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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The
Securities Exchange Act of 1934
Date of Report (date of earliest event reported): June 29, 1998
IQ SOFTWARE CORPORATION
(Exact name of registrant as specified in its charter)
Georgia 0-20085 58-1614492
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
3295 River Exchange Drive, Suite 550, Norcross, Georgia 30092
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (770) 446-8880
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ITEM 5. OTHER EVENTS
On June 29, 1998, IQ Software Corporation ("Corporation")
entered into an Agreement and Plan of Merger, by and among Information
Advantage, Inc., a Delaware corporation ("Information Advantage"), IAC Merger
Corp., a Georgia corporation and wholly-owned subsidiary of Information
Advantage ("Merger Sub") and the Corporation. Upon the closing of the merger,
Merger Sub shall be merged with and into the Corporation (the "Merger"), with
the Corporation surviving the Merger and becoming a wholly-owned subsidiary of
Information Advantage.
ITEM 7. EXHIBITS
Exhibit
Number Description
2.1 Agreement and Plan of Merger, dated June 29,
1998, by and among Information Advantage,
Merger Sub and the Corporation.
99.1 Press Release, dated June 29, 1998, announcing
the signing of the Agreement and Plan of Merger.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
IQ Software Corporation
Date: July 2, 1998 /s/ Charles R. Chitty
-------------------------------------
Charles R. Chitty
Chairman and Chief Executive Officer
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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
by and among
INFORMATION ADVANTAGE, INC.,
IQ SOFTWARE CORPORATION
and
IAC MERGER CORP.
June 29, 1998
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TABLE OF CONTENTS
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ARTICLE I THE MERGER........................................................................1
1.1 Effective Time of the Merger....................................................1
1.2 Closing.........................................................................2
1.3 Effects of the Merger...........................................................2
1.4 Director of the Company.........................................................2
ARTICLE II CONVERSION OF SECURITIES.........................................................2
2.1 Conversion of Capital Stock.....................................................2
2.2 Exchange of Certificates........................................................3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.........................6
3.1 Organization of Parent and Merger Sub...........................................6
3.2 Parent Capital Structure........................................................7
3.3 Authority; No Conflict; Required Filings and Consents...........................8
3.4 SEC Filings; Financial Statements...............................................9
3.5 No Undisclosed Liabilities......................................................9
3.6 Absence of Certain Changes or Events............................................9
3.7 Taxes..........................................................................10
3.8 Properties.....................................................................10
3.9 Intellectual Property..........................................................11
3.10 Agreements, Contracts and Commitments.........................................11
3.11 Litigation....................................................................11
3.12 Environmental Matters.........................................................12
3.13 Employee Benefit Plans........................................................12
3.14 Compliance With Laws..........................................................13
3.15 Accounting and Tax Matters....................................................13
3.16 Registration Statement; Proxy Statement/Prospectus............................13
3.17 Labor Matters.................................................................14
3.18 Insurance; Risk Management....................................................14
3.19 Opinion of Financial Advisor..................................................14
3.20 Interim Operations of Merger Sub..............................................14
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................................14
4.1 Organization of the Company....................................................15
4.2 The Company Capital Structure..................................................15
4.3 Authority; No Conflict; Required Filings and Consents..........................16
4.4 SEC Filings; Financial Statements..............................................17
4.5 No Undisclosed Liabilities.....................................................17
4.6 Absence of Certain Changes or Events...........................................18
4.7 Taxes..........................................................................18
4.8 Properties.....................................................................20
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4.9 Intellectual Property..........................................................20
4.10 Agreements, Contracts and Commitments.........................................21
4.11 Litigation....................................................................21
4.12 Environmental Matters.........................................................21
4.13 Employee Benefit Plans........................................................22
4.14 Compliance With Laws..........................................................23
4.15 Accounting and Tax Matters....................................................23
4.16 Registration Statement; Proxy Statement/Prospectus............................23
4.17 Labor Matters.................................................................24
4.18 Insurance; Risk Management....................................................24
4.19 No Existing Discussions.......................................................24
4.20 Opinion of Financial Advisor..................................................24
4.21 Insider Trading Policies and Practices........................................24
ARTICLE V COMPANY COVENANTS................................................................25
5.1 Access and Investigation.......................................................25
5.2 Operation of the Company's Business............................................25
5.3 Irrevocable Proxies............................................................27
5.4 Reseller Agreement.............................................................27
5.5 Employment Agreement...........................................................27
ARTICLE VI PARENT AND MERGER SUB COVENANTS.................................................27
6.1 Access and Investigation.......................................................27
6.2 Operation of the Parent's Business.............................................27
ARTICLE VII ADDITIONAL AGREEMENTS..........................................................28
7.1 Cooperation....................................................................28
7.2 No Solicitation................................................................28
7.3 Proxy Statement/Prospectus; Registration Statement.............................29
7.4 Nasdaq Quotation...............................................................29
7.5 Stockholders' Meetings.........................................................29
7.6 Legal Conditions to Merger.....................................................30
7.7 Public Disclosure..............................................................31
7.8 Tax-Free Reorganization........................................................31
7.9 Pooling Accounting.............................................................31
7.10 Affiliate Agreements..........................................................31
7.11 Nasdaq Quotation..............................................................32
7.12 Stock Plans...................................................................32
7.13 Brokers or Finders............................................................33
7.14 Letter of the Company's Accountants...........................................33
7.15 Letter of Parent's Accountants................................................33
7.16 Schedules.....................................................................34
7.17 Indemnification...............................................................34
ARTICLE VIII CONDITIONS TO MERGER..........................................................34
8.1 Conditions to Each Party's Obligation to Effect the Merger.....................34
8.2 Additional Conditions to Obligations of the Company............................35
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8.3 Additional Conditions to Obligations of Parent and Merger Sub..................36
ARTICLE IX TERMINATION AND AMENDMENT........................................................38
9.1 Termination....................................................................38
9.2 Effect of Termination..........................................................39
9.3 Fees and Expenses..............................................................39
9.4 Non-Solicitation of Employees..................................................40
9.5 Amendment......................................................................40
9.6 Extension; Waiver..............................................................40
10.1 Nonsurvival of Representations, Warranties and Agreements.....................40
10.2 Notices.......................................................................41
10.3 Interpretation................................................................41
10.4 Counterparts..................................................................42
10.5 Entire Agreement; No Third Party Beneficiaries................................42
10.6 Governing Law.................................................................42
10.7 Assignment....................................................................42
ARTICLE X MISCELLANEOUS....................................................................42
</TABLE>
Exhibit A - Stock Option Agreement
Exhibit B - Form of Voting and Proxy Agreement
Exhibits C-1 and C-2 - Forms of Affiliate Agreements
Exhibit D - Form of Legal Opinion from Parent's Counsel
Exhibit E - Form of Legal Opinion from the Company's Counsel
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated June 29,
1998, is by and among Information Advantage, Inc., a Delaware corporation
("Parent"), IQ Software Corporation, a Georgia corporation (the "Company"), and
IAC Merger Corp., a Georgia corporation and a direct, wholly owned subsidiary of
Parent ("Merger Sub").
WHEREAS, the Boards of Directors of the Company and Parent deem it
advisable and in the best interests of each corporation and its respective
stockholders that the Company and Parent combine in order to advance the
long-term business interests of the Company and Parent;
WHEREAS, the Company, Merger Sub and Parent intend to effect a
merger (the "Merger") of Merger Sub with and into the Company in accordance with
this Agreement and the Georgia Business Corporation Code (the "GCC");
WHEREAS, upon the closing of the Merger, Merger Sub will cease to
exist and the Company will become a wholly owned subsidiary of Parent (the
Company, from and after the Merger, is sometimes referred to herein as the
"Surviving Corporation");
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to Parent to enter into this
Agreement, Parent and the Company have entered into a Stock Option Agreement
dated as of the date of this Agreement and attached hereto as Exhibit A (the
"Stock Option Agreement"), pursuant to which the Company granted Parent an
option to purchase shares of common stock of the Company under certain
circumstances;
WHEREAS, for Federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger
shall be accounted for as a pooling of interests;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I THE MERGER
1.1 Effective Time of the Merger. Subject to the provisions of
this Agreement, a certificate of merger in such form as is required by the
relevant provisions of the GCC (the "Certificate of Merger") shall be duly
prepared, executed and acknowledged by the Surviving Corporation and thereafter
delivered to the Secretary of State of the State of Georgia, for filing, as
provided in the GCC, as soon as practicable on or after the Closing Date (as
defined in Section 1.2). The Merger shall become effective upon the filing of
the Certificate of Merger
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with the Secretary of State of the State of Georgia or at such time thereafter
as is provided in the Certificate of Merger (the "Effective Time").
1.2 Closing. The closing of the Merger (the "Closing") will take
place at 10:00 a.m., local time, on a date to be specified by the Company and
Parent, which shall be no later than the second business day after satisfaction
of the latest to occur of the conditions set forth in Sections 8.1, 8.2 and 8.3
(the "Closing Date"), at the offices of Gunderson Dettmer Stough Villeneuve
Franklin & Hachigian, LLP, 155 Constitution Drive, Menlo Park, California,
unless another date, place or time is agreed to in writing by the Company and
Parent.
1.3 Effects of the Merger. At the Effective Time (i) the separate
existence of Merger Sub shall cease and Merger Sub shall be merged with and into
the Company (Merger Sub and the Company are sometimes referred to together as
the "Constituent Corporations"), (ii) the Bylaws of Merger Sub as in effect
immediately prior to the Effective Time shall be the Bylaws of the Surviving
Corporation, (iii) the directors and officers of the Surviving Corporation
immediately after the Merger shall be as determined by the Board of Directors of
the Parent and shall serve until their respective successors are elected and
qualified or duly appointed, as the case may be, (iv) all the property, rights,
privileges, powers and franchises and duties of Merger Sub and the Company shall
vest in the Surviving Corporation, and (v) all debts, liabilities and duties of
the Company and Merger Sub shall become the debts, liabilities and duties of the
Surviving Corporation.
1.4 Director of the Company. At the Effective Time, Parent shall
cause Charles R. Chitty to be named as member of the Board of Directors of
Parent; provided, that if such person is unwilling or unable to serve in such
capacity, his replacement, if any, shall be selected by Parent's Board of
Directors as constituted at the Effective Time.
ARTICLE II CONVERSION OF SECURITIES
2.1 Conversion of Capital Stock. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Company Common Stock or the capital stock of Merger Sub:
(a) Capital Stock of Merger Sub. Each issued and outstanding
share of the capital stock of Merger Sub shall be converted into and become one
fully paid and nonassessable share of Common Stock of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock.
All shares of Common Stock of the Company, par value .00033 per share ("Company
Common Stock"), that are owned by Company or any Subsidiary (as defined in
Section 3.1) of the Company shall be canceled and retired and shall cease to
exist and no stock of Parent or other consideration shall be delivered in
exchange therefor. All shares of Company Common Stock owned by Parent shall be
unaffected by the Merger.
(c) Exchange Ratio for Company Common Stock. Subject to
Section 2.2, each issued and outstanding share of Company Common Stock (other
than shares to be canceled in accordance with Section 2.1(b)) shall be converted
into the right to receive 1.96
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shares (the "Exchange Ratio") of Common Stock, $.01 par value, of Parent
("Parent Common Stock"). All such shares of Company Common Stock, when so
converted, shall no longer be outstanding and shall automatically be canceled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the shares of Parent Common Stock and any
cash in lieu of fractional shares of Parent Common Stock to be issued or paid in
consideration therefor upon the surrender of such certificate in accordance with
Section 2.2, without interest.
(d) Adjustments to Exchange Ratio. The Exchange Ratio shall
be adjusted to reflect fully the effect of any stock split, reverse split, stock
dividend (including any dividend or distribution of securities convertible into
Parent Common Stock or Company Common Stock), reorganization, recapitalization
or other like change with respect to Parent Common Stock or Company Common Stock
occurring after the date hereof and prior to the Effective Time.
2.2 Exchange of Certificates. The procedures for exchanging
outstanding shares of Company Common Stock for Parent Common Stock pursuant to
the Merger are as follows:
(a) Exchange Agent. As of the Effective Time, Parent shall
deposit with a bank or trust company designated by Parent (the "Exchange
Agent"), for the benefit of the holders of shares of the Company Common Stock,
for exchange in accordance with this Section 2.2, through the Exchange Agent,
(i) certificates representing the shares of Parent Common Stock (such shares of
Parent Common Stock, together with any dividends or distributions with respect
thereto, being hereinafter referred to as the "Exchange Fund") issuable pursuant
to Section 2.1 in exchange for outstanding shares of Company Common Stock, and
(ii) cash in an amount sufficient to permit payment of cash in lieu of
fractional shares pursuant to Section 2.2(e).
(b) Exchange Procedures. As soon as reasonably practicable
after the Effective Time, but not later than ten business days thereafter, the
Exchange Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding shares of Company Common Stock (the "Certificates") whose shares
were converted pursuant to Section 2.1 into the right to receive shares of
Parent Common Stock (i) 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 Exchange Agent and shall be
in such form and have such other provisions as the Company and Parent may
reasonably specify) and (ii) instructions for effecting the surrender of the
Certificates in exchange for certificates representing shares of Parent Common
Stock (plus cash in lieu of fractional shares, if any, of Parent Common Stock as
provided in Section 2.2(e) below). Upon surrender of a Certificate for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal, duly executed,
the holder of such Certificate shall be entitled to receive in exchange therefor
a certificate representing that number of whole shares of Parent Common Stock
which such holder has the right to receive pursuant to the provisions of this
Article II and payment in lieu of fractional shares which the holder of such
Certificate has the right to receive pursuant to Section 2.2(e), and the
Certificate so surrendered shall immediately be canceled. In the event of a
transfer of ownership of
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Company Common Stock which is not registered in the transfer records of the
Company, a certificate representing the proper number of shares of Parent Common
Stock may be issued to a transferee if the Certificate representing such the
Company Common Stock is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer or other applicable taxes have been paid. Until
surrendered as contemplated by this Section 2.2, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the certificate representing shares of Parent Common
Stock and cash in lieu of any fractional shares of Parent Common Stock as
contemplated by this Section 2.2.
