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AGREEMENT AND PLAN OF MERGER
DATED AS OF MARCH 18, 1997
AMONG
AMERICAN LIST CORPORATION,
▇▇▇▇▇▇ COMMUNICATIONS, INC.
AND
▇▇▇▇▇▇ Z ACQUISITION, INC.
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TABLE OF CONTENTS
ARTICLE 1 THE MERGER.......................................................................... 2
SECTION 1.1. The Merger.............................................................. 2
SECTION 1.2. Effective Time.......................................................... 2
SECTION 1.3. Closing of the Merger................................................... 2
SECTION 1.4. Effects of the Merger................................................... 2
SECTION 1.5. Certificate of Incorporation and Bylaws................................. 3
SECTION 1.6. Directors............................................................... 3
SECTION 1.7. Officers................................................................ 3
SECTION 1.8. Conversion of Shares.................................................... 3
SECTION 1.9. Exchange of Certificates................................................ 4
SECTION 1.10. Stock Options........................................................... 7
ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF THE
COMPANY............................................................................. 8
SECTION 2.1. Organization and Qualification; Subsidiaries............................ 8
SECTION 2.2. Capitalization of the Company and Its Subsidiaries...................... 9
SECTION 2.3. Authority Relative to This Agreement; Consents and
Approvals............................................................... 11
SECTION 2.4. SEC Reports; Financial Statements....................................... 11
SECTION 2.5. Information Supplied.................................................... 12
SECTION 2.6. Consents and Approvals; No Violations................................... 13
SECTION 2.7. No Default.............................................................. 13
SECTION 2.8. No Undisclosed Liabilities; Absence of Changes.......................... 14
SECTION 2.9. Litigation.............................................................. 14
SECTION 2.10. Compliance with Applicable Law.......................................... 15
SECTION 2.11. Employee Plans.......................................................... 15
SECTION 2.12. Environmental Laws and Regulations...................................... 16
SECTION 2.13. Tax Matters............................................................. 16
SECTION 2.14. Intangible Property..................................................... 18
SECTION 2.15. Opinion of Financial Adviser............................................ 19
SECTION 2.16. Brokers................................................................. 19
SECTION 2.18. Material Contracts...................................................... 19
SECTION 2.19. Pooling of Interests.................................................... 20
SECTION 2.20. Disclosure.............................................................. 21
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ARTICLE 3 REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION........................................................... 21
SECTION 3.1. Organization............................................................ 21
SECTION 3.2. Capitalization of Parent and Its Subsidiaries........................... 22
SECTION 3.3. Authority Relative to This Agreement.................................... 23
SECTION 3.4. SEC Reports; Financial Statements....................................... 23
SECTION 3.5. Information Supplied.................................................... 24
SECTION 3.6. Consents and Approvals; No Violations................................... 24
SECTION 3.7. No Default.............................................................. 25
SECTION 3.8. No Undisclosed Liabilities; Absence of Changes.......................... 25
SECTION 3.9. Litigation.............................................................. 26
SECTION 3.10. Compliance with Applicable Law.......................................... 26
SECTION 3.11. Environmental Laws and Regulations...................................... 27
SECTION 3.12. Tax Matters............................................................. 27
SECTION 3.13. Intangible Property..................................................... 29
SECTION 3.14. Brokers................................................................. 29
SECTION 3.15. Pooling of Interests.................................................... 29
SECTION 3.16. Disclosure.............................................................. 29
ARTICLE 4 COVENANTS........................................................................... 30
SECTION 4.1. Conduct of Business of the Company...................................... 30
SECTION 4.2. Conduct of Business of Parent........................................... 33
SECTION 4.3. Preparation of S-4 and the Proxy Statement.............................. 33
SECTION 4.4. Other Potential Acquirors............................................... 34
SECTION 4.5. Letters of Accountants.................................................. 35
SECTION 4.6. Meeting................................................................. 35
SECTION 4.7. Stock Exchange Listing.................................................. 36
SECTION 4.8. Access to Information................................................... 36
SECTION 4.9. Additional Agreements; Best Efforts..................................... 36
SECTION 4.10. Consents................................................................ 37
SECTION 4.11. Public Announcements.................................................... 37
SECTION 4.12. Indemnification; Directors' and Officers' Insurance..................... 38
SECTION 4.13. Notification of Certain Matters......................................... 39
SECTION 4.14. Pooling................................................................. 39
SECTION 4.15. Tax-Free Reorganization Treatment....................................... 40
SECTION 4.16. Employment Benefits..................................................... 40
SECTION 4.17. Company Affiliates...................................................... 41
SECTION 4.18. SEC Filings............................................................. 41
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SECTION 4.19. Guarantee of Performance................................................ 41
ARTICLE 5 CONDITIONS TO CONSUMMATION OF THE MERGER............................................ 42
SECTION 5.1. Conditions to Each Party's Obligations to Effect the
Merger.................................................................. 42
SECTION 5.2. Conditions to the Obligations of the Company............................ 42
SECTION 5.3. Conditions to the Obligations of Parent and
Acquisition............................................................. 43
ARTICLE 6 TERMINATION; AMENDMENT; WAIVER...................................................... 45
SECTION 6.1. Termination............................................................. 45
SECTION 6.2. Effect of Termination................................................... 46
SECTION 6.3. Fees and Expenses....................................................... 46
SECTION 6.4. Amendment............................................................... 47
SECTION 6.5. Extension; Waiver....................................................... 47
ARTICLE 7 MISCELLANEOUS....................................................................... 48
SECTION 7.1. Nonsurvival of Representations and Warranties........................... 48
SECTION 7.2. Entire Agreement; Assignment............................................ 48
SECTION 7.3. Validity................................................................ 48
SECTION 7.4. Notices................................................................. 48
SECTION 7.5. Governing Law........................................................... 49
SECTION 7.6. Descriptive Headings.................................................... 49
SECTION 7.7. Parties in Interest..................................................... 49
SECTION 7.8. Severability............................................................ 50
SECTION 7.9. Specific Performance.................................................... 50
SECTION 7.10. Brokers................................................................. 50
SECTION 7.11. Counterparts............................................................ 50
EXHIBIT A - Employment Agreements
EXHIBIT B - Stockholders Agreement
EXHIBIT C - Affiliate Letter
EXHIBIT D - Tax Certificate of Company
EXHIBIT E - Tax Certificate of Parent and Acquisition
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TABLE OF DEFINED TERMS
CROSS REFERENCE
TERM IN AGREEMENT PAGE
AA.................................................... Section 4.5.............................. 35
Acquisition........................................... Preamble................................. 1
Affiliate Letter...................................... Recitals................................. 1
Average Final Closing Price........................... Section 1.8(a)........................... 4
Certificate of Merger................................. Section 1.2.............................. 2
Certificates.......................................... Section 1.9(b)........................... 5
Claim................................................. Section 4.12(a).......................... 38
Closing............................................... Section 1.3.............................. 2
Closing Date.......................................... Section 1.3.............................. 2
Code.................................................. Recitals ................................ 1
Company............................................... Preamble ................................ 1
Company Affiliate..................................... Recitals ................................ 1
Company Board......................................... Section 2.3(a)........................... 11
Company Disclosure Schedule........................... Section 2.1(b)........................... 9
Company Option(s)..................................... Section 1.10(a).......................... 7
Company Permits....................................... Section 2.10............................. 15
Company Plan.......................................... Section 1.10(a).......................... 7
Company SEC Reports................................... Section 2.4.............................. 12
Company Securities.................................... Section 2.2(a)........................... 10
Contracts............................................. Section 2.18(a).......................... 20
Current Premium....................................... Section 4.12(b).......................... 38
DGCL.................................................. Section 1.1.............................. 2
Effective Time........................................ Section 1.2.............................. 2
Employment Agreements................................. Recitals................................. 1
Environmental Claim................................... Section 2.12(a).......................... 16
Environmental Laws.................................... Section 2.12(a).......................... 16
ERISA................................................. Section 2.11............................. 15
Exchange Act.......................................... Section 2.2(c)........................... 10
Exchange Agent........................................ Section 1.9(a)........................... 4
Exchange Fund......................................... Section 1.9(a)........................... 5
Financial Adviser..................................... Section 2.15............................. 19
GAAP.................................................. Section 2.4.............................. 12
Governmental Entity................................... Section 2.6.............................. 13
HSR Act............................................... Section 2.6.............................. 13
Lien.................................................. Section 2.2(b)........................... 10
Material Adverse Effect............................... Sections 2.1(a),3.1(a) .................. 8,21
Merger................................................ Section 1.1.............................. 2
Non-Disclosure Agreement.............................. Section 2.14............................. 19
NYSE.................................................. Section 1.8(b)........................... 4
Parent................................................ Preamble................................. 1
Parent Common Stock................................... Section 1.8(a)........................... 3
Parent Options........................................ Section 1.10(a).......................... 7
Parent Permits........................................ Section 3.10............................. 26
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Parent SEC Reports.................................... Section 3.4.............................. 23
Parent Securities..................................... Section 3.2(a)........................... 22
Proxy Statement....................................... Section 2.5.............................. 12
S-4................................................... Section 2.5.............................. 12
SEC................................................... Section 2.4.............................. 11
Secretary of State.................................... Section 1.2.............................. 2
Securities Act........................................ Recitals................................. 1
Share(s).............................................. Section 1.8(a)........................... 3
Stockholders Agreement................................ Recitals................................. 1
Subsidiary............................................ Section 2.1(a)........................... 9
Superior Proposal..................................... Section 4.4(b)........................... 35
Surviving Corporation................................. Section 1.1.............................. 2
Taxes................................................. Section 2.13(b).......................... 18
Third Party .......................................... Section 6.1(d)........................... 46
Third Party Acquisition............................... Section 6.1(d)........................... 46
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER, dated as of March 18, 1997,
is among AMERICAN LIST CORPORATION, a Delaware corporation (the "Company"),
▇▇▇▇▇▇ COMMUNICATIONS, INC., a Delaware corporation ("Parent"), and ▇▇▇▇▇▇ Z
ACQUISITION, INC., a Delaware corporation and a wholly owned subsidiary of
Parent ("Acquisition").
WHEREAS, the Boards of Directors of the Company, Parent and
Acquisition each have, in light of and subject to the terms and conditions set
forth herein, (i) determined that the Merger (as defined in Section 1.1) is fair
to their respective stockholders and in the best interests of such stockholders
and (ii) approved the Merger in accordance with this Agreement;
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");
WHEREAS, concurrently with the execution hereof and as a
condition to Parent's and Acquisition's willingness to enter into this Agreement
(i) the Company and ▇▇▇▇▇▇ ▇▇▇▇▇▇, the President and Chief Executive Officer of
the Company, ▇▇▇▇▇▇ ▇▇▇▇▇▇, the Vice President-Finance of the Company, and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, the Vice President-Marketing of the Company, respectively,
have entered into Employment Agreements (the "Employment Agreements") attached
hereto as Exhibits ▇-▇, ▇-▇ and A-3 and (ii) certain holders of Shares (as
defined in Section 1.8(a)) are entering into a Stockholders Agreement, a copy of
which is attached hereto as Exhibit B (the "Stockholders Agreement");
WHEREAS, it is intended that the Merger shall be recorded for
accounting purposes as a "pooling-of-interests"; and
WHEREAS, the Company has delivered to Parent a letter
identifying all persons (each, a "Company Affiliate") who are, at the date
hereof, "affiliates" of the Company for purposes of Rule 145 under the
Securities Act of 1933, as amended (the "Securities Act"), and each Company
Affiliate has delivered to Parent a letter in the form attached hereto as
Exhibit C (each, an "Affiliate Letter") relating to (i) the transfer, prior to
the Effective Time (as defined in Section 1.8(a)), of the Shares beneficially
owned by such Company Affiliate on the date hereof, and (ii) the transfer
of the shares of Parent Common Stock (as defined in Section 1.8(a)) to be
received by such Company Affiliate in the Merger.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, the Company, Parent and Acquisition hereby
agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1. The Merger. At the Effective Time and upon the
terms and subject to the conditions of this Agreement and the Merger Agreement
and in accordance with the Delaware General Corporation Law (the "DGCL"),
Acquisition shall be merged with and into the Company (the "Merger"). Following
the Merger, the Company shall continue as the surviving corporation (the
"Surviving Corporation") and the separate corporate existence of Acquisition
shall cease.
SECTION 1.2. Effective Time. Subject to the terms and
conditions set forth in this Agreement, the Company, Parent and Acquisition will
cause a certificate of Merger (the "Certificate of Merger") with respect to the
Merger to be executed and filed with the Secretary of State of the State of
Delaware (the "Secretary of State") as provided in the DGCL. The Merger shall
become effective on the date the Certificate of Merger has been duly filed with
the Secretary of State or at such date as is agreed between the parties and
specified in the Certificate of Merger, and such time is hereinafter referred to
as the "Effective Time."
SECTION 1.3. Closing of the Merger. The closing of the Merger
(the "Closing") will take place at a time and on a date to be specified by the
parties, which shall be no later than the second business day after satisfaction
of the latest to occur of the conditions set forth in Article 5 (the "Closing
Date"), at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, unless another time, date or place is agreed to in writing
by the parties hereto.
SECTION 1.4. Effects of the Merger. The Merger shall have the
effects set forth in the DGCL. Without limiting the generality of the foregoing,
and subject thereto, at the Effective Time, all the properties, rights,
privileges, powers and franchises of the Company and Acquisition shall vest in
the Surviving Corporation, and
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all debts, liabilities and duties of the Company and Acquisition shall become
the debts, liabilities and duties of the Surviving Corporation.
SECTION 1.5. Certificate of Incorporation and Bylaws. The
Certificate of Incorporation of the Company in effect at the Effective Time
shall be the Certificate of Incorporation of the Surviving Corporation until
amended in accordance with applicable law. The Bylaws of the Company in effect
at the Effective Time shall be the Bylaws of the Surviving Corporation until
amended in accordance with applicable law.
SECTION 1.6. Directors. The directors of Acquisition at the
Effective Time shall be the initial directors of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and Bylaws of
the Surviving Corporation until such director's successor is duly elected or
appointed and qualified.
SECTION 1.7. Officers. The officers of the Company at the
Effective Time shall be the initial officers of the Surviving Corporation, each
to hold office in accordance with the Certificate of Incorporation and Bylaws of
the Surviving Corporation until such officer's successor is duly elected or
appointed and qualified.
SECTION 1.8. Conversion of Shares.
(a) At the Effective Time, each share of common stock, par
value $0.01 per share, of the Company (individually a "Share" and collectively,
the "Shares") issued and outstanding immediately prior to the Effective Time
(other than (i) Shares held by any subsidiary of the Company and (ii) Shares
held by Parent, Acquisition or any other Subsidiary of Parent) shall, by virtue
of the Merger and without any action on the part of Acquisition, the Company or
the holder thereof, be converted into and shall represent the right to receive
the number of fully paid and nonassessable shares of common stock, $0.001 par
value per share, of Parent ("Parent Common Stock") equal to the Exchange Ratio.
The "Exchange Ratio" shall be determined prior to the Closing Date based on the
Average Final Closing Price (as defined below) in the following manner:
(i) if the Average Final Closing Price equals or
exceeds $32.00, the Exchange Ratio shall be 1.00;
(ii) if the Average Final Closing Price equals or
exceeds $28.00 but is less than $32.00, the Exchange Ratio
shall equal the quotient
3
(rounded to four decimal places) of $32.00 divided by the
Average Final Closing Price;
(iii) if the Average Final Closing Price equals or
exceeds $26.00 and is less than $28.00, the Exchange Ratio
shall be 1.14; and
(iv) if the Average Final Closing Price is less than
$26.00, the Exchange Ratio shall equal the quotient (rounded
to four decimal places) of $29.71 divided by the Average Final
Closing Price (provided, in the event the Final Average
Closing Price is less than $24.00, that this Agreement shall
not have been terminated pursuant to Section 6.1(c)(iv) or
6.1(d)(v)).
