SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of earliest event reported: October 28, 2002
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SANDATA TECHNOLOGIES, INC.
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(Exact name of registrant as specified in charter)
Delaware 000-14401 11-2841799
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(State of Incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
26 Harbor Park Drive, Port Washington, New York 11050
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(Address of Principal Executive Offices) (Zip Code)
(516) 484-4400
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(Registrant's telephone number, including area code)
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(Former name or former address, if changed since last report)
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Item 5. Other Events.
On October 28, 2002, Sandata Technologies, Inc. (the "Company"), Bert E.
Brodsky, Hugh Freund, Gary Stoller and Sandata Acquisition Corp., a Delaware
corporation, entered into an Agreement and Plan of Merger dated as of October
28, 2002 (the "Merger Agreement"). The Merger Agreement provides for the merger
of Sandata Acquisition Corp. with and into the Company, with the Company
continuing as the surviving corporation. Prior to the effective time of the
merger, Messrs. Brodsky, Freund and Stoller and members of their immediate
family (the "Purchaser Group") have agreed to contribute all of the Company's
stock owned by them to Sandata Acquisition Corp. Pursuant to the Merger
Agreement, at the effective time of the merger, (i) each share of the Company's
common stock, other than stock owned by the Purchaser Group and Sandata
Acquisition Corp., will be converted into the right to receive the merger
consideration of $1.91 in cash and (ii) each outstanding share of Sandata
Acquisition Corp. will be converted into one share of common stock of the
surviving corporation. Pursuant to the Merger Agreement, all outstanding options
to purchase common stock of the Company will be cancelled and converted into the
right to receive a cash payment equal to the product of the number of shares
subject to the option and the difference between the merger consideration of
$1.91 and the per share exercise price of the option. Under the Merger
Agreement, options held by the Purchaser Group will be cancelled and the holders
of those options will not be entitled to receive any consideration.
Completion of the merger is subject to customary closing conditions,
including, among others, stockholder approval, that no actions or proceedings
are pending seeking to prevent consummation of the merger and that no injunction
preventing the consummation of the merger is in effect. As previously disclosed
in the Company's Quarterly Report filed on Form 10-QSB on October 15, 2002, two
stockholders of the Company have filed lawsuits against the Company and the
members of its board of directors alleging, among other things, that the
defendants breached their fiduciary duties to the Company and its stockholders
in connection with Sandata Acquisition Corp.'s proposal to acquire all of the
outstanding stock the Company.
The Purchaser Group owns a sufficient number of the Company's outstanding
stock to approve the merger and has agreed to vote, and to cause Sandata
Acquisition Corp. to vote, all shares of the Company owned by them and Sandata
Acquisition Corp. in favor of the merger. The Merger Agreement does not include
a financing contingency. Stockholder approval will be solicited by means of a
proxy statement, which will be mailed by the Company to stockholders upon
completion of the required Securities and Exchange Commission filing and review
process.
The foregoing is merely a summary of certain of the terms of the Merger
Agreement and does not purport to be a complete statement of the terms,
conditions or provisions of such agreement. A copy of the Merger Agreement is
included as Exhibit 2.1 and the Press Release is included as Exhibit 99.1 to
this report.
Item 7(c). Exhibits.
Exhibit 2.1 Agreement and Plan of Merger, dated as of October 28, 2002,
by and among Sandata Acquisition Corp., Bert E. Brodsky,
Hugh Freund, Gary Stoller and Sandata Technologies, Inc.
Exhibit 99.1 Press Release issued by Sandata Technologies, Inc. on
November 4, 2002.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SANDATA TECHNOLOGIES, INC.
Date: November 4, 2002 By: /s/ Bert E. Brodsky
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Bert E. Brodsky
Chairman and
Chief Executive Officer
Exhibit Index
Exhibit Number Description
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2.1 Agreement and Plan of Merger, dated as of October 28, 2002,
by and among Sandata Acquisition Corp., Bert E. Brodsky,
Hugh Freund, Gary Stoller and Sandata Technologies, Inc.
99.1 Press Release issued by Sandata Technologies, Inc.
on November 4, 2002.
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
SANDATA ACQUISITION CORP.
BERT E. BRODSKY
HUGH FREUND
GARY STOLLER
AND
SANDATA TECHNOLOGIES, INC.
Dated as of October 28, 2002
TABLE OF CONTENTS
ARTICLE I
DEFINED TERMS
1.1 Defined Terms........................................................2
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ARTICLE II
MERGER
2.1 Merger and Surviving Corporation.....................................2
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(a) Merger......................................................2
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(c) Certificate of Incorporation................................2
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(d) By-Laws.....................................................2
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2.2 Effectiveness of Merger..............................................2
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2.3 Effect on Capital Stock..............................................3
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2.4 Delivery of Merger Consideration.....................................3
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(a) Payment Agent...............................................3
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(b) Payment Procedures..........................................3
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(c) No Further Ownership Rights in the Target Common Stock......4
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(d) Termination of Payment Fund.................................4
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(e) Investment of Payment Fund..................................4
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(f) Withholding Rights..........................................5
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2.5 Treatment of Options......... .......................................5
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(a) Options Generally...........................................5
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(b) Cancellation of Certain Options.............................5
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(c) Cancellation Procedures........... .........................5
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(d) Effect of Payments..........................................6
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2.6 Effect of Merger.....................................................6
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(a) Generally...................................................6
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(b) Certain Rights..............................................6
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2.7 Directors of Surviving Corporation...................................7
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2.8 Officers of Surviving Corporation....................................7
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2.9 Closing..............................................................7
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND KEY STOCKHOLDERS
3.1 Valid Existence; Qualification.......................................7
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3.2 Consents.............................................................8
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3.3 Authority; Binding Nature of Agreement...............................8
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3.4 No Breach............................................................8
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3.5 Capitalization.......................................................8
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(a) Purchaser...................................................8
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(b) Target Shares...............................................9
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3.6 Information Supplied.................................................9
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3.7 Operations of Purchaser..............................................9
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3.8 No Financing.........................................................9
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3.9 Litigation; Compliance with Law.....................................10
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3.10 Brokers.............................................................10
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3.11 Payments............................................................10
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3.12 Untrue or Omitted Facts.............................................10
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ARTICLE IV
PRE-CLOSING COVENANTS
4.1 Purchaser Covenants.................................................10
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(a) Certain Actions............................................10
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(b) Government Filings.........................................11
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(c) Voting.....................................................11
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(d) Ownership in Target........................................11
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4.2 Competing Transactions..............................................11
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of the Proxy Statement and Schedule 13E-3...............12
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5.2 Stockholders' Meeting...............................................12
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5.3 Legal Conditions to Merger..........................................13
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5.4 Employee Stock Options; Employee Plans and Benefits.................13
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(a) Options....................................................13
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(b) Payments in Respect of Options.............................13
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(c) Time of Payment............................................13
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(d) Withholding................................................13
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(e) Termination of Equity-Based Compensation...................13
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(f) No Right to Employment.....................................14
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5.5 Indemnification; Exculpation; Directors' and Officers' Insurance....14
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5.6 Communication to Employees..........................................14
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5.7 Additional Actions..................................................14
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ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger..........15
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(a) Stockholder Approval.......................................15
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(b) Government Approvals.......................................15
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(c) Consents Under Agreements..................................15
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(d) No Action..................................................15
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(e) No Injunctions or Restraints; Illegality...................15
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(f) Statutes...................................................15
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(g) Dissenting Shares..........................................15
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6.2 Conditions to Obligations of the Key Stockholders and Purchaser.....16
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(a) Performance of Obligations of Target.......................16
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(b) Material Adverse Effect....................................16
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(c) Proceedings................................................16
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6.3 Conditions to Obligations of Target.................................16
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(a) Representations and Warranties.............................16
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(b) Performance of Obligations of the Key
Stockholders and Purchaser...............................16
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(c) Fairness Opinion...........................................16
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ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination.........................................................17
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7.2 Effect of Termination...............................................18
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7.3 Fees, Expenses and Other Payments...................................18
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(a) Generally..................................................18
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(b) Reimbursement..............................................18
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(c) Payment Obligations........................................18
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7.4 Amendment...........................................................18
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7.5 Extension; Waiver...................................................18
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ARTICLE VIII
DEFINITIONS
8.1 Certain Definitions.................................................19
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ARTICLE IX
GENERAL PROVISIONS
9.1 Survival of Representations, Warranties and Agreements..............22
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9.2 Notices.............................................................22
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9.3 Interpretation......................................................23
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9.4 Counterparts........................................................23
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9.5 Entire Agreement; No Third Party Beneficiaries;
Rights of Ownership................................................23
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9.6 Governing Law; Consent to Jurisdiction..............................23
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(a) Governing Law..............................................23
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(b) Jurisdiction and Venue.....................................23
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9.7 Severability; No Remedy in Certain Circumstances....................24
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9.8 Publicity...........................................................24
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9.9 Assignment..........................................................24
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9.10 Adjustment..........................................................24
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AGREEMENT AND PLAN OF MERGER dated as of October 28, 2002 (the "Agreement")
by and among SANDATA ACQUISITION CORP., a Delaware corporation ("Purchaser"),
BERT E. BRODSKY ("Brodsky"), HUGH FREUND ("Freund"), GARY STOLLER ("Stoller"),
(Brodsky, Freund and Stoller are sometimes collectively referred to as "Key
Stockholders") and SANDATA TECHNOLOGIES, INC., a Delaware corporation ("Target")
(Purchaser, Target and the Key Stockholders are sometimes collectively referred
to as the "Parties" and individually as a "Party").
RECITALS:
WHEREAS, it is the intention of the Parties that Purchaser shall merge with
and into the Target (the "Merger"), with the Target being the surviving
corporation;
WHEREAS, a special committee of the Board of Directors of the Target (the
"Board"), consisting entirely of non-management directors of the Target (the
"Special Committee"), was established for, among other purposes, the purpose of
evaluating the Merger and making a recommendation to the Board with regard to
the Merger.
WHEREAS, the Special Committee has received the opinion of Brean Murray &
Co., Inc. (the "Independent Advisor"), an independent financial advisor to the
Special Committee, that, as of October 28, 2002, the consideration to be
received by the holders of Target Common Stock (as hereinafter defined) pursuant
to the Merger is fair, from a financial point of view, to such holders (the
"Fairness Opinion").
WHEREAS, the Special Committee has, after consultation with the Independent
Advisor selected by the Special Committee and in light of and subject to the
terms and conditions set forth herein, (i) determined that (x) the Merger
Consideration (as defined below) is fair to the holders of Target Common Stock
and (y) the Merger is advisable and in the best interests of the Target and the
holders of Target Common Stock; (ii) approved, and declared the advisability of,
this Agreement and (iii) determined to recommend that the Board and the
stockholders of the Target vote to adopt this Agreement.
WHEREAS, the Board, based on the unanimous recommendation and approval of
the Special Committee, has, in light of and subject to the terms and conditions
set forth herein, (i) determined that (x) the Merger Consideration (as defined
below) is fair to the holders of Target Common Stock and (y) the Merger is
advisable and in the best interests of the Target and the holders of Target
Common Stock; (ii) approved, and declared the advisability of, this Agreement
and (iii) determined to recommend that the stockholders of the Target vote to
adopt this Agreement.
WHEREAS, the Board of Directors and stockholders of Purchaser have approved
this Agreement and the Merger and the transactions contemplated by this
Agreement;
WHEREAS, Purchaser and the Key Stockholders desire to make certain
representations and warranties and Purchaser, the Key Stockholders and Target
desire to make certain covenants and agreements in connection with the Merger
and also to prescribe certain conditions to the Merger;
NOW, THEREFORE, in consideration of the mutual benefits to be derived
hereby and the representations, warranties, covenants and agreements herein
contained, the Parties agree as follows:
ARTICLE I
DEFINED TERMS
1.1 Defined Terms. Capitalized terms used in this Agreement will have the
meanings given such terms in Article VIII hereof or elsewhere in the text of
this Agreement, and variants and derivatives of such terms shall have
correlative meanings.
ARTICLE II
MERGER
2.1 Merger and Surviving Corporation.
(a) Merger. Pursuant to the General Corporation Law of the State of
Delaware (the "Delaware Statute"), Purchaser shall merge with and into Target,
and Target shall be the surviving corporation after the Effective Time of the
Merger (the "Surviving Corporation") and shall continue to exist as a
corporation created and governed by the laws of the State of Delaware.
(b) Tax Consequences. For Federal income tax purposes, the parties intend
the Merger to be treated as a tax-free reorganization within the meaning of
Section 368(a) of the Internal Revenue Code of 1986, as amended.
(c) Certificate of Incorporation. The Certificate of Incorporation of the
Target as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation from and after the
Effective Time.
(d) By-Laws. The By-Laws of the Target as in effect immediately prior to
the Effective Time shall be the By-Laws of the Surviving Corporation from and
after the Effective Time.
2.2 Effectiveness of Merger. If all of the conditions precedent to the
obligations of each of the Parties hereto as hereinafter set forth shall have
been satisfied or waived, a certificate of merger relating to the Merger (the
"Certificate of Merger") shall be delivered as soon as practicable after the
Closing to the Secretary of State of Delaware for filing in accordance with the
Delaware Statute. The Merger shall become effective upon the acceptance of such
filing by the Secretary of State of Delaware or at such later time as is
specified in the Certificate of Merger, which effective time shall be the
"Effective Time" of the Merger.
2.3 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger, and without any action on the part of the holder thereof:
(i) subject to Section 2.3(iv), and other than shares of common stock of
the Target, par value $.001 ("Target Common Stock"), owned by Purchaser, each
share of Target Common Stock issued and outstanding immediately prior to the
Effective Time, shall be converted into the right to receive an amount in cash,
without interest, equal to $1.91 (the "Merger Consideration") in the manner
provided in Section 2.4 hereof;
(ii) each share of Target Common Stock issued and held by the Purchaser
and/or in the Target's treasury or held by any Subsidiary of the Target
immediately prior to the Effective Time, shall, by virtue of the Merger, cease
to be outstanding and shall be cancelled and retired without payment of any
consideration therefor;
(iii) each share of common stock, par value $.01 per share, of Purchaser
that is issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of common stock
of the Surviving Corporation; and
(iv) notwithstanding anything in this Agreement to the contrary, to the
extent provided by the Delaware Statute, Purchaser will not make any payment of
Merger Consideration with respect to Target Common Stock held by any person (a
"Dissenting Stockholder") who elects to demand appraisal of such Dissenting
Stockholder's shares and duly and timely complies with all of the provisions of
the Delaware Statute concerning the right of holders of Target Common Stock to
require appraisal of their shares ("Dissenting Shares"), but such Dissenting
Stockholders shall have the right to receive such consideration as may be
determined to be due such Dissenting Stockholders pursuant to the laws of the
State of Delaware. If, after the Effective Time, a Dissenting Stockholder
withdraws such Dissenting Stockholder's demand for appraisal or fails to perfect
or otherwise loses such Dissenting Stockholder's right of appraisal, in any case
pursuant to the Delaware Statute, such Dissenting Shares will be deemed to be
converted as of the Effective Time into the right to receive the Merger
Consideration pursuant to Section 2.3(i).
2.4 Delivery of Merger Consideration.
(a) Payment Agent. As of the Effective Time, Purchaser shall deposit, or
shall cause to be deposited, with a bank or trust company designated by
Purchaser and satisfactory to the Special Committee (the "Payment Agent"), for
the benefit of the holders of Target Common Stock, for payment in accordance
with this Article II through the Payment Agent, the Merger Consideration to be
paid in respect of all Target Common Stock (such funds deposited with the
Payment Agent, the "Payment Fund").
(b) Payment Procedures. As soon as reasonably practicable after the
Effective Time, the Payment Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented Target Common Stock (the "Certificates"), the following documents:
(i) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
delivery of the Certificates to the Payment Agent and shall be in such form and
have such other provisions as Purchaser may reasonably specify); and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for payment with respect thereto. Upon surrender of a Certificate for
cancellation to the Payment Agent together with such letter of transmittal, duly
executed, the holder of such Certificate shall be entitled to receive in
exchange therefor the Merger Consideration payable with respect to the Target
Common Stock represented by such Certificate pursuant to the provisions of this
Article II, and the Certificate so surrendered shall forthwith be cancelled. In
the event that a holder has lost or misplaced a Certificate, an affidavit of
loss thereof (together with an appropriate indemnity and/or bond if Purchaser so
requires by notice in writing to the holder of such Certificate) satisfactory in
form and substance to the Target's transfer agent and the Payment Agent shall
accept such letter of transmittal in lieu of the applicable Certificate. In the
event of a transfer of ownership of Target Common Stock which is not registered
in the transfer records of the Target, payment of the applicable Merger
Consideration may be made to a transferee if the Certificate representing such
Target Common Stock is presented to the Payment Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.4, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration with respect thereto as contemplated by this
Section 2.4. No interest shall accrue or be paid to any beneficial owner of
Target Common Stock or any holder of any Certificate with respect to the Merger
Consideration payable upon the surrender of any Certificate.
(c) No Further Ownership Rights in the Target Common Stock. The Merger
Consideration paid with respect to the cancellation of Target Common Stock in
accordance with the terms hereof shall be deemed to have been paid in full
satisfaction of all rights pertaining to such Target Common Stock and there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the Target Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be cancelled and exchanged as provided in this Article II, subject to
applicable law in the case of Dissenting Shares.
(d) Termination of Payment Fund. Any portion of the Payment Fund which
remains undistributed to the stockholders of the Target for six months after the
Effective Time shall be delivered to the Surviving Corporation, upon demand, and
any stockholders of the Target who have not theretofore complied with this
Article II shall thereafter look only to the Surviving Corporation for payment
of their claim for the Merger Consideration. Upon termination of the Payment
Fund pursuant to this subsection and upon delivery to the Surviving Corporation
of the balance thereof, the Surviving Corporation shall have the right to invest
any such amount delivered to it in its sole discretion.
(e) Investment of Payment Fund. The Payment Agent shall invest any cash
included in the Payment Fund as directed by the Surviving Corporation, in (i)
obligations of or guaranteed by the United States, and (ii) certificates of
deposit, bank repurchase agreements and bankers' acceptances of any bank or
trust company organized under federal law or under the law of any state of the
United States or of the District of Columbia that has capital, surplus and
undivided profits of at least $500 million or in money market funds which are
invested substantially in such investments, none of which shall have maturities
of greater than one year. Any interest or other income resulting from such
investments shall be paid to the Surviving Corporation. The Surviving
Corporation shall replace any net losses incurred by the Payment Fund as a
result of investments made pursuant to this Section 2.4(e).
(f) Withholding Rights. The Surviving Corporation or the Payment Agent
shall be entitled to deduct and withhold from the Merger Consideration payable
pursuant to this Agreement to any holder of Certificates or Target Common Stock
represented thereby such amounts (if any) as the Surviving Corporation or the
Payment Agent is required to deduct and withhold with respect to the making of
such payment under the Internal Revenue Code of 1986, as amended (the "Code"),
or any provision of state, local or foreign tax law. To the extent that amounts
are so withheld by the Surviving Corporation or the Payment Agent, such withheld
amounts shall be treated for all purposes of this Agreement as having been paid
to the holder of the Target Common Stock in respect of which such deduction and
withholding was made by the Surviving Corporation or the Payment Agent.
2.5 Treatment of Options.
(a) Options Generally. Prior to the Effective Time, except as provided in
Section 2.5(b) hereof, the Board of Directors of the Target (and/or, if
appropriate, the Special Committee) shall adopt appropriate resolutions and take
all other actions necessary to provide that each outstanding stock option or
warrant (each, an "Option") heretofore granted by the Target, whether under the
Target's 1995 Stock Option Plan, 1998 Stock Option Plan or 2000 Stock Option
Plan (collectively, the "Target Stock Plans"), or otherwise, whether or not then
vested or exercisable, shall, at the Effective Time, be cancelled, and each
holder thereof shall be entitled to receive a payment in cash as provided in
Section 5.3 hereof, if any (subject to any applicable withholding taxes, the
"Cash Payment"). As provided herein, unless otherwise determined by Purchaser,
the Target Stock Plans or other plan, program or arrangement providing for the
issuance or grant of any other interest in respect of the capital stock of the
Target) shall terminate as of the Effective Time. After the date hereof, the
Target will not issue any Options or other options, warrants, rights or
agreements which would entitle any person to acquire any capital stock of the
Target or, except as otherwise provided in this Section 2.5(a) or in Section
5.3, to receive any payment in respect thereof.
(b) Cancellation of Certain Options. At the Effective Time, any and all of
the Options held by Bert E. Brodsky, Hugh Freund, Gary Stoller, or any member of
the immediate family of any of them and/or trusts for their benefit (the
"Purchaser Group"), whether or not exercisable at such time, shall without any
action on part of the holder thereof be cancelled.
(c) Cancellation Procedures. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall mail or otherwise cause to be
delivered to each record Option holder (other than the Purchaser Group) as of
the Effective Time, a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Option shall pass,
only upon receipt of any originally-executed copy of the Option Agreement
between the Optionholder and the Target which evidences the Option (the "Option
Agreement") ) and instructions for use in effecting the surrender for
cancellation by the Surviving Corporation of the originally-executed Option
Agreement for payment therefor, all of which shall be in form and substance
reasonably satisfactory to the Target. Upon surrender to the Surviving
Corporation for cancellation of an Option Agreement, together with such letter
of transmittal duly executed and any other necessary documents reasonably
required by the Surviving Corporation, such Option Agreement shall forthwith be
cancelled. Payment with respect to each Option shall be made only to the person
in whose name the Option Agreement is registered. No interest shall be paid or
accrued on the cash payable upon the surrender of the Option Agreement. Until
surrender, in accordance with the provisions of this Section 2.5(c), the Option
Agreement which immediately prior to the Effective Time evidenced outstanding
Options (except for Option Agreements held by the Purchaser Group) shall
represent for all purposes the right to receive cash as herein provided. If any
holder of an Option shall not surrender to the Surviving Corporation his Option
Agreement on or before the fourth anniversary of the Effective Date, he shall
forfeit his interest in payment as provided in this Agreement which interest
shall revert to the Surviving Corporation.
(d) Effect of Payments. All payments made in accordance with the terms of
this Section 2.5 and Section 5.3 in respect of Options shall be deemed to have
been made in full satisfaction of all rights pertaining to such Option.
2.6 Effect of Merger.
(a) Generally. Except as herein otherwise specifically set forth, the
identity, existence, purposes, powers, franchises, rights and immunities of
Target shall continue unaffected and unimpaired by the Merger, and the corporate
identity, existence, purposes, powers, franchises and immunities of Purchaser
shall be merged into Target, and Target, as the Surviving Corporation, shall be
fully vested therewith at the Effective Time.
(b) Certain Rights. At the Effective Time:
(i) All rights, privileges, goodwill, franchises and property, real,
personal and mixed, and all debts due on whatever account and all other things
in action, belonging to Purchaser shall be, and they hereby are, bargained,
conveyed, granted, confirmed, transferred, assigned and set over to and vested
in Target, as the Surviving Corporation, by operation of law and without further
act or deed, and all property and rights, and all and every other interest of
Purchaser shall be the property, rights and interests of Target, as the
Surviving Corporation, as they were of Purchaser;
(ii) No Action or proceeding, whether civil or criminal, pending at the
Effective Time by or against either Purchaser or Target, or any stockholder,
officer or director thereof, shall abate or be discontinued by the Merger, but
may be enforced, prosecuted, settled or compromised as if the Merger had not
occurred, or the Surviving Corporation may be substituted in such Action or
proceeding in place of Purchaser; and
(iii) All rights of employees and creditors and all Liens (as hereinafter
defined) upon the property of Purchaser shall be preserved unimpaired, limited
to the property affected by such Liens at the Effective Time, and all the debts,
liabilities and duties of Purchaser shall attach to Target as the Surviving
Corporation and shall be enforceable against the Surviving Corporation to the
same extent as if all such debts, liabilities and duties had been incurred or
contracted by it.
2.7 Directors of Surviving Corporation. The persons comprising the Board of
Directors of the Purchaser immediately prior to the Effective Time shall be the
Board of Directors of the Surviving Corporation, who shall hold office from the
Effective Time in accordance with its By-Laws until the next annual meeting of
stockholders and until their respective successors shall have been elected and
shall have qualified, subject to the terms hereof.
2.8 Officers of Surviving Corporation. The officers of the Purchaser
immediately prior to the Effective Time shall be the Board of Directors of the
Surviving Corporation, who shall hold office from the Effective Time in
accordance with its By-Laws until the next annual meeting of directors and until
their respective successors shall have been elected or appointed and shall have
qualified, subject to the terms hereof.