(c) Distributions with Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock represented thereby and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to Section 2.2(e)
below until the holder of record of such Certificate shall surrender such
Certificate. Subject to the effect of applicable laws, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of any
cash payable in lieu of a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 2.2(e) below and the amount of dividends
or other distributions with a record date after the Effective Time previously
paid with respect to such whole shares of Parent Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of Parent
Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All
shares of Parent Common Stock issued upon the surrender for exchange of
Certificates in accordance with the terms hereof (including any cash paid
pursuant to subsection (c) or (e) of this Section 2.2) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Company Common Stock, subject, however, to the Surviving Corporation's
obligation to pay any dividends or make any other distributions with a record
date prior to the Effective Time which may have been declared or made by the
Company on such shares of Company Common Stock in accordance with the terms of
this Agreement (to the extent permitted under Section 5.2) prior to the date
hereof and which remain unpaid at the Effective Time, and from and after the
Effective Time there shall be no further registration of transfers on the stock
transfer books of the Surviving Corporation of the shares of Company Common
Stock which were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be canceled and exchanged as provided in this Section
2.2.
(e) No Fractional Shares. No certificate or scrip
representing fractional shares of Parent Common Stock shall be issued upon the
surrender for exchange of Certificates, and such fractional share interests will
not entitle the owner thereof to vote or to exercise any other rights of a
stockholder of Parent. Notwithstanding any other provision of this Agreement,
each holder of shares of Company Common Stock exchanged pursuant to the
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Merger who would otherwise have been entitled to receive a fraction of a share
of Parent Common Stock (after taking into account all Certificates delivered by
such holder) shall receive, in lieu thereof, cash (without interest) in an
amount equal to such fractional part of a share of Parent Common Stock
multiplied by the average of the last reported sales prices of Parent Common
Stock, as reported on the Nasdaq National Market, on each of the ten trading
days immediately preceding the Closing Date.
(f) Termination of Exchange Fund. Any portion of the
Exchange Fund which remains undistributed to the stockholders of the Company for
180 days after the Effective Time shall be delivered to Parent, upon demand, and
any stockholders of the Company who have not previously complied with this
Section 2.2 shall thereafter look only to Parent for payment of their claim for
Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock and any dividends or distributions with respect to Parent Common Stock.
(g) No Liability. To the extent permitted by applicable law,
neither Parent nor the Company shall be liable to any holder of shares of Parent
Common Stock or Company Common Stock, as the case may be, for such shares (or
dividends or distributions with respect thereto) delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(h) Withholding Rights. Each of Parent and the Surviving
Corporation shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement to any holder of shares of Company
Common Stock such amounts as it 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 the Surviving
Corporation or Parent, as the case may be, such withheld amounts shall be
treated for all purposes of this Agreement as having been paid to the holder of
the shares of Company Common Stock in respect of which such deduction and
withholding was made by the Surviving Corporation or Parent, as the case may be.
(i) Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond in
such reasonable amount as the Surviving Corporation may direct as indemnity
against any claim that may be made against it with respect to such Certificate,
the Exchange Agent will issue in exchange for such lost, stolen or destroyed
Certificate the shares of Parent Common Stock and any cash in lieu of fractional
shares, and unpaid dividends and distributions on shares of Parent Common Stock
deliverable in respect thereof pursuant to this Agreement.
(j) Affiliates. Notwithstanding anything herein to the
contrary, Certificates surrendered for exchange by any Affiliate (as defined in
Section 7.10) of the Company shall not be exchanged until Parent has received an
Affiliate Agreement (as defined in Section 7.10) from such Affiliate.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company that the
statements contained in this Article III are true and correct except as set
forth herein and in the disclosure schedule delivered by Parent to the Company
prior to the execution and delivery of this Agreement (the "Parent Disclosure
Schedule"). The Parent Disclosure Schedule shall be arranged in sections and
paragraphs corresponding to the numbered and lettered sections and paragraphs
contained in this Article III and the disclosure in any section or paragraph
shall qualify other sections and paragraphs in this Article III only to the
extent that it is reasonably apparent from a reading of such disclosure that it
also qualifies or applies to such other sections and paragraphs.
3.1 Organization of Parent and Merger Sub. Each of Parent and its
Subsidiaries (as defined below), including Merger Sub, is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation, has all requisite corporate power to own,
lease and operate its property and to carry on its business as now being
conducted and as proposed to be conducted, and is duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction in which
the failure to be so qualified would have a Parent Material Adverse Effect (as
defined below). Except as set forth in the Parent SEC Reports (as defined in
Section 3.4) filed prior to the date hereof, neither Parent nor any of its
Subsidiaries directly or indirectly own any equity or similar interest in, or
any interest convertible into or exchangeable or exercisable for, any
corporation, partnership, joint venture or other business association or entity,
excluding securities in any publicly traded company held for investment by
Parent and comprising less than five percent (5%) of the outstanding stock of
such company. As used in this Agreement, the word "Subsidiary" means, with
respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which (a) such party or any other Subsidiary
of such party is a general partner (excluding partnerships, the general
partnership interests of which held by such party or any Subsidiary of such
party do not have a majority of the voting interest in such partnership) or (b)
at least a majority of the securities or other interests having by their terms
ordinary voting power to elect a majority of the Board of Directors or others
performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries. As used in this Agreement, any reference to a party's "knowledge"
means, with respect to a matter, such party's actual knowledge after due and
diligent inquiry of officers, directors and other employees of such party and
its Subsidiaries reasonably believed to have knowledge of such matter. For
purposes of this Agreement, the term "Parent Material Adverse Effect" means any
effect that is, or would reasonably be expected to be, materially adverse to the
business, properties, financial condition or results of operations of Parent and
its Subsidiaries, taken as a whole; provided, however, that (i) any adverse
change, event or effect that is demonstrated to be primarily caused by the
announcement or pendency of the Merger shall not be taken into account in
determining whether there has been or would be a "Parent Material Adverse
Effect" on or with respect to Parent and its Subsidiaries, taken as a whole, and
(ii) any adverse change in the stock price of Parent as quoted on the Nasdaq
National Market shall not be
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taken into account in determining whether there has been or would be a "Parent
Material Adverse Effect" on or with respect to Parent and its Subsidiaries,
taken as a whole.
3.2 Parent Capital Structure.
(a) The authorized capital stock of Parent consists of
60,000,000 shares of Common Stock, $.01 par value, and 5,000,000 shares of
Preferred Stock, $.01 par value ("Parent Preferred Stock"). As of April 30,
1998, (i) 15,516,770 shares of Parent Common Stock were issued and outstanding,
all of which are validly issued, fully paid and nonassessable, (ii) no shares of
Parent Common Stock were held in the treasury of Parent or by Subsidiaries of
Parent. Section 3.2 of the Parent Disclosure Schedule shows the number of shares
of Parent Common Stock reserved for future issuance pursuant to stock options
granted and outstanding as of April 30, 1998 and the plans under which such
options were granted (together with the 1997 Employee Stock Purchase Plan, the
"Parent Stock Plans"). No material change in such capitalization has occurred
between April 30, 1998 and the date of this Agreement. As of the date of this
Agreement, none of the shares of Parent Preferred Stock are issued and
outstanding. All shares of Parent Common Stock, subject to issuance as specified
above, are duly authorized and, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, shall be
validly issued, fully paid and nonassessable. There are no obligations,
contingent or otherwise, of Parent or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of Parent Common Stock or the capital
stock of any Subsidiary or to provide funds to or make any material investment
(in the form of a loan, capital contribution or otherwise) in any such
Subsidiary or any other entity other than guarantees of bank obligations of
Subsidiaries entered into in the ordinary course of business. All of the
outstanding shares of capital stock of each of Parent's Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and all such shares
(other than directors' qualifying shares in the case of foreign Subsidiaries)
are owned by Parent or another Subsidiary free and clear of all security
interests, liens, claims, pledges, agreements, limitations in Parent's voting
rights, charges or other encumbrances of any nature.
(b) Except as set forth in this Section 3.2 or as reserved
for future grants of options and issuances of shares of Common Stock under the
Parent Stock Plans, there are no equity securities of any class of Parent or any
of its Subsidiaries, or any security exchangeable into or exercisable for such
equity securities, issued, reserved for issuance or outstanding. Except as set
forth in the Parent SEC Reports filed prior to the date hereof or disclosed in
Section 3.2 of the Parent Disclosure Schedule, there are no options, warrants,
equity securities, calls, rights, commitments or agreements of any character to
which Parent or any of its Subsidiaries are a party or by which it is bound
obligating Parent or any of its Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock of Parent or
any of its Subsidiaries or obligating Parent or any of its Subsidiaries to
grant, extend, accelerate the vesting of, change the price of, or otherwise
amend or enter into any such option, warrant, equity security, call, right,
commitment or agreement. To the knowledge of Parent, there are no voting trusts,
proxies or other voting agreements or understandings with respect to the shares
of capital stock of Parent.
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3.3 Authority; No Conflict; Required Filings and Consents.
(a) Each of Parent and Merger Sub has all requisite
corporate power and authority to enter into this Agreement and in the case of
Parent, the Stock Option Agreement, and to consummate the transactions
contemplated by this Agreement and in the case of Parent, the Stock Option
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement by Parent and Merger Sub and in
the case of Parent, the Stock Option Agreement, have been duly authorized by all
necessary corporate action on the part of each of Parent and Merger Sub
(including the approval of the Merger by Parent as the sole stockholder of
Merger Sub), subject only to the approval of the Merger by Parent's
stockholders. This Agreement has been duly executed and delivered by Parent and
Merger Sub, and constitutes the valid and binding obligations of Parent and
Merger Sub, enforceable in accordance with their terms, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting creditors' rights and to general
equity principles (the "Bankruptcy and Equity Exception").
(b) The execution and delivery of this Agreement, and in the
case of Parent, the Stock Option Agreement, by Parent and Merger Sub, does not,
and the consummation of the transactions contemplated by this Agreement and the
Stock Option Agreement will not, (i) conflict with, or result in any violation
or breach of, any provision of the Certificate of Incorporation or Bylaws of
Parent or Merger Sub, each as amended to date, (ii) result in any violation of,
or default under or breach of, or constitute (with or without notice or lapse of
time, or both) a default (or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of any material benefit) under, or
require a consent or waiver under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which Parent or any of its Subsidiaries are a party
or by which any of them or any of their properties or assets may be bound, or
(iii) conflict with or violate any permit, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation applicable
to Parent or any of its Subsidiaries or any of its or their properties or
assets, except in the case of clauses (ii) and (iii) for any such conflicts,
violations, defaults, terminations, cancellations or accelerations that are not,
individually or in the aggregate, reasonably likely to have a Parent Material
Adverse Effect.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court, administrative agency or
commission or other governmental authority or instrumentality ("Governmental
Entity") is required by or with respect to Parent or any of its Subsidiaries in
connection with the execution and delivery of this Agreement and the Stock
Option Agreement or the consummation of the transactions contemplated hereby or
thereby, except for (i) the filing of the Registration Statement (as defined in
Section 3.16 below) with the Securities and Exchange Commission (the "SEC") in
accordance with the Securities Act of 1933, as amended ("Securities Act"), (ii)
the filing of the Certificate of Merger with the Secretary of State of Georgia,
(iii) the filing of the Joint Proxy Statement (as defined in Section 3.16 below)
with the SEC in accordance with the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the National Association of Securities Dealers, Inc.,
and any clearance thereof by the SEC, (iv) the filing with the Nasdaq National
Market of a Notification Form for Listing of Additional Shares, (v) such
consents, approvals, orders, authorizations,
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registrations, declarations and filings as may be required under applicable
state securities laws and the laws of any foreign country and (vi) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, would not be reasonably likely to have a Parent Material
Adverse Effect.
3.4 SEC Filings; Financial Statements.
(a) Parent has filed all forms, reports and documents
required to be filed by Parent with the SEC since December 17, 1997,
(collectively, the "Parent SEC Reports"). The Parent SEC Reports (i) at the time
filed or, with respect to registration statements filed with the SEC under the
Securities Act, as of the effective date thereof, complied in all material
respects with the applicable requirements of the Securities Act, and the
Exchange Act, as the case may be, and (ii) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated in such Parent SEC
Reports or necessary in order to make the statements in such Parent SEC Reports,
in light of the circumstances under which they were made, not misleading. None
of Parent's Subsidiaries are required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes) contained in the Parent SEC Reports
complied as to form in all material respects with the applicable published rules
and regulations of the SEC with respect thereto, was prepared in accordance with
U.S. generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
to such financial statements or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) and fairly presented the consolidated
financial position of Parent and its Subsidiaries as of the dates and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be material in amount. The unaudited balance sheet of Parent as of April 30,
1998 is referred to herein as the "Parent Balance Sheet."
3.5 No Undisclosed Liabilities. Except as disclosed in the Parent
SEC Reports filed prior to the date hereof, and except for normal or recurring
liabilities incurred since April 30, 1998 in the ordinary course of business
consistent with past practices, Parent and its Subsidiaries do not have any
liabilities, either accrued, contingent or otherwise (whether or not required to
be reflected in financial statements in accordance with GAAP), and whether due
or to become due, which individually or in the aggregate are reasonably likely
to have a Parent Material Adverse Effect.
3.6 Absence of Certain Changes or Events. Except as disclosed in
the Parent SEC Reports filed prior to the date hereof, during the period
commencing on the date of the Parent Balance Sheet and ending on the date of
this Agreement, the Parent and its Subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with past practice and,
during such period, there has not been (i) any change in the financial
condition, results of operations, business or properties of the Parent and its
Subsidiaries, taken as a whole, which has had or could reasonably be expected to
have a Parent Material Adverse Effect; (ii) any
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damage, destruction or loss (whether or not covered by insurance) with respect
to the Parent or any of its Subsidiaries having a Parent Material Adverse
Effect; (iii) any material change by the Parent in its accounting methods,
principles or practices to which Parent has not advised Company promptly
thereof; or (iv) any revaluation by the Parent of any of its assets having a
Parent Material Adverse Effect.
3.7 Taxes.
(a) All Tax returns, statements, reports, declarations and
other forms and documents (including without limitation estimated Tax returns
and reports and material information returns and reports) required to be filed
with any Tax authority with respect to any Taxable period ending on or before
the Closing, by or on behalf of Parent (collectively, "Tax Returns" and
individually a "Tax Return"), have been or will be completed and filed when due
(including any extensions of such due date) and all amounts shown due on such
Tax Returns on or before the Effective Time (and all other Taxes due and payable
on or before the Effective Time) have been or will be paid on or before such
date. The Parent's consolidated financial statements (i) fully accrue all actual
and contingent liabilities for Taxes with respect to all periods through April
30, 1998 and Parent has not and will not incur any Tax liability materially in
excess of the amount reflected on the Parent Balance Sheet with respect to such
periods, other than Taxes incurred in the ordinary course of its business
following April 30, 1998, and (ii) properly accrues in accordance with GAAP all
material liabilities for Taxes payable after April 30, 1998 with respect to all
transactions and events occurring on or prior to such date.
(b) For purposes of this Agreement, the following terms have
the following meanings: "Tax" (and, with correlative meaning, "Taxes" and
"Taxable") means any and all taxes including, without limitation, (i) any net
income, alternative or add-on minimum tax, gross income, gross receipts, sales,
use, ad valorem, transfer, franchise, profits, value added, net worth, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
property, environmental or windfall profit tax, custom, duty or other tax
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or any penalty, addition to tax or additional amount
imposed by any Governmental Entity (a "Tax authority") responsible for the
imposition of any such tax (domestic or foreign), (ii) any liability for the
payment of any amounts of the type described in (i) as a result of being a
member of an affiliated, consolidated, combined or unitary group for any Taxable
period or as the result of being a transferee or successor thereof and (iii) any
liability for the payment of any amounts of the type described in (i) or (ii) as
a result of any express or implied obligation to indemnify any other person. As
used in this Section 3.7, the term "Parent" means Parent and any entity included
in, or required under GAAP to be included in, any of the Parent consolidated
financial statements.
3.8 Properties.
(a) Neither the Parent nor any of its Subsidiaries own any
real property.
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(b) All material real property leases of the Parent and its
Subsidiaries are in good standing, valid and effective in accordance with their
respective terms, and neither the Parent nor any of its Subsidiaries are in
default under any of such leases.
3.9 Intellectual Property.
(a) The Parent and its Subsidiaries own, or are licensed or
otherwise possess legally enforceable rights to use, all patents, trademarks,
trade names, service marks, copyrights and mask works, any applications for and
registrations of such patents, trademarks, trade names, service marks,
copyrights and mask works, and all processes, formulae, methods, schematics,
technology, know-how, computer software programs or applications and tangible or
intangible proprietary information or material that are necessary to conduct the
business of the Parent and its Subsidiaries as currently conducted, or planned
to be conducted (the "Parent Intellectual Property Rights").
(b) Neither the Parent nor any of its Subsidiaries are, or
will as a result of the execution and delivery of this Agreement or the
performance of the Parent's obligations under this Agreement or otherwise be, in
breach of any license, sublicense or other agreement relating to the Parent
Intellectual Property Rights, or any licenses, sublicenses and other agreements
as to which the Parent or any of its Subsidiaries are a party and pursuant to
which the Parent or any of its Subsidiaries are authorized to use any third
party patents, trademarks or copyrights, including software that is used in the
manufacture of, incorporated in, or forms a part of any product sold by or
expected to be sold by the Parent or any of its Subsidiaries, the breach of
which would be reasonably likely to have a Parent Material Adverse Effect.
(c) All patents, registered trademarks, service marks and
copyrights which are held by the Parent or any of its Subsidiaries and which are
material to the business of the Parent and its Subsidiaries, taken as a whole,
are valid and subsisting. The Parent (i) has not been sued in any suit, action
or proceeding, or received in writing any claim or notice, which involves a
claim of infringement of any patents, trademarks, service marks, copyrights or
violation of any trade secret or other proprietary right of any third party; and
(ii) has no knowledge that the manufacturing, marketing, licensing or sale of
its products infringes any patent, trademark, service mark, copyright, trade
secret or other proprietary right of any third party.
3.10 Agreements, Contracts and Commitments. The Parent has not
breached, or received in writing any claim or notice that it has breached, any
of the terms or conditions of any agreement, contract or commitment filed as an
exhibit to the Parent SEC Reports ("Parent Material Contracts") in such a manner
as, individually or in the aggregate, are reasonably likely to have a Parent
Material Adverse Effect. Each Parent Material Contract that has not expired by
its terms is in full force and effect.
3.11 Litigation. Except as described in the Parent SEC Reports
filed prior to the date hereof, there is no action, suit or proceeding, claim,
arbitration or investigation against the Parent or any of its Subsidiaries
pending or as to which the Parent or any such Subsidiary has received any
written notice of assertion.
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3.12 Environmental Matters
(a) Except as disclosed in the Parent SEC Reports filed
prior to the date hereof and except for such matters that, individually or in
the aggregate, are not reasonably likely to have a Parent Material Adverse
Effect: (i) the Parent and its Subsidiaries have complied with all applicable
Environmental Laws; (ii) the properties currently owned or operated by Parent
and its Subsidiaries (including soils, groundwater, surface water, buildings or
other structures) are not contaminated with any Hazardous Substances; (iii) the
properties formerly owned or operated by Parent or any of its Subsidiaries were
not contaminated with Hazardous Substances during the period of ownership or
operation by the Parent or any of its Subsidiaries; (iv) neither the Parent nor
any of its Subsidiaries are subject to liability for any Hazardous Substance
disposal or contamination on any third party property; (v) neither the Parent
nor any of its Subsidiaries have been associated with any release or threat of
release of any Hazardous Substance; (vi) neither the Parent nor any of its
Subsidiaries have received any notice, demand, letter, claim or request for
information alleging that the Parent or any of its Subsidiaries may be in
violation of or liable under any Environmental Law; (vii) neither the Parent nor
any of its Subsidiaries are subject to any orders, decrees, injunctions or other
arrangements with any Governmental Entity or are subject to any indemnity or
other agreement with any third party relating to liability under any
Environmental Law or relating to Hazardous Substances; and (viii) there are no
circumstances or conditions involving the Parent or any of its Subsidiaries that
could reasonably be expected to result in any claims, liability, investigations,
costs or restrictions on the ownership, use or transfer of any property of the
Parent pursuant to any Environmental Law.
(b) As used in this Agreement, the term "Environmental Law"
means any federal, state, local or foreign law, regulation, order, decree,
permit, authorization, opinion, common law or agency requirement relating to:
(i) the protection, investigation or restoration of the environment, health and
safety, or natural resources, (ii) the handling, use, presence, disposal,
release or threatened release of any Hazardous Substance or (iii) noise, odor,
wetlands, pollution, contamination or any injury or threat of injury to persons
or property.
(c) As used in this Agreement, the term "Hazardous
Substance" means any substance that is: (i) listed, classified or regulated
pursuant to any Environmental Law; (ii) any petroleum product or by-product,
asbestos-containing material, lead-containing paint or plumbing, polychlorinated
biphenyls, radioactive materials or radon; or (iii) any other substance which is
the subject of regulatory action by any Governmental Entity pursuant to any
Environmental Law.
3.13 Employee Benefit Plans.
(a) With respect to the bonus, stock option, profit sharing,
401(k) and other similar plans and programs ("Parent Employee Plans"),
individually and in the aggregate, no event has occurred and, to the knowledge
of Parent, there exists no condition or set of circumstances in connection with
which the Parent could be subject to any liability under Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), the Code or any other
applicable law.
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(b) With respect to the Parent Employee Plans, individually
and in the aggregate, there are no funded benefit obligations for which
contributions have not been made or properly accrued and there are no unfunded
benefit obligations that have not been accounted for by reserves, or otherwise
properly footnoted in accordance with GAAP, on the financial statements of the
Parent.
3.14 Compliance With Laws. The Parent and each of its Subsidiaries
has complied with, is not in violation of, and has not received any notices of
violation with respect to, any federal, state, local or foreign statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for failures to comply or violations which,
individually or in the aggregate, have not had and are not reasonably likely to
have a Parent Material Adverse Effect.
3.15 Accounting and Tax Matters. To its knowledge, after consulting
with its independent auditors, neither Parent nor any of its Affiliates (as
defined in Section 7.10) have taken or agreed to take any action which would (i)
prevent Parent from accounting for the business combination to be effected by
the Merger as a pooling of interests or (ii) prevent the Merger from
constituting a transaction qualifying as a reorganization under 368(a) of the
Code.
3.16 Registration Statement; Proxy Statement/Prospectus. The
information to be supplied by Parent for inclusion in the registration statement
on Form S-4 pursuant to which shares of Parent Common Stock issued in the Merger
will be registered under the Securities Act (the "Registration Statement") shall
not at the time the Registration Statement is declared effective by the SEC
contain any untrue statement of a material fact or omit to state any material
fact required to be stated in the Registration Statement or necessary in order
to make the statements in the Registration Statement, in light of the
circumstances under which they were made, not misleading. The information
supplied by Parent for inclusion in the joint proxy statement/prospectus to be
sent to the stockholders of the Company and Parent in connection with the
meeting of Parent's stockholders (the "Parent Stockholders' Meeting") and the
Company's stockholders (the "Company Stockholders' Meeting") to consider this
Agreement and the Merger (the "Joint Proxy Statement") shall not, on the date
the Joint Proxy Statement is first mailed to stockholders of Parent or the
Company, at the time of the Parent Stockholders' Meeting and the Company
Stockholders' Meeting and at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made in the Joint Proxy
Statement not false or misleading; or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the Parent Stockholders' Meeting or the Company
Stockholders' Meeting which has become false or misleading. If at any time prior
to the Effective Time any event relating to Parent or any of its Affiliates,
officers or directors should be discovered by Parent which should be set forth
in an amendment to the Registration Statement or a supplement to the Joint Proxy
Statement, Parent shall promptly inform the Company. Notwithstanding the
foregoing, Parent makes no representation, warranty or covenant with respect to
any information supplied by the Company that is contained in any of the
foregoing documents.
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3.17 Labor Matters. Neither the Parent nor any of its Subsidiaries
are parties to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor, as of the date hereof, is the Parent or any of its
Subsidiaries the subject of any material proceeding asserting that the Parent or
any of its Subsidiaries have committed an unfair labor practice or is seeking to
compel it to bargain with any labor union or labor organization nor, as of the
date of this Agreement, is there pending or, to the knowledge of the Parent,
threatened, any material labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving the Parent or any of its Subsidiaries.
3.18 Insurance; Risk Management. All material fire and casualty,
general liability, business interruption, product liability, and sprinkler and
water damage insurance policies maintained by the Parent or any of its
Subsidiaries are with reputable insurance carriers, provide full and adequate
coverage (subject to reasonable deductibles, co-insurance and exclusions) for
all normal risks incident to the business of the Parent and its Subsidiaries and
their respective properties and assets, and are in character and amount at least
equivalent to that carried by persons engaged in similar businesses and subject
to the same or similar perils or hazards, except for any such failures to
maintain insurance policies that, individually or in the aggregate, are not
reasonably likely to have a Parent Material Adverse Effect. The steps taken by
the Parent to manage the various risks incident to the business and operations
of the Parent and its Subsidiaries and their respective properties and assets
are at least equivalent to those taken by persons engaged in similar businesses,
except for any failures to take such steps that, individually or in the
aggregate, are not reasonably likely to have a Parent Material Adverse Effect.
3.19 Opinion of Financial Advisor. The financial advisor of Parent,
BancAmerica Robertson Stephens, has delivered to Parent an opinion dated the
date of this Agreement to the effect that the Exchange Ratio is fair to the
holders of Parent Common Stock from a financial point of view.
3.20 Interim Operations of Merger Sub. Merger Sub was formed solely
for the purpose of engaging in the transactions contemplated by this Agreement,
has engaged in no other business activities and has conducted its operations
only as contemplated by this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub that
the statements contained in this Article IV are true and correct except as set
forth herein and in the disclosure schedule delivered by the Company to Parent
prior to the execution and delivery of this Agreement (the "Company Disclosure
Schedule"). The Company Disclosure Schedule shall be arranged in sections and
paragraphs corresponding to the numbered and lettered sections and paragraphs
contained in this Article IV and the disclosure in any section or paragraph
shall qualify other sections and paragraphs in this Article IV only to the
extent that it is reasonably apparent from a reading of such disclosure that it
also qualifies or applies to such other sections and paragraphs.
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4.1 Organization of the Company. Each of the Company and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
requisite corporate power to own, lease and operate its property and to carry on
its business as now being conducted and as proposed to be conducted, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the failure to be so qualified would have a Company
Material Adverse Effect (as defined below). Except as set forth in the Company
SEC Reports (as defined in Section 4.4) filed prior to the date hereof, neither
the Company nor any of its Subsidiaries directly or indirectly own any equity or
similar interest in, or any interest convertible into or exchangeable or
exercisable for, any corporation, partnership, joint venture or other business
association or entity, excluding securities in any publicly traded company held
for investment by the Company and comprising less than five percent (5%) of the
outstanding stock of such company. For purposes of this Agreement, the term
"Company Material Adverse Effect" means any effect that is, or would reasonably
be expected to be, materially adverse to the business, properties, financial
condition or results of operations of the Company and its Subsidiaries, taken as
a whole; provided, however, that (a) any adverse change, event or effect that is
demonstrated to be primarily caused by the announcement or pendency of the
Merger shall not be taken into account in determining whether there has been or
would be a "Company Material Adverse Effect" on or with respect to the Company
and its Subsidiaries, taken as a whole, and (b) any adverse change in the stock
price of the Company as quoted on the Nasdaq National Market shall not be taken
into account in determining whether there has been or would be a "Company
Material Adverse Effect" on or with respect to the Company and its Subsidiaries,
taken as a whole.
4.2 The Company Capital Structure.
(a) The authorized capital stock of the Company consists of
30,000,000 shares of Common Stock, $.00033 par value, and 5,000,000 shares of
Preferred Stock, $.01 par value ("Company Preferred Stock"). As of the date
hereof, (i) 4,674,216 shares of Company Common Stock were issued and
outstanding, all of which are validly issued, fully paid and nonassessable, and
(ii) no shares of Company Common Stock were held in the treasury of the Company
or by Subsidiaries of the Company. 670,275 shares of Company Common Stock have
been reserved for future issuance pursuant to stock options granted and
outstanding as of the date hereof under the Company stock option plans (the
"Company Stock Plans") listed on Schedule 4.2 of the Company Disclosure
Schedule. As of the date of this Agreement, none of the shares of Company
Preferred Stock is issued and outstanding. All shares of Company Common Stock
subject to issuance as specified above are duly authorized and, upon issuance on
the terms and conditions specified in the instruments pursuant to which they are
issuable, shall be validly issued, fully paid and nonassessable. There are no
obligations, contingent or otherwise, of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any shares of Company Common Stock or
the capital stock of any Subsidiary or to provide funds to or make any material
investment (in the form of a loan, capital contribution or otherwise) in any
such Subsidiary or any other entity other than guarantees of bank obligations of
Subsidiaries entered into in the ordinary course of business. All of the
outstanding shares of capital stock of each of the Company's Subsidiaries are
duly authorized, validly issued, fully paid and nonassessable and all such
shares (other than directors' qualifying shares in the case of foreign
Subsidiaries) are owned by the Company or another Subsidiary free and clear of
all security
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interests, liens, claims, pledges, agreements, limitations in the Company's
voting rights, charges or other encumbrances of any nature.
