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EXHIBIT 2.18
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AGREEMENT AND PLAN OF MERGER
Among
AURORA ELECTRONICS, INC.
▇▇▇▇▇ ACQUISITION CORP.
and
THE CERPLEX GROUP, INC.
Dated as of January 30, 1998
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ARTICLE I.
THE MERGER
SECTION 1.01. The Merger . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.02. Effective Time . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.03. Closing . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II.
THE SURVIVING CORPORATION
SECTION 2.01. Certificate of Incorporation . . . . . . . . . . . . . 4
SECTION 2.02. By-Laws . . . . . . . . . . . . . . . . . . . . . . . . 5
SECTION 2.03. Directors and Officers of Surviving
Corporation . . . . . . . . . . . . . . . . . 5
ARTICLE III.
CONVERSION OF SHARES
SECTION 3.01. Exchange Ratio . . . . . . . . . . . . . . . . . . . . 5
SECTION 3.02. Exchange of Company Stock; Procedures . . . . . . . . . 7
SECTION 3.03. Dividends; Transfer Taxes; Escheat . . . . . . . . . . 8
SECTION 3.04. No Fractional Securities . . . . . . . . . . . . . . . 8
SECTION 3.05. Closing of Company Transfer Books . . . . . . . . . . . 9
SECTION 3.06. Further Assurances . . . . . . . . . . . . . . . . . . 9
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.01. Organization . . . . . . . . . . . . . . . . . . . . 10
SECTION 4.02. Capitalization . . . . . . . . . . . . . . . . . . . 10
SECTION 4.03. Company Subsidiaries . . . . . . . . . . . . . . . . 11
SECTION 4.04. Authority Relative to this Agreement . . . . . . . . 11
SECTION 4.05. Consents and Approvals; No Violations . . . . . . . . 12
SECTION 4.06. Reports and Financial Statements . . . . . . . . . . 13
SECTION 4.07. Absence of Certain Changes or Events;
Material Contracts . . . . . . . . . . . . . . . . 13
SECTION 4.08. Absence of Undisclosed Liabilities . . . . . . . . . 14
SECTION 4.09. No Default . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.10. Litigation . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 4.12. Title to Properties; Encumbrances . . . . . . . . . . 16
SECTION 4.13. Intellectual Property . . . . . . . . . . . . . . . . 16
SECTION 4.14. Compliance with Applicable Law . . . . . . . . . . . 18
SECTION 4.15. Information in Disclosure Documents
and Registration Statement . . . . . . . . . . . . 19
SECTION 4.16. Employee Benefit Plans; ERISA . . . . . . . . . . . . 19
SECTION 4.17. Environmental Laws and Regulations . . . . . . . . . 20
SECTION 4.18. Vote Required . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.19. Opinion of Financial Advisor . . . . . . . . . . . . 21
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SECTION 4.20. DGCL Section 203 . . . . . . . . . . . . . . . . . . 22
SECTION 4.21. Labor Matters . . . . . . . . . . . . . . . . . . . . 22
SECTION 4.22. Severance Arrangements . . . . . . . . . . . . . . . 22
SECTION 4.23. Affiliate Transactions . . . . . . . . . . . . . . . 22
SECTION 4.24. Brokers . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PARENT
SECTION 5.01. Organization . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.02. Capitalization . . . . . . . . . . . . . . . . . . . 23
SECTION 5.03. Parent Subsidiaries . . . . . . . . . . . . . . . . . 24
SECTION 5.04. Authority Relative to this Agreement . . . . . . . . 25
SECTION 5.05. Consents and Approvals; No Violations . . . . . . . . 25
SECTION 5.06. Reports and Financial Statements . . . . . . . . . . 26
SECTION 5.07. Absence of Certain Changes or Events . . . . . . . . 26
SECTION 5.08. Absence of Undisclosed Liabilities . . . . . . . . . 26
SECTION 5.09. No Default . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.10. Litigation . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.11. Taxes . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5.12. Compliance with Applicable Law . . . . . . . . . . . 28
SECTION 5.13. Information in Disclosure Documents
and Registration Statement . . . . . . . . . . . . 29
SECTION 5.14. Vote Required . . . . . . . . . . . . . . . . . . . . 29
SECTION 5.15. Opinion of Financial Advisor . . . . . . . . . . . . 30
SECTION 5.16. Brokers . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VI.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01. Conduct of Business by the Company
Pending the Merger . . . . . . . . . . . . . . . . 30
SECTION 6.02. Conduct of Business by Parent
Pending the Merger . . . . . . . . . . . . . . . . 32
SECTION 6.03. Conduct of Business of Sub . . . . . . . . . . . . . 33
ARTICLE VII.
ADDITIONAL AGREEMENTS
SECTION 7.01. Access and Information . . . . . . . . . . . . . . . 33
SECTION 7.02. No Solicitation . . . . . . . . . . . . . . . . . . . 33
SECTION 7.03. Registration Statement . . . . . . . . . . . . . . . 34
SECTION 7.04. Proxy Statements; Stockholder Approvals . . . . . . . 35
SECTION 7.05. Affiliates . . . . . . . . . . . . . . . . . . . . . 36
SECTION 7.06. Reasonable Efforts . . . . . . . . . . . . . . . . . 36
SECTION 7.07. Certain Agreements . . . . . . . . . . . . . . . . . 37
SECTION 7.08. Company Stock Options . . . . . . . . . . . . . . . . 37
SECTION 7.09. Settlement of Company Stock
Purchase Rights . . . . . . . . . . . . . . . . . . . 38
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SECTION 7.10. Public Announcements . . . . . . . . . . . . . . . . 39
SECTION 7.11. Directors' and Officers' Indemnification
and Insurance . . . . . . . . . . . . . . . . . . . 39
SECTION 7.12. Expenses . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.13. Supplemental Disclosure . . . . . . . . . . . . . . . 40
SECTION 7.14. Public Reporting; Continued Listing . . . . . . . . . 40
ARTICLE VIII.
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 8.01. Conditions to Each Party's Obligation
to Effect the Merger . . . . . . . . . . . . . . . 41
SECTION 8.02. Conditions to Obligations of Parent and
Sub to Effect the Merger . . . . . . . . . . . . . 41
SECTION 8.03. Conditions to Obligation of the Company
to Effect the Merger . . . . . . . . . . . . . . . 43
ARTICLE IX.
TERMINATION
SECTION 9.01. Termination . . . . . . . . . . . . . . . . . . . . . 44
SECTION 9.02. Effect of Termination . . . . . . . . . . . . . . . . 45
ARTICLE X.
GENERAL PROVISIONS
SECTION 10.01. Amendment and Modification . . . . . . . . . . . . . 46
SECTION 10.02. Waiver . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 10.03. Survivability; Investigations . . . . . . . . . . . 47
SECTION 10.04. Notices . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 10.05. Descriptive Headings; Interpretation . . . . . . . . 48
SECTION 10.06. Entire Agreement; Assignment . . . . . . . . . . . . 48
SECTION 10.07. Governing Law; Jurisdiction . . . . . . . . . . . . 48
SECTION 10.08. Severability . . . . . . . . . . . . . . . . . . . . 48
SECTION 10.09. Counterparts . . . . . . . . . . . . . . . . . . . . 49
Exhibits
Exhibit A Irrevocable Proxy and Option Agreement
Exhibit B Form of Affiliates Letter
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Term Section
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Acquiring Person . . . . . . . . . . . . . . . . . . . . . . . 9.01(d)
Acquisition Transaction . . . . . . . . . . . . . . . . . . . . . . 7.02
Affiliate Letters . . . . . . . . . . . . . . . . . . . . . . . 7.05(b)
Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05(a)
Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . 4.14
▇▇▇▇▇▇▇ . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.03(d)
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.13(c)
Cerplex Credit Agreement . . . . . . . . . . . . . . . . . . . Preamble
Cerplex Note Purchase Agreement . . . . . . . . . . . . . . . . Preamble
Cerplex Subordinated Notes . . . . . . . . . . . . . . . . . . Preamble
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . 3.02(b)
Chase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Chase Amendment . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Citibank . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.03
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.03
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company Common Stock . . . . . . . . . . . . . . . . . . . . . Preamble
Company ERISA Affiliate . . . . . . . . . . . . . . . . . . . . 4.16(a)
Company Material Adverse Effect . . . . . . . . . . . . . . . . . . 4.01
Company Permits . . . . . . . . . . . . . . . . . . . . . . . . . . 4.14
Company Plans . . . . . . . . . . . . . . . . . . . . . . . . . 4.16(a)
Company Preferred Stock . . . . . . . . . . . . . . . . . . . . 3.01(b)
Company SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . 4.06
Company Stock . . . . . . . . . . . . . . . . . . . . . . . . . 3.01(b)
Company Stock Option . . . . . . . . . . . . . . . . . . . . . 3.01(d)
Company Stock Purchase Rights . . . . . . . . . . . . . . . . . 3.01(d)
Computer Software . . . . . . . . . . . . . . . . . . . . . . . 4.13(e)
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . 7.01
Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.05
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . 3.01(a)
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . 1.02
Environmental Laws . . . . . . . . . . . . . . . . . . . . . . 4.17(a)
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16(b)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.05
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . 3.02(a)
Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . 3.01(a)
Forbearance Agreement . . . . . . . . . . . . . . . . . . . . . Preamble
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . 4.05
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.05
Intellectual Property . . . . . . . . . . . . . . . . . . . . . 4.13(a)
Interim Management Agreement . . . . . . . . . . . . . . . . . Preamble
Irrevocable Proxy and Option Agreement . . . . . . . . . . . . Preamble
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03
Maximum Amount . . . . . . . . . . . . . . . . . . . . . . . . 7.11(b)
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
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NASD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.05
New Lender . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
New Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08
New Parent Preferred Stock . . . . . . . . . . . . . . . . . . Preamble
New Parent Senior Subordinated Notes . . . . . . . . . . . . . Preamble
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Parent Certificate of Amendment . . . . . . . . . . . . . . . . . . 5.14
Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . Preamble
Parent Material Adverse Effect . . . . . . . . . . . . . . . . . . 5.01
Parent Permits . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11
Parent Preferred Stock . . . . . . . . . . . . . . . . . . . . Preamble
Parent SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . 5.05
Parent Senior Subordinated Notes . . . . . . . . . . . . . . . Preamble
Parent Stock Options . . . . . . . . . . . . . . . . . . . . . 5.02(a)
Parent Stock Purchase Rights . . . . . . . . . . . . . . . . . 5.02(a)
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . 4.15
Registration Statement . . . . . . . . . . . . . . . . . . . . . . 4.15
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . 4.05
Securities Purchase and Exchange Agreement . . . . . . . . . . Preamble
Senior Commitment . . . . . . . . . . . . . . . . . . . . . . . Preamble
Series A Preferred . . . . . . . . . . . . . . . . . . . . . . 4.02(a)
Series B Preferred . . . . . . . . . . . . . . . . . . . . . . 4.02(a)
Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11(a)
Stockholders Agreement . . . . . . . . . . . . . . . . . . . . Preamble
Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Sub Common Stock . . . . . . . . . . . . . . . . . . . . . . . 3.01(c)
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . 3.01(b)
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . 1.01
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11(b)
Tax Return . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11(b)
WCAS VII . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of January 30, 1998, among
AURORA ELECTRONICS, INC., a Delaware corporation ("Parent"), ▇▇▇▇▇ ACQUISITION
CORP., a Delaware corporation and a wholly-owned subsidiary of Parent ("Sub"),
and THE CERPLEX GROUP, INC., a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company deem it advisable and in the best interests of their respective
stockholders that Sub merge with and into the Company (the "Merger") in
accordance with the terms of this Agreement and the General Corporation Law of
the State of Delaware (the "DGCL"), and, in furtherance thereof such Boards of
Directors have approved the Merger; and
WHEREAS, Parent, Sub and the Company desire that at the Effective
Time (as hereinafter defined) all outstanding shares of the capital stock of
the Company (excluding Dissenting Shares (as hereinafter defined) and all
shares of capital stock of the Company held as treasury shares) be converted
into the right to receive fully paid and nonassessable shares of Common Stock,
$.03 par value ("Parent Common Stock"), of Parent, and that all options and
other rights to purchase shares of the capital stock of the Company be
canceled, exchanged or assumed, in each case, as hereinafter provided; and
WHEREAS, Parent, Sub and the Company desire that, immediately
after the Effective Time and solely as a result of the Merger, the Company
shall continue as the surviving corporation, the separate existence of Sub
(except as it may be continued by operation of law) shall cease and Parent will
own all the issued and outstanding shares of the capital stock of the surviving
corporation; and
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to Parent's willingness to enter
into this Agreement, certain holders of shares of the Common Stock, par value
$.001 per share (the "Company Common Stock"), of the Company who own in the
aggregate a majority of the outstanding shares of Company Common Stock are
entering into an agreement with Parent in the form attached hereto as Exhibit A
(the "Irrevocable Proxy and Option Agreement"), pursuant to which such
stockholders have agreed, among other things, (i) to grant irrevocable proxies
coupled with an interest to representatives of Parent to vote such shares of
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Company Common Stock in favor of the Merger, (ii) to grant Parent an option to
purchase such shares of Company Common Stock for the same number of shares as
such stockholders would receive in the Merger and (iii) not to transfer or
otherwise dispose of such shares of Company Common Stock or any interest
therein except pursuant to the Merger or such option, all on the terms and
subject to the conditions set forth therein; and
WHEREAS, Parent and certain holders of the capital stock of
Parent are entering into a Securities Purchase and Exchange Agreement of even
date herewith (the "Securities Purchase and Exchange Agreement"), pursuant to
which such stockholders have agreed at the Effective Time to (i) purchase
$15,000,000 principal amount of 10% Senior Subordinated Notes due 2004 (the
"New Parent Senior Subordinated Notes") of Parent, for cash equal to the
principal amount thereof (except that a portion of the purchase price payable
by Welsh, Carson, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ VII, L.P. ("WCAS VII") shall be paid by
surrender or exchange of other indebtedness as provided therein), (ii) subject
to the rights offering referred to below, purchase up to 180,000 shares of
Senior Convertible Preferred Stock, $.01 par value ("New Parent Preferred
Stock") of Parent, for a cash purchase price of $100 per share, (iii) exchange
an aggregate $10 million principal amount of Parent's existing 10% Senior
Subordinated Notes due 2001 together with accrued interest thereon (the "Parent
Senior Subordinated Notes") for an aggregate 33,000 shares of New Parent
Preferred Stock and (iv) convert all outstanding shares of Convertible
Preferred Stock, $.01 par value ("Parent Preferred Stock") into Parent Common
Stock, on the terms and subject to the conditions set forth therein; and
WHEREAS, pursuant to a Stockholders Agreement of even date
herewith (the "Stockholders Agreement") among WCAS VII, Parent and the Company,
WCAS VII has agreed (i) to vote its shares of Parent Common Stock in favor of
approval of the Parent Certificate of Amendment (as defined herein), (ii)
subject to consummation of the Merger, to convert all outstanding shares of
Parent Preferred Stock into Parent Common Stock in accordance with the
Certificate of Incorporation of Parent, (iii) to make further assurances with
respect to Parent's obligations under this Agreement and the Securities
Purchase and Exchange Agreement and (iv) to grant together with Parent an
option to the Company to purchase certain securities of the Company held by
WCAS VII and Parent in the event this Agreement terminates and the Merger is
not consummated, all on the terms and subject to the conditions contained in
the Stockholders Agreement; and
WHEREAS, Parent wishes to afford its public stockholders the
right to participate in the purchase of New Parent Preferred Stock and the New
Parent Subordinated Notes on the same basis as the purchasers in the Securities
Purchase and Exchange Agreement and, to that end, proposes to offer to such
public
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holders a right to purchase their proportionate share, based on fully-diluted
holdings of Parent Common Stock, of the New Parent Preferred Stock and the New
Parent Subordinated Notes; and
WHEREAS, Parent and the Company are entering into an Interim
Management Agreement of even date herewith (the "Interim Management
Agreement"), providing for the chief executive officer of Parent to serve
jointly as the chief executive officer of the Company of Parent and the Company
during the period specified therein; and
WHEREAS, pursuant to a Note and Warrant Assignment and Transfer
Agreement of even date herewith (the "Cerplex Note Purchase Agreement"),
simultaneously with the execution and delivery hereof, WCAS VII is purchasing
for cash from the holders thereof (i) an aggregate $18,069,375 principal amount
of outstanding 9.50% Senior Subordinated Notes due 2001 together with accrued
interest thereon (the "Cerplex Subordinated Notes") of the Company,
representing all the issued and outstanding Cerplex Subordinated Notes and (ii)
certain warrants to purchase shares of Company Common Stock, all on the terms
and subject to the conditions set forth therein; and
WHEREAS, pursuant to a Forbearance Agreement of even date
herewith and a Seventh Amendment to Credit Agreement and Limited Waiver of even
date herewith (collectively, the "Forbearance Agreement"), Citibank, N.A.
