SOFTKEY/TLC AGREEMENT AND PLAN OF MERGER
AMONG
SOFTKEY INTERNATIONAL INC.,
KIDSCO INC.
AND
THE LEARNING COMPANY
DECEMBER 6, 1995
TABLE OF CONTENTS
Page
1. TENDER OFFER . . . . . . . . . . . . . . . . . . 1
1.1 The Amended Offer . . . . . . . . . . . . . 1
1.2 Compliance and Review . . . . . . . . . . . 2
1.3 Stockholder List . . . . . . . . . . . . . 3
1.4 Directors . . . . . . . . . . . . . . . . . 3
2. PLAN OF MERGER . . . . . . . . . . . . . . . . . 4
2.1 The Merger . . . . . . . . . . . . . . . . 4
2.2 TLC Options . . . . . . . . . . . . . . . . 6
2.3 Effects of the Merger . . . . . . . . . . . 9
2.4 Proxy Statement . . . . . . . . . . . . . . 10
3. REPRESENTATIONS AND WARRANTIES OF TLC . . . . . 10
3.1 Organization; Good Standing; Qualification
and Power . . . . . . . . . . . . . . . . . 11
3.2 Authorization . . . . . . . . . . . . . . . 11
3.3 Capital Structure . . . . . . . . . . . . . 11
3.4 SEC Filings . . . . . . . . . . . . . . . . 12
3.5 Consents and Approvals; Noncontravention . 13
3.6 Litigation . . . . . . . . . . . . . . . . 13
3.7 Broderbund Agreement . . . . . . . . . . . 14
3.8 Absence of Certain Changes . . . . . . . . 14
3.9 TLC Rights Agreement . . . . . . . . . . . 14
3.10 State Takeover Laws . . . . . . . . . . . . 15
4. REPRESENTATIONS AND WARRANTIES OF SOFTKEY . . . 15
4.1 Organization; Good Standing; Qualification
and Power . . . . . . . . . . . . . . . . . 15
4.2 Authorization . . . . . . . . . . . . . . . 15
4.3 Consents and Approvals; Noncontravention . 16
4.4 Litigation . . . . . . . . . . . . . . . . 16
4.5 Financing . . . . . . . . . . . . . . . . . 16
4.6 Interested Stockholders; Beneficial
Ownership . . . . . . . . . . . . . . . . . 16
5. TLC COVENANTS . . . . . . . . . . . . . . . . . 17
5.1 Advice of Changes . . . . . . . . . . . . . 17
5.2 Maintenance of Business . . . . . . . . . . 17
5.3 Conduct of Business . . . . . . . . . . . . 18
5.4 Stockholder Approval . . . . . . . . . . . 21
5.5 Regulatory Approvals . . . . . . . . . . . 21
5.6 Necessary Consents . . . . . . . . . . . . 21
5.7 Access to Information . . . . . . . . . . . 21
5.8 Satisfaction of Conditions Precedent . . . 22
5.9 Litigation . . . . . . . . . . . . . . . . 22
5.10 No Other Negotiations . . . . . . . . . . . 23
6. SOFTKEY COVENANTS . . . . . . . . . . . . . . . 25
6.1 Advice of Changes . . . . . . . . . . . . . 25
6.2 Regulatory Approvals. . . . . . . . . . . . 25
6.3 Necessary Consents. . . . . . . . . . . . . 25
6.4 Satisfaction of Conditions Precedent. . . . 25
6.5 Litigation . . . . . . . . . . . . . . . . 25
6.6 TLC Employee Plans and Benefit
Arrangements. . . . . . . . . . . . . . . . 26
6.7 Indemnification. . . . . . . . . . . . . . 27
6.8 Other Agreements . . . . . . . . . . . . . 29
7. CLOSING MATTERS . . . . . . . . . . . . . . . . 29
7.1 The Closing . . . . . . . . . . . . . . . . 29
7.2 Payment of Merger Consideration. . . . . . 29
7.3 Assumption of Options. . . . . . . . . . . 31
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF TLC . . . 31
8.1 Accuracy of Representations and
Warranties. . . . . . . . . . . . . . . . . 31
8.2 Covenants. . . . . . . . . . . . . . . . . 31
8.3 No Order . . . . . . . . . . . . . . . . . 32
8.4 Other Approvals . . . . . . . . . . . . . . 32
8.5 Stockholder Approval . . . . . . . . . . . 32
8.6 Purchase of Shares . . . . . . . . . . . . 32
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF
SOFTKEY AND KIDSCO . . . . . . . . . . . . . . . 32
9.1 Accuracy of Representations and
Warranties. . . . . . . . . . . . . . . . . 33
9.2 Covenants . . . . . . . . . . . . . . . . . 33
9.3 No Order . . . . . . . . . . . . . . . . . 33
9.4 Other Approvals . . . . . . . . . . . . . . 33
9.5 Stockholder Approval . . . . . . . . . . . 34
9.6 Nonsolicitation . . . . . . . . . . . . . . 34
9.7 Purchase of Shares . . . . . . . . . . . . 34
10. TERMINATION OF AGREEMENT . . . . . . . . . . . . 34
10.1 Termination . . . . . . . . . . . . . . . . 34
10.2 Notice of Termination . . . . . . . . . . . 35
10.3 Effect of Termination . . . . . . . . . . . 36
10.4 Breakup Fee . . . . . . . . . . . . . . . . 36
11. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS . . . . . . . . . . . . . . . . . . . 36
12. MISCELLANEOUS . . . . . . . . . . . . . . . . . 37
12.1 Governing Law . . . . . . . . . . . . . . . 37
12.2 Assignment; Binding Upon Successors and
Assigns . . . . . . . . . . . . . . . . . . 37
12.3 Severability . . . . . . . . . . . . . . . 37
12.4 Counterparts . . . . . . . . . . . . . . . 37
12.5 Other Remedies . . . . . . . . . . . . . . 37
12.6 Amendment and Waivers . . . . . . . . . . . 37
12.7 Expenses . . . . . . . . . . . . . . . . . 38
12.8 Attorneys' Fees . . . . . . . . . . . . . . 38
12.9 Notices . . . . . . . . . . . . . . . . . . 38
12.10 Construction of Agreement . . . . . . 39
12.11 No Joint Venture . . . . . . . . . . . 39
12.12 Further Assurances . . . . . . . . . . 40
12.13 Absence of Third-Party Beneficiary
Rights . . . . . . . . . . . . . . . . . . 40
12.14 Public Announcement . . . . . . . . . 40
12.15 Entire Agreement . . . . . . . . . . . 40
Exhibit A: Form of Certificate of Merger
Exhibit B: Certain Conditions to Offer
Exhibit C: Form of Nonsolicitation Agreement
SOFTKEY/TLC AGREEMENT AND PLAN OF MERGER
THIS SOFTKEY/TLC AGREEMENT AND PLAN OF MERGER (this
"Agreement") is entered into this 6th day of December,
1995 among SoftKey International Inc., a Delaware
corporation ("SoftKey"), Kidsco Inc., a Delaware
corporation and a wholly owned subsidiary of SoftKey
("Kidsco"), and The Learning Company, a Delaware
corporation ("TLC").
RECITALS
The parties intend that, as soon as practicable
after consummation of the Offer (as hereinafter defined),
Kidsco will merge with and into TLC (the "Merger"), with
TLC to be the surviving corporation of the Merger, all
pursuant to the terms and conditions of this Agreement
and (a) a Certificate of Merger substantially in the form
of Exhibit A (the "Certificate of Merger") or (b) if
permitted, Section 253 of the General Corporation Law of
the State of Delaware (the "Delaware Law") and otherwise
in accordance with the applicable provisions of the
Delaware Law. Upon the effectiveness of the Merger, each
outstanding share of TLC Common Stock (as hereinafter
defined) will be converted into the right to receive
$67.50 per share in cash (the "Merger Consideration"),
and SoftKey will assume all outstanding options to
purchase shares of TLC Common Stock, as provided in this
Agreement.
NOW, THEREFORE, the parties hereto hereby agree as
follows:
1. TENDER OFFER
1.1 The Amended Offer. Provided that
this Agreement shall not have been terminated in
accordance with Section 10 hereof and none of the
events set forth in Exhibit B hereto shall have
occurred or be existing, as soon as practicable, and
in any event within five business days of the date
hereof, Kidsco will amend its tender offer for up to
8,590,608 of the outstanding shares of TLC's Common
Stock, par value $.001 per share (the "TLC Common
Stock"), or such lesser number of shares of TLC
Common Stock as may be outstanding upon the
expiration of the Offer (the "Shares"), together
with the Associated Rights (as hereinafter defined),
as set forth in its Offer to Purchase dated October
30, 1995, as amended and supplemented by the first
Supplement (the "First Supplement") to the Offer to
Purchase dated December 4, 1995 (the "Offer to
Purchase"), to (a) extend the Expiration Date (as
defined in the Offer to Purchase) until the date 10
business days from and including the date Kidsco
amends its Tender Offer Statement on Schedule 14D-1
to reflect this Agreement and (b) modify Section 14
of the Offer to Purchase, as amended and
supplemented by Section 10 of the First Supplement,
to read as set forth in Exhibit B (such tender
offer, as so amended, being referred to herein as
the "Offer"). Subject to the terms and conditions
of the Offer, SoftKey will promptly pay $67.50 per
Share, net to the seller in cash, for all Shares
duly tendered that it is obligated to purchase
thereunder with no reduction in the price per Share
to be paid thereunder as a result of the redemption
of the Associated Rights. Without the prior written
consent of TLC, Kidsco will not (i) decrease the
$67.50 per Share Offer price (ii) decrease the
number of Shares to be purchased in the Offer, (iii)
change the form of consideration payable in the
Offer, (iv) add to or change the conditions to the
Offer set forth in Exhibit B provided that, except
as provided in clause (v), any Conditions may be
waived by Kidsco, (v) change or waive the Minimum
Condition (as defined in Exhibit B) or (vi) make any
other change in the terms or conditions of the Offer
which is adverse to the holders of Shares. TLC's
Board of Directors shall recommend acceptance of the
Offer to its stockholders in an amendment to its
Solicitation/Recommendation Statement on Schedule
14D-9 (the "Schedule 14D-9") to be filed with the
Securities and Exchange Commission (the "SEC") as
soon as practicable following the date upon which
Kidsco files an amendment to its Tender Offer
Statement on Schedule 14D-1 (the "Schedule 14D-1")
reflecting this Agreement and containing (including
as exhibits) or incorporating by reference a further
supplement (the "Second Supplement") to the Offer to
Purchase (or portions thereof) and a related,
revised Letter of Transmittal. Subject to the terms
of the Offer and this Agreement and the satisfaction
of all the conditions of the Offer set forth in
Exhibit B, Kidsco will accept for payment and pay
for all Shares validly tendered and not withdrawn
pursuant to the Offer as soon as practicable after
the Expiration Date. Subject to Section 10 hereof,
if the conditions set forth in Exhibit B are not
satisfied or, to the extent permitted by this
Agreement, waived by Kidsco as of the date the Offer
would otherwise have expired, Kidsco will extend the
Offer from time to time until the earlier of the
consummation of the Offer or the Final Date (as
hereinafter defined).
1.2 Compliance and Review. Kidsco
agrees, as to the Schedule 14D-1 and the Second
Supplement and the related, revised Letter of
Transmittal (which together constitute the "Offer
Documents"), and TLC agrees, as to the Schedule 14D-
9, that such documents shall, in all material
respects, comply with the requirements of the
Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations
thereunder and other applicable laws. TLC and its
counsel, as to the Schedule 14D-1, and Kidsco and
its counsel, as to the Schedule 14D-9, shall be
given an opportunity to review such documents prior
to their being filed with the SEC.
