ANNEX A
AGREEMENT AND PLAN OF MERGER
among
The Learning Company, Inc.
TLC Merger Corp.
and
Broderbund Software, Inc.
June 21, 1998
TABLE OF CONTENTS
PAGE
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ARTICLE I
THE MERGER............................................................................................ A-1
Section 1.01 Effective Time of the Merger............................................................. A-1
Section 1.02 Closing.................................................................................. A-1
Section 1.03 Effects of the Merger.................................................................... A-1
Section 1.04 Directors and Officers................................................................... A-1
ARTICLE II
CONVERSION OF SECURITIES.............................................................................. A-2
Section 2.01 Conversion of Capital Stock.............................................................. A-2
Section 2.02 Exchange of Certificates................................................................. A-2
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER.............................................................. A-4
Section 3.01 Organization of Seller................................................................... A-4
Section 3.02 Seller Capital Structure................................................................. A-5
Section 3.03 Authority; No Conflict; Required Filings and Consents.................................... A-6
Section 3.04 SEC Filings; Financial Statements........................................................ A-6
Section 3.05 No Undisclosed Liabilities............................................................... A-7
Section 3.06 Absence of Certain Changes or Events..................................................... A-7
Section 3.07 Taxes.................................................................................... A-7
Section 3.08 Properties............................................................................... A-8
Section 3.09 Intellectual Property.................................................................... A-8
Section 3.10 Agreements, Contracts and Commitments.................................................... A-9
Section 3.11 Litigation............................................................................... A-9
Section 3.12 Environmental Matters.................................................................... A-9
Section 3.13 Employee Benefit Plans................................................................... A-10
Section 3.14 Compliance With Laws..................................................................... A-10
Section 3.15 Accounting and Tax Matters............................................................... A-10
Section 3.16 Registration Statement; Proxy Statement/Prospectus....................................... A-11
Section 3.17 Labor Matters............................................................................ A-11
Section 3.18 Insurance................................................................................ A-11
Section 3.19 No Existing Discussions.................................................................. A-11
Section 3.20 Opinion of Financial Advisor............................................................. A-11
Section 3.21 Section 203 of the DGCL Not Applicable................................................... A-12
Section 3.22 Rights Agreement......................................................................... A-12
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND SUB....................................................... A-12
Section 4.01 Organization of Buyer and Sub............................................................ A-12
Section 4.02 Buyer Capital Structure.................................................................. A-12
Section 4.03 Authority; No Conflict; Required Filings and Consents.................................... A-13
Section 4.04 SEC Filings; Financial Statements........................................................ A-14
Section 4.05 No Undisclosed Liabilities............................................................... A-14
Section 4.06 Absence of Certain Changes or Events..................................................... A-14
Section 4.07 Taxes.................................................................................... A-15
Section 4.08 Properties............................................................................... A-15
Section 4.09 Intellectual Property.................................................................... A-16
Section 4.10 Agreements, Contracts and Commitments.................................................... A-16
Section 4.11 Litigation............................................................................... A-16
Section 4.12 Environmental Matters.................................................................... A-16
Section 4.13 Employee Benefit Plans................................................................... A-17
Section 4.14 Compliance With Laws..................................................................... A-17
Section 4.15 Accounting and Tax Matters............................................................... A-17
Section 4.16 Registration Statement; Proxy Statement/Prospectus....................................... A-17
Section 4.17 Labor Matters............................................................................ A-18
Section 4.18 Insurance................................................................................ A-18
Section 4.19 Opinion of Financial Advisor............................................................. A-18
Section 4.20 Interim Operations of Sub................................................................ A-18
ARTICLE V
CONDUCT OF BUSINESS................................................................................... A-18
Section 5.01 Covenants of Seller...................................................................... A-18
Section 5.02 Covenants of Buyer....................................................................... A-20
Section 5.03 Cooperation.............................................................................. A-20
Section 5.04 Confidentiality.......................................................................... A-20
ARTICLE VI
ADDITIONAL AGREEMENTS................................................................................. A-20
Section 6.01 No Solicitation.......................................................................... A-20
Section 6.02 Proxy Statement/Prospectus; Registration Statement....................................... A-21
Section 6.03 Nasdaq Quotation......................................................................... A-22
Section 6.04 Access to Information.................................................................... A-22
Section 6.05 Stockholders Meetings.................................................................... A-22
Section 6.06 Legal Conditions to Merger............................................................... A-23
Section 6.07 Public Disclosure........................................................................ A-24
Section 6.08 Tax-Free Reorganization.................................................................. A-24
Section 6.09 Pooling Accounting....................................................................... A-24
Section 6.10 Affiliate Agreements..................................................................... A-24
Section 6.11 NYSE Listing............................................................................. A-24
Section 6.12 Stock Plans.............................................................................. A-24
Section 6.13 Brokers or Finders....................................................................... A-25
Section 6.14 Indemnification.......................................................................... A-25
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ARTICLE VII
CONDITIONS TO MERGER.................................................................................. A-26
Section 7.01 Conditions to Each Party's Obligation To Effect the Merger............................... A-26
Section 7.02 Additional Conditions to Obligations of Buyer and Sub.................................... A-26
Section 7.03 Additional Conditions to Obligations of Seller........................................... A-27
ARTICLE VIII
TERMINATION AND AMENDMENT............................................................................. A-27
Section 8.01 Termination.............................................................................. A-27
Section 8.02 Effect of Termination.................................................................... A-28
Section 8.03 Fees and Expenses........................................................................ A-28
Section 8.04 Amendment................................................................................ A-30
Section 8.05 Extension; Waiver........................................................................ A-30
ARTICLE IX
MISCELLANEOUS......................................................................................... A-30
Section 9.01 Nonsurvival of Representations, Warranties and Agreements................................ A-30
Section 9.02 Notices.................................................................................. A-30
Section 9.03 Interpretation........................................................................... A-31
Section 9.04 Counterparts............................................................................. A-31
Section 9.05 Entire Agreement; No Third Party Beneficiaries........................................... A-31
Section 9.06 Governing Law............................................................................ A-31
Section 9.07 Jurisdiction............................................................................. A-31
Section 9.08 Assignment............................................................................... A-32
Section 9.09 Severability............................................................................. A-32
Section 9.10 WAIVER OF JURY TRIAL..................................................................... ▇-▇▇
▇▇▇▇▇▇▇ ▇-▇ Form of Seller Affiliate Agreement
Exhibit A-2 Form of Buyer Affiliate Agreement
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TABLES OF DEFINED TERMS
CROSS REFERENCE
TERMS IN AGREEMENT
----------------------------------------------------------------------------------------------- -----------------
Acquisition Proposal........................................................................... Section 6.01(a)
Affiliate...................................................................................... Section 6.10
Affiliate Agreement............................................................................ Section 6.10
Agreement...................................................................................... Preamble
Agreement of Merger............................................................................ Section 1.01
Alternative Transaction........................................................................ Section 8.03(g)
Antitrust Laws................................................................................. Section 6.06(b)
Bankruptcy and Equity Exception................................................................ Section 3.03(a)
Blue Sky....................................................................................... Section 7.02(d)
Buyer Balance Sheet............................................................................ Section 4.04(b)
Buyer Common Stock............................................................................. Section 2.01(b)
Buyer Disclosure Schedule...................................................................... Article IV
Buyer Employee Plans........................................................................... Section 4.13(a)
Buyer Material Adverse Effect.................................................................. Section 4.01
Buyer Material Contracts....................................................................... Section 4.10
Buyer Meeting.................................................................................. Section 3.16
Buyer SEC Reports.............................................................................. Section 4.04(a)
Buyer Stock Plans.............................................................................. Section 4.02(a)
Buyer Voting Proposal.......................................................................... Section 6.05(b)
Certificates................................................................................... Section 2.02(b)
Closing........................................................................................ Section 1.02
Closing Date................................................................................... Section 1.02
Code........................................................................................... Preamble
Confidentiality Agreement...................................................................... Section 5.04
Constituent Corporations....................................................................... Section 1.03
Exchange Ratio................................................................................. Section 2.01(c)
Effective Time................................................................................. Section 1.01
Environmental Law.............................................................................. Section 3.12(c)
ERISA.......................................................................................... Section 3.13(a)
ERISA Affiliate................................................................................ Section 3.13(a)
Exchange Act................................................................................... Section 3.03(c)
Exchange Agent................................................................................. Section 2.02(a)
Exchange Fund.................................................................................. Section 2.02(a)
Governmental Entity............................................................................ Section 3.03(c)
Hazardous Substance............................................................................ Section 3.12(c)
HSR Act........................................................................................ Section 3.03(c)
Indemnified Parties............................................................................ Section 6.14(a)
IRS............................................................................................ Section 3.07(b)
Joint Proxy Statement.......................................................................... Section 3.16
Material Leases................................................................................ Section 3.08
Merger......................................................................................... Preamble
Order.......................................................................................... Section 6.06(b)
Outside Date................................................................................... Section 8.01(b)
Registration Statement......................................................................... Section 3.16
Rule 145....................................................................................... Section 6.10
SEC............................................................................................ Section 3.03(c)
Securities Act................................................................................. Section 3.03(c)
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CROSS REFERENCE
TERMS IN AGREEMENT
----------------------------------------------------------------------------------------------- -----------------
Seller Balance Sheet........................................................................... Section 3.04(b)
Seller Common Stock............................................................................ Section 2.01(b)
Seller Disclosure Schedule..................................................................... Article III
Seller Employee Plans.......................................................................... Section (a)
Seller Material Adverse Effect................................................................. Section 3.01
Seller Material Contract....................................................................... Section 3.10
Seller Meeting................................................................................. Section 3.16
Seller......................................................................................... Section 3.02(b)
Seller Rights.................................................................................. Section 3.02(b)
Seller Rights Plan............................................................................. Section 3.02(b)
Seller SEC Reports............................................................................. Section 3.04(a)
Seller Stock Plans............................................................................. Section 3.02(a)
Seller Voting Proposal......................................................................... Section 6.05(a)
Subsidiary..................................................................................... Section 3.01
Superior Proposal.............................................................................. Section 6.01(a)
Surviving Corporation.......................................................................... Section 1.03(a)
Tax............................................................................................ Section 3.07(a)
Taxes.......................................................................................... Section 3.07(a)
Third Party.................................................................................... Section 8.03(g)
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of June 21, 1998,
by and among The Learning Company, Inc., a Delaware corporation ("Buyer"), TLC
Merger Corp., a Delaware corporation and a direct, wholly-owned subsidiary of
Buyer ("Sub"), and Broderbund Software, Inc., a Delaware corporation ("Seller").
WHEREAS, the Boards of Directors of Buyer and Seller deem it advisable and
in the best interests of each corporation and its respective stockholders that
Buyer and Seller combine in order to advance the long-term business interests of
Buyer and Seller;
WHEREAS, the combination of Buyer and Seller shall be effected by the terms
of this Agreement through a merger of Sub into Seller, as a result of which the
stockholders of Seller will become stockholders of Buyer (the "Merger");
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a pooling of interests.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I
THE MERGER
Section 1.01 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of this
Agreement, a certificate of merger in such form as is required by the relevant
provisions of the Delaware General Corporation Law ("DGCL") (the "Certificate of
Merger") shall be duly executed and acknowledged by the Surviving Corporation
(as defined in Section 1.03) and thereafter delivered to the Secretary of State
of the State of Delaware for filing, as soon as practicable on the Closing Date
(as defined in Section 1.02). The Merger shall become effective upon the filing
of the Certificate of Merger with the Secretary of State of the State of
Delaware (the "Effective Time").
Section 1.02 CLOSING. The closing of the Merger (the "Closing") will take
place at 10:00 a.m., E.S.T., on a date to be specified by Buyer and Seller (the
"Closing Date"), which shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in Article VII, at the
offices of ▇▇▇▇ and ▇▇▇▇ LLP, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇, unless
another date, place or time is agreed to in writing by Buyer and Seller.
Section 1.03 EFFECTS OF THE MERGER. At the Effective Time (i) the separate
existence of Sub shall cease and Sub shall be merged with and into Seller (Sub
and Seller are sometimes referred to below as the "Constituent Corporations" and
Seller following the Merger is sometimes referred to below as the "Surviving
Corporation"), (ii) the Certificate of Incorporation of Seller shall be amended
so that Article 4 of such Certificate of Incorporation reads in its entirety as
follows: "The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 1,000, all of which shall consist
of Common Stock, $.01 par value per share, and, as so amended, such Certificate
of Incorporation shall be the Certificate of Incorporation of the Surviving
Corporation, and (iii) the Bylaws of Sub as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation. The Merger
shall have the effects set forth in Section 259 of the DGCL.
Section 1.04 DIRECTORS AND OFFICERS. The directors and officers of Sub
immediately prior to the Effective Time shall be the initial directors and
officers of the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and Bylaws of the Surviving Corporation.
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ARTICLE II
CONVERSION OF SECURITIES
Section 2.01 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Seller Common Stock or capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of the capital
stock of Sub shall be converted into and become one fully paid and nonassessable
share of Common Stock of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND BUYER-OWNED STOCK. All shares of
common stock $.01 par value per share, of Seller ("Seller Common Stock") that
are owned by Seller as treasury stock and any shares of Seller Common Stock
owned by Buyer, Sub or any other wholly-owned Subsidiary (as defined in Section
3.01) of Buyer shall be cancelled and retired and shall cease to exist and no
stock of Buyer or other consideration shall be delivered in exchange therefor.
All shares of Common Stock, $.01 par value per share, of Buyer ("Buyer Common
Stock") owned by Seller shall be unaffected by the Merger.
(c) EXCHANGE RATIO FOR SELLER COMMON STOCK. Subject to Section 2.02, each
issued and outstanding share of Seller Common Stock (other than shares to be
cancelled in accordance with Section 2.01(b)), together with the Seller Rights
(as defined below) attached thereto or associated therewith, shall be converted
into the right to receive .8 shares (the "Exchange Ratio") of Buyer Common
Stock. All such shares of Seller Common Stock and all Seller Rights, when so
converted, shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the shares of Buyer Common Stock and any
cash in lieu of fractional shares of Buyer Common Stock to be issued or paid in
consideration therefor upon the surrender of such certificate in accordance with
Section 2.02, without interest.
(d) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be adjusted to
reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into Buyer
Common Stock or Seller Common Stock), reorganization, recapitalization or other
like change with respect to Buyer Common Stock or Seller Common Stock occurring
after the date hereof and prior to the Effective Time.