("Citibank") is agreeing to the repayment of certain loans at a discount and to
waive certain defaults and forbear from enforcing certain of its rights under
the Credit Agreement dated as of October 12, 1994, as amended (the "Cerplex
Credit Agreement") among the Company, the lenders named therein and ▇▇▇▇▇ Fargo
Bank, N.A., as Agent, pending consummation of the Merger and repayment of the
obligations of the Company under the Cerplex Credit Agreement, all on the terms
and subject to the conditions set forth in the Forbearance Agreement; and
WHEREAS, as a condition precedent to the Merger, Parent desires
to obtain proceeds from a new senior lender of at least $17,000,000 (the "New
Senior Loan") on terms acceptable to Parent; and
WHEREAS, pursuant to a letter agreement of even date herewith
(the "Chase Waiver"), The Chase Manhattan Bank, N.A. ("Chase") is consenting to
the New Senior Loan and agreeing to the subordination to the New Senior Loan of
Chase's currently outstanding loan pursuant to the Credit Agreement, dated as
of March 29, 1996, as amended, among Aurora Electronics Group, Inc., the
guarantors named therein, the lenders named therein, and Chase (formerly known
as Chemical Bank), as Agent, all on the terms and subject to the conditions set
forth in the Chase Amendment;
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NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
ARTICLE I.
THE MERGER
SECTION 1.01. The Merger. In accordance with the provisions of
this Agreement and the DGCL, at the Effective Time (as defined in Section
1.02), Sub shall be merged with and into the Company, the separate existence of
Sub (except as it may be continued by operation of law) shall thereupon cease,
and the Company shall be the surviving corporation in the Merger (sometimes
hereinafter called the "Surviving Corporation") and shall continue its
corporate existence under the laws of the State of Delaware. The Merger shall
have the effects set forth in Section 259 of the DGCL.
SECTION 1.02. Effective Time. The Merger shall become effective
at the time of filing of, or at such later time specified in, a properly
executed Certificate of Merger, in the form required by and executed in
accordance with the DGCL, filed with the Secretary of State of the State of
Delaware in accordance with the provisions of Section 251 of the DGCL. Such
filing shall be made as soon as practicable after the Closing (as defined in
Section 1.03). When used in this Agreement, the term "Effective Time" shall
mean the date and time at which the Merger shall become effective.
SECTION 1.03. Closing. The closing of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m., local time, on the day on which all of the
conditions set forth in Article VIII are satisfied or waived or on such other
date and at such other time and place as Parent and the Company shall agree
(such date, the "Closing Date").
ARTICLE II.
THE SURVIVING CORPORATION
SECTION 2.01. Certificate of Incorporation. The Certificate of
Incorporation of Sub in effect at the Effective Time shall be the Certificate
of Incorporation of the Surviving Corporation until amended in accordance with
applicable law, except that the name of the Surviving Corporation shall be "The
Cerplex Group, Inc."
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SECTION 2.02. By-Laws. The By-Laws of Sub as in effect at the
Effective Time shall be the By-Laws of the Surviving Corporation until amended
in accordance with applicable law.
SECTION 2.03. Directors and Officers of Surviving Corporation.
(a) The directors of Sub at the Effective Time shall be
the initial directors of the Surviving Corporation and shall hold office from
the Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the Certificate of
Incorporation or By-Laws of the Surviving Corporation or as otherwise provided
by law.
(b) The officers of the Company at the Effective Time
shall be the initial officers of the Surviving Corporation and shall hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualified in the manner provided in the Certificate of
Incorporation or By-Laws of the Surviving Corporation, or as otherwise provided
by law.
ARTICLE III.
CONVERSION OF SHARES
SECTION 3.01. Exchange Ratio. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder thereof:
(a) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective Time (other than (i) shares to
be canceled in accordance with Section 3.01(b) and (ii) shares of Company
Common Stock for which appraisal rights have been perfected in accordance with
Section 262 of the DGCL ("Dissenting Shares")) shall be converted into the
right to receive, subject to adjustment as provided in Section 3.01(f) below,
1.076368 (the "Exchange Ratio") shares of Parent Common Stock, payable upon the
surrender of the certificate formerly representing such share of Company Common
Stock.
(b) (i) All shares of Company Common Stock and all
shares of Preferred Stock, $.001 par value (the "Company Preferred Stock") of
the Company (collectively sometimes hereinafter referred to as "Company Stock")
that, in either case, are (x) held by the Company as treasury shares or (y)
owned by Parent or any wholly-owned Subsidiary of Parent, and (ii) all shares
of Preferred Stock issued and outstanding immediately prior to the Effective
Time, shall be canceled and retired and cease to exist, and no securities of
Parent or other consideration shall be delivered in exchange therefor. As used
in this Agreement, the
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term "Subsidiary", means, with respect to any party, any corporation or other
organization, whether incorporated or unincorporated, a majority of whose
outstanding equity securities or other interests having by their terms ordinary
voting power to elect a majority of the board of directors or others performing
similar functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party and/or one or more of
its Subsidiaries.
(c) Each share of Common Stock, par value $.01 per
share ("Sub Common Stock"), of Sub issued and outstanding immediately prior to
the Effective Time shall be converted into and become one fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the Surviving
Corporation.
(d) Each outstanding option to purchase Company Common
Stock (each, a "Company Stock Option") under all stock option plans of the
Company shall be assumed by Parent as more specifically provided in Section
7.08 and each outstanding right, subscription, warrant, call, option or other
agreement or arrangement of any kind (collectively, "Company Stock Purchase
Rights") to purchase or otherwise to receive from the Company or any of its
Subsidiaries any of the outstanding authorized but unissued or treasury shares
of the capital stock or any other security of the Company or any of its
Subsidiaries shall be canceled or assumed, as applicable, by Parent as more
specifically provided in Section 7.09.
(e) The holders of Dissenting Shares, if any, shall be
entitled to payment by the Surviving Corporation of the appraised value of such
shares to the extent permitted by and in accordance with the provisions of
Section 262 of the DGCL; provided, however, that (i) if any holder of
Dissenting Shares shall, under the circumstances permitted by the DGCL,
subsequently deliver a written withdrawal of such holder's demand for appraisal
of such shares, or (ii) if any holder fails to establish such holder's
entitlement to rights to payment as provided in such Section 262, or (iii) if
neither any holder of Dissenting Shares nor the Surviving Corporation has filed
a petition demanding a determination of the value of all Dissenting Shares
within the time provided in such Section 262, such holder or holders (as the
case may be) shall forfeit such right to payment for such shares and such
shares shall thereupon be deemed to have been converted into Parent Common
Stock pursuant to Section 3.01(a) as of the Effective Time. The Surviving
Corporation shall be solely responsible for, and shall pay out of its own
funds, any amounts which become due and payable to holders of Dissenting
Shares, and such amounts shall not be paid directly or indirectly by Parent.
(f) It is understood that the parties intend for the
Exchange Ratio to result in a capital structure for Parent in which the holders
of all equity securities on a fully-diluted
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basis of the Company issued and outstanding at the Effective Time (including,
without limitation, Company Common Stock, Company Stock Options and the Company
Stock Purchase Rights listed on Schedule 4.02(a) which are not terminated prior
to the Effective Time) shall receive in the Merger equity securities of Parent
(including Parent Common Stock, Parent Stock Options (as hereinafter defined)
or Parent Stock Purchase Rights (as hereinafter defined), as the case may be)
constituting 25% of the Parent Common Stock on a fully-diluted basis after
giving effect to the Merger and the consummation of all transactions to be
consummated concurrently with the Merger (including the issuance of the New
Parent Preferred Stock, the cancellation of the Cerplex Warrants acquired
pursuant to the Cerplex Note Purchase Agreement and the cancellation of
warrants pursuant to the Forbearance Agreement), not including, for purposes of
such calculation, 50% of the shares of Parent Common Stock subject to then
outstanding Parent Stock Options and 50% of the then outstanding Parent Stock
Purchase Rights with an exercise price or conversion price greater than $2.50.
Accordingly, the parties agree to make such adjustments to the Exchange Ratio
as may be appropriate to give effect to the intent of the parties set forth
herein; provided, that such adjustments may be made no later than five (5)
business days prior to the Effective Time.
SECTION 3.02. Exchange of Company Stock; Procedures.
(a) Prior to the Closing Date, Parent shall designate a
bank or trust company reasonably acceptable to the Company to act as Exchange
Agent hereunder (the "Exchange Agent"). As soon as practicable after the
Effective Time, Parent shall deposit with or for the account of the Exchange
Agent stock certificates representing the number of shares of Parent Common
Stock issuable pursuant to Section 3.01 in exchange for outstanding shares of
Company Stock, which shares of Parent Common Stock shall be deemed to have been
issued at the Effective Time.
(b) As soon as practicable after the Effective Time,
Parent shall cause the Exchange Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Stock (the "Certificates") that were
converted pursuant to Section 3.01 into the right to receive shares of Parent
Common Stock (i) a form of letter of transmittal specifying that delivery shall
be effected, and risk of loss and title to the Certificates shall pass, only
upon proper delivery of the Certificates to the Exchange Agent and (ii)
instructions for use in surrendering such Certificates in exchange for
certificates representing shares of Parent Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter
of transmittal, duly executed, the holder of such Certificate shall be entitled
to receive in exchange therefor (x) a certificate representing that number of
whole shares of
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Parent Common Stock which such holder has the right to receive pursuant to the
provisions of this Article III and (y) cash in lieu of any fractional shares of
Parent Common Stock to which such holder is entitled pursuant to Section 3.04,
after giving effect to any required tax withholdings, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of
ownership of Company Stock which is not registered in the transfer records of
the Company, a certificate representing the proper number of shares of Parent
Common Stock may be issued to a transferee if the Certificate representing such
Company Stock is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer, and by evidence that any
applicable stock transfer taxes had been paid. Until surrendered as
contemplated by this Section 3.02(b), each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon such
surrender a certificate representing shares of Parent Common Stock and cash in
lieu of any fractional shares of Parent Common Stock as contemplated by this
Article III.
SECTION 3.03. Dividends; Transfer Taxes; Escheat. No dividends
or distributions that are declared on shares of Parent Common Stock will be
paid to persons entitled to receive certificates representing shares of Parent
Common Stock hereunder until such persons surrender their Certificates. Upon
such surrender, there shall be paid to the person in whose name the
certificates representing such shares of Parent Common Stock shall be issued,
any dividends or distributions with respect to such shares of Parent Common
Stock which have a record date after the Effective Time and shall have become
payable between the Effective Time and the time of such surrender. In no event
shall the person entitled to receive such dividends or distributions be
entitled to receive interest thereon. Promptly following the date which is six
months after the Effective Time, the Exchange Agent shall deliver to Parent all
cash, certificates and other documents in its possession relating to the
transactions described in this Agreement, and any holders of Company Stock who
have not theretofore complied with this Article III and the letter of
transmittal shall look thereafter only to Parent for the shares of Parent
Common Stock, any dividends or distributions thereon, and any cash in lieu of
fractional shares thereof to which they are entitled pursuant to this Article
III. Notwithstanding the foregoing, neither the Exchange Agent nor any party
hereto shall be liable to a holder of Company Stock for any shares of Parent
Common Stock, any dividends or distributions thereon or any cash in lieu of
fractional shares thereof delivered to a public official pursuant to applicable
abandoned property, escheat or similar laws.
