Agreement and Plan of Merger - Tier Technologies Inc. and Official Payments Corp.
AGREEMENT AND PLAN OF MERGER
by and among
TIER TECHNOLOGIES, INC.,
KINGFISH ACQUISITION CORPORATION
and
OFFICIAL PAYMENTS CORPORATION
Dated as of May 30, 2002
TABLE OF CONTENTS
ARTICLE I THE OFFER AND THE MERGER..................................1
Section 1.01 The Offer........................................1
Section 1.02 Company Actions..................................3
Section 1.03 Directors........................................5
Section 1.04 The Merger.......................................6
Section 1.05 Closing..........................................6
Section 1.06 Effective Time...................................6
Section 1.07 Directors and Officers...........................7
Section 1.08 Stockholders' Meeting; Proxy Statement...........7
Section 1.09 Merger Without Meeting of Stockholders...........8
ARTICLE II EFFECT OF THE MERGER ON THECAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES.........8
Section 2.01 Effect on Capital Stock..........................8
Section 2.02 Exchange of Certificates.........................9
Section 2.03 Dissenting Shares...............................10
Section 2.04 Company Stock Option Plans......................11
Section 2.05 Further Assurances..............................12
ARTICLE III REPRESENTATIONS AND WARRANTIES...........................12
Section 3.01 Representations and Warranties of the Company...12
Section 3.02 Representations and Warranties of Parent........24
ARTICLE IV COVENANTS RELATING TO CONDUCT OF BUSINESS................26
Section 4.01 Conduct of Business of the Company..............26
Section 4.02 No Solicitation by the Company..................29
Section 4.03 Third Party Standstill Agreements...............32
ARTICLE V ADDITIONAL AGREEMENTS....................................32
Section 5.01 Access to Information; Confidentiality..........32
Section 5.02 Reasonable Best Efforts; Cooperation............32
Section 5.03 Indemnification, Exculpation and Insurance......33
Section 5.04 Fees and Expenses...............................34
Section 5.05 Public Announcements............................35
Section 5.06 Employee Matters................................35
Section 5.07 Purchaser Compliance............................37
Section 5.08 Certain Litigation..............................37
Section 5.09 Consents........................................37
ARTICLE VI CONDITIONS PRECEDENT.....................................37
Section 6.01 Conditions to Each Party's Obligation to
Effect the Merger...............................37
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER........................38
Section 7.01 Termination.....................................38
Section 7.02 Effect of Termination...........................40
Section 7.03 Amendment.......................................40
Section 7.04 Extension; Waiver...............................40
ARTICLE VIII GENERAL PROVISIONS..............................................40
Section 8.01 Nonsurvival of Representations and Warranties...41
Section 8.02 Notices.........................................41
Section 8.03 Definitions.....................................41
Section 8.04 Interpretation..................................43
Section 8.05 Counterparts....................................43
Section 8.06 Entire Agreement; No Third-Party Beneficiaries..43
Section 8.07 Governing Law...................................43
Section 8.08 Assignment......................................44
Section 8.09 Consent to Jurisdiction.........................44
Section 8.10 Headings........................................44
Section 8.11 Severability....................................44
INDEX OF TERMS
affiliate....................................................................41
Agreement.....................................................................1
Certificate of Merger.........................................................6
Certificates..................................................................9
Change in Control............................................................36
CIBC.........................................................................20
Closing.......................................................................6
Closing Date..................................................................6
Code.........................................................................11
Company.......................................................................1
Company Acquisition Agreement................................................30
Company Benefit Plans........................................................17
Company Board.................................................................3
Company Common Stock..........................................................1
Company Disclosure Schedule..................................................12
Company Employee.............................................................35
Company Filed SEC Documents..................................................16
Company Intellectual Property................................................20
Company Notice...............................................................29
Company Permits..............................................................17
Company SEC Documents........................................................15
Company Stock Option.........................................................13
Company Stock Option Plans...................................................13
Company Stock Options........................................................14
Company Stockholder Approval.................................................20
Company Stockholders Meeting..................................................7
Company Subsidiary...........................................................13
Company Superior Proposal....................................................30
Company Takeover Proposal....................................................30
Confidential Contracts.......................................................21
Confidentiality Agreement....................................................31
Continuing Employees.........................................................34
Contracts....................................................................22
control......................................................................41
Control Time.................................................................26
D&O Insurance................................................................33
defined benefit..............................................................18
DGCL..........................................................................6
Dissenting Shares............................................................11
Effective Time................................................................6
Environmental Law............................................................41
Environmental Permit.........................................................41
ERISA........................................................................18
ERISA Affiliate..............................................................17
Exchange Act..................................................................2
Exchange Agent................................................................9
Governmental Entity..........................................................14
Hazardous Substances.........................................................41
HSR Act......................................................................15
Intellectual Property........................................................20
Key Employee.................................................................35
knowledge....................................................................42
Leased Real Property.........................................................23
Liens........................................................................13
material adverse change......................................................41
material adverse effect......................................................41
Merger........................................................................6
Merger Consideration..........................................................8
Minimum Condition.............................................................2
Offer.........................................................................1
Offer Documents...............................................................3
Offer Price...................................................................2
Offer to Purchase.............................................................2
Original Directors............................................................5
Parent........................................................................1
person.......................................................................42
Pre-Termination Takeover Proposal Event......................................34
Proxy Statement...............................................................7
Purchase Date.................................................................2
Purchaser.....................................................................1
Purchaser Common Stock........................................................8
Restraints...................................................................37
Schedule 14D-9................................................................4
Schedule TO...................................................................3
SEC...........................................................................2
Securities Act...............................................................15
Shares........................................................................1
Significant Local Clients....................................................14
Stockholders..................................................................1
subsidiary...................................................................42
Surviving Corporation.........................................................6
Taxes........................................................................19
Transactions..................................................................4
without limitation...........................................................42
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as
of May 30, 2002 by and among Official Payments Corporation, a Delaware
corporation (the "Company"), Tier Technologies, Inc., a California
corporation ("Parent"), and Kingfish Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Parent ("Purchaser").
WHEREAS, the respective Boards of Directors of Parent,
Purchaser and the Company have approved, and each deem it advisable and in
the best interests of its stockholders to consummate, the acquisition of
the Company by Parent upon the terms and subject to the conditions set
forth herein;
WHEREAS, the parties desire to make certain
representations, warranties, covenants and agreements in connection with
the Transactions (as defined in Section 1.02(a)) and also to prescribe
various conditions to the Transactions; and
WHEREAS, as a condition and inducement to Parent's and
Purchaser's entering into this Agreement and incurring the obligations set
forth herein, concurrently with the execution and delivery of this
Agreement, Parent and Purchaser are entering into a stockholders agreement
with each of Comerica Incorporated, Beranson Holdings, Inc. and Michaella
Stern (collectively, the "Stockholders"), pursuant to which, among other
things, each Stockholders has agreed to vote such Shares (as defined in
Section 1.01(a)) then owned by the Stockholder in favor of the Merger, to
grant Parent an irrevocable proxy to vote such Shares and to tender all
Shares then owned by such Stockholder to Parent or Purchaser, as
applicable, in accordance with the Offer.
NOW, THEREFORE, in consideration of the representations,
warranties, covenants and agreements contained in this Agreement, the
parties hereto agree as follows:
ARTICLE I
THE OFFER AND THE MERGER
Section 1.01 The Offer.
(a) Provided that this Agreement shall not have been terminated in
accordance with Section 7.01 and none of the events set forth in Annex A
shall have occurred and be continuing, as promptly as practicable (but in
no event later than seven business days after the public announcement of
the execution hereof), Purchaser shall commence (within the meaning of Rule
14d-2 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) a tender offer (the "Offer") for all of the outstanding shares of
Common Stock, par value $.01 per share (the "Shares"), of the Company
("Company Common Stock"), at a price of $3.00 per Share, which price shall
be, subject to any required withholding of taxes, net to the seller in cash
(such price, or such higher price per Share as may be paid in the Offer,
being referred to herein as the "Offer Price"). The obligations of
Purchaser to commence the Offer and to accept for payment and to pay for
any Shares validly tendered on or prior to the expiration of the Offer and
not withdrawn shall be subject only to (A) there being validly tendered and
not withdrawn immediately prior to the expiration of the Offer that number
of Shares which represents at least a majority of the Shares outstanding on
a fully-diluted basis (the "Minimum Condition") and (B) the conditions set
forth in Annex A hereto. For purposes of this Agreement, "fully-diluted
basis" means giving effect to the conversion or exercise of all options
exercisable or convertible into Shares at an exercise price of $3.00 or
less per Share, whether or not exercised or converted at the time of
determination. The Offer shall be made by means of an offer to purchase
(the "Offer to Purchase") containing the terms set forth in this Agreement
and the conditions set forth in Annex A hereto. Purchaser reserves the
right in its sole discretion to increase the price per share payable in the
Offer (and to extend the Offer in connection with any such increase so as
to comply with the applicable rules and regulations of the SEC) and to
waive any of the conditions to the Offer, except that without the consent
of the Company, Purchaser shall not (i) reduce the number of Shares subject
to the Offer, (ii) reduce the Offer Price, (iii) modify or add to the
conditions set forth in Annex A hereto or otherwise amend the Offer in any
manner adverse to the holders of the Shares, (iv) except as provided for
below in this Section 1.01(a), extend the Offer or (v) change the form of
consideration payable in the Offer. Notwithstanding the foregoing,
Purchaser may, without the consent of the Company, (i) extend the Offer
from time to time, in its sole discretion, if, at the initial expiration
date of the Offer (which initial expiration date shall be 20 business days
following commencement of the Offer) or any extension thereof, any of the
conditions to Purchaser's obligation to purchase Shares set forth in Annex
A shall not be satisfied or waived, until such time as such conditions are
satisfied or waived and (ii) extend the Offer for any period required by
any rule, regulation, interpretation or positions of the Securities and
Exchange Commission (the "SEC") or the staff thereof applicable to the
Offer. On the terms and subject to the conditions of the Offer and this
Agreement, Purchaser shall, and Parent shall cause Purchaser to, pay for
all Shares validly tendered and not withdrawn pursuant to the Offer that
Purchaser becomes obligated to purchase pursuant to the Offer as soon as
practicable after the expiration of the Offer; provided, however, that if,
immediately prior to the initial expiration date of the Offer (as it may be
extended), the Shares tendered and not withdrawn pursuant to the Offer
equal less than 100% of the outstanding Shares on a fully-diluted basis,
Purchaser may (x) extend from time to time the Offer for a period not to
exceed fifteen business days, notwithstanding that all conditions to the
Offer are satisfied as of such expiration date of the Offer, provided that
upon such extension Parent and Purchaser shall be deemed to have waived all
of the conditions set forth in Annex A other than the Minimum Condition;
provided, further, that in no event shall Purchaser extend the Offer beyond
the last business day of the month in which the Minimum Condition has been
satisfied and all conditions set forth in Annex A have been satisfied or
waived; or (y) amend the Offer to include a "subsequent offering period"
not to exceed twenty business days to the extent permitted under Rule
14d-11 under the Exchange Act, if available. The date on which Purchaser
shall purchase and pay for Shares tendered pursuant to the Offer shall
hereinafter be referred to as the "Purchase Date" On or prior to the date
that Purchaser becomes obligated to accept for payment and pay for Shares
pursuant to the Offer, Parent will provide or cause to be provided to
Purchaser the funds necessary to pay for all Shares that the Purchaser
becomes so obligated to accept for payment and pay for pursuant to the
Offer.
(b) As soon as practicable on the date the Offer is commenced,
Parent and Purchaser shall file with the SEC a Tender Offer Statement on
Schedule TO with respect to the Offer (together with all amendments and
supplements thereto and including the exhibits thereto, the "Schedule TO").
The Schedule TO will include, as exhibits, the Offer to Purchase and a form
of letter of transmittal and summary advertisement (collectively, together
with any amendments and supplements thereto, the "Offer Documents". Parent
and Purchaser jointly and severally represent and warrant to the Company
that the Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the
Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that
no representation is made by Parent or Purchaser with respect to
information furnished by the Company for inclusion in the Offer Documents.
The Company represents and warrants to Parent and Purchaser that the
information supplied in writing by the Company for inclusion in the Offer
Documents will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Each of Parent and Purchaser agrees
to take all steps necessary to cause the Offer Documents to be filed with
the SEC and to be disseminated to holders of the Shares, in each case as
and to the extent required by applicable federal securities laws. Each of
Parent and Purchaser, on the one hand, and the Company, on the other hand,
agrees to promptly correct any information provided by it for use in the
Offer Documents if and to the extent that it shall have become false and
misleading in any material respect and Parent and Purchaser further agree
to take all steps necessary to cause the Offer Documents as so corrected to
be filed with the SEC and to be disseminated to holders of the Shares, in
each case as and to the extent required by applicable federal securities
laws. The Company and its outside counsel shall be given the opportunity to
review the Schedule TO before it is filed with the SEC. In addition, Parent
and Purchaser will provide the Company and its outside counsel in writing
with any comments, whether written or oral, Parent, Purchaser or their
outside counsel may receive from time to time from the SEC or its staff
with respect to the Offer Documents promptly after the receipt of such
comments.
Section 1.02 Company Actions.
(a) The Company hereby approves of and consents to the Offer and
represents that the Board of Directors of the Company (the "Company Board")
at a meeting duly called and held, has (i) determined that each of the
Agreement, the Offer and the Merger (as defined in Section 1.04) are fair
to, advisable and in the best interests of the stockholders of the Company,
(ii) approved this Agreement and the transactions contemplated hereby,
including the Offer and the Merger (collectively, the "Transactions"), and
(iii) resolved to recommend that the stockholders of the Company accept the
Offer and approve and adopt this Agreement and the Merger; provided, that
such recommendation may be withdrawn, modified or amended in accordance
with the provisions of Section 4.02.
(b) Concurrently with the commencement of the Offer, the Company
shall file with the SEC a Solicitation/Recommendation Statement on Schedule
14D-9 (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 14D-9") which shall, subject to the
provisions of Section 4.02, contain the recommendation referred to in
clause (iii) of Section 1.02(a) hereof. The Company represents and warrants
to Parent and Purchaser that the Schedule 14D-9 will comply in all material
respects with the provisions of applicable federal securities laws and, on
the date filed with the SEC and on the date first published, sent or given
to the Company's stockholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that
no representation is made by the Company with respect to information
furnished by Parent or Purchaser for inclusion in the Schedule 14D-9.
