AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among
WORLD ACCESS, INC.,
WAXS INC.,
TAIL ACQUISITION CORPORATION
and
TELCO SYSTEMS, INC.
Dated as of June 4, 1998
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . 2
SECTION 1.01. Certain Defined Terms . . . . . . . . . . . . . . 2
ARTICLE II THE MERGER . . . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.01. The Merger . . . . . . . . . . . . . . . . . . . 10
SECTION 2.02. Closing . . . . . . . . . . . . . . . . . . . . . 10
SECTION 2.03. Effective Time . . . . . . . . . . . . . . . . . 10
SECTION 2.04. Effect of the Merger . . . . . . . . . . . . . . 11
SECTION 2.05. Certificate of Incorporation; Bylaws;
Directors and Officers of Surviving
Corporation . . . . . . . . . . . . . . . . . . 11
ARTICLE III CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES . . . 11
SECTION 3.01. Conversion of Securities . . . . . . . . . . . . 11
SECTION 3.02. Exchange of Shares Other than Treasury Shares . . 12
SECTION 3.03. Stock Transfer Books . . . . . . . . . . . . . . 13
SECTION 3.04. No Fractional Share Certificates . . . . . . . . 13
SECTION 3.05. Options to Purchase Company Common Stock . . . . 14
SECTION 3.06. Certain Adjustments . . . . . . . . . . . . . . . 15
SECTION 3.07. Undistributed Amounts . . . . . . . . . . . . . . 15
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . 15
SECTION 4.01. Organization and Qualification; Subsidiaries . . 15
SECTION 4.02. Certificate of Incorporation and Bylaws . . . . . 16
SECTION 4.03. Capitalization . . . . . . . . . . . . . . . . . 16
SECTION 4.04. Authority Relative to this Agreement . . . . . . 17
SECTION 4.05. No Conflict; Required Filings and Consents . . . 18
SECTION 4.06. Permits; Compliance with Laws . . . . . . . . . . 18
SECTION 4.07. SEC Filings; Financial Statements . . . . . . . . 20
SECTION 4.08. Absence of Certain Changes or Events . . . . . . 21
SECTION 4.09. Employee Benefit Plans; Labor Matters . . . . . . 21
SECTION 4.10. Certain Tax Matters . . . . . . . . . . . . . . . 24
SECTION 4.11. Contracts; Debt Instruments . . . . . . . . . . . 24
SECTION 4.12. Litigation . . . . . . . . . . . . . . . . . . . 24
SECTION 4.13. Environmental Matters . . . . . . . . . . . . . . 25
SECTION 4.14. Intellectual Property . . . . . . . . . . . . . . 25
SECTION 4.15. Taxes . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.16. Rule 145 Affiliates . . . . . . . . . . . . . . . 26
SECTION 4.17. Brokers . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.18. Certain Business Practices . . . . . . . . . . . 26
SECTION 4.19. Transaction Expenses . . . . . . . . . . . . . . 26
SECTION 4.20. Interested Party Transactions . . . . . . . . . . 27
SECTION 4.21. Charter Anti-takeover Provisions and State
Takeover Statutes . . . . . . . . . . . . . . . 27
SECTION 4.22. Opinion of Financial Advisor . . . . . . . . . . 27
ARTICLE V REPRESENTATIONS AND WARRANTIES OF WAG, PARENT AND
MERGER SUB . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.01. Organization and Qualification; Subsidiaries . . 27
SECTION 5.02. Certificate of Incorporation and Bylaws . . . . . 28
SECTION 5.03. Capitalization . . . . . . . . . . . . . . . . . 28
SECTION 5.04. Authority Relative to this Agreement . . . . . . 29
SECTION 5.05. No Conflict; Required Filings and Consents . . . 29
SECTION 5.06. Permits; Compliance with Laws . . . . . . . . . . 30
SECTION 5.07. SEC Filings; Financial Statements . . . . . . . . 31
SECTION 5.08. Absence of Certain Changes or Events . . . . . . 32
SECTION 5.09. Employee Benefit Plans; Labor Matters . . . . . . 32
SECTION 5.10. Certain Tax Matters . . . . . . . . . . . . . . . 34
SECTION 5.11. Contracts; Debt Instruments . . . . . . . . . . . 34
SECTION 5.12. Litigation . . . . . . . . . . . . . . . . . . . 35
SECTION 5.13. Environmental Matters . . . . . . . . . . . . . . 35
SECTION 5.14. Intellectual Property . . . . . . . . . . . . . . 35
SECTION 5.15. Taxes . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.16. Brokers . . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.17. Certain Business Practices . . . . . . . . . . . 36
SECTION 5.18. Opinion of Financial Advisor . . . . . . . . . . 37
SECTION 5.19. Interested Party Transactions . . . . . . . . . . 37
SECTION 5.20. Ownership of Company Capital Stock . . . . . . . 37
SECTION 6.01. Conduct of Business by the Company Pending
the Closing . . . . . . . . . . . . . . . . . . 37
SECTION 6.02. Conduct of Business by WAG and Parent
Pending the Closing . . . . . . . . . . . . . . 40
SECTION 6.03. Notices of Certain Events . . . . . . . . . . . . 41
SECTION 6.04. Access to Information; Confidentiality . . . . . 41
SECTION 6.05. No Solicitation of Transactions . . . . . . . . . 42
SECTION 6.06. Letters of Accountants . . . . . . . . . . . . . 43
SECTION 6.07. Subsequent Financial Statements . . . . . . . . . 43
SECTION 6.08. Control of Operations . . . . . . . . . . . . . . 43
SECTION 6.09. Further Action; Consents; Filings . . . . . . . . 43
ARTICLE VII ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . 44
SECTION 7.01. Registration Statement; Proxy Statement . . . . . 44
SECTION 7.02. Stockholders' Meetings . . . . . . . . . . . . . 46
SECTION 7.03. Rule 145 Affiliates . . . . . . . . . . . . . . . 47
SECTION 7.04. Directors' and Officers' Indemnification . . . . 47
SECTION 7.05. No Shelf Registration . . . . . . . . . . . . . . 49
SECTION 7.06. Public Announcements . . . . . . . . . . . . . . 49
SECTION 7.07. Nasdaq Listing . . . . . . . . . . . . . . . . . 49
SECTION 7.08. Blue Sky . . . . . . . . . . . . . . . . . . . . 49
SECTION 7.09. Company Stock Options . . . . . . . . . . . . . . 49
SECTION 7.10. Tax Treatment . . . . . . . . . . . . . . . . . . 50
SECTION 7.11. Obligations of Parent and WAG . . . . . . . . . . 50
SECTION 7.12. Company Employees . . . . . . . . . . . . . . . . 50
SECTION 7.13. Board of Directors of Parent and WAG . . . . . . 51
ARTICLE VIII CONDITIONS TO THE MERGER . . . . . . . . . . . . . . . 51
SECTION 8.01. Conditions to the Obligations of Each Party
to Consummate the Merger . . . . . . . . . . . 51
SECTION 8.02. Conditions to the Obligations of the Company . . 52
SECTION 8.03. Conditions to the Obligations of WAG and
Parent . . . . . . . . . . . . . . . . . . . . 53
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . 54
SECTION 9.01. Termination . . . . . . . . . . . . . . . . . . . 54
SECTION 9.02. Effect of Termination . . . . . . . . . . . . . . 56
SECTION 9.03. Amendment . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.04. Waiver . . . . . . . . . . . . . . . . . . . . . 56
SECTION 9.05. Expenses . . . . . . . . . . . . . . . . . . . . 56
ARTICLE X GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.01. Non-Survival of Representations and
Warranties . . . . . . . . . . . . . . . . . . 57
SECTION 10.02. Notices . . . . . . . . . . . . . . . . . . . . 58
SECTION 10.03. Severability . . . . . . . . . . . . . . . . . . 58
SECTION 10.04. Assignment; Binding Effect; Benefit . . . . . . 58
SECTION 10.05. Incorporation of Exhibits . . . . . . . . . . . 58
SECTION 10.06. Governing Law . . . . . . . . . . . . . . . . . 59
SECTION 10.07. Waiver of Jury Trial . . . . . . . . . . . . . . 59
SECTION 10.08. Construction . . . . . . . . . . . . . . . . . . 59
SECTION 10.09. Counterparts . . . . . . . . . . . . . . . . . . 59
SECTION 10.10. Entire Agreement . . . . . . . . . . . . . . . . 60
EXHIBITS
Exhibit 1.00(a) Form of Stockholder Proxy Agreement
Exhibit 7.03 Form of Company Affiliate Agreement
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION, dated as of June 4,
1998 (as amended, supplemented or otherwise modified from time to time, the
"AGREEMENT"), among WORLD ACCESS, INC., a corporation organized and
existing under the laws of the State of Delaware ("WAG"), WAXS INC., a
corporation organized and existing under the laws of the State of Delaware
and a wholly-owned subsidiary of WAG ("PARENT"), TAIL ACQUISITION
CORPORATION, a corporation organized and existing under the laws of the
State of Delaware ("MERGER SUB") and a direct wholly-owned subsidiary of
Parent, and TELCO SYSTEMS, INC., a corporation organized and existing under
the laws of the State of Delaware (the "COMPANY");
W I T N E S S E T H:
WHEREAS, the boards of directors of WAG, Parent, Merger Sub and the
Company have each determined that it is consistent with and in furtherance
of their respective long-term business strategies and fair to and in the
best interests of their respective stockholders to combine the respective
businesses of WAG, Parent and the Company by means of a merger (the
"MERGER") of Merger Sub with and into the Company upon the terms and
subject to the conditions set forth herein and in accordance with the
General Corporation Law of the State of Delaware;
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent and Merger Sub to enter into this Agreement, Parent
has entered into a proxy agreement substantially in the form attached
hereto as Exhibit 1.00(a), dated as of the date hereof (the "STOCKHOLDERS
PROXY AGREEMENT"), with each of the Company's directors and senior
executive officers and ▇▇▇▇ Investment Advisors, Inc., a corporation
organized and existing under the laws of the State of Minnesota (each, a
"PRINCIPAL STOCKHOLDER"), pursuant to which each Principal Stockholder has
granted to Parent a proxy to vote all of the shares of Company Capital
Stock (as hereinafter defined) held by such Principal Stockholder, all upon
the terms and subject to the conditions set forth therein;
WHEREAS, on February 24, 1998, WAG, Parent, NACT Telecommunications,
Inc., a Delaware corporation and a majority-owned subsidiary of WAG
("NACT"), WAXS Acquisition Corp., a Delaware corporation and a wholly-owned
subsidiary of Parent, and NACT Acquisition Corp., a Delaware corporation
and a wholly-owned subsidiary of Parent, entered into that certain
Agreement and Plan of Merger and Reorganization pursuant to which, among
other things, each of WAG and NACT will become wholly-owned subsidiaries of
Parent (the "HOLDING COMPANY REORGANIZATION"); and
WHEREAS, for United States Federal income tax purposes, it is intended
that the Merger qualify as a reorganization under the provisions of Section
368 of the Internal Revenue Code of 1986, as amended (together with the
rules and regulations promulgated thereunder, the "CODE");
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, and
other good and valuable consideration, the receipt and adequacy of which
are hereby acknowledged, and intending to be legally bound hereby, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. Unless the context otherwise
requires, the following terms, when used in this Agreement, shall have the
respective meanings specified below (such meanings to be equally applicable
to the singular and plural number of the terms so defined, unless the
context otherwise requires):
"AFFECTED EMPLOYEE" shall have the meaning specified in Section
7.12(a).
"AFFILIATE" shall have the meaning specified in rule 144
promulgated under the Securities Act.
"AGREEMENT" shall have the meaning specified in the preamble to
this Agreement.
"ALTERNATIVE MERGER" shall have the meaning specified in Section
2.01.
"BENEFICIAL OWNER" shall mean, with respect to any shares of
capital stock, a person who shall be deemed to be the beneficial owner of
such shares (i) which such person or any of its affiliates or associates
(as such term is defined in rule 12b-2 promulgated under the Exchange Act)
beneficially owns, directly or indirectly, (ii) which such person or any of
its affiliates or associates has, directly or indirectly, (A) the right to
acquire (whether such right is exercisable immediately or subject only to
the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of consideration rights, exchange
rights, warrants or options, or otherwise, or (B) the right to vote
pursuant to any agreement, arrangement or understanding, or (iii) which are
beneficially owned, directly or indirectly, by any other persons with whom
such person or any of its affiliates or associates or person with whom such
person or any of its affiliates or associates has any agreement,
arrangement or understanding for the purpose of acquiring, holding, voting
or disposing of any such shares of capital stock; provided, however, that a
Person shall not be deemed the beneficial owner of, or to beneficially own,
any security if the agreement, arrangement or understanding (written or
oral) to vote such security arises solely from a revocable proxy or consent
given to such person pursuant to a definitive proxy statement filed with
the SEC and otherwise in accordance with the rules and regulations under
the Exchange Act.
"BLUE SKY LAWS" shall mean state securities or "blue sky" laws.
"BROADVIEW" shall mean Broadview Associates LLC.
"BUSINESS DAY" shall mean any day on which the principal offices
of the SEC in Washington, D.C. are open to accept filings, or, in the case
of determining a date when any payment is due, any day on which banks are
not required or authorized by law, regulation or executive order to close
in New York, New York.
"CAPITAL INCREASE" shall have the meaning specified in Section
7.01(b).
"CASH DEPOSIT" shall have the meaning specified in Section 3.04.
"CERTIFICATE OF MERGER" shall have the meaning specified in
Section 2.03.
"CLOSING" shall have the meaning specified in Section 2.02.
"CLOSING DATE MARKET PRICE" shall mean the average of the daily
closing price of the WAG Common Stock, in the event that the Holding
Company Reorganization shall not have been consummated, or Parent Common
Stock, in the event that the Holding Company Reorganization shall have been
consummated, in either case as reported on Nasdaq on each of the twenty
consecutive trading days ending on the Determination Date, provided that,
in the event that the Holding Company Reorganization shall have been
consummated during such twenty-day period, the Closing Date Market Price
shall be calculated by reference to the average of the daily closing price
of the WAG Common Stock or the Parent Common Stock, as the case may be, for
the number of days such stock was traded during such period.
"CODE" shall mean the meaning specified in the recitals hereto.
"COMMON EXCHANGE RATIO" shall have the meaning specified in
Section 3.01(a).
"COMPANY FAIRNESS OPINION" shall mean the written opinion of
Broadview delivered to the board of directors of the Company (i) to the
effect that the exchange ratio to be offered the holders of the Company
Common Stock in the Merger is fair to the holders of such stock from a
financial point of view, and (ii) which has been authorized by Broadview
for inclusion in the Proxy Statement.
"COMPANY" shall have the meaning specified in the preamble to
this Agreement.
"COMPANY 1997 10-K" shall have the meaning specified in Section
4.02.
"COMPANY AFFILIATE AGREEMENT" shall have the meaning specified in
Section 7.03(a).
"COMPANY BENEFIT PLANS" shall have the meaning specified in
Section 4.09(a).
"COMPANY CAPITAL STOCK" shall mean the Company Common Stock, the
Company Junior Common Stock and the Company Preferred Stock.
"COMPANY COMMON STOCK" shall mean the Common Stock, par value
$0.01 per share, of the Company.
"COMPANY DISCLOSURE SCHEDULE" shall mean the disclosure schedule
delivered by the Company to Parent prior to the execution of this Agreement
and forming a part hereof.
"COMPANY JUNIOR COMMON STOCK" shall mean the Series A Junior
Common Stock, par value $0.01 per share, of the Company.
"COMPANY LICENSES" shall have the meaning specified in
Section 4.14.
"COMPANY MATERIAL ADVERSE EFFECT" shall mean any change in or
effect on the business of the Company and the Company Subsidiaries that is,
or would reasonably be expected to be, materially adverse to the business,
assets (including intangible assets), liabilities (contingent or
otherwise), condition (financial or otherwise) or results of operations of
the Company and the Company Subsidiaries taken as a whole, other than any
change or effect relating to this Agreement or the transactions
contemplated hereby or the announcement thereof.
"COMPANY MATERIAL CONTRACT" shall have the meaning specified in
Section 4.11.
"COMPANY PERMITS" shall have the meaning specified in
Section 4.06.
"COMPANY PREFERRED STOCK" shall mean the Series A Participating
Cumulative Preferred Stock, $0.01 per share par value, of the Company.
"COMPANY PRODUCTS" shall have the meaning specified in Section
4.06(b).
"COMPANY THIRD PARTY PRODUCTS" shall have the meaning specified
in Section 4.06(b).
"COMPANY REPORTS" shall have the meaning specified in
Section 4.07(a).
"COMPANY STOCKHOLDERS' MEETING" shall have the meaning specified
in Section 7.01(a).
"COMPANY STOCK OPTION" shall have the meaning specified in
Section 3.05.
"COMPANY STOCK PLANS" shall mean the Company's 1980 Stock Option
Plan, the Company's 1988 Non-Statutory Stock Option Plan and the Company's
1990 Stock Option Plan.
"COMPANY STOCK PURCHASE PLANS" shall have the meaning specified
in Section 4.03.
"COMPANY SUBSIDIARIES" shall have the meaning specified in
Section 4.01.
"COMPETING TRANSACTION" shall mean any of the following involving
the Company or any Company Subsidiary whose business constitutes 30% or
more of the net revenues, net income or assets of the Company and its
subsidiaries, taken as a whole, as the case may be (other than the Merger
contemplated by this Agreement):
(i) any merger, consolidation, share exchange, business
combination or other similar transaction;
(ii) any sale, lease, exchange, mortgage, pledge, transfer
or other disposition of 15 percent or more of the assets of such party
and its subsidiaries, taken as a whole, in a single transaction or
series of related transactions except for the sale of inventory in the
ordinary course of business; or
(iii) any tender offer or exchange offer for 15 percent or
more of the outstanding voting securities of such party or the filing
of a registration statement under the Securities Act in connection
therewith.
"CONFIDENTIALITY AGREEMENT" shall mean the Mutual Non-Disclosure
and Confidentiality agreement dated as of November 7, 1997 between WAG and
the Company.
"COSTS" shall have the meaning specified in Section 7.04(b).
"DELAWARE GENERAL CORPORATION LAW" shall mean the General
Corporation Law of the State of Delaware.
"DETERMINATION DATE" shall mean the second business day prior to
the date on which the Effective Time is expected to occur.
"$" shall mean United States Dollars.
"EFFECTIVE TIME" shall have the meaning specified in
Section 2.03.
"ENVIRONMENTAL LAW" shall mean any Law and any enforceable
judicial or administrative interpretation thereof, including any judicial
or administrative order, consent decree or judgment, relating to pollution
or protection of the environment or natural resources, including those
relating to the use, handling, transportation, treatment, storage,
disposal, release or discharge of Hazardous Material, as in effect as of
the date hereof.
"ENVIRONMENTAL PERMIT" shall mean any permit, approval,
identification number, license or other authorization required under or
issued pursuant to any applicable Environmental Law.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, together with the rules and regulations promulgated thereunder.
"EXCHANGE AGENT" shall have the meaning specified in
Section 3.02.
"EXCHANGE FUND" shall have the meaning specified in Section 3.02.
"EXPENSES" shall mean, with respect to any party hereto, all
reasonable out-of-pocket expenses (including all fees and expenses of
counsel, accountants, investment bankers, experts and consultants to a
party hereto and its affiliates, but excluding any allocation of overhead)
incurred by such party or on its behalf in connection with or related to
the authorization, preparation, negotiation, execution and performance of
its obligations pursuant to this Agreement and the consummation of the
Merger, the preparation, printing, filing and mailing of the Registration
Statement and the Proxy Statement, the solicitation of stockholder
approvals, the filing of HSR Act notice, if any, and all other matters
related to the closing of the Merger.
"FCC" shall have the meaning specified in Section 4.06(b).
"GOVERNMENTAL ENTITY" shall mean any United States federal, state
or local or any foreign governmental, regulatory or administrative
authority, agency or commission or any court, tribunal or arbitral body.