1.3 Stockholder List. In connection with
the Offer, TLC will cause its Transfer Agent to
furnish promptly to Kidsco a list, as of a recent
date, of the record holders of shares of TLC Common
Stock and their addresses, as well as mailing labels
containing the names and addresses of all record
holders of shares of TLC Common Stock and lists of
security positions of shares of TLC Common Stock
held in stock depositories. TLC will furnish Kidsco
with such additional information (including, but not
limited to, updated lists of holders of shares of
TLC Common Stock and their addresses, mailing labels
and lists of security positions) and such other
assistance as SoftKey or Kidsco or their agents may
reasonably request in communicating the Offer to the
record and beneficial holders of shares of TLC
Common Stock. Subject to the requirements of
applicable law, and except for such steps as are
necessary or reasonably appropriate to disseminate
the Offer Documents, SoftKey and Kidsco will, and
will cause each of their subsidiaries to, hold in
confidence the information contained in any of such
labels, lists and other information, use such
information received pursuant to this Agreement only
in connection with the Offer and, if this Agreement
is terminated, deliver to TLC all copies of, and
extracts or summaries from, such information then in
their possession.
1.4 Directors. Promptly following
completion of the Offer and if requested by SoftKey,
subject to Section 14(f) of the Exchange Act and
Rule 14f-1 promulgated thereunder, TLC shall take
all actions necessary to cause a number of persons
(rounded up to the nearest whole number) designated
by SoftKey equal to the lesser of (a) the minimum
number necessary to constitute a majority of TLC's
directors or (b) the number which bears the same
ratio to the total number of directors of TLC as the
number of shares of TLC Common Stock purchased by
Kidsco pursuant to the Offer bears to the total
number of outstanding shares of TLC Common Stock, to
become and remain directors of TLC; and TLC shall,
at the request of SoftKey, increase the size of its
Board of Directors or use its best efforts to cause
the resignation of that number of directors which
SoftKey is entitled to designate under this Section
1.4, and with respect to each vacancy created by
such increase or resignations, shall take all action
necessary to effect the election of SoftKey's
designees to the TLC Board of Directors, including
mailing to its stockholders the information required
by Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder; provided, however, that in
no event shall SoftKey be entitled to designate a
majority of TLC's Board of Directors unless SoftKey
then owns Shares entitling it to exercise at least a
majority of the voting power of TLC and provided,
further, that TLC shall not be required to take such
actions necessary to cause the election of any
person as a director if such election would violate
applicable law. After the time that such designees
constitute a majority of the TLC Board of Directors,
any action on the part of TLC with respect to this
Agreement or any of the transactions contemplated
hereby shall require the vote of a majority of the
directors who are not designees of SoftKey.
2. PLAN OF MERGER
2.1 The Merger. Subject to the terms and
conditions of this Agreement, Kidsco will be merged
with and into TLC pursuant to this Agreement and the
Certificate of Merger and in accordance with
applicable provisions of the Delaware Law as
follows:
(a) Conversion of Shares. Each
share of TLC Common Stock and the associated
rights (the "Associated Rights") issued
pursuant to the Rights Agreement (the "TLC
Rights Agreement") between TLC and The First
National Bank of Boston, as Rights Agent, as
amended, that is issued and outstanding
immediately prior to the date and time of
filing of the Certificate of Merger with the
Secretary of State of the State of Delaware
(the "Effective Time"), other than shares and
Associated Rights held by SoftKey or Kidsco
(which shall be cancelled) and, other than
Dissenting Shares (as hereinafter defined),
will by virtue of the Merger and at the
Effective Time, and without any further action
on the part of any holder thereof, be converted
into the right to receive the Merger
Consideration. Shares of TLC stock held by TLC
in its treasury will not be deemed outstanding
for purposes of this Agreement and will not be
converted into cash or any other property.
(b) Stockholders' Meeting. If
approval by TLC's stockholders is required by
applicable law to consummate the Merger, TLC,
acting through its Board of Directors, shall in
accordance with applicable law as soon as
practicable following the consummation of the
Offer:
(i) duly call, give notice of,
convene and hold an annual or special
meeting of its stockholders (the "TLC
Stockholders Meeting") for the purpose of
considering and taking action upon this
Agreement;
(ii) subject to its fiduciary
duties under applicable law, include in
the Proxy Statement (as hereinafter
defined) the recommendation of TLC's Board
of Directors that stockholders of the
Company vote in favor of the approval and
adoption of this Agreement and the
transactions contemplated hereby; and
(iii) use its best efforts
(A) to obtain and furnish the information
required to be included by it in the Proxy
Statement and, after consultation with
SoftKey and Kidsco, respond promptly to
any comments made by the SEC with respect
to the Proxy Statement and any preliminary
version thereof and cause the Proxy
Statement to be mailed to its stockholders
at the earliest practicable time following
the consummation of the Offer and (B) to
obtain the necessary approvals by its
stockholders of this Agreement and the
transactions contemplated hereby.
At such meeting, SoftKey and Kidsco will
vote all TLC Common Stock owned by them in
favor of this Agreement and the transactions
contemplated hereby. In the event that Kidsco
owns at least 90% of the outstanding shares of
TLC Common Stock after consummation of the
Offer, Kidsco agrees to effect the Merger under
Section 253 of the Delaware Law as soon as
practicable after the consummation of the
Offer.
(c) Dissenting Shares.
Notwithstanding anything in this Agreement to
the contrary, shares of TLC Common Stock
outstanding immediately prior to the Effective
Time and held by a holder who has not voted in
favor of the Merger or consented thereto in
writing and who has demanded appraisal for such
shares of TLC Common Stock in accordance with
the Delaware Law ("Dissenting Shares") shall
not be converted into the right to receive the
Merger Consideration unless such holder fails
to perfect or withdraws or otherwise loses his
right to appraisal. If, after the Effective
Time, such holder fails to perfect or withdraws
or loses his right to appraisal, such shares of
TLC Common Stock shall be treated as if they
had been converted as of the Effective Time
into the right to receive the Merger
Consideration without interest thereon. TLC
shall give SoftKey prompt notice of any demands
received by TLC for appraisal of shares of TLC
Common Stock, and, prior to the Effective Time,
SoftKey and Kidsco shall have the right to
participate in all negotiations and proceedings
with respect to such demands. Prior to the
Effective Time, TLC shall not, except with the
prior written consent of SoftKey and Kidsco,
make any payment with respect to, or settle or
offer to settle, any such demands.
2.2 TLC Options.
(a) The date on which any Shares are
first accepted for payment under the Offer is
sometimes referred to herein as the "Tender
Closing Date" and the acceptance of any such
Shares for payment is sometimes referred to
herein as the "Tender Closing." Except for
those individuals who are subject to the profit
recovery provisions of Section 16 of the
Exchange Act (each a "Section 16b Holder"), TLC
shall provide holders of all stock options
("TLC Options") issued under each of the TLC
Plans (as defined in Section 3.3(c)) that are
vested and exercisable as of the Tender Closing
Date, with the opportunity to elect to receive
cash, on the Tender Closing Date, in an amount
determined as set forth below in exchange for
each such vested and exercisable TLC Option.
TLC shall take all actions necessary to provide
that, as to those holders who so elect to
receive cash, each such vested and exercisable
TLC Option shall be cancelled on the Tender
Closing Date, and in consideration of such
cancellation, and except to the extent that
SoftKey or Kidsco and the holder of any such
TLC Option otherwise agree, TLC shall pay to
each such holder of such vested and exercisable
TLC Options an amount in cash in respect
thereof equal to the product of (1) the excess
of $67.50 over the exercise price thereof and
(2) the number of shares of TLC Common Stock
subject thereto.
(b) TLC and SoftKey shall take such
action as is necessary so that each outstanding
TLC Option as to which an election to receive
cash is not made (or, under the terms of
Section 2.2(a) hereof, is not permitted to be
made) shall be assumed by SoftKey and shall
remain outstanding after the Closing Date (as
defined in Section 7.1 below). SoftKey shall
assume such TLC Options in such manner that
SoftKey (i) is a corporation "assuming a stock
option in a transaction to which Section 424(a)
applies" within the meaning of Section 424 of
the Internal Revenue Code of 1986, as amended
(the "Code"), or (ii) to the extent that
Section 424 of the Code does not apply to any
such TLC Options, would be such a corporation
were Section 424 applicable to such option.
Unless by its terms it vests earlier, each TLC
Option assumed or to be assumed by SoftKey
shall become fully vested and exercisable on
the 30th day after the Closing Date except that
(i) such option shall be exercisable for that
number of shares of SoftKey Common Stock equal
to the product of (x) the number of shares of
TLC Common Stock for which such option was
exercisable and (y) the Exchange Ratio (as
defined below) rounded down to the nearest
whole share, and (ii) the exercise price of
such option shall be equal to the exercise
price of such option divided by the Exchange
Ratio rounded up to the nearest whole cent.
For purposes of this Section 2.2, "Exchange
Ratio" shall mean an amount equal to the Merger
Consideration divided by the volume-weighted
average of the closing prices of SoftKey's
common stock, $0.01 par value ("SoftKey Common
Stock"), on the Nasdaq National Market for the
10 trading days ending on the Closing Date.
(c) Notwithstanding Section 2.2(a)
and Section 2.2(b), an option holder's TLC
Options shall vest and become exercisable
immediately prior to the earlier of (i) the
date on which such holder's employment
(including such holder's position as a director
of TLC) is terminated by reason of death,
disability or by SoftKey, Kidsco or their
affiliates (including for purposes of this
Section 2.2, TLC from and after the Tender
Closing) and (ii) the date on which the option
holder terminates his employment (including
such holder's position as a director of TLC)
for Good Reason (as hereafter defined).
(d) For purposes of this Section
2.2, termination of employment for "Good
Reason" shall mean the occurrence of any one of
the following after the Closing Date: (i) the
assignment to the option holder of any duties
inconsistent in any material respect with the
option holder's position (including offices,
titles and reporting levels) or authority as of
the date hereof, or any other action by SoftKey
or its affiliates which results in a diminution
in such position or authority; (ii) SoftKey or
its affiliates requiring the option holder to
be based at any office or location other than
the office or location at which the option
holder was based on the date hereof; (iii) any
change in the option holder's title, position,
offices, reporting levels from the same on the
date hereof; or (iv) any reduction in the
option holder's compensation or fringe
benefits; provided, however, it shall in no
event constitute "Good Reason" (other than
pursuant to clause (ii)) if the option holder
shall retain his or her office, title,
compensation and fringe benefits and shall have
no additional burdensome responsibilities.
(e) As soon as practicable after the
Tender Closing Date, SoftKey shall deliver to
the holders of the TLC Options with respect to
which such holders do not elect (or, under the
terms of Section 2.2(a) hereof, are not
permitted to elect) to receive cash,
appropriate notices setting forth such holders'
rights pursuant to the TLC Stock Option Plans,
and the agreements evidencing the grants of
such TLC Options shall continue in effect on
the same terms and conditions as in effect on
the date hereof (subject to the adjustments
required by this Section 2.2).
(f) SoftKey shall comply with the
terms of the TLC Stock Option Plans and shall
use its best efforts to ensure, to the extent
required by, and subject to the provisions of,
such TLC Stock Option Plans, that the TLC
Options which qualified as incentive stock
options prior to the Tender Closing Date
continue to qualify as incentive stock options
after the Tender Closing Date. SoftKey will
cause the SoftKey Common Stock issuable upon
exercise of the assumed TLC Options to be
registered on a Registration Statement on Form
S-8 as soon as practicable but not later than
10 days after the Effective Time and will use
its best efforts to maintain the effectiveness
of such registration statement or registration
statements for so long as such assumed TLC
Options shall remain outstanding. With respect
to those individuals who subsequent to the
Merger will be subject to the reporting
requirements under Section 16(a) of the
Exchange Act, SoftKey shall administer the TLC
Stock Option Plans assumed pursuant to this
Section 2.2 in a manner that complies with Rule
16b-3 promulgated under the Exchange Act.
