1
AGREEMENT AND PLAN OF MERGER
By and Among
Xxxxxx Instrument Corporation,
Bravo Acquisition Subsidiary, Inc.
and
Electronic Designs, Inc.
Dated as of
May 3, 1998
2
TABLE OF CONTENTS
Page
----
ARTICLE I TERMS AND EFFECTS OF THE MERGER.................................. 1
1.1 The Merger....................................................... 1
1.2 Effective Time................................................... 1
1.3 Merger Consideration............................................. 2
1.4 Stockholders' Rights upon Merger................................. 2
1.5 Surrender and Exchange of Shares................................. 3
1.6 Options and Warrants............................................. 4
1.7 Certificate of Incorporation..................................... 5
1.8 Bylaws........................................................... 5
1.9 Directors and Officers of Surviving Corporation.................. 5
1.10 Statutory Effects of Merger...................................... 6
1.11 Registration Statement; Prospectus/Proxy Statement.............. 6
1.12 Tax-Free Reorganization.......................................... 8
1.13 Additional Actions............................................... 9
1.14 Authorized Shares................................................ 9
1.15 Indemnification.................................................. 9
1.16 Listing Application.............................................. 11
1.17 Voting Agreements................................................ 11
1.18 Ancillary Assumption Agreements.................................. 11
ARTICLE II REPRESENTATIONS, WARRANTIES AND CERTAIN
COVENANTS OF EDI........................................................ 12
2.1 Organization and Good Standing................................. 12
2.2 Capitalization................................................. 12
2.3 Subsidiaries................................................... 13
2.4 Authorization; Binding Agreement............................... 13
2.5 Governmental Approvals......................................... 14
2.6 No Violations.................................................. 14
2.7 Securities Filings and Litigation.............................. 15
2.8 EDI Financial Statements....................................... 15
2.9 Absence of Certain Changes or Events........................... 16
2.10 Compliance with Laws........................................... 16
2.11 Permits........................................................ 16
2.12 Finders and Investment Bankers................................. 17
2.13 Contracts...................................................... 17
2.14 Employee Benefit Plans......................................... 17
2.15 Taxes and Returns.............................................. 18
2.16 Fairness Opinion............................................... 19
2.17 Takeover Statutes.............................................. 19
(i)
3
Page
----
2.18 Intellectual Property Rights..................................... 19
2.19 Certain Business Relationships with Affiliates................... 20
2.20 Environmental Matters............................................ 20
2.21 Labor Matters.................................................... 21
2.22 Disclosure....................................................... 21
ARTICLE III REPRESENTATIONS, WARRANTIES AND
CERTAIN COVENANTS OF XXXXXX............................................. 21
3.1 Organization and Good Standing................................... 22
3.2 Capitalization................................................... 22
3.3 Subsidiaries..................................................... 22
3.4 Authorization; Binding Agreement................................. 23
3.5 Governmental Approvals........................................... 23
3.6 No Violations.................................................... 24
3.7 Securities Filings and Litigation................................ 24
3.8 Xxxxxx Financial Statements...................................... 25
3.9 Absence of Certain Changes or Events............................. 25
3.10 Compliance with Laws............................................. 26
3.11 Permits.......................................................... 26
3.12 Finders and Investment Bankers................................... 26
3.13 Contracts........................................................ 26
3.14 Employee Benefit Plans........................................... 27
3.15 Taxes and Returns................................................ 27
3.16 Fairness Opinion................................................. 28
3.17 Takeover Statutes................................................ 28
3.18 Xxxxxx Rights Plan............................................... 28
3.19 Intellectual Property Rights..................................... 29
3.20 Certain Business Relationships with Affiliates................... 29
3.21 Environmental Matters............................................ 29
3.22 Labor Matters.................................................... 30
3.23 Disclosure....................................................... 30
ARTICLE IV ADDITIONAL COVENANTS OF EDI...................................... 31
4.1 Conduct of Business of EDI and EDI Subsidiaries.................. 31
4.2 Notification of Certain Matters.................................. 32
4.3 Access and Information........................................... 33
4.4 Stockholder Approval............................................. 33
4.5 Reasonable Business Efforts...................................... 33
4.6 Public Announcements............................................. 34
4.7 Compliance....................................................... 34
4.8 No Solicitation.................................................. 34
4.9 SEC and Stockholder Filings...................................... 35
4.10 Tax Opinion Certification........................................ 35
(ii)
4
Page
----
4.11 Affiliate Agreements............................................. 35
4.12 Takeover Statutes................................................ 35
ARTICLE V ADDITIONAL COVENANTS OF XXXXXX................................... 36
5.1 Conduct of Business of Xxxxxx and the Xxxxxx Subsidiaries........ 36
5.2 Notification of Certain Matters.................................. 37
5.3 Access and Information........................................... 38
5.4 Shareholder Approval............................................. 38
5.5 Reasonable Business Efforts...................................... 38
5.6 Public Announcements............................................. 39
5.7 Compliance....................................................... 39
5.8 No Solicitation.................................................. 39
5.9 SEC and Shareholder Filings...................................... 40
5.10 Tax Opinion Certificates......................................... 40
5.11 Board Representation and Officers................................ 40
5.12 Employee Benefit Plans........................................... 41
5.13 Takeover Statutes................................................ 41
ARTICLE VI CONDITIONS...................................................... 41
6.1 Conditions to Each Party's Obligations........................... 41
6.1.1 Stockholder Approval...................................... 41
6.1.2 No Injunction or Action................................... 42
6.1.3 Governmental Approvals.................................... 42
6.1.4 HSR Act................................................... 42
6.1.5 Required Consents......................................... 42
6.1.6 Registration Statement.................................... 43
6.1.7 Blue Sky.................................................. 43
6.1.8 Tax Opinion............................................... 43
6.1.9 Listing of Xxxxxx Stock................................... 43
6.2 Conditions to Obligations of EDI................................. 43
6.2.1 Xxxxxx Representations and Warranties..................... 43
6.2.2 Performance by Xxxxxx..................................... 43
6.2.3 No Material Adverse Change................................ 43
6.2.4 Certificates and Other Deliveries......................... 43
6.2.5 Election of Nominees...................................... 44
6.3 Conditions to Obligations of Xxxxxx.............................. 44
6.3.1 EDI Representations and Warranties........................ 44
6.3.2 Performance by EDI........................................ 44
6.3.3 No Material Adverse Change................................ 44
6.3.4 Certificates and Other Deliveries......................... 44
6.3.5 Affiliate Agreements...................................... 45
ARTICLE VII TERMINATION AND ABANDONMENT.................................... 45
(iii)
5
Page
----
7.1 Termination...................................................... 45
7.2 Effect of Termination and Abandonment............................ 47
7.3 Procedure Upon Termination....................................... 48
ARTICLE VIII MISCELLANEOUS................................................. 48
8.1 Confidentiality.................................................. 48
8.2 Amendment and Modification....................................... 49
8.3 Waiver of Compliance; Consents................................... 49
8.4 Survival of Representations and Warranties....................... 49
8.5 Notices.......................................................... 49
8.6 Binding Effect; Assignment....................................... 50
8.7 Expenses......................................................... 50
8.8 Governing Law.................................................... 50
8.9 Counterparts..................................................... 51
8.10 Interpretation................................................... 51
8.11 Entire Agreement................................................. 51
8.12 Severability..................................................... 51
8.13 Specific Performance............................................. 51
8.14 Third Parties.................................................... 52
8.15 Schedules and Disclosure Letters................................. 52
(iv)
6
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "AGREEMENT") is made and entered
into as of May 3, 1998, by and among Xxxxxx Instrument Corporation, an Indiana
corporation ("XXXXXX"), Bravo Acquisition Subsidiary, Inc., a Delaware
corporation and wholly owned subsidiary of Xxxxxx ("ACQUISITION SUBSIDIARY"),
and Electronic Designs, Inc., a Delaware corporation ("EDI").
RECITALS
A. The respective Boards of Directors of EDI, Acquisition
Subsidiary and Xxxxxx have determined that the merger (the "MERGER") of
Acquisition Subsidiary with and into EDI in accordance with the laws of the
State of Delaware and the provisions of this Agreement is to the long term
benefit of the shareholders of each entity and shall provide strategic benefits
to each of Xxxxxx and EDI, and accordingly, the respective Boards of Directors
have approved the Merger.
B. EDI, Acquisition Subsidiary and Xxxxxx desire to make certain
representations, warranties and agreements in connection with, and establish
various conditions precedent to, the Merger.
C. For federal income tax purposes, it is intended that the
Merger of EDI and Acquisition Subsidiary shall qualify as a reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "CODE"), and that this Agreement shall be, and is hereby, adopted
as a plan of reorganization for the purposes of Section 368 of the Code.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements hereinafter set forth, the
parties hereto agree as follows:
ARTICLE I
TERMS AND EFFECTS OF THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions of
this Agreement, the Merger shall be consummated in accordance with the Delaware
General Corporation Law (the "DELAWARE CODE"). At the Effective Time (as defined
in SECTION 1.2, below), upon the terms and subject to the conditions of this
Agreement, Acquisition Subsidiary shall be merged with and into EDI in
accordance with the Delaware Code and the separate existence of Acquisition
Subsidiary shall thereupon cease, and EDI, as the surviving corporation in the
Merger (the "SURVIVING CORPORATION"), shall continue its corporate existence
under the laws of the State of Delaware as a wholly owned subsidiary of Xxxxxx.
The parties shall prepare and execute a certificate of merger (the "CERTIFICATE
OF MERGER") in order to comply in all respects with the requirements of the
Delaware Code and with the provisions of this Agreement.
1.2 EFFECTIVE TIME. The Merger shall become effective at the time
of the filing of the Certificate of Merger with the Secretary of State of
Delaware in accordance with the
7
applicable provisions of the Delaware Code or at such later time as may be
specified in the Certificate of Merger. The Certificate of Merger shall be filed
as soon as practicable after all of the conditions set forth in this Agreement
have been satisfied or waived by the party or parties entitled to the benefit of
the same. Xxxxxx and EDI shall mutually determine the time of such filing and
the place where the closing of the Merger (the "CLOSING") shall occur. The time
when the Merger shall become effective is herein referred to as the "EFFECTIVE
TIME" and the date on which the Effective Time occurs is herein referred to as
the "CLOSING DATE."
1.3 MERGER CONSIDERATION. (a) Subject to the provisions of this
Agreement and any applicable backup or other withholding requirements, each of
the issued and outstanding shares (the "EDI SHARES") of common stock, par value
$.01 per share, of EDI (the "EDI COMMON STOCK"), as of the Effective Time shall
be converted into the right to receive, and there shall be paid and issued as
hereinafter provided, in exchange for each of the EDI Shares, 1.375 shares (the
"EXCHANGE RATIO") of the common stock of Xxxxxx, stated value $0.10 per share
(the "XXXXXX STOCK"), together with the associated common stock purchase rights
issued under the Xxxxxx Rights Agreement (as hereinafter defined), subject to
payment of cash in lieu of any fractional share as hereinafter provided (the
"MERGER CONSIDERATION"). The Exchange Ratio shall be subject to appropriate
adjustment in the event of a stock split, stock dividend or recapitalization
after the date of this Agreement and prior to the Effective Time applicable to
shares of the Xxxxxx Stock or the EDI Common Stock, or in the event of any
issuance of Xxxxxx Stock or other securities of Xxxxxx after the date of this
Agreement and prior to the Effective Time resulting from the operation of the
Xxxxxx Rights Agreement.
(b) As of the Effective Time, by virtue of the Merger,
each issued and outstanding share of the capital stock of Acquisition Subsidiary
shall be converted into and become one fully paid and nonassessable share of
common stock, par value $.01 per share, of the Surviving Corporation.
(c) No fractional shares of Xxxxxx Stock shall be issued
pursuant to the Merger nor will any fractional share interest involved entitle
the holder thereof to vote, to receive dividends or to exercise any other rights
of a shareholder of Xxxxxx. In lieu thereof, any person who would otherwise be
entitled to a fractional share of Xxxxxx Stock pursuant to the provisions hereof
shall receive an amount in cash equal to the value of such fractional share
(rounded to the nearest cent). The value of such fractional share shall be the
product of such fraction multiplied by an amount equal to the average closing
price of Xxxxxx Stock on the American Stock Exchange for the ten trading days
immediately prior to the third trading day preceding the Closing Date.
(d) Each share of EDI Common Stock held in the treasury
of EDI or by a wholly owned subsidiary of EDI shall be canceled as of the
Effective Time and no Merger Consideration shall be payable with respect
thereto.
1.4 STOCKHOLDERS' RIGHTS UPON MERGER. Upon consummation of the
Merger, the certificates which theretofore represented EDI Shares (the
"CERTIFICATES") shall cease to
2
8
represent any rights with respect thereto and, subject to applicable law and
this Agreement, shall only represent the right to receive the Merger
Consideration payable in lieu of fractional shares of Xxxxxx Stock into which
the EDI Shares have been converted pursuant to this Agreement.
1.5 SURRENDER AND EXCHANGE OF SHARES. (a) Prior to the Closing
Date, Xxxxxx shall appoint American Stock Transfer and Trust Company or another
agent mutually acceptable to Xxxxxx and EDI to act as exchange agent (the
"EXCHANGE AGENT") for the Merger. At or prior to the Effective Time, Xxxxxx
shall deposit, or cause to be deposited with the Exchange Agent such
certificates evidencing such number of shares of Xxxxxx Stock and such amount of
cash in order to enable the Exchange Agent to effect the exchange of
certificates and make the cash payments in respect of fractional shares
contemplated by SECTION 1.5(c) below.
(b) On the Closing Date, Xxxxxx shall instruct the
Exchange Agent to mail to each holder of record of a Certificate within five
business days of receiving from EDI a list of such holders of record, (i) a
letter of transmittal (which shall specify that delivery shall be effected, and
risk of loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall be in such form and have such other
provisions as Xxxxxx may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in exchange for certificates
representing the Merger Consideration.
(c) After the Effective Time, each holder of an EDI Share
shall surrender and deliver the Certificates to the Exchange Agent together with
a duly completed and executed transmittal letter. Upon such surrender and
delivery, the holder shall receive a certificate representing the number of
whole shares of Xxxxxx Stock into which such holder's EDI Shares have been
converted pursuant to this Agreement, and a check representing the amount of
cash payable to such holder in lieu of any fractional share of Xxxxxx Stock.
Until so surrendered and exchanged, each outstanding Certificate after the
Effective Time shall be deemed for all purposes to evidence the right to receive
that number of whole shares of Xxxxxx Stock into which the EDI Shares have been
converted pursuant to this Agreement, subject to payment of cash in lieu of any
fractional share of Xxxxxx Stock; PROVIDED, HOWEVER, that no dividends or other
distributions, if any, in respect of the shares of Xxxxxx Stock declared after
the Effective Time and payable to holders of record after the Effective Time,
shall be paid to the holders of any unsurrendered Certificates until such
Certificates and transmittal letters are surrendered and delivered as provided
herein. Subject to applicable Law, after the surrender and exchange of
Certificates, the record holders thereof will be entitled to receive any such
dividends or other distributions, without interest thereon, which theretofore
have become payable with respect to the number of shares of Xxxxxx Stock for
which such Certificates were exchangeable. Any such dividend or distribution
amounts with a record date after the Effective Time and a payment date prior to
both the first anniversary of the Effective Time and the surrender of such
Certificate shall be deposited (less the amount of any withholding taxes which
may be required thereon) with the Exchange Agent on the applicable payment date,
to be held by the Exchange Agent in a non-interest bearing account
3
9
until the surrender of such Certificate. Holders of any unsurrendered
Certificates shall not be entitled to vote Xxxxxx Stock until such Certificates
are exchanged pursuant to this Agreement.
(d) At the Effective Time, the stock transfer books of
EDI shall be closed and no transfer of EDI Shares shall be made thereafter,
other than transfers of EDI Shares that have occurred prior to the Effective
Time. In the event that, after the Effective Time, Certificates are presented to
the Surviving Corporation, they shall be canceled and exchanged for shares of
Xxxxxx Stock or cash as provided in SECTION 1.3.
(e) In the event any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming such Certificate to be lost, stolen or destroyed, Xxxxxx shall issue or
pay or cause the issuance or payment, as applicable, of the Merger Consideration
in exchange for such Certificate. The Board of Directors of Xxxxxx may, in its
reasonable discretion and as a condition precedent to the issuance thereof,
require the person claiming to be the owner of such lost, stolen or destroyed
Certificate to give to Xxxxxx an indemnity against any claim that may be made
against Xxxxxx with respect to the Certificate alleged to have been lost, stolen
or destroyed, and to provide such other assurances and execute such other
instruments as the Exchange Agent may reasonably require.
(f) Upon the one-year anniversary of the Effective Time,
the Exchange Agent shall return to Xxxxxx the Merger Consideration in the
possession of the Exchange Agent, and its duties as Exchange Agent shall
terminate. Thereafter, each holder of a Certificate may surrender such
Certificate to Xxxxxx and, subject to applicable abandoned property, escheat and
similar laws, receive in exchange therefor the Merger Consideration issuable
with respect thereto pursuant to SECTION 1.3. Any former stockholders of EDI who
have not theretofore complied with this Article I shall thereafter only look to
Xxxxxx for any payment of their EDI Stock representing Xxxxxx Stock, as
determined pursuant to this Agreement.
(g) Neither EDI nor Xxxxxx nor the Exchange Agent shall
be liable to any holder of EDI Shares for any such shares of Xxxxxx Stock (or
dividends or distributions with respect thereto), or cash delivered to a public
official pursuant to any abandoned property, escheat or similar law, rule,
regulation, statute, order, judgment or decree.
1.6 OPTIONS AND WARRANTS. (a) At or prior to the Effective Time,
EDI shall cause all outstanding options (the "EDI OPTIONS") and warrants (the
"EDI WARRANTS") exercisable for shares of EDI Common Stock identified on
SCHEDULE 1.6 attached hereto to be assumed by Xxxxxx. After such action has been
taken, effective at the Effective Time, Xxxxxx shall assume each such
then-outstanding and unexercised EDI Option or EDI Warrant and each such EDI
Option and EDI Warrant shall, by virtue of the Merger and without any action on
the part of the holder thereof, represent options or warrants, respectively,
exercisable for shares of Xxxxxx Stock having the same terms and conditions as
the EDI Options and EDI Warrants
4
10
(including such terms and conditions as may be incorporated by reference into
the agreements evidencing EDI Options and EDI Warrants pursuant to the plans or
arrangements pursuant to which such EDI Options and EDI Warrants were granted)
except that the number of shares issuable upon exercise shall be multiplied by
the Exchange Ratio and rounded to the nearest whole number of shares of Xxxxxx
Stock and the exercise price per share of EDI Stock under such option or warrant
shall be equal to the exercise price per share of EDI Stock under such EDI
Option or EDI Warrant divided by the Exchange Ratio and rounded to the nearest
cent. EDI and Xxxxxx shall use all reasonable efforts to ensure that the EDI
Options which qualified as incentive stock options under Section 422 of the Code
prior to the Effective Time continue to so qualify after the Effective Time.
Xxxxxx shall take all corporate action necessary to reserve for issuance a
sufficient number of shares of Xxxxxx Stock for delivery upon the exercise of
EDI Options and EDI Warrants after the Effective Time.