"GOVERNMENTAL ORDER" shall mean any order, writ, judgment,
injunction, decree, stipulation, determination or award entered by or with
any Governmental Entity.
"HAZARDOUS MATERIAL" shall mean (i) any petroleum, petroleum
products, by-products or breakdown products, radioactive materials,
asbestos-containing materials or polychlorinated biphenyls or (ii) any
chemical, material or substance defined or regulated as toxic or hazardous
or as a pollutant or contaminant or waste under any applicable
Environmental Law.
"HOLDING COMPANY REORGANIZATION" shall have the meaning specified
in the recitals to this Agreement.
"HSR ACT" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended, together with the rules and regulations
promulgated thereunder.
"INDEMNIFIED PARTIES" shall have the meaning specified in
Section 7.04(b).
"IRS" shall mean the United States Internal Revenue Service.
"LAW" shall mean any Federal, state, foreign or local statute,
law, ordinance, regulation, rule, code, order, judgment, decree, other
requirement or rule of law of the United States or any other jurisdiction,
and any other similar act or law.
"LISTED AGREEMENTS" shall have the meaning specified in Section
7.12(c).
"MERGER" shall have the meaning specified in the recitals to this
Agreement.
"MERGER SUB" shall have the meaning specified in the preamble to
this Agreement.
"MERGER SUB COMMON STOCK" shall have the meaning specified in
Section 3.01(c).
"MULTIEMPLOYER PLAN" shall have the meaning specified in Section
4.09(b).
"MULTIPLE EMPLOYER PLAN" shall have the meaning specified in
Section 4.09(b)
"NACT" shall have the meaning specified in the recitals to this
Agreement.
"NASDAQ" shall mean The Nasdaq Stock Market National Market.
"PARENT" shall have the meaning specified in the preamble to this
Agreement.
"PARENT 1997 10-K" shall have the meaning specified in Section
5.02.
"PARENT AFFILIATE AGREEMENT" shall have the meaning specified in
Section 7.03(b).
"PARENT BENEFIT PLANS" shall have the meaning specified in
Section 5.09(a).
"PARENT COMMON STOCK" shall mean the Common Stock, par value
$0.01 per share, of Parent.
"PARENT DISCLOSURE SCHEDULE" shall mean the disclosure schedule
delivered by Parent to the Company prior to the execution of this Agreement
and forming a part hereof.
"PARENT FAIRNESS OPINION" shall mean the written opinion of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ delivered to the board of directors of Parent and WAG (i)
to the effect that the consideration to be paid in the Merger is fair, from
a financial point of view, to Parent and WAG, and (ii) which has been
authorized by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ for inclusion in the Proxy Statement.
"PARENT LICENSES" shall have the meaning specified in Section
5.14.
"PARENT MATERIAL ADVERSE EFFECT" shall mean (i) prior to the
consummation of the Holding Company Reorganization, any change in or effect
on the business of WAG and the Parent Subsidiaries that is, or would
reasonably be expected to be, materially adverse to the business, assets
(including intangible assets), liabilities (contingent or otherwise),
condition (financial or otherwise) or results of operations of WAG and the
Parent Subsidiaries taken as a whole, other than any change or effect
relating to this Agreement or the transactions contemplated hereby or the
announcement thereof and (ii) after the consummation of the Holding Company
Reorganization, any change in or effect on the business of Parent and the
Parent Subsidiaries that is, or would reasonably be expected to be,
materially adverse to the business, assets (including intangible assets),
liabilities (contingent or otherwise), condition (financial or otherwise)
or results of operations of Parent and the Parent Subsidiaries taken as a
whole, other than any change or effect relating to this Agreement or the
transactions contemplated hereby or the announcement thereof.
"PARENT MATERIAL CONTRACT" shall have the meaning specified in
Section 5.11.
"PARENT PERMITS" shall have the meaning specified in
Section 5.06(a).
"PARENT REPORTS" shall have the meaning specified in
Section 5.07(a).
"PARENT STOCKHOLDERS' MEETING" shall have the meaning specified
in Section 7.01(a).
"PARENT STOCK PLANS" shall mean WAG's 1991 Stock Option Plan,
WAG's 1998 Incentive Compensation Plan, WAG's Outside Directors' Warrant
Plan, and WAG's Directors Warrant Incentive Plan, all of which are to be
assumed by Parent upon consummation of the Holding Company Reorganization.
"PARENT SUBSIDIARIES" shall have the meaning specified in
Section 5.01.
"PERSON" shall mean an individual, corporation, partnership,
limited partnership, limited liability company, syndicate, person
(including a "person" as defined in Section 13(d)(3) of the Exchange Act),
trust, association, entity or government or political subdivision, agency
or instrumentality of a government.
"PRESURRENDER DIVIDENDS" shall have the meaning specified in
Section 3.02.
"PRINCIPAL STOCKHOLDER" shall have the meaning specified in the
recitals hereto.
"PROXY STATEMENT" shall have the meaning specified in
Section 7.01(a).
"REGISTRATION STATEMENT" shall have the meaning specified in
Section 7.01(a).
"REPRESENTATIVES" shall have the meaning specified in
Section 6.04(a).
"RESTRAINTS" shall have the meaning specified in Section 8.01(c).
"RESURGENS TRANSACTION" shall mean the pending acquisition by WAG
and Parent of (i) Cherry Communications Incorporated (d/b/a Resurgens
Communications Group) ("RCG") pursuant to that certain Agreement and Plan
of Merger and Reorganization dated as of May 12, 1998 to which WAG, Parent,
RCG and certain other persons are parties, and (ii) Cherry Communications
U.K. Limited ("Cherry U.K.") pursuant to that certain Share Exchange
Agreement and Plan of Reorganization dated as of May 12, 1998 to which WAG,
Parent, the sole shareholder of Cherry U.K. and Cherry U.K. are parties.
"RIGHTS" shall have the meaning specified in Section 3.01(a).
"RIGHTS AGREEMENT" shall have the meaning specified in Section
4.03.
"▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇" shall mean The ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ Company,
LLC.
"RULE 145 AFFILIATE" shall mean, with respect to any specified
person, any other persons who are "affiliates" of such specified person
within the meaning of rule 145 (c) or (d) promulgated under the Securities
Act.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, together with the rules and regulations promulgated thereunder.
"STOCKHOLDERS PROXY AGREEMENT" shall have the meaning specified
in the recitals to this Agreement.
"SUBSIDIARY" shall mean, with respect to any person, any
corporation, limited liability company, partnership, joint venture or other
legal entity of which such person (either alone or through or together with
any other subsidiary of such person) owns, directly or indirectly, a
majority of the stock or other equity interests, the holders of which are
generally entitled to vote for the election of the board of directors or
other governing body of such corporation or other legal entity.
"SUPERIOR PROPOSAL" shall have the meaning specified in
Section 6.06.
"SURVIVING CORPORATION" shall have the meaning specified in
Section 2.01.
"TAXES" shall mean any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind (together with any and all
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any Governmental Entity or taxing authority,
including taxes or other charges on or with respect to income, franchises,
windfall or other profits, gross receipts, property, sales, use, capital
stock, payroll, employment, social security, workers' compensation,
unemployment compensation or net worth; taxes or other charges in the
nature of excise, withholding, ad valorem, stamp, transfer, value-added or
gains taxes; license, registration and documentation fees; and customers'
duties, tariffs and similar charges.
"TERMINATING COMPANY BREACH" shall have the meaning specified in
Section 9.01(g).
"TERMINATING PARENT BREACH" shall have the meaning specified in
Section 9.01(h).
"U.S. GAAP" shall mean United States generally accepted
accounting principles.
"WAG COMMON STOCK" shall mean the Common Stock, par value $0.01
per share, of WAG.
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the Delaware
General Corporation Law, at the Effective Time, Merger Sub shall be merged
with and into the Company. As a result of the Merger, the separate
corporate existence of Merger Sub shall cease and the Company shall
continue as the surviving corporation of the Merger (the "SURVIVING
CORPORATION"). Parent may, with the Company's consent (which will not be
unreasonably withheld), elect to amend this Agreement to provide for a
merger of the Company with and into Merger Sub or Parent or one or more
other affiliates of Parent (an "ALTERNATIVE MERGER"); provided, however,
that (i) any such Alternative Merger shall not alter or change the amount
or kind of consideration to be issued to holders of Company Capital Stock
or Company Stock Options as provided for in this Agreement, (ii) any such
Alternative Merger shall not adversely affect the tax or accounting
treatment provided for herein and shall not materially delay consummation
of the transactions contemplated hereby, (iii) in the event of any such
election, the Company shall have the opportunity to update the Company
Disclosure Schedule to reflect additional items that are required to be set
forth therein only as a result of any differences between the Alternative
Merger structure and that of the Merger and (iv) Parent shall waive any
failure to satisfy Section 8.03(a) or 8.03(b) to the extent such non-
compliance results only from any differences between the Alternative Merger
structure and that of the Merger.
SECTION 2.02. Closing. Unless this Agreement shall have been
terminated and the Merger shall have been abandoned pursuant to
Section 9.01 and subject to the satisfaction or waiver of the conditions
set forth in Article VIII, the consummation of the Merger shall take place
as promptly as practicable (and in any event within three business days)
after satisfaction or waiver of the conditions set forth in Article VIII,
at a closing (the "CLOSING") to be held at such location as is agreed to by
the parties hereto, unless another date is agreed to by the Company and
Parent.
SECTION 2.03. Effective Time. At the time of the Closing, the
parties shall cause the Merger to be consummated by filing a certificate of
merger (the "CERTIFICATE OF MERGER") with the Secretary of State of the
State of Delaware in such form as required by, and executed in accordance
with the relevant provisions of, the Delaware General Corporation Law (the
date and time of such filing, or such later time as may be agreed by the
parties hereto and specified in the Certificate of Merger, being the
"EFFECTIVE TIME").
SECTION 2.04. Effect of the Merger. At the Effective Time, the
effect of the Merger shall be as provided in the applicable provisions of
the Delaware General Corporation Law. Without limiting the generality of
the foregoing, and subject thereto, at the Effective Time, except as
otherwise provided herein, all the property, rights, privileges, powers and
franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and
Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 2.05. Certificate of Incorporation; Bylaws; Directors and
Officers of Surviving Corporation. Unless otherwise agreed by the Company
and Parent prior to the Effective Time, at the Effective Time:
(a) the certificate of incorporation and bylaws of Merger
Sub, as in effect immediately prior to the Effective Time, shall be
the certificate of incorporation and bylaws of the Surviving
Corporation until thereafter amended as provided by Law and such
certificate of incorporation or bylaws;
(b) the officers of the Company immediately prior to the
Effective Time shall be the initial officers of the Surviving
Corporation until their successors are elected or appointed and
qualified or until their resignation or removal; and
(c) the directors of Merger Sub immediately prior to the
Effective Time shall be the initial directors of the Surviving
Corporation until their successors are elected or appointed and
qualified or until their resignation or removal.
ARTICLE III
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 3.01. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub, the
Company or the holders of any of the following securities:
(a) Each share of Company Common Stock (together with the
right to purchase one-hundredth (1/100th) of a share of Company
Preferred Stock (the "RIGHTS")) issued and outstanding immediately
prior to the Effective Time (other than any shares of Company Common
Stock to be cancelled pursuant to Section 3.01(b)) and all rights in
respect thereof shall forthwith cease to exist and shall be converted
into and become exchangeable for that number of shares of WAG Common
Stock (the "COMMON EXCHANGE RATIO") equal to the quotient of (i)
$17.00 divided by (ii) the Closing Date Market Price; provided,
however, that (x) if the Closing Date Market Price is less than
$29.00, then the Common Exchange Ratio shall be equal to .5862, and
(y) if the Closing Date Market Price is more than $36.00, then the
Common Exchange Ratio shall be equal to .4722;
(b) Each share of Company Capital Stock held in the treasury of
the Company and each share of Company Capital Stock owned by WAG or
Parent (in each case, together with any Rights) or of the Company
immediately prior to the Effective Time shall be cancelled and
extinguished without any conversion thereof and no payment shall be
made with respect thereto; and
(c) Each share of common stock, par value $0.01 per share, of
Merger Sub ("MERGER SUB COMMON STOCK") issued and outstanding
immediately prior to the Effective Time and all rights in respect
thereof shall forthwith cease to exist and shall be converted into
and become exchangeable for one newly and validly issued, fully paid
and nonassessable share of common stock of the Surviving Corporation.
SECTION 3.02. Exchange of Shares Other than Treasury Shares. Subject
to the terms and conditions hereof, at or prior to the Effective Time, WAG
shall appoint an exchange agent reasonably acceptable to the Company to
effect the exchange of shares of Company Common Stock for WAG Common Stock,
in accordance with the provisions of this Article III (the "EXCHANGE
AGENT"). From time to time after the Effective Time, WAG shall deposit, or
cause to be deposited, certificates representing WAG Common Stock for
conversion of shares of Company Common Stock, in accordance with the
provisions of Section 3.01 (such certificates, together with any dividends
or distributions with respect thereto, being herein referred to as the
"EXCHANGE FUND"). Commencing immediately after the Effective Time and
until the appointment of the Exchange Agent shall be terminated, each
holder of a certificate or certificates theretofore representing shares of
Company Common Stock may surrender the same to the Exchange Agent and,
after the appointment of the Exchange Agent shall be terminated, any such
holder may surrender any such certificate to WAG. Such holder shall be
entitled upon such surrender to receive in exchange therefor a certificate
or certificates representing the number of full shares of WAG Common Stock
into which the shares of Company Common Stock theretofore represented by
the certificate or certificates so surrendered shall have been converted in
accordance with the provisions of Section 3.01, together with a cash
payment in lieu of fractional shares, if any, in accordance with
Section 3.04, and any such shares of WAG Common Stock shall be deemed to
have been issued at the Effective Time. Until so surrendered and
exchanged, each outstanding certificate which, prior to the Effective Time,
represented issued and outstanding shares of Company Common Stock shall be
deemed for all corporate purposes of WAG, other than the payment of
dividends and other distributions, if any, to evidence ownership of the
number of full shares of WAG Common Stock into which the shares of Company
Common Stock theretofore represented thereby shall have been converted at
the Effective Time. Unless and until any such certificate theretofore
representing shares of Company Common Stock is so surrendered, no dividend
or other distribution, if any, payable to the holders of record of WAG
Common Stock as of any date subsequent to the Effective Time shall be paid
to the holder of such certificate in respect thereof. Upon the surrender
of any such certificate theretofore representing shares of Company Common
Stock, however, the record holder of the certificate or certificates
representing shares of WAG Common Stock issued in exchange therefor shall
receive from the Exchange Agent or from WAG, as the case may be, (i)
payment of the amount of dividends and other distributions, if any, which
as of any date subsequent to the Effective Time and until such surrender
shall have become payable with respect to such number of shares of WAG
Common Stock ("PRESURRENDER DIVIDENDS") 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 such surrender and with a
payment date subsequent to such surrender payable with respect to such
whole shares of WAG Common Stock. No interest shall be payable with
respect to the payment of Presurrender Dividends upon the surrender of
certificates theretofore representing shares of Company Common Stock.
After the appointment of the Exchange Agent shall have been terminated,
such holders of WAG Common Stock which have not received payment of
Presurrender Dividends shall look only to WAG for payment thereof.
Notwithstanding the foregoing provisions of this Section 3.02, risk of loss
and title to such certificates representing shares of Company Common Stock
shall pass only upon proper delivery of such certificates to the Exchange
Agent, and neither the Exchange Agent nor any party hereto shall be liable
to a holder of shares of Company Capital Stock for any WAG Common Stock or
dividends or distributions thereon delivered to a public official pursuant
to any applicable abandoned property, escheat or similar law or to a
transferee pursuant to Section 3.03. References in this Section 3.02 to
Company Common Stock shall be deemed to include the associated Rights.
SECTION 3.03. Stock Transfer Books. (a) At the Effective Time, each
of the stock transfer books of the Company with respect to shares of
Company Common Stock shall be closed, and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on
the records of any such stock transfer books. In the event of a transfer
of ownership of shares of Company Common Stock that is not registered in
the stock transfer records of the Company, at the Effective Time, a
certificate or certificates representing the number of full shares of WAG
Common Stock into which such shares of Company Common Stock shall have been
converted shall be issued to the transferee together with a cash payment in
lieu of fractional shares, if any, in accordance with Section 3.04, and a
cash payment in the amount of Presurrender Dividends, if any, in accordance
with Section 3.02, if the certificate or certificates representing such
shares of Company Capital Stock is or are surrendered as provided in
Section 3.02, accompanied by all documents required to evidence and effect
such transfer and by evidence of payment of any applicable stock transfer
tax.
(b) Notwithstanding anything to the contrary herein,
certificates surrendered for exchange by any person constituting a Rule 145
Affiliate of the Company shall not be exchanged until Parent shall have
received from such person an executed Company Affiliate Agreement, as
provided in Section 7.03.
SECTION 3.04. No Fractional Share Certificates. Unless WAG otherwise
determines, no scrip or fractional share certificates for WAG Common Stock
shall be issued upon the surrender for exchange of certificates evidencing
shares of Company Capital Stock, and an outstanding fractional share
interest shall not entitle the owner thereof to vote, to receive dividends
or to any rights of a stockholder of WAG or of the Surviving Corporation
with respect to such fractional share interest. In lieu of fractional
shares, each holder of shares of Company Common Stock who, except for the
provisions of this Section 3.04, would be entitled to receive a fractional
share of WAG Common Stock shall, upon surrender of the certificate or
certificates representing shares of Company Common Stock, be entitled to
receive an amount in cash (rounded to the nearest whole cent), without
interest, equal to the product obtained by multiplying (a) the fractional
share interest to which such holder would otherwise be entitled (after
taking into account all shares of Company Capital Stock held at the
Effective Time by such holder) by (b) the closing price for a share of WAG
Common Stock reported on Nasdaq on the first business day immediately prior
to the Effective Time. At or prior to the Effective Time, Parent shall pay
to the Exchange Agent an amount in cash (the "CASH DEPOSIT") sufficient for
the Exchange Agent to pay each holder of Company Common Stock the amount of
cash in lieu of fractional shares to which such holder is entitled pursuant
to this Section 3.04. As soon as practicable after the determination of
the amount of cash, if any, to be paid to holders of Company Common Stock
with respect to any fractional share interests, the Exchange Agent shall
make available such amounts, net of any required withholding, to such
holders of Company Common Stock, subject to and in accordance with the
terms of Section 3.02. In no event shall either (i) the total cash
consideration paid to holders of Company Common Stock in lieu of fractional
shares exceed one percent (1%) of the value of the total consideration
issued to holders of Company Common Stock in exchange for their Company
Capital Stock or (ii) any record holder of Company Common Stock, directly
or indirectly, receive cash in an amount equal to or greater than the value
of one full share of WAG Company Stock.
SECTION 3.05. Options to Purchase Company Common Stock. At the
Effective Time, each option granted by the Company to purchase shares of
Company Common Stock (each, a "COMPANY STOCK OPTION") which is outstanding
and unexercised immediately prior to the Effective Time shall be assumed by
WAG and converted into an option to purchase shares of WAG Common Stock in
such number and at such exercise price as provided below and otherwise
having the same terms and conditions as in effect immediately prior to the
Effective Time (except to the extent that such terms, conditions and
restrictions may be altered in accordance with their terms as a result of
the Merger, including vesting as such shall (except as provided in Section
6.01(b)) be accelerated at the Effective Time pursuant to the terms of such
Company Stock Options):
(a) the number of shares of WAG Common Stock to be subject to
the new option shall be equal to the product of (i) the number of
shares of Company Common Stock subject to the original option and
(ii) the Common Exchange Ratio;
(b) the exercise price per share of Parent Common Stock under
the new option shall be equal to the quotient of (i) the exercise
price per share of Company Common Stock under the original option
divided by (ii) the Common Exchange Ratio; and
(c) upon each exercise of options by a holder thereof, the
aggregate number of shares of WAG Common Stock deliverable upon such
exercise shall be rounded, if necessary, to the nearest whole share
and the aggregate exercise price shall be rounded up, if necessary, to
the nearest cent.