Section 2.02 EXCHANGE OF CERTIFICATES. The procedures for exchanging
outstanding shares of Seller Common Stock for Buyer Common Stock pursuant to the
Merger are as follows:
(a) EXCHANGE AGENT. As of the Effective Time, Buyer shall deposit with a
bank or trust company designated by Buyer and Seller (the "Exchange Agent"), for
the benefit of the holders of shares of Seller Common Stock, for exchange in
accordance with this Section 2.02, through the Exchange Agent, (i) certificates
representing the shares of Buyer Common Stock (such shares of Buyer Common
Stock, together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund") issuable pursuant to Section
2.01 in exchange for outstanding shares of Seller Common Stock, (ii) cash in an
amount sufficient to make payments required pursuant to Section 2.02(e), and
(iii) any dividends or distributions to which holders of Certificates (as
defined below) may be entitled pursuant to Section 2.02(c)
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Seller Common Stock (the "Certificates") whose
shares were converted pursuant to Section 2.01 into the right to receive shares
of Buyer Common Stock (i) a letter of transmittal in customary form (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Buyer and
Seller may reasonably specify) and (ii) instructions for effecting the surrender
of the Certificates in exchange for certificates representing
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shares of Buyer Common Stock (plus cash in lieu of fractional shares, if any, of
Buyer Common Stock and any dividends or distributions as provided below). Upon
surrender of a Certificate for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Buyer, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing that number of whole
shares of Buyer Common Stock which such holder has the right to receive pursuant
to the provisions of this Article II plus cash in lieu of fractional shares
pursuant to Section 2.02(e) and any dividends or distributions pursuant to
Section 2.02(c), and the Certificate so surrendered shall immediately be
cancelled. In the event of a transfer of ownership of Seller Common Stock which
is not registered in the transfer records of Seller, a certificate representing
the proper number of shares of Buyer Common Stock plus cash in lieu of
fractional shares pursuant to Section 2.02(e) and any dividends or distributions
pursuant to Section 2.02(c) may be issued to a transferee if the Certificate
representing such Seller Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.02, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the certificate representing shares of Buyer Common
Stock plus cash in lieu of fractional shares pursuant to Section 2.02(e) and any
dividends or distributions pursuant to Section 2.02(c) as contemplated by this
Section 2.02.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or other
distributions declared or made after the Effective Time with respect to Buyer
Common Stock with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the shares of Buyer
Common Stock represented thereby and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to subsection (e) below until
the holder of record of such Certificate shall surrender such Certificate.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the record holder of the certificates
representing whole shares of Buyer Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of Buyer Common Stock to which such holder
is entitled pursuant to subsection (e) below and the amount of dividends or
other distributions with a record date after the Effective Time previously paid
with respect to such whole shares of Buyer Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of Buyer
Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN SELLER COMMON STOCK. All shares of Buyer
Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms hereof (including any cash or other distributions paid
pursuant to subsection (c) or (e) of this Section 2.02) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Seller Common Stock, subject, however, to the Surviving Corporation's obligation
to pay any dividends or make any other distributions with a record date prior to
the Effective Time which may have been declared or made by Seller on such shares
of Seller Common Stock in accordance with the terms of this Agreement (to the
extent permitted under Section 5.01) prior to the date hereof and which remain
unpaid at the Effective Time, and from and after the Effective Time there shall
be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Seller 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 Section 2.02.
(e) NO FRACTIONAL SHARES. No certificate or scrip representing fractional
shares of Buyer Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any other rights of a stockholder of Buyer.
Notwithstanding any other provision of this Agreement, each holder of shares of
Seller Common Stock exchanged pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of Buyer Common
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Stock (after taking into account all Certificates delivered by such holder)
shall receive, in lieu thereof, cash (without interest) in an amount equal to
such fractional part of a share of Buyer Common Stock multiplied by the average
of the last reported sales prices of Buyer Common Stock, as reported on the New
York Stock Exchange, on each of the ten trading days immediately preceding the
Closing Date.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund which
remains undistributed to the stockholders of Seller for 180 days after the
Effective Time shall be delivered to Buyer, upon demand, and any stockholders of
Seller who have not previously complied with this Section 2.02 shall thereafter
look only to Buyer for payment of their claim for Buyer Common Stock, any cash
in lieu of fractional shares of Buyer Common Stock and any dividends or
distributions with respect to Buyer Common Stock.
(g) NO LIABILITY. To the extent permitted by applicable law, neither Buyer
nor Seller shall be liable to any holder of shares of Seller Common Stock or
Buyer Common Stock, as the case may be, for such shares (or dividends or
distributions with respect thereto) properly delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(h) WITHHOLDING RIGHTS. Each of Buyer and the Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Seller Common Stock such
amounts as it is required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by Surviving Corporation or
Buyer, as the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Seller Common Stock in respect of which such deduction and withholding was made
by Surviving Corporation or Buyer, as the case may be.
(i) LOST CERTIFICATES. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the shares
of Buyer Common Stock and any cash in lieu of fractional shares, and unpaid
dividends and distributions on shares of Buyer Common Stock deliverable in
respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer and Sub that the statements
contained in this Article III are true and correct, except as set forth herein
or in the disclosure schedule delivered by Seller to Buyer on or before the date
of this Agreement (the "Seller Disclosure Schedule"). The Seller Disclosure
Schedule shall be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Article III and the disclosure in any
paragraph shall qualify other paragraphs in this Article III only to the extent
that it is reasonably apparent from a reading of such disclosure that it also
qualifies or applies to such other paragraphs.
Section 3.01 ORGANIZATION OF SELLER. Each of Seller and its Subsidiaries (as
defined below) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
requisite corporate power to own, lease and operate its property and to carry on
its business as now being conducted and as proposed to be conducted, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the failure to be so qualified would have a material
adverse effect on the business, properties, financial condition or results of
operations of Seller and its Subsidiaries, taken as a whole (a "Seller Material
Adverse Effect"); provided, however, that for purposes of this Agreement, any
adverse change in the stock price of Seller in and of itself, as quoted on the
Nasdaq National Market, shall not be taken into account in determining whether
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there has been or would be a "Seller Material Adverse Effect" on or with respect
to Seller and its Subsidiaries, taken as a whole. Except as set forth in the
Seller SEC Reports (as defined in Section 3.04) filed prior to the date hereof,
neither Seller nor any of its Subsidiaries directly or indirectly owns any
equity or similar interest in, or any interest convertible into or exchangeable
or exercisable for, any corporation, partnership, joint venture or other
business association or entity, excluding securities in any publicly traded
company held for investment by Seller and comprising less than five percent (5%)
of the outstanding stock of such company. As used in this Agreement, the word
"Subsidiary" means, with respect to Seller, any corporation or other
organization, whether incorporated or unincorporated, of which (i) such party or
any other Subsidiary of such party is a general partner (excluding partnerships,
the general partnership interests of which held by such party or any Subsidiary
of such party do not have a majority of the voting interest in such partnership)
or (ii) at least a majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the Board of Directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party or by
any one or more of its Subsidiaries, or by such party and one or more of its
Subsidiaries and, with respect to Buyer, those entities listed on Buyer
Disclosure Schedule 4.01.
Section 3.02 SELLER CAPITAL STRUCTURE.
(a) The authorized capital stock of Seller consists of 120,000,000 shares of
Common Stock ("Seller Common Stock"). As of May 31, 1998, (i) 20,964,789 shares
of Seller Common Stock were issued and outstanding, all of which are validly
issued, fully paid and nonassessable and (ii) no shares of Seller Common Stock
were held in the treasury of Seller or by Subsidiaries of Seller. The Seller
Disclosure Schedule shows the number of shares of Seller Common Stock reserved
for future issuance pursuant to stock options granted and outstanding as of May
31, 1998 and the plans under which such options were granted (collectively, the
"Seller Stock Plans"). No material change in such capitalization has occurred
between May 31, 1998 and the date of this Agreement. As of the date hereof, all
shares of Seller Common Stock subject to issuance as specified above are duly
authorized and, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be validly issued, fully
paid and nonassessable. As of the date hereof, there are no obligations,
contingent or otherwise, of Seller or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of Seller Common Stock or the capital
stock of any Subsidiary or to provide funds to or make any material investment
(in the form of a loan, capital contribution or otherwise) in any such
Subsidiary or any other entity other than guarantees of bank obligations of
Subsidiaries entered into in the ordinary course of business. As of the date
hereof, all of the outstanding shares of capital stock of each of Seller's
Subsidiaries are duly authorized, validly issued, fully paid and nonassessable
and all such shares (other than directors' qualifying shares in the case of
foreign Subsidiaries) are owned by Seller or another Subsidiary free and clear
of all security interests, liens, claims, pledges, agreements, limitations in
Seller's voting rights, charges or other encumbrances of any nature.
(b) As of the date hereof, except as set forth in this Section 3.02 or as
reserved for future grants of options under the Seller Stock Plans and except
for the rights (the "Seller Rights") issued and issuable under the Preferred
Shares Rights Agreement dated as of May 1, 1996 between Seller and Chemical
Mellon Shareholder Services, L.L.C. (the "Seller Rights Plan"), there are no
equity securities of any class of Seller or any of its Subsidiaries, or any
security exchangeable into or exercisable for such equity securities, issued,
reserved for issuance or outstanding. As of the date hereof, there are no
options, warrants, equity securities, calls, rights, commitments or agreements
of any character to which Seller or any of its Subsidiaries is a party or by
which it is bound obligating Seller or any of its Subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of capital
stock of Seller or any of its Subsidiaries or obligating Seller or any of its
Subsidiaries to grant, extend, accelerate the vesting of, otherwise modify or
amend or enter into any such option, warrant, equity security, call, right,
commitment or agreement. As of the date hereof, to the best knowledge of Seller,
there are no voting trusts, proxies or other voting agreements or understandings
with respect to the shares of capital stock of Seller.
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Section 3.03 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Seller has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement by Seller have been duly
authorized by all necessary corporate action on the part of Seller, subject only
to the approval of the Merger by Seller's stockholders under the DGCL. This
Agreement has been duly executed and delivered by Seller and constitutes the
valid and binding obligation of Seller, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles (the "Bankruptcy and Equity
Exception").
(b) The execution and delivery of this Agreement by Seller does not, and the
consummation of the transactions contemplated by this Agreement will not, (i)
conflict with, or result in any violation or breach of, any provision of the
Certificate of Incorporation or Bylaws of Seller, (ii) result in any violation
or breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any material benefit) under, or require a consent or
waiver under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which Seller or any of its Subsidiaries is a party or by which any
of them or any of their properties or assets may be bound, or (iii) conflict
with or violate any permit, concession, franchise, license, judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Seller or any
of its Subsidiaries or any of its or their properties or assets, except in the
case of (ii) and (iii) for any such conflicts, violations, defaults,
terminations, cancellations or accelerations which are not, individually or in
the aggregate, reasonably likely to have a Seller Material Adverse Effect.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity") is
required by or with respect to Seller or any of its Subsidiaries in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) the filing of the pre-merger
notification report under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, ("HSR Act"), (ii) the filing of the Certificate of Merger with
the Delaware Secretary of State, (iii) the filing of the Joint Proxy Statement
(as defined in Section 3.16 below) with the Securities and Exchange Commission
(the "SEC") in accordance with the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (iv) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state securities laws and the laws of any foreign country and (v) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, would not be reasonably likely to have a Seller Material
Adverse Effect.
Section 3.04 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Seller has filed and made available to Buyer all forms, reports and
documents required to be filed by Seller with the SEC since January 1, 1996
other than registration statements on Form S-8 (collectively, the "Seller SEC
Reports"). The Seller SEC Reports (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act, as the case may
be, and (ii) did not at the time they were filed (or if amended or superseded by
a filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated in such Seller SEC Reports or necessary in order to make
the statements in such Seller SEC Reports, in the light of the circumstances
under which they were made, not misleading. None of Seller's Subsidiaries is
required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes) contained in the Seller SEC Reports complied as to form in
all material respects with the applicable
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published rules and regulations of the SEC with respect thereto, was prepared in
accordance with generally accepted accounting principles applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
to such financial statements or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) and fairly presented the consolidated
financial position of Seller and its Subsidiaries as of the dates and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be material in amount. The unaudited balance sheet of Seller as of May 31, 1998
is referred to herein as the "Seller Balance Sheet."
Section 3.05 NO UNDISCLOSED LIABILITIES. Except as disclosed in the Seller
SEC Reports filed prior to the date hereof, and except for normal or recurring
liabilities incurred since May 31, 1998 in the ordinary course of business
consistent with past practices, Seller and its Subsidiaries do not have any
liabilities, either accrued, contingent or otherwise (whether or not required to
be reflected in financial statements in accordance with generally accepted
accounting principles), and whether due or to become due, which individually or
in the aggregate are reasonably likely to have a Seller Material Adverse Effect.
Section 3.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Seller SEC Reports filed prior to the date hereof, since the date of the
Seller Balance Sheet, Seller and its Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, since such date, there has not been (i) any change in the
financial condition, results of operations, business or properties of Seller and
its Subsidiaries, taken as a whole that has had, or is reasonably likely to
have, a Seller Material Adverse Effect; (ii) any damage, destruction or loss
(whether or not covered by insurance) with respect to Seller or any of its
Subsidiaries having a Seller Material Adverse Effect; (iii) any material change
by Seller in its accounting methods not required pursuant to generally accepted
accounting principles, principles or practices to which Buyer has not previously
consented in writing; (iv) any revaluation by Seller of any of its assets having
a Seller Material Adverse Effect; or (v) any other action or event that would
have required the consent of Buyer pursuant to Section 5.01 of this Agreement
had such action or event occurred after the date of this Agreement.
Section 3.07 TAXES.
(a) For the purposes of this Agreement, a "Tax" or, collectively, "Taxes,"
means any and all material federal, state, local and foreign taxes, assessments
and other governmental charges, duties, impositions and liabilities, including
taxes based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, gains, franchise,
withholding, payroll, recapture, employment, excise, unemployment insurance,
social security, business license, occupation, business organization, stamp,
environmental and property taxes, together with all interest, penalties and
additions imposed with respect to such amounts and any obligations under any
agreements or arrangements with any other person with respect to such amounts
and including any liability for taxes of a predecessor entity.
