EXHIBIT 99.A
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
BY AND AMONG
LOWRANCE ELECTRONICS, INC.,
ORBITAL SCIENCES CORPORATION
AND
ORBITAL MERGER SUB, INC.
Effective as of March 11, 1999
TABLE OF CONTENTS
Page
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ARTICLE I. THE MERGER............................................................................... 2
Section 1.1 The Merger....................................................................... 2
Section 1.2 Closing.......................................................................... 2
Section 1.3 Effective Time................................................................... 2
Section 1.4 Effects of the Merger............................................................ 2
ARTICLE II. THE SURVIVING CORPORATION.............................................................. 3
Section 2.1 Certificate of Incorporation; Bylaws............................................. 3
Section 2.2 Directors and Officers........................................................... 3
ARTICLE III. CONVERSION OF SHARES.................................................................. 3
Section 3.1 Conversion of Securities......................................................... 3
Section 3.2 Appraisal Rights................................................................. 4
Section 3.3 Payment of Merger Consideration.................................................. 4
Section 3.4 Redemption of Series "A" Preferred Stock......................................... 6
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................................... 6
Section 4.1 Organization and Qualification................................................... 6
Section 4.2 The Company's Capitalization..................................................... 7
Section 4.3 Authority Relative to the Agreement.............................................. 7
Section 4.4 Consents and Approvals; No Violation............................................. 8
Section 4.5 Reports and Financial Statements................................................. 8
Section 4.6 No Material Adverse Changes...................................................... 9
Section 4.7 Litigation....................................................................... 10
Section 4.8 Taxes............................................................................ 10
Section 4.9 Tax Basis........................................................................ 12
Section 4.10 Employee Benefit Plans........................................................... 12
Section 4.11 Employment Matters............................................................... 14
Section 4.12 Intellectual Property............................................................ 14
Section 4.13 Environmental Matters............................................................ 15
Section 4.14 Title to Properties; Encumbrances................................................ 15
Section 4.15 Permits and Licenses............................................................. 16
Section 4.16 Material Contracts and Commitments............................................... 16
Section 4.17 Insurance........................................................................ 17
Section 4.18 Product Warranties............................................................... 17
Section 4.19 Certain Business Practices....................................................... 17
Section 4.20 Compliance with Laws............................................................. 17
Section 4.21 Brokers and Finders.............................................................. 17
Section 4.22 Opinion of Financial Advisors.................................................... 18
Section 4.23 Company Stockholders' Approval................................................... 18
Section 4.24 Information Supplied............................................................. 18
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Section 4.25 Disclaimer of Additional and Implied Warranties.................................. 18
ARTICLE V.......................................................................................... 18
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB............................................ 18
Section 5.1 Organization and Qualification................................................... 18
Section 5.2 Authority Relative to the Agreement.............................................. 19
Section 5.3 Consents and Approvals; No Violation............................................. 19
Section 5.4 Litigation....................................................................... 20
Section 5.5 Brokers and Finders.............................................................. 20
Section 5.6 Information Supplied............................................................. 20
Section 5.7 Financing........................................................................ 20
Section 5.8 Disclaimer of Additional and Implied Warranties.................................. 21
ARTICLE VI. COVENANTS OF THE COMPANY, PARENT, AND MERGER SUB PRIOR TO THE EFFECTIVE TIME........... 21
Section 6.1 Conduct of Business by the Company Pending the Merger............................ 21
Section 6.2 No Shopping...................................................................... 22
Section 6.3 Conduct of Business by Parent Pending the Merger................................. 24
ARTICLE VII. ADDITIONAL AGREEMENTS................................................................. 25
Section 7.1 Obligations...................................................................... 25
Section 7.2 Proxy Statement.................................................................. 25
Section 7.3 Access to Information; Confidentiality.......................................... 25
Section 7.4 Indemnification of Company Directors, Officers and Employees..................... 26
Section 7.5 Certain Filings.................................................................. 27
Section 7.6 Public Announcements............................................................. 28
Section 7.7 Further Assurances............................................................... 29
Section 7.8 Notices of Certain Events........................................................ 29
Section 7.9 Company Stockholders' Meeting.................................................... 30
Section 7.10 Expenses and Fees................................................................ 30
Section 7.11 Employee Benefits................................................................ 31
Section 7.12 Takeover Statute................................................................. 32
Section 7.13 Efforts to Consummate the Merger................................................. 32
Section 7.14 Assumption of Debt............................................................... 32
ARTICLE VIII.CONDITIONS TO THE MERGER.............................................................. 32
Section 8.1 Conditions to the Obligations of Each Party...................................... 32
Section 8.2 Conditions to the Obligations of Parent and Merger Sub........................... 33
Section 8.3 Conditions to the Obligations of the Company..................................... 33
ARTICLE IX.TERMINATION; AMENDMENT; WAIVER.......................................................... 34
Section 9.1 Termination...................................................................... 34
Section 9.2 Effect of Termination............................................................ 36
ARTICLE X.MISCELLANEOUS............................................................................ 36
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Section 10.1 Non-Survival of Representations and Warranties; Representation, Warranties,
Covenants and Agreements of Merger Sub........................................... 36
Section 10.2 Entire Agreement; Assignment..................................................... 36
Section 10.3 Amendment and Modification....................................................... 37
Section 10.4 Waiver; Consents................................................................. 37
Section 10.5 Severability..................................................................... 37
Section 10.6 Notices.......................................................................... 37
Section 10.7 Governing Law.................................................................... 38
Section 10.8 Jurisdiction..................................................................... 38
Section 10.9 Descriptive Headings............................................................. 39
Section 10.10 Parties in Interest; No Third Party Beneficiary.................................. 39
Section 10.11 Counterparts..................................................................... 39
Section 10.12 Incorporation by Reference....................................................... 39
Section 10.13 Interpretation................................................................... 39
EXHIBITS
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Exhibit A - Definitions
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AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
THIS AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this
"Agreement"), effective as of March 11, 1999, is entered into by and among
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Lowrance Electronics, Inc., a Delaware corporation (the "Company"), Orbital
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Sciences Corporation, a Delaware corporation ("Parent"), and Orbital Merger Sub,
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Inc., a Delaware corporation and a wholly owned subsidiary of Parent ("Merger
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Sub").
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RECITALS
WHEREAS, the Company, Parent and Magellan Corporation, a majority
owned subsidiary of Parent ("Magellan"), entered into an Agreement and Plan of
Merger dated as of March 11, 1999 (the "Old Merger Agreement"), pursuant to
which (i) Lowrance would have merged with and into Magellan, with Magellan as
the surviving corporation and (ii) the Lowrance stockholders would have received
a certain number of shares of common stock of Parent in exchange for their
Shares (as defined in Section 3.1).
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WHEREAS, Magellan has assigned to Merger Sub all of its rights and
obligations under the Old Merger Agreement, pursuant to an Assignment and
Assumption Agreement dated as of August 26, 1999 by and between Magellan and
Merger Sub.
WHEREAS, each of Parent, Merger Sub and the Company believes that it
is in its and its stockholders' best interests to amend and restate the Old
Merger Agreement to be effective as of March 11, 1999, to provide that (i)
Merger Sub shall merge with and into the Company, with the Company as the
surviving corporation (the "Merger") and (ii) the Lowrance stockholders shall
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receive cash in exchange for their Shares as provided in Article III below.
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WHEREAS, subject to and in accordance with the terms and conditions of
this Agreement, the respective Boards of Directors of Parent, Merger Sub and the
Company have approved this Agreement and the Merger.
WHEREAS, concurrently with the execution of this Agreement and as an
inducement to Parent to enter into this Agreement, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
("Principal Shareholder"), who beneficially owns 1,907,423 shares of common
stock of the Company as of the date hereof, has entered into an Amended and
Restated Stockholder Support Agreement (the "Amended Support Agreement") with
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Parent pursuant to which Principal Shareholder has agreed to vote all voting
securities of the Company beneficially owned by him in favor of approval and
adoption of this Agreement and the Merger.
WHEREAS, the parties hereto desire to set forth certain
representations, warranties and covenants made by each to the other as an
inducement to the consummation of the Merger.
WHEREAS, certain terms used herein are defined in Exhibit A attached
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hereto.
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NOW, THEREFORE, in consideration of the premises and of the mutual
representations, warranties and covenants herein contained, the parties hereto
hereby agree as follows:
ARTICLE I.
THE MERGER
Section 1.1 The Merger. Subject to and in accordance with the terms and
conditions of this Agreement and in accordance with the Delaware General
Corporation Law (the "DGCL"), at the Effective Time (as defined in Section 1.3)
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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 (sometimes referred to herein as the
"Surviving Corporation").
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Section 1.2 Closing. The closing of the Merger (the "Closing") shall take
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place at the offices of Parent, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, or at such other place as Parent, Merger Sub and the Company shall agree,
as soon as practicable after the satisfaction or waiver of the conditions set
forth in Article VIII. The date on which the Closing actually occurs is referred
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to herein as the "Closing Date."
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Section 1.3 Effective Time. The Merger shall become effective at such
time (the "Effective Time") as a certificate of merger is filed with the
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Secretary of State of the State of Delaware in accordance with the DGCL (the
"Certificate of Merger") or at such later time as may be agreed by Parent,
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Merger Sub and the Company and specified in the Certificate of Merger in
accordance with applicable law. The Certificate of Merger shall be filed
simultaneously with the Closing. The parties acknowledge that it is their mutual
desire and intent to consummate the Merger as soon as practicable after the date
hereof, and in any event within five business days after the satisfaction, or
waiver, of all conditions set forth in Article VIII hereof, subject to the terms
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and conditions hereof. Accordingly, subject to the provisions hereof, the
parties shall use all reasonable efforts to consummate, as soon as practicable,
the transactions contemplated by this Agreement.
Section 1.4 Effects of the Merger. The Merger shall have the effects set
forth in the applicable provisions of the DGCL. Without limiting the generality
of the foregoing and subject thereto, at the Effective Time, all the rights,
privileges, powers, franchises and properties of the Company and Merger Sub
shall vest in the Surviving Corporation and all debts, liabilities and duties of
each of the Company and Merger Sub shall become the debts, liabilities and
duties of the Surviving Corporation.
ARTICLE II.
THE SURVIVING CORPORATION
Section 2.1 Certificate of Incorporation; Bylaws. 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 and thereafter shall continue to be its certificate of
incorporation and bylaws until amended as provided therein and under the DGCL.
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Section 2.2 Directors and Officers. The directors and officers of the
Surviving Corporation shall be as designated in Schedule 2.2, and such directors
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and officers shall hold office in accordance with the certificate of
incorporation and bylaws of the Surviving Corporation until their respective
successors are duly elected or appointed and qualified.
ARTICLE III.
CONVERSION OF SHARES
Section 3.1 Conversion of Securities.
(a) At the Effective Time, each share of common stock, par value
$0.10 per share, of the Company ("Share" and collectively the "Shares") issued
and outstanding immediately prior to the Effective Time (other than (i) Shares
held in the Company's treasury or by any of the Company's subsidiaries, (ii)
Shares held by Parent, Merger Sub or any other subsidiary of Parent and (iii)
Dissenting Shares (as defined in Section 3.2)) shall, by virtue of the Merger
and without any action on the part of Merger Sub, the Company or the holder
thereof, be converted into and represent the right to receive $7.30 in cash,
without interest (the "Merger Consideration"). Notwithstanding the foregoing, if
between the date of this Agreement and the Effective Time, the Shares shall have
been changed into a different number of shares or a different class by reason of
any stock dividend, subdivision, reclassification, recapitalization, split,
combination or exchange of shares, then the Merger Consideration contemplated by
the Merger shall be correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or exchange
of shares.
(b) At the Effective Time, each outstanding share of the common
stock, par value $.01 per share, of Merger Sub shall be converted into one share
of common stock, par value $.01 per share, of the Surviving Corporation.
(c) At the Effective Time, each Share held in the treasury of the
Company and each Share held by Parent, Merger Sub or any subsidiary of Parent,
Merger Sub or the Company immediately prior to the Effective Time shall, by
virtue of the Merger and without any action on the part of the Parent, Merger
Sub, the Company or the holder thereof, be canceled and cease to exist and no
payment shall be made with respect thereto.
Section 3.2 Appraisal Rights. Notwithstanding any provision of this
Agreement to the contrary, Shares with respect to which appraisal rights have
been demanded and perfected in accordance with Section 262 of the DGCL (the
"Dissenting Shares") shall not be converted into the right to receive the Merger
Consideration, and the holders thereof shall be entitled only to such rights
granted by the DGCL. Notwithstanding the preceding sentence, if any holder of
Shares who demands appraisal of such Shares under the DGCL shall effectively
withdraw such holder's demand for appraisal in accordance with Section 262 of
the DGCL or becomes ineligible for such appraisal through failure to perfect or
otherwise, then, as of the Effective Date or the occurrence of such event,
whichever last occurs, such holder's Dissenting Shares shall cease to be
Dissenting Shares and shall each be converted into and represent the right to
receive the Merger Consideration. The Company shall give Parent prompt notice of
any written demands for appraisal and any other instrument received by the
Company in connection therewith, and Parent
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shall have the right to participate in all negotiations and proceedings with
respect to such demands. The Company shall not, except with the prior written
consent of Parent, make any payment with respect to, or settle or offer to
settle, any such demands.
Section 3.3 Payment of Merger Consideration.