As used herein, "Average Final Closing Price" shall mean the average of the
closing prices (or, if the Parent Common Stock should not trade on any Trading
Day (as hereinafter defined), the average of the high bid and low asked prices
therefor on such day), regular way, per share of Parent Common Stock, as
reported on the New York Stock Exchange ("NYSE") Composite Tape during the
twenty consecutive Trading Days ending on (and including) the third Trading Day
prior to the Effective Time. "Trading Day" means a day on which the NYSE is open
for trading. The multiple of Parent Common Stock represented by the Exchange
Ratio shall be the Merger Consideration.
(b) At the Effective Time, each outstanding share of the
common stock, par value $0.01 per share, of Acquisition shall be converted into
one share of common stock, par value $0.01 per share, of the Surviving
Corporation.
(c) At the Effective Time, each Share held by Parent,
Acquisition or any subsidiary of Parent, Acquisition or the Company immediately
prior to the Effective Time shall, by virtue of the Merger and without any
action on the part of Acquisition, the Company or the holder thereof, be
canceled, retired and cease to exist and no payment shall be made with respect
thereto.
SECTION 1.9. Exchange of Certificates.
(a) As of the Effective Time, Parent shall make available to
American Stock Transfer Company or another bank or trust company designated by
Parent and reasonably acceptable to the Company (the "Exchange Agent"), for the
benefit of the holders of Shares, for exchange in accordance with this Article
I, through
4
the Exchange Agent: (i) certificates representing the appropriate number of
shares of Parent Common Stock and (ii) cash to be paid in lieu of fractional
shares of Parent Common Stock (such shares of Parent Common Stock and such cash
are hereinafter referred to as the "Exchange Fund").
(b) As soon as reasonably practicable and in any event within
five (5) business days after the Effective Time, the Exchange Agent shall mail
to each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding Shares (the "Certificates")
whose shares were converted into the right to receive shares of Parent Common
Stock pursuant to Section 1.8: (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon delivery of the Certificates to the Exchange Agent and
shall be in such form and have such other provisions as Parent and the Company
may reasonably specify) and (ii) instructions for use in effecting the surrender
of the Certificates in exchange for certificates representing shares of Parent
Common Stock. Upon surrender of a Certificate for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by Parent and
Acquisition (provided that the Company shall have the right to consent, which
consent shall not be unreasonably withheld, to any such other appointment made
prior to the Effective Time), together with such letter of transmittal, duly
executed, the holder of such Certificate shall receive in exchange therefor a
certificate representing that number of whole shares of Parent Common Stock and,
if applicable, a check representing the cash consideration to which such holder
may be entitled on account of a fractional share of Parent Common Stock, which
such holder has the right to receive pursuant to the provisions of this Article
I, and the Certificate so surrendered shall forthwith be canceled. In the event
of a transfer of ownership of Shares which is not registered in the transfer
records of the Company, a certificate representing the proper number of shares
of Parent Common Stock may be issued to a transferee if the Certificate
representing such Shares is presented to the Exchange Agent, accompanied by all
documents required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 1.9, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the certificate representing shares of Parent Common Stock and cash in
lieu of any fractional shares of Parent Common Stock as contemplated by this
Section 1.9.
(c) No dividends or other distributions declared or made after
the Effective Time with respect to Parent Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered Certificate
with respect
5
to the shares of Parent Common Stock represented thereby and no cash payment in
lieu of fractional shares shall be paid to any such holder pursuant to Section
1.9(f) until the holder of record of such Certificate shall surrender such
Certificate. Subject to the effect of applicable laws, following surrender of
any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of any
cash payable in lieu of a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 1.9(f) and the amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole shares of Parent Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of Parent
Common Stock.
(d) In the event that any certificate for Shares shall have
been lost, stolen or destroyed, the Exchange Agent shall issue in exchange
therefor, upon the making of an affidavit of that fact by the holder thereof
such shares of Parent Common Stock and cash in lieu of fractional shares, if
any, as may be required pursuant to this Agreement; provided, however, that
Parent may, in its discretion, require the delivery of a suitable bond or
indemnity.
(e) All shares of Parent Common Stock issued upon the
surrender for exchange of Shares in accordance with the terms hereof (including
any cash paid pursuant to Section 1.9(c) or 1.9(f)) shall be deemed to have been
issued in full satisfaction of all rights pertaining to such Shares, and there
shall be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the Shares which were outstanding immediately prior to
the Effective Time. If, after the Effective Time, Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and exchanged
as provided in this Article I.
(f) No fractions of a share of Parent Common Stock shall be
issued in the Merger, but in lieu thereof each holder of Shares otherwise
entitled to a fraction of a share of Parent Common Stock shall, upon surrender
of his or her certificate or certificates, be entitled to receive an amount of
cash (without interest) determined by multiplying the Average Final Closing
Price by the fractional share interest to which such holder would otherwise be
entitled. The parties acknowledge that payment of the cash consideration in lieu
of issuing fractional shares was not separately bargained for consideration but
merely represents a mechanical rounding off for purposes of
6
simplifying the corporate and accounting problems which would otherwise be
caused by the issuance of fractional shares.
(g) Any portion of the Exchange Fund which remains
undistributed to the stockholders of the Company for one year after the
Effective Time shall be delivered to Parent, upon demand, and any stockholders
of the Company who have not theretofore complied with this Article I shall
thereafter look only to Parent for payment of their claim for Parent Common
Stock, any cash in lieu of fractional shares of Parent Common Stock and any
dividends or distributions with respect to Parent Common Stock.
(h) Neither Parent nor the Company shall be liable to any
holder of Shares, or Parent Common Stock, as the case may be, for such shares
(or dividends or distributions with respect thereto) or cash from the Exchange
Fund delivered to a public official pursuant to any applicable abandoned
property, escheat or similar law.
SECTION 1.10. Stock Options. (a) All options (individually, a
"Company Option" and collectively, the "Company Options") outstanding at the
Effective Time under the 1992 Stock Option Plan of the Company (the "Company
Plan") shall remain outstanding following the Effective Time. At the Effective
Time, such Company Options shall, by virtue of the Merger and without any
further action on the part of the Company or the holder of such Company Options,
be assumed by Parent in such manner that Parent (a) is a corporation (or a
parent or a subsidiary corporation of such corporation) "assuming a stock option
in a transaction to which Section 424(a) applied" within the meaning of Section
424 of the Code; or (b) to the extent that Section 424 of the Code does not
apply to any such Company Options, would be such a corporation (or a parent or a
subsidiary corporation of such corporation) were Section 424 applicable to such
option. At the Effective Time, (i) all references in the Company Plan to the
Company shall be deemed to refer to Parent and (ii) as soon as practicable, but
in no event later than 30 days following the Effective Time, Parent shall issue
to each holder of a Company Option a document evidencing the assumption of such
option by Parent in accordance herewith. Each Company Option assumed by Company
(as assumed, the "Parent Options") shall be exercisable upon the same terms and
conditions including, without limitation, vesting, as under the Company Plan and
the applicable option agreement issued thereunder, except that (x) each such
Company Option shall be exercisable for that whole number of shares of Parent
Common Stock (rounded down to the nearest whole share) into which the number of
shares of Company Common Stock subject to such Company Option immediately prior
to the Effective Time would be converted under Section 1.8 of this Agreement;
and (y) the option price per share of
7
Parent Common Stock shall be an amount equal to the option price per share of
the Company Common Stock subject to such Company Option in effect immediately
prior to the Effective Time divided by the Exchange Ratio (the option price per
share, as so determined, being rounded upward to the nearest full cent). The
date of grant of each Parent Option shall be the date on which the corresponding
Company Option was granted. A cash payment shall be made for any fractional
share based upon the last reported sale price per share of Parent Common Stock
on the Trading Day immediately preceding the date of exercise.
(b) Parent shall take all corporate action necessary to
reserve for issuance a sufficient number of shares of Parent Common Stock for
delivery upon exercise of Parent Options in accordance with this Section 1.10.
As soon as practicable after the Effective Time, Parent shall file a
registration statement on Form S-3 or Form S-8, as the case may be (or any
successor or other appropriate forms), or another appropriate form with respect
to the shares of Parent Common Stock subject to the Parent Options and shall use
its best efforts to maintain the effectiveness of such registration statement or
registration statements (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as the Parent Options remain
outstanding.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each of Parent
and Acquisition as follows:
SECTION 2.1. Organization and Qualification; Subsidiaries.
(a) The Company and each of its Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
businesses as now being conducted, except where the failure to be so organized,
existing and in good standing or to have such power and authority would not have
a Material Adverse Effect (as defined below) on the Company. The Company has
heretofore delivered to Acquisition or Parent accurate and complete copies of
the Certificate of Incorporation and Bylaws, as currently in effect, of the
Company. When used in connection with the Company or its Subsidiaries, the term
"Material Adverse Effect" means any change or effect (i) that is
8
or is reasonably likely to be materially adverse to the properties, business,
results of operations or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as whole, other than any change or effect arising out of
general economic conditions not specifically related to any businesses in which
the Company is engaged or (ii) that may impair the ability of the Company to
consummate the transactions contemplated hereby. For the purposes of this
Agreement, "Subsidiary" shall mean, when used with reference to any other
entity, any entity more than fifty percent (50%) of the outstanding voting
securities or interests (including membership interests) of which are owned
directly or indirectly by such former entity.
(b) Except as set forth in Section 2.1(b) of the Disclosure
Schedule previously delivered by the Company to Parent (the "Company Disclosure
Schedule"), the Company has no Subsidiaries and does not own, directly or
indirectly, beneficially or of record, any shares of capital stock or other
security of any other entity or any other investment in any other entity.
(c) Each of the Company and its Subsidiaries is duly qualified
or licensed and in good standing to do business in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Material Adverse Effect on the Company.
The Company has heretofore delivered to Parent accurate and
complete copies of the Certificate of Incorporation and Bylaws, as currently in
effect, of each of the Company's Subsidiaries.
SECTION 2.2. Capitalization of the Company and Its
Subsidiaries.
(a) The authorized capital stock of the Company consists of:
20,000,000 Shares, of which, as of March 17, 1997, 4,411,678 Shares were issued
and outstanding. All of the Shares have been validly issued, and are fully paid,
nonassessable and free of preemptive rights. As of March 17, 1997, 84,730 Shares
were reserved for issuance and issuable upon or otherwise deliverable in
connection with the exercise of outstanding Company Stock Options issued
pursuant to the Company Plan. Since December 11, 1996, no shares of the
Company's capital stock have been issued other than pursuant to Company Stock
Options already in existence on such date, and, since October 16, 1996, no stock
options have been granted. Except as set forth above, there are outstanding (i)
no shares of capital stock or other voting
9
securities of the Company, (ii) no securities of the Company or its Subsidiaries
convertible into or exchangeable for shares of capital stock or voting
securities of the Company, (iii) except as set forth in Section 2.2(a)(iii) of
the Company Disclosure Schedule, no options or other rights to acquire from the
Company or its Subsidiaries, and no obligations of the Company or its
Subsidiaries to issue, any capital stock, voting securities or securities
convertible into or exchangeable for capital stock or voting securities of the
Company, and (iv) except as set forth in Section 2.2(a)(iv) of the Disclosure
Schedule no equity equivalents, interests in the ownership or earnings of the
Company or its Subsidiaries or other similar rights (including stock
appreciation rights) (collectively, "Company Securities"). There are no
outstanding obligations of the Company or its Subsidiaries to repurchase, redeem
or otherwise acquire any Company Securities. Except as set forth in Section
2.2(a) of the Company Disclosure Schedule, there are no stockholder agreements
(other than the Stockholders Agreement), voting trusts or other agreements or
understandings to which the Company is a party or to which it is bound relating
to the voting or registration of any shares of capital stock of the Company.
(b) All of the outstanding capital stock of each of the
Company's Subsidiaries is owned directly by the Company, free and clear of any
Lien (as defined below) or any other limitation or restriction (including any
restriction on the right to vote or sell the same, except as may be provided as
a matter of law). There are no securities of the Company or its Subsidiaries
convertible into or exchangeable for, no options or other rights to acquire from
the Company or its Subsidiaries, and no other contract, understanding,
arrangement or obligation (whether or not contingent) providing for the issuance
or sale, directly or indirectly, of any capital stock or other ownership
interests in, or any other securities of, any Subsidiary of the Company. There
are no outstanding contractual obligations of the Company or its Subsidiaries to
repurchase, redeem or otherwise acquire any outstanding shares of capital stock
or other ownership interests in any Subsidiary of the Company. For purposes of
this Agreement, "Lien" means, with respect to any asset (including, without
limitation, any security) any mortgage, lien, pledge, charge, security interest
or encumbrance of any kind in respect of such asset.
(c) The Shares constitute the only class of securities of the
Company or its Subsidiaries registered or required to be registered under the
Securities Exchange Act of 1934, as amended (the "Exchange Act").
10
SECTION 2.3. Authority Relative to This Agreement; Consents
and Approvals.
(a) The Company has all necessary corporate power and
authority to execute and deliver this Agreement and, subject to stockholder
approval, to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by the Board of Directors of the
Company (the "Company Board") and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the then
outstanding Shares). This Agreement has been duly and validly executed and
delivered by the Company and constitutes a valid, legal and binding agreement of
the Company, enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to general principles of equity (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(b) The Company Board has duly and validly approved, and taken
all corporate actions required to be taken by the Board for the consummation of,
the transactions, including the Merger, contemplated hereby and resolved to
recommend that the stockholders of the Company approve and adopt this Agreement;
provided, however, that such approval and recommendation may be withdrawn,
modified or amended in the event that the Company Board by majority vote
determines in its good faith judgment, after consultation with and based upon
the advice of independent legal counsel, that it is required to do so in order
to comply with its fiduciary duties to stockholders under applicable law.
SECTION 2.4. SEC Reports; Financial Statements. The Company
has filed all required forms, reports and documents with the Securities and
Exchange Commission (the "SEC") since January 1, 1994, each of which has
complied in all material respects with all applicable requirements of the
Securities Act and the Exchange Act, each as in effect on the dates such forms,
reports and documents were filed. The Company has heretofore delivered to
Parent, in the form filed with the SEC (including any amendments thereto), (i)
its Annual Reports on Form 10-K for each of the fiscal years ended February 28,
1994, February 28, 1995 and February 29, 1996, (ii) all definitive proxy
statements relating to the Company's meetings of stockholders (whether annual or
special) held since January 1, 1992 and (iii) all other reports or
11
registration statements filed by the Company with the SEC since January 1, 1992,
including all exhibits included or incorporated by reference therein (the
"Company SEC Reports"). None of such forms, reports or documents, including,
without limitation, any financial statements or schedules included or
incorporated by reference therein (but excluding Exhibits), contained, when
filed (subject to the amendments filed in connection therewith in the case of
the Company's registration statement on Form S-1 filed in 1996), any untrue
statement of a material fact or omitted to state a material fact required to be
stated or incorporated by reference therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The consolidated financial statements of the Company included in
the Company SEC Reports complied as to form in all material respects with
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto and fairly present, in conformity with generally
accepted accounting principles applied on a consistent basis ("GAAP") (except as
may be indicated in the notes thereto), the consolidated financial position of
the Company and its consolidated Subsidiaries as of the dates thereof and their
consolidated results of operations and changes in financial position for the
periods then ended (subject, in the case of the unaudited interim financial
statements, to normal year-end adjustments). Since February 29, 1996, there has
not been any change, or any application or request for any change, by the
Company or any of its Subsidiaries in accounting principles, methods or policies
for financial accounting or tax purposes (subject, in the case of the unaudited
interim financial statements, to normal year-end adjustments).