Parent and Purchaser jointly and severally represent and warrant to the
Company that the information supplied in writing by Parent and Purchaser
for inclusion in the Schedule 14D-9 will not contain any untrue statement
of material fact or omit to state such material fact required to be stated
therein or necessary in order to make the statements therein, in light of
the circumstances under which such statement was made, not misleading. The
Company further agrees to take all steps necessary to cause the Schedule
14D-9 to be filed with the SEC and to be disseminated to holders of the
Shares, in each case as and to the extent required by applicable federal
securities laws. Each of the Company, on the one hand, and Parent and
Purchaser, on the other hand, agrees promptly to correct any information
provided by it for use in the Schedule 14D-9 if and to the extent that it
shall have become false and misleading in any material respect and the
Company further agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and to be disseminated to
holders of the Shares, in each case as and to the extent required by
applicable federal securities laws. Parent and its outside counsel shall be
given the opportunity to review the Schedule 14D-9 before it is filed with
the SEC. In addition, the Company agrees to provide Parent, Purchaser and
their outside counsel with any comments, whether written or oral, that the
Company or its outside counsel may receive from time to time from the SEC
or its staff with respect to the Schedule 14D-9 promptly after the receipt
of such comments.
(c) In connection with the Offer, the Company will promptly
furnish or cause to be furnished to Purchaser mailing labels, security
position listings and any available listing or computer file containing the
names and addresses of all recordholders of the Shares as of a recent date,
and shall furnish Purchaser with such additional information (including,
but not limited to, updated lists of holders of the Shares and their
addresses, mailing labels and lists of security positions) and assistance
as Purchaser or its agents may reasonably request in communicating the
Offer to the record and beneficial holders of the Shares. Except for such
steps as are necessary to disseminate the Offer Documents, Parent and
Purchaser shall hold in confidence the information contained in any of such
labels and lists and the additional information referred to in the
preceding sentence, will use such information only in connection with the
Offer, and, if this Agreement is terminated, will upon request of the
Company deliver or cause to be delivered to the Company all copies of such
information, labels, listings and files then in its possession or the
possession of its agents or representatives.
Section 1.03 Directors. Promptly upon the purchase of and payment
for any Shares by Parent or Purchaser pursuant to the Offer, Parent shall
be entitled to designate such number of directors, rounded up to the next
whole number, on the Company Board as is equal to the product of (x) the
total number of directors on the Company Board (giving effect to the
election of the directors designated by Parent pursuant to this sentence)
and (y) the percentage that the number of Shares so accepted for payment
bears to the total number of Shares then outstanding. In furtherance
thereof, the Company shall, upon request of Parent, use its reasonable best
efforts promptly either to increase the size of the Company Board or to
secure the resignations of such number of its incumbent directors, or both,
as is necessary to enable Parent's designees to be so elected to the
Company Board, and shall take all actions available to the Company to cause
Parent's designees to be so elected. At such time, the Company shall also
cause persons designated by Parent to have appropriate representation on
each committee of the Company Board. The Company shall promptly take all
actions required pursuant to Section 14(f) of the Exchange Act and Rule
14f-1 promulgated thereunder in order to fulfill its obligations under this
Section 1.03, including mailing to stockholders (as part of the Schedule
14D-9 or otherwise) the information required by such Section 14(f) and Rule
14f-1 as is necessary to enable Parent's designees to be elected to the
Company Board (provided that Purchaser shall have provided to the Company
on a timely basis all information required to be included with respect to
Purchaser's designees). Parent shall supply to the Company in writing, and
be solely responsible for, any information with respect to itself and its
nominees, officers, directors and affiliates required by the aforementioned
Section 14(f) and Rule 14f-1. In the event that Parent's designees are
elected to the Company Board, until the Effective Time (as hereinafter
defined), the Company Board shall have at least three directors who are
directors on the date hereof (the "Original Directors"); provided that, in
such event, if the number of Original Directors shall be reduced below
three for any reason whatsoever, any remaining Original Directors (or
Original Director, if there be only one remaining) shall be entitled to
designate persons to fill such vacancies who shall be deemed to be Original
Directors for purposes of this Agreement or, if no Original Director then
remains, the other directors shall designate three persons to fill such
vacancies who shall not be stockholders, affiliates or associates of Parent
or Purchaser, and such persons shall be deemed to be Original Directors for
purposes of this Agreement. Notwithstanding anything in this Agreement to
the contrary, in the event that Parent's designees are elected to the
Company Board prior to the Effective Time, the affirmative vote of a
majority of the Original Directors shall be required for the Company to (a)
amend or terminate this Agreement or agree or consent to any amendment or
termination of this Agreement, (b) exercise or waive any of the Company's
rights, benefits or remedies hereunder, (c) extend the time for performance
of Parent's and Purchaser's respective obligations hereunder, (d) take any
other action by the Company Board under or in connection with this
Agreement, or (e) approve any other action by the Company which could
adversely affect the interests of the stockholders of the Company (other
than Parent, Purchaser and their affiliates (other than the Company and its
Subsidiaries)), with respect to the Transactions.
Section 1.04 The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and, in accordance with the
Delaware General Corporation Law (the "DGCL"), the Company and Purchaser
shall consummate a merger (the "Merger") pursuant to which (a) Purchaser
shall be merged with and into the Company and the separate corporate
existence of Purchaser shall thereupon cease, (b) the Company shall be the
successor or surviving corporation in the Merger (sometimes hereinafter
referred to as the "Surviving Corporation") and shall continue to be
governed by the laws of the State of Delaware, and (c) the separate
corporate existence of the Company with all its rights, privileges,
immunities, powers and franchises shall continue unaffected by the Merger,
except as set forth in this Section 1.04. Pursuant to the Merger, (x) the
Certificate of Incorporation of the Company, as in effect immediately prior
to the Effective Time (as hereinafter defined), shall be the certificate of
incorporation of the Surviving Corporation until thereafter amended as
provided by law and such certificate of incorporation, and (y) the by-laws
of Purchaser, as in effect immediately prior to the Effective Time, shall
be the by-laws of the Surviving Corporation until thereafter amended as
provided by law, by such certificate of incorporation or by such by-laws.
The Merger shall have the effects set forth in Section 259 of the DGCL.
Section 1.05 Closing. The closing of the Merger (the "Closing")
shall take place at 10:00 a.m. on a date to be specified by the parties
(the "Closing Date"), which shall be no later than the fifth business day
after satisfaction or waiver of all the conditions set forth in Article VI,
unless another time or date is agreed to by the parties hereto. The Closing
will be held at the offices of Skadden, Arps, Slate, Meagher & Flom LLP,
Four Times Square, New York, New York, 10036 or at such other location as
is agreed to by the parties.
Section 1.06 Effective Time. Subject to the provisions of this
Agreement, as soon as practicable on the Closing Date, the parties shall
file a certificate of merger (the "Certificate of Merger") executed in
accordance with the relevant provisions of the DGCL and shall make all
other filings or recordings required under the DGCL to effectuate the
Merger. The Merger shall become effective at such time as the Certificate
of Merger is duly filed with the Secretary of State of the State of
Delaware or at such other subsequent date or time as is agreed upon by the
parties and specified in the Certificate of Merger, such time being
referred to herein as the "Effective Time."
Section 1.07 Directors and Officers. The directors of Purchaser
and the officers of the Company at the Effective Time shall, from and after
the Effective Time, be the directors and officers, respectively, of the
Surviving Corporation until their successors shall have been duly elected
or appointed or qualified or until their earlier death, resignation or
removal in accordance with the certificate of incorporation and by-laws of
the Surviving Corporation.
Section 1.08 Stockholders' Meeting; Proxy Statement.
(a) If required by applicable law in order to consummate the
Merger, the Company, acting through its Board of Directors, shall, in
accordance with applicable law:
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Company Stockholders Meeting")
as promptly as practicable following the acceptance for payment
and purchase of Shares by Purchaser pursuant to the Offer for the
purpose of considering and taking action upon the approval of the
Merger and the adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or
information statement relating to the Merger and this Agreement
and use all reasonable efforts to obtain and furnish the
information required to be included by the SEC in the Proxy
Statement (as hereinafter defined) and, after consultation with
Parent, to respond promptly to any comments made by the SEC with
respect to the preliminary proxy or information statement and
cause a definitive proxy or information statement, including any
amendment or supplement thereto (the "Proxy Statement"), to be
mailed to its stockholders, provided that no amendment or
supplement to the Proxy Statement will be made by the Company
without consultation with Parent and its outside counsel;
(iii) include in the Proxy Statement the recommendation
of the Company Board that stockholders of the Company vote in
favor of the approval of the Merger and the adoption of this
Agreement; and
(iv) use commercially reasonable efforts to solicit from
holders of Shares proxies in favor of the Merger and shall take
such other actions that are reasonably necessary or advisable to
secure any vote or consent of stockholders required by Delaware
law, the Company's certificate of incorporation or bylaws, or
applicable law to effect the Merger.
(b) Parent will provide the Company with the information
concerning Parent and Purchaser required to be included in the Proxy
Statement. Parent shall vote, or cause to be voted, all of the Shares then
owned by it, Purchaser or any of its other subsidiaries or affiliates
controlled by Parent in favor of the approval of the Merger and the
approval and adoption of this Agreement.
Section 1.09 Merger Without Meeting of Stockholders.
Notwithstanding Section 1.08, in the event that Parent, Purchaser and any
other subsidiaries of Parent shall acquire in the aggregate a number of the
outstanding shares of each class of capital stock of the Company, pursuant
to the Offer or otherwise, sufficient to enable Purchaser or the Company to
cause the Merger to become effective without a meeting of stockholders of
the Company, the parties hereto shall, subject to Article IV, take all
necessary and appropriate action to cause the Merger to become effective as
soon as practicable after such acquisition, without a meeting of
stockholders of the Company, in accordance with Section 253 of the DGCL.
ARTICLE II
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES
Section 2.01 Effect on Capital Stock. As of the Effective Time, by
virtue of the Merger and without any further action on the part of the
holders of any Shares or holders of common stock, par value $.01 per share,
of Purchaser (the "Purchaser Common Stock"):
(a) Capital Stock of Purchaser. Each issued and outstanding share
of Purchaser Common Stock shall be converted into and become one validly
issued, fully paid and nonassessable share of common stock of the Surviving
Corporation.
(b) Cancellation of Treasury Stock. Each Share held in the
Company's treasury or by any of the Company's subsidiaries, Parent or any
of Parent's subsidiaries shall automatically be cancelled and retired and
shall cease to exist, and no consideration shall be delivered in exchange
therefor.
(c) Conversion of Company Common Stock. Each Share issued and
outstanding immediately prior to the Effective Time (other than Shares to
be cancelled in accordance with Section 2.01(b) and other than any
Dissenting Shares (as hereinafter defined)) shall be converted into the
right to receive the Offer Price, payable to the holder thereof, without
interest (the "Merger Consideration"), upon surrender of the certificate
formerly representing such Share in the manner provided in Section 2.02. As
of the Effective Time, all such Shares shall no longer be outstanding and
shall automatically be cancelled and retired and shall cease to exist, and
each holder of a certificate representing any such Shares shall cease to
have any rights with respect thereto, except the right to receive the
Merger Consideration therefor, without interest or dividends, upon the
surrender of such certificate in accordance with Section 2.02.
Section 2.02 Exchange of Certificates.
(a) Exchange Agent. Parent shall designate a bank or trust company
reasonably satisfactory to the Company to act as agent for the holders of
the Shares in connection with the Merger (the "Exchange Agent") to receive
in trust the funds to which holders of the Shares shall become entitled
pursuant to Section 2.01(c). At the Effective Time, Parent or Purchaser
shall deposit, or cause to be deposited, with the Exchange Agent for the
benefit of holders of Shares the aggregate consideration to which such
holders shall be entitled at the Effective Time pursuant to Section
2.01(c). Such funds shall be invested as directed by Parent or the
Surviving Corporation pending payment thereof by the Exchange Agent to
holders of the Shares.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, Parent shall cause the Exchange Agent to mail to each
holder of record of a certificate or certificates, which immediately prior
to the Effective Time represented outstanding Shares (the "Certificates"),
whose Shares were converted pursuant to Section 2.01 into the right to
receive the Merger Consideration, (i) a letter of transmittal (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Exchange Agent and shall be in such form and have such other provisions not
inconsistent with this Agreement as Parent and the Company may reasonably
specify) and (ii) instructions for use in surrendering the Certificates in
exchange for payment of the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Exchange Agent and such other documents
as may reasonably by required by the Exchange Agent, together with such
letter of transmittal, duly executed, the holder of such Certificate shall
be entitled to receive in exchange therefor the Merger Consideration for
each Share formerly represented by such Certificate, and the Certificate so
surrendered shall forthwith be cancelled. If payment of the Merger
Consideration is to be made to a person other than the person in whose name
the surrendered Certificate is registered, it shall be a condition of
payment that the Certificate so surrendered shall be properly endorsed or
shall be otherwise in proper form for transfer and that the person
requesting such payment shall have paid any transfer and other taxes
required by reason of the payment of the Merger Consideration to a person
other than the registered holder of the Certificate surrendered or shall
have established to the satisfaction of the Surviving Corporation that such
tax either has been paid or is not applicable. No interest will be paid or
will accrue on the cash payable upon the surrender of any Certificate.
Until surrendered as contemplated by this Section 2.02, each Certificate
shall be deemed at any time after the Effective Time to represent only the
right to receive the Merger Consideration in cash as contemplated by this
Section 2.02.
(c) Transfer Books; No Further Ownership Rights in the Shares. All
cash paid upon the surrender of Certificates in accordance with the terms
of this Article II shall be deemed to have been paid in full satisfaction
of all rights pertaining to those Shares theretofore represented by the
Certificate. At the Effective Time, the stock transfer books of the Company
shall be closed, and thereafter there shall be no further registration of
transfers of the Shares on the records of the Company. From and after the
Effective Time, the holders of Certificates evidencing ownership of the
Shares outstanding immediately prior to the Effective Time shall cease to
have any rights with respect to such Shares, except as otherwise provided
for herein or by applicable law. If, after the Effective Time, Certificates
are presented to the Surviving Corporation for any reason, they shall be
cancelled and exchanged as provided in this Article II.