(b) Seller and each of its Subsidiaries have (i) filed all federal, state,
local and foreign tax returns and reports required to be filed by them prior to
the date of this Agreement (taking into account extensions), (ii) paid or
accrued all Taxes due and payable, and (iii) paid or accrued all Taxes for which
a notice of assessment or collection has been received (other than amounts being
contested in good faith by appropriate proceedings), except in the case of
clause (i), (ii) or (iii) for any such filings, payments or accruals which are
not reasonably likely, individually or in the aggregate, to have a Seller
Material Adverse Effect. Unpaid Taxes for periods prior to the date hereof do
not materially exceed accruals and reserves for Taxes (other than accruals and
reserves for Taxes established to reflect timing differences between book and
Tax income) as set forth on the Seller Balance Sheet. Neither the Internal
Revenue Service (the "IRS") nor any other taxing authority has asserted any
claim for Taxes, or to the actual knowledge of the executive officers of Seller,
is threatening to assert any claims for Taxes, which claims, individually or in
the aggregate, are reasonably likely to have a Seller Material Adverse Effect.
Seller and each of its Subsidiaries have withheld or collected and paid over to
the appropriate governmental authorities (or are properly
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holding for such payment) all Taxes required by law to be withheld or collected,
except for amounts which are not reasonably likely, individually or in the
aggregate, to have a Seller Material Adverse Effect. There are no liens for
Taxes upon the assets of Seller or any of its Subsidiaries (other than liens for
Taxes that are not yet due or that are being contested in good faith by
appropriate proceedings), except for liens which are not reasonably likely,
individually or in the aggregate, to have a Seller Material Adverse Effect.
(c) Seller is not and never has been a party to or bound by any Tax
indemnity, Tax sharing or Tax allocation agreement (whether written or unwritten
or arising under operation of federal law as a result of being a member of a
group filing consolidated Tax Returns, under operation of certain state laws as
a result of being a member of a unitary group, or under comparable laws of other
states or foreign jurisdictions) which includes a party other than Seller nor
does Seller owe any amount under any such agreement.
(d) Neither Seller nor any of its Subsidiaries is a "consenting corporation"
within the meaning of Section 341(f) of the Code, and none of the assets of
Seller or the Subsidiaries are subject to an election under Section 341(f) of
the Code.
(e) Neither Seller nor any of its Subsidiaries has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(f) Neither Seller nor any of its Subsidiaries has made any payments, is
obligated to make any payments, or is a party to any agreement that could
obligate it to make any payments that will be an "excess parachute payment"
under Section 280G of the Code.
Section 3.08 PROPERTIES.
(a) Seller has provided to Buyer a true and complete list of all real
property leased by Seller or its Subsidiaries pursuant to leases providing for
the occupancy of facilities in excess of 10,000 square feet (collectively
"Material Lease(s)") and the location of the premises. Seller is not in default
under any of such leases, except where the existence of such defaults,
individually or in the aggregate, is not reasonably likely to have a Seller
Material Adverse Effect.
(b) Seller has provided to Buyer a true and complete list of all real
property that Seller or any of its Subsidiaries owns. With respect to each such
item of real property, except for such matters that, individually or in the
aggregate, are not reasonably likely to have a Seller Material Adverse Effect:
(a) Seller or the identified Subsidiary has good and clear record and marketable
title to such property, insurable by a recognized national title insurance
company at standard rates, free and clear of any security interest, easement,
covenant or other restriction, except for recorded easements, covenants and
other restrictions which do not materially impair the current uses or occupancy
of such property; and (b) the improvements constructed on such property are in
good condition, and all mechanical and utility systems servicing such
improvements are in good condition, free in each case of material defects.
Section 3.09 INTELLECTUAL PROPERTY.
(a) Seller and its Subsidiaries own, or are licensed or otherwise possess
legally enforceable rights to use, all patents, trademarks, trade names, service
marks and copyrights, any applications for and registrations of such patents,
trademarks, trade names, service marks and copyrights, and all processes,
formulae, methods, schematics, technology, know-how, computer software programs
or applications and tangible or intangible proprietary information or material
that are necessary to conduct the business of Seller and its Subsidiaries as
currently conducted, or planned to be conducted, the absence of which would be
reasonably likely to have a Seller Material Adverse Effect (the "Seller
Intellectual Property Rights").
(b) The execution and delivery of this Agreement and consummation of the
Merger will not result in the breach of, or create on behalf of any third party
the right to terminate or modify, any license, sublicense or other agreement
relating to the Seller's Intellectual Property Rights, or any material licenses,
sublicenses and other agreements as to which Seller or any of its Subsidiaries
is a party and pursuant to
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which Seller or any of its Subsidiaries is authorized to use any third party
patents, trademarks, copyrights or trade secrets ("Seller Third Party
Intellectual Property Rights"), including software that is used in the
manufacture of, incorporated in, or forms a part of any product sold by or
expected to be sold by Seller or any of its Subsidiaries, the breach of which
would be reasonably likely to have a Seller Material Adverse Effect or would
have a material adverse effect on any product of Seller expected to account for
more than $1 million of revenue in the 12 months following the date hereof.
(c) All patents, registered trademarks, service marks and copyrights which
are held by Seller or any of its Subsidiaries the loss or invalidity of which
would cause a Seller Material Adverse Effect, are valid and subsisting. Seller
(i) has not been sued in any suit, action or proceeding, or received in writing
any claim or notice, which involves a claim of infringement of any patents,
trademarks, service marks, copyrights or violation of any trade secret or other
proprietary right of any third party; and (ii) has no knowledge that the
manufacturing, marketing, licensing or sale of its products infringes any
patent, trademark, service ▇▇▇▇, copyright, trade secret or other proprietary
right of any third party, which infringement in the cases of clause (i) and (ii)
would reasonably be expected to have a Seller Material Adverse Effect.
Section 3.10 AGREEMENTS, CONTRACTS AND COMMITMENTS. Seller has not breached,
or received in writing any claim or notice that it has breached, any of the
terms or conditions of any material agreement, contract or commitment filed as
an exhibit to the Seller SEC Reports ("Seller Material Contracts") in such a
manner as, individually or in the aggregate, are reasonably likely to have a
Seller Material Adverse Effect. Each Seller Material Contract that has not
expired by its terms is in full force and effect.
Section 3.11 LITIGATION. Except as described in the Seller SEC Reports filed
prior to the date hereof, there is no action, suit or proceeding, claim,
arbitration or investigation against Seller pending or as to which Seller has
received any written notice of assertion, which, individually or in the
aggregate, is reasonably likely to have a Seller Material Adverse Effect or a
material adverse effect on the ability of Seller to consummate the transactions
contemplated by this Agreement.
Section 3.12 ENVIRONMENTAL MATTERS.
(a) Except as disclosed in the Seller SEC Reports filed prior to the date
hereof and except for such matters that, individually or in the aggregate, are
not reasonably likely to have a Seller Material Adverse Effect: (i) Seller and
its Subsidiaries have complied with all applicable Environmental Laws (as
defined in Section 3.12(b)); (ii) the properties currently owned or operated by
Seller and its Subsidiaries (including soils, groundwater, surface water,
buildings or other structures) are not contaminated with any Hazardous
Substances (as defined in Section 3.12(c)); (iii) the properties formerly owned
or operated by Seller or any of its Subsidiaries were not contaminated with
Hazardous Substances during the period of ownership or operation by Seller or
any of its Subsidiaries; (iv) neither Seller nor its Subsidiaries are subject to
liability for any Hazardous Substance disposal or contamination on any third
party property; (v) neither Seller nor any of its Subsidiaries have released any
Hazardous Substance; (vi) neither Seller nor any of its Subsidiaries has
received any notice, demand, letter, claim or request for information alleging
that Seller or any of its Subsidiaries may be in violation of or liable under
any Environmental Law; (vii) neither Seller nor any of its Subsidiaries is
subject to any orders, decrees, injunctions or other arrangements with any
Governmental Entity or is subject to any indemnity or other agreement with any
third party relating to liability under any Environmental Law or relating to
Hazardous Substances; and (viii) there are no circumstances or conditions
involving Seller or any of its Subsidiaries that could reasonably be expected to
result in any material claims, liability, investigations, costs or restrictions
on the ownership, use or transfer of any property of Seller pursuant to any
Environmental Law.
(b) As used herein, the term "Environmental Law" means any federal, state,
local or foreign law, regulation, order, decree, permit, authorization, opinion,
common law or agency requirement relating to: (A) the protection, investigation
or restoration of the environment, health and safety, or natural resources, (B)
the handling, use, presence, disposal, release or threatened release of any
Hazardous Substance or (C) noise, wetlands, pollution, contamination or any
injury or threat of injury to persons or property.
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(c) As used herein, the term "Hazardous Substance" means any substance that
is: (A) listed, classified or regulated pursuant to any Environmental Law; (B)
any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (C) any other substance which is the subject of
regulatory action by any Governmental Entity pursuant to any Environmental Law.
Section 3.13 EMPLOYEE BENEFIT PLANS.
(a) Seller has listed in Section 3.13 of the Seller Disclosure Schedule all
employee benefit plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and all bonus, stock option,
stock purchase, incentive, deferred compensation, supplemental retirement,
severance and other similar employee benefit plans, and all unexpired severance
agreements, written or otherwise, for the benefit of, or relating to, any
current or former employee of Seller or any trade or business (whether or not
incorporated) which is a member or which is under common control with Seller (an
"ERISA Affiliate") within the meaning of Section 414 of the Code, or any
Subsidiary of Seller (together, the "Seller Employee Plans").
(b) With respect to each Seller Employee Plan, Seller has made available to
Buyer, a true and correct copy of (i) the most recent annual report (Form 5500)
filed with the IRS, (ii) such Seller Employee Plan, (iii) each trust agreement
and group annuity contract, if any, relating to such Seller Employee Plan and
(iv) the most recent actuarial report or valuation relating to a Seller Employee
Plan subject to Title IV of ERISA.
(c) With respect to the Seller Employee Plans, individually and in the
aggregate, no event has occurred, and to the knowledge of Seller, there exists
no condition or set of circumstances in connection with which Seller could be
subject to any liability that is reasonably likely to have a Seller Material
Adverse Effect under ERISA, the Code or any other applicable law.
(d) With respect to the Seller Employee Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no unfunded benefit obligations
which have not been accounted for by reserves, or otherwise properly footnoted
in accordance with generally accepted accounting principles, on the financial
statements of Seller, which obligations are reasonably likely to have a Seller
Material Adverse Effect.
(e) Except as disclosed in Seller SEC Reports filed prior to the date of
this Agreement, and except as provided for in this Agreement, neither Seller nor
any of its Subsidiaries is a party to any oral or written (i) agreement with any
officer or other key employee of Seller or any of its Subsidiaries, the benefits
of which are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving Seller of the nature contemplated by this
Agreement, (ii) agreement with any officer of Seller providing any term of
employment or compensation guarantee extending for a period longer than one year
from the date hereof and for the payment of compensation in excess of $100,000
per annum, or (iii) agreement or plan, including any stock option plan, stock
appreciation right plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement.
Section 3.14 COMPLIANCE WITH LAWS. Seller has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state or local statute, law or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for
failures to comply or violations which, individually or in the aggregate, have
not had and are not reasonably likely to have a Seller Material Adverse Effect.
Section 3.15 ACCOUNTING AND TAX MATTERS. To its knowledge, after consulting
with its independent auditors, neither Seller nor any of its Affiliates (as
defined in Section 6.10) has taken or agreed to take any
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action which would (i) prevent Buyer from accounting for the business
combination to be effected by the Merger as a pooling of interests or (ii)
prevent the Merger from constituting a transaction qualifying as a
reorganization under 368(a) of the Code. Seller has provided or promptly
following the date hereof (but in no event later than June 30, 1998 upon request
from Buyer) will provide to Buyer a letter of its independent accountants, KPMG
Peat Marwick LLP, as to the eligibility of Buyer for a pooling of interests
transaction.
Section 3.16 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The
information to be supplied by Seller for inclusion in the registration statement
on Form S-4 pursuant to which shares of Buyer Common Stock issued in the Merger
will be registered under the Securities Act (the "Registration Statement"),
shall not at the time the Registration Statement is declared effective by the
SEC contain any untrue statement of a material fact or omit to state any
material fact required to be stated in the Registration Statement or necessary
in order to make the statements in the Registration Statement, in light of the
circumstances under which they were made, not misleading. The information to be
supplied by Seller for inclusion in the joint proxy statement/prospectus to be
sent to the stockholders of Buyer and Seller in connection with the meeting of
Seller's stockholders to consider this Agreement and the Merger (the "Seller
Meeting") and in connection with the meeting of Buyer's stockholders (the "Buyer
Meeting") to consider the issuance of shares of Buyer Common Stock pursuant to
the Merger (the "Joint Proxy Statement") shall not, on the date the Joint Proxy
Statement is first mailed to stockholders of Seller or Buyer, at the time of the
Seller Stockholders' Meeting and the Buyer Stockholders' Meeting and at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements made in the Joint Proxy Statement not false or misleading;
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the Seller
Meeting or the Buyer Meeting which has become false or misleading. If at any
time prior to the Effective Time any event relating to Seller or any of its
Affiliates, officers or directors should be discovered by Seller which should be
set forth in an amendment to the Registration Statement or a supplement to the
Joint Proxy Statement, Seller shall promptly inform Buyer.
Section 3.17 LABOR MATTERS. Neither Seller nor any of its Subsidiaries is a
party to or otherwise bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, nor,
as of the date hereof, is Seller or any of its Subsidiaries the subject of any
material proceeding asserting that Seller or any of its Subsidiaries has
committed an unfair labor practice or is seeking to compel it to bargain with
any labor union or labor organization nor, as of the date of this Agreement, is
there pending or, to the knowledge of the executive officers of Seller,
threatened, any material labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving Seller or any of its Subsidiaries.
Section 3.18 INSURANCE. All material fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies maintained by Seller or any of its Subsidiaries are with
reputable insurance carriers, provide full and adequate coverage for all normal
risks incident to the business of Seller and its Subsidiaries and their
respective properties and assets, and are in character and amount at least
equivalent to that carried by persons engaged in similar businesses and subject
to the same or similar perils or hazards, except for any such failures to
maintain insurance policies that, individually or in the aggregate, are not
reasonably likely to have a Seller Material Adverse Effect.
Section 3.19 NO EXISTING DISCUSSIONS. As of the date hereof, Seller has
ceased all discussions or negotiations with any other party with respect to an
Acquisition Proposal (as defined in Section 6.01).
Section 3.20 OPINION OF FINANCIAL ADVISOR. The financial advisor of Seller,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Incorporated, has delivered to Seller an opinion
dated on or about the date of this Agreement to the effect, as of such date,
that the Exchange Ratio is fair to the holders of Seller Common Stock from a
financial point of view.