SECTION 2.5. Information Supplied. None of the information
supplied or to be supplied by the Company for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of shares of Parent Common Stock in
the Merger (the "S-4") will, at the time the S-4 becomes effective under the
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and (ii) the proxy statement relating to the meeting of the
Company's stockholders to be held in connection with the Merger (the "Proxy
Statement") will, at the date mailed to stockholders and at the times of the
meeting of stockholders 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. If at any
time prior to the Effective Time any event with respect to the Company, its
officers and directors or any of its Subsidiaries should occur which is required
to be described in an amendment of,
12
or a supplement to, the S-4 or the Proxy Statement, the Company shall promptly
so advise Parent and such event shall be so described, and such amendment or
supplement (which Parent shall have a reasonable opportunity to review) shall be
promptly filed with the SEC and, as required by law, disseminated to the
stockholders of the Company. The Proxy Statement, insofar as it relates to the
meeting of the Company's stockholders to vote on the Merger, will comply as to
form in all material respects with the provisions of the Exchange Act and the
rules and regulations thereunder.
SECTION 2.6. Consents and Approvals; No Violations. Except as
set forth in Section 2.6 of the Company Disclosure Schedule and except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the Exchange
Act, state securities or blue sky laws, the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), and the filing and
recordation of the Certificate of Merger as required by the DGCL, no filing with
or notice to, and no permit, authorization, consent or approval of, any court or
tribunal or administrative, governmental or regulatory body, agency or authority
(a "Governmental Entity") is necessary for the execution and delivery by the
Company of this Agreement or the consummation by the Company of the transactions
contemplated hereby, except where the failure to obtain such permits,
authorizations, consents or approvals or to make such filings or give such
notice would not have a Material Adverse Effect on the Company. Neither the
execution, delivery and performance of this Agreement by the Company nor the
consummation by the Company of the transactions contemplated hereby will (i)
conflict with or result in any breach of any provision of the respective
Certificate of Incorporation or Bylaws (or similar governing documents) of the
Company or any of its Subsidiaries, (ii) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, amendment, cancellation or acceleration
or Lien) under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, license, contract, agreement or other instrument or
obligation to which the Company or any of its Subsidiaries is a party or by
which any of them or any of their respective properties or assets may be bound,
or (iii) violate any order, writ, injunction, decree, law, statute, rule or
regulation applicable to the Company or any of its Subsidiaries or any of their
respective properties or assets, except in the case of (ii) or (iii) for
violations, breaches or defaults which would not have a Material Adverse Effect
on the Company.
SECTION 2.7. No Default. None of the Company or its
Subsidiaries 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
13
(i) its Certificate of Incorporation or Bylaws (or similar governing documents),
(ii) any note, bond, mortgage, indenture, lease, license, contract, agreement or
other instrument or obligation to which the Company or any of its Subsidiaries
is now a party or by which any of them or any of their respective properties or
assets may be bound or (iii) any order, writ, injunction, decree, law, statute,
rule or regulation applicable to the Company, its Subsidiaries or any of their
respective properties or assets, except in the case of (ii) or (iii) for
violations, breaches or defaults that would not have a Material Adverse Effect
on the Company.
SECTION 2.8. No Undisclosed Liabilities; Absence of Changes.
Except as and to the extent publicly disclosed by the Company in the Company SEC
Reports and except as set forth in Section 2.8 of the Company Disclosure
Schedule, (i) as of November 30, 1996, none of the Company or its Subsidiaries
had any liabilities or obligations of any nature, whether or not accrued,
contingent or otherwise, and whether due or to become due or asserted or
unasserted, which is required to be and which is not fully reflected in,
reserved against or otherwise described in the consolidated balance sheet of the
Company (including the notes thereto) as of such date or which could reasonably
be expected to have a Material Adverse Effect on the Company and (ii) since
November 30, 1996, the business of the Company and its Subsidiaries has been
carried on only in the ordinary and usual course, none of the Company or its
Subsidiaries has incurred any liabilities of any nature, whether or not accrued,
contingent or otherwise, which could reasonably be expected to have, and there
have been no events, changes or effects with respect to the Company or its
Subsidiaries having or which could reasonably be expected to have, a Material
Adverse Effect on the Company.
SECTION 2.9. Litigation. Except as publicly disclosed by the
Company in the Company SEC Reports or in Section 2.9 of the Company Disclosure
Schedule, there is no suit, claim, action, proceeding or investigation pending
or, to the knowledge of the Company, threatened against the Company or any of
its Subsidiaries or any of their respective properties or assets which (a) if
adversely determined, could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company or (b) as of the date
hereof, questions the validity of this Agreement or any action to be taken by
the Company in connection with the consummation of the transactions contemplated
hereby or could otherwise prevent or delay the consummation of the transactions
contemplated by this Agreement. Except as publicly disclosed by the Company,
none of the Company or its Subsidiaries is subject to any outstanding order,
writ, injunction or decree which, insofar as can be reasonably foreseen in the
future, could reasonably be expected to have a Material Adverse Effect
14
on the Company or would prevent or delay the consummation of the transactions
contemplated hereby.
SECTION 2.10. Compliance with Applicable Law. Except as
publicly disclosed by the Company in the Company SEC Reports, the Company and
its Subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Company Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which could not
reasonably be expected to have a Material Adverse Effect on the Company. Except
as publicly disclosed by the Company in the Company SEC Reports, the Company and
its Subsidiaries are in compliance with the terms of the Company Permits, except
where the failure so to comply could not reasonably be expected to have a
Material Adverse Effect on the Company. Except as publicly disclosed by the
Company in the Company SEC Reports or as otherwise disclosed to Parent on the
date hereof, the businesses of the Company and its Subsidiaries are not being
conducted in violation of any law, ordinance or regulation of any Governmental
Entity except that no representation or warranty is made in this Section 2.10
with respect to Environmental Laws (as defined in Section 2.12(a)) and except
for violations or possible violations which do not, and, insofar as reasonably
can be foreseen, in the future will not, have a Material Adverse Effect on the
Company. Except as publicly disclosed by the Company in the Company SEC Reports,
no investigation or review by any Governmental Entity with respect to the
Company or its Subsidiaries is pending or, to the best knowledge of the Company,
threatened, nor, to the best knowledge of the Company, has any Governmental
Entity indicated an intention to conduct the same, other than, in each case,
those which the Company reasonably believes will not have a Material Adverse
Effect on the Company.
SECTION 2.11. Employee Plans. Except as set forth in Section
2.11 of the Company's Disclosure Schedule (the "Company Employee Plans"), copies
of the governing documents for which have been provided to Parent, there are no
"employee benefit plans" as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), maintained or contributed to
by the Company or its Subsidiaries. The Company Employee Plans are in compliance
with the applicable provisions of ERISA and the Code, except for instances of
non-compliance that could not reasonably be expected to have a Material Adverse
Effect on the Company.
15
SECTION 2.12. Environmental Laws and Regulations.
(a) Except as publicly disclosed by the Company in the Company
SEC Reports, (i) each of the Company and its Subsidiaries is in compliance with
all applicable federal, state and local laws and regulations relating to
pollution or protection of human health or the environment (including, without
limitation, ambient air, surface water, ground water, land surface or subsurface
strata) (collectively, "Environmental Laws"), except for non-compliance that
could not reasonably be expected to have a Material Adverse Effect on the
Company, which compliance includes, but is not limited to, the possession by the
Company and its Subsidiaries of all material permits and other governmental
authorizations required under applicable Environmental Laws, and compliance with
the terms and conditions thereof; (ii) none of the Company or its Subsidiaries
has received written notice of, or, to the knowledge of the Company, is the
subject of, any action, cause of action, claim, investigation, demand or notice
by any person or entity alleging liability under or non-compliance with any
Environmental Law (an "Environmental Claim") that could reasonably be expected
to have a Material Adverse Effect on the Company; and (iii) to the knowledge of
the Company, there are no circumstances that are reasonably likely to prevent or
interfere with such material compliance in the future.
(b) Except as publicly disclosed by the Company in the Company
SEC Reports, there are no Environmental Claims which could reasonably be
expected to have a Material Adverse Effect on the Company that are pending or,
to the knowledge of the Company, threatened against the Company or its
Subsidiaries or, to the knowledge of the Company, against any person or entity
whose liability for any Environmental Claim the Company or either of its
Subsidiaries has or may have retained or assumed either contractually or by
operation of law.
SECTION 2.13. Tax Matters. (a) Except as disclosed in writing
to Parent and Acquisition:
(i) The Company and its Subsidiaries have timely filed, or
been included in, all material federal, state, local and foreign Tax Returns (as
defined below) to be filed by them.
(ii) Except to the extent adequately reserved for in
accordance with GAAP, all income and franchise Taxes (as defined below) and
material other Taxes due and payable by the Company and any of its Subsidiaries
have been timely paid in full. The consolidated financial statements contained
in the most recent Company SEC
16
Reports reflect an adequate reserve for all Taxes payable by the Company and its
Subsidiaries for all taxable periods and portions thereof through the date of
such financial statements.
(iii) No material deficiencies for any Taxes have been
proposed, asserted or assessed in writing against the Company or any of its
Subsidiaries that have not been fully paid or adequately provided for in the
appropriate financial statements of the Company and its Subsidiaries. No
material issues relating to Taxes have been raised in writing by any
governmental authority during any presently pending audit or examination.
(iv) The Company and its Subsidiaries have withheld all
material Taxes required to have been withheld and paid by them on their behalf
in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party, and such withheld Taxes
have either been duly paid to the proper governmental authority or set aside in
accounts for such purpose.
(v) None of the Company or any of its Subsidiaries has taken
or agreed to take any action that would prevent or impede the Merger from
qualifying as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
(vi) None of the Company or any of its Subsidiaries has filed
a consent under Section 341(f) of the Code concerning collapsible corporations.
(vii) None of the Company or any of its Subsidiaries has made
any payments, nor is any of them obligated to make any payments, and is not a
party to any agreement that could obligate it to make any payments that will not
be deductible under Section 280G of the Code or would constitute compensation in
excess of the limitation set forth in Section 162(m) of the Code.
(viii) None of the Company or any of its Subsidiaries is a party
to any Tax allocation or sharing agreement or arrangement (whether or not in
writing), except among themselves.
(ix) None of the Company or any of its Subsidiaries has
executed or entered into a closing agreement that could affect its Tax liability
for any period after the Closing Date pursuant to Section 7121 of the Code or
any similar provision of state, local or foreign law.
17
(x) None of the Company or any of its Subsidiaries has agreed
to or is making adjustments pursuant to Section 481(a) of the Code that could
affect its Tax liability for any period after the Closing Date by reason of
change in accounting method initiated by the Company or any of its Subsidiaries
nor to the knowledge of the Company has the IRS proposed any such adjustment or
change in accounting method, or has any application pending with any taxing
authority requesting permission for any changes in accounting methods that
relate to the business or operations of the Company or any of its Subsidiaries.
(b) For purposes of this Agreement, the following definitions
shall apply:
"Tax" or "Taxes" means any federal, state, local or foreign net or gross income,
franchise, profits, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium (including taxes under Section 59A of the
Code), capital stock, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum, estimated, or other
tax, governmental fee or like assessment or charge of any kind whatsoever,
including any interest, penalty or addition thereto, whether disputed or not,
imposed by any governmental authority or arising under any tax law (including by
reason of several and/or transferee liability).
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto and any amendment thereof.
SECTION 2.14. Intangible Property. The Company and it
Subsidiaries own or possess adequate licenses or other valid rights to use all
material patents, patent rights, trademarks, trademark rights, trade names,
trade name rights, copyrights, service marks, trade secrets, applications for
trademarks and for service marks, know-how and other proprietary rights and
information used or held for use in connection with the business of the Company
and its Subsidiaries as currently conducted or as contemplated to be conducted,
and the Company is unaware of any assertion or claim challenging the validity of
any of the foregoing which, individually or in the aggregate, would have a
Material Adverse Effect on the Company. The conduct of the business of the
Company and its Subsidiaries as heretofore and currently conducted has not and
does not conflict in any way with any patent, patent right, license, trademark,
trademark right, trade name, trade name right, service ▇▇▇▇ or copyright of any
third
18
party that, individually or in the aggregate, would have a Material Adverse
Effect on the Company. To the knowledge of the Company, there are no
infringements of any proprietary rights owned by or licensed by or to the
Company or any subsidiary which, individually or in the aggregate, would have a
Material Adverse Effect on the Company.
Each person listed in Section 2.14 of the Company's Disclosure
Schedule has executed a confidentiality, non-disclosure agreement and/or
invention assignment agreement (each, a "Non-Disclosure Agreement"). Such
Non-Disclosure Agreements constitute valid and binding agreements enforceable in
accordance with their respective terms subject to applicable bankruptcy,
insolvency, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to enforceability, to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
SECTION 2.15. Opinion of Financial Adviser. Prudential
Securities Incorporated (the "Financial Adviser") has delivered to the Board its
written opinion, dated the date of this Agreement, to the effect that, as of
such date, the Merger Consideration is fair to the holders of Shares from a
financial point of view, a signed, true and complete copy of which opinion has
been delivered to Parent, and as of the date hereof such opinion has not been
withdrawn or modified.
SECTION 2.16. Brokers. No broker, finder or investment banker
(other than Prudential Securities Incorporated, a true and correct copy of whose
engagement agreement has been provided to Parent) is entitled to any brokerage,
finder's or other fee or commission or expense reimbursement in connection with
the transactions contemplated by this Agreement based upon arrangements made by
and on behalf of the Company or any of its affiliates or stockholders (including
the Company Affiliates).
SECTION 2.17. [Intentionally Omitted]
SECTION 2.18. Material Contracts.
(a) Section 2.18(a) of the Company Disclosure Schedule lists
all of the following contracts to which the Company or any of its Subsidiaries
is a party or by which any of their respective properties or assets are bound:
(i) employment, consulting, non-competition, severance, golden parachute or
indemnification contract (including, without limitation, any contract to which
the Company or any of its
19
Subsidiaries is a party involving employees of the Company or any of its
Subsidiaries); (ii) licensing, merchandising or distribution agreements; (iii)
contracts granting a right of first refusal or first negotiation; (iv)
partnership or joint venture agreements; (v) agreements for the acquisition,
sale or lease of material properties or assets of the Company (by merger,
purchase or sale of assets or stock or otherwise) entered into since January 1,
1992; (vi) contracts or agreements with any Governmental Entity; (vii) other
contracts which materially affect the business, properties or assets of the
Company and its Subsidiaries taken as a whole which are not otherwise disclosed
in this Agreement or were entered into other than in the ordinary course of
business; and (viii) all commitments and agreements to enter into any of the
foregoing (collectively, together with any such contracts entered into in
accordance with Section 4.1 hereof, the "Contracts"). The Company has delivered
or otherwise made available to Parent true, correct and complete copies of the
Contracts listed in Section 2.18(a) of the Company Disclosure Schedule, together
with all amendments, modifications and supplements thereto and all side letters
to which the Company is a party affecting the obligations of any party
thereunder.
(b) Except as set forth in Section 2.18(b) of the Company
Disclosure Schedule:
(i) Each of the Contracts is valid and enforceable in
accordance with its terms, and there is no default under any Contract so listed
either by the Company or, to the knowledge of the Company, by any other party
thereto which could have a Material Adverse Effect, and no event has occurred
that with the lapse of time or the giving of notice or both would constitute a
default thereunder by the Company or, to the knowledge of the Company, any other
party which could have a Material Adverse Effect.