(d) Termination of Fund; No Liability. At any time following six
months after the Effective Time, the Surviving Corporation shall be
entitled to require the Exchange Agent to deliver to it any funds
(including any earnings received with respect thereto) which had been made
available to the Exchange Agent and which have not been disbursed to
holders of Certificates, and thereafter such holders shall be entitled to
look only to the Surviving Corporation (subject to abandoned property,
escheat or other similar laws) and only as general creditors thereof with
respect to the Merger Consideration payable upon due surrender of their
Certificates, without any interest or dividends thereon. Notwithstanding
the foregoing, none of the Surviving Corporation, Parent, Purchaser or the
Exchange Agent shall be liable to any holder of a Certificate for Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law. If any Certificates shall not
have been surrendered prior to seven years after the Effective Time (or
immediately prior to such earlier date on which any payment pursuant to
this Article II would otherwise escheat to or become the property of any
Governmental Entity (as hereinafter defined)), the cash payment in respect
of such Certificate shall, to the extent permitted by applicable law,
become the property of the Surviving Corporation, free and clear of all
claims or interests of any person previously entitled thereto.
(e) Lost, Stolen or Destroyed Certificates. In the event any
Certificates will have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming such Certificate(s) to be
lost, stolen or destroyed and, if required by Parent, the posting by such
person of a bond in such sum as Parent may reasonably direct as indemnity
against any claim that may be made against it or the Surviving Corporation
with respect to such Certificate(s), the Exchange Agent will issue the
Merger Consideration pursuant to Section 2.02(b) deliverable in respect of
the Shares represented by such lost, stolen or destroyed Certificates.
(f) Withholding Taxes. Parent and Purchaser will be entitled to
deduct and withhold, or cause the Exchange Agent to deduct and withhold,
from the Offer Price or the Merger Consideration payable to a holder of
Shares pursuant to the Offer or the Merger any such amounts as are required
under the Internal Revenue Code of 1986, as amended (the "Code"), or any
applicable provision of state, local or foreign tax law. To the extent that
amounts are so withheld by Parent or Purchaser, such withheld amounts will
be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which such deduction and withholding was
made by Parent or Purchaser.
Section 2.03 Dissenting Shares. Notwithstanding any provision of
this Agreement to the contrary, any Shares as to which the holder thereof
has properly demanded appraisal with respect to the Merger in accordance
with Section 262 of the DGCL, otherwise has complied with all of the
provisions of the DGCL concerning the right of holders of Shares to require
appraisal of their Shares, and as of the Effective Time has neither
effectively withdrawn nor lost his right to such appraisal (the "Dissenting
Shares") shall not be converted into or represent a right to receive cash
pursuant to Section 2.01, but the holder thereof shall be entitled to only
such rights as are granted by the DGCL.
(a) Notwithstanding the provisions of Section 2.03(a), if any
holder of Shares who demands appraisal of his Shares under the DGCL
effectively withdraws or loses (through failure to perfect or otherwise)
such holder's right to appraisal, then as of the Effective Time or the
occurrence of such event, whichever later occurs, such holder's Shares
shall automatically be converted into and represent only the right to
receive the Merger Consideration as provided in Section 2.01(c), without
interest or dividends, upon surrender of the Certificate or Certificates
representing such Shares pursuant to Section 2.02.
(b) The Company shall give Parent (i) prompt notice of any written
demands for appraisal or payment of the fair value of any Shares,
withdrawals of such demands, and any other instruments served on the
Company pursuant to the DGCL and received by the Company and (ii) the
opportunity to participate in and direct all negotiations and proceedings
with respect to demands for appraisal under the DGCL. Except with the prior
written consent of Parent, the Company shall not voluntarily make any
payment with respect to any demands for appraisal, settle or offer to
settle any such demands.
Section 2.04 Company Stock Option Plans
(a) The Company shall take all actions necessary or appropriate to
provide that each outstanding option to purchase shares of Company Common
Stock (a "Company Stock Option") granted under any stock option or stock
purchase plan, program or agreement to which the Company or any of its
subsidiaries is a party which is outstanding immediately prior to the
consummation of the Offer, whether or not then exercisable, shall be
cancelled as of the consummation of the Offer and the holder thereof shall
be entitled only to the right to receive an amount in cash payable at the
time of cancellation of such Company Stock Option equal to the product of
(A) the excess, if any, of (x) the Offer Price over (y) the per share
exercise price of such Company Stock Option multiplied by (B) the number of
shares of Company Common Stock subject to such Company Stock Option. Such
cash payment shall be subject to and reduced by all applicable federal,
state and local Taxes to be withheld in respect of such payment. The
surrender of an Option in exchange for the consideration contemplated by
this Section 2.04(a) shall be deemed a release of any and all rights the
Option Holder had or may have had in respect thereof.
(b) The Company shall take all actions necessary to provide that,
upon the consummation of the Offer, (i) the Company Stock Option Plans and
any similar plan or agreement of the Company shall be terminated, (ii) any
rights under any other plan, program, agreement or arrangement to the
issuance or grant of any other interest in respect of the capital stock of
the Company or the Company Subsidiary shall be terminated, and (iii) no
holder of any Company Stock Option will have any right to receive any
shares of capital stock of the Company or, if applicable, the Surviving
Corporation, upon exercise of any Company Stock Option. The Board of
Directors of the Company (or an appropriate committee thereof) has adopted
resolutions which provide that, effective as of the consummation of the
Offer (i) the Company Stock Option Plans (and any similar plan or agreement
of the Company which provides for the grant of options to purchase Shares)
shall be terminated; (ii) any rights under the Company Stock Options shall
be cancelled in accordance with the provisions of Section 2.04(a); and
(iii) no holder of any Company Stock Option will have any right to receive
any shares of capital stock of the Company or, if applicable, the Surviving
Corporation, upon exercise of any Company Stock Option.
Section 2.05 Further Assurances. If at any time after the
Effective Time the Surviving Corporation shall consider or be advised that
any deeds, bills of sale, assignments or assurances or any other acts or
things are necessary, desirable or proper (a) to vest, perfect or confirm,
of record or otherwise, in the Surviving Corporation its right, title or
interest in, to or under any of the rights, privileges, powers, franchises,
properties or assets of either of the constituent corporations, or (b)
otherwise to carry out the purposes of this Agreement, the Surviving
Corporation and its proper officers and directors or their designees shall
be authorized to execute and deliver, in the name and on behalf of either
of the constituent corporations, all such deeds, bills of sale, assignments
and assurances and to do, in the name and on behalf of either constituent
corporation, all such other acts and things as may be necessary, desirable
or proper to vest, perfect or confirm the Surviving Corporation's right,
title or interest in, to or under any of the rights, privileges, powers,
franchises, properties or assets of such constituent corporation and
otherwise to carry out the purposes of this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties of the Company. Except
as set forth on the Disclosure Schedule delivered by the Company to Parent
concurrently with the execution of this Agreement (the "Company Disclosure
Schedule"), the Company represents and warrants to Parent as follows:
(a) Organization, Standing and Corporate Power. Each of the
Company and the Company Subsidiary (as defined in Section 3.01(b)) is a
corporation or other legal entity duly organized, validly existing and in
good standing (with respect to jurisdictions which recognize such concept)
under the laws of the jurisdiction in which it is organized and has the
requisite corporate or other power, as the case may be, and authority to
carry on its business as now being conducted, except, for those
jurisdictions where the failure to be so organized, existing or in good
standing individually or in the aggregate would not have a material adverse
effect (as defined in Section 8.03) on the Company. Each of the Company and
the Company Subsidiary is duly qualified or licensed to do business and is
in good standing (with respect to jurisdictions which recognize such
concept) in each jurisdiction in which the nature of its business or the
ownership, leasing or operation of its properties makes such qualification
or licensing necessary, except for those jurisdictions where the failure to
be so qualified or licensed or to be in good standing would not have,
individually or in the aggregate, a material adverse effect on the Company.
The Company has made available to Parent prior to the execution of this
Agreement complete and correct copies of its certificate of incorporation
and by-laws (or similar organizational documents) of the Company and the
Company Subsidiary.
(b) Subsidiaries. As of the date of this Agreement, Official
Payments UK, Ltd. (the "Company Subsidiary") is the only subsidiary of the
Company and, except in connection with activities relating to its
organization, has had no operating activities from the time of organization
until the date of this Agreement. All of the outstanding share capital of
the Company Subsidiary (i) has been validly issued and is fully paid and
nonassessable, (ii) is owned directly by the Company, free and clear of all
pledges, claims, liens, charges, encumbrances and security interests of any
kind or nature whatsoever (collectively, "Liens") and (iii) is free of any
other restriction (including any restriction on the right to vote, sell or
otherwise dispose of such capital stock or other ownership interests).
(c) Capital Structure. The authorized capital stock of the Company
consists of 150,000,000 shares of Company Common Stock, par value $.01 per
share. As of May 15, 2002: (i) 22,932,876 shares of Company Common Stock
were issued and outstanding and (ii) no shares of Company Common Stock were
held by the Company in its treasury or by the Company Subsidiary. At the
close of business on May 15, 2002: 8,900,000 shares of Company Common Stock
were reserved for issuance in the aggregate pursuant to the Official
Payments Corporation 1999 Stock Incentive Plan and the Official Payments
Corporation 2000 Stock Incentive Plan (collectively, the "Company Stock
Option Plans"), of which 5,765,172 shares were subject to outstanding
Company Stock Options. Section 3.01(c) of the Company Disclosure Schedule
sets forth a true, correct and complete list, as of May 15, 2002, of each
outstanding option to purchase shares of Company Common Stock issued under
any Company Stock Option Plan (collectively, the "Company Stock Options"),
including the holder, date of grant, exercise price and number of shares of
Company Common Stock subject thereto and whether the option is vested and
exercisable. All outstanding shares of capital stock of the Company are,
and all shares which may be issued will be, when issued, duly authorized,
validly issued, fully paid and nonassessable and not subject to preemptive
rights. Except as set forth in this Section 3.01(c), except for changes
since May 15, 2002 resulting from the issuance of shares of Company Common
Stock or Company Stock Options pursuant to the Company Stock Option Plans
as permitted by Section 4.01(b), (x) there are not issued, reserved for
issuance or outstanding (A) any shares of capital stock or other voting
securities of the Company, (B) any securities of the Company convertible
into or exchangeable or exercisable for shares of capital stock or voting
securities of the Company and (C) any warrants, calls, or options to
acquire from the Company, or obligation of the Company to issue, any
capital stock, voting securities or securities convertible into or
exchangeable or exercisable for capital stock or voting securities of the
Company, and (y) there are no outstanding obligations of the Company to
repurchase, redeem or otherwise acquire any such securities or to issue,
deliver or sell, or cause to be issued, delivered or sold, any such
securities. The Company is not a party to any voting agreement with respect
to the voting of any such securities. Other than the Company Subsidiary,
the Company does not directly or indirectly beneficially own any securities
or other beneficial ownership interests in any other entity.
(d) Authority; Noncontravention. The Company has all requisite
corporate power and authority to execute, deliver and perform its
obligations under this Agreement and, subject, in the case of the Merger,
to the Company Stockholder Approval (as defined in Section 3.01(l)), to
consummate the Transactions. The execution, delivery and performance of
this Agreement by the Company and the consummation by the Company of the
Transactions have been duly authorized by all necessary corporate action on
the part of the Company, subject, in the case of the Merger, to the Company
Stockholder Approval. This Agreement has been duly executed and delivered
by the Company and, assuming the due authorization, execution and delivery
by Parent and Purchaser, constitutes a legal, valid and binding obligation
of the Company, enforceable against the Company in accordance with its
terms. The execution and delivery of this Agreement does not, and the
consummation of the Transactions and compliance with the provisions of this
Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any
obligation or loss of a benefit under, require the consent of any third
party, or result in the creation of any Lien upon any of the properties or
assets of the Company under, (i) the certificate of incorporation or
by-laws of the Company, (ii) any loan or credit agreement, note, bond,
mortgage, indenture, lease Contract or other contract, instrument, permit,
or license to which the Company is a party or by which the Company or the
Company's properties or assets is bound or affected or (iii) subject to the
governmental filings and other matters referred to in the following
sentence, any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to the Company or the Company's properties or assets,
other than, (A) in the case of clauses (ii) and (iii), any such conflicts,
violations, defaults, rights, losses or Liens that, individually or in the
aggregate, would not (x) have a material adverse effect on the Company or
(y) reasonably be expected to materially impair or delay the ability of the
Company to perform its obligations under this Agreement and (B) in the case
of clause (ii), any consents, violations or rights of termination that
arise in connection with the Company's agreements with municipal or county
Governmental Entities other than those Governmental Entities listed in
Section 3.01(p) of the Company Disclosure Schedule (the "Significant Local
Clients"). No consent, approval, order or authorization of, action by, or
in respect of, or registration, declaration or filing with, any federal,
state, local or foreign government, any court, administrative, regulatory
or other governmental agency, commission or authority or any
non-governmental U.S. or foreign self-regulatory agency, commission or
authority or any arbitral tribunal (each, a "Governmental Entity") is
required by the Company in connection with the execution and delivery of
this Agreement by the Company or the consummation by the Company of the
Transactions, except for: (1) the filing with the SEC of (A) the Schedule
14D-9 and, if applicable, the Proxy Statement, and (B) such reports under
Section 13(a), 13(d), 15(d) or 16(a) of the Exchange Act, as may be
required in connection with this Agreement and the Transactions; (2) the
filing of the Certificate of Merger with the Secretary of State of the
State of Delaware and appropriate documents with the relevant authorities
of other states in which the Company is qualified to do business and such
filings with Governmental Entities to satisfy the applicable requirements
of state securities or "blue sky" laws; (3) the filing of a pre-merger
notification and report form under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act), and the expiration or
termination of the waiting period thereunder and the filing of comparable
pre-merger notifications in non-U.S. jurisdictions, if applicable, and the
expiration of any waiting periods thereunder; (4) such consents, approvals,
orders or authorizations the failure of which to be made or obtained,
individually or in the aggregate, would not (x) have a material adverse
effect on the Company or (y) reasonably be expected to materially impair or
delay the ability of the Company to perform its obligations under this
Agreement; and (5) consents from or notices to any municipal or county
Governmental Entity solely in a contractual capacity as clients of the
Company other than the Significant Local Clients.