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Section 3.21 SECTION 203 OF THE DGCL NOT APPLICABLE. The Board of Directors
of Seller has taken all actions so that the restrictions contained in Section
203 of the DGCL applicable to a "business combination" (as defined in Section
203) will not apply to the execution, delivery or performance of this Agreement
or the consummation of the Merger or the other transactions contemplated by this
Agreement.
Section 3.22 RIGHTS AGREEMENT. The entering into this Agreement and the
consummation of the transactions contemplated hereby do not and will not result
in the grant of any rights to any person under the Seller Rights Plan or enable
or require the Seller Rights to be exercised, distributed or triggered.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND SUB
Buyer and Sub represent and warrant to Seller that the statements contained
in this Article IV are true and correct, except as set forth herein or in the
disclosure schedule delivered by Buyer to Seller on or before the date of this
Agreement (the "Buyer Disclosure Schedule"). The Buyer Disclosure Schedule shall
be arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Article IV and the disclosure in any paragraph shall qualify
other paragraphs in this Article IV only to the extent that it is reasonably
apparent from a reading of such document that it also qualifies or applies to
such other paragraphs.
Section 4.01 ORGANIZATION OF BUYER AND SUB. Each of Buyer and Sub and
Buyer's other Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, has
all requisite corporate power to own, lease and operate its property and to
carry on its business as now being conducted and as proposed to be conducted,
and is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the failure to be so qualified would
have a material adverse effect on the business, properties, financial condition
or results of operations of Buyer and its Subsidiaries, taken as a whole (a
"Buyer Material Adverse Effect"); provided, however, that for purposes of this
Agreement, any adverse change in the stock price of Buyer in and of itself, as
quoted on the New York Stock Exchange, shall not be taken into account in
determining whether there has been or would be an "Buyer Material Adverse
Effect" on or with respect to Buyer and its Subsidiaries, taken as a whole.
Except as set forth in the Buyer SEC Reports (as defined in Section 4.04) filed
prior to the date hereof, neither Buyer nor any of its Subsidiaries directly or
indirectly owns any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any corporation, partnership, joint
venture or other business association or entity, excluding securities in any
publicly traded company held for investment by Buyer and comprising less than
five percent (5%) of the outstanding stock of such company.
Section 4.02 BUYER CAPITAL STRUCTURE.
(a) The authorized capital stock of Buyer consists of (i) 120,000,000 shares
of Common Stock, $.01 par value ("Buyer Common Stock"), (ii) 1,700,000 shares of
Preferred Stock, $.01 par value, of which 750,000 shares have been designated as
Series A Convertible Participating Preferred Stock ("Series A Preferred Stock")
and (iii) one share of special voting stock, $1.00 par value per share (the
"Special Voting Share"). The stockholders of Buyer have approved an increase in
the authorized Buyer Common Stock to 200,000,000 shares. The Special Voting
Share entitles the holder thereof, which is a Subsidiary of Buyer, to vote,
together with the holders of Buyer Common Stock, on all matters submitted for
the vote of the holders of Buyer Common Stock. The number of votes represented
by the Special Voting Share is equal to the number of shares of such Subsidiary
outstanding which are exchangeable into shares of Buyer Common Stock
("Exchangeable Shares"). As of June 15, 1998, there were outstanding 59,109,756
shares of Buyer Common Stock, 750,000 shares of Series A Preferred Stock
(currently convertible into 15,000,000 shares of Common Stock), 12,510,457
Exchangeable Shares (including 8,687,500 Exchangeable Shares subject to
outstanding warrants) and $200,955,000 principal amount of 5 1/2% Senior
Convertible Notes due 2000 (convertible into approximately 3,791,600 shares of
Common Stock). The Buyer Disclosure Schedule
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shows the number of shares of Buyer Common Stock reserved for future issuance
pursuant to stock options granted and outstanding as of April 30, 1998, and the
plans under which such options were granted (collectively, the "Buyer Stock
Plans"). No material change in such capitalization has occurred between June 15,
1998 and the date of this Agreement. All shares of Buyer Common Stock subject to
issuance as specified above are duly authorized and, upon issuance on the terms
and conditions specified in the instruments pursuant to which they are issuable,
shall be validly issued, fully paid and nonassessable. There are no obligations,
contingent or otherwise, of Buyer or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of Buyer Common Stock or the capital
stock of any Subsidiary or to provide funds to or make any material investment
(in the form of a loan, capital contribution or otherwise) in any such
Subsidiary or any other entity other than guarantees of bank obligations of
Subsidiaries entered into in the ordinary course of business. All of the
outstanding shares of capital stock of each of Buyer's Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and all such shares
(other than directors' qualifying shares and similar shares in the case of
foreign Subsidiaries) are owned by Buyer or another Subsidiary free and clear of
all security interests, liens, claims, pledges, agreements, limitations in
Buyer's voting rights, charges or other encumbrances of any nature.
(b) Except as set forth in this Section 4.02 or as reserved for future
grants of options under the Buyer Stock Plans, there are no equity securities of
any class of Buyer, or any security exchangeable into or exercisable for such
equity securities, issued, reserved for issuance or outstanding. There are no
options, warrants, equity securities, calls, rights, commitments or agreements
of any character to which Buyer or any of its Subsidiaries is a party or by
which it is bound obligating Buyer or any of its Subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of capital
stock of Buyer or any of its Subsidiaries or obligating Buyer or any of its
Subsidiaries to grant, extend, accelerate the vesting of or enter into any such
option, warrant, equity security, call, right, commitment or agreement. To the
best knowledge of Buyer, there are no voting trusts, proxies or other voting
agreements or understandings with respect to the shares of capital stock of
Buyer.
Section 4.03 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Each of Buyer and the Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement and
the consummation of the transactions contemplated by this Agreement have been
duly authorized by all necessary corporate action on the part of each of Buyer
and Sub (including the approval of the Merger by Buyer as the sole stockholder
of Sub), subject only to the approval of the Buyer Voting Proposal (as defined
in Section 6.05) by Buyer's stockholders. This Agreement has been duly executed
and delivered by each of Buyer and Sub and constitutes the valid and binding
obligation of each of Buyer and Sub, enforceable in accordance with their terms,
subject to the Bankruptcy and Equity Exception.
(b) The execution and delivery of this Agreement by each of Buyer and Sub
does not, and the consummation of the transactions contemplated by this
Agreement will not, (i) conflict with, or result in any violation or breach of,
any provision of the Certificate of Incorporation or Bylaws of Buyer or Sub,
(ii) result in any violation or breach of, or constitute (with or without notice
or lapse of time, or both) a default (or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material benefit)
under, or require a consent or waiver under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, contract or other
agreement, instrument or obligation to which Buyer or any of its Subsidiaries is
a party or by which any of them or any of their properties or assets may be
bound, or (iii) conflict with or violate any permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Buyer or any of its Subsidiaries or any of its or their properties
or assets, except in the case of (ii) and (iii) for any such conflicts,
violations, defaults, terminations, cancellations or accelerations which are
not, individually or in the aggregate, reasonably likely to have a Buyer
Material Adverse Effect.
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(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Buyer or any of its Subsidiaries in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby or thereby, except for (i) the filing of the pre-merger notification
report under the HSR Act, (ii) the filing of the Registration Statement with the
SEC in accordance with the Securities Act, (iii) the filing of the Certificate
of Merger with the Delaware Secretary of State, (iv) the filing of the Joint
Proxy Statement with the SEC in accordance with the Exchange Act, (v) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state securities laws and the laws
of any foreign country, (vi) the approval by the New York Stock Exchange of the
listing of the shares of Buyer Common Stock to be issued in the transactions
contemplated by this Agreement, and (vii) such other consents, authorizations,
filings, approvals and registrations which, if not obtained or made, would not
be reasonably likely to have a Buyer Material Adverse Effect.
Section 4.04 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Buyer has filed and made available to Seller all forms, reports and
documents required to be filed by Buyer with the SEC since January 1, 1996 other
than registration statements on Form S-8 (collectively, the "Buyer SEC
Reports"). The Buyer SEC Reports (i) at the time filed, complied in all material
respects with the applicable requirements of the Securities Act and the Exchange
Act, as the case may be, and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated in such Buyer SEC Reports or
necessary in order to make the statements in such Buyer SEC Reports, in the
light of the circumstances under which they were made, not misleading. None of
Buyer's Subsidiaries is required to file any forms, reports or other documents
with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes) contained in the Buyer SEC Reports complied as to form in all
material respects with the applicable published rules and regulations of the SEC
with respect thereto, was prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements
or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC)
and fairly presented the consolidated financial position of Buyer and its
Subsidiaries as of the dates and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount. The
unaudited balance sheet of Buyer as of March 31, 1998 is referred to herein as
the "Buyer Balance Sheet."
Section 4.05 NO UNDISCLOSED LIABILITIES. Except as disclosed in the Buyer
SEC Reports filed prior to the date hereof, and except for normal or recurring
liabilities incurred since March 31, 1998 in the ordinary course of business
consistent with past practices, Buyer and its Subsidiaries do not have any
liabilities, either accrued, contingent or otherwise (whether or not required to
be reflected in financial statements in accordance with generally accepted
accounting principles), and whether due or to become due, which individually or
in the aggregate, are reasonably likely to have a Buyer Material Adverse Effect.
Section 4.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Buyer SEC Reports filed prior to the date hereof, since the date of the
Buyer Balance Sheet, Buyer and its Subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with past practice and,
since such date, there has not been (i) any change in the financial condition,
results of operations, business or properties of Buyer and its Subsidiaries,
taken as a whole, that has had, or is reasonably likely to have, a Buyer
Material Adverse Effect; (ii) any damage, destruction or loss (whether or not
covered by insurance) with respect to Buyer or any of its Subsidiaries having a
Buyer Material Adverse Effect; (iii) any material change by Buyer in its
accounting methods not required pursuant to generally accepted accounting
principles, principles or practices to which Seller has not previously consented
in writing; (iv) any
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revaluation by Buyer of any of its assets having a Buyer Material Adverse
Effect; or (v) any other action or event that would have required the consent of
Seller pursuant to Section 5.02 of this Agreement had such action or event
occurred after the date of this Agreement.
Section 4.07 TAXES.
(a) Buyer and each of its Subsidiaries have (i) filed all federal, state,
local and foreign tax returns and reports required to be filed by them prior to
the date of this Agreement (taking into account extensions), (ii) paid or
accrued all Taxes due and payable, and (iii) paid or accrued all Taxes for which
a notice of assessment or collection has been received (other than amounts being
contested in good faith by appropriate proceedings), except in the case of
clause (i), (ii) or (iii) for any such filings, payments or accruals which are
not reasonably likely, individually or in the aggregate, to have a Buyer
Material Adverse Effect. Unpaid Taxes for periods prior to the date hereof do
not materially exceed accruals and reserves for Taxes (other than accruals and
reserves for Taxes established to reflect timing differences between book and
Tax income) as set forth on the Seller Balance Sheet. Neither the IRS nor any
other taxing authority has asserted any claim for Taxes, or to the actual
knowledge of the executive officers of Buyer, is threatening to assert any
claims for Taxes, which claims, individually or in the aggregate, are reasonably
likely to have a Buyer Material Adverse Effect. Buyer and each of its
Subsidiaries have withheld or collected and paid over to the appropriate
governmental authorities (or are properly holding for such payment) all Taxes
required by law to be withheld or collected, except for amounts which are not
reasonably likely, individually or in the aggregate, to have a Buyer Material
Adverse Effect. There are no liens for Taxes upon the assets of Buyer or any of
its Subsidiaries (other than liens for Taxes that are not yet due or that are
being contested in good faith by appropriate proceedings), except for liens
which are not reasonably likely, individually or in the aggregate, to have a
Buyer Material Adverse Effect.
(b) Buyer is not and never has been a party to or bound by any Tax
indemnity, Tax sharing or Tax allocation agreement (whether written or unwritten
or arising under operation of federal law as a result of being a member of a
group filing consolidated Tax Returns, under operation of certain state laws as
a result of being a member of a unitary group, or under comparable laws of other
states or foreign jurisdictions) which includes a party other than Buyer nor
does Buyer owe any amount under any such agreement.
(c) Neither Buyer nor any of its Subsidiaries is a "consenting corporation"
within the meaning of Section 341(f) of the Code, and none of the assets of
Buyer or the Subsidiaries are subject to an election under Section 341(f) of the
Code.
(d) Neither Buyer nor any of its Subsidiaries has been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
Section 4.08 PROPERTIES.
(a) Buyer is not in default under any of its Material Leases, except where
the existence of such defaults, individually or in the aggregate, is not
reasonably likely to have a Buyer Material Adverse Effect.
(b) With respect to any item of real property owned by Buyer, except for
such matters that, individually or in the aggregate, are not reasonably likely
to have a Buyer Material Adverse Effect: (a) Buyer or the identified Subsidiary
has good and clear record and marketable title to such property, insurable by a
recognized national title insurance company at standard rates, free and clear of
any security interest, easement, covenant or other restriction, except for
recorded easements, covenants and other restrictions which do not materially
impair the current uses or occupancy of such property; and (b) the improvements
constructed on such property are in good condition, and all mechanical and
utility systems servicing such improvements are in good condition, free in each
case of material defects.
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Section 4.09 INTELLECTUAL PROPERTY.
(a) Buyer and its Subsidiaries own, or are licensed or otherwise possess
legally enforceable rights to use, all patents, trademarks, trade names, service
marks and copyrights, any applications for and registrations of such patents,
trademarks, trade names, service marks and copyrights, and all processes,
formulae, methods, schematics, technology, know-how, computer software programs
or applications and tangible or intangible proprietary information or material
that are necessary to conduct the business of Buyer and its Subsidiaries as
currently conducted, or planned to be conducted, the absence of which would be
reasonably likely to have a Buyer Material Adverse Effect (the "Buyer
Intellectual Property Rights").
(b) The execution and delivery of this Agreement and the consummation of the
Merger will not result in breach of, or create on behalf of any third party the
right to terminate or modify, any license, sublicense or other agreement
relating to the Buyer's Intellectual Property Rights, or any material licenses,
sublicenses and other agreements as to which Buyer or any of its Subsidiaries is
a party and pursuant to which Buyer or any of its Subsidiaries is authorized to
use any third party patents, trademarks, copyrights or trade secrets ("Buyer
Third Party Intellectual Property Rights"), including software that is used in
the manufacture of, incorporated in, or forms a part of any product sold by or
expected to be sold by Buyer or any of its Subsidiaries, the breach of which
would be reasonably likely to have a Buyer Material Adverse Effect.
(c) All patents, registered trademarks, service marks and copyrights which
are held by Buyer or any of its Subsidiaries the loss or invalidity of which
would cause a Buyer Material Adverse Effect, are valid and subsisting. Buyer (i)
has not been sued in any suit, action or proceeding, or received in writing any
claim or notice, which involves a claim of infringement of any patents,
trademarks, service marks, copyrights or violation of any trade secret or other
proprietary right of any third party, and (ii) has no knowledge that the
manufacturing, marketing, licensing or sale of its products infringes any
patent, trademark, service ▇▇▇▇, copyright, trade secret or other proprietary
right of any third party, which such infringement in the cases of clause (i) and
(ii) would reasonably be expected to have a Buyer Material Adverse Effect.
Section 4.10 AGREEMENTS, CONTRACTS AND COMMITMENTS. Buyer has not breached,
or received in writing any claim or notice that it has breached, any of the
terms or conditions of any material agreement, contract or commitment filed as
an exhibit to the Buyer SEC Reports ("Buyer Material Contracts") in such a
manner as, individually or in the aggregate, are reasonably likely to have a
Buyer Material Adverse Effect. Each Buyer Material Contract that has not expired
by its terms is in full force and effect.
Section 4.11 LITIGATION. Except as described in the Buyer SEC Reports filed
prior to the date hereof, there is no action, suit or proceeding, claim,
arbitration or investigation against Buyer pending or as to which Buyer has
received any written notice of assertion, which, individually or in the
aggregate, is reasonably likely to have a Buyer Material Adverse Effect or a
material adverse effect on the ability of Buyer to consummate the transactions
contemplated by this Agreement.
Section 4.12 ENVIRONMENTAL MATTERS. Except as disclosed in the Buyer SEC
Reports filed prior to the date hereof and except for such matters that,
individually or in the aggregate, are not reasonably likely to have a Buyer
Material Adverse Effect: (i) Buyer and its Subsidiaries have complied with all
applicable Environmental Laws; (ii) the properties currently owned or operated
by Buyer and its Subsidiaries (including soils, groundwater, surface water,
buildings or other structures) are not contaminated with any Hazardous
Substances; (iii) the properties formerly owned or operated by Buyer or any of
its Subsidiaries were not contaminated with Hazardous Substances during the
period of ownership or operation by Buyer or any of its Subsidiaries; (iv)
neither Buyer nor its Subsidiaries are subject to liability for any Hazardous
Substance disposal or contamination on any third party property; (v) neither
Buyer nor any of its Subsidiaries has released any Hazardous Substance; (vi)
neither Buyer nor any of its Subsidiaries has received any notice, demand,
letter, claim or request for information alleging that Buyer or any of its
Subsidiaries may be in violation of or liable under any Environmental Law; (vii)
neither Buyer nor any of its Subsidiaries is subject to any orders, decrees,
injunctions or other arrangements with any Governmental Entity or is subject to
any indemnity or other agreement with any third party relating to liability
under any
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Environmental Law or relating to Hazardous Substances; and (viii) there are no
circumstances or conditions involving Buyer or any of its Subsidiaries that
could reasonably be expected to result in any material claims, liability,
investigations, costs or restrictions on the ownership, use or transfer of any
property of Buyer pursuant to any Environmental Law.
Section 4.13 EMPLOYEE BENEFIT PLANS.
(a) With respect to each of the employee benefit plans (as defined in
Section 3(3) of ERISA) and all bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance and other similar
employee benefit plans, and all unexpired severance agreements, written or
otherwise, for the benefit of, or relating to, any current or former employee of
Buyer or any ERISA Affiliate of Buyer, or any Subsidiary of Buyer (together, the
"Buyer Employee Plans"), Buyer has made available to Seller, a true and correct
copy of (i) the most recent annual report (Form 5500) filed with the IRS, (ii)
such Buyer Employee Plan, (iii) each trust agreement and group annuity contract,
if any, relating to such Buyer Employee Plan and (iv) the most recent actuarial
report or valuation relating to a Buyer Employee Plan subject to Title IV of
ERISA.
(b) With respect to the Buyer Employee Plans, individually and in the
aggregate, no event has occurred, and to the knowledge of Buyer, there exists no
condition or set of circumstances in connection with which Buyer could be
subject to any liability that is reasonably likely to have a Buyer Material
Adverse Effect under ERISA, the Code or any other applicable law.
(c) With respect to the Buyer Employee Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no unfunded benefit obligations
which have not been accounted for by reserves, or otherwise properly footnoted
in accordance with generally accepted accounting principles, on the financial
statements of Buyer, which obligations are reasonably likely to have a Buyer
Material Adverse Effect.
Section 4.14 COMPLIANCE WITH LAWS. Buyer has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state or local statute, law or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for
failures to comply or violations which, individually or in the aggregate, have
not had and are not reasonably likely to have a Buyer Material Adverse Effect.
Section 4.15 ACCOUNTING AND TAX MATTERS. To its knowledge, after consulting
with its independent auditors, neither Buyer nor any of its Affiliates has taken
or agreed to take any action which would (i) prevent Buyer from accounting for
the business combination to be effected by the Merger as a pooling of interests,
or (ii) prevent the Merger from constituting a transaction qualifying as a
reorganization under Section 368(a) of the Code.
Section 4.16 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The
information in the Registration Statement (except for information supplied by
Seller for inclusion in the Registration Statement, as to which Buyer makes no
representation) shall not at the time the Registration Statement is declared
effective by the SEC contain any untrue statement of a material fact or omit to
state any material fact required to be stated in the Registration Statement or
necessary in order to make the statements in the Registration Statement, in
light of the circumstances under which they were made, not misleading. The
information (except for information to be supplied by Seller for inclusion in
the Joint Proxy Statement, as to which Buyer makes no representation) in the
Joint Proxy Statement shall not, on the date the Joint Proxy Statement is first
mailed to stockholders of Buyer or Seller, at the time of the Buyer Meeting and
the Seller Meeting and at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made in the Joint Proxy
Statement not false or misleading; or omit to state any material fact necessary
to correct any statement in any earlier
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communication with respect to the solicitation of proxies for the Buyer Meeting
or the Seller Meeting which has become false or misleading. If at any time prior
to the Effective Time any event relating to Buyer or any of its Affiliates,
officers or directors should be discovered by Buyer which should be set forth in
an amendment to the Registration Statement or a supplement to the Joint Proxy
Statement, Buyer shall promptly inform Seller.
Section 4.17 LABOR MATTERS. Neither Buyer nor any of its Subsidiaries is a
party to or otherwise bound by any collective bargaining agreement, contract or
other agreement or understanding with a labor union or labor organization, nor,
as of the date hereof, is Buyer or any of its Subsidiaries the subject of any
material proceeding asserting that Buyer or any of its Subsidiaries has
committed an unfair labor practice or is seeking to compel it to bargain with
any labor union or labor organization nor, as of the date of this Agreement, is
there pending or, to the knowledge of the executive officers of Buyer,
threatened, any material labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving Buyer or any of its Subsidiaries.
Section 4.18 INSURANCE. All material fire and casualty, general liability,
business interruption, product liability, and sprinkler and water damage
insurance policies maintained by Buyer or any of its Subsidiaries are with
reputable insurance carriers, provide full and adequate coverage for all normal
risks incident to the business of Buyer and its Subsidiaries and their
respective properties and assets, and are in character and amount at least
equivalent to that carried by persons engaged in similar businesses and subject
to the same or similar perils or hazards, except for any such failures to
maintain insurance policies that, individually or in the aggregate, are not
reasonably likely to have a Buyer Material Adverse Effect.
Section 4.19 OPINION OF FINANCIAL ADVISOR. The financial advisor of Buyer,
BT Alex. ▇▇▇▇▇ Incorporated, has delivered to Buyer an opinion dated the date of
this Agreement, to the effect that, as of such date, the Exchange Ratio is fair
to Buyer from a financial point of view.
Section 4.20 INTERIM OPERATIONS OF SUB. Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated by this Agreement.
ARTICLE V
CONDUCT OF BUSINESS
Section 5.01 COVENANTS OF SELLER. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, Seller agrees as to itself and its respective
Subsidiaries (except to the extent that Buyer shall otherwise consent in
writing), to carry on its business in the usual, regular and ordinary course in
substantially the same manner as previously conducted, to pay its debts and
Taxes and perform other obligations when due subject to good faith disputes over
such debts, Taxes or obligations, and, to the extent consistent with such
business, use commercially reasonable efforts consistent with past practices and
policies to preserve intact its present business organization, keep available
the services of its present officers and key employees and preserve its
relationships with customers, suppliers, distributors, and others having
business dealings with it. Except as expressly contemplated by this Agreement or
set forth in the Seller Disclosure Schedule, Seller shall not (and shall not
permit any of its respective Subsidiaries to), without the written consent of
Buyer:
(a) Accelerate, amend or change the period of exercisability of outstanding
options or restricted stock granted under any employee stock plan of such party
or authorize cash payments in exchange for any options granted under any of such
plans except as required by the terms of such plans or any related agreements in
effect as of the date of this Agreement;
(b) Declare or pay any dividends on or make any other distributions (whether
in cash, stock or property) in respect of any of its capital stock, or split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its
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capital stock, or purchase or otherwise acquire, directly or indirectly, any
shares of its capital stock except from former employees, directors and
consultants in accordance with agreements providing for the repurchase of shares
in connection with any termination of service to such party;
(c) Issue, deliver or sell, or authorize or propose the issuance, delivery
or sale of, any shares of its capital stock or securities convertible into
shares of its capital stock, or subscriptions, rights, warrants or options to
acquire, or other agreements or commitments of any character obligating it to
issue any such shares or other convertible securities, other than (i) the grant
of options consistent with past practices to new employees, which options
represent in the aggregate the right to acquire no more than 200,000 shares (net
of cancellations) of Seller Common Stock, or (ii) the issuance of shares of
Seller Common Stock pursuant to the exercise of options outstanding on the date
of this Agreement or granted pursuant to the foregoing Clause (i);
(d) Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership or
other business organization or division, or otherwise acquire or agree to
acquire any assets (other than inventory and other items in the ordinary course
of business);
(e) Sell, lease, license or otherwise dispose of any of its material
properties or assets, except for transactions in the ordinary course of
business;
(f) (i) Increase or agree to increase the compensation payable or to become
payable to its officers or employees, except for increases in salary or wages of
employees (other than officers) in accordance with past practices, (ii) grant
any additional severance or termination pay to, or enter into any employment or
severance agreements with, any employees or officers, (iii) enter into any
collective bargaining agreement, (iv) establish, adopt, enter into or amend any
bonus, profit sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination or severance
or other plan, trust, fund, policy or arrangement for the benefit of any
directors, officers or employees;
(g) Amend or propose to amend its charter or bylaws, except as contemplated
by this Agreement;
(h) Incur any indebtedness for borrowed money other than pursuant to credit
agreements in effect as of the date hereof; or
(i) Initiate, compromise, or settle any material litigation or arbitration
proceeding except in connection with the Agreement or the transactions
contemplated hereby;
(j) Except in the ordinary course of business, modify, amend or terminate
any Seller Material Contract or waive, release or assign any material rights or
claims;
(k) Make any material Tax election, settle or compromise any material Tax
liability or amend any material Tax return except in the ordinary course of
business or consistent with past practice;
(l) Change its methods of accounting as in effect at May 31, 1998 except as
required by generally accepted accounting principles;
(m) Make or commit to make any capital expenditures that exceed $1,000,000
in the aggregate;
(n) License any intellectual property rights to or from any third party
pursuant to an arrangement that involves a minimum commitment or advance
exceeding $500,000 or royalties at a rate exceeding 20%;
(o) Except as required pursuant to commitments existing on the date hereof
or made without violation of this Section 5.01, make any cash disbursement
exceeding $1 million for any single item or related series of items;
(p) Close any facility or office;
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(q) Invest funds in debt securities or other instruments maturing more than
90 days after the date of investment;
(r) Adopt or implement any stockholder rights plan that could have the
effect of impeding or restricting the consummation of the transactions
contemplated hereby; or
(s) Take, or agree in writing or otherwise to take, any of the actions
described in Sections (a) through (r) above.
Section 5.02 COVENANTS OF BUYER. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, Buyer agrees as to itself and its respective Subsidiaries
(except to the extent that Seller shall otherwise consent in writing), to carry
on its business in the usual, regular and ordinary course in substantially the
same manner as previously conducted, to pay its debts and Taxes and perform its
obligations when due subject to good faith disputes over such debts, Taxes or
obligations, and, to the extent consistent with such business, use commercially
reasonable efforts consistent with past practices and policies to preserve
intact is present business organization, keep available the services of its
present officers and key employees and preserve its relationships with
customers, suppliers, distributors, and others having business dealings with it.
Except as expressly contemplated by this Agreement, Buyer shall not (and shall
not permit any of its respective Subsidiaries to), without the written consent
of Seller:
(a) Declare or pay any dividends on or make any other distributions (whether
in cash, stock or property) in respect of any of its capital stock, or split,
combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock, except from former employees,
directors and consultants in accordance with agreements providing for the
repurchase of shares in connection with any termination of service by such
party;
(b) Amend or propose to amend its charter or bylaws, except as contemplated
by Section 4.02 of this Agreement; or
(c) Take, or agree in writing or otherwise to take, any of the actions
described in Sections (a) and (b) above.
Section 5.03 COOPERATION. Subject to compliance with applicable law, from
the date hereof until the Effective Time, each of Buyer and Seller shall make
its officers available to confer on a regular and frequent basis with one or
more representatives of the other party to report on the general status of
ongoing operations and shall promptly provide the other party or its counsel
with copies of all filings made by such party with any Governmental Entity in
connection with this Agreement, the Merger and the transactions contemplated
hereby and thereby.
Section 5.04 CONFIDENTIALITY. The parties acknowledge that Buyer and Seller
have previously executed a Confidentiality Agreement, dated as of on or about
April 10, 1998 (the "Confidentiality Agreement"), which Confidentiality
Agreement will continue in full force and effect in accordance with its terms,
except as expressly modified herein.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.01 NO SOLICITATION.