SoftKey will reserve a sufficient number of
shares of SoftKey Common Stock for issuance
upon exercise of TLC Options assumed by SoftKey
pursuant to this Section.
(g) Section 16b Holders shall be
permitted (i) to exercise vested TLC Options by
paying the exercise price of such TLC Options
in the form of cash or check to the extent of
the par value of the shares issuable thereunder
and the remainder of such exercise price in the
form of a short-term promissory note payable to
TLC having terms reasonably acceptable to TLC
and (ii) to pay any required withholding taxes
with a short-term promissory note payable to
TLC having terms reasonably acceptable to TLC.
(h) Notwithstanding the foregoing,
each Section 16b Holder issuing a note shall
agree that such holder's stock certificates
representing the shares of TLC Common Stock
otherwise issuable upon exercise of such vested
TLC Options shall be delivered by TLC directly
to the Depositary for the Offer on behalf of
such holder and only on the condition that the
"Special Payment Instructions" box is properly
completed on the related Letter of Transmittal
to provide for payment of the balance under
such notes directly to TLC.
2.3 Effects of the Merger. At the
Effective Time: (a) the separate existence of
Kidsco will cease and Kidsco will be merged with and
into TLC and TLC will be the surviving corporation
of the Merger (the "Surviving Corporation") pursuant
to the terms of this Agreement and the Certificate
of Merger; (b) the certificate of incorporation of
TLC will be the certificate of incorporation of the
Surviving Corporation, except that such certificate
of incorporation will be amended to provide that the
authorized capital stock of the Surviving
Corporation will be 1,000 shares of Common Stock,
par value $.01 per share; (c) the bylaws of TLC
immediately prior to the Effective Time will be the
bylaws of the Surviving Corporation; (d) the
directors of Kidsco immediately prior to the
Effective Time will become the directors of the
Surviving Corporation; (e) the officers of Kidsco
immediately prior to the Effective Time will become
the officers of the Surviving Corporation; (f) each
share of SoftKey Common Stock outstanding
immediately prior to the Effective Time will
continue to be an identical outstanding share of
SoftKey Common Stock; (g) each share of Kidsco
Common Stock, par value $.01 per share, outstanding
immediately prior to the Merger will be converted
into one share of Common Stock of the Surviving
Corporation; (h) each share of TLC Common Stock and
each TLC Option outstanding immediately prior to the
Effective Time will be converted as provided in
Sections 2.1, 2.2 and 2.3; and (i) the Merger will,
from and after the Effective Time, have all of the
effects provided by applicable law, including, but
not limited to, the Delaware Law.
2.4 Proxy Statement. Any proxy materials
distributed to TLC's stockholders in connection with
the Merger, including any amendments or supplements
thereto (the "Proxy Statement"), will comply in all
material respects with applicable federal securities
laws, except that no representation is made by TLC
with respect to information supplied by SoftKey or
Kidsco in writing for inclusion in the Proxy
Statement. None of the information supplied by TLC
in writing for inclusion in the Proxy Statement and
any amendments thereto to be filed with the SEC by
TLC in connection with the transactions contemplated
by this Agreement will, at the respective time (a)
that the Proxy Statement or any amendments or
supplements thereto are filed with the SEC, (b) that
an amendment thereto is mailed to TLC's
stockholders, (c) of the TLC Stockholders Meeting or
(d) of the Effective Time, contain any untrue
statement of a material fact or omit to state any
material fact required to be stated therein or
necessary in order to make the statements therein,
in light of the circumstances under which they are
made, not misleading.
3. REPRESENTATIONS AND WARRANTIES OF TLC
TLC represents and warrants to SoftKey as set
forth below. In this Agreement, any reference to
any event, change or effect being "material" with
respect to any entity or group of entities means any
material event, change or effect related to the
condition (financial or otherwise), properties,
assets, liabilities, businesses, operations or
results of operations of such entity or group of
entities taken as a whole. In this Agreement, the
term "Material Adverse Effect" used in connection
with a party or any of such party's subsidiaries
means any event, change or effect that is materially
adverse to the condition (financial or otherwise),
properties, assets, liabilities, businesses,
operations or results of operations of such party
and its subsidiaries, taken as a whole; provided
that a Material Adverse Effect shall not include any
adverse effect resulting from general economic
conditions or conditions affecting the consumer
software market or the interactive entertainment,
educational or personal productivity sectors of such
market.
3.1 Organization; Good Standing;
Qualification and Power. TLC and each of its
subsidiaries (the "TLC Subsidiaries") is a
corporation duly organized, validly existing and in
good standing under the laws of the state of its
incorporation; has all requisite corporate power and
authority to own, lease and operate its properties
and to carry on its business as now being conducted;
and is duly qualified and in good standing to do
business in each jurisdiction in which the nature of
its business or the ownership or leasing of its
properties makes such qualification necessary, other
than in such jurisdictions where the failure so to
qualify would not have a Material Adverse Effect on
TLC.
3.2 Authorization. TLC has the requisite
corporate power and corporate authority to enter
into this Agreement and the other agreements,
documents and instruments to be executed and
delivered by TLC pursuant hereto (the "Additional
TLC Documents") and to carry out the transactions
contemplated hereby and thereby. The Board of
Directors of TLC has taken all actions required by
law, its certificate of incorporation, its bylaws or
otherwise to be taken by each of them to authorize
the execution, delivery and performance of this
Agreement and the Additional TLC Documents, and when
fully executed and delivered, this Agreement and
each of the Additional TLC Documents will constitute
the valid and binding agreement of TLC, enforceable
against TLC in accordance with its terms.
3.3 Capital Structure.
(a) The authorized capital stock of
TLC consists of 20,000,000 shares of TLC Common
Stock and 1,000,000 shares of Preferred Stock,
$.001 par value (the "TLC Preferred Stock").
At the close of business on December 6, 1995,
7,533,340 shares of TLC Common Stock were
issued and outstanding, no shares of TLC Common
Stock were held by TLC in its treasury,
1,826,212 shares of TLC Common Stock were
reserved for issuance upon the exercise of
outstanding TLC Options. No shares of TLC
Preferred Stock are issued or outstanding. Of
the 1,826,212 outstanding TLC Options, 743,211
TLC Options are presently exercisable. The
monthly vesting schedule of TLC Options which
are not presently exercisable is as set forth
on Schedule 3.3, previously delivered by TLC to
SoftKey. No shares of TLC Common Stock will be
issued except upon exercise of outstanding TLC
Options.
(b) Except for the TLC Options
disclosed in Section 3.3(a) above and the
Associated Rights, there are no options,
warrants, calls, rights, commitments,
conversion rights or agreements of any
character to which TLC or any of the TLC
Subsidiaries is a party or by which TLC or any
of the TLC Subsidiaries is bound obligating TLC
or any of the TLC Subsidiaries to issue,
deliver or sell, or cause to be issued,
delivered or sold, any shares of capital stock
of TLC or any of the TLC Subsidiaries or
securities convertible into or exchangeable for
shares of capital stock of TLC or any of the
TLC Subsidiaries, or obligating TLC or any of
the TLC Subsidiaries to grant, extend or enter
into any such option, warrant, call, right,
commitment, conversion right or agreement.
There are no voting trusts or other agreements
or understandings to which TLC is a party with
respect to the voting of the capital stock of
TLC or any of the TLC Subsidiaries.
(c) All outstanding shares of TLC
Common Stock are validly issued, fully paid and
nonassessable and not subject to preemptive
rights. All outstanding shares of capital
stock of each of the TLC Subsidiaries are
validly issued, fully paid and nonassessable
and are owned by TLC or one of the TLC
Subsidiaries free and clear of any liens,
security interests, pledges, agreements,
claims, charges or encumbrances. TLC has made
available to SoftKey true and correct copies of
its 1986 Stock Option Plan and its Incentive
Stock Option, Nonqualified Stock Option and the
Restricted Stock Purchase Plan-1990, as amended
(collectively, "TLC Plans"), and a correct and
complete list of each TLC Option outstanding as
of the date hereof, including the name of the
holder of such TLC Option, the TLC Plan
pursuant to which such TLC Option was issued,
the security and number of shares covered by
such TLC Option, the per share exercise price
of such TLC Option and the vesting schedule
applicable to each such TLC Option.
3.4 SEC Filings.
(a) TLC has filed all forms, reports
and documents (the "TLC SEC Reports") required
to be filed by it with the SEC since January 1,
1995. The TLC SEC Reports (i) were prepared in
accordance with the requirements of the
Securities Act or the Exchange Act, as the case
may be, and the rules and regulations
thereunder, and (ii) did not at the time they
were filed contain any untrue statement of a
material fact or omit to state a material fact
required to be stated therein or necessary in
order to make the statements made therein, in
the light of the circumstances under which they
were made, not misleading.
(b) Each of the consolidated
financial statements (including, in each case,
any notes thereto) contained in the TLC SEC
Reports was prepared in accordance with United
States generally accepted accounting principles
applied on a consistent basis throughout the
periods indicated (except as may be indicated
in the notes thereto), and each fairly
presented the consolidated financial position,
results of operations and changes in financial
position of TLC and its consolidated
subsidiaries as of the respective dates thereof
and for the respective periods indicated
therein, except as otherwise noted therein
(subject, in the case of unaudited statements,
to normal and recurring year-end adjustments
which were not and are not expected,
individually or in the aggregate, to have a
Material Adverse Effect on TLC).
3.5 Consents and Approvals;
Noncontravention. Neither the execution, delivery
or performance of this Agreement or any of the
Additional TLC Documents by TLC nor the consummation
by TLC of the transactions contemplated hereby or
thereby nor compliance by TLC with any of the
provisions hereof or thereof will (a) violate any
provision of the certificate of incorporation or
bylaws of TLC, (b) except as may be required under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended (the "HSR Act"), require any filing
with, or permit, authorization, consent or approval
of, any court, arbitral tribunal, administrative
agency or commission or other governmental or
regulatory authority or agency (a "Governmental
Entity"), (c) violate any order, writ, injunction,
decree, law, statute, ordinance, rule or regulation
applicable to TLC or any of its properties or assets
or (d) violate any contract to which TLC is a party
or by which it is bound, except in the case of
clauses (c) and (d), for such violations which would
not materially impair the ability of TLC to perform
its obligations hereunder or under any Additional
TLC Documents and which would not, individually or
in the aggregate, have a Material Adverse Effect on
TLC.
3.6 Litigation. Except as set forth in
the TLC SEC Reports or as set forth in Sections 5.9
and 6.5, there is no claim, action, suit, inquiry,
proceeding or investigation by or before any
Governmental Entity pending or, to TLC's knowledge,
threatened against or involving TLC which in any
manner seeks injunctive or other non-monetary relief
with respect to the transactions contemplated hereby
or otherwise seeks to prevent, enjoin, alter or
delay any transactions contemplated hereby. TLC is
not subject to any order, writ, injunction or decree
which, individually or in the aggregate, has or in
the future would have a material adverse effect on
the ability of TLC to consummate the transactions
contemplated hereby.
3.7 Broderbund Agreement. The Agreement
and Plan of Reorganization, dated as of July 31,
1995, by and between Broderbund Software, Inc. and
The Learning Company, as amended (the "Broderbund
Agreement"), has been terminated in accordance with
its terms and does not prevent, restrict or impair
in any respect the consummation of the transactions
contemplated hereby or compliance by TLC with any of
the provisions hereof. TLC has complied with
Section 4.11 of the Broderbund Agreement with
respect to the Offer, the Merger and this Agreement
and is entitled to change its recommendation
concerning the merger provided for in the Broderbund
Agreement and enter into this Agreement thereunder.