(e) Reports; Financial Statements. The Company has timely filed
all required reports, schedules, forms, statements and other documents
(including exhibits and all other information incorporated therein) with
the SEC since January 1, 2000 (the "Company SEC Documents"). As of their
respective dates or if amended, as of the date of the last such amendment,
the Company SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities
Act"), or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such Company
SEC Documents, and none of the Company SEC Documents when filed or if
amended, as of the date of the last such amendment (as supplemented by
subsequently filed Company SEC Documents) contained any untrue statement of
a material fact or omitted 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 included in the Company SEC Documents comply as
to form, as of their respective dates of filing with the SEC or if amended,
as of the date of the last such amendment, in all material respects with
applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, have been prepared in accordance with
generally accepted accounting principles (except, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) applied on a consistent
basis during the periods involved (except as may be indicated in the notes
thereto) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated subsidiaries as of
the dates thereof and the consolidated results of their operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal recurring year-end audit adjustments). Except (A) as
reasonably reflected in such financial statements or in the notes thereto,
(B) for liabilities incurred in connection with this Agreement or the
Transactions, a reasonable estimate of which has been disclosed to Parent
by Company, or (C) for liabilities incurred in the ordinary course of
business since the respective dates of such financial statements, neither
the Company nor any of its subsidiaries has any undisclosed liabilities or
obligations of any nature, whether accrued, absolute or contingent,
required by GAAP to be reflected on a balance sheet or disclosed in the
notes thereto, which would have, individually or in the aggregate, a
material adverse effect on the Company.
(f) Information Supplied. In addition to the representations and
warranties of the Company contained in Sections 1.01(b) and 1.02(b), the
Proxy Statement, if any, will, at the date it is first mailed to the
Company's stockholders or at the time of the Company Stockholders Meeting,
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading, except that no representation or warranty is made by
the Company with respect to information that Parent or Purchaser supplied
to them for inclusion therein or for incorporation by reference therein.
The Proxy Statement will comply as to form in all material respects with
the requirements of the Exchange Act and the rules and regulations
thereunder.
(g) Absence of Certain Changes or Events. Except for liabilities
incurred in connection with this Agreement or the Transactions, as
permitted under Section 4.01 hereof or as set forth in the Company
Disclosure Schedule, since December 31, 2001, the Company has conducted its
business only in the ordinary course, and there has not been (1) any
material adverse change in the Company, (2) any declaration, setting aside
or payment of any dividend or other distribution (whether in cash, stock or
property) with respect to any of the Company's capital stock, (3) any
split, combination or reclassification of any of the Company's capital
stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of the
Company's capital stock, except for issuances of Company Common Stock under
the Company Stock Option Plans, (4) (A) any granting by the Company to any
director or executive officer of the Company of any increase in
compensation, bonus or other benefits, except for normal increases in the
ordinary course of business or in connection with the hiring or promotion
of any such executive officer or increases required under any employment
agreements in effect as of the date of the most recent audited financial
statements included in the Company SEC Documents filed and publicly
available prior to the date of this Agreement (as amended to the date of
this Agreement, the "Company Filed SEC Documents"), (B) any granting by the
Company to any such director or executive officer of any increase in
severance or termination pay, except in the ordinary course of business or
in connection with the hiring or promotion of any such executive officer,
or (C) any entry by the Company into, or any amendment of, any employment,
deferred compensation, consulting, severance, termination or
indemnification agreement with any such director or executive officer,
other than in the ordinary course of business or in connection with the
hiring or promotion of any such executive officer, (5) any change in
accounting methods, principles or practices by the Company materially
affecting its assets, liabilities or business, (6) any tax election that
individually or in the aggregate would reasonably be expected to have a
material adverse effect on the Company or any of its tax attributes or any
settlement or compromise of any material income tax liability, (7) any
incurrence of a material liability or obligation, whether direct, indirect,
or contingent, outside of the ordinary course of business or as otherwise
reflected in the most recent interim financial statements included in the
Company Filed SEC Documents or the April 2002 interim financial statements
delivered by the Company to Purchaser or (8) any agreement to do any of the
foregoing.
(h) Compliance with Applicable Laws; Litigation. The Company holds
all permits, licenses, variances, exemptions, orders, registrations and
approvals of all Governmental Entities which are required for the operation
of the business of the Company as currently conducted (collectively, the
"Company Permits"), except where the failure to have any such Company
Permits would not have, individually or in the aggregate, a material
adverse effect on the Company. The Company is in compliance with the terms
of the Company Permits and all applicable statutes, laws, ordinances, rules
and regulations, except where the failure so to comply would not have,
individually or in the aggregate, a material adverse effect on the Company.
As of the date of this Agreement, no action, demand, suspension,
requirement or investigation by any Governmental Entity and no suit, action
or proceeding by any person, in each case with respect to the Company or
any of the Company's assets, properties or business, or to the knowledge of
the Company, against or involving any of the present or former directors,
officers, employees, consultants or agents of the Company with respect to
the Company, is pending or, to the knowledge (as defined in Section 8.03)
of the Company, threatened, other than, in each case, those the outcome of
which, individually or in the aggregate, would not (i) have a material
adverse effect on the Company or (ii) reasonably be expected to materially
impair or delay the ability of the Company to perform its obligations under
this Agreement.
(i) Benefit Plans. Section 3.01(i) of the Company Disclosure
Schedule contains a true and complete list of all employee benefit plans,
material policies and practices (whether or not subject to ERISA)
applicable to the Company and the Company Subsidiary, including each bonus,
pension, profit sharing, deferred compensation, incentive compensation,
commission, stock ownership, stock purchase, stock option, phantom stock,
stock appreciation right or other stock-based compensation, retirement,
vacation, severance, disability, death benefit, hospitalization, medical,
life insurance or other insurance plan, or other benefit plan, and each
employment, retention, consulting, change in control, termination or
severance agreement providing benefits to any current or former employee,
officer or director of the Company, in each case that is maintained,
sponsored or contributed to by the Company, any subsidiary, or any trade or
business, whether or not incorporated (an "ERISA Affiliate"), which
together with the Company would be deemed to be a single employer within
the meaning of Section 4001(b) of ERISA (collectively, the "Company Benefit
Plans"). Except as set forth in Section 3.01(i) of the Company Disclosure
Schedule, no current or former employee, officer, consultant or director of
the Company or the Company Subsidiary will be entitled to any additional
compensation or benefits or any acceleration of the time of payment or
vesting or any other enhancement of any compensation or benefits under any
Company Benefit Plan as a result of the Transactions.
(j) ERISA Compliance.
(i) With respect to the Company Benefit Plans, no event
has occurred and, to the knowledge of the Company, there exists no
condition or set of circumstances, in connection with which the
Company or the Company Subsidiary could be subject to any
liability under the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), the Code, or any other applicable law
that would have, individually or in the aggregate, a material
adverse effect on the Company.
(ii) Each Company Benefit Plan has been operated and
administered in accordance with its terms, except for any failures
that would not have, individually or in the aggregate, a material
adverse effect on the Company. The Company Benefit Plans are in
compliance with the applicable provisions of ERISA, the Code and
all other applicable laws, except for any failures to be in such
compliance that would not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the
Company. Each Company Benefit Plan that is intended to be
qualified under Section 401(a) or 501(c)(9) of the Code has
received a favorable determination letter from the IRS to such
effect and no such letter has been revoked. To the knowledge of
the Company, no fact or event has occurred since the date of any
determination letter from the IRS which is reasonably likely to
affect adversely such favorable determination or the operation of
the Benefit Plan, except for any occurrence that would not have,
individually or in the aggregate, a material adverse effect on the
Company.
(iii) Except as any of the following either would not
have, individually or in the aggregate, a material adverse effect
on the Company, (x) none of the Company, the Company Subsidiary or
any ERISA Affiliate has incurred any liability under Title IV of
ERISA or other applicable law that has not been paid and no
condition exists that presents a risk to the Company, or the
Company Subsidiary, or ERISA Affiliate of the Company of incurring
any such liability (other than liability for benefits or premiums
to the Pension Benefit Guaranty Corporation arising in the
ordinary course), (y) no Company Benefit Plan has incurred an
"accumulated funding deficiency" (within the meaning of Section
302 of ERISA or Section 412 of the Code) whether or not waived and
(z) to the knowledge of the Company, there are not any facts or
circumstances that would materially change the funded status of
any Company Benefit Plan that is a "defined benefit" plan (as
defined in Section 3(35) of ERISA) since the date of the most
recent actuarial report for such plan. No Company Benefit Plan is
a "multiemployer plan" within the meaning of Section 3(37) of
ERISA.
(iv) Except for disallowances which would not reasonably
be expected to have a material adverse effect on the Company, the
deduction of any amount payable or benefit provided pursuant to
the terms of the Benefit Plans, or any other arrangement,
obligation or agreement, whether written or oral, or otherwise
will not be subject to disallowance under Section 280G or 162(m)
of the Code. No person is entitled to receive any "gross-up"
payment from the Company or the Company Subsidiary, the Surviving
Corporation or any other person in the event that the excise tax
of Section 4999(a) of the Code is imposed on such person.
(k) Taxes.
(i) Each of the Company and the Company Subsidiary has
timely filed (after giving effect to any extensions of time to
file which were obtained and have not expired) all material Tax
(as defined below) returns and Tax reports required to be filed by
it and all such returns and reports are complete and correct in
all material respects, except to the extent that such failures to
file or to be complete or correct would not have, individually or
in the aggregate, a material adverse effect on the Company. The
Company and the Company Subsidiary has paid all Taxes shown as due
on such returns and all material Taxes for which no return was
filed, and the most recent financial statements contained in the
Company Filed SEC Documents reflect an adequate reserve in
accordance with GAAP for all Taxes payable by the Company or the
Company Subsidiary for all taxable periods and portions thereof
accrued through the date of such financial statements.
(ii) No deficiencies for any Taxes have been proposed,
asserted or assessed against the Company or the Company Subsidiary
that are not adequately reserved for, except for deficiencies that
individually or in the aggregate would not have a material adverse
effect on the Company. No examination or audit of any Tax Return
of the Company by any Governmental Entity is currently in progress
and the Company has not received any written notice that any such
exam or audit is pending or threatened.
(iii) Neither the Company, the Company Subsidiary nor, to
the knowledge of the Company, any affiliated, consolidated,
combined or unitary group of which the Company is now or ever was
a member, has waived any statute of limitations or agreed to any
extension of time within which to file any Tax return, which such
statute of limitations has not expired or Tax return has not since
been timely filed, except for waivers and extensions that
individually or in the aggregate would not have a material adverse
effect on the Company.
(iv) As used in this Agreement, "Taxes" shall include all
federal, state, local or foreign income, property, sales, gross
receipts, alternative or minimum, excise, use, occupation,
service, transfer, payroll, franchise, withholding and other taxes
or similar governmental charges, fees, levies or other assessments
including any interest, penalties or additions with respect
thereto.
(l) Voting Requirements. Subject to the provisions of Section 253
of the DGCL, the affirmative vote of the holders of a majority of the
outstanding shares of Company Common Stock at the Company Stockholders
Meeting called to adopt this Agreement (the "Company Stockholder Approval")
is the only vote of the holders of any class or series of the Company's
capital stock necessary to approve and adopt this Agreement and the
transactions contemplated hereby.
(m) State Takeover Statutes. The Board of Directors of the Company
has approved this Agreement, the Stockholders Agreement and the
consummation of the Transactions and, assuming the accuracy of Parent's
representation and warranty contained in Section 3.02(d), such approval
constitutes approval of the Merger, the Offer and the other Transactions by
the Board of Directors of the Company under the provisions of Section 203
of the DGCL such that Section 203 of the DGCL does not apply to the Merger,
the Offer and the other Transactions. To the knowledge of the Company, no
other state takeover statute is applicable to the Merger and the
Transactions.
(n) Brokers. Except for CIBC World Markets Corp. ("CIBC"), no
broker, investment banker, financial advisor or other person is entitled to
any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the Transactions based upon arrangements made
by or on behalf of the Company.
(o) Intellectual Property.
(i) The Company owns or has the valid right to use all
U.S. and foreign patents, trademarks, service marks, trade names,
trade dress, corporate names, domain names, copyrights, trade
secrets, know-how and other confidential or proprietary technical
and business information, inventions (patentable or unpatentable),
processes, formulae and software of any kind (including any and
all documentation, information, materials, licenses, other
agreements or rights, or registrations or applications for
registration, relating to any of the foregoing), as well as all
goodwill symbolized by any of the foregoing (collectively,
"Intellectual Property") necessary to carry on the business of the
Company substantially as currently conducted (collectively, the
"Company Intellectual Property"), except as would not have,
individually or in the aggregate, a material adverse effect on the
Company.
(ii) Except as would not have, individually or in the
aggregate, a material adverse effect on the Company: (i) the
activities, products and services of the Company do not infringe
upon, to the knowledge of the Company, the Intellectual Property
of any other person or entity, or breach the terms of any
agreement with respect to the Company's right to use any Company
Intellectual Property; (ii) as of the date hereof, there are not
claims or suits pending or for which notice has been provided or,
to the knowledge of the Company, threatened (A) alleging that the
Company's activities, products or services infringe upon or
constitute the unauthorized use of any other person or entity's
Intellectual Property or (B) challenging the Company's ownership
of, right to use, or the validity or enforceability of any license
or other agreement relating to, any Company Intellectual Property;
and (iii) to the knowledge of the Company, there are no material
infringements by third parties of any Company Intellectual
Property owned by the Company.
(iii) The consummation of the Merger and the other
Transactions will not result in the loss by the Company of any
rights to Company Intellectual Property, except as would not have,
individually or in the aggregate, a material adverse effect on the
Company.
(p) Certain Contracts.
(i) Except for (x) agreements with municipal or county
Governmental Entities other than the Significant Local Clients and
(y) the agreements (the "Confidential Contracts") listed in
Section 3.01(p) of the Company Disclosure Schedule (the terms of
which agreements are subject to nondisclosure restrictions), the
Company has made available to Parent copies of each contract and
agreement to which the Company or the Company Subsidiary is a
party that is material or by which any of its properties or assets
are bound that are material to the business, properties or assets
of the Company, including, without limitation, to the extent any
of the following are material to the business, properties or
assets of the Company: (i) employment, personal services,
consulting, severance, golden parachute or director, officer or
employee indemnification agreements; (ii) agreements with federal
or state government clients to provide payment services to
citizens (the "Federal and State Clients"); (iii) partnership or
joint venture agreements; (iv) real property leases; (v)
non-competition agreements; (vi) contracts granting a right of
first refusal or first negotiation with respect to any material
assets or line of business of the Company; (vii) agreements for
the acquisition, sale or lease of material properties or assets of
the Company (by merger, purchase or sale of assets or stock or
otherwise) entered into since January 1, 2000; (viii) agreements
with credit card organizations or banks relating to the Company's
acceptance of credit cards and the processing of credit card
transactions; or (ix) any commitments or agreements to enter into
any of the foregoing (collectively, with any such contracts
entered into in accordance with Section 4.01 hereof, the
"Contracts").
(ii) (A) There is no default under any Contract or
Confidential Contract by the Company or, to the knowledge of the
Company, by any other party thereto, and no event has occurred
that with the lapse of time or the giving of notice or both would
constitute a default thereunder by the Company, or to the
knowledge of the Company, any other party, in any such case in
which such default or event could reasonably be expected to have a
material adverse effect on the Company; (B) no party to any such
Contract or Confidential Contract has given notice to the Company
of or made a claim against the Company with respect to any breach
or default thereunder, in any such case in which such breach or
default could reasonably be expected to have a material adverse
effect on the Company; and (C) all of the Contracts and
Confidential Contracts are valid, binding and enforceable in
accordance with their terms, except (1) as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium, fraudulent transfer or conveyance or other laws or
regulations affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability
(regardless of whether considered in a proceeding at law or in
equity) or (2) in such case where it would not reasonably be
expected to have a material adverse effect on the Company. With
respect to the Federal and State Clients and Contracts with credit
card organizations or banks relating to the Company's acceptance
of credit cards and the processing of credit card transactions, to
the knowledge of the Company, the Company has not received any
notice that any such entity intends to terminate or materially
alter or limit its business relationship with the Company.
Convenience fees earned by the Company in connection with
processing payments for the Federal and State Clients and the
Significant Local Clients represent (1) twenty-five of the top
thirty clients of the Company and (2) in the aggregate, in excess
of 80% of the Company's annual net revenues, in each case as
determined by reference to the Company's annual net revenues for
the fiscal year ended December 31, 2001. To the knowledge of the
Company, its course of dealings with Sacramento County, CA,
Monterey County, CA, Sonoma County, CA and Los Angeles Water and
Power have been in the ordinary course, consistent with other
similar governmental entities.
(q) Transactions with Affiliates. As of the date hereof, (i) there
are no outstanding amounts payable to or receivable from, or advances by
the Company or Company Subsidiary to, and the Company is not otherwise a
creditor or debtor to, any stockholder, officer, director, employee or
affiliate of the Company, and (ii) neither the Company nor the Company
Subsidiary is a party to any transaction agreement, arrangement or
understanding with any stockholder, officer, director, employee or
affiliate of the Company. To the knowledge of the Company, no stockholder,
officer, director, employee or affiliate of the Company or the Company
Subsidiary has any contract or arrangement with any customer or supplier of
the Company or the Company Subsidiary that affects in any material manner
the business, financial condition or results of operation of the Company.
(r) Labor Relations. The Company is not a party to any collective
bargaining or other labor union contract applicable to persons employed by
the Company and no collective bargaining agreement is being negotiated by
the Company. As of the date of this Agreement, there is no labor dispute,
strike or work stoppage against the Company pending or, to the knowledge of
the Company, threatened which may interfere with the respective business
activities of the Company, except where such dispute, strike or work
stoppage would not have, individually or in the aggregate, a material
adverse effect on the Company. As of the date of this Agreement, to the
knowledge of the Company, none of the Company or any of its representatives
or employees has committed any unfair labor practice in connection with the
operation of the respective businesses of the Company, and there is no
charge or complaint against the Company by the National Labor Relations
Board or any comparable governmental agency pending or threatened in
writing.
(s) Title to and Sufficiency of Assets.
(i) As of the date hereof, the Company and the Company
Subsidiary own, and as of the Effective Time the Company and the
Company Subsidiary will own, good and marketable title to all of
their assets (excluding, for purposes of this sentence, assets
held under leases), free and clear of any and all Liens, except as
set forth in the Company SEC Documents filed with the SEC prior to
the date hereof and except where the failure to own such title
would not, individually or in the aggregate, have a material
adverse effect on the Company. Such assets, together with all
assets held by the Company and the Company Subsidiary under
leases, licenses or contracts, including all tangible and
intangible personal property and rights necessary or required for
the operation of the businesses of the Company as presently
conducted, except for such assets, leases, licenses or contracts,
the failure to have would not, individually or in the aggregate,
have a material adverse effect on the Company.
(ii) Neither the Company nor the Company Subsidiary owns
any real property. Section 3.01(s) of the Company Disclosure
Schedule sets forth a list of all real property leased or
subleased on behalf of the Company (the "Leased Real Property").
With respect to the Leased Real Property, the Company has not
entered into any written sublease, license, option, right,
concession or other agreement or arrangement granting to any
portion thereof or interest therein, except as disclosed in
Section 3.01(s) of the Company Disclosure Schedule.
(t) Environmental Matters. The Company and the Company Subsidiary
are and have been in compliance with all applicable environmental Laws,
have obtained all Environmental Permits and are in compliance with their
requirements, and have resolved all past non-compliance with Environmental
Laws and Environmental Permits without any pending, on-going or future
obligation, cost or liability, except where such non-compliance, failure to
obtain an Environmental Permit or obligation, cost or liability would not,
individually or in the aggregate, have a material adverse effect on the
Company. To the knowledge of the Company, there are no circumstances that
are reasonably likely to prevent or interfere with such compliance in the
future except where such non-compliance would not, individually or in the
aggregate, have a material adverse effect on the Company. To the knowledge
of the Company, there are no past or present actions or activities,
including, without limitation, the release, emission, discharge or disposal
of any Hazardous Substances at any site presently or previously owned by
the Company or the Company Subsidiary in the conduct of their business that
could reasonably likely form the basis of any claim against the Company or
the Company Subsidiary under Environmental Laws, except for such claims as
would not, individually or in the aggregate, have a material adverse effect
on the Company.
(u) Insurance. The Company and the Company Subsidiary carry or are
entitled to the benefits of insurance as the Company believes are in such
character and amount at least equivalent to that carried by persons engaged
in similar businesses and subject to the same or similar perils or hazards,
except for any such failures to maintain insurance policies that,
individually or in the aggregate, would not have a material adverse effect
on the Company. The Company has made, or caused to been made, any and all
payments required to maintain such policies in full force and effect,
except where the failure to make any such payments, in the aggregate, would
not have a material adverse effect on the Company.
(v) Opinion of Financial Advisor. The Company has received the
opinion of CIBC World Markets Corp., dated the date hereof, to the effect
that, as of such date, the Offer Price is fair from a financial point of
view to the stockholders of the Company; it being understood and
acknowledged by Parent and Purchaser that such opinion has been rendered
for the benefit of the Company Board and is not intended to, and may not,
be relied upon by Parent, Purchaser, their affiliates or their respective
stockholders.
Section 3.02 Representations and Warranties of Parent. Parent
represents and warrants to the Company as follows:
(a) Organization, Standing and Corporate Power. Each of Parent and
Purchaser is a corporation or other legal entity duly organized, validly
existing and in good standing (with respect to jurisdictions which
recognize such concept) under the laws of the jurisdiction in which it is
organized and has the requisite corporate or other power, as the case may
be, and authority to carry on its business as now being conducted, except,
as to Purchaser, for those jurisdictions where the failure to be so
organized, existing or in good standing would not have, individually or in
the aggregate, a material adverse effect on Parent. Each of Parent and
Purchaser is duly qualified or licensed to do business and is in good
standing (with respect to jurisdictions which recognize such concept) in
each jurisdiction in which the nature of its business or the ownership,
leasing or operation of its properties makes such qualification or
licensing necessary, except for those jurisdictions where the failure to be
so qualified or licensed or to be in good standing would not have,
individually or in the aggregate, a material adverse effect on Parent.
Parent has made available to the Company prior to the execution of this
Agreement complete and correct copies of its and the Purchaser's
certificate of incorporation and by-laws (or similar organizational
documents).
(b) Authority; Noncontravention. Each of Parent and Purchaser has
all requisite corporate power and authority to execute, deliver and perform
its obligation under this Agreement and to consummate the Transactions. The
execution, delivery and performance of this Agreement by Parent and
Purchaser and the consummation by Parent and Purchaser of the Transactions
have been duly authorized by all necessary corporate action on the part of
Parent and Purchaser. This Agreement has been duly executed and delivered
by Parent and Purchaser and, assuming the due authorization, execution and
delivery by the Company, constitutes a legal, valid and binding obligation
of Parent and Purchaser, enforceable against Parent and Purchaser in
accordance with its terms. The execution and delivery of this Agreement
does not, and the consummation of the Transactions and compliance with the
provisions of this Agreement will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration
of any obligation or loss of a benefit under, or result in the creation of
any Lien upon any of the properties or assets of Parent or any of its
subsidiaries under, (i) the certificate of incorporation or by-laws (or
similar organizational documents) of Parent or Purchaser, (ii) any loan or
credit agreement, note, bond, mortgage, indenture, lease or other contract,
instrument, permit or license to which Parent or any of its subsidiaries is
a party or by which Parent, any of Parent's subsidiaries or any of their
respective properties or assets is bound or affected, or (iii) subject to
the governmental filings and other matters referred to in the following
sentence, any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent or any of its subsidiaries or their
respective properties or assets, other than, in the case of clauses (ii)
and (iii), any such conflicts, violations, defaults, rights, losses or
Liens that individually or in the aggregate would not (x) have a material
adverse effect on Parent or (y) reasonably be expected to materially impair
or delay the ability of Parent to perform its obligations under this
Agreement. No consent, approval, order or authorization of, action by, or
in respect of, or registration, declaration or filing with, any
Governmental Entity is required by Parent, Purchaser or any of their
subsidiaries in connection with the execution and delivery of this
Agreement by Parent or Purchaser or the consummation by Parent or Purchaser
of the transactions contemplated hereby, except for: (1) the filing with
the SEC of (A) the Offer Documents, and (B) such reports under Section
13(a), 13(d), 15(d) or 16(a) of the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated hereby;
(2) the filing of the Certificate of Merger with the Secretary of State of
the State of Delaware and appropriate documents with the relevant
authorities of other states in which Parent is qualified to do business and
such filings with Governmental Entities to satisfy the applicable
requirements of state securities or "blue sky" laws; (3) the filing of a
pre-merger notification and report form by Parent under the HSR Act and the
expiration or termination of the waiting period thereunder and the filing
of comparable pre-merger notifications in non-U.S. jurisdictions, if
applicable, and the expiration of any mandatory waiting periods thereunder;
and (4) such consents, approvals, orders or authorizations the failure of
which to be made or obtained individually or in the aggregate would not (x)
have a material adverse effect on Parent or (y) reasonably be expected to
materially impair or delay the ability of Parent or Purchaser to perform
its obligations under this Agreement.
(c) Information Supplied. In addition to the representations and
warranties of Parent and Purchaser contained in Sections 1.01(b) and
1.02(b), none of the information supplied or to be supplied by Parent or
Purchaser specifically for inclusion or incorporation by reference in the
Proxy Statement will, at the date it is first mailed to the Company's
stockholders or at the time of the Company Stockholders Meeting, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading.
(d) Ownership of Company Common Stock. Neither Parent, Purchaser
nor any of their subsidiaries beneficially owns (as defined in Rule 13d-3
under the Exchange Act) any Shares.
(e) Sufficient Funds. Parent has, and will make available to
Purchaser, sufficient funds to purchase all of the Shares outstanding at
the Offer Price.
(f) Brokers. Except for Adams, Harkness & Hill, Inc., no broker,
investment banker, financial advisor or other person is entitled to any
broker's, finder's, financial advisor's or other similar fee or commission
in connection with the Transactions based upon arrangements made by or on
behalf of Parent or Purchaser.
