subsidiaries (other than the Surviving
Corporation and its Subsidiaries) in which such employees shall become eligible
to participate as if such service with the Surviving Corporation or any
Subsidiary of the Surviving Corporation and their respective predecessors was
service with Parent or any Subsidiary of Parent (other than the Surviving
Corporation and its Subsidiaries). In the event any severance agreement, program
or policy requires the payment of benefits solely as a result of the
transactions contemplated under agreement, the Company will prior to the Closing
amend such agreement, program or policy to prevent the payment of benefits
solely as a result of the transactions contemplated under this agreement.
7.12. Indemnification of Directors and Officers.
(a) Purchaser agrees that all rights to indemnification or exculpation (to
the extent provided in the certificate of incorporation of the Company) for acts
or omissions occurring prior to the Effective Time in favor of the current or
former directors, officers or employees of the Company and its Subsidiaries as
provided in their respective certificates of incorporation or bylaws shall
survive the Merger and shall continue in full force and effect in accordance
with their terms for a period of six years from the Effective Time. In addition,
until the sixth (6th) anniversary of the Effective Time, Parent shall cause the
Surviving Corporation to maintain in effect with respect to matters occurring
prior to the Effective Time, to the extent available at less than 300% of
current premiums, the policies of directors' and officers' liability insurance
currently maintained by the Company (or policies substantially similar in amount
and coverage) or, in the alternative, may cause similar coverage to be included
in Parent's directors' and officers' liability coverage (if available). The
Company shall not increase, amend or change any rights to indemnification or
exculpation after the date hereof.
(b) If any claims for indemnification as provided in subparagraph (a) above
cannot be satisfied by the Surviving Corporation (through its own means and/or
directors' and officers' liability insurance) and the Surviving Corporation has
distributed assets to Parent or any of Parent's Affiliates or has otherwise
transferred any assets to or for the benefit of Parent or any of Parent's
affiliates (whether by loan, asset sale or otherwise), then Parent shall be
liable for such unsatisfied indemnification claims to the extent of up to the
fair market value of any such distributions or transfers (less, in the case of
any transfer, the fair market value of any consideration received by the Company
in such transfer).
(c) If any claim or claims shall, subsequent to the Effective Time and
within six years thereafter, be made in writing against any present or former
director, officer or employee of the Company based on or arising
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<PAGE> 29
out of the services of such Person prior to the Effective Time in the capacity
of such Person as a director, officer or employee of the Company (and such
director, officer or employee shall have given Parent written notice of such
claim or claims within such six year period), the provisions of subsection (a)
of this Section respecting the rights to indemnity for current or former
directors, officers or employees under the certificate of incorporation and
bylaws of the Company and its Subsidiaries shall continue in effect until the
final disposition of all such claims.
(d) Notwithstanding anything to the contrary in this Section 7.12, neither
Parent nor the Surviving Corporation shall be liable for any settlement effected
without its written consent, which shall not be unreasonably withheld.
7.13. Event Notices and Other Actions.
(a) From and after the date of this Agreement until the Effective Time,
each party hereto shall promptly notify the other parties hereto of (i) the
occurrence or nonoccurrence of any event, the occurrence or nonoccurrence of
which has resulted in, or could reasonably be expected to result in, any
condition to the Offer set forth in Annex B, or any condition to the Merger set
forth in Article VIII, not being satisfied, (ii) the failure of such party to
comply with any covenant or agreement to be complied with by it pursuant to this
Agreement which has resulted in, or could reasonably be expected to result in,
any condition to the Offer set forth in Annex B, or any condition to the Merger
set forth in Article VIII, not being satisfied and (iii) any representation or
warranty made by it contained in this Agreement that is qualified as to
materiality becoming untrue or inaccurate in any respect or any such
representation or warranty that is not so qualified becoming untrue or
inaccurate in any material respect. No delivery of any notice pursuant to this
Section 7.13(a) shall cure any breach of any representation or warranty of such
party contained in this Agreement or otherwise limit or affect the remedies
available hereunder to the party or parties receiving such notice.
(b) The Company and Parent shall not, and shall not permit any of their
respective Subsidiaries to, take any action or nonaction that would, or that
could reasonably be expected to, result in (i) any of the representations and
warranties of such party set forth in this Agreement that is qualified as to
materiality becoming untrue, (ii) any of such representations and warranties
that is not so qualified becoming untrue in any material respect or (iii) except
as otherwise permitted by Section 7.3, any condition to the Offer set forth in
Annex B, or any condition to the Merger set forth in Article VIII, not being
satisfied.
7.14. Third Party Standstill Agreements; Tortious Interference. During the
period from the date of this Agreement through the Effective Time, the Company
shall not terminate, amend, modify or waive any provision of any confidentiality
or standstill or similar agreement to which the Company or any of its
Subsidiaries is a party (other than any involving Parent or customary
confidentiality agreements with customers, suppliers and other third parties in
the ordinary course of business provided that no such terminations, amendments,
modifications or waivers shall, individually or in the aggregate have a Material
Adverse Effect on the Company). Subject to the foregoing, during such period,
the Company agrees to enforce, to the fullest extent permitted under applicable
Law, the provisions of any such agreements, including obtaining injunctions to
prevent any breaches of such agreements and to use all reasonable efforts to
enforce specifically the terms and provisions thereof in any Court of the United
States or any state thereof having jurisdiction. Notwithstanding the foregoing,
nothing in this Section 7.14 is intended to prevent the Company from exercising
its rights under Section 7.3 in accordance with the provisions of Section 7.3.
7.15. Payment of Certain Fees. Upon consummation of the Merger, Parent
shall cause the Surviving Corporation to promptly (but no later than two (2)
Business days following such consummation) pay any fees and expenses owed to the
Financial Advisor.
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ARTICLE VIII
CLOSING CONDITIONS
8.1. Closing Conditions. The obligations of each party to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) This Agreement and the Merger shall have been approved and adopted
by the requisite vote of the stockholders of the Company, if required by
applicable Law.
(b) No Court of competent jurisdiction or Governmental Authority shall
have enacted, issued, promulgated, enforced or entered any Law or Order
(whether temporary, preliminary or permanent) which is in effect and which
has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(c) The applicable waiting period under the HSR Act shall have expired
or been terminated.
(d) The Purchaser, Parent or their Affiliates shall have accepted for
payment and purchased shares of Company Common Stock pursuant to and
subject to the conditions of the Offer.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1. Termination. This Agreement may be terminated and the Offer and the
Merger may be abandoned at any time (notwithstanding approval of the Merger by
the stockholders of the Company) prior to the Effective Time:
(a) by mutual written consent of Parent, Purchaser and the Company;
(b) by Parent, Purchaser or the Company if any Court of competent
jurisdiction or other Governmental Authority shall have issued a final
Order or taken any other final action restraining, enjoining or otherwise
prohibiting the consummation of the Offer or the Merger and such Order or
other action is or shall have become nonappealable;
(c) by Parent or Purchaser if due to an occurrence or circumstance
which would result in a failure to satisfy any of the conditions set forth
in Annex B hereto, Purchaser shall have (i) failed to commence the Offer
within the time required by Regulation 14D under the Exchange Act, (ii)
terminated the Offer without purchasing any shares of Company Common Stock
pursuant to the Offer or (iii) failed to accept for payment shares of
Company Common Stock pursuant to the Offer prior to May 1, 2000 (the
"Termination Date");
(d) by the Company if (i) there shall not have been (x) any breach or
breaches of any representation or warranty or (y) any breach or breaches of
a covenant or agreement on the part of the Company under this Agreement
that, individually or in the aggregate, materially adversely affect (or
materially delay) the consummation of the Offer and Purchaser shall have
(A) failed to commence the Offer within the time required by Regulation 14D
under the Exchange Act, (B) terminated the Offer without purchasing any
shares of Company Common Stock pursuant to the Offer or (C) failed to
accept for payment shares of Company Common Stock pursuant to the Offer
prior to the Termination Date, or (ii) prior to the payment for shares of
Company Common Stock pursuant to the Offer, concurrently with the execution
of an Acquisition Agreement under the circumstances permitted by Section
7.3; provided that such termination under this clause (ii) shall not be
effective unless the Company and the Board of Directors of the Company
shall have complied with all their obligations under Section 7.3 and until
payment of the Termination Fee pursuant to Section 9.5(b);
(e) by Parent or Purchaser prior to the purchase of shares of Company
Common Stock pursuant to the Offer, if (i) Purchaser shall be entitled to
terminate the Offer pursuant to paragraph (b)(i) of Annex B, (ii) there
shall have been any breach of any covenant or agreement on the part of the
Company under this Agreement which materially adversely affects (or
materially delays) the consummation of the
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<PAGE> 31
Offer, which shall not have been cured prior to the earlier of (A) 10 days
following notice of such breach and (B) two Business Days prior to the date
on which the Offer expires, provided, however, that the Company shall have
no right to cure a breach of Section 7.3, (iii) the Board of Directors of
the Company or any committee thereof shall have withdrawn or modified
(including by amendment of Schedule 14D-9) in a manner adverse to Purchaser
its approval or recommendation of the Offer, the Merger or this Agreement
or shall have recommended to the Company's stockholders a Third Party
Acquisition, or (iv) there shall not have been validly tendered and not
withdrawn prior to the expiration of the Offer at least a majority of the
Fully Diluted Shares; or
(f) by the Company prior to the purchase of any shares of Company
Common Stock pursuant to the Offer if (i) there shall have been a breach of
any representation or warranty in this Agreement on the part of Parent or
Purchaser which materially adversely affects (or materially delays) the
consummation of the Offer or the Merger or (ii) there shall have been a
breach of any covenant or agreement in this Agreement on the part of Parent
or Purchaser which materially adversely affects (or materially delays) the
consummation of the Offer or the Merger which shall not have been cured
prior to the earliest of (A) 10 days following notice of such breach and
(B) two Business Days prior to the date on which the Offer expires.