3.8 Absence of Certain Changes. From
September 30, 1995, through the date of this
Agreement, except as previously disclosed in the TLC
SEC Reports or to SoftKey and Kidsco in writing,
neither TLC nor any of the TLC Subsidiaries has
(a) taken actions set forth in Section 5.3 which, in
the aggregate, have caused a Material Adverse Effect
on TLC, (b) suffered any Material Adverse Effect or
(c) entered into any material transaction, or
conducted its business or operations, other than in
the ordinary course of business consistent with past
practice.
3.9 TLC Rights Agreement. TLC has
amended the TLC Rights Agreement to provide that the
execution, delivery and performance of this
Agreement and the transactions contemplated hereby
will not (a) cause SoftKey or any of its affiliates
to become an Acquiring Person (as defined in the TLC
Rights Agreement) or (b) otherwise affect the rights
of the holders of Rights (as defined in the TLC
Rights Agreement), including by causing such Rights
to separate from the underlying shares or by giving
such holders the right to acquire securities of any
party hereto. Pursuant to the amendment of the TLC
Rights Agreement in accordance with the foregoing
sentence, the Rights are inapplicable to the Offer
and the Merger and the other transactions
contemplated hereby. The Offer, when amended in
accordance with the terms hereof, shall constitute a
"Permitted Offer," as that term is defined in the
TLC Rights Agreement.
3.10 State Takeover Laws. The Board of
Directors of TLC has approved the transactions
contemplated by this Agreement such that the
provisions of Section 203 of the Delaware Law will
not apply to this Agreement or to any of the
transactions contemplated hereby.
4. REPRESENTATIONS AND WARRANTIES OF SOFTKEY
SoftKey hereby represents and warrants to
TLC that:
4.1 Organization; Good Standing;
Qualification and Power. SoftKey and each of its
subsidiaries which is required to be listed as an
Exhibit to SoftKey's Annual Report on Form 10-K (the
"SoftKey Subsidiaries") is a corporation duly
organized, validly existing and in good standing
under the laws of the state of its incorporation;
has all requisite corporate power and authority to
own, lease and operate its properties and to carry
on its business as now being conducted; and is duly
qualified and in good standing to do business in
each jurisdiction in which the nature of its
business or the ownership or leasing of its
properties makes such qualification necessary, other
than in such jurisdictions where the failure so to
qualify would not have a Material Adverse Effect on
SoftKey.
4.2 Authorization. Each of SoftKey and
Kidsco has the requisite corporate power and
corporate authority to enter into this Agreement and
the other agreements, documents and instruments to
be executed and delivered by each of them pursuant
hereto (the "Additional SoftKey Documents") and to
carry out the transactions contemplated hereby and
thereby. The Boards of Directors of SoftKey and
Kidsco and the sole stockholder of Kidsco have taken
all actions required by law, their respective
certificates of incorporation, their respective
Bylaws or otherwise to be taken by each of them to
authorize the execution, delivery and performance of
this Agreement and the Additional SoftKey Documents,
and when fully executed and delivered, this
Agreement and each of the Additional SoftKey
Documents will constitute the valid and binding
agreements of each of them, as the case may be,
enforceable against each of them, as the case may
be, in accordance with their respective terms.
4.3 Consents and Approvals;
Noncontravention. Neither the execution, delivery
or performance of this Agreement or any of the
Additional SoftKey Documents by SoftKey or Kidsco
nor the consummation by each of them of the
transactions contemplated hereby or thereby nor
compliance by each of them with any of the
provisions hereof or thereof will (a) violate any
provision of the certificates of incorporation or
bylaws of SoftKey or Kidsco, (b) except as may be
required under the HSR Act, require any filing with,
or permit, authorization, consent or approval of,
any Governmental Entity, (c) violate any order,
writ, injunction, decree, law, statute, ordinance,
rule or regulation applicable to SoftKey or any of
its properties or assets or (d) violate any contract
to which SoftKey is a party or by which it is bound,
except in the case of clauses (c) and (d), for such
violations which would not materially impair the
ability of SoftKey to perform its obligations
hereunder or under any Additional SoftKey Documents
and which would not, individually or in the
aggregate, have a Material Adverse Effect on
SoftKey. The waiting period under the HSR Act with
respect to the transactions contemplated by this
Agreement expired without a request for additional
information being issued.
4.4 Litigation. Except as set forth in
Sections 5.9 and 6.5, there is no claim, action,
suit, inquiry, proceeding or investigation by or
before any Governmental Entity pending or, to
SoftKey's knowledge, threatened against or involving
SoftKey or Kidsco which in any manner seeks
injunctive or other non-monetary relief with respect
to the transactions contemplated hereby or otherwise
seeks to prevent, enjoin, alter or delay any
transactions contemplated hereby. Neither SoftKey
nor Kidsco is subject to any order, writ, injunction
or decree which, individually or in the aggregate,
has or in the future would have a material adverse
effect on the ability of SoftKey or Kidsco to
consummate the transactions contemplated hereby.
4.5 Financing. SoftKey's available
funds, together with the proceeds from the sale to
Tribune Company of SoftKey's 51/2% Senior
Convertible/Exchangeable Notes due 2000 which,
absent an injunction, Tribune Company will be
obligated to make available at the Tender Closing,
are sufficient to acquire all outstanding Shares
(and Shares issuable upon exercise of vested and
exercisable TLC Options) in the Offer and the
Merger.
4.6 Interested Stockholders; Beneficial
Ownership. As of the date of this Agreement,
neither SoftKey nor Kidsco nor, to the best
knowledge of SoftKey, any of their respective
affiliates is an "Interested Stockholder" within the
meaning of Section 203 of the Delaware Law. Neither
SoftKey nor Kidsco nor to their knowledge together
with their respective affiliates and associates is
the "Beneficial Owner" (within the meaning of the
TLC Rights Agreement) of 15% or more of the shares
of TLC Common Stock outstanding as of the date
hereof.
5. TLC COVENANTS
5.1 Advice of Changes. During the period
from the date of this Agreement until the earlier of
the Effective Time or the termination of this
Agreement in accordance with its terms, TLC, upon
learning of any such event or occurrence, will
promptly advise SoftKey in writing (a) of any event
occurring subsequent to the date of this Agreement
that would render any representation or warranty of
TLC or SoftKey contained in this Agreement, if made
on or as of the date of such event or the Closing
Date, untrue or inaccurate in any material respect,
(b) of any Material Adverse Effect on TLC and (c) of
any breach by SoftKey of any covenant or agreement
contained in this Agreement. To ensure compliance
with this Section 5.1, TLC shall deliver to SoftKey
as soon as practicable after the end of each monthly
accounting period ending after the date of this
Agreement and before the earlier of the Closing Date
or the termination of this Agreement in accordance
with its terms, an unaudited consolidated balance
sheet, statement of operations and statement of cash
flows for TLC, which financial statements shall be
prepared in the ordinary course of business, in
accordance with TLC's books and records and
generally accepted accounting principles and shall
fairly present the consolidated financial position
of TLC as of their respective dates and the results
of TLC's operations for the periods then ended.
5.2 Maintenance of Business. During the
period from the date of this Agreement until the
earlier of the Effective Time or the termination of
this Agreement in accordance with its terms, TLC
will use its diligent commercial efforts to carry on
and preserve intact the present business
organization, keep available the services of its
present officers and key employees and preserve the
goodwill of its relationships with customers,
suppliers and others having business relationships
with it in substantially the same manner as it has
prior to the date hereof. If TLC becomes aware of
any material deterioration in the relationship with
any material customer, material supplier or key
employee, it will promptly bring such information to
the attention of SoftKey. TLC shall not hire any
person to any position within TLC or as a consultant
to TLC where the total annual compensation payable
to such person, whether in cash or otherwise, would
exceed $75,000.
5.3 Conduct of Business. Except as
provided in this Agreement, during the period from
the date of this Agreement until the earlier of the
Effective Time or the termination of this Agreement
in accordance with its terms, TLC shall conduct its
business and maintain its business relationships
only in the ordinary and usual course consistent
with past practice and shall not, without the prior
written consent of SoftKey:
(a) incur, assume or prepay any
indebtedness or any other liabilities other
than in the ordinary course of business and
consistent with past practice, except for
amounts that are not in the aggregate material
to the financial condition of TLC and the TLC
Subsidiaries, taken as a whole;
(b) enter into any material
contract, commitment or transaction not in the
ordinary course of its business and consistent
with past practice;
(c) encumber or permit to be
encumbered any of its assets except in the
ordinary course of its business and consistent
with past practice;
(d) release, transfer or otherwise
dispose of any of its assets except in the
ordinary course of business and consistent with
past practice;
(e) enter into any material lease or
contract for the purchase or sale or license of
any property, real or personal, except in the
ordinary course of business and consistent with
past practice;
(f) except as previously disclosed
to SoftKey and Kidsco in writing, pay (or make
any oral or written commitments or
representations to pay) any bonus, increased
salary or special remuneration to any officer,
employee or consultant (except for normal
salary increases consistent with past practices
not to exceed 10% per year pursuant to existing
arrangements previously disclosed to SoftKey)
or enter into or vary the terms of any
employment, consulting or severance agreement
with any such person, pay any severance or
termination pay (other than payments made in
accordance with plans or agreements existing on
the date hereof), grant any stock option
(except for normal grants to newly hired or
current employees consistent with past
practices) or issue any restricted stock, or
enter into or modify any agreement or plan or
increase any employee or other benefits;
provided that TLC shall be entitled to pay
annual year-end bonuses in the ordinary course
of business consistent with past practice;
(g) materially change accounting
policies or procedures (except to the extent
required by United States generally accepted
accounting principles);
(h) declare, set aside or pay any
cash or stock dividend or other distribution in
respect of capital stock payable in cash,
capital stock or property, or redeem or
otherwise acquire any of its capital stock or
its Associated Rights (other than pursuant to
arrangements with terminated employees or
consultants in the ordinary course of business
consistent with past practice);
(i) amend or terminate any contract,
agreement or license to which it is a party,
except those amended or terminated in the
ordinary course of its business consistent with
past practice and those which are not material
in amount or effect;
(j) lend any amount to any person or
entity, other than (i) advances for travel and
expenses which are incurred in the ordinary
course of business, consistent with past
practice, not material in amount and documented
by receipts for the claimed amounts, or (ii)
any loans pursuant to any TLC Section 401(a)
Plan;
(k) assume, endorse, guarantee, act
as a surety or otherwise become liable or
responsible (whether directly, contingently or
otherwise) for any obligation except for
obligations in amounts that are not material;
(l) authorize for issuance, issue,
sell or agree to sell any shares of its capital
stock of any class (except upon the exercise of
a bona fide option or warrant currently
outstanding or permitted to be granted under
Section 5.3(f)), rights, or securities of any
kind to acquire rights or securities
convertible into any shares of its capital
stock whether through the issuance or granting
of any warrants, obligations, rights to
purchase, subscriptions, options (except as
expressly permitted under Section 5.3(f)),
convertible securities or other commitments to
issue shares of capital stock, or accelerate or
otherwise modify the vesting of any outstanding
option or other security;
(m) split, combine or reclassify the
outstanding shares of its capital stock of any
class or enter into any recapitalization or
agreement affecting the number or rights of
outstanding shares of its capital stock of any
class or affecting any other of its securities;
(n) merge, consolidate or reorganize
with, or acquire any entity;
(o) amend its certificate of
incorporation or bylaws, or the Rights
Agreement;
(p) license or sublicense any
intellectual property rights owned or licensed
by TLC except in the ordinary course of
business;
(q) permit any material insurance
policy naming TLC as beneficiary or loss payee
to be cancelled or terminated other than in the
ordinary course of business;
(r) acquire or purchase an equity
interest in or a substantial portion of the
assets of another corporation, partnership or
other business organization or otherwise
acquire any assets outside the ordinary and
usual course of business and consistent with
past practice;
(s) authorize or make any capital
contributions in excess of the amounts
currently budgeted therefor;
(t) settle or compromise any tax
liability or file any income tax return prior
to the last day (including extensions)
prescribed by law, in the case of any of the
foregoing, material to the business, financial
condition or results of operations of TLC;
(u) propose, adopt, approve or
implement any plan which could have the effect
of restructuring, prohibiting, impeding or
otherwise affecting the consummation of the
transactions contemplated herein; or
(v) agree to do, or permit any TLC
Subsidiary to do or agree to do, or enter into
negotiations with respect to, any of the things
described in the preceding clauses in this
Section 5.3.