(b) As soon as practicable after the Effective Time,
Xxxxxx shall deliver to the holders of the EDI Options and EDI Warrants
appropriate notices setting forth each such holder's rights pursuant to such
holder's EDI Options and/or EDI Warrant.
(c) Promptly after the Effective Time, Xxxxxx shall file
or cause to be filed all registration statements on Form S-8, or other
appropriate form, and all other registrations and qualifications as may be
necessary in connection with the sale of Xxxxxx Stock contemplated by such EDI
Options, including without limitation the additional listing of such shares on
the American Stock Exchange, and Xxxxxx shall cause such registration statements
to remain effective (and maintain the current status of the prospectus or
prospectuses contained therein) for so long as such EDI Options remain
exercisable.
1.7 CERTIFICATE OF INCORPORATION. At and after the Effective Time,
the Certificate of Incorporation of the Surviving Corporation shall be the
Certificate of Incorporation of Acquisition Subsidiary in effect at the
Effective Time (subject to any subsequent amendment). The form of Certificate of
Incorporation of Acquisition Subsidiary is set forth on SCHEDULE 1.7 hereto.
1.8 BYLAWS. Subject to SECTION 5.13 below, at and after the
Effective Time, the Bylaws of Acquisition Subsidiary in effect at the Effective
Time shall be the Bylaws of the Surviving Corporation (subject to any subsequent
amendment). The form of the Bylaws of Acquisition Subsidiary is set forth on
SCHEDULE 1.8 hereto.
1.9 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION. The
individuals set forth on SCHEDULE 1.9(a) hereto shall, at and after the
Effective Time, be the directors of the Board of Directors of Surviving
Corporation, and the individuals set forth on SCHEDULE 1.9(b) hereto shall, at
and after the Effective Time, be the officers of the Surviving Corporation;
provided, however, that the term of office for each person set forth on SCHEDULE
1.9(a) and SCHEDULE 1.9(b) who is a designee of EDI shall commence on the fifth
day immediately following the Effective Date.
5
11
1.10 STATUTORY EFFECTS OF MERGER. The Merger shall have all further
effects as specified in the applicable provisions of the Delaware Code.
1.11 REGISTRATION STATEMENT; PROSPECTUS/PROXY STATEMENT.
(a) For the purposes of (i) registering (A) the issuance
of Xxxxxx Stock to holders of the EDI Shares in connection with the Merger, (B)
the issuance of warrants to purchase shares of Xxxxxx Stock to the holders of
EDI Warrants identified in SCHEDULE 1.6 (the "New Warrants") in connection with
the Merger, (C) the offer and sale of the shares of Xxxxxx Stock underlying the
New Warrants in connection with the Merger and from time to time after the
Effective Time and (D) the offer and sale (the "Resale Shelf") from time to time
after the Effective Time of shares of Xxxxxx Stock issued to those persons (x)
whose shares of EDI Common Stock currently are subject to resale pursuant to the
EDI Registration Statement on Form S-3 (No. 333-3328) and (y) who currently are
"affiliates" (as such term is defined in the Securities Exchange Act) of EDI, in
each case with the Securities and Exchange Commission ("SEC") under the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(the "SECURITIES ACT"), and complying with applicable state securities Laws,
(ii) holding the meeting of EDI stockholders to vote upon the adoption of this
Agreement and the Merger and the transactions contemplated hereby and thereby
(the "EDI PROPOSALS"), and (iii) holding the meeting of Xxxxxx'x shareholders to
approve the amendment of Xxxxxx'x Articles of Incorporation to increase the
number of authorized shares of Xxxxxx Stock and to approve the issuance of the
Xxxxxx Stock in the Merger and the other transactions contemplated hereby and
thereby (the "XXXXXX PROPOSALS"), Xxxxxx and EDI shall prepare and file with the
SEC a registration statement on Form S-4 (such registration statement, together
with any and all amendments and supplements thereto, being herein referred to as
the "REGISTRATION STATEMENT"), including a prospectus/joint proxy statement
satisfying all requirements of applicable state securities Laws, the Securities
Act and the Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder (the "SECURITIES EXCHANGE ACT"). Such prospectus/joint
proxy statement in the form mailed by EDI and Xxxxxx to their respective
stockholders, together with any and all amendments or supplements thereto, is
herein referred to as the "PROSPECTUS/PROXY STATEMENT." The obligations of
Xxxxxx with respect to the Resale Shelf shall be governed by the terms and
conditions of the Third Amended and Restated Registration Rights Agreement dated
April 30, 1995 by and among EDI (as successor to Crystallume) and the persons
identified on Exhibit A thereto, as amended from time to time thereafter, and
the Agreement Respecting TFI Registration Rights dated October 10, 1995 by and
between EDI (as successor to Crystallume) and Technology Funding Partners III,
X.X. Xxxxxx shall use its reasonable best efforts to maintain an effective
registration statement for the Xxxxxx Stock issuable upon exercise of the New
Warrants for so long as the New Warrants are exercisable.
(b) EDI will furnish Xxxxxx with such information
concerning EDI and the EDI Subsidiaries as is necessary in order to cause the
Prospectus/Proxy Statement, insofar as it relates to EDI and the EDI
Subsidiaries, to comply with applicable Law. None of the information relating to
EDI and the EDI Subsidiaries supplied by EDI for inclusion in the
6
12
Prospectus/Proxy Statement will be false or misleading with respect to any
material fact or will 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. EDI agrees promptly to
advise Xxxxxx if, at any time prior to the respective meetings of the
stockholders of EDI or Xxxxxx referenced herein, any information provided by it
in the Prospectus/Proxy Statement is or becomes false or misleading in any
material respect and to provide Xxxxxx with the information needed to correct
such. EDI will furnish Xxxxxx with such supplemental information as may be
necessary in order to cause the Prospectus/Proxy Statement, insofar as it
relates to EDI and the EDI Subsidiaries, to comply with applicable Law after the
mailing thereof to the stockholders of EDI or Xxxxxx.
(c) Xxxxxx will furnish EDI with such information
concerning Xxxxxx and the Xxxxxx Subsidiaries as is necessary in order to cause
the Prospectus/Proxy Statement, insofar as it relates to Xxxxxx and the Xxxxxx
Subsidiaries, to comply with applicable Law. None of the information relating to
Xxxxxx and the Xxxxxx Subsidiaries supplied by Xxxxxx for inclusion in the
Prospectus/Proxy Statement will be false or misleading with respect to any
material fact or will 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 were made, not misleading. Xxxxxx agrees promptly
to advise EDI if, at any time prior to the respective meetings of stockholders
of EDI or Xxxxxx referenced herein, any information provided by it in the
Prospectus/Proxy Statement is or becomes false or misleading in any material
respect and to provide EDI with the information needed to correct such. Xxxxxx
will furnish EDI with such supplemental information as may be necessary in order
to cause the Prospectus/Proxy Statement, insofar as it relates to Xxxxxx and the
Xxxxxx Subsidiaries, to comply with applicable Law after the mailing thereof to
the stockholders of EDI or Xxxxxx.
(d) EDI and Xxxxxx agree to cooperate in making any
preliminary filings of the Prospectus/Proxy Statement with the SEC, as promptly
as practicable, pursuant to Rule 14a-6 under the Securities Exchange Act.
(e) Xxxxxx will file the Registration Statement with the
SEC and appropriate materials with applicable state securities agencies as
promptly as practicable following the date of this Agreement and will use all
reasonable efforts to cause the Registration Statement to become effective under
the Securities Act and all such state filed materials to comply with applicable
state securities Laws as soon as reasonably practicable. EDI authorizes Xxxxxx
to utilize in the Registration Statement and in all such state filed materials,
the information concerning EDI and the EDI Subsidiaries provided to Xxxxxx in
connection with, or contained in, the Prospectus/Proxy Statement. Xxxxxx
promptly will advise EDI when the Registration Statement has become effective
and of any supplements or amendments thereto, and Xxxxxx will furnish EDI with
copies of all such documents. Except for the Prospectus/Joint Proxy or the
preliminary prospectus/joint proxy, neither Xxxxxx nor EDI shall distribute any
written material that might constitute a "prospectus" relating to the Merger,
the EDI Proposals or the Xxxxxx Proposals within the meaning of the Securities
Act or any applicable state securities Law without the prior written consent of
Xxxxxx. Xxxxxx
7
13
will advise EDI, and deliver copies (if any) to EDI, promptly after Xxxxxx
receives notice thereof, of any request by the SEC for amendment of the
Prospectus/Proxy Statement or the Registration Statement or comments thereon and
responses thereto or requests by the SEC for additional information, or notice
of the time when the Registration Statement has become effective or any
supplement or amendment has been filed, the issuance of any stop order, or the
suspension of the qualification of the Xxxxxx Stock issuable in connection with
the Merger for offering or sale in any jurisdiction.
(f) Each of Xxxxxx and EDI shall use its best efforts to
timely mail the Prospectus/Proxy Statement to its stockholders. It shall be a
condition to the mailing of the Prospectus/Proxy Statement that (i) Xxxxxx shall
have received a "comfort" letter from Price Waterhouse LLP, independent public
accountants for EDI, of the kind contemplated by the Statement of Auditing
Standards with respect to Letters to Underwriters promulgated by the American
Institute of Certified Public Accountants (the "AICPA STATEMENT"), dated as of
the date on which the Registration Statement shall become effective (and Xxxxxx
shall also receive such a letter as of the Effective Time), each addressed to
Xxxxxx, in form reasonably satisfactory to Xxxxxx, concerning the procedures
undertaken by Price Waterhouse LLP with respect to the financial statements and
information of EDI and its subsidiaries contained in the Registration Statement
and the other matters contemplated by the AICPA Statement and otherwise
customary in scope and substance for letters delivered by independent public
accountants in connection with transactions such as those contemplated by this
Agreement and (ii) EDI shall have received a "comfort" letter from Coopers &
Xxxxxxx L.L.P., independent public accountants for Xxxxxx, of the kind
contemplated by the AICPA Statement, dated as of the date on which the
Registration Statement shall become effective (and EDI shall also receive such a
letter of the Effective Time), each addressed to EDI, in form reasonably
satisfactory to EDI concerning the procedures undertaken by Coopers & Xxxxxxx
L.L.P. with respect to the financial statements and information of Xxxxxx and
its subsidiaries contained in the Registration Statement and the other matters
contemplated by the AICPA Statement and otherwise customary in scope and
substance for letters delivered by independent public accountants in connection
with transactions such as those contemplated by this Agreement.
1.12 TAX-FREE REORGANIZATION. The parties intend that the Merger
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended, and the regulations thereunder (the "CODE").
None of the parties will knowingly take any action that would cause the Merger
to fail to qualify as a reorganization within the meaning of Section 368(a) of
the Code. Following the Effective Time, Xxxxxx shall use its reasonable best
efforts to conduct its business in a manner that would not jeopardize the
characterization of the Merger as a reorganization within the meaning of Section
368(a) of the Code. Xxxxxx presently intends to continue, and shall continue,
for periods after the Effective Time at least one significant historic business
line of EDI, or use at least a significant portion of EDI's historic business
assets in a business, in each case within the meaning of Treasury Regulation
ss.1.368-1(d).
8
14
1.13 ADDITIONAL ACTIONS. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of Acquisition Subsidiary or EDI or otherwise to carry out
this Agreement, the officers and directors of the Surviving Corporation shall be
authorized to execute and deliver, in the name and on behalf of Acquisition
Subsidiary or EDI, all such deeds, bills of sale, assignments and assurances and
to take and do, in the name and on behalf of Acquisition Subsidiary or EDI, all
such other actions and things as may be necessary or desirable to vest, perfect
or confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Agreement.
1.14 AUTHORIZED SHARES. On or prior to the Effective Time, the
Articles of Incorporation of Xxxxxx shall be amended to increase the number of
shares of Xxxxxx Stock that Xxxxxx shall be authorized to issue to 35,000,000.
1.15 INDEMNIFICATION (a) In the event of any threatened or actual
claim, action, suit, proceeding or investigation, whether civil, criminal or
administrative, in which any person who is now, or has been at any time prior to
the date hereof, or who becomes prior to the Effective Time, a director or
officer of (or a director or officer acting in a fiduciary capacity for) EDI or
Xxxxxx (or of a subsidiary of either of them) or, in the case of clause (ii)
below, an employee of EDI or Xxxxxx (or of a subsidiary of either of them) (any
such person an "Indemnified Party") is, or is threatened to be, made a party
based in whole or in part on, or arising in whole or in part out of or
pertaining to (i) the fact that he or she is or was a director (including in his
or her capacity as a member of a committee of the Board of Directors) or officer
of (or a director or officer acting in a fiduciary capacity for) EDI or Xxxxxx
(or of a subsidiary of either of them), or (ii) this Agreement or any of the
transactions contemplated hereby, whether in any case asserted or arising before
or after the Effective Time, the parties hereto agree to cooperate and use their
reasonable efforts to defend against and respond thereto. It is understood and
agreed that (a) prior to the Effective Time, each of EDI and Xxxxxx,
respectively, shall indemnify and hold harmless as and to the fullest extent
permitted by applicable law, each Indemnified Party of EDI (an "EDI Indemnified
Party") and each Indemnified Party of Xxxxxx (a "Xxxxxx Indemnified Party"),
respectively, against any losses, claims, damages, liabilities, costs, expenses
(including reasonable attorneys' fees and expenses), judgments, fines and
amounts paid in settlement (collectively "Losses") in connection with any such
threatened or actual claim, action, suit, proceeding or investigation; and (b)
from and after the Effective Time, Xxxxxx and the Surviving Corporation shall
indemnify and hold harmless as and to the fullest extent permitted by applicable
law, each Indemnified Party against any Losses in connection with any such
threatened or actual claim, action, suit, proceeding or investigation (whether
asserted or arising before or after the Effective Time). For the purpose of this
SECTION 1.15, for the period prior to the Effective Time, each of EDI and
Xxxxxx, and for the period from and after the Effective Time, Xxxxxx and the
Surviving Corporation shall be referred to as an "Indemnifying Party" with
9
15
respect to their respective indemnification obligations hereunder. The
Indemnifying Party shall promptly pay expenses in advance of the final
disposition of any claim, action, suit, proceeding or investigation to the
Indemnified Parties claiming indemnification from such Indemnifying Party
pursuant to this SECTION 1.15 for the period it must so indemnify to the fullest
extent permitted by law, and the Indemnifying Party shall be entitled to
participate in the defense thereof and, to the extent that the Indemnifying
Party so desires, to assume the defense thereof with counsel selected by it,
provided that the Indemnified Party shall have the right to employ separate
counsel, but the fees and expenses of such counsel shall be at the Indemnified
Party's expense unless in such claims or action there is, in the opinion of
independent counsel, a conflict concerning any material issue between the
positions of the Indemnifying Party and the Indemnified Party. In such a case,
if the Indemnified Party notifies the Indemnifying Party, in writing, that the
Indemnified Party elects to employ separate counsel at the expense of the
Indemnifying Party, the Indemnifying Party shall not have the right to assume
such defense of such claim or action on behalf of the Indemnified Party;
provided, however, that the Indemnifying Party shall not be required to pay the
fees and expenses of more than one separate counsel for all of its Indemnified
Parties. An Indemnifying Party shall not be liable to pay any amount in
settlement effected without its prior written consent (which consent shall not
be unreasonably withheld). Promptly upon learning of any claim, action, suit,
proceeding or investigation for which indemnification is available under this
SECTION 1.15, the Indemnified Party shall notify the Indemnifying Party in
writing, provided that the failure to so notify shall not affect the obligations
of the Indemnifying Party except to the extent such failure to notify materially
prejudices such Indemnifying Party. No settlement of any such claim, action,
suit, proceeding or investigation shall be made without the written consent of
the Indemnified Parties with respect thereto unless such Indemnified Party shall
receive a full and unconditional release as a part thereof.
(b) Xxxxxx and the Surviving Corporation agree that all
rights to indemnification existing in favor, and all limitations on the personal
liability, of EDI Indemnified Parties provided for in the Certificate of
Incorporation or Bylaws of EDI or any EDI Subsidiary, and of Xxxxxx Indemnified
Parties provided for in the Certificate of Incorporation or Bylaws of Xxxxxx or
any Xxxxxx Subsidiary, as in effect as of the date hereof with respect to
matters occurring prior to the Effective Time shall survive the Merger and shall
continue in full force and effect for a period of not less than six (6) years
from the Effective Time; provided, however, that all rights to indemnification
in respect of any claim asserted or made within such period shall continue until
the final disposition of such claim. At or prior to the Effective Time, Xxxxxx
shall purchase directors' and officers' liability insurance coverage for
Xxxxxx'x directors and officers and EDI's directors and officers with coverage
for six (6) years following the Effective Time in a form reasonably acceptable
to EDI and of not less than the existing coverage under, and have other terms
not materially less favorable to the insured persons than, the directors' and
officers' liability insurance coverage presently maintained by EDI, in the case
of directors and officers of EDI, or Xxxxxx, in the case of directors and
officers of Xxxxxx, provided, however, that in any event the cost of such policy
shall not exceed $250,000.
10
16
(c) This SECTION 1.15 is intended for the irrevocable
benefit of, and to grant third-party rights to, the Indemnified Parties (as
contemplated by SECTION 8.14) and shall be binding on all successors and assigns
of Xxxxxx, the Surviving Corporation and EDI. Each of the Indemnified Parties
shall be entitled to enforce the covenants contained in this SECTION 1.15. The
provisions for indemnification contained in this SECTION 1.15 are not intended
to be exclusive and are without prejudice to any other rights to indemnification
or advancement of funds which any Indemnified Party may otherwise have.
(d) In the event Xxxxxx, the Surviving Corporation or any
of their successors or assigns (i) consolidates with or merges into any other
person or entity and shall not be the continuing or surviving corporation or
entity of such consolidation or merger or (ii) transfers or conveys all or
substantially all of its properties and assets to any person or entity, then,
and in each such case, proper provision shall be made so that the successors and
assigns of Xxxxxx and the Surviving Corporation assume the obligations set forth
in this SECTION 1.15.
1.16 LISTING APPLICATION. Each of EDI and Xxxxxx shall cooperate
and promptly prepare and submit to the American Stock Exchange, all reports,
applications and other documents that may be necessary or desirable to enable
all of the Xxxxxx Stock that will be outstanding or will be reserved for
issuance at the Effective Time to be listed for trading on the American Stock
Exchange. Each of EDI and Xxxxxx shall furnish all information about itself and
its business and operation and all necessary financial information to the other
as the other may reasonably request in connection with such listing process.
1.17 VOTING AGREEMENTS. Concurrently with the execution and
delivery of this Agreement, EDI and Xxxxxx shall cause those persons set forth
on SCHEDULE 1.17(a) to execute and deliver voting and support agreements in the
form attached hereto as SCHEDULE 1.17(b) agreeing, among other things, to vote
in favor of this Merger Agreement, the Merger and the transactions contemplated
hereby.