(a) From and after the date of this Agreement until the earlier of the
Effective Time or termination of this Agreement pursuant to its terms, Seller
shall not, directly or indirectly, through any officer, director, employee,
financial advisor, representative or agent of such party (i) solicit, initiate,
or encourage any inquiries or proposals that constitute, or could reasonably be
expected to lead to, a proposal or offer for a merger, consolidation, business
combination, sale of substantial assets (other than the sale of Seller's
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products or used equipment in the ordinary course of business), sale of shares
of capital stock (including without limitation by way of a tender offer but
excluding sales pursuant to existing employee and director stock plans) or
similar transaction involving Seller or any of its Subsidiaries, other than the
transactions contemplated by this Agreement (any of the foregoing inquiries or
proposals being referred to in this Agreement as an "Acquisition Proposal"),
(ii) engage in negotiations or discussions concerning, or provide any non-public
information to any person or entity relating to, any Acquisition Proposal, or
(iii) agree to or recommend any Acquisition Proposal; PROVIDED, HOWEVER, that
nothing contained in this Agreement shall prevent Seller or its Board of
Directors, from (A) furnishing non-public information to, or entering into
discussions or negotiations with, any person or entity in connection with an
unsolicited bona fide written Acquisition Proposal by such person or entity or
agreeing to (with the terms of any such agreement being subject to termination
of this Agreement in accordance with Article VIII) or recommending an
unsolicited bona fide written Acquisition Proposal to the stockholders of
Seller, if and only to the extent that (1) the Board of Directors of Seller
believes in good faith (after consultation with its financial advisor) that such
Acquisition Proposal is reasonably capable of being completed on the terms
proposed and would, if consummated, result in a transaction more favorable than
the transaction contemplated by this Agreement (any such more favorable
Acquisition Proposal being referred to in this Agreement as a "Superior
Proposal") and Seller's Board of Directors determines in good faith after
consultation with outside legal counsel that such action is necessary for such
Board of Directors to comply with its fiduciary duties to stockholders under
applicable law and (2) prior to furnishing such non-public information to, or
entering into discussions or negotiations with, such person or entity, such
Board of Directors receives from such person or entity an executed
confidentiality agreement with terms no less favorable to such party than those
contained in the Confidentiality Agreement; or (B) complying with Rule 14d-9 and
14e-2 promulgated under the Exchange Act with regard to an Acquisition Proposal
or making any disclosure to Seller's stockholders if, in the good faith judgment
of Seller's Board of Directors, after consultation with outside legal counsel,
such disclosure is required by applicable law.
(b) Seller shall notify Buyer within one day after receipt by Seller (or its
advisors) of any Acquisition Proposal or any request for nonpublic information
in connection with an Acquisition Proposal or for access to the properties,
books or records of Seller by any person or entity that informs Seller that it
is considering making, or has made, an Acquisition Proposal. Such notice shall
be made orally and in writing and shall indicate in reasonable detail the
identity of the offeror and the terms and conditions of such proposal, inquiry
or contact. Seller shall continue to keep Buyer informed, on a current basis, of
the status of any such discussions or negotiations and all material terms being
discussed or negotiated, which shall include, without limitation, any change to
the proposed price and terms and form of payment.
Section 6.02 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT.
(a) As promptly as practical after the execution of this Agreement, Buyer
and Seller shall prepare and file with the SEC the Joint Proxy Statement, and
Buyer shall prepare and file with the SEC the Registration Statement, in which
the Joint Proxy Statement will be included as a prospectus, provided that Buyer
may delay the filing of the Registration Statement until approval of the Joint
Proxy Statement by the SEC. Buyer and Seller shall use all reasonable efforts to
cause the Registration Statement to become effective as soon after such filing
as practicable. Each of Buyer and Seller will respond to any comments of the SEC
and will use its respective commercially reasonable efforts to have the Joint
Proxy Statement cleared by the SEC and the Registration Statement declared
effective under the Securities Act as promptly as practicable after such filings
and will cause the Joint Proxy Statement and the prospectus contained within the
Registration Statement to be mailed to its stockholders at the earliest
practicable time after both the Proxy Statement is cleared by the SEC and the
Registration Statement is declared effective under the Securities Act. Each of
Buyer and Seller will notify the other promptly upon the receipt of any comments
from the SEC or its staff or any other government officials and of any request
by the SEC or its staff or any other government officials for amendments or
supplements to the Registration Statement, the Joint Proxy Statement or any
filing pursuant to Section 6.02(b) or for additional information and will supply
the other
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with copies of all correspondence between such party or any of its
representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the Registration
Statement, the Joint Proxy Statement, the Merger or any filing pursuant to
Section 6.02(b). Each of Buyer and Seller will cause all documents that it is
responsible for filing with the SEC or other regulatory authorities under this
Section 6.02 to comply in all material respects with all applicable requirements
of law and the rules and regulations promulgated thereunder. Whenever any event
occurs which is required to be set forth in an amendment or supplement to the
Joint Proxy Statement, the Registration Statement or any filing pursuant ot
Section 6.02(b), Buyer or Seller, as the case may be, will promptly inform the
other of such occurrence and cooperate in filing with the SEC or its staff or
any other government officials, and/or mailing to stockholders of Buyer and/or
Seller, such amendment or supplement.
(b) Buyer and Seller shall make all necessary filings with respect to the
Merger under the Securities Act, the Exchange Act, applicable state blue sky
laws and the rules and regulations thereunder.
Section 6.03 NASDAQ QUOTATION. Seller agrees to use commercially reasonable
efforts to continue the quotation of Seller Common Stock on the Nasdaq National
Market during the term of this Agreement.
Section 6.04 ACCESS TO INFORMATION. Upon reasonable notice, Seller and Buyer
shall each (and shall cause each of their respective Subsidiaries to) afford to
the officers, employees, accountants, counsel and other representatives of the
other, reasonable access, during normal business hours during the period prior
to the Effective Time, to all its properties, books, contracts, commitments and
records and, during such period, each of Seller and Buyer shall (and shall cause
each of their respective Subsidiaries to) furnish promptly to the other (a) a
copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to the requirements of federal
securities laws and (b) all other information concerning its business,
properties and personnel as such other party may reasonably request. Unless
otherwise required by law, the parties will hold any such information which is
nonpublic in confidence in accordance with the Confidentiality Agreement. No
information or knowledge obtained in any investigation pursuant to this Section
6.04 or otherwise shall affect or be deemed to modify any representation or
warranty contained in this Agreement or the conditions to the obligations of the
parties to consummate the Merger.
Section 6.05 STOCKHOLDERS MEETINGS.
(a) The Seller, acting through its Board of Directors, shall, subject to and
according to applicable law and its Certificate of Incorporation and Bylaws,
promptly and duly call, give notice of, convene and hold as soon as practicable
to ensure obtaining requisite stockholder approval following the date on which
the Registration Statement becomes effective the Seller Meeting for the purpose
of voting to approve and adopt this Agreement and the Merger (the "Seller Voting
Proposal"). The Board of Directors of the Seller shall, subject to the fiduciary
duties of the Board of Directors of Seller under applicable law as advised in a
written opinion by outside counsel, (i) recommend approval and adoption of the
Seller Voting Proposal by the stockholders of the Seller and include in the
Joint Proxy Statement such recommendation and (ii) take all reasonable and
lawful action to solicit and obtain such approval; provided, however, that in
the context of an Acquisition Proposal the Board of Directors of Seller may
withdraw such recommendation (and be relieved of its duty to solicit approval of
Seller's shareholders) if (but only if) (i) the Board of Directors of Seller has
received a Superior Proposal and (ii) such Board of Directors upon advice of its
outside legal counsel determines that it is required, in order to comply with
its fiduciary duties under applicable law, to recommend such Superior Proposal
to the stockholders of Seller. The Seller stockholder vote required for the
approval of the Seller Voting Proposal shall be a majority of the outstanding
shares of Seller Common stock on the record date for the Seller Meeting.
(b) Buyer, acting through its Board of Directors, shall, subject to and in
accordance with applicable law and its Certificate of Incorporation and Bylaws,
promptly and duly call, give notice of, convene and hold as soon as practicable
to ensure obtaining requisite stockholder approval following the date on which
the Registration Statement becomes effective, the Buyer Meeting for the purpose
of voting to approve the
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issuance of the shares of Buyer Common Stock to be issued in the Merger (the
"Buyer Voting Proposal"). The Board of Directors of Buyer shall, subject to the
fiduciary duties of the Board of Directors of Buyer under applicable law as
advised in a written opinion by outside counsel, (i) recommend approval of the
Buyer Voting Proposal and include in the Joint Proxy Statement such
recommendation and (ii) take all reasonable and lawful action to solicit and
obtain such approval. The Buyer stockholder vote required for approval of the
Buyer Voting Proposal shall be a majority of the shares of Buyer Common Stock
present or represented at the Buyer Meeting at which a quorum is present.
Section 6.06 LEGAL CONDITIONS TO MERGER.
(a) Subject to the terms hereof, Seller and Buyer shall use their respective
commercially reasonable efforts to (i) take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary and proper
under applicable law to consummate and make effective the transactions
contemplated hereby as promptly as practicable, (ii) obtain from any
Governmental Entity or any other third party any consents, licenses, permits,
waivers, approvals, authorizations, or orders required to be obtained or made by
Seller or Buyer or any of their Subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby including, without limitation, the Merger,
(iii) as promptly as practicable, make all necessary filings, and thereafter
make any other required submissions, with respect to this Agreement and the
Merger required under (A) the Securities Act and the Exchange Act, and any other
applicable federal or state securities laws, (B) the HSR Act and any related
governmental request thereunder, and (C) any other applicable law and (iv)
execute or deliver any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement. Seller and Buyer shall cooperate with each other in connection with
the making of all such filings, including providing copies of all such documents
to the non-filing party and its advisors prior to filing and, if requested, to
accept all reasonable additions, deletions or changes suggested in connection
therewith. Seller and Buyer shall use their respective commercially reasonable
efforts to furnish to each other all information required for any application or
other filing to be made pursuant to the rules and regulations of any applicable
law (including all information required to be included in the Joint Proxy
Statement and the Registration Statement) in connection with the transactions
contemplated by this Agreement.
(b) Subject to the terms hereof, Buyer and Seller agree, and shall cause
each of their respective Subsidiaries, to cooperate and to use their respective
commercially reasonable efforts to obtain any government clearances or approvals
required for Closing under the HSR Act, the ▇▇▇▇▇▇▇ Act, as amended, the ▇▇▇▇▇▇▇
Act, as amended, the Federal Trade Commission Act, as amended, and any other
Federal, state or foreign law or, regulation or decree designed to prohibit,
restrict or regulate actions for the purpose or effect of monopolization or
restraint of trade (collectively "Antitrust Laws"), to respond to any government
requests for information under any Antitrust Law, and to contest and resist any
action, including any legislative, administrative or judicial action, and to
have vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order (whether temporary, preliminary or permanent) (an "Order") that
restricts, prevents or prohibits the consummation of the Merger or any other
transactions contemplated by this Agreement under any Antitrust Law. The parties
hereto will consult and cooperate with one another, and consider in good faith
the views of one another, in connection with any analyses, appearances,
presentations, memoranda, briefs, arguments, opinions and proposals made or
submitted by or on behalf of any party hereto in connection with proceedings
under or relating to any Antitrust Law. Buyer shall be entitled to direct any
proceedings or negotiations with any Governmental Entity relating to any of the
foregoing, provided that it shall afford Seller a reasonable opportunity to
participate therein. Notwithstanding anything to the contrary in this Section
6.06, neither Buyer nor any of its Subsidiaries shall be required to (i) divest
any of their respective businesses, product lines or assets, or to take or agree
to take any other action or agree to any limitation, that could reasonably be
expected to have a material adverse effect on Buyer or of Buyer combined with
Seller after the Effective Time, or (ii) take any action under this Section 6.06
if the United States Department of Justice or the United States
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Federal Trade Commission authorizes its staff to seek a preliminary injunction
or restraining order to enjoin consummation of the Merger.
(c) Each of Seller and Buyer shall give (or shall cause their respective
Subsidiaries to give) any notices to third parties, and use, and cause their
respective Subsidiaries to use, their commercially reasonable efforts to obtain
any third party consents related to or required in connection with the Merger
that are (A) necessary to consummate the transactions contemplated hereby, (B)
disclosed or required to be disclosed in the Seller Disclosure Schedule or the
Buyer Disclosure Schedule, as the case may be, or (C) required to prevent a
Seller Material Adverse Effect or a Buyer Material Adverse Effect from occurring
prior to or after the Effective Time.
Section 6.07 PUBLIC DISCLOSURE. Buyer and Seller shall use commercially
reasonable efforts to consult with each other before issuing any press release
or otherwise making any public statement with respect to the Merger or this
Agreement and shall not issue any such press release or make any such public
statement prior to using such efforts, except as may be required by law.
Section 6.08 TAX-FREE REORGANIZATION. Buyer and Seller shall each use its
best efforts to cause the Merger to be treated as a reorganization within the
meaning of Section 368(a) of the Code. The parties hereto hereby adopt this
Agreement as a plan of reorganization.
Section 6.09 POOLING ACCOUNTING. From and after the date hereof and until
the Effective time, neither Seller nor Buyer, nor any of their respective
Subsidiaries, shall knowingly take any action, or knowingly fail to take any
action, that is reasonably likely to jeopardize the treatment of the Merger as a
pooling of interests for accounting purposes.
Section 6.10 Affiliate Agreements. Upon the execution of this Agreement,
Buyer and Seller will provide each other with a list of those persons who are,
in Buyer's or Seller's respective reasonable judgment, "affiliates" of Buyer or
Seller, respectively, within the meaning of Rule 145 (each such person who is an
"affiliate" of Buyer or Seller within the meaning of Rule 145 is referred to as
an "Affiliate") promulgated under the Securities Act ("Rule 145"). Buyer and
Seller shall provide each other such information and documents as Seller or
Buyer shall reasonably request for purposes of reviewing such list and shall
notify the other party in writing regarding any change in the identity of its
Affiliates prior to the Closing Date. Seller and Buyer shall each use its
commercially reasonable efforts to deliver or cause to be delivered to each
other by July 3, 1998 (and in any case prior to the mailing of the Joint Proxy
Statement) from each of its Affiliates, an executed Affiliate Agreement, in
substantially the form appended hereto as Exhibit A-1 (in the case of Seller
Affiliates) and Exhibit A-2 (in the case of Buyer Affiliates) (collectively, the
"Affiliate Agreements"). Buyer shall be entitled to place appropriate legends on
the certificates evidencing any Buyer Common Stock to be received by such
Affiliates of Seller pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the Buyer
Common Stock, consistent with the terms of the Affiliate Agreements (provided
that such legends or stop transfer instructions shall be removed, two years
after the Effective Date, upon the request of any stockholder that is not then
an Affiliate of Buyer).