The adjustments provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Code) shall be
effected in a manner consistent with the requirements of Section 424(a) of
the Code.
SECTION 3.06. Certain Adjustments. If between the date of this
Agreement and the Effective Time, the outstanding shares of Company Capital
Stock or WAG Common Stock shall be changed into a different number of
shares by reason of any reclassification, recapitalization, split-up,
combination or exchange of shares, or any dividend payable in stock or
other securities shall be declared thereon with a record date within such
period, then the exchange ratios established pursuant to the provisions of
Section 3.01 shall be adjusted accordingly to provide to the holders of
Company Capital Stock the same economic effect as contemplated by this
Agreement prior to such reclassification, recapitalization, split-up,
combination, exchange, dividend or increase. In the event the Holding
Company Reorganization is consummated prior to the Effective Time, all
references in this Article III to WAG and to WAG Common Stock shall be
deemed to be references to Parent and Parent Common Stock, respectively.
SECTION 3.07. Undistributed Amounts. Any portion of the Exchange
Fund or the Cash Deposit which remains undistributed for six months after
the Effective Time shall be delivered to WAG, and any holder of Company
Common Stock who has not theretofore complied with the provisions of this
Article III shall thereafter look only to WAG for satisfaction of their
claims for WAG Common Stock or any cash in lieu of fractional shares of WAG
Common Stock and any Presurrender Dividends.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub
that:
SECTION 4.01. Organization and Qualification; Subsidiaries. (a) The
Company and each directly and indirectly owned subsidiary of the Company
(the "COMPANY SUBSIDIARIES") has been duly organized and is validly
existing and in good standing (to the extent applicable) under the laws of
the jurisdiction of its incorporation or organization, as the case may be,
and has the requisite corporate power and authority and all necessary
governmental approvals to own, lease and operate its properties and to
carry on its business as it is now being conducted, except where the
failure to be so organized, existing or in good standing or to have such
power, authority and governmental approvals would not reasonably be
expected to have, individually or in the aggregate, a Company Material
Adverse Effect. The Company and each Company Subsidiary is duly qualified
or licensed to do business, and is in good standing (to the extent
applicable), in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that would not reasonably be
expected to have, individually or in the aggregate, a Company Material
Adverse Effect.
(b) Section 4.01 of the Company Disclosure Schedule sets forth,
as of the date of this Agreement, a true and complete list of each Company
Subsidiary, together with (i) the jurisdiction of incorporation or
organization of each Company Subsidiary and the percentage of each Company
Subsidiary's outstanding capital stock or other equity interests owned by
the Company or another Company Subsidiary and (ii) an indication of whether
each Company Subsidiary is a "Significant Subsidiary" as defined in
Regulation S-X under the Exchange Act. Except as set forth in Section 4.01
of the Company Disclosure Schedule, neither the Company nor any Company
Subsidiary owns an equity interest in any partnership or joint venture
arrangement or other business entity that is material to the financial
condition, results of operations, business or prospects of the Company and
the Company Subsidiaries, taken as a whole.
SECTION 4.02. Certificate of Incorporation and Bylaws. The copies of
the Company's certificate of incorporation and bylaws that are incorporated
by reference as exhibits to the Company's Annual Report on Form 10-K for
the fiscal year ended August 31, 1997 (the "COMPANY 1997 10-K") are true,
complete and correct copies thereof. Such certificate of incorporation and
bylaws are in full force and effect. The Company is not in violation of
any of the provisions of its certificate of incorporation or bylaws.
SECTION 4.03. Capitalization. The authorized capital stock of the
Company consists of 25,000,000 shares of Company Common Stock, 1,000,000
shares of which have been designated as Company Junior Common Stock, and
5,000,000 shares of preferred stock, 200,000 of which have been designated
as Company Preferred Stock. As of the date hereof (i) 11,036,944 shares of
Company Common Stock are issued and outstanding, all of which are validly
issued, fully paid and nonassessable, (ii) no shares of Company Common
Stock are held in the treasury of the Company, (iii) no shares of Company
Common Stock are held by the Company Subsidiaries, (iv) 1,629,407 shares of
Company Common Stock are reserved for future issuance pursuant to employee
stock options or stock incentive rights granted under the Company Stock
Plans, (v) 116,260 shares of Company Common Stock are reserved for future
issuance pursuant to the Company's 1983 Employee Stock Purchase Plan and
the Company's 1997 Foreign Employee Stock Purchase Plan (collectively, the
"Company Stock Purchase Plans"), (vi) 200,000 shares of Company Preferred
Stock are reserved for issuance pursuant to the Rights; and (vii) no shares
of Company Junior Common Stock are issued and outstanding. Except for
shares of Company Common Stock issuable pursuant to the Company Stock Plans
or pursuant to agreements or arrangements described in Section 4.03 of the
Company Disclosure Schedule or in the Company Reports and other than the
Rights, there are no options, warrants or other rights, agreements,
arrangements or commitments of any character to which the Company is a
party or by which the Company is bound relating to the issued or unissued
capital stock of the Company or any Company Subsidiary or obligating the
Company or any Company Subsidiary to issue or sell any shares of capital
stock of, or other equity interests in, the Company or any Company
Subsidiary. Section 4.03 of the Company Disclosure Schedule sets forth a
complete and correct list as of the date hereof of (w) the number of
options to purchase Company Common Stock outstanding and the number of
shares of Company Common Stock issuable thereunder, (x) the exercise price
of each such outstanding stock option, (y) the vesting schedule of each
such outstanding stock option and (z) the grantee or holder of each such
option. All shares of Company Common Stock subject to issuance as
aforesaid, upon issuance prior to the Effective Time on the terms and
conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and
nonassessable. Except as described in Section 4.03 of the Company
Disclosure Schedule, there are no outstanding contractual obligations of
the Company or any Company Subsidiary to repurchase, redeem or otherwise
acquire any shares of Company Capital Stock or any capital stock of any
Company Subsidiary. Each outstanding share of capital stock of each
Company Subsidiary is duly authorized, validly issued, fully paid and
nonassessable and each such share owned by the Company or another Company
Subsidiary is free and clear of all security interests, liens, claims,
pledges, options, rights of first refusal, agreements, limitations on the
Company's or such other Company Subsidiary's voting rights, charges and
other encumbrances of any nature whatsoever, except where the failure to
own such shares free and clear would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect.
Except as set forth in Section 4.03 of the Company Disclosure Schedule,
there are no outstanding contractual obligations of the Company or any
Company Subsidiary to provide funds to, or make any material investment (in
the form of a loan, capital contribution or otherwise) in, any Company
Subsidiary or any other person. Prior to the execution and delivery of
this Agreement, the Company has entered into Amendment No. 1 to that
certain Rights Agreement dated as of February 19, 1997 between the Company
and The First National Bank of Boston, a national banking association, as
Rights Agent (the "RIGHTS AGREEMENT"), relating to the Rights to amend the
definition of "Acquiring Person" set forth in Section 1 of the Rights
Agreement.
SECTION 4.04. Authority Relative to this Agreement. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action, and no other corporate proceedings on the
part of the Company are necessary to authorize this Agreement or to
consummate such transactions (other than the approval of this Agreement and
the Merger by the holders of a majority of the outstanding shares of
Company Common Stock entitled to vote with respect thereto at the Company
Stockholders' Meeting and the filing and recordation of the Certificate of
Merger as required by the Delaware General Corporation Law). This
Agreement has been duly executed and delivered by the Company and, assuming
the due authorization, execution and delivery by the other parties hereto,
constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms.
SECTION 4.05. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by the Company do not, and the
performance by the Company of its obligations hereunder and the
consummation of the Merger will not, (i) conflict with or violate any
provision of the certificate of incorporation or bylaws of the Company or
any equivalent organizational documents of any Company Subsidiary,
(ii) assuming that all consents, approvals, authorizations and permits
described in Section 4.05(b) have been obtained and all filings and
notifications described in Section 4.05(b) have been made, conflict with or
violate any Law applicable to the Company or any Company Subsidiary or by
which any property or asset of the Company or any Company Subsidiary is
bound or affected or (iii) except as set forth in Section 4.05(a) of the
Company Disclosure Schedule, result in any breach of or constitute a
default (or an event which with the giving of notice or lapse of time or
both would reasonably be expected to become a default) under, or give to
others any right of termination, amendment, acceleration or cancellation
of, or result in the creation of a lien or other encumbrance on any
property or asset of the Company or any Company Subsidiary pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation, except, with respect
to clauses (ii) and (iii), for any such conflicts, violations, breaches,
defaults or other occurrences which would not reasonably be expected,
individually or in the aggregate, (A) to have a Company Material Adverse
Effect or (B) to prevent or materially delay the performance by the Company
of its obligations pursuant to this Agreement or the consummation of the
Merger.
(b) The execution and delivery of this Agreement by the Company
do not, and the performance by the Company of its obligations hereunder and
the consummation of the Merger will not, require any consent, approval,
authorization or permit of, or filing by the Company with or notification
by the Company to, any Governmental Entity, except (i) pursuant to
applicable requirements of the Exchange Act, the Securities Act, Blue Sky
Laws, the rules and regulations of Nasdaq, state takeover laws, the
premerger notification requirements of the HSR Act, if any, the filing and
recordation of the Certificate of Merger as required by the Delaware
General Corporation Law, and as set forth in Section 4.05(b) of the Company
Disclosure Schedule, and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not reasonably be expected, individually or in the
aggregate, (A) to have a Company Material Adverse Effect or (B) to prevent
or materially delay the performance by the Company of its obligations
pursuant to this Agreement or the consummation of the Merger.
SECTION 4.06. Permits; Compliance with Laws. The Company and the
Company Subsidiaries are in possession of all franchises, grants,
authorizations, licenses, establishment registrations, product listings,
permits, easements, variances, exceptions, consents, certificates,
identification and registration numbers, approvals and orders of any
Governmental Entity necessary for the Company or any Company Subsidiary to
own, lease and operate its properties or to produce, store, distribute and
market its products or otherwise to carry on its business as it is now
being conducted (collectively, the "Company Permits"), except where the
failure to have, or the suspension or cancellation of, any of the Company
Permits would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, and, as of the date of this
Agreement, no suspension or cancellation of any of the Company Permits is
pending or, to the knowledge of the Company, threatened, except where the
failure to have, or the suspension or cancellation of, any of the Company
Permits would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect. Neither the Company nor any
Company Subsidiary is in conflict with, or in default or violation of,
(i) any Law applicable to the Company or any Company Subsidiary or by which
any property or asset of the Company or any Company Subsidiary is bound or
affected or (ii) any Company Permits, except in the case of clauses (i) and
(ii) for any such conflicts, defaults or violations that would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect. Except as set forth in Section 4.06(a) of the
Company Disclosure Schedule, since August 31, 1997, neither the Company nor
any Company Subsidiary has received from any Governmental Entity any
written notification with respect to possible conflicts, defaults or
violations of Laws, except for written notices relating to possible
conflicts, defaults or violations that would not reasonably be expected to
have, individually or in the aggregate, a Company Material Adverse Effect.
(b) Except as disclosed on Section 4.06(b) of the Company
Disclosure Schedule, since August 31, 1997, there have been no written
notices, citations or decisions by any governmental or regulatory body that
any product produced, manufactured or marketed at any time by the Company
or any of the Company Subsidiaries (the "COMPANY PRODUCTS"), other than a
Company Third Party Product (as defined below), is defective or fails to
meet any applicable standards promulgated by any such governmental or
regulatory body, and no senior executive officer of the Company or any of
the Company Subsidiaries knows of any such defect or failure which has not
been remedied or is in the process of being remedied. In the case of
products which are produced or manufactured by third parties and are
distributed by the Company or any of the Company Subsidiaries (the "COMPANY
THIRD PARTY PRODUCTS"), to the knowledge of any of the senior executive
officers of the Company or any of the Company Subsidiaries, since August
31, 1997, there have been no written notices, citations or decisions by any
governmental or regulatory body that any Company Third Party Product
distributed at any time by the Company or any of the Company Subsidiaries
is defective or fails to meet any applicable standards promulgated by any
such governmental or regulatory body, and none of the senior executive
officers of the Company or any of the Company Subsidiaries knows of any
such defect or failure which has not been remedied or is in the process of
being remedied. The Company and each of the Company Subsidiaries (i) has
complied with the laws, regulations, policies, procedures and
specifications applicable to the Company with respect to the design,
manufacture, testing and inspection of Company Products in the United
States and the operation of manufacturing facilities in the United States
promulgated by the United States Federal Communications Commission (the
"FCC"), and (ii) has complied with the laws, regulations, policies,
procedures and specifications applicable to the Company or such Company
Subsidiary, as applicable, in any jurisdiction outside the United States
with respect to the design, manufacture, testing and inspection of Company
Products and the operation of manufacturing facilities outside of the
United States, except in the case of clause (i) or (ii) for such non-
compliance as would not have a Company Material Adverse Effect. Except as
disclosed on Section 4.06(b) of the Company Disclosure Schedule, since
August 31, 1997, there have been no recalls, field notifications or
seizures ordered or, to the knowledge of any of the senior executive
officers of the Company or any of its Subsidiaries, threatened by any such
governmental or regulatory body with respect to any of the Company
Products, other than Company Third Party Products, and neither the Company
nor any of the Company Subsidiaries has independently engaged in recalls or
field notifications. In the case of Company Third Party Products
distributed by the Company or any of the Company Subsidiaries, neither the
Company nor any of the Company Subsidiaries has received any notices or any
recalls, field notifications or seizures ordered or threatened by any such
governmental or regulatory body with respect to any of such Company Third
Party Products, and neither the Company nor any of the Company Subsidiaries
has independently engaged in recalls or field notifications.
(c) Except as set forth on Section 4.06(c)(i) of the Company
Disclosure Schedule, the Company or one or more of the Company Subsidiaries
has obtained, in all countries where the Company or such Company
Subsidiary, as applicable, is marketing or has marketed the Company
Products, all applicable licenses, registrations, approvals, clearances and
authorizations required to be obtained by it by local, state or Federal
agencies in such countries regulating the safety, effectiveness and market
clearance of the Company Products in such countries that are currently
marketed by the Company or such Company Subsidiary, as applicable, except
where the failure to obtain such licenses, registrations, approvals,
clearances and authorizations would not have a Company Material Adverse
Effect. Section 4.06(c)(ii) of the Company Disclosure Schedule sets forth
a list of all licenses, registrations, approvals, permits and device
listings relating to Company Products. Section 4.06(c)(iii) of the Company
Disclosure Schedule sets forth a description of all inspections by
regulatory authorities, recalls, product actions and audits of Company
Products since August 31, 1997.
SECTION 4.07. SEC Filings; Financial Statements. (a) Except as
disclosed in Section 4.07 of the Company Disclosure Schedule, the Company
has timely filed all forms, reports, statements and documents required to
be filed by it (A) with the SEC and Nasdaq since August 31, 1995 through
the date of this Agreement (collectively and as amended, the "COMPANY
REPORTS") and (B) with any other Governmental Entities, including state
regulatory authorities. Each Company Report (i) was prepared in accordance
with the requirements of the Securities Act, the Exchange Act or the rules
and regulations of Nasdaq, as the case may be, and (ii) did not at the time
it was filed contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order
to make the statements made therein, in the light of the circumstances
under which they were made, not misleading. Each form, report, statement
and document referred to in clause (b) of this paragraph was prepared in
all material respects in accordance with the requirements of applicable
Law. Except as disclosed in Section 4.07 of the Company Disclosure
Schedule, no Company Subsidiary is subject to the periodic reporting
requirements of the Exchange Act or required to file any form, report or
other document with the SEC, Nasdaq, any other stock exchange or any other
comparable Governmental Entity.
(b) Each of the consolidated financial statements (including,
in each case, any notes thereto) contained in the Company Reports filed
since August 31, 1997 was prepared in accordance with U.S. GAAP applied on
a consistent basis throughout the periods indicated (except as may be
indicated in the notes thereto) and each presented fairly, in all material
respects, the consolidated financial position of the Company and the
consolidated Company Subsidiaries as at the respective dates thereof and
for the respective periods indicated therein, except as otherwise noted
therein (subject, in the case of unaudited statements, to normal and
recurring year-end adjustments which did not have and would not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect and as permitted by Form 10-Q of the SEC).
(c) Except as and to the extent set forth or reserved against
on the consolidated balance sheet of the Company and the Company
Subsidiaries as reported in the Company Reports, including the notes
thereto, none of the Company or any Company Subsidiary has any liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) that would be required to be reflected on a balance sheet or in
notes thereto prepared in accordance with U.S. GAAP, except for liabilities
or obligations incurred in the ordinary course of business consistent with
past practice since August 31, 1997 that have not had and would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
SECTION 4.08. Absence of Certain Changes or Events. Since August 31,
1997, except as contemplated by or as disclosed in this Agreement, as set
forth in Section 4.08 of the Company Disclosure Schedule or as disclosed in
any Company Report filed since August 31, 1997 and prior to the date
hereof, the Company and the Company Subsidiaries have conducted their
businesses only in the ordinary course consistent with past practice and,
since such date, there has not been (i) any Company Material Adverse
Effect, excluding any changes and effects resulting from changes in
economic, regulatory or political conditions or changes in conditions
generally applicable to the industries in which the Company and the Company
Subsidiaries are involved, (ii) any event that would reasonably be expected
to prevent or materially delay the performance of its obligations pursuant
to this Agreement and the consummation of the Merger by the Company,
(iii) any material change by the Company in its accounting methods,
principles or practices, (iv) any declaration, setting aside or payment of
any dividend or distribution in respect of the shares of Company Capital
Stock or any redemption, purchase or other acquisition of any of the
Company's securities or (v) any increase in the compensation or benefits or
establishment of any bonus, insurance, severance, deferred compensation,
pension, retirement, profit sharing, stock option (including the granting
of stock options, stock appreciation rights, performance awards or
restricted stock awards), stock purchase or other employee benefit plan, or
any other increase in the compensation payable or to become payable to any
executive officers of the Company or any Company Subsidiary except in the
ordinary course of business consistent with past practice.
SECTION 4.09. Employee Benefit Plans; Labor Matters.
(a) Section 4.09(a) of the Company Disclosure Schedule lists all employee
benefit plans (as defined in Section 3(3) of ERISA) and all bonus, stock
option, stock purchase, restricted stock, incentive, deferred compensation,
retiree medical or life insurance, supplemental retirement, severance or
other benefit plans, programs or arrangements, and all employment,
termination, severance or other contracts or agreements, whether legally
enforceable or not, to which the Company or any Company Subsidiary is a
party, with respect to which the Company or any Company Subsidiary has any
obligation or which are maintained, contributed to or sponsored by the
Company or any Company Subsidiary for the benefit of any current or former
employee, officer or director of the Company or any Company Subsidiary
(collectively, the "COMPANY BENEFIT PLANS"). With respect to each Company
Benefit Plan, the Company has delivered or made available to Parent a true,
complete and correct copy of (i) such Company Benefit Plan and the most
recent summary plan description related to such Company Benefit Plan, if a
summary plan description is required therefor, (ii) each trust agreement or
other funding arrangement relating to such Company Benefit Plan, (iii) the
most recent annual report (Form 5500) filed with the IRS) with respect to
such Company Benefit Plan, (iv) the most recent actuarial report or
financial statement relating to such Company Benefit Plan and (v) the most
recent determination letter issued by the IRS with respect to such Company
Benefit Plan, if it is qualified under Section 401(a) of the Code. Neither
the Company nor any Company Subsidiary has any express or implied
commitment, whether legally enforceable or not, (i) to create, incur
liability with respect to or cause to exist any other employee benefit
plan, program or arrangement, (ii) to enter into any contract or agreement
to provide compensation or benefits to any individual or (iii) to modify,
change or terminate any Company Benefit Plan, other than with respect to a
modification, change or termination required by ERISA or the Code.
(b) None of the Company Benefit Plans is a multiemployer plan
(within the meaning of Section 3(37) or 4001(a)(3) of ERISA) (a
"MULTIEMPLOYER PLAN") or a single employer pension plan (within the meaning
of Section 4001(a)(15) of ERISA) for which the Company or any Company
Subsidiary could incur liability under Section 4063 or 4064 of ERISA (a
"MULTIPLE EMPLOYER PLAN"). None of the Company Benefit Plans provides for
or promises retiree medical, disability or life insurance benefits to any
current or former employee, officer or director of the Company or any
Company Subsidiary.
(c) Each Company Benefit Plan has been administered in all
material respects in accordance with its terms and all contributions
required to be made under the terms of any of the Company Benefit Plans as
of the date of this Agreement have been timely made or have been reflected
on the most recent consolidated balance sheet filed or incorporated by
reference in the Company Reports prior to the date of this Agreement.
Except as set forth in Section 4.09(c) of the Company Disclosure Schedule,
with respect to the Company Benefit Plans, no event has occurred and, to
the knowledge of the Company, there exists no condition or set of
circumstances in connection with which the Company or any Company
Subsidiary could be subject to any liability under the terms of such
Company Benefit Plans, ERISA, the Code or any other applicable Law which
would reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect. No legal action, suit or claim is pending
or, to the knowledge of the Company, threatened with respect to any Company
Benefit Plan (other than claims for benefits in the ordinary course).
(d) Except as disclosed in Section 4.09(d) of the Company
Disclosure Schedule or except as would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect:
(i) each Company Benefit Plan which is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the Code has received a
favorable determination letter from the IRS that it is so qualified and
each trust established in connection with any Company Benefit Plan which is
intended to be exempt from federal income taxation under Section 501(a) of
the Code has received a determination letter from the IRS that it is so
exempt, and no fact or event has occurred since the date of such
determination letter from the IRS to adversely affect the qualified status
of any such Company Benefit Plan or the exempt status of any such trust;
(ii) each trust maintained or contributed to by the Company or any Company
Subsidiary which is intended to be qualified as a voluntary employees'
beneficiary association and which is intended to be exempt from federal
income taxation under Section 501(c)(9) of the Code has received a
favorable determination letter from the IRS that it is so qualified and so
exempt, and no fact or event has occurred since the date of such
determination by the IRS to adversely affect such qualified or exempt
status; (iii) there has been no prohibited transaction (within the meaning
of Section 406 of ERISA or Section 4975 of the Code) with respect to any
Company Benefit Plan; (iv) neither the Company nor any Company Subsidiary
has incurred any liability for any penalty or tax arising under
Section 4971, 4972, 4980, 4980B or 6652 of the Code or any liability under
Section 502 of ERISA, and no fact or event exists which could give rise to
any such liability; (v) no complete or partial termination has occurred
within the five years preceding the date hereof with respect to any Company
Benefit Plan; (vi) no Company Benefit Plan is subject to Title IV of ERISA;
(vii) none of the assets of the Company or any Company Subsidiary is the
subject of any lien arising under Section 302(f) of ERISA or Section 412(n)
of the Code; neither the Company nor any Company Subsidiary has been
required to post any security under Section 307 of ERISA or
Section 401(a)(29) of the Code; and no fact or event exists which could
give rise to any such lien or requirement to post any such security;
(viii) all contributions, premiums or payments required to be made with
respect to any Company Benefit Plan have been made on or before their due
dates; and (ix) all such contributions have been fully deducted for income
tax purposes and no such deduction has been challenged or disallowed by any
government entity and no fact or event exists which could give rise to any
such challenge or disallowance.
(e) Except as set forth in Section 4.09(e) of the Company
Disclosure Schedule, neither the Company nor any Company Subsidiary is a
party to any collective bargaining or other labor union contract applicable
to persons employed by the Company or any Company Subsidiary and no
collective bargaining agreement is being negotiated by the Company or any
Company Subsidiary. As of the date of this Agreement, there is no labor
dispute, strike or work stoppage against the Company or any Company
Subsidiary pending or, to the knowledge of the Company, threatened which
may interfere with the respective business activities of the Company or any
Company Subsidiary, except where such dispute, strike or work stoppage
would not reasonably be expected to have a Company Material Adverse Effect.
As of the date of this Agreement, to the knowledge of the Company, there is
no charge or complaint against the Company or any Company Subsidiary
pending before the National Labor Relations Board or any comparable
Governmental Entity pending or threatened in writing, except where such
unfair labor practice, charge or complaint would not reasonably be expected
to have a Company Material Adverse Effect.
(f) The Company has delivered or made available to Parent true,
complete and correct copies of (i) all employment agreements with officers
and all consulting agreements of the Company and each Company Subsidiary
providing for annual compensation in excess of $100,000, (ii) all severance
plans, agreements, programs and policies of the Company and each Company
Subsidiary with or relating to their respective employees or consultants,
and (iii) all plans, programs, agreements and other arrangements of the
Company and each Company Subsidiary with or relating to their respective
employees or consultants which contain "change of control" provisions.
SECTION 4.10. Certain Tax Matters. Except as disclosed in the
Company Reports, neither the Company nor, to the knowledge of the Company,
any of its affiliates has taken or agreed to take any action that would
reasonably be expected to prevent the Merger from constituting a
transaction qualifying under Section 368 of the Code. The Company is not
aware of any agreement, plan or other circumstances that would reasonably
be expected to prevent the Merger from so qualifying under Section 368 of
the Code.
SECTION 4.11. Contracts; Debt Instruments. Except as disclosed in
the Company Reports or in Section 4.11 of the Company Disclosure Schedule,
there is no contract or agreement that is material to the business,
financial condition or results of operations of the Company and the Company
Subsidiaries taken as a whole (each, a "COMPANY MATERIAL CONTRACT").
Except as disclosed in the Company Reports or in Section 4.11 of the
Company Disclosure Schedule, neither the Company nor any Company Subsidiary
is in violation of or in default under (nor does there exist any condition
which with the passage of time or the giving of notice would reasonably be
expected to cause such a violation of or default under) any loan or credit
agreement, note, bond, mortgage, indenture or lease, or any other contract,
license, agreement, arrangement or understanding to which it is a party or
by which it or any of its properties or assets is bound, except for
violations or defaults that would not reasonably be expected to have,
individually or in the aggregate, a Company Material Adverse Effect. Set
forth in Section 4.11 of the Company Disclosure Schedule is a description
of any material changes to the amount and terms of the indebtedness of the
Company and its subsidiaries as described in the notes to the financial
statements incorporated in the Company 1997 10-K.
SECTION 4.12. Litigation. Except as disclosed in the Company Reports
or in Section 4.12 of the Company Disclosure Schedule, there is no suit,
claim or action or, to the knowledge of the Company, proceeding or
investigation pending or threatened against the Company or any Company
Subsidiary before any Governmental Entity that would reasonably be expected
to have, individually or in the aggregate, a Company Material Adverse
Effect, and, except as disclosed to Parent, to the knowledge of the
Company, there are no existing facts or circumstances that would reasonably
be expected to result in such a suit, claim, action, proceeding or
investigation. Except as disclosed to Parent, the Company is not aware of
any facts or circumstances which would reasonably be expected to result in
the denial of insurance coverage under policies issued to the Company and
the Company Subsidiaries in respect of such suits, claims, actions,
proceedings and investigations for which the Company has a reasonable
expectation of obtaining insurance coverage, except in any case as would
not reasonably be expected to have, individually or in the aggregate, a
Company Material Adverse Effect or as a result of the execution of this
Agreement and consummation of transactions hereunder. Except as disclosed
in the Company Reports or in Section 4.12 of the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary is subject to any
outstanding order, writ, injunction or decree which would reasonably be
expected to have, individually or in the aggregate, a Company Material
Adverse Effect.
SECTION 4.13. Environmental Matters. Except as disclosed in the
Company Reports or in Section 4.13 of the Company Disclosure Schedule, or
as would not reasonably be expected to have, individually or in the
aggregate, a Company Material Adverse Effect, (i) the Company and the
Company Subsidiaries are in compliance with all applicable Environmental
Laws; (ii) all past noncompliance of the Company or any Company Subsidiary
with Environmental Laws or Environmental Permits has been resolved without
any pending, ongoing or future obligation, cost or liability; and
(iii) neither the Company nor any Company Subsidiary has released a
Hazardous Material at, or transported a Hazardous Material to or from, any
real property currently or formerly owned, leased or occupied by the
Company or any Company Subsidiary, in violation of any Environmental Law.
SECTION 4.14. Intellectual Property. Except as set forth in
Section 4.14 of the Company Disclosure Schedule, or as would not reasonably
be expected to have, individually or in the aggregate, a Company Material
Adverse Effect, (i) the Company and the Company Subsidiaries own or possess
adequate licenses or other valid rights to use all patents, patent
applications, patent rights, trademarks, trademark rights, trade names,
trade dress, trade name rights, copyrights and copyright registrations and
applications, copyright rights, service marks, trade secrets, applications
for trademarks and for service marks, know-how and other proprietary rights
and information used or held for use in connection with the respective
businesses of the Company and the Company Subsidiaries as currently
conducted, free and clear of all liens, and (ii) the Company is unaware of
any assertion or claim challenging the ownership, use or validity of any of
the foregoing. Section 4.14 of the Company Disclosure Schedule lists all
material licenses, sublicenses and other agreements to which the Company or
any Company Subsidiary is a party and pursuant to which (i) any third party
is authorized to use any intellectual property right of the Company or any
Company Subsidiary or (ii) the Company or any Company Subsidiary is
authorized to use any intellectual property rights (other than pursuant to
shrink-wrap and software licenses) of a third party (collectively, the
"Company Licenses"), and includes the identity of all parties thereto, a
description of the nature and subject matter thereof, the royalty
provisions, if any, therein and the term thereof. The material Company
Licenses are valid and binding obligations of the Company, enforceable in
accordance with their terms, and there are no material breaches or defaults
thereunder. Except as set forth in Section 4.14 of the Company Disclosure
Schedule, the conduct of the respective businesses of the Company and the
Company Subsidiaries as currently conducted does not infringe upon any
patent, patent right, license, trademark, trademark right, trade dress,
trade name, trade name right, service ▇▇▇▇, copyright or copyright right of
any third party that would reasonably be expected to have, individually or
in the aggregate, a Company Material Adverse Effect. To the knowledge of
the Company, there are no infringements of any proprietary rights owned by
or licensed by or to the Company or any Company Subsidiary that could
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect.
SECTION 4.15. Taxes. Except as set forth in Section 4.15 of the
Company Disclosure Schedule and except for such matters that would not
reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect, (i) the Company and each of the Company
Subsidiaries has timely filed or shall timely file all returns and reports
required to be filed by it with any taxing authority, taking into account
any extension of time to file granted to or obtained on behalf of the
Company and the Company Subsidiaries, (ii) all Taxes shown to be payable on
such returns or reports have been or will be paid, (iii) as of the date
hereof, no deficiencies for any amount of Tax have been asserted or
assessed by any taxing authority against the Company or any Company
Subsidiary that are not adequately reserved for and (iv) the most recent
financial statements contained in the Company Reports reflect an adequate
reserve in accordance with U.S. GAAP for all taxes payable by the Company
and the Company Subsidiaries for all taxable periods and portions thereof
accrued through the date of such financial statements. Within ten days
after the date hereof, the Company and the Company Subsidiaries will make
available to Parent or its legal counsel for inspection copies of all
income and sales and use tax returns for all periods since the date of the
Company's and the Company Subsidiaries' incorporation.
SECTION 4.16. Rule 145 Affiliates. Section 4.16 of the Company
Disclosure Schedule sets forth the name and address of each person who is,
in the Company's reasonable judgment, a Rule 145 Affiliate of the Company.
SECTION 4.17. Brokers. Except for Broadview, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the Merger based upon arrangements made by or
on behalf of the Company.
SECTION 4.18. Certain Business Practices. None of the Company, any
Company Subsidiary or any directors, officers, agents or employees of the
Company or any Company Subsidiary (in their capacities as such) has (i)
used any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns or violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended, (iii)
consummated any transaction, made any payment, entered into any agreement
or arrangement or taken any other action in violation of Section 1128B(b)
of the Social Security Act, as amended, or (iv) made any other unlawful
payment.
SECTION 4.19. Transaction Expenses. Section 4.19 of the Company
Disclosure Schedule sets forth the Company's current, good faith, itemized
estimate, as of the date of this Agreement, of the fees and expenses the
Company will incur in connection with consummating the Merger and the other
transactions contemplated hereby.
SECTION 4.20. Interested Party Transactions. Except as set forth in
Section 4.20 of the Company Disclosure Schedule or in the Company Reports
and except for transactions of the type described in the Company Reports
which have occurred since August 1, 1997 in the ordinary course of
business, since August 31, 1997, no executive officer, director or
stockholder of the Company or any of the Company Subsidiaries has engaged
in any business dealings with the Company or any of the Company
Subsidiaries (other than any such business dealings that would not required
to be disclosed in a proxy statement satisfying the requirements of
Regulation 14A promulgated under the Exchange Act filed on the date
hereof).
SECTION 4.21. Charter Anti-takeover Provisions and State Takeover
Statutes. The board of directors of the Company has approved by a majority
of the Disinterested Directors (as defined in the Company's Certificate of
Incorporation) the Merger, this Agreement, the Stockholders Proxy Agreement
and the transactions contemplated hereby and thereby, and such approval is
sufficient to render inapplicable to the Merger, this Agreement, the
Stockholders Proxy Agreement, and the transactions contemplated hereby and
thereby the provisions of the Company's Certificate of Incorporation
requiring the supermajority approval of the Company's stockholders and the
provisions of Section 203 of the Delaware General Corporation Law. To the
knowledge of the Company, no other state takeover statute or similar
statute or regulation applies or purports to apply to the Merger, this
Agreement, the Stockholders Proxy Agreement or the transactions
contemplated hereby or thereby.
SECTION 4.22. Opinion of Financial Advisor. The Company has received
the Company Fairness Opinion.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF WAG, PARENT AND MERGER SUB
WAG, Parent and Merger Sub hereby jointly and severally represent and
warrant to the Company that:
SECTION 5.01. Organization and Qualification; Subsidiaries. WAG,
Parent, Merger Sub and each other subsidiary of Parent or WAG (the "PARENT
SUBSIDIARIES") has been duly organized and is validly existing and in good
standing (to the extent applicable) under the laws of the jurisdiction of
its incorporation or organization, as the case may be, and has the
requisite corporate power and authority and all necessary governmental
approvals to own, lease and operate its properties and to carry on its
business as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power, authority
and governmental approvals would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect. WAG,
Parent, Merger Sub and each other Parent Subsidiary is duly qualified or
licensed to do business, and is in good standing (to the extent
applicable), in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its business makes such
qualification or licensing necessary, except for such failures to be so
qualified or licensed and in good standing that would not reasonably be
expected to have, individually or in the aggregate, a Parent Material
Adverse Effect.
(b) Section 5.01 of the Parent Disclosure Schedule sets forth,
as of the date of this Agreement, a true and complete list of each Parent
Subsidiary, together with (i) the jurisdiction of incorporation or
organization of each Parent Subsidiary and the percentage of each Parent
Subsidiary's outstanding capital stock or other equity interests owned by
Parent or another Parent Subsidiary and (ii) an indication of whether each
Parent Subsidiary is a "Significant Subsidiary" as defined in Regulation S-
X under the Exchange Act. Except as set forth in Section 5.01 of the
Parent Disclosure Schedule, neither Parent nor any Parent Subsidiary owns
an equity interest in any partnership or joint venture arrangement or other
business entity that is material to the financial condition, results of
operations, business or prospects of Parent and the Parent Subsidiaries,
taken as a whole.
SECTION 5.02. Certificate of Incorporation and Bylaws. The copies of
WAG's certificate of incorporation and bylaws that are incorporated by
reference as exhibits to WAG's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 (the "PARENT 1997 10-K") are true, complete
and correct copies thereof. Parent has heretofore furnished the Company
with true, complete and correct copies of the certificate of incorporation
and bylaws of each of Parent and Merger Sub. Such certificates and bylaws
are in full force and effect. Neither Parent nor Merger Sub is in
violation of any of the provisions of its certificate or bylaws.
SECTION 5.03. Capitalization. The authorized capital stock of Parent
consists of 40,000,000 shares of Parent Common Stock and 10,000,000 shares
of preferred stock. As of the date hereof (i) 1,000 shares of Parent
Common Stock are issued and outstanding, all of which are validly issued,
fully paid and nonassessable and owned by WAG, and (ii) no shares of Parent
Common Stock are held by the Parent Subsidiaries. As of the date hereof,
there are no shares of preferred stock of Parent issued and outstanding.
The authorized capital stock of WAG consists of 40,000,000 shares of WAG
Common Stock and 10,000,000 shares of preferred stock. As of the date
hereof, (i) 21,878,713 shares of WAG Common Stock are issued and
outstanding, all of which are validly issued, fully paid and nonassessable,
(ii) no shares of WAG Common Stock are held in the treasury of WAG, (iii)
no shares of WAG Common Stock are held by the Parent Subsidiaries, (iv)
4,621,774 shares of WAG Common Stock are reserved for future issuance
pursuant to stock options under the Parent Stock Plans, (v) 617,340 shares
of WAG Common Stock are reserved for issuance pursuant to outstanding
warrants to purchase shares of WAG Common Stock, and (vi) 3,105,485 shares
of WAG Common Stock are reserved for issuance upon conversion of WAG's 4.5%
Convertible Subordinated Notes due 2002. As of the date hereof, there are
no shares of preferred stock of WAG issued and outstanding. Upon
consummation of the Holding Company Reorganization, the Parent will succeed
to the capitalization of WAG. Except for the shares of WAG Common Stock
issuable pursuant to the Parent Stock Plans, the Holding Company
Reorganization or the Resurgens Transaction or pursuant to agreements or
arrangements described in Section 5.03 of the Parent Disclosure Schedule,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character to which either WAG or Parent is a party or by
which either WAG or Parent is bound relating to the issued or unissued
capital stock of WAG, Parent, Merger Sub or any other Parent Subsidiary or
obligating Parent, Merger Sub or any other Parent Subsidiary to issue or
sell any shares of capital stock of, or other equity interests in, WAG,
Parent, Merger Sub or any other Parent Subsidiary. All shares of WAG
Common Stock subject to issuance (and all shares of Parent Common Stock
upon consummation of the Holding Company Reorganization) as aforesaid, upon
issuance prior to the Effective Time on the terms and conditions specified
in the instruments pursuant to which they are issuable, will be duly
authorized, validly issued, fully paid and nonassessable. Except as
described in Section 5.03 of the Parent Disclosure Schedule, there are no
outstanding contractual obligations of WAG, Parent, Merger Sub or any other
Parent Subsidiary to repurchase, redeem or otherwise acquire any shares of
WAG Common Stock, Parent Common Stock or any capital stock of any Parent
Subsidiary. Each outstanding share of capital stock of each Parent
Subsidiary is duly authorized, validly issued, fully paid and nonassessable
and each such share owned by WAG, Parent or another Parent Subsidiary is
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on WAG's, Parent's or such
other Parent Subsidiary's voting rights, charges and other encumbrances of
any nature whatsoever, except where the failure to own such shares free and
clear would not reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect. Except as set forth in
Section 5.03 of the Parent Disclosure Schedule, there are no outstanding
contractual obligations of WAG, Parent, Merger Sub or any other Parent
Subsidiary to provide funds to, or make any material investment (in the
form of a loan, capital contribution or otherwise) in, any Parent
Subsidiary or any other person.
SECTION 5.04. Authority Relative to this Agreement. WAG, Parent and
Merger Sub have all necessary corporate power and authority to execute and
deliver this Agreement, to perform their respective obligations hereunder
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement by WAG, Parent and Merger Sub and the
consummation by WAG, Parent and Merger Sub of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of WAG, Parent or
Merger Sub are necessary to authorize this Agreement or to consummate such
transactions (other than the approval of the issuance of the WAG Common
Stock or the Parent Common Stock, as the case may be, pursuant to the
Merger and the increase in the authorized WAG Common Stock or Parent Common
Stock (after the Holding Company Reorganization) to 100,000,000 shares by
the holders of a majority of the outstanding shares of WAG Common Stock, in
the event that the Holding Company Reorganization shall not have been
consummated by the time of the Parent Stockholders' Meeting, or Parent
Common Stock, in the event that the Holding Company Reorganization shall
have been so consummated, and the filing and recordation of the Certificate
of Merger as required by the Delaware General Corporation Law). This
Agreement has been duly executed and delivered by WAG, Parent and Merger
Sub and, assuming the due authorization, execution and delivery by the
Company, constitutes the legal, valid and binding obligation of WAG, Parent
and Merger Sub, enforceable against WAG, Parent and Merger Sub in
accordance with its terms.
SECTION 5.05. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by WAG, Parent and Merger Sub do
not, and the performance by WAG, Parent and Merger Sub of their obligations
hereunder and the consummation of the Merger will not, (i) conflict with or
violate any provision of the certificate or articles of incorporation, as
the case may be, or bylaws of WAG, Parent or Merger Sub or any equivalent
organizational documents of any other Parent Subsidiary, (ii) assuming that
all consents, approvals, authorizations and permits described in
Section 5.05(b) have been obtained and all filings and notifications
described in Section 5.05(b) have been made, conflict with or violate any
Law applicable to Parent or any other Parent Subsidiary or by which any
property or asset of WAG, Parent, Merger Sub or any other Parent Subsidiary
is bound or affected or (iii) except as set forth in Section 5.05(a) of the
Parent Disclosure Schedule, result in any breach of or constitute a default
(or an event which with the giving of notice or lapse of time or both would
reasonably be expected to become a default) under, or give to others any
right of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or other encumbrance on any property or asset of
WAG, Parent, Merger Sub or any other Parent Subsidiary pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation, except, with respect
to clauses (ii) and (iii), for any such conflicts, violations, breaches,
defaults or other occurrences which would not reasonably be expected,
individually or in the aggregate, (A) to have a Parent Material Adverse
Effect or (B) to prevent or materially delay the performance by WAG, Parent
or Merger Sub of its obligations pursuant to this Agreement or the
consummation of the Merger.
(b) The execution and delivery of this Agreement by WAG, Parent
and Merger Sub do not, and the performance by WAG, Parent and Merger Sub of
their respective obligations hereunder and the consummation of the Merger
will not, require any consent, approval, authorization or permit of, or
filing by WAG, Parent or Merger Sub with or notification by WAG, Parent or
Merger Sub to, any Governmental Entity, except (i) pursuant to applicable
requirements of the Exchange Act, the Securities Act, Blue Sky Laws, the
rules and regulations of Nasdaq, state takeover laws, the premerger
notification requirements of the HSR Act, if any, and the filing and
recordation of the Certificate of Merger as required by the Delaware
General Corporation Law and (ii) where failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or
notifications, would not reasonably be expected, individually or in the
aggregate, (A) to have a Parent Material Adverse Effect or (B) to prevent
or materially delay the performance by WAG, Parent or Merger Sub of its
obligations pursuant to this Agreement or the consummation of the Merger.
SECTION 5.06. Permits; Compliance with Laws. WAG, Parent, Merger Sub
and each other Parent Subsidiary is in possession of all franchises,
grants, authorizations, licenses, establishment registrations, product
listings, permits, easements, variances, exceptions, consents,
certificates, identification and registration numbers, approvals and orders
of any Governmental Entity necessary for WAG, Parent, Merger Sub or any
other Parent Subsidiary to own, lease and operate its properties or to
store, distribute and market its products or otherwise to carry on its
business as it is now being conducted (collectively, the "PARENT PERMITS"),
except where the failure to have, or the suspension or cancellation of, any
of the Parent Permits would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect, and, as
of the date of this Agreement, no suspension or cancellation of any of the
Parent Permits is pending or, to the knowledge of Parent or WAG,
threatened, except where the failure to have, or the suspension or
cancellation of, any of the Parent Permits would not reasonably be expected
to have, individually or in the aggregate, a Parent Material Adverse
Effect. None of WAG, Parent, Merger Sub or any other Parent Subsidiary is
in conflict with, or in default or violation of, (i) any Law applicable to
WAG, Parent, Merger Sub or any other Parent Subsidiary or by which any
property or asset of WAG, Parent, Merger Sub or any other Parent Subsidiary
is bound or affected or (ii) any Parent Permits, except in the case of
clauses (i) and (ii) for any such conflicts, defaults or violations that
would not reasonably be expected to have, individually or in the aggregate,
a Parent Material Adverse Effect. Except as set forth in Section 5.06(a)
of the Parent Disclosure Schedule, since December 31, 1997, neither WAG or
Parent nor any Parent Subsidiary has received from any Governmental Entity
any written notification with respect to possible conflicts, defaults or
violations of Laws, except for written notices relating to possible
conflicts, defaults or violations that would not reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect.
SECTION 5.07. SEC Filings; Financial Statements. (a) WAG has timely
filed all forms, reports, statements and documents required to be filed by
it (A) with the SEC and Nasdaq since December 31, 1995 through the date of
this Agreement (collectively and as amended, the "PARENT REPORTS") and (B)
with any other Governmental Entities, including state regulatory
authorities. Except as disclosed in Section 5.07(a) of the Parent
Disclosure Schedule, each Parent Report (i) was prepared in accordance with
the requirements of the Securities Act, the Exchange Act or the rules and
regulations of Nasdaq, as the case may be, and (ii) did not at the time it
was filed contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to make
the statements made therein, in the light of the circumstances under which
they were made, not misleading. Each form, report, statement and document
referred to in clause (b) of this paragraph was prepared in all material
respects in accordance with the requirements of applicable Law. Except as
disclosed in Section 5.07(a) of the Parent Disclosure Schedule, no Parent
Subsidiary is subject to the periodic reporting requirements of the
Exchange Act or required to file any form, report or other document with
the SEC, Nasdaq, any other stock exchange or any other comparable
Governmental Entity.
(b) Except as is provided in Section 5.07(b) of the Parent
Disclosure Schedule, each of the consolidated financial statements
(including, in each case, any notes thereto) contained in the Parent
Reports filed since December 31, 1997 was prepared in accordance with U.S.
GAAP applied on a consistent basis throughout the periods indicated (except
as may be indicated in the notes thereto) and each presented fairly, in all
material respects, the consolidated financial position of Parent and the
consolidated Parent Subsidiaries as at the respective dates thereof and for
the respective periods indicated therein, except as otherwise noted therein
(subject, in the case of unaudited statements, to normal and recurring
year-end adjustments which did not have and would not be reasonably
expected to have, individually or in the aggregate, to have a Parent
Material Adverse Effect and as permitted by Form 10-Q of the SEC).
(c) Except as and to the extent set forth or reserved against on
the consolidated balance sheet of WAG and the Parent Subsidiaries as
reported in the Parent Reports, including the notes thereto, or as
disclosed in Section 5.07(c) of the Parent Disclosure Schedule, none of
WAG, Parent or any Parent Subsidiary has any liabilities or obligations of
any nature (whether accrued, absolute, contingent or otherwise) that would
be required to be reflected on a balance sheet or in notes thereto prepared
in accordance with U.S. GAAP, except for liabilities or obligations
incurred in the ordinary course of business consistent with past practice
since December 31, 1997 that have not had and would not reasonably be
expected to have, individually or in the aggregate, a Parent Material
Adverse Effect.
SECTION 5.08. Absence of Certain Changes or Events. Since December
31, 1997, except as contemplated by or as disclosed in this Agreement, as
set forth in Section 5.08 of the Parent Disclosure Schedule or as disclosed
in any Parent Report filed since December 31, 1997 and the date hereof,
WAG, Parent and the Parent Subsidiaries have conducted their businesses
only in the ordinary course consistent with past practice and, since such
date, there has not been (i) any Parent Material Adverse Effect, excluding
any changes and effects resulting from changes in economic, regulatory or
political conditions or changes in conditions generally applicable to the
industries in which WAG, Parent and the Parent Subsidiaries are involved,
(ii) any event that would reasonably be expected to prevent or materially
delay the performance of its obligations pursuant to this Agreement and the
consummation of the Merger by Merger Sub, (iii) any material change by WAG
in its accounting methods, principles or practices, (iv) any declaration,
setting aside or payment of any dividend or distribution in respect of the
shares of WAG Common Stock or Parent Common Stock or any redemption,
purchase or other acquisition of any of WAG's or Parent's securities, or
(v) any increase in the compensation or benefits or establishment of any
bonus, insurance, severance, deferred compensation, pension, retirement,
profit sharing, stock option (including the granting of stock options,
stock appreciation rights, performance awards or restricted stock awards),
stock purchase or other employee benefit plan, or any other increase in the
compensation payable or to become payable to any executive officers of
Parent, WAG or any Parent Subsidiary except in the ordinary course of
business consistent with past practice.
SECTION 5.09. Employee Benefit Plans; Labor Matters. (a) With
respect to all employee benefit plans (as defined in Section 3(3) of ERISA)
and all bonus, stock option, stock purchase, restricted stock, incentive,
deferred compensation, retiree medical or life insurance, supplemental
retirement, severance or other benefit plans, programs or arrangements, and
all employment, termination, severance or other contracts or agreements,
whether legally enforceable or not, to which WAG, Parent or any Parent
Subsidiary is a party, with respect to which WAG, Parent or any Parent
Subsidiary has any obligation or which are maintained, contributed to or
sponsored by WAG, Parent or any Parent Subsidiary for the benefit of any
current or former employee, officer or director of WAG, Parent or any
Parent Subsidiary (collectively, the "PARENT BENEFIT PLANS"), Parent has
delivered or made available to the Company a true, complete and correct
copy of (i) such Parent Benefit Plan and the most recent summary plan
description related to such Parent Benefit Plan, if a summary plan
description is required therefor, (ii) each trust agreement or other
funding arrangement relating to such Parent Benefit Plan, (iii) the most
recent annual report (Form 5500) filed with the IRS with respect to such
Parent Benefit Plan, (iv) the most recent actuarial report or financial
statement relating to such Parent Benefit Plan and (v) the most recent
determination letter issued by the IRS with respect to such Parent Benefit
Plan, if it is qualified under Section 401(a) of the Code. Neither WAG,
Parent nor any Parent Subsidiary has any express or implied commitment,
whether legally enforceable or not, (i) to create, incur liability with
respect to or cause to exist any other employee benefit plan, program or
arrangement, (ii) to enter into any contract or agreement to provide
compensation or benefits to any individual or (iii) to modify, change or
terminate any Parent Benefit Plan, other than with respect to a
modification, change or termination required by ERISA or the Code.
(b) None of the Parent Benefit Plans is a Multiemployer Plan or
a Multiple Employer Plan. None of the Parent Benefit Plans provides for
or promises retiree medical, disability or life insurance benefits to any
current or former employee, officer or director of WAG, Parent or any
Parent Subsidiary.
(c) Each Parent Benefit Plan has been administered in all
material respects in accordance with its terms and all contributions
required to be made under the terms of any of the Parent Benefit Plans as
of the date of this Agreement have been timely made or have been reflected
on the most recent consolidated balance sheet filed or incorporated by
reference in the Parent Reports prior to the date of this Agreement. With
respect to the Parent Benefit Plans, no event has occurred and, to the
knowledge of WAG or Parent, there exists no condition or set of
circumstances in connection with which WAG, Parent or any Parent Subsidiary
could be subject to any liability under the terms of such Parent Benefit
Plans, ERISA, the Code or any other applicable Law which would reasonably
be expected to have, individually or in the aggregate, a Parent Material
Adverse Effect. No legal action, suit or claim is pending or, to WAG's and
Parent's knowledge, threatened with respect to any Parent Benefit Plan
(other than claims for benefits in the ordinary course).
(d) Other than as disclosed in Section 5.09(d) of the Parent
Disclosure Schedule or except as would not reasonably be expected to have,
individually or in the aggregate, a Parent Material Adverse Effect:
(i) each Parent Benefit Plan which is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the Code has received a
favorable determination letter from the IRS that it is so qualified and
each trust established in connection with any Parent Benefit Plan which is
intended to be exempt from federal income taxation under Section 501(a) of
the Code has received a determination letter from the IRS that it is so
exempt, and no fact or event has occurred since the date of such
determination letter from the IRS to adversely affect the qualified status
of any such Parent Benefit Plan or the exempt status of any such trust;
(ii) each trust maintained or contributed to by WAG, Parent or any Parent
Subsidiary which is intended to be qualified as a voluntary employees'
beneficiary association and which is intended to be exempt from federal
income taxation under Section 501(c)(9) of the Code has received a
favorable determination letter from the IRS that it is so qualified and so
exempt, and no fact or event has occurred since the date of such
determination by the IRS to adversely affect such qualified or exempt
status; (iii) there has been no prohibited transaction (within the meaning
of Section 406 of ERISA or Section 4975 of the Code) with respect to any
Parent Benefit Plan; (iv) neither WAG, Parent nor any Parent Subsidiary has
incurred any liability for any penalty or tax arising under Section 4971,
4972, 4980, 4980B or 6652 of the Code or any liability under Section 502 of
ERISA, and no fact or event exists which could give rise to any such
liability; (v) no complete or partial termination has occurred within the
five years preceding the date hereof with respect to any Parent Benefit
Plan; (vi) no reportable event (within the meaning of Section 4043 of
ERISA) has occurred or is expected to occur with respect to any Parent
Benefit Plan subject to Title IV of ERISA; (vii) no Parent Benefit Plan had
an accumulated funding deficiency (within the meaning of Section 302 of
ERISA or Section 412 of the Code), whether or not waived, as of the most
recently ended plan year of such Parent Benefit Plan; (viii) none of the
assets of WAG, Parent or any Parent Subsidiary is the subject of any lien
arising under Section 302(f) of ERISA or Section 412(n) of the Code;
neither WAG, Parent nor any Parent Subsidiary has been required to post any
security under Section 307 of ERISA or Section 401(a)(29) of the Code; and
no fact or event exists which could give rise to any such lien or
requirement to post any such security; (ix) all contributions, premiums or
payments required to be made with respect to any Parent Benefit Plan have
been made on or before their due dates; (x) all such contributions have
been fully deducted for income tax purposes and no such deduction has been
challenged or disallowed by any government entity and no fact or event
exists which could give rise to any such challenge or disallowance; and
(xi) as of the Effective Time, no Parent Benefit Plan which is subject to
Title IV of ERISA will have an "unfunded benefit liability" (within the
meaning of Section 4001(a)(18) of ERISA).
(e) Except as set forth in Section 5.09(e) of the Parent
Disclosure Schedule, neither WAG or Parent nor any Parent Subsidiary is a
party to any collective bargaining or other labor union contract applicable
to persons employed by WAG, Parent or any Parent Subsidiary and no
collective bargaining agreement is being negotiated by WAG, Parent or any
Parent Subsidiary. As of the date of this Agreement, there is no labor
dispute, strike or work stoppage against WAG, Parent or any Parent
Subsidiary pending or, to the knowledge of WAG or Parent, threatened which
may interfere with the respective business activities of WAG, Parent or any
Parent Subsidiary, except where such dispute, strike or work stoppage would
not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect. As of the date of this Agreement, to the
knowledge of WAG or Parent, there is no charge or complaint against WAG,
Parent or any Parent Subsidiary pending before the National Labor Relations
Board or any comparable Governmental Entity pending or threatened in
writing, except where such unfair labor practice, charge or complaint would
not reasonably be expected to have, individually or in the aggregate, a
Parent Material Adverse Effect.
SECTION 5.10. Certain Tax Matters. Except as disclosed in the Parent
Reports, neither WAG or Parent nor, to the knowledge of WAG or Parent, any
of its affiliates has taken or agreed to take any action that would
reasonably be expected to prevent the Merger from constituting a
transaction qualifying under Section 368 of the Code. Neither WAG nor
Parent is aware of any agreement, plan or other circumstances that would
reasonably be expected to prevent the Merger from so qualifying under
Section 368 of the Code.
SECTION 5.11. Contracts; Debt Instruments. Except as disclosed in
the Parent Reports or in Section 5.11 of the Parent Disclosure Schedule,
there is no contract or agreement that is material to the business,
financial condition or results of operations of WAG, Parent and the Parent
Subsidiaries taken as a whole (each, a "PARENT MATERIAL CONTRACT"). Except
as disclosed in the Parent Reports, neither WAG or Parent nor any Parent
Subsidiary is in violation of or in default under (nor does there exist any
condition which with the passage of time or the giving of notice would
reasonably be expected to cause such a violation of or default under) any
loan or credit agreement, note, bond, mortgage, indenture or lease, or any
other contract, license, agreement, arrangement or understanding to which
it is a party or by which it or any of its properties or assets is bound,
except for violations or defaults that would not reasonably be expected to
have, individually or in the aggregate, a Parent Material Adverse Effect.
Set forth in Section 5.11 of the Parent Disclosure Schedule is a
description of any material changes to the amount and terms of the
indebtedness of WAG, Parent and the Parent Subsidiaries as described in the
notes to the financial statements incorporated in the Parent 1997 10-K.
SECTION 5.12. Litigation. Except as disclosed in the Parent Reports
or in Section 5.12 of the Parent Disclosure Schedule, there is no suit,
claim or action or, to the knowledge of WAG or Parent, proceeding or
investigation pending or threatened against WAG, Parent or any Parent
Subsidiary before any Governmental Entity that would reasonably be expected
to have, individually or in the aggregate, a Parent Material Adverse
Effect, and, except as disclosed to the Company, to the knowledge of WAG or
Parent, there are no existing facts or circumstances that would reasonably
be expected to result in such a suit, claim, action, proceeding or
investigation. Except as disclosed to the Company, neither WAG nor Parent
is aware of any facts or circumstances which would reasonably be expected
to result in the denial of insurance coverage under policies issued to WAG,
Parent and the Parent Subsidiaries in respect of such suits, claims,
actions, proceedings and investigations, except in any case as would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect or as a result of the execution of this Agreement
and consummation of transactions hereunder. Except as disclosed in the
Parent Reports, neither WAG or Parent nor any Parent Subsidiary is subject
to any outstanding order, writ, injunction or decree which would reasonably
be expected to have, individually or in the aggregate, a Parent Material
Adverse Effect.
SECTION 5.13. Environmental Matters. Except as disclosed in the
Parent Reports or as would not reasonably be expected to have, individually
or in the aggregate, a Parent Material Adverse Effect, (i) WAG, Parent and
the Parent Subsidiaries are in compliance with all applicable Environmental
Laws; (ii) all past noncompliance of WAG, Parent or any Parent Subsidiary
with Environmental Laws or Environmental Permits has been resolved without
any pending, ongoing or future obligation, cost or liability; and (iii)
neither WAG or Parent nor any Parent Subsidiary has released a Hazardous
Material at, or transported a Hazardous Material to or from, any real
property currently or formerly owned, leased or occupied by WAG or Parent
or any Parent Subsidiary in violation of any Environmental Law.
SECTION 5.14. Intellectual Property. Except as would not reasonably
be expected to have, individually or in the aggregate, a Parent Material
Adverse Effect, (i) WAG, Parent and the Parent Subsidiaries own or possess
adequate licenses or other valid rights to use all patents, patent
applications, patent rights, trademarks, trademark rights, trade names,
trade dress, trade name rights, copyrights and copyright registrations and
applications, copyright rights, service marks, trade secrets, applications
for trademarks and for service marks, know-how and other proprietary rights
and information used or held for use in connection with the respective
businesses of WAG, Parent and the Parent Subsidiaries as currently
conducted, free and clear of all liens, and (ii) neither WAG nor Parent is
aware of any assertion or claim challenging the ownership, use or validity
of any of the foregoing. Section 5.14 of the Parent Disclosure Schedule
lists all material licenses, sublicenses and other agreements to which WAG,
Parent or any Parent Subsidiary is a party and pursuant to which (i) any
third party is authorized to use any intellectual property right of WAG,
Parent or any Parent Subsidiary or (ii) WAG, Parent or any Parent
Subsidiary is authorized to use any intellectual property rights (other
than pursuant to shrink-wrap and software licenses) of a third party
(collectively, the "Parent Licenses"), and includes the identity of all
parties thereto, a description of the nature and subject matter thereof,
the royalty provisions, if any, therein and the term thereof. The material
Parent Licenses are valid and binding obligations of Parent, enforceable in
accordance with their terms, and there are no material breaches or defaults
thereunder. Except as set forth in Section 5.14 of the Parent Disclosure
Schedule, the conduct of the respective businesses of WAG, Parent and the
Parent Subsidiaries as currently conducted does not infringe upon any
patent, patent right, trademark, trademark right, trade dress, trade name,
trade name right, service ▇▇▇▇, copyright or copyright right of any third
party that would reasonably be expected to have, individually or in the
aggregate, a Parent Material Adverse Effect. To the knowledge of WAG or
Parent, there are no infringements of any proprietary rights owned by or
licensed by or to WAG, Parent or any Parent Subsidiary that would
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect.
SECTION 5.15. Taxes. Except as set forth in Section 5.15 of the
Parent Disclosure Schedule and except for such matters that would not
reasonably be expected to have, individually or in the aggregate, a Parent
Material Adverse Effect, (i) WAG, Parent, Merger Sub and each other Parent
Subsidiary has timely filed or shall timely file all returns and reports
required to be filed by it with any taxing authority, taking into account
any extension of time to file granted to or obtained on behalf of WAG,
Parent, Merger Sub and the other Parent Subsidiaries, (ii) all Taxes shown
to be payable on such returns or reports have been or will be paid,
(iii) as of the date hereof, no deficiency for any amount of Tax has been
asserted or assessed by a taxing authority against WAG, Parent, Merger Sub
or any other Parent Subsidiary that have been adequately reserved for, and
(iv) the most recent financial statements contained in the Parent Reports
reflect an adequate reserve in accordance with U.S. GAAP for all Taxes
payable by WAG, Parent, Merger Sub and the other Parent Subsidiaries for
all taxable periods and portions thereof accrued through the date of such
financial statements.
SECTION 5.16. Brokers. Except for ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇, no broker,
finder or investment banker is entitled to any brokerage, finder's or other
fee or commission in connection with the Merger based upon arrangements
made by or on behalf of WAG or Parent.
SECTION 5.17. Certain Business Practices. None of WAG, Parent, any
Parent Subsidiary or any directors, officers, agents or employees of WAG,
Parent or any Parent Subsidiary (in their capacities as such) has (i) used
any funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity, (ii) made any unlawful
payment to foreign or domestic government officials or employees or to
foreign or domestic political parties or campaigns or violated any
provision of the Foreign Corrupt Practices Act of 1977, as amended, (iii)
consummated any transaction, made any payment, entered into any agreement
or arrangement or taken any other action in violation of Section 1128B(b)
of the Social Security Act, as amended, or (iv) made any other unlawful
payment.
SECTION 5.18. Opinion of Financial Advisor. Parent and WAG have
received the Parent Fairness Opinion.
SECTION 5.19. Interested Party Transactions. Except as set forth in
Section 5.19 of the Parent Disclosure Schedule or in the Parent Reports,
since December 31, 1997, no executive officer, director or stockholder of
Parent or WAG or any of the Parent Subsidiaries has engaged in any business
dealings with Parent or WAG or any of the Parent Subsidiaries (other than
any such business dealings that would not required to be disclosed in a
proxy statement satisfying the requirements of Regulation 14A promulgated
under the Exchange Act filed on the date hereof).
SECTION 5.20. Ownership of Company Capital Stock. Except for the
Stockholders Proxy Agreement, none of WAG, Parent, or to WAG's or Parent's
knowledge, any of their affiliates, (i) beneficially owns (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, or (ii) is
party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, shares of Company
Capital Stock.
ARTICLE VI
COVENANTS
SECTION 6.01. Conduct of Business by the Company Pending the Closing.
The Company agrees that, between the date of this Agreement and the
Effective Time, except as set forth in Section 6.01 of the Company
Disclosure Schedule or as expressly contemplated by any other provision of
this Agreement, unless Parent shall otherwise agree in writing, (x) the
respective businesses of the Company and the Company Subsidiaries shall be
conducted only in, and the Company and the Company Subsidiaries shall not
take any action except in, the ordinary course of business consistent with
past practice and (y) the Company shall use all reasonable efforts to keep
available the services of such of the current officers, significant
employees and consultants of the Company and the Company Subsidiaries and
to preserve the current relationships of the Company and the Company
Subsidiaries with such of the corporate partners, customers, suppliers and
other persons with which the Company or any Company Subsidiary has
significant business relations in order to preserve substantially intact
its business organization. By way of amplification and not limitation,
except as set forth in Section 6.01 of the Company Disclosure Schedule or
as expressly contemplated by any other provision of this Agreement, neither
the Company nor any Company Subsidiary shall, between the date of this
Agreement and the Effective Time, directly or indirectly, do, or agree to
do, any of the following without the prior written consent of Parent, which
consent shall not be unreasonably withheld or delayed:
(a) amend or otherwise change its certificate of incorporation
or bylaws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, transfer, lease,
license, guarantee or encumber, or authorize the issuance, sale,
pledge, disposition, grant, transfer, lease, license or encumbrance
of, (i) any shares of capital stock of the Company or any Company
Subsidiary of any class, or securities convertible into or
exchangeable or exercisable for any shares of such capital stock, or
any options, warrants or other rights of any kind to acquire any
shares of such capital stock, or any other ownership interest
(including any phantom interest), of the Company or any Company
Subsidiary except (A) pursuant to the Rights Agreement, (B) pursuant
to the Company Stock Purchase Plans, (C) for issues of Company Common
Stock pursuant to options outstanding on the date hereof and disclosed
as such pursuant to Section 4.03 and (D) for employee stock option
grants to non-executive officers and directors of the Company;
provided, however, that (v) such grants are at fair market value, at a
level consistent with past practice and have vesting schedules
consistent with past practice, (w) Parent has received notice of the
Company's intention to grant such options, (x) the aggregate amount of
such granted options does not exceed 150,000 shares of Company Common
Stock, (y) no person shall receive a grant in excess of 7,000 shares
of Company Common Stock and (z) the vesting of such granted options
shall not be accelerated as a result of the Merger, or (ii) any
material property or assets of the Company or any Company Subsidiary,
except in the ordinary course of business;
(c) (i) acquire (including by merger, consolidation, or
acquisition of stock or assets) any interest in any corporation,
partnership, other business organization or person or any division
thereof; (ii) except for borrowings under existing credit facilities,
incur any indebtedness for borrowed money or issue any debt securities
or assume, guarantee or endorse, or otherwise as an accommodation
become responsible for, the obligations of any person for borrowed
money or make any loans or advances; (iii) terminate, cancel or
request any material change in, or agree to any material change in,
any Company Material Contract (other than the Rights Agreement) or
enter into any contract or agreement material to the business, results
of operations or financial condition of the Company and the Company
Subsidiaries taken as a whole; or (iv) make or authorize any capital
expenditure, other than capital expenditures in the ordinary course of
business consistent with past practice that have been budgeted for
fiscal year 1998 and disclosed to Parent or capital expenditures that
are not, in the aggregate, in excess of $750,000 for the Company and
the Company Subsidiaries taken as a whole;
(d) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except that any Company
Subsidiary may pay dividends or make other distributions to the
Company or any other Company Subsidiary;
(e) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock,
except pursuant to cashless exercise of stock options;
(f) amend or change the period (or permit any acceleration,
amendment or change not required by the terms of any of the Company
Stock Plans) of exercisability of options granted under the Company
Stock Plans or authorize cash payments in exchange for any Company
Stock Options granted under any of such plans;
(g) increase the compensation payable or to become payable to,
or pay or enter into any agreement or understanding to pay any bonus
to, its directors, officers, consultants or employees (other than
increases in compensation for non-officer employees that are in the
ordinary course of business consistent with past practice and the
payment of bonuses to non-officer employees that are in the ordinary
course of business consistent with past practice, provided that Parent
has received notice of the Company's intention to implement such
increase), or grant any rights to severance or termination pay to, or
enter into any employment or severance agreement which provides
benefits upon a change in control of the Company that would be
triggered by the Merger with, any director, officer, consultant or
other employee of the Company or any Company Subsidiary who is not
currently entitled to such benefits from the Merger or establish,
adopt, enter into or amend any collective bargaining, bonus, profit
sharing, thrift, compensation, stock option, restricted stock,
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement
for the benefit of any director, officer, consultant or employee of
the Company or any Company Subsidiary, except to the extent required
by applicable Law or the terms of a collective bargaining agreement;
(h) pay, discharge, settle or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the
ordinary course of business and consistent with past practice;
(i) take any action to change accounting policies or procedures,
other than actions in the ordinary course of business consistent with
past practice or as required by U.S. GAAP;
(j) make any tax election or settle or compromise any material
Federal, state or local United States income tax liability, or any
income tax liability of any other jurisdiction, other than those made
in the ordinary course of business consistent with past practice and
those for which specific reserves have been recorded on the
consolidated balance sheet of the Company and the consolidated the
Company Subsidiaries dated as of August 31, 1997 included in the
Company 1997 10-K and only to the extent of such reserves;
(k) enter into or amend any contract, agreement, commitment or
arrangement with, or enter into any transaction with, or make any
payment to or on account or behalf of, other than any such
transactions or payments pursuant to the agreements set forth on
Section 6.01(m) of the Company Disclosure Schedule, any affiliate of
the Company or of any Principal Stockholder other than compensation
and benefits in the ordinary course of business;
(l) knowingly take any action that would prevent or impede the
Merger from qualifying as a reorganization within the meaning of
Section 368 of the Code; or
(m) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing or to take
any action which would make any of the representations or warranties
of the Company contained in this Agreement untrue or incorrect in any
material respect or prevent the Company from consummating the Merger
or result in any of the conditions to the Merger set forth herein not
being satisfied.
SECTION 6.02. Conduct of Business by WAG and Parent Pending the
Closing. Each of WAG and Parent agrees that, between the date of this
Agreement and the Effective Time, except (i) as set forth in Section 6.02
of the Parent Disclosure Schedule, (ii) subject to paragraph (e) below, for
any actions taken by WAG or Parent relating to any other acquisitions or
business combinations (including the Holding Company Reorganization and the
Resurgens Transaction) or (iii) as expressly contemplated by any other
provision of this Agreement, unless the Company shall otherwise agree in
writing, (x) the respective businesses of WAG, Parent and the Parent
Subsidiaries shall be conducted only in, and WAG, Parent and the Parent
Subsidiaries shall not take any action except in, the ordinary course of
business consistent with past practice and (y) WAG and Parent shall use all
reasonable efforts to keep available the services of such of the current
officers, significant employees and consultants of WAG, Parent and the
Parent Subsidiaries and to preserve the current relationships of WAG,
Parent and the Parent Subsidiaries with such of the corporate partners,
customers, suppliers and other persons with which WAG, Parent or any Parent
Subsidiary has significant business relations in order to preserve
substantially intact its business organization. By way of amplification
and not limitation, except (i) as set forth in Section 6.02 of the Parent
Disclosure Schedule, (ii) subject to paragraph (e) below, for any actions
taken by WAG or Parent relating to any other acquisitions or business
combinations (including the Holding Company Reorganization and the
Resurgens Transaction) or (iii) as expressly contemplated by any other
provision of this Agreement, neither WAG or Parent nor any Parent
Subsidiary shall, between the date of this Agreement and the Effective
Time, directly or indirectly, do, or agree to do, any of the following
without the prior written consent of the Company, which consent shall not
be unreasonably withheld or delayed:
(a) amend or otherwise change its certificate of incorporation
or bylaws or equivalent organizational documents;
(b) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock, except that any Parent Subsidiary
may pay dividends or make other distributions to Parent or any other
Parent Subsidiary;
(c) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(d) sell, transfer, license, sublicense or otherwise dispose of
any material assets;
(e) acquire (other than in connection with the Holding Company
Reorganization and the Resurgens Transaction) or enter into any
agreement to acquire all or substantially all of the capital stock or
assets of any other person or business unless upon advice of counsel
such transaction would not reasonably be expected to materially delay
or impede the consummation of the Merger;
(f) knowingly take any action that would prevent or impede the
Merger from qualifying as a reorganization within the meaning of
Section 368 of the Code; or
(g) authorize or enter into any formal or informal agreement or
otherwise make any commitment to do any of the foregoing or to take
any action which would make any of the representations or warranties
of WAG, Parent or Merger Sub contained in this Agreement untrue or
incorrect in any material respect or prevent WAG, Parent or Merger Sub
from performing or cause WAG, Parent or Merger Sub not to perform its
covenants hereunder or result in any of the conditions to the Merger
set forth herein not being satisfied.
SECTION 6.03. Notices of Certain Events. Each of Parent, WAG and the
Company shall give prompt notice to the other of (i) any notice or other
communication from any person alleging that the consent of such person is
or may be required in connection with the Merger; (ii) any notice or other
communication from any Governmental Entity in connection with the Merger;
(iii) any actions, suits, claims, investigations or proceedings commenced
or, to its knowledge, threatened against, relating to or involving or
otherwise affecting WAG, Parent, the Company, the Parent Subsidiaries or
the Company Subsidiaries that relate to the consummation of the Merger;
(iv) the occurrence of a default or event that, with the giving of notice
or lapse of time or both, will become a default under any Company Material
Contract or Parent Material Contract; and (v) any change that would
reasonably be expected to have a Company Material Adverse Effect or a
Parent Material Adverse Effect or to delay or impede the ability of either
the Company or Parent (or WAG) to perform its obligations pursuant to this
Agreement and to effect the consummation of the Merger.
SECTION 6.04. Access to Information; Confidentiality. (a) Except as
required pursuant to any confidentiality agreement or similar agreement or
arrangement to which WAG, Parent or the Company or any of the Parent
Subsidiaries or the Company Subsidiaries is a party or pursuant to
applicable Law or the regulations or requirements of any stock exchange or
other regulatory organization with whose rules a party hereto is required
to comply, from the date of this Agreement to the Effective Time, WAG and
Parent shall (and shall cause the Parent Subsidiaries to) and the Company
shall (and shall cause the Company Subsidiaries to) (i) provide to the
other (and its officers, directors, employees, accountants, consultants,
legal counsel, agents and other representatives (collectively,
"REPRESENTATIVES")) access at reasonable times upon prior notice to its and
its subsidiaries' officers, employees, agents, properties, offices and
other facilities and to the books and records thereof, and (ii) furnish
promptly such information concerning its and its subsidiaries' business,
properties, contracts, assets, liabilities and personnel as the other party
or its Representatives may reasonably request. No investigation conducted
pursuant to this Section 6.04 shall affect or be deemed to modify any
representation or warranty made in this Agreement.
(b) The parties hereto shall comply with, and shall cause their
respective Representatives to comply with, all of their respective
obligations under the Confidentiality Agreement with respect to the
information disclosed pursuant to this Section 6.04.
SECTION 6.05. No Solicitation of Transactions. The Company shall
not, directly or indirectly, and shall instruct its officers, directors,
employees, subsidiaries, agents or advisors or other representatives
(including any investment banker, attorney or accountant retained by it),
not to, directly or indirectly, solicit, initiate or knowingly encourage
(including by way of furnishing nonpublic information), or take any other
action knowingly to facilitate, any inquiries or the making of any proposal
or offer (including any proposal or offer to its stockholders) that
constitutes, or may reasonably be expected to lead to, any Competing
Transaction, or enter into or maintain or continue discussions or negotiate
with any person in furtherance of such inquiries or to obtain a Competing
Transaction, or agree to or endorse any Competing Transaction, or authorize
or permit any of the officers, directors or employees of the Company or any
Company Subsidiary, or any investment banker, financial advisor, attorney,
accountant or other representative retained by the Company or any Company
Subsidiary, to take any such action; provided, however, that (i) nothing
contained in this Section 6.05 shall prohibit the board of directors of the
Company from complying with Rule 14e-2 promulgated under the Exchange Act
with regard to a tender or exchange offer not made in violation of this
Section 6.05, (ii) with regard to such an offer, after receiving the advice
of outside counsel, the board of directors of the Company determines in
good faith that it is highly probable that failing to do so would violate
its fiduciary duties, nothing contained in this Section 6.05 shall prohibit
the board of directors of the Company from considering and negotiating
(including furnishing nonpublic information) an unsolicited bona fide
written acquisition proposal which (A) was not received in violation of
this Section 6.05, (B) if executed or consummated would be a Competing
Transaction and (C) is not subject to financing or financing is, in the
good faith judgment of the board of directors of the Company after
consultation with its financial advisors, highly likely of being obtained
by such third party, or (iii) if after receiving the advice of outside
counsel, the board of directors of the Company determines in good faith
that it is highly probable that failing to do so would violate its
fiduciary duties, nothing contained in this Section 6.05 shall prohibit the
board of directors of the Company from approving or recommending to the
stockholders of the Company an unsolicited bona fide written acquisition
proposal which (A) was not received in violation of this Section 6.05,
(B) if executed or consummated would be a Competing Transaction, (C) is not
subject to financing or financing is, in the good faith judgment of the
board of directors of the Company after consultation with its financial
advisors, highly likely of being obtained by such third party and (D) the
board of directors of the Company determines in good faith, after advice of
its financial advisor to such effect, is more favorable to the Company's
stockholders than the transaction contemplated by this Agreement (any such
acquisition proposal, a "SUPERIOR PROPOSAL"). The Company shall notify
Parent promptly, and in no event later than one day after receipt, if any
proposal or offer, or any inquiry or contact with any person with respect
thereto, regarding a Competing Transaction is made. The Company
immediately shall cease and cause to be terminated all existing discussions
or negotiations with any parties conducted heretofore with respect to a
Competing Transaction. Subject to the fiduciary duties of the Board of
Directors of the Company, the Company shall not release any third party
from, or waive any provision of, any confidentiality or standstill
agreement to which it is a party. The Company shall use its best efforts
to ensure that its officers, directors, employees, subsidiaries, agents and
advisors or other representatives (including any investment banker,
attorney or accountant retained by it) are aware of the restrictions
described in this Section 6.05.
SECTION 6.06. Letters of Accountants. Each of the Company and
Parent shall use all reasonable efforts to cause to be delivered to the
other "comfort" letters of each of Ernst & Young LLP and Price Waterhouse
LLP, respectively, each such letter dated and delivered as of the date the
Registration Statement shall have become effective and as of the Effective
Time, and addressed to Parent and the Company, respectively, in form
reasonably satisfactory to the recipient thereof and reasonably customary
in scope and substance for letters delivered by independent public
accountants in connection with mergers such as the Merger contemplated
hereby.
SECTION 6.07. Subsequent Financial Statements. Prior to the
Effective Time, each of the Company and Parent (or WAG if the Holding
Company Reorganization has not yet been consummated) (i) shall consult with
the other prior to making publicly available its financial results for any
period and (ii) shall consult with the other prior to the filing of, and
shall timely file with the SEC, each Annual Report on Form 10-K, Quarterly
Report on Form 10-Q and Current Report on Form 8-K required to be filed by
such party under the Exchange Act and shall promptly deliver to the other
copies of each such report filed with the SEC.
SECTION 6.08. Control of Operations. Nothing contained in this
Agreement shall give Parent and/or WAG, directly or indirectly, the right
to control or direct the operations of the Company and the Company
Subsidiaries prior to the Effective Time. Prior to the Effective Time,
each of Parent (and WAG) and the Company shall exercise, consistent with
the terms and conditions of this Agreement, complete control and
supervision over its respective operations.
SECTION 6.09. Further Action; Consents; Filings. (a) Upon the terms
and subject to the conditions hereof, each of the parties hereto shall use
all reasonable efforts to (i) take, or cause to be taken, all appropriate
action, and do, or cause to be done, all things necessary, proper or
advisable under applicable Law or otherwise to consummate and make
effective the Merger, (ii) obtain from Governmental Entities any consents,
licenses, permits, waivers, approvals, authorizations or orders required to
be obtained or made by WAG, Parent, Merger Sub, the Company or the
Surviving Corporation or any of their respective subsidiaries in connection
with the authorization, execution and delivery of this Agreement and the
consummation of the Merger and (iii) make all necessary filings, and
thereafter make any other required or appropriate submissions, with respect
to this Agreement and the Merger required under (A) the rules and
regulations of Nasdaq, (B) the Securities Act, the Exchange Act and any
other applicable Federal or state securities Laws, (C) the HSR Act, and
(D) any other applicable Law. The parties hereto shall cooperate and
consult with each other in connection with the making of all such filings,
including by providing copies of all such documents to the nonfiling
parties and their advisors prior to filing, and giving due consideration to
their views with respect thereto. No party shall consent to any voluntary
extension of any statutory deadline or waiting period or to any voluntary
delay of the consummation of the Merger at the behest of any Governmental
Entity without prior consultation of the other parties hereto, and due
consideration of such parties' views with respect thereto.
(b) Each of the parties hereto shall promptly give (or cause
their respective subsidiaries to give) any notices regarding the Merger,
this Agreement or the transactions contemplated hereby or thereby to third
parties required under applicable Law or by any contract, license, lease or
other agreement to which it or any of its subsidiaries is bound, and use,
and cause its subsidiaries to use, all reasonable efforts to obtain any
third party consents required under any such contract, license, lease or
other agreement in connection with the consummation of the Merger or the
other transactions contemplated by this Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Registration Statement; Proxy Statement. (a) As
promptly as practicable after the execution of this Agreement, WAG, Parent
and the Company shall jointly prepare, and the Company, WAG and Parent
shall file with the SEC, a document or documents that will constitute
(i) the prospectus forming part of the registration statement on Form S-4
of WAG and Parent (together with all amendments thereto, the "REGISTRATION
STATEMENT"), in connection with the registration under the Securities Act
of the WAG Common Stock or the Parent Common Stock to be issued to the
Company's stockholders pursuant to the Merger and (ii) the proxy statement
or information statement with respect to the Merger relating to the special
meeting of the Company's stockholders (the "COMPANY STOCKHOLDERS' MEETING")
and WAG's or Parent's stockholders, as the case may be (the "PARENT
STOCKHOLDERS' MEETING"), to be held to consider approval of this Agreement
and the Merger contemplated hereby, in the case of the Company
Stockholders' Meeting, and approval of the issuance of Parent Common Stock
or WAG Common Stock, as the case may be, in the Merger, and the approval of
an increase in the authorized WAG Common Stock or Parent Common Stock
(after the Holding Company Reorganization) to 100,000,000 shares (such
increase, the "Capital Increase"), in the case of the Parent Stockholders'
Meeting (together with any amendments thereto, the "PROXY STATEMENT").
Copies of the Proxy Statement shall be provided to Nasdaq in accordance
with its rules. If applicable, each of the parties hereto shall use all
reasonable efforts to cause the Registration Statement to become effective
as promptly as practicable after the date hereof, and, prior to the
effective date of the Registration Statement, the parties hereto shall take
all action required under any applicable Laws in connection with the
issuance of shares of WAG Common Stock or Parent Common Stock pursuant to
the Merger. WAG, Parent or the Company, as the case may be, shall furnish
all information concerning WAG, Parent or the Company as the other parties
may reasonably request in connection with such actions and the preparation
of the Registration Statement, if applicable, and Proxy Statement. As
promptly as practicable after the effective date of the Registration
Statement, the Proxy Statement shall be mailed to the stockholders of the
Company and of Parent or WAG, as applicable. Each of the parties hereto
shall cause the Proxy Statement to comply as to form and substance in all
material respects with the applicable requirements of (i) the Exchange Act,
(ii) the Securities Act, (iii) the rules and regulations of Nasdaq and (iv)
the Delaware General Corporation Law.
(b) The Proxy Statement shall include (i) subject to the
fiduciary duties of the Board of Directors of the Company, (A) the approval
of the Merger and the recommendation of the board of directors of the
Company to the Company's stockholders that they vote in favor of approval
of this Agreement and the Merger contemplated hereby, and (B) the Company
Fairness Opinion, and (ii) subject to the fiduciary duties of the Board of
Directors of WAG or Parent, as the case may be, (A) the approval of the
issuance of Parent Common Stock or WAG Common Stock, as the case may be, in
the Merger and the Capital Increase and the recommendation of the board of
directors of WAG or Parent to WAG's or Parent's stockholders, as
applicable, that they vote in favor of issuance of shares of Parent Common
Stock or WAG Common Stock, as the case may be, in the Merger and the
Capital Increase, and (B) the Parent Fairness Opinion.
(c) No amendment or supplement to the Proxy Statement, if
applicable, or the Registration Statement shall be made without providing
the other parties the opportunity to review and comment thereon. If
applicable, each of the parties hereto shall advise the other parties
hereto, promptly after it receives notice thereof, of the time when the
Registration Statement has become effective or any supplement or amendment
has been filed, of the issuance of any stop order, of the suspension of the
qualification of the WAG Common Stock or the Parent Common Stock issuable
in connection with the Merger for offering or sale in any jurisdiction, or
of any request by the SEC or Nasdaq for amendment of the Proxy Statement or
the Registration Statement or comments thereon and responses thereto or
requests by the SEC for additional information.
(d) None of the information supplied by the Company for
inclusion or incorporation by reference in the Registration Statement, if
applicable, or the Proxy Statement shall, at the respective times filed
with the SEC or other regulatory agency and, in addition, (A) in the case
of the Proxy Statement, at the date it or any amendments or supplements
thereto are mailed to stockholders of WAG or Parent in connection with the
Parent Stockholders' Meeting, and to stockholders of the Company in
connection with the Company Stockholders' Meeting, at the time of the
Company Stockholders' Meeting, and at the time of the Parent Stockholders'
Meeting, and (B) in the case of the Registration Statement, when it becomes
effective under the Securities Act and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. If at any time prior to the Effective Time any event or
circumstance relating to the Company or any Company Subsidiary, or their
respective officers or directors, should be discovered by the Company that
should be set forth in an amendment or a supplement to the Registration
Statement, if applicable, or Proxy Statement, the Company shall promptly
inform Parent and an appropriate amendment or supplement shall promptly be
filed with the SEC. All documents that the Company is responsible for
filing with the SEC in connection with the Merger will comply as to form in
all material respects with the applicable requirements of the rules and
regulations of Nasdaq, the Delaware General Corporation Law, the Securities
Act and the Exchange Act.
(e) None of the information supplied by WAG or Parent for
inclusion or incorporation by reference in the Registration Statement, if
applicable, or the Proxy Statement shall, at the respective times filed
with the SEC or other regulatory agency and, in addition, (A) in the case
of the Proxy Statement, at the date it or any amendments or supplements
thereto are mailed to stockholders of WAG or Parent in connection with the
Parent Stockholders' meeting, and to stockholders of the Company in
connection with the Company Stockholders' Meeting, at the time of the
Company Stockholders' Meeting and at the time of the Parent Stockholders'
Meeting, and (B) in the case of the Registration Statement, when it becomes
effective under the Securities Act and at the Effective Time, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they are made, not
misleading. If, at any time prior to the Effective Time, any event or
circumstance relating to WAG or Parent or any Parent Subsidiary, or their
respective officers or directors, should be discovered by Parent that
should be set forth in an amendment or a supplement to the Registration
Statement or Proxy Statement, Parent shall promptly inform the Company and
an appropriate amendment or supplement shall promptly be filed with the
SEC. All documents that WAG or Parent is responsible for filing with the
SEC in connection with the Merger will comply as to form in all material
respects with the applicable requirements of the rules and regulations of
Nasdaq, the Delaware General Corporation Law, the Securities Act and the
Exchange Act.
SECTION 7.02. Stockholders' Meetings. Subject to the fiduciary
duties of the Company's Board of Directors, in the case of the Company
Stockholders' Meeting, or the fiduciary duties of WAG's or Parent's Board
of Directors, in the case of the Parent Stockholders' Meeting, the Company
shall call and hold the Company Stockholders' Meeting and Parent shall call
and hold the Parent Stockholders' Meeting, as promptly as practicable after
the Registration Statement becomes effective for the purpose of voting upon
the approval of this Agreement and the transactions contemplated hereby
pursuant to the Proxy Statement, and the Company and Parent shall use all
reasonable efforts to hold the Company Stockholders' Meeting and the Parent
Stockholders' Meeting on the same day and as soon as practicable after the
date on which the Registration Statement becomes effective. If applicable
and subject to the fiduciary duties of the Board of Directors of the
Company, the Company shall use all reasonable efforts to solicit from its
stockholders proxies in favor of the approval of this Agreement and the
Merger contemplated hereby pursuant to the Proxy Statement and shall take
all other action necessary or advisable to secure the vote or consent of
stockholders required by the Delaware General Corporation Law or applicable
stock exchange requirements to obtain such approval. If applicable and
subject to the fiduciary duties of the Board of Directors of Parent or WAG,
Parent or WAG, as applicable, shall use all reasonable efforts to solicit
from its stockholders proxies in favor of the issuance of Parent Common
Stock or WAG Common Stock, as the case may be, in the Merger and the
Capital Increase contemplated hereby pursuant to the Proxy Statement and
shall take all other action necessary or advisable to secure the vote of
stockholders required by the Delaware General Corporation Law or applicable
stock exchange requirements to obtain such approval, if required. Each of
the parties hereto shall, subject to the fiduciary duties of its Board of
Directors, take all other action necessary or, in the opinion of the other
parties hereto, advisable to promptly and expeditiously secure any vote or
consent of stockholders required by applicable Law and such party's
certificate of incorporation, as the case may be, and bylaws to effect the
Merger.
SECTION 7.03. Rule 145 Affiliates. Not fewer than 45 days prior to
the Effective Time, the Company shall deliver to Parent a list of names and
addresses of each person who was, in the Company's reasonable judgment, at
the record date for the Company Stockholders' Meeting, a Rule 145 Affiliate
of the Company. The Company shall provide Parent such information and
documents as Parent shall reasonably request for purposes of reviewing such
list. The Company shall use all reasonable efforts to deliver or cause to
be delivered to Parent, prior to the Effective Time, an affiliate agreement
in the form attached hereto as Exhibit 7.03 (each, a "COMPANY AFFILIATE
AGREEMENT"), executed by each of the Rule 145 Affiliates of the Company
identified in the above-referenced list. The foregoing notwithstanding,
Parent shall be entitled to place the legend only as specified in the
Company Affiliate Agreement on the certificates evidencing any of the
Parent Common Stock to be received by (i) any Rule 145 Affiliate of the
Company or (ii) any person Parent reasonably identifies (by written notice
to the Company) as being a person who may be deemed an "affiliate" within
the meaning of rule 145(c) or (d) promulgated under the Securities Act, and
to issue appropriate stop transfer instructions to the transfer agent for
such Parent Common Stock, consistent with the terms of the Company
Affiliate Agreement, regardless of whether such person has executed a
Company Affiliate Agreement and regardless of whether such person's name
and address appear on Section 4.16 of the Company Disclosure Schedule.
SECTION 7.04. Directors' and Officers' Indemnification. (a) The
certificate of incorporation and bylaws of the Surviving Corporation shall
contain the provisions with respect to indemnification that are set forth,
as of the date of this Agreement, in the certificate of incorporation and
bylaws of the Company, which provisions shall not be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would affect adversely the rights thereunder of individuals who
at or at any time prior to the Effective Time were directors, officers,
employees, fiduciaries or agents of the Company.
(b) From and after the Effective Time, Parent, WAG and the
Surviving Corporation shall indemnify and hold harmless each present and
former director and officer of the Company (the "INDEMNIFIED PARTIES"),
against any costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities (collectively,
"COSTS") 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 that the Company would have been
permitted under Delaware law and under its charter documents as in effect
on the date hereof to indemnify such Indemnified Parties, and WAG and
Parent shall also advance expenses as incurred to the fullest extent
permitted under Delaware law upon receipt from the applicable Indemnified
Party to whom expenses are to be advanced of an undertaking to repay such
advances if it is ultimately determined such person is not entitled to
indemnification.
(c) In the event that either of the Surviving Corporation,
Parent or WAG or any of its successors or assigns (i) consolidates with or
merges into any other person and is not the continuing or surviving
corporation or entity of such consolidation or merger or (ii) transfers or
conveys all or substantially all of its properties and assets to any
person, then, and in each such case, proper provision will be made so that
the successors and assigns of Parent, WAG or the Surviving Corporation, as
applicable, will assume the obligations thereof set forth in this Section
7.04.
(d) The provisions of this Section 7.04 (i) are intended to be
for the benefit of, and will be enforceable by, each Indemnified Party,
his or her heirs and his or her representatives and (ii) are in addition
to, and not in substitution for, any other rights to indemnification or
contribution that any such person may have by contract or otherwise.
(e) For six years after the Effective Time, WAG or the Surviving
Corporation shall maintain in effect the Company's current directors' and
officers' liability insurance covering acts or omissions occurring prior to
the Effective Time with respect to those persons who are currently covered
by the Company's directors' and officers' liability insurance policy on
terms with respect to such coverage and amount no less favorable to the
Company's directors and officers currently covered by such insurance than
those of such policy in effect on the date hereof, provided that WAG may
substitute therefor policies of WAG or the Parent Subsidiaries containing
terms with respect to coverage and amount no less favorable to such
directors or officers; provided, further, that in no event shall WAG or the
Surviving Corporation be required to pay aggregate premiums for insurance
under this Section 7.04(e) in excess of 150% of the aggregate premiums paid
by the Company in 1997 on an annualized basis for such purpose; and,
provided further, that if WAG or the Surviving Corporation is unable to
obtain the amount of insurance required by this Section 7.04(e) for such
aggregate premium, then WAG or the Surviving Corporation shall obtain as
much insurance as can be obtained for an annual premium equal to 150% of
the 1997 premium.
(f) WAG shall cause the Surviving Corporation or any successor
thereto to comply with its obligations under this Section 7.04.
SECTION 7.05. No Shelf Registration. Parent shall not be required to
amend or maintain the effectiveness of the Registration Statement for the
purpose of permitting resale of the shares of Parent Common Stock received
pursuant hereto by the persons who may be deemed to be "affiliates" of the
Company or Parent within the meaning of rule 145 promulgated under the
Securities Act.
SECTION 7.06. Public Announcements. Parent and the Company shall
consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or the Merger
and shall not issue any such press release or make any such public
statement without the prior written approval of the other, except to the
extent required by applicable Law or the requirements of the rules and
regulations of Nasdaq, in which case the issuing party shall use all
reasonable efforts to consult with the other party before issuing any such
release or making any such public statement.
SECTION 7.07. Nasdaq Listing. Each of the parties hereto shall use
all reasonable efforts to obtain, prior to the Effective Time, the approval
for including in Nasdaq, effective upon official notice of issuance, of the
shares of WAG Common Stock or Parent Common Stock, as the case may be, into
which the shares of Company Capital Stock will be converted pursuant to
Article III and the shares of WAG Common Stock or Parent Common Stock, as
the case may be, which will be issuable upon exercise of Company Stock
Options pursuant to Section 3.05.
SECTION 7.08. Blue Sky. Each of the parties hereto shall use all
reasonable efforts to obtain prior to the Effective Time all necessary blue
sky permits and approvals required under Blue Sky Laws to permit the
distribution of the shares of WAG Common Stock or Parent Common Stock, as
the case may be, to be issued in accordance with the provisions of this
Agreement.
SECTION 7.09. Company Stock Options. (a) At the Effective Time,
Parent, in the case the Holding Company Reorganization shall have been
consummated, or WAG, in the case the Holding Company Reorganization shall
not have been consummated, shall assume, by virtue of this Agreement and
without any further action on the part of the Company, all of the Company's
obligations with respect to each outstanding Company Stock Option, whether
previously vested or unvested. Unless otherwise elected by Parent prior to
the Effective Time, Parent or WAG shall make such assumption in such manner
that Parent or WAG (i) is a corporation "assuming a stock option in a
transaction to which Section 424(a) applies" within the meaning of Section
424 of the Code or (ii) to the extent that Section 424 of the Code does not
apply to such Company Stock Option, would be such a corporation were
Section 424 of the Code applicable to such Company Stock Option; and, if
not so otherwise elected, after the Effective Time, all references to the
Company in the Company Stock Plans and the applicable Company Stock Option
agreements shall be deemed to refer to WAG, prior to the Holding Company
Reorganization, or Parent, following the Holding Company Reorganization,
which shall have assumed the Company Stock Plans as of the Effective Time
by virtue of this Agreement and without any further action on the part of
the Company, Parent or WAG. Each Company Stock Option so assumed under
this Agreement shall continue to have, and be subject to, the same terms
and conditions set forth in the applicable Company Stock Plan and the
applicable Company Stock Option as in effect immediately prior to the
Effective Time, except as otherwise provided in Section 3.05. Parent shall
use all reasonable efforts to ensure that Company Stock Options intended to
qualify as incentive stock options under Section 422 of the Code prior to
the Effective Time continue to so qualify after the Effective Time.
(b) With respect to the Company Stock Plans, WAG or Parent, as
the case may be, shall take all corporate action necessary or appropriate
to (i) reserve for issuance the number of shares that will be subject to
Company Stock Options referred to in this Section 7.09 and (ii), no later
than the Effective Time, file a registration statement on Form S-8 (or any
successor or other appropriate form) with respect to the shares of WAG
Common Stock or Parent Common Stock, as the case may be, subject to such
plan to the extent such registration statement is required under applicable
law in order for such shares of common stock to be sold without
restriction, and WAG and Parent shall use its best efforts to maintain the
effectiveness of such registration statement (and maintain the current
status of the prospectuses contained therein) for so long as such benefits
and grants remain payable and such options under such plans remain
outstanding.
SECTION 7.10. Tax Treatment. Each of Parent, WAG and the Company
shall use best efforts to cause the Merger to qualify as a reorganization
under the provisions of Section 368 of the Code and to obtain the opinions
of counsel referred to in Sections 8.02(c) and 8.03(c). In addition,
following the Effective Time, each of WAG, Parent and the Surviving
Corporation agree not to take any action that would cause the Merger to
fail to so qualify.
SECTION 7.11. Obligations of Parent and WAG. Prior to consummation
of the Holding Company Reorganization, WAG will take all action necessary
to cause Parent and Merger Sub to perform their respective obligations
under this Agreement and to consummate the Merger on the terms and
conditions set forth herein. Following consummation of the Holding Company
Reorganization, Parent will take all action necessary to cause WAG and
Merger Sub to perform their respective obligations under this Agreement and
to consummate the Merger on the terms and conditions set forth herein.
SECTION 7.12. Company Employees. (a) Individuals who are employed
by the Company or the Company Subsidiaries as of the Effective Time shall
remain employees of the Company or the Company Subsidiaries, as applicable,
immediately following the Effective Time (each such employee, "Affected
Employee"). For a period of one year immediately following the Effective
Time, the annual cash compensation for each Affected Employee shall not be
reduced without such Affected Employee's consent and the insurance
coverage, benefits and vacation and 401(k) participation benefits provided
to Affected Employees shall be, in the aggregate, not less favorable than
those provided to such employees immediately prior to the Effective Time.
Following the Effective Time, for purposes of determining eligibility,
vesting and level of benefits under all employee benefit plans (but not
for pension benefit accrual purposes) and, if applicable, for purposes of
satisfying any waiting periods concerning "preexisting conditions" and the
satisfaction of any "copayment" or deductible requirements, service with
the Company or a Company Subsidiary or any predecessor thereto prior to the
Effective Time shall be treated, to the extent permitted by law, as service
with an "employer" to the same extent as if such persons had been employees
of WAG, Parent or a Parent Subsidiary, and provided further that this
Section 7.12(a) shall not be construed to limit the ability of the
applicable employer to terminate the employment of any Affected Employee or
to review employee benefits programs from time to time and to make such
changes as they deem appropriate.
(b) WAG and the Parent agree to honor, or to cause the
appropriate subsidiary to honor, in accordance with their terms all Company
Benefit Plans; provided, however, that the foregoing shall not prevent any
party from amending or terminating any such plan, contact, agreement,
arrangement or understanding in accordance with its terms.
(c) For the purpose of all Company Benefit Plans which include
the term "change in control", WAG and Parent acknowledge that the Merger
constitutes a "change in control" for all purposes pursuant to any such
Company Benefit Plans. In addition, WAG and Parent acknowledge that, with
respect to the Senior Termination Benefits Agreements listed in Schedule
7.12(c) (the "Listed Agreements"), in light of WAG's and Parent's plans
relating to management assignments and responsibilities with respect to the
business of the Company from and after the Effective Time, each employee
who is a party to any such contract may, following consummation of the
Merger, terminate employment thereunder and, upon such termination, be
entitled to termination payments and benefits described therein.
SECTION 7.13. Board of Directors of Parent and WAG. Immediately
prior to the Effective Time, the boards of directors of Parent and WAG
shall take all action necessary to cause an individual mutually acceptable
to the boards of directors of the Company, on the one hand, and the boards
of directors of Parent and WAG, on the other hand, to be elected to fill
the vacancy on the boards of directors of Parent and WAG at the Effective
Time; provided, however, that if the Holding Company Reorganization shall
have been consummated prior to the Effective Time, then the individual
selected pursuant to the foregoing provision shall not be elected to serve
as a director of WAG.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01. Conditions to the Obligations of Each Party to
Consummate the Merger. The respective obligations of the parties hereto to
consummate the Merger, or to permit the consummation of the Merger, are
subject to the satisfaction or, if permitted by applicable Law, waiver of
the following conditions:
(a) the Registration Statement shall have been declared
effective by the SEC under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement shall have
been issued by the SEC and no proceeding for that purpose shall have
been initiated by the SEC and not concluded or withdrawn;
(b) this Agreement and the Merger shall have been duly
approved by the requisite vote of stockholders of the Company and the
issuance of the shares of WAG Common Stock or Parent Common Stock in
the Merger and the Capital Increase shall have been duly approved by
the requisite vote of the stockholders of WAG or Parent, as the case
may be, in any such case in accordance with the Delaware General
Corporation Law;
(c) no court of competent jurisdiction shall have issued or
entered any order, writ, injunction or decree, and no other
Governmental Entity shall have issued any order (collectively,
"Restraints"), which is then in effect and has the effect of making
the Merger illegal or otherwise prohibiting its consummation;
(d) any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall
have expired or be terminated;
(e) except with respect to the HSR Act (which is addressed
in Section 8.01(d)), all consents, approvals and authorizations
legally required to be obtained to consummate the Merger shall have
been obtained from all Governmental Entities, except where the failure
to obtain any such consent, approval or authorization would not
reasonably be expected to result in a change in or have an effect on
the business of the Company or Parent that is materially adverse to
the business, assets (including intangible assets), liabilities
(contingent or otherwise), condition (financial or otherwise) or
results of operations of WAG, Parent and the Parent Subsidiaries,
taken as a whole; and
(f) the shares of WAG Common Stock or Parent Common Stock,
as the case may be, into which the shares of Company Capital Stock
will be converted pursuant to Article III and the shares of WAG Common
Stock or Parent Common Stock, as the case may be, issuable upon the
exercise of Company Stock Options pursuant to Section 3.05 shall have
been authorized for inclusion in Nasdaq, subject to official notice of
issuance.
SECTION 8.02. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger, or to permit the
consummation of the Merger, are subject to the satisfaction or, if
permitted by applicable Law, waiver of the following further conditions:
(a) each of the representations and warranties of WAG,
Parent and Merger Sub contained in this Agreement that is qualified by
materiality or Parent Material Adverse Effect shall be true, complete
and correct on and as of the Effective Time as if made at and as of
the Effective Time (other than representations and warranties which
address matters only as of a certain date which shall be true,
complete and correct as of such certain date) and each of the
representations and warranties that is not so qualified shall be true,
complete and correct in all material respects on and as of the
Effective Time as if made at and as of the Effective Time (other than
representations and warranties which address matters only as of a
certain date which shall be true, complete and correct in all material
respects as of such certain date), in each case except as contemplated
or permitted by this Agreement, and the Company shall have received a
certificate of the Chairman or President and Chief Financial Officer
of WAG and of Parent to such effect;
(b) WAG and Parent shall each have performed or complied in
all material respects with all material agreements and covenants
required by this Agreement to be performed or complied with by it on
or prior to the Effective Time and the Company shall have received a
certificate of the Chairman or President and Chief Financial Officer
of WAG and of Parent to that effect; and
(c) Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, special
counsel to the Company, shall have issued its opinion, such opinion
dated on or about the date of the Closing, addressed to the Company,
and reasonably satisfactory to it, based upon certain representations
of the Company and assumptions, to the effect that the Merger will be
treated for Federal income tax purposes as a reorganization qualifying
under the provisions of Section 368 of the Code and that each of the
Company, Merger Sub and Parent will be a party to the reorganization
within the meaning of Section 368(b) of the Code, which opinion shall
not have been withdrawn or modified in any material respect.
SECTION 8.03. Conditions to the Obligations of WAG and Parent. The
obligations of WAG and Parent to consummate the Merger, or to permit the
consummation of the Merger, are subject to the satisfaction or, if
permitted by applicable Law, waiver of the following further conditions:
(a) each of the representations and warranties of the Company
contained in this Agreement that is qualified by materiality or
Company Material Adverse Effect shall be true, complete and correct on
and as of the Effective Time as if made at and as of the Effective
Time (other than representations and warranties which address matters
only as of a certain date which shall be true, complete and correct as
of such certain date) and each of the representations and warranties
that is not so qualified shall be true, complete and correct in all
material respects on and as of the Effective Time as if made on and as
of such date (other than representations and warranties which address
matters only as of a certain date which shall be true, complete and
correct in all material respects as of such certain date), in each
case except as contemplated or permitted by this Agreement, and Parent
shall have received a certificate of the Chairman or President and
Chief Financial Officer of the Company to such effect;
(b) the Company shall have performed or complied in all material
respects with all material agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the
Effective Time and Parent shall have received a certificate of the
Chairman or President and Chief Financial Officer of the Company to
that effect; and
(c) ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel to WAG and Parent, shall have
issued its opinion, such opinion dated on or about the date of the
Closing, addressed to Parent, and reasonably satisfactory to it, based
upon certain representations of Parent and assumptions, to the effect
that the Merger will be treated for Federal income tax purposes as a
reorganization qualifying under the provisions of Section 368 of the
Code and that each of Parent, Merger Sub and the Company will be a
party to the reorganization within the meaning of Section 368(b) of
the Code, which opinion shall not have been withdrawn or modified in
any material respect.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time,
notwithstanding any requisite adoption and approval of this Agreement, as
follows:
(a) by mutual written consent duly authorized by the boards of
directors of each of Parent and the Company;
(b) by either Parent or the Company, if the Effective Time shall
not have occurred on or before November 30, 1998; provided, however,
that in the event that the Effective Time has not occurred by such
time solely due to the failure to satisfy the condition specified in
Section 8.01(d) or 8.01(e), then such date may be extended, at the
option of Parent or the Company, until December 31, 1998; provided
further, that the right to terminate this Agreement under this
Section 9.01(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement shall have caused, or
resulted in, the failure of the Effective Time to occur on or before
such date;
(c) by either Parent or the Company, if any Restraint shall have
been entered and shall have become final and nonappealable, provided
that the party seeking to terminate this Agreement pursuant to this
Section 9.01(c) shall have used best efforts to prevent the entry of
and to remove such Restraint;
(d) by the Company, if prior to the Parent Stockholders'
Meeting, the board of directors of WAG or Parent, as the case may be,
withdraws, modifies or changes its recommendation of the issuance of
the WAG Common Stock or the Parent Common Stock, as applicable, in the
Merger or the Capital Increase in a manner adverse to the Company or
its stockholders or shall have resolved to do so;
(e) by Parent, if prior to the Company Stockholders' Meeting,
(i) the board of directors of the Company withdraws, modifies or
changes its recommendation of this Agreement or the Merger in a manner
adverse to Parent or its stockholders or shall have resolved to do so,
or (ii) the board of directors of the Company shall have recommended
to the stockholders of the Company a Competing Transaction or shall
have resolved to do so, or (iii) a tender offer or exchange offer for
15 percent or more of the outstanding shares of capital stock of the
Company shall have been commenced and the board of directors of the
Company shall have failed to recommend against acceptance of such
tender offer or exchange offer by its stockholders (including by
taking no position with respect to the acceptance of such tender offer
or exchange offer by its stockholders);
(f) by Parent or the Company, (i) if this Agreement and the
Merger shall fail to receive the requisite votes for approval at the
Company Stockholders' Meeting or any adjournment or postponement
thereof or (ii) if the issuance of shares of WAG Common Stock or
Parent Common Stock, as the case may be, in the Merger or the Capital
Increase shall fail to receive the requisite votes for approval at the
Parent Stockholders' Meeting or any adjournment or postponement
thereof;
(g) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of the Company set forth in this
Agreement, or if any representation or warranty of the Company shall
have become untrue, incomplete or incorrect, in either case such that
the conditions set forth in Section 8.03 would not be satisfied (a
"TERMINATING COMPANY BREACH"); provided, however, that if such
Terminating Company Breach is curable by the Company through the
exercise of its reasonable efforts within 30 days and for so long as
the Company continues to exercise such reasonable efforts, Parent may
not terminate this Agreement under this Section 9.01(g); and provided
further that the preceding proviso shall not in any event be deemed to
extend any date set forth in paragraph (b) of this Section 9.01;
(h) by the Company, upon breach of any representation, warranty,
covenant or agreement on the part of Parent, WAG and Merger Sub set
forth in this Agreement, or if any representation or warranty of
Parent shall have become untrue, incomplete or incorrect, in either
case such that the conditions set forth in Section 8.02 would not be
satisfied (a "TERMINATING PARENT BREACH"); provided, however, that if
such Terminating Parent Breach is curable by Parent through the
exercise of its reasonable efforts within 30 days and for so long as
Parent continues to exercise such reasonable efforts, the Company may
not terminate this Agreement under this Section 9.01(h); and provided
further that the preceding proviso shall not in any event be deemed to
extend any date set forth in paragraph (b) of this Section 9.01; or
(i) by the Company at any time prior to the Company
Stockholders' Meeting, if, as a result of a Superior Proposal by a
third party, the Board of Directors of the Company determines in good
faith after consultation with outside counsel that it is highly
probable that the Board of Directors would violate its fiduciary
duties under applicable law if it failed to accept the Superior
Proposal.
SECTION 9.02. Effect of Termination. Except as provided in
Section 9.05, in the event of termination of this Agreement pursuant to
Section 9.01, this Agreement shall forthwith become void, there shall be no
liability under this Agreement on the part of any party hereto or any of
its affiliates or any of its or their officers or directors, and all rights
and obligations of each party hereto shall cease, subject to the remedies
of the parties hereto set forth in Section 9.05(b); provided, however, that
nothing herein shall relieve any party hereto from liability for the
willful or intentional breach of any of its representations and warranties
or the willful or intentional breach of any of its covenants or agreements
set forth in this Agreement.
SECTION 9.03. Amendment. This Agreement may be amended by the
parties hereto by action taken by or on behalf of their respective boards
of directors at any time prior to the Effective Time; provided, however,
that, after the approval of this Agreement by the stockholders of the
Company, WAG or Parent, as the case may be, no amendment may be made,
except such amendments that have received the requisite stockholder
approval and such amendments as are permitted to be made without
stockholder approval under the Delaware General Corporation Law, as
applicable. This Agreement may not be amended except by an instrument in
writing signed by the parties hereto.
SECTION 9.04. Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for or waive compliance with the
performance of any obligation or other act of any other party hereto or
(b) waive any inaccuracy in the representations and warranties contained
herein or in any document delivered pursuant hereto. Any such extension or
waiver shall be valid if set forth in an instrument in writing signed by
the party or parties to be bound thereby.
SECTION 9.05. Expenses. (a) Except as set forth in this
Section 9.05, all Expenses incurred in connection with this Agreement and
the Merger shall be paid by the party incurring such Expenses, whether or
not the Merger is consummated, except that Parent and the Company each
shall pay one-half of all Expenses incurred solely for printing, filing and
mailing the Registration Statement and the Proxy Statement and all SEC and
other regulatory filing fees incurred in connection with the Registration
Statement and the Proxy Statement and any fees required to be paid under
the HSR Act.
(b) In the event that (i) Parent shall terminate this Agreement
pursuant to Section 9.01(e); (ii) the Company shall terminate this
Agreement pursuant to Section 9.01(i); or (iii) (A) Parent shall terminate
this Agreement pursuant to Section 9.01(f) which termination is permissible
solely due to the Company's stockholders having failed to approve and adopt
this Agreement and the Merger at the Company Stockholders' Meeting, (B) at
the time of such failure to so approve this Agreement, there shall exist or
be proposed a Competing Transaction with respect to the Company and
(C) within 12 months thereafter, the Company shall enter into a definitive
agreement with respect to any Competing Transaction or any Competing
Transaction shall be consummated; then, in the case of clause (i), (ii) or
(iii) of this Section 9.05(b), promptly (and in any event within two
business days following demand therefor) after such termination or, in the
case of clause (iii) of this Section 9.05(b), promptly after the execution
and delivery of such agreement or such consummation, the Company shall pay
to Parent an amount equal to $5,500,000 plus all of Parent's Expenses, as
evidenced by reasonable documentation, up to an aggregate of $1,000,000.
(c) In the event that the Company shall terminate this Agreement
pursuant to Section 9.01(d) or Section 9.01(f)(ii), Parent shall pay to the
Company within two business days after such termination an amount equal to
$5,500,000 in the event of termination pursuant to Section 9.01(d) or
$2,000,000 in the event of termination pursuant to Section 9.01(f)(ii), in
either case, plus all of the Company's Expenses, as evidenced by reasonable
documentation, and in an amount no greater than $1,000,000, by wire
transfer of immediately available funds to an account designated by the
Company; provided, however, that, in the event both the Company and Parent
would otherwise be entitled to payments under this Section 9.05 in
connection with the termination of this Agreement pursuant to both Sections
9.01(f)(i) and (f)(ii), neither party shall be required to make any payment
under this Section 9.05.
(d) In the event that Parent shall terminate this Agreement
pursuant to Section 9.01(f)(i) and Parent is not otherwise entitled to
payment pursuant to Section 9.05(b), the Company shall pay to Parent within
two business days after such termination an amount equal to $2,000,000 plus
all of Parent's Expenses, as evidenced by reasonable documentation, and in
an amount no greater than $1,000,000, by wire transfer of immediately
available funds to an account designated by Parent; provided, however,
that, in the event both the Company and Parent would otherwise be entitled
to payments under this Section 9.05 in connection with the termination of
this Agreement pursuant to both Sections 9.01(f)(i) and (f)(ii), neither
party shall be required to make any payment under this Section 9.05.
(e) Any payment required to be made pursuant to Section 9.05(b)
shall be made to Parent not later than the date of the entry into an
agreement referred to therein and two business days after delivery to the
Company of notice of demand for payment and shall be made by wire transfer
of immediately available funds to an account designated by Parent in the
notice of demand for payment delivered pursuant to this Section 9.05(e).
In no event shall the Company be entitled to collect amounts pursuant to
this Section 9.05 relating to more than one specified event.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. Non-Survival of Representations and Warranties. The
representations and warranties in this Agreement shall terminate at the
Effective Time or upon the termination of this Agreement pursuant to
Section 9.01, as the case may be. This Section 10.01 shall not limit any
covenant or agreement herein which by its terms contemplates performance
after the Effective Time. Each party agrees that, except for the
representations and warranties contained in this Agreement and the Parent
Disclosure Schedule and the Company Disclosure Schedule, no party hereto
has made any other representations and warranties, and each party 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 Merger contemplated herein, notwithstanding the delivery
or disclosure to any other party or any party's representatives of any
documentation or other information with respect to any one or more of the
foregoing.
SECTION 10.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in
person, by telecopy or facsimile, by registered or certified mail (postage
prepaid, return receipt requested) or by a nationally recognized courier
service to the respective parties at their addresses set forth on the
signature pages to this Agreement (or at such other address for a party as
shall be specified in a notice given in accordance with this
Section 10.02).
SECTION 10.03. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic
or legal substance of the Merger is not affected in any manner materially
adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in a
mutually acceptable manner to the fullest extent permitted by applicable
Law in order that the Merger may be consummated as originally contemplated
to the fullest extent possible.
SECTION 10.04. Assignment; Binding Effect; Benefit. 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 hereto;
provided, however, that Parent may assign its rights, interests and
obligations hereunder to any successor or parent entity of Parent whose
shares are registered under Section 12 of the Exchange Act (or will be so
registered at the Effective Time). Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted assigns.
Notwithstanding anything contained in this Agreement to the contrary, other
than Section 7.04, nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and permitted assigns any rights or remedies under or
by reason of this Agreement.
SECTION 10.05. Incorporation of Exhibits. The Parent Disclosure
Schedule, the Company Disclosure Schedule and all Exhibits attached hereto
and referred to herein are hereby incorporated herein and made a part of
this Agreement for all purposes as if fully set forth herein.
SECTION 10.06. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
DELAWARE (WITHOUT REFERENCE TO CONFLICT OF LAW PRINCIPLES OTHER THAN THOSE
DIRECTING DELAWARE LAW). WAG, PARENT, MERGER SUB AND THE COMPANY EACH
HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY DELAWARE OR FEDERAL
COURT SITTING IN THE CITY OF WILMINGTON, DELAWARE, IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, AND WAG, PARENT,
MERGER SUB AND THE COMPANY EACH HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
DELAWARE STATE COURT OR SUCH FEDERAL COURT. WAG, PARENT, MERGER SUB AND
THE COMPANY EACH HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE
OF SUCH ACTION OR PROCEEDING.
SECTION 10.07. Waiver of Jury Trial. EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER
BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY TRANSACTION OR AGREEMENT CONTEMPLATED HEREBY OR THE
ACTIONS OF ANY PARTY HERETO IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE
OR ENFORCEMENT HEREOF.
SECTION 10.08. Construction. The parties have participated jointly
in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement
shall be construed as if drafted jointly by the parties, and no presumption
or burden of proof shall arise favoring or disfavoring any party by virtue
of the authorship of any of the provisions of this Agreement. Any
reference to any federal, state, local or foreign statute or law shall be
deemed also to refer to all rules and regulations promulgated thereunder,
unless the context otherwise requires. "Herein", "hereby", "hereunder",
"hereof", "hereinbefore", "hereinafter" and other equivalent words refer to
this Agreement as a whole and not solely to the particular Article or
Section in which such word is used. When a reference is made in this
Agreement to a Section or Exhibit, such reference shall be to a Section of,
or an Exhibit to, this Agreement unless otherwise indicated. ANY
INFORMATION CONTAINED IN ANY SCHEDULE OR EXHIBIT TO THIS AGREEMENT SHALL BE
DEEMED TO HAVE BEEN DISCLOSED IN ALL SUCH SCHEDULES AND EXHIBITS. The
table of contents and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever any of the words "include",
"includes" or "including" is used in this Agreement, it shall be deemed to
be followed by the words "without limitation".
SECTION 10.09. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed and delivered shall be deemed to be an original
but all of which taken together shall constitute one and the same
agreement.
SECTION 10.10. Entire Agreement. This Agreement (including the
Exhibits, the Parent Disclosure Schedule and the Company Disclosure
Schedule) constitute the entire agreement among the parties with respect to
the subject matter hereof and supersede all prior agreements and
understandings among the parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any
party hereto unless made in writing and signed by all parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be executed as of the date first written above by their respective
officers thereunto duly authorized.
WORLD ACCESS, INC.
By: /s/
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman and Chief Executive
Officer
2240 Resurgens Plaza
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
2700 International Tower
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇
WAXS INC.
By: /s/
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman and Chief Executive
Officer
▇/▇ ▇▇▇
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▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
TAIL ACQUISITION CORP.
By: /s/
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇
Title: Chairman and Chief Executive
Officer
▇/▇ ▇▇▇
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▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
TELCO SYSTEMS, INC.
By: /s/
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman and Chief Executive
Officer
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
with a copy to:
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