1.18 ANCILLARY ASSUMPTION AGREEMENTS. Concurrently with the
execution and delivery of this Agreement, EDI and Xxxxxx shall execute and
deliver (i) the Assignment and Assumption Agreement in the form attached hereto
as SCHEDULE 1.18(a) pursuant to which Xxxxxx shall agree, among other things, to
be bound by and perform EDI's obligations under the registration rights
agreements referred to therein, subject to the terms of such Assignment and
Assumption Agreement, and (ii) the Assignment and Assumption Agreement in the
form attached hereto as SCHEDULE 1.18(b) pursuant to which Xxxxxx shall agree,
among other things, to be bound by and perform EDI's obligations under the
employment and severance agreements referred to therein, subject to the terms of
such Assignment and Assumption Agreement.
11
17
ARTICLE II
REPRESENTATIONS, WARRANTIES AND CERTAIN
COVENANTS OF EDI
EDI represents, warrants and/or covenants to and with Xxxxxx as
follows:
2.1 ORGANIZATION AND GOOD STANDING. EDI and each of the EDI
subsidiaries (the "EDI SUBSIDIARY") is a corporation or partnership duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite
corporate or partnership power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. EDI and each of
the EDI Subsidiaries is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the character of the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not have a material
adverse effect on the business, assets (including, but not limited to,
intangible assets), condition (financial or otherwise), properties (including,
but not limited to, intangible properties), liabilities or the results of
operations of EDI and the EDI Subsidiaries taken as a whole ("EDI MATERIAL
ADVERSE EFFECT"). SCHEDULE 2.1 attached hereto contains a complete and accurate
list of the jurisdictions of incorporation or organization and qualification or
license of EDI and the EDI Subsidiaries. EDI has heretofore made available to
Xxxxxx accurate and complete copies of the Certificate of Incorporation and
Bylaws, as currently in effect, of EDI and each EDI Subsidiary.
2.2 CAPITALIZATION. As of the date hereof, the authorized capital
stock of EDI consists of (a) 20,000,000 shares of EDI Common Stock, and (b)
8,000,000 shares of convertible preferred stock, (the "EDI PREFERRED STOCK"). As
of May 1, 1998, (a) 7,047,380 shares of EDI Common Stock were issued and
outstanding, (b) 100,915 shares of EDI Common Stock were issued and held in the
treasury of EDI, and (c) no shares of the EDI Preferred Stock were issued and
outstanding. No other capital stock of EDI is authorized or issued. All issued
and outstanding shares of the EDI Common Stock are duly authorized, validly
issued, fully paid and non-assessable and were issued free of preemptive rights
and in compliance with applicable securities Laws. Except as set forth in the
EDI Securities Filings (as hereinafter defined) or on SCHEDULE 2.2 attached
hereto and as otherwise contemplated by this Agreement, as of the date hereof
there are no outstanding rights, subscriptions, warrants, puts, calls,
unsatisfied preemptive rights, options or other agreements of any kind to which
EDI is bound relating to any of the outstanding, authorized but unissued,
unauthorized or treasury shares of the capital stock or any other security of
EDI, and there is no authorized or outstanding security of any kind convertible
into or exchangeable for any such capital stock or other security. The holders
of shares of EDI Stock are not entitled to appraisal rights under applicable Law
(as hereinafter defined) or the Certificate of Incorporation of EDI. Except as
disclosed in the EDI Securities Filings, there are, to the best knowledge of
EDI, no restrictions upon the transfer of or otherwise pertaining to the
securities (including, but not limited to, the ability to pay dividends thereon)
or retained earnings of EDI and the EDI Subsidiaries or the
12
18
ownership thereof other than those, if any, described on SCHEDULE 2.2 attached
hereto or those imposed by the Securities Act, the Securities Exchange Act,
applicable state securities Laws or applicable corporate Law. Neither EDI nor
any EDI Subsidiary beneficially owns any shares of Xxxxxx Common Stock.
2.3 SUBSIDIARIES. SCHEDULE 2.3 attached hereto sets forth the name
and jurisdiction of incorporation or organization of each EDI Subsidiary, each
of which is wholly owned by EDI except as otherwise indicated on said SCHEDULE
2.3. Except as set forth on SCHEDULE 2.3 attached hereto, all of the capital
stock and other interests of the EDI Subsidiaries so held by EDI are owned by it
or an EDI Subsidiary as indicated on said SCHEDULE 2.3, free and clear of any
claim, lien, encumbrance, security interest or agreement with respect thereto.
All of the outstanding shares of capital stock in each of the EDI Subsidiaries
directly or indirectly held by EDI are duly authorized, validly issued, fully
paid and non-assessable and were issued free of preemptive rights and in
compliance with applicable Laws. Except as set forth on SCHEDULE 2.3 attached
hereto, there are no irrevocable proxies or similar obligations with respect to
such capital stock of the EDI Subsidiaries held by EDI and no equity securities
or other interests of any of the EDI Subsidiaries are or may become required to
be issued or purchased by reason of any options, warrants, rights to subscribe
to, puts, calls or commitments of any character whatsoever relating to, or
securities or rights convertible into or exchangeable for, shares of any capital
stock of any EDI Subsidiary, and there are no contracts, commitments,
understandings or arrangements by which any EDI Subsidiary is bound to issue
additional shares of its capital stock, or options, warrants or rights to
purchase or acquire any additional shares of its capital stock or securities
convertible into or exchangeable for such shares.
2.4 AUTHORIZATION; BINDING AGREEMENT. EDI has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery of
this Agreement and the other agreements and documents referred to herein to
which EDI is or will be a party or a signatory (the "EDI ANCILLARY AGREEMENTS")
and the consummation of the transactions contemplated hereby and thereby,
including, but not limited to, the Merger, have been duly and validly authorized
by EDI's Board of Directors and no other corporate proceedings on the part of
EDI or any EDI Subsidiary are necessary to authorize the execution and delivery
of this Agreement and the EDI Ancillary Agreements or to consummate the
transactions contemplated hereby or thereby (other than the adoption of this
Agreement and the approval of the Merger by the stockholders of EDI in
accordance with the Delaware Code and the Certificate of Incorporation and
Bylaws of EDI). This Agreement has been duly and validly executed and delivered
by EDI and constitutes, and upon execution and delivery thereof as contemplated
by this Agreement, the EDI Ancillary Agreements will constitute, the legal,
valid and binding agreements of EDI, enforceable against EDI in accordance with
its and their respective terms, except to the extent that enforceability thereof
may be limited by applicable bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
principles of equity regarding the availability of remedies ("ENFORCEABILITY
EXCEPTIONS").
13
19
2.5 GOVERNMENTAL APPROVALS. No consent, approval, waiver or
authorization of, notice to or declaration or filing with ("CONSENT") any nation
or government, any state or other political subdivision thereof, any entity,
authority or body exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, including, without
limitation, any governmental or regulatory authority, agency, department, board,
commission, administration or instrumentality, any court, tribunal or arbitrator
and any self-regulatory organization ("GOVERNMENTAL AUTHORITY") on the part of
EDI or any of the EDI Subsidiaries is required in connection with the execution
or delivery by EDI of this Agreement and the EDI Ancillary Agreements or the
consummation by EDI of the transactions contemplated hereby or thereby other
than (i) the filing of the Certificate of Merger with the Secretary of State of
Delaware in accordance with the Delaware Code, (ii) filings with the SEC, state
securities laws administrators and the Nasdaq, (iii) filings under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules
and regulations promulgated thereunder (the "HSR ACT"), if required, (iv) such
filings as may be required in any jurisdiction where EDI is qualified or
authorized to do business as a foreign corporation in order to maintain such
qualification or authorization, (v) those Consents required by or related to
contracts pursuant to which EDI provides, directly or indirectly, goods or
services to any Governmental Authority, all as identified on SCHEDULE 2.5
attached hereto; and (vi) those Consents that, if they were not obtained or
made, do not or would not have an EDI Material Adverse Effect or materially and
adversely affect the ability of EDI to perform its obligations as set forth in
this Agreement or to consummate the transactions contemplated hereby.
2.6 NO VIOLATIONS. Except as set forth on SCHEDULE 2.6 attached
hereto, the execution and delivery of this Agreement and the EDI Ancillary
Agreements, the consummation of the transactions contemplated hereby and thereby
and compliance by EDI with any of the provisions hereof or thereof will not (i)
conflict with or result in any breach of any provision of the Certificate of
Incorporation or Bylaws or other governing instruments of EDI or any of the EDI
Subsidiaries, (ii) require any Consent under or result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration
or augment the performance required) under any of the terms, conditions or
provisions of any EDI Material Contract (as hereinafter defined), (iii) result
in the creation or imposition of any lien or encumbrance of any kind upon any of
the assets of EDI or any EDI Subsidiary, or (iv) subject to obtaining the
Consents from Governmental Authorities referred to in SECTION 2.5, above,
contravene any applicable provision of any constitution, treaty, statute, law,
code, rule, regulation, ordinance, policy or order of any Governmental Authority
or other matters having the force of law including, but not limited to, any
orders, decisions, injunctions, judgments, awards and decrees of or agreements
with any court or other Governmental Authority ("LAW") currently in effect to
which EDI or any EDI Subsidiary or its or any of their respective assets or
properties are subject, except in the case of clauses (ii), (iii) and (iv),
above, for any deviations from the foregoing which do not or would not have an
EDI Material Adverse Effect.
14
20
2.7 SECURITIES FILINGS AND LITIGATION. EDI has made available to
Xxxxxx true and complete copies of (i) its Annual Reports on Form 10-KSB for the
years ended September 30, 1997, 1996 and 1995, as filed with the SEC, (ii) its
proxy statements relating to all of the meetings of stockholders (whether annual
or special) of EDI since January 1, 1995, as filed with the SEC, and (iii) all
other reports, statements and registration statements and amendments thereto
(including, without limitation, Quarterly Reports on Form 10-QSB and Current
Reports on Form 8-K, as amended) filed by EDI with the SEC since January 1,
1995. The reports and statements set forth in clauses (i) through (iii), above,
and those subsequently provided or required to be provided pursuant to this
Section, are referred to collectively herein as the "EDI SECURITIES FILINGS." As
of their respective dates, or as of the date of the last amendment thereof, if
amended after filing, none of the EDI Securities Filings (including all
schedules thereto and disclosure documents incorporated by reference therein),
contained or, as to EDI Securities Filings subsequent to the date hereof, will
contain any untrue statement of a material fact or omitted or, as to EDI
Securities Filings subsequent to the date hereof, will omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. Each
of the EDI Securities Filings at the time of filing or as of the date of the
last amendment thereof, if amended after filing, complied or, as to EDI
Securities Filings subsequent to the date hereof, will comply in all material
respects with the Securities Exchange Act or the Securities Act, as applicable.
EDI has timely filed all reports, statements, registration statements and other
filings required to be filed by it under the Securities Exchange Act and the
Securities Act, as applicable. Except as disclosed in the EDI Securities Filings
or on SCHEDULE 2.7, there is no action, cause of action, claim, demand, suit,
proceeding, citation, summons, subpoena, inquiry or investigation of any nature,
civil, criminal, regulatory or otherwise, in law or in equity, by or before any
court, tribunal, arbitrator or other Governmental Authority ("LITIGATION")
pending or, to the knowledge of EDI, threatened against EDI or any EDI
Subsidiary, any officer, director, employee or agent thereof, in his or her
capacity as such, or as a fiduciary with respect to any EDI Benefit Plan, as
hereinafter defined, or otherwise relating to EDI or any EDI Subsidiary or the
securities of any of them, or any properties or rights of EDI or any EDI
Subsidiary or any EDI Benefit Plan which is required to be described in any EDI
Securities Filing that is not so described. No event has occurred as a
consequence of which EDI would be required to file a Current Report on Form 8-K
pursuant to the requirements of the Securities Exchange Act as to which such a
report has not been timely filed with the SEC.
2.8 EDI FINANCIAL STATEMENTS. The audited consolidated financial
statements and unaudited interim financial statements of EDI included in the EDI
Securities Filings (the "EDI FINANCIAL STATEMENTS") have been prepared in
accordance with generally accepted accounting principles applied on a consistent
basis (except as may be indicated therein or in the notes thereto) and present
fairly, in all material respects, the financial position of EDI and the EDI
Subsidiaries as at the dates thereof and the results of their operations and
cash flows for the periods then ended subject, in the case of the unaudited
interim financial statements, to normal year-end audit adjustments, any other
adjustments described therein and the fact that certain information and notes
have been condensed or omitted in accordance with the Securities Exchange Act.
15
21
2.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the EDI Securities Filings filed and publicly available prior to the date of
this Agreement or in SCHEDULE 2.9 attached hereto or as permitted by SECTION
4.1, since September 30, 1997, (i) there has not been any event, occurrence,
fact, condition, change, development or effect ("EVENT") that has had or could
reasonably be expected to have an EDI Material Adverse Effect; (ii) EDI and the
EDI Subsidiaries have operated only in the ordinary course of business and
consistent with past practice; and (iii) without limiting the generality of the
foregoing, and except as disclosed on SCHEDULE 2.9 attached hereto, there has
not been, occurred or arisen:
(a) any declaration, payment or setting aside for payment
of any dividend (except to EDI or an EDI Subsidiary) or other distribution or
any redemption, purchase or other acquisition of any shares of capital stock or
securities of EDI by or from EDI;
(b) any employment, deferred compensation or other
salary, wage or compensation contract entered into between EDI and any EDI
employee, except for normal and customary contracts in the ordinary course of
business and consistent with past practice; or any increase in the salary, wages
or other compensation of any kind, whether current or deferred, of any EDI
employee, other than routine increases that were made in the ordinary course of
business and consistent with past practices; or any creation of any benefit plan
or amendment or modification of any benefit plan; or any election by or on
behalf of EDI made pursuant to the provisions of any benefit plan to accelerate
any payments, obligations or vesting schedules under any benefit plans;
(c) any issuance, sale or disposition by EDI of any
debenture, note, stock or other security issued by EDI, or any modification or
amendment of any right of the holder of any outstanding debenture, note, stock
or other security issued by EDI;
(d) any liability involving the borrowing of money by EDI
except in the ordinary course of business and consistent with past practices;
(e) except for fair value received, in the ordinary
course of business and consistent with past practices, any cancellation of any
liability owed to EDI by any other person; or
(f) any amendment to the Certificate of Incorporation or
By-laws of EDI.
2.10 COMPLIANCE WITH LAWS. The business of EDI and each EDI
Subsidiary has been operated in compliance with all Laws, except for any
instances of non-compliance which have not had and could not reasonably be
expected to have an EDI Material Adverse Effect.
2.11 PERMITS. (i) EDI and the EDI Subsidiaries have all permits,
certificates, licenses, approvals and other authorizations required in
connection with the operation of their business (collectively, "EDI PERMITS"),
(ii) neither EDI nor any EDI Subsidiary is in violation of any EDI Permit, and
(iii) no proceedings are pending or, to the knowledge of EDI,
16
22
threatened, to revoke or limit any EDI Permit, except, in each case, those the
absence or violation of which could not reasonably be expected to have an EDI
Material Adverse Effect.
2.12 FINDERS AND INVESTMENT BANKERS. Neither EDI nor any of its
officers or directors has entered into any contract, arrangement or
understanding with any broker, finder or other person, other than Alliant
Partners, or otherwise incurred any liability for any brokerage fees,
commissions, finders' fees or like payments in connection with the transactions
contemplated hereby.
2.13 CONTRACTS. Except as set forth in the EDI Securities Filings
or in SCHEDULE 2.13 attached hereto, neither EDI nor any of the EDI Subsidiaries
is a party or is subject to any note, bond, mortgage, indenture, contract,
lease, license, agreement, understanding, instrument, bid or proposal that is
material to the business or operations of EDI ("EDI MATERIAL CONTRACT"). EDI has
made available to Xxxxxx true and accurate copies of the EDI Material Contracts.
All such EDI Material Contracts are valid and binding and are in full force and
effect and enforceable against EDI or such subsidiary in accordance with their
respective terms, subject to the Enforceability Exceptions and assuming the due
authorization of the other party or parties thereto. Except as set forth in
SCHEDULE 2.6 attached hereto, (i) no Consent of any person is needed in order
that each such EDI Material Contract shall continue in full force and effect in
accordance with its terms without penalty, acceleration or rights of early
termination by reason of the consummation of the transactions contemplated by
this Agreement, except for Consents the absence of which would not reasonably be
expected to have a EDI Material Adverse Effect, and (ii) neither EDI nor any EDI
Subsidiary is in violation or breach of or default under any such EDI Material
Contract; nor to EDI's knowledge is any other party to any such EDI Material
Contract in violation or breach of or default under any such EDI Material
Contract in each case where such violation or breach would have an EDI Material
Adverse Effect.
2.14 EMPLOYEE BENEFIT PLANS. (a) Except as set forth in SCHEDULE
2.14(a) attached hereto, there are no Benefit Plans (as defined below)
maintained or contributed to by EDI or any of its ERISA Affiliates (as defined
below) ("EDI BENEFIT PLAN"). A "BENEFIT PLAN" shall include (i) an employee
benefit plan as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as amended, together with all regulations thereunder
("ERISA"), even if, because of some other provision of ERISA, such plan is not
subject to any or all of ERISA's provisions, and (ii) whether or not described
in the preceding clause, any pension, profit sharing, stock bonus, deferred or
supplemental compensation, retirement, thrift, stock purchase or stock option
plan, or any other compensation, welfare, fringe benefit or retirement plan,
program, policy, course of conduct, understanding or arrangement of any kind
whatsoever, providing for benefits for, or the welfare of, any or all of the
current or former employees or agents of EDI or any EDI Subsidiary or their
beneficiaries or dependents; provided that Benefit Plans shall not include any
multiemployer plan, as defined in Section 3(37) of ERISA (a "MULTIEMPLOYER
PLAN"). An "ERISA AFFILIATE" is any Person if it would have ever been considered
a single employer with EDI under ERISA Section 4001(b) or part of the same
"controlled group" as EDI for purposes of ERISA Section 302(d)(8)(c). No EDI
17
23
Benefit Plan is a defined benefit pension plan subject to Title IV of ERISA or
Section 412 of the Code. Each of the EDI Benefit Plans has been maintained in
material compliance with its terms and all applicable Law, except where the
failure to do so would not be reasonably likely to result in an EDI Material
Adverse Effect. Neither EDI nor any of its ERISA Affiliates (i) contributes to,
has ever contributed to or has any outstanding liability with respect to, any
Multiemployer Plan; or (ii) except as identified on SCHEDULE 2.14(a), currently
provides any post-employment welfare benefits except as required by the
Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA").
(b) Except as set forth in SCHEDULE 2.14(b) attached
hereto, the consummation of the transactions contemplated by this Agreement will
not (i) entitle any individual to severance pay, or (ii) accelerate the time of
payment or vesting of benefits or increase the amount of compensation due to any
individual.