SECTION 3.04. No Fractional Securities. No certificates or
scrip representing fractional shares of Parent Common Stock shall be issued
upon the surrender for exchange of Certificates,
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and such fractional interests shall not entitle the owner thereof to vote or to
any rights of a security holder. In lieu of any such fractional securities,
each holder of Company Stock who would otherwise have been entitled to a
fraction of a share of Parent Common Stock upon surrender of such holder's
Certificates will be entitled to receive sufficient funds to make a cash
payment (without interest) determined by multiplying (i) the fractional
interest to which such holder would otherwise be entitled (after taking into
account all shares of Company Stock then held of record by such holder) and
(ii) the average last sale price of shares of Parent Common Stock for the
twenty trading days immediately prior to the Effective Time or, if no such sale
takes place on such days, the average of the closing bid and asked prices
thereof for such days, in each case as officially reported on the principal
national securities exchange on which Parent Common Stock is then listed or
admitted to trading or on the OTC Bulletin Board. It is understood (x) that
the payment of cash in lieu of fractional shares of Parent Common Stock is
solely for the purpose of avoiding the expense and inconvenience to Parent of
issuing fractional shares and does not represent separately bargained-for
consideration and (y) that no holder of Company Stock will receive cash in lieu
of fractional shares of Parent Common Stock in an amount greater than the value
of one full share of Parent Common Stock.
SECTION 3.05. Closing of Company Transfer Books. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of shares of Company Stock shall thereafter be made. If, after the
Effective Time, Certificates are presented to the Parent, they shall be
canceled and exchanged as provided in this Article III.
SECTION 3.06. Further Assurances. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things
are necessary or desirable to vest, perfect or confirm of record or otherwise
in the Surviving Corporation its right, title or interest in, to or under any
of the rights, properties or assets of either of Sub or the Company acquired or
to be acquired by the Surviving Corporation as a result of, or in connection
with, the Merger or otherwise to carry out this Agreement, the officers of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of each of Sub and the Company or otherwise, all such deeds,
bills of sale, assignments and assurances and to take and do, in such names and
on such behalves or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out the purposes of this Agreement.
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ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
SECTION 4.01. Organization. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power to carry on its business as it is now
being conducted or presently proposed to be conducted. The Company is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary,
except where the failure to be so qualified will not have a material adverse
effect, individually or in the aggregate, on the business, properties,
financial condition, results of operations or prospects of the Company and its
subsidiaries taken as a whole, or the ability of the Company to consummate the
Merger and the other transactions contemplated by this Agreement (a "Company
Material Adverse Effect").
SECTION 4.02. Capitalization.
(a) The authorized capital stock of the Company
consists of 60,000,000 shares of Company Common Stock and 5,000,000 shares of
Company Preferred Stock, of which 3,066,340 shares have been designated as
Series A Preferred Stock (the "Series A Preferred") and 8,000 shares have been
designated as Series B Preferred Stock (the "Series B Preferred"). As of
January 30, 1998, (i) 36,366,084 shares of Company Common Stock were issued and
outstanding, (ii) no shares of Series A Preferred were issued and outstanding,
(iii) no shares of Series B Preferred were issued and outstanding, (iv) Company
Stock Options to acquire 1,294,881 shares of Company Common Stock were
outstanding under all stock option plans of the Company, (v) 6,000,000 shares
of Company Common Stock were reserved for issuance pursuant to the Company
Stock Options and all other employee benefit plans of the Company and (vi)
4,705,119 shares of Company Common Stock were reserved for issuance upon the
exercise of outstanding Company Stock Purchase Rights. All of the issued and
outstanding shares of Company Common Stock are validly issued, fully paid and
nonassessable. Schedule 4.02(a) sets forth with respect to each Company Stock
Option and each Company Stock Purchase Right, the exercise price, the vesting
or exercisability schedule (as applicable), the expiration date and the number
of shares of Company Common Stock into which such Company Stock Option or
Company Stock Purchase Right, as the case may be, is exercisable.
(b) Except as disclosed in this Section 4.02 or as
set forth on Schedule 4.02(a), (i) there are no
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outstanding Company Stock Options or Company Stock Purchase Rights, (ii) there
is no outstanding security of any kind convertible into or exchangeable for
shares of capital stock of the Company, and (iii) there is no voting trust or
other agreement or understanding to which the Company or any of its
Subsidiaries is a party or is bound with respect to the voting of the capital
stock of the Company or any of its Subsidiaries.
(c) Except as set forth on Schedule 4.02(c), the
Company has not in any manner accelerated or provided for the acceleration or
the vesting or exercisability of, or otherwise modified the terms and
conditions applicable to, any of the Company Stock Options, whether set forth
in the governing stock option plans of the Company, a stock option grant, award
or other agreement or otherwise. Except as set forth on Schedule 4.02(c), none
of the awards, grants or other agreements pursuant to which Company Stock
Options were issued have provisions which accelerate the vesting or right to
exercise such options upon the execution of this Agreement (including the
documents attached as Exhibits hereto), the consummation of the transactions
contemplated hereby (or thereby) or any other "change of control" events.
SECTION 4.03. Company Subsidiaries. Schedule 4.03(a) contains a
complete and accurate list of all Subsidiaries of the Company. Each Subsidiary
of the Company that is a corporation, is duly organized, validly existing and
in good standing under the laws of its jurisdiction of incorporation. Each
Subsidiary of the Company that is a partnership is duly formed and validly
existing under the laws of its jurisdiction of formation. Each Subsidiary of
the Company has the corporate power or the partnership power, as the case may
be, to carry on its business as it is now being conducted or presently proposed
to be conducted. Each Subsidiary of the Company is duly qualified as a foreign
corporation or a foreign partnership, as the case may be, authorized to do
business, and is in good standing, in each jurisdiction where the character of
its properties owned or held under lease or the nature of its activities makes
such qualification necessary, except where the failure to be so qualified will
not have a Company Material Adverse Effect. All of the outstanding shares of
capital stock of the Subsidiaries of the Company that are corporations are
validly issued, fully paid and nonassessable. Except as set forth in Schedule
4.03(b), all of the outstanding shares of capital stock of, or other ownership
interests in, each other Subsidiary of the Company are directly owned by the
Company or a Subsidiary of the Company free and clear of any liens, pledges,
security interests, claims, charges or other encumbrances of any kind
whatsoever ("Liens").
SECTION 4.04. Authority Relative to this Agreement. The Company
has the requisite corporate power and authority to execute and deliver this
Agreement, the Interim Management
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Agreement and the Forbearance Agreement and to consummate the transactions
contemplated hereby and thereby. The execution and delivery of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated on its part hereby have been duly authorized by the Company's
Board of Directors and, except for the approval of its stockholders to be
sought at the stockholders meeting contemplated by Section 7.04(a) with respect
to this Agreement, no other corporate proceedings on the part of the Company
are necessary to authorize this Agreement or for the Company to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with
its terms.
SECTION 4.05. Consents and Approvals; No Violations. Except as
set forth in Schedule 4.05 or as otherwise stated herein, neither the
execution, delivery and performance of this Agreement, the Interim Management
Agreement or the Forbearance Agreement by the Company, nor the consummation by
the Company of the transactions contemplated hereby or thereby, will (i) con-
flict with or result in any breach of any provisions of the charter, by-laws or
other organizational documents of the Company or any of its Subsidiaries, (ii)
require a filing with, or a permit, authorization, consent or approval of, any
federal, state, local or foreign court, arbitral tribunal, administrative
agency or commission or other governmental or other regulatory authority or
administrative agency or commission (a "Governmental Entity"), except in
connection with or in order to comply with the applicable provisions of the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Securities Act of 1933, as amended (the "Securities Act"), the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), state
securities or "blue sky" laws, the By-Laws of the National Association of
Securities Dealers (the "NASD") and the filing and recordation of a Certificate
of Merger as required by the DGCL, (iii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under, or
result in the creation of any Liens on any property or asset of the Company or
any of its Subsidiaries pursuant to, any of the terms, conditions or provisions
of any note, bond, mortgage, indenture, license, contract, agreement or other
instrument or obligation (each, a "Contract") to which the Company or any of
its Subsidiaries is a party or by which any of them or any of their properties
or assets may be bound or (iv) violate any law, order, writ, injunction,
decree, statute, rule or regulation of any Governmental Entity applicable to
the Company, any of its Subsidiaries or any of their properties or assets,
except, in the case of clauses (ii), (iii) and (iv), where the failure to make
such filing or obtain such authorization, consent or approval would not have,
or where such violations, breaches or defaults or
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Liens would not have, in any such case, a Company Material Adverse Effect.
SECTION 4.06. Reports and Financial Statements. Except as set
forth in Schedule 4.06, the Company has timely filed all reports required to be
filed with the Securities and Exchange Commission (the "SEC") pursuant to the
Exchange Act or the Securities Act since January 1, 1995 (collectively, the
"Company SEC Reports"), and has previously made available to Parent true and
complete copies of all such Company SEC Reports. Such Company SEC Reports, as
of their respective dates except to the extent that such Company SEC Reports
were subsequently amended or restated, complied in all material respects with
the applicable requirements of the Securities Act and the Exchange Act, as the
case may be, and none of such Company SEC Reports contained any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. Except to the extent
that such Company SEC Reports were subsequently amended or restated, the
financial statements of the Company included in the Company SEC Reports have
been prepared in accordance with United States generally accepted accounting
principles ("GAAP") consistently applied throughout the periods indicated
(except as otherwise noted therein or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) and fairly present (subject, in the case of
unaudited statements to normal recurring year-end adjustments and any other
adjustments described therein) the consolidated financial position of the
Company and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of operations and cash flows of the Company and its
consolidated Subsidiaries for the periods then ended. Since December 31, 1996,
there has been no change in any of the significant accounting (including tax
accounting) policies, practices or procedures of the Company or any of its
consolidated Subsidiaries.
SECTION 4.07. Absence of Certain Changes or Events; Material
Contracts. Except as set forth on Schedule 4.07 or in the Company SEC Reports
filed and publicly available prior to the date of this Agreement, since
September 30, 1997, (i) neither the Company nor any of its Subsidiaries has
conducted its business and operations other than in the ordinary course and
consistent with past practices, or taken any actions that, if it had been in
effect, would have violated or been inconsistent with the provisions of Section
6.01 in such manner as to result in a Company Material Adverse Effect and (ii)
there has not been any material adverse change in the business, properties,
financial condition, results of operations or prospects of the Company and each
of its Subsidiaries taken as a whole. Except as set forth on Schedule 4.07,
the transactions contemplated by this Agreement will not require the consent
from or the giving of notice to a third party
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pursuant to the terms, conditions or provisions of any material Contract to
which the Company or any of its Subsidiaries is a party.
SECTION 4.08. Absence of Undisclosed Liabilities. Except for
liabilities or obligations which are accrued or reserved against in the
Company's financial statements (or reflected in the notes thereto) included in
the Company SEC Reports or which were incurred after September 30, 1997 in the
ordinary course of business and consistent with past practice, and except as
set forth on Schedule 4.08, none of the Company and its Subsidiaries has any
liabilities or obligations (whether absolute, accrued, contingent or otherwise)
of a nature required by GAAP to be reflected in a consolidated balance sheet or
reflected in the notes thereto) or which would have a Company Material Adverse
Effect.
SECTION 4.09. No Default. Except as set forth on Schedule 4.09,
neither the Company nor any Subsidiary of the Company is in default or
violation (and no event has occurred which with notice or the lapse of time or
both would constitute a default or violation) of any term, condition or
provision of (i) its charter, by-laws or comparable organizational documents,
(ii) any Contract to which the Company or any of its Subsidiaries is a party or
by which they or any of their properties or assets may be bound, or (iii) any
order, writ, injunction, decree, statute, rule or regulation of any
Governmental Entity applicable to the Company or any of its Subsidiaries,
except, in the cases of clauses (ii) and (iii), for defaults or violations
which would not have a Company Material Adverse Effect.
SECTION 4.10. Litigation. Except for litigation disclosed in
the notes to the financial statements included in the Company SEC Reports or
set forth in Schedule 4.10 hereto, there is no suit, action, proceeding or
investigation pending of which the Company has received notice or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries, the outcome of which, in the reasonable judgment of the
Company, is likely to have a Company Material Adverse Effect; nor is there any
judgment, decree, injunction, ruling or order of any Governmental Entity
outstanding against the Company or any of its Subsidiaries having, or which is
reasonably likely to have, a Company Material Adverse Effect.
SECTION 4.11. Taxes.
(a) The Company has heretofore delivered or will make
available to Parent true, correct and complete copies of the consolidated
federal, state, local and foreign income, franchise sales and other Tax Returns
(as hereinafter defined) filed by the Company and the Company Subsidiaries for
each of the Company's fiscal years ended December 31, 1996, 1995, 1994, 1993
and 1992
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inclusive. Except as set forth on Schedule 4.11, the Company has duly filed,
and each Subsidiary has duly filed, all material federal, state, local and
foreign income, franchise, sales and other Tax Returns required to be filed by
the Company or any of its Subsidiaries. All such Tax Returns are true, correct
and complete, in all material respects, and the Company and each of its
Subsidiaries have duly paid, all Taxes (as hereinafter defined) shown on such
Tax Returns and have made adequate provision for payment of all accrued but
unpaid material Taxes anticipated in respect of all periods since the periods
covered by such Tax Returns. Except as set forth on Schedule 4.11, all
material deficiencies assessed as a result of any examination of Tax Returns of
the Company or any of its Subsidiaries by federal, state, local or foreign tax
authorities have been paid or reserved on the financial statements of the
Company in accordance with GAAP consistently applied, and true, correct and
complete copies of all revenue agent's reports, "30-day letters," or "90-day
letters" or similar written statements proposing or asserting any Tax
deficiency against the Company or any of its Subsidiaries for any open year
have been heretofore delivered to Parent. The Company has heretofore delivered
or promptly will make available to Parent true, correct and complete copies of
all written tax-sharing agreements and written descriptions of all such
unwritten agreements or arrangements to which the Company or any of its
Subsidiaries is a party. Except as set forth in Schedule 4.11, no material
issue has been raised during the past five years by any federal, state, local
or foreign taxing authority which, if raised with regard to any other period
not so examined, could reasonably be expected to result in a proposed material
deficiency for any other period not so examined. Except as disclosed in
Schedule 4.11 hereof, neither the Company nor any of its Subsidiaries has
granted any extension or waiver of the statutory period of limitations
applicable to any claim for any material Taxes. The consolidated federal
income tax returns of the Company and its Subsidiaries have been examined by
and settled with the Internal Revenue Service (the "Service"), or the statute
of limitations has expired, for all years through 1993. Except as set forth in
Schedule 4.11, (i) neither the Company nor any of its Subsidiaries is a party
to any agreement, contract or arrangement that would result, separately or in
the aggregate, in the payment of any "excess parachute payments" within the
meaning of Section 280G of the Code; (ii) no consent has been filed under
Section 341(f) of the Code with respect to any of the Company or the
Subsidiaries of the Company; (iii) neither the Company nor any of the
Subsidiaries of the Company has participated in, or cooperated with, an
international boycott within the meaning of Section 999 of the Code; and (iv)
neither the Company nor any of the Subsidiaries of the Company has issued or
assumed any corporate acquisition indebtedness, as defined in Section 279(b) of
the Code. The Company and each Subsidiary of the Company have complied (and
until the Effective Time will comply) in all material respects with all
applicable laws, rules and regulations
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relating to the payment and withholding of Taxes (including, without
limitation, withholding of Taxes pursuant to Sections 1441 and 1442 of the Code
or similar provisions under any foreign laws) and have, within the time and in
the manner prescribed by law, withheld from employee wages and paid over to the
proper governmental authorities all amounts required to be so withheld and paid
over under all applicable laws.