5.4 Stockholder Approval. If the
approval of stockholders of TLC is required, TLC
will promptly call the TLC Stockholders Meeting to
submit this Agreement, the Merger and related
matters for the consideration and approval of the
TLC stockholders. Such approval, if required, will
be recommended by TLC's Board of Directors and
management subject to the fiduciary obligations of
its directors and officers. Such meeting will be
called, held and conducted, and any proxies will be
solicited, in compliance with applicable securities
laws.
5.5 Regulatory Approvals. TLC will
promptly execute and file, or join in the execution
and filing, of any application or other document
that may be necessary in order to obtain the
authorization, approval or consent of any
Governmental Entity, which may be reasonably
required, or which SoftKey may reasonably request,
in connection with the consummation of the
transaction contemplated by this Agreement. TLC
will use its reasonable efforts to promptly obtain
all such authorizations, approvals and consents.
5.6 Necessary Consents. During the term
of this Agreement, TLC will use all reasonable
efforts to obtain such written consents and take
such other actions as may be necessary or
appropriate in addition to those set forth in
Section 5.5 to allow the consummation of the
transactions contemplated hereby and to allow TLC to
carry on its business after the Effective Time.
5.7 Access to Information. TLC will
allow SoftKey and its agents reasonable access
during normal business hours throughout the period
from the date of this Agreement until the earlier of
the Effective Time or the termination of this
Agreement in accordance with its terms, to the
files, books, records (other than privileged
documents and subject to any confidentiality
provisions applicable to communications between TLC
and its counsel), properties, plants and personnel
and, during such period, TLC shall furnish promptly
to SoftKey a copy of each report, schedule and other
document (other than privileged documents and
subject to any confidentiality provisions applicable
to communications between TLC and its counsel) filed
or received by it pursuant to the requirements of
the federal securities laws, provided that no
investigation pursuant to this Section 5.7 shall
affect any representations or warranties made herein
or the conditions to the obligations of SoftKey to
consummate the Merger. In addition, TLC has
delivered to SoftKey the TLC Disclosure Letter
referred to in Article 2 of the Broderbund
Agreement. Unless otherwise required by law,
SoftKey and its representatives shall hold in
confidence all nonpublic information acquired as set
forth in this Section 5.7.
5.8 Satisfaction of Conditions Precedent.
During the term of this Agreement, TLC will use all
reasonable efforts to satisfy or cause to be
satisfied all the conditions precedent that are set
forth in Section 9, and TLC will use all reasonable
efforts to cause the Merger and the other
transactions contemplated by this Agreement to be
consummated.
5.9 Litigation. TLC shall and shall use
all reasonable efforts to cause Tribune Company and
Broderbund Software, Inc. to immediately dismiss,
with prejudice, with each party bearing its own
costs, attorneys' fees and litigation expenses, and
without payment to any adverse party of any damages,
costs, expenses or attorneys fees, all proceedings
pending between them and their affiliates (including
their respective officers and directors) in: Kidsco
Inc. and SoftKey International Inc. v. Xxxxxxx X.
Xxxxxxxx III, Xxxxxxx X. Xxxx, Xxxx X. Xxxxx Xx.,
Xxxxxx Xx, Xxxxxxx X. Xxxxx III, The Learning
Company and Broderbund Software, Inc., Delaware
Chancery, C.A. No. 14649, Xxxxxx, X.X.; Kidsco Inc.
and SoftKey International Inc. v. The Learning
Company and Broderbund Software, Inc., District of
Delaware, C.A. No. 95-733 LON; Kidsco Inc. and
SoftKey International Inc. v. The Learning Company
and Broderbund Software, Inc., Northern District of
California, C.A. No. C-95-4330 SI; The Learning
Company v. SoftKey International Inc., Kidsco Inc.,
Xxxxxxx X. Xxxxx, Xxxxx X'Xxxxx, Xxxxxxx X. Xxxx,
Xxxxxx Xxxxxx, Xxxxxx Xxxxxxxx and Xxxxx X.
Xxxxxxxx, Northern District of California, C.A. No.
C-95-4279 MMC; The Learning Company v. Tribune
Company, Northern District of California, C.A. No.
C-95-4315 CW; and Broderbund Software, Inc. v.
SoftKey International Inc., Kidsco Inc., Xxxxxxx X.
Xxxxx, Xxxxx X'Xxxxx, Xxxxxxx X. Xxxx, Xxxxxx
Xxxxxx, Xxxxxx Xxxxxxxx, and Xxxxx X. Xxxxxxxx,
Northern District of California, C.A. No. C-95-4323
CW; and each shall execute and deliver such further
papers as may be necessary in connection with such
dismissals, including, but not limited to,
exchanging mutual releases with respect or relating
to the subject matter of such proceedings.
5.10 No Other Negotiations. Upon
execution of this Agreement, TLC does not have, or
shall immediately terminate any discussion with, any
third party concerning an Alternative Acquisition
(as defined below). From and after the date of this
Agreement until the earlier of the Effective Time or
the termination of this Agreement in accordance with
its terms, TLC shall not, directly or indirectly,
(a) solicit, engage in discussions or negotiate with
any person (whether such discussions or negotiations
are initiated by TLC or otherwise) or take any other
action intended or designed to facilitate the
efforts of any person, other than SoftKey, relating
to the possible acquisition of TLC or any of the TLC
Subsidiaries (whether by way of merger, purchase of
capital stock, purchase of assets or otherwise) or
any material position of its or their capital stock
or assets (with any such efforts by any such person,
including a firm proposal to make such an
acquisition, to be referred to as an "Alternative
Acquisition"), (b) provide information with respect
to TLC or any of the TLC Subsidiaries to any person,
other than SoftKey, relating to a possible
Alternative Acquisition by any person, other than
SoftKey, (c) enter into an agreement with any
person, other than SoftKey, providing for a possible
Alternative Acquisition or (d) make or authorize any
statement, recommendation or solicitation in support
of any possible Alternative Acquisition by any
person, other than by SoftKey.
Notwithstanding the foregoing, the
restrictions set forth in this Agreement shall not
prevent the Board of Directors of TLC (or its agents
pursuant to its instructions) from taking any of the
following actions: (a) furnishing information
concerning TLC and its business, properties and
assets to any third party or (b) negotiating with
such third party concerning an Alternative
Acquisition provided that all of the following
events shall have occurred: (1) such third party
has made a written proposal to the Board of
Directors of TLC (which proposal may be conditional)
to consummate an Alternative Acquisition which
proposal identifies a price or range of values to be
paid for the outstanding securities or substantially
all of the assets of TLC and if consummated, based
on the advice of TLC's investment bankers, the Board
of Directors of TLC has determined is financially
more favorable to the stockholders of TLC than the
terms of the Merger (a "Superior Proposal"); (2)
TLC's Board of Directors has determined, based on
the advice of its investment bankers, that such
third party is financially capable of consummating
such Superior Proposal; (3) the Board of Directors
of TLC shall have determined, after consultation
with its outside legal counsel, that the fiduciary
duties of the Board of Directors of TLC require TLC
to furnish information to and negotiate with such
third party; and (4) SoftKey shall have been
notified in writing of such Acquisition Proposal,
including all of its terms and conditions, and shall
have been given copies of such proposal.
Notwithstanding the foregoing, TLC shall not provide
any nonpublic information to such third party unless
(A) it has prior to the date thereof provided such
information to SoftKey or SoftKey's representatives;
(B) TLC has notified SoftKey in advance of any such
proposed disclosure of non-public information to any
such third party, with a description of the
information proposed to be disclosed; and (C) TLC
provides such non-public information pursuant to a
nondisclosure agreement with terms which are at
least as restrictive as the nondisclosure agreements
heretofore entered into by TLC.
In addition to the foregoing, TLC shall
not accept or enter into any agreement concerning an
Alternative Acquisition for a period of not less
than 48 hours after SoftKey's receipt of a copy of
such proposal of an Alternative Acquisition. Upon
compliance with the foregoing, TLC shall be entitled
to (i) change its recommendations concerning the
Offer and the Merger and (ii) enter into an
agreement with such third party concerning an
Alternative Acquisition provided that TLC shall
immediately make payment in full to SoftKey of the
Breakup Fee as defined in Section 10.4 below.
If TLC or any of the TLC Subsidiaries
receives any unsolicited offer, inquiry or proposal
to enter into discussions or negotiations relating
to an Alternative Acquisition, TLC shall immediately
notify SoftKey thereof, including information as to
the identity of the party making any such offer,
inquiry or proposal and the specific terms of such
offer, inquiry or proposal, as the case may be.
TLC shall be entitled to provide copies of
this Section 5.10 to third parties who on an
entirely unsolicited basis after the date hereof,
contact TLC concerning an Alternative Acquisition;
provided that SoftKey shall concurrently be notified
of such contact and the delivery of such copy.
6. SOFTKEY COVENANTS
6.1 Advice of Changes. During the period
from the date of this Agreement until the earlier of
the Effective Time or the termination of this
Agreement in accordance with its terms, SoftKey,
upon learning of any such event or occurrence, will
promptly advise TLC in writing (a) of any event
occurring subsequent to the date of this Agreement
that would render any representation or warranty of
SoftKey or TLC contained in this Agreement, if made
on or as of the date of such event or the Closing
Date, untrue or inaccurate in any material respect,
(b) of any Material Adverse Effect on SoftKey and
(c) of any breach by TLC of any covenant or
agreement contained in this Agreement.
6.2 Regulatory Approvals. SoftKey will
promptly execute and file, or join in the execution
and filing, of any application or other document
that may be necessary in order to obtain the
authorization, approval or consent of any
Governmental Entity, which may be reasonably
required, or which TLC may reasonably request, in
connection with the consummation of the transactions
contemplated by this Agreement. SoftKey will use
its reasonable efforts to promptly obtain all such
authorizations, approvals and consents.
6.3 Necessary Consents. During the term
of this Agreement, SoftKey will use all reasonable
efforts to obtain such written consents and take
such other actions as may be necessary or
appropriate in addition to those set forth in
Section 6.1 to allow the consummation of the
transactions contemplated hereby.
6.4 Satisfaction of Conditions Precedent.
During the term of this Agreement, SoftKey will use
all reasonable efforts to satisfy or cause to be
satisfied all the conditions precedent that are set
forth in Section 8, and SoftKey will use all
reasonable efforts to cause the Merger and the other
transactions contemplated by this Agreement to be
consummated.
6.5 Litigation. SoftKey and Kidsco shall
and shall use all reasonable efforts to cause
Tribune Company and Broderbund Software, Inc. to
immediately dismiss, with prejudice, with each party
bearing its own costs, attorneys' fees and
litigation expenses, and without payment to any
adverse party of any damages, costs, expenses or
attorneys' fees, all proceedings pending between
them and their affiliates (including their
respective officers and directors) in: Kidsco Inc.
and SoftKey International Inc. v. Xxxxxxx X.
Xxxxxxxx III, Xxxxxxx X. Xxxx, Xxxx X. Xxxxx Xx.,
Xxxxxx Xx, Xxxxxxx X. Xxxxx III, The Learning
Company and Broderbund Software, Inc., Delaware
Chancery, C.A. No. 14649, Xxxxxx, X.X.; Kidsco Inc.
and SoftKey International Inc. v. The Learning
Company and Broderbund Software, Inc., District of
Delaware, C.A. No. 95-733 LON; Kidsco Inc. and
SoftKey International Inc. v. The Learning Company
and Broderbund Software, Inc., Northern District of
California, C.A. No. C-95-4330 SI; The Learning
Company v. SoftKey International Inc., Kidsco Inc.,
Xxxxxxx X. Xxxxx, Xxxxx X'Xxxxx, Xxxxxxx X. Xxxx,
Xxxxxx Xxxxxx, Xxxxxx Xxxxxxxx and Xxxxx X.