2.15 TAXES AND RETURNS. (a) Except as set forth on SCHEDULE 2.15,
EDI and each EDI Subsidiary has timely filed, or caused to be timely filed all
material Tax Returns (as defined below) required to be filed by it, and has
paid, collected or withheld, or caused to be paid, collected or withheld, all
material amounts of Taxes required to be paid, collected or withheld, other than
such Taxes for which adequate reserves in the EDI Financial Statements have been
established or which are being contested in good faith and with respect to which
EDI is maintaining reserves adequate for their payment. There are no claims or
assessments pending against EDI or any EDI Subsidiary for any alleged deficiency
in any Tax, and EDI has not been notified in writing of any proposed Tax claims
or assessments against EDI or any EDI Subsidiary (other than in each case,
claims or assessments for which adequate reserves in the EDI Financial
Statements have been established or which are being contested in good faith and
with respect to which EDI is maintaining reserves adequate for their payment or
are immaterial in amount). Neither EDI nor any EDI Subsidiary has any waivers or
extensions of any applicable statute of limitations to assess any material
amount of Taxes. Except as set forth on SCHEDULE 2.15, there are no outstanding
requests by EDI or any EDI Subsidiary for any extension of time within which to
file any material Tax Return or within which to pay any material amounts of
Taxes shown to be due on any return. EDI has taken all steps to ensure it has
and, at the Effective Time, shall have full use of all tax loss carryforwards
reflected on its Form 10-KSB for the fiscal year ended September 30, 1997.
(b) To the best knowledge of EDI, there are no liens for
material amounts of Taxes on the assets of EDI or any EDI Subsidiary except for
statutory liens for current Taxes not yet due and payable.
(c) No examination or audit of any Tax Returns of EDI or
any of the EDI Subsidiaries by any Governmental Authority is currently in
progress or, to the best knowledge of EDI, threatened or contemplated.
18
24
(d) EDI has not taken or agreed to take any action that
would prevent the Merger from constituting a tax-free reorganization under the
provisions of Section 368 of the Code.
(e) For purposes of this Agreement, the term "TAX" shall
mean any federal, state, local, foreign or provincial income, gross receipts,
property, sales, use, license, excise, franchise, employment, payroll,
alternative or added minimum, ad valorem, transfer or excise tax, or any other
tax, custom, duty, governmental fee or other like assessment or charge of any
kind whatsoever, together with any interest or penalty imposed by any
Governmental Authority. The term "TAX RETURN" shall mean a report, return or
other information (including any attached schedules or any amendments to such
report, return or other information) required to be supplied to or filed with a
governmental entity with respect to any Tax, including an information return,
claim for refund, amended return or declaration or estimated Tax.
2.16 FAIRNESS OPINION. EDI has received the opinion of Alliant
Partners to the effect that, as of the date hereof, the Merger Consideration is
fair to the holders of EDI Stock from a financial point of view.
2.17 TAKEOVER STATUTES. Assuming Xxxxxx and its "associates" and
"affiliates" (as defined in Section 203 of the Delaware Code) collectively
beneficially own and have beneficially owned at all times during the three year
period prior to the date hereof less than fifteen percent (15%) of the EDI
Shares outstanding, Section 203 of the Delaware Code is, and shall be,
inapplicable to the Merger, this Agreement and the transactions contemplated
hereby and thereby. The foregoing notwithstanding, the Board of Directors of EDI
has approved the Merger and this Agreement, and such approval is sufficient to
render inapplicable to the Merger, this Agreement and the transactions
contemplated by this Agreement, the provisions of Section 203 of the Delaware
Code.
2.18 INTELLECTUAL PROPERTY RIGHTS. To the knowledge of EDI, EDI and
the EDI Subsidiaries own or possess adequate rights or licenses to use all
trademarks, trade names, service marks, service xxxx registrations, service
names, patents, patent rights, copyrights, inventions, licenses, approvals,
governmental authorizations, trade secrets and other intellectual property
rights (collectively "Intellectual Property Rights") to conduct their respective
businesses as now conducted, except to the extent that the failure to possess
such rights or licenses would not have an EDI Material Adverse Effect. EDI and
the EDI Subsidiaries do not have any knowledge of any infringement by EDI or the
EDI Subsidiaries of any Intellectual Property Rights of others, and except as
set forth on SCHEDULE 2.18, there is no claim, action or proceeding being made
or brought against, or to EDI's knowledge, being threatened against, EDI or any
EDI Subsidiary regarding any Intellectual Property Rights or other infringement;
and EDI and the EDI Subsidiaries are unaware of any facts or circumstances which
might give rise to any of the foregoing, except for such facts and circumstances
which would not have, individually or in the aggregate, an EDI Material Adverse
Effect.
19
25
2.19 CERTAIN BUSINESS RELATIONSHIPS WITH AFFILIATES. Except as set
forth in the EDI Securities Filings, as disclosed on SCHEDULE 2.19 or by virtue
of the Merger, since the date of EDI's last proxy statement to its shareholders,
no event has occurred that would be required to be reported by EDI as a Certain
Relationship or Related Transaction pursuant to Item 404 of Regulation S-K
promulgated under the Securities Act.
2.20 ENVIRONMENTAL MATTERS. (a) Except as set forth in SCHEDULE
2.20 hereto and except as to such matters which, individually or in the
aggregate, could not reasonably be expected to have an EDI Material Adverse
Effect, (i) neither EDI nor any EDI Subsidiary has ever generated, transported,
used, stored, treated, disposed of, or managed any Hazardous Waste (as
hereinafter defined) in a manner not in compliance with applicable Environmental
Law (as hereinafter defined); (ii) to the best knowledge of EDI, no Hazardous
Material (as hereinafter defined) has ever been or is threatened to be spilled,
released, or disposed of at any site presently or formerly owned, operated,
leased, or used by EDI or any EDI Subsidiary, or has ever come to be located in
the soil or groundwater at any such site; (iii) no Hazardous Material has ever
been transported from any site presently or formerly owned, operated, leased, or
used by EDI or any EDI Subsidiary for treatment, storage, or disposal at any
other place other than in compliance with applicable Environmental Laws; (iv)
neither EDI nor any EDI Subsidiary presently owns, operates, leases, or uses, or
previously owned, operated, leased, or used any site on which underground
storage tanks are or were located from which a release occurred; and (v) no lien
has ever been imposed by any governmental agency on any property, facility,
machinery, or equipment owned, operated, leased, or used by EDI or any EDI
Subsidiary in connection with the presence of any Hazardous Material.
(b) Except as set forth in SCHEDULE 2.20 hereto, (i)
neither EDI nor any EDI Subsidiary has any material liability under, nor has EDI
or any EDI Subsidiary ever violated in any material respect, any Environmental
Law (as hereinafter defined); (ii) EDI and each EDI Subsidiary, any property
owned, operated, leased, or used by any of them, and any facilities and
operations thereon are presently in compliance in all material respects with all
applicable Environmental Laws; (iii) neither EDI nor any EDI Subsidiary has ever
entered into or been subject to any judgment, consent decree, compliance order,
or administrative order with respect to any environmental or health and safety
matter or received any request for information, notice, demand letter,
administrative inquiry, or formal or informal complaint or claim with respect to
any environmental or health and safety matter or the enforcement of any
Environmental Law; and (iv) neither EDI nor any EDI Subsidiary has any reason to
believe that any of the items enumerated in clause (iii) of this paragraph will
be forthcoming.
(c) Except as set forth in SCHEDULE 2.20 hereto, and to
the best knowledge of EDI, no site owned, operated, leased, or used by EDI or
any EDI Subsidiary contains any asbestos or asbestos-containing material, any
polychlorinated biphenyls (PCBs) or equipment containing PCBs, or any urea
formaldehyde foam insulation.
(d) EDI has provided to Xxxxxx copies of all material
documents, records, and information in EDI's possession or control concerning
any environmental or health and
20
26
safety matter relevant to EDI or any sites formerly or currently owned,
operated, leased or used by EDI or any EDI Subsidiary, whether generated by EDI
or any EDI Subsidiary, or others, including, without limitation, environmental
audits, environmental risk assessments, site assessments, documentation
regarding off-site disposal of Hazardous Materials, spill control plans, and
reports, correspondence, permits, licenses, approvals, consents, and other
authorizations related to environmental or health and safety matters issued by
any governmental agency. In addition, EDI has disclosed to Xxxxxx all sites
formerly or currently owned, operated, leased or used by EDI or any EDI
Subsidiary.
(e) For purposes of this Agreement, (i) "HAZARDOUS
MATERIAL" shall mean and include any hazardous waste, hazardous material,
hazardous substance, petroleum product, oil, toxic substance, pollutant, or
contaminant, as defined or regulated under any Environmental Law, or any other
substance which may pose a threat to the environment or to human health or
safety; (ii) "HAZARDOUS WASTE" shall mean and include any hazardous waste as
defined or regulated under any Environmental Law; and (iii) "ENVIRONMENTAL LAW"
shall mean any environmental or health and safety-related law, regulation, rule,
ordinance, or by-law at the foreign, national, state, or local level, whether
existing as of the date hereof, previously enforced, or subsequently enacted.
For the purposes of this SECTION 2.20, (x) "EDI" shall mean and include EDI, its
predecessors and all other entities for whose conduct EDI is or may be held
responsible under any Environmental Law; and (y) "EDI SUBSIDIARY" shall mean and
include each respective EDI Subsidiary, its predecessors and all other entities
for whose conduct such EDI Subsidiary is or may be held responsible under any
Environmental Law.
2.21 LABOR MATTERS. Except as set forth on SCHEDULE 2.21 hereto,
neither EDI nor any EDI Subsidiary is a party to, or bound by, any collective
bargaining agreement, contract or other agreement or understanding with a labor
union or labor union organization. There are no unfair labor practice or labor
arbitration proceedings pending or, to the best knowledge of EDI, threatened
against EDI or any EDI Subsidiary relating to their business. To the best
knowledge of EDI, there are no organizational efforts with respect to the
formation of a collective bargaining unit presently being made or threatened
involving employees of EDI or any EDI Subsidiary.
2.22 DISCLOSURE. Neither this Agreement nor any certificate
required to be furnished by EDI to Xxxxxx, the Acquisition Subsidiary or any
Xxxxxx Subsidiary in connection with this Agreement or the transactions
contemplated hereby contains any untrue statement of a material fact concerning
EDI or any EDI Subsidiary or omits to state a material fact concerning EDI or
any EDI Subsidiary necessary to make the statements herein or therein not
misleading in light of the circumstances in which they were made.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND
CERTAIN COVENANTS OF XXXXXX
Xxxxxx represents, warrants and/or covenants to and with EDI
as follows:
21
27
3.1 ORGANIZATION AND GOOD STANDING. Xxxxxx, Acquisition Subsidiary
and each subsidiary of Xxxxxx (the "XXXXXX SUBSIDIARY") is a corporation or
partnership duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or organization and has all requisite
corporate or partnership power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Xxxxxx and each
of the Xxxxxx Subsidiaries is duly qualified or licensed and in good standing to
do business in each jurisdiction in which the character of the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not have a material
adverse effect on the business, assets (including, but not limited to,
intangible assets), condition (financial or otherwise), properties (including,
but not limited to, intangible properties), liabilities or the results of
operations of Xxxxxx and the Xxxxxx Subsidiaries taken as a whole ("XXXXXX
MATERIAL ADVERSE EFFECT"). SCHEDULE 3.1 hereto contains a complete and accurate
list of the jurisdiction of incorporation or organization and qualification or
license of Xxxxxx and each Xxxxxx Subsidiary. Xxxxxx has heretofore made
available to EDI accurate and complete copies of the Articles of Incorporation
and Bylaws, as currently in effect, of Xxxxxx and each Xxxxxx Subsidiary.
3.2 CAPITALIZATION. As of the date hereof, the authorized capital
stock of Xxxxxx consists of 15,000,000 shares of Xxxxxx Stock, and 500,000
shares of preferred stock, par value $1.00 per share ("XXXXXX PREFERRED
SHARES"). As of April 30, 1998, (a) 6,674,492 shares of Xxxxxx Stock were issued
and outstanding, and (b) 119,906 shares of Xxxxxx Preferred Shares were
outstanding. No other capital stock of Xxxxxx is authorized or issued. All
issued and outstanding shares of the Xxxxxx Stock and Xxxxxx Preferred Stock are
duly authorized, validly issued, fully paid and non-assessable and were issued
free of preemptive rights and in compliance with applicable securities Laws.
Except as set forth in the Xxxxxx Securities Filings (as hereinafter defined) or
on SCHEDULE 3.2 attached hereto, or as otherwise contemplated by this Agreement,
as of the date hereof there are no outstanding rights, subscriptions, warrants,
puts, calls, unsatisfied preemptive rights, options or other agreements of any
kind to which Xxxxxx is bound relating to any of the outstanding, authorized but
unissued, unauthorized or treasury shares of the capital stock or any other
security of Xxxxxx, and there is no authorized or outstanding security of any
kind convertible into or exchangeable for any such capital stock or other
security. Except as disclosed in the Xxxxxx Securities Filings, there are, to
the best knowledge of Xxxxxx, no restrictions upon the transfer of or otherwise
pertaining to the securities (including, but not limited to, the ability to pay
dividends thereon) or retained earnings of Xxxxxx and the Xxxxxx Subsidiaries or
the ownership thereof other than those imposed by the Securities Act, the
Securities Exchange Act, applicable state securities Laws or applicable
corporate Law. Neither Xxxxxx nor any Xxxxxx Subsidiary beneficially owns any
shares of EDI Common Stock.
3.3 SUBSIDIARIES. SCHEDULE 3.3 attached hereto sets forth the name
and jurisdiction of incorporation or organization of each Xxxxxx Subsidiary,
each of which is wholly owned by Xxxxxx except as otherwise indicated on said
SCHEDULE 3.3. Except as set forth on SCHEDULE 3.3 attached hereto, all of the
capital stock and other interests of the Xxxxxx
22
28
Subsidiaries so held by Xxxxxx are owned by it or a Xxxxxx Subsidiary as
indicated on said SCHEDULE 3.3, free and clear of any claim, lien, encumbrance,
security interest or agreement with respect thereto. All of the outstanding
shares of capital stock in each of the Xxxxxx Subsidiaries held directly or
indirectly by Xxxxxx are duly authorized, validly issued, fully paid and
non-assessable and were issued free of preemptive rights and in compliance with
applicable Laws. There are no irrevocable proxies or similar obligations with
respect to such capital stock of the Xxxxxx Subsidiaries held by Xxxxxx and no
equity securities or other interests of any of the Xxxxxx Subsidiaries are or
may become required to be issued or purchased by reason of any options,
warrants, rights to subscribe to, puts, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into or exchangeable
for, shares of any capital stock of any Xxxxxx Subsidiary, and there are no
contracts, commitments, understandings or arrangements by which any Xxxxxx
Subsidiary is bound to issue additional shares of its capital stock, or options,
warrants or rights to purchase or acquire any additional shares of its capital
stock or securities convertible into or exchangeable for such shares.
3.4 AUTHORIZATION; BINDING AGREEMENT. Xxxxxx and Acquisition
Subsidiary have all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the other agreements and
documents referred to herein to which Xxxxxx or Acquisition Subsidiary is or
will be a party or a signatory (the "XXXXXX ANCILLARY AGREEMENTS") and the
consummation of the transactions contemplated hereby and thereby, including, but
not limited to, the Merger, have been duly and validly authorized by the
respective Boards of Directors of Xxxxxx and Acquisition Subsidiary, as
appropriate, and no other corporate proceedings on the part of Xxxxxx,
Acquisition Subsidiary or any Xxxxxx Subsidiary are necessary to authorize the
execution and delivery of this Agreement and the Xxxxxx Ancillary Agreements or
to consummate the transactions contemplated hereby or thereby (other than the
requisite approval by the Xxxxxx shareholders of the adoption of this Agreement,
the approval of the Merger and of the Xxxxxx Proposals, and the requisite
approval by the sole shareholder of Acquisition Subsidiary of this Agreement and
the Merger). This Agreement has been duly and validly executed and delivered by
each of Xxxxxx and Acquisition Subsidiary and constitutes, and upon execution
and delivery thereof as contemplated by this Agreement, the Xxxxxx Ancillary
Agreements will constitute, the legal, valid and binding agreements of Xxxxxx
and Acquisition Subsidiary, enforceable against each of Xxxxxx and Acquisition
Subsidiary in accordance with its and their respective terms, subject to the
Enforceability Exceptions.
3.5 GOVERNMENTAL APPROVALS. No Consent from or with any
Governmental Authority on the part of Xxxxxx or any of the Xxxxxx Subsidiaries
is required in connection with the execution or delivery by Xxxxxx of this
Agreement and the Xxxxxx Ancillary Agreements or the consummation by Xxxxxx of
the transactions contemplated hereby or thereby other than (i) the filing of the
Certificate of Merger with the Secretary of State of Delaware in accordance with
the Delaware Code; (ii) filings with the SEC, state securities laws
administrators, the American Stock Exchange and applicable Indiana Governmental
23
29
Authorities, (iii) filings under the HSR Act, if required; (iv) those Consents,
if any, required by or related to contracts pursuant to which Xxxxxx provides,
directly or indirectly, goods or services to any Governmental Authority, all as
identified on SCHEDULE 3.5 attached hereto; and (v) those Consents that, if they
were not obtained or made, do not or would not have a Xxxxxx Material Adverse
Effect or materially and adversely affect the ability of Xxxxxx to perform its
obligations set forth herein or to consummate the transactions contemplated
hereby.
3.6 NO VIOLATIONS. Except as set forth on SCHEDULE 3.6 hereto, the
execution and delivery of this Agreement and the Xxxxxx Ancillary Agreements,
the consummation of the transactions contemplated hereby and thereby and
compliance by Xxxxxx with any of the provisions hereof or thereof will not (i)
conflict with or result in any breach of any provision of the Articles of
Incorporation or Bylaws or other governing instruments of Xxxxxx or any of the
Xxxxxx Subsidiaries, (ii) require any Consent under or result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration
or augment the performance required) under any of the terms, conditions or
provisions of any Xxxxxx Material Contract (as hereinafter defined), (iii)
result in the creation or imposition of any lien or encumbrance of any kind upon
any of the assets of Xxxxxx or any Xxxxxx Subsidiary, or (iv) subject to
obtaining the Consents from Governmental Authorities referred to in SECTION 3.5,
above, contravene any Law currently in effect to which Xxxxxx or any Xxxxxx
Subsidiary or its or any of their respective assets or properties are subject,
except in the case of clauses (ii), (iii) and (iv), above, for any deviations
from the foregoing which do not or would not have a Xxxxxx Material Adverse
Effect.
3.7 SECURITIES FILINGS AND LITIGATION. Xxxxxx has made available
to EDI true and complete copies of (i) its Annual Reports on Form 10-K, as
amended, for the years ended September 27, 1997, September 28, 1996 and
September 30, 1995, or periods included therein, as filed with the SEC, (ii) its
proxy statements relating to all of the meetings of shareholders (whether annual
or special) of Xxxxxx since January 1, 1995, as filed with the SEC, and (iii)
all other reports, statements and registration statements and amendments thereto
(including, without limitation, Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, as amended) filed by Xxxxxx with the SEC since January 1,
1995. The reports and statements set forth in clauses (i) through (iii), above,
and those subsequently provided or required to be provided pursuant to this
Section, are referred to collectively as the "XXXXXX SECURITIES FILINGS." As of
their respective dates, or as of the date of the last amendment thereof, if
amended after filing, none of the Xxxxxx Securities Filings (including all
schedules thereto and disclosure documents incorporated by reference therein),
contained or, as to Xxxxxx Securities Filings subsequent to the date hereof,
will contain any untrue statement of a material fact or omitted or, as to Xxxxxx
Securities Filings subsequent to the date hereof, will omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. Each
of the Xxxxxx Securities Filings at the time of filing or as of the date of the
last amendment thereof, if amended after filing, complied or, as to Xxxxxx
Securities Filings subsequent to the date hereof, will comply in all material
respects with the Securities Exchange Act or the
24
30
Securities Act, as applicable. Xxxxxx has timely filed all reports, statements,
registration statements and other filings required to be filed by it under the
Securities Exchange Act and the Securities Act, as applicable. Except as
disclosed in the Xxxxxx Securities Filings or on SCHEDULE 3.7, there is no
Litigation pending or, to the knowledge of Xxxxxx, threatened against Xxxxxx or
any Xxxxxx Subsidiary, any officer, director, employee or agent thereof, in his
or her capacity as such, or as a fiduciary with respect to any Xxxxxx Benefit
Plan, as hereinafter defined, or otherwise relating to Xxxxxx or any Xxxxxx
Subsidiary or the securities of any of them, or any properties or rights of
Xxxxxx or any Xxxxxx Subsidiary or any Xxxxxx Benefit Plan which is required to
be described in any Xxxxxx Securities Filing that is not so described. No event
has occurred as a consequence of which Xxxxxx would be required to file a
Current Report on Form 8-K pursuant to the requirements of the Securities
Exchange Act as to which such a report has not been timely filed with the SEC.