(ii) No party to any such Contract has given notice to the
Company of or made a claim against the Company with respect to any material
breach or material default thereunder.
(c) With respect to those Contracts that were assigned or
subleased to the Company by a third party, all necessary consents to such
assignments or subleases have been obtained.
SECTION 2.19. Pooling of Interests. The representations of the
Company in its letter dated March 18, 1997 to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ are to its
knowledge true and correct.
20
SECTION 2.20. Disclosure. No representation or warranty by the
Company contained in this Agreement and no statement contained in any
certificate delivered by the Company to Acquisition or Parent pursuant to this
Agreement contains any untrue statement of a material fact or omits to state a
material fact necessary to make the statements contained herein or therein not
misleading when taken together in light of the circumstances in which they were
made.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
OF PARENT AND ACQUISITION
Parent and Acquisition hereby represent and warrant to the
Company as follows:
SECTION 3.1. Organization.
(a) Each of Parent, Acquisition and each other Subsidiary of
Parent is a corporation or partnership duly organized, validly existing and in
good standing under the laws of the jurisdiction of its organization and has all
requisite power and authority to own, lease and operate its properties and to
carry on its businesses as now being conducted, except where the failure to be
so organized, existing and in good standing or to have such power and authority
would not have a Material Adverse Effect (as defined below) on Parent. When used
in connection with Parent or Acquisition or any other Subsidiary of Parent, the
term "Material Adverse Effect" means any change or effect (i) that is or is
reasonably likely to be materially adverse to the properties, business, results
of operations or condition (financial or otherwise) of Parent and its
Subsidiaries, taken as a whole, other than any change or effect arising out of
general economic conditions not specifically related to any businesses in which
Parent and its Subsidiaries are engaged or (ii) that may impair the ability of
Parent and/or Acquisition to consummate the transactions contemplated hereby.
(b) Except as set forth in Section 3.1(b) of the Parent
Disclosure Schedule, the Parent has no Subsidiaries and does not own, directly
or indirectly, beneficially or of record, any shares of capital stock or other
security of any other entity or any other investment in any other entity.
(c) Parent has heretofore delivered to the Company accurate
and complete copies of the Certificate of Incorporation and Bylaws, as currently
in effect,
21
of Parent and Acquisition. Each of Parent and its Subsidiaries is duly qualified
or licensed and in good standing to do business in each jurisdiction in which
the property owned, leased or operated by it or the nature of the business
conducted by it makes such qualification or licensing necessary, except in such
jurisdictions where the failure to be so duly qualified or licensed and in good
standing would not have a Material Adverse Effect on Parent.
SECTION 3.2. Capitalization of Parent and Its Subsidiaries.
(a) The authorized capital stock of Parent consists of (i)
120,000,000 shares of Parent Common Stock, of which, as of March 17, 1997,
35,051,062 shares of Parent Common Stock were issued and outstanding and (ii)
5,000,000 shares of preferred stock, $0.001 par value per share, none of which
is issued or outstanding. All of the shares of Parent Common Stock have been
validly issued, and are fully paid, nonassessable and free of preemptive rights.
As of March 17, 1997, 4,649,000 shares of Parent Common Stock were reserved for
issuance and issuable upon or otherwise deliverable in connection with the
exercise of outstanding options. Except as described in the Parent SEC Reports,
as set forth above or as described in Section 3.2(a) of the Parent Disclosure
Schedule, as of the date hereof, there are outstanding (i) no shares of capital
stock or other voting securities of Parent, (ii) no securities of Parent or its
Subsidiaries convertible into or exchangeable for shares of capital stock or
voting securities of Parent, (iii) no options or other rights to acquire from
Parent or its Subsidiaries and no obligations of Parent or its Subsidiaries to
issue, any capital stock, voting securities or securities convertible into or
exchangeable for capital stock or voting securities of Parent, and (iv) no
equity equivalents, interests in the ownership or earnings of Parent or its
Subsidiaries or other similar rights (including stock appreciation rights)
(collectively, "Parent Securities"). There are no outstanding obligations of
Parent or any of its Subsidiaries to repurchase, redeem or otherwise acquire any
Parent Securities. There are no stockholder agreements, voting trusts or other
agreements or understandings to which Parent is a party or to which it is bound
relating to the voting of any shares of capital stock of Parent.
(b) All of the outstanding capital stock of Parent's
Subsidiaries (including Acquisition) is owned by Parent, directly or indirectly,
free and clear of any Lien or any other limitation or restriction (including any
restriction on the right to vote or sell the same, except as may be provided as
a matter of law). There are no securities of Parent or its Subsidiaries
convertible into or exchangeable for, no options or other rights to acquire from
Parent or its Subsidiaries, and no other contract, understanding, arrangement or
obligation (whether or not contingent) providing for the
22
issuance or sale, directly or indirectly, of any capital stock or other
ownership interests in, or any other securities of, any Subsidiary of Parent.
There are no outstanding contractual obligations of Parent or its Subsidiaries
to repurchase, redeem or otherwise acquire any outstanding shares of capital
stock or other ownership interests in any subsidiary of Parent.
(c) The Parent Common Stock constitutes the only class of
equity securities of Parent or its Subsidiaries registered or required to be
registered under the Exchange Act.
SECTION 3.3. Authority Relative to This Agreement. Each of
Parent and Acquisition has all necessary corporate power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by the boards of directors of Parent and Acquisition and by Parent as
the sole shareholder of Acquisition, and no other corporate proceedings on the
part of Parent or Acquisition are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by each of Parent and Acquisition and
constitutes a valid, legal and binding agreement of each of Parent and
Acquisition, enforceable against each of Parent and Acquisition in accordance
with its terms.
SECTION 3.4. SEC Reports; Financial Statements. Parent has
filed all required forms, reports and documents with the SEC since September 30,
1996, each of which has complied in all material respects with all applicable
requirements of the Securities Act and the Exchange Act, each as in effect on
the dates such forms, reports and documents were filed. Parent has heretofore
delivered to the Company, in the form filed with the SEC (including any
amendments thereto), all reports or registration statements filed by Parent with
the SEC since September 24, 1996, including all exhibits included or
incorporated by reference therein (the "Parent SEC Reports"). None of such
forms, reports or documents, including, without limitation, any financial
statements or schedules included or incorporated by reference therein (but
excluding Exhibits), contained, when filed (subject to amendments filed in
connection therewith in the case of Parent's registration statement on form S-1
filed in 1996), any untrue statement of a material fact or omitted to state a
material fact required to be stated or incorporated by reference therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The consolidated financial
statements of Parent included in the Parent SEC Reports
23
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto and fairly present, in conformity with generally accepted accounting
principles applied on a consistent basis (except as may be indicated in the
notes thereto), the consolidated financial position of Parent and its
consolidated Subsidiaries as of the dates thereof and their consolidated results
of operations and changes in financial position for the periods then ended
(subject, in the case of the unaudited interim financial statements, to normal
year-end adjustments). Since September 30, 1996, there has not been any change,
or any application or request for any change, by the Company or any of its
Subsidiaries in accounting principles, methods or policies for financial
accounting or tax purposes.
SECTION 3.5. Information Supplied. None of the information
supplied or to be supplied by Parent or Acquisition for inclusion or
incorporation by reference in (i) the S-4 will, at the time the S-4 becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading and (ii) the Proxy Statement will, at the
date mailed to stockholders and at the times of the meeting of stockholders 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. If at any time prior to
the Effective Time any event with respect to Parent, its officers and directors
or any of its Subsidiaries should occur which is required to be described in an
amendment of, or a supplement to, the S-4 or the Proxy Statement, Parent shall
promptly so advise the Company and such event shall be so described, and such
amendment or supplement (which the Company shall have a reasonable opportunity
to review) shall be promptly filed with the SEC. The S-4 will comply as to form
in all material respects with the provisions of the Securities Act and the rules
and regulations thereunder.
SECTION 3.6. Consents and Approvals; No Violations. Except for
filings, permits, authorizations, consents and approvals as may be required
under, and other applicable requirements of, the Securities Act, the Exchange
Act, state securities or blue sky laws, the HSR Act, and the filing and
recordation of the Certificate of Merger as required by the DGCL, no filing with
or notice to, and no permit, authorization, consent or approval of, any
Governmental Entity is necessary for the execution and delivery by Parent or
Acquisition of this Agreement or the consummation by Parent or Acquisition of
the transactions contemplated hereby, except where the failure to obtain such
permits, authorizations, consents or approvals or to make such
24
filings or give such notice would not have a Material Adverse Effect on Parent.
Neither the execution, delivery and performance of this Agreement by Parent or
Acquisition nor the consummation by Parent or Acquisition of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
provision of the respective Certificate of Incorporation or Bylaws (or similar
governing documents) of Parent or Acquisition or any of Parent's Subsidiaries,
(ii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, amendment, cancellation or acceleration or Lien) under, any of the
terms, conditions or provisions of any note, bond, mortgage, indenture, lease,
license, contract, agreement or other instrument or obligation to which Parent
or Acquisition or any of Parent's Subsidiaries is a party or by which any of
them or any of their respective properties or assets may be bound or (iii)
violate any order, writ, injunction, decree, law, statute, rule or regulation
applicable to Parent or Acquisition or any of Parent's Subsidiaries or any of
their respective properties or assets, except in the case of (ii) or (iii) for
violations, breaches or defaults which would not have a Material Adverse Effect
on Parent.
SECTION 3.7. No Default. None of Parent or any of its
Subsidiaries 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 Certificate of Incorporation or
Bylaws (or similar governing documents), (ii) any note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
to which Parent or any of its Subsidiaries is now a party or by which any of
them or any of their respective properties or assets may be bound or (iii) any
order, writ, injunction, decree, law, statute, rule or regulation applicable to
Parent, its Subsidiaries or any of their respective properties or assets, except
in the case of (ii) or (iii) for violations, breaches or defaults that would not
have a Material Adverse Effect on Parent.
SECTION 3.8. No Undisclosed Liabilities; Absence of Changes.
Except as and to the extent publicly disclosed by Parent in the Parent SEC
Reports, as of September 30, 1996, none of Parent or its Subsidiaries had any
liabilities or obligations of any nature, whether or not accrued, contingent or
otherwise, and whether due or to become due or asserted or unasserted, which is
not fully reflected in, reserved against or otherwise described in the
consolidated balance sheet of Parent and its consolidated Subsidiaries
(including the notes thereto) as of such date or which could reasonably be
expected to have a Material Adverse Effect on Parent. Except as publicly
disclosed by Parent in the Parent SEC Reports, since September 30, 1996, the
business of Parent and its Subsidiaries has been carried on only in the ordinary
and
25
usual course, none of Parent or its Subsidiaries has incurred any liabilities of
any nature, whether or not accrued, contingent or otherwise, and whether due or
to become due or asserted or unasserted, which could reasonably be expected to
have, and there have been no events, changes or effects with respect to Parent
or its Subsidiaries having or which could reasonably be expected to have, a
Material Adverse Effect on Parent.
SECTION 3.9. Litigation. Except as publicly disclosed by
Parent in the Parent SEC Reports, there is no suit, claim, action, proceeding or
investigation pending or, to the knowledge of Parent, threatened against Parent
or any of its Subsidiaries or any of their respective properties or assets which
(a) if adversely determined, could reasonably be expected to have a Material
Adverse Effect on Parent or (b) as of the date hereof, questions the validity of
this Agreement or any action to be taken by Parent in connection with the
consummation of the transactions contemplated hereby or could otherwise prevent
or delay the consummation of the transactions contemplated by this Agreement.
Except as publicly disclosed by Parent in the Parent SEC Reports, none of Parent
or its Subsidiaries is subject to any outstanding order, writ, injunction or
decree which, insofar as can be reasonably foreseen in the future, could
reasonably be expect to have a Material Adverse Effect on Parent or would
prevent or delay the consummation of the transactions contemplated hereby.
SECTION 3.10. Compliance with Applicable Law. Except as
publicly disclosed by Parent in the Parent SEC Reports, Parent and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders and
approvals of all Governmental Entities necessary for the lawful conduct of their
respective businesses (the "Parent Permits"), except for failures to hold such
permits, licenses, variances, exemptions, orders and approvals which could not
reasonably be expected to have a Material Adverse Effect on Parent. Except as
publicly disclosed by Parent in the Parent SEC Reports, Parent and its
Subsidiaries are in compliance with the terms of the Parent Permits, except
where the failure so to comply could not reasonably be expected to have a
Material Adverse Effect on Parent. Except as publicly disclosed by Parent, the
businesses of Parent and its Subsidiaries are not being conducted in violation
of any law, ordinance or regulation of any Governmental Entity except that no
representation or warranty is made in this Section 3.10 with respect to
Environmental Laws and except for violations or possible violations which do
not, and, insofar as reasonably can be foreseen, in the future will not, have a
Material Adverse Effect on Parent. Except as publicly disclosed by Parent in the
Parent SEC Reports, no investigation or review by any Governmental Entity with
respect to Parent or its Subsidiaries is pending or, to the best knowledge of
Parent, threatened, nor, to the best knowledge of Parent, has any Governmental
Entity indicated an intention to conduct the same, other than, in each
26
case, those which Parent reasonably believes will not have a Material Adverse
Effect on Parent.
SECTION 3.11. Environmental Laws and Regulations.
(a) Except as publicly disclosed by Parent in the Parent SEC
Reports, (i) each of Parent and its Subsidiaries is in compliance with all
Environmental Laws, except for non-compliance that could not reasonably be
expected to have a Material Adverse Effect on Parent, which compliance includes,
but is not limited to, the possession by Parent and its Subsidiaries of all
material permits and other governmental authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof; (ii)
none of Parent or its Subsidiaries has received written notice of, or, to the
knowledge of Parent, is the subject of, any Environmental Claim that could
reasonably be expected to have a Material Adverse Effect on Parent; and (iii) to
the knowledge of Parent, there are no circumstances that are reasonably likely
to prevent or interfere with such material compliance in the future.
(b) Except as publicly disclosed by Parent in the Parent SEC
Reports, there are no Environmental Claims which could reasonably be expected to
have a Material Adverse Effect on Parent that are pending or, to the knowledge
of Parent, threatened against Parent or its Subsidiaries or, to the knowledge of
Parent, against any person or entity whose liability for any Environmental Claim
Parent or its Subsidiaries has or may have retained or assumed either
contractually or by operation of law.
SECTION 3.12. Tax Matters. Except as disclosed in writing to
the Company:
(i) Parent and its Subsidiaries have timely filed, or been
included in, all material federal, state, local and foreign Tax Returns to be
filed by them.
(ii) Except to the extent adequately reserved for in
accordance with GAAP, all income and franchise Taxes and material other Taxes
due and payable by Parent and any of its Subsidiaries have been timely paid in
full. The consolidated financial statements contained in the most recent Parent
SEC Reports reflect an adequate reserve for all Taxes payable by Parent and any
of its Subsidiaries for all taxable periods and portions thereof through the
date of such financial statements.
(iii) No material deficiencies for any Taxes have been
proposed, asserted or assessed in writing against Parent or any of its
Subsidiaries that have not
27
been fully paid or adequately provided for in the appropriate financial
statements of Parent and its Subsidiaries. No material issues relating to Taxes
have been raised in writing by any governmental authority during any presently
pending audit or examination.
(iv) Parent and its Subsidiaries have withheld all material
Taxes required to be withheld and paid by them on their behalf in connection
with amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party, and such withheld Taxes have either been duly
paid to the proper governmental authority or set aside in accounts for such
purpose.
(v) None of Parent or any of its Subsidiaries has taken or
agreed to take any action that would prevent or impede the Merger from
qualifying as a tax-free reorganization under Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code").