(b) For purposes of this Agreement, the term "Taxes"
shall mean all taxes, charges, fees, levies, duties, imposts or other
assessments, including, without limitation, income, gross receipts, excise,
property, sales, use, transfer, gains, license, payroll, withholding, capital
stock and franchise taxes, imposed by the United States, or any state, local or
foreign government or subdivision or agency thereof, including any interest,
penalties or additions thereto. For purposes of this Agreement, the term "Tax
Return" shall mean any report, return or other information or document required
to be supplied to a taxing authority in connection with Taxes.
SECTION 4.12. Title to Properties; Encumbrances. Except as
described in the following sentence or as set forth in Schedule 4.12, each of
the Company and its Subsidiaries has good, valid and marketable title to, or a
valid leasehold interest in, all of its respective material properties and
assets (real, personal and mixed, tangible and intangible), including, without
limitation, all the properties and assets reflected in the consolidated balance
sheet of the Company and its Subsidiaries as of September 30, 1997 included in
the Company's Quarterly Report on Form 10-Q for the period ended on such date
(except for properties and assets disposed of in the ordinary course of
business and consistent with past practices since September 30, 1997). None of
such properties or assets are subject to any Liens (whether absolute, accrued,
contingent or otherwise), except (i) as specifically set forth in the Company
SEC Reports or in Schedule 4.12 and (ii) minor imperfections of title and
encumbrances, if any, which are not substantial in amount, do not materially
detract from the value of the property or assets subject thereto and do not
impair the operations of any of the Company and its Subsidiaries.
SECTION 4.13. Intellectual Property.
(a) Except as set forth on Schedule 4.13, the Company and
its Subsidiaries are the sole and exclusive owners of all material patents,
patent applications, patent rights, trademarks, trademark rights, trade names,
trade name rights, copyrights, service marks, trade secrets, registrations for
and applications for registration of trademarks, service marks and copyrights,
technology and know how, rights in Computer Software (as hereinafter defined)
and other proprietary rights and information and all technical and user manuals
and documentation made
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or used in connection with any of the foregoing, used or held for use in
connection with the businesses of the Company or any of its Subsidiaries as
currently conducted (collectively, the "Intellectual Property"), free and clear
of all Liens except as set forth on Schedule 4.13 and except minor
imperfections of title and encumbrances, if any, which are not substantial in
amount, do not materially detract from the value of the Intellectual Property
subject thereto and do not impair the operations of any of the Company and its
Subsidiaries.
(b) Each of the Company and its Subsidiaries owns or in
the case of material Intellectual Property licensed from a third party, to the
knowledge of the Company has the right to use all of the material Intellectual
Property used by it or held for use by it in connection with its business. To
the knowledge of the Company, there are no conflicts with or infringements of
any Intellectual Property by any third party. To the knowledge of the Company,
the conduct of the businesses of the Company and its Subsidiaries as currently
conducted (collectively, the "Business") does not conflict with or infringe in
any way any proprietary right of any third party, which conflict or
infringement would have a Company Material Adverse Effect or restrict in any
material fashion the conduct of such Business, and there is no claim, suit,
action or proceeding pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries (i) alleging any such conflict
or infringement with any third party's proprietary rights, or (ii) challenging
the ownership, use, validity or enforceability of the Intellectual Property.
(c) The material Computer Software used by the Company
or any of its Subsidiaries in the conduct of the Business is either: (i) owned
by the Company or such Subsidiary of the Company, as the case may be, as the
result of internal development by an employee of the Company or such Subsidiary
of the Company; (ii) developed on behalf of the Company or any of its
Subsidiaries by a consultant or contractor and all ownership rights therein
have been assigned or otherwise transferred to or vested in the Company or such
Subsidiary of the Company, as the case may be; or (iii) licensed or acquired
from a third party pursuant to a written license, assignment, or other Contract
which is in full force and effect and of which neither the Company nor any of
its Subsidiaries is in material breach. Except as set forth on Schedule 4.13,
(x) no third party has had access to any of the source code for any of the
Computer Software described in clause (i) or (ii) hereof and (iii) no act has
been done or omitted to be done by the Company or any of its Subsidiaries to
impair or dedicate to the Public or entitle any Governmental Entity to hold
abandoned any of such Computer Software.
(d) For purposes of this Agreement, the term "Computer
Software" shall mean (i) any and all computer programs
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consisting of sets of statements and instructions to be used directly or
indirectly in computer software or firmware, (ii) databases and compilations,
including without limitation any and all data and collections of data, whether
machine readable or otherwise, (iii) all versions of the foregoing (x)
including without limitation all screen displays and designs thereof, and all
component modules of source code or object code or natural language code
therefor, and (y) whether recorded on papers, magnetic media or other
electronic or non-electronic device, (iv) all descriptions, flow-charts and
other work product used to design, plan, organize and develop any of the
foregoing, and (v) all documentation, including without limitation all
technical and user manuals and training materials, relating to the foregoing.
SECTION 4.14. Compliance with Applicable Law. Except as set
forth on Schedule 4.14 or as disclosed in the Company SEC Reports, (i) the
Company and its Subsidiaries hold, and are in compliance with the terms of, all
permits, licenses, exemptions, orders and approvals of all Governmental
Entities necessary for the current and proposed conduct of their respective
businesses ("Company Permits"), except for failures to hold or to comply with
such permits, licenses, exemptions, orders and approvals which would not have a
Company Material Adverse Effect, (ii) no fact exists or event has occurred, and
no action or proceeding is pending or, to the Company's knowledge, threatened,
that has a reasonable possibility of resulting in a revocation, nonrenewal,
termination, suspension or other material impairment of any material Company
Permits, (iii) the businesses of the Company and its Subsidiaries are not being
conducted in violation of any applicable law, ordinance, regulation, judgment,
decree or order of any Governmental Entity ("Applicable Law"), except for
violations or possible violations which do not and are not reasonably likely to
have a Company Material Adverse Effect, and (iv) to the knowledge of the
Company, (x) no investigation or review by any Governmental Entity with respect
to the Company or its Subsidiaries is pending or threatened and (y) no
Governmental Entity has indicated an intention to conduct the same, other than,
in each case, those which the Company reasonably believes will not have a
Company Material Adverse Effect.
SECTION 4.15. Information in Disclosure Documents and
Registration Statement. None of the information to be supplied by the Company
for inclusion in (i) the Registration Statement to be filed with the SEC by
Parent on Form S-4 under the Securities Act for the purpose of registering the
shares of Parent Common Stock to be issued in connection with the Merger (the
"Registration Statement") or (ii) the joint proxy statement to be distributed
in connection with Parent's and the Company's meetings of stockholders with
respect to this Agreement (the "Proxy Statement") will, in the case of the
Registration Statement and any post-effective amendment thereof, at the time it
becomes effective or is filed, as the case may be, and, in any such case, at
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the Effective Time, or, in the case of the Proxy Statement or any amendments
thereof or supplements thereto, at the time of the mailing of the Proxy
Statement and any amendments or supplements thereto, and at the time of the
meeting of stockholders of the Company to be held in connection with the
Merger, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they are made,
not misleading. The Proxy Statement will comply as to form in all material
respects with the applicable provisions of the Exchange Act, and the rules and
regulations promulgated thereunder, except that no representation is made by
the Company with respect to statements made therein based on information
supplied by Parent or its representatives for inclusion in the Proxy Statement
or with respect to information concerning Parent or any of its Subsidiaries
included or incorporated by reference in the Proxy Statement.
SECTION 4.16. Employee Benefit Plans; ERISA.
(a) Schedule 4.16 hereto sets forth a true and complete
list of each material employee benefit plan, arrangement or agreement that is
maintained, or was maintained at any time during the five (5) calendar years
preceding the date of this Agreement (the "Company Plans"), by the Company or
by any United States trade or business, whether or not incorporated (a "Company
ERISA Affiliate"), which together with the Company would be deemed a "single
employer" within the meaning of Section 414(b) and (c) of the Code.
(b) Each of the Company Plans that is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA") is and
has been in compliance with ERISA and the Code in all material respects; each
of the Company Plans intended to be "qualified" within the meaning of Section
401(a) of the Code has received an IRS determination letter regarding its tax-
qualified status; no Company Plan has an accumulated or waived funding
deficiency within the meaning of Section 412 of the Code; neither the Company
nor any Company ERISA Affiliate has incurred, directly or indirectly, any
material liability (including any material contingent liability) to or on
account of a Company Plan pursuant to Title IV of ERISA; no proceedings have
been instituted to terminate any Company Plan that is subject to Title IV of
ERISA; no "reportable event," as such term is defined in Section 4043(b) of
ERISA, has occurred with respect to any Company Plan subject to Title IV of
ERISA; and no condition exists that presents a material risk to the Company or
any Company ERISA Affiliate of incurring a material liability to or on account
of a Company Plan pursuant to Title IV of ERISA.
(c) The current value of the assets of each of the
Company Plans that are subject to Title IV of ERISA, based
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upon the actuarial assumptions (to the extent reasonable) presently used by the
Company Plans, exceeds the present value of the accrued benefits under each
such Company Plan; no Company Plan is a multiemployer plan (within the meaning
of Section 4001(a)(3) of ERISA) and no Company Plan is a multiple employer plan
as defined ia Section 413 of the Code; and all material contributions or other
amounts payable by the Company as of the Effective Time with respect to each
Company Plan in respect of current or prior plan years have been either paid or
accrued on the balance sheet of the Company. To the best knowledge of the
Company, there are no material pending, threatened or anticipated claims (other
than routine claims for benefits) by, on behalf of or against any of the
Company Plans or any trusts related thereto.
(d) Neither the Company nor any Company ERISA
Affiliate, nor any Company Plan, nor any trust created thereunder, nor any
trustee or administrator thereof has engaged in a transaction in connection
with which the Company or any Company ERISA Affiliate, any Company Plan, any
such trust, or any trustee or administrator thereof, or any party dealing with
any Company Plan or any such trust could be subject to either a material civil
penalty assessed pursuant to Section 409 or 502(i) of ERISA or a material tax
imposed pursuant to Section 4975 or 4976 of the Code. No Company Plan provides
death or medical benefits (whether or not insured), with respect to current or
former employees of the Company or any Company ERISA Affiliate beyond their
retirement or other termination of service other than (i) coverage mandated by
applicable law or (ii) death benefits under any "employee pension plan," as
that term is defined in Section 3(2) of ERISA).
SECTION 4.17. Environmental Laws and Regulations.
(a) Except as set forth on Schedule 4.17 and except for
matters which would not, individually or in the aggregate, be reasonably
expected to result in a Company Material Adverse Effect: (i) the Company and
its Subsidiaries are and have been in compliance with, and there are no
outstanding allegations by any person or entity that the Company or its
Subsidiaries has not been in compliance with, all applicable laws, rules,
regulations, common law, ordinances, decrees, orders or other binding legal
requirements relating to pollution (including the treatment, storage and
disposal of wastes and the remediation or releases and threatened releases of
materials), the preservation of the environment, and the exposure to materials
in the environment or work place ("Environmental Laws") and (ii) the Company
and its Subsidiaries currently hold all permits, licenses, registrations and
other governmental authorizations (including exemptions, waivers, and the like)
and financial assurance required under Environmental Laws for the Company and
its Subsidiaries to operate their businesses as currently conducted.
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(b) Except as set forth on Schedule 4.17, (i) to the
knowledge of the Company, there is no friable asbestos-containing material in
or on any real property currently owned, leased or operated by the Company or
its Subsidiaries and (ii) there are and have been no underground storage tanks
(whether or not required to be registered under any applicable law), dumps,
landfills, lagoons, surface impoundments, injection ▇▇▇▇▇ or other land
disposal units in or on any property currently owned, leased or operated by the
Company or its Subsidiaries.
(c) Except as set forth on Schedule 4.17, (i) neither
the Company nor its Subsidiaries has received (or, to the knowledge of the
Company, is expected to receive) (x) any written communication from any person
stating or alleging that any of them may be a potentially responsible party
under any Environmental Law (including, without limitation, the Federal
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
a amended) with respect to any actual or alleged environmental contamination
nor (y) any request for information under any Environmental Law from any
Governmental Entity with respect to any actual or alleged material
environmental contamination; and (ii) none of the Company, its Subsidiaries or
any Governmental Entity is conducting or has conducted (or, to the knowledge of
the Company, is threatening to conduct) any environmental remediation or
investigation which could result in a material liability of the Company or its
Subsidiaries under any Environmental Law.
SECTION 4.18. Vote Required. The affirmative vote of (i) the
holders of a majority of the outstanding shares of capital stock of the Company
entitled to vote thereon, consisting of the Company Common Stock present in
person or represented by proxy at the stockholders' meeting of the Company
described in Section 7.04(a) (provided that the shares so present or repre-
sented constitute a majority of the outstanding shares of Company Common Stock)
is the only vote of the holders of any class or series of the Company's capital
stock necessary to approve the Merger. The Board of Directors of the Company
(at a meeting duly called and held) has unanimously (i) approved this
Agreement, the Forbearance Agreement and the Interim Management Agreement, (ii)
determined that the transactions contemplated hereby and thereby are fair to
and in the best interests of the holders of Company Stock and (iii) determined
to recommend this Agreement, the Merger and the other transactions contemplated
hereby to such holders for approval and adoption.
SECTION 4.19. Opinion of Financial Advisor. The Company has
received the opinion of ▇▇▇▇▇▇ and Company LLC, dated the date hereof,
substantially to the effect that the consideration to be received in the Merger
by the holders of Company Common Stock is fair to such holders from a financial
point of view.
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SECTION 4.20. DGCL Section 203. Prior to the date hereof, the
Company has elected, in accordance with the provisions of Section 203(b) of the
DGCL, not to be governed by Section 203 of the DGCL.