9.2. Effect of Termination. In the event of the termination and abandonment
of this Agreement pursuant to Section 9.1, this Agreement shall forthwith become
void and have no effect, without any liability on the part of any party hereto
or its Affiliates, directors, officers or stockholders, other than the
provisions of this Section 9.2 and Sections 5.19, 6.7, 7.5 and 9.5 and Article X
and the Confidentiality Agreement. Nothing contained in this Section 9.2 shall
relieve any party from liability for any antecedent breach of this Agreement.
9.3. Amendment. This Agreement may be amended by action taken by the
Company, Parent and Purchaser at any time before or after any adoption of this
Agreement by the stockholders of the Company (whether or not such adoption is
required); provided that after the date of adoption of this Agreement by the
stockholders of the Company, no amendment shall be made that by Law requires
further approval of such stockholders without the approval of such stockholders.
This Agreement may not be amended except by an instrument in writing signed on
behalf of all the parties.
9.4. Extension; Waiver. At any time prior to the Effective Time, a party
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 of the other parties contained herein or in any
document, certificate or writing delivered pursuant hereto or (c) waive
compliance with any of the agreements or conditions of the other parties hereto
contained herein; provided that after the date of adoption of the Merger by the
stockholders of the Company, no extensions or waivers shall be made that by Law
requires further approval by such stockholders without the approval of such
stockholders. 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.
9.5. Fees, Expenses and Other Payments.
(a) Except as provided in Section 9.5(b) of this Agreement, all fees and
expenses incurred by the parties hereto shall be borne solely and entirely by
the party which has incurred such fees and expenses.
(b) If:
(i) Parent or Purchaser terminates this Agreement pursuant to Section
9.1(e)(i) (other than a termination resulting from an event or circumstance
that causes a Material Adverse Effect with respect to the Company after the
date of this Agreement, which event or circumstance was not caused by the
willful or intentional action or inaction by the Company) or pursuant to
Section 9.1(e) (ii) (other than as a result of a breach of Section 7.3),
and in any such case, any proposal for a Third Party Acquisition shall have
been made on or prior to the date of such termination and in any such case,
within 12 months thereafter the Company enters into an agreement with
respect to the consummation of a Third Party Acquisition or a Third Party
Acquisition is otherwise consummated;
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(ii) Parent or Purchaser terminates this Agreement pursuant to Section
9.1(e)(ii) as a result of a breach of Section 7.3 or pursuant to Section
9.1(e)(iii); or
(iii) the Company terminates this Agreement pursuant to Section
9.1(d)(ii); or
(iv) if Parent or Purchaser terminates, or does not purchase any
shares of Company Common Stock under, the Offer, and prior to such
termination an Acquisition Proposal is publicly announced, and within
twelve (12) months after such termination, the transactions contemplated by
such Acquisition Proposal (as may be modified or amended) are consummated;
then, in each case, the Company shall pay to Parent, within two Business
Days following the execution and delivery of such agreement or such
occurrence, as the case may be, or simultaneously with such termination
pursuant to Section 9.1(d)(ii), a fee, in cash, of $3 million (the
"Termination Fee).
(c) Any payment required to be made pursuant to Section 9.5(b) of this
Agreement shall be made to Parent by wire transfer of immediately available
funds to an account designated by Parent.
ARTICLE X
GENERAL PROVISIONS
10.1. Nonsurvival of Representations, Warranties and Agreements. None of
the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 10.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
10.2. Notices. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given upon
receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses or sent by electronic transmission to the telecopier number specified
below:
(a) If to either of the Parent Companies:
Solution 6 Holdings Limited
Town Hall House
Level 21, 456 Kent Street
Sydney, New South Wales,
Australia 2000
Attention: Thomas A. Montgomery
Telecopier No.: 011-612-9278-0702
with a copy to:
Jackson Walker L.L.P.
901 Main Street, Suite 6000
Dallas, Texas 75202
Attention: Richard F. Dahlson
Telecopier No.: (214) 953-6187
(b) If to the Company:
Elite Information Group, Inc.
5100 West Gold Leaf Circle
Los Angeles, California 90056
Attention: Christopher K. Poole
Telecopier No.: (323) 292-3975
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with a copy to:
Robinson Bradshaw & Hinson, P.A.
101 North Tryon Street, Suite 1900
Charlotte, North Carolina 28246
Attention: Patrick S. Bryant
Telecopier No.: (704) 378-4000
or to such other address or telecopier number as any party may, from time to
time, designate in a written notice given in a like manner. Notice given by
telecopier shall be deemed received on the day the sender receives telecopier
confirmation that such notice was received at the telecopier number of the
addressee. Notice given by mail as set out above shall be deemed received three
days after the date the same is postmarked.
10.3. Headings. The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
10.4. 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 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 an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible.
10.5. Entire Agreement. This Agreement (together with the Annexes, the
Company's Disclosure Letter, the Confidentiality Agreement and the other
Transaction Agreements) constitutes the entire agreement of the parties, and
supersedes all prior agreements and undertakings, both written and oral, among
the parties, with respect to the subject matter hereof.
10.6. Assignment. Neither this Agreement nor any of the rights, interests
or obligations under this Agreement shall be assigned, in whole or in part, by
operation of Law or otherwise by any of the parties without the prior written
consent of the other parties, except that Purchaser may assign, in its sole
discretion, any of or all its rights (including the right to purchase Shares in
the Offer), interests and obligations under this Agreement to Parent or to an
Affiliate of Parent, but no such assignment shall relieve Purchaser of any of
its obligations under this Agreement. Any attempted assignment in violation of
this Section 10.06 shall be void. Subject to the preceding sentences, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
10.7. Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto and its successors and permitted
assigns, and, except as provided in Article III, Article IV and Section 7.12
nothing in this Agreement, express or implied, is intended to or shall confer
upon any other Person any rights, benefits or remedies or any nature whatsoever
under or by reason of this Agreement.
10.8. Failure or Indulgence Not Waiver; Remedies Cumulative. No failure or
delay on the part of any party hereto in the exercise of any right hereunder
shall impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor shall any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right.
10.9. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE, REGARDLESS OF THE LAWS THAT
MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAW.