(vi) None of Parent or any of its Subsidiaries has filed a
consent under Section 341(f) of the Code concerning collapsible corporations.
(vii) None of Parent or any of its Subsidiaries has made any
payments, nor is any of them obligated to make any payments, and is not a party
to any agreement that could obligate it to make any payments that will not be
deductible under Section 280G of the Code or would constitute compensation in
excess of the limitation set forth in Section 162(m) of the Code.
(viii) None of Parent or any of its Subsidiaries is a party to
any Tax allocation or sharing agreement or arrangement (whether or not in
writing), except among themselves.
(ix) None of Parent or any of its Subsidiaries has executed or
entered into a closing agreement that could affect its Tax liability for any
period after the Closing Date pursuant to Section 7121 of the Code or any
similar provision of state, local, or foreign law.
(x) None of Parent or any of its Subsidiaries has agreed to or
is making adjustments pursuant to Section 481(a) of the Code that could affect
its Tax liability for any period after the Closing Date by reason of change in
accounting method initiated by Parent or any of its Subsidiaries nor to the
knowledge of Parent has the IRS proposed any such adjustment or change in
accounting method, or has any
28
application pending with any taxing authority requesting permission for any
changes in accounting methods that relate to the business or operations of
Parent or any of its Subsidiaries.
SECTION 3.13. Intangible Property. Parent and its Subsidiaries own or
possess adequate licenses or other valid rights to use all material patents,
patent rights, trademarks, trademark rights, trade names, trade name rights,
copyrights, service marks, trade secrets, applications for trademarks and for
service marks, know-how and other proprietary rights and information used or
held for use in connection with the business of Parent and its Subsidiaries as
currently conducted or as contemplated to be conducted, and Parent is unaware of
any assertion or claim challenging the validity of any of the foregoing which,
individually or in the aggregate, would have a Material Adverse Effect on
Parent. The conduct of the business of Parent and its Subsidiaries as heretofore
and currently conducted has not and does not conflict in any way with any
patent, patent right, license, trademark, trademark right, trade name, trade
name right, service ▇▇▇▇ or copyright of any third party that, individually or
in the aggregate, would have a Material Adverse Effect on Parent. To the
knowledge of Parent there are no infringements of any proprietary rights owned
by or licensed by or to Parent or any Subsidiary which, individually or in the
aggregate, would have a Material Adverse Effect on Parent.
SECTION 3.14. Brokers. No broker, finder or investment banker
(other than ▇▇▇▇▇▇▇▇▇, Lufkin & ▇▇▇▇▇▇▇▇) is entitled to any brokerage, finder's
or other fee or commission or expense reimbursement in connection with the
transactions contemplated by this Agreement based upon arrangements made by and
on behalf of Parent or Acquisition.
SECTION 3.15. Pooling of Interests. The assurances of Parent
in its letter dated March 14, 1997 to AA are to Parent's knowledge true and
correct.
SECTION 3.16. Disclosure. No representation or warranty by
Parent contained in this Agreement and no statement contained in any certificate
delivered by Parent to the Company pursuant to this Agreement contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements contained herein or therein not misleading when taken
together in light of the circumstances in which they were made.
29
ARTICLE 4
COVENANTS
SECTION 4.1. Conduct of Business of the Company. Except as
contemplated by this Agreement or as set forth in Section 4.1 of the Company's
Disclosure Schedule, during the period from the date hereof to the Effective
Time, the Company will, and will cause each of its Subsidiaries to, conduct its
operations in the ordinary course of business consistent with past practice and,
to the extent consistent therewith, with no less diligence and effort than would
be applied in the absence of this Agreement, seek to preserve intact its current
business organizations, keep available the service of its current officers and
employees and preserve its relationships with customers, suppliers and others
having business dealings with it to the end that goodwill and ongoing businesses
shall be unimpaired at the Effective Time. Without limiting the generality of
the foregoing, and except as otherwise expressly provided in this Agreement,
prior to the Effective Time, neither the Company nor any of its Subsidiaries
will, without the prior written consent of Parent:
(a) amend its Certificate of Incorporation or Bylaws (or other
similar governing instrument);
(b) authorize for issuance, issue, sell, deliver or agree or
commit to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or otherwise)
any stock of any class or any other securities or equity equivalents (including,
without limitation, any stock options or stock appreciation rights), except for
the issuance of Shares upon the exercise of options outstanding under the
Company's 1992 Stock Option Plan and listed in Section 2.2(a) of the Company's
Disclosure Schedule, in accordance with the terms of such Plan and options as in
effect on the date hereof;
(c) split, combine or reclassify any shares of its capital
stock, declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its capital
stock, make any other actual, constructive or deemed distribution in respect of
any shares of its capital stock or otherwise make any payments to stockholders
in their capacity as such or redeem or otherwise acquire any of its securities
or any securities of any of its Subsidiaries, except for the regular quarterly
dividend on the Shares not in excess of $ .30 per share per quarter;
30
(d) adopt a plan of complete or partial liquidation,
dissolution, merger, consolidation, restructuring, recapitalization or other
reorganization of the Company or any of its Subsidiaries (other than the
Merger);
(e) alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or ownership of
any Subsidiary;
(f) (i) incur or assume any long-term or short-term debt or
issue any debt securities; (ii) assume, guarantee, endorse or otherwise become
liable or responsible (whether directly, contingently or otherwise) for the
obligations of any other person except in the ordinary course of business
consistent with past practice and in amounts not material to the Company and its
Subsidiaries, taken as a whole, and except for obligations of the wholly owned
subsidiary of the Company; (iii) make any loans, advances or capital
contributions to, or investments in, any other person (other than to a
Subsidiary of the Company or customary loans or advances to employees in the
ordinary course of business consistent with past practice and in amounts not
material to the maker of such loan or advance); (iv) pledge or otherwise
encumber shares of capital stock of the Company or its Subsidiaries; or (v)
mortgage or pledge any of its material assets, tangible or intangible, or create
or suffer to exist any material Lien thereupon;
(g) except as may be required by law or as contemplated by
this Agreement, enter into, adopt or amend or terminate any bonus, profit
sharing, compensation, severance, termination, stock option, stock appreciation
right, restricted stock, performance unit, stock equivalent, stock purchase
agreement, pension, retirement, deferred compensation, employment, severance or
other employee benefit agreement, trust, plan, fund or other arrangement for the
benefit or welfare of any director, officer or employee in any manner, or
increase in any manner the compensation or fringe benefits of any director,
officer or employee or pay any benefit not required by any plan and arrangement
as in effect as of the date hereof (including, without limitation, the granting
of stock appreciation rights or performance units);
(h) acquire, sell, lease or dispose of any assets outside the
ordinary course of business or any assets which in the aggregate are material to
the Company and its Subsidiaries taken as a whole, or enter into any commitment
or transaction outside the ordinary course of business consistent with past
practice;
31
(i) except as may be required as a result of a change in law
or in generally accepted accounting principles, change any of the accounting
principles or practices used by it;
(j) revalue in any material respect any of its assets,
including, without limitation, writing down the value of inventory or
writing-off notes or accounts receivable other than in the ordinary course of
business or as required by GAAP;
(k) (i) acquire (by merger, consolidation, or acquisition of
stock or assets) any corporation, partnership or other business organization or
division thereof or any equity interest therein; (ii) other than in the ordinary
course of business consistent with past practice, enter into any contract or
agreement or amend any of the Contracts or the agreements referred to in Section
2.16, provided that in no event shall the Company or any of its Subsidiaries
amend, modify or extend any of the agreements set forth in Section 2.18(a) of
the Company's Disclosure Schedule; (iii) authorize any new capital expenditure
or expenditures which, individually, is in excess of $30,000 or, in the
aggregate, are in excess of $100,000; or (iv) enter into or amend any contract,
agreement, commitment or arrangement providing for the taking of any action that
would be prohibited hereunder;
(l) pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business of claims, liabilities reflected or reserved against in, or
contemplated by, the consolidated financial statements (or the notes thereto) of
the Company and its Subsidiaries or incurred in the ordinary course of business
consistent with past practice;
(m) settle or compromise any pending or threatened suit,
action or claim relating to the transactions contemplated hereby;
(n) make or revoke any material tax election or settle or
compromise any tax liability material to the Company and its Subsidiaries taken
as a whole; or
(o) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.1(a) through 4.1(n) or any action which would
make any of the representations or warranties of the Company contained in this
Agreement untrue or incorrect.
32
SECTION 4.2. Conduct of Business of Parent. Except as
contemplated by this Agreement, during the period from the date hereof to the
Effective Time, Parent will not, without the prior written consent of Company:
(a) amend its Certificate of Incorporation (except to increase
its authorized capital stock) or Bylaws;
(b) combine or reclassify any shares of its capital stock,
declare, set aside or pay any dividend or other distribution (whether in cash,
stock or property or any combination thereof) in respect of its capital stock,
make any other actual, constructive or deemed distribution in respect of any
shares of its capital stock or otherwise make any payments to stockholders in
their capacity as such, or redeem or otherwise acquire any of its securities, or
(unless a proportionate adjustment shall be made to Merger Consideration) split
its shares of capital stock;
(c) adopt a plan of complete or partial liquidation,
dissolution, restructuring, recapitalization or other reorganization of Parent;
or
(d) take, or agree in writing or otherwise to take, any of the
actions described in Sections 4.2(a) through 4.2(c) or any action which would
make any of the representations or warranties of Parent contained in this
Agreement untrue or incorrect.
SECTION 4.3. Preparation of S-4 and the Proxy Statement.
Parent will, as promptly as practicable, prepare and file with the SEC the S-4,
containing a proxy statement/prospectus and a form of proxy, in connection with
the registration under the Securities Act of the shares of Parent Common Stock
issuable upon conversion of the Shares and the other transactions contemplated
hereby. The Company will, as promptly as practicable, prepare and file with the
SEC the Proxy Statement that will be the same proxy statement/prospectus
contained in the S-4 and a form of proxy, in connection with the vote of the
Company's stockholders with respect to the Merger. Parent and the Company will,
and will cause their accountants and lawyers to, use their best efforts to have
or cause the S-4 declared effective as promptly as practicable, including,
without limitation, causing their accountants to deliver necessary or required
instruments such as opinions and certificates, and will take any other action
required or necessary to be taken under federal or state securities laws or
otherwise in connection with the registration process, it being understood and
agreed that ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP, counsel to the Company, will render the
tax opinion referred to in Section 5.2(d) on (i) the date the preliminary Proxy
Statement is filed with the SEC and (ii) the date the S-4 is filed with the SEC.
Each of the Company
33
and, if applicable, Parent will use its best efforts to cause the Proxy
Statement to be mailed to its stockholders at the earliest practicable date.
SECTION 4.4. Other Potential Acquirors. (a) The Company, its
affiliates and their respective officers, directors, employees, representatives
and agents shall immediately cease any existing discussions or negotiations, if
any, with any parties conducted heretofore with respect to any acquisition of
all or any material portion of the assets of, or any equity interest in, the
Company or its Subsidiaries or any business combination with the Company or its
Subsidiaries. The Company may, directly or indirectly, furnish information and
access, in each case only in response to unsolicited requests therefor, to any
corporation, partnership, person or other entity or group pursuant to
confidentiality agreements, and may participate in discussions and negotiate
with such entity or group concerning any merger, sale of assets, sale of shares
of capital stock or similar transaction involving the Company or any Subsidiary
or division of the Company, if such entity or group has submitted a written
proposal to the Company Board relating to any such transaction and the Company
Board determines in its good faith judgment, after consultation with and based
upon the advice of independent legal counsel, that it is required to do so to
comply with its fiduciary duties to stockholders under applicable law. The
Company Board shall provide a written notice to Parent and Acquisition
describing in reasonable detail the material terms and conditions of any such
proposal as promptly as reasonably practicable following prompt consideration
thereof by the Company Board and shall keep Parent and Acquisition advised
thereafter of material developments with respect thereto as promptly as
reasonably practicable. Except as set forth above, neither the Company nor any
of its affiliates shall, nor shall the Company authorize or permit any of its or
their respective officers, directors, employees, representatives or agents to
directly or indirectly, encourage, solicit, participate in or initiate
discussions or negotiations with, or provide any information to, any
corporation, partnership, person or other entity or group (other than Parent and
Acquisition, any affiliate or associate of Parent and Acquisition or any
designees of Parent and Acquisition) concerning any merger, sale of assets, sale
of shares of capital stock or similar transaction involving the Company or any
Subsidiary or division of the Company; provided, however, that nothing herein
shall prevent the Company Board from taking, and disclosing to the Company's
stockholders, a position contemplated by Rules 14d-9 and 14e-2 promulgated under
the Exchange Act with regard to any tender offer; provided, further, that
nothing herein shall prevent the Company Board from making such disclosure to
the Company's stockholders as, in the good faith judgment of the Company Board,
after consultation with and based upon the advice of independent legal counsel,
is required to comply with its fiduciary duties to stockholders under applicable
law.
34
(b) Except as set forth in this Section 4.4, the Company Board
shall not approve or recommend, or cause the Company to enter into any agreement
with respect to, any Third Party Acquisition (as defined in Section 6.1).
Notwithstanding the foregoing, if the Board of Directors of the Company, after
consultation with and based upon the advice of independent legal counsel,
determines in good faith that it is necessary to do so in order to comply with
its fiduciary duties to stockholders under applicable law, the Company Board may
approve or recommend a Superior Proposal (as defined below) or cause the Company
to enter into an agreement with respect to a Superior Proposal, but in each case
only after a reasonable period following delivery of a written notice to Parent
and Acquisition containing the information specified in Section 4.4(a) hereof
including the identity of the person making such Superior Proposal. In addition,
if the Company proposes to enter into an agreement with respect to any Third
Party Acquisition, it shall concurrently with entering into such an agreement
pay, or cause to be paid, to Parent the fee required by Section 6.3(a) hereof.
For purposes of this Agreement, a "Superior Proposal" means any bona fide
proposal to acquire, directly or indirectly, for consideration consisting of
cash and/or securities, more than 50% of the Shares then outstanding or all or
substantially all the assets of the Company and otherwise on terms which the
Company Board determines in its good faith judgment (based on the advice of a
financial advisor of nationally recognized reputation) to be more favorable to
the Company's stockholders than the Merger.
SECTION 4.5. Letters of Accountants. The Company shall use its
best efforts to cause to be delivered to Parent a letter of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
the Company's independent auditors, and Parent shall use its best efforts to
cause to be delivered to the Company a letter of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP ("AA"),
Parent's independent auditors, in each case dated a date within two business
days before the date on which the S-4 shall become effective and addressed to
the recipients thereof, in form and substance reasonably satisfactory to such
recipients and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the S-4.
SECTION 4.6. Meeting. The Company shall call a meeting of its
stockholders to be held as promptly as practicable for the purpose of voting
upon this Agreement and related matters. The Company and Acquisition will,
through their respective Boards of Directors recommend to their respective
stockholders approval of such matters; provided, however, that the Company Board
may withdraw its recommendation if the Company Board by a majority vote
determines in its good faith judgment, after consultation with and based upon
the advice of independent legal counsel, that it is required to do so to comply
with its fiduciary duties to stockholders
35
under applicable law. The Company and Parent shall coordinate and cooperate with
respect to the timing of such meetings and shall use their best efforts to hold
such meetings on the same day and as soon as practicable after the date hereof.
SECTION 4.7. Stock Exchange Listing. Parent shall use its best
efforts to cause the shares of Parent Common Stock to be issued in the Merger
and the shares of Parent Common Stock to be reserved for issuance upon exercise
of Company Stock Options to be approved for listing on the NYSE, subject to
official notice of issuance, prior to the Closing Date.
SECTION 4.8. Access to Information.