Xxxxxxxx, Northern District of California, C.A. No.
C-95-4279 MMC; The Learning Company v. Tribune
Company, Northern District of California, C.A. No.
C-95-4315 CW; and Broderbund Software, Inc. v.
SoftKey International Inc., Kidsco Inc., Xxxxxxx X.
Xxxxx, Xxxxx X'Xxxxx, Xxxxxxx X. Xxxx, Xxxxxx
Xxxxxx, Xxxxxx Xxxxxxxx, and Xxxxx X. Xxxxxxxx,
Northern District of California, C.A. No. C-95-4323
CW; and each shall execute and deliver such further
papers as may be necessary in connection with such
dismissals, including, but not limited to,
exchanging mutual releases with respect or relating
to the subject matter of such proceedings.
6.6 TLC Employee Plans and Benefit
Arrangements. SoftKey and TLC agree that the TLC
employee plans and benefit arrangements that are in
effect at the date of this Agreement shall, to the
extent practicable, remain in effect, for 30 days
from and after the Effective Time. To the extent
such employee plans and benefit arrangements are
changed or terminated before such date, or SoftKey's
employee plans and benefit arrangements are
substituted after such date, such employee plans and
benefit arrangements shall be no less favorable, in
the aggregate, than the SoftKey employee plans and
benefit arrangements provided to similarly situated
employees of SoftKey. It is the agreement of the
parties that employees of TLC or the TLC
Subsidiaries shall receive credit for time served
with TLC or any of the TLC Subsidiaries, for
purposes of eligibility and vesting with respect to
employee benefit plans. In the case of TLC employee
plans and benefit arrangements under which the
employees' interests are based upon the TLC Common
Stock, such interests shall, from and after the
Effective Time, be based on SoftKey Common Stock in
an equitable manner. SoftKey agrees to pay
severance equal to at least one week's salary for
each full year of service to each employee of TLC or
the TLC subsidiaries whose employment is terminated
within one year of the Effective Time by SoftKey or
its affiliates (including TLC following the
consummation of the Offer).
6.7 Indemnification.
(a) The certificate of incorporation
of the Surviving Corporation shall contain the
provisions with respect to indemnification set
forth in the certificate of incorporation of
TLC on the date of this Agreement, which
provisions shall not be amended, repealed or
otherwise modified for a period of six years
from the Effective Time in any manner that
would adversely affect the rights thereunder of
individuals who at or prior to the Effective
Time were directors, officers, employees or
agents of TLC, unless such modification is
required by law.
(b) After the Effective Time and for
a period of six years after the date hereof,
SoftKey and the Surviving Corporation shall, to
the fullest extent permitted under applicable
law or under SoftKey's or the Surviving
Corporation's certificate of incorporation or
bylaws, indemnify and hold harmless, each
present and former director, officer, employee
or agent of TLC (collectively, the "Indemnified
Parties") against any costs or expenses
(including attorneys' fees), judgments, fines,
losses, claims, damages, liabilities and
amounts paid in settlement in connection with
any claim, action, suit, proceeding or
investigation, whether civil, criminal,
administrative or investigative, arising out of
or pertaining to any action or omission
occurring prior to or at the Effective Time, or
arising out of or pertaining to the
transactions contemplated by this Agreement.
Without limiting the generality of the
foregoing, in the event any such Indemnified
Party is or becomes involved in any capacity in
any action, proceeding or investigation in
connection with any matter, including, without
limitation, the transactions contemplated by
this Agreement, occurring prior to or at the
Effective Time, SoftKey or the Surviving
Corporation shall pay as incurred such
Indemnified Party's legal and other expenses
(including the cost of any investigation and
preparation) incurred in connection therewith.
In the event of any such claim, action, suit,
proceeding or investigation, (i) any counsel
retained by the Indemnified Parties to defend
them with respect to any such claim, action,
suit, proceeding or investigation for any
period after the Effective Time shall be
reasonably satisfactory to the Surviving
Corporation and SoftKey, (ii) after the
Effective Time, the Surviving Corporation and
SoftKey shall pay the reasonable fees and
expenses of such counsel, promptly after
statements therefor are received and (iii) the
Surviving Corporation and SoftKey will
cooperate in the defense of any such matter;
provided, however, that neither the Surviving
Corporation nor SoftKey shall be liable for any
settlement effected without its written consent
(which consent shall not be unreasonably
withheld); and provided further, that, in the
event that any claim or claims for
indemnification are asserted or made within
such six-year period, all rights to
indemnification in respect of any such claim or
claims shall continue until the disposition of
any and all such claims. The Indemnified
Parties as a group may retain only one law firm
to represent them with respect to any single
action unless there is, under applicable
standards of professional conduct, a conflict
on any significant issue between the positions
of any two or more Indemnified Parties.
(c) SoftKey agrees that, from and
after the Effective Time, the Surviving
Corporation shall cause to be maintained in
effect for not less than six years from the
Effective Time the current policies of the
directors' and officers' liability insurance
maintained by TLC; provided that the Surviving
Corporation may substitute therefor policies of
at least the same coverage containing terms and
conditions which are no less advantageous and
provided that such substitution shall not
result in any gaps or lapses in coverage with
respect to matters occurring prior to the
Effective Time; provided, further, that the
Surviving Corporation shall not be required to
pay an annual premium in excess of 150% of the
last annual premium paid by TLC prior to the
date hereof and if the Surviving Corporation is
unable to obtain the insurance required by this
Section 6.7(c) it shall obtain as much
comparable insurance as possible for an annual
premium equal to such maximum amount.
(d) After the Effective Time, the
Surviving Corporation and SoftKey will fulfill
and honor in all respects the obligations of
TLC pursuant to indemnification agreements with
TLC's officers, directors and key employees in
existence at the Effective Time. Such
indemnification agreements have been made
available to SoftKey.
6.8 Other Agreements. SoftKey and TLC
agree (i) to terminate their solicitation of proxies
("Removal Proxies") in connection with the special
meeting of stockholders of TLC that was scheduled to
be held on January 8, 1996 and called to consider,
among other things, removal of all of the current
directors of TLC (the "Removal Special Meeting"),
(ii) to cooperate and take all reasonable efforts to
cause cancellation of the Removal Special Meeting
and (iii) not to vote any Removal Proxies received
from TLC stockholders at the Removal Special
Meeting, if held.
7. CLOSING MATTERS
7.1 The Closing. Subject to the
termination of this Agreement as provided in
Section 10 below, the Closing of the transactions
contemplated by this Agreement (the "Closing") will
take place at the offices of Skadden, Arps, Slate,
Xxxxxxx & Xxxx, Xxx Xxxxxx Xxxxxx, 00xx Xxxxx,
Xxxxxx, Xxxxxxxxxxxxx 00000 on a date (the "Closing
Date") and at a time to be mutually agreed upon by
the parties, which date shall be no later than the
third business day after all conditions to Closing
set forth herein shall have been satisfied or
waived, unless another place, time and date is
mutually selected by TLC and SoftKey. Concurrently
with the Closing, the Certificate of Merger will be
filed in the office of the Secretary of State of the
State of Delaware.
7.2 Payment of Merger Consideration.
(a) Paying Agent. Prior to the
Closing Date, SoftKey shall select a bank or
trust company reasonably acceptable to TLC to
act as paying agent (the "Paying Agent") in the
Merger. Promptly after the Effective Time,
SoftKey shall deposit with the Paying Agent,
for the benefit of the holders of shares of TLC
Common Stock, for payment in accordance with
this Agreement, all funds necessary for the
Paying Agent to make payments of the Merger
Consideration to holders of shares of TLC
Common Stock outstanding immediately prior to
the Effective Time pursuant to this Agreement
(hereinafter referred to as the "Payment
Fund").
(b) Payment Procedures. As soon as
practicable after the Effective Time, the
Paying Agent shall mail to each holder of
record of a certificate or certificates which
immediately prior to the Effective Time
represented issued and outstanding shares of
TLC Common Stock (collectively, the
"Certificates"), (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 Paying Agent and shall
be in such form and have such other provisions
as SoftKey and TLC may reasonably specify) and
(ii) instructions for use in effecting the
surrender of the Certificates in exchange for
the Merger Consideration. Upon surrender of a
Certificate for cancellation to the Paying
Agent, together with a duly executed letter of
transmittal and such other documents as may be
reasonably required by the Paying Agent, the
holder of such Certificate shall be entitled to
receive in exchange therefor an amount in cash
equal to the Merger Consideration multiplied by
the number of shares of TLC Common Stock held
by the holder immediately prior to the
Effective Time, and the Certificate so
surrendered shall forthwith be cancelled. In
the event of a transfer of ownership of shares
of TLC Common Stock which is not registered on
the transfer records of TLC, the appropriate
amount of cash provided for in this Section
7.2(b) may be paid to a transferee if the
Certificate representing such TLC Common Stock
is presented to the Paying 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 7.2, each Certificate shall be deemed,
on and after the Effective Time, to represent
only the right to receive upon such surrender
the appropriate amount of cash provided for in
this Section 7.2(b).
(c) No Further Ownership Rights in
TLC Common Stock. All cash paid to holders of
shares of TLC Common Stock outstanding
immediately prior to the Effective Time shall
be deemed to have been paid in full
satisfaction of all rights pertaining to such
shares of TLC Common Stock, and after the
Effective Time there shall be no further
registration of transfers on the stock transfer
books of the Surviving Corporation of the
shares of TLC Common Stock which were
outstanding immediately prior to the Effective
Time. If, after the Effective Time,
Certificates are presented to the Surviving
Corporation for any reason, they shall be
cancelled and exchanged as provided in this
Section 7.2.
(d) Termination of Payment Fund.
Any portion of the Payment Fund which remains
undistributed to the stockholders of TLC for
six months after the Effective Time shall be
delivered to SoftKey, upon demand, and any
former stockholders of TLC who have not
theretofore complied with this Section 7.2
shall thereafter look only to SoftKey for
payment of their claim for the Merger
Consideration.
(e) No Liability. Neither the
Paying Agent nor TLC shall be liable to any
holder of shares of TLC Common Stock as a
result of the Payment Fund having been
delivered to a public official pursuant to any
applicable abandoned property, escheat or
similar law.
7.3 Assumption of Options. Promptly
after the Effective Time, SoftKey will notify in
writing each holder of a TLC Option of the
assumption of such TLC Option by SoftKey, the number
of shares of SoftKey Common Stock that are then
subject to such option and the exercise price of
such option, as determined pursuant to this
Agreement.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF TLC
The obligations of TLC hereunder are subject to
the fulfillment or satisfaction on or before the
Closing, of each of the following conditions (any
one or more of which may be waived by TLC, but only
in a writing signed by TLC):
8.1 Accuracy of Representations and
Warranties. The representations and warranties of
SoftKey set forth in Section 4 shall be true and
accurate in every material respect on and as of the
Closing Date with the same force and effect as if
they had been made at the Closing except to the
extent the failure of such representations and
warranties to be true and accurate in such respects
has not had and could not reasonably be expected to
have a Material Adverse Effect on SoftKey, and TLC
shall receive a certificate to such effect executed
by SoftKey's Chief Executive Officer and Chief
Financial Officer.
8.2 Covenants. SoftKey shall have
performed and complied in all material respects with
all of its covenants required to be performed by it
under this Agreement on or before the Closing, and
TLC shall receive a certificate to such effect
signed by SoftKey's Chief Executive Officer and
Chief Financial Officer.