10.10. Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent
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<PAGE> 34
breaches of this Agreement and to enforce specifically the terms and provisions
of this Agreement in any Delaware state court or any Federal court located in
the State of Delaware, this being in addition to any other remedy to which they
are entitled at law or in equity. In addition, each of the parties hereto (a)
consents to submit itself to the personal jurisdiction of any Delaware state
court or any Federal court located in the State of Delaware in the event any
dispute arises out of this Agreement or any transaction contemplated by this
Agreement (and Parent agrees that promptly after the date hereof, Parent will
appoint CT Corporation as agent for service of process in Delaware for such
purpose), (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (c)
agrees that it will not bring any action relating to this Agreement or any
transaction contemplated by this Agreement in any court other than any Delaware
state court or any Federal court sitting in the State of Delaware and (d) waives
any right to trial by jury with respect to any action related to or arising out
of this Agreement or any transaction contemplated by this Agreement. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of Delaware or of the United
States of America located in the State of Delaware, and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
10.11. Counterparts. This Agreement may be executed in multiple
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed as of the date first written above by their respective officers or
directors thereunto duly authorized.
SOLUTION 6 HOLDINGS LIMITED.
By: /s/ THOMAS A. MONTGOMERY
----------------------------------
Name: Thomas A. Montgomery
------------------------------------
Title: CEO
------------------------------------
ELITE INFORMATION GROUP, INC.
By: /s/ CHRISTOPHER K. POOLE
----------------------------------
Name: Christopher K. Poole
------------------------------------
Title: CEO
------------------------------------
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ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Agreement shall have the meanings set
forth below unless the context shall otherwise require:
"Acquisition Agreement" shall have the meaning ascribed to such term in
Section 7.3(b).
"Acquisition Proposal" shall have the meaning ascribed to such term in
Section 7.3(d).
"Affiliate" shall mean, with respect to any Person, any other Person that
controls, is controlled by or is under common control with the former Person.
"Agreement" shall mean the Agreement and Plan of Merger dated as of
December 14, 1999 among Parent, Purchaser and the Company, including any
amendments thereto and each Annex (including this Annex A) and Schedule thereto
(including the Company's Disclosure Letter).
"Balance Sheet Date" shall mean November 30, 1999.
"Benefit Plans" shall mean any employee pension benefit plan (whether or
not insured), as defined in Section 3(2) of ERISA, any employee welfare benefit
plan (whether or not insured) as defined in Section 3(1) of ERISA, any plans
that would be employee pension benefit plans or employee welfare benefit plans
if they were subject to ERISA, such as foreign plans and plans for directors,
any employment contracts, severance or termination pay arrangements, any stock
bonus, stock ownership, stock option, stock purchase, stock appreciation rights,
phantom stock or other stock plan (whether qualified or nonqualified), and any
bonus or incentive compensation plan sponsored, maintained or contributed to by
the Company or any of its Subsidiaries for the benefit of any of the present or
former directors, officers, employees, agents, consultants or other similar
representatives providing services to or for the Company or any of its
Subsidiaries in connection with such services or any such plans which have been
so sponsored, maintained, or contributed to within six years prior to the date
of this Agreement (however, as to employment contracts, and severance or
termination pay arrangements, only as to those that are currently in effect);
provided, however, that such term shall not include (a) routine employment
policies and procedures developed and applied in the ordinary course of business
and consistent with past practice, including wage, vacation, holiday and sick or
other leave policies, and (b) workers compensation insurance.
"Business Day" means any day other than a day on which banks in New York
are authorized or obligated to be closed.
"Certificate" shall mean an outstanding stock certificate which immediately
prior to the Effective Time represented shares of Company Common Stock.
"Certain Stockholders" shall have the meaning ascribed to such term in the
recitals to the Agreement.
"Certificate of Merger" shall have the meaning ascribed to such term in
Section 3.2.
"Closing" shall have the meaning ascribed to such term in Section 4.4.
"Closing Date" shall mean the date of the Closing as determined pursuant to
Section 4.4.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
Regulations promulgated thereunder.
"Company" shall mean Elite Information Group, Inc., a Delaware corporation.
"Company Common Stock" shall have the meaning ascribed to such term in the
recitals to the Agreement.
"Company Contract" shall mean all contracts, agreements, arrangements and
understandings to which the Company or any of its Subsidiaries is a party which
fall into any of the following categories: (i) leases; (ii) contracts with
customers (including maintenance agreements) as provided in Section 5.12 of the
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Company's Disclosure Letter or which, as of the date hereof, have a receivable
balance of over $50,000 any portion of which is over 120 days past due, which
contracts are listed on Section A-1 of the Company's Disclosure Letter; (iii)
agreements of resale with third party software providers; (iv) dealer
agreements; (v) the Agreement with Data Fusion Technologies, Inc.; (vi) the
License Support and Maintenance Agreement with Pivotal Corporation and the
Services Agreement with Basys Inc.; (vii) agreements with any employees that
cannot be terminated at will without less than a three-month
severance/termination payment; (viii) agreements entered into since January 1,
1998 involving the sale of any stock and/or all or substantially all of the
assets of the or by the Company or any of its current or former subsidiaries;
(ix) loan agreements; (x) noncompetition agreements; (xi) consulting agreements
(excluding temporary employee agreements and consulting agreements with
installation contractors entered into in the ordinary course of business); or
(xii) agreements with financial advisors.
"Company Option Plans" shall mean the option plans listed in Section 5.3(a)
of the Company's Disclosure Letter.
"Company SEC Documents" shall have the meaning ascribed to such term in
Section 5.7(a).
"Company Stock Options" shall mean stock options granted pursuant to the
Company Option Plans.
"Company Stockholder Approval" shall have the meaning ascribed to such term
in Section 5.4(b).
"Company Stockholders' Meeting" shall have the meaning ascribed to such
term in Section 3.7(b).
"Company's Audited Consolidated Financial Statements" shall mean the
consolidated balance sheets of the Company and its Subsidiaries as of December
31, 1998 and December 31, 1997 and the related consolidated statements of income
and cash flows for the fiscal years ended December 31, 1998, 1997 and 1996,
together with the notes thereto, all as audited by Pricewaterhouse Coopers LLP,
under their report with respect thereto dated February 6, 1999 and included in
the Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1998 filed with the SEC.
"Company's Consolidated Financial Statements" shall mean the Company's
Audited Consolidated Financial Statements and the Company's Unaudited
Consolidated Financial Statements.
"Company's Disclosure Letter" shall mean a letter dated the date of the
Agreement delivered by the Company to the Parent Companies concurrently with the
execution of the Agreement, which, among other things, shall identify exceptions
to the Company's representations and warranties contained in Article V and
covenants contained in Article VII by specific section and subsection
references.
"Company's Unaudited Consolidated Financial Statements" shall mean the
unaudited consolidated balance sheet of the Company and its Subsidiaries as of
September 30, 1999, and the related consolidated statements of income and cash
flows for the nine-month periods ended September 30, 1999 and September 30,
1998.
"Copyrights" shall have the meanings ascribed to such term in Section 5.18.
"Confidentiality Agreement" shall mean that certain confidentiality
agreement between Parent and the Company entered into in 1999.
"Control Date" shall have the meaning ascribed to such term in Section 2.4.
"Court" shall mean any court of the United States, any foreign country or
any domestic or foreign state, and any political subdivision thereof, or any
arbitration tribunal and shall include the European Court of Justice.
"Current Benefit Plans" shall mean Benefit Plans that are sponsored,
maintained, or contributed to by the Company or any of its Subsidiaries as of
the date of this Agreement.
"DGCL" shall mean the General Corporation Law of the State of Delaware.
"Dissenting Shares" shall have the meaning ascribed to such term in Section
4.3.
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"Effective Time" shall mean the date and time of the completion of the
filing of the Certificate of Merger with the Secretary of State of the State of
Delaware in accordance with Section 3.2 or such later time as Parent and the
Company may agree and specify in such certificate.
"Environmental Law or Laws" shall mean any and all Laws, enforceable
requirements or Orders of any Governmental Authority pertaining to health or the
environment currently in effect and applicable to a specified Person and its
Subsidiaries, including the Clean Air Act, as amended, the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980 ("CERCLA"), as
amended, the Federal Water Pollution Control Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, the Resource Conservation and
Recovery Act of 1976 ("RCRA"), as amended, the Hazardous & Solid Waste
Amendments Act of 1984, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
the Oil Pollution Act of 1990, as amended ("OPA"), any state or local Laws
implementing the foregoing federal Laws, and all other environmental
conservation or protection Laws. For purposes of the Agreement, the terms
"hazardous substance" and "release" have the meanings specified in CERCLA;
provided, however, that, to the extent the Laws of the state or locality in
which the property is located establish a meaning for "hazardous substance" or
"release" that is broader than that specified in CERCLA, such broader meaning
shall apply within the jurisdiction of such state or locality, and the term
"hazardous substance" shall include all dehydration and treating wastes, waste
(or spilled) oil, and waste (or spilled) petroleum products, by-products and
derivatives thereof, polychlorinated biphenyls, asbestos, and radioactive
material, even if such are specifically exempt from classification as hazardous
substances or hazardous wastes pursuant to CERCLA or RCRA or the analogous
statutes of any jurisdiction applicable to the specified Person or its
Subsidiaries or any of their respective properties or assets.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the Regulations promulgated thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934, and the
Regulations promulgated thereunder.
"Exchange Fund" shall mean the fund of cash deposited with the Paying Agent
pursuant to Section 4.2.
"Expenses" shall have the meaning ascribed to such term in the Option
Agreement.
"Filed Company SEC Documents" shall have the meaning ascribed to such term
by Section 5.9.
"Financial Advisor" shall mean Volpe Brown Whelan & Company, LLC, the
financial advisor to the Company with respect to the Transactions.
"Fully Diluted Shares" shall have the meaning ascribed to such term in
Annex B.
"GAAP" shall mean accounting principles generally accepted in the United
States consistently applied by a specified Person.
"Governmental Authority" shall mean any governmental agency or authority
(other than a Court) of the United States, any foreign country, or any domestic
or foreign state, and any political subdivision or agency thereof, and shall
include any multinational authority having governmental or quasi-governmental
powers.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the Regulations promulgated thereunder.
"Independent Directors" shall have the meaning ascribed to such term in
Section 2.4.
"Intellectual Property" shall have the meaning ascribed to such term in
Section 5.18.
"IRS" shall mean the Internal Revenue Service.
"Knowledge" shall mean, with respect to either the Company or Parent, the
actual knowledge (after reasonable inquiry) of: (i) in the case of the Company,
Christopher K. Poole, Barry Emerson, Steven Todd and Mark Goldin; and, (ii) in
the case of Parent, any executive officer of Parent.
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"Laws" shall mean all laws, statutes, ordinances and Regulations of the
United States, any foreign country, or any domestic or foreign state, and any
political subdivision or agency thereof, including all decisions of Courts
having the effect of Law in each such jurisdiction.
"Leaseholds" shall mean, with respect to any Person, all the right, title
and interest of such Person as lessee or licensee, in, to and under leases,
licenses, improvements and/or fixtures.
"Licenses-In" shall have the meaning ascribed to such term in Section 5.18.
"Licenses-Out" shall have the meaning ascribed to such term in Section
5.18.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any agreement to give any of the
foregoing), any conditional sale or other title retention agreement, any lease
in the nature thereof or the filing of or agreement to give any financing
statement under the Uniform Commercial Code of any jurisdiction.
"Material" shall mean is or will be material to the business, properties,
assets, condition (financial and other) or results of operations of a specified
Person and its Subsidiaries, if any, taken as a whole.
"Material Adverse Effect" shall mean any change or effect that is material
and adverse to the business, properties, assets, condition (financial and other)
or results of operations of a specified Person and its Subsidiaries, if any,
taken as a whole, including a material adverse effect on the ability of a
specified Person to perform its obligations under each Transaction Agreement to
which it is a party, other than any such effect arising out of or resulting
from, in the case of a determination with respect to the Company and its
Subsidiaries (i) changes in general economic conditions, (ii) general changes or
developments in the industries in which the Company and its Subsidiaries operate
and (iii) facts or events that are primarily and directly attributable to the
announcement of this Agreement and the Transactions.
"Material Business" shall have the meaning ascribed to such term in Section
7.3(d).
"Material Contract" shall mean any Company Contract, except with respect to
contracts with customers, only if such contract is not commercially reasonable
or not consistent with past practices.
"Merger" shall have the meaning ascribed to such term in Section 3.1.
"Merger Consideration" shall mean, as to any Certificate, the amount to be
paid to the holder thereof pursuant to the Merger, which amount shall be equal
to the product of the number of shares of Company Common Stock evidenced by such
Certificate, multiplied by the Per Share Merger Consideration.
"Minimum Tender Condition" shall have the meaning ascribed to such term in
Annex B.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"Offer" shall have the meaning ascribed to such term in the recitals to the
Agreement.
"Offer Closing Date" shall mean the date on which the acceptance for
payment and payment by Purchaser for shares of Company Common Stock tendered
pursuant to the Offer occurs.
"Offer Documents" shall have the meaning ascribed to such term in Section
2.1(c).
"Order" shall mean any judgment, order or decree of any Court or
Governmental Authority, federal, foreign, state or local.
"Parent" shall mean Solution 6 Holdings Limited, a New South Wales,
Australia corporation.
"Parent Companies" shall have the meaning ascribed to such term in the
first paragraph of the Agreement.
"Patents" shall have the meaning ascribed to such term in Section 5.18.
"Paying Agent" shall mean a bank or trust company designated and appointed
by Parent to act in the capacities required thereof under Section 4.2.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Per Share Merger Consideration" shall have the meaning ascribed to such
term in Section 4.01(a).
"Permits" shall mean any and all permits, licenses, authorizations, orders,
certificates, registrations or other approvals granted by any Governmental
Authority.
"Permitted Lien" shall mean (i) Liens for taxes not yet due and payable or
which are being contested in good faith and by appropriate proceedings, (ii)
carriers', warehousemen's, mechanics', materialmen's, repairmen's or other like
Liens arising in the ordinary course of business which are less than $10,000 in
amount and which are being contested in good faith by appropriate proceedings,
or (iii) easements, rights-of-way, encroachments, restrictions, conditions and
other similar encumbrances incurred or suffered in the ordinary course of
business and which, individually or in the aggregate (A) are not substantial in
character, amount or extent in relation to the applicable real property and (B)
do not materially detract from the use, utility or value of the applicable real
property or otherwise materially impair the Company's present business
operations at such location.
"Person" shall mean an individual, partnership, limited liability company,
corporation, joint stock company, trust, estate, joint venture, association or
unincorporated organization, or any other form of business or professional
entity, but shall not include a Governmental Authority.
"Proprietary Information" shall have the meaning ascribed to such term in
Section 5.18.
"Proxy Statement" shall mean a proxy statement conforming to the
requirements of the Exchange Act and relating to the adoption of this Agreement
by the Company's stockholders, if such adoption is required by Law.
"Purchaser" shall mean EIG Acquisition Corp., a Delaware corporation and a
wholly owned Subsidiary of Parent.
"Qualifying Proposal" shall have the meaning ascribed to such term in
Section 7.3(d).
"Regulation" shall mean any rule or regulation of any Governmental
Authority having the effect of Law.
"Reports" shall mean, with respect to a specified Person, all reports,
registrations, filings and other documents and instruments required to be filed
by the specified Person or any of its Subsidiaries with any Governmental
Authority (other than the SEC).
"Representatives" shall have the meaning ascribed to such term in Section
7.3(a).
"Restricted Stock" shall have the meaning ascribed to such term in Section
3.6(a).
"Schedule 14D-1" shall have the meaning ascribed to such term in Section
2.1(c).
"Schedule 14D-9" shall have the meaning ascribed to such term in Section
2.2.
"SEC" shall mean the Securities and Exchange Commission.
"SEC Reports" shall mean all of the following filings since December 1,
1996: (a) all Annual Reports on Form 10-K, (b) all Quarterly Reports on Form
10-Q, (c) all proxy statements relating to meetings of stockholders (whether
annual or special), (d) all Current Reports on Form 8-K and (e) all other
reports, schedules, registration statements or other documents required to be
filed during a specified period by a Person with the SEC pursuant to the
Securities Act or the Exchange Act.
"Section 262" shall have the meaning ascribed to such term in Section 4.3.
"Securities Act" shall mean the Securities Act of 1933 and the Regulations
promulgated thereunder.
"Software" shall have the meaning ascribed to such term in Section 5.18.
"Stockholders Agreement" shall have the meaning ascribed to such term in
the recitals to this Agreement.
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A "Subsidiary" of a specified Person shall mean any corporation,
partnership, limited liability company, joint venture or other legal entity of
which the specified Person (either alone or through or together with any other
Subsidiary) owns, directly or indirectly, 50% or more of the stock or other
equity or partnership interests the holders of which are generally entitled to
vote for the election of the board of directors or other governing body of such
corporation or other legal entity.