3.8 XXXXXX FINANCIAL STATEMENTS. The audited consolidated
financial statements and unaudited interim financial statements of Xxxxxx
included in the Xxxxxx Securities Filings (the "XXXXXX FINANCIAL STATEMENTS")
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis (except as may be indicated therein or in the
notes thereto) and present fairly, in all material respects, the financial
position of Xxxxxx and the Xxxxxx Subsidiaries as at the dates thereof and the
results of their operations and cash flows for the periods then ended subject,
in the case of the unaudited interim financial statements, to normal year-end
audit adjustments, any other adjustments described therein and the fact that
certain information and notes have been condensed or omitted in accordance with
the Securities Exchange Act.
3.9 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as set forth in
the Xxxxxx Securities Filings filed and publicly available prior to the date of
this Agreement or in SCHEDULE 3.9 attached hereto or as permitted by SECTION
5.1, since September 27, 1997, (i) there has not been any event, occurrence,
fact, condition, change, development or effect ("EVENT") that has had or could
reasonably be expected to have a Xxxxxx Material Adverse Effect; (ii) Xxxxxx and
the Xxxxxx Subsidiaries have operated only in the ordinary course of business
and consistent with past practice; and (iii) without limiting the generality of
the foregoing and except as disclosed on SCHEDULE 3.9 attached hereto, there has
not been, occurred or arisen:
(a) any declaration, payment or setting aside for payment
of any dividend (except to Xxxxxx or a Xxxxxx Subsidiary and dividends required
under the present terms of the Xxxxxx Preferred Stock) or other distribution or
any redemption, purchase or other acquisition of any shares of capital stock or
securities of Xxxxxx by or from Xxxxxx;
(b) any employment, deferred compensation or other
salary, wage or compensation contract entered into between Xxxxxx and any Xxxxxx
employee, except for normal and customary contracts in the ordinary course of
business and consistent with past practice; or any increase in the salary, wages
or other compensation of any kind, whether current or deferred, of any Xxxxxx
employee, other than routine increases that were made in
25
31
the ordinary course of business and consistent with past practices; or any
creation of any benefit plan or amendment or modification of any benefit plan;
or any election by or on behalf of Xxxxxx made pursuant to the provisions of any
benefit plan to accelerate any payments, obligations or vesting schedules under
any benefit plans;
(c) any issuance, sale or disposition by Xxxxxx of any
debenture, note, stock or other security issued by Xxxxxx, or any modification
or amendment of any right of the holder of any outstanding debenture, note,
stock or other security issued by Xxxxxx;
(d) any liability involving the borrowing of money by
Xxxxxx except in the ordinary course of business and consistent with past
practices;
(e) except for fair value received, in the ordinary
course of business and consistent with past practices, any cancellation of any
liability owed to Xxxxxx by any other person; or
(f) any amendment to the Certificate of Incorporation or
By-laws of Xxxxxx.
3.10 COMPLIANCE WITH LAWS. The business of Xxxxxx and each of
Xxxxxx Subsidiary has been operated in compliance with all Laws, except for any
instances of non-compliance which have not had and could not reasonably be
expected to have a Xxxxxx Material Adverse Effect.
3.11 PERMITS. (i) Xxxxxx and the Xxxxxx Subsidiaries have all
permits, certificates, licenses, approvals and other authorizations required in
connection with the operation of their business (collectively, "XXXXXX
PERMITS"), (ii) neither Xxxxxx nor any Xxxxxx Subsidiary is in violation of any
Xxxxxx Permit, and (iii) no proceedings are pending or, to the knowledge of
Xxxxxx, threatened, to revoke or limit any Xxxxxx Permit, except, in each case,
those the absence or violation of which could not reasonably be expected to have
a Xxxxxx Material Adverse Effect.
3.12 FINDERS AND INVESTMENT BANKERS. Neither Xxxxxx nor any of its
officers or directors has entered into any contract, arrangement or
understanding with any broker, finder or other person, other than Xxxxxxx & Co.,
or otherwise incurred any liability for any brokerage fees, commissions,
finders' fees or like payments in connection with the transactions contemplated
hereby.
3.13 CONTRACTS. Except as set forth in the Xxxxxx Securities
Filings or in SCHEDULE 3.13, neither Xxxxxx nor any Xxxxxx Subsidiary is a party
or is subject to any note, bond, mortgage, indenture, contract, lease, license,
agreement, understanding, instrument, bid or proposal that is material to the
business or operations of Xxxxxx ("XXXXXX MATERIAL CONTRACT"). Xxxxxx has made
available to EDI true and accurate copies of the Xxxxxx Material Contracts. All
such Xxxxxx Material Contracts are valid and binding and are in full
26
32
force and effect and enforceable against Xxxxxx or such subsidiary in accordance
with their respective terms, subject to the Enforceability Exceptions and
assuming the due authorization of the other party or parties thereto. Except as
referenced in SECTION 3.6 above, (i) no Consent of any person is needed in order
that each such Xxxxxx Material Contract shall continue in full force and effect
in accordance with its terms without penalty, acceleration or rights of early
termination by reason of the consummation of the transactions contemplated by
this Agreement, except for Consents the absence of which would not reasonably be
expected to have a Xxxxxx Material Adverse Effect, and (ii) neither Xxxxxx nor
any Xxxxxx Subsidiary is in violation or breach of or default under any such
Xxxxxx Material Contract, nor to Xxxxxx'x knowledge is any other party to any
such Xxxxxx Material Contract in violation or breach of or default under any
such Xxxxxx Material Contract in each case where such violation or breach would
have Xxxxxx Material Adverse Effect.
3.14 EMPLOYEE BENEFIT PLANS. (a) Except as set forth in SCHEDULE
3.14(a) attached hereto, there are no Benefit Plans maintained or contributed to
by Xxxxxx or any of its ERISA Affiliates ("XXXXXX BENEFIT PLAN"). Each of the
Xxxxxx Benefit Plans has been maintained in material compliance with its terms
and all applicable Law, except where the failure to do so would not be
reasonably likely to result in a Xxxxxx Material Adverse Effect. Except as set
forth on SCHEDULE 3.14(a) attached hereto, no Xxxxxx Benefit Plan is a defined
benefit pension plan subject to Title IV of ERISA or Section 412 of the Code.
Except as set forth on SCHEDULE 3.14(a), neither Xxxxxx nor any of its ERISA
Affiliates (i) contributes to, has ever contributed to or has any outstanding
liability with respect to, any Multiemployer Plan; or (ii) currently provides
any post-employment welfare benefits except as required by COBRA.
(b) Except as set forth on SCHEDULE 3.14(b) attached
hereto, the consummation of the transactions contemplated by this Agreement will
not (i) entitle any individual to severance pay; or (ii) accelerate the time of
payment or vesting of benefits or increase the amount of compensation due to any
individual.
3.15 TAXES AND RETURNS. (a) Xxxxxx and each Xxxxxx Subsidiary has
timely filed, or caused to be timely filed all material Tax Returns required to
be filed by it, and has paid, collected or withheld, or caused to be paid,
collected or withheld, all material amounts of Taxes required to be paid,
collected or withheld, other than such Taxes for which adequate reserves in the
Xxxxxx Financial Statements have been established or which are being contested
in good faith and with respect to which Xxxxxx is maintaining reserves adequate
for their payment. There are no claims or assessments pending against Xxxxxx or
any Xxxxxx Subsidiary for any alleged deficiency in any Tax, and Xxxxxx has not
been notified in writing of any proposed Tax claims or assessments against
Xxxxxx or any Xxxxxx Subsidiary (other than in each case, claims or assessments
for which adequate reserves in the Xxxxxx Financial Statements have been
established or which are being contested in good faith and with respect to which
Xxxxxx is maintaining reserves adequate for their payment or are immaterial in
amount). Neither Xxxxxx nor any Xxxxxx Subsidiary has any waivers or extensions
of any applicable statute of limitations to assess any material amount of Taxes.
There are no outstanding requests by Xxxxxx or any Xxxxxx Subsidiary for any
extension of time within
27
33
which to file any material Tax Return or within which to pay any material
amounts of Taxes shown to be due on any return.
(b) To the best knowledge of Xxxxxx, there are no liens
for material amounts of Taxes on the assets of Xxxxxx or any Xxxxxx Subsidiary
except for statutory liens for current Taxes not yet due and payable.
(c) No examination or audit of any Tax Returns of Xxxxxx
or any of the Xxxxxx Subsidiaries by any Governmental Authority is currently in
progress or, to the best knowledge of Xxxxxx, threatened or contemplated.
(d) Xxxxxx has not taken or agreed to take any action
that would prevent the Merger from constituting a tax-free reorganization under
the provisions of Section 368 of the Code.
3.16 FAIRNESS OPINION. Xxxxxx received the opinion of Xxxxxxx & Co.
to the effect that, as of the date hereof, the Merger Consideration is fair to
the holders of Xxxxxx Stock from a financial point of view.
3.17 TAKEOVER STATUTES. Assuming EDI and its "associates" and
"affiliates" (as defined in Section 23-1-43 of the Indiana Business Corporation
Law) collectively beneficially own and have owned at all times during the five
year period prior to the date hereof less than ten percent (10%) of the Xxxxxx
Stock outstanding, Section 23-1-43-18 of the Indiana Business Corporation Law
is, and shall be, inapplicable to the Merger, this Agreement and the
transactions contemplated hereby and thereby. The foregoing notwithstanding, the
Board of Directors of Xxxxxx has approved the Merger, this Agreement, and the
agreements contemplated by this Agreement, and such approval is sufficient to
render inapplicable to the Merger, this Agreement and the transactions and
agreements contemplated by this Agreement, the provisions of Section 23-1-43-18
of the Indiana Business Corporation Law.
3.18 XXXXXX RIGHTS PLAN. Under the Rights Agreement between Xxxxxx
and American Stock Transfer and Trust Company, dated as of December 6, 1996 (the
"XXXXXX RIGHTS AGREEMENT"), neither EDI nor any stockholder of EDI or any
Affiliate or Associate (as such terms are defined in the Xxxxxx Rights
Agreement) of EDI or any such stockholder of EDI, will become an "Acquiring
Person"; no "Share Acquisition Date" or "Distribution Date" (as such terms are
defined in the Xxxxxx Rights Agreement) will occur; and the holders of any
rights issued pursuant to the Xxxxxx Rights Agreement will not be entitled to
receive any benefits under the Xxxxxx Rights Agreement as a result of the
approval, execution or delivery of this Agreement or the consummation of the
transactions contemplated hereby. From and after the date of this Agreement
until the Effective Time, Xxxxxx shall not take any action that would cause EDI
or any stockholder of EDI or any Affiliate or Associate of EDI or any such
stockholder to become an "Acquiring Person" under the Xxxxxx Rights Agreement,
or that would cause a "Share Acquisition Date" or "Distribution Date" to occur
or give the holders of
28
34
any Rights any benefits under the Xxxxxx Rights Agreement, as a result of the
Merger or any of the transactions contemplated by this Agreement.
3.19 INTELLECTUAL PROPERTY RIGHTS. To the knowledge of Xxxxxx,
Xxxxxx and the Xxxxxx Subsidiaries own or possess adequate rights or licenses to
use all Intellectual Property Rights to conduct their respective businesses as
now conducted, except to the extent that the failure to possess such rights or
licenses would not have a Xxxxxx Material Adverse Effect. Xxxxxx and the Xxxxxx
Subsidiaries do not have any knowledge of any infringement by Xxxxxx or the
Xxxxxx Subsidiaries of any Intellectual Property Rights of others, and except as
set forth on SCHEDULE 3.19, there is no claim, action or proceeding being made
or brought against, or to Xxxxxx'x knowledge, being threatened against, Xxxxxx
or any Xxxxxx Subsidiary regarding any Intellectual Property Rights or other
infringement; and Xxxxxx and the Xxxxxx Subsidiaries are unaware of any facts or
circumstances which might give rise to any of the foregoing, except for such
facts and circumstances which would not have, individually or in the aggregate,
a Xxxxxx Material Adverse Effect.
3.20 CERTAIN BUSINESS RELATIONSHIPS WITH AFFILIATES. Except as set
forth in the Xxxxxx Securities Filing, as disclosed on SCHEDULE 3.20 or by
virtue of the Merger, since the date of Xxxxxx'x last proxy statement to its
shareholders, no event has occurred that would be required to be reported by
Xxxxxx as a Certain Relationship or Related Transaction pursuant to Item 404 of
Regulation S-K promulgated under the Securities Act.
3.21 ENVIRONMENTAL MATTERS. (a) Except as set forth in SCHEDULE
3.21 hereto and except as to such matters which, individually or in the
aggregate, could not reasonably be expected to have a Xxxxxx Material Adverse
Effect, (i) neither Xxxxxx nor any Xxxxxx Subsidiary has ever generated,
transported, used, stored, treated, disposed of, or managed any Hazardous Waste
in a manner not in compliance with applicable Environmental Law; (ii) to the
best knowledge of Xxxxxx, no Hazardous material has ever been or is threatened
to be spilled, released, or disposed of at any site presently or formerly owned,
operated, leased, or used by Xxxxxx or any Xxxxxx Subsidiary, or has ever come
to be located in the soil or groundwater at any such site; (iii) no Hazardous
Material has ever been transported from any site presently or formerly owned,
operated, leased, or used by Xxxxxx or any Xxxxxx Subsidiary for treatment,
storage, or disposal at any other place other than in compliance with applicable
Environmental Laws; (iv) neither Xxxxxx nor any Xxxxxx Subsidiary presently
owns, operates, leases, or uses, or previously owned, operated, leased, or used
any site on which underground storage tanks are or were located from which a
release occurred; and (v) no lien has ever been imposed by any governmental
agency on any property, facility, machinery, or equipment owned, operated,
leased, or used by Xxxxxx or any Xxxxxx Subsidiary in connection with the
presence of any Hazardous Material.
(b) Except as set forth in SCHEDULE 3.21 hereto, (i)
neither Xxxxxx nor any Xxxxxx Subsidiary has any material liability under, nor
has Xxxxxx or any Xxxxxx Subsidiary ever violated in any material respect, any
Environmental Law; (ii) Xxxxxx and each Xxxxxx Subsidiary, any property owned,
operated, leased, or used by any of them, and
29
35
any facilities and operations thereon are presently in compliance in all
material respects with all applicable Environmental Laws; (iii) neither Xxxxxx
nor any Xxxxxx Subsidiary has ever entered into or been subject to any judgment,
consent decree, compliance order, or administrative order with respect to any
environmental or health and safety matter or received any request for
information, notice, demand letter, administrative inquiry, or formal or
informal complaint or claim with respect to any environmental or health and
safety matter or the enforcement of any Environmental Law; and (iv) neither
Xxxxxx nor any Xxxxxx Subsidiary has any reason to believe that any of the items
enumerated in clause (iii) of this paragraph will be forthcoming.
(c) Except as set forth in SCHEDULE 3.21 hereto, and to
the best knowledge of Xxxxxx, no site owned, operated, leased or used by Xxxxxx
or any Xxxxxx Subsidiary contains any asbestos or asbestos-containing material,
any PCBs or equipment containing PCBs, or any urea formaldehyde foam insulation.
(d) Xxxxxx has provided to EDI copies of all material
documents, records, and information in Xxxxxx'x possession or control concerning
any environmental or health and safety matter relevant to Xxxxxx or any sites
formerly or currently owned, operated, leased or used by Xxxxxx or any Xxxxxx
Subsidiary, whether generated by Xxxxxx or any Xxxxxx Subsidiary, or others,
including, without limitation, environmental audits, environmental risk
assessments, site assessments, documentation regarding off-site disposal of
Hazardous Materials, spill control plans, and reports, correspondence, permits,
licenses, approvals, consents, and other authorizations related to environmental
or health and safety matters issued by any governmental agency. In addition,
Xxxxxx has disclosed to EDI all sites formerly or currently owned, operated,
leased or used by Xxxxxx or any Xxxxxx Subsidiary.
(e) For purposes of this SECTION 3.21, (i) "XXXXXX" shall
mean and include Xxxxxx, its predecessors and all other entities for whose
conduct Xxxxxx is or may be held responsible under any Environmental Law and
(ii) "XXXXXX SUBSIDIARY" shall mean and include each respective Xxxxxx
Subsidiary, its predecessors and all other entities for whose conduct such
Xxxxxx Subsidiary is or may be held responsible under any Environmental Law.
3.22 LABOR MATTERS. Except as set forth on SCHEDULE 3.22 hereto,
neither Xxxxxx nor any Xxxxxx Subsidiary is a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor union organization. There are no unfair labor
practice or labor arbitration proceedings pending or, to the best knowledge of
Xxxxxx, threatened against Xxxxxx or any Xxxxxx Subsidiary relating to their
business. To the best knowledge of Xxxxxx, there are no organizational efforts
with respect to the formation of a collective bargaining unit presently being
made or threatened involving employees of Xxxxxx or any Xxxxxx Subsidiary.
3.23 DISCLOSURE. Neither this Agreement nor any certificate
required to be furnished by Xxxxxx to EDI or any EDI Subsidiary in connection
with this Agreement or the
30
36
transactions contemplated hereby contains any untrue statement of a material
fact concerning Xxxxxx, the Acquisition Subsidiary or any Xxxxxx Subsidiary or
omits to state a material fact concerning Xxxxxx, the Acquisition Subsidiary or
any Xxxxxx Subsidiary necessary to make the statements herein or therein not
misleading in light of the circumstances in which they were made.
