<PAGE>
EXHIBIT 2
EXECUTION VERSION
AGREEMENT AND PLAN OF MERGER
DATED DECEMBER
17, 2004
BY AND AMONG
AFFILIATED COMPUTER SERVICES, INC.
ACS MERGER CORP.
AND
SUPERIOR CONSULTANT HOLDINGS CORPORATION
EXECUTION VERSION
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TABLE OF CONTENTS
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SECTION 1. THE
OFFER...................................................................................
2
1.1
Conduct of the
Offer........................................................................
2
1.2
Company
Actions.............................................................................
4
1.3
Board of
Directors..........................................................................
5
1.4
Top-Up
Option...............................................................................
6
SECTION 2. MERGER
TRANSACTION..........................................................................
7
2.1
Merger of
Acquisition Sub into the
Company..................................................
7
2.2
Effect of the
Merger........................................................................
7
2.3
Closing;
Effective
Time.....................................................................
8
2.4
Certificate of
Incorporation and Bylaws; Directors and
Officers............................. 8
2.5
Conversion of
Shares........................................................................
9
2.6
Surrender of
Certificates; Stock Transfer
Books............................................. 9
2.7
Shares Subject
to Appraisal
Rights..........................................................
11
2.8
Additional
Actions..........................................................................
12
SECTION 3. REPRESENTATIONS AND WARRANTIES OF
THE COMPANY...............................................
12
3.1
Organization................................................................................
12
3.2
Capital Stock
and
Ownership.................................................................
13
3.3
Financial and
Corporate
Records.............................................................
14
3.4
Compliance with
Law.........................................................................
14
3.5
SEC
Filings.................................................................................
16
3.6
Title to Assets;
Condition and
Sufficiency..................................................
18
3.7
Obligations.................................................................................
19
3.8
Operations Since
September 30,
2004.........................................................
19
3.9
Tangible
Property...........................................................................
20
3.10
Real
Property...............................................................................
20
3.11
Environmental
Matters.......................................................................
21
3.12
Intellectual
Property.......................................................................
21
3.13
Contracts...................................................................................
23
3.14
Employees; Labor
Matters....................................................................
24
3.15
Employee Benefit
Matters....................................................................
25
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EXECUTION VERSION
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3.16
Taxes.......................................................................................
27
3.17
Proceedings and
Judgments...................................................................
29
3.18
Related Party and
Affiliate
Transactions....................................................
29
3.19
Effect of Agreement;
Inapplicability of Anti-takeover
Statutes.............................. 29
3.20
Board Recommendation;
Vote
Required.........................................................
30
3.21
Non-Contravention;
Consents.................................................................
30
3.22
Fairness
Opinion............................................................................
32
3.23
Financial Advisory and
Other
Fees...........................................................
32
3.24
Disclosure..................................................................................
32
3.25
Subcontractors..............................................................................
32
3.26
Business
Relationships......................................................................
33
3.27
Proposals and
Pipeline......................................................................
33
3.28
Insurance...................................................................................
33
SECTION 4. REPRESENTATIONS AND WARRANTIES OF
PARENT AND ACQUISITION SUB................................
34
4.1
Due
Organization............................................................................
34
4.2
Authority;
Binding Nature of
Agreement......................................................
34
4.3
Non-Contravention;
Consents.................................................................
34
4.4
Disclosure..................................................................................
34
4.5
Funds.......................................................................................
35
4.6
Litigation..................................................................................
35
4.7
Brokers.....................................................................................
35
SECTION 5. CERTAIN COVENANTS OF THE
COMPANY............................................................
35
5.1
Access and
Investigation....................................................................
35
5.2
Operation of the
Company's
Business.........................................................
36
5.3
No
Solicitation.............................................................................
40
SECTION 6. ADDITIONAL COVENANTS OF THE
PARTIES.........................................................
43
6.1
Stockholder
Approval; Proxy
Statement.......................................................
43
6.2
Regulatory
Approvals........................................................................
43
6.3
Stock
Options...............................................................................
44
6.4
Employee
Benefits...........................................................................
45
6.5
Indemnification
of Officers and
Directors...................................................
46
6.6
Additional
Agreements.......................................................................
47
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EXECUTION VERSION
ii
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6.7
Disclosure..................................................................................
47
6.8
Change of
Control
Payments..................................................................
47
6.9
Aprahamian
Notes............................................................................
47
6.10
Resignation of
Officers and
Directors.......................................................
48
6.11
General
Cooperation.........................................................................
48
SECTION 7. CONDITIONS PRECEDENT TO THE
MERGER..........................................................
48
7.1
Stockholder
Approval........................................................................
48
7.2
No
Restraints...............................................................................
48
7.3
Consents,
Approvals.........................................................................
48
7.4
Waiting
Period..............................................................................
48
7.5
Consummation of
Offer.......................................................................
48
SECTION 8.
TERMINATION.................................................................................
48
8.1
Termination.................................................................................
48
8.2
Effect of
Termination.......................................................................
49
8.3
Expenses;
Termination
Fees..................................................................
50
SECTION 9. MISCELLANEOUS
PROVISIONS....................................................................
51
9.1
Amendment...................................................................................
51
9.2
Waiver......................................................................................
52
9.3
No Survival of
Representations and
Warranties...............................................
52
9.4
Entire
Agreement; Counterparts; No Third Party
Beneficiaries................................ 52
9.5
Applicable Law;
Jurisdiction................................................................
52
9.6
Headings....................................................................................
52
9.7
Attorneys'
Fees.............................................................................
53
9.8
Assignability...............................................................................
53
9.9
Notices.....................................................................................
53
9.10
Cooperation.................................................................................
54
9.11
Severability................................................................................
54
9.12
Interpretation of
Representations...........................................................
54
9.13
Bankruptcy
Qualification....................................................................
54
9.14
Construction................................................................................
54
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EXECUTION VERSION
iii
<PAGE>
EXHIBITS
Exhibit A -- Definitions
Exhibit B -- List of Persons
Entering into Tender and Voting Agreement
Exhibit C -- List of Consents
Annex I -- Conditions of the
Offer
EXECUTION VERSION
<PAGE>
AGREEMENT AND PLAN OF MERGER
PARTIES: AFFILIATED COMPUTER
SERVICES, INC.,
a Delaware corporation ("PARENT")
2828 North Haskell Avenue
Dallas, Texas 75204
ACS MERGER CORP.,
a Delaware corporation ("ACQUISITION SUB")
2828 North Haskell Avenue
Dallas, Texas 75204
SUPERIOR CONSULTANT HOLDINGS CORPORATION,
a Delaware corporation (the "COMPANY")
5225 Auto Club Drive
Dearborn, Michigan 48126
DATE:
December 17, 2004
BACKGROUND
A. The
respective boards of directors of Parent, Acquisition Sub and
the
Company have each determined that it is
advisable and in the best interests of
their respective stockholders for Parent to
acquire the Company upon the terms
and provisions of and subject to the
conditions set forth in this Agreement.
B. It is
proposed that Acquisition Sub make a cash tender offer (the
"OFFER") for all of the outstanding shares
of common stock, $.01 par value per
share of the Company ("COMPANY COMMON
STOCK") at $8.50 per share (such amount,
or any greater per share amount paid
pursuant to the Offer, subject to Section
1.1(e), being the "PER SHARE AMOUNT"), upon
the terms and provisions of and
subject to the conditions of this
Agreement.
C. In
furtherance of the acquisition of the Company by Parent, the
respective boards of directors of Parent,
Acquisition Sub and the Company have
each approved a merger (the "MERGER") of
Acquisition Sub with and into the
Company, with the Company as the surviving
corporation, upon the terms and
provisions of and subject to the conditions
set forth in this Agreement.
D. By
resolutions duly adopted, the Company Board has unanimously, in
light of and subject to the terms and
conditions hereof: (i) determined that
this Agreement and the transactions
contemplated hereby, including the Offer and
the Merger, are fair to and in the best
interests of the Company and the Company
Stockholders and (ii) resolved to recommend
that the Company Stockholders accept
the Offer and tender their shares pursuant
to the Offer and adopt this
Agreement.
E. In
order to induce Parent and Acquisition Sub to enter into this
Agreement and to consummate the
transactions contemplated hereby, concurrently
with the execution and delivery
EXECUTION VERSION
<PAGE>
of this Agreement, certain of the
stockholders of the Company set forth on
Exhibit B hereto are executing a tender and
voting agreement in favor of Parent
and Acquisition Sub (the "TENDER AND VOTING
AGREEMENT").
F. Unless
the context clearly indicates otherwise, capitalized terms used
herein shall have the meanings set forth in
Exhibit A hereto.
NOW
THEREFORE, in consideration of the mutual agreements contained
herein
and subject to the satisfaction of the
terms and conditions set forth herein,
the parties hereto agree as follows:
Section 1. THE OFFER
1.1
Conduct of the Offer.
(a)
Provided that this Agreement shall not have been terminated in
accordance with Section 8 hereof and that
none of the events or circumstances
set forth in Annex I shall have occurred or
exist (excluding the events or
circumstances set forth in paragraph "(a)"
in Annex I), as promptly as
practicable, and in any event not later
than five Business Days after the date
of this Agreement, Parent shall cause
Acquisition Sub to commence (within the
meaning of Rule 14d-2 under the Exchange
Act) the Offer.