"Surviving Corporation" shall mean the Company as the corporation surviving
the Merger.
"Tax" or "Taxes" shall mean all Federal, state, county, local, municipal,
foreign and other taxes, assessments, duties or similar charges of any kind
whatsoever, including all corporate franchise, income, sales, use, ad valorem,
receipts, value added, profits, license, withholding, payroll, employment,
excise, premium, property, customs, net worth, capital gains, transfer, stamp,
documentary, social security, environmental, alternative minimum, occupation,
recapture and other taxes, and including all interest, penalties and additions
imposed with respect to such amounts, and all amounts payable pursuant to any
agreement or arrangement with respect to Taxes.
"Taxing Authority" shall mean any domestic, foreign, federal, national,
state, county or municipal or other local government, any subdivision, agency,
commission or authority thereof, or any quasi-governmental body exercising tax
regulatory authority.
"Tax Return" or "Tax Returns" shall mean all returns, declarations of
estimated tax payments, reports, estimates, information returns and statements,
including any related or supporting information with respect to any of the
foregoing, filed or to be filed with any Taxing Authority in connection with the
determination, assessment, collection or administration of any Taxes.
"Terminated Benefit Plans" shall mean Benefit Plans that were sponsored,
maintained, or contributed to by the Company or any of its Subsidiaries within
six years prior to the date of the Agreement but which have been terminated
prior to the date of the Agreement.
"Termination Date" shall have the meaning ascribed to such term in Section
9.1(c).
"Termination Fee" shall have the meaning ascribed to such term in Section
9.5(b).
"Third Party Acquisition" shall mean (a) the acquisition of the Company by
merger, consolidation, share exchange, recapitalization, liquidation,
dissolution, business combination or other similar transaction by any Person
(which includes for these purposes a "person" as defined in Section 13(d)(3) of
the Exchange Act) other than Parent, Purchaser or any Affiliate thereof (a
"Third Party"); (b) the acquisition by a Third Party of more than 50% of the
assets of the Company and its Subsidiaries, taken as a whole; (c) the
acquisition by a Third Party of 50% or more of the outstanding Company Common
Stock or 50% or more of the aggregate ordinary voting power represented by the
issued and outstanding capital stock of the Company; (d) the adoption by the
Company of a plan of liquidation or the declaration or payment of an
extraordinary dividend; or (e) the purchase by the Company or any of its
Subsidiaries of more than 30% of the outstanding shares of Company Common Stock.
"Trademarks" shall have the meaning ascribed to such term in Section 5.18.
"Transaction Agreements" shall mean, collectively, the Agreement and the
Stockholders Agreement.
"Transactions" shall mean, collectively, the transactions contemplated by
the Transaction Agreements.
"Voting Company Debt" shall have the meaning ascribed to such term in
Section 5.3(e).
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ANNEX B
CONDITIONS OF THE OFFER
(a) Notwithstanding any other term of the Offer or the Agreement, Purchaser
shall not be required to accept for payment or, subject to any applicable rules
and regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Purchaser's obligation to pay for or return tendered shares of
Company Common Stock promptly after the termination or withdrawal of the Offer),
to pay for any shares of Company Common Stock tendered pursuant to the Offer
unless (i) there shall have been validly tendered and not withdrawn prior to the
expiration of the Offer that number of shares of Company Common Stock which
would represent at least a majority of the Fully Diluted Shares (the "Minimum
Tender Condition"), (ii) any waiting period under the HSR Act applicable to the
purchase of shares of Company Common Stock pursuant to the Offer shall have
expired or been terminated; and (iii) [the Company has amended its Rights Plan
so that the stockholders' rights under the Rights Plan are not triggered by the
Offer or the Agreement. The term "Fully Diluted 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.
(b) Furthermore, notwithstanding any other term of the Offer or the
Agreement, Purchaser shall not be required to commence the Offer, accept for
payment or, subject as aforesaid, pay for any shares of Company Common Stock not
theretofore accepted for payment or paid for, and may terminate or amend the
Offer, (i) with the consent of the Company or (ii) if, at any time on or after
the date of the Agreement and before the acceptance of such shares for payment
or the payment therefor, any of the following conditions exists:
(i) any representation and warranty of the Company in this Agreement
that is qualified as to materiality shall not be true and correct or any
such representation and warranty that is not so qualified shall not be true
and correct in any material respect, as of the date of the Agreement and as
of such time, except to the extent such representation and warranty
expressly relates to an earlier date (in which case on and as of such
earlier date);
(ii) the Company shall have breached any of its covenants or
agreements contained in the Agreement which breaches, individually or in
the aggregate, materially adversely affects (or materially delays) the
consummation of the Offer (it being understood that a breach of Section
7.13 of the Agreement shall not result in a failure of this condition to be
satisfied unless such breach results in the failure of the condition
specified in paragraph (i) above);
(iii) there shall be threatened or pending any suit, action or
proceeding by any Governmental Authority, or any suit, action or proceeding
brought by any other Person that has a reasonable likelihood of success,
(A) challenging the acquisition by Parent or Purchaser of any Company
Common Stock, seeking to restrain or prohibit the making or consummation of
the Offer or the Merger, or seeking to obtain from the Company, Parent or
any of their respective Subsidiaries or Affiliates any damages in an amount
that would result in a Material Adverse Effect in respect of the Company,
taken as a whole, and in the case of Parent or any of its Subsidiaries or
Affiliates relating to the Transaction, (B) seeking to prohibit or limit
the ownership or operation by the Company, Parent or any of their
respective Subsidiaries or Affiliates of any Material portion of the
business or assets of the Company, Parent or any of their respective
Subsidiaries or Affiliates, or to compel the Company, Parent or any of
their respective Subsidiaries or Affiliates to dispose of or hold separate
any Material portion of the business or assets of the Company, Parent or
any of their respective Subsidiaries or Affiliates, as a result of the
Offer, the Merger or any of the other Transactions or (C) which otherwise
is reasonably likely to have a Material Adverse Effect on the Company;
(iv) there shall be any statute, rule, regulation, legislation,
interpretation, judgment, order or injunction threatened, proposed, sought,
enacted, entered, enforced, promulgated, amended or issued with respect to,
or deemed applicable to, or any consent or approval withheld with respect
to, (A) Parent, the Company or any of their respective Subsidiaries or
Affiliates or (B) the Offer or the Merger by any
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Governmental Authority that has or is reasonably likely to result, directly
or indirectly, in any of the consequences referred to in paragraph (iii)
above;
(v) since the date of the Agreement there shall have occurred any
event, change, effect or development that, individually or in the
aggregate, has had or is reasonably likely to have, a Material Adverse
Effect on the Company;
(vi) there shall have occurred and be continuing (A) any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the
United States or in Australia (excluding any coordinated trading halt
triggered solely as a result of a specified decrease in a market index),
(B) a declaration of a banking moratorium by any Governmental Authority or
any suspension of payments by any Governmental Authority in respect of
banks in the United States or in Australia, (C) any general limitation
(whether or not mandatory) by any Governmental Authority in the United
States or in Australia on the extension of credit by banks or other lending
institutions or (D) in the case of any of the foregoing existing on the
date of the Agreement, a material acceleration or worsening thereof;
(vii) any Person (which includes a "person" as such term is defined in
Section 13(d)(3) of the Exchange Act) other than Purchaser, any of its
Affiliates, or any group of which any of them is a member shall have
acquired beneficial ownership of more than 20% of the outstanding shares of
Company Common Stock or shall have entered into a definitive agreement or
an agreement in principle with the Company with respect to a tender offer
or exchange offer for any shares of Company Common Stock or a merger,
consolidation or other business combination with or involving the Company
or any of its Subsidiaries;
(viii) the Agreement shall have been terminated in accordance with its
terms; which, in the sole judgment of Purchaser or Parent, in any such
case, and regardless of the circumstances giving rise to any such condition
(including any action or inaction by Parent or any of its Affiliates),
makes it inadvisable to proceed with such acceptance for payment or
payment.
The foregoing conditions are for the sole benefit of Purchaser and Parent
and may be asserted by Purchaser or Parent regardless of the circumstances
giving rise to such condition or may be waived by Purchaser and Parent in whole
or in part at any time and from time to time in their sole and reasonable
judgment; provided that the Minimum Tender Condition may be waived or modified
only by the mutual written consent of Purchaser and the Company. The failure by
Parent, Purchaser or any other Affiliate of Parent at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right, the
waiver of any such right with respect to particular facts and circumstances
shall not be deemed a waiver with respect to any other facts and circumstances
and each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.