8.3 No Order. No Governmental Entity or
federal or state court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive
order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in
effect and which prevents, prohibits or materially
restricts consummation of the Merger or any other
transactions contemplated by this Agreement;
provided, however, that the parties shall use their
reasonable efforts to cause any such decree,
judgment, injunction or other order to be vacated or
lifted.
8.4 Other Approvals. Other than the
filing of merger documents in accordance with the
Delaware Law, all authorizations, consents, waivers,
orders or approvals required to be obtained, and all
filings, notices or declarations required to be
made, by any party hereto prior to the consummation
of the Merger and the other transactions
contemplated by this Agreement shall have been
obtained from, and made with, all required
Governmental Entities, except for such
authorizations, consents, waivers, orders,
approvals, filings, notices or declarations the
failure of which to obtain or make would not have a
Material Adverse Effect.
8.5 Stockholder Approval. If required,
the principal terms of this Agreement and the Merger
shall have been approved and adopted by the TLC
stockholders in accordance with applicable law and
TLC's certificate of incorporation and bylaws.
8.6 Purchase of Shares. Kidsco shall
have purchased Shares pursuant to the Offer.
9. CONDITIONS PRECEDENT TO OBLIGATIONS OF
SOFTKEY AND KIDSCO
The obligations of SoftKey and Kidsco hereunder
are subject to the fulfillment or satisfaction on or
before the Closing, of each of the following
conditions (any one or more of which may be waived
by SoftKey and Kidsco, but only in writing signed by
SoftKey and Kidsco) provided that Section 9.1,
Section 9.2 and Section 9.7 shall not apply from and
after the later to occur of (a) the purchase of
Shares pursuant to the Offer and (b) the date on
which TLC has taken all appropriate actions
theretofore requested by SoftKey and Kidsco to
appoint SoftKey's designees to the Board of
Directors of TLC pursuant to Section 1.4 (the later
of such dates being referred to herein as the "Board
Date"):
9.1 Accuracy of Representations and
Warranties. The representations and warranties of
TLC set forth in Section 3 shall be true and
accurate in every material respect on and as of the
Closing Date with the same force and effect as if
they had been made at the Closing except to the
extent the failure of such representations and
warranties to be true and accurate in such respects
has not had and could not reasonably be expected to
have a Material Adverse Effect on TLC, and SoftKey
shall receive a certificate to such effect executed
by TLC's Chief Executive Officer and Chief Financial
Officer.
9.2 Covenants. TLC shall have performed
and complied in all material respects with all of
its covenants required to be performed by it under
this Agreement or the Merger Agreement on or before
the Closing, and SoftKey shall receive a certificate
to such effect signed by TLC's Chief Executive
Officer and Chief Financial Officer.
9.3 No Order. No Governmental Entity or
federal or state court of competent jurisdiction
shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive
order, decree, injunction or other order (whether
temporary, preliminary or permanent) which is in
effect and which prevents, prohibits or materially
restricts consummation of the Merger or any other
transactions contemplated by this Agreement;
provided, however, that the parties shall use their
reasonable efforts to cause any such decree,
judgment, injunction or other order to be vacated or
lifted.
9.4 Other Approvals. Other than the
filing of merger documents in accordance with the
Delaware Law, all authorizations, consents, waivers,
orders or approvals required to be obtained, and all
filings, notices or declarations required to be
made, by any party hereto prior to the consummation
of the Merger and the other transactions
contemplated by this Agreement shall have been
obtained from, and made with, all required
Governmental Entities, except for such
authorizations, consents, waivers, orders,
approvals, filings, notices or declarations the
failure of which to obtain or make would not have a
Material Adverse Effect.
9.5 Stockholder Approval. If required,
the principal terms of this Agreement and the Merger
shall have been approved by the TLC stockholders in
accordance with applicable law and TLC'S certificate
of incorporation and bylaws.
9.6 Nonsolicitation. Messrs. Xxxx,
Xxxxxxxx and Xxxxxxx each shall have executed and
delivered to SoftKey a Nonsolicitation Agreement
substantially in the form of Exhibit C.
9.7 Purchase of Shares. Kidsco shall
have purchased Shares pursuant to the Offer.
10. TERMINATION OF AGREEMENT
10.1 Termination. This Agreement may be
terminated and the Merger may be abandoned at any
time prior to the Effective Time, whether before or
after approval of the Merger by the stockholders of
TLC, if required:
(a) by mutual written consent of TLC
and SoftKey, by action of their respective
Boards of Directors;
(b) by either party, if Kidsco or
SoftKey shall not have purchased any Shares
pursuant to the Offer on or before the Final
Date (as defined below); provided that no party
shall have the right to terminate this
Agreement under this clause (b) at any time
when it is in material breach of any provision
of this Agreement or the Offer;
(c) by either party, if a permanent
injunction or other order by any federal or
state court which would make illegal or
otherwise permanently restrain or prohibit the
consummation of the Merger shall have been
issued and shall have become final and
nonappealable;
(d) by either party if the Offer
expires or is terminated or withdrawn pursuant
to its terms without any Shares being purchased
thereunder; provided, however, that SoftKey may
not terminate this Agreement pursuant to this
Section 10.1(d) if SoftKey's or Kidsco's
termination of, or failure to accept for
payment or pay for any Shares tendered pursuant
to, the Offer does not follow the occurrence,
or failure to occur, as the case may be, of any
condition set forth in Exhibit B hereto;
(e) by TLC, upon a breach of any
representation, warranty, covenant or agreement
on the part of SoftKey or Kidsco set forth in
this Agreement, or if any representation or
warranty of SoftKey or Kidsco shall have become
untrue, in either case such that the conditions
set forth in Section 8.1 or Section 8.2, as the
case may be, would be incapable of being
satisfied by the Final Date;
(f) by TLC if the Offer has not been
amended as required herein prior to the fifth
business day after the date hereof;
(g) by either party, if the TLC
Board of Directors shall have accepted or
approved, or recommended to the stockholders of
TLC, a Superior Proposal (a "Superior Proposal
Termination"); or
(h) by SoftKey, if the TLC Board of
Directors shall have publicly (including by
amendment of the Schedule 14D-9) withdrawn or
modified, in a manner adverse to SoftKey or
Kidsco, its approval or recommendation of the
Offer, the Merger or this Agreement or shall
have resolved to do so; provided, however, that
SoftKey shall have no right to terminate this
Agreement if as a result of TLC's receipt of a
proposal for an Alternative Acquisition, TLC
withdraws, modifies or amends its approval or
recommendation of the Offer, the Merger or this
Agreement by reason of taking and disclosing to
TLC's stockholders a position contemplated by
Rule 14e-2(a)(2) or (3) promulgated under the
Exchange Act with respect to such proposal, the
Offer, the Merger or this Agreement and if
within five business days of taking and
disclosing to its stockholders the
aforementioned position, TLC publicly
reconfirms its recommendation of the Offer, the
Merger and this Agreement.
As used herein, the "Final Date" shall be March
1, 1996.
10.2 Notice of Termination. Any
termination of this Agreement under Section 10.1
above will be effective by the delivery of written
notice of the terminating party to the other party
hereto.
10.3 Effect of Termination. In the case
of any termination of this Agreement as provided in
this Article 10, this Agreement shall be of no
further force and effect (except as provided in
Section 10.4 and Article 12) and nothing herein
shall relieve any party from liability for any
breach of this Agreement.
10.4 Breakup Fee.
(a) Upon the occurrence of any of
the following events, TLC shall immediately
make payment to SoftKey (by wire transfer or
cashiers check) of a breakup fee in the amount
of $15,000,000 plus $3,000,000 to cover
expenses of SoftKey (collectively, the "Breakup
Fee"): (i) this Agreement is terminated
pursuant to a Superior Proposal Termination;
(ii) the Board of Directors of TLC shall have
refused to recommend or changed its
recommendations concerning the Offer or the
Merger or shall have disclosed, in any manner,
its intention to change such recommendation; or
(iii) TLC shall have terminated this Agreement
after the Final Date, if prior to the Final
Date a third party shall have proposed, or it
shall have been publicly disclosed that a third
party intends to propose an Alternative
Acquisition, and within three months following
the Final Date, TLC shall enter into an
agreement with such third party providing for
an Alternative Acquisition.
(b) Payment of the foregoing fees
shall not be in lieu of damages incurred in the
event of breach of this Agreement.
(c) SoftKey shall not be entitled to
receive the Breakup Fee hereunder if it shall
have committed a material breach of this
Agreement.
11. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND
COVENANTS
All representations, warranties and covenants
of the parties contained in this Agreement will
remain operative and in full force and effect,
regardless of any investigation made by or on behalf
of the parties to this Agreement, until the earlier
of the termination of this Agreement or the Closing
Date, whereupon such representations, warranties and
covenants will expire (except for covenants that by
their terms survive for a longer period).
12. MISCELLANEOUS
12.1 Governing Law. The internal laws of
the State of Delaware (irrespective of its choice of
law principles) will govern the validity of this
Agreement, the construction of its terms and the
interpretation and enforcement of the rights and
duties of the parties hereto.
12.2 Assignment; Binding Upon Successors
and Assigns. Neither party hereto may assign any of
its rights or obligations hereunder without the
prior written consent of the other party hereto.
This Agreement will be binding upon and inure to the
benefit of the parties hereto and their respective
successors and permitted assigns.
12.3 Severability. If any provision of
this Agreement, or the application thereof, will for
any reason and to any extent be invalid or
unenforceable, the remainder of this Agreement and
application of such provision to other persons or
circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The
parties further agree to replace such void or
unenforceable provision of this Agreement with a
valid and enforceable provision that will achieve,
to the greatest extent possible, the economic,
business and other purposes of the void or
unenforceable provision.
12.4 Counterparts. This Agreement may be
executed in any number of counterparts, each of
which will be an original as regards any party whose
signature appears thereon and all of which together
will constitute one and the same instrument. This
Agreement will become binding when one or more
counterparts hereof, individually or taken together,
will bear the signatures of all the parties
reflected hereon as signatories.
12.5 Other Remedies. Except as otherwise
provided herein, any and all remedies herein
expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other
remedy conferred hereby or by law on such party, and
the exercise of any one remedy will not preclude the
exercise of any other.
12.6 Amendment and Waivers. Any term or
provision of this Agreement may be amended, and the
observance of any term of this Agreement may be
waived (either generally or in a particular instance
and either retroactively or prospectively) only by a
writing signed by the party to be bound thereby.
The waiver by a party of any breach hereof or
default in the performance hereof will not be deemed
to constitute a waiver of any other default or any
succeeding breach or default. The Agreement may be
amended by the parties hereto at any time before or
after approval of the TLC stockholders, if required,
but after such approval, if required, no amendment
will be made which by applicable law requires the
further approval of the TLC stockholders without
obtaining such further approval.
12.7 Expenses. Each party will bear its
respective expenses and legal fees incurred with
respect to this Agreement and the transactions
contemplated hereby.
12.8 Attorneys' Fees. Should suit be
brought to enforce or interpret any part of this
Agreement, the prevailing party will be entitled to
recover, as an element of the costs of suit and not
as damages, reasonable attorneys' fees to be fixed
by the court (including, but not limited to, costs,
expenses and fees on any appeal).
12.9 Notices. All notices and other
communications pursuant to this Agreement shall be
in writing and deemed to be sufficient if contained
in a written instrument and shall be deemed given if
delivered personally, telecopied, sent by nationally
recognized overnight courier or mailed by registered
or certified mail (return receipt requested),
postage prepaid, to the parties at the following
address (or at such other address for a party as
shall be specified by like notice):
If to TLC to: The Learning Company
0000 Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
With a copy to: Stradling, Yocca, Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx III, Esq.
Telecopier: (000) 000-0000
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxx X. Xxxxx, Esq.