(a) Between the date hereof and the Effective Time, the
Company will give Parent and Acquisition and their authorized representatives
reasonable access to all employees, plants, offices, warehouses and other
facilities and to all books and records of the Company and its Subsidiaries,
will permit Parent and Acquisition to make such inspections as Parent and
Acquisition may reasonably require and will cause the Company's officers and
those of its Subsidiaries to furnish Parent and Acquisition with such financial
and operating data and other information with respect to the business,
properties and personnel of the Company and its Subsidiaries as Parent or
Acquisition may from time to time reasonably request, provided that no
investigation pursuant to this Section 4.8(a) shall affect or be deemed to
modify any of the representations or warranties made by the Company.
(b) Between the date hereof and the Effective Time, Parent
shall furnish to the Company and its authorized representatives reasonable
access to such material information relating to the business and financial
condition of Parent as the Company may reasonably request, provided that such
information shall not include detail with respect to employee compensation and
benefit matters or information subject to confidentiality restrictions binding
on Parent.
(c) Each of the parties will hold and will cause its
consultants and advisors to hold in confidence all documents and information
concerning the other parties hereto furnished in connection with the
transactions contemplated by this Agreement pursuant to the terms of that
certain Confidentiality Agreement entered into between the Company and Parent
dated February 5, 1997.
SECTION 4.9. Additional Agreements; Best Efforts. Subject to
the terms and conditions herein provided, each of the parties hereto agrees to
use best
36
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things reasonably necessary, proper or advisable under applicable laws
and regulations to consummate and make effective the transactions contemplated
by this Agreement, including, without limitation, (i) cooperation in the
preparation and filing of the Proxy Statement and the S-4, any filings that may
be required under the HSR Act, and any amendments to any thereof; (ii)
contesting any legal proceeding relating to the Merger; and (iii) the execution
of any additional instruments, including the Certificate of Merger, necessary to
consummate the transactions contemplated hereby. Subject to the terms and
conditions of this Agreement, Parent and Acquisition agree to use all reasonable
efforts to cause the Effective Time to occur as soon as practicable after the
shareholder vote or votes with respect to the Merger. In case at any time after
the Effective Time any further action is necessary to carry out the purposes of
this Agreement, the proper officers and directors of each party hereto shall
take all such necessary action.
SECTION 4.10. Consents. Parent, Acquisition and the Company
each will use all reasonable efforts to obtain consents of all third parties and
Governmental Entities necessary, proper or advisable for the consummation of the
transactions contemplated by this Agreement.
SECTION 4.11. Public Announcements. Parent, Acquisition and
the Company, as the case may be, will consult with one another before issuing
any press release or otherwise making any public statements with respect to the
transactions contemplated by this Agreement, including, without limitation, the
Merger. Immediately following the execution and delivery hereof the Company will
announce the suspension of its previously announced stock purchase program.
37
SECTION 4.12. Indemnification; Directors' and Officers'
Insurance.
(a) Parent and Acquisition agree that all rights to
indemnification or exculpation now existing in favor of the directors, officers,
employees and agents of the Company and its Subsidiaries as provided in their
respective Certificates of Incorporation or Bylaws (or other similar governing
instruments) or otherwise in effect as of the date hereof with respect to
matters occurring prior to the Effective Time shall survive the Merger and shall
continue in full force and effect for a period of six (6) years from the
Effective Time; provided, however, that all rights to indemnification in respect
of any claim (a "Claim") asserted or made within such period shall continue
until the disposition of such Claim. To the maximum extent permitted by the
DGCL, such indemnification shall be mandatory rather than permissive and the
Surviving Corporation shall advance expenses in connection with such
indemnification to the fullest extent permitted under applicable law, provided
that the person to whom expenses are advanced provides an undertaking to repay
such advances if it is ultimately determined that such person is not entitled to
indemnification); provided, however, the indemnification provided hereunder
shall not be greater than the indemnification permissible pursuant to the
Company's or its Subsidiaries' respective Certificates of Incorporation and
Bylaws (or other similar governing instruments), as in effect as of the date
hereof.
(b) Parent shall cause the Surviving Corporation to maintain
in effect for not less than three years from the Effective Time policies of the
directors' and officers' liability and fiduciary insurance substantially on the
terms pursuant to which Parent's directors currently are insured with respect to
claims arising from facts or events occurring prior to the Effective Time to the
extent required to cover the types of actions and omissions with respect to
which Parent's directors are currently insured (provided that the Surviving
Corporation shall not be required to pay an annual premium for such insurance in
excess of 200% of the premiums paid as of the Effective Date for such insurance
("Current Premium"), and if such premiums for such insurance would at any time
exceed 200% of the Current Premium, the Parent shall cause Surviving Corporation
to maintain policies of insurance which, in Parent's good faith determination,
provide the maximum coverage available at an annual premium equal to 200% of the
Current Premium).
(c) In the event Parent or any of its successors or assigns
(i) consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger or
(ii) transfers or conveys all or substantially all of its properties and assets
to any person, then, and in
38
each such case, to the extent necessary, proper provision shall be made so that
the successors and assigns of Parent assume the obligations set forth in this
section.
(d) The provisions in this Section 4.12 (i) are intended to be
for the benefit of, and shall be enforceable by, each person entitled to
indemnification hereunder, and each such person's heirs and representatives and
(ii) are in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have by contract or
otherwise.
SECTION 4.13. Notification of Certain Matters. The Company
shall give prompt notice to Parent and Acquisition, and Parent and Acquisition
shall give prompt notice to the Company, of (i) the occurrence or nonoccurrence
of any event the occurrence or nonoccurrence of which would be likely to cause
any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at or prior to the Effective Time, (ii) any
material failure of the Company, Parent or Acquisition, as the case may be, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder, (iii) any notice of, or other communication
relating to, a default or event which, with notice or lapse of time or both,
would become a default, received by it or any of its Subsidiaries subsequent to
the date of this Agreement and prior to the Effective Time, under any contract
material to the financial condition, properties, businesses or results of
operations of it and its Subsidiaries taken as a whole to which it or any of its
Subsidiaries is a party or is subject, (iv) any notice or other communication
from any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement, or
(v) any material adverse change in their respective financial condition,
properties, businesses, results of operations or prospects, taken as a whole,
other than changes resulting from general economic conditions; provided,
however, that the delivery of any notice pursuant to this Section 4.13 shall not
cure such breach or non-compliance or limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
SECTION 4.14. Pooling. The Company and Parent each agrees that
it will not take any action which could prevent the Merger from being accounted
for as a "pooling-of-interests" for accounting purposes and the Company will
bring to the attention of Parent, and Parent will bring to the attention of the
Company, any actions, or agreements or understandings, whether written or oral,
to act that could be reasonably likely to prevent Parent from accounting for the
Merger as a "pooling-of-interests." Concurrently herewith, AA has delivered to
Parent a letter to the effect that Parent qualifies for pooling-of-interests
accounting and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ has delivered to
39
the Company a letter to the effect that the Company qualifies for
pooling-of-interests accounting. Parent shall use commercially reasonable
efforts to have AA deliver updating confirmation of AA's letter to Parent, and
the Company shall use commercially reasonable efforts to have ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
deliver updating confirmation of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇'▇ letter to the Company, in each
case upon the filing of the S-4 and upon the mailing of the Proxy Statement. The
Company and Parent each shall use commercially reasonable efforts to cause their
respective accountants to cooperate fully with the other in connection with the
delivery of such confirmations.
SECTION 4.15. Tax-Free Reorganization Treatment. The Company,
and Parent and Acquisition shall each execute and deliver to ▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇ LLP, counsel to the Company, and to Weil, Gotshal & ▇▇▇▇▇▇ LLP, counsel to
Parent and Acquisition, a certificate substantially in the form attached hereto
as Exhibits D and E, respectively, at such time or times as reasonably requested
by such law firms in connection with their delivery of opinions with respect to
the transactions contemplated hereby, and shall provide a copy of such
certificate to the Company and to Parent and Acquisition, respectively. None of
the Company, Parent or Acquisition shall take or cause to be taken any action
which would cause to be untrue (or fail to take or cause not to be taken any
action which would cause to be untrue) any of the representations in Exhibits D
and E.
SECTION 4.16. Employment Benefits. Parent shall, for a period
of at least one year following the Closing, use commercially reasonable best
efforts to continue to provide to employees of the Surviving Corporation the
Company's Oxford health plan as currently in effect or, if the continuation of
such plan is not possible or commercially practicable, benefits at least as
favorable as those currently provided under the Oxford plan. With respect to any
employee benefit plans provided to employees of the Company by the Parent after
the Closing Date (the "Parent Employee Plans"), Parent shall grant all employees
of the Surviving Company who become participants in such plans credit for all
services with the Company prior to the Closing Date for purposes of eligibility
and vesting for which such services were recognized by the Company. To the
extent the Parent Employee Plans provide medical or dental welfare benefits
after the Closing Date, Parent shall cause all pre-existing condition exclusions
and actively at work requirements to be waived to the extent allowable under the
Company Employee Plans and Parent shall provide that any expenses incurred on or
before the Closing Date shall be taken into account under the Parent Employee
Plans to the extent satisfied under the Company Employee Plans for purposes of
satisfying the applicable deductible, coinsurance and maximum out-of-pocket
provisions for such employees and their covered dependents. On and after the
Closing Date, Parent shall
40
cause the medical or dental welfare benefit plans covering employees of the
Company to provide continuation coverage (within the meaning of Section 4980B of
the Code) to employees of the Company who terminated prior to the Closing Date
and their dependents.
SECTION 4.17. Company Affiliates. (a) The Company has
identified to Parent each Company Affiliate and each Company Affiliate has
delivered to Parent on or prior to the date hereof, a written agreement (i) that
such Company Affiliate will not sell, pledge, transfer or otherwise dispose of
any shares of Parent Common Stock issued to such Company Affiliate pursuant to
the Merger, except in compliance with Rule 145 promulgated under the Securities
Act or an exemption from the registration requirements of the Securities Act and
(ii) that such Company Affiliate will not thereafter sell or in any other way
reduce such Company Affiliate's risk relative to any shares of Parent Common
Stock received in the Merger (within the meaning of the SEC's Financial
Reporting Release No. 1, "Codification of Financing Reporting Policies," 'SS'
201.01 47 F.R. 21028 (April 15, 1982)), until such time as financial results
(including combined sales and net income) covering at least 30 days of
post-merger operations have been published, except as permitted by Staff
Accounting Bulletin No. 76 issued by the SEC.
(b) Parent shall use its best efforts to publish no later than
30 days after the end of the first calendar month after the Effective Time in
which there are at least 30 days of financial results for post-merger
operations, the financial results required by Section 4.17(a) above.
SECTION 4.18. SEC Filings. Each of Parent and the Company
shall promptly provide the other party (or its counsel) with copies of all
filings made by the other party or any of its Subsidiaries with the SEC or any
other state or federal Governmental Entity in connection with this Agreement and
the transactions contemplated hereby.
SECTION 4.19. Guarantee of Performance. Parent hereby
guarantees the performance by Acquisition of its obligations under this
Agreement and the indemnification obligations of the Surviving Corporation
pursuant to Section 4.12(a) hereof.
41
ARTICLE 5
CONDITIONS TO CONSUMMATION OF THE MERGER
SECTION 5.1. Conditions to Each Party's Obligations to Effect
the Merger. The respective obligations of each party hereto to effect the Merger
is subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) this Agreement shall have been approved and adopted by the
requisite vote of the stockholders of the Company;
(b) no statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or enforced
by any United States court or United States governmental authority which
prohibits, restrains, enjoins or restricts the consummation of the Merger;
(c) any waiting period applicable to the Merger under the HSR
Act shall have terminated or expired, and any other governmental or regulatory
notices or approvals required with respect to the transactions contemplated
hereby shall have been either filed or received;
(d) the S-4 shall have become effective under the Securities
Act and shall not be the subject of any stop order or proceedings seeking a stop
order and Parent shall have received all state securities laws or "blue sky"
permits and authorizations necessary to issue shares of Parent Common Stock in
exchange for the Shares in the Merger;
(e) Parent shall have received an opinion from AA stating that
the Merger will be accounted for under GAAP as a "pooling-of-interests," and
such opinion shall not have been withdrawn or modified in any material respect;
and
(f) the Employment Agreements shall be in full force and
effect.
SECTION 5.2. Conditions to the Obligations of the Company. The
obligation of the Company to effect the Merger is subject to the satisfaction at
or prior to the Effective Time of the following conditions:
(a) the representations of Parent and Acquisition contained in
this Agreement or in any other document delivered pursuant hereto shall be true
and correct
42
in all material respects at and as of the Effective Time with the same effect as
if made at and as of the Effective Time, and at the Closing Parent and
Acquisition shall have delivered to the Company a certificate to that effect;
(b) each of the obligations of Parent and Acquisition to be
performed at or before the Effective Time pursuant to the terms of this
Agreement shall have been duly performed in all material respects at or before
the Effective Time and at the Closing Parent and Acquisition shall have
delivered to the Company a certificate to that effect;
(c) the shares of Parent Common Stock issuable to the Company
stockholders pursuant to this Agreement and such other shares required to be
reserved for issuance in connection with the Merger shall have been authorized
for listing on the NYSE upon official notice of issuance;
(d) the opinion of ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP, counsel to the
Company, to the effect that (i) the Merger will be treated for Federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the
Code; (ii) each of Parent, Acquisition, and the Company will be a party to the
reorganization within the meaning of Section 368(b) of the Code; and (iii) no
gain or loss will be recognized by shareholders of the Company with respect to
shares of Parent Common Stock received in the Merger in exchange for Shares,
except with respect to cash received in lieu of fractional shares;
(e) Parent shall have obtained the consent or approval of each
person whose consent or approval shall be required in connection with the
transactions contemplated hereby under any loan or credit agreement, note,
mortgage, indenture, lease or other agreement or instrument, except those for
which failure to obtain such consents and approvals would not, in the reasonable
opinion of the Company, individually or in the aggregate, have a Material
Adverse Effect on Parent; and
(f) there shall have been no events, changes or effects with
respect to Parent or its Subsidiaries having or which could reasonably be
expected to have a Material Adverse Effect on Parent.
SECTION 5.3. Conditions to the Obligations of Parent and
Acquisition. The respective obligations of Parent and Acquisition to effect the
Merger are subject to the satisfaction at or prior to the Effective Time of the
following conditions:
43
(a) the representations of the Company contained in this
Agreement or in any other certificate delivered pursuant hereto shall be true
and correct in all material respects at and as of the Effective Time with the
same effect as if made at and as of the Effective Time, and at the Closing the
Company shall have delivered to Parent and Acquisition a certificate to that
effect;
(b) each of the obligations of the Company to be performed at
or before the Effective Time pursuant to the terms of this Agreement shall have
been duly performed in all material respects at or before the Effective Time and
at the Closing the Company shall have delivered to Parent and Acquisition a
certificate to that effect;
(c) each Company Affiliate and each stockholder that is a
party to the Stockholders Agreement shall have performed his or its respective
obligations under the applicable Affiliate Letter and/or the Stockholders
Agreement (if applicable), and Parent shall have received a certificate signed
by each of them to such effect;
(d) the Company shall have obtained the consent or approval of
each person whose consent or approval shall be required in order to permit the
succession by the Surviving Corporation pursuant to the Merger to any
obligation, right or interest of the Company or any Subsidiary of the Company
under any loan or credit agreement, note, mortgage, indenture, lease or other
agreement or instrument, except for those for which failure to obtain such
consents and approvals would not, in the reasonable opinion of Parent,
individually or in the aggregate, have a Material Adverse Effect on the Company;
and
(e) there shall have been no events, changes or effects with
respect to the Company or its Subsidiaries having or which could reasonably be
expected to have, a Material Adverse Effect on the Company.