2.9 Closing. Unless this Agreement shall have been terminated pursuant to
Article VII and subject to the satisfaction or waiver of the conditions set
forth in Article VI, the closing of the Merger (the "Closing") will take place
as promptly as practicable (and in any event within five business days)
following satisfaction or waiver of the conditions set forth in Article VI (the
"Closing Date"), but in no event later than April 15, 2003, at the offices of
Certilman Balin Adler & Hyman, LLP, 90 Merrick Avenue, East Meadow, New York
11554, unless another date, time or place is agreed to in writing by the
Parties.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND KEY STOCKHOLDERS
Purchaser and the Key Stockholders, jointly and severally, make the
following representations and warranties to Target, each of which shall be
deemed Material, and Target in executing, delivering and consummating this
Agreement, has relied upon the correctness and completeness, in all Material
respects, of each of such representations and warranties:
3.1 Valid Existence; Qualification. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Purchaser has the power to carry on its business as now conducted and
to own its assets. Purchaser is not required to be qualified in any jurisdiction
in order to own its assets or carry on its business as now conducted, and there
has not been any claim by any other jurisdiction to the effect that Purchaser is
required to qualify or otherwise be authorized to do business as a foreign
corporation therein. The copies of Purchaser's Certificate of Incorporation, as
amended to date, certified by the Secretary of State of the State of Delaware,
and By-Laws, as amended to date (certified by the Secretary of Purchaser), which
have been delivered to Target, are true and complete copies of those documents
as in effect on the date hereof.
3.2 Consents. No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity or other
Person is required to be received by or on the part of Purchaser or any Key
Stockholder to enable Purchaser and/or such Key Stockholder to enter into and
carry out this Agreement and/or Purchaser to consummate the Merger.
3.3 Authority; Binding Nature of Agreement. Purchaser has the corporate
power and authority to enter into this Agreement and carry out its obligations
hereunder. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by the board of
directors and stockholders of Purchaser, and no other corporate proceedings on
the part of Purchaser are necessary to authorize the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby.
This Agreement constitutes the valid and binding obligation of Purchaser and
each Key Stockholder and is enforceable against it in accordance with its terms.
3.4 No Breach. Neither the execution and delivery of this Agreement nor
compliance by Purchaser and/or any Key Stockholder with any of the provisions
hereof nor the consummation of the transactions contemplated hereby will:
(i) violate or conflict with any provision of the Certificate of
Incorporation or By-Laws of Purchaser;
(ii) violate or conflict with, or alone or with notice or the passage of
time, or both, result in the breach or termination of, or otherwise give any
party the right to terminate, or declare a Default under, the terms of any
Contract to which Purchaser and/or any Key Stockholder is a party or by which it
or he may be bound;
(iii) result in the creation of any Lien upon any of the assets of
Purchaser;
(iv) violate any judgment, order, injunction, decree or award against, or
binding upon, Purchaser and/or any Key Stockholder or upon any of its or his
assets; or
(v) violate any law or regulation of any jurisdiction relating to Purchaser
and/or any Key Stockholder.
3.5 Capitalization.
(a) Purchaser. The authorized capital stock of Purchaser consists of
100,000 shares of Common Stock, $.01 par value per share ("Purchaser Common
Stock"), of which no shares are issued and outstanding. At or prior to Closing,
Purchaser shall deliver to Target a true and complete list of the record holders
of such shares. At the time such shares are issued, all of such issued and
outstanding shares of Purchaser Common Stock shall be duly authorized, validly
issued, fully paid and nonassessable. There are no outstanding Derivative
Securities of Purchaser that are convertible into or exchangeable for any
securities of Purchaser and there are no outstanding subscriptions, options,
warrants, rights, calls or other commitment or agreements to which Purchaser or
any Key Stockholder or member of the Purchaser Group is a party or by which it
or he is bound calling for the issuance, transfer, sale or disposition of any
securities of Purchaser or Derivative Securities of Purchaser.
(b) Target Shares. Each of the members of the Purchaser Group, directly or
indirectly, Beneficially Owns the number of shares of Target Common Stock set
forth opposite his or her name below (in each case, the "Purchaser Group
Shares"):
Name Number of Shares
Bert E. Brodsky 747,773
Jessica Heather Brodsky 294,470
David Craig Brodsky 18,783
Jeffrey Holden Brodsky 184,925
Lee Jared Brodsky 18,684
Hugh Freund 350,721
Emily Freund 20,732
Leland Freund 20,732
Gertrude Kay 6,000
Gary Stoller 153,778
Except for the Options to be cancelled pursuant to Section 2.5(b), there
are no outstanding Derivative Securities of Target that are convertible into or
exchangeable for any securities of Target and there are no outstanding
subscriptions, options, warrants, rights, calls or other commitment or
agreements to which any member of the Purchaser Group is a party or by which it
or he is bound calling for the issuance, transfer, sale or disposition of any
securities of Target or Derivative Securities of Target.
3.6 Information Supplied. None of the information concerning the Key
Stockholders or Purchaser provided by or on behalf of the Key Stockholders
and/or Purchaser specifically for inclusion or incorporation by reference in the
Proxy Statement or the Schedule 13E-3 will, at the date of mailing to
stockholders and at the times of the meetings of stockholders to be held in
connection with the Merger, 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.
3.7 Operations of Purchaser. Purchaser was incorporated on April 17, 2002
has engaged in no business activities and has conducted its operations only as
contemplated hereby.
3.8 No Financing. Purchaser has, or will as of the Closing have, sufficient
funds available in the aggregate amount sufficient to pay all of the Merger
Consideration and any payments required under this Agreement. Immediately after
giving effect to the transactions contemplated hereby, Purchaser will not (i) be
insolvent (either because its financial condition is such that the sum of its
debts is greater than the fair value of its assets or because the fair salable
value of its assets is less than the amount required to pay its probable
liability on its existing debts as they mature), (ii) have unreasonably small
capital with which to engage in its business, or (iii) have incurred debts
beyond its ability to pay as they come due.
3.9 Litigation; Compliance with Law. There are no Actions relating to
Purchaser or any of its assets or business, pending or, to the knowledge of
Purchaser, threatened, or any order, injunction, award or decree outstanding
against Purchaser or against or relating to any of its assets or business; and
to the knowledge of Purchaser and the Key Stockholders, there exists no basis
for any such Action. The Purchaser is not in violation of any law, regulation,
ordinance, order, injunction, decree, award, or other requirement of any
Governmental Entity or court or arbitrator relating to its assets.
3.10 Brokers. Neither Purchaser nor any Key Stockholder has engaged,
consented to, or authorized any broker, finder, investment banker or other third
party to act on its or his behalf, directly or indirectly, as a broker or finder
in connection with the transactions contemplated hereby.
3.11 Payments. Purchaser has not directly or indirectly paid or delivered
any fee, commission or other sum of money or item or property, however
characterized, to any finder, agent, client, customer, supplier, government
official or other Person, in the United States or any other country, which is
illegal under any federal, state or local laws of the United States (including,
without limitation, the U.S. Foreign Corrupt Practices Act) or such other
country.
3.12 Untrue or Omitted Facts. No representation, warranty or statement by
Purchaser and/or any Key Stockholder in this Agreement contains any untrue
statement of a Material fact, or omits to state a Material fact necessary in
order to make such representations, warranties or statements not misleading.
Without limiting the generality of the foregoing, there is no fact known to
Purchaser and/or any Key Stockholder that has had, or which may be reasonably
expected to have, a Material Adverse Effect that has not been disclosed in this
Agreement.
ARTICLE IV
PRE-CLOSING COVENANTS
4.1 Purchaser Covenants. Except as expressly contemplated by this
Agreement, after the date hereof and prior to the Effective Time, without the
prior written consent of the Target:
(a) Certain Actions. The Purchaser shall not (and the Key Stockholders
shall not authorize or permit Purchaser to) take any action that would, or might
reasonably be expected to, result in any of its or the Target's representations
and warranties set forth in this Agreement being or becoming untrue in any
Material respect, or in any of the conditions to the Merger set forth in Article
VI not being satisfied, or which would adversely affect the ability of any of
them or of the Target to obtain any of the Requisite Regulatory Approvals.
(b) Government Filings. Purchaser shall (and the Key Stockholders shall
cause the Purchaser to) cooperate with the Target in determining whether any
filings are required to be made with, or consents, authorizations, orders,
approvals required to be obtained from, any third party or Governmental Entity
prior to the Effective Time in connection with this Agreement or the
transactions contemplated hereby, and shall cooperate in making any such filings
promptly and in seeking to obtain timely any such consents, authorizations,
orders and/or approvals. Purchaser shall (and the Key Stockholders shall cause
the Purchaser to) promptly provide the Target with copies of all other filings
made by the Purchaser with any Governmental Entity in connection with this
Agreement, the Merger or the other transactions contemplated hereby.
(c) Voting. The Purchaser shall (and the Key Stockholders shall cause the
Purchaser to) and the Key Stockholders shall (and shall cause all members of the
Purchaser Group to) vote all Target Common Stock standing in their respective
names on the books of the Target to approve this Agreement and the transactions
contemplated hereby.
(d) Ownership in Target.
(i) Prior to the Effective Time, the Key Stockholders shall (and shall
cause the other members of the Purchaser Group to) contribute their
Purchaser Group Shares to the Purchaser.
(ii) Between the date hereof and the Effective Time, the Key
Stockholders shall not take any action that would prevent the Purchaser
from owning, and shall cause the Purchaser to own, on or prior to the
Effective Time, a number of shares of Target Common Stock no less than the
number of Purchaser Group Shares.
(iii) Prior to the Effective Time, the Key Stockholders shall (or
shall cause the Purchaser Group to) contribute to the capital of Purchaser
an amount of cash sufficient to pay the aggregate Merger Consideration and
all reasonably forseeable claims arising in connection with this Agreement
and the Merger.
4.2 Competing Transactions. Nothing contained in this Agreement shall
prohibit the Target from, prior to the date of the Stockholders' Meeting, (i)
furnishing information to, or entering into discussions or negotiations with,
any person that makes an unsolicited written, bona fide proposal to the Target
with respect to a Competing Transaction which could reasonably be expected to
result in a Superior Proposal, if, (A) the failure to take such action would be
inconsistent with the Board's and the Special Committee's fiduciary duties to
the Target's stockholders under applicable law, and (B) prior to furnishing such
information to, or entering into discussions or negotiations with, such person,
the Target (x) provides reasonable notice to Purchaser to the effect that it is
furnishing information to, or entering into discussions or negotiations with,
such person and (y) receives from such person a fully executed confidentiality
agreement, (ii) complying with the rules and regulations promulgated by the SEC,
including, without limitation, Rule 14d-9 or Rule 14e-2 promulgated under the
Exchange Act with regard to a tender or exchange offer, or (iii) failing to make
or withdrawing or modifying its recommendation referred to in Section 5.2, or
recommending an unsolicited, bona fide proposal with respect to a Competing
Transaction which could reasonably be expected to result in a Superior Proposal,
following the receipt of such a proposal, if the failure to take such action
would be inconsistent with the Board's and the Special Committee's fiduciary
duties to the Target's stockholders under applicable law.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Preparation of the Proxy Statement and Schedule 13E-3.
(i) The Target shall as promptly as practicable prepare and file a proxy or
information statement relating to the Stockholders' Meeting (together with all
amendments, supplements and exhibits thereto, the "Proxy Statement") with the
SEC and will use its best efforts to respond to the comments of the SEC and to
cause the Proxy Statement to be mailed to the Target's stockholders at the
earliest practical time. The Target will notify Purchaser promptly of the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff for amendments or supplements to the Proxy Statement or for
additional information and will supply Purchaser with copies of all
correspondence between the Target or any of its representatives, on the one
hand, and the SEC or its staff, on the other hand, with respect to the Proxy
Statement or the Merger. If at any time prior to the Stockholders' Meeting there
shall occur any event that should be set forth in an amendment or supplement to
the Proxy Statement, the Target will promptly prepare and mail to its
stockholders such an amendment or supplement. The Target will not mail any Proxy
Statement, or any amendment or supplement thereto, to which Purchaser reasonably
objects. The Target hereby consents to the inclusion in the Proxy Statement of
the recommendation of the Board described in Section 5.2, subject to any
modification, amendment or withdrawal thereof, and represents that the
Independent Advisor has, subject to the terms of its engagement letter with the
Target, consented to the inclusion of references to the Fairness Opinion in the
Proxy Statement.
(ii) The Target and Purchaser shall together prepare and file a Transaction
Statement on Schedule 13E-3 (together with all amendments and exhibits thereto,
the "Schedule 13E-3") under the Exchange Act. Each of the Key Stockholders and
Purchaser shall furnish all information concerning it, its Affiliates and the
holders of its capital stock required to be included in the Schedule 13E-3 and,
after consultation with each other, shall respond promptly to any comments made
by the SEC with respect to the Schedule 13E-3. All such information shall be in
accordance with and subject to Section 3.5 of this Agreement.
5.2 Stockholders' Meeting. The Target shall call the Stockholders' Meeting
to be held as promptly as practicable for the purpose of voting upon the
approval of this Agreement, the Merger and the other transactions contemplated
hereby. The Target will, through its Board and the Special Committee, recommend
to its stockholders approval of such matters, unless the taking of such action
would be inconsistent with the Board's and the Special Committee's fiduciary
duties to stockholders under applicable laws. The Target shall solicit from
Target stockholders entitled to vote at the Stockholders' Meeting proxies in
favor of such approval and shall take all other action necessary or helpful to
secure the vote or consent of such holders required by the Delaware Statute or
this Agreement to effect the Merger. The Target shall (and the Key Stockholders
shall cause the Target to) coordinate and cooperate with Purchaser with respect
to the timing of such meeting.
5.3 Legal Conditions to Merger. Each of the Target, the Key Stockholders
and Purchaser shall use all reasonable best efforts to take, or cause to be
taken, all actions necessary (i) to comply promptly with all legal requirements
which may be imposed on such party with respect to the Merger and to consummate
the transactions contemplated by this Agreement, subject to the approval of
stockholders of the Company described in Section 5.2, and (ii) to obtain (and to
cooperate with the other party to obtain) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity and of any other
public or private third party which is required to be obtained or made by such
party in connection with the Merger and the transactions contemplated by this
Agreement.
5.4 Employee Stock Options; Employee Plans and Benefits.
(a) Options. Prior to the Effective Time, the Board of Directors of the
Target (or, if appropriate, the Special Committee or any committee administering
the Target Stock Option Plans) shall adopt such resolutions or take such other
actions as are required to effect the transactions contemplated by Section 2.5
in respect of all outstanding Options, and thereafter the Board of Directors of
the Target (or any such committee) shall adopt any such additional resolutions
and take such additional actions as are required in furtherance of the
foregoing.
(b) Payments in Respect of Options. Each Option cancelled pursuant to
Section 2.5(a) shall, upon cancellation, be converted into the right to receive
an amount in cash equal to the product of (i) the number of shares of Target
Common Stock subject to such Option, whether or not then exercisable, and (ii)
the excess, if any, of the Merger Consideration over the exercise price per
share subject or related to such Option (the "Option Consideration").
(c) Time of Payment. The cash amount described in paragraph (b) of this
Section 5.4 shall be paid as promptly as is practicable after the Effective
Time.
(d) Withholding. All amounts payable pursuant to Section 2.5(a) and
Sections 5.4(b) and (c) shall be subject to any required withholding of taxes
and shall be paid without interest. Payment shall, at Purchaser's request, be
withheld in respect of any Option until Purchaser has received documentation
that evidences such payment is in full satisfaction of all rights under such
Option.
(e) Termination of Equity-Based Compensation. No stock options or warrants
will be issued under the Target Stock Option Plans or otherwise after the date
hereof. Unless otherwise determined by Purchaser, any provision in any other
Benefit Plan providing for the potential issuance, transfer or grant of any
capital stock of the Target or any interest, or release of restrictions, in
respect of any capital stock of the Target shall be terminated as of the
Effective Time. The Target shall ensure that, as of the Effective Time, unless
otherwise determined by Purchaser, no holder of an Option, restricted stock or
Derivative Security or any participant in the Target Stock Option Plans or other
Benefit Plan or otherwise shall have any right thereunder to acquire any capital
stock of the Target or the Surviving Corporation, other than shares of Target
Common Stock issued or issuable upon exercise of Options that were issued and
outstanding on the date hereof. Holders of Options shall not be entitled to
receive any payment or benefit except as provided in Section 2.5(a) and this
Section 5.4.
(f) No Right to Employment. Other than as specifically contemplated in this
Agreement, nothing contained in this Agreement shall confer upon any employee of
the Target or any ERISA Affiliate any right with respect to employment by
Purchaser, the Surviving Corporation or any of its Affiliates, nor shall
anything herein interfere with any or create any additional right of Purchaser,
the Surviving Corporation or any of its Affiliates to terminate the employment
of any such employee at any time, with or without cause, or restrict Purchaser,
the Surviving Corporation or any of Purchaser's Affiliates in the exercise of
their independent business judgment in modifying any other terms and conditions
of the employment of any such employee.
5.5 Indemnification; Exculpation; Directors' and Officers' Insurance.
(i) As of the Effective Time, the certificate of incorporation and by-laws
of the Surviving Corporation shall contain provisions no less favorable with
respect to indemnification and exculpation than are set forth in the
certification of incorporation and/or by-laws of the Target, which provisions
shall not be amended, repealed or otherwise modified for a period of six years
from the Effective Time in any manner that would adversely affect the rights
thereunder of individuals who at the Effective Time were directors, officers,
employees or agents of the Target. From and after the Effective Time, for a
period of six years, Purchaser and the Surviving Corporation, jointly and
severally, shall indemnify the directors and officers of the Target on terms no
less favorable than the provisions with respect to indemnification that are set
forth in the certificate of incorporation and/or by-laws of the Target as of the
Effective Time. Purchaser and the Target agree that the directors, officers and
employees of the Target covered thereby are intended to be third party
beneficiaries under this Section 5.5 and shall have the right to enforce the
obligations of the Surviving Corporation and the Purchaser.
(ii) The Surviving Corporation shall maintain in effect, from the Effective
Time until such period of time during which claims could legally be made against
any director or officer of the Target, in their capacity as such, any and all
directors' and officers' liability insurance currently maintained by the Target.
5.6 Communication to Employees. The Target and Purchaser will cooperate
with each other with respect to, and endeavor in good faith to agree in advance
upon the method and content of, all written or oral communications or disclosure
to employees of the Target or any of its Subsidiaries with respect to the Merger
and any other transactions contemplated by this Agreement. Upon reasonable
notice, the Target shall (and the Key Stockholders shall cause the Target to)
provide Purchaser access to the Target's and its Subsidiaries' employees and
facilities.
5.7 Additional Actions. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all actions reasonably necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement.
ARTICLE VI
CONDITIONS PRECEDENT
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each Party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions unless waived
by both Purchaser and Target:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted by the affirmative vote of the holders of a majority of the outstanding
shares of Target Common Stock entitled to vote thereon.
(b) Government Approvals. All authorizations, consents, orders or approvals
of, or declarations or filings with, and all expirations or early terminations
of waiting periods imposed by, any Governmental Entity which are necessary for
the consummation of the Merger shall have been filed, occurred or been obtained
(all such permits, approvals, filings and consents and the lapse of all such
waiting periods being referred to as the "Requisite Regulatory Approvals") and
all such Requisite Regulatory Approvals shall be in full force and effect.
(c) Consents Under Agreements. The Target shall have obtained the consent
or approval of all persons and Governmental Entities relating to any loan or
credit agreement, note, mortgage, indenture, lease, license or other agreement,
Contract or instrument to which it or any of its subsidiaries is a party.
(d) No Action. No Action, suit or proceeding shall have been instituted, or
shall be pending or threatened (i) seeking to restrain in any Material respect
or prohibit the consummation of the Merger, (ii) seeking to obtain from the
Target, any of its directors, or Purchaser any damages which would reasonably be
expected to result in a Material Adverse Effect, or (iii) seeking to impose the
restrictions, prohibitions or limitations on the Merger.
(e) No Injunctions or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger shall be in effect, nor shall any proceeding by any
Governmental Entity seeking any of the foregoing be pending.
(f) Statutes. No statute, rule, regulation, executive order or decree or
order of any kind shall have been enacted by any Governmental Entity which would
make the consummation of the Merger illegal.
(g) Dissenting Shares. Dissenting Shares shall constitute less than 25% of
all shares of Target Common Stock outstanding immediately prior to the Effective
Time.
6.2 Conditions to Obligations of the Key Stockholders and Purchaser. The
obligations of the Key Stockholders and Purchaser to effect the Merger are
subject to the satisfaction of the following conditions unless waived by the Key
Stockholders and Purchaser:
(a) Performance of Obligations of Target. The Target shall have performed
and complied in all Material respects with all obligations required to be
performed or complied with by it under this Agreement at or prior to the Closing
Date, and Purchaser shall have received a certificate signed on behalf of the
Target by the President and Chief Executive Officer of the Target and by the
Chief Financial Officer of the Target to such effect.
(b) Material Adverse Effect. Since the date of this Agreement, there shall
not have occurred any Material Adverse Effect with respect to the Target and no
facts or circumstances arising after the date of this Agreement shall have
occurred which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect with respect to the Target.
(c) Proceedings. All proceedings to be taken on the part of the Target in
connection with the transactions contemplated by this Agreement and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Purchaser, and Purchaser shall have received copies of all such
documents and other evidences as Purchaser may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
6.3 Conditions to Obligations of Target. The obligation of the Target to
effect the Merger is subject to the satisfaction of the following conditions
unless waived by the Target:
(a) Representations and Warranties. The representations and warranties of
the Purchaser and the Key Stockholders set forth in this Agreement shall be true
and correct in all respects as of the Effective Time as though made on or as of
such time (ignoring for purposes of this determination any materiality or
Material Adverse Effect qualifiers contained within individual representations
and warranties), except for (i) those representations and warranties that
address matters only as of a particular date or only with respect to a specific
period of time which need only be true and correct as of such date or with
respect to such period and (ii) such failures to be true and correct as would
not, individually or in the aggregate, reasonably be expected to result in a
Material Adverse Effect on Purchaser.
(b) Performance of Obligations of the Key Stockholders and Purchaser. The
Key Stockholders and Purchaser shall have performed and complied in all Material
respects with all obligations required to be performed by them under this
Agreement at or prior to the Closing Date, and the Target shall have received a
certificate signed on behalf of Purchaser by the President and Chief Executive
Officer of Purchaser and by the Chief Financial Officer of Purchaser and by each
Key Stockholder to such effect.
(c) Fairness Opinion. The Special Committee shall have received the
Fairness Opinion of the Independent Advisor as of the Effective Time and the
Fairness Opinion of the Independent Advisor shall not have been withdrawn,
modified, repealed or revoked.
ARTICLE VII
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether before or after approval of the matters presented in
connection with the Merger by the stockholders of the Target:
(i) by mutual consent of Purchaser and the Target in a written instrument,
whether or not the Merger has been approved by the stockholders of the Target;
(ii) by the Target, if any of the conditions set forth in Sections 6.1
and/or 6.3 would be incapable of being satisfied by April 15, 2003 and shall not
have been waived;
(iii) By the Purchaser and Key Stockholders, if any of the conditions set
forth in Sections 6.1 and/or 6.2 would be incapable of being satisfied by April
15, 2003, in each case, except as such shall have been the result of any action
or inaction by Purchaser or any Key Stockholder, and shall not have been waived
by Target;
(iv) by either Purchaser or the Target if the Merger shall not have been
consummated on or prior to April 15, 2003 (or such later date as may be agreed
to in writing by the Target and Purchaser) (other than due to the failure of the
party seeking to terminate this Agreement to perform its obligations under this
Agreement required to be performed at or prior to the Effective Time);
(v) by Purchaser, if the Special Committee or the Board shall have (i)
withdrawn, modified or changed its approval or recommendation of this Agreement,
the Merger or any of the other transactions contemplated herein in any manner
which is adverse to Purchaser or shall have resolved to do the foregoing; or
(ii) approved or have recommended to the stockholders of the Target a Competing
Transaction or a Superior Proposal, entered into an agreement with respect to a
Competing Transaction or Superior Proposal or shall have resolved to do the
foregoing;
(vi) by Purchaser, if (i) a tender offer or exchange offer or a proposal by
a third party to acquire the Target or the Target Common Stock pursuant to a
merger, consolidation, share exchange, business combination, tender or exchange
offer or similar transaction shall have been commenced or publicly proposed
which contains a proposal as to price (without regard to the specificity of such
price proposal) and (ii) the Target shall not have made a recommendation to the
stockholders of the Target to reject such proposal within ten (10) business days
of its commencement or the date such proposal first becomes publicly disclosed,
if sooner;
(vii) by the Target, if the Special Committee and the Board authorize the
Target to enter into a written agreement with respect to a Competing Transaction
that the Special Committee and the Board have determined is a Superior Proposal;
and
(viii) by Target, in its sole discretion, which shall be final, conclusive
and binding, to the extent it believes such termination to be reasonably
necessary to discharge the fiduciary obligation of its Board of Directors and/or
Special Committee under applicable law.
7.2 Effect of Termination. In the event of termination of this Agreement
and abandonment of the Merger by either the Target or Purchaser as provided in
Section 7.1, this Agreement shall forthwith terminate and there shall be no
liability or obligation on the part of Purchaser, the Key Stockholders or the
Target or their respective officers or directors except with respect to Sections
5.5 and 7.3; provided, however, that, subject to the provisions of Section 9.7,
nothing herein shall relieve any party of liability for any breach hereof,
except that in the event of a termination of this Agreement, no party shall have
any right to the recovery of expenses except as provided in Section 7.3.
7.3 Fees, Expenses and Other Payments.
(a) Generally. Except as otherwise provided in this Section 7.3, whether or
not the Merger is consummated, all costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby (including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants) shall be borne solely and entirely by the party which has incurred
such costs and expenses (with respect to such party, its "Expenses").
(b) Reimbursement. Purchaser and the Key Stockholders agree that if this
Agreement shall be terminated pursuant to Sections 7.1(ii), 7.1(iii) (but only
with respect to the failure of a condition set forth in 6.1) or 7.1(iv) through
(viii) then they shall pay to the Target an amount equal to Target's actual
Expenses.
(c) Payment Obligations. Any payment required to be made pursuant to this
Section 7.3 shall be made as promptly as practicable but not later than five
business days after termination of this Agreement and shall be made by wire
transfer of immediately available funds to an account designated by Target.
7.4 Amendment. To the extent permitted by the Delaware Statute, this
Agreement may be amended by the parties hereto, by action taken or authorized by
their respective Boards of Directors and the Special Committee, at any time
before the Effective Time, regardless of approval of the matters presented in
connection with the Merger by the stockholders of the Target or of Purchaser.
This Agreement may not be amended except by an instrument in writing signed on
behalf of each of the Parties hereto.
7.5 Extension; Waiver. At any time prior to the Effective Time, the parties
hereto, by action taken or authorized by their respective Boards of Directors
and the Special Committee, may, to the extent legally allowed, (i) extend the
time for the performance of any of the obligations or other acts of the other
parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party.
ARTICLE VIII
DEFINITIONS
8.1 Certain Definitions. For purposes of this Agreement:
(a) "Action" shall mean any action, claim, suit, demand, litigation,
governmental or other proceeding, labor dispute, arbitral action, governmental
audit, inquiry, investigation, criminal prosecution, investigation or unfair
labor practice charge or complaint.
(b) an "Affiliate" of any person or entity means another person that
directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with, such first person or entity.
(c) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities, means having "beneficial ownership" of such securities in accordance
with the provisions of Rule 13d-3 under the Exchange Act. Without duplicative
counting of the same securities by the same holder, securities beneficially
owned by a person include securities beneficially owned by all other persons
with whom such person would constitute a group.
(d) "Benefit Plan" shall mean any "employee benefit plans" (as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended,
including, but not limited to, employment Contracts, bonus, pension, profit
sharing, deferred compensation, incentive compensation, excess benefit, stock,
stock option (including the Target Stock Plans), severance, termination pay,
change in control or other employee benefit plans, programs or arrangements,
including those providing medical, dental, vision, disability, life insurance
and vacation benefits (other than those required to be maintained by law),
whether written or unwritten, qualified or unqualified, funded or unfunded,
foreign or domestic, currently maintained, or contributed to, or required to be
maintained or contributed to, by the Target or any ERISA Affiliate for the
benefit of any current or former employees, officers or directors of the Target
or any Subsidiary or with respect to which the Target or its Subsidiaries have
any liability.
(e) "Contract" shall mean any agreement, contract, note, lease, evidence of
indebtedness, purchase order, letter of credit, indenture, security or pledge
agreement, franchise agreement, undertaking, covenant not to compete, employment
agreement, license, instrument, obligation, commitment, course of dealing or
practice, understanding or arrangement, whether written or oral, to which a
particular Person is a party or is otherwise bound.
(f) "Competing Transaction" shall mean any of the following (other than the
transactions contemplated by this Agreement) involving the Target: (i) any
merger, consolidation, share exchange, exchange offer, business combination,
recapitalization, liquidation, dissolution or other similar transaction
involving the Target resulting in the Target's current stockholders owning less
than a majority of the capital stock of the surviving corporation in such
transaction; (ii) any sale, lease, exchange, mortgage, pledge, transfer or other
disposition of assets representing 20% or more of the total assets of the Target
and its Subsidiaries, in a single transaction or series of transactions; (iii)
any tender offer or exchange offer for 20% or more of the outstanding Target
Common Stock or the filing of a registration statement under the Securities Act
in connection therewith; (iv) any person or group acquiring Beneficial Ownership
of 15% or more, or such person or group having increased its Beneficial
Ownership beyond 15%, of the outstanding Target Common Stock; or (v) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing.
(g) "Default" shall mean any breach, default and/or other violation, and/or
the occurrence of any event that with or without the passage of time or the
giving of notice or both would constitute a breach, default or other violation,
under, or give any Person the right to accelerate, terminate or renegotiate, any
Contract.
(h) "Derivative Securities" shall mean warrants, options, rights, shares of
capital stock, evidences of indebtedness, or other securities, which are
convertible, exercisable or exchangeable into shares of common stock.
(i) "ERISA Affiliate" shall mean the Target or any other person or entity
that, together with the Target, is treated as a single employer under Section
414 of the Internal Revenue Code of 1986, as amended.
(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(k) "Governmental Entity" shall mean a federal, state, local, or foreign
governmental body or a political subdivision of such governmental body, or other
regulatory body, court, administrative agency or commission or other
governmental authority or instrumentality.
(l) "Lien" shall mean any claim, lien, pledge, option, charge, restriction,
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof.
(m) "Material" with respect to any entity means an event, change or effect
which is material in relation to the condition (financial or otherwise),
properties, assets, liabilities, businesses or operations of such entity and its
Subsidiaries taken as a whole.
(n) "Material Adverse Effect" means, with respect to the Target or
Purchaser, any change, event or effect shall have occurred that, when taken
together with all other adverse changes, events or effects that have occurred
would or would reasonably be expected to (i) be Materially adverse to the
business, assets, properties, results of operations or condition (financial or
otherwise) of such party and its Subsidiaries taken as a whole, or (ii) prevent
or Materially delay the consummation, or increase the cost to Purchaser, of the
Merger.
(o) "Person" means an individual, corporation, limited liability company,
general or limited partnership , joint venture, association, trust,
unincorporated organization or other legal entity.
(p) "Securities Act" shall mean the Exchange Act of 1933, as amended.
(q) "SEC" means the United States Securities and Exchange Commission.
(r) a "Subsidiary" of any person means another person, an amount of the
voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
(s) "Superior Proposal" means any bona fide written proposal to acquire,
directly or indirectly, for consideration consisting of cash and/or securities,
all of the shares of Target Common Stock then outstanding or all or
substantially all of the assets of the Target and the assumption of the
liabilities and obligations of the Target to be followed by a pro rata
distribution of the sale proceeds to stockholders of the Target, that (i) is not
subject to any financing conditions or contingencies, (ii) provides holders of
Target Common Stock with per share consideration that the Special Committee
determines in good faith, after receipt of advice of its Independent Advisor, is
more favorable from a financial point of view than the consideration to be
received by holders of Target Common Stock in the Merger, (iii) is determined by
the Special Committee in its good faith judgment, after receipt of advice of its
Independent Advisor and outside legal counsel, to be likely of being completed
(taking into account all legal, financial, regulatory and other aspects of the
proposal, the Person making the proposal and the expected timing to complete the
proposal), and (iv) does not, in the definitive agreement, contain any "due
diligence" conditions.
ARTICLE IX
GENERAL PROVISIONS
9.1 Survival of Representations, Warranties and Agreements. The
representations and warranties made by the Parties contained in this Agreement
and any other agreement delivered pursuant hereto or made in writing by or on
behalf of the Parties shall not survive beyond the Effective Time.
9.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to the Key Stockholders and Purchaser, to:
Sandata Acquisition Corp.
26 Harbor Park Drive
Port Washington, New York 11050
Attention: Bert E. Brodsky
Facsimile: (516) 484-3290
With a copy to:
Panza, Maurer & Maynard, P.A.
Third Floor, Bank of America Building
3600 North Federal Highway
Fort Lauderdale, Florida 33308
Attention: Linda C. Frazier, Esq.
Facsimile: (954) 390-7991
(b) if to the Target, to:
Sandata Technologies, Inc.
