EXHIBIT 1
AGREEMENT AND PLAN OF REORGANIZATION
BY AND AMONG
ELECTRONIC ARTS INC.
VILLAGE ACQUISITION CORPORATION
AND
MAXIS, INC.
Dated as of June 4, 1997
TABLE OF CONTENTS
Page
----
ARTICLE I THE MERGER....................................................... 1
1.1 The Merger...................................................... 1
1.2 Effective Time; Closing......................................... 1
1.3 Effect of the Merger............................................ 2
1.4 Certificate of Incorporation; Bylaws............................ 2
1.5 Directors and Officers.......................................... 2
1.6 Effect on Capital Stock......................................... 2
1.7 Dissenting Shares............................................... 3
1.8 Surrender of Certificates....................................... 3
1.9 No Further Ownership Rights in Maxis Common Stock............... 5
1.10 Lost, Stolen or Destroyed Certificates.......................... 5
1.11 Tax and Accounting Consequences................................. 6
1.12 Taking of Necessary Action; Further Action...................... 6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF MAXIS......................... 6
2.1 Organization of Maxis........................................... 6
2.2 Maxis Capital Structure......................................... 7
2.3 Obligations With Respect to Capital Stock....................... 8
2.4 Authority....................................................... 8
2.5 Certain Statutory Provisions Not Applicable..................... 9
2.6 SEC Filings; Maxis Financial Statements......................... 10
2.7 Absence of Certain Changes or Events............................ 11
2.8 Taxes........................................................... 11
2.9 Intellectual Property........................................... 12
2.10 Compliance; Permits; Restrictions; Insurance.................... 13
2.11 Litigation...................................................... 14
2.12 Brokers' and Finders' Fees...................................... 14
2.13 Employee Benefit Plans.......................................... 14
2.14 Title to Properties; Absence of Liens and Encumbrances.......... 15
2.15 Environmental Matters........................................... 16
2.16 Employees; Labor Matters........................................ 16
2.17 Agreements, Contracts and Commitments........................... 17
2.18 Pooling of Interests............................................ 18
2.19 Change of Control Payments...................................... 19
2.20 Proxy Statement/Prospectus...................................... 19
2.21 Board Approval.................................................. 19
2.22 Fairness Opinion................................................ 19
2.23 Products and Distribution....................................... 20
2.24 Development Tools............................................... 20
-ii-
2.25 Interested Party Transactions................................... 21
ARTICLE III REPRESENTATIONS AND WARRANTIES OF ELECTRONIC ARTS AND
MERGER SUB............................................................ 21
3.1 Organization of Electronic Arts and Merger Sub.................. 21
3.2 Electronic Arts and Merger Sub Capital Structure................ 21
3.3 Authority....................................................... 22
3.4 Section 203 of the Delaware General Corporation Law Not
Applicable...................................................... 23
3.5 SEC Filings; Electronic Arts Financial Statements............... 23
3.6 Absence of Certain Changes or Events............................ 24
3.7 Pooling of Interests............................................ 24
3.8 Proxy Statement/Prospectus...................................... 24
3.9 Board Approval.................................................. 25
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME............................. 25
4.1 Conduct of Business............................................. 25
ARTICLE V ADDITIONAL AGREEMENTS............................................ 28
5.1 Proxy Statement/Prospectus; Registration Statement; Other
Filings; Board Recommendations.................................. 28
5.2 Meetings of Stockholders........................................ 29
5.3 Confidentiality................................................. 29
5.4 No Solicitation................................................. 30
5.5 Public Disclosure............................................... 32
5.6 Legal Requirements.............................................. 32
5.7 Third Party Consents............................................ 32
5.8 Notification of Certain Matters................................. 32
5.9 Reasonable Best Efforts and Further Assurances.................. 33
5.10 Stock Options and Employee Benefits............................. 33
5.11 Forms S-8....................................................... 34
5.12 Indemnification and Insurance................................... 34
5.13 NMS Listing..................................................... 35
5.14 Maxis Affiliate Agreement....................................... 36
5.15 Regulatory Filings; Reasonable Efforts.......................... 36
5.16 Tax-Free Reorganization......................................... 36
5.17 Pooling Covenant................................................ 36
5.18 Employee Matters................................................ 36
ARTICLE VI CONDITIONS TO THE MERGER........................................ 37
6.1 Conditions to Obligations of Each Party to Effect the Merger.... 37
6.2 Additional Conditions to Obligations of Maxis................... 38
-iii-
6.3 Additional Conditions to the Obligations of Electronic Arts and
Merger Sub...................................................... 39
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER.............................. 40
7.1 Termination..................................................... 40
7.2 Notice of Termination; Effect of Termination.................... 42
7.3 Fees and Expenses............................................... 42
ARTICLE VIII GENERAL PROVISIONS............................................ 43
8.1 Non-Survival of Representations and Warranties.................. 43
8.2 Notices......................................................... 43
8.3 Interpretation; Knowledge....................................... 44
8.4 Counterparts.................................................... 44
8.5 Entire Agreement; Third Party Beneficiaries..................... 44
8.6 Severability.................................................... 44
8.7 Other Remedies; Specific Performance............................ 45
8.8 Governing Law................................................... 45
8.9 Rules of Construction........................................... 45
8.10 Assignment...................................................... 45
8.11 WAIVER OF JURY TRIAL............................................ 45
-iv-
INDEX OF EXHIBITS
Exhibit A Form of Maxis Voting Agreement
Exhibit B Form of Maxis Affiliate Agreement
Exhibit C Form of Fenwick & West LLP Legal Opinion
Exhibit D Form of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, Professional
Corporation Legal Opinion
-v-
AGREEMENT AND PLAN OF REORGANIZATION
This AGREEMENT AND PLAN OF REORGANIZATION (this "Agreement") is made and
entered into as of June 4, 1997, among Electronic Arts Inc., a Delaware
corporation ("Electronic Arts"), Village Acquisition Corporation, a Delaware
corporation and a wholly owned subsidiary of Electronic Arts ("Merger Sub"), and
Maxis, Inc., a Delaware corporation ("Maxis").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement and
in accordance with the Delaware General Corporation Law ("Delaware Law"),
Electronic Arts and Maxis intend to enter into a business combination
transaction.
B. Concurrently with the execution of this Agreement, and as a
condition and inducement to Electronic Arts' willingness to enter into this
Agreement, a stockholder of Maxis is entering into a Voting Agreement (the
"Voting Agreement") in substantially the form attached hereto as Exhibit A.
C. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
D. It is also intended by the parties hereto that the Merger (as
defined below) shall qualify for accounting treatment as a pooling of interests.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware Law, Merger Sub shall be merged with and into
Maxis (the "Merger"), the separate corporate existence of Merger Sub shall cease
and Maxis shall continue as the surviving corporation. Maxis as the surviving
corporation after the Merger is hereinafter sometimes referred to as the
"Surviving Corporation."
1.2 Effective Time; Closing. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of
Delaware Law (the "Certificate of Merger") (the time of such filing (or such
later time as may be agreed in writing by the parties and specified in the
Certificate of Merger) being the "Effective Time") as soon as practicable on or
after the Closing Date (as herein defined). The closing of the Merger (the
"Closing") shall take place at the offices of Fenwick & West LLP, Two ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at a time and date to be specified by the
parties, which shall be no later than the second business day after the
satisfaction or waiver of the conditions set forth in Article VI, or at such
other time, date and location as the parties hereto agree in writing (the
"Closing Date"). The parties acknowledge that it is their express current intent
that, to the extent practicable, the Closing Date shall occur on or before
August 31, 1997.
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of Maxis and Merger Sub shall vest in the Surviving Corporation, and
all debts, liabilities and duties of Maxis and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation. At the Effective
Time, the separate existence of Merger Sub will cease and Merger Sub will be
merged with and into Maxis.
1.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation of the
Surviving Corporation (subject, however, to Section 5.12); provided, however,
that at the Effective Time, the Certificate of Incorporation of the Surviving
Corporation shall be amended so that the name of the Surviving Corporation shall
be Maxis, Inc.
(b) The Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be, at the Effective Time, the Bylaws of the Surviving
Corporation until thereafter amended, subject, however, to Section 5.12 hereof.
1.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly elected or appointed
and qualified. The initial officers of the Surviving Corporation shall be the
officers of Maxis immediately prior to the Effective Time, until their
respective successors are duly appointed.
1.6 Effect on Capital Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of Merger Sub, Maxis or the holders of
any of the following securities:
(a) Conversion of Maxis Common Stock. Each share of Common Stock,
$.0001 par value per share, of Maxis (the "Maxis Common Stock") issued and
outstanding immediately prior to the Effective Time, (other than any shares of
Maxis Common Stock to be canceled pursuant to Section 1.6(b)) will be canceled
and extinguished and automatically
-2-
converted (subject to Sections 1.6(e) and (f)) into 0.3644 (the "Exchange
Ratio") shares of Common Stock of Electronic Arts (the "Electronic Arts Common
Stock").
(b) Cancellation of Electronic Arts-Owned Stock. Each share of
Maxis Common Stock held by Maxis or owned by Merger Sub, Electronic Arts or any
direct or indirect wholly owned subsidiary of Maxis or of Electronic Arts
immediately prior to the Effective Time shall be canceled and extinguished
without any conversion thereof.
(c) Stock Options; Employee Stock Purchase Plans. At the Effective
Time, all options to purchase Maxis Common Stock then outstanding under Maxis'
1993 Stock Option Plan (the "1993 Option Plan") and Maxis' 1995 Stock Plan (the
"1995 Option Plan" and, collectively, the "Maxis Stock Option Plans") shall be
assumed by Electronic Arts; and Section 5.10(c) hereof shall govern Maxis' 1995
Employee Stock Purchase Plan (the "ESPP").
(d) Capital Stock of Merger Sub. Each share of Common Stock, $.01
par value per share, of Merger Sub (the "Merger Sub Common Stock") issued and
outstanding immediately prior to the Effective Time shall be converted into one
validly issued, fully paid and nonassessable share of Common Stock, $.01 par
value per share, of the Surviving Corporation. Each certificate evidencing
ownership of shares of Merger Sub Common Stock shall evidence ownership of such
shares of capital stock of the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Electronic Arts Common Stock or Maxis Common Stock),
reorganization, recapitalization, reclassification or other like change with
respect to Electronic Arts Common Stock or Maxis Common Stock occurring or
having a record date on or after the date hereof and prior to the Effective
Time.
(f) Fractional Shares. No fraction of a share of Electronic Arts
Common Stock will be issued by virtue of the Merger, but in lieu thereof each
holder of shares of Maxis Common Stock who would otherwise be entitled to a
fraction of a share of Electronic Arts Common Stock (after aggregating all
fractional shares of Electronic Arts Common Stock that otherwise would be
received by such holder) shall receive from Electronic Arts an amount of cash
(rounded to the nearest whole cent) equal to the product of (i) such fraction,
multiplied by (ii) the average closing price of one share of Electronic Arts
Common Stock for the five (5) most recent days that Electronic Arts Common Stock
has traded ending on the trading day immediately prior to the Effective Time, as
reported on the Nasdaq National Market.
1.7 Dissenting Shares. No appraisal rights will be available under
Delaware Law for shares of Maxis Common Stock in connection with the Merger.
1.8 Surrender of Certificates.
(a) Exchange Agent. Norwest Bank Minnesota, N.A. shall act as the
exchange agent (the "Exchange Agent") in the Merger.
-3-
(b) Electronic Arts to Provide Common Stock. Promptly after the
Effective Time, Electronic Arts shall make available to the Exchange Agent for
exchange in accordance with this Article I, the shares of Electronic Arts Common
Stock issuable pursuant to Section 1.6 in exchange for outstanding shares of
Maxis Common Stock, and cash in an amount sufficient for payment in lieu of
fractional shares pursuant to Section 1.6(f) and any dividends or distributions
to which holders of shares of Maxis Common Stock may be entitled pursuant to
Section 1.8(d).
(c) Exchange Procedures. Promptly after the Effective Time,
Electronic Arts shall cause the Exchange Agent to mail to each holder of record
(as of the Effective Time) of a certificate or certificates (the
"Certificates"), which immediately prior to the Effective Time represented
outstanding shares of Maxis Common Stock whose shares were converted into shares
of Electronic Arts Common Stock pursuant to Section 1.6, cash in lieu of any
fractional shares pursuant to Section 1.6(f) and any dividends or other
distributions pursuant to Section 1.8(d), (i) a letter of transmittal in
customary form (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall contain such other provisions as
Electronic Arts may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing shares of Electronic Arts Common Stock, cash in lieu of any
fractional shares pursuant to Section 1.6(f) and any dividends or other
distributions pursuant to Section 1.8(d). Upon surrender of Certificates for
cancellation to the Exchange Agent or to such other agent or agents as may be
appointed by Electronic Arts, together with such letter of transmittal, duly
completed and validly executed in accordance with the instructions thereto, the
holders of such Certificates shall be entitled to receive in exchange therefor
certificates representing the number of whole shares of Electronic Arts Common
Stock into which their shares of Maxis Common Stock were converted at the
Effective Time, payment in lieu of fractional shares which such holders have the
right to receive pursuant to Section 1.6(f) and any dividends or distributions
payable pursuant to Section 1.8(d), and the Certificates so surrendered shall
forthwith be canceled. Until so surrendered, outstanding Certificates will be
deemed from and after the Effective Time, for all corporate purposes, subject to
Section 1.8(d) as to the payment of dividends, to evidence the ownership of the
number of full shares of Electronic Arts Common Stock into which such shares of
Maxis Common Stock shall have been so converted and the right to receive an
amount in cash in lieu of the issuance of any fractional shares in accordance
with Section 1.6(f) and any dividends or distributions payable pursuant to
Section 1.8(d).
(d) Distributions With Respect to Unexchanged Shares. No dividends
or other distributions declared or made after the date of this Agreement with
respect to Electronic Arts Common Stock with a record date after the Effective
Time will be paid to the holders of any unsurrendered Certificates with respect
to the shares of Electronic Arts Common Stock represented thereby until the
holders of record of such Certificates shall surrender such Certificates, and no
cash payment in lieu of fractional shares shall be paid to such holder until the
holder of record of such Certificates shall surrender such Certificates. Subject
to applicable law, following surrender of any such Certificates, the Exchange
Agent shall deliver to the record
-4-
holders thereof, without interest, certificates representing whole shares of
Electronic Arts Common Stock issued in exchange therefor along with payment in
lieu of fractional shares pursuant to Section 1.6(f) hereof and the amount of
any such dividends or other distributions with a record date after the Effective
Time payable with respect to such whole shares of Electronic Arts Common Stock.
(e) Transfers of Ownership. If certificates representing shares of
Electronic Arts Common Stock are to be issued in a name other than that in which
the Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the persons
requesting such exchange will have paid to Electronic Arts or any agent
designated by it any transfer or other taxes required by reason of the issuance
of certificates representing shares of Electronic Arts Common Stock in any name
other than that of the registered holder of the Certificates surrendered, or
established to the satisfaction of Electronic Arts or any agent designated by it
that such tax has been paid or is not payable.
(f) No Liability. Notwithstanding anything to the contrary in this
Section 1.8, none of the Exchange Agent, Electronic Arts, the Surviving
Corporation or any party hereto shall be liable to a holder of shares of
Electronic Arts Common Stock or Maxis Common Stock for any amount properly paid
to a public official pursuant to any applicable abandoned property, escheat or
similar law.
(g) Termination of Exchange Agent Provisions. On the demand of
Electronic Arts, any Electronic Arts Common Stock issuable or cash payable in
accordance with this Agreement that is made available to the Exchange Agent, if
not distributed to the stockholders of Maxis for one year after the Effective
Time, shall no longer be made available to the Exchange Agent, and any former
stockholders of Maxis who have not theretofore complied with this Section 1.8
shall thereafter look only to Electronic Arts for payment of their claim for
Electronic Arts Common Stock, any cash in lieu of fractional shares of
Electronic Arts Common Stock and any dividends or distributions with respect to
Electronic Arts Common Stock.
1.9 No Further Ownership Rights in Maxis Common Stock. All shares of
Electronic Arts Common Stock issued in accordance with the terms hereof
(including any cash paid in respect thereof pursuant to Section 1.6(f) and
1.8(d)) shall be deemed to have been issued in full satisfaction of all rights
pertaining to such shares of Maxis Common Stock, and there shall be no further
registration of transfers on the records of the Surviving Corporation of shares
of Maxis Common Stock which were outstanding immediately prior to the Effective
Time. If after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as provided in
this Article I.
1.10 Lost, Stolen or Destroyed Certificates. In the event any Certificates
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, certificates representing the
shares of Electronic Arts Common Stock into which the shares of Maxis Common
Stock represented by such Certificates were converted pursuant to Section 1.6,
-5-
cash for fractional shares, if any, as may be required pursuant to Section
1.6(f) and any dividends or distributions payable pursuant to Section 1.8(d);
provided, however, that Electronic Arts may, in its discretion and as a
condition precedent to the issuance of such certificates representing shares of
Electronic Arts Common Stock, require the owner of such lost, stolen or
destroyed Certificates to deliver a bond in such sum as it may reasonably direct
as indemnity against any claim that may be made against Electronic Arts, the
Surviving Corporation or the Exchange Agent with respect to the Certificates
alleged to have been lost, stolen or destroyed.
1.11 Tax and Accounting Consequences.
(a) It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended (the "Code"). The parties hereto adopt this
Agreement as a "plan of reorganization" within the meaning of Sections 1.368-
2(g) and 1.368-3(a) of the United States Income Tax Regulations.
(b) It is intended by the parties hereto that the Merger shall
qualify for accounting treatment as a pooling of interests.
1.12 Taking of Necessary Action; Further Action. If, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Maxis and Merger Sub, the officers and directors of Maxis and
Merger Sub will take all such lawful and necessary action. Electronic Arts shall
cause Merger Sub to perform all of its obligations relating to this Agreement
and the transactions contemplated hereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF MAXIS
Maxis represents and warrants to Electronic Arts and Merger Sub, subject to
the exceptions disclosed in writing in the disclosure letter supplied by Maxis
to Electronic Arts dated as of the date hereof and certified by a duly
authorized officer of Maxis (the "Maxis Schedules"), as follows:
2.1 Organization of Maxis.
(a) Maxis and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; has the corporate power and authority to own,
lease and operate its assets and property and to carry on its business as now
being conducted and as proposed to be conducted; and is duly qualified or
licensed to do business and is in good standing in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
activities makes such qualification or licensing necessary, except where the
failure to be so qualified would not have a Material Adverse Effect (as defined
below) on Maxis.
-6-
(b) Maxis has delivered to Electronic Arts a true and complete list
of all of Maxis' direct and indirect subsidiaries (whether wholly or partially
owned by Maxis), indicating the jurisdiction of incorporation of each
subsidiary, Maxis' equity interest therein and a list of any other equity
holders of such subsidiary.
(c) Maxis has delivered or made available to Electronic Arts a true
and correct copy of the Certificate of Incorporation and Bylaws of Maxis and
similar governing instruments of each of its subsidiaries, each as amended to
date, and each such instrument is in full force and effect. Neither Maxis nor
any of its subsidiaries is in violation of any of the provisions of its
Certificate of Incorporation or Bylaws or equivalent governing instruments.
(d) When used in connection with an entity, the term "Material
Adverse Effect" means, for purposes of this Agreement, any change, event or
effect that is materially adverse to the business, assets (including intangible
assets), financial condition or results of operations of such entity and its
subsidiaries taken as a whole; provided, however, that (i) any adverse change,
event or effect that is demonstrated to be primarily caused by conditions
affecting the United States economy generally or the economy of any nation or
region in which such entity or any of its subsidiaries conducts business that is
material to the business of such entity and its subsidiaries, taken as a whole,
shall not be taken into account in determining whether there has been or would
be a "Material Adverse Effect" on or with respect to such entity, (ii) any
adverse change, event or effect that is demonstrated to be primarily caused by
conditions generally affecting the interactive entertainment software industry
shall not be taken into account in determining whether there has been or would
be a "Material Adverse Effect" on or with respect to such entity and (iii) any
adverse change, event or effect that is demonstrated to be primarily caused by
the announcement or pendency of the Merger shall not be taken into account in
determining whether there has been or would be a "Material Adverse Effect" on or
with respect to such entity.
2.2 Maxis Capital Structure. The authorized capital stock of Maxis
consists of 40,000,000 shares of Common Stock, $.0001 par value per share, of
which there were 11,255,934 shares issued and outstanding as of March 31, 1997
and 5,000,000 shares of Preferred ▇▇▇▇▇, ▇.▇▇▇▇ par value per share, of which no
shares are issued or outstanding. All outstanding shares of Maxis Common Stock
are duly authorized, validly issued, fully paid and nonassessable and are not
subject to preemptive rights created by statute, the Certificate of
Incorporation or Bylaws of Maxis or any agreement or document to which Maxis is
a party or by which it is bound. As of March 31, 1997, Maxis had reserved an
aggregate of 1,854,000 and 1,775,000 shares, respectively, of Maxis Common
Stock, net of exercises, for issuance to employees, consultants and non-employee
directors pursuant to the 1993 Option Plan and the 1995 Option Plan, under which
options are outstanding for an aggregate of 120,438 shares and 923,308 shares,
respectively, and under which no shares and 851,692 shares, respectively, are
available for grant as of March 31, 1997. All shares of Maxis Common Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, would be duly
authorized, validly issued, fully paid and nonassessable. The Maxis Schedules
list for each person who held options to acquire shares of Maxis Common
-7-
Stock at March 31, 1997, the name of the holder of such option, the exercise
price of such option, the number of shares as to which such option will have
vested at such date, the vesting schedule for such option and whether the
exercisability of such option will be accelerated in any way by the transactions
contemplated by this Agreement, and indicate the extent of acceleration, if any.
As of March 31, 1997, an aggregate of 200,000 shares of Maxis Common Stock were
reserved for issuance pursuant to the ESPP.
2.3 Obligations With Respect to Capital Stock. Except as set forth in
Section 2.2, there are no equity securities, partnership interests or similar
ownership interests of any class of Maxis, or any securities exchangeable or
convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests, issued, reserved for issuance or
outstanding. Except for securities Maxis owns, directly or indirectly through
one or more subsidiaries, there are no equity securities, partnership interests
or similar ownership interests of any class of any subsidiary of Maxis, or any
security exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except as set forth in Section 2.2, there
are no options, warrants, equity securities, partnership interests or similar
ownership interests, calls, rights (including preemptive rights), commitments or
agreements of any character to which Maxis or any of its subsidiaries is a party
or by which it is bound obligating Maxis or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem
or otherwise acquire, or cause the repurchase, redemption or acquisition, of any
shares of capital stock, partnership interests or similar ownership interests of
Maxis or any of its subsidiaries or obligating Maxis or any of its subsidiaries
to grant, extend, accelerate the vesting of or enter into any such option,
warrant, equity security, call, right, commitment or agreement. Except as set
forth in Section 2.2 and the Voting Agreement, there are no registration rights
and, to the knowledge of Maxis, as of the date of this Agreement, there are no
voting trusts, proxies or other agreements or understandings with respect to any
equity security of any class of Maxis or with respect to any equity security,
partnership interest or similar ownership interest of any class of any of its
subsidiaries.
2.4 Authority.
(a) Maxis has all requisite corporate power and authority to enter
into this Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Maxis, subject only to the approval and adoption
of this Agreement and the approval of the Merger by Maxis' stockholders and the
filing and recordation of the Agreement of Merger pursuant to Delaware Law. A
vote of the holders of at least a majority of the outstanding shares of the
Maxis Common Stock is required for Maxis' stockholders to approve and adopt this
Agreement and approve the Merger. This Agreement has been duly executed and
delivered by Maxis and, assuming the due authorization, execution and delivery
by Electronic Arts and, if applicable, Merger Sub, constitutes a valid and
binding obligation of Maxis, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy and other similar laws and general
principles of equity. The execution and delivery of this Agreement by Maxis does
not, and the
-8-
performance of this Agreement by Maxis will not, (i) conflict with or violate
the Certificate of Incorporation or Bylaws of Maxis or the equivalent
organizational documents of any of its subsidiaries, (ii) subject to obtaining
the approval and adoption of this Agreement and the approval of the Merger by
Maxis' stockholders as contemplated in Section 5.2 and compliance with the
requirements set forth in Section 2.4(b) below, conflict with or violate, in any
material respect, any law, rule, regulation, order, judgment or decree
applicable to Maxis or any of its subsidiaries or by which its or any of their
respective properties is bound or affected, or (iii) conflict with, result in
any breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or impair Maxis' rights or alter the
rights or obligations of any third party under, or give rise to any rights of
termination, amendment, acceleration or cancellation of any obligation contained
in, or result in the creation of a lien or encumbrance on, any of the properties
or assets of Maxis or any of its subsidiaries pursuant to any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Maxis or any of its subsidiaries is a
party or by which Maxis or any of its subsidiaries or its or any of their
respective properties or assets are bound or affected, except with respect to
clause (iii) for any such conflicts, violations, defaults, rights, liens,
encumbrances or other occurrences that would, individually or in the aggregate,
not have a Material Adverse Effect on Maxis. The Maxis Schedules list all
consents, waivers and approvals under any of Maxis' or any of its subsidiaries'
agreements, contracts, licenses or leases required to be obtained in connection
with the consummation of the transactions contemplated hereby, which, if
individually or in the aggregate not obtained, would result in a Material
Adverse Effect on Maxis.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any court, administrative agency or
commission or other governmental authority or instrumentality, foreign or
domestic ("Governmental Entity"), is required to be obtained by Maxis or any of
its subsidiaries in connection with the execution and delivery of this Agreement
or the Agreement of Merger or the consummation of the transactions contemplated
hereby or thereby, except for (i) the filing of the Agreement of Merger with the
Secretary of State of the State of Delaware, (ii) the filing of the Proxy
Statement (as defined in Section 2.20) with the Securities and Exchange
Commission ("SEC") in accordance with the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (iii) such consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
applicable federal and state securities laws (including a Form S-4 registration
statement to register the shares of Electronic Arts Common Stock issued in the
Merger) and the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and the securities or antitrust laws of any foreign country and
(iv) such other consents, authorizations, filings, approvals and registrations
which if not obtained or made would not have a Material Adverse Effect on
Village or a material adverse effect on the ability of the parties to consummate
the Merger.
2.5 Certain Statutory Provisions Not Applicable. The Board of Directors
of Maxis has taken all actions so that the restrictions contained in Section 203
of the Delaware Law applicable to a "business combination" (as defined in such
Section 203) will not apply to the execution, delivery or performance of this
Agreement or to the consummation of the Merger or
-9-
the other transactions contemplated by this Agreement. Maxis is not a foreign
corporation subject to Section 2115 of the California Corporations Code as of
the date hereof.
2.6 SEC Filings; Maxis Financial Statements.
(a) Maxis has filed all forms, reports and documents, together with
all exhibits, required to be filed with the SEC since January 1, 1996, and has
made available to Electronic Arts such forms, reports and documents in the form
filed with the SEC. All such required forms, reports and documents (including
those that Maxis may file subsequent to the date hereof) are referred to herein
as the "Maxis SEC Reports." The Maxis SEC Reports (i) as of their respective
dates were prepared in accordance with the requirements of the Securities Act or
the Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Maxis SEC Reports, and (ii) did not at the time
they were filed (or if amended or superseded by a filing prior to the date of
this Agreement, then on the date of such filing) or, in the case of Maxis SEC
Reports filed under the Securities Act, when such filing became effective,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. None of Maxis' subsidiaries is required to file any forms, reports
or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in Maxis SEC Reports (the "Maxis
Financials"), including any Maxis SEC Reports filed after the date hereof until
the Closing, (x) complied as to form in all material respects with the published
rules and regulations of the SEC with respect thereto, (y) was prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited interim financial statements, as
may be permitted by the SEC on Form 10-Q under the Exchange Act) and (z) fairly
presented the consolidated financial position of Maxis and its subsidiaries as
at the respective dates thereof and the consolidated results of Maxis'
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements were or are subject to normal and recurring year-
end adjustments. The balance sheet of Maxis as of March 31, 1997 is hereinafter
referred to as the "Maxis Balance Sheet." Except as disclosed in the Maxis
Financials, since the date of the Maxis Balance Sheet through the date of this
Agreement, neither Maxis nor any of its subsidiaries has any liabilities
(absolute, accrued, contingent or otherwise) of a nature required to be
disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP which are, individually or
in the aggregate, material to the business, results of operations or financial
condition of Maxis and its subsidiaries taken as a whole, except (i) liabilities
provided for in the Maxis Balance Sheet or (ii) net liabilities incurred since
the date of the Maxis Balance Sheet in the ordinary course of business
consistent with past practices, which do not create an aggregate net increase in
liabilities (after taking into account any net increase in assets) in excess of
$4,000,000.
(c) Maxis has heretofore furnished to Electronic Arts a complete
and correct copy of any amendments or modifications, which have not yet been
filed with the SEC but which
-10-
are required to be filed, to agreements, documents or other instruments which
previously had been filed by Maxis with the SEC pursuant to the Securities Act
or the Exchange Act.
2.7 Absence of Certain Changes or Events. Since the date of the Maxis
Balance Sheet through the date of this Agreement, there has not been: (i) any
Material Adverse Effect on Maxis or any event that would reasonably be likely to
have a Material Adverse Effect on Maxis; (ii) any material change by Maxis in
its accounting methods, principles or practices, except as required by
concurrent changes in GAAP; (iii) any material revaluation by Maxis of any of
its assets, including, without limitation, writing down the value of capitalized
inventory or writing off notes or accounts receivable other than in the ordinary
course of business; (iv) any declaration, setting aside, payment of a dividend
or other distribution with respect to the shares of Maxis, or any direct or
indirect redemption, purchase or other acquisition by Maxis of any of its shares
of capital stock, except for the repurchase at cost of unvested shares held by
Maxis employees on the termination of their employment; (v) any material
increase in or modification of the compensation or benefits payable or to become
payable by Maxis to any of its directors, officers or employees, except in the
ordinary course of business consistent with past practice; (vi) any acquisition
or sale of a material amount of property or assets of Maxis, other than in the
ordinary course of business consistent with past practice; (vii) any alteration
in the term of any outstanding security of Maxis; (viii) any (A) incurrence,
assumption or guarantee by Maxis of any debt for borrowed money, (B) issuance or
sale of any securities convertible into or exchangeable for debt securities of
Maxis or (C) except for grants of options under Maxis' 1995 Stock Plan, issuance
or sale of options or other rights to acquire from Maxis, directly or
indirectly, debt securities of Maxis or any securities convertible into or
exchangeable for such debt securities; (ix) other than in the ordinary course of
business, any creation or assumption by Maxis of any mortgage, pledge, security
interest or lien or other encumbrance on any asset; (x) any making of any loan,
advance or capital contribution to or investment in any person other than (A)
travel loans or advances made in the ordinary course of business of Maxis, (B)
other loans and advances in an aggregate amount which does not exceed $100,000
outstanding at any time and (C) purchases on the open market of liquid, publicly
traded securities; (xi) any entering into, amendment of, relinquishment,
termination or non-renewal of, or any material breach under, any material
contract, lease transaction, commitment or other right or obligation other than
in the ordinary course of business; or (xii) any transfer or grant of a right
under the Maxis IP Rights (as defined in Section 2.9 below), other than those
transferred or granted in the ordinary course of business.
2.8 Taxes. Maxis and each of its subsidiaries, and any consolidated,
combined, unitary or aggregate group for Tax (as defined below) purposes of
which Maxis or any of its subsidiaries is or has been a member, has timely filed
all Returns (as defined below) required to be filed by it (other than those that
are not, individually or in the aggregate, material), has paid all Taxes shown
thereon to be due and has provided adequate accruals in all material respects in
accordance with GAAP in its financial statements for any Taxes that have not
been paid, whether or not shown as being due on any returns. In addition, (i)
no material claim for unpaid Taxes has become a lien against the property of
Maxis or any of its subsidiaries or is being asserted against Maxis or any of
its subsidiaries, (ii) no material audit of any Tax Return of Maxis or any of
its subsidiaries is being conducted by a Tax authority as of the date of this
Agreement, (iii) no
-11-
extension of the statute of limitations on the assessment of any material Taxes
has been granted by Maxis or any of its subsidiaries and is currently in effect
as of the date of this Agreement and (iv ) there is no agreement, contract or
arrangement to which Maxis or any of its subsidiaries is a party that may result
in the payment of any amount that would not be deductible pursuant to Sections
280G, 162 or 404 of the Code. As used herein, "Taxes" shall mean all taxes of
any kind, including, without limitation, those on or measured by or referred to
as income, gross receipts, sales, use, ad valorem, franchise, profits, license,
withholding, payroll, employment, excise, severance, stamp, occupation, premium,
value added, property or windfall profits taxes, customs, duties or similar
fees, assessments or charges of any kind whatsoever, together with any interest
and any penalties, additions to tax or additional amounts imposed by any
governmental authority, domestic or foreign. As used herein, "Return" shall mean
any return, report or statement required to be filed with any governmental
authority with respect to taxes.
2.9 Intellectual Property.
(a) Maxis (including, for all purposes under this Section 2.9, all
of Maxis' subsidiaries) owns, or has a valid and perpetual license under, all
patents, trademarks, trade names, service marks, copyrights, any applications
for all of the foregoing, trade secrets and know-how that are required for the
conduct of business of Maxis (including, without limitation, the development,
production and marketing of Maxis' products) as currently conducted (the "Maxis
IP Rights"), with sufficient rights for the conduct of Maxis' business as
currently conducted.
(b) Schedule 2.9(b) of the Maxis Schedules sets forth a complete
list of all patents, registered copyrights, registered trademarks, trade names
and service marks and any applications for all of the foregoing, included in
Maxis IP Rights, and specifies, where applicable, the jurisdictions in which
each such Maxis IP Right has been issued or registered or in which an
application for such issuance and registration has been filed, including the
respective registration or application numbers and the names of all registered
owners. Schedule 2.9(b) of Maxis Schedules sets forth the list of all material
licenses, sublicenses and other agreements to which Maxis is a party (with
subsidiaries clearly identified) and pursuant to which Maxis or any other person
is licensed or otherwise has rights under any Maxis IP Right (excluding licenses
granted by Maxis in the ordinary course of business that permit use of software
products without a right to modify, distribute or sublicense the same and
excluding standard licenses granted to Maxis by software vendors covering
software which is broadly distributed by such licensors). The execution and
delivery of this Agreement by Maxis, and the consummation of the transactions
contemplated hereby, will neither cause Maxis to be in violation or default
under any such license, sublicense or other agreement, nor entitle any other
party to any such license, sublicense or agreement to terminate or modify such
license, sublicense or agreement, except for such violations, defaults,
terminations or modifications which, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect on Maxis.
(c) Neither the manufacture, marketing, license, sale or intended
use of any product or technology currently licensed or sold or under development
by Maxis violates in any material respect any license or agreement between Maxis
and any third party or, to the
-12-
knowledge of Maxis, infringes in any material respect any intellectual property
right of any other party; and there is no pending or, to the knowledge of Maxis,
threatened claim or litigation contesting the validity, ownership or right to
use, sell, license or dispose of any Maxis IP Rights, nor, to the knowledge of
Maxis, is there any basis for any such claim that is likely to be successful,
nor has Maxis received any notice asserting that any Maxis IP Rights or the
proposed use, sale, license or disposition thereof conflicts or will conflict
with the rights of any other party, nor, to the knowledge of Maxis, is there any
basis for any such assertion that is likely to be successful. To Maxis'
knowledge, there is no material unauthorized use, infringement or
misappropriation under any Maxis IP Rights by any third party, including any
employee or former employee of Maxis. To the knowledge of Maxis, no Maxis IP
Right or product of Maxis is subject to any outstanding decree, order, judgment,
or stipulation restricting in any manner the licensing thereof by or to Maxis.
It is Maxis' policy to have each employee, consultant or contractor of Maxis
execute a proprietary information and confidentiality agreement substantially in
the form of Maxis' standard forms of such agreement, and all of Maxis'
employees, consultants and contractors have executed such an agreement.
(d) Maxis has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, all Maxis IP Rights and the intellectual property rights of third
parties entrusted to them.
2.10 Compliance; Permits; Restrictions; Insurance.
(a) Neither Maxis nor any of its subsidiaries is, in any material
respect, in conflict with, or in default or violation of any law, rule,
regulation, ordinance, order, judgment or decree applicable to Maxis or any of
its subsidiaries or by which Maxis or any of its subsidiaries or any of their
respective properties is bound or affected. To the knowledge of Maxis, no
investigation or review by any Governmental Entity is pending, threatened or
contemplated against Maxis or any of its subsidiaries. There is no material
agreement, judgment, injunction, order or decree binding upon Maxis or any of
its subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of Maxis or any of its
subsidiaries, any acquisition of material property by Maxis or any of its
subsidiaries or the conduct of business by Maxis as currently conducted.
(b) Maxis and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities which
are material to the operation of the business of Maxis or any of its
subsidiaries (collectively, the "Maxis Permits"). Maxis and its subsidiaries are
in compliance in all material respects with the terms of the Maxis Permits.
(c) Maxis and its subsidiaries maintain and at all times since
January 1, 1994 have maintained fire and casualty and general liability
insurance that Maxis believes to be reasonably prudent for its business. The
Maxis Schedules lists all such insurance policies presently in effect, and
copies of all such policies have been provided or made available to Electronic
Arts or its counsel.
-13-
2.11 Litigation. Except as disclosed in the Maxis SEC Reports, there
is no action, suit, proceeding, claim, demand, arbitration or investigation
pending, or as to which Maxis or any of its subsidiaries has received any notice
of assertion nor, to Maxis' knowledge, is there a threatened action, suit,
proceeding, claim, arbitration or investigation against Maxis or any of its
subsidiaries which is reasonably likely to have a Material Adverse Effect on
Maxis. Maxis has no knowledge of any unasserted claim, the assertion of which
is likely, and which, if asserted, will seek damages, an injunction or other
legal, equitable, monetary or nonmonetary relief, which claim individually or
collectively with other such unasserted claims if granted would have a Material
Adverse Effect on Maxis. No Governmental Entity has at any time challenged or
questioned in writing the legal right of Maxis to develop, offer or sell any of
its products in the present manner or style thereof. Maxis has delivered or
made available to Electronic Arts or its counsel complete and correct copies of
all correspondence prepared by its counsel for Maxis' auditors in connection
with the last two completed audits of Maxis' financial statements and any such
correspondence since the date of the last such audit.
2.12 Brokers' and Finders' Fees. Except for fees payable to Alex.
▇▇▇▇▇ & Sons Incorporated pursuant to an engagement letter dated March 1, 1997,
a copy of which has been provided to Electronic Arts, none of Maxis or any of
its subsidiaries has incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with this Agreement or any transaction contemplated
hereby.
2.13 Employee Benefit Plans.
(a) With respect to each material employee benefit plan, program,
arrangement and contract (including, without limitation, any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA")) maintained or contributed to by Maxis or any
trade or business (a "Maxis Affiliate") which is under common control with
Maxis within the meaning of Section 414 of the Code (the "Maxis Employee
Plans"), Maxis has made available to Electronic Arts a true and complete copy
of, to the extent applicable, (i) such Maxis Employee Plan, (ii) the most recent
annual report (Form 5500), (iii) each trust agreement related to such Maxis
Employee Plan, (iv) the most recent summary plan description for each Maxis
Employee Plan for which such a description is required, (v) the most recent
actuarial report relating to any Maxis Employee Plan subject to Title IV of
ERISA and (vi) the most recent United States Internal Revenue Service ("IRS")
determination letter issued with respect to any Maxis Employee Plan.
(b) Each Maxis Employee Plan which is intended to be qualified
under Section 401(a) of the Code has received a favorable determination from the
IRS covering the provisions of the Tax Reform Act of 1986 stating that such
Maxis Employee Plan is so qualified and nothing has occurred since the date of
such letter that could reasonably be expected to affect the qualified status of
such plan. Each Maxis Employee Plan has been operated in all material respects
in accordance with its terms and the requirements of applicable law. Neither
Maxis nor any Maxis Affiliate has incurred or is reasonably expected to incur
any material liability under Title IV of ERISA in connection with any Maxis
Employee Plan. All contributions due from Maxis or any Maxis Affiliate with
respect to any Maxis Employee Plan have been made or
-14-
accrued on Maxis' financial statements, and no further contributions will be due
or will have accrued thereunder as of the Effective Date, except contributions
that are consistent with the Employee Plans and past practices of Maxis. The
group health plans, as defined in Section 4980B(g) of the Code, that benefit
employees of Maxis and Maxis Affiliates are in material compliance with the
continuation coverage requirements of subsection 4980B of the Code. There are no
outstanding violations of Section 4980B of the Code with respect to any Maxis
Employee Plan, covered employees or qualified beneficiaries which would have a
Material Adverse Effect on Maxis.
(c) Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including, without limitation, severance, unemployment compensation,
golden parachute, bonus or otherwise) becoming due to any director or employee
of Maxis or any of its subsidiaries from Maxis or any of its subsidiaries, under
any Maxis Employee Plan or otherwise, (ii) materially increase any benefits
otherwise payable under any Maxis Employee Plan or otherwise or (iii) result in
the acceleration of the time of payment or vesting of any such benefits.
(d) Maxis has made available to Electronic Arts a list of all
employees of Maxis and of any of its subsidiaries and their salaries as of the
date of this Agreement.
2.14 Title to Properties; Absence of Liens and Encumbrances.
(a) The Maxis Schedules list the real property owned by Maxis.
The Maxis Schedules list each real or personal property lease (excluding
software leases) with annual lease payments of $100,000 or more to which Maxis
is a party and each amendment thereto. To Maxis' knowledge, all such current
leases are in full force and effect, are valid and effective in accordance with
their respective terms, and there is not, to Maxis' knowledge, under any of such
leases, any existing material default or material event of default (or event
which with notice or lapse of time, or both, would constitute a default).
(b) Maxis has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any liens, pledges, charges, claims, security
interests or other encumbrances of any sort ("Liens"), except as reflected in
the Maxis Financials, the Maxis SEC Reports or in the Maxis Schedules and except
for liens for taxes not yet due and payable or liens imposed by law and incurred
in the ordinary course of business for obligations not yet due to carriers,
warehousemen, laborers, materials men and the like and such imperfections of
title and encumbrances, if any, which are not material in character, amount or
extent, and which do not materially detract from the value, or materially
interfere with the present use, of the property subject thereto or affected
thereby. Neither Maxis nor any of its subsidiaries is in violation of any
zoning, building or safety ordinance, regulation or requirement or other law or
regulation applicable to the operation of owned or leased properties (the
violation of which would have a Material Adverse Effect on Maxis), or has
received any notice of violation with which it has not complied, except where
such violation would not have a Material Adverse Effect on Maxis.
-15-
2.15 Environmental Matters.
(a) Hazardous Material. Except as reasonably would not be likely
to result in a material liability to Maxis, no underground storage tanks and no
amount of any substance that has been designated by any Governmental Entity or
by applicable federal, state or local law to be radioactive, toxic, hazardous or
otherwise a danger to health or the environment, including, without limitation,
PCBs, asbestos, petroleum, urea-formaldehyde and all substances listed as
hazardous substances pursuant to the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, or defined as a hazardous
waste pursuant to the United States Resource Conservation and Recovery Act of
1976, as amended, and the regulations promulgated pursuant to said laws, (a
"Hazardous Material"), but excluding office and janitorial supplies, are
present, as a result of the actions of Maxis or any of its subsidiaries or any
affiliate of Maxis, or, to Maxis' knowledge, as a result of any actions of any
third party or otherwise, in, on or under any property, including the land and
the improvements, ground water and surface water thereof, that Maxis or any of
its subsidiaries has at any time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as reasonably would
not be likely to result in a material liability to Maxis, neither Maxis nor any
of its subsidiaries has transported, stored, used, manufactured, disposed of,
released or exposed its employees or others to Hazardous Materials in violation
of any law in effect on or before the Closing Date, nor has Maxis or any of its
subsidiaries disposed of, transported, sold, used, released, exposed its
employees or others to or manufactured any product containing a Hazardous
Material (collectively "Hazardous Materials Activities") in violation of any
rule, regulation, treaty or statute promulgated by any Governmental Entity in
effect prior to or as of the date hereof to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity.
(c) Permits. Maxis and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the "Maxis
Environmental Permits") which are material for the conduct of Maxis' and its
subsidiaries' Hazardous Material Activities and other businesses of Maxis and
its subsidiaries as such activities and businesses are currently being
conducted.
(d) Environmental Liabilities. No material action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is pending
or, to Maxis' knowledge, threatened concerning any Maxis Environmental Permit,
Hazardous Material or any Hazardous Materials Activity of Maxis or any of its
subsidiaries. Maxis is not aware of any fact or circumstance which could involve
Maxis or any of its subsidiaries in any material environmental litigation or
impose upon Maxis any material environmental liability.
2.16 Employees; Labor Matters. Between January 1, 1996 and the date
of this Agreement, to Maxis' knowledge, no employee of Maxis or any of its
subsidiaries has violated, in any material respect, any employment contract,
patent disclosure agreement or noncompetition agreement between such employee
and any former employer of such employee due to such
-16-
employee being employed by Maxis or any of its subsidiaries and disclosing to
Maxis or any of its subsidiaries trade secrets or proprietary information of
such employer. Between April 1, 1997 and the date of this Agreement, to Maxis'
knowledge, no employee of Maxis or any of its subsidiaries has given notice to
Maxis or any of its subsidiaries that such employee intends to terminate his or
her employment with Maxis or any of its subsidiaries except for terminations of
a nature and number that are consistent with Maxis' prior experience. There are
no activities or proceedings of any labor union to organize any employees of
Maxis or any of its subsidiaries and there are no strikes, or material
slowdowns, work stoppages or lockouts, or threats thereof by or with respect to
any employees of Maxis or any of its subsidiaries. Maxis is not, and has never
been, a party to any collective bargaining agreement. Maxis and its subsidiaries
are, and since January 1, 1996, Maxis and its subsidiaries have been in
compliance in all material respects with all applicable laws regarding
employment practices, terms and conditions of employment, and wages and hours
(including, without limitation, ERISA, WARN or any similar state or local law).
2.17 Agreements, Contracts and Commitments. Except as set forth in
the Maxis Schedules, as of the date hereof, neither Maxis nor any of its
subsidiaries is a party to or is bound by:
(a) any employment or consulting agreement, contract or
commitment with any officer, employee, consultant or member of Maxis' Board of
Directors, other than those that are terminable by Maxis or any of its
subsidiaries on no more than thirty days notice without liability or financial
obligation, except to the extent general principles of wrongful termination law
may limit Maxis' or any of its subsidiaries' ability to terminate employees at
will;
(b) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
(c) any agreement of indemnification or guaranty not entered into
in the ordinary course of business other than indemnification agreements between
Maxis or any of its subsidiaries and any of its officers or directors;
(d) any agreement, contract or commitment containing any covenant
limiting the freedom of Maxis or any of its subsidiaries to engage in any line
of business or compete with any person or granting any exclusive distribution
rights;
(e) any agreement, contract or commitment currently in force
relating to the disposition or acquisition of assets not in the ordinary course
of business or any ownership interest in any corporation, partnership, joint
venture or other business enterprise;
(f) any material joint marketing or development agreement
currently in force;
-17-
(g) any agreement, contract or commitment currently in force to
provide source code to any third party for any product or technology that is
material to Maxis and its subsidiaries taken as a whole, except for (i) any
agreement, contract or commitment pursuant to which source code is provided for
maintenance of the source code or for development of modifications thereto only,
and not for distribution of source or object code to third parties, and (ii) any
source code escrow agreement entered into in the ordinary course of business
that contains provisions relating to the release of source code if Maxis and/or
any of its subsidiaries ceases to do business or fails to provide appropriate
maintenance;
(h) any agreement, contract or commitment currently in force to
license any third party to manufacture or reproduce any Maxis product, except as
a distributor or OEM bundler in the ordinary course of business;
(i) any continuing contract for the future purchase, sale or
manufacture of products, material, supplies, equipment or services requiring
payment to or from Maxis or any of its subsidiaries in an amount in excess of
$100,000 per annum which is not terminable on 90 days' or less notice without
cost or other liability at or at any time after the Effective Time or in which
Maxis or any of its subsidiaries has granted or received manufacturing rights,
most favored nation pricing provisions relating to any product, group of
products or territory;
(j) any material contract providing for the development of
software (other than contracts with consultants) for, or license of software to,
Maxis, which software is used or incorporated in any Maxis Product (as defined
in Section 2.23);
(k) any indenture, mortgage, promissory note, loan agreement,
guarantee or other agreement or commitment for the borrowing of money, for a
line of credit or for a leasing transaction of a type required to be capitalized
in accordance with Statement of Financial Accounting Standards No. 13 of the
Financial Accounting Standards Board; or
(l) any written agreement between or among Maxis or any of its
subsidiaries regarding intercompany loans, revenue or cost sharing, ownership or
license of Maxis IP Rights, intercompany royalties or dividends or similar
matters.
Any agreement, contract or commitment described in clauses (a) through (l)
above shall be referred to as a "Maxis Contract." Neither Maxis nor any of its
subsidiaries, nor to Maxis' knowledge any other party to a Maxis Contract (as
defined below), is in material breach, violation or default under, and neither
Maxis nor any of its subsidiaries has since January 1, 1997 received written
notice that it has materially breached, violated or defaulted under, and there
exists no event, condition or occurrence which, after notice or lapse of time,
or both, would constitute such a material default by Maxis or any of its
subsidiaries under, any of the Maxis Contracts that are material to Maxis or
would be reasonably likely to cause a Material Adverse Effect on Maxis.
2.18 Pooling of Interests. To the knowledge of Maxis, based on
consultation with its independent accountants, neither Maxis nor any of its
directors, officers, affiliates or
-18-
stockholders has taken any action which would preclude Electronic Arts' ability
to account for the Merger as a pooling of interests.
2.19 Change of Control Payments. The Maxis Schedules set forth each
plan or agreement pursuant to which any material amounts may become payable
(whether currently or in the future) to current or former employees,
consultants, officers and directors of Maxis as a result of or in connection
with the Merger.
2.20 Proxy Statement/Prospectus. The information supplied by Maxis
for inclusion in the Form S-4 registration statement relating to the issuance of
Electronic Arts Common Stock in the Merger (the "Registration Statement") shall
not at the time the Registration Statement is filed with the SEC and at the time
it becomes effective under the Securities Act, 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 not misleading. The
information supplied by Maxis for inclusion in the proxy statement/prospectus to
be sent to the stockholders of Maxis in connection with the meeting of Maxis'
stockholders to consider the approval and adoption of this Agreement and the
approval of the Merger (the "Maxis Stockholders' Meeting") (such proxy
statement/prospectus as amended or supplemented is referred to herein as the
"Proxy Statement") shall not, on the date the Proxy Statement is first mailed to
Maxis' stockholders, at the time of the Maxis Stockholders' Meeting and at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not false or misleading; or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies for the Maxis Stockholders' Meeting which has become false or
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. If at any time prior to the Effective Time, any event relating to
Maxis or any of its affiliates, officers or directors should be discovered by
Maxis which should be set forth in an amendment to the Registration Statement or
a supplement to the Proxy Statement, Maxis shall promptly inform Electronic
Arts. Notwithstanding the foregoing, Maxis makes no representation or warranty
with respect to any information supplied by Electronic Arts or Merger Sub which
is contained in any of the foregoing documents.
2.21 Board Approval. The Board of Directors of Maxis has, as of the
date of this Agreement, unanimously (i) approved this Agreement and the Merger,
(ii) determined that the Merger is fair to, and in the best interests of, Maxis
and its stockholders and (iii) determined to recommend that the stockholders of
Maxis approve and adopt this Agreement and approve the Merger.
2.22 Fairness Opinion. Maxis has received a written opinion from
Alex. ▇▇▇▇▇ & Sons Incorporated, dated as of the date hereof, to the effect that
as of the date hereof, the Exchange Ratio is fair to Maxis' stockholders from a
financial point of view and has delivered to Electronic Arts a copy of such
opinion.
-19-
2.23 Products and Distribution. The Maxis Schedules contain a complete
list of the top five (5) software products (by title, determined by aggregate
net sales by Maxis or any of its subsidiaries in fiscal 1997 from such title)
published and/or distributed by Maxis or any of its subsidiaries (the "Maxis
Published Products") and the expected top five (5) products (by title,
determined by the projected net sales for such title in its first year after
introduction) under development or consideration by Maxis or its subsidiaries
with a scheduled ship date on or prior to December 31, 1997 (the "Maxis Products
Under Development," collectively with the Maxis Published Products referred to
as the "Maxis Products") (which list is correct in all material respects).
(a) The Maxis Schedules set forth, for each Maxis Product, the
following (to the extent not already listed on another Schedule to this
Agreement): (i) a list of all material contracts and agreements (including
without limitation all material development, trademark license, technology
license, distribution or other agreements) relating to the Maxis Products; (ii)
whether the Maxis Product has been developed internally (i.e., substantially
entirely by employees of Maxis or any of its subsidiaries) or externally (i.e.,
including substantive contributions by one or more independent contractors to
Maxis) and, if externally, such Schedule sets forth the identity of the
significant independent contractors and a list of the material agreements with
such independent contractors; (iii) the material advances paid or payable, and
the material royalties payable, to any third parties with respect to such Maxis
Product; and (iv) a list of the third parties with significant distribution or
publication rights to such Maxis Product together with a description of: (A) the
territory in which the third party has distribution rights; and (B) whether such
distribution rights are exclusive or nonexclusive (all of which information
disclosed pursuant to clauses (i)-(iv) of this paragraph is correct in all
material respects).
(b) The Maxis Schedules set forth, for each Maxis Product Under
Development, the following (as of the date of this Agreement): (i) the currently
scheduled public availability date without regard to the Merger (which dates
Maxis believes to be reasonable); (ii) a schedule of development milestone
events and any material related payments, including both milestones already
achieved in the past six (6) months and those scheduled for the future; and
(iii) whether any significant development milestone for such Maxis Product has
been missed in the past six (6) months by more than thirty (30) days (all of
which information disclosed pursuant to clauses (i)-(iii) of this paragraph is
correct in all material respects).
2.24 Development Tools. The Maxis Schedules contain a complete list of
all material software development tools used or currently intended to be used by
Maxis or any of its subsidiaries in the development of any of the Maxis
Published Products, except for any such tools that are generally available and
are used in their generally available form (such as standard compilers) (the
"Maxis Development Tools"). The Maxis Schedules also set forth, for each Maxis
Development Tool: (a) for any Maxis Development Tool not entirely developed
internally by the employees of Maxis or any of its subsidiaries, the identity of
the independent contractors and consultants involved in a material way in such
development and a list of the material agreements with such independent
contractors and consultants with respect to the Maxis Published Products; (b) a
list of any third parties with any rights to receive material royalties or other
payments with respect to such Maxis Development Tools, and a schedule of all
such
-20-
royalties payable; (c) a list of any material restrictions on Maxis' or any of
its subsidiaries' unrestricted right to use and distribute such Maxis
Development Tool; and (d) a list of all agreements with third parties for the
use by such third party of such Maxis Development Tools (all of which
information disclosed pursuant to clauses (a)-(d) of this paragraph is correct
in all material respects).
2.25 Interested Party Transactions. Except as disclosed in the Maxis SEC
Reports filed prior to the date of this Agreement, since the date of Maxis' last
proxy statement to its stockholders, no event has occurred that would be
required to be reported by Maxis as a Certain Relationship or Related
Transaction, pursuant to Item 404 of Regulation S-K promulgated by the SEC.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
ELECTRONIC ARTS AND MERGER SUB
Electronic Arts and Merger Sub represent and warrant to Maxis, subject to
the exceptions disclosed in writing in the disclosure letter supplied by
Electronic Arts to Maxis dated as of the date hereof and certified by a duly
authorized officer of Electronic Arts (the "Electronic Arts Schedules"), as
follows:
3.1 Organization of Electronic Arts and Merger Sub.
(a) Each of Electronic Arts and Merger Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized; has the corporate power and authority to
own, lease and operate its assets and property and to carry on its business as
now being conducted; and is duly qualified or licensed to do business and is in
good standing in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified would not have a Material Adverse Effect on Electronic Arts.
(b) Electronic Arts has delivered or made available to Maxis a true
and correct copy of the charter and Bylaws of Electronic Arts and Merger Sub,
each as amended to date, and each such instrument is in full force and effect.
Neither Electronic Arts nor Merger Sub is in violation of any of the provisions
of its charter or Bylaws.
3.2 Electronic Arts and Merger Sub Capital Structure. The authorized
capital stock of Electronic Arts consists of 70,000,000 shares of Common Stock,
par value $0.01 per share, of which there were 54,165,716 shares issued and
outstanding as of March 29, 1997, and 1,000,000 shares of Preferred Stock, par
value $0.01 per share, of which no shares are issued or outstanding. The
authorized capital stock of Merger Sub consists of 1,000 shares of Common Stock,
par value $0.01 per share, all of which, as of the date hereof, are issued and
outstanding and are held by Electronic Arts. Merger Sub was formed on June 2,
1997 for the purpose of
-21-
consummating the Merger and has no material assets or liabilities except as
necessary for such purpose. All outstanding shares of Electronic Arts Common
Stock are duly authorized, validly issued, fully paid and nonassessable and are
not subject to preemptive rights created by statute, the Certificate of
Incorporation or Bylaws of Electronic Arts or any agreement or document to which
Electronic Arts is a party or by which it is bound. Electronic Arts has reserved
a sufficient number of shares of Common Stock for the issuance of shares to the
stockholders of Maxis in the Merger.
3.3 Authority.
(a) Each of Electronic Arts and Merger Sub has all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Electronic Arts and,
in the case of this Agreement, Merger Sub, subject only to the filing and
recordation of the Agreement of Merger pursuant to Delaware Law. This Agreement
has been duly executed and delivered by each of Electronic Arts and Merger Sub
and, assuming the due authorization, execution and delivery by Maxis,
constitutes the valid and binding obligation of Electronic Arts, enforceable in
accordance with its terms, except as enforceability may be limited by bankruptcy
and other similar laws and general principles of equity. The execution and
delivery of this Agreement by each of Electronic Arts and Merger Sub does not,
and the performance of this Agreement by each of Electronic Arts and Merger Sub
will not (i) conflict with or violate the Certificate of Incorporation or Bylaws
of Electronic Arts or the Certificate of Incorporation or Bylaws of Merger Sub
or the equivalent organizational documents of any of Electronic Arts' other
subsidiaries, (ii) subject to compliance with the requirements set forth in
Section 3.3(b) below, conflict with or violate in any material respect any law,
rule, regulation, order, judgment or decree applicable to Electronic Arts or any
of its subsidiaries (including Merger Sub) or by which its or any of their
respective properties is bound or affected, or (iii) conflict with, result in
any breach of or constitute a default (or an event that with notice or lapse of
time or both would become a default) under, or impair Electronic Arts' rights or
alter the rights or obligations of any third party under, or give rise to any
rights of termination, amendment, acceleration or cancellation of any obligation
contained in, or result in the creation of a lien or encumbrance on any of the
properties or assets of Electronic Arts or any of its subsidiaries (including
Merger Sub) pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Electronic Arts or any of its subsidiaries (including Merger Sub) is a
party or by which Electronic Arts or any of its subsidiaries or its or any of
their respective properties or assets are bound or affected, except with respect
to clause (iii) for any such conflicts, violations, defaults, rights, liens,
encumbrances or other occurrences that would, individually or in the aggregate,
not have a Material Adverse Effect on Electronic Arts. The Electronic Arts
Schedules list all material consents, waivers and approvals under any of
Electronic Arts' or any of its subsidiaries' agreements, contracts, licenses or
leases required to be obtained in connection with the consummation of the
transactions contemplated hereby, which, if individually or in the aggregate not
obtained, would result in a Material Adverse Effect on Electronic Arts.
-22-
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is required to
be obtained by Electronic Arts or Merger Sub in connection with the execution
and delivery of this Agreement or the consummation of the Merger, except for (i)
the filing of the Registration Statement relating to the issuance of Electronic
Arts Common Stock in the Merger with the SEC in accordance with the Securities
Act, (ii) the filing of the Agreement of Merger with the Secretary of State of
the State of Delaware, (iii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws and the HSR Act and the securities or
antitrust laws of any foreign country, and (iv) such other consents,
authorizations, filings, approvals and registrations which if not obtained or
made would not have a Material Adverse Effect on Electronic Arts or a material
adverse effect on the ability of the parties to consummate the Merger.
3.4 Section 203 of the Delaware General Corporation Law Not Applicable.
The Board of Directors of Electronic Arts has taken all actions so that the
restrictions contained in Section 203 of the Delaware General Corporation Law
applicable to a "business combination" (as defined in such Section 203) will not
apply to the execution, delivery or performance of this Agreement or to the
consummation of the Merger or the other transactions contemplated by this
Agreement.
3.5 SEC Filings; Electronic Arts Financial Statements.
(a) Electronic Arts has filed all forms, reports and documents,
together with all exhibits, required to be filed with the SEC since January 1,
1996, and has made available to Maxis such forms, reports and documents in the
form filed with the SEC. All such required forms, reports and documents
(including those that Electronic Arts may file subsequent to the date hereof)
are referred to herein as the "Electronic Arts SEC Reports." The Electronic Arts
SEC Reports (i) as of their respective dates were prepared in accordance with
the requirements of the Securities Act or the Exchange Act, as the case may be,
and the rules and regulations of the SEC thereunder applicable to such
Electronic Arts SEC Reports, and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) or, in the case of Electronic Arts SEC Reports filed
under the Securities Act, when such filing became effective, contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. None of
Electronic Arts' subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in Electronic Arts SEC Reports
(the "Electronic Arts Financials"), including any Electronic Arts SEC Reports
filed after the date hereof until the Closing, (x) complied as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, (y) was prepared in accordance with GAAP applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited interim financial statements, as
may be permitted by the SEC on
-23-
Form 10-Q under the Exchange Act) and (z) fairly presented the consolidated
financial position of Electronic Arts and its subsidiaries as at the respective
dates thereof and the consolidated results of Electronic Arts' operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments. The balance sheet of Electronic Arts contained in Electronic Arts
SEC Reports as of March 31, 1997 is hereinafter referred to as the "Electronic
Arts Balance Sheet." Except as disclosed in the Electronic Arts Financials,
since the date of the Electronic Arts Balance Sheet through the date of this
Agreement neither Electronic Arts nor any of its subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise) of a nature required to
be disclosed on a balance sheet or in the related notes to the consolidated
financial statements prepared in accordance with GAAP which are, individually or
in the aggregate, material to the business, results of operations or financial
condition of Electronic Arts and its subsidiaries taken as a whole, except
liabilities (i) provided for in the Electronic Arts Balance Sheet, or (ii)
incurred since the date of the Electronic Arts Balance Sheet in the ordinary
course of business consistent with past practices that would not have a Material
Adverse Effect on Electronic Arts.
(c) Electronic Arts has heretofore furnished to Maxis a complete
and correct copy of any amendments or modifications, which have not yet been
filed with the SEC but which are required to be filed, to agreements, documents
or other instruments which previously had been filed by Electronic Arts with the
SEC pursuant to the Securities Act or the Exchange Act.
3.6 Absence of Certain Changes or Events. Since the date of the
Electronic Arts Balance Sheet through the date of this Agreement, there has not
been any Material Adverse Effect on Electronic Arts or any event that would
reasonably be likely to have a Material Adverse Effect on Electronic Arts.
3.7 Pooling of Interests. To the knowledge of Electronic Arts, based on
consultation with its independent accountants, neither Electronic Arts nor any
of its directors, officers, affiliates or stockholders has taken any action
which would preclude Electronic Arts' ability to account for the Merger as a
pooling of interests.
3.8 Proxy Statement/Prospectus. The information supplied by Electronic
Arts for inclusion in the Registration Statement shall not at the time the
Registration Statement is filed with the SEC and at the time it becomes
effective under the Securities Act, 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 not misleading. The
information supplied by Electronic Arts for inclusion in the Proxy Statement
shall not, on the date the Proxy Statement is first mailed to Maxis'
stockholders, at the time of the Maxis Stockholders' Meeting and at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not false or misleading; or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies for the Maxis Stockholders' Meeting which has become false or
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. If at any time prior to
-24-
the Effective Time, any event relating to Electronic Arts or any of its
affiliates, officers or directors should be discovered by Electronic Arts which
should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement, Electronic Arts shall promptly inform Maxis.
Notwithstanding the foregoing, Electronic Arts makes no representation or
warranty with respect to any information supplied by Maxis which is contained in
any of the foregoing documents.
3.9 Board Approval. The Board of Directors of Electronic Arts has (i)
determined that the Merger is fair to, and in the best interests of, Electronic
Arts and its stockholders and (ii) approved the Merger.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, Maxis and each of its subsidiaries
shall, except as permitted by the terms of this Agreement or to the extent that
Electronic Arts shall otherwise consent in writing, which consent shall not be
unreasonably withheld, or as provided in Section 4 of the Maxis Schedules, carry
on and use reasonable best efforts to preserve its business, in all material
respects, in the usual, regular and ordinary course, and in compliance with all
applicable laws and regulations, pay its debts and taxes when due subject to
good faith disputes over such debts or taxes, pay or perform other material
obligations when due, and use its reasonable best efforts consistent with past
practices and policies to (i) preserve intact its present business organization,
(ii) keep available the services of its present officers and employees and (iii)
preserve its relationships with customers, suppliers, distributors, licensors,
licensees, and others with which it has business dealings.
In addition, except as permitted by the terms of this Agreement, and except
as provided in Section 4 of the Maxis Schedules, without the prior written
consent of Electronic Arts (which consent shall not be unreasonably withheld)
during the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement pursuant to its terms and the
Effective Time, Maxis shall not do any of the following and shall not permit its
subsidiaries to do any of the following (except as required by applicable law):
(a) Waive any stock repurchase rights, accelerate, amend or change
the period of exercisability of options or restricted stock, or reprice options
granted under any employee, consultant or director stock plans or authorize cash
payments in exchange for any options granted under any of such plans;
(b) Grant any severance or termination pay to any officer or
employee except payments in amounts consistent with policies and past practices
or pursuant to written agreements outstanding, or policies existing, on the date
hereof and as previously disclosed in writing or made available to Electronic
Arts, or adopt any new severance plan;
-25-
(c) Transfer or license to any person or entity or otherwise extend
the term of any agreement with respect to, amend or modify in any material
respect any rights (including without limitation distribution rights) to the
Maxis IP Rights or enter into assignments of future patent rights, other than
licenses and distribution rights in the ordinary course of business;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(e) Repurchase or otherwise acquire, directly or indirectly, any
shares of capital stock of Maxis, except repurchases of unvested shares at cost
in connection with the termination of the employment, consulting or director
relationship with any employee, officer, consultant or director pursuant to
agreements in effect as of the date hereof;
(f) Issue, deliver, sell, authorize or propose the issuance,
delivery or sale of, any shares of capital stock or any securities convertible
into shares of capital stock, or subscriptions, rights, warrants or options to
acquire any shares of capital stock or any securities convertible into shares of
capital stock, or enter into other agreements or commitments of any character
obligating it to issue any such shares or convertible securities, or, except
pursuant to agreements existing on the date hereof, accelerate the vesting of
any outstanding option or other security, other than the issuance, delivery
and/or sale of (i) shares of Maxis Common Stock pursuant to the exercise of
outstanding stock options, (ii) shares of Maxis Common Stock issuable to
participants in the Maxis ESPP consistent with the terms thereof and (iii)
options to purchase Maxis Common Stock granted at fair market value, consistent
with past practice and in accordance with Maxis Stock Option Plans;
(g) Cause, permit or propose any amendments to any charter document
or Bylaw (or similar governing instruments of any subsidiaries);
(h) Acquire or agree to acquire by merging or consolidating with,
or by purchasing any equity interest in or a material portion of the assets of,
or by any other manner, any business or any corporation, partnership interest,
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets which are material, individually or in
the aggregate, to the business of Maxis or enter into any material joint
ventures, strategic partnerships or alliances;
(i) Sell, lease, encumber or otherwise dispose of any properties or
assets which are material, individually or in the aggregate, to the business of
Maxis, except in the ordinary course of business consistent with past practice;
(j) Incur any indebtedness for borrowed money in excess of
$2,500,000, or guarantee any indebtedness of any person for borrowed money
(except that Maxis may guarantee any indebtedness of any subsidiary of Maxis,
and any subsidiary of Maxis may guarantee any
-26-
indebtedness of Maxis or of any other subsidiary of Maxis; provided that the
total guaranteed indebtedness in the foregoing cases, together with any incurred
indebtedness by Maxis, does not exceed $2,500,000), or issue or sell any debt
securities or warrants or rights to acquire debt securities of Maxis or
guarantee any debt securities of others;
(k) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan, enter into any employment contract
(other than: (x) offer letters and letter agreements with employees who are
terminable "at will," or (y) as required by law), pay any special bonus or
special remuneration to any director or employee other than in the ordinary
course of business, consistent with past practice, or increase the salaries or
wage rates of its officers or employees other than in the ordinary course of
business, consistent with past practice;
(l) Make any payments outside of the ordinary course of business in
excess of $1 million for purposes of settling any dispute;
(m) Take any action, or permit any of its affiliates to take any
action, that would be reasonably likely to interfere with Electronic Arts'
ability to account for the Merger as a pooling of interests whether or not
otherwise permitted by the provisions of this Section 4.1;
(n) Pay (or make any oral or written commitments or representations
to pay) any bonus, increased salary or special remuneration to any officer,
employee or consultant (except (i) for normal salary increases consistent with
past practices not to exceed 10% per year, (ii) pursuant to existing
arrangements previously disclosed to Electronic Arts and (iii) for reasonable
bonuses to encourage retention of employees after the announcement of a Superior
Proposal (as defined below)) or enter into or vary the terms of any employment,
consulting or severance agreement with any such person, pay any severance or
termination pay (other than payments made in accordance with plans or agreements
existing on the date hereof), grant any stock option (except for normal grants
to newly hired employees or newly promoted employees consistent with past
practices) or issue any restricted stock, or enter into or modify, in any
material respect, any agreement or plan or increase, in any material respect,
benefits of the type described in Section 2.13;
(o) Materially change its accounting methods, principles or
practices, except as required by concurrent changes in GAAP;
(p) Amend in a manner adverse to the Company or terminate any
material contract, agreement or license to which it is a party except those
amended or terminated in the ordinary course of its business, consistent with
past practice;
(q) Lend any amount to any person or entity, other than (i)
advances for travel and expenses which are incurred in the ordinary course of
business or (ii) any loans pursuant to any Maxis Section 401(k) Plan;
-27-
(r) Waive or release any right or claim except for the waiver or
release of non-material claims in the ordinary course of business, consistent
with past practice or the waiver or release of rights or claims set forth in the
Maxis Schedules;
(s) Split or combine the outstanding shares of its capital stock of
any class or enter into any recapitalization or agreement affecting the number
or rights of outstanding shares of its capital stock of any class or affecting
any other of its securities;
(t) Agree to any audit assessment by any Tax authority in excess of
$500,000;
(u) Change any insurance coverage in any material respects; or
(v) Agree in writing or otherwise to take any of the actions
described in Section 4.1 (a) through (u) above.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; Registration Statement; Other Filings;
Board Recommendations.
(a) As promptly as practicable after the execution of this
Agreement, Maxis and Electronic Arts will prepare, and file with the SEC, the
Proxy Statement, and Electronic Arts will prepare and file with the SEC the
Registration Statement in which the Proxy Statement will be included as a
prospectus. Each of Maxis and Electronic Arts will respond to any comments of
the SEC, will use its respective reasonable best efforts to have the
Registration Statement declared effective under the Securities Act as promptly
as practicable after such filing and, to the extent that presenting this
Agreement and the Merger to Maxis' stockholders for their approval and adoption
would not violate applicable law, Maxis will cause the Proxy Statement to be
mailed to the Maxis stockholders at the earliest practicable time after the
Registration Statement is declared effective by the SEC. As promptly as
practicable after the date of this Agreement, each of Maxis and Electronic Arts
will prepare and file any other filings required to be filed by it under the
Exchange Act, the Securities Act or any other Federal, foreign or Blue Sky or
related laws relating to the Merger and the transactions contemplated by this
Agreement (the "Other Filings"). Each of Maxis and Electronic Arts will notify
the other promptly upon the receipt of any comments from the SEC or its staff or
any other government officials and of any request by the SEC or its staff or any
other government officials for amendments or supplements to the Registration
Statement, the Proxy Statement or any Other Filing or for additional information
and will supply the other with copies of all correspondence between such party
or any of its representatives, on the one hand, and the SEC, or its staff or any
other government officials, on the other hand, with respect to the Registration
Statement, the Proxy Statement, the Merger or any Other Filing. Each of Maxis
and Electronic Arts will cause all documents that it is responsible for filing
with the SEC or other regulatory authorities under this Section 5.1(a) to comply
in all material respects with all applicable requirements of law and the rules
and regulations promulgated thereunder. Whenever Maxis or Electronic Arts
obtains knowledge of
-28-
the occurrence of any event which is required to be set forth in an amendment or
supplement to the Proxy Statement, the Registration Statement or any Other
Filing, Maxis or Electronic Arts, as the case may be, will promptly inform the
other of such occurrence and cooperate in filing with the SEC or its staff or
any other government officials, and/or mailing to stockholders of Maxis, such
amendment or supplement.
(b) Subject to the provisions of Section 5.4(b), the Proxy
Statement will include the recommendation of the Board of Directors of Maxis in
favor of adoption and approval of this Agreement and approval of the Merger
(except that notwithstanding anything to the contrary contained in this
Agreement, the Board of Directors of Maxis may withdraw, modify or refrain from
making such recommendation to the extent that the Board determines, in good
faith, after consultation with outside legal counsel, that compliance with the
Board's fiduciary duties would require it to do so).
5.2 Meeting of Stockholders. Promptly after the date hereof, Maxis will
take all action necessary in accordance with Delaware Law and its Certificate of
Incorporation and Bylaws to convene the Maxis Stockholders' Meeting to be held
as promptly as practicable, and in any event (to the extent permissible under
applicable law) within 45 days after the declaration of effectiveness of the
Registration Statement, for the purpose of voting upon this Agreement. For so
long as the Board of Directors of Maxis continues to make the recommendation set
forth in Section 5.1, Maxis will use its reasonable best efforts to solicit from
its stockholders proxies in favor of the adoption and approval of this Agreement
and the approval of the Merger and will take all other action necessary or
advisable to secure the vote or consent of its stockholders required by the
rules of the National Association of Securities Dealers, Inc. or Delaware Law to
obtain such approvals.
5.3 Confidentiality.
(a) The parties acknowledge that Electronic Arts and Maxis have
previously executed a Confidentiality Agreement, dated May 24, 1996 (the
"Confidentiality Agreement"), which Confidentiality Agreement will continue in
full force and effect in accordance with its terms.
(b) Access to Information. Each of Electronic Arts and Maxis will
afford the other party and its accountants, counsel and other representatives
reasonable access during normal business hours to the properties, books, records
and personnel of such party during the period prior to the Effective Time to
obtain all information concerning the business, including the status of product
development efforts, properties, results of operations and personnel of such
party, as the other party may reasonably request. No information or knowledge
obtained in any investigation pursuant to this Section 5.3 will affect or be
deemed to modify any representation or warranty contained herein or the
conditions to the obligations of the parties to consummate the Merger.
-29-
5.4 No Solicitation.
(a) Subject to Section 5.4(b), from and after the date of this
Agreement until the earlier of the Effective Time or termination of this
Agreement pursuant to its terms, Maxis and its subsidiaries shall not, and will
instruct their respective directors, officers, employees, representatives,
investment bankers, agents and affiliates not to, directly or indirectly, (i)
solicit, initiate or encourage the making, submission or announcement of, any
Acquisition Proposal (as defined below) by any person, entity or group (other
than Electronic Arts and its affiliates, agents and representatives), or (ii)
participate in any discussions or negotiations with, or disclose any non-public
information concerning Maxis or any of its subsidiaries to, or afford any access
to the properties, books or records of Maxis or any of its subsidiaries to, or
otherwise assist or facilitate, or enter into any agreement or understanding
with, any person, entity or group (other than Electronic Arts and its
affiliates, agents and representatives), in connection with any Acquisition
Proposal with respect to Maxis. Without limiting the generality of the
foregoing, Maxis acknowledges and agrees that any violation of any of the
restrictions set forth in the preceding sentence by any director, officer,
employee, representative, investment banker, agent or affiliate of Maxis shall
be deemed to constitute a breach of this Section 5.4 by Maxis. For the purposes
of this Agreement, an "Acquisition Proposal" with respect to an entity means any
proposal or offer relating to (i) any merger, consolidation, sale of substantial
assets or similar transactions involving the entity or any subsidiaries of the
entity (other than sales or licenses of assets or inventory in the ordinary
course of business or as permitted under the terms of this Agreement), (ii) sale
of 15% or more of the outstanding shares of capital stock of the entity
(including without limitation by way of a tender offer or an exchange offer),
(iii) the acquisition by any person of beneficial ownership or a right to
acquire beneficial ownership of, or the formation of any "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) which beneficially owns, or has the right to acquire beneficial
ownership of, 15% or more of the then outstanding shares of capital stock of the
entity (except for acquisitions for passive investment purposes only in
circumstances where the person or group qualifies for and files a Schedule 13G
with respect thereto); or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing. Maxis will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any Acquisition Proposal. Maxis will (i) notify Electronic Arts as promptly
as practicable if it receives any proposal or written inquiry or written request
for Maxis in connection with an Acquisition Proposal or potential Acquisition
Proposal and (ii) as promptly as practicable notify Electronic Arts of the
significant terms and conditions of any such Acquisition Proposal, as well as
the identity of the third party submitting such Acquisition Proposal. In
addition, subject to the other provisions of this Section 5.4(a), from and after
the date of this Agreement until the earlier of the Effective Time and
termination of this Agreement pursuant to its terms, Maxis and its subsidiaries
will not, and will instruct their respective directors, officers, employees,
representatives, investment bankers, agents and affiliates not to, directly or
indirectly, make or authorize any public statement, recommendation or
solicitation in support of any Acquisition Proposal made by any person, entity
or group (other than Electronic Arts); provided, however, that nothing herein
shall prohibit Maxis' Board of Directors from taking and disclosing to Maxis'
stockholders a position with respect to a tender offer pursuant to Rules 14d-9
and 14e-2 promulgated under the Exchange Act.
-30-
(b) Notwithstanding anything contrary contained in Section 5.4(a) or
elsewhere in this Agreement, prior to the Effective Time, Maxis may, to the
extent the Board of Directors of Maxis determines, in good faith, after
consultation with outside legal counsel, that the Board's fiduciary duties
require it to do so, participate in discussions or negotiations with, and,
subject to the requirements of paragraph (c) below, furnish non-public
information, and afford access to the properties, books or records of Maxis to
any person, entity or group after such person, entity or group has delivered to
Maxis in writing, an unsolicited bona fide Acquisition Proposal (which has not
been withdrawn) which the Board of Directors of Maxis in its good faith
reasonable judgment determines, after consultation with its independent
financial advisors, would reasonably likely to result in a transaction more
favorable than the Merger to the stockholders of Maxis (a "Superior Proposal").
In addition, notwithstanding the provisions of paragraph (a) above or any other
provision of this Agreement, in connection with a submitted, written bona fide
Acquisition Proposal, Maxis may refer the proposing third party to this Section
5.4 or make a copy of this Section 5.4 available to such third party. In the
event Maxis receives a Superior Proposal, nothing contained in this Agreement
(but subject to the terms of this paragraph (b)) will prevent the Board of
Directors of Maxis from recommending such Superior Proposal to Maxis'
stockholders, if the Board determines, in good faith, after consultation with
outside legal counsel, that such action is required by its fiduciary duties; in
such case, the Board of Directors of Maxis may withdraw, modify or refrain from
making its recommendations set forth in Section 5.1(b), and, to the extent it
does so, Maxis may refrain from soliciting proxies and taking such other action
necessary to secure the affirmative vote of its stockholders as may be required
by Section 5.2; provided that (to the extent permissible under applicable law)
Maxis shall remain obligated under Section 5.2 to convene the Maxis Stockholder
Meeting and shall have the vote on the Merger considered by the stockholders of
Maxis prior to the vote (if any) on the Superior Proposal; and provided,
further, that Maxis shall not recommend to its stockholders a Superior Proposal
for a period of not less than 48 hours after Electronic Arts' receipt of a copy
of such Superior Proposal (or a description of the significant terms and
conditions thereof, if not in writing) and the identity of the third party.
Notwithstanding anything elsewhere contained in Section 5.4(a) or elsewhere in
this Agreement, Maxis may, if its Board of Directors determines, in good faith,
after consultation with outside legal counsel that the Board's fiduciary duties
require it to do so, enter into an agreement or understanding relating to a
Superior Proposal; provided, that (i) such agreement or understanding provides
that the Merger shall be considered by the stockholders of Maxis prior to the
Superior Proposal and (ii) if the Merger is approved by the stockholders of
Maxis, neither Maxis nor Electronic Arts shall be required to pay a fee or
otherwise incur any material liability arising out of the agreement or
understanding relating to the Superior Proposal, including, without limitation,
as a result of the Superior Proposal not being approved. The performance of
such agreement or understanding relating to the Superior Proposal to the extent
necessary to facilitate the due consideration of such Superior Proposal at the
meeting of the stockholders of Maxis after the Merger shall not constitute a
breach of this Agreement.
(c) Notwithstanding anything to the contrary herein, Maxis will not
provide any non-public information to a third party unless: (x) Maxis provides
such non-public information pursuant to a nondisclosure agreement with terms
regarding the protection of oral or
-31-
written confidential information at least as restrictive as such terms in the
Confidentiality Agreement; and (y) such non-public information has been
previously delivered to Electronic Arts.
(d) As of the date of this Agreement, Maxis shall immediately cease
and cause to be terminated any existing discussions with any Person that relate
to any Acquisition Proposal.
5.5 Public Disclosure. Maxis and Electronic Arts will consult with each
other before issuing any press release or otherwise making any public statement
with respect to the Merger, this Agreement or an Acquisition Proposal and will
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with a
national securities exchange or the Nasdaq Stock Market.
5.6 Legal Requirements. Each of Maxis, Merger Sub and Electronic Arts
will take all reasonable actions necessary or desirable to comply promptly with
all legal requirements which may be imposed on them with respect to the
consummation of the transactions contemplated by this Agreement (including
furnishing all information required in connection with approvals by or filings
with any Governmental Entity, and prompt resolution of any litigation prompted
hereby) and will promptly cooperate with and furnish information to any party
hereto necessary in connection with any such filings with or investigations by
any Governmental Entity, and any other such requirements imposed upon any of
them or their respective subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement. Electronic Arts will use its
commercially reasonable efforts to take such steps as may be necessary to comply
with the securities and blue sky laws of all jurisdictions which are applicable
to the issuance of Electronic Arts Common Stock pursuant hereto. Maxis will use
its commercially reasonable efforts to assist Electronic Arts as may be
necessary to comply with the securities and blue sky laws of all jurisdictions
which are applicable in connection with the issuance of Electronic Arts Common
Stock pursuant hereto.
5.7 Third Party Consents. As soon as practicable following the date
hereof, Maxis and Electronic Arts will each use its commercially reasonable
efforts to obtain all material consents, waivers and approvals under any of its
or its subsidiaries' agreements, contracts, licenses or leases required to be
obtained in connection with the consummation of the transactions contemplated
hereby.
5.8 Notification of Certain Matters. Maxis and Merger Sub will give
prompt notice to Electronic Arts, and Electronic Arts will give prompt notice to
Maxis, after obtaining knowledge of the occurrence, or failure to occur, of any
event, which occurrence or failure to occur would be reasonably likely to cause
(a) any representation or warranty contained in this Agreement and made by it to
be untrue or inaccurate in any material respect at any time from the date of
this Agreement to the Effective Time such that the conditions set forth in
Section 6.2(a) or 6.3(a), as the case may be, would not be satisfied as a result
thereof, (b) any Material Adverse Effect on Maxis or Electronic Arts or (c) any
failure of Maxis and Merger Sub or Electronic Arts, as the case may be, to
comply with or satisfy, in any material respect, any covenant, condition or
agreement to be complied with or satisfied by it under this Agreement such that
the condition set
-32-
forth in Section 6.2(b) or 6.3(b), as the case may be, would not be satisfied as
a result thereof. To ensure compliance with this Section 5.8, Maxis shall
deliver to Electronic Arts as soon as practicable but in any event within thirty
days after the end of each monthly accounting period beginning with the month
ended May 31, 1997 and ending with the monthly accounting period occurring
before the earlier of the Closing Date or the termination of this Agreement in
accordance with its terms, an unaudited consolidated balance sheet, statement of
operations and statement of cash flows for Maxis, which financial statements
shall be prepared in the ordinary course of business, in accordance with Maxis'
books and records and generally accepted accounting principles and shall fairly
present the consolidated financial position of Maxis as of their respective
dates and the results of Maxis' operations for the periods then ended.
Notwithstanding the above, the delivery of any notice pursuant to this Section
5.8 will not limit or otherwise affect the remedies available hereunder to the
party receiving such notice.
5.9 Reasonable Best Efforts and Further Assurances. Subject to the
respective rights and obligations of Maxis and Electronic Arts under this
Agreement (including the rights of Maxis under 5.1(b) and 5.4(b)), each of the
parties to this Agreement will use its reasonable best efforts to effectuate the
Merger and other transactions contemplated hereby, to fulfill and cause to be
fulfilled the conditions to closing under this Agreement and to effect the
Closing as soon as practicable; provided that neither Maxis nor Electronic Arts
nor any subsidiary or affiliate thereof will be required to agree to any
divestiture by itself or any of its affiliates of shares of capital stock or of
any business, assets or property, or the imposition of any material limitation
on the ability of any of them to conduct their businesses or to own or exercise
control of such assets, properties and stock. Subject to the first sentence of
this Section 5.9, each party hereto, at the reasonable request of another party
hereto, will execute and deliver such other instruments and do and perform such
other acts and things as may be necessary or desirable for effecting completely
the consummation of the transactions contemplated hereby.
5.10 Stock Options and Employee Benefits.
(a) At the Effective Time, each outstanding option to purchase shares
of Maxis Common Stock (each a "Maxis Stock Option") under the Maxis Stock Option
Plans, whether or not exercisable, will be assumed by Electronic Arts. Each
Maxis Stock Option so assumed by Electronic Arts under this Agreement will
continue to have, and be subject to, the same terms and conditions set forth in
the applicable Maxis Stock Option Plan immediately prior to the Effective Time
and the Stock Option Agreement by which it is evidenced, except that (i) each
Maxis Stock Option will be exercisable (or will become exercisable in accordance
with its terms) for that number of whole shares (and no fractional shares) of
Electronic Arts Common Stock equal to the product of the number of shares of
Maxis Common Stock that were issuable upon exercise of such Maxis Stock Option
immediately prior to the Effective Time multiplied by the Exchange Ratio,
rounded down to the nearest whole number of shares of Electronic Arts Common
Stock, and (ii) the per share exercise price for the shares of Electronic Arts
Common Stock issuable upon exercise of such assumed Maxis Stock Option will be
equal to the quotient determined by dividing the exercise price per share of
Maxis Common Stock at which such Maxis Stock Option was exercisable immediately
prior to the Effective Time by the Exchange Ratio, rounded up to the nearest
whole cent. As soon as reasonably practicable after the
-33-
Effective Time, Electronic Arts will issue to each holder of an outstanding
Maxis Stock Option a notice describing the foregoing assumption of such Maxis
Stock Option by Electronic Arts.
(b) The parties intend that Maxis Stock Options assumed by Electronic
Arts shall qualify following the Effective Time as incentive stock options as
defined in Section 422 of the Code to the extent Maxis Stock Options qualified
as incentive stock options immediately prior to the Effective Time.
(c) Prior to the Effective Time, Maxis shall take such actions as are
necessary to establish a "new exercise date" (as such term is used in the ESPP)
in accordance with the terms of the ESPP (the "New Exercise Date") for the then
current offering periods (as such term is used in the ESPP). The New Exercise
Date shall be the last trading day on which shares of Maxis' Common Stock are
traded on the Nasdaq National Market immediately prior to the Effective Time;
provided, however, that the New Exercise Date shall be conditioned upon
consummation of the Merger. On the New Exercise Date, Maxis shall apply the
funds credited as of such date under the ESPP within each participant's payroll
withholdings account to the purchase of whole shares of Maxis Common Stock in
accordance with the ESPP.
(d) Electronic Arts will reserve sufficient shares of Electronic Arts
Common Stock for issuance under Section 5.10(a) and under Section 1.6(c) hereof.
5.11 Form S-8. Electronic Arts agrees to file a registration statement on
Form S-8 for the shares of Electronic Arts Common Stock issuable with respect to
assumed Maxis Stock Options no later than five (5) business days after the
Closing Date.
5.12 Indemnification and Insurance.
(a) From and after the Effective Time, Electronic Arts will cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
Maxis pursuant to each indemnification agreement currently in effect between
Maxis and each person who is or was a director or officer of Maxis or any of its
subsidiaries at or prior to the Effective Time (the "Indemnified Parties") and
any indemnification provisions under Maxis' Certificate of Incorporation or
Bylaws as in effect on the date hereof. The Certificate of Incorporation and
By-laws of the Surviving Corporation will contain provisions with respect to
exculpation and indemnification that are at least as favorable to the
Indemnified Parties as those contained in the Certificate of Incorporation and
Bylaws of Maxis as in effect on the date hereof, which provisions will not be
amended, repealed or otherwise modified from the Effective Time in any manner
that would adversely affect the rights thereunder of any Indemnified Party,
unless such modification is required by law.
(b) Without limiting the provisions of paragraph (a), after the
Effective Time Electronic Arts will cause the Surviving Corporation, to the
fullest extent permitted under applicable law or under the Surviving
Corporation's Certificate of Incorporation or By-laws, to indemnify and hold
harmless each Indemnified Party against any costs or expenses (including
reasonable attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and amounts
-34-
paid in settlement in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, to the
extent arising out of or pertaining to any action or omission in his or her
capacity as a director or officer of Maxis or any of its subsidiaries arising
out of or pertaining to the transactions contemplated by this Agreement for a
period of six years after the Effective Time; provided, however, that if, at any
time prior to the sixth anniversary of the Effective Time, any Indemnified Party
delivers to Electronic Arts a written notice asserting a claim for
indemnification under this Section 5.12(b), then the claim asserted in such
notice shall survive the sixth anniversary of the Effective Time until such time
as such claim is fully and finally resolved. In the event of any such claim,
action, suit, proceeding or investigation (i) any counsel retained by the
Indemnified Parties for any period after the Effective Time must be reasonably
satisfactory to Electronic Arts, (ii) after the Effective Time, Electronic Arts
will cause the Surviving Corporation to pay the reasonable fees and expenses of
such counsel, promptly after statements therefor are received and (iii)
Electronic Arts will cause Surviving Corporation to cooperate in the defense of
any such matter; provided, however, that neither Electronic Arts nor the
Surviving Corporation will be liable for any settlement effected without its
written consent (which consent will not be unreasonably withheld). The
Indemnified Parties as a group may retain only one law firm (in addition to
local counsel) to represent them with respect to any single action unless there
is, under applicable standards of professional conduct, a conflict on any
significant issue between the positions of any two or more Indemnified Parties.
In the event Electronic Arts or the Surviving Corporation or any of their
respective 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 to effectuate the purposes of this Section 5.12, proper
provision shall be made so that the successors and assigns of Electronic Arts
and Maxis assume the obligations set forth in this Section 5.12 and none of the
actions described in clause (i) or (ii) shall be taken until such provision is
made.
(c) Without limiting any of the obligations of Electronic Arts or the
Surviving Corporation set forth elsewhere in this Section 5.12, Electronic Arts
shall cause the Surviving Corporation to maintain in effect, during the six-year
period commencing as of the Effective Time, a policy of directors' and officers'
liability insurance for the benefit of each of the Indemnified Parties providing
coverage and containing terms no less advantageous to the Indemnified Parties
than the coverage and terms of Maxis' existing policy of directors' and
officers' liability insurance.
(d) This Section 5.12 will survive any termination of this Agreement
and the consummation of the Merger at the Effective Time, is intended to benefit
Maxis, the Surviving Corporation and each of the Indemnified Parties, and will
be binding on all successors and assigns of the Surviving Corporation and
Electronic Arts.
5.13 NMS Listing. Electronic Arts agrees to authorize for listing on the
Nasdaq National Market the shares of Electronic Arts Common Stock issuable, and
those required to be reserved for issuance, in connection with the Merger, upon
official notice of issuance.
-35-
5.14 Maxis Affiliate Agreement. Set forth on the Maxis Schedules is a list
of those persons who may be deemed to be, in Maxis' reasonable judgment,
affiliates of Maxis within the meaning of Rule 145 promulgated under the
Securities Act (each a "Maxis Affiliate"). Maxis will provide Electronic Arts
with such information and documents as Electronic Arts reasonably requests for
purposes of reviewing such list. Maxis will use its reasonable best efforts to
deliver or cause to be delivered to Electronic Arts, as promptly as practicable
on or following the date hereof (and in any event no later than the date 30 days
prior to the Effective Time), from each Maxis Affiliate an executed affiliate
agreement in substantially the form attached hereto as Exhibit B (the "Maxis
Affiliate Agreement"), each of which will be in full force and effect as of the
Effective Time. Electronic Arts will be entitled to place appropriate legends
on the certificates evidencing any Electronic Arts Common Stock to be received
by a Maxis Affiliate pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the Electronic
Arts Common Stock, consistent with the terms of the Maxis Affiliate Agreement.
5.15 Regulatory Filings; Reasonable Efforts. As soon as may be reasonably
practicable, Electronic Arts and Maxis and certain Maxis Affiliates (if
necessary) each shall file with the United States Federal Trade Commission (the
"FTC") and the Antitrust Division of the United States Department of Justice
("DOJ") Notification and Report Forms relating to the transactions contemplated
herein as required by the HSR Act, as well as comparable pre-merger notification
forms required by the merger notification or control laws and regulations of any
applicable jurisdiction, as agreed to by the parties. Electronic Arts and Maxis
each shall promptly (a) supply the other with any information which may be
required in order to effectuate such filings and (b) supply any additional
information which reasonably may be required by the FTC, the DOJ or the
competition or merger control authorities of any other jurisdiction and which
the parties may reasonably deem appropriate.
5.16 Tax-Free Reorganization. No party shall take any action either prior
to or after the Effective Time that could reasonably be expected to cause the
Merger to fail to qualify as a "reorganization" under Section 368(a) of the
Code.
5.17 Pooling Covenant. Prior to the earlier of termination of this
Agreement and the Effective Time, Electronic Arts will not take any action, and
Electronic Arts will not permit any of its affiliates to take any action, that
would be reasonably likely to interfere with Electronic Arts' ability to
account for the Merger as a pooling of interests. In addition, Electronic Arts
will use its reasonable best efforts to deliver or cause to be delivered to
Maxis, on or as promptly as practicable following the date hereof (and in any
event no later than the date 30 days prior to the Effective Time), from each
person who may be deemed to be an "affiliate" of Electronic Arts within the
meaning of Rule 145 promulgated under the Securities Act, an agreement (which
will be in full force and effect as of the Effective Time) requiring such person
to refrain from taking any action that would be reasonably likely to interfere
with Electronic Arts' ability to account for the Merger as a pooling of
interests.
5.18 Employee Matters. Promptly following the Merger, employees of Maxis
will become subject to Electronic Arts standard employee benefit plans on an
equivalent basis with
-36-
other similarly situated employees of Electronic Arts and will receive full
credit pursuant to such plans for years of service at Maxis.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Stockholder Approval. This Agreement shall have been approved and
adopted, and the Merger shall have been duly approved, by the requisite vote
under applicable law, by the stockholders of Maxis.
(b) Registration Statement Effective; Proxy Statement. The SEC shall
have declared the Registration Statement effective. No stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose, and no similar proceeding in
respect of the Proxy Statement, shall have been initiated or threatened in
writing by the SEC.
(c) No Order; HSR Act. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger. All
waiting periods under the HSR Act relating to the transactions contemplated
hereby will have expired or terminated early.
(d) Tax Opinions. Maxis and Electronic Arts shall each have received
written opinions from their respective counsel, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, A Professional Corporation, and Fenwick & West LLP, in form and
substance reasonably satisfactory to them, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368(a) of the Code and
such opinions shall not have been withdrawn; provided, however, that if the
counsel to either Maxis or Electronic Arts does not render such opinion, this
condition shall nonetheless be deemed to be satisfied with respect to such party
if counsel to the other party renders such opinion to such party. The parties
to this Agreement agree to make reasonable representations as requested by such
counsel for the purpose of rendering such opinions.
(e) Nasdaq Listing. The shares of Electronic Arts Common Stock
issuable to stockholders of Maxis pursuant to this Agreement and such other
shares required to be reserved for issuance in connection with the Merger shall
have been authorized for listing on the Nasdaq National Market upon official
notice of issuance.
(f) Opinion of Accountants. Maxis shall have received from Ernst &
Young LLP, independent auditors for Maxis, a letter dated within two (2)
business days prior to the
-37-
Effective Time (which may contain customary qualifications and assumptions), to
the effect that Ernst & Young LLP concurs with Maxis' management conclusion that
no conditions exist related to Maxis that would preclude Electronic Arts from
accounting for the Merger as a pooling of interests; and Maxis shall have
received from KPMG Peat Marwick LLP, the independent auditors for Electronic
Arts, a copy of a letter addressed to Electronic Arts dated the Closing Date, in
substance reasonably satisfactory to Maxis (and which may contain customary
qualifications and assumptions and which may be based in part on the letter
referred to above from Ernst & Young LLP to Maxis) to the effect that KPMG Peat
Marwick LLP concurs with Electronic Arts' management conclusions that as of that
date, no conditions exist that would preclude Electronic Arts from accounting
for the Merger as a pooling of interests.
6.2 Additional Conditions to Obligations of Maxis. The obligation of
Maxis to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Effective Time of each of the following conditions, any of
which may be waived, in writing, exclusively by Maxis:
(a) Representations and Warranties. The representations and
warranties of Electronic Arts and Merger Sub contained in this Agreement shall
be true and correct in all material respects as of the date of this Agreement,
except where the failure to be so true and correct would not have a Material
Adverse Effect on Electronic Arts. In addition, the representations and
warranties of Electronic Arts and Merger Sub contained in this Agreement shall
be true and correct in all material respects on and as of the Effective Time
except for changes contemplated by this Agreement and except for those
representations and warranties which address matters only as of a particular
date, which shall remain true and correct in all material respects as of such
particular date, (it being understood that, for the purposes of determining
whether such representations and warranties made as of a particular date have
been true and correct, any inaccuracies therein that shall have been cured in
all material respect shall be disregarded), with the same force and effect as if
made on and as of the Effective Time, except in such cases (other than the
representations in Sections 3.2 and 3.3) where the failure to be so true and
correct would not have a Material Adverse Effect on Electronic Arts. Maxis
shall have received a certificate with respect to the foregoing signed on behalf
of Electronic Arts by the Chief Executive Officer and the Chief Financial
Officer of Electronic Arts;
(b) Agreements and Covenants. Electronic Arts and Merger Sub shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by them on
or prior to the Effective Time, and Maxis shall have received a certificate to
such effect signed on behalf of Electronic Arts by the Chief Executive Officer
and the Chief Financial Officer of Electronic Arts; and
(c) Material Adverse Effect. No Material Adverse Effect with respect
to Electronic Arts shall have occurred since the date of this Agreement.
(d) Legal Opinion. Maxis shall have received a legal opinion from
Fenwick & West LLP in the form attached hereto as Exhibit C.
-38-
6.3 Additional Conditions to the Obligations of Electronic Arts and Merger
Sub. The obligations of Electronic Arts and Merger Sub to consummate and effect
the Merger shall be subject to the satisfaction at or prior to the Effective
Time of each of the following conditions, any of which may be waived, in
writing, exclusively by Electronic Arts:
(a) Representations and Warranties. The representations and warranties
of Maxis contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement, except where the failure to be so
true and correct would not have a Material Adverse Effect on Maxis. In
addition, the representations and warranties of Maxis contained in this
Agreement shall be true and correct in all material respects on and as of the
Effective Time except for changes contemplated by this Agreement and except for
those representations and warranties which address matters only as of a
particular date, which shall remain true and correct in all material respects as
of such particular date (it being understood that, for the purposes of
determining whether such representations and warranties made as of a particular
date have been true and correct, any inaccuracies therein that shall have been
cured in all material respect shall be disregarded), with the same force and
effect as if made on and as of the Effective Time, except in such cases (other
than the representations in Sections 2.2, 2.3, 2.4 and 2.22) where the failure
to be so true and correct would not have a Material Adverse Effect on Maxis.
Electronic Arts shall have received a certificate with respect to the foregoing
signed on behalf of Maxis by the President and the Chief Financial Officer of
Maxis;
(b) Agreements and Covenants. Maxis shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time, and Electronic Arts shall have received a certificate to such effect
signed on behalf of Maxis by the President and the Chief Financial Officer of
Maxis; and
(c) Material Adverse Effect. No Material Adverse Effect with respect
to Maxis shall have occurred since the date of this Agreement.
(d) Legal Opinion. Electronic Arts shall have received a legal
opinion from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, A Profession Corporation, in the
form attached hereto as Exhibit D.
(e) Injunctions or Restraints on Conduct of Business. No temporary
restraining order, preliminary or permanent injunction or other order issued by
any court of competent jurisdiction or the legal, contractual or regulatory
restraint limiting or restricting Electronic Arts conduct or operation of its
business or the business or Maxis and its subsidiaries, following the Merger,
shall be in effect, nor shall any proceeding brought by an administrative agency
or commission or other Governmental Entity, domestic or foreign, seeking the
foregoing be pending, except where the existence of any of the forgoing items
would not have a Material Adverse Effect on Maxis.
-39-
(f) Dissenters' Rights. To the extent that Section 2115 of the
California Corporations Code applies to Maxis, fewer than 5% of the stockholders
of Maxis shall have exercised or perfected their dissenters' rights under the
California Corporations Code.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time of the Merger, whether before or after approval of the Merger
by the stockholders of Maxis:
(a) by mutual written consent duly authorized by the Boards of
Directors of Electronic Arts and Maxis;
(b) by either Electronic Arts or Maxis, if the Merger shall not have
been consummated by October 31, 1997 for any reason; provided, however, that the
right to terminate this Agreement under this Section 7.1(b) shall not be
available to any party whose action or failure to act has been a principal cause
of or resulted in the failure of the Merger to occur on or before such date and
such action or failure to act constitutes a breach of this Agreement;
(c) by either Electronic Arts or Maxis, if a Governmental Entity shall
have issued an order, decree or ruling or taken any other action (an "Order"),
in any case having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, which order, decree or ruling is final and
nonappealable;
(d) by either Electronic Arts or Maxis, if the required approval of
the stockholders of Maxis contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote upon a vote taken
at a meeting of stockholders duly convened therefor or at any adjournment
thereof;
(e) by Electronic Arts, if at any time prior to the approval of the
Merger by the stockholders of Maxis, the Board of Directors of Maxis accepts,
publicly endorses, recommends or executes a letter of intent or similar document
with respect to a Superior Proposal or resolves to do any of the foregoing;
(f) by Electronic Arts, if any of the following shall occur:
(i) Maxis shall have failed to include in the Proxy Statement
the unanimous recommendation of the Board of Directors of Maxis in favor of
approval and adoption of this Agreement and the Merger, or the Board of
Directors of Maxis shall have amended or modified in a manner adverse to
Electronic Arts such Board of Directors' unanimous recommendation in favor of
the Merger or approval or adoption of this Agreement;
-40-
(ii) the Board of Directors of Maxis shall have approved,
publicly endorsed, recommended or executed a letter of intent or similar
document with respect to any Acquisition Proposal other than the Merger;
(iii) a tender or exchange offer relating to securities of Maxis
shall have been commenced and Maxis shall not have sent to its security holders,
within ten (10) business days after the commencement of such tender or exchange
offer, a statement that Maxis recommends rejection of such tender or exchange
offer;
(iv) an Acquisition Proposal (other than a tender or exchange
offer relating to the securities of Maxis) is publicly announced, and, upon
Electronic Arts request, Maxis fails to issue a press release announcing its
opposition to such Acquisition Proposal within five (5) business days after such
request; or
(v) Section 2115 of the California Corporations Code applies to
Maxis, and pooling for the Merger is not available because one or more of the
stockholders of Maxis who own at least ten percent (10%) of the outstanding
Maxis Common Stock as of the date of this Agreement exercise or perfect their
dissenters' rights.
(g) by Maxis, upon a breach of any representation, warranty, covenant
or agreement on the part of Electronic Arts set forth in this Agreement, or if
any such representation or warranty of Electronic Arts shall have become
inaccurate, in either case such that the conditions set forth in Section 6.2(a)
or Section 6.2(b), as the case may be, would not be satisfied as of the time of
such breach or as of the time such representation or warranty shall have become
inaccurate; provided, however, that if such inaccuracy in Electronic Arts'
representations and warranties or breach by Electronic Arts is curable by
Electronic Arts through the exercise of its commercially reasonable efforts,
then Maxis may not terminate this Agreement under this Section 7.1(g) if
Electronic Arts is exercising commercially reasonable efforts to cure such
inaccuracy or breach; and, provided, further, that Maxis may not terminate this
Agreement pursuant to this Section 7.1(g) if it shall have materially breached
this Agreement;
(h) by Electronic Arts, upon a breach of any representation, warranty,
covenant or agreement on the part of Maxis set forth in this Agreement, or if
any such representation or warranty of Maxis shall have become inaccurate, in
either case such that the conditions set forth in Section 6.3(a) or Section
6.3(b), as the case may be, would not be satisfied as of the time of such breach
or as of the time such representation or warranty shall have become inaccurate;
provided, however, that if such inaccuracy in Maxis' representations and
warranties or breach by Maxis is curable by Maxis through the exercise of its
commercially reasonable efforts, then Electronic Arts may not terminate this
Agreement under this Section 7.1(h) if Maxis is exercising commercially
reasonable efforts to cure such inaccuracy or breach; and, provided, further,
that Electronic Arts may not terminate this Agreement pursuant to this Section
7.1(h) if it shall have materially breached this Agreement;
(i) by Maxis, if the average closing price of Electronic Arts Common
Stock, as presently constituted, as quoted in the Nasdaq National Market and
reported in the Wall Street
-41-
Journal, over the ten (10) trading days ending the third business day prior to
the date originally established in the Proxy Statement for the Maxis Stockholder
Meeting is less than $20.00 (as adjusted for stock splits, recapitalizations,
stock dividends and the like); or
(j) by either Electronic Arts or Maxis, in the event of a tender or an
exchange offer relating to the securities of Maxis which is accepted by more
than fifty percent (50%) of the outstanding shares of Maxis Common Stock
(excluding for such calculation the shares of Maxis Common Stock held
beneficially or of record by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇).
7.2 Notice of Termination; Effect of Termination. Any termination of this
Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 7.2, Section 7.3 and Article 8 (miscellaneous), each of which
shall survive the termination of this Agreement, and (ii) nothing herein shall
relieve any party from liability for any willful breach of this Agreement. No
termination of this Agreement shall affect the obligations of the parties
contained in the Confidentiality Agreement, all of which obligations shall
survive termination of this Agreement in accordance with their terms.
7.3 Fees and Expenses.
(a) General. Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated; provided, however, that Electronic Arts and
Maxis shall share equally all fees and expenses, other than attorneys' and
accountants fees and expenses, incurred in relation to the printing and filing
of the Proxy Statement (including any preliminary materials related thereto) and
the Registration Statement (including financial statements and exhibits) and any
amendments or supplements thereto.
(b) Maxis Payments. If this Agreement is terminated by Electronic
Arts or Maxis pursuant to Section 7.1(d) or 7.1(j), or by Electronic Arts
pursuant to Section 7.1(e) or 7.1(f), then: Maxis shall pay to Electronic Arts,
in cash, a non-refundable fee in the amount of $5,000,000 (the "Termination
Fee"); provided that such amount will not be payable if, prior to the
termination triggering the obligation to make such payment, either: (i) a
Material Adverse Effect on Electronic Arts had occurred and Maxis had provided
written notice to Electronic Arts of such event; or (ii) Maxis shall have become
entitled pursuant to Section 7.1(g) to terminate this Agreement, shall have
given written notice to Electronic Arts to that effect, and Electronic Arts
shall be unable or unwilling to effect a cure to such breach. In the case of
termination of this Agreement by Maxis pursuant to Section 7.1(d) or 7.1(j), the
Termination Fee shall be paid by Maxis prior to or contemporaneous with notice
of such termination being provided to Electronic Arts and as a condition to
Maxis' right to terminate under such provisions, and in the case of termination
of this Agreement by Electronic Arts pursuant to Section 7.1(d), 7.1(e), 7.1(f)
or 7.1(j), the Termination Fee shall be paid by Maxis within three (3) business
days after such notice of such termination.
-42-
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. The representations
and warranties of Electronic Arts, Maxis and Merger Sub contained in this
Agreement shall terminate at the Effective Time, and only the covenants that by
their terms survive the Effective Time shall survive the Effective Time.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to Electronic Arts or Merger Sub, to:
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, SVP & General Counsel
with a copy to:
Fenwick & West LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Maxis, to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
-43-
with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
8.3 Interpretation; Knowledge.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of this Agreement unless otherwise indicated. The words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
(b) For purposes of this Agreement (a) as it relates to Electronic
Arts, the term "knowledge" means, with respect to any matter in question, that
any of the Chief Executive Officer, Chief Financial Officer or General Counsel
of Electronic Arts, has actual knowledge of such matter and (b) as it relates to
Maxis, the term "knowledge" means, with respect to any matter in question, that
any of the Chief Executive Officer, Chief Financial Officer, General Counsel,
Vice President--Product Development or Vice President--Business Development of
Maxis has actual knowledge of such matter.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement and
the documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including Maxis Schedules (a) constitute
the entire agreement among the parties with respect to the subject matter hereof
and supersede all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter hereof, it being understood
that the Confidentiality Agreement shall continue in full force and effect until
the Closing and shall survive any termination of this Agreement; and (b) are not
intended to confer upon any other person any rights or remedies hereunder,
except as specifically provided in Sections 5.12 and 5.18.
8.6 Severability. In the event that any provision of this Agreement
or the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the
-44-
application of such provision to other persons or circumstances will be
interpreted so as reasonably to effect the intent of the parties hereto. The
parties further agree to replace such void or unenforceable provision of this
Agreement with a valid and enforceable provision that will achieve, to the
extent possible, the economic, business and other purposes of such void or
unenforceable provision.
8.7 Other Remedies; Specific Performance. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy. The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.8 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 law
thereof.
8.9 Rules of Construction. The parties hereto agree that they have
been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
8.10 Assignment. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
8.11 WAIVER OF JURY TRIAL. EACH OF ELECTRONIC ARTS, MAXIS AND MERGER
SUB HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF ELECTRONIC ARTS,
MAXIS OR MERGER SUB IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT HEREOF.
*****
-45-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
-▇▇-
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ INC.
By: /s/ E. ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: E. ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Title: Exec. VP - CFAO
-------------------------------
VILLAGE ACQUISITION CORPORATION
By: /s/ E. ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Name: E. ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Title: President
-------------------------------
MAXIS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Title: President and CEO
-------------------------------
**** REORGANIZATION AGREEMENT ****