(a) Concurrent with the Effective Time, Parent shall deposit with
Bank Boston, N.A. or such other agent or agents as may be appointed by Parent
and Merger Sub (the "Payment Agent") for the benefit of the holders of Shares,
cash in the aggregate amount necessary to pay the Merger Consideration (such
cash is hereinafter referred to as the "Merger Fund") payable pursuant to
Section 3.1 in respect of outstanding Shares.
(b) As soon as reasonably practicable after the Effective Time, the
Payment Agent shall mail to each holder of record of a certificate or
certificates which immediately prior to the Effective Time represented
outstanding Shares (the "Certificates") whose Shares were converted into the
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right to receive the Merger Consideration pursuant to Section 3.1: (i) a letter
of transmittal (which shall specify that delivery shall be effected and risk of
loss and title to the Certificates shall pass only upon delivery of the
Certificates to the Payment Agent and shall be in such form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for the Merger
Consideration.
(c) Upon surrender of a Certificate for cancellation to the Payment
Agent together with such letter of transmittal duly executed, the holder of such
Certificate shall be entitled to receive in exchange therefor a check
representing the Merger Consideration which such holder has the right to receive
pursuant to the provisions of this Article III and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Shares which is not registered in the transfer records of the Company,
payment of the Merger Consideration may be made to a transferee if the
Certificate representing such Shares is presented to the Payment Agent
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 3.3, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the Merger Consideration as contemplated by this
Section 3.3.
(d) In the event that any Certificate shall have been lost, stolen or
destroyed, the Payment Agent shall issue in exchange therefor, upon the making
of an affidavit of that fact by the holder thereof, such Merger Consideration as
may be required pursuant to this Agreement; provided, however, that Parent or
the Payment Agent may also, in its discretion, require the delivery of a
suitable bond or indemnity.
(e) All Merger Consideration paid upon the surrender for exchange of
Shares in accordance with the terms hereof shall be deemed to have been paid in
full satisfaction of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares which were outstanding immediately prior to the
Effective Time. If after the Effective Time Certificates are presented to the
Surviving Corporation for any reason they shall be canceled and exchanged as
provided in this Article III.
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(f) Any portion of the Merger Fund that remains unclaimed by the
holders of Shares six months after the Effective Time shall be returned to
Parent, upon demand, and any such holder who has not exchanged such holder's
Shares for the Merger Consideration in accordance with this Section 3.3 prior to
that time shall thereafter look only to Parent for payment of the Merger
Consideration in respect of such holder's Shares. Notwithstanding the foregoing,
Parent shall not be liable to any holder of Shares for any amount paid to a
public official pursuant to applicable abandoned property laws. Any amounts
remaining unclaimed by holders of Shares two years after the Effective Time (or
such earlier date immediately prior to such time as such amounts would otherwise
escheat to or become property of any Governmental Authority) shall, to the
extent permitted by applicable law, become the property of Parent free and clear
of any claims or interest of any Person previously entitled thereto.
(g) Parent shall have the right to demand that the Payment Agent
return to Parent such portion of the Merger Fund that represents the Merger
Consideration payable for Shares for which appraisal rights have been perfected
and for which payment has been made pursuant to Section 262 of the DGCL.
(h) Surviving Corporation shall be entitled to deduct and
withhold from the Merger Consideration otherwise payable pursuant to this
Agreement to any holder of the Shares such amounts as it is required by
regulations to deduct and withhold with respect to the making of such payment
under the Code, or any provision of state, local or foreign law. To the extent
that amounts are so withheld by Surviving Corporation, such withheld amounts
shall be treated for all purposes of this Agreement as having been paid to the
holder of the Shares in respect of which such deduction and withholding was
made.
(i) The Payment Agent shall invest any cash included in the
Exchange Fund, as directed by Parent, on a daily basis. Any interest and other
income resulting from such investments shall be paid to Parent.
Section 3.4 Redemption of Series "A" Preferred Stock. Immediately prior
to the Effective Time, the Company will redeem for cash all shares of the Series
"A" Preferred Stock, par value $0.50 per share, of the Company (the "Series "A"
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Preferred Stock") issued and outstanding immediately prior to the Effective
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Time, upon delivery of the certificates(s) representing shares of the Series "A"
Preferred Stock and such other documents as may reasonably be required by the
Company and Parent. The holders of Series "A" Preferred Stock have agreed to
surrender their Series "A" Preferred Stock to the Company for $4.625 per share
of Series "A" Preferred Stock.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as
follows:
Section 4.1 Organization and Qualification.
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(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware. The
Company has all requisite corporate power and authority to carry on its business
as it is now being conducted, and to own, lease and operate its properties and
assets. The Company is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each state or other jurisdiction in
which the properties and assets owned, leased or operated by it or the nature of
the business conducted by it make such qualification necessary, except in such
jurisdictions where the failure to be duly qualified or in good standing does
not and would not reasonably be expected to result in a Material Adverse Effect
on the Company. Each such jurisdiction in which the Company is so qualified is
set forth on Schedule 4.1(a).
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(b) Schedule 4.1(b) contains a list of all Subsidiaries of the
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Company, indicating in each case the name, type of entity, jurisdiction of
organization and other jurisdictions in which it is authorized to do business
and the owners of its capital stock. Each Subsidiary of the Company which is a
corporation is duly incorporated, validly existing and in good standing under
the laws of the state or jurisdiction of its incorporation and has all requisite
corporate power and authority to carry on its business as it is now being
conducted and to own, lease and operate its properties and assets. Each
Subsidiary of the Company which is not a corporation is duly organized and
validly existing under all applicable laws and has all necessary power and
authority to carry on its business as it is now being conducted and to own,
lease and operate its properties and assets. Each Subsidiary of the Company is
duly qualified to do business as a foreign entity and is in good standing under
the laws of each state or other jurisdiction in which the properties and assets
owned, leased or operated by it or the nature of the business conducted by it
make such qualification necessary, except in such jurisdictions where the
failure to be duly qualified or in good standing does not and would not result
in a Material Adverse Effect on the Company. Except for the capital stock of the
Subsidiaries of the Company, the Company does not own, directly or indirectly,
any capital stock or other ownership interest in any Person.
(c) True, correct and complete copies of the Company's
Organizational Documents as of the date hereof and the Organizational Documents
of each Subsidiary of the Company as of the date hereof have been delivered by
the Company to Parent.
Section 4.2 The Company's Capitalization. The authorized capital stock
of the Company consists of (i) 10,000,000 Shares, and (ii) 300,000 shares of
preferred stock of the Company, of which 230,000 shares are no par value per
share (the "Company Preferred Stock"), and 70,000 shares are the Series "A"
Preferred Stock. As of March 5, 1999, (i) 3,768,796 shares of the Shares were
issued and outstanding, (ii) no shares of the Company Preferred Stock were
issued and outstanding, and (iii) 70,000 shares of the Series "A" Preferred
Stock were issued and outstanding (as of the Effective Time, such shares of
Series "A" Preferred Stock will have been redeemed in accordance with Section
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3.4). As of March 5, 1999, no Shares were held in the treasury of the Company
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and (ii) no shares of the Company Preferred Stock or the Series "A" Preferred
Stock were held in the treasury of the Company. Except as set forth on Schedule
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4.2, there are no outstanding subscriptions, options, phantom stock, convertible
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securities, rights, warrants, calls, irrevocable proxies or other agreements or
commitments of any kind directly or
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indirectly obligating the Company to issue any security of or equity interest in
the Company, or irrevocable proxies or any agreements restricting the voting or
transfer of or otherwise relating to any security or equity interest in the
Company or an agreement to do any of the foregoing. Except as set forth in this
Section 4.2, no shares of capital stock or other equity or voting securities of
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the Company are issued, reserved for issuance or outstanding. As of the date of
this Agreement, no bonds, debentures, notes or other indebtedness of the Company
having the right to vote on any matters on which stockholders may vote are
issued or outstanding. As of the date of this Agreement, there are no
outstanding obligations of the Company or the Subsidiaries of the Company to
repurchase, redeem or otherwise acquire any shares of capital stock of the
Company or the Subsidiaries of the Company. All of the outstanding shares of
capital stock of the Company and all outstanding shares of capital stock of each
Subsidiary of the Company have been duly authorized, validly issued and are
fully paid and non-assessable, and are free of preemptive rights. All dividends
declared prior to the date hereof have been paid.
Section 4.3 Authority Relative to the Agreement. The Company has full
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby, subject to the Company Required Statutory Approvals (as defined in
Section 4.4) and the approval of the stockholders of the Company ("Company
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Stockholders' Approval") at a special meeting of the stockholders of the Company
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pursuant to the DGCL ("Company Stockholders' Meeting"). The execution and
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delivery of this Agreement, the performance of its obligations hereunder and the
consummation of the transactions contemplated hereby have been duly and validly
authorized and approved by the Board of Directors of the Company, and no further
corporate actions or proceedings on the part of the Company are necessary to
authorize the execution and delivery of this Agreement, the performance of the
obligations hereunder or the consummation of the transactions contemplated
hereby, except for the Company Stockholders' Approval. This Agreement has been
duly and validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery by Parent and Merger Sub, constitutes the
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization, moratorium, or other similar laws relating to creditors' rights
generally and general equitable principles.
Section 4.4 Consents and Approvals; No Violation.
(a) Except for (i) filings as may be required by the HSR Act, (ii)
the filing of the Proxy Statement (as defined in Section 7.2) with the SEC
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pursuant to the Exchange Act, (iii) the filing of the Certificate of Merger with
the Secretary of State of the State of Delaware (the filings and approvals
referred to in clauses (i) through (iii) are collectively referred to as the
"Company Required Statutory Approvals"), and (iv) as otherwise set forth on
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Schedule 4.4, no filing or registration with, no notice to, or consent or
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approval of any third party, including but not limited to, any Governmental
Authority, creditor or other Person in a contractual relationship with the
Company or any Subsidiary of the Company, is necessary in connection with the
execution and delivery of this Agreement by the Company, the performance of its
obligations hereunder, or the consummation of the transactions contemplated
hereby.
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(b) Except as set forth on Schedule 4.4, the execution and delivery
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of this Agreement, the consummation of the transactions contemplated hereby, or
the compliance by the Company with the provisions hereof will not (i) conflict
with or violate any provision of any Organizational Document of the Company or
any Subsidiary of the Company; (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, contract,
agreement, commitment, bond, mortgage, indenture, license, lease, pledge
agreement or other instrument or obligation to which the Company or any
Subsidiary of the Company is a party or by which the Company or any Subsidiary
of the Company or any of their respective properties or assets may be bound;
(iii) violate or conflict with any provision of any Governmental Authorization
or Legal Requirement binding upon the Company or any Subsidiary of the Company;
or (iv) result in, or require, the creation or imposition of, any lien,
mortgage, pledge, security interest or other encumbrance upon or with respect to
any of the properties or assets now owned or used by the Company or any
Subsidiary of the Company, except in the instances of clauses (ii), (iii) and
(iv) as would not have a Material Adverse Effect on the Company or materially
impair the ability of the Company to consummate the transactions contemplated by
this Agreement.
Section 4.5 Reports and Financial Statements.
(a) The Company has made available to Parent copies of its (a) Annual
Reports on Form 10-K for the fiscal year ended July 31, 1998 and for each of the
two immediately preceding fiscal years, as filed with the SEC, (b) proxy and
information statements relating to (i) all meetings of its stockholders (whether
annual or special) since January 1, 1996 and (ii) any actions by written consent
in lieu of a stockholders' meeting since January 1, 1996, until the date hereof,
if any, and (c) all other reports, including quarterly reports, or registration
statements filed by the Company with the SEC since January 1, 1996 (other than
Registration Statements filed on Form S-8) (the documents referred to in clauses
(a), (b) and (c), including the exhibits filed therewith, are collectively
referred to as the "Company SEC Reports").
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(b) The Company has filed all forms, reports, statements and other
documents required to be filed by it with the SEC since January 1, 1996. No
Subsidiary of the Company is required to file any report, form or other document
with the SEC. As of their respective dates, the Company SEC Reports complied in
all material respects with all applicable requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations thereunder
applicable to such Company SEC Reports.
(c) As of their respective dates (and as of the effective date of any
registration statement as amended or supplemented filed by the Company), the
Company SEC Reports did not contain any untrue statement of any material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
(d) The audited consolidated financial statements and unaudited
interim consolidated financial statements of the Company included in such
Company SEC Reports
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(collectively, the "Company Financial Statements") have been prepared in
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accordance with GAAP (except as may be indicated therein or in the notes
thereto) and fairly present in all material respects the consolidated financial
position of the Company and its Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended, subject, in the case of the unaudited interim financial statements, to
normal year-end and audit adjustments and any other adjustments described
therein that are not material in amount or effect.
(e) Neither the Company nor any of its Subsidiaries has any
debts, liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on, or disclosed
or reserved against in, a consolidated balance sheet of the Company and its
Subsidiaries or in the notes thereto, prepared in accordance with GAAP
consistently applied, except for (a) debts, liabilities and obligations that
were so reserved on, or disclosed or reflected in, the consolidated balance
sheet of the Company and its Subsidiaries as of October 31, 1998 and the notes
thereto, included in the Quarterly Report on Form 10-Q of the Company for the
quarter then ended, or the consolidated balance sheet of the Company and its
Subsidiaries as of July 31, 1998 and the notes thereto, included in the Annual
Report on Form 10-K of the Company for the year then ended, and (b) debts,
liabilities or obligations arising in the ordinary course of business since
October 31, 1998.
Section 4.6 No Material Adverse Changes. Except as set forth on Schedule
--------
4.6 or as disclosed in the Company SEC Reports, since July 31, 1998 neither the
---
Company nor any Subsidiary has (i) issued or sold any of its respective capital
stock or corporate debt obligations (other than checks, drafts, bills and notes
issued in the ordinary course of its business consistent with past practice);
(ii) sold or granted any option, warrant or other right to purchase any of its
respective capital stock; (iii) declared or set aside or paid any dividend or
made any other distribution in respect of its respective capital stock, or,
directly or indirectly, purchased, redeemed or otherwise acquired any shares of
such stock; (iv) made any payments or distributions pursuant to any tax sharing
agreements or arrangements, except in the ordinary course of business consistent
with past practices; (v) acquired, transferred or disposed of, or agreed to
acquire, transfer or dispose of, any assets except in the ordinary course of
business consistent with past practice; (vi) subjected any assets to any liens,
other than liens for taxes not yet due and payable; (vii) suffered any damage,
destruction or casualty loss that has caused or could reasonably be expected to
cause a Material Adverse Effect on the Company, whether or not covered by
insurance; (viii) suffered any strike, labor dispute or threatened labor
dispute; (ix) guaranteed or assumed responsibility for any indebtedness or the
performance of any other obligations other than those of the Company or its
Subsidiaries; (x) operated the business of the Company or its Subsidiaries other
than in, or entered into any material transactions or arrangements (including
those effected for tax purposes) outside, the ordinary course of business
consistent with past practice; (xi) made any material change in their accounting
methods, principles or practices (except such change required by a concurrent
change in GAAP); (xii) revalued any assets thereof in any material respect;
(xiii) entered into any material transaction with any director, officer or 5%
shareholder of the Company or any Affiliate thereof other than in respect of
compensation for services rendered; (xiv) increased or established any bonus,
insurance, welfare, benefit, severance, pension, profit sharing retirement or
other employee
9
benefit plan or increased the compensation payable or to become payable to any
employees, officers, directors or consultants of the Company or any of its
Subsidiaries, which increase or establishment, individually or in the aggregate
will result in a material liability; or (xv) made any loan, contribution or
investment in any Person other than loans, contributions or investments in
wholly-owned Subsidiaries made in the ordinary course of business, consistent
with past practice. Since July 31, 1998 there has not been any event, occurrence
or development which has had or reasonably could be expected to have a Material
Adverse Effect with respect to the Company.
Section 4.7 Litigation. Except as set forth on Schedule 4.7 or as
------------
disclosed in the Company SEC Reports, there are no Proceedings pending or, to
the Knowledge of the Company, threatened against the Company or any Subsidiary
of the Company or involving any of the properties or assets of the Company or
any Subsidiary of the Company which would, if determined or resolved adversely
to the Company or any Subsidiary in accordance with the plaintiff's demands, or
would reasonably be expected to, have a Material Adverse Effect on the Company.
Section 4.8 Taxes. Except as set forth on Schedule 4.8 or as disclosed in
------------
the Company SEC Reports:
(a) The Company and its Subsidiaries have timely filed (or there
has been filed on their behalf) with the appropriate Governmental Authorities
all Tax Returns that each of them was required to file on or before the Closing
Date. All such Tax Returns were correct and complete in all material respects,
and all such Tax Returns properly reflected the respective liabilities of the
Company and its Subsidiaries for Taxes for the periods covered thereby. All
Taxes shown as due on the heretofore described Tax Returns have been timely
paid. Neither the Company nor any Subsidiary of the Company is currently the
beneficiary of any extension of time within which to file any Tax Return.
(b) Neither the Company nor any Subsidiary of the Company has
received any notice of deficiency or assessment or proposed deficiency or
assessment in connection with any Tax Return, and there are not any pending Tax
examinations of, or claims served against, the Company or any Subsidiary of the
Company. There is no material dispute or claim concerning any Tax liability of
the Company or any Subsidiary of the Company either claimed or raised by any
authority in writing and there is no material dispute or claim concerning any
Tax liability of the Company or any Subsidiary of the Company proposed or
threatened (whether orally or in writing) by any Governmental Authority. The
Company has made available to Parent true and correct copies of all federal and
state Tax Returns, examination reports and statements of deficiencies assessed
against or agreed to by the Company or any Subsidiary of the Company for all
open Tax years. Neither the Company nor any Subsidiary of the Company has
extended, or waived the application of, any statute of limitations of any
jurisdiction regarding the assessment or collection of any Taxes; neither the
Company nor any Subsidiary of the Company has requested any extension of time
within which to file any Tax Return which is currently pending and neither the
Company nor any Subsidiary of the Company has waived any statute of limitations
in respect of Taxes or agreed to any extension of time with respect to a Tax
10
assessment or deficiency. No material claim has ever been made by a Governmental
Authority in a jurisdiction where either the Company or a Subsidiary of the
Company does not file Tax Returns that the Company or a Subsidiary of the
Company is or may be subject to taxation by that jurisdiction. None of the
assets of the Company or a Subsidiary of the Company (i) are required to be
treated as being owned by another Person pursuant to the so-called safe harbor
lease provisions of former Section 168(f)(8) of the Code, (ii) secures any debt
the interest on which is tax-exempt under Code Section 103(a) or (iii) is tax-
exempt use property within the meaning of Code Section 168(h).
(c) Neither the Company nor any Subsidiary of the Company has
filed a consent under Section 341(f) of the Code concerning collapsible
corporations. Neither the Company nor any Subsidiary of the Company has been a
United States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code. Neither the Company nor any Subsidiary of the
Company is party to any Tax allocation or sharing agreement. Neither the Company
nor any Subsidiary of the Company has agreed or is required to make any
adjustment pursuant to Code Section 481(a) by reason of a change in accounting
method initiated by either the Company or any Subsidiary of the Company and the
Internal Revenue Service has not proposed any such adjustment or change in
accounting method. Neither the Company nor any Subsidiary of the Company has
made any payments, nor is any of them obligated to make any payments, nor is any
of them a party to any agreement that could obligate one or more of them to make
any payments that will not be deductible under Section 280G of the Code. Neither
the Company nor any Subsidiary of the Company (i) has been a member of an
affiliated group filing a consolidated federal income tax return (other than a
group the common parent of which was the Company) or (ii) has any liability for
the Taxes of any Person under Treas. Reg. (S) 1.1502-6 (or any similar provision
of state, local, or foreign law), as a transferee or successor, by contract, or
otherwise.
(d) The unpaid Taxes of the Company and its Subsidiaries (i) did
not, as of the most recent fiscal month end, exceed by any material amount the
reserve for Tax liability (other than any reserve for deferred taxes established
to reflect timing differences between book and tax income) set forth on the face
of the most recent balance sheet (rather than in any notes thereto) and (ii)
will not exceed by any material amount that reserve as adjusted for operations
and transactions through the Closing Date in accordance with the past custom and
practice of the Company in filing its Tax Returns.
Section 4.9 Tax Basis. The adjusted tax basis of the Company's assets
exceed the amount of the Company's liabilities.
Section 4.10 Employee Benefit Plans.
(a) Schedule 4.10(a) contains a list of all "employee pension
---------------
benefit plans" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) (sometimes referred to herein
-----
as the "Company Pension Plans"), "employee welfare benefit plans" (as defined
---------------------
in Section 3(1) of ERISA, hereinafter a "Company Welfare Plan"), "employee
--------------------
benefit plans"(as defined in Section 3(3) of ERISA, hereinafter an "Employee
--------
11
Benefit Plan," employment, consulting, severance, stock option, stock purchase,
------------
incentive, deferred compensation plans or arrangements, vacation, change in
control, stay-on bonus plans or arrangements, and other material employee
compensation and fringe benefit plans or agreements, whether oral or in writing,
which is entered into, maintained or contributed to or required to be
contributed to by the Company or an "ERISA Affiliate" (as hereinafter defined)
or under which the Company or any ERISA Affiliate may incur any liability
(collectively, the "Company Benefit Plans"). The Company upon request has made
---------------------
available to Parent true, complete, and correct copies of (i) each Company
Benefit Plan and any subsequently adopted amendments thereto, (ii) for the three
most recent plan years, annual reports on Form 5500 required to be filed with
respect to each Company Benefit Plan, (iii) the most recent summary plan
description for each Company Benefit Plan for which such a summary plan
description is required (with all summaries of material modifications provided
after the most recent summary plan description was distributed), (iv) each trust
agreement and group annuity contract relating to any Company Benefit Plan and
(v) each favorable determination letter from the Internal Revenue Service with
respect to each Company Benefit Plan that is intended to be qualified under
Section 401(a) of the Code. For purposes of this Section 4.10, "ERISA Affiliate"
---------------
shall mean any entity which is (or at any relevant time was) a member of a
"controlled group of corporations" with or under "common control" with the
Company as defined in Code Section 414(b), (c) or (m).
(b) All Company Benefit Plans are and have been administered in
material compliance with their terms and all applicable Legal Requirements,
including, without limitation, ERISA and the Code. 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 of its Subsidiaries could be subject
to any liability under the terms of such Company Benefit Plans, ERISA, the Code
or any other applicable law which would have a Material Adverse Effect on the
Company. There are no pending or, to the Company's or any of its Subsidiary's
Knowledge, threatened investigations by any Governmental Authority, termination
proceedings, or other claims (except claims for benefits payable in the normal
operation of the Company Benefit Plans), Proceedings against or involving any
Company Benefit Plan or asserting any rights or claims to benefits under any
Company Benefit Plan.
(c) No Company Benefit Plan is a "multiemployer plan" within the
meaning of Section 4001(a)(3) of ERISA (hereinafter, a "Multiemployer Plan").
------------------
Neither the Company nor any ERISA Affiliate has, at any time, withdrawn from a
Multiemployer Plan in a "complete withdrawal" or a "partial withdrawal" as
defined in Sections 4203 and 4205 of ERISA, respectively, so as to result in a
liability contingent or otherwise (including, but not limited to, the obligation
pursuant to an agreement entered into in accordance with Section 4204 of ERISA)
of the Company or any ERISA Affiliate. If, as of the Closing Date, the Company
(and all ERISA Affiliates) were to withdraw from all Multiemployer Plans to
which it (or any of them) has contributed or been obligated to contribute, it
(and they) would incur no liabilities to such plans under Title IV of ERISA.
(d) Each of the Company Benefit Plans that is an "employee pension
benefit plan" within the meaning of Section 3(2) of ERISA and each related trust
agreement, annuity contract or other funding instrument related thereto that is
intended to be qualified and tax
12
exempt under Sections 401(a) (or 403(a), as appropriate) and 501(a) of the Code
is qualified and tax-exempt under the provisions of Code Sections 401(a) (or
403(a), as appropriate) and 501(a) and has been so qualified during the period
from its adoption to date.
(e) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) except as set
forth on Schedule 4.10(e), result in any payment under any Company Benefit Plan
----------------
(including, without limitation, severance or unemployment compensation) becoming
due to any Person; (ii) result in the creation of a right or the acceleration of
vesting under any Company Benefit Plans; or (iii) materially increase any
benefits otherwise payable under any Company Benefit Plan.
(f) There is no contract, agreement, plan or arrangement covering any
employee or former employee of the Company or any ERISA Affiliate that,
individually or collectively, provides for the payment of any amount (i) that is
not deductible under Code Sections 162(a)(1) or 404 or (ii) that is an "excess
parachute payment" pursuant to Code Section 280G.
(g) Neither the Company nor any plan fiduciary of any Company Benefit
Plan has engaged in any transaction in violation of Sections 404 or 406 of ERISA
or any "prohibited transaction" as defined in Code Section 4975(c)(1), for which
no exemption exists under Section 408 of ERISA or Code Section 4975(c)(2) or
(d), or has otherwise violated the provisions of Part 4 of Title I, Subtitle B
of ERISA. The Company has not knowingly participated in a violation of Part 4 of
Title I, Subtitle B of ERISA by any plan fiduciary of any Company Benefit Plan
(or other employee benefit plan subject to ERISA) and has not been assessed any
civil penalty under Sections 502(1) of ERISA.
Section 4.11 Employment Matters. Except as set forth on Schedule 4.11 or
-------------
as disclosed in the Company SEC Reports, there are no agreements with labor
unions or associations representing employees of the Company or any Subsidiary
of the Company. No material work stoppage against the Company or any Subsidiary
of the Company is pending or, to the Knowledge of the Company, threatened.
Neither the Company nor any Subsidiary of the Company is involved in or, to the
Knowledge of the Company, is threatened with any material labor dispute or
similar material Proceeding relating to labor matters involving the employees of
the Company or any Subsidiary of the Company (excluding routine workers'
compensation claims). There is no pending, or to the Knowledge of the Company,
threatened, charge or complaint against the Company or any Subsidiary of the
Company by the National Labor Relations Board or any comparable state agency,
except where such unfair labor practice, charge or complaint would not have a
Material Adverse Effect on the Company.
Section 4.12 Intellectual Property. Schedule 4.12(a) sets forth with
----------------
respect to the proprietary rights of the Company and each Subsidiary of the
Company: (i) for each patent and patent application, as applicable, the number
and normal expiration date, or the application number and date of filing, (ii)
for each registered trademark, tradename or service ▇▇▇▇, the application serial
number or registration number, the application or issue date, the next renewal
date (if applicable), and the class of goods covered, and a listing of all
unregistered trademarks,
13
(iii) for each registered copyright, the year of creation or date of first
publication of the work, the number of registration for each country in which a
copyright application has been registered, (iv) for each registered mask work,
the registration number and date of registration and (v) all such proprietary
rights in the form of licenses. True and correct copies of all such listed
proprietary rights (including all pending applications and application related
documents and materials) owned, controlled or used by or on behalf of Company or
any Subsidiary of the Company or in which the Company or any Subsidiary of the
Company has any interest whatsoever have been provided or made available to
Parent.
