<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Boca Research, Inc.
(Name of Issuer)
Common Stock, par value $.01
(Title of Class of Securities)
096888-10-2
(CUSIP Number)
Stephen R. Rusmisel
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004
(212) 858-1442
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
May 28, 1999
(Date of Event which Requires
Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
Schedule because of Section 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check
the following: / /
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See Section 240.13d-7(b) for
other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the Notes)
<PAGE> 2
Page 2 of 9 Pages
CUSIP NO. 096888-10-2
SCHEDULE 13D
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Alexander Hafele
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
AF, OO (see Item 3)
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Germany
- --------------------------------------------------------------------------------
NUMBER OF SHARES 7. SOLE VOTING POWER
1,747,965
BENEFICIALLY OWNED BY
8. SHARED VOTING POWER
EACH PERSON WITH 0
9. SOLE DISPOSITIVE POWER
1,477,965
(see Item 4 re: 270,000 additional shares subject to options)
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,747,965
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT ON ROW (11)
16.6%
14. TYPE OF REPORTING PERSON
IN
<PAGE> 3
Page 3 of 9 Pages
CUSIP NO. 096888-10-2
SCHEDULE 13D
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Gerhard Harlos
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
AF, OO (see Item 3)
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Germany
- --------------------------------------------------------------------------------
NUMBER OF SHARES 7. SOLE VOTING POWER
1,747,965
BENEFICIALLY OWNED BY
8. SHARED VOTING POWER
EACH PERSON WITH 0
9. SOLE DISPOSITIVE POWER
1,477,965
(see Item 4 re: 270,000 additional shares subject to options)
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,747,965
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT ON ROW (11)
16.6%
14. TYPE OF REPORTING PERSON
IN
- --------------------------------------------------------------------------------
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Page 4 of 9 Pages
CUSIP NO. 096888-10-2
SCHEDULE 13D
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Infomatec Integrated Information Systems AG
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Infomatec Integrated Information Systems AG is organized under
the laws of the Federal Republic of Germany
- --------------------------------------------------------------------------------
NUMBER OF SHARES 7. SOLE VOTING POWER
1,747,965
BENEFICIALLY OWNED BY
8. SHARED VOTING POWER
EACH PERSON WITH 0
9. SOLE DISPOSITIVE POWER
1,477,965
(see Item 4 re: 270,000 additional shares subject to options)
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,747,965
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT ON ROW (11)
16.6%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
CO
- --------------------------------------------------------------------------------
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Page 5 of 9 Pages
CUSIP NO. 096888-10-2
SCHEDULE 13D
- --------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Infomatec AG International, Inc.
- --------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) / /
(b) / /
- --------------------------------------------------------------------------------
3. SEC USE ONLY
- --------------------------------------------------------------------------------
4. SOURCE OF FUNDS
AF, OO (see Item 3)
- --------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS
IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
- --------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Infomatec AG International Inc. is organized under the laws of
the State of Delaware
- --------------------------------------------------------------------------------
NUMBER OF SHARES 7. SOLE VOTING POWER
1,747,965
BENEFICIALLY OWNED BY
8. SHARED VOTING POWER
EACH PERSON WITH 0
9. SOLE DISPOSITIVE POWER
1,477,965
(see Item 4 re: 270,000 additional shares subject to options)
10. SHARED DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
1,747,965
- --------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES / /
- --------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT ON ROW (11)
16.6%
- --------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON
<PAGE> 6
Page 6 of 9 Pages
SCHEDULE 13D
Item 1. Security and Issuer.
The class of equity securities to which this statement relates is the
common stock, par value $.01 (the "Shares") of Boca Research, a Florida
corporation (the "Issuer"). The principal executive offices of the Issuer are
1377 Clint Moore Road, Boca Raton, FL 33487.
Item 2. Identity and Background.
(a) Names of Persons Filing. This statement is being filed jointly by
Alexander Hafele, Gerhard Harlos, Infomatec Integrated Information Systems AG, a
corporation organized under the laws of The Federal Republic of Germany
("Infomatec") and Infomatec AG International Inc. ("Infomatec U.S."), a Delaware
corporation (collectively, the "Reporting Persons"). The principal business of
Infomatec is high-end software for e-commerce and trade, which is conducted at
its principal office at the address as set forth in Paragraph (b) below. The
principal business of Infomatec U.S. is to hold the 1,747,965 shares of the
Issuer and to make future investments. Its address is also set forth in
Paragraph (b) below. The Joint Filing Agreement among the Reporting Persons is
attached as Exhibit A hereto.
(b) Business Addresses. The business address of Infomatec and of
Alexander Hafele and Gerhard Harlos, is Steinerne Furt 76, 86167 Augsburg,
Germany. The business address of Infomatec U.S. is c/o Winthrop, Stimson, Putnam
& Roberts, One Battery Park Plaza, New York, New York 10004-1490.
(c) Employment. The present principal occupation of each of Alexander
Hafele and Gerhard Harlos, is as co-chief executives of Infomatec, respectively.
(d) Convictions. None of the Reporting Persons has, during the last
five years, been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors).
(e) Civil Proceedings. None of the Reporting Persons has, during the
last five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to federal or
state securities law or finding any violation with respect to such laws.
(f) Citizenship. Alexander Hafele and Gerhard Harlos are citizens of
The Federal Republic of Germany.
Item 3. Source and Amount of Funds or Other Consideration.
On May 28, 1999, Infomatec provided the funds for the purchase by
Infomatec U.S. of 1,747,965 Shares from the Issuer for an aggregate price of
$8,005,679.70 ($4.58 per Share). The source of funds for the purchase was
working capital.
Item 4. Purpose of Transaction.
The purpose of the acquisition of the Shares of the Issuer described
herein is to influence the Board of Directors and the business and management of
the Issuer, to assist in the development of the
<PAGE> 7
Page 7 of 9 Pages
Issuer, and for investment. The 1,747,965 Shares of the Issuer were acquired
under the Amended Common Stock Purchase Agreement ("Agreement") dated as of
April 28, 1999, a copy of which is attached hereto as Exhibit B. Under the
Agreement, Infomatec committed to grant options for an aggregate of 270,000
shares of common stock of the Issuer to eight executives of the Issuer to
motivate them to remain in the employment of the Issuer. The Agreement also
provides for certain purchase rights to enable Infomatec (including its
affiliates) to acquire additional Shares of the Issuer in order to maintain its
percentage interest in the common stock of the Issuer, and for certain
registration rights and the right to nominate four out of nine members of the
Board of Directors of the Issuer so long as it continues to own at least
1,400,000 Shares of the Issuer. Pursuant to its commitment, the board of
directors of the Issuer elected four nominees of Infomatec to its Board on May
28, 1999. The directors so elected were Alexander Hafele, Gerhard Harlos, Karl
Gruns, Chief Financial Officer of Infomatec AG and Eduard Will, Chairman and
Chief Executive Officer of Infomatec U.S.
From time to time, the Reporting Persons have engaged in discussions
with the Issuer, its officers and directors and other significant shareholders
relating to the Issuer's policies, management, directors, business, operations,
financial condition, strategies and other developments, and Infomatec intends to
engage in such discussions in the future.
From time to time, The Reporting persons may buy additional Shares on
the open market or in privately negotiated purchases, from the Issuer or
otherwise, and may sell Shares in privately negotiated sales or pursuant to
registration rights granted under the Agreement.
Notwithstanding the foregoing, as a significant shareholder of the
Issuer and through representation on the Issuer's Board of Directors, the
Reporting Persons may consider from time to time (i) an extraordinary corporate
transaction, such as a merger or reorganization, involving the Issuer or any of
its subsidiaries, (ii) a sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries, (iii) material changes in the present
capitalization or dividend policy of the Issuer, (iv) other material changes in
the Issuer's business or corporate structure, (v) changes in the Issuer's
charter and bylaws or other actions which may impede the acquisition of control
of the Issuer by any person, (vi) causing a class of securities of the Issuer to
be delisted from a national securities exchange or to cease to be authorized in
an inter-dealer quotation system of a registered national securities
association, (vii) causing a class of equity securities of the Issuer to become
eligible for termination of registration pursuant to Section 12(g)(4) of the
Securities Exchange Act of 1934, as amended or (viii) any action similar to any
of those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) Infomatec U.S. is the direct beneficial owner of 1,747,965 Shares,
which in the aggregate constitute approximately 16.6% of the outstanding shares
of common stock of the Issuer. As the sole shareholder of Infomatec U.S.,
Infomatec may also be deemed to be the beneficial owner of such shares as may
Messrs. Hafele and Harlos, who each own approximately 35% of the stock of
Infomatec.
(b) Infomatec U.S. has the sole power to vote or direct the vote and disposition
of 1,477,965 Shares directly owned by it as described in paragraph (a), and
Infomatec and Messrs. Halfele and Harlos may also be deemed to have such power.
As described in Item 4 above and as set forth in Exhibit A hereto, an additional
270,000 Shares are owned by Infomatec U.S. and are to be the subject of options
to be granted to certain executives of the Issuer to motivate them to remain in
the employment of the Company. Accordingly, the Reporting Persons may be deemed
to have the sole power to vote or direct the vote of 270,000 additional shares
until and unless the options are exercised but the disposition of such 270,000
<PAGE> 8
Page 8 of 9 Pages
Shares is subject to the existence of the options until and unless they should
lapse without being exercised.
(c) Except as described in Item 4 hereof, none of the Reporting
Persons has effected any transactions in Shares during the past 60 days.
(d) Except following any exercise of the options for 270,000 Shares
referred to in paragraph (b) hereof, no other person is known by the Reporting
Persons to have the right to receive or the power to direct the receipt of
dividends from, or the proceeds from the sale of any of the 1,747,965 Shares
acquired by Infomatec U.S.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
As described in Item 4 above and as set forth in the Agreement filed as
Exhibit A hereto, the Issuer has granted to Infomatec certain purchase rights to
enable it to acquire additional shares of common stock of the Issuer in order to
maintain its percentage interest in the common stock of the Issuer, and the
right of Infomatec to nominate four out of nine members of the board of
directors of the Issuer so long as it continues to own at least 1,400,000 shares
of the Issuer. The Issuer has also granted certain registration rights to
Infomatec with respect to the Shares.
Except described as forth in this Schedule 13D, and Exhibit A hereto,
to the best knowledge of the Reporting Persons, there are no contracts,
arrangements, understandings or relationships (legal or otherwise) among the
persons named in Item 2 and between such persons and any person with respect to
any securities of the issuer, including but not limited to transfer or voting of
any of the securities, finder's fees, joint ventures, loan or option
arrangements, put or calls, guarantees of profits, division of profits or loss,
or the giving or withholding of proxies.
Item 7. Material to be Filed as Exhibits.
EXHIBIT A -- Joint Filing Agreement dated as of August 3, 1999, among
Alexander Hafele, Gerhard Harlos, Infomatec Integrated Information
System AG and Infomatec AG International AG
EXHIBIT B - Amended Common Stock Purchase Agreement dated as of April
28, 1999.
By: /s/ Alexander Hafele
------------------------
Alexander Hafele
By: /s/Gerhard Harlos
------------------------
Gerhard Harlos
<PAGE> 9
Page 9 of 9 Pages
INFOMATEC INTEGRATED INFORMATION
SYSTEMS AG
By: /s/ Karl Gruns
---------------------------
Name: Karl Gruns
Title: Chief Financial Officer
INFOMATEC AG INTERNATIONAL, INC.
By: /s/ Eduard Will
---------------------------
Name: Eduard Will
Title: Chief Executive Officer
Dated: August 3, 1999
<PAGE> 1
EXHIBIT A
JOINT FILING AGREEMENT
We, the signatories of the statement on Schedule 13D to which this
Agreement is attached, hereby agree that such statement is, and any amendments
thereto filed by any of us will be, filed on behalf of each of us.