26 Harbor Park Drive
Port Washington, New York 11050
Attention: Jonathan Friedman, Esq.
Facsimile: (516) 605-6989
With copies to:
Certilman Balin Adler & Hyman, LLP
90 Merrick Avenue, 9th Floor
East Meadow, New York 11554
Attention: Steven J. Kuperschmid, Esq.
Facsimile: (516) 296-7111
9.3 Interpretation. When a reference is made in this Agreement to Sections,
such reference shall be to a Section of this Agreement unless otherwise
indicated. The recitals hereto constitute an integral part of this Agreement.
The table of contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement. Whenever the words "include", "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available. The phrases "the date of this
Agreement", "the date hereof" and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to October 28, 2002.
9.4 Counterparts. This Agreement may be executed in two or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when two or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.
9.5 Entire Agreement; No Third Party Beneficiaries; Rights of Ownership.
This Agreement (including the documents and the instruments referred to herein)
(i) constitutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof; and (ii) except as provided in Sections 2.4, 2.5, 5.3 and
5.5, is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder. The parties hereby acknowledge that, except as
hereinafter agreed to in writing, no party shall have the right to acquire or
shall be deemed to have acquired shares of common stock of the other party
pursuant to the Merger until consummation thereof.
9.6 Governing Law; Consent to Jurisdiction.
(a) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware without regard to the
principles of conflicts of laws thereof.
(b) Jurisdiction and Venue. Each of the parties hereto (A) consents to
submit itself to the exclusive personal jurisdiction and venue of any Delaware
state court or any federal court located in the State of Delaware in the event
any dispute arises out of this Agreement or any of the transactions contemplated
by this Agreement and (B) agrees that it shall not attempt to deny or defeat
such personal jurisdiction or venue by motion or other request for leave from
any such court.
9.7 Severability; No Remedy in Certain Circumstances. Any term or provision
of this Agreement that is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability of the remaining
terms and provisions hereof or the validity or enforceability of the offending
term or provision in any other situation or in any other jurisdiction. If the
final judgment of a court of competent jurisdiction declares that any term or
provision hereof is invalid or unenforceable, the parties agree that the court
making the determination of invalidity or unenforceability shall have the power
to reduce the scope, duration, or area of the term or provision, to delete
specific words or phrases, or to replace any invalid or unenforceable term or
provision with a term or provision that is valid and enforceable and that comes
closest to expressing the intention of the invalid or unenforceable term or
provision, and this Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be appealed. Except as
otherwise contemplated by this Agreement, to the extent that a party hereto took
an action inconsistent herewith or failed to take action consistent herewith or
required hereby pursuant to an order or judgment of a court or other competent
authority, such party shall incur no liability or obligation unless such party
did not in good faith seek to resist or object to the imposition or entering of
such order or judgment.
9.8 Publicity. Except as otherwise required by any applicable law or rules
or regulations promulgated thereunder, including, without limitation, any public
disclosure obligations of Target, so long as this Agreement is in effect,
neither the Target, the Key Stockholders nor Purchaser shall issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement without the consent of the other
party, which consent shall not be unreasonably withheld.
9.9 Assignment. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of law or otherwise) without the prior written consent of the other
parties. Subject to the preceding sentence, this Agreement will be binding upon,
inure to the benefit of and be enforceable by the parties and their respective
successors and assigns.
9.10 Adjustment. All dollar amounts and share numbers set forth herein,
including without limitation the Merger Consideration, shall be subject to
equitable adjustment in the event of any stock split, stock dividend, reverse
stock split or similar event affecting the Target Common Stock, between the date
of this Agreement and the Effective Time, to the extent appropriate.
The Remainder of this Page is Intentionally Left Blank. Signature page
follows.
IN WITNESS WHEREOF, Purchaser, the Key Stockholders and the Target have
caused this Agreement, to be signed by their respective officers thereunto duly
authorized or individually, as the case may be, all as of the date hereof.
SANDATA ACQUISITION CORP.
By:____________________
Name: _________________
Title:_________________
SANDATA TECHNOLOGIES, INC.
By:______________________
Name: ___________________
Title:___________________
________________________
Bert E. Brodsky
_________________________
Hugh Freund
_________________________
Gary Stoller
Exhibit 99.1
FOR IMMEDIATE RELEASE CONTACT:
Bert Brodsky
Chairman
Sandata Technologies, Inc.
(516) 484-4400, X200
bbrodsky@sandata.com
Sandata Technologies Signs Merger Agreement with Sandata Acquisition Corp.
SANDATA TECHNOLOGIES, INC. SIGNS MERGER AGREEMENT FOR $1.91 CASH PER SHARE
Port Washington, NY, November 4, 2002 - Sandata Technologies, Inc. (NASDAQ:
SAND) announced today that it has entered into a definitive merger agreement
with Sandata Acquisition Corp., a Delaware corporation.
The Merger Agreement provides for the merger of Sandata Acquisition Corp.
with and into the Company, with the Company continuing as the surviving
corporation. Prior to the effective time of the merger, Messrs. Brodsky, Freund
and Stoller and members of their immediate family have agreed to contribute all
of the Company's stock owned by them to Sandata Acquisition Corp. and at the
effective time of the merger, (i) each share of the Company's common stock,
other than stock owned by the Purchaser Group and Sandata Acquisition Corp.,
will be converted into the right to receive the merger consideration of $1.91 in
cash and (ii) each outstanding share of Sandata Acquisition Corp. will be
converted into one share of common stock of the surviving corporation. Pursuant
to the Merger Agreement, all outstanding options to purchase common stock of the
Company will be cancelled and converted into the right to receive a cash payment
equal to the product of the number of shares subject to the option and the
difference between the merger consideration of $1.91 and the per share exercise
price of the option. Under the Merger Agreement, options held by the Purchaser
Group will be cancelled and the holders of those options will not be entitled to
receive any consideration.
The merger consideration represents a premium of approximately 282% over
the closing price of the Company's common stock as reported on the Nasdaq Small
Cap Market on August 2, 2002, the last trading date prior to the announcement of
the proposed merger.
The Board of Directors of the Company, acting upon the unanimous
recommendation of a Special Committee of the Board, comprised of two
non-management directors who are not materially interested in the transaction,
unanimously approved the merger. In reaching its decision to recommend the
merger to the full Board, the Special Committee received a fairness opinion from
the Committee's financial advisor, Brean Murray & Co., Inc.
Completion of the merger is subject to customary closing conditions,
including, among others, stockholder approval, that no actions or proceedings
are pending seeking to prevent consummation of the merger and that no injunction
preventing the consummation of the merger is in effect. As previously disclosed
in the Company's Quarterly Report filed on Form 10-QSB on October 15, 2002, two
stockholders of the Company have filed lawsuits against the Company and the
members of its board of directors alleging, among other things, that the
defendants breached their fiduciary duties to the Company and its stockholders
in connection with Sandata Acquisition Corp.'s proposal to acquire all of the
outstanding stock the Company.
The Purchaser Group owns a sufficient number of the Company's outstanding
stock to approve the merger and has agreed to vote, and to cause Sandata
Acquisition Corp. to vote, all shares of the Company owned by them and Sandata
Acquisition Corp. in favor of the merger. The Merger Agreement does not include
a financing contingency. Stockholder approval will be solicited by means of a
proxy statement, which will be mailed by the Company to stockholders upon
completion of the required Securities and Exchange Commission filing and review
process.
Stockholders of the Company will be able to obtain a copy of the proxy
statement and other relevant documents filed with the SEC free-of-charge (when
available) from the SEC's website at www.sec.gov. The proxy statement will also
be available upon request by contacting the Company at our principal office, 26
Harbor Park Drive, Port Washington, New York 11050, 516 484-4400.
The Company is a leading provider of advanced Information Technology (IT)
solutions for payroll and billing, electronic time and attendance services and
IT support services.
This press release contains forward-looking statements which involve known
and unknown risks and uncertainties or other factors that may cause actual
results, performance or achievements to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. When used herein, the words "may", "could", "will",
"believes", "anticipates", "expects" and similar expressions identify
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. For a discussion of such risks and uncertainties,
including but not limited to those discussed above in this press release, as
well as risks relating to developments in and regulation of the health-care
industry, new technology developments, competitive bidding, risks and
uncertainties associated with the Internet and Internet-related products, and
other factors, readers are urged to carefully review and consider various
disclosures made by the Company in its Annual Report on Form 10K-SB for the most
recently completed fiscal year and other Securities and Exchange Commission
filings.