ARTICLE IV
ADDITIONAL COVENANTS OF EDI
EDI represents, covenants and agrees as follows:
4.1 CONDUCT OF BUSINESS OF EDI AND EDI SUBSIDIARIES. Except as
expressly contemplated by this Agreement, during the period from the date of
this Agreement to the Effective Time, EDI shall conduct, and it shall cause the
EDI Subsidiaries to conduct, its or their businesses in the ordinary course and
consistent with past practice, subject to the limitations contained in this
Agreement, and EDI shall, and it shall cause the EDI Subsidiaries to, use its or
their reasonable business efforts to preserve intact its business organization,
to keep available the services of its officers and employees and to maintain
satisfactory relationships with all persons with whom it does business. Without
limiting the generality of the foregoing, and except as otherwise expressly
provided in this Agreement or as otherwise set forth in the EDI Disclosure
Letter (as hereinafter defined), after the date of this Agreement and prior to
the Effective Time, neither EDI nor any EDI Subsidiary will, without the prior
written consent of Xxxxxx:
(i) amend or propose to amend its Certificate of
Incorporation or Bylaws in any material respect;
(ii) authorize for issuance, issue, grant, sell, pledge,
dispose of or propose to issue, grant, sell, pledge or dispose of any shares of,
or any options, warrants, commitments, subscriptions or rights of any kind to
acquire or sell any shares of, the capital stock or other securities of EDI or
any EDI Subsidiary including, but not limited to, any securities convertible
into or exchangeable for shares of stock of any class of EDI or any EDI
Subsidiary, except for the issuance of shares of EDI Common Stock pursuant to
the exercise of stock options or warrants outstanding on the date of this
Agreement in accordance with their present terms or pursuant to EDI's employee
stock purchase plan;
(iii) split, combine or reclassify any shares of its
capital stock or declare, pay or set aside any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock;
(iv) (a) create, incur or assume any debt in excess of
$500,000 or obligations in respect of capital leases, except pursuant to
existing agreements and pursuant to refinancings of existing obligations on
terms that are no less favorable to EDI or the EDI Subsidiaries than the
existing terms; (b) assume, guarantee, endorse or otherwise become liable or
responsible
31
37
(whether directly, indirectly, contingently or otherwise) for the obligations of
any person; (c) make any capital expenditures in excess of $500,000 or make any
loans, advances or capital contributions to, or investments in, any other person
(other than to an EDI Subsidiary and customary travel, relocation or business
advances to employees made in the ordinary course of business consistent with
past practice); (d) acquire the stock or assets of, or merge or consolidate
with, any other person; (e) voluntarily incur any material liability or
obligation (absolute, accrued, contingent or otherwise); or (f) sell, transfer,
mortgage, pledge or otherwise dispose of, or encumber, or agree to sell,
transfer, mortgage, pledge or otherwise dispose of or encumber, any assets or
properties, real, personal or mixed material to EDI and the EDI Subsidiaries
taken as a whole other than to secure debt permitted under (a) of this clause
(iv);
(v) increase in any manner the compensation of any of its
officers or employees, hire or solicit for employment any person who is an
employee of Xxxxxx, or enter into, establish, amend or terminate any employment,
consulting, retention, change in control, collective bargaining, bonus or other
incentive compensation, profit sharing, health or other welfare, stock option or
other equity, pension, retirement, vacation, severance, deferred compensation or
other compensation or benefit plan, policy, agreement, trust, fund or
arrangement with, for or in respect of, any shareholder, officer, director,
other employee, agent, consultant or affiliate other than as required pursuant
to the terms of agreements in effect on the date of this Agreement;
(vi) except as disclosed on SCHEDULE 4.1 attached hereto,
enter into any lease or amend any lease of real property; or
(vii) agree to do any of the foregoing.
Furthermore, EDI covenants, represents and warrants that from and after
the date of this Agreement, unless Xxxxxx shall otherwise expressly consent in
writing, EDI shall, and EDI shall cause each EDI Subsidiary to, use its or their
reasonable business efforts to comply in all material respects with all Laws
applicable to it or any of its properties, assets or business and maintain in
full force and effect all EDI Permits necessary for, or otherwise material to,
such business.
4.2 NOTIFICATION OF CERTAIN MATTERS. EDI shall give prompt written
notice to Xxxxxx if any of the following occur after the date of this Agreement:
(i) any notice of, or other communication relating to, a default or Event which,
with notice or lapse of time or both, would become a default under any EDI
Material Contract which could reasonably be expected to have an EDI Material
Adverse Effect; (ii) receipt of any notice or other communication in writing
from any third party alleging that the Consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement,
provided that such Consent would have been required to have been disclosed in
this Agreement; (iii) receipt of any material notice or other communication from
any Governmental Authority (including, but not limited to, Nasdaq or any
securities exchange) in connection with
32
38
the transactions contemplated by this Agreement; (iv) the occurrence of an Event
which could reasonably be expected to have an EDI Material Adverse Effect; (v)
the commencement or threat of any Litigation involving or affecting EDI or any
EDI Subsidiary, or any of their respective properties or assets, or, to its
knowledge, any employee, agent, director or officer, in his or her capacity as
such, of EDI or any EDI Subsidiary which, if pending on the date hereof, would
have been required to have been disclosed in this Agreement or which relates to
the consummation of the Merger or any material development in connection with
any Litigation disclosed by EDI in or pursuant to this Agreement or the EDI
Securities Filings; and (vi) the occurrence of any Event that could reasonably
be expected to cause a breach by EDI of any provision of this Agreement or an
EDI Ancillary Agreement, including such a breach that could occur if such Event
had taken place on or prior to the date of this Agreement.
4.3 ACCESS AND INFORMATION. Subject to the confidentiality
obligations of Xxxxxx as set forth in SECTION 8.1 of this Agreement, between the
date of this Agreement and the Effective Time, EDI and the EDI Subsidiary will
give, and shall direct its accountants and legal counsel to give, Xxxxxx, its
lenders and their respective authorized representatives (including, without
limitation, financial advisors, accountants and legal counsel) at all reasonable
times access as reasonably requested to all offices and other facilities and to
all contracts, agreements, commitments, books and records (including, but not
limited to, Tax Returns) of or pertaining to EDI and each EDI Subsidiary, will
permit the foregoing to make such reasonable inspections as they may require and
will cause its officers promptly to furnish Xxxxxx with (a) such financial and
operating data and other information with respect to the business and properties
of EDI and each EDI Subsidiary as Xxxxxx may from time to time reasonably
request, and (b) a copy of each material report, schedule and other document
filed or received by EDI or any EDI Subsidiary pursuant to the requirements of
applicable securities laws or Nasdaq. All such information shall be deemed
"Confidential Information" as such term is defined in those certain letter
agreements dated March 10, 1997 and April 24, 1997 between EDI and Xxxxxx (the
"Confidentiality Agreements'), except as otherwise provided in such
Confidentiality Agreements.
4.4 STOCKHOLDER APPROVAL. As soon as practicable, EDI will take
all steps necessary to duly call, give notice of, convene and hold a meeting of
its stockholders for the purpose of approving the EDI Proposals and for such
other purposes as may be necessary or desirable in connection with effectuating
the transactions contemplated hereby. Except in the case where the Board of
Directors of EDI determines in good faith, after receiving advice of counsel,
that doing so could reasonably be expected to be a breach of the directors'
fiduciary duties under applicable Law, the Board of Directors of EDI (i) will
recommend to the stockholders of EDI that they approve the EDI Proposals, and
(ii) will use its reasonable best efforts to obtain any necessary approval by
EDI's stockholders of the EDI Proposals including, without limitation, voting
the EDI Shares held by such Directors for such adoption and approval.
4.5 REASONABLE BUSINESS EFFORTS. Subject to the terms and
conditions herein provided, EDI agrees to use its reasonable business efforts to
take, or cause to be taken, all
33
39
actions, and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable the Merger
and the transactions contemplated by this Agreement including, but not limited
to (i) obtaining the Consent of EDI's lenders and others to this Agreement and
the transactions contemplated hereby, (ii) the defending of any Litigation
against EDI or any EDI Subsidiary challenging this Agreement or the consummation
of the transactions contemplated hereby, (iii) obtaining all Consents from
Governmental Authorities required for the consummation of the Merger and the
transactions contemplated thereby, and (iv) timely making all necessary filings
under the HSR Act. Upon the terms and subject to the conditions hereof, EDI
agrees to use reasonable business efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary to satisfy the
other conditions of the closing set forth herein.
4.6 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,
EDI shall not, and shall cause its affiliates not to, issue or cause the
publication of any press release or any other announcement with respect to the
Merger, the EDI Proposals or the transactions contemplated hereby or thereby
without the consent of Xxxxxx, which consent shall not be unreasonably withheld,
except where such release or announcement is required by applicable Law or
pursuant to any applicable listing agreement with, or rules or regulations of,
Nasdaq, in which case EDI, prior to making such announcement, shall consult with
Xxxxxx regarding the same.
4.7 COMPLIANCE. In consummating the Merger and the transactions
contemplated hereby, EDI shall comply in all material respects with the
provisions of the Securities Exchange Act and the Securities Act and shall
comply, and/or cause the EDI Subsidiaries to comply or to be in compliance, in
all material respects, with all other applicable Laws.
4.8 NO SOLICITATION. (a) EDI shall, and shall direct and use
reasonable efforts to cause its officers, directors, employees, representatives
and agents to, immediately cease any discussions or negotiations with any
parties that may be ongoing with respect to a EDI Takeover Proposal (as
hereinafter defined). EDI shall not, nor shall it permit any EDI Subsidiary to,
nor shall it authorize or permit any of its officers, directors or employees or
any investment banker, financial advisor, attorney, accountant or other
representative retained by it or any EDI Subsidiary to, directly or indirectly,
(i) solicit, initiate or encourage (including by way of furnishing information),
or take any other action designed or reasonably likely to facilitate, any
inquiries or the making of any proposal which constitutes, or would reasonably
be expected to lead to, any EDI Takeover Proposal or (ii) participate in any
discussions or negotiations regarding any EDI Takeover Proposal; PROVIDED,
HOWEVER, that if, at any time prior to the Effective Time, the Board of
Directors of EDI determines in good faith, after consultation with legal and
financial advisors, that an EDI Takeover Proposal may reasonably be expected to
lead to an EDI Superior Proposal (as defined below), EDI may, in response to an
EDI Takeover Proposal which was not solicited, initiated or encouraged
subsequent to the date hereof, and subject to compliance with SECTION 4.8(b),
(x) furnish information with respect to EDI to any person pursuant to a
customary confidentiality agreement (as determined by EDI after consultation
with its outside counsel) and (y) participate in negotiations regarding such
34
40
EDI Takeover Proposal. "EDI TAKEOVER PROPOSAL" means any inquiry, proposal or
offer from any person relating to any direct or indirect acquisition or purchase
of 15% or more of the assets of EDI and the EDI Subsidiaries or 15% or more of
any class of equity securities of EDI or any EDI Subsidiary, any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 15% or more of any class of equity securities of EDI or any EDI
Subsidiaries, any merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar transaction involving EDI
or any EDI Subsidiary, other than the transactions contemplated by this
Agreement.
(b) In addition to the obligations of EDI set forth in
paragraph (a) of this SECTION 4.8, EDI shall notify Xxxxxx orally and in writing
promptly, but in no event later than 48 hours after receipt by EDI of any
request for information or of any EDI Takeover Proposal, the material terms and
conditions of such request or EDI Takeover Proposal and the identity of the
person making such request or EDI Takeover Proposal.
(c) Nothing contained in this SECTION 4.8 shall prohibit
EDI from taking and disclosing to its stockholders a position contemplated by
Rule 14d-9 and Rule 14e-2 or any other applicable rule promulgated under the
Securities Exchange Act or from making any disclosure to EDI's stockholders if,
in the good faith judgment of the Board of Directors of EDI, after consultation
with outside counsel, failure so to disclose would be inconsistent with its
fiduciary duties to EDI's stockholders under applicable law.
4.9 SEC AND STOCKHOLDER FILINGS. EDI shall send to Xxxxxx a copy
of all material public reports and materials as and when it sends the same to
its stockholders, the SEC or any state or foreign securities commission.
4.10 TAX OPINION CERTIFICATION. EDI shall execute and deliver a
certificate in a form satisfactory to the counsel of both EDI and Xxxxxx, signed
by an officer of EDI setting forth factual representations and covenants that
will serve as a basis for the tax opinions required pursuant to SECTION 6.1.8 of
this Agreement ("EDI TAX OPINION CERTIFICATE").
4.11 AFFILIATE AGREEMENTS. EDI shall use reasonable business
efforts to ensure that each person who is or may be an "affiliate" of EDI within
the meaning of Rule 145 promulgated under the Securities Act shall enter into an
agreement in the form attached hereto as SCHEDULE 4.11.
4.12 TAKEOVER STATUTES. If any "fair price," "moratorium," "control
share acquisition" or other similar antitakeover statute or regulation enacted
under state or federal laws in the United States (each a "TAKEOVER STATUTE"),
including, without limitation, Section 203 of the Delaware Code, is or may
become applicable to this Agreement, the Merger or the EDI Proposals, EDI and
the members of its Board of Directors will grant such approvals, and take such
actions as are necessary so that the transactions contemplated by this Agreement
and the EDI Proposals may be consummated as promptly as practicable on the terms
contemplated
35
41
hereby and thereby and otherwise act to eliminate or minimize the effects of any
Takeover Statute on any of the transactions contemplated hereby or thereby.
ARTICLE V
ADDITIONAL COVENANTS OF XXXXXX
Xxxxxx covenants and agrees as follows:
5.1 CONDUCT OF BUSINESS OF XXXXXX AND THE XXXXXX SUBSIDIARIES.
Except as expressly contemplated by this Agreement, during the period from the
date of this Agreement to the Effective Time, Xxxxxx shall conduct, and it shall
cause each Xxxxxx Subsidiary to conduct, its or their businesses in the ordinary
course and consistent with past practice, subject to the limitations contained
in this Agreement, and Xxxxxx shall, and it shall cause each Xxxxxx Subsidiary
to, use its or their reasonable business efforts to preserve intact its business
organization, to keep available the services of its officers and employees and
to maintain satisfactory relationships with all persons with whom it does
business. Without limiting the generality of the foregoing, and except as
otherwise expressly provided in this Agreement or as otherwise set forth in the
Xxxxxx Disclosure Letter (as hereinafter defined), after the date hereof and
prior to the Effective Time, neither Xxxxxx nor any Xxxxxx Subsidiary will,
without the prior written consent of EDI:
(i) amend or propose to amend its Articles of
Incorporation or Bylaws (or comparable governing instruments) in any material
respect;
(ii) authorize for issuance, issue, grant, sell, pledge,
dispose of or propose to issue, grant, sell, pledge or dispose of any shares of,
or any options, warrants, commitments, subscriptions or rights of any kind to
acquire or sell any shares of, the capital stock or other securities of Xxxxxx
or any Xxxxxx Subsidiary including, but not limited to, any securities
convertible into or exchangeable for shares of stock of any class of Xxxxxx or
any Xxxxxx Subsidiary, except for the issuance of shares of Xxxxxx Stock and
related Rights pursuant to the conversion of Xxxxxx Preferred Stock and the
exercise of stock options outstanding on the date of this Agreement in
accordance with their present terms;
(iii) split, combine or reclassify any shares of its
capital stock or declare, pay or set aside any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect of
its capital stock, other than dividends payable in the ordinary course in
respect of the Xxxxxx Preferred Stock, which shall not exceed $100,000 per
quarter;
(iv) (a) create, incur or assume any debt in excess of
$500,000 or obligations in respect of capital leases, except pursuant to
existing agreements and pursuant to refinancings of existing obligations on
terms that are no less favorable to Xxxxxx or the Xxxxxx Subsidiaries than the
existing terms; (b) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, indirectly, contingently or otherwise) for the
obligations of
36
42
any person; (c) make any capital expenditures in excess of $500,000 or make any
loans, advances or capital contributions to, or investments in, any other person
(other than to a Xxxxxx Subsidiary and customary travel, relocation or business
advances to employees made in the ordinary course of business consistent with
past practice); (d) acquire the stock or assets of, or merge or consolidate
with, any other person; (e) voluntarily incur any material liability or
obligation (absolute, accrued, contingent or otherwise); or (f) except as set
forth on SCHEDULE 5.1 attached hereto, sell, transfer, mortgage, pledge or
otherwise dispose of, or encumber, or agree to sell, transfer, mortgage, pledge
or otherwise dispose of or encumber, any assets or properties, real, personal or
mixed material to Xxxxxx and the Xxxxxx Subsidiaries taken as a whole other than
to secure debt permitted under (a) of this clause (iv);
(v) increase in any manner the compensation of any of its
officers or employees, hire or solicit for employment any person who is an
employee of EDI, or enter into, establish, amend or terminate any employment,
consulting, retention, change in control, collective bargaining, bonus or other
incentive compensation, profit sharing, health or other welfare, stock option or
other equity, pension, retirement, vacation, severance, deferred compensation or
other compensation or benefit plan, policy, agreement, trust, fund or
arrangement with, for or in respect of, any shareholder, officer, director,
other employee, agent, consultant or affiliate other than as required pursuant
to the terms of agreements in effect on the date of this Agreement;
(vi) except as disclosed on SCHEDULE 5.1 attached hereto,
enter into any lease or amend any lease of real property; or
(vii) agree to do any of the foregoing.
Furthermore, Xxxxxx covenants, represents and warrants that from and
after the date of this Agreement, unless EDI shall otherwise expressly consent
in writing, Xxxxxx shall, and Xxxxxx shall cause each Xxxxxx Subsidiary to, use
its or their reasonable business efforts to comply in all material respects with
all Laws applicable to it or any of its properties, assets or business and
maintain in full force and effect all the Xxxxxx Permits necessary for, or
otherwise material to, such business.
5.2 NOTIFICATION OF CERTAIN MATTERS. Xxxxxx shall give prompt
written notice to EDI if any of the following occur after the date of this
Agreement: (i) any notice of, or other communication relating to, a default or
Event which, with notice or lapse of time or both, would become a default under
any Xxxxxx Material Contract which could reasonably be expected to have a Xxxxxx
Material Adverse Effect; (ii) receipt of any notice or other communication in
writing from any third party alleging that the Consent of such third party is or
may be required in connection with the transactions contemplated by this
Agreement, provided that such Consent would have been required to have been
disclosed in this Agreement; (iii) receipt of any material notice or other
communication from any Governmental Authority (including, but not limited to the
American Stock Exchange or any other securities exchange) in connection with the
transactions contemplated by this Agreement; (iv) the
37
43
occurrence of an Event which could reasonably be expected to have a Xxxxxx
Material Adverse Effect; (v) the commencement or threat of any Litigation
involving or affecting Xxxxxx or any Xxxxxx Subsidiary or any of their
respective properties or assets, or, to its knowledge, any employee, agent,
director or officer, in his or her capacity as such, of Xxxxxx or any Xxxxxx
Subsidiary which, if pending on the date hereof, would have been required to
have been disclosed in this Agreement or which relates to the consummation of
the Merger or any material development in connection with any Litigation
disclosed by Xxxxxx in or pursuant to this Agreement or the Xxxxxx Securities
Filings; and (vi) the occurrence of any Event that could reasonably be expected
to cause a breach by Xxxxxx of any provision of this Agreement or a Xxxxxx
Ancillary Agreement, including such a breach that could occur if such Event had
taken place on or prior to the date of this Agreement.