SECTION 4.21. Labor Matters. Except as set forth in Schedule
4.21, neither the Company nor any of its Subsidiaries is a party to, or bound
by, any collective bargaining agreement, contract or other understanding with a
labor union or labor organization and, to the knowledge of the Company, there
is no activity, involving any employees of the Company or its Subsidiaries
seeking to certify a collective bargaining unit or engaging in any other
organizational activity.
SECTION 4.22. Severance Arrangements. Except as set forth on
Schedule 4.22 hereto, neither the Company nor any of its subsidiaries is party
to any agreement with any employee (i) the benefits of which (including,
without limitation, severance benefits) are contingent, or the terms of which
are materially altered, upon the occurrence of a transaction involving the
Company or any of its Subsidiaries of the nature of any of the transactions
contemplated by this Agreement, the Merger or the Interim Management Agreement
or (ii) providing severance benefits in excess of those generally available
under the Company's severance policies as in effect on the date hereof (which
are described on Schedule 4.22), or which are conditioned upon a change of
control, after the termination of employment of such employees regardless of
the reason for such termination of employment, and neither the Company nor any
of its Subsidiaries is a party to any employment agreement or compensation
guarantee extending for a period longer than one year from the date hereof.
Schedule 4.22 sets forth all employment agreements and compensation guarantees,
regardless of duration, to which the Company or any of its Subsidiaries is a
party.
SECTION 4.23. Affiliate Transactions. Except as set forth in
Schedule 4.23 or as disclosed in the Company SEC Reports, there are no material
Contracts that are still in force or effect (oral or written) between the
Company or any of its Subsidiaries, on the one hand, and any (i) officer or
director of the Company or any of its Subsidiaries, (ii) record or beneficial
owner of five percent or more of the voting securities of the Company or (iii)
affiliate (as such term is defined in Regulation 12b-2 promulgated under the
Exchange Act) of any such officer, director or beneficial owner, on the other
hand.
SECTION 4.24. Brokers. Except as set forth in Schedule 4.24
hereto, no broker, finder or financial advisor is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger or the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of the Company.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF PARENT
Parent represents and warrants to the Company as follows:
SECTION 5.01. Organization. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power to carry on its business as it is now
being conducted or presently proposed to be conducted. Parent is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities make such qualification necessary, except
where the failure to be so qualified will not have a material adverse effect
individually or in the aggregate, on the business, properties, financial
condition, results of operations or prospects of Parent and its Subsidiaries
taken as a whole or on the ability of Parent to consummate the Merger and the
other transactions contemplated by this Agreement (a "Parent Material Adverse
Effect"). Sub is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware. Sub has not engaged in any
business (other than in connection with this Agreement and the transactions
contemplated hereby) since the date of its incorporation.
SECTION 5.02. Capitalization.
(a) The authorized capital stock of Parent consists of
50,000,000 shares of Parent Common Stock, and 1,000,000 shares of Preferred
Stock, par value $.01 per share of Parent, of which 400,000 shares have been
designated Convertible Preferred Stock, 25,000 shares have been designated
Series B Convertible Preferred Stock, 25,000 shares have been designated Series
C Convertible Preferred Stock and 20,000 shares have been designated Series D
Convertible Preferred Stock. As of January 30, 1998, (i) 6,847,583 shares of
Parent Common Stock were issued and outstanding, (ii) 470,000 shares of Parent
Preferred Stock were issued and outstanding, (iii) options to acquire 4,311,599
shares of Parent Common Stock (the "Parent Stock Options") were outstanding
under all stock option plans of Parent, (iv) 5,209,887 shares of Parent Common
Stock were reserved for issuance pursuant to the Parent Stock Options and all
other employee benefit plans of Parent, (v) 30,000,000 shares of Parent Common
Stock were reserved for issuance upon the conversion of the outstanding Parent
Preferred Stock and (vi) 3,700,000 shares of Parent Company Stock were reserved
for issuance upon the exercise of all outstanding rights, subscriptions,
warrants, calls, options or other agreements or arrangements of any kind
(collectively, the "Parent Stock Purchase Rights") to purchase or
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otherwise receive from Parent any of the outstanding authorized but unissued or
treasury shares of the capital stock or any other security of Parent. All of
the outstanding shares of capital stock of Parent are, and the shares of Parent
Common Stock issuable in exchange for shares of Company Common Stock and
Company Preferred Stock at the Effective Time in accordance with this Agreement
will be, when so issued, duly authorized, validly issued, fully paid and
nonassessable. Schedule 5.02 sets forth with respect to each Parent Stock
Option and Parent Stock Purchase Right, the exercise price, the vesting or
exercisability schedule (as applicable), the expiration date and the number of
shares of Parent Common Stock into which such Parent Stock Option or Parent
Stock Purchase Right, as the case may be, is exercisable.
(b) The authorized capital stock of Sub consists of
1,000 shares of Sub Common Stock, of which 1,000 shares, as of the date hereof,
were issued and outstanding. All of such outstanding shares are owned by
Parent, and are validly issued, fully paid and nonassessable.
(c) Except as disclosed in this Section 5.02 or as set
forth on Schedule 5.02, (i) there are no outstanding Parent Stock Options or
Parent Stock Purchase Rights, (ii) there is no outstanding security of any kind
convertible into or exchangeable for such capital stock and (iii) there is no
voting trust or other agreement or understanding to which Parent or Sub is a
party or is bound with respect to the voting of the capital stock of Parent or
Sub.
SECTION 5.03. Parent Subsidiaries. Schedule 5.03(a) contains a
complete and accurate list of all Subsidiaries of Parent. Each Subsidiary of
Parent that is a corporation is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation. Each Subsidiary
of Parent that is a partnership is duly formed and validly existing under the
laws of its jurisdiction of formation. Each Subsidiary of Parent has the
corporate power or the partnership power, as the case may be, to carry on its
business as it is now being conducted or presently proposed to be conducted.
Each Subsidiary of Parent is duly qualified as a foreign corporation or a
foreign partnership, as the case may be, authorized to do business, and is in
good standing, in each jurisdiction where the character of its properties owned
or held under lease or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified will not have a Parent
Material Adverse Effect. All of the outstanding shares of capital stock of the
Subsidiaries of Parent that are corporations are validly issued, fully paid and
nonassessable. Except as set forth in Schedule 5.03(b), all of the outstanding
shares of capital stock of, or other ownership interests in, each other
Subsidiary of
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Parent are directly owned by Parent or a Subsidiary of Parent free and clear of
any Liens.
SECTION 5.04. Authority Relative to this Agreement. Each of
Parent and Sub has the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by each of Parent and Sub and the
consummation by Parent and Sub of the transactions contemplated on its part
hereby have been duly authorized by their respective Boards of Directors, and
by Parent as the sole stockholder of Sub, and, except for the approval of
Parent's stockholders to be sought at the stockholders meeting contemplated by
Section 7.04(b), no other corporate proceedings on the part of Parent or Sub
are necessary to authorize this Agreement or for Parent and Sub to consummate
the transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Parent and Sub and constitutes a valid and
binding agreement of each of Parent and Sub, enforceable against Parent and Sub
in accordance with its terms.
SECTION 5.05. Consents and Approvals; No Violations. Except as
set forth in Schedule 5.05 or as otherwise stated herein, neither the
execution, delivery and performance of this Agreement by Parent or Sub, nor the
consummation by Parent or Sub of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provisions of the Certificate of
Incorporation or By-Laws of Parent or of Sub, (ii) require a filing with, or a
permit, authorization, consent or approval of, any Governmental Entity except
in connection with or in order to comply with the applicable provisions of the
HSR Act, the Securities Act, the Exchange Act, state laws relating to
takeovers, if applicable, state securities or "blue sky" laws, the By-Laws of
NASD and other exchanges on which the shares of Parent Common Stock are listed,
and the filing and recordation of a Certificate of Merger as required by the
DGCL, (iii) result in a violation or breach of, or constitute (with or without
due notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration) under, or result in the creation of
a Lien on any property or asset of Parent or any of its Subsidiaries pursuant
to, any of the terms, conditions or provisions of any Contract to which Parent
or Sub is a party or by which either of them or any of their properties or
assets may be bound or (iv) violate any law, order, writ, injunction, decree,
statute, rule or regulation of any Governmental Entity applicable to Parent,
Sub or any of their properties or assets, except, in the case of clauses (ii),
(iii) and (iv), where the failure to make such filing or obtain such
authorization, consent or approval would not have, or where such violations,
breaches or defaults or Liens would not have, in any such case, a Parent
Material Adverse Effect.
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SECTION 5.06. Reports and Financial Statements. Except as set
forth in Schedule 5.06, Parent has timely filed all reports required to be
filed with the SEC pursuant to the Exchange Act or the Securities Act since
January 1, 1995 (collectively, the "Parent SEC Reports"), and has previously
made available to the Company true and complete copies of all such Parent SEC
Reports. Such Parent SEC Reports, as of their respective dates except to the
extent that such Parent SEC Reports were amended or restated, complied in all
material respects with the applicable requirements of the Securities Act and
the Exchange Act, as the case may be, and none of such SEC Reports contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Except
to the extent that such Parent SEC Reports were amended or restated, the
financial statements of Parent included in the Parent SEC Reports have been
prepared in accordance with GAAP consistently applied throughout the periods
indicated (except as otherwise noted therein or, in the case of unaudited
statements, as permitted by Form 10-Q of the SEC) and fairly present (subject,
in the case of unaudited statements, to normal, recurring year-end adjustments
and any other adjustments described therein) the consolidated financial
position of Parent and its consolidated Subsidiaries as at the dates thereof
and the consolidated results of operations and cash flows of Parent and its
consolidated Subsidiaries for the periods then ended. Since December 31, 1996,
there have been no changes in any of the significant accounting (including tax
accounting) policies, practices or procedures of the Parent or any of its
consolidated Subsidiaries.
SECTION 5.07. Absence of Certain Changes or Events. Except as
set forth in Schedule 5.07 or in the Parent SEC Reports since September 30,
1997, Parent has not conducted its business and operations other than in the
ordinary course and consistent with past practices, or taken any actions, that
if it had been in effect, would have violated Section 6.02 in such a manner as
to result in a Parent Material Adverse Effect.
SECTION 5.08. Absence of Undisclosed Liabilities. Except for
liabilities or obligations which are accrued or reserved against in Parent's
financial statements (or reflected in the notes thereto) included in the Parent
SEC Reports or which were incurred after September 30, 1997 in the ordinary
course of business and consistent with past practice, and except as set forth
in Schedule 5.08, none of Parent and its Subsidiaries has any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of a nature
required by GAAP to be reflected in a consolidated balance sheet (or reflected
in the notes thereto) or which would have a Parent Material Adverse Effect.
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SECTION 5.09. No Default. Neither Parent nor any Subsidiary of
Parent is in default or violation (and no event has occurred which with notice
or the lapse of time or both would constitute a default or violation) of any
term, condition or provision of (i) its charter, by-laws or comparable
organizational documents, (ii) Contracts to which Parent or its Subsidiaries is
a party or by which they or any of their properties or assets may be bound, or
(iii) any order, writ, injunction, decree, statute, rule or regulation of any
Governmental Entity applicable to Parent or any of its Subsidiaries, except, in
the case of causes (ii) and (iii) above, for defaults or violations which would
not have a Parent Material Adverse Effect.
SECTION 5.10. Litigation. Except for litigation disclosed in
the notes to the financial statements included in the Parent SEC Reports, there
is no suit, action, proceeding or investigation pending of which Parent has
received notice or, to the knowledge of Parent, threatened against or affecting
Parent or any of its Subsidiaries, the outcome of which, in the reasonable
judgment of Parent, is likely to have a Parent Material Adverse Effect; nor is
there any judgment, decree, injunction, ruling or order of any Governmental
Entity outstanding against Parent or any of its Subsidiaries having, or which
is reasonably likely to have, a Parent Material Adverse Effect.
SECTION 5.11. Taxes. Parent has heretofore delivered or will
make available to the Company true correct and complete copies of the
consolidated federal, state, local and foreign income, franchise, sales and
other Tax Returns filed by Parent and its Subsidiaries for each of the Parent's
fiscal years ended December 31, 1996, 1995, 1994, 1993 and 1992 inclusive.
Except as set forth on Schedule 5.11, Parent has duly filed, and each of its
Subsidiaries has duly filed, all material federal, state, local and foreign
income, franchise, sales and other Tax Returns required to be filed by Parent
or the Subsidiaries of Parent. All such Tax Returns are true, correct and
complete, in all material respects, and Parent and the Subsidiaries of Parent
have duly paid all Taxes shown on such Tax Returns and have paid or made
adequate provision for payment of all accrued but unpaid material Taxes in
respect of all periods since the periods covered by such Tax Returns. Except
as set forth on Schedule 5.11, all material deficiencies assessed as a result
of any examination of Tax Returns of Parent or the Subsidiaries of Parent by
federal, state, local or foreign tax authorities have been paid or reserved on
the financial statements of Parent in accordance with GAAP consistently
applied, and true, correct and complete copies of all revenue agent's reports,
"30-day letters," or "90-day letters" or similar written statements proposing
or asserting any Tax deficiency against Parent or the Subsidiaries of Parent
for any open year have been heretofore delivered to the Company. Except as set
forth on Schedule 5.11, no material issue has been raised during the past five
years by any federal, state,
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local or foreign taxing authority which, if raised with regard to any other
period not so examined, could reasonably be expected to result in a proposed
material deficiency for any other period not so examined. Except as disclosed
in Schedule 5.11, neither Parent nor any of its Subsidiaries has granted any
extension or waiver of the statutory period of limitations applicable to any
claim for any material Taxes. The consolidated federal income tax returns of
Parent and the Subsidiaries of Parent have been examined by and settled with
the Service, or the statute of limitations has expired, for all years through
1993. Except as set forth on Schedule 5.11, neither Parent nor any Subsidiary
of Parent (i) is a party to any agreement, contract or arrangement that would
result, separately or in the aggregate, in the payment of any "excess parachute
payments" within the meaning of Section 280G of the Code; (ii) has filed a
consent under Section 341(f) of the Code with respect to any of Parent or the
Subsidiaries of Parent; (iii) has participated in, or cooperated with, an
international boycott within the meaning of Section 999 of the Code; or (iv)
has issued or assumed any corporate acquisition indebtedness, as defined in
Section 279(b) of the Code. Parent and each of the Subsidiaries of Parent have
complied (and until the Effective Time will comply) in all material respects
with all applicable laws, rules and regulations relating to the payment and
withholding of Taxes (including, without limitation, withholding of Taxes
pursuant to Sections 1441 and 1442 of the Code or similar provisions under any
foreign laws) and have, within the time and in the manner prescribed by law,
withheld from employee wages and paid over to the proper governmental authori-
ties all amounts required to be so withheld and paid over under all applicable
laws.
SECTION 5.12. Compliance with Applicable Law. Except as
disclosed in the Parent SEC Reports, (i) Parent and its Subsidiaries hold, and
are in compliance with the terms of, all permits, licenses, exemptions, orders
and approvals of all Governmental Entities necessary for the current or
proposed conduct of their respective businesses ("Parent Permits"), except for
failures to hold or to comply with such permits, licenses, exemptions, orders
and approvals which would not have a Parent Material Adverse Effect, (ii) no
fact exists or event has occurred, and no action or proceeding is pending or,
to Parent's knowledge, threatened, that has a reasonable possibility of
resulting in a revocation, non-renewal, termination, suspension or other
material impairment of any material Parent Permits, (iii) the businesses of
Parent and its Subsidiaries are not being conducted in violation of any
Applicable Law (including ERISA and Environmental Laws), except for violations
or possible violations which do not and are not reasonably likely to have a
Parent Material Adverse Effect, and (iv) to the knowledge of Parent, (x) no
investigation or review by any Governmental Entity with respect to Parent or
its Subsidiaries is pending or threatened and (y) no Governmental Entity has
indicated an intention to
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conduct the same, other than, in each case, those which Parent reasonably
believes will not have a Parent Material Adverse Effect.
SECTION 5.13. Information in Disclosure Documents and
Registration Statement. None of the information to be supplied by Parent or
Sub for inclusion in (i) the Registration Statement or (ii) the Proxy Statement
will, in the case of the Registration Statement and any post-effective
amendment thereto, at the time it becomes effective or is filed, as the case
may be, and, in any case, at the Effective Time, or, in the case of the Proxy
Statement or any amendments thereof or supplements thereto, at the time of the
mailing of the Proxy Statement and any amendments or supplements thereto, and
at the time of the meeting of stockholders of Parent to be held in connection
with the Merger, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. The Registration Statement, including all amendments
thereto, and the Proxy Statement will comply as to form in all material
respects with the applicable provisions of the Securities Act and the Exchange
Act, and the rules and regulations promulgated thereunder, except that no
representation is made by Parent with respect to statements made therein based
on information supplied by the Company or its representatives for inclusion in
the Registration Statement or the Proxy Statement or with respect to
information concerning the Company or any of its Subsidiaries included or
incorporated by reference in the Registration Statement or the Proxy Statement.
SECTION 5.14. Vote Required. The affirmative vote of (i) the
holders of a majority of the shares of Parent Common Stock, voting together as
a single class with the holders of the Parent Preferred Stock (with such Parent
Preferred Stock holders being entitled to one vote for each share of Parent
Common Stock into which such shares of Parent Preferred Stock so held would be
convertible on the record date set for the vote), and (ii) the holders of a
majority of the outstanding shares of Parent Preferred Stock, voting as a
separate class, are the only votes of the holders of any class or series of
Parent capital stock necessary to approve the amendment to Parent's Certificate
of Incorporation (the "Parent Certificate of Amendment") necessary to authorize
a sufficient number of shares of Parent Common Stock for issuance in the Merger
and for issuance upon the conversion of the New Parent Preferred Stock. The
affirmative vote of Parent, as the sole stockholder of all outstanding shares
of Sub Common Stock, is the only vote of the holders of any class or series of
Sub capital stock necessary to approve the Merger. The Board of Directors of
Parent (at a meeting duly called and held) has by the unanimous vote of the
directors (w) approved this Agreement, the Securities Purchase and Exchange
Agreement, the Interim Management Agreement and the Chase Waiver, (x)
determined
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that the transactions contemplated hereby and thereby are fair to and in the
best interests of the holders of Parent Common Stock, (y) approved the Parent
Certificate of Amendment and determined to submit the Parent Certificate of
Amendment to such holders for approval and adoption and (z) caused Parent, as
the sole stockholder of Sub, to approve and adopt this Agreement. The Board of
Directors of Sub (by unanimous written consent) has approved this Agreement.
SECTION 5.15. Opinion of Financial Advisor. Parent has received
the opinion of ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated, dated January 28, 1998,
substantially to the effect that the transactions contemplated hereby are fair
to the stockholders of Parent (other than WCAS VII and its affiliates) from a
financial point of view as a whole.
SECTION 5.16. Brokers. Except as set forth on Schedule 5.16
hereto, no broker, finder or financial advisor is entitled to any brokerage
finder's or other fee or commission in connection with the Merger or the
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of Parent or Sub.
ARTICLE VI.
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01. Conduct of Business by the Company Pending the
Merger. Prior to the Effective Time, unless Parent shall otherwise agree in
writing, or as otherwise expressly contemplated by this Agreement (including
Schedule 6.01 hereto) or resulting from joint management of the Company and
Parent pursuant to the Interim Management Agreement:
(a) the Company shall conduct, and cause each of its
Subsidiaries to conduct, its business only in the ordinary and usual course
consistent with past practice, and the Company shall use, and cause each of its
Subsidiaries to use, its reasonable efforts consistent with past practice to
preserve intact its present business organization, keep available the services
of its present officers and key employees, and preserve the goodwill of those
having business relationships with it;
(b) the Company shall not, nor shall it permit any of
its Subsidiaries to, (i) amend its charter, by-laws or other organizational
documents, (ii) split, combine or reclassify any shares of its outstanding
capital stock, (iii) declare, set aside or pay any dividend or other
distribution payable in cash, stock or property (other than payments to the
Company by a Subsidiary) or (iv) directly or indirectly redeem or otherwise
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acquire any shares of its capital stock or shares of the capital stock of any
of its Subsidiaries;
(c) the Company shall not, nor shall it permit any of
its Subsidiaries to, (i) authorize for issuance, issue or sell or agree to
issue or sell any shares of, or Rights to acquire or convertible into any
shares of, its capital stock or shares of the capital stock of any of its
Subsidiaries (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise), except for the
issuance of shares of Company Common Stock upon the exercise of Company Stock
Options or Company Stock Purchase Rights outstanding on the date of this
Agreement and disclosed in Section 4.02 hereof; (ii) merge or consolidate with
another entity; (iii) acquire or purchase an equity interest in or a
substantial portion of the assets of another corporation, partnership or other
business organization or otherwise acquire any assets outside the ordinary and
usual course of business and consistent with past practice or otherwise enter
into any material contract, commitment or transaction outside the ordinary and
usual course of business consistent with past practice; (iv) sell, lease,
license, waive, release, transfer, encumber or otherwise dispose of any
material amount of its assets outside the ordinary and usual course of business
and consistent with past practice; (v) incur, assume or prepay any material
indebtedness or any other material liabilities other than in the ordinary
course of business and consistent with past practice; (vi) assume, guarantee,
endorse or otherwise become liable or responsible (whether directly,
contingently or otherwise) for the obligations of any other person other than a
Subsidiary of the Company, in each case in the ordinary course of business and
consistent with past practice; (vii) make any loans, advances or capital
contributions to, or investments in, any other person, other than to
Subsidiaries of the Company; (viii) authorize or make capital expenditures in
excess of the amounts currently budgeted therefor and disclosed to Parent; (ix)
permit any insurance policy naming the Company or any Subsidiary of the Company
as a beneficiary or a loss payee to be canceled or terminated other than in the
ordinary course of business; or (x) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(d) the Company shall not, nor shall it permit its
Subsidiaries to, (i) adopt, enter into, terminate or amend (except as may be
required by Applicable Law) any Company Plan or other arrangement for the
current or future benefit or welfare of any director, officer or current or
former employee, (ii) increase in any manner the compensation or fringe
benefits of, or pay any bonus to, any director, officer or employee (except for
increases in salaried compensation in the ordinary course of business
consistent with past practice), or (iii) take any action to fund or in any
other way secure, or to accelerate or otherwise
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remove restrictions with respect to, the payment of compensation or benefits
under any employee plan, agreement, contract, arrangement or other Company Plan
(including the Company Stock Options); and
(e) the Company shall not, nor shall it permit its
Subsidiaries to, take any action with respect to, or make any material change
in, its accounting or tax policies or procedures.
SECTION 6.02. Conduct of Business by Parent Pending the Merger.
Prior to the Effective Time, unless the Company shall otherwise agree in
writing, or as otherwise expressly contemplated by this Agreement or resulting
from joint management of the Company pursuant to the Interim Management
Agreement:
(a) the business of Parent shall be conducted, and
Parent shall cause each of its Subsidiaries to conduct its business, only in
the ordinary and usual course consistent with past practice, and Parent shall
use, and Parent shall cause each of its Subsidiaries to use, its reasonable
efforts to preserve intact its present business organization, to keep available
the services of its respective present officers and key employees, and preserve
the goodwill of those having business relationships with it;
(b) Parent shall not, nor shall it permit any of its
Subsidiaries to, (i) amend its charter (other than, in the case of Parent, to
increase the number of authorized shares of Parent Common Stock and to create
the New Parent Preferred Stock), By-Laws or other organizational documents;
(ii) split, combine or reclassify any shares of its outstanding capital stock;
(iii) declare, set aside or pay any dividend or other distribution payable in
cash, stock or property (other than payments to Parent by a Subsidiary or
regular dividends on the Parent Preferred Stock); or (iv) directly or
indirectly redeem or otherwise acquire any shares of its capital stock or
shares of the capital stock of any of its Subsidiaries;
(c) Parent shall not, nor shall it permit any of its
Subsidiaries to, (i) authorize for issuance, issue or sell or agree to issue or
sell any shares of, or Rights to acquire or convertible into any shares of, its
capital stock or shares of capital stock of any of its Subsidiaries (whether
through the issuance or granting of options, warrants, commitments, subscrip-
tions, rights to purchase or otherwise), except for (w) the issuance of shares
of Parent Common Stock (A) upon the exercise of Parent Stock Options or other
Rights outstanding on the date of this Agreement and disclosed in Section 5.02
hereof, (B) upon the exercise of Parent Stock Options or Parent Stock Purchase
Rights outstanding as of the date of this Agreement or Parent Stock Options
described in the immediately following clause (x), or (C) upon the conversion
of the Parent Preferred Stock in
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accordance with its present terms, (x) the issuance of Parent Stock Options
pursuant to existing employee benefit plans or arrangements in a manner
consistent with past practice, (y) the issuance of New Parent Preferred Stock
pursuant to the Securities Purchase and Exchange Agreement and the Parent
Rights Offering and (z) the issuance of Parent Common Stock upon conversion of
New Parent Preferred Stock in accordance with its terms, or (ii) merge or
consolidate with any other entity, other than the merger of Sub into the
Company or the merger of any Subsidiary of Parent into Parent or any Subsidiary
of Parent; and
(d) neither Parent nor Sub shall take any action with
respect to, or make any material change in, its accounting or tax policies or
procedures.
SECTION 6.03. Conduct of Business of Sub. During the period
from the date of this Agreement to the Effective Time, Sub shall not engage in
any activities of any nature except as provided in or contemplated by this
Agreement. It is understood that Sub was formed by Parent solely for the
purpose of effecting the Merger, and that Sub will have no material assets and
no material liabilities prior to the Merger.
ARTICLE VII.
ADDITIONAL AGREEMENTS
SECTION 7.01. Access and Information. Each of the Company and
Parent shall (and shall cause its Subsidiaries and its and their respective
officers, directors, employees, auditors and agents to) afford to the other and
to the other's officers, employees, financial advisors, legal counsel,
accountants, consultants and other representatives reasonable access during
normal business hours throughout the period prior to the Effective Time to all
of its books and records and its properties, plants and personnel and, during
such period, each shall furnish promptly to the other a copy of each report,
schedule and other document filed or received by it pursuant to the
requirements of federal securities laws, provided that no investigation
pursuant to this Section 7.01 shall affect any representations or warranties
made herein or the conditions to the obligations of the respective parties to
consummate the Merger. Unless otherwise required by law, each party agrees
that it (and its Subsidiaries and its and their respective representatives)
shall hold in confidence all non-public information so acquired in accordance
with the terms of the Confidentiality Agreement, dated December 9, 1997,
between Parent and the Company (the "Confidentiality Agreement").
SECTION 7.02. No Solicitation. Prior to the Effective Time, the
Company agrees that neither it, any of its Subsidiaries
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or its affiliates, nor any of the respective directors, officers, employees,
agents or representatives of the foregoing will, directly or indirectly,
solicit, initiate or encourage (including by way of furnishing or disclosing
non-public information) any inquiries or the making of any proposal with
respect to any merger, consolidation or other business combination involving
the Company or any Subsidiary of the Company or the acquisition of all or any
significant assets or capital stock of the Company or any Subsidiary of the
Company taken as a whole (an "Acquisition Transaction") or negotiate, explore
or otherwise engage in discussions with any person (other than Parent and its
representatives) with respect to any Acquisition Transaction or enter into any
agreement, arrangement or understanding with respect to any such Acquisition
Transaction or which would require it to abandon, terminate or fail to
consummate the Merger or any other transaction contemplated by this Agreement;
provided, however, that the Company may, in response to an unsolicited written
proposal from a third party, furnish information to and engage in discussions
with such third party, in each case only if the Board of Directors of the
Company determines in good faith by a majority vote, after consultation with
its financial advisors and based upon the advice of outside legal counsel to
the Company, that failing to take such action would result in a breach of the
fiduciary duties of the Board of Directors. The Company agrees that as of the
date hereof, its Subsidiaries and affiliates, and the respective directors,
officers, employees, agents and representatives of the foregoing, shall
promptly cease and cause to be terminated any existing activities, discussions
or negotiations with any person (other than Parent and its representatives)
conducted heretofore with respect to any Acquisition Transaction. The Company
agrees to immediately advise Parent in writing of any inquiries or proposals
received by, any such information requested from, or any such negotiations or
discussions sought to be initiated or continued with, any of the Company, its
Subsidiaries or affiliates, or any of the respective directors, officers,
employees, agents or representatives of the foregoing, in each case from each
person (other than Parent and its representatives) with respect to an
Acquisition Transaction, and the terms thereof, including the identity of such
third party, and to update on an ongoing basis or upon Parent's request, the
status thereof, as well as any actions taken or other developments pursuant to
this Section 7.02.