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EXHIBIT 99(c)(2)
STOCKHOLDERS AGREEMENT
This Stockholders Agreement, dated as of December 14, 1999, is by and among
Solution 6 Holdings, Limited, a New South Wales, Australia corporation
("Parent"), EIG Acquisition Corp., a Delaware corporation and an indirect
wholly-owned subsidiary of Parent ("Purchaser"), and the persons listed on
Schedule A hereto (each a "Stockholder" and, collectively, the "Stockholders").
WHEREAS, concurrently with the execution of this Agreement, Parent,
Purchaser and Elite Information Group, Inc., a Delaware corporation (the
"Company"), are entering into an Agreement and Plan of Merger, dated as of the
date hereof (as the same may be amended or supplemented, the "Merger Agreement";
terms used but not defined herein have the meanings set forth in the Merger
Agreement), providing for the making of a cash tender offer (as such offer may
be amended from time to time as permitted under the Merger Agreement, the
"Offer") by Purchaser for shares of Common Stock, par value $.01 per share, of
the Company (the "Common Stock") and the merger of the Company and Purchaser
(the "Merger");
WHEREAS, each Stockholder is the beneficial owner of the shares of Common
Stock set forth opposite such Stockholder's name on Schedule A hereto; such
shares of Common Stock, as such shares may be adjusted by stock dividend, stock
split, recapitalization, combination or exchange of shares, merger,
consolidation, reorganization or other change or transaction of or by the
Company, together with shares of Common Stock that may be acquired after the
date hereof by such Stockholder, including shares of Common Stock issuable upon
the exercise of options to purchase Common Stock (as the same may be adjusted as
aforesaid), being collectively referred to herein as the "Shares" of such
Stockholder;
WHEREAS, pursuant to the Merger Agreement, the Company has irrevocably
approved the granting of the options to purchase Common Stock granted herein by
the Stockholders and the purchase of such Common Stock by the Purchaser upon
exercise of such options for purposes of Section 203 of Delaware General
Corporation Law and has irrevocably excepted such grants and purchases from the
definition of "acquiring person" and/or "triggering event" and terms of similar
import contained in the Company's Rights Plan; and
WHEREAS, as a condition to their willingness to enter into the Merger
Agreement, Parent and Purchaser have requested that the Stockholders enter into
this Agreement;
NOW, THEREFORE, to induce Parent and Purchaser to enter into, and in
consideration of their entering into, the Merger Agreement, and in consideration
of the premises and the representations, warranties and agreements contained
herein, the parties agree as follows:
1. Agreement to Sell; Tender.
(a) Subject to Section 8 below, as promptly as practicable following the
expiration of the Offer (but in no event later than 10:00 a.m., New York City
time, on the Business Day immediately after such expiration), each Stockholder
hereby severally and not jointly agrees to sell to Purchaser, and Purchaser
agrees to purchase, all the Shares owned by such Stockholder not tendered
pursuant to Section 1(b) at a price per Share equal to the price per Share paid
by Purchaser in the Offer (the "Offer Price"). The obligations of each
Stockholder to sell its Shares pursuant to this Section 1(a) is conditioned upon
Purchaser purchasing shares of Common Stock pursuant to the Offer.
(b) In addition, each Stockholder hereby severally and not jointly agrees
that if such Stockholder is directed to tender the Shares it owns as of the date
hereof and any Shares it may acquire prior to the expiration of the Offer by
Purchaser pursuant to the following sentence, it shall promptly tender all such
Shares in the Offer, and it shall not withdraw any Shares so tendered(it being
understood that the obligation contained in this sentence is unconditional,
subject to Section 8 below). In the event that Purchaser wishes to direct a
Stockholder to tender its Shares, Purchaser shall give written notice to such
Stockholder to such effect and specifying the number (if less than all) of such
Stockholder's Shares. Section 1(a) above shall be deemed satisfied upon
completion of the purchase of such Shares in the Offer.
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<PAGE> 2
(c) In addition, each Stockholder hereby severally and not jointly grants
to Purchaser an irrevocable option (as to each Stockholder, the "Option") to
purchase any of or all the Shares owned by such Stockholder and any of or all
the Shares for which any stock options owned by such Stockholder are then
exercisable on the date the Option is exercised by the Purchaser (on any date,
the "Vested Options") in each case at a price per Share equal to the Offer Price
(less, in the case of Vested Options, the applicable exercise price). The Option
may be exercised at any time and from time to time after the occurrence of an
Exercise Event (as defined below) and on or prior to thirty (30) days following
the occurrence of an Exercise Event. In the event that Purchaser wishes to
exercise the Option as to a Stockholder, Purchaser shall give written notice(the
date of such notice being called the "Notice Date") to such Stockholder and to
the Company specifying the number (if less than all) of such Stockholder's
Shares, including shares of Common Stock underlying Vested Options, and a place,
time and date not later than 10 Business Days from the Notice Date for the
closing of such purchase.
As used herein, an "Exercise Event" means the occurrence of any of the
following events:
(i) at any time prior to termination of the Merger Agreement, any
corporation, partnership, individual, trust, unincorporated association, or
other entity or "person" (as defined in Section 13 (d) (3) of the Exchange
Act), other than purchaser or any of its "affiliates" (as defined in the
Exchange Act) (a "Third Party"), shall have:
(A) commenced or announced an intention to commence a tender offer or
exchange offer for any shares, the consummation of which would result in
"beneficial ownership" (as defined in the Exchange Act) by such Third Party
(together with all such Third Party's affiliates and "associates" (as
defined in the Exchange Act)) of 50% or more of the then outstanding voting
equity of the Company (either on a primary or a fully diluted basis);
(B) acquired beneficial ownership of shares that, when aggregated with
any shares already owned by such Third Party, its affiliates and
associates, would result in the aggregate beneficial ownership by such
Third Party, its affiliates and associates of 10% or more of the then
outstanding voting equity of the Company (either on a primary or a fully
diluted basis); provided, however, that "Third Party" for purposes of this
clause (B) does not include any corporation, partnership, person, other
entity or group that beneficially owns more than 10% of the outstanding
voting equity of the Company (either on a primary or a fully diluted basis)
as of the date hereof and that does not, after the date hereof, increase
such ownership percentage by more than an additional 1% of the outstanding
voting equity of the Company (either on a primary or a fully diluted
basis);
(C) acquired assets constituting 10% or more of the total assets or
earning power of the Company taken as a whole;
(D) entered into an agreement with the Company that contemplates the
acquisition of (x) assets constituting 10% or more of the total assets or
earning power of the Company taken as a whole or (y) beneficial ownership
of 10% or more of the outstanding voting equity of the Company; or
(ii) any event has occurred that would allow the Company or Parent to
terminate the Merger Agreement under circumstances in which Parent may be
or become entitled to a Termination Fee.
2. Representations and Warranties of the Stockholders. Each Stockholder
hereby severally represents and warrants to Parent and Purchaser as
follows:
(a) Such Stockholder has all requisite power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
If such Stockholder is not an individual, the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by such Stockholder. This
Agreement has been duly executed and delivered by such Stockholder and
constitutes a valid and binding obligation of the Stockholder enforceable
against such Stockholder in accordance with its terms, except as the same may be
limited by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar Laws relating to creditors' rights generally
2
<PAGE> 3
and (b) legal principles of general applicability governing the application and
availability of equitable remedies. Except for the expiration or termination of
any applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), neither the execution, delivery or
performance of this Agreement by such Stockholder nor the consummation by such
Stockholder of the transactions contemplated hereby will (i) require any filing
with, or permit, authorization, consent or approval of, any Governmental
Authority, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default under, or give rise to
any right of termination, amendment, cancellation or acceleration under, or
result in the creation of any Lien upon any of the properties or assets of such
Stockholder under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, license, permit, concession, franchise, contract,
agreement or other instrument or obligation (a "Contract") to which such
Stockholder is a party or by which such Stockholder or any of such Stockholder's
properties or assets, including such Stockholder's Shares, may be bound or (iii)
violate any Order (as defined in the Merger Agreement) or any Law applicable to
such Stockholder or any of such Stockholder's properties or assets, including
such Stockholder's Shares, other than, in the case of clause (ii) above, such
items that, individually or in the aggregate, have not and could not reasonably
be expected to have a material adverse effect on the ability of such Stockholder
to perform its obligations under this Agreement.
(b) Such Stockholder's Shares and the certificates representing such Shares
are now, and at all times during the term hereof will be, held by such
Stockholder, or by a nominee or custodian for the benefit of such Stockholder,
and such Stockholder is the legal and beneficial owner of and has good and
marketable title to such Shares, free and clear of any Liens, proxies, voting
trusts or agreements, understandings or arrangements, except for any such Liens
or proxies arising hereunder and Liens described on Schedule B attached hereto.
Notwithstanding anything in this Agreement to the contrary, the obligations of
the Stockholder listed in Schedule B under this Agreement are subject to the
matters set forth on Schedule B attached hereto.
(c) No broker, investment banker, financial advisor or other person is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of such Stockholder.
(d) Such Stockholder understands and acknowledges that Parent is entering
into, and causing Purchaser to enter into, the Merger Agreement in reliance upon
such Stockholder's execution and delivery of this Agreement.
3.Representations and Warranties of Parent and the Purchaser. Parent and
the Purchaser hereby represent and warrant to the Stockholders as
follows:
(a) Each of Parent and such Purchaser has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by Parent and such Purchaser and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Parent and such Purchaser. This Agreement has
been duly executed and delivered by Parent and such Purchaser and constitutes a
valid and binding obligation of Parent and Purchaser enforceable in accordance
with its terms, except as the same may be limited by (i) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar Laws relating
to creditors' rights generally and (ii) legal principles of general
applicability governing the application and availability of equitable remedies.
(b) The Shares will be acquired in compliance with, and such Purchaser will
not offer to sell or otherwise dispose of any Shares so acquired by it in
violation of the registration requirements of, the Securities Act of 1933, as
amended.
4.Covenants of the Stockholders. Each Stockholder severally agrees as
follows:
(a) Such Stockholder shall not, except as contemplated by the terms of this
Agreement, (i) sell, transfer, pledge, assign or otherwise dispose of, or enter
into any Contract, option or other arrangement (including any profit sharing
arrangement) or understanding with respect to the sale, transfer, pledge,
assignment or other disposition of, the Shares to any person other than
Purchaser or Purchaser's designee,
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<PAGE> 4
(ii) enter into any voting arrangement, whether by proxy, voting agreement,
voting trust, power-of-attorney or otherwise, with respect to the Shares or
(iii) 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.
(b) Subject to Section 10 below, until the Merger is consummated or the
Merger Agreement is terminated, such Stockholder shall not, nor shall such
Stockholder permit any investment banker, financial adviser, attorney,
accountant or other representative or agent of such Stockholder to, directly or
indirectly (i) solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed or reasonably likely to
facilitate, any inquiries or the making of any proposal which constitutes, or
may reasonably be expected to lead to, any Acquisition Proposal or (ii)
participate in any discussions or negotiations regarding any Acquisition
Proposal. Without limiting the foregoing, it is understood that any violation of
the restrictions set forth in the preceding sentence by an investment banker,
financial advisor, attorney, accountant or other representative or agent of such
Stockholder shall be deemed to be a violation of this Section 4(b) by such
Stockholder.
(c) At any meeting of stockholders of the Company called to vote upon the
Merger and the Merger Agreement or at any adjournment thereof or in any other
circumstances upon which a vote, consent or other approval (including by written
consent) with respect to the Merger and the Merger Agreement is sought, such
Stockholder shall vote (or cause to be voted) such Stockholder's Shares in favor
of the Merger, the adoption by the Company of the Merger Agreement and the
approval of the other Transactions (as defined in the Merger Agreement). At any
meeting of stockholders of the Company or at any adjournment thereof or in any
other circumstances upon which the Stockholder's vote, consent or other approval
is sought, the Stockholder shall vote (or cause to be voted) the Stockholder's
Shares against (i) any merger agreement or merger (other than the Merger
Agreement and the Merger), consolidation, combination, sale of substantial
assets, reorganization, recapitalization, dissolution, liquidation or winding up
of or by the Company or any other Acquisition Proposal (collectively,
"Alternative Transactions") or (ii) any amendment of the Company's certificate
of incorporation or bylaws or other proposal or transaction involving the
Company or any of its subsidiaries, which amendment or other proposal or
transaction would in any manner impede, frustrate, prevent or nullify the Offer,
the Merger, the Merger Agreement or any of the other Transactions (collectively,
"Frustrating Transactions").
5. Grant of Irrevocable Proxy; Appointment of Proxy.
(a) Each Stockholder hereby irrevocably grants to, and appoints, Chris
Tyler and Thomas A. Montgomery and any other individual who shall hereafter be
designated by Parent, and each of them, such Stockholder's proxy and
attorney-in-fact (with full power of substitution), for and in the name, place
and stead of such Stockholder, to vote such Stockholder's Shares, or grant a
consent or approval in respect of such Shares, at any meeting of stockholders of
the Company or at any adjournment thereof or in any other circumstances upon
which their vote, consent or other approval is sought, in favor of the Merger,
the adoption by the Company of the Merger Agreement and the approval of the
terms thereof and each of the other transactions contemplated by the Merger
Agreement and against any alternative Transaction or Frustrating Transaction.
(b) Each Stockholder represents that any proxies heretofore given in
respect of such Stockholder's Shares are not irrevocable, and that any such
proxies are hereby revoked.
(c) Each Stockholder hereby affirms that the irrevocable proxy set forth in
this Section 5 is given in connection with the execution of the Merger
Agreement, and that such irrevocable proxy is given to secure the performance of
the duties of such Stockholder under this Agreement. Such Stockholder hereby
further affirms that the irrevocable proxy is coupled with an interest and may
under no circumstances be revoked, subject to Section 8 below. Such Stockholder
hereby ratifies and confirms all that such irrevocable proxy may lawfully do or
cause to be done by virtue hereof. Such irrevocable proxy is executed and
intended to be irrevocable in accordance with the provisions of the General
Corporation Law of the State of Delaware. Such irrevocable proxy shall be valid
until the termination of this Agreement pursuant to Section 8 below.
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<PAGE> 5
6. Further Assurances. Each Stockholder will, from time-to-time, execute
and deliver, or cause to be executed and delivered, such additional or further
transfers, assignments, endorsements, consents and other instruments as Parent
or Purchaser may reasonably request for the purpose of effectively carrying out
the transactions contemplated by this Agreement and to vest the power to vote
such Stockholder's Shares as contemplated by Section 5. Parent and Purchaser
jointly and severally agree to use reasonable efforts to take, or cause to be
taken, all actions necessary to comply promptly with all legal requirements that
may be imposed with respect to the transactions contemplated by this Agreement
(including any applicable legal requirements of the HSR Act).
7. Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties without the prior
written consent of the other parties, except that Purchaser may assign, in its
sole discretion, any or all of its rights, interests and obligations hereunder
to Parent or to an Affiliate of Parent, but no such assignment shall relieve
Purchaser of any of its obligations under this Agreement. 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.
Each Stockholder agrees that this Agreement and the obligations of such
Stockholder hereunder shall attach to such Stockholder's Shares and shall be
binding upon any person or entity to which legal or beneficial ownership of such
Shares shall pass, whether by operation of law or otherwise, including such
Stockholder's heirs, guardians, administrators or successors.
8. Termination. This Agreement shall terminate upon the earlier of (i) the
Effective Time or (ii) the termination of the Merger Agreement in accordance
with its terms, except that, Section 1(c) shall survive any such termination to
the extent provided herein.
9. Stop Transfer. The Company agrees with, and covenants to, Parent and
Purchaser that the Company shall not register the transfer of any certificate
representing any Stockholder's Shares unless such transfer is made in accordance
with the terms of this Agreement.
10. Stockholder Capacity. No person executing this Agreement makes any
agreement or understanding herein in his or her capacity as a director or
officer of the Company or any subsidiary of the Company. Each Stockholder signs
solely in his or her capacity as the beneficial owner of such Stockholder's
Shares and nothing herein shall limit or affect any actions taken by a
Stockholder in its capacity as an officer or director of the Company or any
subsidiary of the Company to the extent specifically permitted by, or
specifically permitted in the Merger Agreement.