44
ARTICLE 6
TERMINATION; AMENDMENT; WAIVER
SECTION 6.1. Termination. This Agreement may be terminated and
the Merger may be abandoned at any time, but prior to the Effective Time:
(a) by mutual written consent of Parent, Acquisition and the
Company;
(b) by Parent and Acquisition or the Company if (i) any court
of competent jurisdiction in the United States or other United States
governmental authority shall have issued a final order, decree or ruling or
taken any other final action restraining, enjoining or otherwise prohibiting the
Merger and such order, decree, ruling or other action is or shall have become
nonappealable or (ii) the Merger has not been consummated by August 15, 1997;
provided that no party may terminate this Agreement pursuant to this clause (ii)
if such party's failure to fulfill any of its obligations under this Agreement
shall have been the reason that the Effective Time shall not have occurred on or
before said date;
(c) by the Company if (i) there shall have been a breach of
any representation or warranty on the part of Parent or Acquisition set forth in
this Agreement, or if any representation or warranty of Parent or Acquisition
shall have become untrue, in either case such that the conditions set forth in
Section 5.2(a) would be incapable of being satisfied by August 15, 1997 (or as
otherwise extended), (ii) there shall have been a breach by Parent or
Acquisition of any of their respective covenants or agreements hereunder having
a Material Adverse Effect on the Parent or materially adversely affecting (or
materially delaying) the consummation of the Merger, and Parent or Acquisition,
as the case may be, has not cured such breach within twenty business days after
notice by the Company thereof, provided that the Company has not breached any of
its obligations hereunder, (iii) the Company enters into a definitive agreement
relating to a Superior Proposal in accordance with Section 4.4(b), provided that
such termination under this clause (iii) shall not be effective unless the
Company has complied with all of the provisions of such Section 4.4(b) and until
payment of the fee required by Section 6.3(a) hereof; or (iv) the Average Final
Closing Price shall be less than $20.00.
(d) by Parent and Acquisition if (i) there shall have been a
breach of any representation or warranty on the part of the Company set forth in
this Agreement,
45
or if any representation or warranty of the Company shall have become untrue, in
either case such that the conditions set forth in Section 5.3(a) would be
incapable of being satisfied by August 15, 1997 (or as otherwise extended), (ii)
there shall have been a breach by the Company of its covenants or agreements
hereunder having a Material Adverse Effect on the Company or materially
adversely affecting (or materially delaying) the consummation of the Merger, and
the Company has not cured such breach within twenty business days after notice
by Parent or Acquisition thereof, provided that neither Parent or Acquisition
has breached any of their respective obligations hereunder, (iii) the Company
enters into a definitive agreement relating to any Third Party Acquisition (as
defined below), (iv) the Company Board shall have withdrawn, modified or changed
its approval or recommendation of this Agreement or the Merger, shall have
recommended to the Company's stockholders a Third Party Acquisition, or shall
have adopted any resolution to effect any of the foregoing, (v) the Average
Final Closing Price shall be less than $24.00, or (vi) the Company shall have
convened a meeting of its stockholders to vote upon the Merger and shall have
failed to obtain the requisite vote of its stockholders.
"Third Party Acquisition" means the occurrence of any of the
following events (i) the acquisition of the Company by merger or otherwise by
any person (which includes a "person" as such term is defined in Section
13(d)(3) of the Exchange Act) or entity other than Parent, Acquisition or any
affiliate thereof (a "Third Party"); (ii) the acquisition by a Third Party of
more than 20% of the total assets of the Company and its Subsidiaries, taken as
a whole; or (iii) the acquisition by a Third Party of 20% or more of the
outstanding Shares.
SECTION 6.2. Effect of Termination. In the event of the
termination and abandonment of this Agreement pursuant to Section 6.1, this
Agreement shall forthwith become void and have no effect, without any liability
on the part of any party hereto or its affiliates, directors, officers or
stockholders, other than the provisions of this Section 6.2 and Sections 4.8(c),
6.3 and 7.10 hereof. Nothing contained in this Section 6.2 shall relieve any
party from liability for any breach of this Agreement.
SECTION 6.3. Fees and Expenses.
(a) In the event that this Agreement shall be terminated
pursuant to Section 6.1(c)(iii), Section 6.1(d)(iii) or Section 6.1(d)(iv),
Parent and Acquisition would suffer direct and substantial damages, which
damages cannot be determined with reasonable certainty. To compensate Parent and
Acquisition for such damages, the Company shall pay to Parent as liquidated
damages, which amount shall be payable as
46
the amount of $5,000,000 (less any amounts previously paid to Parent,
Acquisition and their affiliates pursuant to Section 6.3(b)) immediately upon
demand or, in case of any termination pursuant to Section 6.1(c)(iii) or
6.1(d)(iii), at the time specified in Section 4.4(b). It is specifically agreed
that the amount to be paid pursuant to this Section 6.3(a) represents liquidated
damages and not a penalty.
(b) Upon the termination of this Agreement pursuant to
Sections 6.1(d)(i), (ii), (iii), (iv) or (vi), the Company shall reimburse
Parent, Acquisition and their affiliates (not later than ten business days after
submission of statements therefor) for all actual documented out-of-pocket fees
and expenses, actually and reasonably incurred by any of them or on their behalf
in connection with the Merger and the consummation of all transactions
contemplated by this Agreement (including, without limitation, fees payable to
investment bankers, counsel to any of the foregoing, and accountants), in an
aggregate amount not to exceed $1,000,000.
(c) Upon the termination of this Agreement pursuant to
Sections 6.1(c)(i) or (ii), Parent shall reimburse the Company and its
affiliates (not later than ten business days after submission of statements
therefor) for all actual documented out-of-pocket fees and expenses, actually
and reasonably incurred by any of them or on their behalf in connection with the
Merger and the consummation of all transactions contemplated by this Agreement
(including, without limitation, fees payable to investment bankers, counsel to
any of the foregoing, and accountants, in an aggregate amount not to exceed
$1,000,000).
(d) Except as specifically provided in this Section 6.3, each
party shall bear its own expenses in connection with this Agreement and the
transactions contemplated hereby. The cost of printing the S-4 and the Proxy
Statement shall be borne equally by the Company and Parent.
SECTION 6.4. Amendment. This Agreement may be amended by
action taken by the Company, Parent and Acquisition at any time before or after
approval of the Merger by the stockholders of the Company (if required by
applicable law) but, after any such approval, no amendment shall be made which
requires the approval of such stockholders under applicable law without such
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of the parties hereto.
SECTION 6.5. Extension; Waiver. At any time prior to the
Effective Time, each party hereto (for these purposes, Parent and Acquisition
shall together be
47
deemed one party and the Company shall be deemed the other party) may (i) extend
the time for the performance of any of the obligations or other acts of the
other party, (ii) waive any inaccuracies in the representations and warranties
of the other party contained herein or in any document, certificate or writing
delivered pursuant hereto or (iii) waive compliance by the other party with any
of the agreements or conditions contained herein. Any agreement on the part of
either party hereto to any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such party. The failure of
either party hereto to assert any of its rights hereunder shall not constitute a
waiver of such rights.
ARTICLE 7
MISCELLANEOUS
SECTION 7.1. Nonsurvival of Representations and Warranties.
The representations and warranties made herein shall not survive beyond the
Effective Time or a termination of this Agreement.
SECTION 7.2. Entire Agreement; Assignment. This Agreement (a)
constitutes the entire agreement between the parties hereto with respect to the
subject matter hereof and supersedes all other prior agreements and
understandings, both written and oral, between the parties with respect to the
subject matter hereof and (b) shall not be assigned by operation of law or
otherwise; provided, however, that Acquisition may assign any or all of its
rights and obligations under this Agreement to any Subsidiary of Parent, but no
such assignment shall relieve Acquisition of its obligations hereunder if such
assignee does not perform such obligations.
SECTION 7.3. Validity. If any provision of this Agreement, or
the application thereof to any person or circumstance, is held invalid or
unenforceable, the remainder of this Agreement, and the application of such
provision to other persons or circumstances, shall not be affected thereby, and
to such end, the provisions of this Agreement are agreed to be severable.
SECTION 7.4. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
cable, telegram, facsimile or telex, or by registered or certified mail (postage
prepaid, return receipt requested), to the other party as follows:
48
if to Parent or Acquisition: ▇▇▇▇▇▇ COMMUNICATIONS, INC.
Two Democracy Center
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇.
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
if to the Company to: AMERICAN LIST CORPORATION
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as the person to whom notice is given may have
previously furnished to the other in writing in the manner set forth above.
SECTION 7.5. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to the principles of conflicts of law thereof.
SECTION 7.6. Descriptive Headings. The descriptive headings
herein are inserted for convenience of reference only and are not intended to be
part of or to affect the meaning or interpretation of this Agreement.
SECTION 7.7. Parties in Interest. This Agreement shall be
binding upon and inure solely to the benefit of each party hereto and its
successors and permitted assigns, and except as provided in Sections 4.12, 4.16
and 7.2, nothing in
49
this Agreement, express or implied, is intended to or shall confer upon any
other person any rights, benefits or remedies of any nature whatsoever under or
by reason of this Agreement.
SECTION 7.8. Severability. If any term or other provision of
this Agreement is invalid, illegal or unenforceable, all other provisions of
this Agreement shall remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to any party.
SECTION 7.9. Specific Performance. The parties hereto
acknowledge that irreparable damage would result if this Agreement were not
specifically enforced, and they therefore consent that the rights and
obligations of the parties under this Agreement may be enforced by a decree of
specific performance issued by a court of competent jurisdiction. Such remedy
shall, however, not be exclusive and, subject to Section 7.8, shall be in
addition to any other remedies, which any party may have under this Agreement or
otherwise.
SECTION 7.10. Brokers. The Company agrees to indemnify and
hold harmless Parent and Acquisition, and Parent and Acquisition agree to
indemnify and hold harmless the Company, from and against any and all liability
to which Parent and Acquisition, on the one hand, or the Company, on the other
hand, may be subjected by reason of any brokers, finders or similar fees or
expenses with respect to the transactions contemplated by this Agreement to the
extent such similar fees and expenses are attributable to any action undertaken
by or on behalf of the Company, or Parent or Acquisition, as the case may be.
SECTION 7.11. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original, but
all of which shall constitute one and the same agreement.
50
IN WITNESS WHEREOF, each of the parties has caused this
Agreement to be duly executed on its behalf as of the day and year first above
written.
AMERICAN LIST
CORPORATION
ATTEST: By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President and C.E.O.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Associate
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇▇▇▇ COMMUNICATIONS,
INC.
ATTEST: By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice Chairman and C.O.O
By: /s/ ▇▇▇▇▇ ▇. Pavken
--------------------------------------
Name: ▇▇▇▇▇ ▇. Pavken
Title: Assistant Secretary and
Chief Accounting Officer
▇▇▇▇▇▇ Z ACQUISITION, INC.
ATTEST: By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice Chairman and C.O.O.
By: /s/ ▇▇▇▇▇ ▇. Pavken
-----------------------------------
Name: ▇▇▇▇▇ ▇. Pavken
Title: Assistant Secretary
51
EXHIBIT B
STOCKHOLDERS AGREEMENT
AGREEMENT, dated March 18, 1997 (this "Agreement"), by and
among ▇▇▇▇▇▇ COMMUNICATIONS, INC., a Delaware corporation ("Parent"), and each
of the other parties signatory hereto (each, a "Stockholder" and, collectively,
the "Stockholders").
W I T N E S S E T H:
WHEREAS, concurrently herewith, Parent, ▇▇▇▇▇▇ Z ACQUISITION,
INC., a Delaware corporation and a direct wholly-owned subsidiary of Parent
("Merger Sub"), and AMERICAN LIST CORPORATION, a Delaware corporation (the
"Company"), are entering into an Agreement and Plan of Merger (as such agreement
may hereafter be amended from time to time, the "Merger Agreement;" capitalized
terms used and not defined herein have the respective meanings ascribed to them
in the Merger Agreement) pursuant to which Merger Sub will be merged with and
into the Company (the "Merger");
WHEREAS, each of the Stockholders Beneficially Owns (as
defined herein) the number of shares, par value $.01 per share, of common stock
of the Company (the "Shares" or "Company Common Stock") set forth opposite such
Stockholder's name on Schedule I hereto;
WHEREAS, as an inducement and a condition to entering into the
Merger Agreement, Parent has required that the Stockholders agree, and the
Stockholders have agreed, to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the
mutual premises, representations, warranties, covenants and agreements contained
herein, the parties hereto hereby agree as follows:
1. Provisions Concerning Company Common Stock. Each
Stockholder hereby agrees that during the period commencing on the date hereof
and continuing until the first to occur of the Effective Time and termination of
the Merger Agreement in accordance with its terms, at any meeting of the holders
of Company Common Stock, however called, or in connection with any written
consent of the holders of Company Common Stock, such Stockholder shall vote (or
cause to be voted) the Shares held of record or Beneficially Owned (as defined
below) by such Stockholder, whether heretofore owned or hereafter acquired, (i)
in favor of approval
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of the Merger Agreement and any actions required in furtherance thereof and
hereof; (ii) against any action or agreement that would result in a breach in
any respect of any covenant, representation or warranty or any other obligation
or agreement of the Company under the Merger Agreement (after giving effect to
any materiality or similar qualifications contained therein); and (iii) except
as otherwise agreed to in writing in advance by Parent, against the following
actions (other than the Merger and the transactions contemplated by the Merger
Agreement): (A) any extraordinary corporate transaction, such as a merger,
consolidation or other business combination involving the Company; (B) a sale,
lease, transfer or disposition of any assets outside the ordinary course of
business or any assets which in the aggregate are material to the Company and
its Subsidiaries taken as a whole, or a reorganization, recapitalization,
dissolution or liquidation of the Company; (C) (1) any change in a majority of
the persons who constitute the board of directors of the Company; (2) any change
in the present capitalization of the Company or any amendment of the Company's
Certificate of Incorporation or By-Laws; (3) any other material change in the
Company's corporate structure or business; or (4) any other action which, in the
case of each of the matters referred to in clauses (C) (1), (2) or (3), is
intended, or could reasonably be expected, to impede, interfere with, delay,
postpone, or materially adversely affect the Merger and the transactions
contemplated by this Agreement and the Merger Agreement. Such Stockholder shall
not enter into any agreement or understanding with any Person (as defined below)
the effect of which would be inconsistent or violative of the provisions and
agreements contained herein. For purposes of this Agreement, "Beneficially Own"
or "Beneficial Ownership" with respect to any securities shall mean having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")),
including pursuant to any agreement, arrangement or understanding, whether or
not in writing. Without duplicative counting of the same securities by the same
holder, securities Beneficially Owned by a Person shall include securities
Beneficially Owned by all other Persons with whom such Person would constitute a
"group" as within the meanings of Section 13(d)(3) of the Exchange Act. For
purposes of this Agreement, "Person" shall mean an individual, corporation,
partnership, joint venture, association, trust, unincorporated organization or
other entity.