(b)
Subject to the terms and conditions of the Offer and this
Agreement,
Parent shall cause Acquisition Sub to
accept for payment all shares of Company
Common Stock validly tendered and not
withdrawn pursuant to the Offer at the
earliest time following the initial
Expiration Date at which time all conditions
of the Offer shall have been satisfied or
waived by Acquisition Sub, and,
thereafter, Acquisition Sub shall accept
for payment all additional shares of
Company Common Stock validly tendered
during any Subsequent Offering Period to
the extent Parent and Acquisition Sub
determine to provide a Subsequent Offering
Period in connection with the Offer;
provided that Parent and Acquisition Sub
are permitted to do so pursuant to Section
1.1(c), provided, further, the
obligation of Acquisition Sub to accept for
payment and to pay for any shares of
Company Common Stock tendered pursuant to
the Offer shall be subject to (i) the
condition that there shall be validly
tendered and not withdrawn a number of
shares of Company Common Stock (including
the shares tendered under the Tender
and Voting Agreement) that immediately
prior to the acceptance for payment of
shares of Company Common Stock pursuant to
the Offer, represents at least a
majority of the Fully Diluted Number of
Company Shares (the "MINIMUM CONDITION")
and (ii) the other conditions set forth in
Annex I. Acquisition Sub expressly
reserves the right in its sole discretion
to increase the Per Share Amount, to
waive (in whole or in part) any of the
conditions of the offer set forth in
Annex I or to make any other changes in the
terms and conditions of the Offer;
provided that (A) without the prior written
consent of the Company, which may be
withheld in the Company's sole discretion:
(1) the Minimum Condition may not be
increased and (2) no change may be made
that changes the form of consideration
to be paid, that reduces the Per Share
Amount or that changes the number of
shares of Company Common Stock sought in
the Offer, or imposes any additional
material conditions to the Offer in
addition to the Minimum Condition and the
conditions set forth in Annex I; and (B)
without the prior written consent of
the Company, which may not be unreasonably
withheld, delayed or conditioned: (1)
except for
EXECUTION VERSION
2
<PAGE>
the extensions and/or Subsequent Offering
Periods provided for in Section
1.1(c), no change may be made that extends
the expiration date of the Offer
beyond the initial expiration date of the
Offer and (2) no change may be made
that amends any other terms of the Offer in
a manner materially adverse to the
Company Stockholders, when taken as a whole
with all other changes and
amendments. Simultaneously with the
acceptance for payment of any shares in the
Offer, Parent shall cause Acquisition Sub
to deposit with the Paying Agent
immediately available cash funds sufficient
to pay for all shares of Company
Common Stock validly tendered and not
withdrawn pursuant to the Offer.
(c)
Subject to the terms and conditions thereof, the Offer shall
remain
open until midnight, Eastern time, on the
date that is 20 Business Days after
the date the Offer is commenced (the
initial "EXPIRATION DATE," and any
expiration time and date established
pursuant to an authorized extension of the
Offer as so extended, also an "EXPIRATION
DATE"); provided, however, that,
without the consent of the Company,
Acquisition Sub may (i) extend the Offer for
one or more periods of not more than five
Business Days not to exceed an
aggregate of 15 Business Days if, at the
scheduled Expiration Date, any of the
conditions of the Offer shall not have been
satisfied or waived until such time
as such conditions are satisfied or waived
to the extent permitted by this
Agreement; (ii) extend the Offer for any
period required by any rule,
regulation, interpretation or position of
the SEC or the SEC staff thereof
applicable to the Offer or (iii) extend the
Offer for one subsequent offering
period (as provided in Rule 14d-11 under
the Exchange Act) (a "SUBSEQUENT
OFFERING PERIOD") for three to 20 Business
Days in order to acquire at least 90%
of the outstanding shares of Company Common
Stock or otherwise. Upon the written
request of the Company, Parent agrees to
cause Acquisition Sub to extend the
Offer for one or more periods not to exceed
an aggregate of 15 Business Days,
if, as of any Expiration Date, all of the
conditions of the Offer are not
satisfied, but Parent reasonably believes
that such conditions are reasonably
capable of being satisfied in such period.
Parent and Acquisition Sub shall
comply with the obligations respecting
prompt payment and announcement under the
Exchange Act, and, without limiting the
generality of the foregoing, Acquisition
Sub shall, and Parent shall cause
Acquisition Sub to, accept for payment, and
pay for, all shares of Company Common Stock
validly tendered and not withdrawn
pursuant to the Offer promptly following
the acceptance of the shares of Company
Common Stock for payment pursuant to the
Offer and this Agreement.
(d) On the
date of commencement of the Offer, Parent and Acquisition Sub
shall (i) file with the SEC a Tender Offer
Statement on Schedule TO with respect
to the Offer which will contain the offer
to purchase shares of Company Common
Stock pursuant to the Offer (the "OFFER
STATEMENT") and related letter of
transmittal and other ancillary offer
documents and instruments and (ii) use all
commercially reasonable efforts to cause
the Offer Statement and related
documents and instruments to be
disseminated to Company Stockholders in
accordance in all material respects with
applicable United States federal
securities laws. Parent and Acquisition Sub
agree that they shall use all
commercially reasonable efforts to cause
the Schedule TO and all exhibits,
amendments or supplements thereto (which
together constitute the "OFFER
DOCUMENTS") to comply in all material
respects with the Exchange Act, the
Securities Act and the rules and
regulations thereunder and other applicable
Law. The Company, Parent and Acquisition
Sub will use their respective
commercially reasonable efforts to comply
in all material respects with the
applicable requirements of the United
States federal securities laws. The
information provided and to be provided by
the Company, Parent and Acquisition
Sub for
EXECUTION VERSION
3
<PAGE>
use in the Offer Documents shall not, on
the date filed with the SEC and on the
date first published or sent or given to
the Company Stockholders, as the case
may be, 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 (A) no
representation is made by Parent or
Acquisition Sub with respect to the
information supplied by the Company for
inclusion in the Offer Documents and (B) no
representation is made by the
Company with respect to the information
supplied by Parent or Acquisition Sub
for inclusion in the Offer Documents. Each
of Parent, Acquisition Sub and the
Company shall use all commercially
reasonable efforts to respond promptly to any
comments of the SEC or its staff with
respect to the Offer Documents or the
Offer and to correct promptly any
information provided by it for use in the
Offer Documents if and to the extent that
such information shall have become
false or misleading in any material
respect. Parent, Acquisition Sub and the
Company shall take all steps necessary to
cause the Offer Documents as
supplemented or amended to correct such
information to be filed with the SEC and
to be disseminated to Company Stockholders,
in each case as and to the extent
required by applicable United States
federal securities laws. The Company shall
promptly furnish to Parent and Acquisition
Sub all information concerning the
Acquired Companies and the Company
Stockholders that may be required or
reasonably requested in connection with any
action contemplated by this Section
1.1(d). The Company and its counsel shall
be given reasonable opportunity to
review and comment on the Offer Documents
(including any amendment thereto)
prior to the filing thereof with the SEC.
Parent and Acquisition Sub agree to
provide the Company and its counsel with
any comments that Parent, Acquisition
Sub or their counsel may receive from the
SEC or its staff with respect to the
Offer Documents promptly after receipt of
such comments and prior to their
response to such comments.
(e) If,
between the date of this Agreement and the date on which any
particular share of Company Common Stock is
accepted for payment pursuant to the
Offer, the outstanding shares of Company
Common Stock are changed into a
different number or class of shares by
reason of any stock split, division or
subdivision of shares, stock dividend,
reverse stock split, consolidation of
shares, reclassification, recapitalization
or other similar transaction, then
the Per Share Amount shall be appropriately
adjusted to reflect such change or
transaction.
1.2
Company Actions.
(a) The
Company hereby approves of and consents to the Offer. The
Company
hereby consents to the inclusion in the
Offer Documents of the Company Board
Recommendation, subject to the right of the
Company Board to withdraw, modify or
amend the Company Board Recommendation in
accordance with the provisions of
Section 5.3.
(b) As
promptly as practicable but no more than five Business Days
after
the day that the Offer is commenced, the
Company shall file with the SEC and
(following or contemporaneously with the
dissemination of the Offer Statement
and related documents) disseminate to
Company Stockholders, in each case as and
to the extent required by applicable United
States federal securities laws, a
Solicitation/Recommendation Statement on
Schedule 14D-9 with respect to the
Offer (together with any amendments or
supplements thereto, the "SCHEDULE
14D-9") that shall contain the Company
Board Recommendation. The Company agrees
that it shall cause the Schedule 14D-9 to
comply in all material respects with
the
EXECUTION VERSION
4
<PAGE>
Exchange Act and the rules and regulations
thereunder and other applicable Law.
Each of Parent, Acquisition Sub and the
Company agrees to promptly correct any
information provided by it for use in the
Schedule 14D-9 if and to the extent
that such information shall have become
false or misleading in any material
respect, and the Company further agrees to
take all steps necessary to cause the
Schedule 14D-9 as supplemented or amended
to correct such information to be
filed with the SEC and to be disseminated
to Company Stockholders, in each case
as and to the extent required by applicable
United States federal securities
laws. Parent and its counsel shall be given
reasonable opportunity to review and
comment on the Schedule 14D-9 (including
any amendment thereto) prior to the
filing thereof with the SEC. The Company
agrees to provide Parent and its
counsel with any comments the Company or
its counsel may receive from the SEC or
its staff with respect to the Schedule
14D-9 promptly after receipt of such
comments.
(c) The
Company will, or will cause its transfer agent to, promptly
furnish Parent and Acquisition Sub with a
list of its stockholders, mailing
labels and any available listing or
computer file containing the names and
addresses of all Company Stockholders of
record and lists of securities
positions of shares of Company Common Stock
held in stock depositories, in each
case as of the most recent practicable
date, and will provide to Parent such
additional information (including updated
lists of stockholders, mailing labels
and lists of securities positions) and such
other assistance as Parent or
Acquisition Sub may reasonably request in
connection with the Offer and the
Merger. Except as required by applicable
Laws, and except as necessary to
disseminate and communicate the Offer, the
Merger or the transactions
contemplated by this Agreement to the
Company Stockholders, Parent and
Acquisition Sub (and their respective
representatives) shall hold in confidence
the information contained in any such
labels, listings and files to the extent
required by the Confidentiality
Agreement.
1.3 Board
of Directors.
(a)
Promptly upon the acceptance of and deposit of funds for payment
in
accordance with Section 1.1(b) for at least
a majority of the shares of Company
Common Stock outstanding by Parent,
Acquisition Sub or any of their Affiliates
pursuant to and in accordance with the
terms of the Offer and this Agreement and
from time to time thereafter, and subject
to Section 1.3(c), Parent shall be
entitled to designate up to such number of
directors, rounded to the nearest
whole number constituting at least a
majority of the directors, on the Company
Board as will give Parent representation on
the Company Board equal to the
product of the number of directors on the
Company Board (giving effect to any
increase in the number of directors
pursuant to this Section 1.3) and the
percentage that such number of shares of
Company Common Stock so purchased bears
to the total number of outstanding shares
of Company Common Stock, and the
Company shall use all commercially
reasonable efforts to, upon Parent's request,
promptly, at Parent's election, either
increase the size of the Company Board or
secure the resignation of such number of
directors as is necessary to enable
Parent's designees to be elected to the
Company Board and to cause Parent's
designees to be so elected. At such times,
subject to this Section 1.3, the
Company will cause individuals designated
by Parent to constitute a majority of
each committee of the Company Board (other
than the Company's audit committee);
provided that such designees of Parent
shall not be designated to any committee
of the Company Board established to take
action under this Agreement, which
committee shall be composed only of
Independent Directors.
EXECUTION VERSION
5
<PAGE>
(b) The
Company's obligation to appoint designees to the Company Board
shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder.
The Company promptly shall take all action
required pursuant to Section 14(f) of
the Exchange Act and Rule 14f-1 thereunder
in order to fulfill its obligations
under this Section 1.3, and shall include
in the Schedule 14D-9 such information
with respect to the Company and its
officers and directors as is required
pursuant to such Section 14(f) of the
Exchange Act and Rule 14f-1 thereunder in
order to fulfill its obligations under this
Section 1.3 and the United States
federal securities laws; provided that
Parent shall have provided to the Company
prior to the filing with the SEC of the
Schedule 14D-9 the information and
consents with respect to Parent and
Acquisition Sub and its designees, officers,
directors and Affiliates required by
Section 14(f) of the Exchange Act and Rule
14f-1 thereunder. Parent will supply to the
Company in writing any information
with respect to itself and its nominees,
officers, directors and Affiliates
required under the Exchange Act pursuant to
Section 14(f) of the Exchange Act
and Rule 14f-1 thereunder.
(c) In the
event that Parent's designees are elected or designated to the
Company Board then, until the Effective
Time, the Company shall cause the
Company Board to have at least three
directors who are directors on the date of
this Agreement, including at least three
directors who are (i) selected by such
current directors; and (ii) independent
directors for purposes of the continued
listing requirements of Nasdaq (such
directors, the "INDEPENDENT DIRECTORS");
provided, however, that, if any Independent
Director is unable to serve due to
death or disability or any other reason,
the remaining Independent Directors
shall be entitled to elect or designate
another individual (or individuals) who
serve(s) as a director (or directors) on
the date of this Agreement (provided
that no such individual is an employee of
the Company or its Subsidiaries) to
fill the vacancy, and such director (or
directors) shall be deemed to be an
Independent Director (or Independent
Directors) for purposes of this Agreement.
If no Independent Director then remains,
the other directors shall designate
three individuals who are directors on the
date of this Agreement, provided that
such individuals shall not be employees,
officers, directors or Affiliates of
the Company, Parent or Acquisition Sub (or,
in the event there shall be less
than two directors available to fill the
vacancies as a result of such
individuals' deaths, disabilities or
refusals to serve, such smaller number of
individuals who are directors on the date
of this Agreement) to fill the
vacancies and such directors shall be
deemed Independent Directors for purposes
of this Agreement. Following the
Appointment Time and prior to the Effective
Time, Parent and Acquisition Sub shall
cause any amendment of this Agreement,
any amendment of the Company Certificate or
the Company Bylaws, any termination
of this Agreement by the Company, any
extension by the Company of the time for
the performance of any of the obligations
or other acts of Acquisition Sub or
Parent or waiver of any of the Company's
rights under this Agreement or other
action adversely affecting the rights of
the Company Stockholders (other than
Parent or Acquisition Sub), not to be
effected without the affirmative vote of a
majority of the Independent Directors.
Following the Appointment Time and prior
to the Effective Time, neither Parent nor
Acquisition Sub shall take any action
to remove any Independent Director absent
cause.
1.4 Top-Up
Option.
(a) The
Company hereby grants to Parent and Acquisition Sub an
irrevocable
option (the "TOP-UP OPTION") to purchase,
at a price per share equal to the Per
Share Amount, a number of shares of Company
Common Stock (the "TOP-UP OPTION
SHARES") that, when added
EXECUTION VERSION
6
<PAGE>
to the number of shares of Company Common
Stock owned by Parent, Acquisition Sub
or any wholly-owned Subsidiary of Parent or
Acquisition Sub at the time of
exercise of the Top-Up Option, constitutes
one share of Company Common Stock
more than 90% of the Fully Diluted Number
of Company Shares after the issuance
of the Top-Up Option Shares. The Top-Up
Option may be exercised by Parent or
Acquisition Sub, in whole or in part, at
any time on or after the first date on
which Acquisition Sub accepts any shares of
Company Common Stock for payment
pursuant to the Offer (the "ACCEPTANCE
DATE") and on or prior to the tenth
Business Day after the later of (i) the
Acceptance Date or (ii) the expiration
of any Subsequent Offering Period;
provided, however, that the obligation of the
Company to deliver Top-Up Option Shares
upon the exercise of the Top-Up Option
is subject to the conditions that (A) no
provision of any applicable Law and no
judgment, injunction, order or decree shall
prohibit the exercise of the Top-Up
Option or the delivery of the Top-Up Option
Shares in respect of such exercise,
(B) the issuance of Top-Up Option Shares
pursuant to the Top-Up Option would not
require approval of the Company
Stockholders under applicable Law (including,
without limitation, Nasdaq rules and
regulations, including Section
4350(i)(1)(D)), and (C) Acquisition Sub has
accepted for payment and in
accordance with Section 1.1(b) paid for all
shares of Company Common Stock
validly tendered in the Offer and not
withdrawn. The parties shall cooperate to
ensure that the issuance of the Top-Up
Option Shares is accomplished consistent
with applicable Law, including compliance
with an applicable exemption from
registration of the Top-Up Option Shares
under the Securities Act.
(b) In the
event Parent or Acquisition Sub wishes to exercise the Top-Up
Option, Parent shall so notify the Company
in writing and shall set forth in
such notice (i) the number of shares of
Company Common Stock that are expected
to be owned by Parent, Acquisition Sub or
any wholly-owned Subsidiary of Parent
or Acquisition Sub immediately preceding
the purchase of the Top-Up Option
Shares and (ii) a place and time for the
closing of the purchase of the Top-Up
Option Shares. The Company shall, as soon
as practicable following receipt of
such notice, notify Parent and Acquisition
Sub of the number of shares of
Company Common Stock then outstanding and
the number of Top-Up Option Shares. At
the closing of the purchase of the Top-Up
Option Shares, Parent or Acquisition
Sub, as the case may be, shall pay the
Company the aggregate price required to
be paid for the Top-Up Option Shares, and
the Company shall cause to be issued
to Parent or Acquisition Sub, as the case
may be, one or more certificates, as
required by Parent or Acquisition Sub, as
the case may be, representing the
Top-Up Option Shares.
Section 2. MERGER TRANSACTION
2.1 Merger
of Acquisition Sub into the Company. Upon the terms and subject
to the conditions set forth in this
Agreement and in accordance with the General
Corporation Law of the State of Delaware
(the "DGCL"), at the Effective Time,
Acquisition Sub shall be merged with and
into the Company, the separate
existence of Acquisition Sub shall cease
and the Company will continue its
existence under the laws of the State of
Delaware as a wholly-owned Subsidiary
of Parent. The Company, in its capacity as
the corporation surviving the Merger,
is hereinafter sometimes referred to as the
"SURVIVING CORPORATION."
2.2 Effect
of the Merger. The Merger shall have the effects set forth in
this Agreement and in the applicable
provisions of the DGCL. Without limiting
the generality of the
EXECUTION VERSION
7
<PAGE>
foregoing, and subject thereto, at the
Effective Time, all properties, rights,
privileges and powers of the Company and
Acquisition Sub shall vest in the
Surviving Corporation, and all debts,
liabilities, obligations and duties of the
Company and Acquisition Sub shall become
debts, liabilities, obligations and
duties of the Surviving Corporation.
2.3
Closing; Effective Time. Unless this Agreement shall have been
terminated and the transactions
contemplated hereby shall have been abandoned
pursuant to Section 8, the consummation of
the Merger (the "CLOSING") shall take
place at the offices of Fulbright &
Jaworski L.L.P., 2200 Ross Ave., Suite 2800,
Dallas, Texas 75201, at 10:00 a.m., Dallas
time, on a date to be designated by
Parent (the "CLOSING DATE"), which shall be
no later than the fifth Business Day
after the satisfaction or waiver of the
last to be satisfied or waived of the
conditions set forth in Section 7 (other
than delivery of items to be delivered
at the Closing and other than those
conditions that by their nature are to be
satisfied at the Closing, it being
understood that the occurrence of the Closing
shall remain subject to the delivery of
such items and the satisfaction or
waiver of such conditions at the Closing),
unless another date, time or place is
agreed to in writing by the parties hereto,
provided that the Closing shall be
delayed if and only for so long as
reasonably necessary if a banking moratorium,
act of terrorism or war (whether or not
declared) affecting United States
banking or financial markets generally
prevents the Closing. Subject to the
provisions of this Agreement, a certificate
of merger satisfying the applicable
requirements of the DGCL (the "CERTIFICATE
OF MERGER") shall be duly executed by
the Company and filed with the Secretary of
State of the State of Delaware as
promptly as possible on the Closing Date.
The Merger shall become effective upon
the date and time of the filing of the
Certificate of Merger with the Secretary
of State of the State of Delaware, or at
such later time as is specified in the
Certificate of Merger (the "EFFECTIVE
TIME"). Notwithstanding anything herein to
the contrary, in the event that Acquisition
Sub shall acquire at least 90% of
the outstanding shares of Company Common
Stock, Parent and the Company hereby
agree to take all necessary and appropriate
action to cause the Merger to become
effective, without a meeting of the Company
Stockholders, in accordance with
Section 253 of the DGCL as promptly as
practicable.
2.4
Certificate of Incorporation and Bylaws; Directors and
Officers.
Unless otherwise determined by Parent prior
to the Effective Time:
(a) the
Certificate of Merger shall provide that, at the Effective
Time,
the Surviving Corporation's certificate of
incorporation as in effect
immediately prior to the Effective Time
shall be amended as of the Effective
Time so as to contain the provisions, and
only the provisions, contained
immediately prior thereto in Acquisition
Sub's certificate of incorporation,
except for Article I thereof, which shall
read "The name of the corporation is
"SUPERIOR CONSULTANT HOLDINGS CORPORATION"
(the "SURVIVING CHARTER"), until
amended in accordance with the DGCL;
(b) at the
Effective Time the bylaws of Acquisition Sub in effect
immediately prior to the Effective Time
shall be the bylaws of the Surviving
Corporation (the "SURVIVING BYLAWS"), until
amended in accordance with the
Surviving Charter, the Surviving Bylaws or
the DGCL and the Company shall take
all requisite action necessary to effect
the foregoing;
EXECUTION VERSION
8
<PAGE>
(c) the
directors of Acquisition Sub immediately prior to the Effective
Time shall be the initial directors of the
Surviving Corporation and shall hold
office until the earlier of their
resignation or removal or until their
respective successors are duly elected and
qualified, as the case may be; and
(d) the
officers of Acquisition Sub immediately prior to the Effective
Time shall be the initial officers of the
Surviving Corporation and shall hold
office until the earlier of their
resignation or removal or until their
respective successors are duly elected and
qualified, as the case may be.
2.5
Conversion of Shares.
(a) At the
Effective Time, by virtue of the Merger and without any further
action on the part of Parent, Acquisition
Sub, the Company or any stockholder of
the Company:
(i) any shares of Company Common Stock then held by the Company
or
any wholly
owned Subsidiary of the Company (or held in the Company's
treasury)
or owned by Acquisition Sub or Parent or any of their
respective
affiliates
shall automatically be canceled and shall cease to exist, and
no cash or
other consideration shall be delivered in exchange therefor;
(ii) each share of Company Common Stock that is issued and
outstanding immediately prior to the Effective time (other than
the
Dissenting
Shares (as defined below) or shares of Company Common Stock
cancelled
pursuant to Section 2.5(a)(i)) shall be canceled and
extinguished and
converted into the right to receive the Per Share Amount
(the
"MERGER CONSIDERATION"), without interest; and
(iii) each of the shares of the common stock, $0.01 par value
per
share, of
Acquisition Sub then outstanding shall be converted into one
fully paid
and nonassessable share of common stock, par value $0.01 per
share, of
the Surviving Corporation and such newly issued shares shall
thereafter
constitute all of the issued and outstanding Surviving
Corporation capital stock.
(b) If,
between the date of this Agreement and the Effective Time, the
outstanding shares of Company Common Stock
are changed into a different number
or class of shares by reason of any stock
split, division or subdivision of
shares, stock dividend, reverse stock
split, consolidation of shares,
reclassification, recapitalization or other
similar transaction, then the Merger
Consideration shall be appropriately
adjusted to reflect such change or
transaction.
2.6 Surrender of
Certificates; Stock Transfer Books.
(a) Mellon
Investor Services LLC, or such other bank or trust company
designated by Parent prior to the Effective
Time and reasonably acceptable to
the Company, shall act as agent (the
"PAYING AGENT") for the applicable Company
Stockholders to receive the funds to which
holders of such shares shall become
entitled pursuant to Section 2.5(a)(ii).
Such funds shall be invested by the
Paying Agent as directed by Parent or the
Surviving Corporation in (i)
obligations of or guaranteed by the United
States, (ii) commercial paper rated
A-1, P-1 or A-2, P-2, and (iii)
certificates of deposit, bank repurchase
agreements and bankers acceptances of
any
EXECUTION VERSION
9
<PAGE>
bank or trust company organized under
federal Laws or the Laws of any state of
the United States or District of Columbia
that has capital, surplus or undivided
profits of at least $500,000,000 or in
money market funds which are invested
substantially in such investments. Earnings
from such investments shall be the
sole and exclusive property of Parent and
the Surviving Corporation, and no part
of such earnings shall accrue to the
benefit of Company Stockholders. Until
surrendered in accordance with the
provisions of this Section 2.6, each
certificate that immediately prior to the
Effective Time represented any shares
of Company Common Stock (a "CERTIFICATE")
(other than Certificates representing
shares owned by Parent, Acquisition Sub or
any other Subsidiary of Parent,
shares held by the Company and Dissenting
Shares) shall represent for all
purposes, from and after the Effective
Time, only the right to receive the
applicable Merger Consideration.
(b)
Promptly after the Effective Time, the Surviving Corporation
shall
cause to be mailed to each Person who was,
at the Effective Time, a holder of
record of shares of Company Common Stock
entitled to receive the Merger
Consideration pursuant to Section 2.5, (i)
a form of letter of transmittal
(which shall specify that delivery shall be
effected, and risk of loss and title
to the Certificates shall pass, only upon
proper delivery of the Certificates to
the Paying Agent and shall be in such form
and have such other customary
provisions as Parent may reasonably
specify) and (ii) instructions for use in
effecting the surrender of the Certificates
pursuant to such letter of
transmittal. Upon surrender to the Paying
Agent of a Certificate, together with
such letter of transmittal, duly completed
and validly executed in accordance
with the instructions thereto, and such
other documents as may be required
pursuant to such instructions, the holder
of such Certificate shall be entitled
to promptly receive, in exchange therefor
the Merger Consideration for each
share of Company Common Stock formerly
evidenced by such Certificate, and such
Certificate shall then be canceled. No
interest shall accrue or be paid on the
Merger Consideration payable upon the
surrender of any Certificate for the
benefit of the holder of such Certificate.
If the payment of the Merger
Consideration is to be made to a Person
other than the Person in whose name the
surrendered Certificate formerly evidencing
shares of Company Common Stock is
registered on the stock transfer books of
the Company, it shall be a condition
of payment that the Certificate so
surrendered be endorsed properly or otherwise
be in proper form for transfer and that the
Person requesting such payment shall
have paid all transfer and other similar
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
Acquisition Sub that such Taxes either have
been paid or are not applicable.
Until surrendered as contemplated by this
Section 2.6(b), each Certificate shall
be deemed, from and after the Effective
Time, to represent only the right to
receive the Per Share Amount for each share
of Company Common Stock formerly
evidenced by such Certificate. If any
Certificate shall have been lost, stolen
or destroyed, Parent may, in its discretion
and as a condition precedent to the
payment of the Merger Consideration for
each share of Company Common Stock
formerly evidenced by such Certificate,
require the owner of such lost, stolen
or destroyed Certificate to provide an
appropriate affidavit of that fact and to
deliver a bond (in such sum as Parent may
reasonably direct, but not more than
market value plus a reasonable sum to cover
applicable costs incurred by Parent
or Surviving Corporation) as indemnity
against any claim that may be made
against the Paying Agent, Parent or the
Surviving Corporation with respect to
such Certificate.
EXECUTION VERSION
10
<PAGE>
(c) At any
time following the sixth month after the Effective Time, the
Surviving Corporation shall be entitled to
require the Paying Agent to deliver
to it any funds which had been made
available to the Paying Agent and not
disbursed to Company Stockholders
(including, without limitation, all interest
and other income received by the Paying
Agent in respect of all funds made
available to it), and, thereafter, such
holders shall thereafter look to the
Surviving Corporation (subject to abandoned
property, escheat and other similar
Laws) only as general creditors thereof
with respect to any Merger Consideration
that may be payable upon due surrender of
the Certificates held by them, without
any interest or dividends thereon.
Notwithstanding the foregoing, to the fullest
extent permitted by Law, none of the
Surviving Corporation, Parent or the Paying
Agent shall be liable to any holder of a
share of Company Common Stock for any
Merger Consideration delivered in respect
of such share to a public official
pursuant to any abandoned property, escheat
or other similar law. If any
Certificates shall not have been
surrendered upon the fifth anniversary of the
Effective Time (or immediately prior to
such earlier date on which any Merger
Consideration in respect of such
Certificate would otherwise escheat to or
become the property of any Governmental
Body), any amounts payable in respect of
such Certificate shall, to the extent
permitted by applicable Law, become the
property of the Surviving Corporation, free
and clear of all claims or interest
of any Person previously entitled
thereto.
(d) The
consideration issued upon the surrender of the Certificates in
accordance with this Agreement shall be
deemed to have been issued in full
satisfaction of all rights pertaining to
the shares of Company Common Stock
formerly represented thereby. Subject to
Section 2.5(a)(iii), at the close of
business on the day of the Effective Time,
the stock transfer books of the
Company with respect to the shares of
Company Common Stock shall be closed and
thereafter there shall be no further
registration of transfers of shares of
Company Common Stock on the records of the
Company. From and after the Effective
Time, the Company Stockholders outstanding
immediately prior to the Effective
Time shall cease to have any rights with
respect to such shares except as
otherwise provided herein or by applicable
Law.
(e) Each
of the Surviving Corporation, Parent and Acquisition Sub shall
be
entitled to deduct and withhold (or cause
the Paying Agent to deduct and
withhold) from the consideration otherwise
payable in the Merger to any holder
of shares of Company Common Stock such
amounts as it is required to deduct and
withhold with respect to Taxes. To the
extent that amounts are so withheld, such
withheld amounts shall be treated for all
purposes of this Agreement as having
been paid to the holder of the shares of
Company Common Stock in respect of
which such deduction and withholding was
made.
2.7 Shares
Subject to Appraisal Rights.
(a)
Notwithstanding anything to the contrary contained in this
Agreement,
to the extent that the provisions of
Section 262 of the DGCL are, or prior to
the Effective Time become, applicable to
the Merger, any shares of Company
Common Stock that as of the Effective Time
are held by any Company Stockholder
that is entitled to demand and properly
demands appraisal rights under Section
262 of the DGCL with respect to such shares
(the "DISSENTING SHARES") shall not
be converted into or represent the right to
receive the Merger Consideration in
accordance with Section 2.5(a), but instead
such Company Stockholder shall be
entitled only to such rights as may be
granted by Section 262 of the DGCL;
provided, however,
EXECUTION VERSION
11
<PAGE>
that if such appraisal rights shall not be
perfected or the holders of such
shares shall otherwise lose their appraisal
rights with respect to such shares
under Section 262 of the DGCL or otherwise,
then, as of the later of the
Effective Time or the time of the failure
to perfect such status or the loss of
such rights, such shares shall
automatically be converted into and shall
represent only the right to receive (upon
the surrender of the certificate or
certificates representing such shares) the
Merger Consideration in accordance
with Section 2.5(a).
(b) The
Company shall give Parent (i) prompt notice of any written
demand
received by the Company prior to the
Effective Time to require the Company to
purchase the Dissenting Shares pursuant to
Section 262 of the DGCL and of any
other demand, notice or instrument
delivered to the Company prior to the
Effective Time pursuant to the DGCL and
(ii) the opportunity to participate in
all negotiations and proceedings with
respect to any such demand, notice or
instrument. The Company shall not make any
payment or settlement offer prior to
the Effective Time with respect to any such
demand unless Parent shall have
consented in its sole discretion in writing
to such payment or settlement offer.
2.8
Additional Actions. If, at any time after the Effective Time,
the
Surviving Corporation shall consider or be
advised that any further deeds, bills
of sale, assignments or assurances in law
or any other acts are necessary or
desirable to (a) 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, properties or assets of the Company
or (b) otherwise carry out the
provisions of this Agreement, the Company
shall be deemed to have granted to the
Surviving Corporation an irrevocable power
of attorney to execute and deliver
all such deeds, bills of sale, assignments
or assurances in law and to take all
acts necessary, proper or desirable to
vest, perfect or confirm title to and
possession of such rights, properties or
assets in the Surviving Corporation and
otherwise to carry out the provisions of
this Agreement, and the officers and
directors of the Surviving Corporation are
authorized in the name of the Company
to take any and all such action.
Section 3. REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
Except as
set forth in the Company Disclosure Letter, the Company
represents and warrants to Parent and
Acquisition Sub as follows:
3.1
Organization. Each of the Company and its Subsidiaries is an
Entity
duly organized, validly existing and in
good standing under the Law of the
jurisdiction of its incorporation or
organization with all requisite corporate
power and authority to own its Assets and
to conduct its business as and where
presently conducted. Each of the Company
and its Subsidiaries is duly qualified
or registered to do business in each
jurisdiction (whether federal, state, local
or foreign) where such qualification or
registration is required by applicable
Law, except where the failure to be so
qualified or registered would not,
individually or in the aggregate, have a
Material Adverse Effect. The following
information for each of the Company's
Subsidiaries is set forth in Section 3.1
to the Company Disclosure Letter, as
applicable: (a) its name, type of entity
and jurisdiction of incorporation or
organization; (b) each jurisdiction
(whether federal, state, local or foreign)
in which such Subsidiary is qualified
to conduct business and an indication of
whether such Subsidiary is in good
standing in each such jurisdiction and (c)
its authorized capital stock or share
capital and the number of issued and
EXECUTION VERSION
12
<PAGE>
outstanding shares (or other equity
interests) and the record owner(s) thereof.
Neither the Company nor any of its
Subsidiaries has agreed or is obligated to
make, or is bound by any Contract under
which it may become obligated to make,
any future equity or similar investment in
or capital contribution to any other
Person. True, correct and complete copies
of certificates of incorporation,
bylaws and other organization and related
documents of the Company and of each
of the Company's Subsidiaries have been
provided to Parent.
3.2 Capital Stock and
Ownership.
(a) The
authorized capital stock of the Company consists of 30,000,000
shares of Company Common Stock of which (i)
10,551,530 shares were issued and
outstanding as of November 30, 2004 and
(ii) 469,250 shares were held by the
Company in its treasury. The Company is the
sole record and beneficial owner of
all of the shares of capital stock or other
equity interest of each of its
Subsidiaries and it has good and marketable
title to such shares, free and clear
of any Encumbrances other than as provided
by applicable United States federal
and state securities Laws. There are no
shares of Company Common Stock held by
any of the Company's Subsidiaries. None of
the outstanding shares of Company
Common Stock is entitled or subject to any
preemptive right, right of
participation, right of maintenance or any
similar right. None of the
outstanding shares of Company Common Stock
is subject to any right of first
refusal in favor of the Company. There is
no Contract to which the Company or
the Company's Subsidiaries is a party or by
the Company or any of the Company's
Subsidiaries or any of their business or
Assets is bound relating to the voting
or registration of, or restricting any
Person from purchasing, selling, pledging
or otherwise disposing of (or granting any
option or similar right with respect
to), any shares of Company Common Stock.
None of the Company or the Company's
Subsidiaries is under any obligation, or is
bound by any Contract pursuant to
which it may become obligated, to
repurchase, redeem or otherwise acquire any
outstanding shares of Company Common Stock.
Since September 30, 2004, the
Company has not repurchased, redeemed or
otherwise acquired any shares of
Company Common Stock. The Company directly
owns all of the outstanding shares of
capital stock of Superior Consultant
Company, Inc., a Michigan corporation
("OPERATING SUB"). Operating Sub directly
owns all of the outstanding shares of
capital stock (or other ownership or equity
interests) of each of its
Subsidiaries. Other than (i) the Company's
direct or indirect ownership of its
Subsidiaries and (ii) the Company's shares
of capital stock held in its
treasury, neither the Company nor any of
its Subsidiaries owns any equity
securities, or securities convertible into
equity securities, of any other
Person.
(b) There
are 4,792,241 shares of Company Common Stock issuable pursuant
to the exercise of outstanding options
issued under the Company's Stock Option
Plans and under outstanding warrants
(collectively, "COMPANY OPTIONS"). Section
3.2(b) to the Company Disclosure Letter
sets forth a true, correct and complete
list, as of the date hereof, of the name of
each holder of a Company Option, the
number of outstanding Company Options held
by such holder, the grant date
thereof, the number of shares of Company
Common Stock such holder is entitled to
receive upon exercise thereof, the exercise
price, the vesting schedule, whether
such Person was an employee at the time of
grant, and whether the Company Option
is intended to qualify as an "incentive
stock option" (within the meaning of
Section 422 of the Code). The Company has
delivered to Parent and Acquisition
Sub true, correct and complete copies of
the Company's Stock Option Plans and
all forms and variations of each agreement
used under the
EXECUTION VERSION
13
<PAGE>
Company's Stock Option Plans and all other
Company Options. Since October 25,
2004, the Company has not granted any
Company Options.
(c) Except
for the Company Options, there are no outstanding
subscriptions, options, calls, warrants or
rights (whether or not currently
exercisable) to acquire any shares of the
capital stock or other securities of
Company or any of the Company's
Subsidiaries.
(d) There
are no (i) outstanding security, instrument or obligation that
is or may become convertible into or
exchangeable for any shares of the capital
stock or other securities of Company (or
any of the Company's Subsidiaries)
other than the Company Options; (ii)
stockholder rights plan (or similar plan
commonly referred to as a "poison pill") or
Contract under which Company (or any
of the Company's Subsidiaries) is or may
become obligated to sell or otherwise
issue any shares of its capital stock or
any other securities; (iii) outstanding
stock appreciation rights or similar
derivative securities or rights of or by
the Company (or any of the Company's
Subsidiaries); (iv) bonds, debentures,
notes or other indebtedness of the Company
having the right to vote on any
matters on which Company Stockholders may
vote; (v) obligations by the Company
or any of the Company's Subsidiaries to
make any payments based on the price or
value of the shares of Company Common Stock
or (vi) outstanding obligations
requiring the Company to give any Person
the right to receive any benefits or
rights similar to any rights enjoyed by or
accruing to the Company Stockholders
or any rights to participate in the equity
or net income of the Company.
(e) All of
the issued and outstanding shares of capital stock of each of
the Company and the Company's Subsidiaries
have been duly authorized and validly
issued, and are fully paid and
nonassessable. The issuance and sale of all of
the shares of capital stock described in
Section 3.2(a) have been in compliance
in all material respects with United States
federal and state securities laws.
3.3
Financial and Corporate Records. The Company has delivered to
Parent
an accurate and complete list, as of the
date of the Agreement, of all bank
accounts, other accounts, certificates of
deposit, marketable securities, other
investments, safe deposit boxes, lock boxes
and safes of each of the Acquired
Companies, and the names of all officers,
employees or other individuals who
have access thereto or are authorized to
make withdrawals therefrom or
dispositions thereof.
3.4
Compliance with Law.
(a) The
operations of each of the Acquired Companies, the conduct of
the
business of each of the Acquired Companies,
and the ownership, possession and
use of the Assets of each of the Acquired
Companies are in compliance, and at
all times since January 1, 2001 have been
in compliance, with all applicable
Laws, except where the failure to comply
would not reasonably be expected to
result in a Material Adverse Effect. From
January 1, 2001 through the date of
this Agreement, none of the Company or its
Subsidiaries has received any notice
from any Governmental Body regarding any
actual or possible material violation
of, or material failure to comply with, any
Law. No material Governmental
Authorizations are necessary for the
Acquired Companies to conduct their
business as and where presently conducted
or to own their Assets.
EXECUTION VERSION
14
<PAGE>
(b)
Without limiting Section 3.4(a), none of the Company, its
Subsidiaries, or any of their respective
officers, directors, employees, agents
and/or representatives have directly or
indirectly (i) offered, paid or received
any remuneration, in cash or in kind, to or
made any financial arrangements
with, any past or present customers, past
or present suppliers, contractors or
third party payors in order to obtain
business or payments from such Persons
where either the remuneration or financial
arrangement is illegal under
applicable Laws; (ii) given or agreed to
give or is aware that there has been
made or there is any agreement to make any
material gift or gratuitous payment
of any kind nature or description to any
customer or potential customer supplier
or potential supplier, contractor or third
party payor or any other Person where
either the gift or gratuitous payment is
illegal under applicable Laws; (iii)
made or agreed to make or is aware that
there has been made or that there is any
agreement to make, any material
contribution, payment or gift of funds or
property to or for the private use of any
governmental official, employee or
agent where either the contribution,
payment or gift is illegal under applicable
Laws; (iv) made, or agreed to make or is
aware that there has been made or that
there is any agreement to make any material
payment to any Person with the
intention or understanding that any part of
such payment would be used for any
purpose other than that described in the
document supporting such payment where
the payment is illegal under applicable
Laws and/or (v) conducted business other
than in compliance in all material respects
with all applicable anti-kickback or
patient or healthcare solicitation laws and
regulations, including but not
limited to 42 U.S.C. 1320a-7b(b), as
amended, or any applicable state
anti-kickback or other similar state or
federal Laws.
(c)
Without limiting Section 3.4(a), to the Company's knowledge,
the
activities of each of the Company, its
Subsidiaries, and any of their respective
officers, directors, agents and employees
have complied in all material
respects, and the operations of each of the
Company and its Subsidiaries have
complied in all material respects, with all
applicable Laws governing corrupt or
illicit business practices, including,
without limitation, laws dealing with
improper or illegal payments, gifts or
gratuities and/or the payment of money or
anything of value directly or indirectly to
any Person (whether a government
official or private individual) for the
purpose of illegally inducing any Person
or government official, or political party
or official thereof, or any candidate
for any such position, in making any
decision or illegally assisting any Person
in obtaining or retaining business or
taking any other action favorable to such
Person, and/or dealing with business
practices in relation to investments
outside of the United States (including, by
way of example, if applicable, the
United States Foreign Corrupt Practices
Act, as amended). None of the Company,
its Subsidiaries or any of their respective
directors, officers, agents or
employees of the Company or any of its
Subsidiaries has, in connection with the
conduct of the business of the Company and
its Subsidiaries, (i) used any funds
for unlawful contributions, gifts,
entertainment or other unlawful expenses
relating to political activity; (ii)
established or maintained any unrecorded
fund or asset for any purpose or made any
false entries on the books and records
of the Company or any Subsidiary for any
reason; (iii) paid or delivered any
fee, commission or any other sum of money
or item of property, however
characterized, to any finder, agent,
government official or other party, in the
United States or any other country, which
in any manner relates to the assets,
business or operations of the Company or
any of its Subsidiaries in violation of
any United States federal, state, local or
foreign Law or (iv) made any other
unlawful payment. The internal accounting
controls and procedures of the Company
and its Subsidiaries are sufficient to
cause compliance in all material respects
with the United States Foreign Corrupt
Practices Act, as amended.
EXECUTION VERSION
15
<PAGE>
(d)
Without limiting Section 3.4(a), the Acquired Companies have been
in
compliance in all material respects with
the applicable provisions of HIPAA,
including the Privacy Standards, the
Electronic Transactions Standards and the
Security Standards promulgated under the
Administrative Simplifications
subtitle. The Company and each of its
Subsidiaries have appropriately documented
in all material respects, each business
associate or other agreement governing
the use or disclosure of protected health
information (as such terms are used in
HIPAA) and none of the Acquired Companies,
and to the Company's knowledge is any
other party, in violation of or in default
in respect of, nor has there occurred
an event or condition that with the passage
of time or giving of notice would
constitute a default or violation of any
business associate or similar
agreement. No complaint or action has ever
been filed with the U.S. Department
of Health and Human Services Office of
Civil Rights or with any other
Governmental Body relating to the violation
by the Acquired Companies (or to the
Company's knowledge, under any system
designed by the Acquired Companies for any
of their customers) of privacy laws or the
electronic transmission of health
information. None of the Acquired
Companies, and to the Company's knowledge,
none of their respective officers,
employees or agents have been excluded from
participation in any governmental program,
including any state or federal
healthcare program or been a party to any
action or Proceeding concerning
exclusion from any governmental program.
The Company and its Subsidiaries have
adopted appropriate policies, procedures or
compliance plans to ensure adherence
in all material respects to HIPAA and other
federal or state privacy laws
applicable to the Company and its
Subsidiaries. None of the Acquired Companies,
or to the Company's knowledge, any of their
respective officers, employees or
agents have been or are currently subject
to a Corporate Integrity Agreement
with the Officer of Inspector General or
similar agreement with a Governmental
Body.
3.5 SEC
Filings.
(a) All
statements, reports, schedules, forms and other documents
required
to have been filed by the Company with the
SEC under the Exchange Act or the
Securities Act since January 1, 2001 have
been so filed and in a timely manner
(or timely in all material respects in the
case of filings under Section 16 of
the Exchange Act). As of the time it was
filed with the SEC (or, if amended,
supplemented or superseded by a filing
prior to the date of this Agreement, then
on the date of such filing): (i) each of
the Company SEC Documents complied in
all material respects with the applicable
requirements of the Securities Act or
the Exchange Act (as the case may be) and
(ii) except to the extent that
information contained in any Company SEC
Document has been revised or superseded
by a later filed Company SEC Document, none
of the Company SEC Documents
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 the light of the circumstances
under which they were made, not
misleading. There are no outstanding
comments from, or unresolved issues raised
by, the SEC with respect to the Company SEC
Documents. No executive officer of
the Company has failed in any respect to
make the certification required of him
or her under Sections 302 or 906 of SOX and
no enforcement action has been
initiated against the Company relating to
disclosures contained in any Company
SEC Documents.
(b) Except
to the extent stated therein, the consolidated financial
statements (including any related notes)
contained in the Company SEC Documents:
(i) when filed, complied as to form in all
material respects with the published
rules and regulations of the SEC
EXECUTION VERSION
16
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applicable thereto; (ii) when filed, were
prepared in accordance with GAAP
(except as may be indicated in the notes to
such financial statements or, in the
case of unaudited statements, as permitted
by Form 10-Q of the SEC, and except
that the unaudited financial statements may
not contain footnotes and are
subject to normal and recurring year-end
adjustments) and (iii) fairly present
in all material respects the consolidated
financial position of Company as of
the respective dates thereof and the
consolidated results of operations and cash
flows of Company for the periods covered
thereby (except as may be indicated in
the notes to such financial statements or,
in the case of unaudited statements,
as permitted by Form 10-Q of the SEC, and
except that the unaudited financial
statements may not contain footnotes and
are subject to normal and recurring
year-end adjustments). The unaudited
consolidated balance sheet of the Company
and its Subsidiaries as of September 30,
2004 included in the Company's
Quarterly Report for the quarter ended
September 30, 2004 is sometimes referred
to as the "LATEST BALANCE SHEET."
(c) The
Company has devised and maintain a system of internal
accounting
controls sufficient to provide reasonable
assurances regarding the reliability
of financial reporting and the preparation
of financial statements for external
purposes in accordance with GAAP, including
that (i) transactions are executed
only in accordance with management's
authorization; (ii) transactions are
recorded as necessary to permit preparation
of the financial statements of the
Company and to maintain accountability for
the assets of the Company and its
Subsidiaries, as applicable; (iii) access
to such assets is permitted only in
accordance with management's authorization;
(iv) the reporting of such assets is
compared with existing assets at regular
intervals and (v) accounts, notes and
other receivables and inventory are
recorded accurately, and proper and adequate
procedures are implemented to effect the
collection thereof on a current and
timely basis. The Company (i) has designed
disclosure controls and procedures
(within the meaning of Rules 13a-15(e) and
15d-15(e) of the Exchange Act) to
ensure that material information relating
to the Acquired Companies is made
known to their respective management by
others within the Acquired Companies as
appropriate to allow timely decisions
regarding required disclosure and to make
the certifications required by the Exchange
Act with respect to the Company SEC
Documents and (ii) has disclosed, based on
its most recent evaluation prior to
the date of this Agreement, to its auditors
and the audit committee of the
Company Board (A) any significant
deficiencies in the design or operation of
internal controls which are reasonably
likely to adversely affect in any
material respect its ability to record,
process, summarize and report financial
data and have disclosed to its auditors any
material weaknesses in internal
controls, and (B) any fraud, whether or not
material, that involves management
or other employees who have a significant
role in its internal controls over
financial reporting. No disclosures
described in clause (A) or (B) of the
preceding sentence have been made by the
Company's management to the Company's
auditors and audit committee since July 30,
2002. The Company has initiated its
process of compliance with Section 404 of
SOX and expects to be in full
compliance therewith by December 31,
2005.
(d) Since
August 5, 2003, (i) none of the Company nor any of its
Subsidiaries nor, to the Company's
knowledge, any director, officer, employee,
auditor, accountant or representative of
any of the Company or any of its
Subsidiaries has received or otherwise had
or obtained knowledge of any material
complaint, allegation, assertion or claim,
whether written or oral, regarding
the accounting or auditing practices,
procedures, methodologies or methods of
the Company or any of its Subsidiaries or
their respective internal accounting
controls, including any
EXECUTION VERSION
17
<PAGE>
material complaint, allegation, assertion
or claim that the Company or of its
Subsidiaries has engaged in questionable
accounting or auditing practices and
(ii) no attorney representing the Acquired
Companies, whether or not employed
thereby, has reported evidence of a
material violation of U.S. federal
securities laws, breach of fiduciary duty
or similar material violation by the
Company or any of its officers, directors,
employees or agents, or those of its
Subsidiaries, to the Company Board or any
committee thereof or to any director
or officer of the Company. Since January 1,
2001, neither the Company nor any of
its Subsidiaries has received from the SEC
or any other Governmental Body any
written comments or questions with respect
to any of the Company SEC Reports
(including the financial statements
included therein) or any registration
statement filed by any of them with the SEC
or any notice from the SEC or other
Governmental Body that such Company SEC
Reports (including the financial
statements included therein) or
registration statements are being reviewed or
investigated, and to the Company's
knowledge, there is not, as of the date of
this Agreement, any investigation or review
being conducted by the SEC or any
other Governmental Body of any Company SEC
Document (including the financial
statements included therein).
(e)
Section 3.5(e) to the Company Disclosure Letter sets forth all
outstanding loans made by the Company or
any of its Subsidiaries to any
executive officer (as defined in Rule 3b-7
under the Exchange Act) or director
of the Company. Since July 30, 2002,
neither the Company nor any of its
Subsidiaries has made, or materially
modified, any loans to any executive
officer or director of the Company or any
of the Company's Subsidiaries.
(f) The
Company is not required to file any forms, reports, schedules,
statements or other documents with any
foreign Governmental Body that performs a
similar function to that of the SEC or any
securities exchange or quotation
service other than Nasdaq. No Subsidiary of
the Company is subject to the
periodic reporting requirements of Section
13 or 15 of the Exchange Act or is
otherwise required to file documents with
the SEC, any securities exchange or
quotation service, any other comparable
Governmental Body or any foreign
Governmental Body that performs a similar
function to that of the SEC.
3.6 Title
to Assets; Condition and Sufficiency. The Acquired Companies
have good and marketable title to all of
the material Assets that each purports
to own free and clear of all Encumbrances
(other than the Permitted
Encumbrances) and such Assets together with
the Assets covered under the Real
Property Leases, equipment leases, the
Intellectual Property Licenses and
licenses for Commercially Available
Software, are sufficient to permit the
Acquired Companies to conduct their
businesses in all material respects in the
ordinary course immediately after Closing
in substantially the same manner as
prior to Closing. Except for equipment
leases, the leases for the Real Property,
including all amendments thereto, to which
any of the Acquired Companies is a
party (the "REAL PROPERTY LEASES"), the
Intellectual Property Licenses and
licenses for Commercially Available
Software, the Acquired Companies own good
and marketable title in and to all other
Assets used or acquired for use in the
Acquired Companies' business and
operations. Other than the Subleases, no Person
other than the Company or its Subsidiaries,
owns any right, title or interest in
or to the Assets used or held for use in
connection with the business or
operations of the Acquired Companies
through any rights, title or interest
granted by the Acquired Companies or their
predecessors. The items of tangible
personal property owned or leased by the
Acquired Companies and the improvements
and fixtures located on the premises
covered by the Real Property Leases are in
good working order
EXECUTION VERSION
18
<PAGE>
or condition in all material respects,
reasonable wear and tear excepted and are
suitable in all material respects for the
uses for which they are intended,
other than surplus, obsolete and unwanted
assets in the ordinary course of
business, any material amounts of which has
previously been written off as of
the Latest Balance Sheet.
3.7
Obligations.
(a)
Neither the Company nor any of its Subsidiaries has any Obligations
of
any type other than (i) Obligations
reflected on the Latest Balance Sheet or in
the notes thereto; (ii) Obligations that
have been incurred by the Acquired
Companies since the date of the Latest
Balance Sheet and prior to the date
hereof and not in breach of any of the
representations and warranties made in
Section 3.8; (iii) Obligations incurred
subsequent to the date hereof in
accordance with Section 5.2(b) or (iv)
obligations under any Contract (other
than a Contract relating to a financing)
incurred by the Acquired Companies in
the ordinary course of business and
consistent with past practices, provided
that none of the Acquired Companies has
defaulted under, or is in breach of, any
provision of (or would be in breach or
default upon the giving of notice or the
passage of time), such Contract.
(b)
Section 3.7(b) to the Company Disclosure Letter sets forth, as of
the
date of this Agreement, a true, correct and
complete list of all of the Acquired
Companies' capital leases other than
capital leases involving payments of less
than $25,000 under any single lease or
$100,000 in the aggregate. Section 3.7(b)
to the Company Disclosure Letter sets
forth, as of the date of this Agreement, a
true and complete list of all of the
Company's letters of credit, including all
amounts currently outstanding.
3.8
Operations Since September 30, 2004. From September 30, 2004 and on
or
prior to the date of this Agreement:
(a) no
event has occurred, and no circumstance has arisen, that alone
or
in combination with any other events or
circumstances, had or would reasonably
be expected to have a Material Adverse
Effect;
(b) none
of the Acquired Companies has (i) incurred any Obligation
outside
the ordinary course of business consistent
with past practices; (ii) acquired or
disposed of any business or Assets (other
than inventory or obsolete or surplus
Assets, in each case, in the ordinary
course of business consistent with past
practices) or (iii) entered into any
Contract (other than purchase orders, trade
payables, or employment agreements, in each
case, in the ordinary course of
business consistent with past practices or
customer Contracts) or other
transaction, involving an amount exceeding
$100,000 individually, or $250,000 in
the aggregate;
(c) none
of the Acquired Companies has sold, issued or granted, or
authorized the issuance of, (i) any capital
stock or other security (except for
Company Common Stock issued upon the
exercise of outstanding Company Options);
(ii) any option, warrant or right to
acquire any capital stock or any other
security or (iii) any instrument
convertible into or exchangeable for any
capital stock or other security;
EXECUTION VERSION
19
<PAGE>
(d)
neither the Company nor any of its Subsidiaries has: (i) entered
into
a Specified Contract, except in the
ordinary course of business and consistent
with past practices; (ii) participated in
any merger, consolidation,
reorganization, share exchange, business
combination, recapitalization,
reclassification of shares, stock split,
reverse stock split or similar
transaction; (iii) acquired the business or
any bulk assets of any other Person;
(iv) completely or partially liquidated or
dissolved; (v) terminated any part of
their respective material businesses; (vi)
changed any of their methods of
accounting or accounting practices in any
material respect, other than to comply
with applicable laws or GAAP; (vii) made
any material Tax election; (viii)
commenced or settled any material
Proceeding or (ix) have incurred any
Obligation to any of their respective
Affiliates except for compensation and
participation in Benefit Plans by employees
in the ordinary course of business;
(e)
neither the Company nor any of its Subsidiaries has: (i)
declared,
accrued, set aside or paid any dividend or
made any distribution with respect to
any shares of capital stock (other than
transactions between or among the
Company and its Subsidiaries); (ii) formed
any Subsidiary or acquired any equity
or other interest in any Person; (iii)
amended their respective articles or
certificates of incorporation or formation,
bylaws or other organization
documents or (iv) entered into any Contract
that commits or committed any of
them to take any action or omit to take any
action that would constitute a
breach of any of the provisions of this
Agreement; and
(f)
neither the Company nor any of its Subsidiaries has engaged in
any
transaction that, if done after execution
of this Agreement, would violate
Section 5.2.
3.9
Tangible Property. All material Tangible Property of each of
the
Acquired Companies, wherever located, is,
in the aggregate: (a) suitable, in all
material respects, for the uses for which
it is employed and (b) in satisfactory
operating condition (except for ordinary
wear and tear), other than surplus,
obsolete and unwanted assets in the
ordinary course of business which has
previously been written off as of the
Latest Balance Sheet.
3.10 Real
Property.
(a) Except
as set forth in Section 3.10(a) to the Company Disclosure
Letter, neither the Company nor any of its
Subsidiaries owns any Real Property.
(b)
Section 3.10(b) to the Company Disclosure Letter sets forth, as of
the
date of this Agreement, a true and complete
schedule listing all Real Property
Leases. The Company has made available to
Buyer correct and complete copies of
the Real Property Leases. Each of the Real
Property Leases is in full force and
effect, and, to the Company's knowledge, is
enforceable against the landlord in
accordance with its terms. Except as set
forth in Section 3.10(c) to the Company
Disclosure Letter, none of the Real
Property Leases has been assigned by the
Company or any of its Subsidiaries. No
notices of default or notices of
termination have been received by the
Acquired Companies with respect to the
Real Property Leases which have not been
withdrawn or canceled. None of the
Company nor any of its Subsidiaries is, and
to the Company's knowledge, no other
party is, in material default under any
Real Property Lease.
(c)
Section 3.10(c) to the Company Disclosure Letter sets forth, as of
the
date of this Agreement, a true and complete
schedule listing all of the Acquired
Companies' arrangements to
EXECUTION VERSION
20
<PAGE>
sublease any of its Real Property (the
"SUBLEASES"), including the parties to
such sublease arrangement, whether such
sublessee is a Related Party, and the
scheduled payments. No notices of default
or notices of termination have been
received by the Acquired Companies with
respect to the Subleases which have not
been withdrawn or canceled. None of the
Company nor any of its Subsidiaries is,
and to the Company's knowledge, no other
party is, in material default under any
Sublease.
3.11
Environmental Matters. The Acquired Companies are in compliance
in
all material respects with all
Environmental Laws. There is no condition on any
Real Property that violates in any material
respects any Environmental Laws or
requires remediation or other material
action under Environmental Laws. The
Acquired Companies are not subject to any
Judgment that relates to any
Environmental Law. None of the Acquired
Companies have received any notice or
other communication (in writing or
otherwise) from any Person that alleges that
the Company or any of its Subsidiaries is
not in compliance with any
Environmental Law. The Company has
delivered to, or made available for review
by, Parent true and complete copies of all
environmental reports, studies,
investigations or correspondence (which are
in the possession or control of the
Company) regarding any environmental
related liabilities of the Acquired
Companies or any environmental conditions
at any property owned or operated by
the Acquired Companies or any corporate
predecessor in interest for which the
Company or any of its Subsidiaries would be
liable.
3.12
Intellectual Property.
(a) Except
for the Licensed Intellectual Property that is described in
Section 3.12(a) to the Company Disclosure
Letter and Commercially Available
Software, to the Company's knowledge, all
of the Intellectual Property that is
material to the conduct of the Acquired
Companies' business and operations as
currently conducted and operated is Owned
Intellectual Property. Other than the
Owned Intellectual Property, Commercially
Available Software and the Licensed
Intellectual Property, to the Company's
knowledge, there is no other material
Intellectual Property used or necessary for
use for the conduct of the business
and operations of the Acquired
Companies.
(b) The
Intellectual Property that is owned by the Acquired Companies
is
referred to herein as the "OWNED
INTELLECTUAL PROPERTY." Section 3.12(b) to the
Company Disclosure Letter sets forth a
complete list of all patents and patent
applications, registered trademarks and
applications to register trademarks,
Internet domain name registrations and
registered copyrights of the Acquired
Companies and the Company Software products
currently marketed by the Acquired
Companies. The Acquired Companies have
taken reasonable measures to protect for
its own sole use and benefit the
confidential and proprietary nature of the
Trade Secrets and confidential information
material to the business of the
Acquired Companies. None of the Acquired
Companies nor, to the Company's
knowledge, any other party, is in material
breach of or default under any
Contract or is not in compliance in all
material respects with applicable Law
relating to the Owned Intellectual
Property. The Acquired Companies have good
and marketable title in and to all of the
Owned Intellectual Property material
to the conduct of the Acquired Companies'
business and operations as currently
conducted and operated, including the items
listed in Section 3.12(b) to the
Company Disclosure Letter, free and clear
of any Encumbrances other than
Permitted Encumbrances. The Owned
Intellectual Property was not developed as
part
EXECUTION VERSION
21
<PAGE>
of the performance of any obligation for
any third Person which would require
the taking of any action, whether or not
actually taken, in order for all rights
to the Owned Intellectual Property to
become vested in, or retained by, the
Acquired Companies.
(c) All
Copyrights comprising the Owned Intellectual Property material
to
the conduct of the Acquired Companies'
business and operations as currently
conducted and operated, including the
applicable items listed in Section 3.12(c)
to the Company Disclosure Letter, consist
exclusively of (i) "works made for
hire" as that term is used in Title 17 of
the United States Code or (ii) works
developed by independent contractors or
consultants engaged by the Acquired
Companies which, except as would not
otherwise have a Material Adverse Effect,
have assigned to the Acquired Companies
their entire right, title and interest
in and to the work or works produced,
pursuant to a valid and enforceable
written Contracts. The Owned Intellectual
Property does not include any
Intellectual Property in which any Person
other than the Acquired Companies has
or may acquire any right of ownership,
control or compensation.
(d) None
of the Acquired Companies has granted to any Person or
obligated
itself to grant to any Person any license,
option, or other right in or with
respect to any of the Owned Intellectual
Property, whether or not requiring
payment to the Acquired Companies, other
than licenses to use Owned Intellectual
Property granted to clients under client
Contracts entered into in the ordinary
course of business, the Contracts or forms
of which (containing all material
terms) were made available to Parent. No
Person has in writing or, to the
Company's knowledge, orally, either
asserted any rights in or offered to grant
the Acquired Companies a license or any
other right of use with respect to the
Owned Intellectual Property. None of the
Acquired Companies have any obligation
to compensate any Person for any
development, license, use, sale, distribution
or modification of any of the Owned
Intellectual Property.
(e)
Section 3.12(e) to the Company Disclosure Letter sets forth a
complete
list of all written Contracts
("INTELLECTUAL PROPERTY LICENSES") that provide
for the license of Intellectual Property to
the Acquired Companies ("LICENSED
INTELLECTUAL PROPERTY") other than
Commercially Available Software, which is not
required to be listed. None of the Acquired
Companies, or, to the Company's
knowledge, any other party, is in material
breach of or default under any
Intellectual Property Licenses or not in
compliance in all material respects
with applicable Law relating to any
material Licensed Intellectual Property. To
the Company's knowledge, each Intellectual
Property License is valid and in full
force and effect in all material respects.
The Acquired Companies have obtained
from all third party developers and/or
owners of any material software programs
utilized in connection with the operation
of the Acquired Companies' business
any licenses that may be necessary for the
Acquired Companies to permit any
customer, client or other business
relationship thereof to utilize such material
software programs in connection with the
services provided by the Acquired
Companies, at an Acquired Company site on
an Acquired Company computer and at a
non-Acquired Company site or on a
non-Acquired Company computer to the extent
such software programs actually are being
used by such persons at such
locations.
(f) Except
for indemnification obligations of the Acquired Companies to
their customers and vendors in the ordinary
course of business under written
Contracts, forms of which (containing all
of the material terms) have made
available to Parent, none of the Acquired
Companies has agreed to indemnify any
Person against any charge of infringement
or other
EXECUTION VERSION
22
<PAGE>
violation with respect to any Intellectual
Property. None of the Acquired
Companies has infringed, misappropriated or
otherwise violated the Intellectual
Property rights of a third Person. None of
the Acquired Companies has received
any written assertion, complaint, demand or
any notice whatsoever alleging any
such infringement, misappropriation or
other violation.
(g) There
is no Proceeding pending, or to the Company's knowledge,
threatened, with respect to, and no
outstanding Judgment concerning (i) the
Owned Intellectual Property or (ii) right
of the Acquired Companies to develop,
license, use, sell, distribute or modify
the Company Software.
3.13
Contracts.
(a) Set
forth in Section 3.13(a) to the Company Disclosure Letter or
filed
as exhibits to the Company SEC Documents
(filed since January 1, 2004), is a
true and complete schedule listing of all
of the following types of Contracts to
which any of the Acquired Companies is a
party or by which any of the Acquired
Companies is bound as of the date of this
Agreement (collectively, the
"SPECIFIED CONTRACTS"), grouped into the
following categories:
(i) Contracts with customers or clients pursuant to which the
customer
or client pays the Company an annual amount exceeding $250,000;
(ii) Contracts for the purchase, license, lease and/or
maintenance
of any
Software other than Commercially Available Software;
(iii) Contracts for the lease or sublease of Real Property owned
or
used by
any of the Acquired Companies;
(iv) loan agreements, mortgages, notes, and guarantees;
(v) Contracts that obligate the Company to make payments as a
result
of the
transactions contemplated herein that are contingent on a
"change
in
ownership or control," within the meaning of Section 280G of the
Code;
(vi) any Contract and any amendment thereto required to be filed
,
or filed, as an
exhibit to any report of the Company (whether annual,
quarterly
or interim) filed pursuant to the Exchange Act of the type
described
in Item 601(b)(10) of Regulation S-K of the Securities Act
entered
into by the Company or any of its Subsidiaries since and
including
January 1,
2003;
(vii) joint venture, partnership and similar agreement;
(viii) Contracts that are not cancelable within 60 days without
payment of
a material (with respect to such contract) amount of money
that,
after the Effective Time, would have the effect of limiting the
freedom of
the Company or any of its Subsidiaries to compete in any line
of
business in any geographic area or to hire any individual or group
of
individuals, other than covenants relating to the non-solicitation
or
non-hiring
of client personnel contained in client Contracts entered into
in the
ordinary course of business;
EXECUTION VERSION
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<PAGE>
(ix) Contracts providing for "earn-outs," "savings guarantees,"
"performance guarantees," or other contingent payments by the
Company or
any of its
Subsidiaries involving more than $250,000 over the term of such
Contract;
(x) Contracts with or for the benefit of any of any Related Party
of
any
Acquired Company other than those disclosed in the "Management
Compensation" or "Certain Relationships and Related Transactions"
sections
of the
Company's definitive proxy statement filed with the SEC on
April
28,
2004;
(xi) Contracts that provide for the indemnification of any
officer
or
director of any Acquired Company;
(xii) Contracts relating to the acquisition, transfer,
development,
sharing or
licensing of any Intellectual Property by any Acquired Company;
and
(xiii) other Contracts that requires payments in excess of
$100,000
per
year.
(b) The
Company has provided Parent true, correct and complete copies
of
all Specified Contracts. With respect to
each of the Contracts to which any of
the Acquired Companies is a party or is
bound, none of the Acquired Companies is
in default thereunder, nor would be in
default thereunder with the passage of
time, the giving of notice, or both, and,
to the Company's knowledge, none of
the other parties to any Contract is in
default thereunder or would be in
default thereunder with the passage of
time, the giving of notice or both,
except in each case for those defaults
which, individually or in the aggregate,
would not reasonably be expected to have a
Material Adverse Effect. Each
Contract to which any of the Acquired
Companies is a party or is bound, is in
full force and effect in accordance with
its terms, except where the failure of
any or all of such Contracts to be in full
force and effect, individually or in
the aggregate, would not reasonably be
expected to have a Material Adverse
Effect. No party to any Specified Contract
to which any of the Acquired
Companies is a party or is bound has made
or threatened any claims or demands in
writing against any Acquired Company for
cancellation, termination or
modification of the subcontracts or for
other remedies or relief. Neither the
Company nor any of its Subsidiaries have
assigned or otherwise conveyed or
transferred, or agreed to assign, convey or
transfer to any Person, any right,
title or interest in or to any of the
Specified Contracts, or any account
receivable relating thereto, whether as a
security interest or otherwise.
3.14
Employees; Labor Matters.
(a) None
of the Acquired Companies is a party to or bound by any union
or
collective bargaining Contract, nor is any
such Contract currently being
negotiated by or on behalf of any of the
Acquired Companies. Other than possible
isolated individual controversies which
have not had, and could not reasonably
be expected to have, individually or in the
aggregate, a Material Adverse
Effect, there are no controversies pending
or, to the Company's knowledge,
threatened between the Company or its
Subsidiaries and any of their respective
employees. None of the Acquired Companies
is engaged in any unfair labor
practice of any nature. Since January 1,
2001, there has not been any slowdown,
work stoppage, labor dispute or union
organizing activity, or any similar
activity or dispute, affecting any of the
Acquired Companies
EXECUTION VERSION
24
<PAGE>
or any of their employees. There is not now
pending, and to the Company's
knowledge, no Person has threatened to
commence, any such slowdown, work
stoppage, labor dispute or union organizing
activity or any similar activity or
dispute.
(b)
Section 3.14(b) to the Company Disclosure Letter sets forth all of
the
Acquired Companies' employees who are not
"at will" employees. Section 3.14(b)
sets forth a true, correct and complete
list of all employment contracts,
severance agreements or similar agreements
between any of the Acquired Companies
and any current or former employee (to the
extent still in force with respect to
former employees) (i) whose base salary is
more than $125,000 per year; (ii)
whose agreement requires more than two
weeks notice by the employer to be
terminated or (iii) whose agreement
provides that the employee is entitled to
receive severance, termination or other
similar payments in excess of two weeks
of base salary upon termination by the
employer. True, correct and complete
copies of such employment contracts,
severance agreements or similar agree