(g) No Prior Activities. Purchaser was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
no subsidiaries and has undertaken no business activities other than in
connection with entering into this Agreement and engaging in the
transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS RELATING TO CONDUCT OF BUSINESS
Section 4.01 Conduct of Business of the Company. Except as set
forth in Section 4.01 of the Company Disclosure Schedule, except as
otherwise expressly permitted, required or contemplated by this Agreement
or except as consented to in writing by Parent (provided that with respect
to clauses (l), (m), (n) and (o) of this Section 4.01 such consent not to
be unreasonably withheld or delayed) during the period from the date of
this Agreement to the earlier of the Effective Time and the appointment or
election of Parent's designees to the Company Board pursuant to Section
1.03 (such earlier time, the "Control Time"), the Company shall carry on
its business in the ordinary course consistent with past practice and in
compliance in all material respects with all applicable laws and
regulations and, to the extent consistent therewith, use reasonable best
efforts to preserve intact its current business organization, to keep
available the services of its current officers and other current key
employees and to maintain satisfactory relationships with those
Governmental Entities, vendors, merchants and other persons having
significant business dealings with the Company. Without limiting the
generality of the foregoing (but subject to the above exceptions), during
the period from the date of this Agreement to the Control Time, the Company
shall not and shall not permit the Company Subsidiary to:
(a) (x) declare, set aside or pay any dividends on, or make any
other distributions in respect of, any of its capital stock, (y) split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock, except for issuances of
Company Common Stock upon the exercise of Company Stock Options under the
Company Stock Option Plans or in connection with other awards under the
Company Stock Option Plans outstanding as of the date hereof in accordance
with their present terms or issued pursuant to Section 4.01(b) or (z)
except pursuant to agreements entered into with respect to the Company
Stock Option Plans, purchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its subsidiaries or any other
securities thereof or any rights, warrants or options to acquire any such
shares or other securities;
(b) issue, deliver, sell, pledge or otherwise encumber or subject
to any Lien any shares of its capital stock, any other voting securities or
any securities convertible into, or any rights, warrants or options to
acquire, any such shares, voting securities or convertible securities
(other than: (i) Company Stock Options granted under clause (y) below or;
(ii) the issuance of Company Common Stock upon (A) the exercise of Company
Stock Options or (B) in connection with other awards under the Company
Stock Option Plans, which in the case of either (A) or (B) are (x)
outstanding as of the date hereof in accordance with their present terms or
(y) granted after the date hereof with the written consent of Parent);
(c) amend its certificate of incorporation or by-laws;
(d) acquire by merging or consolidating with, or by purchasing a
substantial portion of the assets of, or by any other manner, any business
or any person;
(e) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or assets
(including securitizations), other than in the ordinary course of business
consistent with past practice;
(f) incur any indebtedness for borrowed money or issue any debt
securities or assume, guarantee or endorse, or otherwise become responsible
for the obligations of any person, or make any loans, advances or capital
contributions to, or investments in, any person other than a wholly owned
subsidiary, except in the ordinary course of business consistent with past
practice;
(g) take, or agree to commit to take, any action that would or is
reasonably likely to result in any representation or warranty becoming
untrue or any of the conditions to the Offer set forth in Annex A or any of
the conditions to the Merger set forth in Article VI not being satisfied,
or that would materially impair the ability of the Company, Parent,
Purchaser or the holders of Shares to consummate the Offer or the Merger in
accordance with the terms hereof or materially delay such consummation;
(h) alter (through merger, liquidation, reorganization,
restructuring or in any other fashion) the corporate structure or ownership
of the Company or the Company Subsidiary;
(i) increase the compensation payable or to become payable to the
Company's or Company's Subsidiary directors, officers or employees or grant
any severance or termination pay to, or enter into any employment or
severance agreement with, any director, officer or employee of the Company
or the Company Subsidiary (except with respect to the payment of severance
pay to non-Continuing Employees to the extent permitted by Section
5.06(a)); or establish, adopt, enter into, or, except as may be required to
comply with applicable law or as permitted under Section 2.04, amend in any
material respect or take action to enhance in any material respect or
accelerate any rights or benefits under, any labor, collective bargaining,
bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any director, officer or employee, except in any such case
as related to employees in the ordinary course of business and to the
extent such action or amendment does not (and is not expected to) to result
in increased expenses, costs or liabilities in excess of $50,000 in the
aggregate;
(j) knowingly violate or knowingly fail to perform, in any
material respect, any obligation or duty imposed upon the Company or the
Company Subsidiary by any applicable federal, state or local law, rule,
regulation, guideline or ordinance;
(k) make any change to accounting policies, practices or
procedures (other than actions required to be taken as a result of a change
in law or GAAP);
(l) prepare or file any material Tax Return inconsistent with past
practice or, on any such Tax Return, take any material position, make any
material election, or adopt any material method that is inconsistent with
positions taken, elections made or methods used in preparing or filing
similar Tax Returns in prior periods;
(m) settle or compromise any claims or litigation, including any
federal, state, local or foreign income tax dispute, where (i) the
consideration paid by the Company, in the aggregate, has a fair market
value in excess of $100,000 or (ii) there are potential criminal
liabilities;
(n) other than in the ordinary course of business consistent with
past practice, enter into, terminate or materially amend any agreement or
contract to which the Company is a party (provided, however, that nothing
in this Section 4.01 shall prevent the Company from renewing any existing
contract with any Governmental Entities), (i) having a remaining term in
excess of six months and (ii) which involves or is expected to involve
future receipt or payment of $100,000 or more during the term thereof, or
waive, release or assign any material rights or claims under any such
agreement or contract; or purchase any real property, or make or agree to
make any new capital expenditure or expenditures which in the aggregate
exceed $100,000;
(o) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise) in excess of $100,000, other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past
practice and in accordance with their terms, of any such claims,
liabilities or obligations (in each case not related to pending litigation)
reflected or disclosed in the most recent consolidated financial statements
(or the notes thereto) of the Company included in the Company SEC Documents
or incurred since the date of such financial statements in the ordinary
course of business consistent with past practice; or
(p) authorize, recommend, propose, commit or agree to take, or
announce an intention to take, any of the foregoing actions.
Section 4.02 No Solicitation by the Company.
(a) The Company and the Company Subsidiary and each of their
respective affiliates, directors, officers, employees, agents and
representatives (including without limitation any investment banker,
financial advisor, attorney, accountant or other representative retained by
it or any of its subsidiaries) shall immediately cease any discussions or
negotiations with any other parties that may be ongoing with respect to the
possibility or consideration of any Company Takeover Proposal (as defined
below). From the date of this Agreement through the Effective Time, the
Company shall not, nor shall it permit any of its subsidiaries to, nor
shall it authorize or permit any of its or its subsidiaries' directors,
officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it or any of its
subsidiaries to, directly or indirectly through another person, (i)
solicit, initiate or encourage (including by way of furnishing information
or assistance), or take any other action designed to facilitate or that is
likely to result in, any inquiries or the making of any proposal which
constitutes, or is reasonably likely to lead to, any Company Takeover
Proposal (as defined below), (ii) enter into any agreement with respect to
any proposal for a Company Takeover Proposal, or (iii) participate in any
discussions or negotiations regarding any Company Takeover Proposal;
provided, however, that if, at any time, the Board of Directors of the
Company determines in good faith, after consultation with outside counsel,
that it would be inconsistent with the Board's fiduciary duties to the
Company and its stockholders or otherwise breach or violate applicable law
(based on the advice of outside counsel), the Company may, in response to a
bona fide, written Company Takeover Proposal not solicited in violation of
this Section 4.02(a) that the Board of Directors of the Company believes in
good faith would result in a Company Superior Proposal (as defined in
Section 4.02(b)), subject to providing 48 hour prior written notice of its
decision to take such action to Parent and identifying the person making
the proposal and all the material terms and conditions of such proposal
(the "Company Notice") and compliance with Section 4.02(c), following
delivery of the Company Notice (i) furnish information with respect to the
Company to any person making such a Company Takeover Proposal pursuant to a
customary confidentiality agreement (as determined by the Company after
consultation with its outside counsel) on terms no more favorable to such
person than the terms contained in the Confidentiality Agreement between
Company and Parent (provided that such confidentiality agreement may omit a
standstill provision if the Company Notice contains a release of Parent
from any standstill obligation, if such standstill provision has not
previously been released), and (ii) participate in discussions or
negotiations regarding such a Company Takeover Proposal. Any violation of
the foregoing restrictions by any of the Company's representatives, whether
or not such representative is so authorized and whether or not such
representative is purporting to act on behalf of the Company or otherwise,
shall be deemed to be a breach of this Agreement by the Company. For
purposes of this Agreement, "Company Takeover Proposal" means any inquiry,
proposal or offer from any person relating to any (v) direct or indirect
acquisition or purchase of a business that constitutes a substantial
portion of the net revenues, net income or assets of the Company, (w)
direct or indirect acquisition or purchase of a substantial interest in any
class of equity securities of the Company, (x) tender offer or exchange
offer that if consummated would result in any person beneficially owning a
substantial interest in any class of equity securities of the Company, (y)
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company, other than the
transactions contemplated by this Agreement or (z) any other transaction
the consummation of which could reasonably be expected to impede, interfere
with, prevent or materially delay the Merger or Offer or which could
reasonably be expected to dilute or adversely affect materially the
benefits to Parent of the transactions contemplated by this Agreement or
the Stockholder Agreement.
(b) Except as expressly permitted by this Section 4.02, neither
the Board of Directors of the Company nor any committee thereof shall (i)
after receipt of a Company Takeover Proposal, withdraw or modify, or
propose publicly to withdraw or modify, in a manner adverse to Parent, the
approval or recommendation by such Board of Directors or such committee of
the Merger or this Agreement, (ii) approve or recommend, or propose
publicly to approve or recommend, any Company Takeover Proposal or (iii)
cause the Company to enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement (each, a
"Company Acquisition Agreement") related to any Company Takeover Proposal.
Notwithstanding the foregoing, in the event that the Board of Directors of
the Company determines in good faith, based on the advice of outside legal
counsel and after consultation with a nationally recognized investment
banking firm serving as financial advisor to the Company, that the value of
the consideration provided in such proposal, at the time of such
determination by the Board of Directors, exceeds the Merger Consideration
and that the Company Takeover Proposal is a Company Superior Proposal, the
Board of Directors of the Company may (subject to this and the following
sentences) (x) withdraw or adversely modify its approval or recommendation
of the Transactions or the matters to be considered at the Company
Stockholders Meeting, (y) approve or recommend such Company Superior
Proposal and/or (z) terminate this Agreement and, if it so chooses, enter
into a Company Acquisition Agreement with respect to such Company Superior
Proposal, but only after the third full business day following Parent's
receipt of written notice advising Parent that the Board of Directors of
the Company is prepared to terminate this Agreement and only if, during
such three-day period, the Company and its advisors shall have negotiated
in good faith with Parent to make such adjustments in the terms and
conditions of this Agreement as would enable Parent to proceed with the
transactions contemplated herein on terms and conditions substantially
equivalent to the Company Superior Proposal; it being understood and agreed
that should Parent not seek to proceed with the transactions contemplated
herein on such adjusted terms, the Company may solicit additional Company
Takeover Proposals. For purposes of this Agreement, a "Company Superior
Proposal" means any bona fide written proposal made by a third party to
acquire, directly or indirectly, including pursuant to a tender offer,
exchange offer, merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction, for
consideration consisting of cash and/or securities, more than 50% of the
combined voting power of the shares of Company Common Stock then
outstanding or all or substantially all the assets of the Company and
otherwise on terms which the Board of Directors of the Company determines
in its good faith judgment to be more favorable to the Company's
stockholders than the Offer and Merger and for which financing, to the
extent required, is then committed or which, in the good faith judgment of
the Board of Directors of the Company, is highly likely to be obtained by
such third party.
(c) In addition to the obligations of the Company set forth in
paragraphs (a) and (b) of this Section 4.02, the Company shall promptly,
and in any event within 24 hours, advise Parent orally and in writing of
any Company Takeover Proposal (or any inquiry which could lead to a Company
Takeover Proposal) and keep Parent informed, on a current basis, of the
continuing status thereof and shall contemporaneously provide to Parent all
materials provided to or made available to any third party pursuant to this
Article IV which were not previously provided to Parent.
(d) Nothing contained in this Section 4.02 shall prohibit the
Company from taking and disclosing to its stockholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or from
making any disclosure to the Company's stockholders if, in the good faith
judgment of the Board of Directors of the Company, after consultation with
outside counsel, failure so to disclose would be inconsistent with its
obligations under applicable law.
Section 4.03 Third Party Standstill Agreements. Except as
permitted in connection with a Company Takeover Proposal under Section
4.02, during the period from the date of this Agreement through the
Effective Time, the Company shall not terminate, amend, modify or waive any
provision of any standstill agreement to which the Company is a party
(other than, to the extent mutually agreed between Parent and the Company,
any such agreement involving Parent). Except as permitted in connection
with a Company Takeover Proposal under Section 4.02, during such period,
the Company agrees to enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreements, including, but not
limited to, obtaining injunctions to prevent any breaches of such
agreements and to enforce specifically the terms and provisions thereof in
any court of the United States or any state thereof having jurisdiction.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.01 Access to Information; Confidentiality. To the extent
permitted by applicable law and subject to the Agreement dated April 17,
2002, between Parent and the Company (the "Confidentiality Agreement"), the
Company shall afford to Parent and to the officers, employees, accountants,
counsel, financial advisors and other representatives of Parent, reasonable
access, and permit them to make such inspections and copies as they may
reasonably require, during normal business hours during the period prior to
the Effective Time to the Company's properties, books, contracts,
commitments, personnel and records and, during such period, the Company
shall furnish promptly to Parent all other information concerning its
business, properties and personnel as Parent may reasonably request, and
reasonably make available to Parent all personnel of the Company
knowledgeable about matters relevant to such inspections. No review
pursuant to this Section 5.01 shall have an effect for the purpose of
determining the accuracy of any representation or warranty given by the
Company. Parent will hold, and will cause its respective officers,
employees, accountants, counsel, financial advisors and other
representatives and affiliates to hold, any nonpublic information in
accordance with the terms of the Confidentiality Agreement.
Section 5.02 Reasonable Best Efforts; Cooperation. Upon the terms
and subject to the conditions set forth in this Agreement, each of the
parties agrees to use reasonable best efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and
cooperate with the other parties in doing, all things necessary, proper or
advisable to consummate and make effective, in the most expeditious manner
practicable, the Offer, the Merger and the other Transactions, including
(i) the obtaining of all necessary actions or nonactions, waivers, consents
and approvals from Governmental Entities and the making of all necessary
registrations and filings and the taking of all steps as may be necessary
to obtain an approval or waiver from, or to avoid an action or proceeding
by, any Governmental Entity, (ii) the obtaining of all necessary consents,
approvals or waivers from third parties, (iii) the defending of any
lawsuits or other legal proceedings, whether judicial or administrative,
challenging this Agreement or the consummation of the Transactions,
including seeking to have any stay or temporary restraining order entered
by any court or other Governmental Entity vacated or reversed, and (iv) the
execution and delivery of any additional instruments necessary to
consummate the Transactions and to fully carry out the purposes of this
Agreement. Nothing set forth in this Section 5.02 will limit or affect
actions permitted to be taken pursuant to Section 4.02.
Section 5.03 Indemnification, Exculpation and Insurance.