SECTION 7.03. Registration Statement. As promptly as
practicable, Parent and the Company shall in consultation with each other
prepare and file with the SEC the Proxy Statement and Parent in consultation
with the Company shall prepare and file with the SEC the Registration
Statement. Each of Parent and the Company shall use its reasonable best
efforts to have the Registration Statement declared effective. Parent shall
also use its reasonable best efforts to take any action required to be taken
under state securities or "blue sky" laws in connection with the
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issuance of the shares of Parent Common Stock pursuant to this Agreement and
the Merger. The Company shall furnish Parent with all information concerning
the Company and its Subsidiaries and the holders of its capital stock and shall
take such other action as Parent may reasonably request in connection with the
Registration Statement and the issuance of shares of Parent Common Stock. If
at any time prior to the Effective Time any event or circumstance relating to
Parent, any Subsidiary of Parent, the Company, any Subsidiary of the Company,
or their respective officers or directors, is discovered by such party which
should be set forth in an amendment or a supplement to the Registration
Statement or Proxy Statement, such party shall promptly inform the other
thereof and take appropriate action in respect thereof.
SECTION 7.04. Proxy Statements; Stockholder Approvals.
(a) The Company, acting through its Board of Directors,
shall, subject to and in accordance with applicable law and its Certificate of
Incorporation and By-Laws, promptly and duly call, give notice of, convene and
hold as soon as practicable following the date upon which the Registration
Statement becomes effective, a meeting of the holders of Company Common Stock
for the purpose of voting to approve and adopt this Agreement and the
transactions contemplated hereby, and, subject to the fiduciary duties of the
Board of Directors of the Company under applicable law as advised by outside
legal counsel, recommend approval and adoption of this Agreement and the
transactions contemplated hereby, by the stockholders of the Company entitled
to vote thereon and include in the Proxy Statement such recommendation and take
all reasonable and lawful action to solicit and obtain such approval.
(b) Parent, acting through its Board of Directors,
shall, subject to and in accordance with applicable law and its Certificate of
Incorporation and By-Laws, promptly and duly call, give notice of, convene and
hold as soon as practicable following the date upon which the Registration
Statement becomes effective, a meeting of the holders of Parent Common Stock
and Parent Preferred Stock for the purpose of voting to approve the Parent
Certificate of Amendment.
(c) Parent and the Company, as promptly as practicable
(or with such other timing as they mutually agree), shall cause the definitive
Proxy Statement to be mailed to their stockholders.
(d) At or prior to the Closing, each of Parent and the
Company shall deliver to the other a certificate of its Secretary setting forth
the voting results from its stockholder meeting.
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SECTION 7.05. Affiliates.
(a) At least 45 days prior to the Effective Time, the
Company shall cause to be delivered to Parent a list identifying all persons
who were, in its reasonable judgment, at the record date for its stockholders'
meeting convened in accordance with Section 7.04 hereof, "affiliates" of the
Company as that term is used in paragraphs (c) and (d) of Rule 145 under the
Securities Act (the "Affiliates").
(b) The Company shall use its best efforts to cause
each person who is identified as one of its Affiliates in its list referred to
in Section 7.05(a) above to deliver to Parent (with a copy to the Company), at
least 30 days prior to the Effective Time, a written agreement, in the form
attached here as Exhibit B (the "Affiliate Letters").
(c) If any Affiliate of the Company refuses to provide
an Affiliate Letter, Parent may place appropriate legends on the certificates
evidencing the shares of Parent Common Stock to be received by such Affiliate
pursuant to the terms of this Agreement and to issue appropriate stop transfer
instructions to the transfer agent for shares of Parent Common Stock to the
effect that the shares of Parent Common Stock received by such Affiliate
pursuant to this Agreement only may be sold, transferred or otherwise conveyed
(i) pursuant to an effective registration statement under the Securities Act,
(ii) in compliance wit Rule 145 promulgated under the Securities Act, or (iii)
pursuant to another exemption under the Securities Act.
SECTION 7.06. Reasonable Efforts. Subject to the terms and
conditions herein provided, and with the understanding that time is of the
essence, each of the parties hereto agrees to use its reasonable efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement,
the Securities Purchase and Exchange Agreement, the Cerplex Note Purchase
Agreement, and the Note and Warrant Assignment and Transfer Agreement, and
fulfill the conditions set forth in Article VIII hereof, including, without
limitation, (i) the obtaining of all necessary waivers, consents and approvals
and (ii) the effecting of all necessary registrations and filings; provided,
however, that the foregoing shall not require either party hereto to waive any
condition to its obligation to effect the Merger set forth herein or obtain
from any of its stockholders any guarantees of its obligations or any undertak-
ings with respect thereto similar in purpose or effect other than as provided
herein or in such agreements. Without limiting the generality of the
foregoing, as promptly as practicable, the Company, Parent and Sub shall make
all filings and submissions under the HSR Act as may be reasonably required to
be made in
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connection with this Agreement and the transactions contemplated hereby.
Subject to the Confidentiality Agreements, the Company will furnish to Parent
and Sub, and Parent and Sub will furnish to the Company, such information and
assistance as the other may reasonably request in connection with the
preparation of any such filings or submissions. Subject to the Confidentiality
Agreements, the Company will provide Parent and Sub, and Parent and Sub will
provide the Company, with copies of all material written correspondence,
filings and communications (or memoranda setting forth the substance thereof)
between such party or any of its representatives and any Governmental Entity,
with respect to the obtaining of any waivers, consent or approvals and the
making of any registrations or filings, in each case that is necessary to
consummate the Merger and the other transactions contemplated hereby. In case
at any time after the Effective Time any further action is necessary or
desirable to carry out the purposes of this Agreement, the proper officers or
directors of Parent and the Surviving Corporation shall take all such necessary
action.
SECTION 7.07. Certain Agreements. Concurrently herewith, and as
an essential inducement for Parent's entering into this Agreement, (i) Parent
is entering into the Irrevocable Proxy and Option Agreement with certain
holders of the Company Common Stock, (ii) Parent is entering into the
Securities Purchase and Exchange Agreement with the several purchasers named
therein, (iii) Parent and the Company are entering into the Interim Management
Agreement, (iv) WCAS VII is entering into the Cerplex Note Purchase Agreement
with the several noteholders named therein, (v) the Company and Citibank are
entering into the Forbearance Agreement, (vi) Parent has obtained the Senior
Commitment from the New Lender and (vii) Parent is entering into the Chase
Amendment with Chase.
SECTION 7.08. Company Stock Options. At the Effective Time,
each of the Company Stock Options which is outstanding immediately prior to the
Effective Time shall be assumed by Parent and converted automatically into an
option to purchase shares of Parent Common Stock (a "New Option") in an amount
and at an exercise price determined as provided below:
(a) the number of shares of Parent Common Stock to be
subject to the New Option shall be equal to the product of the number of shares
of Company Common Stock remaining subject (as of immediately prior to the
Effective Time) to the original option and the Exchange Ratio, provided that
any fractional shares of Parent Common Stock resulting from such multiplication
shall be rounded down to the nearest share; and
(b) the exercise price per share of Parent Common Stock
under the New Option shall be equal to the exercise price per share of Company
Common Stock under the original option
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divided by the Exchange Ratio, provided that such exercise price shall be
rounded down to the nearest cent.
The adjustment provided herein with respect to any Options which are "incentive
stock options" (as defined in Section 422 of the Code) shall be and is intended
to be effected in a manner which is consistent with Section 424(a) of the Code.
After the Effective Time, each New Option shall be exercisable and shall vest
upon the same terms and conditions as were applicable to the related Company
Stock Option immediately prior to the Effective Time, except that all
references to the Company shall be deemed to be references to Parent. Parent
shall file with the SEC a Registration Statement on Form S-8 (or other
appropriate form) or a post-effective amendment to the Registration Statement
and shall take any action required to be taken under state securities "blue
sky" laws for purposes of registering all shares of Parent Common Stock
issuable after the Effective Time upon exercise of the New Options, and use all
reasonable efforts to have such registration statement or post-effective
amendment become effective with respect thereto as promptly as practicable
after the Effective Time.
SECTION 7.09. Settlement of Company Stock Purchase Rights.
(a) At the Effective Time, each of the warrants to
purchase Company Common Stock set forth on Schedule 4.02(a) hereto which are
outstanding and which are not being canceled or terminated pursuant to the
Forbearance Agreement or the Stockholders Agreement shall be assumed by Parent
and converted automatically into a warrant to purchase shares of Parent Common
Stock (a "New Warrant") in an amount and at an exercise price determined as
provided below:
(i) the number of shares of Parent Common Stock
to be subject to the New Warrant shall be equal to the product of the
number of shares of Company Common Stock remaining subject (as of
immediately prior to the Effective Time) to the original warrant and the
Exchange Ratio, provided that any fractional shares of Parent Common
Stock resulting from such multiplication shall be rounded to the nearest
share; and
(ii) the exercise price per share of Parent
Common Stock under the New Warrant shall be equal to the exercise price
per share of Company Common Stock under the original warrant divided by
the Exchange Ratio, provided that such exercise price shall be rounded
to the nearest cent.
After the Effective Time, each New Warrant shall be exercisable and shall vest
upon the same terms and conditions as were applicable
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to the related Company warrant immediately prior to the Effective Time, except
that all references to the Company shall be deemed to be references to Parent.
(b) At the Effective Time, each outstanding Company
Stock Purchase Right not listed on Schedule 4.02(a) shall be canceled and
retired and cease to exist, and no securities of Parent or other consideration
shall be delivered in exchange therefor.
SECTION 7.10. Public Announcements. Each of Parent, Sub, and
the Company agrees that it will not issue any press release or otherwise make
any public statement with respect to this Agreement (including the Exhibits
hereto) or the transactions contemplated hereby (or thereby) without the prior
consent of the other party, which consent shall not be unreasonably withheld or
delayed; provided, however, that such disclosure can be made without obtaining
such prior consent if (i) the disclosure is required by law or by obligations
imposed pursuant to any listing agreement with any national securities exchange
and (ii) the party making such disclosure has first used its reasonable
best efforts to consult with (but not obtain the consent of) the other party
about the form and substance of such disclosure.
SECTION 7.11. Directors' and Officers' Indemnification and
Insurance.
(a) All rights to indemnification, advancement of
litigation expenses and limitation of personal liability existing in favor of
the directors and officers of the Company under the provisions existing on the
date hereof in the Company's Certificate of Incorporation, By-Laws or by
contract shall, with respect to any matter existing or occurring at or prior to
the Effective Time (including the transactions contemplated by this Agreement),
survive the Effective Time, and, as of the Effective Time, the Surviving
Corporation and Parent shall assume all obligations of the Company in respect
thereof as to any claim or claims asserted prior to or within a six-year period
immediately after the Effective Time.
(b) For a period of three years after the Effective
Time, the Surviving Corporation and Parent shall cause to be maintained in
effect the current policies of directors and officers' liability insurance
maintained by the Company (provided that the Surviving Corporation and Parent
may substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are no less advantageous to former
officers and directors of the Company with respect to claims arising from facts
or events which occurred before the Effective Time); provided, however, that in
no event shall the Surviving Corporation or Parent be required to expend
pursuant to this Section 7.11(b) more than an amount equal to 150% of current
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annual premiums paid by the Company for such insurance (the "Maximum Amount")
(which premiums the Company represents and warrants to be approximately
$312,000 in the aggregate).
(c) The obligations under this Section 7.11 shall be
transferred to, and assumed in writing by, the successor entity in the event of
a sale of substantially all of the assets, merger or recapitalization of Parent
during the applicable time periods referenced herein.
SECTION 7.12. Expenses. Except as otherwise set forth in
Section 9.02(b), whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement (including the Exhibits
hereto) and the transactions contemplated hereby (and thereby) shall be paid by
the party incurring such expenses, except that (i) the filing fee in connection
with filings under the HSR Act, (ii) the expenses incurred in connection with
printing the Registration Statement and the Proxy Statement and (iii) the
filing fee with the SEC relating to the Registration Statement or the Proxy
Statement will be shared equally by Parent and the Company. In the event the
Merger is consummated, Parent shall cause the Company to pay, at the Closing
and in accordance with agreements entered into by the Company, the fees and
expenses incurred by the Company in connection with the transactions
contemplated hereby that are listed in Schedule 7.12.
SECTION 7.13. Supplemental Disclosure. The Company shall give
prompt notice to Parent, and Parent shall give prompt notice to the Company, of
(i) the occurrence or non-occurrence, of any event of which such party is aware
the occurrence, or non-occurrence, of which would result in the breach of (x)
any representation or warranty by such party contained in this Agreement or (y)
any covenant, condition or agreement by such party contained in this Agreement
and (ii) any failure of the Company or Parent, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 7.13 shall not have any effect for the purpose of
determining the satisfaction of the conditions set forth in Article VIII of
this Agreement or otherwise limit or affect the remedies available hereunder to
any party.
SECTION 7.14. Public Reporting; Continued Listing. Parent shall
use its best efforts (i) to maintain the registration of its Common Stock under
▇▇▇▇▇▇▇ ▇▇ ▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇, (▇▇) to make and keep public information available
as those terms are understood and defined in SEC Rule 144 and (iii) to maintain
the listing of its Common Stock on the OTC Bulletin Board, in each case for a
minimum of three years from the Effective Time.
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ARTICLE VIII.
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 8.01. Conditions to Each Party's Obligation to Effect
the Merger. The respective obligations of each party to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) HSR Approval. Any waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated, and no action shall have been instituted by the Department of
Justice or Federal Trade Commission challenging or seeking to enjoin the
consummation of this transaction, which action shall have not been withdrawn or
terminated.
(b) Stockholder Approval. This Agreement and the
transactions contemplated hereby shall have been approved and adopted by (i)
the requisite vote (as described in Section 4.18) of the stockholders of the
Company and (ii) by the requisite vote (as described in Section 5.14) of the
stockholders of Parent, in each case, in accordance with applicable law.
(c) Registration Statement. The Registration Statement
shall have been declared effective under the Securities Act and shall not be
the subject of any stop order or proceeding by the SEC seeking a stop order.
(d) No Order. No Governmental Entity (including a
federal or state court) of competent jurisdiction 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 materially restricts, prevents or
prohibits consummation of the Merger or any transaction contemplated by this
Agreement; provided, however, that the parties shall use their reasonable best
efforts to cause any such decree, judgment, injunction or other order to be
vacated or lifted.