Telecopier: (000) 000-0000
And if to SoftKey
or Kidsco to: c/o SoftKey International Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: Chief Executive Officer
Telecopier: (000) 000-0000
With a copy to: Skadden, Arps, Slate, Xxxxxxx & Xxxx
Xxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopier: (000) 000-0000
All such notices and other communications shall be
deemed to have been received (a) in the case of
personal delivery, on the date of such delivery, (b)
in the case of a telecopy, when the party receiving
such copy shall have confirmed receipt of the
communication, (c) in the case of delivery by
nationally recognized overnight courier, on the
business day following dispatch, and (d) in the case
of mailing, on the third business day following such
mailing.
12.10 Construction of Agreement. This
Agreement has been negotiated by the respective
parties hereto and their attorneys and the language
hereof will not be construed for or against either
party. A reference to a Section or an Exhibit will
mean a Section in, or Exhibit to, this Agreement
unless otherwise explicitly set forth. The titles
and headings herein are for reference purposes only
and will not in any manner limit the construction of
this Agreement which will be considered as a whole.
12.11 No Joint Venture. Nothing contained
in this Agreement will be deemed or construed as
creating a joint venture or partnership between any
of the parties hereto. No party is by virtue of
this Agreement authorized as an agent, employee or
legal representative of any other party. No party
will have the power to control the activities and
operations of any other. The status of the parties
hereto is, and at all times, will continue to be,
that of independent contractors with respect to each
other. No party will have any power or authority to
bind or commit any other. No party will hold itself
out as having any authority or relationship in
contravention of this Section 12.11.
12.12 Further Assurances. Each party
agrees to cooperate fully with the other parties and
to execute such further instruments, documents and
agreements and to give such further written
assurances as may be reasonably requested by any
other party to evidence and reflect the transactions
described herein and contemplated hereby and to
carry into effect the intents and purposes of this
Agreement.
12.13 Absence of Third-Party Beneficiary
Rights. No provisions of this Agreement are
intended, nor will be interpreted, to provide or
create any third-party beneficiary rights or any
other rights of any kind in any client, customer,
affiliate, stockholder, partner or any party hereto
or any other person or entity unless specifically
provided otherwise herein, and, except as so
provided, all provisions hereof will be personal
solely between the parties to this Agreement.
Anything contained herein to the contrary
notwithstanding, (a) the holders of TLC Options are
intended beneficiaries of Section 2.2; (b) the
employees of TLC are intended beneficiaries of
Section 6.5; and (c) the officers and directors of
TLC and the other Indemnified Parties are intended
beneficiaries of Section 6.6.
12.14 Public Announcement. Upon execution
of this Agreement, SoftKey and TLC promptly will
issue a joint press release approved by both parties
announcing this Agreement. Thereafter, SoftKey or
TLC may issue such press releases, and make such
other disclosure regarding the Merger, as it
determines (after consultation with legal counsel)
are required under applicable securities laws or
rules of The Nasdaq Stock Market.
12.15 Entire Agreement. This Agreement and
the exhibits hereto constitute the entire
understanding and agreement of the parties hereto
with respect to the subject matter hereof and
supersede all prior and contemporaneous agreements
or understandings, inducements or conditions,
express or implied, written or oral, between the
parties with respect hereto. The express terms
hereof control and supersede any course of
performance or usage of trade inconsistent with any
of the terms hereof.
IN WITNESS WHEREOF, the parties hereto have executed
this SoftKey/TLC Agreement and Plan of Merger as of the
date first above written.
SOFTKEY INTERNATIONAL INC.
By: /s/ R. Xxxxx Xxxxxx
Name: R. Xxxxx Xxxxxx
Title: Chief Financial Officer
KIDSCO INC.
By: /s/ R. Xxxxx Xxxxxx
Name: R. Xxxxx Xxxxxx
Title:
THE LEARNING COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx III
Name: Xxxxxxx X. Xxxxxxxx III
Title: President and Chief
Executive Officer
EXHIBIT A
CERTIFICATE OF MERGER
OF
KIDSCO INC.
INTO
THE LEARNING COMPANY
Pursuant to Section 251(c) of the General
Corporation Law of the State of Delaware
The Learning Company, a Delaware corporation, does
hereby certify to the following facts relating to the
merger of Kidsco Inc. into The Learning Company (the
"Merger"):
FIRST: The names and states of incorporation of the
constituent corporations to the Merger are as follows:
Name State
The Learning Company Delaware
Kidsco Inc. Delaware
SECOND: A SoftKey/TLC Agreement and Plan of
Merger dated December 6, 1995 has been approved, adopted,
certified, executed and acknowledged by each of the
constituent corporations in accordance with Section 251
of the General Corporation Law of the State of Delaware.
THIRD: The name of the corporation surviving the
Merger is The Learning Company (the "Surviving
Corporation").
FOURTH: The text of the Certificate of
Incorporation of the Surviving Corporation should be
amended to read as set forth as Exhibit A to this
Certificate of Merger.
FIFTH: An executed copy of the SoftKey/TLC
Agreement and Plan of Merger is on file at the principal
place of business of the Surviving Corporation, Xxx
Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000.
A copy of the SoftKey/TLC Agreement and Plan of
Merger will be furnished upon request and without cost to
any stockholder of either constituent corporation.
IN WITNESS WHEREOF, The Learning Company has caused
this Certificate of Merger to be executed in its
corporate name this day of , 1995.
THE LEARNING COMPANY
By:
Name:
Title:
EXHIBIT B
CERTAIN CONDITIONS OF THE OFFER
Notwithstanding any other provisions of the
Offer, and in addition to (and not in limitation of)
Kidsco's rights to extend and amend the Offer at any time
in its sole discretion (but subject to the terms and
restrictions of the Merger Agreement) Kidsco shall not be
required to accept for payment or, subject to any
applicable rules and regulations of the Commission,
including Rule 14e-1(c) under the Exchange Act (relating
to Kidsco's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the
Offer), pay for, and may delay the acceptance for payment
of or, subject to the restriction referred to above, the
payment for, any tendered Shares, and may terminate the
Offer, if, in the reasonable judgment of SoftKey or
Kidsco (i) the number of Shares, including the Associated
Rights, that have been validly tendered and not withdrawn
prior to the expiration of the Offer, when added to the
number of Shares (and Associated Rights) beneficially
owned by SoftKey, Kidsco and their respective affiliates,
does not constitute a majority of the Shares (and
Associated Rights) outstanding on a fully diluted basis
(the "Minimum Condition") or (ii) at any time on or after
December 6, 1995 and before the time of payment for any
such Shares (whether or not any Shares have theretofore
been accepted for payment pursuant to the Offer) any of
the following events shall occur or shall have occurred:
(a) there shall be instituted or pending any
action or proceeding by any government or
governmental authority or agency, domestic or
foreign, or by any other person, domestic or
foreign, before any court or governmental authority
or agency, domestic or foreign, (i)(A) challenging
or seeking to make illegal, to delay materially or
otherwise directly or indirectly to restrain or
prohibit the making of the Offer, the acceptance for
payment of, or payment for, some or all the Shares
by SoftKey or Kidsco or the consummation by SoftKey
or Kidsco of the Merger, (B) seeking to obtain
material damages or (C) otherwise directly or
indirectly relating to the transactions contemplated
by the Offer or the Merger, (ii) seeking to prohibit
the ownership or operation by SoftKey or Kidsco or
any other affiliates of SoftKey or Kidsco of all or
any portion of the business or assets of TLC and its
subsidiaries, taken as a whole, or of SoftKey or
Kidsco, or to compel SoftKey, Kidsco or any other
affiliates of SoftKey or Kidsco to dispose of or
hold separately all or any material portion of the
business or assets of TLC and its subsidiaries,
taken as a whole, or seeking to impose any material
limitation on the ability of SoftKey, Kidsco or any
other affiliates of SoftKey or Kidsco to conduct
their respective businesses or own such assets,
(iii) seeking to impose limitations on the ability
of SoftKey or Kidsco or any other affiliates of
SoftKey or Kidsco effectively to exercise full
rights of ownership of the Shares or Associated
Rights, including, without limitation, the right to
vote any Shares acquired by any such person on all
matters properly presented to TLC's stockholders or
(iv) seeking to require divestiture by SoftKey,
Kidsco or any other affiliates of SoftKey or Kidsco
of any Shares;
(b) there shall be any action taken or any
statute, rule, regulation, judgment, order or
injunction proposed, enacted, enforced, promulgated,
amended, issued or deemed applicable to the Offer or
the Merger, by any court, government or
governmental, administrative or regulatory authority
or agency, domestic or foreign, which, is likely to
directly or indirectly result in any of the
consequences referred to in clauses (i) through (iv)
of paragraph (a) above;
(c) TLC shall have breached, or failed to
comply with, in any material respect any of its
obligations under the Agreement which has not been
cured, or any representation or warranty of TLC in
the Agreement shall have been incorrect in any
material respect when made or shall have since
ceased to be true and correct in any material
respect and, in each case, shall continue to be
untrue (except that the representations and
warranties contained in Section 3.3(a) and (b) of
the Agreement shall be true and correct without
regard to materiality, if such failure to be true
has an adverse effect on SoftKey, Kidsco or their
ability to consummate the Offer);
(d) the Agreement shall have been terminated
in accordance with its terms or SoftKey or Kidsco
shall have reached an agreement or understanding in
writing with TLC providing for termination or
amendment of the Offer;
which, in the reasonable judgment of SoftKey or Kidsco in
any such case, and regardless of the circumstances giving
rise to any such condition, makes it inadvisable to
proceed with the Offer and/or with such acceptance for
payment or payment.
The foregoing conditions are for the sole
benefit of either SoftKey and Kidsco and may be asserted
by either SoftKey or Kidsco in its sole discretion
regardless of the circumstances giving rise to any such
conditions or may be waived by SoftKey or Kidsco in its
sole discretion in whole or in part at any time and from
time to time, in each case, subject to the terms of the
Agreement. The failure by SoftKey or Kidsco at any time
to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, and each such right
shall be deemed an ongoing right which may be asserted at
any time and from time to time. Any determination by
SoftKey or Kidsco concerning any event described in this
Exhibit B shall be final and binding on all parties other
than the Company.
EXHIBIT C
NONSOLICITATION AGREEMENT
This Nonsolicitation Agreement is made as of the
day of December, 1995, between
("Executive") and SoftKey International Inc. ("SoftKey").
For valuable consideration, receipt of which is
acknowledged, the parties hereto agree as follows:
1. Nonsolicitation. For a period of one year from
the date hereof, Executive (other than in Executive's
role as an employee or director of The Learning Company)
shall not: (i) hire, entice or in any other manner
persuade or attempt to persuade any then-current employee
of The Learning Company or any of its subsidiaries to
discontinue his or her relationship or violate any
agreement with any of such companies; provided, however,
that this Agreement shall not be violated if (i)
Executive is an employee, consultant, director, agent or
stockholder of an entity that engages in any of the
foregoing activities, so long as Executive was not
personally involved in such activities and such
activities were not done at Executive's initiation, or
(ii) the contact regarding such matters was initiated by
the employee.
2. Enforceability. In the event the restrictions
contained in Section 1 shall be determined by any court
of competent jurisdiction to be unenforceable by reason
of their extending for too great a period of time or over
too great a geographical area or by reason of their being
too extensive in any other respect, they shall be
interpreted to extend only for the maximum period of time
for which they may be enforceable, and over the maximum
geographical area as to which they may be enforceable,
and to the maximum extent in all other respects as to
which they may be enforceable, all as determined by such
court in such action.
3. Governing Law. This Agreement shall be
governed by the laws of the State of Delaware, without
regard to conflict of laws principles thereof.
IN WITNESS WHEREOF, the parties have duly executed
this Nonsolicitation Agreement as of the date first above
written.
___________________________
SOFTKEY INTERNATIONAL INC.
By:________________________
Name:
Title:
