EXHIBIT 4
________________________________________________________________________________
AGREEMENT AND PLAN OF MERGER
By and Among
Acxiom Corporation,
ACX Acquisition Co., Inc.
and
May & Xxxx, Inc.
Dated as of May 26, 1998
________________________________________________________________________________
1
TABLE OF CONTENTS
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ARTICLE I
THE MERGER.................................................................................. 3
Section 1.1 The Merger................................................................... 3
Section 1.2 Effective Time of the Merger................................................. 3
ARTICLE II
THE SURVIVING CORPORATION................................................................... 4
Section 2.1 Certificate of Incorporation................................................. 4
Section 2.2 By-Laws...................................................................... 4
Section 2.3 Directors and Officers of Surviving Corporation.............................. 4
ARTICLE III
CONVERSION OF SHARES........................................................................ 5
Section 3.1 Exchange Ratio............................................................... 5
Section 3.2 Exchange of Shares........................................................... 6
Section 3.3 Dividends; Transfer Taxes.................................................... 6
Section 3.4 No Fractional Securities..................................................... 7
Section 3.5 Certain Adjustments.......................................................... 8
Section 3.6 Closing of Company Transfer Books............................................ 8
Section 3.7 Closing...................................................................... 9
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT.................................................... 9
Section 4.1 Organization................................................................. 9
Section 4.2 Capitalization............................................................... 10
Section 4.3 Subsidiaries................................................................. 11
Section 4.4 Authority Relative to this Agreement......................................... 12
Section 4.5 Consents and Approvals; No Violations........................................ 13
Section 4.6 Reports and Financial Statements............................................. 14
Section 4.7 Absence of Certain Changes or Events......................................... 15
Section 4.8 Litigation................................................................... 15
Section 4.9 Patents, Trademarks, Etc..................................................... 16
Section 4.10 Information in Disclosure Documents and Registration Statement............... 16
Section 4.11 Absence of Undisclosed Liabilities........................................... 17
Section 4.12 No Default................................................................... 18
Section 4.13 Title to Properties; Encumbrances............................................ 18
Section 4.14 Compliance with Applicable Law............................................... 19
Section 4.15 Labor Matters................................................................ 19
Section 4.16 Employee Benefit Plans; ERISA................................................ 20
Section 4.17 Vote Required................................................................ 24
Section 4.18 Opinion of Financial Advisor................................................. 25
Section 4.19 Ownership of Company Common Stock............................................ 25
Section 4.20 Pooling...................................................................... 25
Section 4.21 ............................................................................. 25
Section 4.22 Contracts.................................................................... 28
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY............................................... 29
Section 5.1 Organization................................................................. 29
Section 5.2 Capitalization............................................................... 30
Section 5.3 Subsidiaries................................................................. 31
Section 5.4 Authority Relative to this Agreement......................................... 32
Section 5.5 Consents and Approvals; No Violations........................................ 33
Section 5.6 Reports and Financial Statements............................................. 34
Section 5.7 Absence of Certain Changes or Events......................................... 35
Section 5.8 Litigation................................................................... 35
Section 5.9 Patents, Trademarks, Etc..................................................... 36
Section 5.10 Information in Disclosure Documents and Registration Statement............... 36
Section 5.11 Absence of Undisclosed Liabilities........................................... 37
Section 5.12 No Default................................................................... 37
Section 5.13 Taxes........................................................................ 38
Section 5.14 Title to Properties; Encumbrances............................................ 40
Section 5.15 Compliance with Applicable Law............................................... 41
Section 5.16 Labor Matters................................................................ 41
Section 5.17 Employee Benefit Plans; ERISA................................................ 41
Section 5.18 Contracts.................................................................... 46
Section 5.19 Vote Required................................................................ 47
Section 5.20 Opinion of Financial Advisor................................................. 47
Section 5.21 Takeover Statute............................................................. 48
Section 5.22 The Company Rights Agreement................................................. 48
Section 5.23 Ownership of Parent Common Stock............................................. 49
Section 5.24 Pooling...................................................................... 49
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER...................................................... 49
Section 6.1 Conduct of Business by the Company Pending the Merger........................ 49
Section 6.2 Conduct of Business by Parent Pending the Merger............................. 52
Section 6.3 Conduct of Business of Sub................................................... 54
ARTICLE VII
ADDITIONAL AGREEMENTS....................................................................... 54
Section 7.1 Access and Information....................................................... 54
Section 7.2 Acquisition Proposals........................................................ 55
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Section 7.3 Registration Statement....................................................... 57
Section 7.4 Proxy Statements; Stockholder Approvals...................................... 58
Section 7.5 Affiliate Agreements......................................................... 60
Section 7.6 Antitrust Laws............................................................... 61
Section 7.7 Proxies...................................................................... 61
Section 7.8 Employees, Employee Benefits................................................. 62
Section 7.9 Stock Options................................................................ 63
Section 7.10 Public Announcements......................................................... 65
Section 7.11 By-Law Indemnification and Insurance......................................... 65
Section 7.12 Expenses..................................................................... 66
Section 7.13 Additional Agreements........................................................ 68
Section 7.14 Control of the Company's and Parent's Operations............................. 68
Section 7.15 Company Rights Plan.......................................................... 69
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER.................................................... 69
Section 8.1 Conditions to Each Party's Obligation to Effect the Merger................... 69
Section 8.2 Conditions to Obligation of the Company to Effect the Merger................. 70
Section 8.3 Conditions to Obligations of Parent and Sub to Effect the Merger............. 71
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER........................................................... 72
Section 9.1 Termination.................................................................. 72
Section 9.2 Effect of Termination........................................................ 75
Section 9.3 Amendment.................................................................... 75
Section 9.4 Waiver....................................................................... 76
ARTICLE X
GENERAL PROVISIONS.......................................................................... 76
Section 10.1 Survival of Representations, Warranties and Agreements....................... 76
Section 10.2 Brokers...................................................................... 77
Section 10.3 Notices...................................................................... 77
Section 10.4 Descriptive Headings......................................................... 78
Section 10.5 Entire Agreement; Assignment................................................. 78
Section 10.6 Governing Law................................................................ 79
Section 10.7 Specific Performance......................................................... 79
Section 10.8 Counterparts................................................................. 79
Exhibit A-1 Irrevocable Proxy
iii
Page
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Exhibit A-2 Irrevocable Proxy
Exhibit A-3 Irrevocable Proxy
Exhibit B Form of Company Rights Plan Amendment
Exhibit C Form of Affiliate Letter for Affiliates of the Company
Exhibit D Form of Affiliate Letter for Affiliates of Parent
iv
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 26, 1998, by and among Acxiom
Corporation, a Delaware corporation ("Parent"), ACX Acquisition Co., Inc., a
Delaware corporation and a wholly owned subsidiary of Parent ("Sub"), and May &
Xxxx, Inc., a Delaware corporation (the "Company").
WHEREAS, the Boards of Directors of Parent and Sub and the Company deem it
advisable and in the best interests of their respective stockholders that Parent
combine with the Company, and such Boards of Directors have approved the merger
(the "Merger") of Sub with and into the Company upon the terms and subject to
the conditions set forth herein; and
WHEREAS, concurrently with the execution and delivery of this Agreement,
and as a condition and inducement to the Company's willingness to enter into
this Agreement, a holder of shares of Parent's common stock, par value $.10 per
share (the "Parent Common Stock") is granting the Company an irrevocable proxy
in the form attached hereto as Exhibit A-1 (the "Parent Stock Proxy"), to vote
such shares of Parent Common Stock; and
WHEREAS, concurrently with the execution and delivery of this Agreement and
as a condition and inducement to Parent's and Sub's willingness to enter into
this Agreement, certain holders of shares of the Company's Common Stock, par
value $.01 per share (the "Company Common Stock"), are granting Parent
irrevocable proxies, in the forms attached hereto as Exhibits A-2 and A-3 (the
"Company Stock Proxies" and, together with the Parent Stock Proxy, the
"Proxies"), to vote such shares of Company Common Stock; and
WHEREAS, immediately following the execution and delivery of this
Agreement, the Company and Parent will enter into a stock option agreement (the
"Company Option
Agreement"), pursuant to which the Company will grant Parent the option to
purchase shares of Company Common Stock, upon the terms and subject to the
conditions set forth therein; and
WHEREAS, immediately following the execution and delivery of this
Agreement, the Company and Parent will enter into a stock option agreement (the
"Parent Option Agreement"), pursuant to which Parent will grant the Company the
option to purchase shares of Parent Common Stock, upon the terms and subject to
the conditions set forth therein; and
WHEREAS, for U.S. federal income tax purposes, it is intended that the
Merger shall qualify as a reorganization within the meaning of Section 368(a) of
the Internal Revenue Code of 1986, as amended (the "Code") and this Agreement is
hereby adopted as a plan of reorganization for purposes of Section 368 of the
Code; and
WHEREAS, for financial accounting purposes, it is intended that the Merger
shall be accounted for as a pooling of interests under United States generally
accepted accounting principles.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Proxies, the parties hereto agree as follows:
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ARTICLE I
THE MERGER
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Section 1.1 The Merger. Upon the terms and subject to the conditions
----------
set forth herein, at the Effective Time (as defined in Section 1.2 hereof), Sub
shall be merged with and into the Company and the separate existence of Sub
shall thereupon cease, and the name of the Company, as the surviving corporation
in the Merger (the "Surviving Corporation"), shall by virtue of the Merger be
"May & Xxxx, Inc." The Merger shall have the effects set forth in Section 259
of the General Corporation Law of the State of Delaware (the "GCL").
Section 1.2 Effective Time of the Merger. The Merger shall become
----------------------------
effective when a properly executed certificate of merger (the "Certificate of
Merger") is duly filed with the Secretary of State of the State of Delaware,
which filing shall be made as soon as practicable after the closing of the
transactions contemplated by this Agreement in accordance with Section 3.6
hereof. When used in this Agreement, the term "Effective Time" shall mean the
date and time at which the Certificate of Merger is so filed.
ARTICLE II
THE SURVIVING CORPORATION
-------------------------
Section 2.1 Certificate of Incorporation. The Certificate of
----------------------------
Incorporation of Sub in effect immediately prior to the Effective Time shall be
the Certificate of Incorporation of the Surviving Corporation (except that
Article I of the Certificate of Incorporation shall be amended as of the
Effective Time to read as follows "The name of the Corporation is May & Xxxx,
Inc.").
3
Section 2.2 By-Laws. Subject to Section 7.11 hereof, the By-Laws of
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Sub as in effect immediately prior to the Effective Time shall be the By-Laws of
the Surviving Corporation.
Section 2.3 Directors and Officers of Surviving Corporation. (a)
-----------------------------------------------
The directors of Sub immediately prior to the Effective Time shall be the
initial directors of the Surviving Corporation and shall hold office from the
Effective Time until their respective successors are duly elected or appointed
and qualify in the manner provided in the Certificate of Incorporation and By-
Laws of the Surviving Corporation or as otherwise provided by law.
(b) The officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation and shall hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualify in the manner provided in the Certificate of
Incorporation and By-Laws of the Surviving Corporation, or as otherwise provided
by law.
ARTICLE III
CONVERSION OF SHARES
--------------------
Section 3.1 Exchange Ratio. At the Effective Time, by virtue of the
--------------
Merger and without any action on the part of the holders of any of the capital
stock of Sub or the Company:
(a) Each share of Company Common Stock (the "Shares") issued and
outstanding immediately prior to the Effective Time (other than Shares held by
Parent or any direct or indirect wholly owned subsidiary of Parent or Shares to
be cancelled pursuant to
4
Section 3.1(b)) shall be converted into the right to receive .80 (the "Exchange
Ratio") of a validly issued, fully paid and non-assessable share of common
stock, par value $.10 per share, of Parent ("Parent Shares"), payable upon the
surrender of the certificate formerly representing such Share. Holders of Shares
shall also have the right to receive together with each Parent Share issued in
the Merger, one associated preferred stock purchase right (a "Parent Right") in
accordance with the Rights Agreement dated as of January 28, 1998 (the "Parent
Rights Agreement"), between Parent and First Chicago Trust Company of New York.
References herein to the Parent Shares issuable in the Merger shall be deemed to
include the associated Parent Rights.
(b) Each Share held in the treasury of the Company and each Share held
by Parent or any direct or indirect wholly owned subsidiary of Parent
immediately prior to the Effective Time shall be cancelled and retired and cease
to exist and no consideration shall be delivered in exchange therewith.
(c) Each share of Common Stock, par value $.01 per share, of Sub
issued and outstanding immediately prior to the Effective Time shall be
converted into and become one validly issued, fully paid and non-assessable
share of common stock, par value $.01 per share, of the Surviving Corporation,
and the Surviving Corporation shall be a wholly owned subsidiary of Parent.
Section 3.2 Exchange of Shares. Parent shall authorize one or more
------------------
persons (reasonably satisfactory to the Company) to act as exchange agent
hereunder (the "Exchange Agent"). As soon as practicable after the Effective
Time, Parent shall make available, and each holder of Shares will be entitled to
receive, upon surrender to the Exchange Agent of one or more certificates
representing such Shares for cancellation, certificates representing the number
of
5
Parent Shares into which such Shares are converted in the Merger. The Parent
Shares into which the Shares shall be converted in the Merger shall be deemed to
have been issued at the Effective Time.
Section 3.3 Dividends; Transfer Taxes. No dividends that are
-------------------------
declared on Parent Shares will be paid to persons entitled to receive
certificates representing Parent Shares until such persons surrender their
certificates representing Shares. Upon such surrender, there shall be paid to
the person in whose name the certificates representing such Parent Shares shall
be issued, any dividends which shall have become payable with respect to such
Parent Shares between the Effective Time and the time of such surrender. In no
event shall the person entitled to receive such dividends be entitled to receive
interest on such dividends. If any certificates for any Parent Shares are to be
issued in a name other than that in which the certificate representing Shares
surrendered in exchange therefor is registered it shall be a condition of such
exchange that the person requesting such exchange shall pay to the Exchange
Agent any transfer or other taxes required by reason of the issuance of
certificates for such Parent Shares in a name other than that of the registered
holder of the certificate surrendered or shall establish to the satisfaction of
the Exchange Agent that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Exchange Agent nor any party hereto
shall be liable to a holder of Shares for any Parent Shares or dividends thereon
or, in accordance with Section 3.4 hereof, proceeds of the sale of fractional
interests, delivered to a public official pursuant to applicable escheat laws.
Section 3.4 No Fractional Securities. No certificates or scrip
------------------------
representing fractional Parent Shares shall be issued upon the surrender for
exchange of certificates representing Shares pursuant to this Article III and no
dividend, stock split-up or other change in
6
the capital structure of the Company shall relate to any fractional security,
and such fractional interests shall not entitle the owner thereof to vote or to
any rights of a security holder. In lieu of any such fractional securities,
each holder of Shares who would otherwise have been entitled to a fraction of a
Parent Share upon surrender of stock certificates for exchange pursuant to this
Article III will be paid cash upon such surrender in an amount equal to the
product of such fraction multiplied by the closing sale price of Parent Shares
on the National Association of Securities Dealers Automated Quotations National
Market System (the "NASDAQ") on the day of the Effective Time, or, if the Parent
Shares are not so traded on such day, the closing sale price on the next
preceding day on which such stock was traded on the NASDAQ.
Section 3.5 Certain Adjustments. If between the date hereof and the
-------------------
Effective Time, the outstanding shares of Parent Common Stock or of Company
Common Stock shall be changed into a different number of shares by reason or
reclassification, recapitalization, split-up, combination or exchange of shares,
or any dividend payable in stock or other securities shall be declared thereon
with a record date within such period, the Exchange Ratio shall be adjusted
accordingly to provide the holders of Company Common Stock, the same economic
effect as contemplated by this Agreement prior to such reclassification,
recapitalization, split-up, combination, exchange or dividend.
Section 3.6 Closing of Company Transfer Books. At the Effective
---------------------------------
Time, the stock transfer books of the Company shall be closed and no transfer of
Shares shall thereafter be made. From and after the Effective Time, the holders
of the Shares issued and outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such Shares, except as otherwise
provided herein. If, after the Effective Time, certificates
7
representing Shares are presented to the Surviving Corporation, they shall be
cancelled and exchanged for certificates representing Parent Shares and cash in
lieu of any fractional shares in accordance with Section 3.4 hereof.
Section 3.7 Closing. The closing of the transactions contemplated by
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this Agreement (the "Closing") shall take place at the offices of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, at 10:00 a.m.,
local time, on the later of (a) the date of the stockholders' meetings referred
to in Section 7.4 hereof or (b) the day on which all of the conditions set forth
in Article VIII hereof are satisfied or waived, or at such other date, time and
place as Parent and the Company shall agree.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT
----------------------------------------
Parent represents and warrants to the Company as follows:
Section 4.1 Organization. Parent is a corporation duly organized,
------------
validly existing and in good standing under the laws of the State of Delaware
and has the corporate power to carry on its business as it is now being
conducted or presently proposed to be conducted. Parent is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities make such qualification necessary, except where
such failures to be so qualified would not in the aggregate have a material
adverse effect on the business, assets, liabilities, condition (financial or
otherwise) or results of operations of Parent and its subsidiaries, taken as a
whole (a "Parent Material Adverse Effect"). Sub is a corporation duly
8
organized, validly existing and in good standing under the laws of the State of
Delaware. Sub has not engaged in any business since the date of its
incorporation.
Section 4.2 Capitalization. The authorized capital stock of Parent
--------------
consists of 200,000,000 shares of Common Stock, par value $.10 per share, and
1,000,000 shares of Preferred Stock, par value $.01 per share ("Parent Preferred
Stock"), of which 200,000 shares have been designated as Participating Preferred
Stock (the "Participating Preferred Stock"). As of the date hereof, (i)
52,446,883 Parent Shares were issued and outstanding and (ii) no shares of
Parent Preferred Stock were issued and outstanding. Except as set forth on
Schedule 4.2 hereto, all of the issued and outstanding Parent Shares are validly
issued, fully paid and nonassessable and free of preemptive rights. All of the
Parent Shares issuable in exchange for Shares at the Effective Time in
accordance with this Agreement will be, when so issued, duly authorized, validly
issued, fully paid and nonassessable. The authorized capital stock of Sub
consists of 1,000 shares of Common Stock, par value $.01 per share, 100 shares
of which are validly issued and outstanding, fully paid and nonassessable and
are owned by Parent. Except as set forth in Schedule 4.2 hereto, there are no
outstanding options, warrants, subscriptions, calls, rights, convertible
securities or other agreements or commitments obligating Parent to issue,
transfer or sell any of its securities other than: (i) rights to acquire shares
of Participating Preferred Stock pursuant to the Parent Rights Agreement, and
(ii) options to receive or acquire 7,725,516 Parent Shares pursuant to employee
incentive or benefit plans, programs and arrangements ("Parent Employee Stock
Options") and (iii) the Parent Option Agreement.
Section 4.3 Subsidiaries. Schedule 4.3 hereto sets forth each direct
------------
or indirect interest owned by Parent in any other corporation, partnership,
joint venture or other business
9
association or entity, foreign or domestic, of which Parent or any of its other
Parent Subsidiaries owns, directly or indirectly, greater than fifty percent of
the shares of capital stock or other equity interests (including partnership
interests) entitled to cast at least a majority of the votes that may be cast by
all shares or equity interests having ordinary voting power for the election of
directors or other governing body of such entity (each such entity is
hereinafter referred to as a "Parent Subsidiary" and are hereinafter
collectively referred to as the "Parent Subsidiaries"). Each Parent Subsidiary
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation. Each Parent Subsidiary is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities makes such qualification necessary except
where the failure to be so qualified will not have a Parent Material Adverse
Effect. Each Parent Subsidiary has the corporate power to carry on its business
as it is now being conducted or presently proposed to be conducted. All of the
outstanding shares of capital stock of the Parent Subsidiaries are validly
issued, fully paid and nonassessable. Except as set forth on Schedule 4.3, all
of the outstanding shares of capital stock of, or other ownership interests in,
each of the Parent Subsidiaries are owned by Parent or by a Parent Subsidiary
free and clear of any liens, claims, charges or encumbrances. There are not now,
and at the Effective Time there will not be, any outstanding options, warrants,
subscriptions, calls, rights, convertible securities or other agreements or
commitments obligating Parent or any Parent Subsidiary to issue, transfer or
sell any securities of any Parent Subsidiary. There are not now, and at the
Effective Time there will not be, any voting trusts or other agreements or
understandings to which Parent or any
10
of the Parent Subsidiaries is a party or is bound with respect to the voting of
the capital stock of Parent or any of the Parent Subsidiaries.
Section 4.4 Authority Relative to this Agreement. Each of Parent and
------------------------------------
Sub has the corporate power to enter into this Agreement, the Parent Option
Agreement and the Company Option Agreement, to carry out its obligations
hereunder and thereunder and to consummate the Merger. The execution and
delivery of this Agreement, the Parent Option Agreement and the Company Option
Agreement by Parent and Sub, the consummation by Parent and Sub of the
transactions contemplated hereby and thereby and the consummation of the Merger
have been duly authorized by the Boards of Directors of Parent and Sub, and by
the Disinterested Directors (pursuant to Article Tenth, Section (b) of Parent's
Certificate of Incorporation) and by Parent as the sole stockholder of Sub, and,
except for the approvals of Parent's stockholders to be sought at the
stockholders' meeting contemplated by Section 7.4(b) hereof no other corporate
proceedings on the part of Parent or Sub are necessary to authorize this
Agreement or the transactions contemplated hereby. This Agreement, the Parent
Option Agreement and the Company Option Agreement have been duly and validly
executed and delivered by each of Parent and Sub and, assuming the due
authorization, execution and delivery by the other party hereto and thereto,
this Agreement, the Parent Option Agreement and the Company Option Agreement
constitute valid and binding agreements of each of Parent and Sub, enforceable
against Parent and Sub in accordance with their respective terms, except insofar
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, or principles governing the availability of equitable remedies.
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Section 4.5 Consents and Approvals; No Violations. Except for
-------------------------------------
applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
0000 (xxx "XXX Xxx"), the Securities Act of 1933, as amended (the "Securities
Act"), the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the
rules and regulations of NASDAQ, state securities or blue sky laws, and the
filing and recordation of a Certificate of Merger as required by the GCL, no
filing with, and no permit, authorization, consent or approval of, any public
body or authority is necessary for the consummation by Parent and Sub of the
transactions contemplated by this Agreement, the Parent Option Agreement and the
Company Option Agreement. Except as set forth on Schedule 4.5, neither the
execution and delivery of this Agreement, the Parent Option Agreement or the
Company Option Agreement by Parent or Sub nor the consummation by Parent or Sub
of the transactions contemplated hereby or thereby, nor compliance by Parent or
Sub with any of the provisions hereof or thereof will (a) conflict with or
result in any breach of any provisions of the Certificate of Incorporation or
By-Laws of Parent or of Sub, (b) result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, agreement or other instrument or obligation to which Parent
or any of its subsidiaries is a party or by which any of them or any of their
properties or assets may be bound or (c) violate any order, writ, injunction,
decree, statute, rule or regulation applicable to Parent, any of its
subsidiaries or any of their properties or assets, except in the case of clauses
(b) and (c) for violations, breaches or defaults which would not individually or
in the aggregate have a Parent Material Adverse Effect.
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Section 4.6 Reports and Financial Statements. Parent has filed all
--------------------------------
reports required to be filed with the Securities and Exchange Commission (the
"SEC") pursuant to the Exchange Act since March 31, 1996 (such reports together
with all registration statements, prospectuses and information statements filed
by the Company since March 31, 1996 being hereinafter collectively referred to
as the "Parent SEC Reports"), and has previously furnished the Company with true
and complete copies of all such Parent SEC Reports. None of such Parent SEC
Reports, as of their respective dates, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. As of their respective dates, all such
Parent SEC Reports complied as to form in all material respects with the
applicable requirements of the Securities Act. Each of the balance sheets
(including the related notes) included in the Parent SEC Reports fairly presents
the consolidated financial position of Parent and its subsidiaries as of the
respective dates thereof, and the other related statements (including the
related notes) included therein fairly present the results of operations and the
changes in financial position of Parent and its subsidiaries for the respective
periods or as of the respective dates set forth therein (subject, where
appropriate, to normal year-end adjustments), all in conformity with generally
accepted accounting principles consistently applied during the periods involved
except as otherwise noted therein.
Section 4.7 Absence of Certain Changes or Events. Except as set
------------------------------------
forth in the Parent SEC Reports, since December 31, 1997, neither Parent nor any
of the Parent Subsidiaries has: (a) suffered any change which had or would have
a Parent Material Adverse Effect or (b) subsequent to the date hereof, except as
permitted by Section 6.2 hereof, conducted its
13
business and operations other than in the ordinary course of business and
consistent with past practices.
Section 4.8 Litigation. Except for litigation disclosed in the
----------
Parent SEC Reports and except as set forth on Schedule 4.8, there is no suit,
action or proceeding pending or, to the knowledge of Parent, threatened against
or affecting Parent or any of its subsidiaries, the outcome of which, is
reasonably likely to have a Parent Material Adverse Effect; nor is there any
judgment, decree, injunction, rule or order of any court, governmental
department, commission, agency, instrumentality or arbitrator outstanding
against Parent or any of the Parent Subsidiaries having, or which has or would
have, a Parent Material Adverse Effect.
Section 4.9 Patents, Trademarks, Etc. Except as set forth on
------------------------
Schedule 4.9, to the knowledge of Parent, Parent and the Parent Subsidiaries own
or possess adequate licenses or other valid rights to use all material patents,
patent rights, trademarks, trademark rights, trade names, trade name rights,
copyrights, service marks, licenses, trade secrets, applications for trademarks
and for service marks, computer software, software programs, know-how and other
proprietary rights and information (collectively,"Proprietary Rights") used or
held for use in connection with the business of Parent and the Parent
Subsidiaries as currently conducted or as contemplated to be conducted, free and
clear of any liens, claims or encumbrances. Except as set forth on Schedule 4.9
hereto, to the knowledge of Parent, the conduct of the business of Parent and
the Parent Subsidiaries as currently conducted does not conflict in any way with
any Proprietary Right of any third party. Except as set forth in Schedule 4.9
hereto, to the knowledge of Parent there are no infringements of any of the
Proprietary Rights owned by or licensed to Parent or any of the Parent
Subsidiaries.
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Section 4.10 Information in Disclosure Documents and Registration
----------------------------------------------------
Statement. None of the information to be supplied by Parent or Sub for inclusion
---------
in (a) the Registration Statement to be filed with the SEC by Parent on Form S-4
under the Securities Act for the purpose of registering the Parent Shares to be
issued in the Merger (the "Registration Statement") and (b) the joint proxy
statement to be distributed in connection with the Parent's and the Company's
meeting of stockholders to vote upon this Agreement (the "Proxy Statement") will
in the case of the Registration Statement, at the time it becomes effective and
at the Effective Time, or, in the case of the Proxy Statement or any amendments
thereof or supplements thereto, at the time of the mailing of the Proxy
Statement and any amendments or supplements thereto, and at the time of the
meeting of stockholders to be held in connection with the Merger, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading. The
Registration Statement will comply as to form in all material respects with the
provisions of the Securities Act, and the rules and regulations promulgated
thereunder.
Section 4.11 Absence of Undisclosed Liabilities
----------------------------------
Other than obligations incurred in the ordinary course of business,
neither Parent nor any of the Parent Subsidiaries has any liabilities or
obligations of any nature, whether or not accrued, contingent or otherwise, and
there is no existing condition, situation or set of circumstances which would
reasonably be expected to result in such a liability or obligation which would
be required to be disclosed on a consolidated balance sheet under GAAP, except
(a)
15
liabilities or obligations reflected in the Parent SEC Reports and (b)
liabilities or obligations which would not, individually or in the aggregate,
have a Parent Material Adverse Effect.
Section 4.12 No Default. Neither Parent nor any of the Parent
----------
Subsidiaries is in default or violation (and no event has occurred which with
notice or the lapse of time or both would constitute a default or violation) of
any term, condition or provision of (a) its Certificate of Incorporation or By-
Laws, (b) any note, bond, mortgage, indenture, license, agreement, contract,
lease, commitment or other obligation to which Parent or any of the Parent
Subsidiaries is a party or by which they or any of their properties or assets
may be bound, or (c) any order, writ, injunction, decree, statute, rule or
regulation applicable to Parent or any of the Parent Subsidiaries, except in the
case of clauses (b) and (c) above for defaults or violations which would not
have a Parent Material Adverse Effect.
Section 4.13 Title to Properties; Encumbrances.
---------------------------------
Except as described in the following sentence, each of Parent and the
Parent Subsidiaries has good and valid and marketable title to, or a valid
leasehold interest in, all of its properties and assets (real, personal and
mixed, tangible and intangible) material to the operation of Parent's business
and operations, including, without limitation, all such properties and assets
reflected in the consolidated balance sheet of Parent and the Parent
Subsidiaries as of December 31, 1997 included in Parent's Quarterly Report on
Form l0-Q for the period ended on such date (except for properties and assets
disposed of in the ordinary course of business and consistent with past
practices since December 31, 1997). None of such properties or assets are
subject to any liability, obligation, claim, lien, mortgage, pledge, security
interest, conditional sale agreement, charge or encumbrance of any kind (whether
absolute, accrued, contingent or
16
otherwise), except (i) as set forth in the Parent SEC Reports, and (ii) such
encumbrances that do not individually or in the aggregate have a Parent Material
Adverse Effect.
Section 4.14 Compliance with Applicable Law. Each of Parent and the
------------------------------
Parent Subsidiaries is in compliance with all applicable laws (whether statutory
or otherwise), rules, regulations, orders, ordinances, judgments or decrees of
all governmental authorities (federal, state, local, foreign or otherwise)
(collectively "Laws") except where the failure to be in such compliance would
not, individually or in the aggregate, have a Parent Material Adverse Effect.
Section 4.15 Labor Matters. Except as set forth in Schedule 4.15
-------------
hereto, neither Parent nor any of the Parent Subsidiaries is a party to, or
bound by, any collective bargaining agreement, contract or other agreement or
understanding with a labor union or labor organization. There is no unfair
labor practice or labor arbitration proceeding pending or, to the knowledge of
Parent, threatened against Parent or the Parent Subsidiaries relating to their
business, except for any such preceding which would not have a Parent Material
Adverse Effect. To the knowledge of Parent, there are no organizational efforts
with respect to the formation of a collective bargaining unit presently being
made or threatened involving employees of Parent or any of the Parent
Subsidiaries.
Section 4.16 Employee Benefit Plans; ERISA. (a) Schedule 4.16
-----------------------------
hereto contains a true and complete list of each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance or termination
pay, hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension, or retirement plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement (the "Parent Plans"), maintained or contributed to or
required to be
17
contributed to by (i) Parent, (ii) any Parent Subsidiary or (iii) any trade or
business, whether or not incorporated (an "ERISA Affiliate"), that together with
Parent would be deemed a "single employer" within the meaning of Section 4001 of
the Employee Retirement Income Security Act of 1974, as amended, and the rules
and regulations promulgated thereunder ("ERISA"), for the benefit of any
employee or former employee of Parent, any Parent Subsidiary or any ERISA
Affiliate. Schedule 4.16 hereto identifies each of the Parent Plans that is an
"employee benefit plan," as that term is defined in Section 3(3) of ERISA (such
plans being hereinafter referred to collectively as the "Parent ERISA Plans").
(b) With respect to each of the Parent Plans, Parent has heretofore
made available to the Company true and complete copies of each of the following
documents:
(i) a copy of the Parent Plan (including all amendments
thereto);
(ii) a copy of the annual report and actuarial report, if
required under ERISA, with respect to each such Parent Plan for the last
two years;
(iii) a copy of the most recent Summary Plan Description,
together with each Summary of Material Modifications, required under ERISA
with respect to such Parent Plan;
(iv) if the Parent Plan is funded through a trust or any third
party funding vehicle, a copy of the trust or other funding agreement
(including all amendments thereto) and the latest financial statements
thereof; and
(v) the most recent determination letter received from the
Internal Revenue Service with respect to each Parent Plan intended to
qualify under Section 401 of the Code.
18
(c) No liability under Title IV of ERISA has been incurred by Parent,
any Parent Subsidiary or any ERISA Affiliate since the effective date of ERISA
that has not been satisfied in full, and no condition exists that presents a
material risk to Parent, any Parent Subsidiary or any ERISA Affiliate of
incurring a liability under such Title. To the extent this representation
applies to Sections 4064, 4069 or 4204 of Title IV of ERISA, it is made not only
with respect to the ERISA Plans but also with respect to any employee benefit
plan, program, agreement or arrangement subject to Title IV of ERISA to which
Parent, a Parent Subsidiary or an ERISA Affiliate made, or was required to make,
contributions during the five-year period ending on the Effective Time.
(d) With respect to each Parent ERISA Plan which is subject to Title
IV of ERISA, the present value of accrued benefits under such plan, based upon
the actuarial assumptions used for funding purposes in the most recent actuarial
report prepared by such plan's actuary with respect to such plan did not exceed,
as of its latest valuation date, the then current value of the assets of such
plan allocable to such accrued benefits.
(e) No Parent ERISA Plan or any trust established thereunder has
incurred any "accumulated funding deficiency" (as defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived, as of the last day of
the most recent fiscal year of each Parent ERISA Plan ended prior to the
Effective Time; and all contributions required to be made with respect thereto
(whether pursuant to the term of any Parent ERISA Plan or otherwise) on or prior
to the Effective Time have been timely made.
19
(f) No Parent ERISA Plan is a "multiemployer pension plan," as
defined in Section 3(37) of ERISA, nor is any Parent ERISA Plan a plan described
in Section 4063(a) of ERISA.
(g) Each Parent ERISA Plan intended to be "qualified" within the
meaning of Section 401(a) of the Code is so qualified and the trusts maintained
thereunder are exempt from taxation under Section 501(a) of the Code.
(h) Each of the Parent Plans has been operated and administered in
all material respects in accordance with applicable laws, including, but not
limited to, ERISA and the Code.
(i) No amounts payable under the Parent Plans will fail to be
deductible for federal income tax purposes by virtue of Section 280G of the
Code.
(j) No Parent Plan provides benefits, including without limitation
death or medical benefits (whether or not insured), with respect to current or
former employees of Parent, any Parent Subsidiary or any ERISA Affiliate beyond
their retirement or other termination of service, other than (i) coverage
mandated by applicable law, (ii) death benefits or retirement benefits under any
"employee pension plan", as that term is defined in Section 3(2) of ERISA, (iii)
deferred compensation benefits accrued as liabilities on the books of Parent,
any Parent Subsidiary or any ERISA Affiliate or (iv) benefits the full cost of
which is borne by the current or former employee (or his beneficiary).
(k) The consummation of the transactions contemplated by this
Agreement will not:
20
(i) entitle any current or former employee or officer of
Parent, any Parent Subsidiary or any ERISA Affiliate to severance pay,
unemployment compensation or any other payment, except as expressly
provided in this Agreement,
(ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such employee or officer, or
(iii) result in any prohibited transaction described in Section
406 of ERISA or Section 4975 of the Code for which an exemption is not
available.
(l) With respect to each Parent Plan that is funded wholly or
partially through an insurance policy, there will be no material liability of
Parent, any Parent Subsidiary or any ERISA Affiliate, as of the Effective Time,
under any such insurance policy or ancillary agreement with respect to such
insurance policy in the nature of a retroactive rate adjustment, loss sharing
arrangement or other actual or contingent liability arising wholly or partially
out of events occurring prior to the closing.
(m) There are no pending, threatened or anticipated claims by or on
behalf of any of the Parent Plans, by any employee or beneficiary covered under
any such Parent Plan, or otherwise involving any such Parent Plan (other than
routine claims for benefits).
(n) Neither Parent, any Parent Subsidiary or any ERISA Affiliate, nor
any of the Parent ERISA Plans, nor any trust created thereunder, nor any trustee
or administrator thereof has engaged in a transaction in connection with which
Parent, any Parent Subsidiary or any ERISA Affiliate, any of the Parent ERISA
Plans, any such trust, or any trustee or administrator thereof, or any party
dealing with the Parent ERISA Plans or any such trust could be subject to
21
either a material civil liability under Section 409 of ERISA or Section 502(i)
of ERISA, or a material tax imposed pursuant to Section 4975 or 4976 of the
Code.
Section 4.17 Vote Required. Approval of the Merger by the
-------------
stockholders of Parent will require the approval of a majority of the total
votes cast in person or by proxy at the stockholders' meeting referred to in
Section 7.4. No other vote of the stockholders of Parent, or of the holders of
any other securities of Parent (equity or otherwise), is required by law, the
Certificate of Incorporation or By-laws of Parent or otherwise in order for
Parent to consummate the Merger, the Parent Option Agreement and the
transactions contemplated hereby and thereby.
Section 4.18 Opinion of Financial Advisor. The Board of Directors
----------------------------
of Parent (at a meeting duly called and held) has unanimously determined that
the transactions contemplated hereby are fair to and in the best interests of
the holders of the Parent Shares. Parent has received the opinion of Xxxxxxxx
Inc., Parent's financial advisor, substantially to the effect that the Exchange
Ratio is fair to Parent from a financial point of view.
Section 4.19 Ownership of Company Common Stock. Except as
---------------------------------
contemplated by this Agreement, the Proxies and the Company Option Agreement, as
of the date hereof, neither Parent nor, to its knowledge without independent
investigation, any of its affiliates, (i) beneficially owns (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, or (ii) is party to any
agreement, arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in each case, shares of capital stock of the Company.
Section 4.20 Pooling. Neither Parent nor any Parent Subsidiary has
-------
knowledge of any fact or information which causes, or should reasonably cause,
Parent or Subsidiary to believe that the transactions contemplated by this
Agreement could not be accounted for as a
22
pooling of interests under Opinion 16 of the Accounting Principles Board and
applicable SEC rules and regulations.
Section 4.21 Taxes. (a) All federal, state, local and foreign Tax
-----
Returns required to be filed by or on behalf of Parent, each of the Parent
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which Parent or any of its Subsidiaries (i) is a member (a "Current Parent
Group") or (ii) has been a member within six years prior to the date hereof but
is not currently a member, but only insofar as any such Tax Return relates to a
taxable period ending on a date within the last six years (a "Past Parent
Group," together with Current Parent Groups, a "Parent Affiliated Group") have
been timely filed, and all such Tax Returns are complete and accurate except to
the extent any failure to file or any inaccuracies in filed returns would not,
individually or in the aggregate, have a Parent Material Adverse Effect (it
being understood that the representations made in this Section, to the extent
that they relate to Past Parent Groups, are made to the knowledge of Parent).
All Taxes due and owing by Parent, any Parent Subsidiary or any Parent
Affiliated Group have been timely paid, or adequately reserved for, except to
the extent any failure to pay or reserve would not, individually or in the
aggregate, have a Parent Material Adverse Effect. There is no audit examination,
deficiency, refund litigation, proposed adjustment or matter in controversy with
respect to any Taxes due and owing by Parent, any Parent Subsidiary or any
Affiliated Group which would, individually or in the aggregate, have a Parent
Material Adverse Effect. All assessments for Taxes due and owing by Parent, any
Parent Subsidiary or any Parent Affiliated Group with respect to completed and
settled examinations or concluded litigation have been paid. Prior to the date
of this Agreement, Parent has provided the Company with written schedules of (i)
the taxable years of Parent for
23
which the statutes of limitations with respect to U.S. federal income Taxes have
not expired, and (ii) with respect to U.S. federal income Taxes, for all taxable
years for which the statute of limitations has not yet expired, those years for
which examinations have been completed, those years for which examinations are
presently being conducted, and those years for which examinations have not yet
been initiated. Parent and each of the Parent Subsidiaries have complied in all
material respects with all rules and regulations relating to the payment and
withholding of Taxes, except to the extent any such failure to comply would not,
individually or in the aggregate, have a Parent Material Adverse Effect.
(b) Neither Parent nor any of the Parent Subsidiaries is a party to,
bound by, or has any obligation under any Tax sharing, allocation, indemnity, or
similar contract or arrangement.
(c) Neither Parent nor any of the Parent Subsidiaries knows of any
fact or has taken any action that could reasonably be expected to prevent the
Merger from qualifying as a reorganization with the meaning of Section 368(a) of
the Code.
(d) Schedule 4.21 sets forth (i) the taxable years of Parent for
which the statute of limitations with respect to Material State income Taxes
have not expired, and (ii) with respect to Material State income Taxes, for all
taxable years for which the statute of limitations has not expired, those years
for which examinations have been completed, those years for which examinations
are presently being conducted, and those years for which examinations have not
yet been initiated.
(e) For purposes of this Agreement: (i) "Taxes" means any and all
federal, state, local, foreign, provincial, territorial or other taxes, imposts,
rates, levies, assessments and
24
other charges of any kind whatsoever whether imposed directly or through
withholding (together with any and all interest, penalties, additions to tax and
additional amounts applicable with respect thereto), including, without
limitation, income, franchise, windfall or other profits, gross receipts,
property, sales, use, capital stock, payroll, employment, social security,
workers' compensation, unemployment compensation, net worth, excise,
withholding, ad valorem and value added taxes, and (ii) "Tax Return" means any
declaration, return, report, schedule, certificate, statement or other similar
document (including relating or supporting information) required to be filed or,
where none is required to be filed with a taxing authority, the statement or
other document issued by a taxing authority in connection with any Tax,
including, without limitation, any information return, claim for refund, amended
return or declaration of estimated Tax. For purposes of this Section 4.21
"Material State" means any state for which the average allocation percentage of
Parent and the Parent Subsidiaries for the past three years exceeds ten percent
(10%).
Section 4.22 Contracts. Except as set forth on Schedule 4.22 hereto,
---------
neither Parent nor any of the Parent Subsidiaries is party to any agreement
(whether written or oral) that (a) involves performance of services or delivery
of goods or materials of an amount or value in excess of $3 million per year; or
(b) is a software licensing agreement involving an amount or value in excess of
$2,000,000 (the "Parent Contracts"). Each Parent Contract is valid and binding
on Parent and is in full force and effect, and Parent and each of the Parent
Subsidiaries have in all material respects performed all obligations required to
be performed by them to date under each Parent Contract, except where such
noncompliance, individually or in the aggregate, would not have a Parent
Material Adverse Effect. Neither Parent nor any of the Parent
25
Subsidiaries knows of, or has received notice of, any violation or default under
any Parent Contract except for such violations or defaults as would not in the
aggregate have a Parent Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to Parent and Sub as follows:
Section 5.1 Organization. The Company is a corporation duly
------------
organized, validly existing and in good standing under the laws of the State of
Delaware and has the corporate power to carry on its business as it is now being
conducted or presently proposed to be conducted. The Company is duly qualified
as a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary, except such
failures to be so qualified which would not in the aggregate have a material
adverse effect on the business, assets, liabilities, condition (financial or
otherwise) or results of operations of the Company and its subsidiaries taken as
a whole (a "Company Material Adverse Effect").
Section 5.2 Capitalization. The authorized capital stock of the
--------------
Company consists of 50,000,000 shares of Common Stock, par value $.01 per share
and 2,000,000 shares of Preferred Stock, no par value ("Company Preferred
Stock"), of which 300,000 shares have been designated as Series A Participating
Preferred Stock. As of the date hereof, 26,073,654 shares of Company Common
Stock were issued and outstanding and no shares of Company Preferred Stock were
issued and outstanding. All of the issued and outstanding Shares are
26
validly issued, fully paid and nonassessable and free of preemptive rights.
Except for (i) the 7,228,153 shares of Company Common Stock issuable upon the
conversion of the 5 1/4% Convertible Subordinated Notes due 2003, (ii) options
to receive or acquire 4,630,003 shares of Company Common Stock granted (or to be
granted pursuant to Section 6.1(c)) pursuant to employee incentive or benefit
plans, programs and arrangements of the Company ("Employee Stock Options"),
which options are listed by optionee, price per share, date of grant and number
of shares covered thereby on Schedule 5.2 hereto, (iii) warrants to purchase
180,000 shares of Company Common Stock and (iv) the rights (the "Company
Rights") to acquire shares of Series A Participating Preferred Stock pursuant to
the Rights Agreement between the Company and Xxxxxx Trust and Savings Bank dated
March 1, 1996 (the "Company Rights Agreement"), and as otherwise provided for in
this Agreement and the Company Option Agreement, there are not now, and at the
Effective Time there will not be, any shares of capital stock of the Company
issued or outstanding or any options, warrants, subscriptions, calls, rights,
convertible securities or other agreements or commitments obligating the Company
to issue, transfer or sell any shares of its capital stock. Except as provided
in this Agreement or in the Schedules hereto, after the Effective Time, the
Company will have no obligation to issue, transfer or sell any shares of its
capital stock pursuant to any employee benefit plan or otherwise.
Section 5.3 Subsidiaries. Schedule 5.3 hereto sets forth each
------------
direct or indirect interest owned by the Company in any other corporation,
partnership, joint venture or other business association or entity, foreign or
domestic, of which the Company or any of its other Subsidiaries owns, directly
or indirectly, greater than fifty percent of the shares of capital stock or
other equity interests (including partnership interests) entitled to cast at
least a majority of the
27
votes that may be cast by all shares or equity interests having ordinary voting
power for the election of directors or other governing body of such entity (each
such entity is hereinafter referred to as a Subsidiary and are hereinafter
collectively referred to as the "Subsidiaries".) Each Subsidiary is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of incorporation. Each Subsidiary is duly qualified as a
foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties owned or held under lease or
the nature of its activities makes such qualification necessary except where the
failure to be so qualified will not have a Company Material Adverse Effect. Each
Subsidiary has the corporate power to carry on its business as it is now being
conducted or presently proposed to be conducted. All of the outstanding shares
of capital stock of the Subsidiaries are validly issued, fully paid and
nonassessable and are owned by the Company or by a Subsidiary free and clear of
any liens, claims, charges or encumbrances. There are not now, and at the
Effective Time there will not be, any outstanding options, warrants,
subscriptions, calls, rights, convertible securities or other agreements or
commitments obligating the Company or any Subsidiary to issue, transfer or sell
any securities of any Subsidiary. There are not now, and at the Effective Time
there will not be, any voting trusts or other agreements or understandings to
which the Company or any of the Subsidiaries is a party or is bound with respect
to the voting of the capital stock of the Company or any of the Subsidiaries.
Section 5.4 Authority Relative to this Agreement. The Company has
------------------------------------
the corporate power to enter into this Agreement, the Parent Option Agreement
and the Company Option Agreement, to carry out its obligations hereunder and
thereunder and to consummate the Merger. The execution and delivery of this
Agreement, the Parent Option Agreement and the
28
Company Option Agreement by the Company, the consummation by the Company of the
transactions contemplated hereby and thereby and the consummation of the Merger
have been duly authorized by the Company's Board of Directors and, except for
the approval of its stockholders to be sought at the stockholders meeting
contemplated by Section 7.4 hereof and the filing of the Certificate of Merger
as required by the GCL, no other corporate proceedings on the part of the
Company are necessary to authorize this Agreement, the Parent Option Agreement
and the Company Option Agreement, the transactions contemplated hereby and
thereby or the consummation of the Merger. This Agreement, the Parent Option
Agreement and the Company Option Agreement have been duly and validly executed
and delivered by the Company and, assuming due authorization, execution and
delivery by the other parties hereto, this Agreement, the Parent Option
Agreement and the Company Option Agreement constitute valid and binding
agreements of the Company, enforceable against the Company in accordance with
their terms, except insofar as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors' rights generally, or principles governing the availability of
equitable remedies.
Section 5.5 Consents and Approvals; No Violations. Except for
-------------------------------------
applicable requirements of the HSR Act, the Securities Act, the Exchange Act,
state securities or blue sky laws, the rules and regulations of NASDAQ and the
filing and recordation of a Certificate of Merger as required by the GCL, no
filing with, and no permit, authorization, consent or approval of, any public
body or authority is necessary for the consummation by the Company of the
transactions contemplated by this Agreement, the Parent Option Agreement and the
Company Option Agreement. Neither the execution and delivery of this Agreement,
the Parent Option
29
Agreement or the Company Option Agreement by the Company, nor the consummation
by the Company of the transactions contemplated hereby or thereby, nor
compliance by the Company with any of the provisions hereof or thereof, will (a)
conflict with or result in any breach of any provisions of the Certificate of
Incorporation or By-Laws of the Company or any of the Subsidiaries, (b) except
as set forth on Schedule 5.5(b), result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation or acceleration) under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, contract, agreement or other instrument or obligation to which the
Company or any of the Subsidiaries is a party or by which any of them or any of
their properties or assets may be bound or (c) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to the Company, any
of the Subsidiaries or any of their properties or assets, except in the case of
clauses (b) and (c) for violations, breaches or defaults which would not
individually or in the aggregate have a Company Material Adverse Effect.
Section 5.6 Reports and Financial Statements. The Company has
--------------------------------
filed all reports required to be filed with the SEC pursuant to the Exchange Act
since March 26, 1996 (such reports, together with all registration statements,
prospectuses and information statements filed by the Company since March 26,
1996, being hereinafter collectively referred to as the "Company SEC Reports"),
and has previously furnished Parent with true and complete copies of all such
Company SEC Reports. None of such Company SEC Reports, as of their respective
dates, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. As of their respective dates, all
30
such Company SEC Reports complied as to form in all material respects with the
applicable requirements of the Securities Act. Each of the balance sheets
(including the related notes) included in the Company SEC Reports fairly
presents the consolidated financial position of the Company and the Subsidiaries
as of the respective dates thereof, and the other related statements (including
the related notes) included therein fairly present the results of operations and
the changes in financial position of the Company and the Subsidiaries for the
respective periods or as of the respective dates set forth therein (subject,
where appropriate, to normal year-end adjustments), all in conformity with
generally accepted accounting principles consistently applied during the periods
involved, except as otherwise noted therein.
Section 5.7 Absence of Certain Changes or Events. Except as set
------------------------------------
forth in Schedule 5.7 hereto or in the Company SEC Reports, since September 30,
1997, neither the Company nor any of the Subsidiaries has: (a) suffered any
change which had or would have a Company Material Adverse Effect or (b)
subsequent to the date hereof, except as permitted by Section 6.1 hereof,
conducted its business and operations other than in the ordinary course of
business and consistent with past practices.
Section 5.8 Litigation. Except for litigation disclosed in the
----------
Company SEC Reports there is no suit, action or proceeding pending or, to the
knowledge of the Company, threatened against or affecting the Company or any of
its Subsidiaries the outcome of which is reasonably likely to have a Company
Material Adverse Effect; nor is there any judgment, decree, injunction, rule or
order of any court, governmental department, commission, agency, instrumentality
or arbitrator outstanding against the Company or any of its Subsidiaries, which
has or would have a Company Material Adverse Effect.
31
Section 5.9 Patents, Trademarks, Etc. Except as set forth in
------------------------
Schedule 5.9, to the knowledge of the Company, the Company and its Subsidiaries
own or possess adequate licenses or other valid rights to use all Proprietary
Rights used or held for use in connection with the business of the Company and
its Subsidiaries as currently conducted or as contemplated to be conducted, free
and clear of any liens, clams or encumbrances. Except as set forth in Schedule
5.9, to the knowledge of the Company, the conduct of the business of the Company
and its Subsidiaries as currently conducted does not conflict in any way with
any Proprietary Right of any third party. To the knowledge of the Company there
are no infringements of any of the Proprietary Rights owned by or licensed to
the Company or any of its Subsidiaries.
Section 5.10 Information in Disclosure Documents and Registration
----------------------------------------------------
Statement. None of the information to be supplied by the Company for inclusion
---------
in the Proxy Statement or the Registration Statement, other than the information
to be supplied by Parent or Sub, will, in the case of the Registration
Statement, at the time it becomes effective and at the Effective Time, or, in
the case of the Proxy Statement or any amendments thereof or supplements
thereto, at the time of the mailing of the Proxy Statement and any amendments or
supplements thereto, and at the time of the meeting of stockholders of the
Company to be held in connection with the Merger, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy Statement
will comply as to form in all material respects with the provisions of the
Exchange Act, and the rules and regulations promulgated thereunder.
32
Section 5.11 Absence of Undisclosed Liabilities. Other than
----------------------------------
obligations incurred in the ordinary course of business, neither the Company nor
any of its Subsidiaries has any liabilities or obligations of any nature,
whether or not accrued, contingent or otherwise, and there is no existing
condition, situation or set of circumstances which would reasonably be expected
to result in such a liability or obligation which would be required to be
disclosed on a consolidated balance sheet under GAAP, except (a) liabilities or
obligations reflected in the Company SEC Reports and (b) liabilities or
obligations which would not, individually or in the aggregate, have a Company
Material Adverse Effect.
Section 5.12 No Default. Neither the Company nor any of the
----------
Subsidiaries is in default or violation (and no event has occurred which with
notice or the lapse of time or both would constitute a default or violation) of
any term, condition or provision of (a) its Certificate of Incorporation or By-
Laws, (b) any note, bond, mortgage, indenture, license, agreement, contract,
lease, commitment or other obligation to which the Company or any of the
Subsidiaries is a party or by which they or any of their properties or assets
may be bound, or (c) any order, writ, injunction, decree, statute, rule or
regulation applicable to the Company or any of the Subsidiaries, except in the
case of clauses (b) and (c) above for defaults or violations which would not
individually or in the aggregate have a Company Material Adverse Effect.
Section 5.13 Taxes. (a) All federal, state, local and foreign Tax
-----
Returns required to be filed by or on behalf of the Company, each of its
Subsidiaries, and each affiliated, combined, consolidated or unitary group of
which the Company or any of its Subsidiaries (i) is a member (a "Current Company
Group") or (ii) has been a member within six years prior to the date hereof but
is not currently a member, but only insofar as any such Tax Return relates to a
33
taxable period ending on a date within the last six years (a "Past Company
Group," together with Current Company Groups, a "Company Affiliated Group") have
been timely filed, and all such Tax Returns are complete and accurate except to
the extent any failure to file or any inaccuracies in filed returns would not,
individually or in the aggregate, have a Company Material Adverse Effect (it
being understood that the representations made in this Section, to the extent
that they relate to Past Company Groups, are made to the knowledge of the
Company). All Taxes due and owing by the Company, any Subsidiary of the Company
or any Company Affiliated Group have been timely paid, or adequately reserved
for, except to the extent any failure to pay or reserve would not, individually
or in the aggregate, have a Company Material Adverse Effect. There is no audit
examination, deficiency, refund litigation, proposed adjustment or matter in
controversy with respect to any Taxes due and owing by the Company, any
Subsidiary or any Affiliated Group which would, individually or in the
aggregate, have a Company Material Adverse Effect. All assessments for Taxes due
and owing by the Company, any Subsidiary or any Company Affiliated Group with
respect to completed and settled examinations or concluded litigation have been
paid. Schedule 5.13 sets forth (i) the taxable years of the Company for which
the statutes of limitations with respect to U.S. federal income Taxes have not
expired, and (ii) with respect to U.S. federal income Taxes, for all taxable
years for which the statute of limitations has not yet expired, those years for
which examinations have been completed, those years for which examinations are
presently being conducted, and those years for which examinations have not yet
been initiated. The Company and each of its Subsidiaries have complied in all
material respects with all rules and regulations relating to the payment and
withholding of Taxes, except to the
34
extent any such failure to comply would not, individually or in the aggregate,
have a Company Material Adverse Effect.
(b) Neither the Company nor any of its Subsidiaries is a party to,
bound by, or has any obligation under any Tax sharing, allocation, indemnity, or
similar contract or arrangement.
(c) Neither the Company nor any of its Subsidiaries knows of any fact
or has taken any action that could reasonably be expected to prevent the Merger
from qualifying as a reorganization within the meaning of Section 368(a) of the
Code.
(d) Schedule 5.13 sets forth (i) the taxable years of the Company for
which the statute of limitations with respect to Material State income Taxes
have not expired, and (ii) with respect to Material State income Taxes, for all
taxable years for which the statute of limitations has not expired, those years
for which examinations have been completed, those years for which examinations
are presently being conducted, and those years for which examinations have not
yet been initiated.
(e) For purposes of this Section 5.13: "Material State" means any
state for which the average allocation percentage of the Company and its
Subsidiaries for the past three years exceeds ten percent (10%).
Section 5.14 Title to Properties; Encumbrances. Except as described
---------------------------------
in the following sentence, each of the Company and the Subsidiaries has good and
marketable title to, or a valid leasehold interest in, all of its properties and
assets (real, personal and mixed, tangible and intangible material to the
operations and business of the Company), including, without limitation, all such
properties and assets reflected in the consolidated balance sheet of the
35
Company and the Subsidiaries as of March 31, 1998 included in the Company's
Quarterly Report on Form 10-Q for the period ended on such date (except for
properties and assets disposed of in the ordinary course of business and
consistent with past practices since March 31, 1998). None of such properties or
assets are subject to any liability, obligation, claim, lien, mortgage, pledge,
security interest, conditional sale agreement, charge or encumbrance of any kind
(whether absolute, accrued, contingent or otherwise), except (i) as set forth in
the Company SEC Reports or in Schedule 5.14 hereto, and (ii) such encumbrances
that do not individually or in the aggregate have a Company Material Adverse
Effect.
Section 5.15 Compliance with Applicable Law. Each of the Company
------------------------------
and the Subsidiaries is in compliance with all applicable Laws (whether
statutory or otherwise), except where the failure to be in such compliance would
not, individually or in the aggregate, have a Company Material Adverse Effect.
Section 5.16 Labor Matters. Except as set forth on Schedule 5.16,
-------------
neither the Company nor any of the Subsidiaries is a party to, or bound by, any
collective bargaining agreement, contract or other agreement or understanding
with a labor union or labor organization. There is no unfair labor practice or
labor arbitration proceeding pending or, to the knowledge of the Company,
threatened against the Company or the Subsidiaries relating to their business,
except for any such preceding which would not have a Company Material Adverse
Effect. To the knowledge of the Company, there are no organizational efforts
with respect to the formation of a collective bargaining unit presently being
made or threatened involving employees of the Company or any of the
Subsidiaries.
36
Section 5.17 Employee Benefit Plans; ERISA. (a) Schedule 5.17
-----------------------------
hereto contains a true and complete list of each bonus, deferred compensation,
incentive compensation, stock purchase, stock option, severance or termination
pay, hospitalization or other medical, life or other insurance, supplemental
unemployment benefits, profit-sharing, pension, or retirement plan, program,
agreement or arrangement, and each other employee benefit plan, program,
agreement or arrangement (the "Plans"), maintained or contributed to or required
to be contributed to by (i) the Company, (ii) any Subsidiary or (iii) any ERISA
Affiliate, that together with the Company would be deemed a "single employer"
within the meaning of Section 4001 of ERISA, for the benefit of any employee or
former employee of the Company, any Subsidiary or any ERISA Affiliate. Schedule
5.17(a) hereto identifies each of the Plans that is an "employee benefit plan,"
as that term is defined in Section 3(3) of ERISA (such plans being hereinafter
referred to collectively as the "ERISA Plans").