(a) The Company and/or each of its Subsidiaries owns, or is licensed
or otherwise possesses legally enforceable rights to use all patents,
trademarks, trade names, service marks, copyrights, and any applications
therefor, technology, know-how, computer software programs or applications, and
tangible or intangible proprietary information or material that are used in the
business of the Company and its Subsidiaries as currently conducted, except as
would not have a Material Adverse Effect on the Company.
(b) Except as disclosed in Schedule 4.12(b) or as would not have a
----------------
Material Adverse Effect on the Company: (i) the Company is not, nor will it be
as a result of the execution and delivery of this Agreement or the performance
of its obligations hereunder, in violation of any licenses, sublicenses and
other agreements as to which the Company is a party and pursuant to which the
Company is authorized to use any third-party patents, trademarks, service marks
and copyrights ("Third-Party Intellectual Property Rights"); (ii) no claims
----------------------------------------
with respect to the patents, registered and material unregistered trademarks and
service marks, registered copyrights, trade names and any applications therefor
owned by the Company and its Subsidiaries (the "Company Intellectual Property
-----------------------------
Rights"), any trade secret material to the Company, or Third-Party Intellectual
------
Property Rights to the extent arising out of any use, reproduction or
distribution of such Third-Party Intellectual Property Rights by or through the
Company or any of its Subsidiaries, are currently pending or, to the Knowledge
of the Company, threatened by any Person; and (iii) the Company has no Knowledge
of any valid grounds for any bona fide claims (1) to the effect that the
manufacture, sale, licensing or use of any products as now used, sold or
licensed or proposed for use, sale or license by the Company or any of its
Subsidiaries, infringes on any copyright, patent, trademark, service ▇▇▇▇ or
trade secret; (2) against the use by the Company or any of its Subsidiaries, of
any trademarks, trade names, trade secrets, copyrights, patents, technology,
know-how or computer software programs and applications used in the business of
the Company or any of its Subsidiaries as currently conducted or as proposed to
be conducted; (3) challenging the ownership, validity or effectiveness of any of
the Company Intellectual Property Rights or other trade secret material to the
Company; or (4) challenging the license or legal enforceable right to use of the
Third-Party Intellectual Rights by the Company or any of its Subsidiaries.
Section 4.13 Environmental Matters. Except as set forth on Schedule 4.13
-------------
or as disclosed in the Company SEC Reports, (i) the Company has not received any
notice of violation relating to the failure of any Company Business Facility to
comply with Environmental Laws, other than violations that would not reasonably
be expected to have a Material Adverse Effect and (ii) there are no existing or
pending Proceedings asserted by any Governmental Authority or
14
other third party relating to any Environmental Laws at any Company Business
Facility, except that which would not have a Material Adverse Effect. The
properties, assets and operations of the Company and its Subsidiaries are in
compliance in all material respects with all applicable Environmental Laws.
Except as disclosed on Schedule 4.13, there are no present or past Environmental
Conditions in any way relating to the business of the Company or any of its
Subsidiaries, any properties or facilities currently or formerly managed by the
Company or any of its Subsidiaries.
Section 4.14 Title to Properties; Encumbrances. Schedule 4.14 lists all
-------------
real properties owned or leased by the Company or any of its Subsidiaries. The
Company and its Subsidiaries have good and valid title to all of the properties,
assets, real and personal, reflected as owned in the books and records of the
Company and the Company Financial Statements and all properties and assets
purchased or otherwise acquired by the Company or any Subsidiary of the Company
since July 31, 1998, except for those properties and assets disposed of in the
ordinary course of business since July 31, 1998. None of the properties or
assets owned by the Company or its Subsidiaries is subject to any lien,
mortgage, pledge, security interest or other encumbrance arising by, through or
under the Company or its Subsidiaries, except (i) liens, mortgages, pledges,
security interests or other encumbrances securing liabilities or obligations
shown on the Company Financial Statements, with respect to which no default (or
circumstance which with notice or lapse of time or both would constitute a
default) presently exists, (ii) liens, mortgages, pledges, security interests or
other encumbrances incurred in connection with the purchase of property or
assets after July 31, 1998, with respect to which no default (or circumstance
which with notice or lapse of time or both would constitute a default) exists,
(iii) liens, mortgages, pledges, security interests or other encumbrances
described in Schedule 4.14, (iv) liens for taxes, assessments or governmental
-------------
charges or levies which are not delinquent, and (v) liens, mortgages, pledges,
security interests or other encumbrances that do not materially interfere with
the Company's and its Subsidiaries' use and enjoyment of the assets encumbered
thereby. There are no pending or to the Knowledge of the Company, threatened
condemnation proceedings against or affecting any material properties or assets
of the Company or any of its Subsidiaries is subject to any commitment or other
arrangement for its sale to a third party outside of the ordinary course of
business. All leases under which the Company or its Subsidiaries lease any real
property have been made available to Parent and are in good standing, valid and
effective in accordance with their respective terms, and there is not, under any
such leases, any existing default or event which with notice or lapse of time or
both would become a default by or on behalf of the Company or its Subsidiaries,
except for any default which would not have a Material Adverse Effect on the
Company.
Section 4.15 Permits and Licenses. Except as set forth in Schedule 4.15,
-------------
the Company and each Subsidiary of the Company have all material permits,
licenses, certificates and authorities including all Governmental Authorizations
(collectively, "Permits") from Governmental Authorities required to own, lease
-------
and operate their properties and conduct their businesses as they are now being
conducted, except for Permits the failure of which to obtain would not
reasonably be expected to have a Material Adverse Effect. Such Permits (i) are
in full force and effect unimpaired by any act or omission of the Company or any
Subsidiary of the Company, or their employees or agents, and (ii) have not been
suspended or revoked. The
15
Company and each Subsidiary of the Company have complied with, and will continue
to comply with, the terms of the Permits until Closing, except for any failure
to comply which would not reasonably be expected to result in a Material Adverse
Effect on the Company.
Section 4.16 Material Contracts and Commitments. Except as set forth on
Schedule 4.16 or disclosed in the Company SEC Reports, neither the Company nor
-------------
any of its Subsidiaries is a party to, or is bound by (a) any material
agreement, indenture, or other instrument relating to the borrowing of money by
the Company or any of its Subsidiaries or the guarantee by the Company or any of
its Subsidiaries of any such obligation or (b) any other contract or agreement
or amendment thereto that (i) is required to be filed by the Company with the
SEC pursuant to Item 601 of Regulation S-K, (ii) places any material
restrictions on the right of the Company or any of its Subsidiaries to engage in
any material business activity currently conducted, or (iii) is otherwise
material to the financial condition, results of operations or business of the
Company and its Subsidiaries, taken as a whole (collectively, the "Company
-------
Contracts"). Except as set forth on Schedule 4.16, neither the Company nor any
--------- -------------
nor any of its Subsidiaries is in default under any Company Contract, and there
has not occurred any event that with the lapse of time or the giving of notice
or both would constitute such a default, other than defaults which in the
aggregate would not reasonably be expected to have a Material Adverse Effect on
the Company.
Section 4.17 Insurance. Schedule 4.17 sets forth a list of all insurance
-------------
policies issued in favor of the Company or its Subsidiaries which relate to the
business of the Company or its Subsidiaries, and all such policies are currently
in force and effect.
Section 4.18 Product Warranties. As of January 31, 1999, the Company's
reserve for its obligations under its express warranties covering its products
sold was $1,010,000.
Section 4.19 Certain Business Practices. Neither the Company, any of its
Subsidiaries, nor, to the Company's Knowledge, any directors, officers, agents
or employees of the Company or any of its Subsidiaries, (i) has used any funds
for unlawful contributions, gifts, entertainment or other unlawful expenses
related to political activity; (ii) has 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) has made any other payment prohibited by
applicable law; or (iv) in the case of the Company, any of its Subsidiaries or
any of its officers or key employees, is a party to or bound by any
noncompetition or similar agreement or obligation with any third party, which
restricts its or his or her business practices.
Section 4.20 Compliance with Laws. The conduct of the business of the
Company and its Subsidiaries complies with all applicable Legal Requirements
(other than Environmental Laws which are governed solely by Section 4.13),
------------
except for violations or failures to so comply, if any, that would not
reasonably be expected to have a Material Adverse Effect on the Company.
Section 4.21 Brokers and Finders. Except for the fees and expenses
payable to Chase Securities Inc. ("Chase Securities"), which fees are reflected
----------------
in its agreement with the Company (a copy of which has been delivered to
Parent), the Company has not entered into any contract,
16
arrangement or understanding with any Person or firm which may result in the
obligation of the Company to pay any finder's fees, brokerage or agent
commissions or other like payments in connection with the transactions
contemplated hereby. Except for the fees and expenses paid or payable to Chase
Securities, there is no claim for payment by the Company of any investment
banking fees, finder's fees, brokerage or agent commissions or other like
payments in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
Section 4.22 Opinion of Financial Advisors. The Company has received the
opinion of American Appraisal Associates dated the date of this Agreement, to
the effect that, as of such date, the consideration to be received in the Merger
by the Company's stockholders is fair to the Company's stockholders from a
financial point of view, and a copy of the written opinion will be delivered to
Parent and Merger Sub promptly after its receipt by the Company, but in any
event not later than three business days after the date of this Agreement.
Section 4.23 Company Stockholders' Approval. The affirmative vote of
stockholders of the Company required for approval and adoption of this Agreement
and the Merger is 63 1/3% of the outstanding shares of the Shares.
Section 4.24 Information Supplied. None of the information supplied or to
be supplied by the Company for inclusion in the Proxy Statement will, at the
date mailed to stockholders and at the times of the meeting or meetings of
stockholders of the Company to be held in connection with the Merger, contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein in light of the circumstances under which they are made not misleading.
The Proxy Statement will comply as to form in all material respects with the
provisions of the Exchange Act and the rules and regulations thereunder.
Section 4.25 Disclaimer of Additional and Implied Warranties. The Company
is making no representations or warranties, express or implied, of any nature
whatsoever except as specifically set forth in Article IV of this Agreement.
----------
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
Section 5.1 Organization and Qualification. Each of Parent and Merger
Sub is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware. Each of Parent and Merger Sub has all
requisite corporate power and authority to carry on its business as it is now
being conducted, and to own, lease and operate its properties and assets. Each
of Parent and Merger Sub is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each state or other
jurisdiction in which the properties and assets owned, leased or operated by it
or the nature of the business conducted by it make such qualification necessary,
except in such jurisdictions where the failure to be duly
17
qualified or in good standing does not and would not reasonably be expected to
result in a Material Adverse Effect on Parent. Each such jurisdiction in which
Parent is so qualified is listed on Schedule 5.1.
------------
Section 5.2 Authority Relative to the Agreement. Each of Parent and
Merger Sub has full corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby, subject to the Parent Required Statutory
Approvals (as defined in Section 5.3). The execution and delivery of this
-----------
Agreement, the performance of the obligations hereunder and the consummation of
the transactions contemplated hereby have been duly and validly authorized and
approved by the Board of Directors of Parent and Merger Sub and by Parent, as
the sole stockholder of Merger Sub and no further corporate actions or
proceedings on the part of Parent or Merger Sub are necessary to authorize the
execution and delivery of this Agreement, the performance of the obligations
hereunder or the consummation of the transactions contemplated hereby. This
Agreement has been duly and validly executed and delivered by Parent and Merger
Sub and, assuming the due authorization, execution and delivery hereof by the
Company, this Agreement constitutes the valid and binding obligation of each of
Parent and Merger Sub, enforceable against it in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium, or
other similar laws relating to creditors' rights generally and general equitable
principles.
Section 5.3 Consents and Approvals; No Violation.
(a) Except for (i) filings as may be required by the HSR Act,
(ii) filings required pursuant to federal and state securities laws and
regulations of the New York Stock Exchange, Inc., (iii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware (the
filings and approvals referred to in clauses (i) through (iii) are collectively
referred to as the "Parent Required Statutory Approvals"), and (iv) as
-----------------------------------
otherwise set forth on Schedule 5.3, no filing or registration with, no notice
------------
to, or consent or approval of any third party, including, but not limited to,
any Governmental Authority, creditor or other Person in a contractual
relationship with Parent or Merger Sub, is necessary in connection with the
execution and delivery of this Agreement by Parent or Merger Sub, the
performance of its obligations hereunder, or the consummation of the
transactions contemplated hereby.
(b) Except as set forth on Schedule 5.3, the execution and
------------
delivery of this Agreement, the consummation of the transactions contemplated
hereby, or the compliance by Parent and Merger Sub with any of the provisions
hereof will not (i) conflict with or violate any provision of the respective
Organizational Document of Parent and Merger Sub; (ii) result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, amendment, cancellation or
acceleration) under, any of the terms, conditions or provisions of any note,
contract, agreement, commitment, bond, mortgage, indenture, license, lease,
pledge agreement or other instrument or obligation to which Parent or any
Subsidiary of Parent is a party or by which Parent or any Subsidiary of Parent
or any of their respective properties or assets may be bound; (iii) violate or
conflict with any provision of any Governmental Authorization or Legal
Requirement binding upon Parent or any
18
Subsidiary of Parent; or (iv) result in, or require, the creation or imposition
of, any lien, mortgage, pledge, security interest or other encumbrance upon or
with respect to any of the properties or assets now owned or used by Parent or
any Subsidiary of Parent, except as may be required in connection with the
assumption by a Subsidiary of Parent of the indebtedness of the Company, and
except in the instances of clauses (ii), (iii) and (iv) as would not reasonably
be expected to have a Material Adverse Effect on Parent or materially impair the
ability of Parent to consummate the transactions contemplated by this Agreement.
Section 5.4 Litigation. Except as set forth on Schedule 5.4 or as
------------
disclosed in all forms, reports and documents filed by Parent with the SEC since
January 1, 1996, there are no Proceedings pending or, to the Knowledge of
Parent, threatened against Parent or any Subsidiary of Parent or involving any
of the properties or assets of Parent or any Subsidiary of the Parent that seek
to restrain or enjoin the consummation of the Merger or which would, if
determined or resolved adversely to the Parent or any Subsidiary in accordance
with the plaintiff's demands, reasonably be expected to have a Material Adverse
Effect on the Parent.
Section 5.5 Brokers and Finders. Neither Parent nor Merger Sub has
entered into any contract, arrangement or understanding with any Person or firm
which may result in the obligation of Parent or Merger Sub to pay any finder's
fees, brokerage or agent commissions or other like payments in connection with
the transactions contemplated hereby. There is no claim for payment by Parent or
Merger Sub of any investment banking fees, finder's fees, brokerage or agent
commissions or other like payments in connection with the negotiations leading
to this Agreement or the consummation of the transactions contemplated hereby.
Section 5.6 Information Supplied. None of the information supplied or
to be supplied by Parent or Merger Sub for inclusion or incorporated by
reference in the Proxy Statement will, at the date mailed to stockholders and at
the times of the meeting or meetings of stockholders of the Company to be held
in connection with the Merger, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein in light of the circumstances under which
they are made not misleading.
Section 5.7 Financing. Parent or Merger Sub has sufficient capital
resources to enable Merger Sub to effect the Merger as contemplated herein at
the Effective Time.
Section 5.8 Disclaimer of Additional and Implied Warranties. Each of
Parent and Merger Sub is making no representations or warranties, express or
implied, of any nature whatsoever except as specifically set forth in Article V
---------
of this Agreement.
ARTICLE VI.
COVENANTS OF THE COMPANY, PARENT, AND MERGER SUB
PRIOR TO THE EFFECTIVE TIME
Section 6.1 Conduct of Business by the Company Pending the Merger. The
Company covenants and agrees that, from the date of this Agreement until the
Effective Time,
19
unless Parent and Merger Sub shall otherwise agree in writing or as otherwise
expressly contemplated by this Agreement:
(a) The business of the Company and its Subsidiaries shall be
conducted only in, and the Company and its Subsidiaries shall not take any
action except in, the ordinary course of business consistent with past practice
and in compliance in all material respects with all applicable Legal
Requirements;
(b) The Company shall not directly or indirectly do any of the
following: (i) issue, sell, pledge, dispose of or encumber, or permit any
Subsidiary of the Company to issue, sell, pledge, dispose of or encumber, (A)
any capital stock of the Company or any of its Subsidiaries except for the
redemption of the shares of Series "A" Preferred Stock outstanding as set forth
in Section 3.4 or (B) other than in the ordinary course of business and
-----------
consistent with past practice and not relating to the borrowing of money, any
assets of the Company or any of its Subsidiaries; (ii) amend or propose to amend
the respective Organizational Documents of the Company or any of its
Subsidiaries; (iii) split, combine or reclassify any outstanding capital stock,
or declare, set aside or pay any dividend payable in cash, stock, property or
otherwise with respect to its capital stock whether now or hereafter
outstanding, except for dividends by the Company's Subsidiaries to the Company;
(iv) redeem, purchase or acquire or offer to acquire, or permit any of its
Subsidiaries to redeem, purchase or acquire or offer to acquire, any of its or
their capital stock except for the redemption of the Series "A" Preferred Stock
as set forth in Section 3.4; or (v) except in the ordinary course of business
and consistent with past practice, enter into any contract, agreement,
commitment or arrangement with respect to any of the matters set forth in this
Section 6.1(b);
--------------
(c) The Company shall not, and shall not permit any Subsidiary of the
Company to, (i) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of the Company or any Subsidiary of the Company or
guarantee any debt securities of other Persons other than indebtedness of the
Company or any Subsidiary of the Company to the Company or any Subsidiary of the
Company and other than in the ordinary course of business, (ii) make any loans,
advances or capital contributions to, or investments in, any other Person, other
than by the Company or any Subsidiary of the Company to or in the Company or any
Subsidiary of the Company or (iii) pay, discharge or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than in the case of clauses (ii) and (iii),
loans, advances, capital contributions, investments, payments, discharges or
satisfactions incurred or committed to in the ordinary course of business
consistent with past practice.
(d) Except as disclosed on Schedule 4.16, the Company shall not, and
-------------
shall not permit any Subsidiary of the Company to, (i) increase the compensation
payable or to become payable to any of its executive officers or employees or
(ii) take any action with respect to the grant of any severance or termination
pay, or stay, bonus or other incentive arrangement (other than pursuant to
benefit plans and policies in effect on the date of this Agreement), except any
such increases or grants made in the ordinary course of business and in
accordance with past practice.
20
(e) The Company shall use reasonable efforts (i) to preserve intact
the business organization of the Company and each of its Subsidiaries; (ii) to
maintain in effect any franchises, authorizations or similar rights of the
Company and each of its Subsidiaries; (iii) to keep available the services of
its and their current officers and key employees; (iv) to preserve the goodwill
of those having business relationships with it and its Subsidiaries; (v) to
maintain and keep its properties and the properties of its Subsidiaries in as
good a repair and condition as presently exists, except for deterioration due to
ordinary wear and tear and damage due to casualty; and (vi) to maintain in full
force and effect insurance comparable in amount and scope of coverage to that
currently maintained by it and its Subsidiaries;
(f) The Company shall not make or agree to make, or permit any of its
Subsidiaries to make or agree to make, any new capital expenditure other than
those made in accordance with the 1999 Operating and Capital Budget approved by
the Company's Board of Directors;
(g) The Company shall and shall cause its Subsidiaries to perform in
all material respects their respective obligations under any contracts and
agreements to which any of them is a party or to which any of their assets is
subject, except to the extent such failure to perform would not result in a
Material Adverse Effect, and except for such obligations as the Company or its
Subsidiaries in good faith may dispute; and
(h) The Company shall not, and shall not permit any Subsidiary of the
Company to, take any action that could reasonably be expected to result in (i)
any of the representations or warranties of the Company set forth in this
Agreement that are qualified as to materiality becoming untrue, (ii) any of such
representations and warranties that are not so qualified becoming untrue in any
material respect or (iii) any of the conditions to the Merger set forth in
Article VIII not being satisfied.
------------
Section 6.2 No Shopping.
(a) The Company represents and warrants to and covenants and agrees
with Parent and Merger Sub that neither the Company nor any of the Subsidiaries
has any agreement, arrangement or understanding with any potential acquiror
that, directly or indirectly, would be violated, or require any payments, by
reason of the execution, delivery and/or consummation of this Agreement.
(b) The Company shall, and shall cause its Subsidiaries and its and
their officers, employees, investment bankers, attorneys and other agents and
representatives to, immediately cease any existing discussions or negotiations
with any Person other than Parent and Merger Sub (a "Third Party") heretofore
-----------
conducted with respect to any Company Acquisition Proposal (as defined below).
The Company shall not, and shall cause its Subsidiaries and its and their
respective officers, directors, employees, investment bankers, attorneys and
other agents and representatives not to, directly or indirectly (x) solicit,
initiate, continue, facilitate or encourage (including by way of furnishing or
disclosing non-public information) any inquiries, proposals or offers from any
Third Party with respect to, or that could reasonably be expected to lead to,
any acquisition or purchase of a material portion of the assets or business or a
25% or
21
more voting equity interest in (including by way of a tender offer) or any
amalgamation, merger, consolidation or business combination with, or any
recapitalization or restructuring, or any similar transaction involving, the
Company or any of its Subsidiaries (the foregoing being referred to as a
"Company Acquisition Proposal") or (y) negotiate, explore or otherwise
----------------------------
communicate in any way with any Third Party with respect to any Company
Acquisition Proposal, or enter into, approve or recommend any agreement,
arrangement or understanding requiring the Company to abandon or fail to
consummate the Merger or any other transaction contemplated hereby.
(c) Notwithstanding anything to the contrary in the foregoing clause
(b), the Company may in response to an unsolicited written proposal with respect
to a Company Acquisition Proposal, from a Third Party (i) furnish or disclose
non-public information to such Third Party and (ii) negotiate, explore or
otherwise communicate with such Third Party, in each case only if (A) the Board
of Directors of the Company by majority vote determines in good faith upon
considering the advice of outside counsel that failing to take such action would
constitute a breach of the fiduciary duties of the Board of Directors of the
Company under applicable law (the Company Acquisition Proposal meeting the
requirements of this clause (A), a "Superior Proposal"), (B) prior to
-----------------
furnishing or disclosing any non-public information to, or entering into
discussions or negotiations with, such Third Party, the Company receives from
such Third Party an executed confidentiality agreement with terms no less
favorable in the aggregate to the Company than those contained in the
Confidentiality Agreement between the Company and Parent (the "Confidentiality
---------------
Agreement"), but which confidentiality agreement shall not provide for any
---------
exclusive right to negotiate with the Company or any payments by the Company and
(C) the Company advises Parent and Merger Sub of all such non-public information
delivered to such Third Party concurrently with such delivery; provided however,
that the Company shall not, and shall cause its Affiliates not to, enter into a
definitive agreement with respect to a Superior Proposal unless (w) the Company
has given Parent and Merger Sub five business days notice of its intention to
enter into such definitive agreement, (x) if Parent and Merger Sub make a
counter-proposal within such five business day period, the Board of Directors of
the Company shall have determined, in light of any such counter-proposal, that
the Third Party's proposal is still a Superior Proposal, (y) the Company
concurrently terminates this Agreement in accordance with the terms hereof and
pays any termination fees required under Section 7.10 and agrees to pay any
------------
other amounts required under such Section and (z) such agreement permits the
Company to terminate it if it receives a Superior Proposal, such termination and
related provisions to be on terms no less favorable to the Company, including as
to fees and reimbursement of expenses, as those contained herein.
(d) The Company shall promptly (but in any event within one day of
the Company becoming aware of same) advise Parent and Merger Sub of the receipt
by the Company, any of its Subsidiaries or any of its bankers, attorneys or
other agents or representatives of any inquiries or proposals relating to a
Company Acquisition Proposal and any actions taken pursuant to subsection (c)
above. The Company shall promptly (but in any event within one day of the
Company becoming aware of same) provide Parent and Merger Sub with a copy of any
such inquiry or proposal in writing and a written statement with respect to any
such inquiries or proposals not in writing, which statement shall include the
identity of the parties
22
making such inquiries or proposal and the material terms thereof. The Company
shall, from time to time, promptly (but in any event within one day of the
Company becoming aware of same) inform Parent and Merger Sub of the status and
content of and development with respect to any discussions regarding any Company
Acquisition Proposal with a third party, including (i) the calling of meetings
of the Board of Directors of the Company to take action with respect to such
Company Acquisition Proposal, (ii) the execution of any letters of intent,
memoranda of understanding or similar non-binding agreements with respect to
such Company Acquisition Proposal, (iii) the waiver of any standstill agreement
to which the Company is or becomes a party, (iv) the determination by the Board
of Directors of the Company to recommend to the stockholders of the Company that
they approve or accept a Superior Proposal or withdraw or modify in a manner
adverse to Parent or Merger Sub its approval or recommendation of this Agreement
or the Merger, (v) the determination by the Company to publicly disclose receipt
of a Superior Proposal and (vi) the waiver by the Company of any confidentiality
agreement with a Person proposing a Superior Proposal. For the avoidance of
doubt, the Company agrees that it will not enter into any definitive agreement
with respect to a Superior Proposal unless and until Parent and Merger Sub have
been given notice of the identity of the party making such Superior Proposal,
the terms thereof and developments referred to in the preceding sentence and the
intent to enter into such a definitive agreement at least five business days
prior to the entering into such agreement.
Section 6.3 Conduct of Business by Parent Pending the Merger. Parent
covenants and agrees that, from the date of this Agreement until the Effective
Time, unless the Company shall otherwise agree in writing or as otherwise
expressly contemplated by this Agreement, Parent shall not, and shall not permit
any of its Subsidiaries to, take any action that could reasonably be expected to
result in (i) any of the respective representations or warranties of the Parent
and Merger Sub set forth in this Agreement that are qualified as to materiality
becoming untrue, (ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect or (iii) any of the conditions
to the Merger set forth in Article VIII not being satisfied.
ARTICLE VII.
ADDITIONAL AGREEMENTS
Section 7.1 Obligations. The Company, Merger Sub and Parent will take
all reasonable action necessary to perform their respective obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement. None of the Company, Parent or Merger Sub shall take
any action that would reasonably be expected to render them unable to perform
their respective obligations under this Agreement and to consummate the Merger
on the terms and conditions set forth in this Agreement.
Section 7.2 Proxy Statement. The Company shall promptly prepare and
file with the SEC preliminary proxy materials with appropriate requests for
confidential treatment, which shall constitute the Company's proxy statement
(the "Proxy Statement"). Parent and Merger Sub agree to cooperate in such
---------------
preparation and to provide promptly to the Company all information with respect
to Parent, Merger Sub and the transactions contemplated by this Agreement
required
23
to be included or incorporated by reference therein. The Company will use its
reasonable best efforts to have cleared by the SEC and thereafter mail to its
stockholders as promptly as practicable the Proxy Statement and all other proxy
materials for the meeting of its stockholders to consider and vote upon this
Agreement. Parent shall have a right to review and comment on the Company Proxy
Statement and other proxy materials before filing with the SEC. Each of the
Company and Parent shall notify each other after the receipt by it of any
written or oral comments of the SEC and shall promptly supply the other with
copies of all correspondence between it or any of its representatives and the
SEC with respect to any of the foregoing filings. The Proxy Statement shall
contain the recommendation of the Board of Directors of the Company that the
stockholders of the Company vote to approve and adopt the Merger and this
Agreement, unless the Board of Directors of the Company concludes in good faith
upon considering the advice of outside counsel that such recommendation would
constitute a breach by the Board of Directors of the Company of its fiduciary
duty under applicable law.
Section 7.3 Access to Information; Confidentiality. From the date
hereof to the Effective Time, the Company shall, and shall cause its
Subsidiaries and its and their officers, directors, employees and
representatives to, afford the representatives of Parent and Merger Sub
reasonable access during normal business hours to its officers, employees,
representatives, books and records, and shall furnish Parent and Merger Sub all
financial data as Parent and Merger Sub, through their representatives,
reasonably may request; provided, however, that the Company shall not be so
obligated if, based upon written advice of its counsel, providing such access
would reasonably likely violate applicable law. Parent and Merger Sub agree to
hold in strictest confidence all, and not to disclose to others for any reason
whatsoever, any non-public information received by it, any Subsidiary of Parent
or Merger Sub or its or their representatives in connection with the
transactions contemplated hereby except (i) as required by law; (ii) for
disclosure to officers, directors, employees and representatives of Parent and
the Subsidiaries of Parent as necessary in connection with the transactions and
filings contemplated hereby; and (iii) for information which becomes publicly
available other than through Parent or Merger Sub. In the event the Merger is
not consummated, Parent and Merger Sub shall return to the Company all non-
public information (no matter where contained) and other material obtained from
the Company, the Subsidiaries of the Company or their representatives in
connection with the transactions contemplated hereby, or shall certify to the
Company that such information has been destroyed. Without limiting in any manner
the obligations of Parent and Merger Sub under the foregoing provisions of this
Section 7.3, during the period between the date hereof and the Effective Time,
or in the event that this Agreement is terminated for any reason by Parent,
Merger Sub or the Company, all information disclosed by the Company to either
Parent or Merger Sub relating in any manner to the Company's business,
operations, prospects, financial position or results of operations shall not be
used, employed or misappropriated in any manner by Parent, Merger Sub or any of
their Affiliates, successors or assigns that would be detrimental, harmful or
adverse to the business, operations, prospects, financial position or results of
operations of the Company.
Section 7.4 Indemnification of Company Directors, Officers and
Employees.
24
(a) The Company shall, and from and after the Effective Time, Parent
and the Surviving Corporation shall, to the fullest extent permitted under
applicable law, defend, indemnify and hold harmless each person who is now, or
has been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer, director or employee of the Company or any of the
Company's Subsidiaries (each, an "Indemnified Party" and, collectively, the
-----------------
"Indemnified Parties") against (i) all costs or expenses (including reasonable
-------------------
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
amounts paid in settlement in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal, administrative or
investigative, based in whole or in part on, or arising in whole or in part out
of, the fact that such person is or was an officer, director or employee,
whether pertaining to any matter existing or occurring at or prior to the
Effective Time and whether asserted or claimed prior to, or at or after, the
Effective Time (collectively, the "Indemnified Liabilities"); and (ii) all
-----------------------
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to, this Agreement, the Merger or the transactions
contemplated hereby. The Company (or after the Effective Time, Parent and the
Surviving Corporation) shall be entitled to participate in and, to the extent
that it may wish, to assume the defense of any action, with counsel reasonably
satisfactory to the Indemnified Party but, if any Indemnified Party believes
that by reason of an actual or potential conflict of interest it is advisable
for such Indemnified Party to be represented by separate counsel, or if the
Company (or after the Effective Time, Parent and the Surviving Corporation)
shall fail to assume responsibility for such defense, such Indemnified Party may
retain counsel reasonably satisfactory to the Company (or after the Effective
Time, Parent and the Surviving Corporation) who will represent such Indemnified
Party, and the Company (or after the Effective Time, Parent and the Surviving
Corporation) shall pay all reasonable fees and disbursements of such counsel
promptly as statements therefor are received to the full extent permitted by
applicable law upon receipt of any undertaking contemplated by the DGCL. The
Indemnified Party and the Company (or after the Effective Time, Parent and the
Surviving Corporation) will cooperate with each other and use all reasonable
efforts to assist each other in the vigorous defense of any such matter;
provided, however, that neither the Company, Parent nor the Surviving
Corporation shall be liable for any settlement of any claim effected without its
written consent. Any Indemnified Party wishing to claim indemnification under
this Section 7.4, upon learning of any such claim, action, suit, proceeding or
-----------
investigation, shall promptly notify the Company, Parent or the Surviving
Corporation, as applicable (but the failure to be so notified by an Indemnified
Party shall not relieve it from any liability which it may have under this
Section 7.4 except to the extent such failure prejudices such party). The
-----------
indemnifying parties shall be required to pay for only one law firm, in addition
to local counsel, in each applicable jurisdiction selected by the Indemnified
Parties as a group in accordance with the foregoing provisions with respect to
each such matter unless there is, under applicable standards of professional
conduct, a conflict in any significant issue between the positions of any two or
more Indemnified Parties.
(b) The Company does not currently maintain in effect policies of
directors' and officers' liability insurance. Parent shall use its reasonable
efforts to obtain coverage for the Company's officers and directors with respect
to claims arising from facts or events which occurred after January 1, 1999
under policies of directors' and officers' liability insurance currently
maintained in effect by Parent, such coverage to be effective as of the Closing
Date.
25
(c) In the event Parent, the Surviving Corporation or any of their
successors or assigns (i) consolidates with or merges into any other Person and
shall not be 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, to the
extent necessary, proper provision shall be made so that the successors and
assigns of Parent and the Surviving Corporation assume the obligations set forth
in this Section 7.4.
-----------
(d) The provisions of this Section 7.4 (i) are intended to be for the
-----------
benefit of, and shall be enforceable by, each Indemnified Party, his heirs and
his 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 under the Company's certificate of incorporation, bylaws, by contract or
otherwise.
(e) In the event of any action, suit, proceeding or investigation
with respect to which any Indemnified Party is entitled to indemnification under
this Section 7.4, the parties hereto agree to cooperate and use their respective
-----------
reasonable efforts to vigorously defend against and respond thereto.
Section 7.5 Certain Filings.
(a) The Company, Merger Sub and Parent shall cooperate with one
another (i) in connection with the preparation of the Proxy Statement, (ii) in
determining whether any action by or in respect of, or filing with, any
Governmental Authority is required, or any actions, consents, approvals, or
waivers are required to be obtained from parties to any material agreements, in
connection with the consummation of the transactions contemplated by this
Agreement, and (iii) in taking such actions or making such filings, furnishing
information required in connection therewith and seeking to obtain such actions,
consents, approvals, or waivers in a timely manner.
(b) If not previously filed by Parent, Merger Sub and the Company,
Parent, Merger Sub and the Company will, by April 30, 1999, make such filings as
may be required by the HSR Act with respect to the consummation of the
transactions contemplated by this Agreement and will use all reasonable efforts
to obtain early termination of any waiting period under the HSR Act. Parent,
Merger Sub and the Company will file or cause to be filed as promptly as
practicable with the United States Federal Trade Commission ("FTC") and the
---
United States Department of Justice ("Justice Department") any supplemental
------------------
information which may be requested during the initial waiting period pursuant to
the HSR Act. All filings referred to in this Section 7.5(b) will comply in all
--------------
material respects with the requirements of the respective laws pursuant to which
they are made.
(c) Without limiting the generality or effect of Section 7.5(b) and
--------------
notwithstanding any provision herein to the contrary, each of the parties will
(i) use commercially reasonable best efforts to comply as expeditiously as
possible with all lawful requests of Governmental Authorities for additional
information and documents during the initial waiting period pursuant to the HSR
Act, (ii) not (A) extend any waiting period under the HSR Act or (B) enter into
any voluntary agreement with any Governmental Authorities not to
26
consummate the transactions contemplated by this Agreement, except with the
prior consent of the other, and (iii) cooperate with each other and use
reasonable efforts to obtain the requisite approval of the FTC and Justice
Department.
Section 7.6 Public Announcements. So long as this Agreement is in
effect, Parent, Merger Sub, and the Company agree to consult with each other in
issuing any press release or otherwise making any public statement with respect
to the transactions contemplated by this Agreement. Without the prior consent of
the other parties hereto, which consent shall not be unreasonably withheld,
Parent, Merger Sub and the Company will not issue, or permit any of its agents
or Affiliates to issue, any press releases or otherwise make or permit any of
its agents or Affiliates to make, public statements with respect to this
Agreement or the transactions contemplated by this Agreement, except as may be
required by law, stock exchange requirements or by obligations pursuant to any
listing agreement under which the Shares is quoted on the NASDAQ National Market
System. The commencement of litigation relating to this Agreement or the
transactions contemplated hereby or any proceedings in connection therewith
shall not be deemed a violation of this Section 7.6.
-----------
Section 7.7 Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger Sub, any
deeds, bills of sale, assignments, or assurances and to take and do, in the name
and on behalf of the Company or Merger Sub, any other actions and things to
vest, perfect, or confirm of record or otherwise in the Surviving Corporation
any and all right, title, and interest in, to, and under any of the rights,
properties, or assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger.
Section 7.8 Notices of Certain Events. Each of the Company, Parent and
Merger Sub shall promptly notify the other party hereto of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any Governmental Authority
in connection with the transactions contemplated by this Agreement. If any party
or any Affiliate thereof receives a request for additional information or
documentary material from any such Governmental Authority with respect to the
transactions contemplated by this Agreement, then such party will endeavor in
good faith to make, or cause to be made, as soon as reasonably practicable and
after consultation with the other party, an appropriate response in compliance
with such request. Parent, Merger Sub and the Company will consult and cooperate
with one another with respect to (and prior to) any understandings, undertakings
or agreements (oral or written) which are proposed to be made or entered into
with any Governmental Authority in connection with the transactions contemplated
by this Agreement, and no such understanding, undertaking, or agreement shall be
made or entered into without the mutual agreement of Parent, Merger Sub and the
Company;
27
(c) any Proceedings commenced or, to its Knowledge, threatened
against, relating to, or involving or otherwise affecting such party that, if
pending on the date of this Agreement, would have been required to have been
disclosed pursuant to this Agreement or that relate to the consummation of the
transactions contemplated by this Agreement; and
(d) (i) the discovery by such party that any representation or
warranty contained in this Agreement is untrue or inaccurate in any material
respect (or in any respect in the case of any representation or warranty
containing any materiality qualification), (ii) the occurrence or failure to
occur of any event which occurrence or failure to occur would be likely to cause
any of the representations or warranties in this Agreement to be untrue or
incorrect in any material respect (or in any respect in the case of any
representation or warranty containing any materiality qualification) at the
Effective Time, except for representations and warranties that speak as of a
specified date, which need only be true and correct as of the specified date,
and (iii) any material failure (or any failure in the case of any covenant,
condition or agreement containing any materiality qualification) on its part to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 7.8(d) shall not limit or otherwise affect the
--------------
remedies available hereunder to the party receiving such notice.
Section 7.9 Company Stockholders' Meeting. The Company shall promptly
take all action reasonably necessary in accordance with the DGCL and its
certificate of incorporation and bylaws to convene the Company Stockholders'
Meeting. The Board of Directors of the Company (i) shall recommend at such
meeting that the stockholders of the Company vote to adopt and approve the
Merger and this Agreement; (ii) shall use its reasonable efforts to solicit from
stockholders of the Company proxies in favor of such adoption and approval; and
(iii) shall take all other action reasonably necessary to secure a vote of its
stockholders in favor of the adoption and approval of the Merger and this
Agreement; provided, however, that the Board of Directors of the Company may
withdraw, modify or change such recommendation, decline to solicit from the
stockholders of the Company such proxies, and decline to take any such other
action necessary to secure such a vote of the Company's stockholders, if it
determines in good faith, upon considering the advice of outside counsel, that
making such recommendation, soliciting from the stockholders of the Company such
proxies, and taking such other action necessary to secure such a vote of the
Company's stockholders, or the failure to so withdraw, modify or change such
recommendation, or the failure to decline to solicit from the stockholders of
the Company such proxies, or the failure to decline to take any such other
action necessary to secure such a vote of the Company's stockholders, or the
failure to recommend any other offer or proposal, could reasonably be deemed to
cause the members of the Board of Directors to breach their fiduciary duties
under applicable law. At such meeting, all Shares then owned by Parent, Merger
Sub, or any other Affiliate of Parent, or with respect to which Parent, Merger
Sub, or any other Affiliate of Parent holds the power to direct the voting,
shall be voted in favor of the adoption and approval of the Merger and this
Agreement.
Section 7.10 Expenses and Fees.
28
(a) Whether or not the Merger is consummated, all costs and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, including, without
limitation, (i) the filing fee and expenses incurred in connection with the
filing under the HSR Act with Parent as the acquiring person shall be paid by
Parent, and (ii) all filing fees and expenses and printing and mailing expenses
incurred in connection with the Proxy Statement shall be paid by the Company.
Notwithstanding anything to the contrary in this paragraph, $250,000 of fees and
expenses of the Company shall be reimbursed by Parent or Merger Sub to the
Company if the Merger is not consummated due to the failure to obtain the
requisite approval from the FTC and the Justice Department as a result of
Parent's acts or omissions.
(b) Notwithstanding the provisions of Section 7.10(a), if this
---------------
Agreement is terminated in accordance with Section 9.1(g) or Section 9.1(h), the
-------------- --------------
Company shall promptly, but in no event later than three business days after
written request by Parent, pay to Parent an amount equal to $2,600,000 in
immediately available funds, if, and only if, a Triggering Event (as defined
below) shall have occurred prior to termination of this Agreement in accordance
with Section 9.1(g) or Section 9.1(h). As used herein, "Triggering Event" shall
-------------- -------------- ----------------
mean the occurrence of any of the following events: (i) the Company shall have
entered into an agreement with respect to any Company Acquisition Proposal; or
(ii) the Company Board of Directors shall have withdrawn, modified or changed
its approval or recommendation of this Agreement or the Merger in a manner
adverse to Parent or Merger Sub.
(c) Notwithstanding the provisions of Section 7.10(a), if this
---------------
Agreement is terminated in accordance with Section 9.1(i), Parent shall
--------------
promptly, but in no event later than three business days after written request
by the Company, pay to the Company an amount equal to $2,600,000 in immediately
available funds.
Section 7.11 Employee Benefits. Parent shall cause, as promptly as
practicable after the Effective Time, the participation of all employees of the
Company as of the Effective Time in the various benefit plans and programs
maintained for Magellan employees or, at Parent's discretion, Parent employees,
or in substantially similar programs, including any of the following benefit
plans maintained as of the Effective Time, in each case to the extent a
similarly situated Magellan or Parent employee is entitled to participate
therein: medical/dental/vision care, life insurance, disability income, sick
pay, holiday and vacation pay, 401(k) plan coverage, Section 125 benefit
arrangements, bonus, profit-sharing or other incentive plans, dependent care
assistance and severance benefits, to the extent the Company employees meet the
eligibility requirements for each such plan or program and their participation
therein is consistent with the terms of such plan or program and all applicable
laws or regulations and for so long as such plans and programs are provided to
the employees of Magellan or Parent (as applicable); provided, however, that any
preexisting condition exclusion applicable under plans and programs pursuant to
which such employee benefits are provided to employees of the Company and the
Company Subsidiaries shall be waived; and provided, further, that Parent shall,
or shall cause Magellan to (as applicable) credit each employee of the Company
and the Company Subsidiaries with any deductibles already incurred during the
year such coverage under the Magellan or Parent (as applicable) benefit plans
begins.
29
(a) With respect to any "employee benefit plan" as defined in Section
3(3) of ERISA maintained by Magellan or Parent and in which Company employees
are allowed to participate pursuant to Section 7.11(a), for all purposes,
including, but not limited to, determining eligibility to participate, level of
benefits and vesting, service with the Company or any Company Subsidiary shall
be treated as service with Magellan or Parent, as applicable; provided, however,
that such service need not be recognized to the extent that such recognition
would result in any duplication of benefits.
(b) On or before, but effective as of the Effective Time, the Company
and the Company Subsidiaries shall take such actions as may be necessary to
cause each individual employed by the Company and any Company Subsidiaries
immediately prior to the Effective Time to have a fully vested and
nonforfeitable interest in such employee's account balance under the 401(k) plan
sponsored by the Company and the Company Subsidiaries as of the Effective Time.
Section 7.12 Takeover Statute. If Section 203 of the DGCL or any other
takeover statute ("Takeover Statute") shall become applicable to the
----------------
transactions contemplated hereby, the Company and the members of the Board of
Directors of the Company, subject to their fiduciary duties, shall grant such
approvals and take such actions as are necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate or minimize the effects of
such Takeover Statute on the transactions contemplated hereby.
Section 7.13 Efforts to Consummate the Merger. Parent, Merger Sub and
the Company each agree to use their commercially reasonable best efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper, or advisable under the terms of this Agreement or
applicable Legal Requirements to consummate the Merger as soon as practicable
after the date hereof, including, without limitation, securing all consents and
authorizations of third parties and giving all notices to third parties which
may be necessary or reasonably required in order to consummate the Merger, and
Parent, Merger Sub and the Company shall use their reasonable efforts to
promptly cooperate to obtain all necessary Governmental Authorizations necessary
to consummate the Merger.
Section 7.14 Assumption of Debt. The Company shall use its reasonable
efforts to obtain an agreement from Company's lender that the Company's
indebtedness will be assumable by Merger Sub or another Subsidiary of Parent.
ARTICLE VIII.
CONDITIONS TO THE MERGER
Section 8.1 Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Sub to consummate the Merger are
subject to the prior satisfaction of the following conditions:
(a) this Agreement shall have been approved and adopted by the
stockholders of the Company in accordance with the applicable provisions of the
DGCL;
30
(b) any applicable waiting period under the HSR Act relating to
the Merger shall have expired or been terminated;
(c) all authorizations, consents, orders and approvals of, and
declarations and filings with, and all expirations of waiting periods imposed
by, any Governmental Authority which, if not obtained in connection with the
consummation of the transactions contemplated hereby, could reasonably be
expected to have a Material Adverse Effect on the Company (collectively,
"Required Regulatory Approvals"), shall have been obtained, have been declared
-----------------------------
or filed or have occurred, as the case may be, and all such Required Regulatory
Approvals shall be in full force and effect; and
(d) no provision of any applicable Legal Requirement and no
judgment, injunction, order or decree shall prohibit the consummation of the
Merger.
Section 8.2 Conditions to the Obligations of Parent and Merger Sub. The
obligations of Parent and Merger Sub to consummate the Merger are subject to the
prior satisfaction or waiver of the following further conditions:
(a) Each of the representations and warranties of the Company
contained in this Agreement (without giving effect to any qualification
contained therein as to materiality, including, without limitation, the phrases
"material," "in all material respects," "substantial," or "substantially," and
"Material Adverse Effect"), shall be true and correct on and as of the Closing
Date except (i) that those representations and warranties which address matters
only as of a particular date shall remain true and correct as of such particular
date and (ii) where the failure to be so true and correct would not,
individually or in the aggregate, have or be reasonably likely to have a
Material Adverse Effect on the Company. The Company shall have performed or
complied with all agreements and covenants required to be performed by it under
this Agreement at or prior to the Closing Date that are qualified as to
materiality and shall have performed or complied in all material respects with
all other agreements and covenants required to be performed by it under this
Agreement at or prior to the Closing Date that are not so qualified as to
materiality. Since July 31, 1998, there has not been any event, occurrence or
development which has had or reasonably could be expected to have a Material
Adverse Effect with respect to the Company. Parent and Merger Sub shall have
received at the Effective Time a certificate, dated the day of the Effective
Time and validly executed by or on behalf of the Company, to the effect that the
conditions set forth in preceding three sentences have been so satisfied.
(b) All consents, approvals and waivers from any Person necessary
to the consummation of the transactions contemplated hereby shall have been
obtained, including, without limitation, consents from the Company's lender of
the redemption of the Series "A" Preferred Stock as provided in Section 3.4.
(c) Holders of not more than 10% of the total outstanding Shares
shall have demanded appraisal rights for their Shares in accordance with DGCL.
31
Section 8.3 Conditions to the Obligations of the Company. The obligations
of the Company to consummate the Merger are subject to the prior satisfaction or
waiver of the following further conditions:
Each of the representations and warranties of Parent and Merger Sub
contained in this Agreement (without giving effect to any qualification
contained therein as to materiality, including, without limitation, the phrases
"material," "in all material respects," "substantial," or "substantially," and
"Material Adverse Effect"), shall be true and correct on and as of the Closing
Date except (i) that those representations and warranties which address matters
only as of a particular date shall remain true and correct as of such particular
date and (ii) where the failure to be so true and correct would not,
individually or in the aggregate, have or be reasonably likely to have a
Material Adverse Effect on Parent. Parent and Merger Sub shall have performed
or complied with all agreements and covenants required to be performed by it
under this Agreement at or prior to the Closing Date that are qualified as to
materiality and shall have performed or complied in all material respects with
all agreements and covenants required to be performed by it under this Agreement
at or prior to the Closing Date that are not so qualified as to materiality.
The Company shall have received at the Effective Time certificates, dated the
day of the Effective Time and validly executed by or on behalf of Parent and
Merger Sub, to the effect that the conditions set forth in preceding two
sentences have been so satisfied.
ARTICLE IX.
TERMINATION; AMENDMENT; WAIVER
Section 9.1 Termination. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing Date, by action taken or authorized by the Board of Directors of the
terminating party or parties, whether before or after approval of the matters
presented in connection with the Merger by the stockholders of the Company in
accordance with one or more of the following:
(a) by mutual written consent executed by the Company, Merger Sub
and Parent and duly authorized by the respective Board of Directors of the
Company, Merger Sub and Parent;
(b) By Parent or Merger Sub if there is a material breach of any
covenant or agreement on the part of the Company set forth in this Agreement, or
if (i) any representation or warranty of the Company that is qualified as to
materiality shall have become untrue or (ii) any representation or warranty of
the Company that is not so qualified shall have become untrue in any material
respect, in each case such that the conditions set forth in Section 8.2 would
-----------
not be satisfied (a "Terminating Company Breach"); provided, however, that, if
such Terminating Company Breach is capable of being cured by the Company prior
to the Effective Time through the exercise of its best efforts, Parent and
Merger Sub shall promptly give notice of such Terminating Company Breach to the
Company and if such Terminating Company Breach is cured within 20 days after
giving notice to the Company of such breach, neither Parent nor Merger Sub may
terminate this Agreement under this Section 9.1(b);
--------------
32
(c) By the Company, if there is a material breach of any covenant
or agreement on the part of the Parent or Merger Sub set forth in this
Agreement, or if (i) any representation or warranty of Parent or Merger Sub that
is qualified as to materiality shall have become untrue or (ii) any
representation or warranty of Parent or Merger Sub that is not so qualified
shall have become untrue in any material respect, in each case such that the
conditions set forth in Section 8.3 would not be satisfied ("Terminating Parent
----------- ------------------
Breach"); provided, however, that, if such Terminating Parent Breach is capable
------
of being cured by Parent or Merger Sub prior to the Effective Time through the
exercise of its best efforts, the Company shall promptly give notice of such
Terminating Parent Breach to Parent and Merger Sub and if such Terminating
Parent Breach is cured within 20 days after giving written notice to Parent and
Merger Sub of such breach, the Company may not terminate this Agreement under
this Section 9.1(c);
--------------
(d) by Parent, Merger Sub or the Company if the Closing Date
shall not have occurred, other than through the failure of any such party to
fulfill its obligations hereunder, on or before December 23, 1999 (assuming that
Parent, Merger Sub and the Company have caused their respective filing(s)
required by the HSR Act to be made on or before April 30, 1999, and it being
understood that Parent, Merger Sub and the Company are each obligated hereunder
to use their respective commercially reasonable best efforts to comply with any
later request(s) for information made by any Governmental Authority having
jurisdiction under the HSR Act) or such later date agreed to in writing by
Parent, Merger Sub and the Company; provided, that none of Parent, Merger Sub or
the Company shall be entitled to terminate this Agreement pursuant to this
Section 9.1(d), if the Merger has not been consummated as a result of such
--------------
party's (or its Affiliates') material breach of any representation, warranty or
covenant set forth in this Agreement;
(e) by Parent, Merger Sub or the Company if any court of
competent jurisdiction in the United States of America or other (federal or
state) Governmental Authority shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement and such order, decree, ruling or
other action shall have been final and nonappealable;
(f) by Parent, Merger Sub or the Company if this Agreement shall
not have been approved or adopted by the stockholders of the Company after the
matter shall have been presented to them for a vote at the Company Stockholders'
Meeting (including any adjournment thereof);
(g) by the Company if the Board of Directors of the Company
determines to accept a Superior Proposal and withdraws its recommendation in
favor of adoption and approval of the Merger and this Agreement because the
Company's Board of Directors believes in good faith that such a withdrawal is
necessary for the Company's Board of Directors to act in a manner which is
consistent with its fiduciary duties to the stockholders of the Company; or
(h) by Parent or Merger Sub if (i) the Board of Directors of the
Company shall have withdrawn or materially and adversely modified its
recommendation of the Merger or this Agreement; (ii) the Board of Directors of
the Company shall have recommended to the
33
stockholders of the Company that they approve a Company Acquisition Proposal
other than contemplated by this Agreement; (iii) a tender offer or exchange
offer that, if successful, would result in any Person or "group" (such term
having the meaning in this Section 9.1(h) as is ascribed under Regulation 13D
--------------
under the Exchange Act) becoming a Beneficial Owner of 50% or more of the
outstanding Shares is commenced (other than by Parent, Merger Sub or any of
their Affiliates) and the Board of Directors of the Company recommends that the
stockholders of the Company tender their shares in such tender or exchange
offer; or (iv) for any reason the Company fails to call and hold the Company
Stockholders Meeting by December 23, 1999 (provided that Parent's right to
terminate this Agreement under such clause (iv) shall not be available if at
such time the Company would be entitled to terminate this Agreement under
Section 9.1(c)); or
(i) By the Company if the Board of Directors of Parent or Merger
Sub shall have withdrawn or materially and adversely modified its approval of
the Merger or this Agreement.