5.3 ACCESS AND INFORMATION. Subject to the confidentiality
obligations of EDI as set forth in SECTION 8.1 of this Agreement, between the
date of this Agreement and the Effective Time, Xxxxxx and the Xxxxxx
Subsidiaries will give, and shall direct its accountants and legal counsel to
give EDI, and their respective authorized representatives (including, without
limitation, its lenders, financial advisors, accountants and legal counsel) at
all reasonable times access as reasonably requested to all offices and other
facilities and to all contracts, agreements, commitments, books and records
(including, but not limited to, Tax Returns) of or pertaining to Xxxxxx and the
Xxxxxx Subsidiaries, will permit the foregoing to make such reasonable
inspections as they may require and will cause its officers promptly to furnish
EDI with (a) such financial and operating data and other information with
respect to the business and properties of Xxxxxx and the Xxxxxx Subsidiaries as
EDI may from time to time reasonably request, and (b) a copy of each material
report, schedule and other document filed or received by Xxxxxx or any of the
Xxxxxx Subsidiaries pursuant to the requirements of applicable securities laws
or the American Stock Exchange. All such information shall be deemed
"Confidential Information" as such term is defined in those certain letter
agreements dated March 10, 1997 and April 24, 1997 between EDI and Xxxxxx (the
"Confidentiality Agreements"), except as otherwise provided in such
Confidentiality Agreements.
5.4 SHAREHOLDER APPROVAL. As soon as practicable, Xxxxxx will take
all steps necessary to duly call, give notice of, convene and hold a meeting of
its shareholders for the purpose of approving the Xxxxxx Proposals, for such
other purposes as may be necessary or desirable in connection with effectuating
the transactions contemplated hereby and for such other purposes as Xxxxxx shall
determine. Except in the case where the Board of Directors of Xxxxxx determines
in good faith, after receiving advice of counsel, that doing so could reasonably
be expected to be a breach of the directors' fiduciary duties under applicable
Law, the Board of Directors of Xxxxxx (i) will recommend to the shareholders of
Xxxxxx that they approve the Xxxxxx Proposals, and (ii) will use its reasonable
best efforts to obtain any necessary approval by Xxxxxx'x shareholders of the
Xxxxxx Proposals, including, without limitation, voting the Xxxxxx Stock held by
such Directors for such approval.
5.5 REASONABLE BUSINESS EFFORTS. Subject to the terms and
conditions herein provided, Xxxxxx agrees to use its reasonable business efforts
to take, or cause to be taken,
38
44
all actions, and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable the Merger
and the transactions contemplated by this Agreement including, but not limited
to (i) obtaining the Consent of Xxxxxx'x lenders to this Agreement and the
transactions contemplated hereby, (ii) the defending of any Litigation against
Xxxxxx or any Xxxxxx Subsidiary challenging this Agreement or the consummation
of the transactions contemplated hereby, (iii) obtaining all Consents from
Governmental Authorities required for the consummation of the Merger and the
transactions contemplated thereby, and (iv) timely making all necessary filings
under the HSR Act. Upon the terms and subject to the conditions hereof, Xxxxxx
agrees to use reasonable business efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary to satisfy the
other conditions of the closing set forth herein.
5.6 PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect,
Xxxxxx shall not, and shall cause its affiliates not to, issue or cause the
publication of any press release or any other announcement with respect to the
Merger, the Xxxxxx Proposals, the EDI Proposals, or the transactions
contemplated hereby or thereby without the consent of EDI, which consent shall
not be unreasonably withheld, except where such release or announcement is
required by applicable Law or pursuant to any applicable listing agreement with,
or rules or regulations of, the American Stock Exchange, in which case Xxxxxx,
prior to making such announcement, will consult with EDI regarding the same.
5.7 COMPLIANCE. In consummating the Merger and the transactions
contemplated hereby, Xxxxxx shall comply in all material respects with the
provisions of the Securities Exchange Act and the Securities Act and shall
comply, and/or cause the Xxxxxx Subsidiaries to comply or to be in compliance,
in all material respects, with all other applicable Laws.
5.8 NO SOLICITATION. (a) Xxxxxx shall, and shall direct and use
reasonable efforts to cause its officers, directors, employees, representatives
and agents to, immediately cease any discussions or negotiations with any
parties that may be ongoing with respect to a Xxxxxx Takeover Proposal (as
hereinafter defined). Xxxxxx shall not, nor shall it permit any Xxxxxx
Subsidiary to, nor shall it authorize or permit any of its officers, directors
or employees or any investment banker, financial advisor, attorney, accountant
or other representative retained by it or any Xxxxxx Subsidiary to, directly or
indirectly, (i) solicit, initiate or encourage (including by way of furnishing
information), or take any other action designed or reasonably likely to
facilitate, any inquiries or the making of any proposal which constitutes, or
would reasonably be expected to lead to, any Xxxxxx Takeover Proposal or (ii)
participate in any discussions or negotiations regarding any Xxxxxx Takeover
Proposal; PROVIDED, HOWEVER, that if, at any time prior to the Effective Time,
the Board of Directors of Xxxxxx determines in good faith, after consultation
with legal and financial advisors, that a Xxxxxx Takeover Proposal may
reasonably be expected to lead to a Xxxxxx Superior Proposal (as defined below),
Xxxxxx may, in response to a Xxxxxx Takeover Proposal which was not solicited,
initiated or encouraged subsequent to the date hereof, and subject to compliance
with SECTION 5.8(b), (x) furnish information with respect to Xxxxxx to any
person pursuant to a customary confidentiality agreement (as determined by
Xxxxxx after consultation with its outside
39
45
counsel) and (y) participate in negotiations regarding such Xxxxxx Takeover
Proposal. "XXXXXX TAKEOVER PROPOSAL" means any inquiry, proposal or offer from
any person relating to any direct or indirect acquisition or purchase of 15% or
more of the assets of Xxxxxx and the Xxxxxx Subsidiaries or 15% or more of any
class of equity securities of Xxxxxx or any Xxxxxx Subsidiary, any tender offer
or exchange offer that if consummated would result in any person beneficially
owning 15% or more of any class of equity securities of Xxxxxx or any Xxxxxx
Subsidiary, any merger, consolidation, share exchange, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Xxxxxx or any Xxxxxx Subsidiary, other than the transactions contemplated by
this Agreement.
(b) In addition to the obligations of Xxxxxx set forth in
paragraph (a) of this SECTION 5.8, Xxxxxx shall notify EDI orally and in writing
promptly, but in no event later than 48 hours after receipt by Xxxxxx of any
request for information or of any Xxxxxx Takeover Proposal, the material terms
and conditions of such request or Xxxxxx Takeover Proposal and the identity of
the persons making such request or Xxxxxx Takeover Proposal.
(c) Nothing contained in this SECTION 5.8 shall prohibit
Xxxxxx from taking and disclosing to its shareholders a position contemplated by
Rule 14d-9 and Rule 14e-2 or other applicable rule promulgated under the
Securities Exchange Act or from making any disclosure to Xxxxxx'x shareholders
if, in the good faith judgment of the Board of Directors of Xxxxxx, after
consultation with outside counsel, failure so to disclose would be inconsistent
with its fiduciary duties to Xxxxxx'x shareholders under applicable law.
5.9 SEC AND SHAREHOLDER FILINGS. Xxxxxx shall send to EDI a copy
of all material public reports and materials as and when it sends the same to
its shareholders, the SEC or any state or foreign securities commission.
5.10 TAX OPINION CERTIFICATES. Xxxxxx shall execute and deliver a
certificate in form satisfactory to the counsel of EDI and Xxxxxx, signed by an
officer of Xxxxxx setting forth factual representations and covenants that will
serve as a basis for the tax opinions required pursuant to SECTION 6.1.8 of this
Agreement ("XXXXXX TAX OPINION CERTIFICATE").
5.11 BOARD REPRESENTATION AND OFFICERS. Xxxxxx'x Board of Directors
will take action to cause the full Board of Directors of Xxxxxx (the "Xxxxxx
Board") at the Effective Time to consist of seven directors, three of whom shall
be designated by Xxxxxx, three of whom shall be designated by EDI and one of
whom shall be appointed by the six directors so designated. The three directors
designated by Xxxxxx will appoint to the Xxxxxx Board, effective on the fifth
day immediately following the Effective Time, the three nominees designated by
EDI. It is the intent of the parties that membership on the compensation and
stock option, audit and nominating committees of the Board shall initially
consist of an equal number of designees of Xxxxxx and designees of EDI. The
Xxxxxx Board will take action to cause Xxxxxx X. XxXxxxxxxx to be appointed
Chairman of the Board and Xxxxx Xxxxxxxxxx to be appointed as President and
Chief Executive Officer of Xxxxxx. At and after the Effective Time of the
Merger, the other officers of Xxxxxx shall be as set forth on SCHEDULE 5.11
hereto
40
46
and the Xxxxxx Board will take all necessary action to cause the individuals set
forth on such SCHEDULE 5.11 to serve at the Effective Time in the offices set
forth opposite their respective names; provided, however, that the term of
office of each individual designated by EDI, including Xxxxxx X. XxXxxxxxxx and
Xxxxx X. Xxxxxxx, shall commence on the fifth day immediately following the
Effective Date.
5.12 EMPLOYEE BENEFIT PLANS. BENEFIT PLANS. For a period of at
least sixty (60) days after the Effective Time, Xxxxxx shall maintain the
Benefit Plans of EDI as are set forth on Schedule 5.12(a) and are in effect on
the date hereof. Employees of EDI may continue to receive the same benefits
under such Benefit Plans for such period and until the Board of Xxxxxx shall
consolidate the Benefit Plans of Xxxxxx and EDI; provided, however, that in any
event, (i) EDI participants shall receive full credit for years of service with
EDI or any EDI Subsidiary prior to the Merger for all purposes (except benefit
accrual) for which such service was recognized under the Benefit Plan of EDI or
such Subsidiary including recognition of service for eligibility and vesting;
(ii) such participants shall participate in the Benefit Plans of Xxxxxx on terms
no less favorable than those offered by Xxxxxx to similarly situated employees
of Xxxxxx; and (iii) Xxxxxx shall cause any and all pre-existing condition
limitations (to the extent such limitations did not apply to a pre-existing
condition under EDI's Benefit Plans) to be waived with respect to such
participants and their eligible dependents. Neither Xxxxxx nor the Surviving
Corporation shall treat any employee of EDI as a "new" employee for purposes of
any exclusion under any health, dental or vision plan of Xxxxxx or the Surviving
Corporation, as the case may be, for a pre-existing medical condition, except to
the extent such EDI employee is a "new" employee of EDI for such purposes.
5.13 TAKEOVER STATUTES. If any Takeover Statute, including without
limitation Section 23-1-43-18 of the Indiana Business Corporation Law, is or may
become applicable to the Merger or the Xxxxxx Proposals, Xxxxxx and the members
of its Board of Directors will grant such approvals, and take such actions as
are necessary so that the transactions contemplated by this Agreement and the
Xxxxxx Proposals may be consummated as promptly as practicable on the terms
contemplated hereby and thereby and otherwise act to eliminate or minimize the
effects of any Takeover Statute on any of the transactions contemplated hereby
or thereby.
ARTICLE VI
CONDITIONS
6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each party to effect the Merger shall be subject to the
fulfillment or waiver at or prior to the Closing Date of the following
conditions:
6.1.1 STOCKHOLDER APPROVAL. The EDI Proposals shall have
been approved by the requisite vote of the stockholders of EDI in accordance
with the Delaware Code and the Xxxxxx Proposals shall have been approved by the
requisite vote of the shareholders of
41
47
Xxxxxx in accordance with applicable Law and the rules and regulations of Nasdaq
and the American Stock Exchange, respectively.
6.1.2 NO INJUNCTION OR ACTION. No order, statute, rule,
regulation, executive order, stay, decree, judgment or injunction shall have
been enacted, entered, promulgated or enforced by any court or other
Governmental Authority which prohibits or prevents the consummation of the
Merger which has not been vacated, dismissed or withdrawn by the Closing Date.
EDI and Xxxxxx shall use their reasonable best efforts to have any of the
foregoing vacated, dismissed or withdrawn by the Closing Date.
6.1.3 GOVERNMENTAL APPROVALS. All Consents of any
Governmental Authority required for the consummation of the Merger and the
transactions contemplated by this Agreement shall have been obtained by Final
Order (as hereafter defined), except as may be waived by Xxxxxx and EDI or those
Consents the failure of which to obtain could not reasonably be expected to have
a Surviving Corporation Material Adverse Effect (as defined below). The term
"FINAL ORDER" with respect to any Consent of a Governmental Authority shall mean
an action by the appropriate Governmental Authority as to which: (i) no request
for stay by such Governmental Authority of the action is pending, no such stay
is in effect, and, if any deadline for filing any such request is designated by
statute or regulation, it has passed; (ii) no petition for rehearing or
reconsideration of the action is pending before such Governmental Authority, and
no appeal or comparable administrative remedy with such or any other
Governmental Authority is pending before such Governmental Authority, and the
time for filing any such petition, appeal or administrative remedy has passed;
(iii) such Governmental Authority does not have the action under reconsideration
on its own motion and the time for such reconsideration has passed; and (iv) no
appeal to a court, or request for stay by a court, of the Governmental Authority
action is pending or in effect, and if any deadline for filing any such appeal
or request is designated by statute or rule, it has passed.
6.1.4 HSR ACT. Any waiting period applicable to the Merger
under the HSR Act shall have expired or earlier termination thereof shall have
been granted and no action, suit, proceeding or investigation shall have been
instituted by either the United States Department of Justice or the Federal
Trade Commission to prevent the consummation of the transactions contemplated by
this Agreement or to modify or amend such transactions in any material manner,
or if any such action, suit, proceeding or investigation shall have been
instituted, it shall have been withdrawn or a final judgment shall have been
entered against such Department or Commission, as the case may be.
6.1.5 REQUIRED CONSENTS. Any required Consents of any
person to the Merger or the transactions contemplated hereby, including, without
limitation, the Consents of the respective lenders of Xxxxxx and EDI, shall have
been obtained and be in full force and effect, except for those the failure of
which to obtain could not reasonably be expected to have a material adverse
effect on the business, assets (including, but not limited to, intangible
assets), condition (financial or otherwise), properties (including, but not
limited to, intangible properties), liabilities or the results of operations of
the Surviving Corporation and its
42
48
subsidiaries taken as a whole ("SURVIVING CORPORATION MATERIAL ADVERSE EFFECT")
or a Xxxxxx Material Adverse Effect.
6.1.6 REGISTRATION STATEMENT. The Registration Statement
shall have been declared effective and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
action, suit, proceeding or investigation for that purpose shall have been
initiated or threatened by any Governmental Authority.
6.1.7 BLUE SKY. Xxxxxx shall have received all state
securities law authorizations necessary to consummate the transactions
contemplated hereby.
6.1.8 TAX OPINION. Xxxxxx shall have received an opinion
from Xxxxxx'x tax counsel and EDI shall have received an opinion from EDI's tax
counsel substantially to the effect that, if the Merger is consummated in
accordance with the provisions of this Agreement, under current Law, for federal
income tax purposes, the Merger will qualify as a reorganization within the
meaning of Section 368(a) of the Code.
6.1.9 LISTING OF XXXXXX STOCK. The shares of Xxxxxx Stock
comprising the Merger Consideration shall have been listed on the American Stock
Exchange subject to official notice of issuance.
6.2 CONDITIONS TO OBLIGATIONS OF EDI. The obligation of EDI to
effect the Merger shall be subject to the fulfillment at or prior to the Closing
Date of the following additional conditions, any one or more of which may be
waived by EDI:
6.2.1 XXXXXX REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Xxxxxx contained in this Agreement that are
modified by materiality or Xxxxxx Material Adverse Effect shall be true and
correct in all respects and those that are not so modified shall be true and
correct in all material respects, on the date hereof and, except for changes not
prohibited by this Agreement, as of the Closing Date as if made at the Closing
Date.
6.2.2 PERFORMANCE BY XXXXXX. Xxxxxx shall have performed
and complied with all of the covenants and agreements in all material respects
and satisfied in all material respects all of the conditions required by this
Agreement to be performed or complied with or satisfied by Xxxxxx at or prior to
the Closing Date.
6.2.3 NO MATERIAL ADVERSE CHANGE. There shall not have
occurred after the date hereof any Event that has or reasonably could be
expected to have a Xxxxxx Material Adverse Effect or a Surviving Corporation
Material Adverse Effect.
6.2.4 CERTIFICATES AND OTHER DELIVERIES. Xxxxxx shall have
delivered to EDI (i) a certificate executed on its behalf by its President or
another authorized officer to the effect that the conditions set forth in
SUBSECTIONS 6.2.1, 6.2.2 AND 6.2.3, above, have been satisfied;
43
49
(ii) a certificate of existence from the Secretary of State of the State of
Indiana stating that Xxxxxx is a validly existing corporation in good standing;
(iii) a certificate from the Secretary of State of the State of Delaware stating
that Acquisition Subsidiary is a validly existing corporation in good standing;
(iv) duly adopted resolutions of the Board of Directors of each of Xxxxxx and
the Board of Directors and stockholder of Acquisition Subsidiary approving the
execution, delivery and performance of this Agreement, the Xxxxxx Ancillary
Agreements and the instruments contemplated hereby and thereby, and of the
Xxxxxx shareholders approving the Xxxxxx Proposals, each certified by its
Secretary; (v) a true and complete copy of the Articles of Incorporation of
Xxxxxx certified by the Secretary of State of the State Indiana, and a true and
complete copy of the Bylaws of Xxxxxx certified by the Secretary thereof; (vi) a
true and complete copy of the Certificate of Incorporation of Acquisition
Subsidiary certified by the Secretary of State of the State of Delaware, and a
true and complete copy of the Bylaws of Acquisition Subsidiary certified by the
Secretary thereof; (vii) the duly executed Xxxxxx Tax Opinion Certificate;
(viii) the supplemental agreements referred to in SECTION 1.6 hereof; and (ix)
such other documents and instruments as EDI reasonably may request.
6.2.5 ELECTION OF NOMINEES. Xxxxxx shall have taken all
action necessary to cause the EDI Nominees to become members of the Board of
Directors of Xxxxxx and the officers set forth on SCHEDULE 5.11 to become
officers of Xxxxxx, in each case subject to SECTION 5.11.
6.3 CONDITIONS TO OBLIGATIONS OF XXXXXX. The obligations of Xxxxxx
to effect the Merger shall be subject to the fulfillment at or prior to the
Closing Date of the following additional conditions, any one or more of which
may be waived by Xxxxxx:
6.3.1 EDI REPRESENTATIONS AND WARRANTIES. The
representations and warranties of EDI contained in this Agreement that are
modified by materiality or EDI Material Adverse Effect shall be true and correct
in all respects, and those that are not so modified shall be true and correct in
all material respects, on the date hereof and, except for changes not prohibited
by this Agreement, as of the Closing Date as if made at the Closing Date.
6.3.2 PERFORMANCE BY EDI. EDI shall have performed and
complied with all the covenants and agreements in all material respects and
satisfied in all material respects all the conditions required by this Agreement
to be performed or complied with or satisfied by EDI at or prior to the Closing
Date.
6.3.3 NO MATERIAL ADVERSE CHANGE. There shall have not
occurred after the date hereof any Event that has or reasonably could be
expected to have an EDI Material Adverse Effect or a Surviving Corporation
Material Adverse Effect.
