EXHIBIT 2.1
------------------------------------------------------------------------------
EXECUTION COPY
AGREEMENT AND PLAN OF MERGER
DATED AS OF DECEMBER 11, 1998
AMONG
TWIN ACQUISITION CORP.,
ALLIED DIGITAL, INC.
AND
XXXXXX COMMUNICATIONS, INC.
------------------------------------------------------------------------------
TABLE OF CONTENTS
ARTICLE 1 - THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Effective Time of the Merger. . . . . . . . . . . . . . . . . . . . 2
1.4 Effects of the Merger . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 Articles of Incorporation; Bylaws . . . . . . . . . . . . . . . . . 2
1.6 Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.7 Officers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE 2 - EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS . . . . . . . . . . . . . . . . . . . . 3
2.1 Effect on Capital Stock . . . . . . . . . . . . . . . . . . . . . . 3
(a) Common Stock of Sub. . . . . . . . . . . . . . . . . . . . . . 3
(b) Cancellation of Treasury Stock and Parent-Owned
Company Common Stock . . . . . . . . . . . . . . . . . . 3
(c) Conversion of Company Common Stock . . . . . . . . . . . . . . 3
(d) Cancellation and Retirement of Company Common Stock. . . . . . 3
2.2 Appointment of Exchange Agent . . . . . . . . . . . . . . . . . . . 4
2.3 Payment of Merger Consideration . . . . . . . . . . . . . . . . . . 4
(a) Persons Entitled to Merger Consideration . . . . . . . . . . . 4
(b) Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . . 4
2.4 Stock Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(a) Cancellation of Company Stock Options. . . . . . . . . . . . . 4
(b) Termination of Stock Plans . . . . . . . . . . . . . . . . . . 5
2.5 Exchange of Certificates. . . . . . . . . . . . . . . . . . . . . . 5
(a) Deposit Cash with Exchange Agent . . . . . . . . . . . . . . . 5
(b) Exchange Procedures. . . . . . . . . . . . . . . . . . . . . . 5
(c) Lost Certificates. . . . . . . . . . . . . . . . . . . . . . . 6
(d) No Further Ownership Rights in Company Common Stock. . . . . . 6
(e) Termination of Exchange Fund . . . . . . . . . . . . . . . . . 7
(f) No Liability . . . . . . . . . . . . . . . . . . . . . . . . . 7
(g) Investment of Exchange Fund. . . . . . . . . . . . . . . . . . 7
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . 7
3.1 Representations and Warranties of the Company . . . . . . . . . . . 7
(a) Organization, Standing and Corporate Power . . . . . . . . . . 7
(b) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 8
(c) Capital Structure. . . . . . . . . . . . . . . . . . . . . . . 8
(d) Authority; Noncontravention. . . . . . . . . . . . . . . . . . 9
(e) SEC Documents; Undisclosed Liabilities; Financial
Statements . . . . . . . . . . . . . . . . . . . . . . .10
(f) Information Supplied . . . . . . . . . . . . . . . . . . . . .11
(g) Absence of Certain Changes or Events . . . . . . . . . . . . .11
i
(h) Litigation; Labor Matters; Compliance with Laws. . . . . . . .12
(i) Employee Matters . . . . . . . . . . . . . . . . . . . . . . .12
(j) Tax Returns and Tax Payments . . . . . . . . . . . . . . . . .13
(k) State Antitakeover Laws and Company Articles of
Incorporation Not Applicable . . . . . . . . . . . . . . .15
(l) Environmental Matters. . . . . . . . . . . . . . . . . . . . .15
(m) Personal Property; Real Property . . . . . . . . . . . . . . .16
(n) Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . .18
(o) Opinion of Financial Advisor . . . . . . . . . . . . . . . . .19
(p) Board Recommendation . . . . . . . . . . . . . . . . . . . . .19
(q) Required Company Vote. . . . . . . . . . . . . . . . . . . . .19
(r) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . .19
(s) Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . .20
(t) Intellectual Property Rights . . . . . . . . . . . . . . . . .20
(u) Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . .21
(v) Certain Business Practices . . . . . . . . . . . . . . . . . .21
(w) Year 2000. . . . . . . . . . . . . . . . . . . . . . . . . . .22
(x) No Other Representations and Warranties. . . . . . . . . . . .22
3.2 Representations and Warranties of Sub . . . . . . . . . . . . . . .22
(a) Organization, Standing and Corporate Power . . . . . . . . . .22
(b) Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . .23
(c) Authority; Noncontravention. . . . . . . . . . . . . . . . . .23
(d) Information Supplied . . . . . . . . . . . . . . . . . . . . .24
(e) Absence of Certain Changes or Events . . . . . . . . . . . . .24
(f) Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . .24
(g) Financing. . . . . . . . . . . . . . . . . . . . . . . . . . .24
(h) Certain Anti-takeover Provisions Not Applicable. . . . . . . .25
(i) No Other Representations and Warranties. . . . . . . . . . . .25
ARTICLE 4 - COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR
TO MERGER. . . . . . . . . . . . . . . . . . . . . . . . . . . .25
4.1 Conduct of Business of the Company. . . . . . . . . . . . . . . . .25
ARTICLE 5 - ADDITIONAL AGREEMENTS. . . . . . . . . . . . . . . . . . . . . .28
5.1 Preparation of Proxy Statement; Special Meeting . . . . . . . . . .28
(a) Proxy Statement. . . . . . . . . . . . . . . . . . . . . . . .28
(b) Special Meeting. . . . . . . . . . . . . . . . . . . . . . . .28
(c) Stock Records. . . . . . . . . . . . . . . . . . . . . . . . .28
5.2 Access to Information . . . . . . . . . . . . . . . . . . . . . . .28
(a) Access . . . . . . . . . . . . . . . . . . . . . . . . . . . .28
(b) Report of Developments . . . . . . . . . . . . . . . . . . . .29
(c) Commitment Notice. . . . . . . . . . . . . . . . . . . . . . .29
5.3 Best Efforts. . . . . . . . . . . . . . . . . . . . . . . . . . . .29
5.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . .29
(a) Obligation . . . . . . . . . . . . . . . . . . . . . . . . . .29
ii
(b) Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . .30
(c) Scope. . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
5.5 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .30
(a) Obligation . . . . . . . . . . . . . . . . . . . . . . . . . .30
(b) Obligation Upon Consummation of Merger . . . . . . . . . . . .30
5.6 Public Announcements. . . . . . . . . . . . . . . . . . . . . . . .30
5.7 Takeover Statutes . . . . . . . . . . . . . . . . . . . . . . . . .31
5.8 No Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . .31
5.9 Certain Agreements. . . . . . . . . . . . . . . . . . . . . . . . .33
5.10 Employee Benefits. . . . . . . . . . . . . . . . . . . . . . . . .33
5.11 Certain Actions. . . . . . . . . . . . . . . . . . . . . . . . . .34
5.12 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
ARTICLE 6 - CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . .34
6.1 Conditions to Each Party's Obligation to Effect the Merger. . . . .34
(a) Company Shareholder Approval . . . . . . . . . . . . . . . . .34
(b) HSR Act and other Authorizations . . . . . . . . . . . . . . .34
(c) No Injunctions or Restraints . . . . . . . . . . . . . . . . .34
6.2 Conditions to Obligation of Sub . . . . . . . . . . . . . . . . . .35
(a) Representations and Warranties . . . . . . . . . . . . . . . .35
(b) Performance of Obligations of the Company. . . . . . . . . . .35
(c) Consents, etc. . . . . . . . . . . . . . . . . . . . . . . . .35
(d) Dissenters' Rights . . . . . . . . . . . . . . . . . . . . . .35
(e) Opinion of Counsel to the Company. . . . . . . . . . . . . . .36
(f) Contract Consents. . . . . . . . . . . . . . . . . . . . . . .36
(g) Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
(h) Resignations . . . . . . . . . . . . . . . . . . . . . . . . .36
(i) Pending Action . . . . . . . . . . . . . . . . . . . . . . . .36
(j) Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . . .36
(k) Good Standing Certificates . . . . . . . . . . . . . . . . . .37
(l) No Material Adverse Change . . . . . . . . . . . . . . . . . .37
(m) Financing. . . . . . . . . . . . . . . . . . . . . . . . . . .37
(n) Consent of Option Holders. . . . . . . . . . . . . . . . . . .37
(o)Certain Transactions. . . . . . . . . . . . . . . . . . . . . .37
(p)Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . .37
6.3 Conditions to Obligation of the Company . . . . . . . . . . . . . .38
(a) Representations and Warranties . . . . . . . . . . . . . . . .38
(b) Performance of Obligations of Sub. . . . . . . . . . . . . . .38
(c) Opinion of Counsel to Sub. . . . . . . . . . . . . . . . . . .38
ARTICLE 7 - TERMINATION, AMENDMENT AND WAIVER. . . . . . . . . . . . . . . .38
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
7.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . .40
7.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
7.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . . . . . .40
iii
ARTICLE 8 - GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . .40
8.1 Nonsurvival of Representations and Warranties . . . . . . . . . . .40
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
8.3 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
8.4 Interpretation. . . . . . . . . . . . . . . . . . . . . . . . . . .50
8.5 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . .50
8.6 Entire Agreement; No Third-Party Beneficiaries. . . . . . . . . . .50
8.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . .50
8.8 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
8.9 Enforcement . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
8.10 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . .51
8.11 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . .51
iv
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is entered into as
of December 11, 1998, by and among Twin Acquisition Corp., a Minnesota
corporation ("Sub") and a direct wholly owned subsidiary of Allied Digital,
Inc., a New York corporation ("ADI"), Xxxxxx Communications, Inc., a
Minnesota corporation (the "Company"), and ADI (for purposes of Section 8.11
only).
RECITALS
A. The Boards of Directors of Sub and the Company have approved, and deem
it advisable and in the best interests of their respective companies and
shareholders to consummate, a merger of Sub with and into the Company (the
"Merger"), with the Company as the surviving corporation (the "Surviving
Corporation") in the Merger, upon the terms and subject to the conditions set
forth in this Agreement, pursuant to which each share of Common Stock, par
value $.10 per share, of the Company ("Company Common Stock") issued and
outstanding immediately prior to the Effective Time, other than (i) shares of
Company Common Stock owned by the Company or by Sub or (ii) shares of Company
Common Stock held by shareholders who properly exercise, preserve and protect
their dissenters' rights under Sections 302A.471 and 302A.473 of the
Minnesota Business Corporation Act ("MBCA") ("Dissenters' Rights"), will be
converted into the right to receive, subject to the terms hereof, $10.00 per
share in cash.
B. The Merger and this Agreement require the vote of a majority of the
outstanding shares of Company Common Stock entitled to vote thereon for the
approval thereof (the "Company Shareholder Approval") at a special meeting of
the shareholders of the Company (the "Special Meeting").
C. Certain capitalized terms shall have the meanings ascribed to them in
Section 8.3.
AGREEMENT
In consideration of the above recitals, and of the representations,
warranties, covenants and agreements contained in this Agreement, the parties
agree as follows:
ARTICLE 1
THE MERGER
1.1 THE MERGER. Upon the terms and subject to the conditions set
forth in this Agreement, and in accordance with the MBCA, Sub shall be merged
with and into the Company at the Effective Time. Upon the Effective Time,
the separate existence of Sub shall cease, and the Company shall continue as
the Surviving Corporation having the name Xxxxxx Communications, Inc.
1
1.2 CLOSING. Unless this Agreement shall have been terminated and
the transactions herein contemplated shall have been abandoned pursuant to
Section 7.1, and subject to the satisfaction or waiver of the conditions set
forth in Article 6, the closing of the Merger (the "Closing"), will take
place at 10:00 a.m. Eastern time on the second Business Day after
satisfaction of the conditions set forth in Article 6 (or, if not satisfied
or waived at that time, as soon as practicable thereafter following
satisfaction or waiver of the conditions set forth therein (the "Closing
Date")) at the offices of Xxxxxx, Xxxxx & Bockius LLP, 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 unless another date, time or place is agreed to in
writing by the parties hereto.
1.3 EFFECTIVE TIME OF THE MERGER. On the Closing Date, the parties
shall file a certificate of merger or other appropriate documents (in any
such case, the "Certificate of Merger") executed in accordance with the
relevant provisions of the MBCA and shall make all other filings or
recordings required under the MBCA. The Merger shall become effective at
such time as the Certificate of Merger is duly filed with the Secretary of
State of the State of Minnesota, or at such other time as is permissible in
accordance with the MBCA and as Sub and the Company shall agree should be
specified in the Certificate of Merger (the time the Merger becomes effective
being the "Effective Time").
1.4 EFFECTS OF THE MERGER. The Merger shall have the effects set
forth in the MBCA.
1.5 ARTICLES OF INCORPORATION; BYLAWS.
(a) The Articles of Incorporation of the Company as they may
be amended or restated (the "Articles") as in effect at the Effective
Time shall be the Articles of Incorporation of the Surviving
Corporation until thereafter changed or amended as provided therein or
by applicable Law.
(b) At the Effective Time, the bylaws attached hereto as
Exhibit A shall be the bylaws of the Surviving Corporation until
thereafter amended as provided by Law and such bylaws.
1.6 DIRECTORS. The directors of the Surviving Corporation shall be
the Persons designated by Sub immediately prior to the Effective Time, each to
hold office in accordance with the Articles of Incorporation and the bylaws of
the Surviving Corporation.
1.7 OFFICERS. The officers of the Surviving Corporation shall be the
officers of the Company immediately prior to the Effective Time, in each case
until their respective successors are duly elected or appointed and qualified.
2
ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK
OF THE CONSTITUENT CORPORATIONS
2.1 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of
the Merger and without any action on the part of the holder of any shares of
Company Common Stock or any shares of capital stock of Sub:
(a) COMMON STOCK OF SUB. Each share of common stock of Sub
issued and outstanding immediately prior to the Effective Time shall
be converted into one share of common stock of the Surviving
Corporation.
(b) CANCELLATION OF TREASURY STOCK AND SUB-OWNED COMPANY
COMMON STOCK. Each share of the Company Common Stock that is owned by
the Company and each share of Company Common Stock that is owned by
Sub shall automatically be canceled and retired and shall cease to
exist, and no cash or other consideration shall be delivered or
deliverable in exchange therefor.
(c) CONVERSION OF COMPANY COMMON STOCK. Except as otherwise
provided herein and subject to Sections 2.3 and 2.5, each issued and
outstanding share (or any fraction thereof) of Company Common Stock,
except for shares of Company Common Stock held by shareholders who
validly exercise, preserve and protect their Dissenters' Rights, shall
be converted into the right to receive $10.00 in cash from the
Surviving Corporation (the "Merger Consideration").
(d) CANCELLATION AND RETIREMENT OF COMPANY COMMON STOCK. As
of the Effective Time, all shares of Company Common Stock (other than
shares canceled pursuant to Section 2.1(b)) issued and outstanding
immediately prior to the Effective Time shall no longer be outstanding
and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such shares
of Company Common Stock shall cease to have any rights with respect
thereto, except the right to receive the Merger Consideration in
accordance with Section 2.1(c) upon surrender of such certificate in
accordance with Section 2.5, and except for those holders who validly
exercise, preserve and protect their Dissenters' Rights whose
entitlement to receive any form of consideration under this Agreement
shall be governed by Section 302A.473 of the MBCA ("Section 302A.473").
2.2 APPOINTMENT OF EXCHANGE AGENT. Prior to the mailing of the Proxy
Statement, Sub shall appoint a bank or trust company designated by Sub and
reasonably satisfactory to the Company to act as exchange agent (the "Exchange
Agent") for the payment of the Merger Consideration.
3
2.3 PAYMENT OF MERGER CONSIDERATION.
(a) PERSONS ENTITLED TO MERGER CONSIDERATION. The manner in
which each share of Company Common Stock (other than shares of Company
Common Stock to be canceled as set forth in Section 2.1(b)) shall be
converted as of the Effective Time into the right to receive the
Merger Consideration shall be as set forth in this Section 2.3. All
references to "outstanding shares of Company Common Stock" in this
Section 2.3 shall mean all shares of Company Common Stock outstanding
immediately prior to the Effective Time. Each Person who is a record
holder of shares of Company Common Stock as of the record date for the
meeting of the Company's shareholders called to approve the Merger and
this Agreement, and who has not validly exercised, preserved and
protected Dissenters' Rights and remains a record holder of such stock
until the Effective Time, will be entitled, with respect to all of his
shares, to receive the Merger Consideration.
(b) DISSENTERS' RIGHTS. Any holder of outstanding shares of
Company Common Stock (other than shares referred to in Section 2.1(b))
who has not voted for the Merger and who has properly exercised,
preserved and protected Dissenters' Rights shall be entitled to
receive only such consideration as determined in accordance with
Section 302A.473; PROVIDED, HOWEVER, that any holder of outstanding
shares of Company Common Stock (other than shares referred to in
Section 2.1(b)) who has not voted for the Merger, but has failed to
properly exercise, preserve and protect Dissenters' Rights, shall be
entitled to receive the Merger Consideration in accordance with the
terms and conditions of this Agreement in lieu of the rights of a
dissenting shareholder under Section 302A.473.
2.4 STOCK PLANS. Prior to the mailing of the Proxy Statement, the
Board of Directors of the Company (or, if appropriate, any committee
administering the Stock Plans (as defined below)) shall adopt such resolutions
or take such other actions as may be required to effect the following:
(a) CANCELLATION OF COMPANY STOCK OPTIONS. Other than as
expressly set forth in the Xxxxxxxx Option Termination Agreement, the
Company shall adjust the terms of all outstanding options to purchase
shares of Company Common Stock ("Company Stock Options") granted under
the Company's 1983 Incentive Stock Option Plan, the Company's 1985
Stock Option Plan, the Company's 1988 Stock Option Plan, the Company's
1990 Discounted Stock Option Plan, the Company's 1990 Non-Employee
Directors Stock Option Plan, the Company's 1990 Company Wide Stock
Option Plan, the Company's 1995 Stock Option Plan, the Company's 1995
Non-Employee Directors Stock Option Plan or the Company's 1998 Stock
Option Plan and any other plan or arrangement providing for the
issuance or grant of any interest in respect of capital stock of the
Company or any former Subsidiary (collectively, the "Option Plans") to
provide that, at the
4
Effective Time, each Company Stock Option outstanding immediately
prior to the Effective Time, whether or not then vested or
exercisable, shall be canceled and thereafter the former holder
thereof shall be entitled by having held such Company Stock Option
only to a payment from the Surviving Corporation (subject to any
applicable withholding taxes, as the case may be) equal to the product
of (i) the total number of shares of Company Common Stock subject to
such Company Stock Option and (ii) the excess of $10.00 over the
exercise price per share of Company Common Stock subject to such
Company Stock Option, payable in cash immediately following the
Effective Time.
(b) TERMINATION OF STOCK PLANS. Except as otherwise agreed
to in writing by Sub, the Option Plans and any other plan, program or
arrangement providing for the issuance or grant of any interest in
respect of the capital stock of the Company or any former Subsidiary
(collectively, the "Stock Plans") shall terminate as of the Effective
Time, and the Company shall ensure that following the Effective Time
no holder of a Company Stock Option nor any participant in any of the
Stock Plans shall have any right thereunder to acquire any equity
securities of the Company or the Surviving Corporation.
2.5 EXCHANGE OF CERTIFICATES.
(a) DEPOSIT CASH WITH EXCHANGE AGENT. As soon as reasonably
practicable as of or after the Effective Time, Sub shall deposit with
the Exchange Agent, for the benefit of the holders of shares of
Company Common Stock, for exchange in accordance with this Article 2,
the Merger Consideration.
(b) EXCHANGE PROCEDURES. As soon as practicable after the
Effective Time, the Exchange Agent shall mail to each holder of an
outstanding certificate or certificates which prior thereto
represented shares of Company Common Stock (other than certificates
held of record or beneficially by the Company or Sub and other than
certificates held by a holder that has properly exercised, preserved
and protected Dissenters' Rights) (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and
title to such certificate shall pass, only upon delivery of such
certificates to such Exchange Agent), and (ii) instructions for use in
effecting the surrender of the certificates for the Merger
Consideration. Upon proper surrender to the Exchange Agent of such
certificates for cancellation, the holder of such certificates shall
after the Effective Time be entitled only to the amount of cash into
which the aggregate number of shares of Company Common Stock
previously represented by such certificate or certificates surrendered
shall have been converted pursuant to this Agreement. The Exchange
Agent shall accept such certificates upon compliance with such
reasonable terms and conditions as the Exchange Agent may impose to
effect an orderly exchange thereof in accordance with normal exchange
practices. After the Effective Time, there shall be no further
transfer on the records of the Company or its transfer agent of
certificates representing shares of Company Common Stock and if such
5
certificates are presented to the Company for transfer, they shall be
canceled against delivery of cash as hereinabove provided. If cash is
to be remitted to a Person other than that in which the certificate
for Company Common Stock surrendered for exchange is registered, it
shall be a condition of such exchange that the certificate so
surrendered shall be properly endorsed, with signature guaranteed, or
otherwise in proper form for transfer and that the Person requesting
such exchange shall establish to the satisfaction of the Surviving
Corporation or its transfer agent that any transfer or other taxes
required by reason of payment of Merger Consideration to a Person
other than that of the registered holder of the certificate
surrendered has been paid or is not applicable. Until surrendered as
contemplated by this Section 2.5(b), each certificate for shares of
Company Common Stock shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the
Merger Consideration. No interest will be paid or will accrue on any
cash payable as Merger Consideration.
(c) LOST CERTIFICATES. In the event that a certificate for
shares of Company Common Stock shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the holder
claiming such certificate to have been lost, stolen or destroyed, the
amount to which such holder would have been entitled under Section
2.5(b) but for failure to deliver such certificate to the Exchange
Agent shall nevertheless be paid to such holder, provided that the
Surviving Corporation may, in its sole discretion and as a condition
precedent to such payment, require such holder to give the Surviving
Corporation a bond in such sum as it may reasonably direct as
indemnity against any claim that may be had against the Surviving
Corporation with respect to the certificate alleged to have been lost,
stolen or destroyed.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK.
All cash paid upon the surrender for exchange of certificates
representing shares of Company Common Stock in accordance with the
terms of this Article 2 (including any cash paid pursuant to the valid
exercise of Dissenters' Rights) shall be deemed to have been issued
(and paid) in full satisfaction of all rights pertaining to the shares
of Company Common Stock theretofore represented by such certificates.
(e) TERMINATION OF EXCHANGE FUND. Any portion of the Merger
Consideration deposited with the Exchange Agent pursuant to this
Section 2.5 (the "Exchange Fund") which remains undistributed to the
holders of the certificates representing shares of Company Common
Stock for six months after the Effective Time shall be delivered to
the Surviving Corporation, upon demand, and any holders of shares of
Company Common Stock who have not theretofore complied with this
Article 2 shall thereafter look only to the Surviving Corporation and
only as general creditors thereof for payment of their claim for cash.
6
(f) NO LIABILITY. To the fullest extent permitted by Law,
none of Sub, the Company or the Exchange Agent shall be liable to any
Person in respect of cash from the Exchange Fund delivered to a public
official pursuant to any applicable abandoned property, escheat or
similar law. If any certificates representing shares of Company Common
Stock shall not have been surrendered prior to five years after the
Effective Time (or immediately prior to such earlier date on which any
cash in respect of such certificate would otherwise escheat to or
become the property of any Governmental Entity), any such cash in
respect of such certificate shall, to the extent permitted by
applicable law, become the property of the Surviving Corporation, free
and clear of all claims or interest of any Person previously entitled
thereto.
(g) INVESTMENT OF EXCHANGE FUND. The Exchange Agent shall
invest the cash included in the Exchange Fund, as directed by the
Surviving Corporation, on a daily basis. Any interest and other
income resulting from such investments shall be paid to the Surviving
Corporation.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to Sub as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. The Company
is duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated and has the
requisite corporate power and authority to carry on its business as
now being conducted and to own, lease and operate all of its
properties and assets. Except as set forth in Section 3.1(a) of the
disclosure schedule (the "Company Disclosure Schedule") delivered to
Sub by the Company at the time of execution of this Agreement, the
Company is duly qualified or licensed to do business and is in good
standing in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties and assets makes such
qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed (individually or in
the aggregate) would not have a Material Adverse Effect with respect
to the Company. Attached as Section 3.1(a) of the Company Disclosure
Schedule are complete and correct copies of the Articles and Bylaws of
the Company.
(b) SUBSIDIARIES. The Company has no Subsidiaries. The
Company does not own, directly or indirectly, any capital stock or
other ownership interest in any corporation, partnership, business
association, joint venture or other entity.
(c) CAPITAL STRUCTURE. The authorized capital stock of the
Company consists of 20,000,000 shares of Company Common Stock, par
value $.10 per share. Subject to any Permitted Changes as of the date
of this Agreement, there
7
are (i) 4,082,226 shares of Company Common Stock issued and
outstanding; (ii) 320,824 shares of Company Common Stock issuable upon
exercise of outstanding Company Stock Options granted under the Option
Plans but not yet exercisable; and (iii) 203,095 shares of Company
Common Stock issuable upon exercise of outstanding Company Stock
Options granted under the Option Plans and immediately exercisable.
Except as set forth above, no shares of capital stock or other equity
securities of the Company are issued, reserved for issuance or
outstanding. All outstanding shares of capital stock of the Company
are, and all shares which may be issued pursuant to the Stock Plans
will be when issued, duly authorized, validly issued, fully paid and
nonassessable and not subject to preemptive rights. There are no
outstanding bonds, debentures, notes or other Debt instruments or
other securities of the Company having the right to vote (or
convertible into, or exchangeable for, securities having the right to
vote) on any matters on which shareholders of the Company may vote.
Except as set forth above, there are no outstanding securities,
options, warrants, preemptive rights, calls, rights, commitments,
agreements, arrangements or undertakings of any kind to which the
Company is a party or by which it is bound obligating the Company to
issue, deliver or sell, or cause to be issued, delivered or sold,
additional shares of capital stock or other equity or voting
securities of the Company or obligating the Company to issue, grant,
extend or enter into any such security, option, warrant, pre-emptive
right, call, right, commitment, agreement, arrangement or undertaking.
Except as set forth in Section 3.1(c) of the Company Disclosure
Schedule and other than the Company Stock Options, (i) there are no
outstanding contractual obligations, commitments, understandings or
arrangements of the Company to repurchase, redeem or otherwise acquire
or make any payment in respect of or measured or determined based on
the value or market price of any shares of capital stock of the
Company and (ii) to the Knowledge of the Company, there are no
irrevocable proxies with respect to shares of capital stock of the
Company. Other than as set forth in Section 3.1(c) of the Company
Disclosure Schedule, there are no agreements or arrangements pursuant
to which the Company is or could be required to register shares of
Company Common Stock or other securities under the Securities Act of
1933, as amended (the "Securities Act").
(d) AUTHORITY; NONCONTRAVENTION. The Company has the requisite
corporate power and authority to enter into this Agreement and, subject
to the Company Shareholder Approval with respect to the consummation of
the Merger, to consummate the transactions contemplated hereby and to
perform its obligations hereunder. The execution and delivery of this
Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of the Company and no other
corporate proceedings on the part of the Company are necessary to
authorize this Agreement or consummate the contemplated transactions,
subject, in the case of the Merger, to the Company Shareholder Approval.
This Agreement has been duly executed and
8
delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms. Except as disclosed in Section 3.1(d) of
the Company Disclosure Schedule, the execution and delivery of this
Agreement does not, and the consummation of the transactions
contemplated hereby and compliance with the provisions hereof will
not, conflict with, or result in any breach or violation of or default
(with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of or "put"
right with respect to any obligation or to loss of a material benefit
under, or result in the creation of any Lien upon any of the
properties or assets of the Company under, (i) the Articles or bylaws,
as they may be amended and restated (the "Bylaws"), of the Company,
(ii) any Contract or Permit applicable to the Company or its
properties or assets or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any Order, Laws,
or arbitration award applicable to the Company or its properties or
assets; other than, in the case of clauses (ii) and (iii), any such
conflicts, breaches, violations, defaults, rights, losses or Liens
that individually or in the aggregate could not have a Material
Adverse Effect with respect to the Company or could not prevent,
hinder or materially delay the ability of the Company to consummate
the transactions contemplated by this Agreement. No consent,
approval, Order or authorization of, or registration, declaration or
filing with, or notice to, any Governmental Entity, is required by or
with respect to the Company in connection with the execution and
delivery of this Agreement by the Company or the consummation by the
Company of the transactions contemplated hereby, except for (i) the
filing of a premerger notification and report form by the Company
under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), (ii) the filing with the United States
Securities and Exchange Commission (the "SEC") of (y) a proxy
statement relating to the Company Shareholder Approval (such proxy
statement as amended or supplemented from time to time, the "Proxy
Statement"), and (z) such reports under the Securities Exchange Act of
1934 (the "Exchange Act") as may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (iii)
the filing of the Certificate of Merger with the Secretary of State of
the State of Minnesota, and appropriate documents with the relevant
authorities of other states in which the Company is qualified to do
business and (iv) such other consents, approvals, Orders,
authorizations, registrations, declarations, filings or notices as are
set forth in Section 3.1(d) of the Company Disclosure Schedule. The
Board of Directors (at a meeting duly called and held at which a
quorum was present), based upon the unanimous recommendation of a
committee (the "Special Committee") comprised solely of all of the
Company's disinterested directors (as such term is defined in Section
302A.673 of the MBCA), has unanimously determined that the Merger is
advisable and in the best interests of the Company and has unanimously
resolved to recommend approval of the Merger and adoption of this
Agreement by the holders of the Company Common Stock.
9
(e) SEC DOCUMENTS; UNDISCLOSED LIABILITIES; FINANCIAL
STATEMENTS.
(i) The Company has filed all required reports,
schedules, forms, statements and other documents with the SEC
since February 1, 1995 (collectively, and in each case
including all exhibits and schedules thereto and documents
incorporated by reference therein, the "SEC Documents"). As of
their respective dates, the SEC Documents complied in all
material respects with the requirements of the Securities Act
or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to
such SEC Documents, and none of the SEC Documents (including
any and all financial statements included therein) as of such
dates contained any untrue statement of a material fact or
omitted to state a 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. The consolidated financial statements of the
Company included in the SEC Documents (the "SEC Financial
Statements") comply as to form in all material respects with
applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, have been prepared
in accordance with GAAP (except, in the case of unaudited
consolidated quarterly statements, as permitted by Form 10-Q of
the SEC) applied on a consistent basis during the periods
involved (except as may be indicated in the notes thereto) and
fairly present the consolidated financial position of the
Company and its former Subsidiaries as of the dates thereof and
the consolidated results of their operations and cash flows for
the periods then ended (subject, in the case of unaudited
quarterly statements, to normal year-end audit adjustments).
(ii) The Company has furnished Sub with the unaudited
consolidated balance sheet of the Company as of November 30,
1998 (after giving effect to the consummation of the
disposition of the Products Division of the Company) (the
"Unaudited Financial Statement"). The Unaudited Financial
Statement fairly presents the consolidated financial position
of the Company as of November 30, 1998 (after giving effect to
the consummation of the disposition of the Products Division),
and has been prepared in conformity with GAAP, except as
otherwise specifically noted in the notes thereto.
(iii) Except for Liabilities which are accrued or
reserved against in the SEC Financial Statements (or reflected
in the notes thereto) or which were incurred after the date of
the most recent SEC Financial Statements in the ordinary course
of business and consistent with past practices or which are set
forth in Section 3.1(e) of the Company Disclosure Schedule, the
Company does not have any material Liabilities (whether
absolute, accrued, contingent or otherwise).
10
(f) INFORMATION SUPPLIED. None of the information supplied
or to be supplied by the Company for inclusion or incorporation by
reference in the Proxy Statement will, at the date it is first mailed
to the Company's shareholders or at the time of the Special Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement will comply as to
form in all material respects with the requirements of the Exchange
Act and the rules and regulations promulgated thereunder, except that
no representation is made by the Company with respect to statements
made or incorporated by reference therein based on information
supplied by Sub for inclusion or incorporation by reference therein.
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as
disclosed in Section 3.1(g) of the Company Disclosure Schedule, since
February 1, 1995, the Company has conducted its business only in the
ordinary course consistent with past practice, and since December 31,
1997, there is not and has not been: (i) any Material Adverse Change
with respect to the Company; (ii) any condition, event or occurrence
which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect or give rise to a Material Adverse
Change with respect to the Company; (iii) any event which, if it had
taken place following the execution of this Agreement, would not have
been permitted by Section 4.1 without the prior consent of Sub; or
(iv) any condition, event or occurrence which would prevent, hinder or
materially delay the ability of the Company to consummate the
transactions contemplated by this Agreement.
(h) LITIGATION; LABOR MATTERS; COMPLIANCE WITH LAWS.
(i) Except as set forth in Section 3.1(h) of the
Company Disclosure Schedule, there is no suit, action or
proceeding or investigation pending or, to the Knowledge of the
Company, threatened against or affecting the Company and no
basis for any such suit, action, proceeding or investigation
that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect with respect to the
Company or prevent, hinder or materially delay the ability of
the Company to consummate the transactions contemplated by this
Agreement, nor is there any Order of any Governmental Entity or
arbitrator outstanding against the Company having, or which,
insofar as reasonably could be foreseen by the Company, in the
future could have, any such effect.
(ii) The Company is not a party to, or bound by, any
collective bargaining agreement, Contract or other agreement or
understanding with a labor union or labor organization, and it
is not the subject of any proceeding asserting that it has
committed an
11
unfair labor practice or seeking to compel it to bargain with
any labor organization as to wages or conditions of employment,
nor is there any strike, work stoppage or other labor dispute
involving it pending or, to its Knowledge, threatened, any of
which could have a Material Adverse Effect with respect to the
Company.
(iii) The conduct of the Business substantially
complies with all statutes, Laws, regulations, ordinances,
rules, judgments, Orders, decrees or arbitration awards
applicable thereto, except for violations or failures so to
comply, if any, that, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect
with respect to the Company.
(i) EMPLOYEE MATTERS. The Company has delivered to Sub full
and complete copies or descriptions of and Section 3.1(i) of the
Company Disclosure Schedule sets forth a list of each material
employment, severance, bonus, profit sharing, compensation,
termination, stock option, stock appreciation right, restricted stock,
phantom stock, performance unit, pension, retirement, deferred
compensation, welfare or other employee benefit agreement, trust fund
or other arrangement and any union, guild or collective bargaining
agreement maintained or contributed to or required to be contributed
to by the Company or any of its ERISA Affiliates, for the benefit or
welfare of any director, officer, employee or former employee of the
Company or any of its ERISA Affiliates (such plans and arrangements
being collectively the "Company Benefit Plans"), whether or not
subject to the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). Each of the Company Benefit Plans is in material
compliance with all applicable Laws including ERISA and the Code and
all contributions have been made on a timely basis. The Liabilities
accrued under each Company Benefit Plan are reflected on the latest
balance sheet of the Company included in the SEC Documents in
accordance with GAAP applied on a consistent basis. The Company has
no Company Benefit Plan that is a "multiemployer plan" as such term is
defined in Section 3(37) of ERISA (a "Multiemployer Plan"). The
Company has no Company Benefit Plan that is subject to Title IV of
ERISA. There are no pending, threatened, or anticipated claims (other
than routine claims for benefits or immaterial claims) by, on behalf
of or against any of the Company Benefit Plans or any trusts related
thereto. Each Company Benefit Plan intended to qualify under Section
401(a) of the Code has at all times since its adoption been so
qualified, and each trust which forms a part of any such plan has at
all times since its adoption been Tax-exempt under Section 501(a) of
the Code. Neither the Company, any former Subsidiary nor any ERISA
Affiliate has incurred any liability for any Tax imposed under Section
4971 through 4980B of the Code or civil liability under Section 502(i)
or (l) of ERISA. No benefit under any Company Benefit Plan,
including, without limitation, any severance or parachute payment plan
or agreement, will be established or become accelerated, vested or
payable by reason of any transaction contemplated under this
Agreement, other
12
than as specifically set forth in Section 2.4 hereof or in the
employment agreements with Xxxxxx X. Xxxxxxx and M. Xxxxxxx Xxxxxxxx.
No Company Benefit Plan provides health or death benefit coverage
beyond the termination of an employee's employment, except as required
by Part 6 of Subtitle B of Title I of ERISA or Section 4980B of the
Code or any State Laws requiring continuation of benefits coverage
following termination of employment. "ERISA Affiliate" means, with
respect to any Person, any trade or business, whether or not
incorporated, that together with such Person would be deemed a "single
employer" within the meaning of Section 4001(a)(15) of ERISA.
(j) TAX RETURNS AND TAX PAYMENTS. The Company and each of
its former Subsidiaries has timely filed (or, as to former
Subsidiaries, the Company has filed on its behalf) all Tax Returns
required to be filed by it, has paid (or, as to former Subsidiaries,
the Company has paid on its behalf) all Taxes shown thereon to be due
and has provided (or, as to former Subsidiaries, the Company has made
provision on its behalf of) specific reserves in its financial
statements for any Taxes that have not been paid, whether or not shown
as being due on any Tax Returns. Except as set forth in Section
3.1(j) of the Company Disclosure Schedule: (i) no claim for unpaid
Taxes has been asserted by a Tax authority or has become a Lien
(except for Liens for Taxes not yet due and payable) against the
property of the Company or any of its former Subsidiaries or is being
asserted against the Company or any of its former Subsidiaries; (ii)
no audit, examination, investigation or other proceeding in respect of
any Tax or of any Tax Return of the Company or any of its former
Subsidiaries is being conducted, threatened or pending by a Tax
authority; (iii) no extension of the statute of limitations on the
assessment of any Taxes has been granted by the Company or any of its
former Subsidiaries and is currently in effect; (iv) all Tax Returns
filed with respect to the Company or any of its former Subsidiaries
are complete and accurate in all material respects; (v) none of the
Company or any of its former Subsidiaries has made an election under
Section 341(f) of the Code; (vi) none of the Company or its former
Subsidiaries is a party to any agreement or arrangement that could
reasonably be expected to result, separately or in the aggregate, in
the actual or deemed payment by the Company or a former Subsidiary of
any "excess parachute payments" within the meaning of Section 280G of
the Code or any amount that is subject to Section 162(m) of the Code;
(vii) none of the Company or its former Subsidiaries has been a United
States real property holding corporation within the meaning of Section
897(c)(2) of the Code during the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code; (viii) all Taxes required to be
withheld, collected or deposited by or with respect to the Company and
its former Subsidiaries have been timely withheld, collected or
deposited, as the case may be, and, to the extent required, have been
paid to the relevant Tax authority, except, in each case, to the
extent that failing to so withhold, collect, deposit or pay would not
have a Material Adverse Effect; (ix) none of the Company or its former
Subsidiaries has issued or assumed (A) any obligations described in
Section 279(b) of the Code, (B) any applicable high yield discount
13
obligations, as defined in Section 163(i) of the Code, or (C) any
registration-required obligations, within the meaning of Section
163(f)(2) of the Code, that are not in registered form; (x) there are
no requests for information currently outstanding that could affect
the Taxes of the Company and its former Subsidiaries; and (xi) there
are no proposed reassessments of any property owned by the Company or
any of its former Subsidiaries or other proposals that could increase
the amount of any Tax to which the Company or any of its former
Subsidiaries would be subject. Neither the Company nor any of its
former Subsidiaries is or has been a member of any consolidated,
combined, unitary or aggregate group for Tax purposes except such a
group consisting only of the Company and its former Subsidiaries. As
used herein: "Tax Return" shall mean any return, report or statement
required to be filed with any Governmental Entity with respect to
Taxes; the "Code" shall mean the Internal Revenue Code of 1986, as
amended; and "Tax" or "Taxes" shall mean all federal, state, local and
foreign income, profits, franchise, gross receipts, environmental,
customs duty, capital stock, severance, stamp, payroll, sales,
employment, unemployment, disability, use, property, withholding,
excise, production, value added, occupancy and other taxes, duties or
assessments of any nature whatsoever together with all interest,
penalties, fines and additions to tax imposed with respect to such
amounts and any interest in respect of such penalties and additions to
tax.
(k) STATE ANTI-TAKEOVER LAWS AND COMPANY ARTICLES OF
INCORPORATION NOT APPLICABLE. The Board of Directors of the Company
and the Special Committee (which Special Committee has been duly
constituted pursuant to Section 302A.673 of the MBCA and consists only
of, and includes all, disinterested directors as defined in such
Section) have approved this Agreement and the transactions
contemplated hereby and such approval constitutes approval of the
Merger and the other transactions contemplated hereby by the Board of
Directors of the Company and the Special Committee under the
provisions of Section 302A.673 of the MBCA and Article 12 of the
Articles, such that Section 302A.673 of the MBCA and Article 12 of the
Articles do not apply to this Agreement or the transactions
contemplated hereby. The Merger does not constitute a "control share
acquisition" subject to the provisions of Section 302A.671 of the
MBCA, by virtue of Section 302A.011, Subd. 38(d) of the MBCA. No
other state takeover statute or similar statute or regulation of the
State of Minnesota applies or purports to apply to this Agreement or
the transactions contemplated hereby and no other provision of the
Articles, Bylaws or other governing instruments of the Company or the
terms of any agreement of the Company would, directly or indirectly,
restrict or impair the ability of ADI to vote, or otherwise to
exercise the rights of a shareholder with respect to, securities of
the Company that may be acquired or controlled by ADI by virtue of
this Agreement or the transactions contemplated hereby or permit any
shareholder of the Company to acquire securities of the Company on a
basis not available to ADI in the event that ADI were to acquire
securities of the Company. The Company is not a party to any rights
or similar anti-takeover plan.
14
(l) ENVIRONMENTAL MATTERS. Except as disclosed in Section
3.1(l) of the Company Disclosure Schedule: (i) to the Knowledge of
the Company, the Company has obtained and holds all necessary
Environmental Permits and each of the same are fully transferable to
Sub; (ii) to the Knowledge of the Company, the Company is in material
compliance with all terms, conditions and provisions of all applicable
Environmental Permits and Environmental Laws; (iii) there are no past,
pending or, to the Knowledge of the Company, threatened Environmental
Claims against the Company, and the Company is not aware of any facts
or circumstances which could reasonably be expected to form the basis
for any Environmental Claim against the Company; (iv) to the Knowledge
of the Company, no Releases of Hazardous Materials have occurred at,
from, in, to, on, or under any Site and no Hazardous Materials are
present in, on, about or migrating to or from any Site that could give
rise to an Environmental Claim against the Company except in
accordance with applicable Laws; (v) to the Knowledge of the Company,
neither the Company, nor any predecessor of the Company, nor any
entity previously owned by the Company has transported or arranged for
the treatment, storage, handling, disposal, or transportation of any
Hazardous Material to any off Site location which could result in an
Environmental Claim against the Company; (vi) to the Knowledge of the
Company, no Site is a current, or, to the Knowledge of the Company,
proposed, Environmental Clean-up Site; (vii) to the Knowledge of the
Company, there are no Liens (other than Permitted Liens) arising under
or pursuant to any Environmental Law on any Site and there are no
facts, circumstances, or conditions that could reasonably be expected
to restrict, encumber, or result in the imposition of special
conditions under any Environmental Law with respect to the ownership,
occupancy, development, use, or transferability of any Site; (viii) to
the Knowledge of the Company, there are no (A) underground storage
tanks, active or abandoned, (B) polychlorinated biphenyl-containing
equipment, or (C) asbestos-containing material at any Site; (ix) there
have been no environmental investigations, studies, audits, tests,
reviews or other analyses conducted by, on behalf of, or which are in
the possession of the Company with respect to any Site which have not
been delivered to Sub prior to execution of this Agreement; and (x)
the Company is not subject to any Order by or with any Governmental
Entity imposing any material Liability or obligations pursuant to or
under any Environmental Law that would have or would reasonably be
expected to have a Material Adverse Effect on the Company.
(m) PERSONAL PROPERTY; REAL PROPERTY.
(i) Except as disclosed in Section 3.1(m)(i) of the
Company Disclosure Schedule, the Company (A) has good, clear
and marketable title to all of the personal properties
reflected in the latest audited balance sheet included in the
SEC Documents as being owned by the Company or acquired after
the date thereof which are, individually or in the aggregate,
material to the Business on a consolidated basis (except
properties sold or
15
otherwise disposed of since the date thereof in the ordinary
course of business or in connection with the sale of the
Products Division), free and clear of (1) all Liens except (x)
statutory liens securing payments not yet due and (y) such
imperfections or irregularities of title or other Liens (other
than real property mortgages or deeds of trust) as do not
materially affect the use of the properties or assets subject
thereto or affected thereby or otherwise materially impair
business operations at such properties, and (2) all real
property mortgages and deeds of trust and (B) is the lessee of
all leasehold estates reflected in the latest audited financial
statements included in the SEC Documents or acquired after the
date thereof which are material to the Business on a
consolidated basis and is in possession of the properties
purported to be leased thereunder (except leaseholds sold,
assigned or otherwise disposed of in connection with the sale
of the Products Division), and each such lease is valid without
default thereunder by the lessee or, to the Company's
Knowledge, the lessor.
(ii) Section 3.1(m)(ii) of the Company Disclosure
Schedule contains a true, correct and complete list (including,
without limitation, legal descriptions) of all real property
owned by the Company (together with all buildings, improvements
and structures thereon and all easements, rights of way, and
appurtenances relating thereto, the "Owned Real Property").
The Company owns the Owned Real Property in fee subject to no
Liens (including, without limitation, leases, occupancy
agreements, possessory rights, options and rights of first
refusal) except as set forth in Section 3.1(m)(ii) of the
Company Disclosure Schedule (the "Owned Real Property Permitted
Liens").
(iii) Section 3.1(m)(iii) of the Company Disclosure
Schedule contains a true, correct and complete list of all
leases and subleases (including, without limitation, all
modifications, extensions or amendments thereto) under which
the Company is tenant or subtenant (as so modified, extended or
amended, the "Real Property Leases"), including the date of
each Real Property Lease, the premises demised thereunder (the
"Leased Real Property," together with the Owned Real Property,
the "Real Property"). The Real Property Leases are subject to
no Liens (including, without limitation, leases, occupancy
agreements, possessory rights, options and rights of first
refusal) except as set forth in Section 3.1(m) of the Company
Disclosure Schedule (the "Leased Real Property Permitted
Liens," together with the Owned Real Property Permitted Liens,
the "Permitted Liens").
(iv) Copies of the Real Property Leases and all
mortgages, title insurance policies and other title related
documents with respect to the Leased Real Property have been
delivered to Sub by the Company. Subject to the terms of the
respective Real Property Leases and the Leased
16
Real Property Permitted Liens, to the Knowledge of the Company,
the Company has a valid and subsisting leasehold estate in and
the right to quiet enjoyment to each parcel of Leased Real
Property for the full term of the respective Real Property
Lease. The Real Property Leases are in full force and effect
and are enforceable in accordance with their respective terms,
except as such enforceability may be subject to or limited by
bankruptcy, insolvency, reorganization or other similar Laws,
now or hereafter in effect, affecting the enforcement of
creditors' rights generally. The Company has not assigned,
pledged, mortgaged, hypothecated or otherwise transferred any
Real Property Lease. Except as set forth in Section 3.1(m)(iv)
of the Company Disclosure Schedule, the Company has not sublet
all or any portion of any Leased Real Property. To the
Knowledge of the Company, there are no defaults by any tenant
or landlord under any Real Property Lease, and no event has
occurred or failed to occur which, with the giving of notice or
the passage of time, or both, would constitute a default under
any Real Property Lease. There are no disputes under any Real
Property Lease. No penalties are accrued and unpaid under any
Real Property Lease. As of the date of this Agreement, no
landlord or tenant under any Real Property Lease has exercised
any option or right to (A) cancel or terminate such Real
Property Lease or shorten the term thereof, (B) lease
additional premises, (C) reduce or relocate the premises
demised by such Real Property Lease or (D) purchase any
property. The Company does not owe nor will it owe any
brokerage commissions or finder's fees with respect to any Real
Property Lease or any renewal or extension thereof or the
exercise of any right or option thereunder.
(v) No assessments or special assessments have been
levied, or, to the Knowledge of the Company, are contemplated
or pending, against any parcel of Real Property.
(vi) The Company is not in default under, nor has it
breached any of the material terms of, any of the Permitted
Liens.
(vii) To the Knowledge of the Company, the Real
Property, including, without limitation, all buildings,
building systems, structural components, roofs, and building
equipment, are in good condition and repair (reasonable wear
and tear excepted), suitable for (A) their intended purposes,
(B) the purposes which they are currently being used and (C)
the operation of the Business.
(viii) Except for the Real Property, the Company does
not own or hold any interest in real property.
17
(ix) To the Knowledge of the Company, no portion of
any parcel of Real Property is located in an area designated as
a flood zone by any Governmental Entity.
(x) To the Knowledge of the Company, each parcel of
Real Property is in compliance with all applicable Laws in all
material respects, including, without limitation, the Americans
with Disabilities Act and all building, zoning, environmental
and health Laws. To the Knowledge of the Company, there are no
notes or notices of violation of any Law affecting or against
any parcel of Real Property.
(xi) There are no condemnation or appropriation
proceedings pending or, to the Knowledge of the Company,
threatened against any parcel of Real Property.
(n) BROKERS. No broker, investment banker, financial
advisor or other Person, other than EVEREN Securities, Inc., (pursuant
to fee agreements, copies of which have been provided to Sub), is
entitled to any broker's, finder's, financial advisor's or other
similar fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on
behalf of the Company.
(o) OPINION OF FINANCIAL ADVISOR. The Company has received
the opinion of EVEREN Securities, Inc., dated the date of this
Agreement (which opinion shall be updated within five (5) days prior
to the mailing of the Proxy Statement), to the effect that the Merger
Consideration to be received in the Merger by the Company's
shareholders is fair to the holders of the Company Common Stock from a
financial point of view, a signed copy of which opinion has been
delivered to Sub.
(p) BOARD RECOMMENDATION. The Board of Directors of the
Company, at a meeting duly called and held, has by unanimous vote of
those directors present (who constituted 100% of the directors then in
office) (i) determined that this Agreement and the transactions
contemplated hereby, including the Merger, are fair to and in the best
interests of the shareholders of the Company, and (ii) resolved to
recommend that the holders of the shares of Company Common Stock
approve this Agreement and the transactions contemplated herein,
including the Merger.
(q) REQUIRED COMPANY VOTE. The Company Shareholder
Approval, being the affirmative vote of a majority of the outstanding
shares of the Company Common Stock, is the only vote of the holders of
any class or series of the Company's securities necessary to approve
this Agreement, the Merger and the other transactions contemplated
hereby.
18
(r) INSURANCE. Since January 1, 1993, the Company has
obtained and maintained in full force and effect insurance with
responsible and reputable insurance companies or associations in such
amounts, on such terms, with such deductibles and covering such risks,
including fire and other risks insured against by extended coverage,
as is customarily carried by reasonably prudent Persons conducting
businesses or owning assets similar to those of the Company, and the
Company has maintained in full force and effect liability insurance
against claims for personal injury or death or property damage
occurring in connection with the Business activities of the Company or
any properties owned, occupied or controlled by the Company in such
amount as is customarily carried by reasonably prudent Persons
conducting businesses or owning assets similar to those of the
Company. There is no material default with respect to any provision
contained in any such policy or binder, nor has the Company failed to
give any material notice or to present any material claim under any
such policy or binders in due and timely fashion. There are no billed
but unpaid premiums past due under any such policy or binder, the
failure of which to be paid would result in the cancellation of such
policy or binder. Except as otherwise set forth in Section 3.1(r) of
the Company Disclosure Schedule, (i) there are no outstanding claims
in excess of normal retentions that are not covered under any such
policy or binder and, to the Knowledge of the Company, there has not
occurred any event that might reasonably form the basis of any claim
in excess of normal retentions that is not covered against or relating
to the Company that is not covered by any such policy and binder; (ii)
no notice of cancellation or non-renewal of any such policy or binder
has been received; and (iii) except as set forth in Section 3.1(r) of
the Company Disclosure Schedule, there are no performance bonds
outstanding with respect to the Company.
(s) PERMITS. Except as set forth in Section 3.1(s) of the
Company Disclosure Schedule and except as could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect, (i) the Permits are valid and in full force and effect, (ii)
the Company is not in default under, and no condition exists that with
notice or lapse of time or both would constitute a default under, the
Permits and (iii) none of the Permits will be terminated or impaired
or become terminable, in whole or in part, as a result of the
transactions contemplated by this Agreement. The Company has all
Permits necessary to carry on its business as currently conducted or
as proposed to be conducted, except where the failure to have any
Permit would not have a Material Adverse Effect.
(t) INTELLECTUAL PROPERTY RIGHTS. The Company has interests
in or uses only the Intellectual Property disclosed in Section 3.1(t)
of the Company Disclosure Schedule in connection with the conduct of
the Business. Except as set forth in Section 3.1(t) of the Company
Disclosure Schedule, the Company either owns or has a valid and
binding license to use each item of Intellectual Property set forth in
Section 3.1(t) of the Company Disclosure Schedule. No
19
other Intellectual Property is used or necessary in the conduct of the
Business. Except as disclosed in Section 3.1(t) of the Company
Disclosure Schedule, (i) the Company has the exclusive right to use
the Intellectual Property disclosed in Section 3.1(t) of the Company
Disclosure Schedule, (ii) all registrations with and applications to
any Governmental Entity in respect of such Intellectual Property are
valid and in full force and effect and are not subject to the payment
of any Taxes or maintenance fees or the taking of any other actions by
the Company to maintain their validity or effectiveness, (iii) there
are no restrictions on the direct or indirect transfer of any license,
or any interest therein, held by the Company in respect of such
Intellectual Property, (iv) the Company has delivered to Sub prior to
the execution of this Agreement documentation with respect to any
invention, process, design, computer program or other know-how or
trade secret included in such Intellectual Property, which
documentation is accurate in all material respects and reasonably
sufficient in detail and content to identify and explain such
invention, process, design, computer program or other know-how or
trade secret and to facilitate its full and proper use without
reliance on the special knowledge or memory of any Person, (v) the
Company has taken reasonable security measures to protect the secrecy,
confidentiality and value of its trade secrets in respect of the
Business, (vi) the Company is not, nor has it received any notice that
it is, in default (or with the giving of notice or lapse of time or
both, would be in default) under any license to use such Intellectual
Property and (vii) the Company does not have any Knowledge that such
Intellectual Property is being infringed by any other Person. Except
as set forth in Section 3.1(t) of the Company Disclosure Schedule, the
Company has not received notice that the Company is infringing any
Intellectual Property of any other Person in connection with the
conduct of the Business; no claim is pending or, to the Knowledge of
the Company, has been made to such effect that has not been resolved,
and, to the Knowledge of the Company, the Company is not infringing
any Intellectual Property rights of any other Person in connection
with the conduct of the Business.
(u) CONTRACTS. Section 3.1(u) of the Company Disclosure
Schedule sets forth a list of all material Contracts to which the
Company is a party or by or to which it or its assets are bound or
subject, including, without limitation, (i) Contracts relating to the
borrowing of money; (ii) Contracts with any current Affiliate or
current or former officer or director of the Company; (iii) joint
venture agreements between the Company and an unaffiliated third
party; (iv) any Contracts providing for payments to or from the
Company of $100,000 or more per year; (v) any license agreements,
distribution agreements, franchise agreements or agreements in respect
of similar rights granted to or held by the Company; (vi) any Contract
that materially limits the freedom of the Company to compete in any
line of business or with any Person or in any geographical area or
which would so materially limit the freedom of the Company so to
compete after the Effective Time; (vii) any other Contract not made in
the ordinary course of business which Contract is material to the
Company; (viii) any Tax sharing or Tax
20
indemnity agreement or other similar arrangement or (ix) any lease
(other than Real Property Leases). The Company has heretofore made
available to Sub true and complete copies of each of the Contracts set
forth in Section 3.1(u) of the Company Disclosure Schedule. Except
for Contracts that could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, all
Contracts disclosed in Section 3.1(u) of the Company Disclosure
Schedule are valid and binding Contracts of the Company, are in full
force and effect (except for those that have terminated or will
terminate by their own terms), and the Company is not, nor, to the
Knowledge of the Company, is any other party thereto, in default in
any material respect under the terms of any such Contract.
(v) CERTAIN BUSINESS PRACTICES. Neither the Company nor any
of its directors, officers or employees or, to the Knowledge of the
Company, agents or representatives (in their capacity as directors,
officers, agents, representatives or employees) has: (i) used any
funds for unlawful contributions, gifts, entertainment or other
unlawful expenses relating to political activity; (ii) directly or
indirectly paid or delivered any fee, commission or other sum of money
or item of property, however characterized, to any finder, agent, or
other Person acting on behalf of or under the auspices of a
governmental official or Governmental Entity, in the United States or
any other country, which is in any manner related to the Business,
that was illegal under any Federal, state or local laws of the United
States or any other country having jurisdiction; or (iii) made any
payment to any customer or supplier of the Company or any officer,
director, partner, employee or agent of any such customer or supplier
for the unlawful sharing of fees or to any such customer or supplier
or any such officer, director, partner, employee or agent for the
unlawful rebating of charges, or engaged in any other unlawful
reciprocal practice, or made any other unlawful payment or given any
other unlawful consideration to any such customer or supplier or any
such officer, director, partner, employee or agent, in respect of the
Business.
(w) YEAR 2000. Except as set forth in Section 3.1(w) of the
Company Disclosure Schedule, the information systems (including all
computer hardware and software) and technology (including, but not
limited to, information technology, embedded systems, or any other
electro-mechanical or processor-based system), owned, licensed or
otherwise used by the Company are free of any "Year 2000 Problem" and
any "9/9/99 Problem" such that such systems and technology do not and
will not, without requiring any modifications, experience any
malfunctions, premature cancellation or expiration of contractual
rights or deletion of data, or any other problems in connection with
(i) the year 2000 (and all subsequent years) as distinct from 1900's
years, (ii) the date February 29, 2000, and all subsequent leap years,
or (iii) the date September 9, 1999.
(x) NO OTHER REPRESENTATIONS AND WARRANTIES. The Company
represents and warrants that it is not relying upon any
representations and warranties of Sub that are not contained in this
Agreement or in the documents
21
and instruments delivered with this Agreement and agrees that there
shall not be deemed to be any other express or implied representations
or warranties made by or on behalf of Sub in connection with the
Merger or the other transactions contemplated by this Agreement
(including the documents and instruments delivered with this
Agreement).
3.2 REPRESENTATIONS AND WARRANTIES OF SUB. Sub represents and
warrants to the Company as follows:
(a) ORGANIZATION, STANDING AND CORPORATE POWER. Sub is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is incorporated and has the requisite corporate
power and authority to carry on its business as now being conducted. Sub
is a newly formed Minnesota corporation and, except for activities
incident to the acquisition of the Company, has not engaged in any
business activities. On the Closing Date, all the outstanding shares of
capital stock of Sub will have been validly issued and are fully paid and
nonassessable and will be owned (of record and beneficially) by ADI, free
and clear of all Liens. ADI is an indirect, wholly owned subsidiary of
ADT.
(b) SUBSIDIARIES. Sub has no Subsidiaries and during the
period commencing with the date hereof and ending at the Effective Time
will have no Subsidiaries.
(c) AUTHORITY; NONCONTRAVENTION. Sub has all requisite
corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated by this Agreement. The
execution and delivery of this Agreement by Sub and the consummation by
Sub of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of Sub. This
Agreement has been duly executed and delivered by and constitutes a valid
and binding obligation of Sub, enforceable against Sub in accordance with
its terms. The execution and delivery of this Agreement do not, and
the consummation of the transactions contemplated by this Agreement
and compliance with the provisions of this Agreement will not,
conflict with, or result in any breach or violation of, or default
(with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of or "put"
right with respect to any obligation or to any loss of a material
benefit under, or result in the creation of any Lien upon any of the
properties or assets of Sub under, (i) the Articles of Incorporation
or bylaws of Sub, (ii) any Contract or Permit applicable to Sub or its
properties or assets or (iii) subject to the governmental filings and
other matters referred to in the following sentence, any Order, Laws
or arbitration award applicable to Sub or its respective properties or
assets; other than, in the case of clauses (ii) and (iii), any
such conflicts, breaches, violations, defaults, rights, losses or
Liens that individually or in the aggregate could not have a Material
Adverse Effect with
22
respect to Sub or could not prevent, hinder or materially delay
the ability of Sub to consummate the transactions contemplated
by this Agreement. No consent, approval, Order or authorization
of, or registration, declaration or filing with, or notice
to, any Governmental Entity is required by or with respect to
Sub in connection with the execution and delivery of this Agreement by
Sub or the consummation by Sub of any of the transactions contemplated
by this Agreement, except for (i) the filing of a premerger
notification and report form under the HSR Act, (ii) the filing with
the SEC of such reports under the Exchange Act as may be required in
connection with this Agreement and the transactions contemplated
hereby, (iii) the filing of the Certificate of Merger with the
Secretary of State of the State of Minnesota, and (iv) such other
consents, approvals, Orders, authorizations, registrations,
declarations, filings or notices as may be required under the
"takeover" or "blue sky" laws of various states.
(d) INFORMATION SUPPLIED. None of the information supplied
or to be supplied by Sub for inclusion or incorporation by reference
in the Proxy Statement will, at the date the Proxy Statement is first
mailed to the Company's shareholders or at the time of the Special
Meeting, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances
under which they are made, not misleading.
(e) ABSENCE OF CERTAIN CHANGES OR EVENTS. Sub has conducted
its business only in the ordinary course consistent with past
practice, and there is not and has not been (i) any Material Adverse
Change with respect to Sub; (ii) any condition, event or occurrence
which, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect or give rise to a Material Adverse
Change with respect to Sub; or (iii) any condition, event or
occurrence which could reasonably be expected to prevent, hinder or
materially delay the ability of Sub to consummate the transactions
contemplated by this Agreement.
(f) BROKERS. No broker, investment banker, financial
advisor or other Person is entitled to or may be paid any broker's,
finder's, financial advisor's or other similar fee or commission in
connection with the transactions contemplated by this Agreement based
upon arrangements made by or on behalf of Sub.
(g) FINANCING.
(i) Sub has provided to the Company true and complete
copies of commitment letters (the "Bank Commitment Letters"),
in each case dated December 1, 1998, from Fleet and CMP
pursuant to which they have committed to provide, together with
the equity financing referred to in clause (ii) below, all of
the financing required in order to consummate the transactions
contemplated by
23
this Agreement and to fund what Sub reasonably believes to be the
working capital needs of the Company following the Closing. The
financing to be provided pursuant to the foregoing arrangements
is hereinafter referred to as the "Financing." As of the date
hereof, the Bank Commitment Letters relating to the Financing
have not been withdrawn and are in full force and effect.
(ii) Sub has delivered to the Company a true and
complete copy of a commitment letter addressed to ADI ("399
Commitment Letter"), dated as of December 1, 1998, from 399
Venture Partners, Inc. ("399") pursuant to which 399 (together
with its Affiliates) will have available up to $15 million,
subject to the terms and conditions set forth therein, for
purposes of consummating the transactions contemplated by this
Agreement. As of the date hereof, the 399 Commitment Letter
has not been withdrawn and is in full force and effect.
(h) CERTAIN ANTI-TAKEOVER PROVISIONS NOT APPLICABLE. To the
Knowledge of Sub, neither Sub nor any Affiliate or associate was an
"interested shareholder" of the Company as defined in Section
302A.011, Subd. 49(a) of the MBCA immediately prior to Sub's execution
and delivery of this Agreement.
(i) NO OTHER REPRESENTATIONS AND WARRANTIES. Sub represents
and warrants that it is not relying upon any representations and
warranties of the Company that are not contained in this Agreement or
in the documents and instruments delivered with this Agreement or in
the Company Disclosure Schedule and agrees that there shall not be
deemed to be any other express or implied representations or
warranties made by or on behalf of the Company in connection with the
Merger or the other transactions contemplated by this Agreement (which
includes the documents and instruments delivered with this Agreement
and the Company Disclosure Schedule).
ARTICLE 4
COVENANTS RELATING TO CONDUCT OF BUSINESS
PRIOR TO MERGER
4.1 CONDUCT OF BUSINESS OF THE COMPANY. From the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time (except as otherwise specifically required by the terms of
this Agreement), the Company shall act and carry on the Business in the usual,
regular and ordinary course of business consistent with past practice and, to
the extent consistent therewith, use its best efforts to preserve intact its
current business organizations, keep available the services of its current
officers and employees and preserve its relationships with customers, suppliers,
licensors, licensees, advertisers, distributors and others having business
dealings with it to the end that its goodwill and ongoing businesses shall not
be impaired in any material respect at the Effective Time. Without limiting the
generality of the
24
foregoing, from the date of this Agreement and continuing until the earlier
of the termination of this Agreement or the Effective Time, the Company shall
not directly or indirectly without the prior written consent of Sub:
(a) (i) declare, set aside or pay any dividends on, or make
any other distributions (whether in cash, stock or property or any
combination thereof) in respect of, any of its capital stock, (ii)
split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities or property in respect
of, in lieu of or in substitution for shares of its capital stock, or
(iii) purchase, redeem or otherwise acquire any shares of capital
stock of the Company or any other securities thereof or any rights,
warrants or options to acquire any such shares or other securities,
except, in the case of clause (iii), for the acquisition of shares of
Company Common Stock from holders of Company Stock Options in full or
partial payment of the exercise price payable by such holder or tax
liability arising in connection therewith, upon exercise of Company
Stock Options outstanding on the date of this Agreement in accordance
with their present terms in the ordinary course of business;
(b) authorize for issuance, issue, deliver, sell, pledge or
otherwise encumber any shares of the capital stock of the Company, any
other voting securities or any securities convertible into, or any
rights, warrants or options to acquire any such shares, voting
securities or convertible securities or any other securities or equity
equivalents (including, without limitation, stock appreciation
rights), or contractual obligation valued or measured by the value or
market price of Company Common Stock (other than the issuance of
Company Common Stock upon the exercise of Company Stock Options
outstanding on the date of this Agreement and in accordance with their
present terms in the ordinary course of business, such issuance,
together with the acquisitions of shares of Company Common Stock
permitted under clause (a) above, being referred to herein as
"Permitted Changes");
(c) amend or otherwise modify its Articles, Bylaws or other
comparable charter or organizational documents;
(d) acquire or agree to acquire by merging or consolidating
with, or by purchasing a substantial portion of the stock or assets
of, or by any other manner, any business or any corporation,
partnership, joint venture, association, or other business
organization or division thereof;
(e) sell, lease, license, mortgage or otherwise encumber or
subject to any Lien or otherwise dispose of any of its properties or
assets, except in the ordinary course of business consistent with past
practice;
(f) (i) incur any Debt or issue or sell any Debt securities
or warrants or other rights to acquire any Debt securities of the
Company, enter into any "keep well" or other agreement to maintain any
financial statement condition of another
25
Person or enter into any arrangement having the economic effect of any of the
foregoing, except for short-term borrowings incurred in the ordinary course
of business consistent with past practice, or (ii) make any loans, advances
or capital contributions to, or investments in, any other Person, other than
to the Company;
(g) acquire or agree to acquire any assets, or make or agree to make
any capital expenditures except in the ordinary course of business consistent
with past practice;
(h) pay, discharge or satisfy any claims (including claims of
shareholders), Liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), except for the payment, discharge or
satisfaction, of (i) Liabilities or obligations in the ordinary course of
business consistent with past practice or in accordance with their terms as
in effect on the date hereof, or (ii) Liabilities reflected or reserved
against in, or contemplated by, the most recent consolidated audited
financial statements (or the notes thereof) of the Company included in the
SEC Documents, or waive, release, grant, or transfer any rights of material
value or modify or change in any material respect any existing license,
lease, Contract or other document, other than in the ordinary course of
business consistent with past practice;
(i) adopt or amend in any material respect (except as may be required
by Law or by this Agreement) any bonus, profit sharing, compensation, stock
option, pension, retirement, deferred compensation, employment or other
employee benefit plan, agreement, trust, fund or other arrangement (including
any Company Benefit Plan) for the benefit or welfare of any employee,
director or former director or employee or, other than increases for
individuals (other than officers and directors) in the ordinary course of
business consistent with past practice, increase the compensation or fringe
benefits of any director, employee or former director or employee, pay any
benefit not required by any existing plan, arrangement or agreement, grant
any new or modified severance or termination arrangement or increase or
accelerate any benefits payable under its severance or termination pay
policies in effect on the date hereof, other than any such increase or
acceleration provided for under such policies as in effect on the date of
this Agreement;
(j) change any material accounting principle used by it, except for
such changes as may be required to be implemented following the date of this
Agreement pursuant to GAAP or rules and regulations of the SEC promulgated
following the date hereof;
(k) take any action that would, or is reasonably likely to, result in
any of its representations and warranties in this Agreement becoming
untrue, or in any of the conditions to the Merger set forth in Article 6 not
being satisfied;
26
(l) except in the ordinary course of business and consistent with
past practice, make any Tax election, change any Tax accounting principle
or practice or settle or compromise any federal, state, local or foreign
income Tax Liability; and
(m) authorize any of, or commit or agree to take any of, the
foregoing actions.
In addition, from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Effective Time, the
Company shall deliver to Sub a copy of any material notice related to any
Real Property or any Real Property Lease.
ARTICLE 5
ADDITIONAL AGREEMENTS
5.1 PREPARATION OF PROXY STATEMENT; SPECIAL MEETING.
(a) PROXY STATEMENT. Promptly following the date of this
Agreement, the Company shall prepare and file with the SEC the Proxy
Statement. The Company will use its reasonable best efforts to cause
the Proxy Statement to be mailed to the Company's shareholders as
promptly as practicable after it has been filed with the SEC unless the
SEC has elected to review and comment upon the Proxy Statement, in which
case the Company will use its reasonable best efforts to cause the Proxy
Statement to be mailed to the Company's shareholders as promptly as
practicable after the SEC has completed such review.
(b) SPECIAL MEETING. The Company will, as promptly as practicable
following the date of this Agreement, duly call, give notice of, convene
and hold the Special Meeting. The Company will, through its Board of
Directors, recommend to its shareholders approval of the foregoing
matters, as set forth in Section 3.1(p). Such recommendation, together
with a copy of the fairness opinion referred to in Section 3.1(o), shall
be included in the Proxy Statement. The Company will use reasonable
efforts to hold such meeting as soon as practicable after the date
hereof.
(c) STOCK RECORDS. The Company will cause its transfer agent to
make stock transfer records relating to the Company available to the
extent reasonably necessary to effectuate the intent of this Agreement.
5.2 ACCESS TO INFORMATION.
(a) ACCESS. From the date hereof through the Effective Time, the
Company shall, and shall cause its officers, employees, counsel,
financial advisors and other representatives to, afford to Sub and its
representatives reasonable access during normal business hours during
the period prior to the Effective Time
27
to its properties, books, contracts, commitments, personnel and records
and, during such period, shall, and shall cause its officers, employees
and representatives to, furnish promptly to Sub (i) a copy of each
report, schedule, registration statement and other document filed by it
during such period pursuant to the requirements of Federal or state
securities laws and (ii) all other information concerning its business,
properties, financial condition, operations and personnel as Sub may
from time to time reasonably request. No investigation pursuant to this
Section 5.2 shall affect any representations or warranties of the
Company herein or the conditions to the obligations of the parties
hereto. All information obtained by Sub pursuant to this Section 5.2(a)
shall be kept confidential in accordance with the confidentiality
agreement dated March 30, 1998 between Citicorp Venture Capital, Ltd.
and EVEREN Securities, Inc. (the "Confidentiality Agreement").
(b) REPORT OF DEVELOPMENTS. From the date hereof through the
Effective Time, the Company shall report on operational matters and
promptly advise Sub orally and in writing of any change or event having,
or which, insofar as can reasonably be foreseen, could have, a Material
Adverse Effect on the Company. Sub and the Company will give prompt
written notice to the other of any event which could reasonably be
expected to cause a breach of any of its own respective representations,
warranties, covenants or other agreements contained in this Agreement.
(c) COMMITMENT NOTICE. In the event that Fleet or CMP notifies
ADI that any such Person is withdrawing its commitment contemplated by
the applicable Bank Commitment Letter addressed to ADI and delivered by
such Person, Sub shall promptly notify in writing the Company of such
event.
5.3 BEST EFFORTS. Each of the parties agrees to use its reasonable
best efforts to take, or cause to be taken, all actions, and to do, or cause
to be done, and to assist and cooperate with the other parties in doing, all
things necessary, proper or advisable to consummate and make effective, in
the most expeditious manner practicable, the Merger and the other transactions
contemplated by this Agreement. Sub and the Company will use their best
efforts and cooperate with one another (i) in promptly determining whether
any filings are required to be made or consents, approvals, waivers, Permits
or authorizations are required to be obtained under any applicable Law or
from any Governmental Entity or other Person in connection with the transactions
contemplated by this Agreement and (ii) in promptly making any such filings,
in furnishing information required in connection therewith and in timely
seeking to obtain any such consents, approvals, waivers, Permits or
authorizations.
5.4 INDEMNIFICATION.
(a) OBLIGATION. For a period of six years after the Effective Time,
the Surviving Corporation shall indemnify and hold harmless the present and
former officers and directors of the Company and its former Subsidiaries in
respect of
28
acts or omissions occurring prior to the Effective Time to the maximum
extent provided under the Articles and Bylaws, or any of its former
Subsidiaries' certificate of incorporation or bylaws, in either case, as
in effect on the date hereof; provided that such indemnification shall
be subject to any limitation imposed from time to time under applicable
law.
(b) INSURANCE. For a period of six years after the Effective
Time, the Surviving Corporation shall provide officers' and directors'
liability insurance in respect of acts or omissions occurring prior to
the Effective Time covering each such Person currently covered by the
Company's or any of its former Subsidiaries' officers' and directors'
liability insurance policy on terms with respect to coverage and amount
no less favorable than those of such policy in effect on the date hereof
(or, if such insurance policy cannot be obtained, such insurance policy
on terms with respect to coverage and amount as favorable as can be
obtained, subject to the proviso at the conclusion of this sentence),
provided that, in satisfying its obligation under this Section 5.4(b),
the Surviving Corporation shall not be obligated to pay premiums in
excess of 150% of the amount per annum the Company paid in its last full
fiscal year, which amount has been disclosed to Sub.
(c) SCOPE. The provisions of this Section 5.4 are intended to be
for the benefit of, and shall be enforceable by, each Person set forth
in this Section 5.4 and his or her heirs and representatives.
5.5 EXPENSES.
(a) OBLIGATION. Subject to Section 5.5(b), whether or not the
Merger is consummated, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses.
(b) OBLIGATION UPON CONSUMMATION OF MERGER. In the event the
Merger is consummated, the Surviving Corporation shall be responsible for
paying expenses incurred by or fees due to EVEREN Securities, Inc., the
Company's financial advisor (excluding its fees for its fairness
opinion); Xxxx, Plant, Xxxxx, Xxxxx & Xxxxxxx, P.A., the Company's legal
counsel; and Ernst & Young LLP, the Company's independent auditors
relating to the Merger and the transactions contemplated by this
Agreement.
5.6 PUBLIC ANNOUNCEMENTS. Sub, on the one hand, and the Company, on
the other hand, will consult with each other before issuing, and provide each
other the opportunity to review and comment upon, any press release or other
public statements with respect to the transactions contemplated by this
Agreement, including the Merger, and shall not issue any such press release or
make any such public statement prior to such consultation, except as may be
required by applicable Law, court process or by obligations pursuant to any
listing agreement with any national securities exchange. The parties agree that
the initial press release or releases
29
to be issued with respect to the transactions contemplated by this Agreement
shall be mutually agreed upon prior to the issuance thereof.
5.7 TAKEOVER STATUTES. If any "fair price," "moratorium," "control
share acquisition" or other form of anti-takeover statute or regulation shall
become applicable to the transactions contemplated hereby, the Company and the
members of the Board of Directors of the Company shall grant such approvals and
take such actions as are reasonably necessary so that the transactions
contemplated hereby may be consummated as promptly as practicable on the terms
contemplated hereby and otherwise act to eliminate or minimize the effects of
such statute or regulation on the transactions contemplated hereby.
5.8 NO SOLICITATION.
(a) From and after the date of this Agreement, until the earlier
of the Effective Time or the termination of this Agreement, the Company
shall not, and shall not authorize or permit any of its officers,
directors, employees, agents, representatives or advisors to, (A) solicit,
initiate or encourage (including by way of furnishing information), or
take any other action to facilitate the submission of inquiries,
proposals or offers from any Person relating to any acquisition or
purchase of 5% or more of the consolidated assets of the Company (other
than in the ordinary course of business) or of over 5% of any class of
equity securities of the Company or any tender offer (including a self
tender offer) or exchange offer that if consummated would result in any
Person beneficially owning 5% or more of any class of equity securities
of the Company, or any merger, consolidation, business combination, sale
of substantially all assets, recapitalization, liquidation, dissolution
or similar transaction involving the Company, other than the
transactions contemplated by this Agreement, or any other transaction
the consummation of which would or could reasonably be expected to
impede, interfere with, prevent or materially delay the Merger or which
would or could reasonably be expected to materially dilute the benefits
to ADI or Sub of the transactions contemplated hereby (collectively,
"Transaction Proposals") or agree to or endorse any Transaction
Proposal, or (B) enter into or participate in any discussions or
negotiations regarding any of the foregoing, or furnish to any other
Person any information with respect to the Business, its properties or
assets or any of the foregoing, or otherwise cooperate in any way with,
or assist or participate in, facilitate or encourage, any effort or
attempt by any other Person to do or seek any of the foregoing;
PROVIDED, HOWEVER, that the foregoing shall not prohibit the Company
from (i) furnishing information concerning the Company and the Business
or its properties or assets pursuant to an appropriate and customary
confidentiality agreement (which shall not be substantially less
restrictive than any confidentiality agreement entered into by Sub in
connection with the Merger) to a third party who has made an unsolicited
Transaction Proposal, (ii) engaging in discussions or negotiations with
a third party who has made an unsolicited Transaction Proposal,
(iii) following receipt of an unsolicited Transaction Proposal, taking and
disclosing to its shareholders a position contemplated by
30
Rules 14d-9 and 14e-2 under the Exchange Act (provided no such position
shall constitute a recommendation of such transaction if it does not
constitute a Superior Acquisition Proposal) or otherwise complying with
its duties of disclosure under applicable state law, and/or (iv) following
receipt of an unsolicited Transaction Proposal, failing to make or
withdrawing or modifying its recommendation referred to in Section 3.1(p),
but in each case referred to in the foregoing clauses (i) through (iv)
only if and to the extent that the Board of Directors of the Company
shall have concluded in good faith, after consulting with financial
advisors and considering the advice of outside counsel, that (1) such
action is required by the Board of Directors of the Company in the
exercise of its fiduciary duties to the shareholders of the Company and
(2) such action is reasonably likely to be subject to completion and
would, if consummated, result in a Superior Acquisition Proposal;
PROVIDED, FURTHER, that the Board of Directors of the Company shall not
take any of the foregoing actions referred to in clauses (i) through
(iv) until after giving at least one Business Day's advance written
notice to Sub with respect to the actions specified in the foregoing
clauses (i) through (iv) that it shall take. In addition, if the Board
of Directors of the Company receives a Transaction Proposal, then the
Company shall promptly inform Sub in writing of the material terms of
such proposal and the identity of the Person making it. As of the date
hereof, the Company will immediately cease and cause to be terminated
any existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. Without
limiting the foregoing, it is understood that any violation of the
restrictions set forth in this Section by any director or executive
officer of the Company or by any investment banker, financial adviser,
attorney, accountant, or other representative of the Company shall be
deemed to be a breach of this Section by the Company.
(b) If (i) this Agreement shall be terminated pursuant to
Section 7.1(e) or 7.1(f)(ii) or (ii) (1) a Person (other than Sub)
shall have made a Transaction Proposal, (2) the Agreement shall be
terminated pursuant to Section 7.1(g), 7.1(f)(i), or 7.1(f)(iii) and
(3) any Transaction Proposal (whether or not proposed prior to the Special
Meeting to approve the Merger and whether or not it involves the Person
making the Transaction Proposal referred to in Section 5.8(b)(ii)(1)
above) shall have been consummated within 12 months following the
termination of this Agreement, the Company shall pay to Sub, within
twenty (20) Business Days following such occurrence, a fee of $1.9 million
together with reimbursement of all reasonable out-of-pocket costs, fees and
expenses, including, without limitation, the reasonable fees and
disbursements of banks, investment banks, accountants or legal counsel and
the expenses of any litigation incurred in connection with collecting the
fees and other amounts provided for in this Section 5.8(b) up to a maximum
amount of $900,000 in the aggregate for all such costs, fees and expenses;
provided, however, such fee and reimbursed expenses shall be payable within
sixty (60) days following the termination of this Agreement pursuant to
Section 7.1(e) or 7.1(f)(ii) of this Agreement.
31
5.9 CERTAIN AGREEMENTS. The Company will not waive or fail to enforce
any provision of any confidentiality or standstill or similar agreement to which
it is a party without the prior written consent of Sub.
5.10 EMPLOYEE BENEFITS.
(a) The Surviving Corporation shall maintain the Xxxxxx
Communications, Inc. Flexible Spending Account from the Closing Date
through March 31, 1999, for the benefit of those individuals who were
employees of the Company immediately prior to the Closing Date and who
participated in such account as of such date, provided, however, that the
Surviving Corporation may elect to continue to maintain such account after
such date in its sole discretion.
(b) The Surviving Corporation shall maintain the Xxxxxx
Communications, Inc. Retirement Savings Plan ("Savings Plan") after the
Closing Date until such time as it deems appropriate to terminate such
plan, in its sole discretion. Promptly after the termination of the
Savings Plan, if any, the Surviving Corporation shall cause coverage
under a defined contribution plan that is qualified under Section 401(a)
of the Code to be extended to the employees of the Surviving Corporation
who were eligible to actively participate in the Savings Plan as of the
date of its termination. Such employees shall be granted service credit
(for eligibility and vesting purposes only) under such defined
contribution plan for service with the Company prior to the Closing Date.
(c) The Surviving Corporation shall maintain the group health
and dental plans sponsored by the Company after the Closing Date for
those individuals who were employees of the Company immediately prior to
the Closing Date, and who participate in such plans as of such date;
PROVIDED, HOWEVER, that the Surviving Corporation may terminate such
plans at any time after the Closing Date, as it determines in its sole
discretion. Promptly after the termination of such plans, if any, such
employees and their dependents shall be enrolled in such medical, dental
and vision, and other employee welfare benefit plans that the Surviving
Corporation shall offer to such employees in its sole discretion.
(d) Nothing in this Section 5.10, express or implied, shall be
construed to prevent the Surviving Corporation from (i) terminating or
modifying to any extent the employment or the employment relationship of
any employee at any time for any reason, or (ii) terminating or modifying
to any extent or in any respect any employee benefit plan, program or
arrangement that the Surviving Corporation may contribute to, maintain,
or establish for the benefit of employees, directors, consultants,
contractors or otherwise, at any time for any reason.
(e) The Company and the Board of Directors shall cause the plan
administrator of (or under) each of the Option Plans, and/or shall take
such other steps as may be necessary or appropriate, to amend the Option
Plans and adjust
32
the Company Stock Options so that the holders of such Company Stock
Options (the "Optionees"), upon consummation of the Merger, shall only
be entitled, with respect to each applicable Company Stock Option, to
the difference between (x) $10.00 MINUS (y) the applicable exercise
price. In addition, the Company and the Board of Directors shall cause
each Optionee (other than the Optionee who is a party to the Xxxxxxxx
Option Termination Agreement) to execute a written consent, which
consent shall authorize the cancellation of each Company Stock Option in
exchange for an amount in cash equal to the amount described herein, and
shall waive all of such Optionee's rights under the Option Plans and any
related agreements, including but not limited to the right to receive
capital stock of the Company upon exercise of the Company Stock Option.
5.11 CERTAIN ACTIONS. The Company shall use its best efforts to take,
or cause to be taken, the actions set forth in Section 5.11 of the Company
Disclosure Schedule prior to the Closing Date.
5.12 DEBT. The Company shall cause total Debt of the Company
determined in accordance with GAAP as of the Effective Time not to exceed
$20.5 million.
ARTICLE 6
CONDITIONS PRECEDENT
6.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) COMPANY SHAREHOLDER APPROVAL. The Company Shareholder
Approval shall have been obtained.
(b) HSR ACT AND OTHER AUTHORIZATIONS. All waiting periods (and
any extensions thereof) applicable to the Merger under the HSR Act shall
have been terminated or shall have expired and the parties shall have
received all other authorizations, consents and approvals of Governmental
Entities required in connection with the execution, delivery and
performance of this Agreement; and, further, all such authorizations,
consents and approvals (i) shall not impose any limitations or
restrictions on Sub and (ii) shall not be subject to the satisfaction of
any condition that has not been satisfied or waived. Sub may, in its
sole discretion, waive the condition under Section 6.1(b)(i) on behalf of
both itself and the Company.
(c) NO INJUNCTIONS OR RESTRAINTS. No temporary restraining
Order, preliminary or permanent injunction or other Order issued by any
court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger shall be in effect; PROVIDED,
HOWEVER, that the parties
33
hereto shall use their best efforts to have any such injunction, Order,
restraint or prohibition vacated.
6.2 CONDITIONS TO OBLIGATION OF SUB. The obligation of Sub to effect
the Merger is further subject to the satisfaction or waiver by Sub of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Company set forth in this Agreement shall be true and
correct in all material respects with respect to representations and
warranties not qualified by materiality and in all respects with respect
to representations and warranties qualified by materiality, in each case
as of the date of this Agreement and as of the Closing Date as though
made on and as of the Closing Date, except for those representations and
warranties which address matters only as of a particular date (which
shall have been true and correct as of such date). Sub shall have
received a certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company to such
effect.
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company
shall have performed the covenants required to be performed by it under
this Agreement at or prior to the Closing Date (except for such failures
to perform as have not had or could not reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect with
respect to the Company or adversely affect the ability of the Company to
consummate the transactions herein contemplated or perform its obligations
hereunder), and Sub shall have received a certificate signed on behalf of
the Company by the Chief Executive Officer and the Chief Financial Officer
of the Company to such effect.
(c) CONSENTS, ETC. Sub shall have received evidence, in form
and substance reasonably satisfactory to it, that such Permits and Orders
of Governmental Entities and other Persons as are necessary in connection
with the transactions contemplated hereby have been obtained, except such
Permits and Orders which are not, individually or in the aggregate,
material to Sub or the Company or the failure of which to have been
received would not materially dilute the aggregate benefits to ADI or Sub
received in the Merger.
(d) DISSENTERS' RIGHTS. Holders of not more than 10% of the
shares of Company Common Stock issued and outstanding immediately prior
to the Effective Time have exercised, preserved and protected their
Dissenters' Rights.
(e) OPINION OF COUNSEL TO THE COMPANY. Sub shall have received,
on and as of the Closing Date, an opinion of Xxxx, Plant, Xxxxx, Xxxxx &
Xxxxxxx, P.A., counsel to the Company, substantially in the form of
Exhibit B.
(f) CONTRACT CONSENTS. The Company shall have delivered to Sub
(i) written consents from the Persons who are parties to the Contracts
set forth in Section 6.2(f)(i) of the Company Disclosure Schedule to
(A) the transactions
34
contemplated hereunder and (B) the reincorporation, subsequent to the
Effective Time, of the Company in the State of Delaware pursuant to the
merger of the Company with and into Xxxxxx Communications, Inc., to be
formed as a Delaware corporation and wholly-owned Subsidiary of the
Company and (ii) written evidence of the termination of the Contracts
set forth in Section 6.2(f)(ii) of the Company Disclosure Schedule.
(g) DEBT. Total Debt of the Company determined on a consolidated
basis in accordance with GAAP as of the Effective Time shall not exceed
$20.5 million.
(h) RESIGNATIONS. The Company shall have received and accepted the
resignations of the directors of the Company designated by Sub.
(i) PENDING ACTION. There shall not be instituted or pending
any Action or Proceeding by any Governmental Entity, or any Action or
Proceeding by any other Person, that has a reasonable likelihood of
success before any Governmental Entity, (i) challenging or seeking to
make illegal, to delay materially or otherwise directly or indirectly to
restrain or prohibit the consummation of the Merger or seeking to obtain
material damages or otherwise directly or indirectly relating to the
transactions contemplated by this Agreement, (ii) seeking to restrain or
prohibit the ownership or operation by Sub of all or any material portion
of the Business or the assets of the Company, (iii) seeking to impose or
confirm material limitations on the ability of Sub to effectively control
the Business or operations of the Company, or effectively to exercise
full rights of ownership of shares of Company Common Stock or (iv)
requiring divestiture by Sub of any shares of Company Common Stock, and
no Governmental Entity shall have issued any judgment, Order, decree or
injunction, and there shall not be any statute, rule or regulation, that
in the reasonable judgment of Sub is likely, directly or indirectly, to
result in any of the consequences referred to in the preceding clauses
(i) through (iv).
(j) TAXES. The Company shall have paid all applicable
transfer, real property transfer, documentary stamp and similar Taxes
(and the Company shall have properly executed all forms and Tax Returns
required in connection therewith) in connection with the transactions
contemplated hereby.
(k) GOOD STANDING CERTIFICATES. The Company shall have
delivered to Sub (i) copies of the Articles certified by the Minnesota
Secretary of State, (ii) certificates from the Minnesota Secretary of
State to the effect that the Company is in good standing or subsisting in
the State of Minnesota, listing all charter documents of the Company on
file and attesting to its payment of all franchise or similar Taxes, and
(iii) a certificate from the Secretary of State or other appropriate
official in each jurisdiction in which the Company is qualified or
35
admitted to do business to the effect that the Company is duly qualified
or admitted and in good standing in such jurisdiction.
(l) NO MATERIAL ADVERSE CHANGE. Other than the transactions
contemplated by the Asset Purchase Agreement, dated November 9, 1998,
between the Company and Gift Connections, Inc., there has been no
Material Adverse Change with respect to the Company taken as a whole
since December 31, 1997.
(m) FINANCING. Sub shall have received the proceeds from the
Financing on terms reasonably satisfactory to Sub to enable Sub to
consummate the transactions contemplated hereby; such terms and
conditions to be deemed reasonably satisfactory to Sub if they are
substantially similar to the terms and conditions of the Bank Commitment
Letters and 399 Commitment Letter.
(n) CONSENT OF OPTION HOLDERS. The Company shall have received
a written consent of each Optionee, in the form satisfactory to Sub,
authorizing the cancellation of each Company Stock Option in exchange for
a payment in an amount described in Section 2.4 hereof, and waiving all
of such Optionee's rights under the Option Plans and any related
agreements, including but not limited to the right to receive capital
stock of the Company upon exercise of the Company Stock Option.
(o) CERTAIN TRANSACTIONS. The transactions contemplated by the
Xxxxxxxx Option Termination Agreement and the Xxxxxxxx Subscription
Agreement shall have been consummated.
(p) AGREEMENT. The Olzenak Employment Agreement, (ii) the
Xxxxxxxx Employment Agreement (as amended by Amendment No. 1, dated the
date hereof) and (iii) the Xxxxxxxx Employment Agreement (as amended by
Amendment No. 1, dated the date hereof) shall be in full force and
effect.
6.3 CONDITIONS TO OBLIGATION OF THE COMPANY. The obligation of the
Company to effect the Merger is further subjected to the satisfaction or waiver
of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Sub set forth in this Agreement shall be true and correct
in all material respects with respect to representations and warranties
not qualified by materiality and in all respects with respect to
representations and warranties qualified by materiality, in each case as
of the date of this Agreement and as of the Closing Date as though made
on and as of the Closing Date, except for those representations and
warranties which address matters only as of a particular date (which
shall have been true and correct as of such date). The Company shall
have received a certificate signed on behalf of Sub by a duly authorized
executive officer of Sub to such effect.
36
(b) PERFORMANCE OF OBLIGATIONS OF SUB. Sub shall have
performed the covenants required to be performed by it under this
Agreement at or prior to the Closing Date (except for such failures to
perform as have not had or could not reasonably be expected, either
individually or in the aggregate, to have a Material Adverse Effect with
respect to Sub or adversely affect the ability of Sub to consummate the
transactions herein contemplated or perform its obligations hereunder),
and the Company shall have received a certificate signed on behalf of
Sub by a duly authorized executive officer of Sub to such effect.
(c) OPINION OF COUNSEL TO SUB. The Company shall have
received, on and as of the Closing Date, an opinion of Xxxxxxxxxxx, Xxxxx
and Xxxxxxxx LLP, special Minnesota counsel to Sub, substantially in the
form of Exhibit C.
ARTICLE 7
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated and abandoned at
any time prior to the Effective Time of the Merger, whether before or after
approval of the Merger by the shareholders of the Company, applicable by written
notice to the other party:
(a) by mutual written consent of Sub and the Company; or
(b) by either Sub or the Company, if any Governmental Entity
shall have issued an Order or taken any other action permanently
enjoining, restraining or otherwise prohibiting the Merger and such Order
or other action shall have become final and nonappealable; or
(c) by either Sub or the Company, if the Merger shall not have
been consummated on or before March 31, 1999 (other than due to the
failure of the party seeking to terminate this Agreement to perform its
obligations under this Agreement required to be performed at or prior to
the Effective Time); or
(d) by either Sub or the Company, if any required approval of
the shareholders of the Company shall not have been obtained by reason of
the failure to obtain the required vote upon a vote held at a duly held
meeting of shareholders or at any adjournment thereof; or
(e) by the Company, if at any time prior to the Effective Time,
in the event that a Person has made a Transaction Proposal that the Board
of Directors of the Company determines, in good faith, and after
consultation with and advice from its financial advisors, is reasonably
likely to be subject to completion and would, if consummated, result in a
transaction more favorable, from a financial point of view, to the
Company's shareholders than the transactions contemplated by this
Agreement and the Merger (a "Superior Acquisition Proposal"); or
37
(f) by Sub, if (i) the Board of Directors of the Company shall
have withdrawn or modified or amended, in a manner adverse to Sub, either
its approval or recommendation of this Agreement and the Merger or its
recommendation that the Company's shareholders adopt and approve the
transactions contemplated by this Agreement and the Merger, (ii) the
Board of Directors of the Company shall have approved, recommended or
endorsed any Superior Acquisition Proposal, or (iii) the Company has
failed to duly call the Special Meeting to approve the Merger; or
(g) by Sub, if the Company fails to perform any of its material
obligations under this Agreement or has breached any material
representation, warranty, or covenant contained herein when made or at
any time prior to the Closing in any material respect, and after having
been notified of such breach, the breach continues for thirty (30) days
without cure after such notice; or
(h) by the Company, if Sub fails to perform any of its
respective material obligations under this Agreement or has breached any
material representation, warranty or covenant contained herein when made
or at any time prior to the Closing in any material respect, and after
having been notified of such breach, the breach continues for thirty (30)
days without cure after such notice.
(i) by the Company, if Sub delivers the written notice to the
Company contemplated by Section 5.2(c) with respect to either or both of
the Bank Commitment Letters and, within 5 Business Days following the
delivery of such written notice, Sub has not delivered to the Company
either (i) a substitute commitment letter or letters on substantially the
same terms and conditions as the applicable Bank Commitment Letter or
Bank Commitment Letters which are the subject of the written notice
contemplated by Section 5.2(c) or (ii) a written notice setting forth a
waiver by Sub of the condition set forth in Section 6.2(m) with respect
to that portion of the Financing to be provided under the relevant Bank
Commitment Letter or Bank Commitment Letters, as the case may be.
7.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Company or Sub as provided in Section 7.1, this
Agreement shall forthwith become void and have no effect, without any Liability
or obligation on the part of Sub or the Company, other than pursuant to the
provisions of Section 5.5 and this Section 7.2 and provided, further, that the
Confidentiality Agreement shall survive any such termination. Nothing contained
in this Section shall, however, relieve any party for any breach of the
representations, warranties, covenants or agreements set forth in this Agreement
prior to any such termination.
7.3 AMENDMENT. This Agreement may be amended by the parties at any
time before or after required approval of the Merger by the shareholders of the
Company; PROVIDED, HOWEVER, that after such approval, there shall be made no
amendment that by Law requires further approval by such shareholders. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties.
38
7.4 EXTENSION; WAIVER. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained in this Agreement or in any document
delivered pursuant to this Agreement or (c) subject to the proviso of Section
7.3, waive compliance with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any such extension or waiver
shall be valid only if set forth in an instrument in writing signed on behalf of
such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of such
rights.
ARTICLE 8
GENERAL PROVISIONS
8.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time. This Section 8.1
shall not limit any covenant or agreement of the parties which by its terms
contemplates performance after the Effective Time.
8.2 NOTICES. All notices, requests, claims, demands and other
communications under this Agreement shall be in writing and shall be deemed
given if delivered personally or sent by overnight courier (providing proof of
delivery) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Sub, to:
Twin Acquisition Corp.
c/o Allied Digital Technologies Corp.
000 Xxxx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
with a copy to:
399 Venture Partners, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
and
39
Xxxxxx, Xxxxx & Bockius LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
(b) if to the Company, to:
Xxxxxx Communications, Inc.
0000 Xxxx 00xx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Chief Executive Officer
Telecopy No.: (000) 000-0000
with a copy to:
Xxxx, Plant, Xxxxx, Xxxxx & Xxxxxxx, P.A.
3400 City Center
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopy No.: (000) 000-0000
8.3 DEFINITIONS. For purposes of this Agreement:
(a) "399" has the meaning ascribed to it in Section 3.2(g)(ii).
(b) "399 Commitment Letter" has the meaning ascribed to it in
Section 3.2(g)(ii).
(c) "Actions or Proceedings" means any action, suit,
proceeding, arbitration or Governmental or Regulatory Authority
investigation or audit.
(d) "ADI" has the meaning ascribed to it in the Introduction.
(e) "ADT" means Allied Digital Technologies Corp., a Delaware
corporation
(f) an "Affiliate" with respect to any Person, means any other
Person that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, such Person.
(g) "Agreement" has the meaning ascribed to it in the
Introduction.
(h) "Articles" has the meaning ascribed to it in Section
1.5(a).
40
(i) "Bank Commitment Letters" has the meaning ascribed to it in
Section 3.2(g)(i).
(j) "Business" means the business of the Company as presently
conducted or proposed to be conducted.
(k) "Business Day" means any day on which the principal offices
of the SEC in Washington, D.C. are open to accept filings or, in the case
of determining a date when any payment is due, any day other than a day
on which banks in New York, New York are required or authorized to be
closed.
(l) "Bylaws" has the meaning ascribed to it in Section 3.1(d).
(m) "Capital Lease Obligation" means, with respect to any
Person and a capital lease, the amount of the obligation of such Person
as the lessee under such capital lease which would, in accordance with
GAAP, appear as a Liability on a balance sheet of such Person.
(n) "Certificate of Merger" has the meaning ascribed to it in
Section 1.3.
(o) "Closing" has the meaning ascribed to it in Section 1.2.
(p) "Closing Date" has the meaning ascribed to it in
Section 1.2.
(q) "CMP" means Citicorp Mezzanine Partners, L.P.
(r) "Code" has the meaning ascribed to it in Section 3.1(j).
(s) "Company" has the meaning ascribed to it in the
Introduction.
(t) "Company Benefit Plans" has the meaning ascribed to it in
Section 3.1(i).
(u) "Company Common Stock" has the meaning ascribed to it in
the Recitals.
(v) "Company Disclosure Schedule" has the meaning ascribed to
it in Section 3.1(a).
(w) "Company Shareholder Approval" has the meaning ascribed to
it in the Recitals.
(x) "Company Stock Options" has the meaning ascribed to it in
Section 2.4(a).
41
(y) "Confidentiality Agreement" has the meaning ascribed to it
in Section 5.2(a).
(z) "Contract" means any agreement, lease, evidence of
indebtedness, mortgage, indenture, license, security agreement or other
contract (whether written or oral).
(aa) "Debt" with respect to any Person means, at any time,
without duplication, (i) Liabilities for borrowed money and redemption
obligations in respect of mandatorily redeemable preferred stock; (ii)
Liabilities for the deferred purchase price of property acquired by such
Person (excluding accounts payable arising in the ordinary course of
business but including all Liabilities created or arising under any
conditional sale or other title retention agreement with respect to any
such property); (iii) Capital Lease Obligations of such Person; (iv)
Liabilities for borrowed money secured by any Lien with respect to any
property owned by such Person (whether or not such Person has assumed or
otherwise become liable for such Liabilities); (v) Liabilities in respect
of letters of credit or instruments serving a similar function issued or
accepted for its account by banks and other financial institutions
(whether or not representing obligations for borrowed money); (vi) Swap
Obligations of such Person; (vii) any Tax Liability, whether or not
accrued or owing, arising from a taxable event occurring before the
Closing Date; and (viii) any Guaranty of such Person with respect to
Liabilities of a type described in any of clauses (i) through (viii)
hereof.
(bb) "Dissenters' Rights" has the meaning ascribed to it in the
Recitals.
(cc) "Effective Time" has the meaning ascribed to it in Section
1.3.
(dd) "Environment" means all air, surface water, groundwater, or
land, including land surface or subsurface, including all fish, wildlife,
biota and all other natural resources.
(ee) "Environmental Claim" means any and all administrative or
judicial actions, suits, orders, claims, Liens, notices, notices of
violations, investigations, complaints, requests for information,
proceedings, or other communication (written or oral), whether criminal
or civil (collectively, "Claims") pursuant to or relating to any
applicable Environmental Law by any Person (including but not limited to
any Governmental Entity, private person and citizens' group) based upon,
alleging, asserting or claiming any actual or potential (i) violation of
or Liability under any Environmental Law, (ii) violation of an
Environmental Permit, or (iii) Liability for investigatory costs, cleanup
costs, removal costs, remedial costs, response costs, natural resource
damages, property damage, personal injury, fines, or penalties arising
out of, based on, resulting from, or related to the presence, Release, or
threatened Release into the Environment, of any Hazardous Materials at
any location, including but not limited to any off-Site location to which
Hazardous Materials or materials
42
containing Hazardous Materials were sent for handling, storage,
treatment or disposal.
(ff) "Environmental Clean-up Site" means any location which is
listed or proposed for listing on the National Priorities List, the
Comprehensive Environmental Response, Compensation and Liability
Information System, or on any similar state list of sites requiring
investigation or cleanup, or which is the subject of any pending or
threatened action, suit, proceeding, or investigation related to or
arising from any alleged violation of Environmental Law, or at which
there has been a Release, or a threatened or suspected Release of a
Hazardous Material.