Section 9.2 Effect of Termination. In the event of the termination and
abandonment of this Agreement pursuant to Section 9.1 hereof, this Agreement
-----------
shall thereafter become void and have no effect, without any liability on the
part of any party or its directors, other than the provisions of Sections 7.3
------------
(to the extent regarding confidentiality and the obligation not to use the
Company's information to its detriment or harm), 7.10, and Article X; provided,
---- ---------
however, that nothing contained in this Section 9.2 shall relieve any party from
-----------
liability for any breach or violation of this Agreement.
ARTICLE X.
MISCELLANEOUS
Section 10.1 Non-Survival of Representations and Warranties;
Representation, Warranties, Covenants and Agreements of Merger Sub. All
representations warranties, covenants and other agreements in this Agreement
shall not survive the Merger, and after the Effective Time neither the Company,
Parent, Merger Sub or their respective officers or directors shall have any
further obligation with respect thereto. This Section 10.1 shall not limit any
------------
covenant or agreement of the parties hereto which by its terms contemplates
performance after the Effective Time. Notwithstanding anything to the contrary
in this Agreement, all representations, warranties, covenants and agreements of
Merger Sub shall be made as of August 26, 1999.
Section 10.2 Entire Agreement; Assignment. This Agreement (a) constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all other prior agreements and understandings, including, without
limitation, the Old Agreement, both written and oral, among the parties or any
of them with respect to the subject matter hereof, and (b) shall not be assigned
by operation of law or otherwise. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of and be enforceable by
the parties and their respective successors and assigns.
34
Section 10.3 Amendment and Modification. This Agreement may be amended,
modified, terminated, rescinded or supplemented only by written agreement of the
parties hereto at any time before or after approval hereof by the stockholders
of the Company, but after such approval, any amendment shall be made in
accordance with applicable Legal Requirements.
Section 10.4 Waiver; Consents. At any time prior to the Effective Time,
the parties hereto may (i) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (ii) waive any
inaccuracies in the representations and warranties contained herein or in any
documents delivered pursuant hereto, and (iii) waive compliance with any of the
agreements or conditions contained herein; provided, however, that any such
waiver that affects the rights of the stockholders of the Company shall be in
accordance with applicable Legal Requirements. Any failure of a party to comply
with any obligation, covenant, agreement or condition herein may be waived by
the party affected thereby only by a written instrument signed by the party
granting such waiver. No waiver, or failure to insist upon strict compliance, by
any party of any condition or any breach of any obligation, term, covenant,
representation, warranty or agreement contained in this Agreement, in any one or
more instances, shall be construed to be a waiver of, or estoppel with respect
to, any other condition or any other breach of the same or any other obligation,
term, covenant, representation, warranty or agreement. Whenever this Agreement
requires or permits consent by or on behalf of any party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver.
Section 10.5 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
Section 10.6 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed duly given (a) on the date of delivery
if delivered personally, (b) on the first business day following the date of
dispatch if delivered by a nationally recognized next-day courier service, (c)
on the next Business Day following the date of mailing if delivered by
registered or certified mail, return receipt requested, postage prepaid or (d)
if sent by facsimile transmission, with a copy mailed on the same day in the
manner provided in (a) or (b) above, when transmitted and receipt is confirmed
by telephone. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice to the respective parties as follows:
if to Parent or Merger Sub to:
Orbital Sciences Corporation
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: Legal Department
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
35
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇
if to the Company to:
Lowrance Electronics, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with a copy (which shall not constitute notice) to:
Stuart, Biolchini, ▇▇▇▇▇▇ & Givray
Suite 3300
First Place Tower
Fifteen ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
or to such other address as the Person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above
(provided that notice of any change of address shall be effective only upon
receipt thereof).
Section 10.7 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 10.8 Jurisdiction. Any process against Parent, Merger Sub or the
Company in, or in connection with, any suit, action or proceeding arising out of
or relating to this Agreement or any of the transactions contemplated by this
Agreement may be served personally or by certified mail at the address set forth
in Section 10.6 with the same effect as though served on it personally.
------------
Section 10.9 Descriptive Headings. The descriptive headings and table of
contents are inserted for convenience of reference only and are not intended to
be part of or to affect the meaning or interpretation of this Agreement.
Section 10.10 Parties in Interest; No Third Party Beneficiary. Except as
set forth in Section 7.4, this Agreement shall be binding upon and inure solely
-----------
to the benefit of each party hereto, and nothing in this Agreement, express or
implied, is intended to confer upon any other Person any rights or remedies of
any nature whatsoever under or by reason of this Agreement.
36
Section 10.11 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 10.12 Incorporation by Reference. Any and all schedules,
exhibits, annexes, statements, reports, certificates or other documents or
instruments referred to herein or attached hereto are incorporated herein by
reference hereto as though fully set forth at the point referred to in the
Agreement.
Section 10.13 Interpretation. When a reference is made in this Agreement
to Sections, Exhibits or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. Whenever the
words "include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation." The 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
content requires otherwise.
[SIGNATURES ON FOLLOWING PAGE(S)]
37
IN WITNESS WHEREOF, each of the parties has caused this Agreement to
be executed on its behalf by its officers thereunto duly authorized, all as of
the day and year first above written.
ORBITAL SCIENCES CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
ORBITAL MERGER SUB, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and Secretary
LOWRANCE ELECTRONICS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Executive Officer
38
EXHIBIT A
DEFINITIONS
For the purposes of this Agreement, the following terms shall have the meanings
specified or referred to below whether or not capitalized when used in this
Agreement.
"Affiliate" means, with respect to a specified Person, (a) any Entity
---------
of which such Person is an executive officer, director, partner, trustee or
other fiduciary or is directly or indirectly the Beneficial Owner of 10% or more
of any class of equity security thereof or other financial interest therein; (b)
if such Person is an individual, any relative or spouse of such individual, or
any relative of such spouse (such relative being related to the individual in
question within the second degree) and any Entity of which any such relative,
spouse, or relative of spouse is an executive officer, director, partner,
trustee or other fiduciary or is directly or indirectly the Beneficial Owner of
10% or more of any class of equity security thereof or other financial interest
therein; (c) if such Person is an Entity, any director, executive officer,
partner, trustee or other fiduciary or any direct or indirect Beneficial Owner
of 10% or more of any class of equity security of, or other financial interest
in, such Entity; (d) any Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with the
Person specified, or (e) with respect to the Company, any stockholder. For
purposes of this definition, "executive officer" means the president, any vice
president in charge of a principal business unit, division or function such as
sales, administration, research and development, or finance, and any other
officer, employee or other Person who performs a policy making function or has
the same duties as those of a president or vice president. For purposes of this
definition, "control" (including "controlling", "controlled by" and "under
common control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Beneficial Owner" shall have the meaning set forth in Rule 13d-3 of
----------------
the General Rules and Regulations promulgated under the Exchange Act as in
effect as of the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
----
"Company Business Facility" means any land, building or structure
-------------------------
owned or leased by the Company and/or any Subsidiary of the Company.
"Entity" means any corporation (including any non-profit corporation),
------
general partnership, limited partnership, limited liability company, joint
venture, joint stock association, estate, trust, cooperative, foundation, union,
syndicate, league, consortium, coalition, committee, society, firm, company or
other enterprise, association, organization or entity of any nature.
"Environmental Conditions" means the introduction into the environment
------------------------
of any Hazardous Substance (whether or not upon any Company Business Facility or
other property) as a result of which the Company or any of its Subsidiaries has
or may become liable to any Person
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or by reason of which any Company Business Facility or any of the assets of the
Company or its Subsidiaries may suffer or be subject to any lien.
"Environmental Laws" means any and all Legal Requirements that relate
------------------
to public and worker health and safety and pollution, contamination,
preservation, protection, or clean-up of the air, surface water, ground water,
soil or wetlands and activities or conditions relating thereto.
"Environmental Permit" means all permits, licenses, certificates,
--------------------
registrations, identification numbers, applications, consents, approvals,
variances, notices of intent, and exemptions necessary for the ownership, use
and/or operation of any current Company Business Facility to comply with
Requirements of Environmental Laws.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations promulgated thereunder.
"GAAP" means generally accepted United States accounting principles,
----
consistently applied.
"Governmental Authority" means any governmental authority, including,
----------------------
but not limited to, any foreign governmental authority, the United States of
America, any State of the United States, any local authority and any political
subdivision of any of the foregoing, any multi-national organization or body,
any agency, department, commission, board, bureau, court or other authority of
any of the foregoing, or any quasi-governmental or private body exercising, or
purporting to exercise, any executive, legislative, judicial, administrative,
police, regulatory or taxing authority or power of any nature.
"Governmental Authorization" means any permit (including, but not
--------------------------
limited to, any Environmental Permit), license, franchise, approval (including
clearance under the HSR Act), certificate, consent, ratification, permission,
confirmation, endorsement, waiver, certification, registration, qualification or
other authorization issued, granted, given or otherwise made available by or
under the authority of any Governmental Authority or pursuant to any Legal
Requirement.
"Hazardous Substance" shall mean any pollutant, contaminant, chemical,
-------------------
and any toxic, infectious, carcinogenic, reactive, corrosive, ignitable or
flammable chemical or chemical compound or hazardous substance, material or
waste, whether solid, liquid or gas, including, without limitation, any quantity
of asbestos in any form, urea formaldehyde, PCB's, radon gas, crude oil or any
fraction thereof, all forms of natural gas, petroleum products or by-products or
derivatives, radioactive substance or material, pesticide waste waters, sludges,
and slag, that is subject to regulation, control or remediation under any
Environmental Laws; and any other substance, material or waste that is subject
to regulation, control or remediation under any Environmental Laws.
"HSR Act" shall mean the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
-------
of 1976, as amended, and the rules and regulations promulgated thereunder.
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"Knowledge"; unless otherwise specifically defined in the text of the
---------
Agreement with respect to one or more Sections, the Company or Parent, as
appropriate, shall be deemed to have "knowledge" of a particular fact or other
matter if any director or executive officer of the Company or Parent, as
appropriate, has current, actual knowledge of such fact or other matter or if
such director or executive officer would have such knowledge through the conduct
of his duties in a reasonable manner in accordance with generally accepted
industry standards.
"Legal Requirement" shall mean any applicable law (including, but not
-----------------
limited to, Environmental Laws), statute, ordinance, decree, requirement, order,
treaty, proclamation, convention, rule or regulation (or interpretation of any
of the foregoing) of, and the terms of any Governmental Authorization issued by,
any Governmental Authority which exists on the date of this Agreement and/or
exists up to and including the Closing Date.
"Material Adverse Effect," when used in this Agreement in connection
-----------------------
with the Company and its Subsidiaries, or Parent and its Subsidiaries, as the
case may be, means any event, circumstances, effect, fact or condition that
individually or in the aggregate with all other events, facts, circumstances,
effects or conditions is or could reasonably be anticipated to be materially
adverse to the business, assets (including intangible assets), liabilities,
financial condition or results of operations of the Company and all of its
Subsidiaries or Parent and all of its Subsidiaries, as applicable, taken as a
whole, excluding specifically any such event, fact or condition resulting from
or relating to (a) changes in general economic or political conditions or (b)
changes arising out of the effects of the seasonality and volatility of the
Company's and its Subsidiaries' businesses consistent with the historic
seasonality and volatility of the Company's and its Subsidiaries' businesses.
"Organizational Documents" means, with respect to a corporation, the
------------------------
certificate of incorporation, articles of incorporation and bylaws of such
corporation; with respect to a general partnership, the partnership agreement
establishing such partnership; with respect to a joint venture, the joint
venture agreement establishing such joint venture; with respect to a limited
partnership, the limited partnership agreement and the certificate of limited
partnership of such limited partnership; with respect to a trust, the instrument
establishing such trust; and with respect to any other Entity, any charter
document or other document or agreement executed, adopted, approved, ratified or
filed in connection with the formation, creation, constitution, governance or
organization of such Entity, in each case including any and all amendments or
modifications thereof.
"Person" means any individual, Entity or Governmental Authority.
------
"Proceeding" means any action, suit, litigation, arbitration, lawsuit,
----------
claim, proceeding (including any civil, criminal, administrative, investigative
or appellate proceeding and any informal proceeding), review, prosecution,
contest, hearing, inquiry, inquest, audit, examination, investigation,
challenge, controversy or dispute commenced, brought, conducted or heard by or
before, or otherwise involving, any Governmental Authority or any arbitrator.
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"Requirement(s) of Environmental Law(s)" means all requirements,
--------------------------------------
conditions, restrictions or stipulations of Environmental Laws applicable to the
Company, its Subsidiaries or the assets and/or the business of the Company or
any of its Subsidiaries.
"SEC" means the Securities and Exchange Commission.
---
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations promulgated thereunder.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, joint venture, joint stock association, business trust or other
Entity of which such Person or another Subsidiary of such Person directly or
indirectly owns more than 20% of the outstanding capital stock or other equity
interest.
"Tax" or "Taxes" means any federal, state, local or foreign net or
--- -----
gross income, gross receipts, sales, use, ad valorem, transfer, franchise,
license, withholding, payroll, employment, excise, severance, stamped,
occupation, premium, personal property, real property, capital stock, profits,
social security, unemployment, disability, registration, value added, estimated,
alternative or add-on minimum taxes, customs duties or other taxes, fees,
assessments or charges of any kind whatsoever, together with any interest and
penalties, additions to tax or additional amounts imposed by any Governmental
Authority.
"Tax Return" means any return, declaration, report, claim for refund,
----------
or information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
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