(b) Except as set forth in this Section 4.2 or as reserved
for future grants of options and issuances of shares of Common Stock under the
Company Stock Plans, there are no equity securities of any class of the Company
or any of its Subsidiaries, or any security exchangeable into or exercisable for
such equity securities, issued, reserved for issuance or outstanding. Except as
set forth in the Company SEC Reports filed prior to the date hereof, in the
Stock Option Agreement or disclosed in Section 4.2 of the Company Disclosure
Schedule, there are no options, warrants, equity securities, calls, rights,
commitments or agreements of any character to which the Company or any of its
Subsidiaries are a party or by which they are bound obligating the Company or
any of its Subsidiaries to issue, deliver or sell, or cause to be issued,
delivered or sold, additional shares of capital stock of the Company or any of
its Subsidiaries or obligating the Company or any of its Subsidiaries to grant,
extend, accelerate the vesting of, change the price of, or otherwise amend or
enter into any such option, warrant, equity security, call, right, commitment or
agreement. To the knowledge of the Company, there are no voting trusts, proxies
or other voting agreements or understandings with respect to the shares of
capital stock of the Company.
4.3 Authority; No Conflict; Required Filings and Consents.
(a) The Company has all requisite corporate power and
authority to enter into this Agreement and the Stock Option Agreement and to
consummate the transactions contemplated by this Agreement and the Stock Option
Agreement. The execution and delivery of this Agreement and the Stock Option
Agreement and the consummation of the transactions contemplated by this
Agreement and the Stock Option Agreement by the Company have been duly
authorized by all necessary corporate action on the part of the Company, subject
only to the approval of the Merger by the Company's stockholders under the GCC.
This Agreement and the Stock Option Agreement have been duly executed and
delivered by the Company and constitute the valid and binding obligation of the
Company, enforceable in accordance with their terms, subject to the Bankruptcy
and Equity Exception.
(b) The execution and delivery of this Agreement and the
Stock Option Agreement by the Company does not, and the consummation of the
transactions contemplated by this Agreement and the Stock Option Agreement will
not, (i) conflict with, or result in any violation or breach of, any provision
of the Certificate of Incorporation or Bylaws of the Company, each as amended to
date, (ii) result in any violation of, or default under or breach of, or
constitute (with or without notice or lapse of time, or both) a default (or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of any material benefit) under, or require a consent or waiver under,
any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, lease, contract or other agreement, instrument or obligation to which
the Company or any of its Subsidiaries are a party or by which any of them or
any of their properties or assets may be bound, or (iii) conflict with or
violate any permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to the Company or any of
its Subsidiaries or any of its or their properties or assets, except in the case
of clauses (ii) and (iii) for any such conflicts, violations, defaults,
terminations,
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cancellations or accelerations that are not, individually or in the aggregate,
reasonably likely to have a Company Material Adverse Effect.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is required by
or with respect to the Company or any of its Subsidiaries in connection with the
execution and delivery of this Agreement and the Stock Option Agreement or the
consummation of the transactions contemplated hereby or thereby, except for (i)
the filing of the Certificate of Merger with the Secretary of State of Georgia,
(ii) the filing of the Joint Proxy Statement with the SEC in accordance with the
Exchange Act and the National Association of Securities Dealers, Inc., and any
clearance thereof by the SEC, (iii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable state securities laws and the laws of any foreign country and (iv)
such other consents, authorizations, filings, approvals and registrations which,
if not obtained or made, would not be reasonably likely to have a Company
Material Adverse Effect.
4.4 SEC Filings; Financial Statements.
(a) The Company has filed and made available to Parent all
forms, reports and documents required to be filed by the Company with the SEC
since December 31, 1996 (collectively, the "Company SEC Reports"). The Company
SEC Reports (i) at the time filed or, with respect to registration statements
filed with the SEC under the Securities Act, as of the effective date thereof,
complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing prior to the date
of this Agreement, then on the date of such filing) contain any untrue statement
of a material fact or omit to state a material fact required to be stated in
such Company SEC Reports or necessary in order to make the statements in such
Company SEC Reports, in light of the circumstances under which they were made,
not misleading. None of the Company's Subsidiaries is required to file any
forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes) contained in the Company SEC
Reports complied as to form in all material respects with the applicable
published rules and regulations of the SEC with respect thereto, was prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements
or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC)
and fairly presented the consolidated financial position of the Company and its
Subsidiaries as of the dates and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount. The
unaudited balance sheet of the Company dated as of April 30, 1998 is referred to
herein as the "Company Balance Sheet."
4.5 No Undisclosed Liabilities. Except as disclosed in the Company
SEC Reports filed prior to the date hereof, and except for normal or recurring
liabilities incurred since April 30, 1998 in the ordinary course of business
consistent with past practices, the Company
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and its Subsidiaries do not have any liabilities, either accrued, contingent or
otherwise (whether or not required to be reflected in financial statements in
accordance with GAAP), and whether due or to become due, which individually or
in the aggregate, are reasonably likely to have a Company Material Adverse
Effect.
4.6 Absence of Certain Changes or Events. Except as disclosed in
the Company SEC Reports filed prior to the date hereof, during the period
commencing on the date of the Company Balance Sheet and ending on the date of
this Agreement, the Company and its Subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with past practice and,
during such period, there has not been (i) any change in the financial
condition, results of operations, business or properties of the Company and its
Subsidiaries, taken as a whole, which has had or could reasonably be expected to
have a Company Material Adverse Effect; (ii) any damage, destruction or loss
(whether or not covered by insurance) with respect to the Company or any of its
Subsidiaries having a Company Material Adverse Effect; (iii) any material change
by the Company in its accounting methods, principles or practices to which
Parent has not previously consented in writing; (iv) any revaluation by the
Company of any of its assets having a Company Material Adverse Effect; or (v)
any other action or event that would have required the consent of Parent
pursuant to Section 5.2 of this Agreement had such action or event occurred
after the date of this Agreement and that, in the case of this clause (v),
individually or in the aggregate, has had or is reasonably likely to have a
Company Material Adverse Effect.
4.7 Taxes.
(a) All Tax returns, statements, reports, declarations and
other forms and documents (including without limitation estimated Tax returns
and reports and material information returns and reports) required to be filed
with any Tax authority with respect to any Taxable period ending on or before
the Closing, by or on behalf of Company (collectively, "Tax Returns" and
individually a "Tax Return"), have been or will be completed and filed when due
(including any extensions of such due date) and all amounts shown due on such
Tax Returns on or before the Effective Time (and all other Taxes due and payable
on or before the Effective Time) have been or will be paid on or before such
date. The Company's consolidated financial statements (i) fully accrue all
actual and contingent liabilities for Taxes with respect to all periods through
April 30, 1998 and Company has not and will not incur any Tax liability
materially in excess of the amount reflected on the Company Balance Sheet with
respect to such periods, other than Taxes incurred in the ordinary course of its
business following April 30, 1998, and (ii) properly accrues in accordance with
GAAP all material liabilities for Taxes payable after April 30, 1998 with
respect to all transactions and events occurring on or prior to such date. All
information set forth in the notes to the Company consolidated financial
statements relating to Tax matters is true, complete and accurate in all
material respects. No material Tax liability since April 30, 1998 has been
incurred by Company other than in the ordinary course of business and adequate
provision has been made by Company for all Taxes since that date in accordance
with GAAP on at least a quarterly basis.
(b) Company has previously provided or made available, or
will provide or make available, to Parent true and correct copies of all income,
franchise, and sales Tax Returns, and, as reasonably requested by Parent, prior
to or following the date hereof,
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presently existing information statements and reports. Company has withheld and
paid to the applicable financial institution or Tax authority all amounts
required to be withheld. No Tax Returns filed with respect to Taxable years of
Company through the Taxable year ended January 31, 1994 in the case of the
United States have been examined, and such Taxable years are now closed. Company
(or any member of any affiliated or combined group of which Company has been a
member) has not granted any extension or waiver of the limitation period
applicable to any Tax Returns that is still in effect. There is no material
claim, audit, action, suit, proceeding, or (to the knowledge of Company)
investigation now pending or (to the knowledge of Company) threatened against or
with respect to Company in respect of any Tax or assessment. No notice of
deficiency or similar document of any Tax authority has been received by
Company, and there are no liabilities for Taxes (including liabilities for
interest, additions to Tax and penalties thereon and related expenses) with
respect to the issues that have been raised (and are currently pending) by any
Tax authority that could, if determined adversely to Company, materially and
adversely affect the liability of Company for Taxes. There are no liens for
Taxes (other than for current Taxes not yet due and payable) upon the assets of
Company. Company is in full compliance with all the terms and conditions of any
Tax exemptions or other Tax-sharing agreement or order of a foreign government
and the consummation of the Merger will not have any adverse effect on the
continued validity and effectiveness of any such Tax exemption or other
Tax-sharing agreement or order. Neither Company nor any person on behalf of
Company has entered into or will enter into any agreement or consent pursuant to
the collapsible corporation provisions of Section 341(f) of the Code (or any
corresponding provision of state, local or foreign income tax law) or agreed to
have Section 341(f)(2) of the Code (or any corresponding provision of state,
local or foreign income tax law) apply to any disposition of any asset owned by
Company. None of the assets of Company is property that Company is required to
treat as being owned by any other person pursuant to the so-called "safe harbor
lease" provisions of former Section 168(f)(8) of the Code. None of the assets of
Company directly or indirectly secures any debt the interest on which is tax
exempt under Section 103(a) of the Code. None of the assets of Company is
"tax-exempt use property" within the meaning of Section 168(h) of the Code.
Company has not made and will not make a deemed dividend election under Treas.
Reg. Section 1.1502-32(f)(2) or a consent dividend election under Section 565 of
the Code. Company has never been a party to any transaction intended to qualify
under Section 355 of the Internal Revenue Code or any corresponding provision of
state law. Company has not participated in (and will not participate in) an
international boycott within the meaning of Section 999 of the Code. Company
does not have and has not had a permanent establishment in any foreign country,
as defined in any applicable tax treaty or convention between the United States
of America and such foreign country and Company has not engaged in a trade or
business within any foreign country. Company has never elected to be treated as
an S-corporation under Section 1362 of the Code or any corresponding provision
of federal or state law. All material elections with respect to Company's Taxes
made during the fiscal years ending, January, 31, 1995, 1996, 1997 and 1998 (if
filed) are reflected on the Company Tax Returns for such periods, copies of
which have been provided or made available to Parent. After the date of this
Agreement, no material election with respect to Taxes will be made without the
prior written consent of Parent, which consent will not be unreasonably withheld
or delayed. Company is not party to any joint venture, partnership, or other
arrangement or contract which could be treated as a partnership for federal
income tax purposes. Company is not currently and never has been subject to the
reporting requirements of Section 6038A of the Code. There is no agreement,
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contract or arrangement to which Company is a party that could, individually or
collectively, result in the payment of any amount that would not be deductible
by reason of Sections 280G (as determined without regard to Section 280G(b)(4),
162 (other than 162(a)) or 404 of the Code. Company is not a party to or bound
by any Tax indemnity, Tax sharing or Tax allocation agreement (whether written
or unwritten or arising under operation of federal law as a result of being a
member of a group filing consolidated Tax returns, under operation of certain
state laws as a result of being a member of a unitary group, or under comparable
laws of other states or foreign jurisdictions) which includes a party other than
Company nor does Company owe any amount under any such Agreement. Company has
previously provided or made available to Parent true and correct copies of all
income, franchise, and sales Tax Returns, and, as reasonably requested by
Parent, prior to or following the date hereof, presently existing information
statements and reports. Company is not, and has not been, a United States real
property holding corporation (as defined in Section 897(c)(2) of the Code)
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
Other than by reason of the Merger, Company has not been and will not be
required to include any material adjustment in Taxable income for any Tax period
(or portion thereof) pursuant to Section 481 or 263A of the Code or any
comparable provision under state or foreign Tax laws as a result of
transactions, events or accounting methods employed prior to the Merger.
(c) As used in this Section 4.7, the term "Company" means
Company and any entity included in, or required under GAAP to be included in,
any of the Company consolidated financial statements.
4.8 Properties.
(a) Neither the Company nor any of its Subsidiaries own any
real property.
(b) All material real property leases of the Company and its
Subsidiaries are in good standing, valid and effective in accordance with their
respective terms, and neither the Company nor any of its Subsidiaries are in
default under any of such leases.
4.9 Intellectual Property.
(a) The Company and its Subsidiaries own, or are licensed or
otherwise possess legally enforceable rights to use, all patents, trademarks,
trade names, service marks, copyrights and mask works, any applications for and
registrations of such patents, trademarks, trade names, service marks,
copyrights and mask works, and all processes, formulae, methods, schematics,
technology, know-how, computer software programs or applications and tangible or
intangible proprietary information or material that are necessary to conduct the
business of the Company and its Subsidiaries as currently conducted, or planned
to be conducted (the "Company Intellectual Property Rights").
(b) Neither the Company nor any of its Subsidiaries are, or
will as a result of the execution and delivery of this Agreement or the
performance of the Company's obligations under this Agreement or otherwise be,
in breach of any license, sublicense or other agreement relating to the Company
Intellectual Property Rights, or any licenses, sublicenses and
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other agreements as to which the Company or any of its Subsidiaries are a party
and pursuant to which the Company or any of its Subsidiaries are authorized to
use any third party patents, trademarks or copyrights ("Company Third Party
Intellectual Property Rights"), including software that is used in the
manufacture of, incorporated in, or forms a part of any product sold by or
expected to be sold by the Company or any of its Subsidiaries, the breach of
which would be reasonably likely to have a Company Material Adverse Effect.
(c) All patents, registered trademarks, service marks and
copyrights which are held by the Company or any of its Subsidiaries and which
are material to the business of the Company and its Subsidiaries, taken as a
whole, are valid and subsisting. The Company (i) has not been sued in any suit,
action or proceeding, or received in writing any claim or notice, which involves
a claim of infringement of any patents, trademarks, service marks, copyrights or
violation of any trade secret or other proprietary right of any third party; and
(ii) has no knowledge that the manufacturing, marketing, licensing or sale of
its products infringes any patent, trademark, service mark, copyright, trade
secret or other proprietary right of any third party.
4.10 Agreements, Contracts and Commitments. The Company has not
breached, or received in writing any claim or notice that it has breached, any
of the terms or conditions of any agreement, contract or commitment filed as an
exhibit to the Company SEC Reports ("Company Material Contracts") in such a
manner as, individually or in the aggregate, are reasonably likely to have a
Company Material Adverse Effect. Each Company Material Contract that has not
expired by its terms is in full force and effect.
4.11 Litigation. Except as described in the Company SEC Reports
filed prior to the date hereof, there is no action, suit or proceeding, claim,
arbitration or investigation against the Company or any of its Subsidiaries
pending or as to which the Company or any such Subsidiary has received any
written notice of assertion.
4.12 Environmental Matters.
Except as disclosed in the Company SEC Reports filed prior to
the date hereof and except for such matters that, individually or in the
aggregate, are not reasonably likely to have a Company Material Adverse Effect:
(i) the Company and its Subsidiaries have complied with all applicable
Environmental Laws; (ii) the properties currently owned or operated by Company
and its Subsidiaries (including soils, groundwater, surface water, buildings or
other structures) are not contaminated with any Hazardous Substances; (iii) the
properties formerly owned or operated by Company or any of its Subsidiaries were
not contaminated with Hazardous Substances during the period of ownership or
operation by the Company or any of its Subsidiaries; (iv) neither the Company
nor any of its Subsidiaries are subject to liability for any Hazardous Substance
disposal or contamination on any third party property; (v) neither the Company
nor any of its Subsidiaries have been associated with any release or threat of
release of any Hazardous Substance; (vi) neither the Company nor any of its
Subsidiaries have received any notice, demand, letter, claim or request for
information alleging that the Company or any of its Subsidiaries may be in
violation of or liable under any Environmental Law; (vii) neither the Company
nor any of its Subsidiaries are subject to any orders, decrees, injunctions or
other arrangements with any Governmental Entity or are subject to any indemnity
or other agreement
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with any third party relating to liability under any Environmental Law or
relating to Hazardous Substances; and (viii) there are no circumstances or
conditions involving the Company or any of its Subsidiaries that could
reasonably be expected to result in any claims, liability, investigations, costs
or restrictions on the ownership, use or transfer of any property of the Company
pursuant to any Environmental Law.
4.13 Employee Benefit Plans.
(a) The Company has listed in Section 4.13 of the Company
Disclosure Schedule all employee benefit plans (as defined in Section 3(3) of
ERISA and all bonus, stock option, restricted stock, stock appreciation right,
phantom stock, executive compensation, profit-sharing, stock purchase,
incentive, deferred compensation, supplemental retirement, severance and other
similar employee benefit plans, programs, policies, perquisites, arrangements
(written or otherwise) and all unexpired offer letters, employment agreements,
severance agreements, written or otherwise, for the benefit of, or relating to,
any current or former employee of the Company or any trade or business (whether
or not incorporated) (an "ERISA Affiliate") which under Section 414 of the Code
is aggregated with the Company, or any Subsidiary of the Company (collectively,
the "Company Employee Plans").
(b) With respect to each Company Employee Plan, the Company
has made available to Parent, a true and correct copy of (i) the most recent
annual report (Form 5500), if any, filed with the IRS, (ii) such Company
Employee Plan, (iii) each trust agreement and group annuity contract, if any,
relating to such Company Employee Plan, (iv) the most recent actuarial report or
valuation relating to a Company Employee Plan subject to Title IV of ERISA, (v)
the most updated summary plan description for employee benefit plans defined in
Section 3(3) of ERISA, including any summaries of material modifications and
(vi) with respect to each Company Employee Plan that is intended to qualify
under section 401(a) of the Code, the most recent determination letter
concerning such plan's qualification under section 401(a) of the Code, as issued
by the Internal Revenue Service, and any subsequent determination letter
application.
(c) With respect to the Company Employee Plans, individually
and in the aggregate, no event has occurred and, to the knowledge of Company,
there exists no condition or set of circumstances in connection with which the
Company could be subject to any liability under ERISA, the Code or any other
applicable law.
(d) With respect to the Company Employee Plans, individually
and in the aggregate, there are no funded benefit obligations for which
contributions have not been made or properly accrued and there are no unfunded
benefit obligations that have not been accounted for by reserves, or otherwise
properly footnoted in accordance with GAAP, on the financial statements of the
Company.
(e) Except as disclosed in the Company SEC Reports filed
prior to the date of this Agreement, and except as provided for in this
Agreement, neither the Company nor any of its Subsidiaries are a party to any
oral or written (i) agreement with any officer or other key employee of the
Company or any of its Subsidiaries, the benefits of which are contingent, or the
terms of which are materially altered, upon the occurrence of a transaction
involving the
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Company of the nature contemplated by this Agreement, (ii) agreement with any
officer of the Company providing any term of employment or compensation
guarantee extending for a period longer than one year from the date hereof or
for the payment of compensation in excess of $100,000 per annum, or (iii)
agreement or plan, including any stock option plan, stock appreciation right
plan, restricted stock plan or stock purchase plan, any of the benefits of which
will be increased, or the vesting of the benefits of which will be accelerated,
by the occurrence of any of the transactions contemplated by this Agreement or
the value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement.
(f) Except as provided for in this Agreement, neither the
Company nor any of its Subsidiaries are a party to any contract, plan or
arrangement (written or otherwise) covering any employee or former employee of
the Company or any of its Subsidiaries that, individually or collectively, could
give rise to the payment of any amount that would not be deductible pursuant to
the terms of Section 280G of the Code.
4.14 Compliance With Laws. The Company and each of its Subsidiaries
has complied with, is not in violation of, and has not received any notices of
violation with respect to, any federal, state, local or foreign statute, law or
regulation with respect to the conduct of its business, or the ownership or
operation of its business, except for failures to comply or violations which,
individually or in the aggregate, have not had and are not reasonably likely to
have a Company Material Adverse Effect.
4.15 Accounting and Tax Matters. To its knowledge, after consulting
with its independent auditors, neither the Company nor any of its Affiliates
have taken or agreed to take any action which would (i) prevent Parent from
accounting for the business combination to be effected by the Merger as a
pooling of interests or (ii) prevent the Merger from constituting a transaction
qualifying as a reorganization under Section 368(a) of the Code.
4.16 Registration Statement; Proxy Statement/Prospectus. The
information to be supplied by the Company for inclusion in the Registration
Statement shall not at the time the Registration Statement is declared effective
by the SEC contain any untrue statement of a material fact or omit to state any
material fact required to be stated in the Registration Statement or necessary
in order to make the statements in the Registration Statement, in light of the
circumstances under which they were made, not misleading. The information
supplied by the Company for inclusion in the Joint Proxy Statement shall not, on
the date the Joint Proxy Statement is first mailed to stockholders of the
Company or Parent, at the time of the Company Stockholders' Meeting and the
Parent Stockholders' Meeting and at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it shall be
made, is false or misleading with respect to any material fact, or omit to state
any material fact necessary in order to make the statements made in the Joint
Proxy Statement not false or misleading; or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Company Stockholders' Meeting or the Parent
Stockholders' Meetings which has become false or misleading. If at any time
prior to the Effective Time any event relating to the Company or any of its
Affiliates, officers or directors should be discovered by the Company which
should be set forth in an amendment to the Registration Statement or a
supplement to the Joint Proxy Statement, the Company shall promptly inform
Parent. Notwithstanding the foregoing, the Company makes no
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representation, warranty or covenant with respect to any information supplied by
Parent that is contained in any of the foregoing documents.
4.17 Labor Matters. Neither the Company nor any of its Subsidiaries
are parties to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor, as of the date hereof, is the Company or any of its
Subsidiaries the subject of any material proceeding asserting that the Company
or any of its Subsidiaries have committed an unfair labor practice or is seeking
to compel it to bargain with any labor union or labor organization nor, as of
the date of this Agreement, is there pending or, to the knowledge of the
Company, threatened, any material labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving the Company or any of its Subsidiaries.
4.18 Insurance; Risk Management. All material fire and casualty,
general liability, business interruption, product liability, and sprinkler and
water damage insurance policies maintained by the Company or any of its
Subsidiaries are with reputable insurance carriers, provide full and adequate
coverage (subject to reasonable deductibles, co-insurance and exclusions) for
all normal risks incident to the business of the Company and its Subsidiaries
and their respective properties and assets, and are in character and amount at
least equivalent to that carried by persons engaged in similar businesses and
subject to the same or similar perils or hazards, except for any such failures
to maintain insurance policies that, individually or in the aggregate, are not
reasonably likely to have a Company Material Adverse Effect. The steps taken by
the Company to manage the various risks incident to the business and operations
of the Company and its Subsidiaries and their respective properties and assets
are at least equivalent to those taken by persons engaged in similar businesses,
except for any failures to take such steps that, individually or in the
aggregate, are not reasonably likely to have a Company Material Adverse Effect.
4.19 No Existing Discussions. As of the date hereof, the Company is
not engaged, directly or indirectly, in any discussions or negotiations with any
other party with respect to an Acquisition Proposal.
4.20 Opinion of Financial Advisor. The financial advisor of the
Company, First Albany Corporation, has delivered to the Board of Directors of
the Company an opinion dated the date of this Agreement to the effect that the
Exchange Ratio is fair, as of the date of the Agreement, to the stockholders of
the Company from a financial point of view.
4.21 Insider Trading Policies and Practices. Section 4.21 to the
Company Disclosure Schedule sets forth a copy of the Company's insider trading
policy as in effect on the date hereof. The Company and, to the knowledge of the
Company, each of its directors, officers and employees who are subject to such
policy have complied in all material respects with the terms of such policy.
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ARTICLE V
COMPANY COVENANTS
5.1 Access and Investigation. During the period from the date of
this Agreement through the earlier of the Effective Time or termination of this
Agreement, the Company shall, and shall cause its Subsidiaries to; (a) provide
Parent and Parent's representatives with reasonable access to the Company's and
its Subsidiaries' representatives, personnel, assets and facilities and to all
books, records, Tax Returns, work papers and other documents and information
relating to the Company and its Subsidiaries and (b) provide Parent and Parent's
representatives with such copies of the books, records, Tax Returns, work papers
and other documents and information relating to the Company and its Subsidiaries
as Parent may reasonably request.
5.2 Operation of the Company's Business. During the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the Effective Time, the Company agrees as to itself and its
Subsidiaries (except to the extent expressly contemplated by this Agreement or
the Disclosure Schedules or that Parent shall otherwise consent in writing), to
carry on its and its Subsidiaries' business in the usual, regular and ordinary
course in substantially the same manner as previously conducted, to pay and to
cause its Subsidiaries to pay debts and Taxes when due subject to good faith
disputes over such debts or Taxes, to pay or perform its and its Subsidiaries'
other obligations when due, and, to the extent consistent with such business,
use all reasonable efforts (and in any event efforts no less favorable than
those consistent with past practices and policies) to preserve intact its and
its Subsidiaries' present business organizations, to use its reasonable best
efforts to keep available the services of its present officers and key employees
and to use its reasonable best efforts to preserve its and its Subsidiaries'
relationships with customers, suppliers, distributors, licensors, licensees and
others having business dealings with it or its Subsidiaries to the end that its
and its Subsidiaries' goodwill and ongoing business shall be unimpaired at the
Effective Time. The Company shall promptly notify Parent of any material event
or occurrence whether or not incurred in the ordinary course of business. Except
as expressly contemplated by this Agreement, the Company hereafter shall not
(and shall not permit any of its Subsidiaries to), without the written consent
of Parent:
(a) Accelerate, amend or change the period of exercisability
of options or restricted stock granted under any of the Company's or any of its
Subsidiaries' employee stock plans or authorize cash payments in exchange for
any options granted under any of such plans except as required by the terms of
such plans or any related agreements in effect as of the date of this Agreement;
(b) Declare or pay any dividends on or make any other
distributions (whether in cash, stock or property) in respect of any of its
capital stock, or split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or purchase or otherwise
acquire, directly or indirectly, any shares of its capital stock except from
former employees, directors and consultants in accordance with agreements
providing for the repurchase of shares in connection with any termination of
service to such party;
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(c) Issue, deliver or sell, or authorize or propose the
issuance, delivery or sale of, any shares of its capital stock or securities
convertible into shares of its capital stock, or subscriptions, rights, warrants
or options to acquire, or other agreements or commitments of any character
obligating it to issue any such shares or other convertible securities, other
than (i) the grant of options to purchase less than an aggregate of 150,000
shares of Company Common Stock consistent with past practices to new employees
who are not executives of the Company and provided, further that up to 25,000 of
such 150,000 shares may be issued to existing employees of the Company without
consent in accordance with the provisions of this Section 5.2, (ii) the issuance
of shares of Company Common Stock, pursuant to the exercise of options
outstanding prior to the date of this Agreement, or (iii) the issuance of shares
of Company Common Stock, pursuant to the Stock Option Agreement;
(d) Acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial equity interest in or substantial portion
of the assets of, or by any other manner, any business or any corporation,
partnership or other business organization or division, or otherwise acquire or
agree to acquire any assets (other than inventory and other items in the
ordinary course of business);
(e) Sell, lease, license or otherwise dispose of any of its
material properties or assets, except for software licenses in the ordinary
course of business;
(f) (i) Increase or agree to increase the compensation
payable or to become payable to its officers or employees, except for increases
in salary or wages of employees or officers in the ordinary course of business
consistent with past practice, (ii) grant any severance or termination pay to,
or enter into any employment or severance agreements with, any employees or
officers, except in the ordinary course of business with respect to employees
who are not officers, (iii) enter into any collective bargaining agreement
(other than as required by law or extensions to existing agreements in the
ordinary course of business), (iv) establish, adopt, enter into or amend any
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination, severance
or other plan, trust, fund, policy or arrangement for the benefit of any
directors, officers or employees;
(g) Amend or propose to amend its charter or bylaws, except
as contemplated by this Agreement;
(h) Incur any indebtedness for borrowed money other than
pursuant to credit agreements in effect as of the date hereof;
(i) Initiate, compromise or settle any material litigation
or arbitration proceeding (other than as a result of a breach of this Agreement
or the transactions contemplated herein) (Parent shall not unreasonably withhold
its consent to any such initiation, compromise or settlement);
(j) Except in the ordinary course of business, modify, amend
or terminate any Company Material Contract or waive, release or assign any
material rights;
(k) Make any material Tax election other than in the
ordinary course of business and consistent with past practice, change any
material Tax election, adopt any Tax
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accounting method other than in the ordinary course of business and consistent
with past practice, change any Tax accounting method, enter into any closing
agreement, settle any Tax claim or assessment or consent to any Tax claim or
assessment or change in any material respect its accounting methods, principles
or practices, except insofar as may be required by an applicable change in GAAP;
or
(l) Take, or agree in writing or otherwise to take, any of
the actions described in paragraphs (a) through (k) above.
In addition, the Company shall notify Parent promptly following the
execution by the Company or any of its Subsidiaries of any agreement providing
for the receipt of amounts in excess of $500,000 or payment of amounts in excess
of $50,000.
5.3 Irrevocable Proxies. Each of the parties listed on Schedule
5.3 has delivered an executed form of Voting and Proxy Agreement in favor of
Parent in the form attached hereto as Exhibit B-1 (each, a "Proxy").
5.4 Reseller Agreement. Company and Parent shall execute a
Reseller Agreement (the "Reseller Agreement") with respect to the Company's
products which is mutually acceptable to the parties, on or before July 13,
1998.
5.5 Employment Agreement. Parent and Charles R. Chitty have
executed an employment agreement which is mutually acceptable to the parties, on
or before July 13, 1998.
ARTICLE VI
PARENT AND MERGER SUB COVENANTS
6.1 Access and Investigation. During the period from the date of
this Agreement through the earlier of the Effective Time or termination of this
Agreement, the Parent shall, and shall cause its Subsidiaries to; (a) provide
Company and Company's representatives with reasonable access to the Parent and
its Subsidiaries' representatives, personnel, assets and facilities and to all
books, records, Tax Returns, work papers and other documents and information
relating to the Parent and its Subsidiaries and (b) provide Company and
Company's representatives with such copies of the books, records, Tax Returns,
work papers and other documents and information relating to the Parent and its
Subsidiaries as Company may reasonably request.
6.2 Operation of the Parent's Business. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Effective Time, the Parent agrees to promptly notify
Company of any material event or occurrence whether or not incurred in the
ordinary course of business.
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ARTICLE VII
ADDITIONAL AGREEMENTS
7.1 Cooperation. Subject to compliance with applicable law, from
the date hereof until the Effective Time, each of the Company and Parent shall
confer on a regular and frequent basis with one or more representatives of the
other party to report on the general status of ongoing operations and shall
promptly provide the other party or its counsel with copies of all filings made
by such party with any Governmental Entity in connection with this Agreement,
the Merger and the transactions contemplated hereby and thereby.
7.2 No Solicitation.
(a) The Company shall not, directly or indirectly, through
any officer, director, employee, financial advisor, representative, Subsidiary
or agent of such party (i) take any action to solicit, initiate or encourage any
inquiries or proposals that constitute, or could reasonably be expected to lead
to, a proposal or offer for a merger, consolidation, business combination, sale
of substantial assets, sale of shares of capital stock (including without
limitation by way of a tender offer) or similar transaction involving the
Company or any of its Subsidiaries, other than the transactions contemplated by
this Agreement (any of the foregoing inquiries or proposals being referred to in
this Agreement as an "Acquisition Proposal"), (ii) engage in negotiations or
discussions concerning, or provide any non-public information to any person or
entity relating to, any Acquisition Proposal, or (iii) agree to or recommend any
Acquisition Proposal; provided, however, that nothing contained in this
Agreement shall prevent the Company, or its Board of Directors, to the extent
such Board of Directors determines, in good faith, based upon and consistent
with advice received in consultation with outside legal counsel, that such Board
of Directors' fiduciary duties under applicable law require it to do so, from
(A) furnishing non-public information to, or entering into discussions or
negotiations with, any person or entity in connection with an unsolicited bona
fide written Acquisition Proposal by such person or entity or recommending an
unsolicited bona fide written Acquisition Proposal by such person or entity to
the stockholders of the Company, if and only to the extent that (1) the Board of
Directors of the Company believes in its good faith reasonable judgment (based
upon and consistent with advice received in consultation with independent
financial and legal advisors) that such Acquisition Proposal is reasonably
capable of being completed on the terms proposed and, after taking into account
the strategic benefits anticipated to be derived from the Merger and the
long-term prospects of Parent and the Company as a combined company, would, if
consummated, result in a transaction more favorable over the long term from a
financial point of view than the transaction contemplated by this Agreement (any
such more favorable Acquisition Proposal being referred to in this Agreement as
a "Superior Proposal") and the Board of Directors of the Company determines in
good faith after consultation with, and based upon and consistent with advice
received from, outside legal counsel that such action is necessary for such
Board of Directors to comply with its fiduciary duties to stockholders under
applicable law and (2) prior to furnishing such non-public information to, or
entering into discussions or negotiations with, such person or entity, such
Board of Directors receives from such person or entity an executed
confidentiality agreement with terms no less favorable to such party than those
contained in the Non-Disclosure Agreement dated June 17, 1998 between Parent and
the Company (the "Confidentiality Agreement"), such non-public information has
been
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previously delivered to the Board of Directors of Parent and the Company advises
the Parent hereto in writing of such disclosure or negotiations, including the
party to whom disclosed or with whom discussions or negotiations will occur; or
(B) complying with Rules 14d-9 and 14e-2 promulgated under the Exchange Act with
regard to an Acquisition Proposal.
(b) The Company shall notify Parent immediately after
receipt by the Company (or their advisors) of any Acquisition Proposal or any
request for non-public information in connection with an Acquisition Proposal or
for access to the properties, books or records of such party or any of its
Subsidiaries by any person or entity that informs such party that it is
considering making, or has made, an Acquisition Proposal. Such notice shall be
made orally and in writing and shall indicate in reasonable detail the identity
of the offeror and the terms and conditions of such proposal, inquiry or
contact. Such party shall continue to keep the other party hereto informed, on a
current basis, of the status of any such discussions or negotiations and the
terms being discussed or negotiated.
7.3 Proxy Statement/Prospectus; Registration Statement.
(a) As promptly as practical after the execution of this
Agreement, the Company and Parent shall prepare and file with the SEC the Joint
Proxy Statement, and Parent shall prepare and file with the SEC the Registration
Statement, in which the Joint Proxy Statement will be included as a prospectus,
provided that Parent may delay the filing of the Registration Statement until
approval of the Joint Proxy Statement by the SEC. The Company and Parent shall
use all reasonable efforts to cause the Registration Statement to become
effective as soon after such filing as practical; provided, however, that Parent
shall have no obligation to agree to account for the Merger as a "purchase" in
order to cause the Registration Statement to become effective. The Joint Proxy
Statement, and any amendment or supplement thereto, shall include the
recommendation of the Board of Directors of Parent and the recommendation of the
Board of Directors of the Company in favor of this Agreement and the Merger;
provided that the Board of Directors of either party may withdraw such
recommendation if such Board of Directors believes in its good faith reasonable
judgment, based upon and consistent with advice received in consultation with
outside legal counsel, that the withdrawal of such recommendation is necessary
for such Board of Directors to comply with its fiduciary duties under applicable
law.
(b) The Company and Parent shall make all necessary filings
with respect to the Merger under the Securities Act, the Exchange Act,
applicable state blue sky laws and the rules and regulations thereunder.
7.4 Nasdaq Quotation. Each of the Company and Parent agrees to
continue the quotation of Company Common Stock and Parent Common Stock on the
Nasdaq National Market during the term of this Agreement so that appraisal
rights will not be available to stockholders of Parent or the Company.
7.5 Stockholders' Meetings.
(a) Parent and the Company shall each call a meeting of its
respective stockholders to be held as promptly as practicable for the purpose of
voting, in each case, upon
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this Agreement and the Merger. Subject to Sections 7.2 and 7.3, Parent and the
Company will, through their respective Boards of Directors, recommend to their
respective stockholders approval of such matters and will coordinate and
cooperate with respect to the timing of such meetings and shall use their best
efforts to hold such meetings on the same day and as soon as practicable after
the date hereof and shall not postpone or adjourn (other than for the absence of
a quorum) their respective stockholders' meetings without the consent of the
other party. Subject to Sections 7.2 and 7.3, each party shall use all
reasonable efforts to solicit from stockholders of such party proxies in favor
of such matters.
(b) Parent may also submit additional proposals to its
stockholders at the Parent Stockholders' Meeting, separate from the proposals
referred to in Section 7.5(a). The approval by Parent's stockholders of such
additional proposals shall not be a condition to the closing of the Merger under
this Agreement.
7.6 Legal Conditions to Merger.
(a) Subject to Sections 7.2 and 7.3, Parent and the Company
shall each use their best efforts to (i) take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary and proper
under applicable law to consummate and make effective the transactions
contemplated hereby as promptly as practicable, (ii) obtain from any
Governmental Entity any consents, licenses, permits, waivers, approvals,
authorizations or orders required to be obtained or made by Parent or the
Company or any of their Subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby, including, without limitation, the Merger, and
(iii) as promptly as practicable, make all necessary filings, and thereafter
make any other required submissions, with respect to this Agreement and the
Merger required under (A) the Securities Act and the Exchange Act, and any other
applicable federal or state securities laws and (B) any applicable law. Parent
and the Company shall cooperate with each other in connection with the making of
all such filings, including providing copies of all such documents to the
non-filing party and its advisors prior to filing and, if requested, to accept
all reasonable additions, deletions or changes suggested in connection
therewith. Parent and the Company shall use their best efforts to furnish to
each other all information required for any application or other filing to be
made pursuant to the rules and regulations of any applicable law (including all
information required to be included in the Joint Proxy Statement and the
Registration Statement) in connection with the transactions contemplated by this
Agreement.
(b) The Company and Parent agree, and shall cause each of
their respective Subsidiaries, to cooperate and to use their respective best
efforts to obtain any government clearances or approvals required for Closing
under any Federal, state or foreign law, regulation, rule, order or decree
designed to prohibit, restrict or regulate actions for the purpose or effect of
monopolization or restraint of trade (collectively, "Antitrust Laws"), to
respond to any government requests for information under any Antitrust Law, and
to contest and resist any action, including any legislative, administrative or
judicial action, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) (an "Order") that restricts, prevents or prohibits the consummation
of the Merger or any other transactions contemplated by this Agreement under any
Antitrust Law. The parties hereto will consult and cooperate with one another,
and consider in good faith the
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views of one another, in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto in connection with proceedings
under or relating to any Antitrust Law. In the event of a challenge to the
transactions contemplated by this Agreement pursuant to any Antitrust laws,
Parent and the Company shall use their best efforts to defeat such challenge,
including by institution and defense of litigation, or to settle such challenge
on terms that permit the consummation of the Merger; provided, however, that
nothing herein shall require either party to agree to divest or hold separate
any portion of its business, product line or assets or otherwise take action
that could reasonably be expected to have a Parent Material Adverse Effect, a
Company Material Adverse Effect or an effect to Parent combined with the
Surviving Corporation after the Effective Time comparable to either a Parent
Material Adverse Effect or a Company Material Adverse Effect. In case at any
time after the Effective Time any further action is necessary or desirable to
carry out the purposes of this Agreement or to vest the Surviving Corporation
with full title to all properties, assets, rights, approvals, immunities and
franchises of either of the Constituent Corporations, the proper officers and
directors of each party to this Agreement shall take all such necessary action.
(c) Each of Parent and Company shall give (or shall cause
their respective Subsidiaries to give) any notices to third parties, and use,
and cause their respective Subsidiaries to use, their best efforts to obtain any
third party consents related to or required in connection with the Merger that
are (i) necessary to consummate the transactions contemplated hereby, (ii)
disclosed or required to be disclosed in the Parent Disclosure Schedule or the
Company Disclosure Schedule, as the case may be, or (iii) required to prevent a
Parent Material Adverse Effect or a Company Material Adverse Effect from
occurring prior to or after the Effective Time.
7.7 Public Disclosure. The Company and Parent shall consult with
each other before issuing any press release or otherwise making any public
statement with respect to the Merger or this Agreement and shall not issue any
such press release or make any such public statement prior to such consultation,
except as may be required by law or by obligations pursuant to any listing
agreement with any national securities exchange or by the National Association
of Securities Dealers, Inc.
7.8 Tax-Free Reorganization. The Company and Parent shall each use
its best efforts to cause the Merger to be treated as a reorganization within
the meaning of Section 368(a) of the Code.
7.9 Pooling Accounting. From and after the date hereof and until
the Effective Time, Parent and the Company shall each use its best efforts to
cause the business combination to be effected by the Merger to be accounted for
as a pooling of interests and to take such action as may be reasonably necessary
to permit such treatment. Each of Parent and the Company shall use its best
efforts to cause its respective Affiliates not to take any action that would
adversely affect the ability of Parent to account for the business combination
to be effected by the Merger as a pooling of interests.
7.10 Affiliate Agreements. Upon the execution of this Agreement,
the Company and Parent will provide each other with a list of those persons who
are, in the
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Company's or Parent's respective reasonable judgment, "affiliates" of the
Company or Parent, respectively, within the meaning of Rule 145 promulgated
under the Securities Act ("Rule 145") (each such person who is an "affiliate" of
the Company or Parent within the meaning of Rule 145 is referred to as an
"Affiliate"). The Company and Parent shall provide each other with such
information and documents as Parent or the Company shall reasonably request for
purposes of reviewing such list and shall notify the other party in writing
regarding any change in the identity of its Affiliates prior to the Closing
Date. Parent and the Company shall each use its best efforts to deliver or cause
to be delivered to each within thirty days of the date hereof (and in any case
prior to the Effective Time) from each of its Affiliates, an executed Affiliate
Agreement, in form attached hereto as Exhibit C-1, in the case of Affiliates of
the Company, and in the form attached hereto as Exhibit C-2, in the case of
Affiliates of Parent (each, an "Affiliate Agreement"). Parent shall be entitled
to place appropriate legends on the certificates evidencing any Parent Common
Stock to be received by such Affiliates of the Company pursuant to the terms of
this Agreement, and to issue appropriate stop transfer instructions to the
transfer agent for the Parent Common Stock, consistent with the terms of the
Affiliate Agreements (provided that such legends or stop transfer instructions
shall be removed, two years after the Effective Date, upon the request of any
stockholder that is not then an Affiliate of Parent).
7.11 Nasdaq Quotation. Parent shall use its best efforts to cause
the shares of Parent Common Stock to be issued in the Merger to be approved for
quotation on the Nasdaq National Market, subject to official notice of issuance,
prior to the Closing Date.
7.12 Stock Plans.
(a) At the Effective Time, each outstanding option to
purchase shares of Company Common Stock (a "Company Stock Option") under the
Company Stock Plans, whether vested or unvested, shall be deemed to constitute
an option to acquire, on the same terms and conditions as were applicable under
such Company Stock Option, the same number of shares of Parent Common Stock as
the holder of such Company Stock Option would have been entitled to receive
pursuant to the Merger had such holder exercised such option in full immediately
prior to the Effective Time (rounded downward to the nearest whole number), at a
price per share (rounded upward to the nearest whole cent) equal to (y) the
aggregate exercise price for the shares of Company Common Stock purchasable
pursuant to such Company Stock Option immediately prior to the Effective Time
divided by (z) the number of full shares of Parent Common Stock deemed
purchasable pursuant to such Company Stock Option in accordance with the
foregoing.
(b) As soon as practicable after the Effective Time, Parent
shall deliver to the participants in Company Stock Plans appropriate notice
setting forth such participants' rights pursuant thereto and the grants made
pursuant to Company Stock Plans shall continue in effect on the same terms and
conditions (subject to the adjustments required by this Section 7.12 after
giving effect to the Merger).
(c) At the Effective Time, by virtue of the Merger and
without the need of any further corporate action, Parent shall assume the
Company Stock Plans, with the result that all obligations of the Company under
the Company Stock Plans, including with respect to Company Stock Options
outstanding at the Effective Time under each Company Stock
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Plan, shall be obligations of Parent following the Effective Time. Parent shall
take all corporate action necessary to reserve for issuance a sufficient number
of shares of Parent Common Stock for delivery under Company Stock Plans assumed
in accordance with this Section 7.12. As soon as practicable after the Effective
Time, Parent shall file a registration statement on Form S-8 (or any successor
or other appropriate forms), or another appropriate form with respect to the
shares of Parent Common Stock subject to such options, and shall use its best
efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such options remain outstanding.
(d) The Board of Directors of the Company shall, prior to or
as of the Effective Time, take all necessary actions, pursuant to and in
accordance with the terms of the Company Stock Plans and the instruments
evidencing the Company Stock Options, to provide for the conversion of the
Company Stock Options into options to acquire Parent Common Stock in accordance
with this Section 7.12, and that no consent of the holders of the Company Stock
Options is required in connection with such conversion.
7.13 Brokers or Finders. Each of the Company and Parent represents,
as to itself, its Subsidiaries and its Affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement,
except BancAmerica Robertson Stephens, whose fees and expenses will be paid by
Parent in accordance with Parent's agreement with such firm, and First Albany
Corporation, whose fees and expenses will be paid by the Company in accordance
with the Company's agreements with such firm (a copy of which have been
delivered by the Company to Parent prior to the date of this Agreement). Each of
the Company and Parent agrees to indemnify and hold the other harmless from and
against any and all claims, liabilities or obligations with respect to any such
fees, commissions or expenses asserted by any person on the basis of any act or
statement alleged to have been made by such party or any of its Affiliates.
7.14 Letter of the Company's Accountants. The Company shall use all
reasonable efforts to cause to be delivered to Parent and the Company a letter
of Ernst & Young LLP, the Company's independent auditors, dated a date within
two business days before the date on which the Registration Statement shall
become effective and addressed to Parent, in form reasonably satisfactory to
Parent and customary in scope and substance for letters delivered by independent
public accountants in connection with registration statements similar to the
Registration Statement.
7.15 Letter of Parent's Accountants. Parent shall use all
reasonable efforts to cause to be delivered to the Company and Parent a letter
of Price Waterhouse LLP, Parent's independent auditors, dated a date within two
business days before the date on which the Registration Statement shall become
effective and addressed to the Company, in form reasonably satisfactory to the
Company and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement.
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7.16 Schedules. From time to time prior to the Closing Date, each
of Parent and the Company will promptly supplement or amend the Parent or the
Company Disclosure Schedules, as the case may be, with respect to any matter
hereafter arising that, if existing or occurring at or prior to the date of this
Agreement, would have been required to be set forth or described in the Parent
or the Company Disclosure Schedules, as the case may be, or that is necessary to
correct any information in the Parent or the Company Disclosure Schedules, as
the case may be, or in any representation and warranty of each of Parent and the
Company that has been rendered inaccurate thereby. For purposes of determining
the accuracy of the respective representations and warranties contained in
Articles III and IV, and in order to determine the fulfillment of the conditions
set forth in Article VIII, the Parent or the Company Disclosure Schedules, as
the case may be, shall be deemed to include only that information contained
therein on the date of this Agreement and shall be deemed to exclude any
information contained in any subsequent supplement or amendment thereto unless
such changes reflect actions taken in compliance with the provisions of Articles
V, VI and VIII hereof.
7.17 Indemnification.
(a) From and after the Effective Time, Parent agrees that it
will cause the Surviving Corporation to, indemnify and hold harmless each
present and former director and officer of the Company (the "Indemnified
Parties"), against any costs or expenses (including attorneys' fees), judgments,
fines, losses, claims, damages, liabilities or amounts paid in settlement
(collectively, "Costs") incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, arising out of or pertaining to matters existing or occurring at
or prior to the Effective Time, whether asserted or claimed prior to, at or
after the Effective Time, to the fullest extent that the Company would have been
permitted under GCC and its certificate of incorporation, bylaws or resolutions
of the Board of Directors of the Company in effect on the date hereof to
indemnify such Indemnified Party (and the Surviving Corporation shall also
advance expenses as incurred to the fullest extent permitted under applicable
law, provided the Indemnified Party to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
Indemnified Party is not entitled to indemnification).
(b) The provisions of this Section 7.17 are intended to be
in addition to the rights otherwise available to the current officers and
directors of the Company by law, charter, statute, bylaw, resolution of the
Board of Directors of the Company or agreement, and shall operate for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs and their representatives.
ARTICLE VIII
CONDITIONS TO MERGER
8.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction prior to the Closing Date of the following
conditions:
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(a) Stockholder Approval. This Agreement and the Merger
shall have been approved and adopted by the affirmative vote of the holders of a
majority of the issued and outstanding shares of Company Common Stock (the
"Required Company Stockholder Approval") and Parent Common Stock (the "Required
Parent Stockholder Approval.")
(b) Approvals. Other than the filing provided for by Section
1.1, all authorizations, consents, orders or approvals of, or declarations or
filings with, or expirations of waiting periods imposed by, any Governmental
Entity the failure of which to file, obtain or occur is reasonably likely to
have a Company Material Adverse Effect or a Parent Material Adverse Effect shall
have been filed, been obtained or occurred.
(c) Registration Statement. The SEC shall have declared the
Registration Statement effective. No stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose, and no similar proceeding in respect of the Joint
Proxy Statement, shall have been initiated or threatened by the SEC.
(d) No Injunctions. No Governmental Entity or federal, state
or foreign court of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree,
judgment or injunction (each an "Order") or statute, rule, regulation which is
in effect and which has the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger or otherwise limiting or restricting
Parent's conduct or operation of the business of the Company and its
Subsidiaries following the Merger in a manner that could reasonably be expected
to have an affect on Parent combined with the Surviving Corporation after the
Effective Time comparable to either a Parent Material Adverse Effect or a
Company Material Adverse Effect.
(e) Pooling Letters. Parent shall have received a letter
from Ernst & Young LLP and a letter from Price Waterhouse LLP, each addressed to
Parent, each regarding such firm's concurrence with management's conclusions, as
to the appropriateness of the pooling of interests accounting, under Accounting
Principles Board Opinion No. 16 for the Merger, if closed and consummated in
accordance with this Agreement, it being agreed that the Company and Parent
shall each provide reasonable cooperation to Ernst & Young LLP and Price
Waterhouse LLP, to enable them to issue such letters.
(f) Nasdaq. The shares of Parent Common Stock to be issued
in the Merger shall have been approved for quotation on the Nasdaq National
Market.
8.2 Additional Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger is subject to the satisfaction of
each of the following conditions, any of which may be waived in writing
exclusively by the Company:
(a) Representations and Warranties. The representations and
warranties of Parent and Merger Sub set forth in this Agreement shall be true
and correct as of the date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier date) as of the Closing
Date as though made on and as of the Closing Date, except (i) for changes
contemplated by this Agreement and (ii) in the case of representations and
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warranties that are not qualified as to materiality, where the failures to be
true and correct, individually or in the aggregate, have not had and are not
reasonably likely to have a Parent Material Adverse Effect or a material adverse
effect upon the consummation of the transactions contemplated hereby; and the
Company shall have received a certificate signed on behalf of Parent by the
chief executive officer and the chief financial officer of Parent to such
effect.
(b) Performance of Obligations of Parent and Merger Sub.
Parent and Merger Sub shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date; and the Company shall have received a certificate signed on
behalf of Parent by the chief executive officer and the chief financial officer
of Parent to such effect.
(c) Affiliates Agreement. Each Affiliate of Parent shall
have entered into an Affiliate Agreement with Parent in accordance with Section
7.10 of this Agreement.
(d) Legal Opinion. The Company shall have received a legal
opinion from Parent's legal counsel, in substantially the form attached hereto
as Exhibit D with such assumptions, qualifications and exceptions as are
customary.
(e) No Material Adverse Changes. There shall not have
occurred any material adverse change in the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations, results of operations or prospects of Parent and its Subsidiaries,
taken as a whole.
(f) Tax Opinion. The Company shall have received a written
opinion from Miller & Martin LLP, counsel to the Company, to the effect that the
Merger will be treated for Federal income tax purposes as a tax-free
reorganization within the meaning of Section 368(a) of the Code, and such
opinion shall not have been withdrawn.
(g) Employment Agreement. The employment agreement
referenced in Section 5.5 of this Agreement shall have been executed and
delivered by Parent.
8.3 Additional Conditions to Obligations of Parent and Merger Sub.
The obligation of Parent to effect the Merger is subject to the satisfaction of
each of the following conditions, any of which may be waived in writing
exclusively by Parent and Merger Sub:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in this Agreement shall be true and correct
as of the date of this Agreement and (except to the extent such representations
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date, except (i) for changes contemplated by this Agreement and (ii)
in the case of representations and warranties that are not qualified as to
materiality, where the failures to be true and correct, individually or in the
aggregate, have not had and are not reasonably likely to have a Company Material
Adverse Effect or a material adverse effect upon the consummation of the
transactions contemplated hereby; and Parent shall have received a certificate
signed on behalf of the Company by the chief executive officer and the chief
financial officer of the Company to such effect.
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(b) Performance of Obligations of The Company. The Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Closing Date, and Parent
shall have received a certificate signed on behalf of the Company by the chief
executive officer and the chief financial officer of the Company to such effect.
(c) Affiliates Agreements. Each Affiliate of the Company and
Parent shall have entered into an Affiliate Agreement with the Company and
Parent in accordance with Section 7.10 of this Agreement.
(d) Legal Opinion. The Parent shall have received a legal
opinion from Company's legal counsel substantially in the form attached hereto
as Exhibit E with such assumptions, qualifications and exceptions as are
customary.
(e) No Material Adverse Changes. There shall not have
occurred any material adverse change in the condition (financial or otherwise),
properties, assets (including intangible assets), liabilities, business,
operations, results of operations or prospects of the Company and its
Subsidiaries, taken as a whole.
(f) Tax Opinion. Parent shall have received the opinion of
Gunderson Dettmer Stough Villeneuve Franklin & Hachigian, LLP, counsel to
Parent, to the effect that the Merger will be treated for Federal income tax
purposes as a tax-free reorganization within the meaning of Section 368(a) of
the Code, and such opinion shall not have been withdrawn.
(g) Proxies. Each party identified in Schedule 5.3 hereto
shall have delivered an executed Proxy in favor of Parent in accordance with
Section 5.3 of this Agreement.
(h) FIRPTA. Company shall, prior to the Closing Date,
provide Parent with a properly executed Foreign Investment in Real Property Tax
Act of 1980 ("FIRPTA") Notification Letter, in form and substance satisfactory
to Parent, which states that shares of capital stock of Company do not
constitute "United States real property interests" under Section 897(c) of the
Code, for purposes of satisfying Parent's obligations under Treasury Regulation
Section 1.1445-2(c)(3). In addition, simultaneously with delivery of such
Notification Letter, Company shall have provided to Parent, as agent for
Company, a form of notice to the Internal Revenue Service in accordance with the
requirements of Treasury Regulation Section 1.897-2(h)(2) along with written
authorization for Parent to deliver such notice form to the Internal Revenue
Service on behalf of Company upon the Closing of the Merger.
(i) Employment Agreement. The employment agreement
referenced in Section 5.5 of this Agreement shall have been executed and
delivered by Charles R. Chitty.
(j) Reseller Agreement. The parties shall have executed the
Reseller Agreement on or before July 13, 1998.
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ARTICLE IX
TERMINATION AND AMENDMENT
9.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 9.1(b) through 9.1(g), by
written notice by the terminating party to the other party), whether before or
after approval of the matters presented in connection with the Merger by the
stockholders of Parent or the Company:
(a) by mutual written consent of the Company and Parent; or
(b) by either the Company or Parent if the Merger shall not
have been consummated by November 30, 1998 (the "Outside Date") (provided that
the right to terminate this Agreement under this Section 9.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been a significant cause of or resulted in the failure of the
Merger to occur on or before such date); or
(c) by either the Company or Parent if a court of competent
jurisdiction or other Governmental Entity shall have issued a nonappealable
final order, decree or ruling or taken any other nonappealable final action, in
each case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger; or
(d) by either Parent or Company, if at the Company
Stockholders' Meeting or the Parent Stockholders' Meeting (including any
adjournment or postponement) the final vote of the Stockholders shall have been
taken and, in respect of Company, the Required Company Stockholder Approval
shall not have been obtained or, in respect of Parent, the Required Parent
Stockholder Approval shall not have been obtained (provided that the right to
terminate this Agreement under this Section 9.1(d) shall not be available to (i)
Parent where the failure to obtain Parent Stockholder Approval shall have been
caused by the action or failure to act of the Parent and such action or failure
to act constitutes a material breach by Parent of this Agreement, or (ii) the
Company where the failure to obtain Company Stockholder Approval shall have been
caused by the action or failure to act of the Company and such action or failure
to act constitutes a material breach by the Company of this Agreement. A
material breach by a party of Sections 7.3 or 7.5 hereof will constitute a
material breach hereunder; or
(e) by Parent, if (i) the Board of Directors of the Company
shall have withdrawn or modified its recommendation of this Agreement or the
Merger; (ii) the Board of Directors of the Company shall have recommended to the
stockholders of the Company an Alternative Transaction; (iii) a tender offer or
exchange offer for 20% or more of the outstanding shares of Company Common Stock
is commenced (other than by Parent or an Affiliate of Parent) and the Board of
Directors of the Company recommends that the stockholders of the Company tender
their shares in such tender offer or exchange offer; or (iv) for any other
reason the Company fails to call and hold the Company Stockholders' Meeting by
the Outside Date (provided that Parent's right to terminate this Agreement under
such clause (iv) shall not be available if at such time the Company would be
entitled to terminate this Agreement under Sections 9.1(f) or (g); or
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<PAGE> 43
(f) by the Company, if (i) the Board of Directors of the
Parent shall have withdrawn or modified its recommendation of this Agreement or
the Merger, or (ii) for any other reason the Parent fails to call and hold the
Parent Stockholders' Meeting by the Outside Date (provided that Company's right
to terminate this Agreement under such clause (ii) shall not be available if at
such time the Parent would be entitled to terminate this Agreement under Section
9.1(e) or (g)).
(g) by the Company or Parent, if there has been a breach of
any representation, warranty, covenant or agreement on the part of the other
party set forth in this Agreement, which breach (i) causes the conditions set
forth in Section 8.2(a) or (b) (in the case of termination by the Company) or
8.3(a) or (b) (in the case of termination by Parent) not to be satisfied, and
(ii) shall not have been cured within 20 business days (or prior to the Outside
Date, if earlier) following receipt by the breaching party of written notice of
such breach from the other party.
9.2 Effect of Termination. In the event of termination of this
Agreement as provided in Section 9.1, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of the Company,
Parent, Merger Sub or their respective officers, directors, stockholders or
Affiliates; provided, however that, (a) except as set forth in (b) below, no
such termination shall limit liability for any willful breach of this Agreement,
(b) the sole remedy for any termination of this Agreement pursuant to Section
9.1(e) or (f) shall be the fee payment provided in Section 9.3(b) or 9.3(c), as
the case may be and (c) the provisions of Sections 9.3 and 9.4 of this
Agreement, the Stock Option Agreement and the Confidentiality Agreement shall
remain in full force and effect and survive any termination of this Agreement.
9.3 Fees and Expenses.
(a) Except as set forth in this Section 9.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, whether
or not the Merger is consummated; provided, however, that Parent and the Company
shall share equally all fees and expenses, other than accountants' and
attorneys' fees, incurred in relation to the printing and filing of the Joint
Proxy Statement (including any related preliminary materials) and the
Registration Statement (including financial statements and exhibits) and any
amendments or supplements.
(b) The Company shall pay Parent a termination fee of
$2,240,000 in immediately available funds within five business days after the
termination of this Agreement by Parent pursuant to Section 9.1(e).
(c) The Parent shall pay the Company a termination fee in an
amount equal to the Company's out-of-pocket costs (including reasonable attorney
and accountant fees) incurred in connection with the transactions contemplated
by this Agreement (but in no event in excess of $450,000) in immediately
available funds within five business days after the termination of this
Agreement by Company pursuant to Section 9.1(f).
(d) As used in this Agreement, "Alternative Transaction"
means either (i) a transaction pursuant to which any person (or group of
persons) other than Parent or its
39
<PAGE> 44
respective affiliates (a "Third Party"), acquires more than 20% of the
outstanding shares of Company Common Stock, as the case may be, pursuant to a
tender offer or exchange offer or otherwise, (ii) a merger or other business
combination involving the Company pursuant to which any Third Party acquires
more than 20% of the outstanding equity securities of the Company or the entity
surviving such merger or business combination, (iii) any other transaction
pursuant to which any Third Party acquires control of assets (including for this
purpose the outstanding equity securities of Subsidiaries of the Company, and
the entity surviving any merger or business combination including any of them)
of the Company having a fair market value (as determined by the Board of
Directors of the Company or Parent, as the case may be, in good faith) equal to
more than 20% of the fair market value of all the assets of the Company and its
Subsidiaries, taken as a whole, immediately prior to such transaction, or (iv)
any public announcement by a Third Party of a proposal, plan or intention to do
any of the foregoing or any agreement to engage in any of the foregoing.
9.4 Non-Solicitation of Employees. For a period of two years from
the date of this Agreement, Parent and Company will, and each will cause its
Subsidiaries not to, directly or indirectly, solicit or employ in any capacity
any employee of the other party or of its Subsidiaries or any person who had
been an employee of the other within three months of such solicitation or
employment.
9.5 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of Parent or of the Company, but, after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
9.6 Extension; Waiver. At any time prior to the Effective Time,
including after approvals of the stockholders of the Company or Parent, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
ARTICLE X MISCELLANEOUS
10.1 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Sections 1.4, 2.1, 2.2, 7.14,
Article X, and the agreements of the Affiliates delivered pursuant to Section
7.10. The Confidentiality Agreement shall survive the execution and delivery of
this Agreement.
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<PAGE> 45
10.2 Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) 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 the Company, to:
IQ Software Corporation
3295 River Exchange Drive
Suite 550
Norcross, GA 30092
Attn: Chief Executive Officer
Telecopy: (770) 448-4088
with a copy to:
Miller & Martin LLP
100 Galleria Parkway, N.W. Suite 1200
Atlanta, GA 30339
Attn: Ugo F. Ippolito, Esq.
Telecopy: (770) 850-6550
(a) if to Parent or Merger Sub, to
Information Advantage, Inc.
7905 Golden Triangle Drive
Eden Prairie, MN 55344-7227
Telecopy: (612) 833-3701
Attn: Chief Executive Officer
with a copy to:
Gunderson Dettmer Stough Villeneuve Franklin &
Hachigian, LLP
155 Constitution Drive
Menlo Park, CA 94025
Attn: Jay K. Hachigian, Esq.
Telecopy: (650) 321-2800
10.3 Interpretation. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement they shall be deemed to be
followed by the words "without limitation." The phrase "made available" in this
Agreement shall mean that the information referred to has been made available if
requested by the party to whom such information is to be made available. The
phrases "the date of this Agreement," "the
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<PAGE> 46
date hereof," and terms of similar import, unless the context otherwise
requires, shall be deemed to refer to June 29, 1998.
10.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
10.5 Entire Agreement; No Third Party Beneficiaries. This Agreement
(including the documents and the instruments referred to herein) (a) constitutes
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, and (b) except as provided in Section 7.12 is not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder;
provided that the Confidentiality Agreement shall remain in full force and
effect until the Effective Time. Each party hereto agrees that, except for the
representations and warranties contained in this Agreement, neither Parent nor
the Company makes any other representations or warranties, and each hereby
disclaims any other representations and warranties made by itself or any of its
officers, directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement or
the transactions contemplated hereby, notwithstanding the delivery or disclosure
to the other or the other's representatives of any documentation or other
information with respect to any one or more of the foregoing.
10.6 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law.
10.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. 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.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the Company, Merger Sub and Parent have caused
this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
INFORMATION ADVANTAGE, INC.
/s/Larry J. Ford
- ---------------------------------
By: Larry J. Ford
Its: President and Chief Executive Officer
IAC MERGER CORP.
/s/Larry J. Ford
- ---------------------------------
By: Larry J. Ford
Its: President and Chief Executive Officer
IQ SOFTWARE CORPORATION
/s/Charles R. Chitty
- ---------------------------------
By: Charles R. Chitty
Its: Chairman, President and Chief Executive Officer
<PAGE> 1
EXHIBIT 99.1
CONTACT:
Kay Rindels Don Anderson
Marketing Manager Vice President & CFO
Information Advantage Information Advantage
612.833.3923 612.833.3838
[email protected] [email protected]
Kent Elmer
Corporate Finance
IQ Software
770.446.8880, ext. 225
[email protected]
INFORMATION ADVANTAGE TO ACQUIRE IQ SOFTWARE
COMBINED PRODUCT OFFERING WILL CREATE THE MOST COMPREHENSIVE, END-TO-END,
INTERNET-BASED BUSINESS INTELLIGENCE SUITE
EDEN PRAIRIE, Minn. (June 29, 1998) -- Information Advantage Inc. (Nasdaq:
IACO), a leading provider of relational on-line analytical processing (OLAP)
software, and IQ Software (Nasdaq: IQSW), a leading provider of enterprise
reporting software, today announced the execution of a definitive merger
agreement for Information Advantage to acquire IQ Software.
Under terms of the agreement, Information Advantage will issue 1.96 shares of
its common stock in exchange for each share of IQ Software. IQ Software has
4,674,216 shares of common stock outstanding, giving the transaction an
estimated value, on a fully diluted basis, of $65 million based on Friday's
closing price of $6.8125 for Information Advantage common stock. Completion of
the transaction is subject to approval by the shareholders of both companies and
other customary conditions, and is anticipated to close in October 1998.
The transaction will be accounted for as a pooling of interests. Information
Advantage said it expects the acquisition, exclusive of merger-related costs, to
be accretive to earnings for the current fiscal year, which ends January 31,
1999. Information Advantage had revenues of $30.2 million for the trailing 12
months ended April 30, 1998. IQ Software had revenue of $25.0 million for the
same period.
The transaction immediately expands Information Advantage's market presence;
extends its direct sales, distributor and partner channels; and will strengthen
its product offerings to provide end-to-end Internet-based Business Intelligence
(BI) applications for the enterprise. The merger will establish Information
<PAGE> 2
Advantage as a leader in Internet-based BI applications with 420 professionals,
27 offices, and products used by over 1.7 million individuals. The companies'
combined sales models will create a more balanced distribution strategy with an
extended direct sales force covering North America and Europe, a global presence
including 24 international distributors covering all the major continents, and
an improved product offering designed to attract vertical application
development partners.
"The acquisition of IQ Software represents a strategic business initiative for
Information Advantage to increase our size, revenue and profitability. It offers
the company an expanded sales and marketing strategy, and creates an extended
product line for complete, simple and cost effective enterprise Business
Intelligence," said Larry Ford, president and CEO of Information Advantage.
"Information Advantage and IQ Software have complementary business models and
product lines that will allow our customers to start at workgroup, department or
corporate levels, then expand across the enterprise."
"Information Advantage and IQ Software share a common vision of using Internet
technologies to empower knowledge workers worldwide with access to and analysis
of corporate information," said Charles R. Chitty, president and CEO of IQ
Software. "The new Business Intelligence suite will allow people throughout the
enterprise to analyze critical business information from a browser as easily as
they can access any information on the Web, with control, security and
structure." Following the close of the transaction, Chitty will assume a new
role as senior vice president of vertical BI applications and become a member of
the board.
Upon completion of the acquisition, Information Advantage will combine its
strengths in relational OLAP with IQ's product leadership in enterprise
reporting to offer an integrated, comprehensive BI suite that resides on a
single platform including common user profiles, security, intelligent agents,
administration, collaboration and metadata. Today, organizations have separate
tools and platforms for query, all forms of OLAP, and enterprise reporting.
Deploying and maintaining multiple point solutions becomes impractical and
cost-prohibitive as organizations attempt to make BI available to hundreds or
thousands of Internet/intranet/extranet users. The BI suite will integrate these
point solutions into a common platform to reach large, enterprise-wide user
bases using Internet technology.
"This is a welcome consolidation of OLAP vendors with complementary
capabilities," says Nigel Pendse, lead author of The OLAP Report
(www.olapreport.com). "The OLAP market has been far too fragmented, which has
confused customers and led to over-complex, costly implementations. If
Information Advantage can rapidly integrate the two companies' technologies and
cultures, and take advantage of the new Microsoft-driven OLAP standards, it
should be in an excellent position to deliver scalable enterprise-wide
analytical and reporting applications."
Information Advantage is a leading provider of robust, relational OLAP solutions
for enterprise deployments. Its award winning, scalable DecisionSuite(R) product
line supports data mart or data warehouse implementations for thousands of users
and terabytes of data, and provides access and analysis capabilities via the
Internet, intranet or extranet. IQ Software is a leading provider of enterprise
reporting software. Its products use an Internet-based, scalable architecture to
deliver information from multiple sources to any user, including OLAP cubes for
mobile users. IQ products dynamically access information
<PAGE> 3
from all major relational databases, enterprise applications including SAP, and
from the dimensional databases Microsoft Plato and Arbor Essbase, on NT and UNIX
platforms.
"The Information Advantage acquisition of IQ Software is good news for customers
from both companies," said Joseph Smialowski, senior vice president and chief
information officer, Sears, Roebuck and Co. "Sears uses Information Advantage
for product and customer analysis applications and IQ for enterprise reporting.
This merger is a step towards creating the most simple and cost effective way to
deliver consistent and integrated content to any decision maker anywhere."
ABOUT IQ SOFTWARE
Founded in 1984 in Norcross, Georgia, IQ Software is a market leader in
providing client/server end-user decision support tools. The first company to
deliver three-tier architecture and true object-based query and reporting tools,
IQ Software offers a family of products that includes IQ/Objects,
IQ/SmartServer, IQ/Vision and IQ/LiveWeb. The Company's products are sold by a
direct sales force in North America and Europe, complemented by more than 900
software application developers and vertical market resellers. International
distribution is handled by more than 50 distributors and by the Company's UK
subsidiary. For more information, For more information, contact IQ Software at
1-800-458-0386.
ABOUT INFORMATION ADVANTAGE
Information Advantage Inc. develops and markets DecisionSuite, a leading
enterprise OLAP software application and toolset. DecisionSuite, an
award-winning solution, allows everyone in the organization to make more
informed decisions with advanced business analysis tools, detect and alert
agents, liberal sharing of dynamic information for collaborative decision
making, and a suite of personalized applications for executives, professionals
and analysts. Additionally, WebOLAP, DecisionSuite's codeless desktop for the
Web, gives users the ability to perform OLAP analysis over the World Wide Web.
Information Advantage products have been proven in production environments since
1991 across industries such as retail, financial services, insurance,
healthcare, telecommunications, government and manufacturing. For the third
consecutive year, Information Advantage is the only relational OLAP vendor on
Open Systems Advisors Crossroads A-List to receive the AA-rating, the highest
bestowed. For more information, contact Information Advantage at 612/833-3700.
###
Information Advantage, DecisionSuite, DecisionSuite Server and WebOLAP are
registered trademarks or trademarks of Information Advantage, Inc. Other
products are trademarks or registered trademarks of their respective holders and
should be treated as such.