(gg) "Environmental Law" means any and all federal, state,
local, provincial and foreign, civil and criminal Laws, statutes,
ordinances, Orders, codes, rules, regulations, Environmental Permits,
policies, guidance documents, judgments, decrees, injunctions, or
agreements with any Governmental Entity, relating to the protection of
health and the Environment, worker health and safety, and/or governing
the handling, use, generation, treatment, storage, transportation,
disposal, manufacture, distribution, formulation, packaging, labeling, or
Release of Hazardous Materials, whether now existing or subsequently
amended or enacted, including but not limited to: the Clean Air Act,
U.S.C. Section 7401 et seq.; the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Section 9601 et seq.;
the Federal Water Pollution Control Act, 33 U.S.C. Section 1251 et seq.;
the Hazardous Material Transportation Act, 49 U.S.C. Section 1801 et
seq.; the Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.
Section 136 et seq.; the Resource and Conservation and Recovery Act of
1976 ("RCRA"), 42 U.S.C. Section 6901 et seq.; the Toxic Substances
Control Act, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and
Health Act of 1970, 29 U.S.C. Section 651 et seq.; the Oil Pollution Act
of 1990, 33 U.S.C. Section 2701 et seq.; and the state analogies
thereto, all as amended or superseded from time to time; and any common
law doctrine, including but not limited to, negligence, nuisance,
trespass, personal injury, or property damages related to or arising out
of the presence, Release, or exposure to a Hazardous Material.
(hh) "Environmental Permit" means any federal, state, local,
provincial or foreign Permits, licenses, approvals, consents or
authorizations required by any Governmental Entity under or in connection
with any Environmental Law and includes any and all Orders, consent
orders or binding agreements issued or entered into by a Governmental
Entity under any applicable Environmental Law.
(ii) "ERISA" has the meaning ascribed to it in Section 3.1(i).
(jj) "ERISA Affiliate" has the meaning ascribed to it in Section
3.1(i).
(kk) "Exchange Act" has the meaning ascribed to it in Section
3.1(d).
43
(ll) "Exchange Agent" has the meaning ascribed to it in Section
2.2.
(mm) "Exchange Fund" has the meaning ascribed to it in Section
2.5(e).
(nn) "Financing" has the meaning ascribed to it in Section
3.2(g)(i).
(oo) "Fleet" means Fleet National Bank, N.A.
(pp) "GAAP" shall mean U.S. generally accepted accounting
principles applied on a consistent basis throughout all applicable
periods.
(qq) "Governmental Entity" means any government or political
subdivision thereof, whether foreign or domestic, federal, state,
provincial, county, local, municipal or regional, or any other
governmental entity, any agency, authority, department, division or
instrumentality of any such government, political subdivision, or other
governmental entity or other instrumentality of the United States, any
foreign country or any domestic or foreign state, county, city or other
political subdivision, any court, arbitral tribunal or arbitrator, and
any nongovernmental regulating body, to the extent that the rules,
regulations or Orders of such body have the force of Law.
(rr) "Guaranties" by any Person means all obligations (other
than endorsements in the ordinary course of business of negotiable
instruments for deposit or collection) of such Person guaranteeing, or in
effect guaranteeing, any Debt, cash dividend or other monetary obligation
of any other Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, all obligations
incurred through an agreement, contingent or otherwise, by such Person:
(i) to purchase such Debt or obligation or any property or assets
constituting security therefor; (ii) to advance or supply funds for the
purchase or payment of such Debt or obligation; (iii) to lease property
or to purchase securities or other property or services primarily for the
purpose of assuring the owner of such Debt or obligation of the ability
of the primary obligor to make payment of the Debt or obligation; or (iv)
otherwise to assure the owner of the Debt or obligation of the primary
obligor against loss in respect thereof. For the purposes of all
computations made under this Agreement, a Guaranty in respect of any Debt
for borrowed money shall be deemed to be Debt equal to the principal
amount of such Debt for borrowed money which has been guaranteed, and a
Guaranty in respect of any other obligation or Liability or any dividend
shall be deemed to be Debt equal to the maximum aggregate amount of such
obligation, Liability or dividend unless such Guaranty is limited.
(ss) "Hazardous Material" means petroleum, petroleum
hydrocarbons or petroleum products, petroleum by-products, radioactive
materials, asbestos-containing materials, gasoline, diesel fuel,
pesticides, radon, urea formaldehyde, lead or lead-containing material,
polychlorinated biphenyls, and any other chemicals, materials, substances
or wastes in any amount or concentration which
44
are now or hereafter become defined as or included in the definition of
"hazardous substances," "hazardous materials," "hazardous wastes,"
"extremely hazardous wastes," "restricted hazardous wastes," "toxic
substances," "toxic pollutants," "pollutants," "regulated substances,"
"solid wastes," or "contaminants" or words of similar import, under any
Environmental Law.
(tt) "HSR Act" has the meaning ascribed to it in Section 3.1(d).
(uu) "Intellectual Property" shall mean all trademarks and
trademark rights, trade names and trade name rights, service marks and
service xxxx rights, service names and service name rights, copyrights
and copyright rights, patents and patent rights, brand names, trade
dress, business and product names, logos, slogans, trade secrets,
inventions, processes, formulae, industrial models, processes, designs,
specifications, data, technology, methodologies, computer programs
(including all source codes), confidential and proprietary information,
whether or not subject to statutory registration, and all related
technical information, manufacturing, engineering and technical drawings,
know-how and all pending applications for and registrations of patents,
trademarks, service marks and copyrights, and the right to xxx for past
payment, if any, in connection with any of the foregoing, and all
documents, disks and other media on which any of the foregoing is stored.
(vv) "Knowledge" means actual or constructive knowledge without
independent investigation of any current officer.
(ww) "Laws" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the
United States, any foreign country or any domestic or foreign state,
county, city or other political subdivision or of any Governmental
Entity.
(xx) "Leased Real Property" has the meaning ascribed to it in
Section 3.1(m)(iii).
(yy) "Leased Real Property Permitted Liens" has the meaning
ascribed to it in Section 3.1(m)(iii).
(zz) "Liability" means all indebtedness, obligations and other
liabilities (or contingencies that have not yet become liabilities) of a
Person (whether absolute, accrued, contingent (or based upon any
contingency), fixed or otherwise, or whether due or to become due).
(aaa) "Liens" means all pledges, claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever.
(bbb) "Material Adverse Change" or "Material Adverse Effect"
means, when used in connection with the Company or Sub, any change or
effect that
45
either individually or in the aggregate with all other such changes or
effects is materially adverse to the business, assets, properties,
condition (financial or otherwise), prospects or results of operations
of such party; PROVIDED, HOWEVER, that, a decline in general economic
conditions affecting the Company or Sub shall not be deemed to be a
"Material Adverse Change" or to have a "Material Adverse Effect" with
respect to either such party or its Subsidiaries.
(ccc) "MBCA" has the meaning ascribed to it in the Recitals.
(ddd) "Merger" has the meaning ascribed to it in the Recitals.
(eee) "Merger Consideration" has the meaning ascribed to it in
Section 2.1(c).
(fff) "Multiemployer Plan" has the meaning ascribed to it in
Section 3.1(i).
(ggg) "Olzenak Employment Agreement" means the Employment
Agreement, dated the date hereof, between ADI and Xxxxxxx Xxxxxxx.
(hhh) "Option Plans" has the meaning ascribed to it in Section
2.4(a).
(iii) "Optionees" has the meaning ascribed to it in Section
5.10(e).
(jjj) "Order" means any writ, judgment, decree, injunction or
similar order of any Governmental Entity (in each such case whether
preliminary or final).
(kkk) "Owned Real Property" has the meaning ascribed to it in
Section 3.1(m)(ii).
(lll) "Owned Real Property Permitted Liens" has the meaning
ascribed to it in Section 3.1(m)(ii).
(mmm) "Permit" means any license, franchise, permit, certificate,
approval, consent or other similar authorization affecting, or relating
in any way to, the assets or Business of the Company.
(nnn) "Permitted Changes" has the meaning ascribed to it in
Section 4.1(b).
(ooo) "Permitted Liens" has the meaning ascribed to it in Section
3.1(m)(iii).
(ppp) "Person" means an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other
entity.
46
(qqq) "Products Division" means the Company's division that
manufactures and sells gift products and collectibles to retailers in
various niche markets which has been sold to Gift Connections, Inc.
(rrr) "Proxy Statement" has the meaning ascribed to it in Section
3.1(d).
(sss) "RCRA" has the meaning ascribed to it in Section 8.3(ff).
(ttt) "Real Property" has the meaning ascribed to it in Section
3.1(m).
(uuu) "Real Property Leases" has the meaning ascribed to it in
Section 3.1(m)(iii).
(vvv) "Xxxxxxxx Employment Agreement" means the Employment
Agreement, dated March 13, 1998, between Xxxxxxx Xxxxxxxx and the
Company.
(www) "Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping,
or disposing of a Hazardous Material into the Environment.
(xxx) "Savings Plan" has the meaning ascribed to it in Section
5.10(b).
(yyy) "SEC" has the meaning ascribed to it in Section 3.1(d).
(zzz) "SEC Documents" has the meaning ascribed to it in Section
3.1(e)(i).
(aaaa) "SEC Financial Statements" has the meaning ascribed to it
in Section 3.1(e)(i).
(bbbb) "Section 302A.473" has the meaning ascribed to it in
Section 2.1(d).
(cccc) "Securities Act" has the meaning ascribed to it in Section
3.1(c).
(dddd) "Site" means any of the real properties currently or
previously owned, leased or operated by the Company, its former
Subsidiaries, any predecessors of the Company or its former Subsidiaries
or any entities previously owned by the Company or its former
Subsidiaries, including all soil, subsoil, surface waters and groundwater
thereat.
(eeee) "Special Committee" has the meaning ascribed to it in
Section 3.1(d).
(ffff) "Special Meeting" has the meaning ascribed to it in the
Recitals.
(gggg) "Stock Plans" has the meaning ascribed to it in Section
2.4(b).
47
(hhhh) "Sub" has the meaning ascribed to it in the Introduction.
(iiii) a "Subsidiary" of any Person means another Person, an
amount of the voting securities, other voting ownership or voting
partnership interests of which is sufficient to elect at least a majority
of its board of directors or other governing body (or, if there are no
such voting interests, 50% or more of the equity interest of which) is
owned directly or indirectly by such first Person.
(jjjj) "Superior Acquisition Proposal" has the meaning ascribed to
it in Section 7.1(e).
(kkkk) "Surviving Corporation" has the meaning ascribed to it in
the Recitals.
(llll) "Swap Obligations" means, with respect to any Person,
payment obligations with respect to interest rate swaps, currency swaps
and similar obligations obligating such Person to make payments, whether
periodically or upon the happening of a contingency. For the purposes of
this Agreement, the amount of any Swap Obligation shall be the amount
determined in respect thereof as of the end of the then most recently
ended fiscal quarter of such Person, based on the assumption that such
Swap Obligation had terminated at the end of such fiscal quarter, and, in
making such determination, if any agreement relating to such Swap
Obligation provides for the netting of amounts payable by and to such
Person thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then, in each such case, the
amount of such obligation shall be the net amount so determined.
(mmmm) "Tax Return" has the meaning ascribed to it in Section
3.l(j).
(nnnn) "Tax(es)" has the meaning ascribed to it in Section 3.1(j).
(oooo) "Transaction Proposals" has the meaning ascribed to it in
Section 5.8(a).
(pppp) "Unaudited Financial Statement" has the meaning ascribed to
it in Section 3.1(e)(ii).
(qqqq) "Xxxxxxxx Employment Agreement" means the Employment
Agreement, dated March 13, 1998, between Xxxxxxxx and the Company.
(rrrr) "Xxxxxxxx Option Termination Agreement" means the Option
Termination and Grant Agreement, dated the date hereof, between ADT and
E. Xxxxx Xxxxxxxx, in the form of Exhibit D attached hereto.
48
(ssss) "Xxxxxxxx Subscription Agreement" means the Subscription
Agreement dated the date hereof between ADT and E. Xxxxx Xxxxxxxx, in the
form of Exhibit E attached hereto.
8.4 INTERPRETATION. A reference made in this Agreement to a Section,
Exhibit or Schedule, shall be to a Section of, or an Exhibit or Schedule to,
this Agreement unless otherwise indicated. The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
the meaning or interpretation of this Agreement. Whenever the words "include,"
"includes" or "including" are used in this Agreement, they shall be deemed to be
followed by the words "without limitation."
8.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
8.6 ENTIRE AGREEMENT; NO THIRD-PARTY BENEFICIARIES. This Agreement
constitutes the entire agreement, and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter of this Agreement. Except as provided in Section 5.4, this
Agreement is not intended to confer upon any Person other than the parties any
rights or remedies.
8.7 GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York (without regard to any
conflict of laws provisions that might indicate the applicability of the laws of
any jurisdiction other than the State of New York), except to the extent that
the MBCA applies as a result of the Company and Sub being incorporated in the
State of Minnesota, in which case the MBCA shall apply to the extent required
under applicable choice of law doctrines.
8.8 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations under this Agreement shall be assigned, in whole or in
part, by operation of Law or otherwise, by any of the parties without the prior
written consent of the other parties. Subject to the preceding sentence, this
Agreement will be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
8.9 ENFORCEMENT. The parties agree that irreparable damage would
occur in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached.
It is accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the State of New York
or of the United States located in the State of New York in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, and each party agrees (a) it will not attempt to deny or defeat
personal jurisdiction or venue in any such court by motion or other request for
leave from any such court and (b) it will not bring any action relating to this
Agreement or any of the transactions contemplated by this Agreement in any court
other than any such court.
49
8.10 SEVERABILITY. Whenever possible, each provision or portion of any
provision of this Agreement will be interpreted in such manner as to be
effective and valid under applicable Law but if any provision or portion of any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect under any applicable Law or rule in any jurisdiction, such
invalidity, illegality or unenforceability will not affect any other provision
or portion of any provision in such jurisdiction, and this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision or portion of any provision had never been
contained herein, so long as the economic and legal substance of the
transactions contemplated hereby are not affected in a manner materially adverse
to any party hereto.
8.11 GUARANTY. ADI shall fully, completely and unconditionally
guarantee the performance of the obligations of Sub under this Agreement.
IN WITNESS WHEREOF, Sub, ADI and the Company have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.
XXXXXX COMMUNICATIONS, INC.
By /S/ E. Xxxxx Xxxxxxxx
Its Chief Executive Officer
TWIN ACQUISITION CORP.
By /S/ Xxxxx X. Xxxx
Its Vice President
FOR PURPOSES OF SECTION 8.11 ONLY:
ALLIED DIGITAL, INC.
By /S/ Xxxxx X. Xxxx
Its Senior Vice President
50