6.3.4 CERTIFICATES AND OTHER DELIVERIES. EDI shall have
delivered, or caused to be delivered, to Xxxxxx (i) a certificate executed on
its behalf by its Chairman or another
44
50
duly authorized officer to the effect that the conditions set forth in
SUBSECTIONS 6.3.1, 6.3.2 AND 6.3.3, above, have been satisfied; (ii) a
certificate of good standing from the Secretary of State of the State of
Delaware stating that EDI is a validly existing corporation in good standing;
(iii) duly adopted resolutions of the Board of Directors and stockholders of EDI
approving the execution, delivery and performance of this Agreement, the EDI
Proposals, the EDI Ancillary Agreements and the instruments contemplated hereby
and thereby, certified by the Secretary of EDI; (iv) a true and complete copy of
the Certificate of Incorporation certified by the Secretary of State of the
State of Delaware, and a true and complete copy of the Bylaws of EDI certified
by the Secretary thereof; (v) the duly executed EDI Tax Opinion Certificate; and
(vi) such other documents and instruments as Xxxxxx reasonably may request.
6.3.5 AFFILIATE AGREEMENTS. Each person who is or may be an
"affiliate" of EDI within the meaning of Rule 145 of the rules and regulations
of the SEC promulgated under the Securities Act shall have entered into an
agreement in the form attached hereto as SCHEDULE 4.11.
ARTICLE VII
TERMINATION AND ABANDONMENT
7.1 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after approval of the
stockholders of EDI and the shareholders of Xxxxxx described herein:
(a) by mutual written consent of Xxxxxx and EDI;
(b) by either Xxxxxx or EDI if:
(i) the Merger shall not have been consummated on or
prior to November 1, 1998 (other than due to a failure of the party seeking to
terminate this Agreement to perform its obligations required by this Agreement
to be performed at or prior to the Effective Time);
(ii) the approval of EDI's stockholders required by
SECTION 6.1.1 shall not have been obtained at a meeting duly convened therefor
or at any adjournment or postponement thereof;
(iii) the approval of Xxxxxx'x shareholders as required by
SECTION 6.1.1 shall not have been obtained at a meeting duly convened therefor
or at any adjournment or postponement thereof; or
(iv) any Governmental Authority shall have issued an
order, decree or ruling or taken any other action permanently enjoining,
restraining or otherwise prohibiting the consummation of the Merger and such
order, decree or ruling or other action shall have become final and
nonappealable;
45
51
(c) by Xxxxxx, if EDI shall have breached in any material respect
any of its representations, warranties, covenants or other agreements contained
in this Agreement, which breach or failure to perform is incapable of being
cured or has not been cured within 30 days after the giving of written notice to
EDI;
(d) by Xxxxxx, if, notwithstanding the provisions of SECTION 5.8,
the Board of Directors of Xxxxxx, after consultation with legal and financial
advisors, determines in good faith that authorizing Xxxxxx to enter into an
agreement with respect to a Xxxxxx Superior Proposal (a "XXXXXX SUPERIOR
PROPOSAL AGREEMENT") is necessary to comply with the directors' fiduciary duties
to stockholders under applicable law and the Board of Directors of Xxxxxx
authorizes or desires to authorize Xxxxxx to execute a Xxxxxx Superior Proposal
Agreement, provided that Xxxxxx has, prior to the termination of this Agreement
and/or the execution of such Xxxxxx Superior Proposal Agreement, paid the
Termination Fee (as defined in SECTION 7.2(b)). For purposes of this Agreement,
a "XXXXXX SUPERIOR PROPOSAL" means any bona fide Xxxxxx Takeover Proposal, the
terms of which the Board of Directors of Xxxxxx determines in its good faith
judgment, after receiving advice from Xxxxxxx & Co. or other financial advisor
of nationally recognized reputation, to be more favorable from a financial point
of view to Xxxxxx'x stockholders than the Merger;
(e) by Xxxxxx, if the Board of Directors of EDI or any committee
thereof shall have withdrawn or modified in a manner adverse to Xxxxxx its
approval or recommendation of the EDI Proposals, failed to include such
recommendation in the Prospectus/Proxy Statement or failed to reconfirm its
recommendation within fifteen business days after a written request to do so, or
approved or recommended any EDI Takeover Proposal;
(f) by EDI, if Xxxxxx shall have breached in any material respect
any of its representations, warranties, covenants or other agreements contained
in this Agreement, which breach or failure to perform is incapable of being
cured or has not been cured within 30 days after the giving of written notice to
Xxxxxx;
(g) by EDI, if, notwithstanding the provisions of SECTION 4.8, the
Board of Directors of EDI, after consultation with legal and financial advisors,
determines in good faith that authorizing EDI to enter into an agreement with
respect to an EDI Superior Proposal (an "EDI SUPERIOR PROPOSAL AGREEMENT") is
necessary to comply with the directors' fiduciary duties to stockholders under
applicable law and the Board of Directors of EDI authorizes or desires to
authorize EDI to execute an EDI Superior Proposal Agreement, provided that EDI
has, prior to the termination of this Agreement and/or the execution of such EDI
Superior Proposal Agreement, paid the Termination Fee. For purposes of this
Agreement, an "EDI SUPERIOR PROPOSAL" means any bona fide EDI Takeover Proposal,
the terms of which the Board of Directors of EDI determines in its good faith
judgment, after receiving advice from Alliant Partners or other financial
advisor of nationally recognized reputation, to be more favorable from a
financial point of view to EDI's stockholders than the Merger;
46
52
(h) by EDI, if the Board of Directors of Xxxxxx or any committee
thereof shall have withdrawn or modified in a manner adverse to EDI its approval
or recommendation of the Xxxxxx Proposals, failed to include such recommendation
in the Prospectus/Proxy Statement or failed to reconfirm its recommendation
within fifteen business days after a written request to do so, or approved or
recommended any Xxxxxx Takeover Proposal; or
(i) by EDI, if any person shall become an "Acquiring Person" under
the Xxxxxx Rights Plan or a "Share Acquisition Date" or "Distribution Date"
otherwise occurs under the Xxxxxx Rights Plan at any time from and after the
date of this Agreement.
7.2 EFFECT OF TERMINATION AND ABANDONMENT. (a) In the event of
termination of this Agreement and the abandonment of the Merger pursuant to this
ARTICLE VII, this Agreement (other than as set forth in this SECTION 7.2 and in
SECTION 7.3, SECTION 8.1, SECTION 8.7, SECTION 8.11 and SECTION 8.14) shall
become void and of no effect with no liability on the part of any party hereto
(or of any of its directors, officers, employees, agents, legal or financial
advisors or other representatives); PROVIDED, HOWEVER, that no such termination
shall relieve any party hereto from any liability for any breach of this
Agreement.
(b) In the event that EDI desires to terminate this
Agreement pursuant to SECTION 7.1(g), then EDI shall first pay Xxxxxx a fee
equal to $500,000 (the "TERMINATION FEE"), payable by wire transfer of same day
funds. In the event that Xxxxxx terminates this Agreement pursuant to SECTION
7.1(e), then EDI shall promptly, but in no event later than two business days
after the date of such termination, pay Xxxxxx the Termination fee, payable by
wire transfer of same day funds. Notwithstanding anything herein to the
contrary, in no event shall EDI be required to pay the Termination fee to Xxxxxx
more than once. EDI acknowledges that the agreements contained in this SECTION
7.2(b) are an integral part of the transactions contemplated by this Agreement,
and that, without these agreements, Xxxxxx would not enter into this Agreement;
accordingly, if EDI fails to promptly pay the amount due pursuant to this
SECTION 7.2(b), and, in order to obtain such payment, Xxxxxx commences a suit
which results in a judgment against EDI for the Termination Fee set forth in
this paragraph (b), EDI shall also pay to Xxxxxx its costs and expenses
(including attorneys' fees) in connection with such suit, together with interest
on the amount of the Termination Fee at the prime rate of Citibank N.A. in
effect on the date such payment was required to be made.
(c) In the event that Xxxxxx desires to terminate this
Agreement pursuant to SECTION 7.1(d), then Xxxxxx shall first pay EDI the
Termination Fee, payable by wire transfer of same day funds. In the event that
EDI terminates this Agreement pursuant to SECTION 7.1(h), then Xxxxxx shall
promptly, but in no event later than two business days after the date of such
termination, pay EDI the Termination Fee, payable by wire transfer of same day
funds. Notwithstanding anything herein to the contrary, in no event shall Xxxxxx
be required to pay the Termination Fee to EDI more than once. Xxxxxx
acknowledges that the agreements contained in this SECTION 7.2(c) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, EDI would not enter into this Agreement; accordingly,
if Xxxxxx fails to promptly pay the amount due pursuant to this
47
53
SECTION 7.2(c), and, in order to obtain such payment, EDI commences a suit which
results in a judgment against Xxxxxx for the Termination Fee set forth in this
paragraph (c), Xxxxxx shall also pay to EDI its costs and expenses (including
attorneys' fees) in connection with such suit, together with interest on the
amount of the Termination Fee at the prime rate of Citibank N.A. in effect on
the date such payment was required to be made
7.3 PROCEDURE UPON TERMINATION. If this Agreement is terminated as
provided herein, each party shall use its reasonable best efforts to redeliver
all documents, work papers and other material (including any copies thereof) of
any other party relating to the transactions contemplated hereby, whether
obtained before or after the execution hereof, to the party furnishing the same.
ARTICLE VIII
MISCELLANEOUS
8.1 CONFIDENTIALITY. Unless (i) otherwise expressly provided in
this Agreement, (ii) required by applicable Law or any listing agreement with,
or the rules and regulations of, any applicable securities exchange or Nasdaq,
(iii) necessary to secure any required Consents as to which the other party has
been advised, or (iv) consented to in writing by Xxxxxx and EDI, any information
or documents furnished by either party to the other, prior to the date hereof
pursuant to confidentiality obligations or on or after the date hereof in
connection herewith, shall be kept strictly confidential by EDI, Xxxxxx and
their respective officers, directors, employees and agents. Prior to any
disclosure pursuant to the preceding sentence, the party intending to make such
disclosure shall consult with the other party regarding the nature and extent of
the disclosure. Nothing contained herein shall preclude disclosures to the
extent necessary to comply with accounting, SEC and other disclosure obligations
imposed by applicable Law. To the extent required by such disclosure
obligations, Xxxxxx or EDI, after consultation with the other party, may file
with the SEC a Report on Form 8-K pursuant to the Securities Exchange Act with
respect to the Merger, which report may include, among other things, financial
statements and pro forma financial information with respect to the other party.
In connection with any filing with the SEC of a registration statement or
amendment thereto under the Securities Act, EDI or Xxxxxx, after consultation
with the other party, may include a prospectus containing any information
required to be included therein with respect to the Merger, including, but not
limited to, financial statements and pro forma financial information with
respect to the other party, and thereafter distribute said prospectus. Xxxxxx
and EDI shall cooperate with the other and provide such information and
documents as may be required in connection with any such filings. In the event
the Merger is not consummated, each party shall return to the other any
documents furnished by the other and all copies thereof any of them may have
made and will hold in absolute confidence any information obtained from the
other party except to the extent (i) such party is required to disclose such
information by Law or such disclosure is necessary or desirable in connection
with the pursuit or defense of a claim, (ii) such information was known by such
party prior to such disclosure or was thereafter developed or obtained by such
party independent of such disclosure, or (iii) such information becomes
generally available to the public or is otherwise no longer confidential. Prior
to any
48
54
disclosure of information pursuant to the exception in clause (i) of the
preceding sentence, the party intending to disclose the same shall so notify the
party which provided the same in order that such party may seek a protective
order or other appropriate remedy should it choose to do so.
8.2 AMENDMENT AND MODIFICATION. This Agreement may be amended,
modified or supplemented only by a written agreement among EDI, Xxxxxx and
Acquisition Subsidiary, following action taken by their respective Boards of
Directors, but after any stockholder approval contemplated by this Agreement is
obtained, no amendment shall be made which by law requires the further approval
of stockholders, without obtaining such further approval.
8.3 WAIVER OF COMPLIANCE; CONSENTS. Any failure of EDI on the one
hand, or Xxxxxx on the other hand, to comply with any obligation, covenant,
agreement or condition herein may be waived by Xxxxxx on the one hand, or EDI on
the other hand, only by a written instrument signed by the party granting such
waiver, but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this SECTION 8.3.
8.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The respective
representations, warranties, covenants and agreements of EDI and Xxxxxx
contained herein or in any certificates or other documents delivered prior to or
at the Closing shall survive the execution and delivery of this Agreement,
notwithstanding any investigation made or information obtained by the other
party, but shall terminate at the Effective Time, except for those contained in
SECTIONS 1.5, 1.6, 1.11(a), 1.13, 1.15, 5.11, 5.12, 8.1, 8.3 - 8.8, 8.10 - 8.15,
and except for the agreements delivered pursuant to SECTION 6.3.5 hereof and the
certificates referred to in SECTIONS 6.2.4(vii) and 6.3.4(v) hereof.
8.5 NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given when delivered in
person, by facsimile, receipt confirmed, or on the next business day when sent
by overnight courier or on the second succeeding business day when sent by
registered or certified mail (postage prepaid, return receipt requested) to the
respective parties at the following addresses (or at such other address for a
party as shall be specified by like notice):
(i) if to EDI, to:
with a copy to:
Xxxxxxx, Xxxxxxx & Xxxx LLP
Exchange Place
49
55
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxx, P.C.
Telecopy: (000) 000-0000
(ii) if to Xxxxxx or Acquisition Subsidiary, to:
with a copy to:
Xxxxx Xxxx LLP
000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attention: XxXxxx Xxxxxx, Esq.
Telecopy: (000) 000-0000
8.6 BINDING EFFECT; ASSIGNMENT. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto prior to the Effective Time without the
prior written consent of the other parties hereto, except that Acquisition
Subsidiary may assign to Xxxxxx or any other direct wholly owned subsidiary of
Xxxxxx any and all rights, interests and obligations of Acquisition Subsidiary
under this Agreement; provided that any assignment by Acquisition Subsidiary of
any or all of its rights, interests and obligations under this Agreement to
Xxxxxx shall require that the Merger contemplated by this Agreement shall then
be structured as a direct merger of EDI with and into Xxxxxx or any other
structure approved in writing by EDI.
8.7 EXPENSES. All costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs or expenses, subject to the rights of such party
contemplated under SECTION 7.2, above.
8.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware without regard to
its rules of conflict of laws. Each of EDI, Bowmar, and Acquisition Subsidiary
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of Delaware and of the United States of
America located in the State of Delaware (the "DELAWARE COURTS") for any
litigation arising out of or relating to this Agreement and the transactions
contemplated hereby (and agrees not to commence any litigation relating thereto
except in such courts), waives any objection to the laying of venue of any such
litigation in the Delaware Courts and agrees not to plead or claim in any
Delaware Court that such litigation brought therein has been brought in any
inconvenient forum. Each of the parties hereto agrees, (a) to the extent such
party is not otherwise subject to service of process in the State of Delaware,
to appoint and maintain an agent in the State of Delaware as such party's agent
for acceptance of legal process, and (b) that service of process may also be
made on such party by prepaid certified mail with a proof of mailing receipt
validated by the United States Postal Service
50
56
constituting evidence of valid service. Service made pursuant to (a) or (b)
above shall have the same legal force and effect as if served upon such party
personally within the State of Delaware. For purposes of implementing the
parties' agreement to appoint and maintain an agent for service of process in
the State of Delaware, each such party does hereby appoint The Corporation Trust
Company, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxx Xxxxxx Xxxxxx, Xxxxxxxx 00000, as
such agent.
8.9 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
8.10 INTERPRETATION. The article and section headings contained in
this Agreement are solely for the purpose of reference, are not part of the
agreement of the parties and shall not in any way affect the meaning or
interpretation of this Agreement. As used in this Agreement, (i) the term
"PERSON " shall mean and include an individual, a partnership, a joint venture,
a corporation, a limited liability company, a trust, an association, an
unincorporated organization, a Governmental Authority and any other entity; (ii)
the term "AFFILIATE," with respect to any person, shall mean and include any
person controlling, controlled by or under common control with such person; and
(iii) the term "SUBSIDIARY" of any specified person shall mean any corporation
50 percent or more of the outstanding voting power of which, or any partnership,
joint venture, limited liability company or other entity 50 percent or more of
the total equity interest of which, is directly or indirectly owned by such
specified person.
8.11 ENTIRE AGREEMENT. This Agreement and the documents or
instruments referred to herein including, but not limited to, the Schedules
attached hereto and the Disclosure Letters referred to herein, which Schedules
and Disclosure Letters are incorporated herein by reference, embody the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, representations,
warranties, covenants, or undertakings, other than those expressly set forth or
referred to herein. This Agreement supersedes all prior agreements and the
understandings between the parties with respect to such subject matter.
8.12 SEVERABILITY. In case any provision in this Agreement shall be
held invalid, illegal or unenforceable in a jurisdiction, such provision shall
be modified or deleted, as to the jurisdiction involved, only to the extent
necessary to render the same valid, legal and enforceable, and the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired thereby nor shall the validity, legality or
enforceability of such provision be affected thereby in any other jurisdiction.
8.13 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. Accordingly, the parties further agree that each party shall
be entitled to an injunction or restraining order or other equitable remedies to
prevent breaches of this Agreement and to enforce specifically the terms
51
57
and provisions hereof in any Delaware Court, this being in addition to any other
right or remedy to which such party may be entitled under this Agreement, at law
or in equity.
8.14 THIRD PARTIES. Nothing contained in this Agreement or in any
instrument or document executed by any party in connection with the transactions
contemplated hereby shall create any rights in, or be deemed to have been
executed for the benefit of, any person or entity that is not a party hereto or
thereto, or, a successor or permitted assign of such a party; PROVIDED HOWEVER,
that the parties hereto specifically acknowledge that the provisions of SECTIONS
1.15, 5.11 and 5.12, above, are intended to be for the benefit of, and shall be
enforceable by, the Indemnified Parties and the employees of EDI and/or the EDI
Subsidiaries affected thereby and their heirs and representatives.
8.15 SCHEDULES AND DISCLOSURE LETTERS. EDI and Xxxxxx acknowledge
that the Schedules to this Agreement, the EDI Disclosure Letter and the Xxxxxx
Disclosure Letter (i) relate to certain matters concerning the disclosures
required and transactions contemplated by this Agreement, (ii) are qualified in
their entirety by reference to specific provisions of this Agreement, (iii) are
not intended to constitute and shall not be construed as indicating that such
matter is required to be disclosed, nor shall such disclosure be construed as an
admission that such information is material with respect to EDI or Xxxxxx, as
the case may be, except to the extent required by this Agreement, and (iv)
disclosure of the information contained in one EDI or Xxxxxx Schedule shall be
deemed as proper disclosure for all EDI or Xxxxxx Schedules, as the case may be.
IN WITNESS WHEREOF, Xxxxxx, Acquisition Subsidiary and EDI have caused
this Agreement to be signed and delivered by their respective duly authorized
officers as of the date first above written.
XXXXXX INSTRUMENT CORPORATION
By /s/ Xxxxx Xxxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: Chief Executive Officer
BRAVO ACQUISITION SUBSIDIARY, INC.
By /s/ Xxxxx Xxxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxxx
Title: President
52
58
ELECTRONIC DESIGNS, INC.
By /s/ Xxxxxx X. XxXxxxxxxx
------------------------------------
Name: Xxxxxx X. XxXxxxxxxx
Title: President
53