(a) From and after the Effective Time, Parent shall, or shall
cause the Surviving Corporation to, indemnify and hold harmless from
liabilities for acts or omissions occurring at or prior to the Effective
Time those classes of persons currently entitled to indemnification from
the Company and the Company Subsidiary (and any other subsidiary formed
after the date hereof with the written consent of Parent) as provided in
their respective certificates of incorporation or by-laws (or comparable
organizational documents) and to cause the Surviving Corporation in the
Merger to assume, without further action, as of the Effective Time any
indemnification agreements of the Company in effect as of the date hereof;
provided, however, that (i) those persons entitled to recovery pursuant to
the terms of those insurance policies issued to Imperial Bancorp and
Comerica Incorporated as set forth in Section 5.03(c) of the Company
Disclosure Schedule (including any endorsements and/or replacements
thereto, the "Insurance Policies") shall not be entitled to duplication of
recovery under the Insurance Policies, on the one hand, and from Parent or
the Surviving Corporation, on the other, and (ii) Parent and the Surviving
Corporation shall be subrogated to the rights of those persons entitled to
recover pursuant to the Insurance Policies; provided, that the timing and
amount of any recovery under the Insurance Policies shall not affect
Parent's or the Surviving Corporation's obligations pursuant to this
Section 5.03. The parties agree to use commercially reasonable efforts to
ensure that there is no duplication of recovery under the Insurance
Policies and this Section 5.03. Subject to clauses (i) and (ii) of the
preceding sentence, Parent also agrees to, or shall cause the Surviving
Corporation to, advance expenses to any such person promptly upon receipt
of an undertaking from such person that such expenses shall be repaid
should it be ultimately determined that such person is not entitled to
indemnification. In addition, from and after the Effective Time, directors
and officers of the Company who become directors or officers of Parent or
any of its subsidiaries will be entitled to indemnification under Parent's
or any of its subsidiaries' certificate of incorporation and by-laws (or
comparable organizational documents), as the same may be amended from time
to time in accordance with their terms and applicable law, and to all other
indemnity rights and protections as are afforded to other directors and
officers of Parent or any of its subsidiaries.
(b) In the event that the Surviving Corporation or any of its
successors or assigns (i) consolidates with or merges into any other person
and is not the continuing or surviving corporation or entity of such
consolidation or merger or (ii) except for any disposition of assets by the
Surviving Corporation required by applicable law in connection with the
Merger, transfers or conveys all or substantially all of its properties and
assets to any person, then, and in each such case, proper provision will be
made so that the successors and assigns of the Surviving Corporation assume
the obligations set forth in this Section 5.03.
(c) Pursuant to the Executive Liability and Indemnification
Polices Maintenance Agreement between Company and Comerica Incorporated,
dated as the date hereof, the parties hereby acknowledge that the Company's
directors and officers shall be insured for any acts of omissions occurring
prior to the Effective Time pursuant to the Insurance Policies. Parent
shall, or shall cause the Surviving Corporation, to make all deductible
payments relating to claims under such Insurance Policies.
(d) The provisions of this Section 5.03 (i) are intended to be for
the benefit of, and will be enforceable by, each indemnified party, his or
her heirs and his or her representatives and (ii) are in addition to, and
not in substitution for, any other rights to indemnification or
contribution that any such person may have by contract or otherwise.
Section 5.04 Fees and Expenses.
(a) Except as provided in this Section 5.04, all fees and expenses
incurred in connection with the Transactions, this Agreement and the other
transactions contemplated hereby shall be paid by the party incurring such
fees or expenses, whether or not the Merger is consummated.
(b) In the event that this Agreement is terminated by the Company
pursuant to Section 7.01(c)(ii), then simultaneously with any such
termination, the Company shall pay Parent a fee of $1.75 million, by wire
transfer of same day funds.
(c) In the event that (A) a Pre-Termination Takeover Proposal
Event (as defined below) shall occur and thereafter this Agreement is
terminated by either Parent or the Company pursuant to Section 7.01(b)(i)
solely as a result of the failure of the Minimum Condition having been
satisfied and (B) within 12 months following the date of such termination
the Company enters into a Company Acquisition Agreement with the party (or
an affiliate thereof) who initiated the Pre-Termination Takeover Proposal
Event, then the Company shall, upon the date the transactions set forth in
such Company Acquisition Agreement are consummated, pay Parent a fee equal
to $1.75 million by wire transfer of same day funds. A "Pre-Termination
Takeover Proposal Event" shall be deemed to occur if a Company Takeover
Proposal shall have been publicly made directly to the Company's
stockholders generally or any person shall have publicly announced an
intention (whether or not conditional) to make a Company Takeover Proposal.
(d) In the event that this Agreement is terminated by the Parent
pursuant to Section 7.01(d)(iv), then simultaneously with any such
termination, the Company shall pay Parent a fee of $1.75 million, by wire
transfer of same day funds.
Section 5.05 Public Announcements. Parent and the Company will
consult with each other before issuing, and provide each other the
opportunity to review, comment upon and concur with, any press release or
other public statements with respect to the Transactions, and shall not
issue any such press release or make any such public statement prior to
such consultation, except as either party may determine is required by
applicable law, court process or by obligations pursuant to any listing
agreement with any national securities exchange or the Nasdaq Stock Market.
The parties agree that the initial press release to be issued with respect
to the transactions contemplated by this Agreement shall be in the form
heretofore agreed to by the parties.
Section 5.06 Employee Matters
(a) Parent hereby agrees that individuals identified as continuing
employees ("Continuing Employees") in Section 5.06(a)(1) of the Company
Disclosure Schedule and who are employed by the Company as of the Closing
shall continue to be employed by the Surviving Corporation immediately
following the Closing. Upon request of Parent, Company shall terminate the
employment or services of all individuals not identified as a Continuing
Employee as soon as practicable following the earlier to occur of (i) the
consummation of the Offer or (ii) Parent's waiver of the conditions to the
Offer set forth in Annex A upon an extension of the Offer. Each such
terminated employee shall receive the severance pay as determined pursuant
to Section 5.06(c) of the Company Disclosure Schedule with respect to such
employee. Each Continuing Employee identified as a transition employee in
Section 5.06(a)(1) of the Company Disclosure Schedule (a "Transition
Employee") shall receive the severance pay as determined pursuant to
Section 5.06(c) of the Company Disclosure Schedule with respect to such
employee upon the earlier to occur of (i) termination of the Transition
Employee's employment by Parent or the Surviving Corporation (other than a
termination for cause as defined in Section 5.06(c) of the Company
Disclosure Schedule), or (ii) the completion of the respective Transition
Employee's transition period set forth in Section 5.06(a)(1) of the Company
Disclosure Schedule. Prior to the consummation of the Offer, the Company
shall assist Parent in causing, and Parent shall reasonably endeavor to
cause, each Continuing Employee who is identified in Section 5.06(a)(1) of
the Company Disclosure Schedule as key employee ("Key Employee") to enter
an employment agreement substantially in the form as set forth 5.06(a)(2)
of the Company Disclosure Schedule which shall provide for base salary
equal to or exceeding the respective employee's salary on the date hereof
(which base salary the Company represents has not been increased since
April 15, 2002). Except as modified or amended with the consent of a
Continuing Employee, or actions taken in furtherance thereof, Parent hereby
agrees, and agrees to cause the Surviving Corporation, to comply with the
terms and make required payments when due under (and not to attempt to
invalidate), each of the contracts and agreements identified in Section
3.01(i) of the Company Disclosure Schedule. Neither this Section 5.06 nor
any other provision of this Agreement shall limit the ability or right of
the Company to terminate the employment of any of its employees after the
Closing (subject to any rights of any such employee pursuant to a written
contract or agreement).
(b) From and after the Closing, for purposes of all employee
benefit plans, programs and arrangements maintained by or contributed to by
Parent, Parent shall use commercially reasonable efforts, or shall cause
the Surviving Corporation to use commercially reasonable efforts, to cause
each such plan, program or arrangement, to the extent permitted by
applicable law, to treat the prior service with the Company and its
affiliates of each person who is an employee of the Company or its
subsidiaries immediately prior to the Closing (a "Company Employee") (to
the same extent such service is recognized under analogous plans, programs
or arrangements of the Company or its affiliates prior to the Closing) as
service rendered to Parent or its subsidiaries, as the case may be, for
purposes of eligibility to participate in and vesting thereunder (but not
benefit accrual under defined benefit pension plans); provided, however,
that such crediting of service shall not operate to duplicate any benefit
or the funding of such benefit. To the extent that following the Closing, a
Continuing Employee participates in a Parent Benefit Plan, Parent shall use
commercially reasonable efforts to cause each Parent Benefit Plan to waive
any preexisting condition which was waived under the terms of any Company
Benefit Plan immediately prior to the Closing or waiting period limitation
which would otherwise be applicable to a Company Employee on or after the
Closing. Parent shall recognize any accrued but unused vacation time of the
Company Employees as of the Closing Date to the extent accrued in Company's
books and records, and Parent shall cause the Company and its subsidiaries
to provide such paid vacation.
(c) For a period of eleven months following the Effective Time
Parent shall provide, or shall cause the Surviving Corporation, the Company
or their affiliates to provide to each Company Employee who is a Continuing
Employee with each such entity with employee benefits that are no less
favorable in the aggregate than those provided to comparable employees of
the Parent. Parent shall, or shall cause the Surviving Corporation, to
provide severance pay to any Continuing Employee whose employment is
terminated by Parent or the Surviving Corporation (other than a termination
for cause as defined in Section 5.06(c) of the Company Disclosure
Schedule), or any of their respective subsidiaries, during the period
beginning on the Closing Date and ending eleven months following the
Effective Time. In connection with the preceding sentence, the amount of
severance payable to any such terminated Company Employee shall be as
determined pursuant to Section 5.06(c) of the Company Disclosure Schedule
with respect to such employee.
(d) Parent acknowledges that for purposes of all the applicable
Company Benefit Plans identified on Schedule 3.01 of the Company Disclosure
Schedule, the execution of this Agreement and the consummation of the
transactions contemplated by this Agreement will constitute a "Change in
Control" of the Company (as that term is defined in such plans, agreements
and arrangements). Parent and the Company further acknowledge that all
plans set forth in the subsection entitled "Employee Benefit Plans" on
Section 3.01(i) of the Company Disclosure Schedule will be terminated at
the Effective Time or as soon as practicable thereafter and shall each use
commercially reasonable efforts to cause such termination.
(e) Other than filing the appropriate Tax returns with applicable
Governmental Entities, prior to consummation of the Offer the Company shall
have taken all legally required steps to cause the termination of the U.S.
Audiotex LLC Employee Pension Plan and to cause all account funds pursuant
to such plan to be distributed to participants prior to the consummation of
the Effective Time.
Section 5.07 Purchaser Compliance. Parent shall cause Purchaser to
comply with all of its obligations under or related to this Agreement.
Section 5.08 Certain Litigation. The Company agrees that it shall
not settle any litigation commenced after the date hereof against the
Company or any of its directors by any stockholder of the Company relating
to the Merger, the Offer, this Agreement or the Stockholder Agreement
without the prior written consent of Parent, which consent may not be
unreasonably withheld. Except as permitted in Section 4.02, the Company
shall not voluntarily cooperate with any third party that may hereafter
seek to restrain or prohibit or otherwise oppose the Merger or the
Transactions and shall cooperate with Parent and Purchaser to resist any
such effort to restrain or prohibit or otherwise oppose the Merger.
Section 5.09 Consents. The Company shall use all commercially
reasonable efforts to obtain the consents set forth in Section 5.09 of the
Company Disclosure Schedule and each consent shall be reasonably acceptable
to Parent.
ARTICLE VI
CONDITIONS PRECEDENT
Section 6.01 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger is
subject to the satisfaction or waiver on or prior to the Effective Time of
the following conditions:
(a) Stockholder Approval. If required by applicable law, the
Company Stockholder Approval shall have been obtained.
(b) No Injunctions or Restraints. No judgment, order, decree,
statute, law, ordinance, rule, regulation or permanent injunction, entered,
enacted, promulgated, enforced or issued by any court or other Governmental
Entity of competent jurisdiction or other legal restraint or prohibition
(collectively, "Restraints") shall be in effect preventing the consummation
of the Offer, the Merger or the material transactions contemplated thereby;
provided, however, that each of the parties shall have used its reasonable
best efforts to prevent the entry of any such Restraints and to appeal as
promptly as possible any such Restraints that may be entered.
(c) Purchase of Shares in the Offer. Parent, Purchaser or their
affiliates shall have accepted for payment and paid for all of the Shares
tendered pursuant to the Offer, except that this condition shall not apply
if Parent, Purchaser or their affiliates shall have failed to purchase
Shares pursuant to the Offer in breach of their obligations under this
Agreement.
(d) Frustration of Closing Conditions. None of Parent, Purchaser
or the Company may rely on the failure of any condition set forth in
Section 6.01 to be satisfied if such failure was caused by such party's
failure to use reasonable best efforts to consummate the Offer, the Merger
and the other Transactions, as required by and subject to Section 5.02.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.01 Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after the Company
Stockholder Approval:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Offer shall have expired in accordance with
the terms of this Agreement without any Shares being purchased
therein; provided, however, that the right to terminate this
Agreement under this Section 7.01(b)(i) 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
Parent or Purchaser, as the case may be, to purchase the Shares
pursuant to the Offer on or prior to such date or if the failure
of a condition to this Agreement results from facts or
circumstances that constitute a breach of any representation or
warranty under this Agreement by such party;
(ii) if the Offer shall not have been consummated by
September 1, 2002 or such date as the Offer shall have been
extended pursuant to Section 1.01(a); provided, however, that the
right to terminate this Agreement pursuant to this Section
7.01(b)(ii) shall not be available to any party whose failure to
perform any of its obligations under this Agreement results in the
failure of the Offer to be consummated by such time or if the
failure of a condition to this Agreement results from facts or
circumstances that constitute a breach of any representation or
warranty under this Agreement by such party; or
(iii) if any Restraint having any of the effects set
forth in Section 6.01(b) shall be in effect and shall have become
final and nonappealable; provided, that the party seeking to
terminate this Agreement pursuant to this Section 7.01(b)(iii)
shall have used reasonable best efforts to prevent the entry of
and to remove such Restraint;
(c) by the Company:
(i) if at any time prior to the consummation of the Offer
Parent or Purchaser shall have breached or failed to perform in
any material respect any of their respective material
representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform
(A) would give rise to the failure of a condition set forth in
Section 6.3 and (B) cannot be or has not been cured within 10 days
after the giving of written notice to Parent or Purchaser, as
applicable, except, in any case, for such breaches or failures to
perform which are not, in the Company's opinion, reasonably likely
to adversely affect Parent's or Purchaser's ability to complete
the Offer or the Merger;
(ii) if the Board of Directors of the Company shall have
exercised its termination rights set forth in Section 4.02(b);
provided that, in order for the termination of this Agreement
pursuant to this paragraph (ii) to be deemed effective, the
Company shall have complied with all provisions of (A) Section
4.02, including the notice provisions therein and (B) Section
5.04(b), including the timing of such payment; or
(iii) if Parent, Purchaser or any of their affiliates
shall have failed to commence the Offer in accordance with Section
1.01(a); provided, that the Company may not terminate this
Agreement pursuant to this Section 7.01(c)(iii) if the cause of
such failure was due to any action or failure to act on the part
of the Company;
(d) by Parent or Purchaser:
(i) if prior to the purchase of Shares pursuant to the
Offer, the Company shall have breached or failed to perform any of
its representations, warranties, covenants or other agreements
contained in this Agreement (except where the breach of such
representations or warranties results from changes specifically
permitted by the Agreement or from any transaction expressly
consented to in writing by Parent) which (A) would give rise to
the failure of a condition set forth in Annex A hereto and (B)
cannot be or has not been cured within 10 days after the giving of
written notice to the Company;
(ii) if, due to an occurrence not involving a breach by
Parent or Purchaser of their respective obligations hereunder,
which makes it impossible to satisfy any of the conditions set
forth in Annex A hereto, Parent, Purchaser, or any of their
affiliates shall have failed to commence the Offer in accordance
with Section 1.01(a);
(iii) if either Parent or Purchaser is entitled to
terminate the Offer as a result of the occurrence of an event set
forth in paragraph (b) of Annex A hereto; or
(iv) if (A) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner
adverse to Parent its approval or recommendation of the Offer, the
Merger or this Agreement, or approved or recommended any Company
Takeover Proposal (whether or not in compliance with Section
5.04(b)) or (B) the Board of Directors of the Company thereof
shall have resolved to take any of the foregoing actions.