11. Performance by Purchaser. Parent covenants and agrees for the benefit
of the Stockholders that it shall cause Purchaser to perform in full each
obligation of Purchaser set forth in this Agreement.
12. 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 federal court located in the
State of Delaware or in any Delaware state court, this being in addition to any
other remedy to which they are entitled at law or in equity. In addition, each
of the parties hereto (I) consents to submit such party to the personal
jurisdiction of any Federal court located in the State of Delaware or any
Delaware state court in the event any dispute arises out of this Agreement or
any of the transactions contemplated hereby, (ii) agrees that such party will
not attempt to deny or defeat such personal jurisdiction by motion or other
request for leave from any such court, (iii) agrees that such party will not
bring any action relating to this Agreement or any of the transactions
contemplated hereby in any court other than a Federal court located in the state
of Delaware or a Delaware state court and (iv) waives any right to trial by jury
with respect to any claim or proceeding related to or arising out of this
Agreement or any of the transactions contemplated hereby. The parties
irrevocably and unconditionally waive any objection to the laying of venue of
any action, suit or proceeding arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of Delaware or of the United
States of America located in the State of Delaware, and hereby further
irrevocably and unconditionally waive and agree not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum.
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<PAGE> 6
13. General Provisions.
(a) All costs and expenses incurred in connection with this Agreement and
the transactions contemplated hereby shall be paid by the party incurring such
expense.
(b) This Agreement may not be amended except by an instrument in writing
signed by each of the parties hereto; provided, however, that this Agreement may
be amended without the written agreement of the parties hereto to add additional
persons as "Stockholders" hereunder by execution by such persons of a signature
page hereto, in which event Parent shall amend Schedule A to reflect such
addition.
(c) All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally, telecopied (which is confirmed),
sent by overnight courier (providing proof of delivery) or mailed by registered
or certified mail (return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
if to Parent or Purchaser:
Solution 6 Holdings Limited
Town Hall House
Level 21, 456 Kent Street
Sydney, New South Wales,
Australia 2000
Attention: Thomas A. Montgomery
Telecopier No.: 011-612-9278-0702
with a copy to:
Jackson Walker L.L.P.
901 Main Street
Dallas, Texas 75202
Attention: Richard F. Dahlson
Telecopy No: (214) 953-6187
if to a Stockholder:
to the address set forth under the name
of such Stockholder on Schedule A hereto
with a copy to:
Robinson Bradshaw & Hinson P.A.
101 North Tyson Street, Suite 1900
Charlotte, North Carolina 28246
Attention: Patrick S. Bryant
Telecopier No.: (704) 378-4000
(d) When a reference is made in this Agreement to a Section, such reference
shall be to a Section of this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Wherever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation". Words in the singular
include the plural, and words in the plural include the singular.
(e) This Agreement may be executed in multiple counterparts, and by the
different parties hereto in separate counterparts, each of which when executed
shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
(f) This Agreement (including the documents and instruments referred to
herein) (i) constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the
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<PAGE> 7
parties with respect to the subject matter hereof and (ii) is not intended to
confer upon any person other than the parties hereto any rights or remedies
hereunder.
(g) This Agreement shall be governed by, and construed in accordance with,
the Laws of the State of Delaware, regardless of the Laws that might otherwise
govern under applicable principles of conflict of Law.
(h) Except as otherwise required by Law, court process or the rules of a
national securities exchange or the Nasdaq National Market or as contemplated or
provided in the Merger Agreement, for so long as this Agreement is in effect, no
Stockholder shall issue or cause the publication of any press release or other
public announcement with respect to the transactions contemplated by this
Agreement or the Merger Agreement without the consent of Parent, which consent
shall not be unreasonably withheld.
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<PAGE> 8
IN WITNESS WHEREOF, each of Parent and Purchaser has caused this Agreement
to be signed by its officer or director there unto duly authorized and each
Stockholder has signed this Agreement, all as of the date first written above.
SOLUTION 6 HOLDINGS, LIMITED
By:
/s/ THOMAS A. MONTGOMERY
------------------------------------
Name: Thomas A. Montgomery
------------------------------------
Title: CFO
------------------------------------
EIG ACQUISITION CORP.
By:
/s/ THOMAS A. MONTGOMERY
------------------------------------
Name: Thomas A. Montgomery
------------------------------------
Title: CFO
------------------------------------
STOCKHOLDERS:
See attached signature pages
ACKNOWLEDGED AND AGREED TO AS TO
SECTION 9:
ELITE INFORMATION GROUP, INC.
By:
/s/ CHRISTOPHER K. POOLE
------------------------------------
Name: Christopher K. Poole
------------------------------------
Title: CEO
------------------------------------
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<PAGE> 9
SIGNATURE PAGE
TO
STOCKHOLDERS AGREEMENT
This Signature Page to the Stockholders Agreement, dated as of December 14,
1999 (the "Agreement"), by and among Solution 6 Holdings, Limited, a New South
Wales, Australia corporation, EIG Acquisition Corp., a Delaware corporation, and
certain other persons, is hereby executed by the undersigned as a "Stockholder"
thereunder as of the date first set forth above.
PAR Investment Partners, L.P.
By: PAR Group, L.P., General Partner
By: PAR Capital Management,
Inc.,
General Partner
By:
/s/ ARTHUR G. EPKER III
--------------------------------
Name: Arthur G. Epker III
--------------------------------
Title: Vice President, PAR
Capital
Management, Inc.
--------------------------------
/s/ CHRISTOPHER K. POOLE
------------------------------------
Printed Name: Christopher K. Poole
------------------------------------
/s/ WILLIAM G. SEYMOUR
------------------------------------
Printed Name: William G. Seymour
------------------------------------
/s/ BARRY EMERSON
------------------------------------
Printed Name: Barry Emerson
------------------------------------
/s/ DAVID A. FINLEY
------------------------------------
Printed Name: David A. Finley
------------------------------------
/s/ ROGER NOALL
------------------------------------
Printed Name: Roger Noall
------------------------------------
/s/ ALAN RICH
------------------------------------
Printed Name: Alan Rich
------------------------------------
9
<PAGE> 10
SCHEDULE A
<TABLE>
<CAPTION>
NUMBER OF
SHARES OF
COMMON NUMBER OF
NAME AND ADDRESS STOCK OPTIONS
- ---------------- --------- ---------
<S> <C> <C>
Christopher K. Poole........................................ 5,000 195,000
Chairman & CEO
Elite Information Group, Inc.
5100 W. Goldleaf Cr. #100
Los Angeles, CA 90056
Business Phone: (323) 642-5270
Arthur G. Epker III, Vice President......................... 1,220,300 5,000
PAR Capital Management
One Financial Center #1600
Boston, MA 02111
Business Phone: (617) 526-8992
Barry Emerson............................................... -- 25,000
Chief Financing Officer
Elite Information Group, Inc.
5100 W. Goldleaf Cr. #100
Los Angeles, CA 90056
Business Phone: (323) 642-5270
Alan Rich, Chairman......................................... -- 5,000
Elite Information Systems, Inc.
9430 Kirkside Road
Los Angeles, CA 90035
Business Phone: (323) 642-5300
William G. Seymour.......................................... 436,622 3,000
PriMax Properties
1115 East Morehead Street
Charlotte, NC 28204-2814
Business Phone: (704) 344-8200 x11
David A. Finley, President.................................. 2,000 81,666
Investment Management Partners II, Inc.
21 Bedford Center Road
Bedford Hills, NY 10507
Business Phone: (914) 242-6215
Roger Noall................................................. 20,000 3,000
KeyCorp
127 Public Square
Cleveland, OH 44114-1306
Business Phone: (216) 689-5651
</TABLE>
<PAGE> 11
SCHEDULE B
EXCEPTIONS
1. Some or all of the Shares held by William G. Seymour are pledged to Bank
of America as security for loans. The obligations of William G. Seymour under
this Agreement with respect to such Shares are subject to the rights of Bank of
America as pledgee of such Shares. William G. Seymour agrees to use commercially
reasonable efforts to cause Bank of America to permit him to perform his
obligations hereunder with respect to such pledged Shares, including the tender
or sale thereof. Nothing in this Agreement shall require William G. Seymour to
breach his obligations to Bank of America with respect to such pledged Shares.