(e) Approvals. Other than the filing of Merger
documents in accordance with the DGCL, all authorizations, consents, waivers,
orders or approvals of, or declarations or filings with, or expirations of
waiting periods imposed by, any Governmental Entity, the failure of which to
obtain, make or occur would have a material adverse effect at or after the
Effective Time on (i) Parent or (ii) the Surviving Corporation shall have been
obtained, been filed or have occurred.
SECTION 8.02. Conditions to Obligations of Parent and Sub to
Effect the Merger. The obligations of Parent and Sub to effect the Merger
shall be subject to the satisfaction at or
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prior to the Effective Time of the following additional conditions, unless
waived in writing by Parent:
(a) Representations and Warranties. All repre-
sentations and warranties of the Company that are qualified with reference to a
Company Material Adverse Effect or materiality shall be true and correct in all
respects and all representations and warranties that are not so qualified shall
be true and correct in all material respects, in each case as of the date of
this Agreement, except to the extent such representations and warranties speak
as of an earlier date.
(b) Performance of Obligations of the Company. Each of
the Company and its Subsidiaries shall have performed in all material respects
all obligations (including those under Section 7.13) required to be performed
by it under this Agreement at or prior to the Effective Time, and Parent shall
have received a certificate signed on behalf of the Company by a proper officer
of the Company to such effect.
(c) Tax Opinion of Counsel. Parent shall have received
an opinion of ▇▇▇▇▇▇ & ▇▇▇▇ LLP, tax counsel to Parent, in form and substance
reasonably satisfactory to Parent, dated as of the Effective Time,
substantially to the effect that the Merger will constitute a reorganization
for federal income tax purposes within the meaning of Section 368(a) of the
Code and that, accordingly, no gain or loss will be recognized by the Company,
Parent or Sub as a result of the Merger.
(d) Letters of Resignation. Parent and Sub shall have
received letters of resignation addressed to the Company from the members of
the Company's Board of Directors and letters of resignation addressed to each
of the Company's Subsidiaries from the members of such Subsidiary's board of
directors, which resignations shall be effective as of the Effective Time.
(e) Dissenting Shares. The aggregate number of shares
of Company Common Stock into which all Dissenting Shares are convertible shall
not constitute more than 5% of the number of shares of Company Common Stock
outstanding as of immediately prior to the Effective Time (calculated assuming
full conversion of all then issued and outstanding shares of Company Preferred
Stock but no other dilution).
(f) Debt Financing. Parent shall have obtained at
least $17,000,000 of proceeds from the New Senior Loan on terms reasonably
acceptable to Parent, as determined in good faith by Parent.
(g) Repayment of Indebtedness. Citibank shall have
complied with the Forbearance Agreement in all material respects and the
Company shall have satisfied in full its obligations
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under the Cerplex Credit Agreement, the Liens granted thereunder shall have
been discharged and the Cerplex Credit Agreement shall have been terminated.
SECTION 8.03. Conditions to Obligation of the Company to Effect
the Merger. The obligation of the Company to effect the Merger shall be
subject to the satisfaction at or prior to the Effective Time of the following
additional conditions, unless waived in writing by the Company:
(a) Representations and Warranties. All repre-
sentations and warranties of Parent contained in this Agreement that are
qualified with reference to a Parent Material Adverse Effect or materiality
shall be true and correct in all respects and all representations and
warranties that are not so qualified shall be true and correct in all material
respects as of the date of this Agreement, and, except to the extent such
representations and warranties speak as of an earlier date.
(b) Performance of Obligations of Parent and Sub. Each
of Parent and Sub shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the
Effective Time, and the Company shall have received a certificate signed on
behalf of Parent by the chief executive officer or the chief financial officer
of Parent to such effect.
(c) Tax Opinion of Counsel. The Company shall have
received an opinion of ▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇, LLP ("▇▇▇▇▇▇▇") in form and
substance reasonably satisfactory to the Company, dated as of the Effective
Time, substantially to the effect that the Merger will constitute a
reorganization for federal income tax purposes within the meaning of Section
368(a) of the Code and that accordingly:
(i) no gain or loss will be recognized by the
stockholders of the Company who exchange their Company Stock solely for
shares of Parent Common Stock pursuant to the Merger (except to the
extent that cash is received in lieu of a fractional share interest);
(ii) the aggregate basis of the shares of Parent
Common Stock received by stockholders of the Company in the Merger will
be the same as the aggregate basis of the Company Stock surrendered in
exchange therefor (reduced by any amount allocable to a fractional share
interest for which cash is received);
(iii) the holding period of the shares of Parent
Common Stock received by stockholders of the Company in the Merger will
include the period during which the shares of Company Stock surrendered
in exchange
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therefor were held, provided such shares were held as a capital asset at
the Effective Time; and
(iv) no gain or loss will be recognized by the
Company, Parent or Sub as a result of the Merger.
In rendering such opinion ▇▇▇▇▇▇▇ may require and rely upon
representations contained in certificates of officers of Parent, Sub and the
Company, certain principal stockholders and others; provided, however, that the
condition set forth in this Section 8.03(c) shall be deemed satisfied if
▇▇▇▇▇▇▇ is unable to render such opinion solely by reason of any of the holders
of the Company Common Stock refusing or failing to provide ▇▇▇▇▇▇▇ with
requested representations.
(d) Directors. Parent shall have appointed ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇ to Parent's Board of Directors.
(e) Debt Financing. Parent shall have obtained at
least $17,000,000 of proceeds in respect of the New Senior Loan and the
Securities Purchase and Exchange Agreement shall have been consummated.
ARTICLE IX.
TERMINATION
SECTION 9.01. Termination. This Agreement may be terminated at
any time prior to the Effective Time, whether before or after approval by the
stockholders of Parent or the Company:
(a) by mutual consent of Parent and the Company;
(b) by either Parent or the Company, if (i) the Merger
shall not have been consummated before June 30, 1998, or (ii) the approval of
the stockholders of the Company required by Section 4.18 hereof shall not have
been obtained at a meeting duly convened therefor or any adjournment thereof;
provided that in the case of any such termination pursuant to this Section
9.01(b), the failure to so consummate the Merger by such date or to obtain such
stockholder approval shall not have been caused by the action or failure to act
of the party (or its Subsidiaries) seeking to terminate this Agreement, which
action or failure to act constitutes a breach of this Agreement);
(c) by either Parent or the Company, if any permanent
injunction or action by any Governmental Entity of competent jurisdiction
preventing the consummation of the Merger shall have become final and
nonappealable; provided, however, that the party seeking to terminate this
Agreement pursuant to
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this Section 9.01(c) shall have used all reasonable efforts to remove such
injunction or overturn such action;
(d) by Parent, if (i) there has been breach of any
representations or warranties of the Company set forth herein the effect of
which is a Company Material Adverse Effect, (ii) there has been a breach in any
material respect of any of the covenants or agreements set forth in this
Agreement on the part of the Company, which breach is not curable or, if
curable, is not cured within 30 days after written notice of such breach is
given by Parent to the Company, or (iii) the Board of Directors of the Company
(x) withdraws or amends or modifies in a manner adverse to Parent or Sub its
recommendation or approval in respect of this Agreement or the Merger, (y)
makes any recommendation with respect to an Acquisition Transaction (including
making no recommendation or stating an inability to make a recommendation),
other than a recommendation to reject such Acquisition Transaction, or (z)
takes any material action that would be prohibited by Section 7.02; and
(e) by the Company, if (i) there has been a breach of
any representations or warranties of Parent set forth herein the effect of
which is a Parent Material Adverse Effect, (ii) there has been a breach in any
material respect of any of the covenants or agreements set forth in this
Agreement on the part of Parent, which breach is not curable or, if curable, is
not cured within 30 days after written notice of such breach is given by the
Company to Parent or (iii) such termination is necessary to allow the Company
to enter into an Acquisition Transaction that its Board of Directors has
determined in good faith, by a majority vote after consultation with its
financial advisors and based upon the advice of outside legal counsel to the
Company, is more favorable to the stockholders of the Company than the Merger
contemplated by this Agreement (provided that the termination described in this
clause (iii) shall not be effective unless and until the Company shall have
paid to Parent in full the fee and expense reimbursement described in Section
9.02(b)).
SECTION 9.02. Effect of Termination.
(a) In the event of termination of this Agreement
pursuant to this Article IX, the Merger shall be deemed abandoned and this
Agreement shall forthwith become void, without liability on the part of any
party hereto, except as provided in this Section 9.02, Section 7.01 and Section
7.12, and except that nothing herein shall relieve any party from liability for
any breach of this Agreement.
(b) If (x) Parent shall have terminated this Agreement
pursuant to Section 9.01(d)(iii), (y) the Company shall have terminated this
Agreement pursuant to Section 9.01(e)(iii) or (z) either (1) Parent or the
Company shall have terminated
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this Agreement pursuant to Section 9.01(b)(ii) or (2) Parent shall have
terminated this Agreement pursuant to Section 9.01(d)(ii) and, prior to or
within one (1) year after any termination described in this clause (z), the
Company (or any of its Subsidiaries) shall have directly or indirectly entered
into a definitive agreement for, or shall have consummated, an Acquisition
Transaction, then, in any of such cases, the Company shall pay Parent (A) a
termination fee of one million dollars ($1,000,000), plus (B) an amount, not in
excess of five hundred thousand dollars ($500,000), equal to Parent's actual,
documented out-of-pocket expenses directly attributable to the negotiation and
execution of this Agreement and the transactions contemplated hereby and the
Merger; provided, however, that no fee or expense reimbursement shall be paid
pursuant to this Section 9.02(b) if Parent shall be in material breach of its
obligations hereunder. Any fees or amounts payable under this Section 9.02(b)
shall be paid in same day funds no later than (i) two business days after a
termination described in clause (x) of this Section 9.02(b), (ii) concurrently
with a termination described in clause (y) of this Section 9.02(b) or (ii)
concurrently with the consummation of such Acquisition Transaction, in the case
of a termination described in clause (z) of this Section 9.02(b).
ARTICLE X.
GENERAL PROVISIONS
SECTION 10.01. Amendment and Modification. At any time prior to
the Effective Time, this Agreement may be amended, modified or supplemented
only by written agreement (referring specifically to this Agreement) of Parent,
Sub and the Company with respect to any of the terms contained herein;
provided, however, that after any approval and adoption of this Agreement by
the stockholders of Parent or the Company, no such amendment, modification or
supplementation shall be made which under applicable law requires the approval
of such stockholders, without the further approval of such stockholders.
SECTION 10.02. Waiver. At any time prior to the Effective Time,
Parent and Sub, on the one hand, and the Company, on the other hand, may (i)
extend the time for the performance of any of the obligations or other acts of
the other, (ii) waive any inaccuracies in the representations and warranties of
the other contained herein or in any documents delivered pursuant hereto and
(iii) waive compliance by the other with any of the agreements or conditions
contained herein which may legally be waived. Any such extension or waiver
shall be valid only if set forth in an instrument in writing specifically
referring to this Agreement and signed on behalf of such party.
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SECTION 10.03. Survivability; Investigations. The respective
representations and warranties of Parent and the Company contained herein or in
any certificates or other documents delivered prior to or as of the Effective
Time (i) shall not be deemed waived or otherwise affected by any investigation
made by any party hereto and (ii) shall not survive beyond the Effective Time.
The covenants and agreements of the parties hereto (including the Surviving
Corporation after the Merger) shall survive the Effective Time without
limitation (except for those which, by their terms, contemplate a shorter
survival period).
SECTION 10.04. Notices. All notices and other communications
hereunder shall be in writing and shall be delivered personally or by next-day
courier or telecopied with confirmation of receipt, to the parties at the a
dresses specified below (or at such other address for a party as shall be
specified by like notice; provided that notices of a change of address shall be
effective only upon receipt thereof). Any such notice shall be effective upon
receipt, if personally delivered or telecopied, or one day after delivery to a
courier for next-day delivery.
(a) If to Parent or Sub, to:
Aurora Electronics, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
with copies to:
Reboul, MacMurray, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Kristol
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
(b) if to the Company, to:
The Cerplex Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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with copies to:
▇▇▇▇▇▇▇ Phleger & ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy Number: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Esq.
SECTION 10.05. Descriptive Headings; Interpretation. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any why the meaning or interpretation of this Agreement.
References in this Agreement to Sections, Schedules, Exhibits or Articles mean
a Section, Schedule, Exhibit or Article of this Agreement unless otherwise
indicated. References to this Agreement shall be deemed to include the
Exhibits and Schedules hereto, unless the context otherwise requires. The term
"person" shall mean and include an individual, a partnership, a joint venture,
a corporation, a trust, a Governmental Entity or an unincorporated
organization.
SECTION 10.06. Entire Agreement; Assignment. This Agreement
(including the Schedules, Exhibits and other documents and instruments referred
to herein), together with the Irrevocable Proxy and Option Agreement and the
Confidentiality Agreements, constitute the entire agreement and supersede all
other prior agreements and understandings, both written and oral, among the
parties or any of them, with respect to the subject matter hereof. This
Agreement is not intended to confer upon any person not a party hereto any
rights or remedies hereunder except with respect to the obligations to the
individuals and entities under Section 7.11 and the obligations to individuals
and entities under Section 7.14. This Agreement shall not be assigned by
operation of law or otherwise; provided that Parent or Sub may assign its
rights and obligations hereunder to a direct or indirect subsidiary of Parent,
but no such assignment shall relieve Parent or Sub, as the case may be, of its
obligations hereunder.
SECTION 10.07. Governing Law; Jurisdiction. This Agreement
shall be governed by and construed in accordance with the laws of the State of
Delaware without giving effect to the provisions thereof relating to conflicts
of law. Each party hereto hereby irrevocably submits to the exclusive
jurisdiction of the Court of Chancery in the State of Delaware in any action,
suit or proceeding arising in connection with this Agreement, and agrees that
any such action, suit or proceeding shall be brought only in such court (and
waives any objection based on forum non conveniens or any other objection to
venue therein).
SECTION 10.08. Severability. In case any one or more of the
provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect against a party hereto,
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the validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired thereby and such
invalidity, illegality or unenforceability shall only apply as to such party in
the specific jurisdiction where such judgment shall be made.
SECTION 10.09. Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed to be an original but
all of which shall constitute one and the same agreement.
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IN WITNESS WHEREFORE, each of Parent, Sub and the Company has caused
this Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
AURORA ELECTRONICS, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman
▇▇▇▇▇ ACQUISITION CORP.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chairman
THE CERPLEX GROUP, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chairman