By: /s/ Alexander Hafele
------------------------------
Name: Alexander Hafele
By: /s/ Gerhard Harlos
------------------------------
Name: Gerhard Harlos
Infomatec Integrated Information Systems AG
By: /s/ Karl Gruns
------------------------------
Name: Karl Gruns
Title: Chief Financial Officer
Infomatec AG International AG
By: /s/ Eduard Will
------------------------------
Name: Eduard Will
Title: Chief Executive Officer
Dated: August 3, 1999
<PAGE> 1
Exhibit B
================================================================================
AMENDED COMMON STOCK PURCHASE AGREEMENT
between
BOCA RESEARCH, INC.
and
INFOMATEC INTEGRATED INFORMATION SYSTEMS AG
================================================================================
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TABLE OF CONTENTS
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ARTICLE I
AUTHORIZATION OF ISSUANCE OF THE COMMON STOCK...................... 1
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK; CLOSING
Section 2.01 Purchase and Sale............................................. 1
Section 2.02 Closing....................................................... 1
Section 2.03 Deliveries.................................................... 2
Section 2.04 Use of Proceeds............................................... 2
Section 2.05 Definitions................................................... 2
Section 2.06 Set Aside of Shares for Retention of Management............... 2
Section 2.07 Right to Maintain Percentage.................................. 3
Section 2.08 Registration Rights........................................... 5
(a) Demand Registration..................................... 5
(b) Incidental Registration................................. 6
(c) Certain Obligations of the Company...................... 6
(d) Expenses................................................ 7
(e) Indemnification by the Company.......................... 7
(f) Indemnification by Purchaser and Underwriters........... 8
(g) Indemnification Procedure............................... 8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.01 Organization and Good Standing................................ 9
Section 3.02 Capitalization................................................ 9
Section 3.03 Due Authorization; Execution and Delivery..................... 10
Section 3.04 Absence of Breach; No Conflict................................ 10
Section 3.05 Validity...................................................... 10
Section 3.06 Securities Law Compliance..................................... 11
Section 3.07 Commission Documents; Financial Information................... 11
Section 3.08 Approvals; Compliance with Laws; Licenses and Authorities..... 12
Section 3.09 Litigation.................................................... 12
Section 3.10 Tax Matters................................................... 13
Section 3.11 Material Contracts............................................ 13
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Section 3.12 Title to Properties, Encumbrances............................. 14
Section 3.13 Plant and Equipment; Sufficiency of Assets.................... 14
Section 3.14 Labor Matters................................................. 14
Section 3.15 Environmental Matters......................................... 15
Section 3.16 No Existing Violation, Default, Etc........................... 15
Section 3.17 Affiliate Transactions........................................ 15
Section 3.18 Insurance..................................................... 16
Section 3.19 Unlawful Payments and Contributions........................... 16
Section 3.20 Year 2000..................................................... 16
Section 3.21 Absence of Certain Events; No Material Adverse Change......... 16
Section 3.22 Full Disclosure............................................... 18
Section 3.23 ERISA......................................................... 18
Section 3.24 Intellectual Property......................................... 18
Section 3.25 Hart-Scott-Rodino Filing...................................... 18
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Section 4.01 Organization and Standing..................................... 18
Section 4.02 Investment Representation..................................... 19
Section 4.03 Due Authorization; Execution and Delivery..................... 19
Section 4.04 Absence of Breach; No Conflict................................ 19
Section 4.05 No Consents................................................... 20
Section 4.06 Investment Company............................................ 20
Section 4.07 Ownership of Stock of the Company............................. 20
Section 4.08 Certain Regulatory Matters.................................... 20
Section 4.09 Due Diligence................................................. 20
Section 4.10 Availability of Funds......................................... 21
Section 4.11 Hart-Scott-Rodino Filing...................................... 21
ARTICLE V
COVENANTS
Section 5.01 Covenants of the Company...................................... 21
(a) Access and Confidentiality.............................. 21
(b) Announcements........................................... 21
(c) Shares.................................................. 21
Section 5.02 Proxy Matters; Standstill..................................... 22
[Section 5.03 Intentionally Omitted]........................................ 25
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ii
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Section 5.04 Board Nominations............................................. 25
Section 5.05 International Investment...................................... 25
ARTICLE VI
FINANCIAL STATEMENTS; ACCESS TO INFORMATION
Section 6.01 Financial Statements.......................................... 26
Section 6.02 Access to Information......................................... 27
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EACH PARTY
TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY
Section 7.01 No Adverse Action or Decision................................. 27
Section 7.02 No Injunction................................................. 27
Section 7.03 Consents of Third Parties; Modification of Agreements......... 27
Section 7.04 Board of Directors' Approval.................................. 28
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
COMPANY TO ISSUE, SELL AND DELIVER THE COMMON STOCK
Section 8.01 Accuracy of the Purchaser's Representations and Warranties.... 28
Section 8.02 Performance by the Purchaser.................................. 28
Section 8.03 Approval of Finova Capital Corporation........................ 28
Section 8.04 Opinion of Robinson Humphrey Company LLC...................... 28
Section 8.05 Opinion of Purchaser's Counsel................................ 29
ARTICLE IX
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
PURCHASER TO PURCHASE AND ACCEPT DELIVERY OF THE COMMON STOCK
Section 9.01 Accuracy of the Company's Representations and Warranties...... 29
Section 9.02 Performance by the Company.................................... 29
Section 9.03 No Material Adverse Effect.................................... 29
Section 9.04 Governmental Approvals and Consents........................... 30
Section 9.05 Secretary's Certificate....................................... 30
Section 9.06 Proceedings................................................... 30
Section 9.07 Shares........................................................ 30
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Section 9.08 Opinion of Company Counsel.................................... 30
ARTICLE X
TERMINATION
Section 10.01 Termination by Mutual Written Consent......................... 32
Section 10.02 Termination by the Company or the Purchaser................... 32
Section 10.03 Termination by the Purchaser.................................. 32
Section 10.04 Termination by the Company.................................... 32
Section 10.05 Effect of Termination......................................... 33
Section 10.06 Negotiations with Third Parties............................... 33
ARTICLE XI
DEFINITIONS............................................... 33
ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices....................................................... 36
Section 12.02 Fees and Expenses............................................. 37
Section 12.03 Survival of Representations and Warranties.................... 37
Section 12.04 Entire Agreement.............................................. 38
Section 12.05 Successors and Assigns........................................ 38
Section 12.06 Paragraph Headings............................................ 38
Section 12.07 Applicable Law................................................ 38
Section 12.08 Severability.................................................. 38
Section 12.09 Equitable Remedies............................................ 38
Section 12.10 No Waiver..................................................... 39
Section 12.11 Counterparts.................................................. 39
Section 12.12 Brokers....................................................... 39
Section 12.13 Certain Assignment of Rights.................................. 39
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iv
<PAGE> 6
AMENDED COMMON STOCK PURCHASE AGREEMENT
AGREEMENT made and entered into as of the 28th day of April, 1999,
among BOCA RESEARCH, INC., a Florida corporation (the "Company"), and INFOMATEC
INTEGRATED INFORMATION SYSTEMS AG (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Company desires to sell to the Purchaser, and the
Purchaser desires to purchase from the Company, 1,747,965 shares of the
Company's common stock, par value $0.01 per share ("Shares"), such total Shares
purchased not to exceed 19.9% of the Company's issued common stock; and
WHEREAS, the Company and the Purchaser are entering into this Agreement
to provide for said purchase and sale of Shares and to establish various rights
and obligations in connection therewith, upon the terms and subject to the
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual premises and covenants
contained herein, and of other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE I
AUTHORIZATION OF ISSUANCE OF THE COMMON STOCK
Prior to the Closing, the Company shall have duly authorized and taken
all such corporate and other action which is necessary in accordance with the
terms of this Agreement to effect the valid issuance, sale and delivery to the
Purchaser of the Shares to be purchased hereunder.
ARTICLE II
PURCHASE AND SALE OF COMMON STOCK; CLOSING
Section 2.01 Purchase and Sale. Upon the terms and subject to the
conditions hereinafter set forth, on the Closing Date, the Company shall issue,
sell and deliver to the Purchaser, and the Purchaser shall purchase from the
Company, the Shares for the purchase price equal to $4.58 USD per share. Payment
for the Shares shall be made by wire transfer of immediately available funds to
the account of the Company designated on Schedule 2.01 hereto (or in such other
manner as may be agreed by the Purchaser and the Company), and shall be wired
against the issuance and delivery by the Company on the Closing Date to the
Purchaser of certificates in definitive and fully registered form representing
the Shares being purchased by the Purchaser.
Section 2.02 Closing. Subject to the terms and conditions of this
Agreement, the closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Spinner, Dittman, Federspiel &
Dowling at 10:00 a.m., Eastern time, on May 28, 1999,
<PAGE> 7
or at such other later date or such other place as the parties shall mutually
agree. The date of the Closing is referred to in this Agreement as the "Closing
Date."
Section 2.03 Deliveries. At or prior to the Closing, the parties shall
deliver all documents, instruments, certificates and writings required to be
executed and delivered by them at or prior to the Closing pursuant to this
Agreement.
Section 2.04 Use of Proceeds. The proceeds from the purchase and sale
of the Shares hereunder will be used for general corporate purposes.
Section 2.05 Definitions. Terms used as defined terms herein and not
otherwise defined shall have the meanings set forth in Article XI.
Section 2.06 Set Aside of Shares for Retention of Management. In order
to motivate the existing management to remain in the employment of the Company,
the Purchaser hereby agrees, and the Company hereby consents, subject to the
approval of the shareholders of the Company, to the Purchaser granting to those
members of management hereinafter set forth ("Management") the option to
purchase and acquire from the Purchaser out of the Shares being acquired by
Purchaser pursuant to this Agreement, 270,000 shares thereof (the "Management
Retention Options") at an option strike price equal to $4.58 USD per share in
the manner and number of shares allocated as hereafter set forth:
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Name Number of Shares
- ---- ----------------
<S> <C>
Anthony Zalenski 95,000
Navroze Mehta 45,000
Larry Light 45,000
Alex Oprescu 45,000
Marty Ritchason 20,000
Robert Heinlein 10,000
Debbie Feeney 5,000
Dennis Gallinat 5,000
</TABLE>
(a) The Management Retention Options shall vest at the rate of
50% of the Management Retention Options immediately upon shareholder approval
and the remaining 50% of the Management Retention Options one (1) year
thereafter.
(b) The Management Retention Options shall immediately vest
upon a Change of Control in the Company as defined in this Agreement.
(c) The Management Retention Options shall remain exercisable
for a period of five (5) years from the date of Closing.
(d) The Management Retention Options shall be granted in an
Option Agreement prepared by Company counsel and in form and substance
reasonably acceptable to Purchaser and delivered to Management five (5) days
following the required shareholder approval. The Company will, at its expense,
take on a timely basis all such action as is required to comply with Federal and
State securities laws with respect to the Management Retention
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<PAGE> 8
Options and will indemnify Purchaser with respect to all information relating to
the Company required to be provided to the optionees, such indemnification to
include registration statement indemnification such as provided for in Section
2.08 hereof.
Section 2.07 Right to Maintain Percentage.
(a) If hereafter at any time, or from time to time, the
Company shall intend to issue (i) shares of common stock, or other securities
which are directly or indirectly convertible into or exchangeable for shares of
common stock, or (ii) warrants or options (other than options currently issuable
pursuant to existing employee stock option and employee benefit plans and
options or rights to purchase not more than 100,000 shares of common stock which
options or rights may become issuable pursuant to future employee stock option
and employee benefit plans) or other rights to acquire shares of its common
stock or (iii) shares of common stock in connection with the acquisition of all
or substantially all of the assets, business, or voting stock of another entity
other than in either (i) or (ii) above pro rata to existing shareholders on the
date thereof, or (iv) upon the exercise of outstanding warrants, options or
rights (other than outstanding options currently issuable pursuant to existing
employee stock option and employee benefit plans and options or rights to
purchase not more than 100,000 shares of common stock which may become issuable
pursuant to future employee stock and employee benefit plans) (collectively, the
"Subject Shares"), then in each such instance the Company shall, at least 15
days prior to each such intended issuance, via the Company Notice (as defined
below), offer to Purchaser the right to purchase such number, amount or units of
additional securities of the same type as the Subject Shares as may be necessary
to permit Purchaser to maintain its relative percentage of the total voting
power of the Company following issuance of such securities (the "Preferential
Purchase Right"). The Preferential Purchase Right may be exercised in whole or
in part with respect to any and every event deemed a Preferential Purchase
Right.
(b) The "Company Notice" shall set forth the terms and
conditions of the proposed issuance, including the price or other consideration
to be received by the Company for such issuance. Purchaser shall then, for a
period of fourteen days, have the right to elect, via Purchaser's Notice (as
defined below), to exercise the Preferential Purchase Right to purchase
additional shares or units of the same type as the Subject Shares on the same
terms that such Subject Shares are issued.
(c) Within fourteen days after receipt of the Company Notice,
Purchaser shall advise the Company in writing ("Purchaser's Notice") of its
intention with respect to the purchase of the additional shares or units of
securities of the same type as the Subject Shares covered by the Company Notice.
Upon the delivery of Purchaser's Notice, Purchaser shall become obligated to
purchase the number, amount of units of additional securities as specified in
the Purchaser's Notice, provided, however, that if for any reason the actual
issuance of the Subject Shares shall result in a greater or lesser number of
Subject Shares being issued than were set forth in the Company Notice, then
Purchaser shall have two business days from the receipt of notice from the
Company to such effect, which notice (the "Revised Notice") shall set forth such
new number of Subject Shares actually issued, to elect to purchase in accordance
with the terms hereof and thereof such additional or lesser shares or units of
the same type as the Subject Shares were actually issued on the same terms that
such Subject Shares were actually issued, which purchase shall become a binding
obligation of Purchaser upon such election. Such purchase
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<PAGE> 9
shall be consummated on the later of (x) the business day following the
consummation of the transaction which gave rise to the Preferential Purchase
Right (or immediately following the third business day following the receipt of
the Revised Notice) or (y) the business day following the early termination or
expiration of the applicable waiting period under the Hart- Scott-Rodino Act
with respect to the purchase of such securities, or such later date as shall be
mutually agreed to in writing by Purchaser and the Company, provided, however,
that if for any reason the intended sale of Subject Shares shall not occur, the
Company shall have no obligation whatsoever to issue and Purchaser shall have no
obligation to purchase any share or units of the same type as the Subject Shares
as to which Purchaser has notified the Company of its election to purchase
hereunder. At the closing of such purchase, which shall take place at the
principal office of the Company in Boca Raton, Florida, the Company shall
deliver to Purchaser certificates evidencing the number, amount or units of
additional securities of the same type as the Subject Shares or, where
appropriate, other instruments reflecting the ownership of the additional
securities of the same type as the Subject Shares purchased by Purchaser, and
Purchaser shall, in accordance with paragraph (d) below, deliver to the Company
the same type and amount of consideration per share or unit of the additional
securities of the same type as the Subject Shares purchased as was paid by the
purchasers of the Subject Shares in the transaction which gave rise to the
Preferential Purchase Right less any underwriting or placement discounts or
commissions payable by the Company with respect to the Subject Shares.
(d) If the consideration paid per share or unit of the Subject
Shares in the transaction giving rise to the Preferential Purchase Right
described in the Company Notice is not solely made up of cash or marketable
securities then the Company Notice shall, if determinable, include the fixed
price or other value of such non-cash consideration as of the day such fixed
price is to be determined for the transaction giving rise to the Preferential
Purchase Right, and the consideration then payable by Purchaser for additional
securities of the same type and amount as the Subject Shares shall be in cash,
payable in the same day funds, equal to the amount of such fixed price or other
value. In all other such events, the price to be paid by Purchaser per share or
unit shall be the value of such securities as jointly determined by Purchaser
and the Company and if they cannot agree as determined by Robinson Humphrey
Company LLC.
(e) If the purchase price set forth in the Company Notice
shall include marketable securities, the purchase price payable by Purchaser
shall include, to the extent marketable securities were included as a portion of
the consideration provided for in the Company Notice, an amount in cash
determined by reference to the "Current Market Price" of such securities on the
date of the announcement of the transaction giving rise to the Preferential
Purchase Right. The term "Current Market Price" shall mean, as applied to any
class of stock on any date, the average of the daily "Closing Prices" (as
defined below) for the 30 consecutive "Trading Days" (as defined below)
immediately prior to the date in question. The term "Closing Price" on any day
shall mean the last sales price, regular way, per share of such stock on such
day, or if no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, as reported in the principal consolidated
transaction reporting system with respect to securities listed on the principal
national securities exchange on which the shares of such stock are listed or
admitted to trading, or, if the shares of such stock are not listed or admitted
to trading on any national securities exchange, the average of the high bid and
low asked prices in the over-the-counter manner as reported by the National
Association of Securities Dealers Inc.'s
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<PAGE> 10
Automated Quotation System. The term "Trading Day" shall mean a day on which the
principal national securities exchange on which such shares of such stock are
listed or admitted to trading is open for the transaction of business or if the
shares of such stock are not listed or admitted to trading on any national
securities exchange, a day on which banking institutions in the Borough of
Manhattan, City and State of New York are not authorized or obligated by law or
executive order to close.
Section 2.08 Registration Rights.
(a) Demand Registration. At any time (i) after Closing Date or
(ii) before the receipt by Purchaser and the Company of an opinion of counsel
reasonably satisfactory to both Purchaser and the Company that registration of
the Shares under the Securities Act is not then required in order for Purchaser
to effect a public offering, Purchaser shall have the right to make two requests
of the Company in writing to register under the Securities Act at least 15% of
the Shares (shares subject to request hereunder being referred to as the
"Subject Stock"), and the Company shall use best efforts to cause such Subject
Stock to be registered under the Securities Act as soon as reasonably
practicable so as to permit promptly the sale thereof, and in connection
therewith, the Company shall prepare and file, on such appropriate form as the
Company in its discretion shall determine, a registration statement under the
Securities Act to effect such registration. Purchaser undertakes to provide all
such information and materials and take all such action as may be required in
order to permit the Company to comply with all applicable requirements of the
Commission and to obtain any desired acceleration of the effective date of such
registration statement. Notwithstanding the foregoing, the Company (i) shall not
be obligated to cause any special audit to be undertaken in connection with any
such registration (ii) shall be entitled to postpone for a reasonable period of
time, but not in excess of 60 days, the filing of any registration statement
otherwise required to be prepared and filed by the Company if the Company is, at
such time, conducting or about to conduct an underwritten public offering of
equity securities (or securities convertible into equity securities) and is
advised in writing by its managing underwriter or underwriters (with a copy to
Purchaser) that such offering would in its or their opinion be adversely
affected by the registration so requested and (iii) shall be entitled to
postpone for a reasonable period of time the filing of any registration
statement otherwise required to be prepared and filed by the Company if the
Company determines, in its reasonable judgment, that such registration and
offering would interfere with any financing, acquisition, corporate
reorganization or other material transaction involving the Company or that it
would require the Company to disclose material non-public information that it
deems advisable not to disclose and promptly gives Purchaser written notice of
such determination. If the Company shall so postpone the filing of a
registration statement, Purchaser shall have the right to withdraw the request
for registration by giving written notice to the Company within 30 days after
receipt of the notice of postponement and, in the event of such withdrawal, such
request shall not be counted for purposes of the requests for registration to
which Purchaser is entitled to in this paragraph (a).
(b) Incidental Registration. If, at any time after Closing
Date, the Company proposes to register any of its securities under the
Securities Act (otherwise than pursuant to paragraph (a), and other than
securities to be issued pursuant to a stock option or other employee benefit or
similar plan), the Company shall, as promptly as practicable, give written
notice to Purchaser of the Company's intention to effect such registration. If,
within 15 days after receipt
5
<PAGE> 11
of such notice, Purchaser submits a written request to the Company specifying
the number of shares of common stock that it proposes to sell or otherwise
dispose of, the Company shall include the shares specified in Purchaser's
request in such registration statement and the Company shall keep each such
registration statement in effect and maintain compliance with each Federal and
state law and regulation as set forth in subsection 2.08 (c) below.
Notwithstanding the foregoing, if the offering of the Company's securities
pursuant to such registration statement is to be made by or through
underwriters, the Company shall not be required to include any Shares of
Purchaser therein if and to the extent that the underwriter managing the
offering reasonably believes in good faith that such inclusion would materially
adversely affect such offering; provided, however, that in such event, Purchaser
shall delay any offering by it for such period, not to exceed 60 days, as the
managing underwriter shall request and the Company shall file such supplements
and post-effective amendments and take such other steps as may be necessary to
permit Purchaser to make its proposed offering following the end of such period
of delay.
(c) Certain Obligations of the Company. In connection with any
offering of shares of Subject Stock registered pursuant to this Section 2.08,
the Company (i) shall furnish to Purchaser such number of copies of any
prospectus (including any preliminary prospectus) as it may reasonably request
in order to effect the offering and sale of the Subject Stock to be offered and
sold, but only while the Company shall be required under the provisions hereof
to cause the registration statement to remain current and (ii) take such action
as shall be necessary to qualify the shares covered by such registration
statement under such Blue Sky or other state securities laws for offer and sale
as Purchaser shall request; provided, however, that the Company shall not be
obligated to qualify as a foreign corporation to do business under the laws of
any jurisdiction in which it shall not then be qualified or to file any general
consent to service of process in any jurisdiction in which such a consent has
not been previously filed. The Company shall enter into an underwriting
agreement with a managing underwriter or underwriters selected by it (reasonably
satisfactory to Purchaser) containing representations, warranties, indemnities
and agreements then customarily included by an issuer in underwriting agreements
with respect to secondary distributions; provided, however, that such
underwriter or underwriters shall agree to use their best efforts to ensure that
the offering results in a distribution of the Subject Stock sold in accordance
with the terms of the agreement. In connection with any offering of Subject
Stock registered pursuant to this Section 2.08. The Company shall (x) furnish to
the underwriter, at the Company's expense, unlegended certificates representing
ownership of the Subject Stock being sold in such denominations as requested and
(y) instruct any transfer agent and registrar of the Subject Stock to release
any stop transfer orders with respect to such Subject Stock. Upon any
registration becoming effective pursuant to this Section 2.08, the Company shall
use its best efforts to keep such registration statements current for a period
of nine months.
(d) Expenses. All out-of-pocket expenses (other than the fees
and disbursements of the Company's and Purchaser's respective legal counsel,
which shall be paid by each party) incurred in connection with any registration
statements referred to in this Section 2.08, including, without limitation, the
fees and disbursements of the Company's accountants, all underwriting discounts,
commissions and expenses, the fees and disbursements of the Purchaser's
accountants, all Commission and Blue Sky registration and filing fees, printing
expenses and transfer agent's and registrar's fees, to the extent such fees and
expenses are attributable to the registration of the Subject Stock or, if the
Subject Stock is registered together
6
<PAGE> 12
with other securities of the Company, pro rata according to the dollar amount
received by Purchaser compared to the total dollar amount received by all
sellers of such registered securities (including the Company) shall be borne
equally by the Company and the Purchaser.
(e) Indemnification by the Company. In the case of any
offering registered pursuant to this Section 2.08, the Company agrees to
indemnify and hold Purchaser, each underwriter of Shares under such registration
and all of their directors and officers, and each person who controls any of the
foregoing within the meaning of Section 15 of the Securities Act, harmless
against any and all losses, claims, damages or liabilities to which they or any
of them may become subject under the Securities Act or any other statute or
common law or otherwise, and to reimburse them, from time to time upon request,
for any legal or other expenses reasonably incurred by them in connection with
investigating any claims and defending any actions, insofar as any such losses,
claims, damages, liabilities or actions shall arise out of or shall be based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in the registration statement relating to the sale of such Subject
Stock, or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading or (ii)
any untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus (as amended or supplemented if the Company shall have
filed with the Commission any amendment thereof or supplement thereto), or the
omission or alleged omission to state therein a material fact necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the indemnification agreement
contained in this paragraph (e) shall not apply to such losses, claims, damages,
liabilities or actions arising out of or based upon and in conformity with
information furnished in writing to the Company by Purchaser or any such
underwriter specifically for use in connection with the preparation of the
registration statement or any preliminary prospectus or prospectus contained in
the registration statement or any such amendment thereof or supplement thereto
or made in any preliminary prospectus, and the prospectus contained in the
registration statement in the form filed by the Company with the Commission
pursuant to Rule 424 under the Securities Act shall have corrected such
statement or omission and a copy of such prospectus shall not have been sent or
given to such person at or prior to the confirmation of such sale to him.
(f) Indemnification by Purchaser and Underwriters. In the case
of each offering registered pursuant to this Section 2.08, the Purchaser and
each underwriter participating therein shall agree, in the same manner and to
the same extent as set forth in paragraph (e) of this Section 2.08 severally to
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act, and the
directors and officers of Company, and in the case of each such underwriter,
Purchaser, each person, if any, who controls Purchaser within the meaning of the
Securities Act and the directors and officers of the Purchaser, with respect to
any statement in or omission from such registration statement or any preliminary
prospectus (as amended or as supplemented, if amended or supplemented as
aforesaid) or prospectus contained in such registration statement (as amended or
supplemented, if amended or supplemented as aforesaid), if such statement or
omission shall have been made in reliance upon and in conformity with
information furnished in writing to the Company by such indemnifying party
specifically for use in connection with the preparation of
7
<PAGE> 13
such registration statement or any preliminary prospectus or prospectus
contained in such registration statement or any such amendment thereof or
supplement thereto.
(g) Indemnification Procedure. Each party indemnified under
paragraph (e) or (f) of this Section 2.08 shall, promptly after receipt of
notice of the commencement of any action against such indemnified party in
respect of which indemnity may be sought hereunder, notify the indemnifying
party in writing of the commencement thereof. The omission of any indemnified
party to so notify an indemnifying party of any such action shall not relieve
the indemnifying party from any liability in respect of such action which it may
have to such indemnified party on account of the indemnity agreement contained
in paragraph (e) or (f) of this Section 2.08, except to the extent the
indemnifying party was prejudiced by such omission, and in no event shall
relieve the indemnifying party from any other liability which it may have to
such indemnified party. In case any such action shall be brought against any
indemnified party and it shall notify an indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and, to
the extent that it may desire, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under paragraph (e) or (f) of this Section 2.08 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof, other than reasonable costs of investigation (unless such
indemnified party reasonably objects to such assumption on the grounds that
there may be defenses available to it which are different from or in addition to
such indemnifying party, in which event the indemnified party shall be
reimbursed by the indemnifying party for the expenses incurred in connection
with retaining separate legal counsel).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As of the Closing, the Company will represent and warrant to the
Purchaser as follows:
Section 3.01 Organization and Good Standing. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida, and is duly qualified to transact business as a foreign
corporation and is in good standing in each jurisdiction in which the nature of
the business transacted by it or the character or location of the properties
owned or leased by it requires such qualification, except where the failure to
be so qualified or in good standing would not have a Material Adverse Effect.
The Company has full corporate power and authority to own and manage its
properties and to carry on its business as it is now being (and as it is
currently proposed to be) conducted. The copies of the Company's certificate of
incorporation, by-laws and other organizational documents and instruments (in
each case, as amended and/or restated through the date hereof), heretofore made
available to the Purchaser, are true, complete and correct copies thereof. The
Company, directly or indirectly, owns all of the outstanding capital stock of
each Subsidiary. The Company does not own any interest in any other company or
entity other than the Subsidiaries set forth on Schedule 3.01 (a), and other
than interests in trusts established by the Company or its Subsidiaries in
connection with the Company's securitization program. Each Subsidiary is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation or organization and has
8
<PAGE> 14
the power and authority to own or lease its properties and to conduct its
business as now conducted. All outstanding shares of the capital stock of each
Subsidiary have been validly issued and are fully paid and non-assessable.
Except as set forth on Schedule 3.01 (b), there are no outstanding options,
warrants, rights, agreements or commitments of any nature whatsoever of any
third party to subscribe for or purchase any equity security of any Subsidiary
or to cause any Subsidiary to issue any such equity security.
Section 3.02 Capitalization. The authorized capitalization of the
Company consists of: (a) 25,000,000 shares of common stock, par value $0.01 per
share, and (b) 5,000,000 shares of Preferred Stock, par value $0.01 per share
("Preferred Stock"). As of March 31, 1999, there were 8,783,746 shares of common
stock outstanding, and there are currently no shares of Preferred Stock
outstanding. No other class or series of capital stock of the Company is, or at
the Closing will be, authorized or issued. All such shares outstanding on the
date hereof are, and the Shares, when issued, will be, duly authorized, validly
issued and fully paid and non-assessable. Except as set forth on Schedule 3.02,
there are no outstanding options, warrants, rights, puts, calls, commitments, or
other contracts, arrangements, or understandings issued by or binding upon the
Company requiring or providing for, and there are no outstanding debt or equity
securities of the Company which upon the conversion, exchange or exercise
thereof would require or provide for, the issuance by the Company of any shares
of capital stock (or any other securities of the Company which, with notice,
lapse of time and/or payment of monies, are or would be convertible into or
exercisable or exchangeable for shares of capital stock). Except as set forth in
Schedule 3.02, there are no preemptive or other similar rights available to the
existing holders of common stock or other securities of the Company.
Section 3.03 Due Authorization; Execution and Delivery. The Company has
all requisite corporate right, power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby, including without
limitation the issuance of the Shares. As of the Closing, the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby will have been duly authorized and approved by
the Board of Directors of the Company and no further corporate action on the
part of the Company is necessary to authorize the execution, delivery and
performance by the Company of this Agreement or the consummation by the Company
of the transactions contemplated hereby. This Agreement constitutes the legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except that such enforcement may be subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights, and the remedies of
specific performance and injunctive relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may be
brought.
Section 3.04 Absence of Breach; No Conflict. Except as set forth on
Schedule 3.04 hereto, the execution, delivery, and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby will not (a) give rise to a right to (or otherwise)
terminate, accelerate the maturity of or accelerate or increase any payment due
under, trigger a right of redemption of, conflict with, result in a breach or
violation of any of the terms, conditions or provisions of, constitute a default
(or an event which, with notice or lapse of time, or both, would constitute a
default) under, require any approval, waiver or consent under, or result in the
creation or imposition of any obligations on behalf of the
9
<PAGE> 15
Company or any Lien upon any property or assets of the Company or any Subsidiary
pursuant to the terms of, any note, bond, mortgage, pledge, indenture, deed of
trust, lease, agreement, indemnity, obligation, commitment, instrument,
franchise, license, certificate or permit to which the Company or any of the
Subsidiaries is a party or by which any of their respective properties or assets
may be bound; (b) violate or conflict with any term or provision of the
certificate of incorporation, by-laws or equivalent organizational instruments
and documents (in each case, as amended and/or restated through the date hereof)
of the Company or any Subsidiary; or (c) assuming the accuracy of the
representations and warranties of the Purchaser contained in Article IV hereof,
violate any judgment, decree, order, writ, statute, rule or regulation of any
judicial, arbitral, public, or governmental authority having jurisdiction over
the Company, any of the Subsidiaries or any of their respective properties or
assets. The issuance of the Shares will not violate the rules, regulations or
bylaws of the Nasdaq Stock Market or any other securities exchange on which the
securities of the Company are traded or listed.
Section 3.05 Validity. The Shares to be issued, sold and delivered to
the Purchaser hereunder shall, upon such issuance, sale, exercise and delivery
in accordance with this Agreement, be duly authorized, validly issued, fully
paid and non-assessable, and free and clear of any and all Liens and preemptive
and other similar rights.
Section 3.06 Securities Law Compliance. Assuming the representations
and warranties of the Purchaser set forth in Section 4.02 hereof are true and
correct in all material respects, the offer and sale of the Shares pursuant to
this Agreement will be exempt from the registration requirements of the
Securities Act. Neither the Company nor any Person acting on its behalf has, in
connection with the offering of the Shares, engaged in (i) any form of general
solicitation or general advertising (as those terms are used within the meaning
of Rule 502(c) under the Securities Act), (ii) any action involving a public
offering within the meaning of Section 4(2) of the Securities Act, or (iii) any
action that would require the registration under the Securities Act of the
offering and sale of the Shares pursuant to this Agreement or that would violate
applicable state securities or "blue sky" laws. The Company has not made and
will not prior to the Closing make, directly or indirectly, any offer or sale of
the Shares of the same or similar class as the Shares if, as a result, the offer
and sale contemplated hereby could fail to be entitled to exemption from the
registration requirements of the Securities Act. As used herein, the terms
"offer" and "sale" have the meanings specified in Section 2(3) of the Securities
Act.
Section 3.07 Commission Documents; Financial Information.
(a) The Company has made available to the Purchaser true and
complete copies of all SEC Documents filed with the Commission since January 1,
1998, and will furnish the Purchaser a true and correct copy of each amendment
thereto and any SEC Documents filed by the Company with the Commission on or
before the Closing Date. As of their respective filing dates, the SEC Documents
complied (or will comply) in all material respects with the requirements of the
Securities Act, Exchange Act and the rules and regulations of the Commission
thereunder applicable to such SEC Documents, and as of their respective dates
none of the SEC Documents contained (or will contain) any untrue statement of a
material fact or omitted (or will omit) to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The financial
statements of the Company and its Subsidiaries included in the SEC
10
<PAGE> 16
Documents comply (or will comply) as of their respective dates as to form in all
material respects with applicable accounting requirements and the rules and
regulations of the Commission with respect thereto (except as may be indicated
in the notes thereto or, in the case of the unaudited statements, as permitted
by Form 10-Q promulgated by the Commission), and present fairly (or will present
fairly) as of their respective dates the consolidated financial position of the
Company and the Subsidiaries as at the dates thereof and the consolidated
results of their operations and their consolidated cash flows for each of the
respective periods, in conformity with GAAP. As used in this Agreement, the
consolidated balance sheet of the Company and its Subsidiaries at December 31,
1998 previously provided to the Purchaser is hereinafter referred to as the
"Balance Sheet", and December 31, 1998 is hereinafter referred to as the
"Balance Sheet Date."
(b) Except as and to the extent expressly set forth in the
Balance Sheet, or the notes, schedules or exhibits thereto, or as disclosed in
the SEC Documents, (i) as of the Balance Sheet Date, neither the Company nor the
Subsidiaries had any material liabilities or obligations (whether absolute,
contingent, accrued or otherwise) that would be required to be included on a
balance sheet or in the notes, schedules or exhibits thereto prepared in
accordance with GAAP and (ii) since the Balance Sheet Date, the Company and its
Subsidiaries have not incurred any such material liabilities or obligations
other than in the ordinary course of business.
Section 3.08 Approvals; Compliance with Laws; Licenses and Authorities.
(a) Except as provided for in this Agreement and assuming the
accuracy of the representations and warranties of the Purchaser contained in
Article IV hereof, no notices, reports or other filings are required to be made
by the Company or any Subsidiary with, nor are any consents, registrations,
applications, approvals, permits, licenses or authorizations required to be
obtained by the Company or any Subsidiary from, any public or governmental
authority or other third party in connection with the execution and delivery of
this Agreement the consummation by the Company of the transactions contemplated
hereby, or the exercise by the Purchaser of its rights hereunder, except for any
of the foregoing, the failure of which to make or obtain would not have a
Material Adverse Effect or adversely affect the Purchaser's rights hereunder.
(b) The business of the Company and each of the Subsidiaries
has been and is presently being conducted in compliance with all applicable
federal, state, county and local ordinances, statutes, rules, regulations and
laws (collectively "Laws").
(c) Except as would not have a Material Adverse Effect, (i)
the Company and its Subsidiaries have all permits or licenses of all Authorities
that are necessary to carry on the business of the Company and its Subsidiaries
as now conducted; (ii) each such permit or license is in full force and effect
and has not been revoked, canceled or encumbered and the Company or relevant
Subsidiary is in compliance therewith in all respects; and (iii) no such permit
or license will be terminated or adversely affected by virtue of the execution
of this Agreement or the performance by the parties of their obligations or the
exercise by the parties of their rights hereunder.
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Section 3.09 Litigation. Except as set forth on Schedule 3.09, there
are no pending actions, suits, proceedings, arbitrations or investigations
against or affecting the Company or any of its Subsidiaries or any of their
respective properties, assets or operations, or with respect to which the
Company or any such Subsidiary is responsible by way of indemnity or otherwise
(a "Material Claim"), that are required under the Securities Act or Exchange Act
to be described in such SEC Documents or which, if there is an adverse decision,
could singly, or in the aggregate, with all such other actions, suits,
investigations or proceedings, have a Material Adverse Effect and, to the
knowledge of the Company, no such actions, suits, proceedings or investigations
are threatened. No adverse development has occurred with respect to any Material
Claim except as disclosed in the SEC Documents filed with the Commission prior
to the date of this Agreement.
Section 3.10 Tax Matters.
(a) Each of the Company and its Subsidiaries has filed or
caused to be filed, or has properly filed extensions for, all material Tax
Returns that are required to be filed by or respect to the Company, any of its
Subsidiaries or the business of the Company and its Subsidiaries; and each of
the Company and its Subsidiaries has timely paid or caused to be paid all
material Taxes with respect thereto whether or not shown on said Tax Returns
(and on all material assessments received by it) to the extent that such Taxes
and assessments have become due, except for any failure to so file or cause to
be filed, any failure to so file an extension, or any failure to so pay or cause
to be paid, in each case that would not, individually or in the aggregate, have
a Material Adverse Effect, and, except for any failure to pay or cause to be
paid Taxes the validity or amount of which is being contested in good faith by
appropriate proceedings and with respect to which adequate reserves, in
accordance with generally accepted accounting principles, have been set aside.
All said Tax Returns are complete and accurate in all respects and have been
prepared in compliance with all applicable laws and regulations, except for any
such failure to be complete and accurate or to be so prepared that would not,
individually or in the aggregate, have a Material Adverse Effect. The Company
and its Subsidiaries reasonably believe (i) the reserves on the Balance Sheet of
the Company and its Subsidiaries for Taxes due or owing by the Company and its
Subsidiaries to be adequate in all material respects for all unpaid Taxes,
whether or not disputed, of the Company and its Subsidiaries for all fiscal
years that, as of the Balance Sheet Date, had not been examined and reported on
by any taxing authorities (or closed by applicable statutes), and (ii) that as
of the Closing Date, such reserves as adjusted on the books in accordance with
past practice, will be sufficient for the then-unpaid taxes of the Company and
its Subsidiaries attributable to periods prior to and ending on the Closing
Date, except in either case where any failure to establish any such reserve
would not individually or in the aggregate constitute a Material Adverse Effect.
(b) Except as shown on Schedule 3.10(b), there are no actions
or proceedings currently pending or, to the best knowledge of the Company or any
of its Subsidiaries, threatened in writing against the Company, any of its
Subsidiaries or any affiliated group with respect to the Company, any of its
Subsidiaries or the business of the Company and its Subsidiaries by any
governmental authority for the assessment or collection of material Taxes, and
no claim for the assessment or collection of material Taxes has been asserted in
writing against the Company or any of its Subsidiaries or any affiliate group
with respect to the Company, any of its Subsidiaries or the business of the
Company and its Subsidiaries, in either case which singly or in the aggregate
are likely to have a Material Adverse Effect.
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Section 3.11 Material Contracts. All of the material contracts of the
Company or any of its Subsidiaries which have a value of greater than $
100,000.00 per year in revenue or expense are described in Schedule 3.11 hereof
and are in full force and effect. True and complete copies of all such material
contracts as of Closing have been made available to the Purchaser. All material
contracts to which the Company or its Subsidiaries are parties on or prior to
the date hereof which will be required to be described or filed as an Exhibit in
the SEC Documents required to be filed following the date hereof have been
provided to the Purchaser and are in full force and effect. Neither the Company
nor any of its Subsidiaries nor, to the knowledge of the Company, any other
party is in material breach of or in default under any such contract. The
Purchaser acknowledges its obligation under the Confidentiality Agreement
heretofore entered into with the Company as it specifically relates to contracts
with the Company's customers.
Section 3.12 Title to Properties, Encumbrances. Each of the Company and
its Subsidiaries has good and valid title to its respective assets, free and
clear of all defects and Liens except (a) materialmen's, mechanics', carriers',
workmen's, warehousemen's, repairmen's, or other like Liens arising in the
ordinary course of business; (b) Liens for current Taxes not yet due and
payable; (c) Liens or minor imperfections of title that do not materially
interfere with the use or materially detract from the value of such property,
and (d) Liens permitted by the Finova loan agreement.
Section 3.13 Plant and Equipment; Sufficiency of Assets.
(a) The plant and equipment used by the Company and its
Subsidiaries has been maintained to the standards of operating condition and
repair typical of companies engaged in the same or similar businesses except as
would not have a Material Adverse Effect.
(b) Each of the Company and its Subsidiaries own or have the
lawful right to use all assets, properties, operating rights, easements,
contracts, leases, licenses, and other instruments necessary to operate their
businesses lawfully and to maintain the same as presently conducted except as
would not have a Material Adverse Effect.
Section 3.14 Labor Matters.
(a) Neither the Company nor any of its Subsidiaries is party
to any labor or collective bargaining agreement and there are no labor or
collective bargaining agreements which pertain to employees of the Company or
any of its Subsidiaries.
(b) No employees of the Company or any Subsidiary are
represented by any labor organization. No labor organization or group of
employees of the Company or any of its Subsidiaries has made a pending demand
for recognition or certification, and there are no representation or
certification proceedings or petitions seeking a representation proceeding
presently pending or, to the knowledge of the Company, threatened to be brought
or filed, with the NLRB or any other labor relations tribunal or authority. To
the knowledge of the Company, there are no organizing activities involving the
Company or any of its Subsidiaries pending with, or threatened by, any labor
organization.
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(c) There are no strikes, work stoppages, slowdowns, lockouts,
material arbitrations or material grievances or other material labor disputes
pending or, to the knowledge of the Company, threatened against or involving the
Company or any of its Subsidiaries. Except as would not result in any Material
Adverse Effect, there are no unfair labor practice charges, grievances or
complaints pending or, to the knowledge of the Company, threatened by or on
behalf of any employee or group of employees of the Company or any of its
Subsidiaries.
Section 3.15 Environmental Matters.
(a) Each of the Company and its Subsidiaries is in material
compliance with all Environmental Laws and neither the Company nor any of its
Subsidiaries has received any written communication from a governmental
authority with respect to such compliance or the failure thereof.
(b) There is no civil, criminal or administrative action,
claim, demand, investigation or notice relating to a violation of an
Environmental Law (an "Environmental Claim") pending or, to the knowledge of the
Company, threatened and to the knowledge of the Company, there are no past or
present actions, activities, circumstances, conditions, events or incidents,
including, without limitation, the release, emission, discharge or disposal of
any chemical, pollutant, contaminant, waste, toxic substance, petroleum or
petroleum product, that would form the basis of any Environmental Claim, in
either case (A) against the Company or any of its Subsidiaries, (B) against any
person or entity whose liability for any Environmental Claim the Company or any
of its Subsidiaries has or may have retained or assumed either contractually or
by operation of law, or (C) involving any real or personal property which the
Company or any of its Subsidiaries owns, leases or manages except, in each case,
as would not have a Material Adverse Effect.
Section 3.16 No Existing Violation, Default, Etc. Neither the Company
nor any of its Subsidiaries is (a) in violation of any provision of its
certificate of incorporation, by-laws or other organizational documents or (b)
in violation of any applicable Law, stock exchange rule or regulation, which
violation has or would reasonably be expected to have a Material Adverse Effect.
No breach, event of default or event that, but for the giving of notice or the
lapse of time or both, would constitute an event of default exists under any
indenture, mortgage, loan agreement, note or other agreement or instrument for
borrowed money, any guarantee of any agreement or instrument for borrowed money
or any lease, permit, license or other agreement to which the Company or any of
its Subsidiaries is a party or by which the Company or any such Subsidiary is
bound or to which any of the properties, assets or operations of the Company or
any such Subsidiary is subject, which breach, event of default, or event that,
but for the giving of notice or the lapse of time or both, would constitute an
event of default, has or would reasonably be expected to have a Material Adverse
Effect.
Section 3.17 Affiliate Transactions. Except as disclosed in Schedule
3.17, the Company and its Subsidiaries have not entered into any material
transaction or material series of transactions with any current or former
director, officer, employee or Affiliate of the Company.
Section 3.18 Insurance. The Company and its Subsidiaries, in the
reasonable determination of the Company's management, maintain with financially
sound and reputable
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insurers insurance against loss or damage of the kinds customarily insured
against by corporations of established reputation engaged in the same or a
similar business and similarly situated, and of such types and in such amounts
as is customarily carried under similar circumstances by such other
corporations.
Section 3.19 Unlawful Payments and Contributions. Neither the Company
nor any of its directors, officers or, to the Company's knowledge, any of its
other employees or agents has (a) used any Company funds for any unlawful
contribution, endorsement, gift, entertainment or other unlawful expense
relating to political activity; (b) made any direct or indirect unlawful payment
to any government official or employee from Company funds; (c) violated or is in
violation of any provision of the Foreign Corrupt Practices Act of 1977, as
amended in connection with the Company's and its Subsidiaries' business; or (d)
made any bribe, rebate, payoff, influence payment, kickback or other unlawful
payment to any person or entity with respect to matters pertaining to the
Company.
Section 3.20 Year 2000. The Company and its Subsidiaries have
undertaken those steps and efforts to assume Year 2000 compliance internally and
with regard to its products as described in its most recent 10K filed with the
SEC.
Section 3.21 Absence of Certain Events; No Material Adverse Change.
Since the Balance Sheet Date, the Company and its Subsidiaries each has
conducted its business operations in the ordinary course and there has not
occurred any event or condition having or, that is reasonably likely to have, a
Material Adverse Effect. Without limiting the generality of the foregoing, other
than as is disclosed in the SEC Documents filed with the Commission since
January 1, 1999, or on Schedule 3.21 hereto, since the Balance Sheet Date there
has not occurred:
(a) any change or agreement to change the character or nature
of the business of the Company or any of its Subsidiaries;
(b) any purchase, sale, transfer, assignment, conveyance or
pledge of the assets or properties of the Company or any of its Subsidiaries,
except in the ordinary course of business;
(c) any waiver or modification by the Company or any of its
Subsidiaries of any right or rights of substantial value, or any payment, direct
or indirect, in satisfaction of any liability, in each case, having a Material
Adverse Effect;
(d) any liability, contract, agreement, license or other
commitment entered into or assumed by or on behalf of the Company or any of its
Subsidiaries relating to the business, assets or properties of the Company or
any of its Subsidiaries, whether oral or written, except in the ordinary course
of business;
(e) any loan, advance or capital expenditure by the Company or
any of its Subsidiaries, except for loans, advances and capital expenditures
made in the ordinary course of business;
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(f) any change in the accounting principles, methods,
practices or procedures followed by the Company in connection with the business
of the Company or any change in the depreciation or amortization policies or
rates theretofore adopted by the Company in connection with the business of the
Company and its Subsidiaries;
(g) any declaration or payment of any dividends, or other
distributions in respect of the outstanding shares of capital stock of the
Company or any of its Subsidiaries (other than dividends declared or paid by
wholly-owned Subsidiaries);
(h) any issuance of any shares of capital stock of the Company
or any of its Subsidiaries or any other change in the authorized capitalization
of the Company or any of its Subsidiaries, except as contemplated by this
Agreement;
(i) any grant or award of any options, warrants, conversion
rights or other rights to acquire any shares of capital stock of the Company or
any of its Subsidiaries, except as contemplated by this Agreement or except
pursuant to employee benefit plans, programs or arrangements in existence on the
date hereof, in the ordinary course of business consistent with past practice;
(j) (a) any granting by the Company or any of its Subsidiaries
to any employee earning in excess of $100,000 USD per year any increase in
compensation, except in the ordinary course of business consistent with prior
practice or as was required under employment agreements in effect as of the date
of the most recent audited financial statements included in the SEC Documents,
(b) any granting by the Company or any of its Subsidiaries to any employee
earning in excess of $100,000 USD per year of any increase in severance or
termination pay, except as was required under any employment, severance, or
termination agreements in effect as of the date of the most recent audited
financial statements included in the SEC documents, or (c) any entry by the
Company or any of its Subsidiaries into any employment, severance, or
termination agreement with any employee earning in excess of $100,000 USD per
year; or
(k) any adoption, or amendment in any material respect, by the
Company or any of its Subsidiaries of any collective bargaining agreement or any
bonus, pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, change of control, retention, disability, death benefit,
hospitalization, medical, or other plan, arrangement, or understanding (whether
or not legally binding) providing benefits to any current or former employee,
officer, or director of the Company or any of its Subsidiaries (collectively,
"Benefit Plans").
Section 3.22 Full Disclosure. None of the statements made by the
Company in this Agreement (including, without limitation, the representations
and warranties made by the Company herein and in the schedules and exhibits
hereto which are incorporated by reference herein and which constitute an
integral part of this Agreement) contains (or will contain on the Closing Date)
any untrue statement of a material fact, or omits (or will omit on the Closing
Date) to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
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Section 3.23 ERISA. Neither the Company nor any of its subsidiaries
sponsors or maintains (or has ever sponsored or maintained) an "employee pension
benefit plan" (within the meaning of Section 3(2) of ERISA) that is subject to
Title IV of ERISA or to the minimum funding requirements of Section 412 of the
Code or Part 3 of Title I of ERISA. Neither the Company nor any of its
subsidiaries contributes or is obligated to contribute (or has ever been
obligated to contribute) to a "multiemployer plan" (within the meaning of
Section 4001 (a)(3) of ERISA).
Section 3.24 Intellectual Property. Except as set forth on Schedule
3.24, it owns, or possesses licenses for, free and clear of all liens,
encumbrances, licenses, claims and other restrictions or burdens, all patents,
trade names, internet domain names, trademarks, copyrights. inventions,
processes, designs, computer software, works of authorship, franchises,
formulas, trade secrets, know-how and other intangible property and proprietary
rights (collectively, "Intellectual Property") necessary for or used in the
conduct of its business, and may use all such Intellectual Property in the
conduct of its business with, to the best of the Company's knowledge, no
conflict with or infringement of the rights of others which would have a
material adverse impact on the Company.
Section 3.25 Hart-Scott-Rodino Filing. The Company hereby represents
and warrants that it is not a $ 100,000,000.00 USD party as defined in the
Hart-Scott-Rodino Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby severally as to itself (but not jointly)
represents and warrants and covenants to the Company as follows:
Section 4.01 Organization and Standing. The Purchaser, which is an
entity, represents and warrants that it is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its formation.
Section 4.02 Investment Representation. The Purchaser represents and
warrants that it is an "Accredited Investor" within the meaning of Rule 501 (a)
of Regulation D under the Securities Act, and it is or will be acquiring the
Shares for its own account and not with a view to, or for sale in connection
with, any distribution thereof in violation of the Securities Act. It
understands that the Shares have not been registered under the Securities Act by
reason of a specific exemption from the registration provisions thereof which
depends upon, among other things, the bona fide nature of their investment
intent as expressed herein. The Purchaser hereby acknowledges and agrees that
upon the original issuance thereof, and until such time as the same is no longer
required under the applicable requirements of the Securities Act and the rules
and regulations thereunder, the Shares may bear the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE
LAWS REGULATING THE SALE OF SECURITIES AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE
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TRANSFERRED UNLESS REGISTERED OR AN OPINION OF COUNSEL SATISFACTORY TO
THE CORPORATION IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS NOT
REQUIRED."
Section 4.03 Due Authorization; Execution and Delivery. As of Closing,
the Purchaser represents and warrants that it has the requisite right, power and
authority to enter into this Agreement, and to consummate the transactions
contemplated hereby and thereby, and that the execution, delivery and
performance of this Agreement, and the consummation of the transactions
contemplated hereby and thereby, have been duly authorized by all necessary
action on its behalf, and this Agreement constitutes, and will constitute, the
legal, valid and binding obligation of it, enforceable against it in accordance
with the terms hereof and thereof, except that such enforcement may be subject
to applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights, and the remedy of
specific performance and injunctive relief may be subject to equitable defenses
and to the discretion of the court before which any proceeding therefor may be
brought.
Section 4.04 Absence of Breach; No Conflict. The Purchaser represents
and warrants that the execution, delivery and performance of this Agreement, and
the consummation of the transactions contemplated hereby and thereby, will not
(a) conflict with, or constitute a default under, any agreement to which such
Purchaser is a party or by which any of the properties or assets of such
Purchaser may be bound; (b) violate or conflict with the governing
organizational instruments and documents (in each case, as amended and/or
restated through the date hereof) of such Purchaser or (c) assuming that the
Company is an "operating company" as such term is defined in Department of Labor
Regulation 2510.3-101, violate any statute, rule, regulation, order, judgment,
writ or decree of any judicial public or governmental authority having
jurisdiction over such Purchaser, or any of the properties or assets of such
Purchaser, which violation would prevent, impair, hinder or delay the
consummation of the transactions contemplated by this Agreement.
Section 4.05 No Consents. Other than as is required in this Agreement,
the Purchaser represents and warrants that no consent, authorization or approval
of, or filing with, any person or any federal, state or local government
department, commission, board, agency or instrumentality is required to be made
or obtained by such Purchaser in connection with its execution and performance
of this Agreement as may be required under the HSR Act or pursuant to the laws,
rules and regulations of the Department of Commerce notifications and except for
such consents, authorizations, approvals and filings the absence of which would
not prevent, impair, hinder or delay the consummation of the transactions
contemplated by this Agreement.
Section 4.06 Investment Company. The Purchaser represents and warrants
that it is not (and immediately after consummation of the transactions
contemplated by this Agreement will not be) an investment company, a company
controlled by an investment company, or otherwise subject to any provisions of
the Investment Company Act of 1940, as amended, and/or the rules and regulations
of the Commission promulgated thereunder.
Section 4.07 Ownership of Stock of the Company. The Purchaser
represents and warrants that it does not own beneficially or of record any
shares of
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capital stock or other securities of the Company and does not have any present
intention or plan to acquire shares of capital stock or other securities of the
Company except pursuant to this Agreement and the transactions contemplated
hereby.
Section 4.08 Certain Regulatory Matters. The Purchaser represents and
warrants that it is not aware of any facts or circumstances regarding such
Purchaser, including the record or beneficial ownership of any securities by
such Purchaser, which can reasonably be expected to cause the Department of
Justice or the Federal Trade Commission to prohibit such Purchaser's acquisition
of Shares contemplated hereunder or the exercise by such Purchaser of its rights
contained herein pursuant to their regulatory authority over such matters.
Section 4.09 Due Diligence. Without in any way affecting or mitigating
the representations and warranties of the Company contained in Article III of
this Agreement or affecting any rights resulting from a breach thereof, the
Purchaser will, if it participates in Closing, acknowledge that as of Closing,
it has had an opportunity to engage in due diligence on the Company and has had
an opportunity to discuss the Company and its business and prospects with
management of the Company.
Section 4.10 Availability of Funds. The Purchaser represents that it
has immediately available to it adequate funds, without borrowing same,
necessary to perform its obligations under this Agreement.
Section 4.11 Hart-Scott-Rodino Filing. The Purchaser hereby represents
and warrants that it is not a $100,000,000.00 USD party as defined in the
Hart-Scott-Rodino Act.
ARTICLE V
COVENANTS
Section 5.01 Covenants of the Company.
(a) Access and Confidentiality. Upon reasonable notice prior
to the Closing, the Company shall (and shall cause each of its Subsidiaries to)
afford the Purchaser and its representatives reasonable access during normal
business hours to its properties books, contracts and records and personnel and
advisors and the Company shall (and shall cause each of the Subsidiaries to)
furnish promptly to the Purchaser all information concerning its business,
properties and personnel as the Purchaser or its representatives may reasonably
request, provided that any review will be conducted in a way that will not
interfere unreasonably with the conduct of the Company's business.
(b) Announcements. Except as required by law or as advised by
outside counsel, no party or any Affiliate, officer or agent of the parties
hereto shall make any announcement concerning the transactions contemplated
hereby without the other parties' written consent, which consent shall not
unreasonably be withheld; provided, however, that any party or such Affiliate,
officer or agent may make any announcements required by applicable law so long
as the text of such announcement shall have been provided to the parties hereto
prior to the making of such announcement. The parties agree to consult with each
other with respect to announcements concerning the transactions contemplated
hereby.
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(c) Shares. From the date hereof until the Closing, the
Company will not issue any shares of its capital stock or securities convertible
or exchangeable for shares of capital stock, except for the issuances set forth
on Schedule 3.02. The Company hereby covenants to the Purchaser, that from and
after the date hereof and so long as the Purchaser owns any Issuable Shares, the
Company shall:
(i) Replacement of Certificates. Upon receipt by the
Company of evidence reasonably satisfactory to it of loss, theft,
destruction or mutilation of any certificate evidencing any of the
Shares (or securities issued upon exchange, conversion or exercise
thereof), and (in case of loss, theft or destruction) of indemnity
reasonably satisfactory to the Company, and upon the surrender and
cancellation of such certificate, if mutilated, the Company shall make
and deliver in lieu of such certificate a new certificate for the
number of Shares (or securities issued upon exchange, conversion or
exercise thereof), as the case may be, evidenced by such lost, stolen,
destroyed or mutilated certificate which remains outstanding. A
Purchaser's (which term does not include any successors or assigns of
the initial Purchaser) agreement of indemnity shall constitute
indemnity satisfactory to the Company for the purposes of this Section
5.01(c) without the need of any further surety or bond.
(ii) Government and Other Approval. Promptly prepare,
submit and file with all public and governmental authorities, all
applications, notices, registrations, certificates, statements and such
other information, documents and instruments as may be required
pursuant to any federal, state, local or foreign Law or rule or
regulation of the NASD or any securities exchange, in connection with
the consummation of the transactions contemplated by this Agreement,
including the effect of any dividends, exchange or conversion rights,
anti-dilution provisions or Board control contemplated by the terms of
the Shares or other securities of the Company which may be acquired by
the Purchaser pursuant to this Agreement.
Section 5.02 Proxy Matters; Standstill.
(a) The Purchaser hereby agrees that during the Standstill
Period (hereinafter defined) it will not, nor will it permit any of its
Affiliates (the Purchaser together with its Affiliates being hereinafter
referred to as a "Purchaser Group") to, directly or indirectly, unless in any
such case specifically authorized in advance to do so by the Board of Directors
of the Company:
(i) acquire, offer to acquire, or agree to acquire by
purchase, by joining a partnership, limited partnership, syndicate or
other "group" (as such term is used in Section 13(d)(3) of the Exchange
Act, hereinafter referred to as "13D Group"), any securities of the
Company entitled to vote generally in the election of directors, or
securities convertible into or exercisable or exchangeable for such
securities (collectively, "Restricted Shares") or any material portion
of the assets or businesses of the Company and its Subsidiaries if and
to the extent that (a) such action would trigger a Change of Control or
(b) such action has not received any requisite approval from
governmental authorities; provided, however, that nothing contained
herein shall prohibit any member of a Purchaser Group from acquiring
any Restricted Shares acquired pursuant to this
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Agreement or otherwise contemplated hereby, including Section 2.07
hereof, (x) as a result of a stock split, stock dividend or similar
recapitalization by the Company or (y) upon the execution of
unsolicited buy orders by any member of a Purchaser Group which is a
registered broker-dealer for the bona fide accounts of its brokerage
customers unaffiliated and not acting in concert with any member of
such Purchaser. Prior to acquiring any shares of capital stock of the
Company, other than upon exercise of its rights under the Agreement and
the Shares, the Purchaser will give written notice of their intent to
do so to the Company. If within ten (10) days after receipt of such
notice, the Company advises the Purchaser in writing that, based on the
advice of its advisors, it believes that the proposed acquisition would
be prohibited by this paragraph, the parties shall thereafter discuss
in good faith whether such acquisition would in fact be so prohibited;
(ii) participate in, or encourage, the formation of any
13D Group which owns or seeks to acquire beneficial ownership of, or
otherwise acts in respect of, Restricted Shares, other than any 13D
Group which is comprised exclusively of the Purchaser or a Purchaser
Group and any other permitted transferee or transferees of securities
from the Purchaser in accordance with Section 5.03;
(iii) make, or in any way participate in, directly or
indirectly, any "solicitation" of "Proxies" (as such terms are defined
or used in Regulation 14A under the Exchange Act) or become a
"participant" in any "election contest" (as such terms are defined or
used in Rule 14a-11 under the Exchange Act) with respect to the
Company, or initiate, propose or otherwise solicit stockholders for the
approval of one or more stockholder proposals with respect to the
Company or induce or attempt to induce any other person to initiate any
stockholder proposal, provided, however, that the limitation contained
in this clause (iii) shall not apply to (y) the election of any
directors to be elected by the holders of Shares or (z) any matter to
be voted on by the Company's stockholders that is not initiated or
proposed by any member of a Purchaser Group or any Affiliate thereof;
or
(iv) call or seek to have called any meeting of the
stockholders of the Company, provided, however, that the limitation
contained in this clause (iv) shall not apply to any meeting of the
stockholders of the Company called for the purpose of voting on any
matter described in the proviso of clause (iii) above.
(b) Nothing in this Section 5.02 shall preclude members of a
Purchaser Group from exercising the voting and other rights, (i) granted to the
Purchaser pursuant to this Agreement or (ii) in connection with any proposed
merger, sale of assets or similar transaction, or tender or exchange offer
proposed by any person who is not part of a Purchaser Group or any of its
Affiliates.
(c) As used herein, the term "Standstill Period" shall mean
the period from the date of this Agreement until the earlier to occur of.
(i) the date which is the second anniversary of the
Closing Date; or
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(ii) the designation of any date as the termination date
of the Standstill Period by a majority of the directors of the Company
at a duly convened meeting thereof or by all of the directors of the
Company by written consent; or
(iii) the Company's material breach of any of its
obligations contained in this Agreement; or
(iv) the Company or any of its Subsidiaries shall
commence a voluntary case concerning itself under Title 11 of the
United States Code entitled "Bankruptcy" as now or hereafter in effect,
or any successor thereto (the "Bankruptcy Code"), which, in the case of
a Subsidiary of the Company, has had or would have a Material Adverse
Effect; or an involuntary case is commenced against the Company or any
of its Subsidiaries and the petition not controverted within 10 days,
or is not dismissed within 60 days after commencement of the case,
which, in the case of a Subsidiary of the Company, has had or would
have a Material Adverse Effect; or a custodian (as defined in the
Bankruptcy Code) is appointed for, or takes charge of, all or any
substantial part of the property of the Company or any of its
Subsidiaries, which, in the case of a Subsidiary of the Company, has
had or would have a Material Adverse Effect; or the Company or any of
its Subsidiaries commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors,
rehabilitation, dissolution, insolvency or liquidation or similar law
of any jurisdiction, whether now or hereafter in effect, relating to
the Company or such Subsidiary, or there is commenced against the
Company or any of its Subsidiaries any such proceeding which remains
undismissed for a period of 60 days, which, in the case of a Subsidiary
of the Company, has had or would have a Material Adverse Effect; or the
Company or any of its Subsidiaries is adjudicated insolvent or
bankrupt, which, in the case of a Subsidiary of the Company, has had or
would have a Material Adverse Effect; or any order of relief or other
order approving any such case or proceeding is entered, which, in the
case of a Subsidiary of the Company, has had or would have a Material
Adverse Effect; or the Company or any of the Subsidiaries suffers any
appointment of any custodian or the like for it or any substantial part
of its property to continue undischarged or unstayed for a period of 60
days, which, in the case of a Subsidiary of the Company, has had or
would have a Material Adverse Effect; or the Company or any of its
Subsidiaries makes a general assignment for the benefit of creditors,
which, in the case of a Subsidiary of the Company, has had or would
have a Material Adverse Effect; or the Company shall fail to pay, or
shall state that it is unable to pay, or shall be unable to pay, its
debts, generally as they become due, which, in the case of a Subsidiary
of the Company, has had or would have a Material Adverse Effect; or the
Company or any of its Subsidiaries shall call a meeting of its
creditors with a view to arranging a composition or adjustment of its
debts, which, in the case of a Subsidiary of the Company, has had or
would have a Material Adverse Effect; or the Company or any of its
Subsidiaries shall by any act or failure to act indicate its consent
to, approval of or acquiescence in any of the foregoing, which, in the
case of a Subsidiary of the Company, has had or would have a Material
Adverse Effect; or any corporate action is taken by the Company or any
of its Subsidiaries for the purpose of effecting any of the foregoing,
which, in the case of a Subsidiary of the Company, has had or would
have a Material Adverse Effect; or
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(v) without encouragement by or the participation of the
Purchaser or any of its Affiliates, the acquisition by any person or
13D Group (other than members of a Purchaser Group or Affiliates
thereof) of, the commencement of a tender offer by such person or 13D
Group for, or the public announcement of an intention to acquire,
Restricted Shares which, if added to the Restricted Shares (if any),
including the Management Retention Options, already owned by such
person or 13D Group, would represent nineteen and nine-tenths percent
(19.9%) or more of the total voting power (including rights to acquire
voting power) of the Company's Restricted Shares, or the receipt by
such person or 13D Group of the Company's agreement or consent to make
such acquisition; or
(vi) the date this Agreement is terminated in accordance
with its terms.
[Section 5.03 Intentionally Omitted].
Section 5.04 Board Nominations. Upon Closing, and for so long as the
Purchaser shall continue to own at least 1,400,000 shares of common stock
purchased by it on the Closing Date, the Board of Directors of the Company shall
consist of nine (9) members and the Purchaser shall have the right to nominate
four (4) out of nine (9) members to the Board of Directors of the Company, and
to effect such nominations, the parties hereby agree to the following procedure:
In the event the Closing shall have taken place prior to the 1999
Annual Shareholder Meeting of the Company, the Company shall amend its proxy to
designate for nomination to the shareholders of the Company for election to the
Board of Directors: (i) four (4) members to be designated by the Purchaser, and
(ii) five (5) members to be designated by the Board members other than the
designees of the Purchaser. Within one month following the Closing, the Company
shall request the resignation of Anthony F. Zalenski and the two outside Board
members who have served the shortest terms in such capacity and shall take
action to appoint the four-members designated by the Purchaser, the effect of
which, upon such resignations, would result in a 9-member Board with 4 members
to annually be designated by the Purchaser and 5 members to annually be
designated by recommendation to the shareholders of the Company by the Board
members other than the designees of the Purchaser. During such time as the
Purchaser's right to designate nominees to the Board pursuant to this section
shall be applicable, the Company agrees to recommend to the shareholders the
election of such entire slate of nominations and the Purchaser agrees to vote
their shares, in person or by proxy, for the election of such entire slate of
nominations.
At such time as Purchaser shall beneficially own less than 75% of the
Shares, Purchaser shall use its best efforts to cause such remaining director or
directors, who has or have been elected hereunder at Purchaser's designation, to
promptly resign from the Company's Board of Directors. The Company agrees that
so long as Purchaser is entitled pursuant to the terms of this Section 5.04 to
representation on the Board of Directors of the Company, the Company shall not
increase or decrease the number of Directors constituting the entire Board of
Directors, except as contemplated by this Agreement.
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Section 5.05 International Investment. The Company shall prepare and
file (or, to the extent necessary, furnish) all required reporting documentation
under the International Investment and Trade in Surveys Act, 22 U.S.C.
Section 3101 et seq., to the extent applicable.
ARTICLE VI
FINANCIAL STATEMENTS; ACCESS TO INFORMATION
Section 6.01 Financial Statements. The Company covenants that it will
deliver to each Purchaser who owns any Shares those items set forth in
paragraphs (a), (b) and (d) and that, upon request, it will deliver to each
original Purchaser (but not their transferees) those items set forth in
paragraphs (c), (e) and (f):
(a) As soon as practicable and in any event within 45 days
after the end of each quarterly period (other than the last quarterly period) in
each fiscal year, a consolidated statement of income and consolidated statements
of changes in financial position and cash flows of the Company and its
Subsidiaries for such quarterly period and for the period from the beginning of
the current fiscal year to the end of such quarterly period, and a consolidated
balance sheet of the Company and its Subsidiaries as at the end of such
quarterly period, setting forth in each case in comparative form figures for the
corresponding periods in the preceding fiscal year, all in reasonable detail and
certified by an authorized financial officer of the Company, subject to changes
resulting from year-end adjustments; provided, however, that delivery pursuant
to clause (d) below of a copy of the Quarterly Report on Form 10-Q of the
Company for such quarterly period filed with the Commission shall be deemed to
satisfy the requirements of this clause (a);
(b) As soon as practicable and in any event within 90 days
after the end of each fiscal year, a consolidated statement of income and
consolidated statements of changes in financial position and cash flows of the
Company and its Subsidiaries for such year, and a consolidated balance sheet of
the Company and its Subsidiaries as of the end of such year, setting forth in
each case in comparative form corresponding consolidated figures from the
preceding annual audit, all in reasonable detail together with an opinion
directed to the Company of independent public accountants of recognized standing
selected by the Company; provided, however, that delivery pursuant to clause (d)
below of a copy of the Annual Report on Form 10-K of the Company for such fiscal
year filed with the Commission shall be deemed to satisfy the requirements of
this clause (b);
(c) Promptly upon transmission thereof, copies of all such
financial statements, proxy statements, notices and reports as it shall send to
its public stockholders and copies of all registration statements (without
exhibits), other than on Form S-8 or any similar successor form, and all reports
which it files with the Commission (or any governmental body or agency
succeeding to the functions of the Commission);
(d) Promptly upon receipt thereof, a copy of each other report
submitted to the Company or any of its Subsidiaries by independent accountants
in connection with any annual, interim or special audit made by them of the
books of the Company or any of its Subsidiaries; and
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(e) With reasonable promptness, such other financial data as
the Purchaser may reasonably request.
Section 6.02 Access to Information. The Company shall permit the
Purchaser (and its designated representatives) to visit and inspect any of the
properties of the Company and its Subsidiaries, including the books and records
of the Company and its Subsidiaries (and to make extracts and copies therefrom),
and to consult with respect to and discuss the affairs, businesses, finances,
operations and accounts of the Company and its Subsidiaries with the officers,
directors and employees of such entities, all at such reasonable times and as
often as such Purchaser may reasonably request. The Purchaser agrees, except as
otherwise required by law, to keep any confidential information obtained
pursuant to this Article VI confidential.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF EACH PARTY
TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY
The respective obligation of each party hereto to consummate the
transactions contemplated hereby is subject to the satisfaction, at or before
the Closing, of each of the following conditions set forth in Section 7.01
through Section 7.03 below. These conditions may be waived by each party (in
whole or in part) at any time in its sole discretion.
Section 7.01 No Adverse Action or Decision. There shall be no action,
suit, investigation or proceeding pending with, or to the knowledge of the
Company threatened against or affecting the Company, any of its Subsidiaries or
any of their respective properties or rights, before any court, arbitrator or
administrative or governmental body which (a) seeks to restrain, enjoin or
prevent the consummation of the issuance, sale and delivery of the Shares to the
Purchaser or (b) challenges the validity or legality of the issuance, sale and
delivery of the Shares to the Purchaser or seeks to recover damages or to obtain
other relief in connection therewith, which in any single case or in the
aggregate (i) the Company or the Purchaser shall reasonably determine is
reasonably likely to result in a Material Adverse Effect, or (ii) the Purchaser
shall reasonably determine is reasonably likely to result in a material
impairment to the Purchaser's rights hereunder.
Section 7.02 No Injunction. No temporary, preliminary or permanent
injunction or any order by any federal or state court of competent jurisdiction
shall have been issued which prohibits or otherwise seeks to prohibit, restrain,
enjoin or delay the consummation of the issuance, sale and delivery of the
Shares to the Purchaser.
Section 7.03 Consents of Third Parties; Modification of Agreements. The
Company shall have duly obtained modifications of or waivers under the
agreements described in Section 5.01(c)(ii) amending or waiving any right to
acceleration, redemption or increase of any payment or obligation of the Company
or its Subsidiaries which could arise as a result of the transactions
contemplated hereby, which modifications or waivers shall be in a form
reasonably satisfactory to the Purchaser.
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Section 7.04 Board of Directors' Approval. This Agreement is contingent
upon the approval of this Agreement by the Board of Directors of the Company and
the Supervisory Board of the Purchaser by May 21, 1999. In the event the above
required approvals of the Company's Board of Directors and the Purchaser's
Supervisory Board shall not have been obtained by May 21, 1999, and the parties
shall not have entered into a mutually acceptable extension agreement, this
Agreement shall automatically terminate and neither party shall have further
liability thereunder to the other party, including but not limited to any
liability under Section 10.05.
ARTICLE VIII
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
COMPANY TO ISSUE, SELL AND DELIVER THE COMMON STOCK
The obligations of the Company to issue, sell and deliver the Shares
are subject to the satisfaction, at or before the Closing, of each of the
following additional conditions set forth in Sections 8.01, 8.02, 8.03, and 8.04
below. These conditions are for the Company's sole benefit and may be waived by
the Company (in whole or in part) at any time in its sole discretion.
Section 8.01 Accuracy of the Purchaser's Representations and
Warranties. The representations and warranties of the Purchaser contained in
Article IV hereof shall be true and correct as of the date when made and as of
the Closing Date, as though made on such date, and the Company shall have
received a certificate attesting thereto signed by a duly authorized officer or
agent of the Purchaser.
Section 8.02 Performance by the Purchaser. The Purchaser shall have
performed, satisfied and complied with, in all material respects, all covenants,
agreements, and conditions required by this Agreement to be performed, satisfied
or complied with by them on or prior to the Closing Date, and the Company shall
have received a certificate attesting thereto signed by a duly authorized
officer or agent of the Purchaser.
Section 8.03 Approval of Finova Capital Corporation. The Company shall
have obtained the written approval of Finova Capital Corporation consenting to
the subject sale and issuance of the Shares.
Section 8.04 Opinion of Robinson Humphrey Company LLC. The Company
shall have obtained the opinion of the Robinson Humphrey Company LLC to the
effect that the consideration to be paid by the Purchaser to the Company is fair
to the holders of the Company's Shares from a financial point of view.
Section 8.05 Opinion of Purchaser's Counsel. The Company shall receive
an opinion, dated as of the Closing Date, from Seitz, Weckbach, Fent, counsel to
the Purchaser, to the effect that:
(i) The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite
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corporate power and authority to own its properties and to carry on its
business as conducted.
(ii) The Purchaser has all necessary corporate power and
has taken all necessary corporate action required for the due
authorization, execution, delivery and performance by the Purchaser of
the Agreement and the consummation of the transactions contemplated
therein.
ARTICLE IX
CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE
PURCHASER TO PURCHASE AND ACCEPT DELIVERY OF THE COMMON STOCK
The obligations of the Purchaser hereunder to acquire and pay for, and
accept delivery of, the Shares are subject to the satisfaction, at or before the
Closing, of each of the following additional conditions set forth in Section
9.01 through Section 9.07 below. These conditions are for the Purchaser's sole
benefit and may be waived (in whole or in part) by the Purchaser.
Section 9.01 Accuracy of the Company's Representations and Warranties.
The representations and warranties of the Company contained in Article III
hereof which are not subject to a qualification regarding materiality shall be
true and correct in all material respects as of the date when made and as of the
Closing Date, as though made on such date, the representations and warranties of
the Company contained in Article III hereof, which are subject to a
qualification regarding materiality shall be true and correct in all respects as
of the date when made and as of the Closing Date, as though made on such date,
and each Purchaser shall have received a certificate attesting thereto signed by
the Chief Executive Officer of the Company, on behalf of the Company.
Section 9.02 Performance by the Company. The Company shall have
performed, satisfied and complied with, in all material respects, all covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with on or prior to the Closing Date, and the Purchaser shall have
received a certificate attesting thereto signed by the Chief Executive Officer
of the Company.
Section 9.03 No Material Adverse Effect. There shall not have occurred
and there shall not otherwise exist any condition, event or development having,
or likely to have (in the reasonable judgment of the Purchaser), a Material
Adverse Effect.
Section 9.04 Governmental Approvals and Consents. The Company shall
have duly obtained, received or effected (and all applicable waiting and
termination periods, if any, including any extensions thereof, under any
applicable law, statute, regulation or rule, shall have expired or terminated)
all authorizations, consents, approvals, licenses, franchises, permits and
certificates by or of, and shall have made all filings and effected all
notifications, registrations and qualifications with, all federal, state and
local governmental and regulatory Authorities necessary for the issuance, sale
and delivery of the Shares being issued and sold at the Closing and, to the
extent required at Closing, the consummation of the other transactions
contemplated hereby.
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Section 9.05 Secretary's Certificate. The Secretary or an Assistant
Secretary of the Company shall have delivered to the Purchaser at the Closing
Date a Certificate dated as of the Closing certifying: (a) that attached thereto
is a true and complete copy of the By-Laws of the Company as in effect on the
date of such certification; (b) that attached thereto is a true and complete
copy of all resolutions adopted by the Board of Directors of the Company
authorizing the execution, delivery and performance of the Agreement, the
issuance, sale and delivery of the Issuable Shares, and that all such
resolutions are in full force in effect and are all the resolutions adopted in
connection with the transactions contemplated by this Agreement; (c) that
attached thereto is a true and complete copy of the Certificate of Incorporation
as in effect on the date of such certification; and (d) to the incumbency and
specimen signature of certain officers of the Company.
Section 9.06 Proceedings. All corporate and other proceedings to be
taken by the Company in connection with the transactions contemplated by this
Agreement and all documents reflecting or evidencing such proceedings shall be
reasonably satisfactory in scope, form and substance to the Purchaser and its
legal counsel, and the Purchaser and its legal counsel shall have received all
such duly executed counterpart originals or certified or other copies of such
documents and instruments as they may reasonably request.
Section 9.07 Shares. The sale of the Shares to the Purchaser hereunder
shall have been exempted from the provisions of the Blue Sky Law of the Florida
Statutes.
Section 9.08 Opinion of Company Counsel. Purchaser shall have received
an opinion, dated as of the Closing Date, from Spinner, Dittman, Federspiel &
Dowling, counsel to the Company, to the effect that:
(i) the Company is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to
own its properties and to carry on its business as conducted. The
Company is duly licensed or qualified to do business as a foreign
corporation in each jurisdiction where such qualification is required,
except for those jurisdictions wherein the failure to so qualify would
not have a material adverse effect upon the Company.
(ii) The Company has all necessary corporate power and
has taken all necessary corporate action required for the due
authorization, execution, delivery and performance by the Company of
the Agreement and the consummation of the transactions contemplated
therein, and for the due authorization, issuance and delivery of the
Common Stock.
(iii) To the best of the knowledge of counsel to the
Company, the execution, delivery, and performance of this Agreement by
the Company and the consummation by the Company of the transactions
contemplated hereby will not (x) give rise to a right to (or otherwise)
terminate, accelerate the maturity of or accelerate or increase any
payment due under, trigger a right of redemption of, conflict with,
result in a breach or violation of any of the terms, conditions or
provisions of, constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, require any
approval,
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waiver or consent under (other than obtaining the consent of Finova
Capital Corporation), or result in the creation or imposition of any
obligations on behalf of the Company or any Lien upon any property or
assets of the Company or any Subsidiary pursuant to the terms of, any
note, bond, mortgage, pledge, indenture, deed of trust, lease,
agreement, indemnity, obligation, commitment, instrument, franchise,
license, certificate or permit to which the Company or any of the
Subsidiaries is a party or by which any of their respective properties
or assets may be bound; (y) violate or conflict with any term or
provision of the certificate of incorporation, by-laws or equivalent
organizational instruments and documents (in each case, as amended
and/or restated through the date hereof) of the Company or any
Subsidiary; or (z) assuming the accuracy of the representations and
warranties of the Purchaser contained in Article IV of this Agreement,
violate any judgment, decree, order, writ, statute, rule or regulation
of any judicial, arbitral, public, or governmental authority having
jurisdiction over the Company, any of the Subsidiaries or any of their
respective properties or assets. The issuance of the Shares will not
violate the rules, regulations or bylaws of the Nasdaq Stock Market or
any other securities exchange on which the securities of the Company
are traded or listed.
(iv) The Shares to be issued, sold and delivered to the
Purchaser hereunder shall, upon such issuance, sale, exercise and
delivery in accordance with this Agreement, be duly authorized, validly
issued, fully paid and non-assessable, and free and clear of any and
all Liens and preemptive and other similar rights.
ARTICLE X
TERMINATION
Section 10.01 Termination by Mutual Written Consent. This Agreement may
be terminated and the transactions contemplated hereby may be abandoned, for any
reason, at any time prior to the Closing Date, by the mutual written consent of
the Company and the Purchaser.
Section 10.02 Termination by the Company or the Purchaser. Subsequent
to the approval of the Board of Directors of the Company and the Supervisory
Board of the Purchaser, this Agreement may be terminated and the transactions
contemplated hereby may be abandoned by action of Company or the Purchaser if
and to the extent that (a) the Closing shall not have occurred at or prior to
5:00 p.m., Eastern time, on May 28, 1999, or such date as shall be mutually
agreed upon by the parties; provided, however, that the right to terminate this
Agreement under this Section 10.02 shall not be available to any party whose
failure to fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Closing Date to occur on or before such date; or
(b) any court or governmental authority of competent jurisdiction shall have
issued an order, decree, writing or ruling or taken any other action, or there
shall be in effect any statute, rule or regulation, permanently restraining,
enjoining or otherwise prohibiting the purchase of the Shares hereunder, or the
consummation of the transactions contemplated by this Agreement.
Section 10.03 Termination by the Purchaser. Subsequent to the approval
of the Board of Directors of the Company and the Supervisory Board of the
Purchaser, this Agreement may be terminated and the transactions contemplated
hereby may be abandoned by action of Purchaser,
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at any time prior to the Closing Date, if (a) the Company shall have failed to
comply in any material respect with any of the covenants or agreements contained
in this Agreement to be complied with or performed by the Company at or prior to
such date of termination, and the Company shall not, within a reasonable period
of time after notice of such failure, have cured or commenced prompt and
diligent measures which would promptly cure such failure, (b) there shall have
been a material misrepresentation or material breach by the Company with respect
to any representation or warranty made by it in this Agreement and such
misrepresentation or breach cannot be cured prior to the Closing Date, or (c)
there shall have occurred and be continuing any condition, event or development
having, or reasonably likely to have, a Material Adverse Effect.
Section 10.04 Termination by the Company. Subsequent to the approval of
the Board of Directors of the Company and the Supervisory Board of the
Purchaser, this Agreement may be terminated and the transactions contemplated
hereby may be abandoned by action of the Company, at any time prior to the
Closing Date, if (a) the Purchaser shall have failed to comply in any material
respect with any of the covenants or agreements contained in this Agreement to
be complied with or performed by the Purchaser at or prior to such date of
termination and the Purchaser shall not, within a reasonable period of time
after notice of such failure, have cured or commenced prompt and diligent
measures which would promptly cure such failure, (b) there shall have been a
material misrepresentation or material breach by the Purchaser with respect to
any representation or warranty made by the Purchaser in this Agreement and such
misrepresentation or breach cannot be cured prior to the Closing Date, or (c)
pursuant to Section 10.06 below.
Section 10.05 Effect of Termination. If this Agreement is terminated
pursuant to this Article X, this Agreement shall become void and of no effect
with no liability on the part of any party hereto, except (a) to the extent such
termination results from the breach by a party hereto of any of its
representations, warranties, covenants or agreements set forth in this
Agreement, and (b) that the covenants and agreements contained in that certain
Confidentiality Agreement between the parties dated April 13, 1999, shall
survive termination hereof.
Section 10.06 Negotiations with Third Parties. The Company shall be
entitled to entertain, discuss and negotiate with any third party that provides
an unsolicited offer for the sale of the Shares that is potentially superior to
the terms of this Agreement in satisfaction of its fiduciary obligations to the
Company's shareholders, as advised by its independent legal counsel. In the
event the Company shall determine that an unsolicited offer is superior, the
Company reserves the right to terminate this Agreement by providing written
notice to the Purchaser.
ARTICLE XI
DEFINITIONS
"Affiliate" shall have the meaning set forth in Rule l2b-2 promulgated
by the Commission under the Exchange Act.
"Approval Date" shall mean the date (i) on which the Purchaser shall
have obtained all necessary approvals from the FTC and other regulatory
authorities with jurisdiction over the
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acquisition of the Shares and (ii) on which all applicable notice and comment
periods shall have expired without disapproval by the other authorities. Such
approval of the authorities shall mean approvals with respect to the Purchaser's
acquisition of the Shares.
"Authorities" shall mean approvals, consents, rights, certificates,
orders, franchises, determinations, permissions, licenses, authorities or grants
issued, declared, designated or adopted by any nation or government, any
federal, state, municipal or other political subdivision thereof or any
department, commission, board, bureau, agency or instrumentality exercising
executive, legislative, judicial, regulatory or administrative functions
pertaining to government.
"Balance Sheet" shall have the meaning set forth in Section 3.07 of
this Agreement.
"Balance Sheet Date" shall have the meaning set forth in Section 3.07
of this Agreement.
"Benefit Plans" shall have the meaning set forth in Section 3.23 of
this Agreement.
"Business Day" shall mean any day except a Saturday, Sunday or other
day on which commercial banks in the City of New York are not open for the
transaction of business.
"CERCLA" shall mean Comprehensive Environmental Response, Compensation,
and Liability Act.
"Change of Control" shall mean:
(i) An acquisition by any individual, entity or group
(within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934 (the "Exchange Act") of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act)
of 50% or more of the combined voting power of the then outstanding
securities entitled to vote generally in the election of directors of
the Company; excluding, however, the following (1) any acquisition by
the Company, (2) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Company or any
corporation controlled by the Company, or (3) any acquisition by any
entity pursuant to a transaction which is excluded from subsection (ii)
below; or
(ii) The approval by the shareholders of the Company of a
reorganization, merger or consolidation or sale or other disposition of
all or substantially all of the assets of the Company ("Corporate
Transaction"); excluding, however, any Corporate Transaction which
would result in the voting securities of the Company immediately prior
to such Corporate Transaction continuing to represent (either by
remaining outstanding or being converted into voting securities of
another entity) 50% or more of the combined voting power of the
securities entitled to vote generally in the election of directors of
the Company or such other entity existing immediately after such
Corporate Transaction.
"Closing" shall have the meaning set forth in Section 2.02 of this
Agreement.
"Closing Date" shall have the meaning set forth in Section 2.02 of this
Agreement.
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"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Commission" shall mean the Securities and Exchange Commission.
"Company" shall mean BOCA RESEARCH, INC., a Florida corporation.
"Environmental Claim" shall have the meaning set forth in Section 3.15.
"Environmental Laws" shall mean any applicable Law concerning releases
into any part of the natural environment, or protection of natural resources,
the environment and public and employee health and safety including, without
limitation, CERCLA, the Hazardous Materials Transportation Act (49 U.S.C.
Section 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C.
Section 6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.), the
Clean Air Act (33 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act
(15 U.S.C. Section 7401 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (17 U.S.C. Section 136 et seq.), and OSHA, as such laws have
been and may be amended or supplemented through the Closing Date, and the
regulations promulgated pursuant thereto, and any applicable state or local
statutes, and the regulations promulgated pursuant thereto.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"GAAP" shall mean United States generally accepted accounting
principles.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976.
"IRS" shall mean the United States Internal Revenue Service.
"Lien" shall mean any lien, claim, charge, pledge, mortgage, security
interest or other encumbrance.
"Material Adverse Effect" shall mean a material adverse effect on the
business, prospects, condition (financial or otherwise), assets or results of
operations of the Company and the Subsidiaries taken as a whole.
"NASD" shall mean the National Association of Securities Dealers, Inc.
"NLRB" shall mean the National Labor Relations Board.
"OSHA" shall mean Occupational Safety and Health Act.
"Permits" shall mean, collectively, each permit, license, order or
authorization from any public or governmental authority which is material to or
necessary for the conduct of the business of the Company or any of the
Subsidiaries.
"Person" shall mean any individual, firm, corporation, partnership,
limited liability company or partnership, trust, incorporated or unincorporated
association, joint venture, government (or any agency or political subdivision
thereof) or other entity of any kind.
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"Purchaser" shall mean INFOMATEC INTEGRATED INFORMATION SYSTEMS AG and
its Affiliates for so long as it shall own in the aggregate at least 15 percent
of the Shares purchased by them hereunder.
"SEC Documents" means all reports, schedules, registration statements
and other documents (including all exhibits and schedules thereto) filed by the
Company with the Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Subsidiary" shall mean each corporation or other entity of which a
majority of the voting power of the voting equity securities or equity interest
is owned, directly or indirectly by the Company.
"Taxes" shall mean all taxes, charges, fees, levies or other
assessments, including, without limitation, all net income, gross receipts,
capital, sales, use, ad valorem, value added, transfer, franchise, profits,
inventory, capital stock, license, withholding, payroll, employment, social
security, unemployment, excise, severance, stamp, occupation, property and
estimated taxes, customs, duties, fees, assessments and charges of any kind
whatsoever, together with any interest and any penalties, fines, additions to
tax or additional amounts imposed by any public or governmental taxing authority
(domestic or foreign) and shall include any transferee liability in respect of
Taxes.
"Tax Return" shall mean all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any Taxes.
ARTICLE XII
MISCELLANEOUS
Section 12.01 Notices. Except as otherwise provided herein, whenever it
is provided herein that any notice, demand, request, consent, approval,
declaration or other communication shall or may be given to or served upon any
of the parties by any other party, or whenever any of the parties desires to
give or serve upon any other communication with respect to this Agreement, each
such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and either shall be delivered in person with
receipt acknowledged or sent by registered or certified-mail, return receipt
requested, postage prepaid, or by overnight mail or courier, or delivery service
or by telecopy and confirmed by telecopy answer back, addressed as follows:
(a) If to the Company to:
Boca Research, Inc.
1377 Clint More Road
Boca Raton, FL 33487
Attention: Chief Executive Officer
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With a copy to:
Robert W. Federspiel, Esq.
Spinner, Dittman, Federspiel & Dowling
501 E. Atlantic Avenue
Delray Beach, FL 33483
(b) If to the Purchaser to:
Infomatec Integrated Information Systems AG
Steinerne Furt 76
86167 Augsburg, Germany
Attention: Karl Gruns, Chief Financial Officer
With a copy to:
Arthur H. Fredston, Esq.
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, NY 100014-1490
or at such other address as may be substituted by notice given as herein
provided. The furnishing of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice, demand,
request, consent, approval, declaration or other communication hereunder shall
be deemed to have been duly given or served on (A) the date on which personally
delivered, with receipt acknowledged, (B) the date on which telecopied and
confirmed by telecopy answer back, or (C) the next Business Day if delivered by
overnight or express mail, courier or delivery service, as the case may be.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall in no way adversely affect the effectiveness of such
notice, demand, request, consent, approval, declaration or other communication.
Section 12.02 Fees and Expenses. Each party shall be responsible for
its own legal fees and costs with respect to negotiating and entering into this
Agreement. The Company agrees to indemnify and save harmless the Purchaser and
its respective officers, trustees, directors, partners, employees and agents
from and against any and all actions, causes of action, suits, losses,
liabilities and damages, and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) in connection therewith (herein called the
"indemnified liabilities") incurred by Purchaser or any of its officers,
trustees, directors, partners, employees or agents as a result of, or arising
out of, or relating to any of the transactions contemplated hereby subject to
Section 12.03 herewith and except for any indemnified liabilities arising (i) on
account of the gross negligence or willful misconduct of such Purchaser or any
of its officers, directors, partners, employees or agents, (ii) on account of
any breach of a material term or provision of this Agreement by the Purchaser
hereunder or (iii) on account of Taxes based on income in respect of securities
of the Company, except as otherwise expressly provided herein; provided that, if
and to the extent such agreement to indemnify may be unenforceable for any
reason, the Company shall make the maximum contribution to the payment and
satisfaction of
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each of the indemnified liabilities which shall be permissible under applicable
law. The obligations of the Company under this Section 12.02 shall survive the
transfer, redemption or conversion of any Shares.
Section 12.03 Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by the
Company in connection herewith shall survive the execution and delivery of this
Agreement, the sale and purchase of the Shares and any disposition thereof for a
period ending sixty days following the filing with the Commission of the
Company's Annual Report on Form 10-K covering the fiscal year ending December
31, 1999, except that the representations and warranties contained in Section
3.10 and Section 4.07 shall survive until the expiration of the applicable
statute of limitations for Taxes and three (3) years, respectively.
Section 12.04 Entire Agreement. This Agreement, together with the
schedules and exhibits hereto which are incorporated by reference herein,
represent the entire agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersedes any and all prior oral and
written agreements, arrangements and understandings among the parties hereto
with respect to such subject matter, including the agreement executed April 28,
1999, and can be amended, supplemented or changed, and any provision hereof can
be waived, only by a written instrument making specific reference to this
Agreement signed by the party against whom enforcement of any such amendment,
supplement, modification or waiver is sought. Notwithstanding the foregoing, any
document which is contemplated to be executed or delivered at Closing in the
form attached as an Exhibit hereto may be delivered in substantially the form
attached, together with any changes thereto reasonably acceptable to the parties
hereto.
Section 12.05 Successors and Assigns. This Agreement shall be binding
upon the parties hereto and their respective successors and assigns, including
any person to whom the Purchaser may assign its right and obligations to
purchase Shares and shall inure to the benefit of the parties hereto and, their
respective successors and assigns.
Section 12.06 Paragraph Headings. The paragraph headings contained in
this Agreement are for general reference purposes only and shall not affect in
any manner the meaning or interpretation of the terms or other provisions of
this Agreement.
Section 12.07 Applicable Law. This Agreement shall be governed by,
construed and enforced in accordance with the laws of the State of Florida,
applicable to contracts to be made, executed, delivered and performed wholly
within such state, and in any case, without regard to the conflicts of law
principles of such state.
Section 12.08 Severability. If at any time subsequent to the date
hereof, any provision of this Agreement shall be held by any court of competent
jurisdiction to be illegal, void or unenforceable, such provision shall be of no
force and effect, but the illegality or unenforceability of such provision shall
have no effect upon and shall not impair the enforceability of any other
provision of this Agreement.
Section 12.09 Equitable Remedies. The parties hereto agree that
irreparable harm would occur in the event that any of the covenants contained in
this Agreement were not
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performed in all material respects by the parties hereto in accordance with
their specific terms or conditions or were otherwise breached, and that money
damages are an inadequate remedy for breach thereof because of the difficulty of
ascertaining and quantifying the amount of damage that will be suffered by the
parties hereto in the event that such covenants are not performed in accordance
with their terms or are otherwise breached. It is accordingly hereby agreed that
the parties hereto shall be entitled to seek an injunction or injunctions to
restrain, enjoin and prevent breaches and violations of any of the covenants,
contained in this Agreement by the other parties and to enforce specifically the
terms and provisions hereof in any court of the United States or any state
having competent jurisdiction, such remedy being in addition to and not in lieu
of, any other rights and remedies to which the other parties are entitled to at
law or in equity.
Section 12.10 No Waiver. The failure of any party at any time or times
to require performance of any provision hereof shall not affect the right at a
later time to enforce the same. No waiver by any party of any condition, and no
breach of any provision, term, covenant, representation or warranty contained in
this Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be construed as a further or continuing waiver of any such
condition or of the breach of any other provision, term, covenant,
representation or warranty of this Agreement.
Section 12.11 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute but one and the same original instrument.
Section 12.12 Brokers. The Company, on the one hand, and the Purchaser,
on the other hand, represents and warrants to the other party hereto that
neither it nor any of its officers, directors, general partners, agents,
employees, Affiliates or associates, has engaged or authorized any broker or
finder to act, directly or indirectly, on its behalf, in connection with the
transactions contemplated by this Agreement, or has consented to or acquiesced
in anyone so acting, and it knows of no claim by any person for compensation
from it for so acting or of any basis for such a claim except, (i) in the case
of the Company, for Robinson Humphrey Company LLC pursuant to the terms of the
Engagement Letter previously provided to the Purchaser, and (ii) in the case of
the Purchaser, for Herr Ed Will.
Section 12.13 Certain Assignment of Rights. Prior to Closing, the
Purchaser shall not be entitled to assign any of its rights hereunder other than
as is provided in Section 2.06 with regard to the Management Retention Options.
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement, as of the day and year first above written.
SELLER PURCHASER
BOCA RESEARCH, INC. INFOMATEC INTEGRATED INFORMATION
SYSTEMS AG
By: /s/ Anthony F. Zalenski By: /s/ Karl Gruns
Name: Anthony F. Zalenski Name: Karl Gruns
Title: President/Chief Executive Officer Title: CPA/Chief Financial Officer
37