Section 7.02 Effect of Termination. In the event of termination of
this Agreement by either the Company, Parent or Purchaser as provided in
Section 7.01, this Agreement shall forthwith become void and have no
effect, without any liability or obligation on the part of Parent,
Purchaser or the Company, other than the provisions of the last sentence of
Section 5.01, Section 5.04, this Section 7.02 and Article VIII, which
provisions survive such termination, provided, however, that nothing herein
shall relieve any party from any liability for any willful breach by such
party of any of its representations or warranties, or for any material
breach of its covenants or agreements, in each case as set forth in this
Agreement.
Section 7.03 Amendment. This Agreement may be amended by the
parties at any time before or after the Company Stockholder Approval;
provided, however, that after any such approval, there shall not be made
any amendment that by law requires further approval by the stockholders of
the Company or Parent without the further approval of such stockholders.
This Agreement may not be amended except by an instrument in writing signed
on behalf of each of the parties and approved by the Original Directors if
required by Section 1.03.
Section 7.04 Extension; Waiver. At any time prior to the Effective
Time, a party may (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in
the representations and warranties of the other party contained in this
Agreement or in any document delivered pursuant to this Agreement or (c)
subject to the proviso of Section 7.03, waive compliance by the other party
with any of the agreements or conditions contained in this Agreement. Any
agreement on the part of a party to any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of
such party and approved by the Original Directors if required by Section
1.03. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of
such rights.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.01 Nonsurvival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time. This Section 8.01 shall not limit any covenant or agreement of the
parties which by its terms contemplates performance after the Effective
Time.
Section 8.02 Notices. All notices, requests, claims, demands and
other communications under this Agreement shall be in writing and shall be
deemed given if delivered personally, telecopied (which is confirmed) or
sent by overnight courier (providing proof of delivery) to the parties at
the following addresses (or at such other address for a party as shall be
specified by like notice):
(a) if to Parent or Purchaser, to:
Tier Technologies, Inc.
1350 Treat Blvd., Suite 250
Walnut Creek, CA 94596
Telecopy No.: (925) 937-3902
Attention: James L. Bildner
with a copy to:
Farella Braun + Martel LLP
235 Montgomery St.
San Francisco, CA 94104
Telecopy No.: (415) 954-4480
Attention: Bruce R. Deming, Esq.
(b) if to the Company, to
Official Payments Corporation
3 Landmark Square
Stamford, CT 06901
Telecopy No.: (203) 969-0305
Attention: General Counsel
with copies to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
Telecopy No.: (212) 735-2000
Attention: Eric J. Friedman, Esq.
Section 8.03 Definitions. For purposes of this Agreement:
(a) an "affiliate" of any person means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person, where
"control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management policies of a person,
whether through the ownership of voting securities, by contract, as trustee
or executor, or otherwise;
(b) "Environmental Law" means any foreign, federal, state or local
law, past, present or future and as amended, and any judicial or
administrative interpretation thereof, including any judicial or
administrative order, consent decree or judgment, or common law, relating
to pollution or protection of the environment, health or safety or natural
resources, including those relating to the use, handling, transportation,
treatment, storage, disposal, release or discharge of Hazardous Substances;
(c) "Environmental Permit" means any permit, approval,
identification number, license or other authorization required under any
applicable Environmental Law;
(d) "Hazardous Substances" means (i) petroleum and petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials and polychlorinated biphenyls, and (ii) any
other chemicals, materials or substances regulated as toxic or hazardous or
as a pollutant, contaminant or waste or for which liability or standards of
care are imposed under any applicable Environmental Law;
(e) "material adverse change" or "material adverse effect" means,
when used in connection with the Company or Parent, any change, effect,
event, occurrence or state of facts that is, or would reasonably be
expected to be, materially adverse to the business, properties, assets
(whether tangible or intangible), condition (financial or otherwise),
operations or results of operations of such party and its subsidiaries
taken as a whole, or a material adverse effect on the ability of such party
to perform its obligations under this Agreement or on the ability of the
party to consummate the Offer, the Merger and the other Transactions
without material deviation from the time frame such actions would otherwise
be consummated in the absence of such effect; provided that material
adverse effect shall not include any change, effect, event or occurrence
relating to (i) the economy or securities markets of the United States or
any other region in general, (ii) this Agreement or the transactions
expressly contemplated hereby or the announcement thereof, or (iii) the
industry in which the Company or Parent, as the case may be, operates in
general, and not specifically relating to the Company or Parent or their
respective subsidiaries, and the terms "material" and "materially" have
correlative meanings;
(f) "person" means an individual, corporation, partnership,
limited liability company, joint venture, association, trust,
unincorporated organization or other entity;
(g) a "subsidiary" of any person means another person, an amount
of the voting securities or other voting ownership or partnership interests
of which is sufficient to elect at least a majority of its Board of
Directors or other governing body (or, if there are no such voting
securities or interests, 50% or more of the equity interests of which) is
owned directly or indirectly by such first person.
(h) "knowledge" of any person which is not an individual means the
actual knowledge of such person's executive officers after due inquiry.
Section 8.04 Interpretation. When a reference is made in this
Agreement to an Article, Section or Exhibit, such reference shall be to an
Article or Section of, or an Exhibit to, this Agreement unless otherwise
indicated. The table of contents, index of terms and headings contained in
this Agreement are for reference purposes only and shall not affect in any
way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall
be deemed to be followed by the words "without limitation". The words
"hereof", "herein" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. All terms defined in this Agreement
shall have the defined meanings when used in any certificate or other
document made or delivered pursuant hereto unless otherwise defined
therein. The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such term. Any agreement,
instrument or statute defined or referred to herein or in any agreement or
instrument that is referred to herein means such agreement, instrument or
statute as from time to time amended, modified or supplemented, including
(in the case of agreements or instruments) by waiver or consent and (in the
case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a person are also to its permitted successors and assigns.
Section 8.05 Counterparts. This Agreement may be executed in two
or more counterparts, all of which shall be considered one and the same
Agreement and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other parties.
Section 8.06 Entire Agreement; No Third-Party Beneficiaries. This
Agreement (including the documents and instruments referred to herein), and
the Confidentiality Agreement (a) constitute the entire agreement, and
supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter of this Agreement and
(b) except for the provisions of Article II and Section 5.03, are not
intended to confer upon any person other than the parties any rights or
remedies.
Section 8.07 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE,
REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICT OF LAWS THEREOF.
Section 8.08 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned, in
whole or in part, by operation of law or otherwise by either of the parties
hereto without the prior written consent of the other party except that
Purchaser may assign, in its sole discretion, any or all of its rights,
interests and obligations hereunder to Parent or to any direct or indirect
wholly owned subsidiary of Parent; provided, that Parent shall be obligated
to cause such subsidiary to comply with its obligations under or related to
this Agreement. Any assignment in violation of the preceding sentence shall
be void. Subject to the preceding two sentences, this Agreement will be
binding upon, inure to the benefit of, and be enforceable by, the parties
and their respective successors and assigns.
Section 8.09 Consent to Jurisdiction. Each of the parties hereto
(a) consents to submit itself to the personal jurisdiction of any federal
court located in the State of Delaware or any Delaware state court in the
event any dispute arises out of this Agreement or any of the transactions
contemplated by this Agreement, (b) agrees that it will not attempt to deny
or defeat such personal jurisdiction by motion or other request for leave
from any such court, and (c) agrees that it will not bring any action
relating to this Agreement or any of the transactions contemplated by this
Agreement in any court other than a federal court sitting in the State of
Delaware or a Delaware state court.
Section 8.10 Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement.
Section 8.11 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect. Upon such determination
that any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible to the fullest extent permitted by applicable law in an acceptable
manner to the end that the transactions contemplated hereby are fulfilled
to the extent possible.
[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement and Plan of Merger to be signed by their respective officers
thereunto duly authorized, all as of the date first written above.
Tier Technologies, Inc.
By: /s/ James L. Bildner
---------------------------------
Name: James L. Bildner
Title: Chairman & CEO
Kingfish Acquisition Corporation
By: /s/ James L. Bildner
---------------------------------
Name: James L. Bildner
Title: CEO
Official Payments Corporation
By: /s/ Thomas R. Evans
----------------------------------
Name: Thomas R. Evans
Title: Chairman & CEO
ANNEX A
Certain Conditions of the Offer. Notwithstanding any other
provisions of the Offer, Purchaser shall not be required to accept for
payment or, subject to any applicable rules and regulations of the SEC,
including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination
or withdrawal of the Offer), pay for, and may delay the acceptance for
payment of or, subject to the restriction referred to above, the payment
for, any tendered Shares, and may terminate or amend the Offer as to any
Shares not then paid for, if (i) any applicable waiting period under the
HSR Act has not expired or terminated, (ii) the Minimum Condition has not
been satisfied, or (iii) at any time on or after the date of this Agreement
and (except in the case of clause (a), (b) or (g)) continuing in effect for
a period of 10 days following notice by the Parent to the Company, any of
the following events shall occur (other than as a result of any action or
inaction of Parent or any of its subsidiaries which constitutes a breach of
this Agreement):
(a) there shall be any statute, rule, regulation, judgment, order
or injunction issued, enacted, entered, enforced, promulgated or deemed
applicable to the Offer or the Merger or any other action shall be taken by
any Governmental Entity (other than actions taken by any Governmental
Entity pursuant to any state or federal antitrust law, including without
limitation the HSR Act) (i) prohibiting or imposing any material
limitations on Parent's or Purchaser's ownership or operation (or that of
any of their respective subsidiaries or affiliates) of their or the
Company's businesses or assets, (ii) restraining or prohibiting the making
or consummation of the Offer, the Merger or the performance of any of the
other transactions contemplated by this Agreement, (iii) imposing material
limitations on the ability of Purchaser, or rendering Purchaser unable, to
accept for payment, pay for or purchase some or all of the Shares pursuant
to the Offer, and the Merger, (iv) imposing material limitations on the
ability of Purchaser or Parent effectively to exercise full rights of
ownership of the Shares, including, without limitation, the right to vote
the Shares purchased by it on all matters properly presented to the
Company's stockholders or (v) otherwise is reasonably likely to materially
adversely affect the Purchaser or the Company taken as a whole;
(b) the Company shall have entered into any Company Acquisition
Agreement with respect to any Company Superior Proposal in accordance with
Section 4.02(b) of this Agreement, the Board of Directors of the Company
has withdrawn or modified the approval or recommendation by such Board of
the Merger in accordance with 4.02(b) of this Agreement or the Company or
its directors or representatives have taken any other action, whether or
not in accordance with the Agreement, that permits Parent to terminate this
Agreement in accordance with Section 7.01;
(c) any of the representations and warranties of the Company set
forth in this Agreement that are qualified as to materiality or material
adverse effect shall not be true and correct and any such representations
and warranties that are not so qualified shall not be true and correct in
any material respect, in each case as of the scheduled expiration of the
Offer, except where the failure of such representations and warranties to
be so true and correct results directly from changes specifically permitted
by this Agreement or from any transaction expressly consented to in writing
by Parent;
(d) the Company shall have breached or failed to perform in any
material respect any material obligation or to comply in any material
respect with any material agreement or covenant of the Company to be
performed or complied with by it under this Agreement at or immediately
prior to consummation of the Offer;
(e) any third party shall not have given its written consent as
required under the applicable contract in identified in Section 5.09 of the
Company Disclosure Schedule;
(f) twenty percent or more of the Key Employees shall not have
entered into written employment agreements with the Company as provided in
Section 5.06(a) of this Agreement;
(g) there shall have occurred any change, event, condition, fact
or set of facts, or development which has had or would reasonably be
expected to have a material adverse change with respect to the Company; or
(h) this Agreement shall have been terminated in accordance with
its terms;
which in the reasonable judgment of Parent or Purchaser, in any such case,
and regardless of the circumstances (including any action or inaction by
Parent or Purchaser) giving rise to such condition makes it inadvisable to
proceed with the Merger, the Offer and/or with such acceptance for payment
of or payment for Shares.
The foregoing conditions are for the sole benefit of Parent and
Purchaser, may be waived by Parent or Purchaser, in whole or in part, at
any time and from time to time in the sole discretion of Parent or
Purchaser. The failure by Parent or Purchaser at any time to exercise any
of the foregoing rights shall not be deemed a waiver of any such right and
each such right shall be deemed an ongoing right which may be asserted at
any time and from time to time.
Terms used, but not defined, in this Annex A shall have the
meanings given to them in the Agreement.