Section 6.11 NYSE LISTING. Buyer shall use commercially reasonable efforts
to cause the shares of Buyer Common Stock to be issued in the Merger to be
listed on the New York Stock Exchange, subject to official notice of issuance,
on or prior to the Closing Date.
Section 6.12 STOCK PLANS.
(a) At the Effective Time, each outstanding option to purchase shares of
Seller Common Stock ("Seller Stock Option") under the Seller Stock Plans,
whether vested or unvested, shall be deemed to constitute an option to acquire,
on the same terms and conditions as were applicable under such Seller Stock
Option, the same number of shares of Buyer Common Stock as the holder of such
Seller Stock Option would have been entitled to receive pursuant to the Merger
had such holder exercised such option in full immediately prior to the Effective
Time (rounded downward to the nearest whole number), at a
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price per share (rounded upward to the nearest whole cent) equal to (y) the
aggregate exercise price for the shares of Seller Common Stock purchasable
pursuant to such Seller Stock Option immediately prior to the Effective Time
divided by (z) the number of full shares of Buyer Common Stock deemed
purchasable pursuant to such Seller Stock Option in accordance with the
foregoing.
(b) As soon as practicable after the Effective Time, Buyer shall deliver to
the participants in Seller Stock Plans appropriate notice setting forth such
participants' rights pursuant thereto and the grants pursuant to Seller Stock
Plans shall continue in effect on the same terms and conditions (subject to the
adjustments required by this Section 6.12 after giving effect to the Merger).
(c) Buyer shall take all corporate action necessary to reserve for issuance
a sufficient number of shares of Buyer Common Stock for delivery under Seller
Stock Plans assumed in accordance with this Section 6.12. As soon as practicable
after the Effective Time, Buyer shall file a registration statement on Form S-8
(or any successor or other appropriate forms), or another appropriate form with
respect to the shares of Buyer Common Stock subject to such options and shall
use its best efforts to maintain the effectiveness of such registration
statement or registration statements (and maintain the current status of the
prospectus or prospectuses contained therein) for so long as such options remain
outstanding.
(d) The Board of Directors of Seller shall, prior to or as of the Effective
Time, take all necessary actions, pursuant to and in accordance with the terms
of the Seller Stock Plans and the instruments evidencing the Seller Stock
Options, to provide for the conversion of the Seller Stock Options into options
to acquire Buyer Common Stock in accordance with this Section 6.12, and that no
consent of the holders of the Seller Stock Options is required in connection
with such conversion.
(e) Seller shall terminate its Employee Stock Purchase Plan in accordance
with its terms as of or prior to the Effective Time.
Section 6.13 BROKERS OR FINDERS. Each of Buyer and Seller represents, as to
itself, its Subsidiaries and its Affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
broker's or finder's fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement except whose fees
and expenses will be paid by Seller in accordance with Seller's agreement with
such firm (a copy of which has been delivered by Seller to Buyer prior to the
date of this Agreement), and whose fees and expenses will be paid by Buyer in
accordance with Buyer's agreement with such firm (a copy of which has been
delivered by Buyer prior to the date of this Agreement).
Section 6.14 INDEMNIFICATION.
(a) From and after the Effective Time, Buyer agrees that it will, and will
cause the Surviving Corporation to, indemnify and hold harmless each present and
former director and officer of Seller (the "Indemnified Parties"), against any
costs or expenses (including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities or amounts paid in settlement incurred in connection with
any claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent
permitted under Delaware law (and Buyer and the Surviving Corporation shall also
advance expenses as incurred to the fullest extent permitted under applicable
law, provided the Indemnified Party to whom expenses are advanced provides an
undertaking to repay such advances if it is ultimately determined that such
Indemnified Party is not entitled to indemnification).
(b) For a period of six years after the Effective Time, Buyer shall cause
the Surviving Corporation to maintain (to the extent available in the market) in
effect a directors' and officers' liability insurance policy covering those
persons who are currently covered by Seller's directors' and officers' liability
insurance policy (a copy of which has been heretofore delivered to Buyer) with
coverage in amount and scope at least as favorable to such persons as Seller's
existing coverage; provided, that in no event shall Buyer or the
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Surviving Corporation be required to expend in excess of 150% the annual premium
currently paid by Seller for such coverage.
(c) The provisions of this Section 6.14 are intended to be an addition to
the rights otherwise available to the current officers and directors of Seller
by law, charter, statute, bylaw or agreement, and shall operate for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and their representatives.
ARTICLE VII
CONDITIONS TO MERGER
Section 7.01 Conditions to Each Party's Obligation To Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) STOCKHOLDER APPROVAL. The Seller Voting Proposal shall have been
approved and adopted by the affirmative vote of the holders of a majority of the
shares of Seller Common Stock outstanding on the record date for the Seller
Meeting and the Buyer Voting Proposal shall have been approved by the
affirmative vote of the holders of a majority of the shares of Buyer Common
Stock present or represented at the Buyer Meeting at which a quorum is present.
(b) HSR ACT. The waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated.
(c) APPROVALS. Other than the filing provided for by Section 1.02, all
authorizations, consents, orders or approvals of, or declarations or filings
with, or expirations of waiting periods imposed by, any Governmental Entity, the
failure of which to file, obtain or occur is reasonably likely to have a Buyer
Material Adverse Effect or Seller Material Adverse Effect shall have been filed,
been obtained or occurred.
(f) REGISTRATION STATEMENT. The Registration Statement shall have become
effective under the Securities Act and shall not be the subject of any stop
order or proceedings seeking a stop order.
(g) NO INJUNCTIONS. No Governmental Entity (including any federal, state or
court) of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any order, executive order, stay, decree, judgment or
injunction (each an "Order) or statute, rule, regulation which is in effect and
which has the effect of making the Merger illegal or otherwise prohibiting
consummation of the Merger.
(h) POOLING LETTER. Buyer and Seller shall have received a letter from
Coopers & ▇▇▇▇▇▇▇ LLP, addressed to Buyer regarding its concurrence with Buyer's
management conclusions, as to the appropriateness of the pooling of interests
accounting, under Accounting Principles Board Opinion No. 16 for the Merger, as
contemplated to be effected as of the date of the letter, it being agreed that
Buyer and Seller shall each provide reasonable cooperation to Coopers & ▇▇▇▇▇▇▇
LLP to enable them to issue such a letter.
Section 7.02 ADDITIONAL CONDITIONS TO OBLIGATIONS OF BUYER AND SUB. The
obligations of Buyer and Sub to effect the Merger are subject to the
satisfaction of each of the following conditions, any of which may be waived in
writing exclusively by Buyer and Sub:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Seller set forth in this Agreement shall be true and correct as of the date of
this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date, except for, (i) changes contemplated by this Agreement and
(ii) where the failures to be true and correct, individually or in the
aggregate, have not had and are not reasonably likely to have a Seller Material
Adverse Effect or a material adverse effect upon the consummation of the
transactions
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contemplated hereby; and Buyer shall have received a certificate signed on
behalf of Seller by the chief executive officer and the chief financial officer
of Seller to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF SELLER. Seller shall have performed in all
material respects all obligations required to be performed by it under this
Agreement at or prior to the Closing Date; and Buyer shall have received a
certificate signed on behalf of Seller by the chief executive officer and the
chief financial officer of Seller to such effect.
(c) TAX OPINION. Buyer shall have received a written opinion from ▇▇▇▇ and
▇▇▇▇ LLP counsel to Buyer, to the effect that the Merger will be treated for
Federal income tax purposes as a tax-free reorganization within the meaning of
Section 368(a) of the Code; provided that if ▇▇▇▇ and ▇▇▇▇ LLP does not render
such opinion, this condition shall nonetheless be deemed satisfied if ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C. renders such opinion to Buyer (it being agreed
that Buyer and Seller shall each provide reasonable cooperation, including
making reasonable representations, to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C. or
▇▇▇▇ and ▇▇▇▇ LLP, as the case may be, to enable them to render such opinion).
Section 7.03 ADDITIONAL CONDITIONS TO OBLIGATIONS OF SELLER. The obligation
of Seller to effect the Merger is subject to the satisfaction of each of the
following conditions, any of which may be waived, in writing, exclusively by
Seller:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties of
Buyer and Sub set forth in this Agreement shall be true and correct as of the
date of this Agreement and (except to the extent such representations speak as
of an earlier date) as of the Closing Date as though made on and as of the
Closing Date, except for, (i) changes contemplated by this Agreement and (ii)
where the failures to be true and correct, individually or in the aggregate,
have not had and are not reasonably likely to have a Buyer Material Adverse
Effect or a material adverse effect upon the consummation of the transactions
contemplated hereby; and Seller shall have received a certificate signed on
behalf of Buyer by the chief executive officer and the chief financial officer
of Buyer to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF BUYER AND SUB. Buyer and Sub shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Closing Date, and Seller shall have
received a certificate signed on behalf of Buyer by the chief executive officer
and the chief financial officer of Buyer to such effect.
(c) TAX OPINION. Seller shall have received the opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel to Seller, to the effect that the Merger will
be treated for Federal income tax purposes as a tax-free reorganization within
the meaning of Section 368(a) of the Code; provided that if ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C. does not render such opinion, this condition shall
nonetheless be deemed satisfied if ▇▇▇▇ and ▇▇▇▇ LLP renders such opinion to
Seller (it being agreed that Buyer and Seller shall each provide reasonable
cooperation, including making reasonable representations, to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C. or ▇▇▇▇ and ▇▇▇▇ LLP, as the case may be, to enable them
to render such opinion).
(d) NYSE. The shares of Buyer Common Stock to be issued in the Merger shall
have been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.01 TERMINATION. This Agreement may be terminated at any time prior
to the Effective Time (with respect to Sections 8.01(b) through 8.01(g), by
written notice by the terminating party to the other party), whether before or
after approval of the matters presented in connection with the Merger by the
stockholders of Seller or Buyer:
(a) by mutual written consent of Buyer and Seller; or
A-27
(b) by either Buyer or Seller if the Merger shall not have been consummated
by December 31, 1998 (the "Outside Date") (provided that the right to terminate
this Agreement under this Section 8.01(b) shall not be available to any party
whose failure to fulfill any obligation under this Agreement has been the cause
of or resulted in the failure of the Merger to occur on or before such date); or
(c) by either Buyer or Seller if a Governmental Entity of competent
jurisdiction shall have issued a nonappealable final order, decree or ruling or
taken any other nonappealable final action, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger; or
(d) by Buyer or Seller if (x) at the Seller Meeting (including any
adjournment or postponement), the requisite vote of the stockholders of Seller
in favor of the Seller Voting Proposal shall not have been obtained; or if (y)
at the Buyer Meeting (including any adjournment or postponement), the requisite
vote of the stockholders of Buyer in favor of the Buyer Voting Proposal shall
not have been obtained (provided that the right to terminate this Agreement
under this Section 8.01(d) shall not be available to any party seeking
termination who at the time is in breach of or has failed to fulfill its
obligations under this Agreement); or
(e) by Buyer, if (i) the Board of Directors of Seller shall have withdrawn
or modified its recommendation of the Seller Voting Proposal; (ii) after the
receipt by Seller of an Acquisition Proposal, Buyer requests in writing that the
Board of Directors of Seller reconfirm its recommendation of this Agreement or
the Merger and the Board of Directors of Seller fails to do so within 10
business days after its receipt of Buyer's request; (iii) the Board of Directors
of Seller shall have recommended to the stockholders of Seller an Alternative
Transaction (as defined in Section 8.03(g)); (iv) a tender offer or exchange
offer for 20% or more of the outstanding shares of Seller Common Stock is
commenced (other than by Buyer or an Affiliate of Buyer) and the Board of
Directors of Seller recommends that the stockholders of Seller tender their
shares in such tender or exchange offer; or (v) for any reason Seller fails to
call and hold the Seller Meeting by the Outside Date; or
(f) by Seller, if (i) the Board of Directors of Buyer shall have withdrawn
or modified its recommendation of the Buyer Voting Proposal; or (ii) for any
reason Buyer fails to call and hold the Buyer Meeting by the Outside Date; or
(g) by Buyer or Seller, if there has been a breach of any representation,
warranty, covenant or agreement on the part of the other party set forth in this
Agreement, which breach (i) causes the conditions set forth in Section 7.02(a)
or (b) (in the case of termination by Buyer) or 7.03(a) or (b) (in the case of
termination by Seller) not to be satisfied, and (ii) shall not have been cured
within 30 days following receipt by the breaching party of written notice of
such breach from the other party.
Section 8.02 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 8.01, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of Buyer, Seller,
Sub or their respective officers, directors, stockholders or Affiliates, except
as set forth in Sections 5.04, 6.13, 8.03 and Article IX; provided that any such
termination shall not limit liability for any willful breach of this Agreement
and the provisions of Sections 5.04, 6.13, 8.03 and Article IX of this Agreement
and the Confidentiality Agreement shall remain in full force and effect and
survive any termination of this Agreement.
Section 8.03 FEES AND EXPENSES.
(a) Except as set forth in this Section 8.03, all fees and expenses incurred
in connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expenses, whether or not the Merger is
consummated; provided however, that Seller and Buyer shall share equally all
fees and expenses, other than attorneys' fees, incurred with respect to the
printing and filing of the Joint Proxy Statement (including any related
preliminary materials) and the Registration Statement (including financial
statements and exhibits) and any amendments or supplements.
A-28
(b) Seller shall pay Buyer up to $2,000,000 as reimbursement for expenses of
Buyer actually incurred relating to the transactions contemplated by this
Agreement prior to termination (including, but not limited to, fees and expenses
of Buyer's counsel, accountants and financial advisors, but excluding any
discretionary fees paid to such financial advisors), upon the termination of
this Agreement by Buyer pursuant to (i) Section 8.01(d); (ii) Section 8.01(e),
(iii) Section 8.01(b) as a result of the failure to satisfy the condition set
forth in Section 7.02(a); or (iv) Section 8.01(g).
(c) Seller shall pay Buyer a termination fee of $22,500,000 upon the
earliest to occur of the following events:
(i) the termination of this Agreement by Buyer pursuant to Section
8.01(e); or
(ii) the termination of this Agreement by Buyer pursuant to Section
8.01(g) after a breach by Seller of this Agreement; or
(iii) the termination of the Agreement by Buyer pursuant to Section
8.01(d) as a result of the failure to receive the requisite vote for approval of
the Seller Voting Proposal by the stockholders of Seller at the Seller Meeting
if, at the time of such failure, there shall have been announced an Alternative
Transaction relating to Seller which shall not have been absolutely and
unconditionally withdrawn and abandoned.