2. Other Covenants, Representations and Warranties. Each
Stockholder hereby represents and warrants to Parent as follows:
(a) Ownership of Shares. Such Stockholder is the Beneficial
Owner of the number of Shares set forth opposite such Stockholder's name on
Schedule I hereto. On the date hereof, the Shares set forth opposite such
Stockholder's name on Schedule I hereto constitute all of the Shares owned of
record or Beneficially Owned by such Stockholder. Such Stockholder has (i) sole
voting power and sole power to issue
B-2
instructions with respect to the matters set forth in Section 1 hereof, sole
power of disposition, sole power of conversion, sole power to demand appraisal
rights and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Shares set forth opposite
such Stockholder's name on Schedule I hereto and denoted by footnote 1, with no
limitations, qualifications or restrictions on such rights or (ii) shared voting
power and shared power to issue instructions with respect to the matters set
forth in Section 1 hereof, shared power of disposition, shared power of
conversion, shared power to demand appraisal rights and shared power to agree to
all of the matters set forth in this Agreement, in each case shared with another
Stockholder party to this Agreement and in each case with respect to all of the
Shares set forth opposite such Stockholder's name on Schedule 1 hereto and
denoted by footnote 2.
(b) Power; Binding Agreement. Such Stockholder has the legal
capacity, power and authority to enter into and perform all of such
Stockholder's obligations under this Agreement. The execution, delivery and
performance of this Agreement by such Stockholder will not violate any other
agreement to which such Stockholder is a party including, without limitation,
any voting agreement, stockholder agreement or voting trust. This Agreement has
been duly and validly executed and delivered by such Stockholder and constitutes
a valid and binding agreement of such Stockholder, enforceable against such
Stockholder in accordance with its terms. There is no beneficiary or holder of a
voting trust certificate or other interest of any trust of which such
Stockholder is Trustee who is not a party to this Agreement and whose consent is
required for the execution and delivery of this Agreement or the consummation by
such Stockholder of the transactions contemplated hereby. If such Stockholder is
married and such Stockholder's Shares constitute community property, this
Agreement has been duly authorized, executed and delivered by, and constitutes a
valid and binding agreement of, such Stockholder's spouse, enforceable against
such person in accordance with its terms.
(c) No Conflicts. (A) No filing with, and no permit,
authorization, consent or approval of, any state or federal public body or
authority is necessary for the execution of this Agreement by such Stockholder
and the consummation by such Stockholder of the transactions contemplated hereby
and (B) none of the execution and delivery of this Agreement by such
Stockholder, the consummation by such Stockholder of the transactions
contemplated hereby or compliance by such Stockholder with any of the provisions
hereof shall (1) result in a violation or breach of, or constitute (with or
without notice or lapse of time or both) a default (or give rise to any third
party right of termination, cancellation, material modification or acceleration)
under any of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, commitment, arrangement, understanding, agreement
or other instrument or
B-3
obligation of any kind to which such Stockholder is a party or by which such
Stockholder or any of such Stockholder's properties or assets may be bound, or
(2) violate any order, writ, injunction, decree, judgment, order, statute, rule
or regulation applicable to such Stockholder or any of such Stockholder's
properties or assets.
(d) No Finder's Fees. Other than existing financial advisory
and investment banking arrangements between the Company and Prudential
Securities Incorporated, no broker, investment banker, financial adviser or
other person is entitled to any broker's, finder's, financial adviser's or other
similar fee or commission in connection with the transactions contemplated by
the Merger Agreement based upon arrangements made by or on behalf of such
Stockholder or any of its affiliates or, to the knowledge of such Stockholder,
the Company or any of its affiliates.
(e) Other Potential Acquirors. Such Stockholder (i) shall
immediately cease any existing discussions or negotiations, if any, with any
parties conducted heretofore with respect to any acquisition of all or any
material portion of the assets of, or any equity interest in, the Company or its
Subsidiaries or any business combination with the Company or its Subsidiaries,
in his, her or its capacity as such, and (ii) from and after the date hereof
until termination of the Merger Agreement, unless and until the Company is
permitted to take such actions under Section 4.4 of the Merger Agreement, shall
not, in such capacity, directly or indirectly, initiate, solicit or knowingly
encourage (including by way of furnishing non-public information or assistance),
or take any other action to facilitate knowingly, any inquiries or the making of
any proposal that constitutes, or may reasonably be expected to lead to, any
such transaction or acquisition, or agree to or endorse any such transaction or
acquisition, or authorize or permit any of such Stockholder's agents to do so.
Such Stockholder shall provide a written notice to Parent and Merger Sub
describing in reasonable detail the material terms and conditions of any such
proposal as promptly as reasonably practicable following receipt thereof by such
Stockholder (in its capacity as such) and shall keep Parent and Acquisition
advised thereafter of material developments with respect thereto as promptly as
reasonably practicable.
(f) Restriction on Transfer, Proxies and Non-Interference.
Such Stockholder shall not, directly or indirectly: (i) except as contemplated
by the Merger Agreement, offer for sale, sell, transfer, tender, pledge,
encumber, assign or otherwise dispose of, or enter into any contract, option or
other arrangement or understanding with respect to or consent to the offer for
sale, sale, transfer, tender, pledge, encumbrance, assignment or other
disposition of, any or all of such Stockholder's Shares or any interest therein;
(ii) grant any proxies or powers of attorney, deposit any Shares into a voting
trust or enter into a voting agreement with respect to any Shares;
B-4
or (iii) take any action that would make any representation or warranty of such
Stockholder contained herein untrue or incorrect or have the effect of
preventing or disabling such Stockholder from performing such Stockholder's
obligations under this Agreement.
(g) Reliance by Parent. Such Stockholder understands and
acknowledges that Parent is entering into, and causing Merger Sub to enter into,
the Merger Agreement in reliance upon such Stockholder's execution and delivery
of this Agreement.
3. Further Assurances. From time to time, at the other party's
request and without further consideration, each party hereto shall execute and
deliver such additional documents and take all such further lawful and
commercially reasonable action as may be necessary or desirable to consummate
and make effective the transactions contemplated by this Agreement.
4. Stop Transfer; Restrictive Legend. (a) Each Stockholder
agrees with, and covenants to, Parent that such Stockholder shall not request
that the Company register the transfer (book-entry or otherwise) of any
certificate or uncertificated interest representing any of such Stockholder's
Shares, unless such transfer is made in compliance with this Agreement. In the
event of a stock dividend or distribution, or any change in the Company Common
Stock by reason of any stock dividend, split-up, recapitalization, combination,
exchange of shares or the like, the term "Shares" shall be deemed to refer to
and include the Shares as well as all such stock dividends and distributions and
any shares into which or for which any or all of the Shares may be changed or
exchanged.
(b) Upon the written request of Parent, all certificates
representing any of such Stockholder's Shares shall contain the following
legend:
"The securities represented by this certificate, including
certain voting and transfer rights with respect thereto, are
subject to the terms of a Stockholders Agreement, dated March
18, 1997, among ▇▇▇▇▇▇ COMMUNICATIONS, INC., the Issuer and
the parties listed on the signature pages thereto, a copy of
which is on file in the principal office of the Issuer."
5. Termination. Except as otherwise provided herein, the
covenants and agreements contained herein with respect to the Shares shall
terminate upon the earliest of (a) termination of the Merger Agreement in
accordance with its terms, (b)
B-5
the Effective Time or (c) at the election of the Stockholders, if the Company's
Board of Directors would have the right to terminate the Merger Agreement under
Section 6.1(c)(iv) thereof.
6. Stockholder Capacity. No person executing this Agreement
who is or becomes during the term hereof a director of the Company makes any
agreement or understanding herein in his or her capacity as such director. Each
Stockholder signs solely in his or her capacity as the record and/or beneficial
owner of such Stockholder's Shares.
7. Miscellaneous.
(a) Entire Agreement. This Agreement and the Merger Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
(b) Certain Events. Each Stockholder agrees that this
Agreement and the obligations hereunder shall attach to such Stockholder's
Shares and shall be binding upon any person or entity to which legal or
beneficial ownership of such Shares shall pass, whether by operation of law or
otherwise, including, without limitation, such Stockholder's heirs, guardians,
administrators or successors. Notwithstanding any transfer of Shares, the
transferor shall remain liable for the performance of all obligations under this
Agreement of the transferor.
(c) Assignment. This Agreement shall not be assigned by
operation of law or otherwise without the prior written consent of the other
party, provided that Parent may assign, in its sole discretion, its rights and
obligations hereunder to any direct or indirect wholly owned subsidiary of
Parent, but no such assignment shall relieve Parent of its obligations hereunder
if such assignee does not perform such obligations.
(d) Amendments, Waivers, Etc. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified or terminated, with
respect to any one or more Stockholders, except upon the execution and delivery
of a written agreement executed by the relevant parties hereto; provided that
Schedule I hereto may be supplemented by Parent by adding the name and other
relevant information concerning any Stockholder of the Company who agrees to be
bound by the terms of this Agreement without the agreement of any other party
hereto, and thereafter such added stockholder shall be treated as a
"Stockholder" for all purposes of this Agreement.
B-6
(e) Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly received if so given) by hand delivery, telegram, telex
or telecopy, or by mail (registered or certified mail, postage prepaid, return
receipt requested) or by any courier service, such as Federal Express, providing
proof of delivery. All communications hereunder shall be delivered to the
respective parties at the following addresses:
If to any Stockholder: At the addresses set forth
on Schedule I hereto
with a copy to: ▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Parent
or Merger Sub: ▇▇▇▇▇▇ Communications, Inc.
Two Democracy Center
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
with a copy to: Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
(f) Severability. Whenever possible, each provision or portion
of any provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any
B-7
applicable law or rule in any jurisdiction, such invalidity, illegality or
unenforceability will not affect any other provision or portion of any provision
in such jurisdiction, and this Agreement will be reformed, construed and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision or portion of any provision had never been contained herein.
(g) Specific Performance. Each of the parties hereto
recognizes and acknowledges that a breach by it of any covenants or agreements
contained in this Agreement will cause the other party to sustain damages for
which it would not have an adequate remedy at law for money damages, and
therefore each of the parties hereto agrees that in the event of any such breach
the aggrieved party shall be entitled to the remedy of specific performance of
such covenants and agreements and injunctive and other equitable relief in
addition to any other remedy to which it may be entitled, at law or in equity.
(h) Remedies Cumulative. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at law or
in equity shall be cumulative and not alternative, and the exercise of any
thereof by any party shall not preclude the simultaneous or later exercise of
any other such right, power or remedy by such party.
(i) No Waiver. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(j) No Third Party Beneficiaries. This Agreement is not
intended to be for the benefit of, and shall not be enforceable by, any person
or entity who or which is not a party hereto.
(k) Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of New York, without giving
effect to the principles of conflicts of law thereof.
(l) Descriptive Headings. The descriptive headings used herein
are inserted for convenience of reference only and are not intended to be part
of or to affect the meaning or interpretation of this Agreement.
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(m) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed to be an original, but all of which,
taken together, shall constitute one and the same Agreement.
B-9
IN WITNESS WHEREOF, Parent and each Stockholder have caused
this Agreement to be duly executed as of the day and year first above written.
▇▇▇▇▇▇ COMMUNICATIONS, INC.
By:__________________________
Name:________________________
Title:_______________________
-----------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇.▇. ▇▇▇▇▇ INVESTMENT BANKING
CORP.
By:__________________________
Name:________________________
Title:_______________________
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Schedule I to
Stockholders Agreement
Name and Address Number of Shares Owned
(1)
▇▇▇▇▇▇ ▇▇▇▇▇▇ 223,525*
(1)
▇.▇. ▇▇▇▇▇ Investment Banking Corp. 711,021
(1) Stockholder has sole power with respect to such shares. See Section 2(a)(i)
of this Agreement.
* Excludes 3,564 shares held by spouse as to which beneficial ownership is
disclaimed.
B-11
EXHIBIT C
March __, 1997
▇▇▇▇▇▇ COMMUNICATIONS, INC.
Two Democracy Drive
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
Reference is made to the provisions of the Agreement and Plan
of Merger, dated as of March 18, 1997 (together with any amendments thereto, the
"Merger Agreement"), among AMERICAN LIST CORPORATION, a Delaware corporation
(the "Company"), ▇▇▇▇▇▇ COMMUNICATIONS, INC., a Delaware corporation ("Parent"),
and ▇▇▇▇▇▇ Z ACQUISITION, INC., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), pursuant to which Merger Sub will be merged
with and into the Company, with the Company continuing as the surviving
corporation (the "Merger"). This letter constitutes the undertakings of the
undersigned contemplated by the Merger Agreement.
I understand that I may be deemed to be an "affiliate" of the
Company, as such term is defined for purposes of Rule 145 ("Rule 145")
promulgated under the Securities Act of 1933, as amended (the "Securities Act"),
and that the transferability of the shares of common stock, par value $.001 per
share, of Parent (the "Parent Shares") which I will receive upon the
consummation of the Merger in exchange for my shares of common stock of the
Company (the "Company Shares"), or upon exercise of certain options I hold to
purchase shares of common stock of the Company is restricted. Nothing herein
shall be construed as an admission that I am an affiliate or as a waiver of any
rights that I may have to object to any claim that I am such an affiliate on or
after the date of this letter.
I hereby represent, warrant and covenant to Parent that:
(a) I will not transfer, sell or otherwise dispose of any of
the Parent Shares except (i) pursuant to an effective registration statement
under the Securities Act, or (ii) as permitted by, and in accordance with, Rule
145, if applicable, or another applicable exemption under the Securities Act;
and
C-1
(b) I will not (i) transfer, sell or otherwise dispose of any
Company Shares or (ii) sell or otherwise reduce my risk (within the meaning of
the Securities and Exchange Commission's Financial Reporting Release No. 1.,
"Codification of Financial Reporting Policies," Section 201.01 [47 F.R. 21028]
(May 17, 1982) with respect to any Parent Shares, in each case until after such
time (the "Delivery Time") as consolidated financial statements which reflect at
least 30 days of post-merger combined operations of Parent and the Company have
been published by Parent, except as permitted by Staff Accounting Bulletin No.
76 issued by the Securities and Exchange Commission; and
(c) I shall execute and deliver to ▇▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇ LLC,
counsel to the Company, and to the Company a certificate in such form as and at
such time or times as may be reasonably requested by such law firm or the
Company, as the case may be, in connection with such law firm's delivery of an
opinion with respect to the transactions contemplated by the Merger Agreement
and shall provide a copy thereof to Parent.
I hereby acknowledge that, except as otherwise provided in the
Merger Agreement, Parent is under no obligation to register the sale, transfer,
pledge or other disposition of the Parent Shares or to take any other action
necessary for the purpose of making an exemption from registration available.
I understand that Parent may issue stop transfer instructions
to its transfer agents with respect to the Parent Shares and that a restrictive
legend will be placed on the certificates delivered to me evidencing the Parent
Shares in substantially the following form:
"This certificate and the shares represented hereby have been
issued pursuant to a transaction governed by Rule 145 ("Rule 145") promulgated
under the Securities Act of 1933, as amended (the "Securities Act"), and may not
be sold or otherwise disposed of unless registered under the Securities Act
pursuant to a Registration Statement in effect at the time or unless the
proposed sale or disposition can be made in compliance with Rule 145 or without
registration in reliance on another exemption therefrom. Reference is made to
that certain letter agreement, dated March , 1997, between the Holder and the
Issuer, a copy of which is on file in the principal office of the Issuer which
contains further restrictions on the transferability of this certificate and the
shares represented hereby."
C-2
Without the consent of J. ▇▇▇▇▇▇ ▇▇▇▇▇, Parent shall not
register any shares of its common stock currently held or beneficially owned by
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in connection with
any registered secondary offering prior to the publication of at least 30 days
of financial results of Parent and its consolidated subsidiaries for the period
following the Merger, provided that the restrictions in this paragraph shall
terminate upon the earlier of (i) the termination of the Merger Agreement for
any reason or (ii) August 15, 1997 unless the Merger shall have been consummated
as of such date.
The term Parent Shares as used in this letter shall mean and
include not only the common stock of Parent as presently constituted, but also
any other stock which may be issued in exchange for, in lieu of, or in addition
to, all or any part of such Parent Shares.
Very truly yours,
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C-3