(d) Buyer shall pay Seller up to $2,000,000 as reimbursement for expenses of
Seller actually incurred relating to the transactions contemplated by this
Agreement prior to termination (including, but not limited to, but excluding any
discretionary fees paid to such financial advisors), upon the termination of
this Agreement by Seller pursuant to (i) Section 8.01(d), (ii) Section 8.01(f),
(iii) Section 8.01(b) as a result of the failure to satisfy the condition set
forth in Section 7.03(a), or (iv) Section 8.01(g).
(e) Buyer shall pay Seller a termination fee of $22,500,000 upon the
earliest to occur of the following events:
(i) the termination of this Agreement by Seller pursuant to Section
8.01(f); or
(ii) the termination of this Agreement by Seller pursuant to Section
8.01(g) after a breach by Buyer of this Agreement; or
(iii) the termination of the Agreement by Seller pursuant to Section
8.01(d) as a result of the failure to receive the requisite vote for approval of
this Agreement and the Merger by the stockholders of Buyer at the Buyer Meeting
if, at the time of such failure, there shall have been announced an Alternative
Transaction relating to Buyer which shall not have been absolutely and
unconditionally withdrawn and abandoned.
(f) The expenses and fees, if applicable, payable pursuant to Section
8.03(b), 8.03(c), 8.03(d) and 8.03(e) shall be paid within one business day
after demand therefor following the first to occur of the events giving rise to
the payment obligation described in Section 8.03(b), 8.03(c)(i), (ii) or (iii),
8.03(d) or 8.03(e)(i), (ii) or (iii); PROVIDED that in no event shall Buyer or
Seller, as the case may be, be required to pay the expenses and fees, if
applicable, to the other, if, immediately prior to the termination of this
Agreement, the party to receive the expenses and fees, if applicable, was in
material breach of its obligations under this Agreement.
(g) As used in this Agreement, "Alternative Transaction" means either (i) a
transaction pursuant to which any person (or group of persons) other than Buyer
or Seller or their respective affiliates (a "Third Party"), acquires more than
20% of the outstanding shares of Seller Common Stock or Buyer Common stock, as
the case may be, pursuant to a tender offer or exchange offer or otherwise, (ii)
a merger or other business combination involving Seller or Buyer pursuant to
which any Third Party acquires more than 20% of the outstanding shares of Seller
Common Stock or Buyer Common Stock, as the case may be, or the entity surviving
such merger or business combination, (iii) any other transaction pursuant to
which any
A-29
Third Party acquires control of assets (including for this purpose the
outstanding equity securities of Subsidiaries of Seller or Buyer, and the entity
surviving any merger or business combination including any of them) of Seller or
Buyer having a fair market value equal to more than 20% of the fair market value
of all the assets of Seller or Buyer, as the case may be, immediately prior to
such transaction (except for sale of products or used equipment in the ordinary
course of business), or (iv) any public announcement by a Third Party of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.
Section 8.04 AMENDMENT. This Agreement may be amended by the parties hereto,
by action taken or authorized by their respective Boards of Directors, at any
time before or after approval of the matters presented in connection with the
Merger by the stockholders of Seller or of Buyer, but, after any such approval,
no amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto.
Section 8.05 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto and (iii) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in a written instrument signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
Section 9.01 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS. None
of the representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Articles I and II, Sections 1.04,
2.01, 2.02, 6.12, 6.14 and Article IX, and the agreements of the Affiliates
delivered pursuant to Section 6.10. The Confidentiality Agreement shall survive
the execution and delivery of this Agreement.
Section 9.02 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(which is confirmed) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Buyer or Sub, to
The Learning Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇ and ▇▇▇▇ LLP
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
A-30
(b) if to Seller, to
Broderbund Software, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: General Counsel
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇, Esq.
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Section 9.03 INTERPRETATION. When a reference is made in this Agreement to
Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. 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 June 21, 1998. The words
"include," "includes" and "including" when used herein shall be deemed in each
case to be following by the words "without limitation." 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. For
purposes of this Agreement the term "knowledge" means with respect to a party
hereto, with respect to any matter in question, that any of the Chief Executive
Officer, Chief Financial Officer, General Counsel, any Vice President or
Controller of such party, has actual knowledge of such matter.
Section 9.04 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.
Section 9.05 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This Agreement
(including the documents and the instruments referred to herein) (a) constitute
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof, and (b) except as provided in Section 6.14 are not intended to confer
upon any person other than the parties hereto any rights or remedies hereunder;
provided that the Confidentiality Agreement shall remain in full force and
effect until the Effective Time. Each party hereto agrees that, except for the
representations and warranties contained in this Agreement, neither Seller nor
Buyer makes any other representations or warranties, and each hereby disclaims
any other representations and warranties made by itself or any of its officers,
directors, employees, agents, financial and legal advisors or other
representatives, with respect to the execution and delivery of this Agreement or
the transactions contemplated hereby, notwithstanding the delivery or disclosure
to the other or the other's representatives of any documentation or other
information with respect to any one or more of the foregoing.
Section 9.06 GOVERNING LAW. This Agreement shall be governed and construed
in accordance with the laws of the State of Delaware without regard to any
applicable conflicts of law.
Section 9.07 JURISDICTION. Each of the parties hereto (i) consents to submit
itself to the personal jurisdiction of any Federal court located in the State of
Delaware or any Delaware state court in the event any dispute arises out of this
Agreement or any of the transactions contemplated by this Agreement,
A-31
(ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, and (iii)
agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this agreement in any court other than a
Federal court sitting in the State of Delaware or a Delaware state court.
Section 9.08 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.
Section 9.09 SEVERABILITY. In the event that any provision of this Agreement
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
Section 9.10. WAIVER OF JURY TRIAL. EACH OF BUYER, SELLER AND SUB HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF BUYER, SELLER OR SUB IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
A-32
IN WITNESS WHEREOF, Buyer, Sub and Seller have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
THE LEARNING COMPANY, INC.
By: /s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------------------------------
Title: Executive Vice President
and Chief Financial Officer
--------------------------------------------------------------------
TLC MERGER CORP.
By: /s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------------------------------------
Title: President
--------------------------------------------------------------------
BRODERBUND SOFTWARE, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------------------------------------
Title: Chief Executive Officer
--------------------------------------------------------------------
▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
Seller Affiliate Agreement
AFFILIATE AGREEMENT
, 1998
The Learning Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Broderbund Software, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
An Agreement and Plan of Merger dated as of June 21, 1998 (the "Agreement")
has been entered into by and among Broderbund Software, Inc., a Delaware
corporation ("Seller"), The Learning Company, Inc., a Delaware corporation
("Buyer"), and TLC Merger Corp., a Delaware corporation and a wholly owned
subsidiary of Buyer (the "Sub"). The Agreement provides for the merger of the
Sub with and into Seller (the "Merger"). In accordance with the Agreement,
shares of common stock, $.01 par value per share, of Seller (the "Seller Common
Stock") shall be converted into shares of common stock, $.01 par value per
share, of Buyer (the "Buyer Common Stock"), as described in the Agreement.
The undersigned has been advised that as of the date of this agreement the
undersigned may be deemed to be an "affiliate" of Seller, as the term
"affiliate" is defined for purposes of paragraphs (c) and (d) of Rule 145 of the
Rules and Regulations of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), and/or as such term is used in, and for purposes of, Accounting Series
Releases Nos. 130 and 135, as amended, of the Commission.
In consideration of the mutual agreements, provisions and covenants set
forth in the Agreement and hereinafter in this agreement, the undersigned
represents and agree as follows:
1. POOLING REQUIREMENTS. The undersigned will not within the 30 day period
prior to the Effective Time (as defined in the Agreement), sell, transfer,
pledge, hypothecate or otherwise dispose of, or reduce the undersigned's
interest in or risk relating to, any shares of Seller Common Stock or Buyer
Common Stock owned by the undersigned. In addition, the undersigned will not,
from and after the Effective Time, sell, transfer, pledge, hypothecate or
otherwise dispose of, or reduce the undersigned's interest in or risk relating
to any Buyer common stock issued to the undersigned pursuant to the Merger, or
any other shares of Buyer capital stock, until after such time as Buyer has
published (within the meaning of Accounting Series Release No. 135, as amended,
of the Commission) financial results covering at least 30 days of combined
operations of Seller and Buyer.
2. [To be included in ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇' s Affiliate Agreement only]
REGISTRATION OF SHARES. Buyer shall file with the Commission, as promptly as
practicable after the Effective Time, a registration statement on Form S-3
covering the resale to the public by Buyer of Buyer Common Stock ( the "Buyer
Registration Statement"). Buyer shall use its reasonable efforts to cause the
Buyer Registration Statement to be declared effective by the Commission as soon
as practicable (the "Effective Date"). Buyer shall cause the Buyer Registration
Statement to remain effective for 6 months after the Effective Date or such
earlier time as all the Buyer Common Stock covered by the Buyer Registration
Statement has been sold pursuant thereto.
3. RULE 145. The undersigned will not offer, sell, pledge, hypothecate,
transfer or otherwise dispose of, or reduce its interest in or risk relating to,
any of the shares of Buyer Common Stock issued to the undersigned in the Merger
unless at such time either: (i) such transaction is permitted pursuant to the
provisions of Rule 145 under the Securities Act; (ii) the undersigned shall have
furnished to Buyer an opinion of counsel, reasonably satisfactory to Buyer to
the effect that such transaction is otherwise exempt from the registration
requirements of the Securities Act; or (iii) a registration statement under the
Securities Act covering the proposed offer, sale, pledge, hypothecation,
transfer or other disposition shall be effective under the Securities Act.
4. LEGEND.
(a) The undersigned understands that all certificates representing Buyer
Common Stock delivered to the undersigned pursuant to the Merger shall bear a
legend in substantially the form set forth below, until the earlier to occur of
(i) one of the events referred to in Section 3 above or (ii) the date on which
the undersigned requests removal of such legend, provided, that such request
occurs at least two years from the Effective Time (as defined in the Merger
Agreement) and that the undersigned is not at the time of such request, and has
not been during the three months period preceding to such request, an affiliate
of Buyer.
"The shares represented by this certificate were issued in a transaction to
which Rule 145 of the Securities Act of 1933 applies and may only be
transferred in accordance with the provisions of such rule. In addition, the
shares represented by this certificate may only be transferred in accordance
with the terms of an affiliate agreement dated , 1998 between the
initial holder hereof and The Learning Company, Inc., a copy of which
agreement may be inspected by the holder of this certificate at the
principal offices of The Learning Company, Inc., or furnished by The
Learning Company, Inc. to the holder of this certificate upon written
request without charge."
(b) Buyer in its discretion may cause stop transfer orders to be placed
with its transfer agent with respect to the certificates for the shares of Buyer
Common Stock that are required to bear the foregoing legend.
5. GENERAL PROVISIONS. This agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
principles of conflicts of laws. This agreement shall be binding on the
undersigned's successors and assigns, including his or her heirs, executors and
administrators.
The undersigned has carefully read this agreement and discussed its
requirements, to the extent the undersigned believed necessary, with its counsel
or counsel for Buyer.
Very truly yours,
--------------------------------------
Signature
--------------------------------------
Print Name
Accepted:
Broderbund Software, Inc.
By:
------------------------------------------
Name:
--------------------------------------
Title:
---------------------------------------
Dated:
--------------------------------------
The Learning Company, Inc.
By:
------------------------------------------
Name:
--------------------------------------
Title:
---------------------------------------
Dated:
--------------------------------------
Exhibit A-2
Buyer Affiliate Agreement
AFFILIATE AGREEMENT
, 1998
The Learning Company, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
An Agreement and Plan of Merger dated as of June 21, 1998 (the "Agreement")
has been entered into by and among Broderbund Software, Inc., a Delaware
corporation ("Seller"), The Learning Company, Inc., a Delaware corporation
("Buyer"), and TLC Merger Corp., a Delaware corporation and a wholly owned
subsidiary of Buyer (the "Sub"). The Agreement provides for the merger of the
Sub with and into Seller (the "Merger"). In accordance with the Agreement,
shares of common stock, $.01 par value per share, of Seller (the "Seller Common
Stock") shall be converted into shares of common stock, $.01 par value per
share, of Buyer (the "Buyer Common Stock"), as described in the Agreement.
The undersigned has been advised that as of the date of this agreement the
undersigned may be deemed to be an "affiliate" of Buyer, as the term "affiliate"
is defined under the Rules and Regulations of the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended,
and/or as such term is used in, and for purposes of, Accounting Series Releases
Nos. 103 and 135, as amended, of the Commission.
In consideration of the mutual agreements, provisions and covenants set
forth in the Agreement and hereinafter in this agreement, the undersigned
represents and agree as follows:
1. POOLING REQUIREMENTS. The undersigned will not within the 30 day period
prior to the Effective Time (as defined in the Agreement), sell, transfer,
pledge, hypothecate or otherwise dispose of, or reduce the undersigned's
interest in or risk relating to, any shares of Seller Common Stock or Buyer
Common Stock owned by the undersigned. In addition, the undersigned will not,
from and after the Effective Time, sell, transfer, pledge, hypothecate or
otherwise dispose of, or reduce the undersigned's interest in or risk relating
to any shares of Buyer capital stock, until after such time as Buyer has
published (within the meaning of Accounting Series Release No. 135, as amended,
of the Commission) financial results covering at least 30 days of combined
operations of Seller and Buyer. The restrictions set forth herein may be waived
by the Buyer to the extent such waiver, in the opinion of Buyer's independent
accountants, does not jeopardize the treatment of the Merger as a pooling of
interests.
2. GENERAL PROVISIONS. This agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
principles of conflicts of laws. This agreement shall be binding on the
undersigned's successors and assigns, including his heirs, executors and
administrators.
The undersigned has carefully read this agreement and discussed its
requirements, to the extent the undersigned believed necessary, with its counsel
or counsel for Buyer.
Very truly yours,
--------------------------------------
Signature
--------------------------------------
Print Name
Accepted:
Broderbund Software, Inc.
By:
------------------------------------------
Name:
--------------------------------------
Title:
---------------------------------------
Dated:
--------------------------------------
The Learning Company, Inc.
By:
------------------------------------------
Name:
--------------------------------------
Title:
---------------------------------------
Dated:
--------------------------------------