(b) With respect to each of the Plans, the Company has heretofore
delivered or will deliver to Parent true and complete copies of each of the
following documents:
(i) a copy of the Plan (including all amendments thereto);
(ii) a copy of the annual report and actuarial report, if
required under ERISA, with respect to each such Plan for the last two
years;
(iii) a copy of the most recent Summary Plan Description,
together with each Summary of Material Modifications, required under ERISA
with respect to such Plan;
37
(iv) if the Plan is funded through a trust or any third party
funding vehicle, a copy of the trust or other funding agreement (including
all amendments thereto) and the latest financial statements thereof; and
(v) the most recent determination letter received from the
Internal Revenue Service with respect to each Plan intended to qualify
under Section 401 of the Code.
(c) No liability under Title IV of ERISA has been incurred by the
Company, any Subsidiary or any ERISA Affiliate since the effective date of ERISA
that has not been satisfied in full, and no condition exists that presents a
material risk to the Company, any Subsidiary or any ERISA Affiliate of incurring
a liability under such Title. To the extent this representation applies to
Sections 4064, 4069 or 4204 of Title IV of ERISA, it is made not only with
respect to the ERISA Plans but also with respect to any employee benefit plan,
program, agreement or arrangement subject to Title IV of ERISA to which the
Company, a Subsidiary or an ERISA Affiliate made, or was required to make,
contributions during the five-year period ending on the Effective Time.
(d) Except as disclosed in Schedule 5.17, with respect to each ERISA
Plan which is subject to Title IV of ERISA, the present value of accrued
benefits under such plan, based upon the actuarial assumptions used for funding
purposes in the most recent actuarial report prepared by such plan's actuary
with respect to such plan did not exceed, as of its latest valuation date, the
then current value of the assets of such plan allocable to such accrued
benefits.
38
(e) Except as disclosed in Schedule 5.17, no ERISA Plan or any trust
established thereunder has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of each ERISA Plan
ended prior to the Effective Time; and all contributions required to be made
with respect thereto (whether pursuant to the term of any ERISA Plan or
otherwise) on or prior to the Effective Time have been timely made.
(f) No ERISA Plan is a "multiemployer pension plan," as defined in
Section 3(37) of ERISA, nor is any ERISA Plan a plan described in Section
4063(a) of ERISA.
(g) Each ERISA Plan intended to be "qualified" within the meaning of
Section 401(a) of the Code is so qualified and the trusts maintained thereunder
are exempt from taxation under Section 501(a) of the Code.
(h) Each of the Plans has been operated and administered in all
material respects in accordance with applicable laws, including, but not limited
to, ERISA and the Code.
(i) Except as disclosed in Schedule 5.17, no amounts payable under
the Plans will fail to be deductible for federal income tax purposes by virtue
of Section 280G of the Code. Schedule 5.17 sets forth the aggregate amount of
entitlements and other amounts that could be (i) received (whether in cash or
property or the vesting of property) under any of the Plans as a result of any
of the transactions contemplated by this Agreement by any person which is a
"disqualified individual" (as such term is defined in Section 280G(c) of the
Code) and (ii) characterized as an "excess parachute payment" (as such term is
defined in Section 280G(b)(1) of the Code), plus the amount of any excise taxes
that may be imposed with respect thereto and any additional amounts or gross-ups
that may be paid with respect to such amounts.
39
(j) Except as disclosed in Schedule 5.17, no Plan provides benefits,
including without limitation death or medical benefits (whether or not insured),
with respect to current or former employees of the Company, any Subsidiary or
any ERISA Affiliate beyond their retirement or other termination of service,
other than (i) coverage mandated by applicable law, (ii) death benefits or
retirement benefits under any "employee pension plan", as that term is defined
in Section 3(2) of ERISA, (iii) deferred compensation benefits accrued as
liabilities on the books of the Company, any Subsidiary or any ERISA Affiliate
or (iv) benefits the full cost of which is borne by the current or former
employee (or his beneficiary).
(k) Except as disclosed on Schedule 5.17, the consummation of the
transactions contemplated by this Agreement will not
(i) entitle any current or former employee or officer of the
Company, any Subsidiary or any ERISA Affiliate to severance pay,
unemployment compensation or any other payment, except as expressly
provided in this Agreement,
(ii) accelerate the time of payment or vesting, or increase the
amount of compensation due any such employee or officer, or
(iii) result in any prohibited transaction described in Section
406 of ERISA or Section 4975 of the Code for which an exemption is not
available.
(l) With respect to each Plan that is funded wholly or partially
through an insurance policy, there will be no liability of the Company, any
Subsidiary or any ERISA Affiliate, as of the Effective Time, under any such
insurance policy or ancillary agreement with respect to such insurance policy in
the nature of a retroactive rate adjustment, loss sharing
40
arrangement or other actual or contingent liability arising wholly or partially
out of events occurring prior to the closing.
(m) There are no pending, threatened or anticipated claims by or on
behalf of any of the Plans, by any employee or beneficiary covered under any
such Plan, or otherwise involving any such Plan (other than routine claims for
benefits).
(n) Neither the Company, any Subsidiary or any ERISA Affiliate, nor
any of the ERISA Plans, nor any trust created thereunder, nor any trustee or
administrator thereof has engaged in a transaction in connection with which the
Company, any Subsidiary or any ERISA Affiliate, any of the ERISA Plans, any such
trust, or any trustee or administrator thereof, or any party dealing with the
ERISA Plans or any such trust could be subject to either a material civil
liability under Section 409 of ERISA or Section 502(i) of ERISA, or a material
tax imposed pursuant to Section 4975 or 4976 of the Code.
Section 5.18 Contracts. Except as set forth on Schedule 5.18
---------
hereto, neither the Company nor any of its Subsidiaries is party to any
agreement (whether written or oral) that (a) involves performance of services or
delivery of goods or materials of an amount or value in excess of $1 million per
year; or (b) is a software licensing agreement involving an amount or value in
excess of $500,000 (the "Company Contracts"). Each Company Contract is valid and
binding on the Company and is in full force and effect, and the Company and each
of its Subsidiaries have in all material respects performed all obligations
required to be performed by them to date under each Company Contract, except
where such noncompliance, individually or in the aggregate, would not have a
Company Material Adverse Effect. Neither the Company nor any of its Subsidiaries
knows of, or has received notice of, any violation or default under any
41
Company Contract except for such violations or defaults as would not in the
aggregate have a Company Material Adverse Effect.
Section 5.19 Vote Required. Approval of the Merger by the
-------------
stockholders of the Company will require the affirmative vote of the holders of
a majority of the outstanding Shares. No other vote of the stockholders of the
Company, or of the holders of any other securities of the Company (equity or
otherwise), is required by law, the certificate of incorporation or by-laws of
the Company or otherwise in order for the Company to consummate the Merger and
the transactions contemplated hereby and by the Company Option Agreement.
Section 5.20 Opinion of Financial Advisor. The Board of Directors
----------------------------
of the Company (at meetings duly called and held) has unanimously determined
that the transactions contemplated hereby are fair to and in the best interests
of the Company's stockholders. The Company has received the opinion of
Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation, the Company's financial
advisor, substantially to the effect that the Exchange Ratio is fair to the
holders of the Company Common Stock from a financial point of view.
Section 5.21 Takeover Statute. The Board of Directors of the
----------------
Company has approved this Agreement, the Parent Option Agreement and the Company
Option Agreement and the transactions contemplated hereby and thereby and,
assuming the accuracy of Parent's and Sub's representation and warranty
contained in Section 4.19, such approval constitutes approval of the Merger and
the other transactions contemplated hereby by such Board of Directors under the
provisions of Section 203 of the GCL such that Section 203 of the GCL does not
apply to this Agreement and the transactions contemplated hereby.
42
Section 5.22 The Company Rights Agreement. The Board of Directors
----------------------------
of the Company has approved the amendment of the Company Rights Plan in the form
attached hereto as Exhibit B and as a result thereof, none of the execution or
delivery of this Agreement, the Proxies or the Company Option Agreement or the
consummation of the transactions contemplated hereby or thereby will (a) cause
the Company Rights to become exercisable or to separate from the stock
certificates to which they are attached, (b) cause Parent to become an
"Acquiring Person" (as such term is defined in the Company Rights Agreement), or
(c) trigger any other provisions of the Company Rights Agreement.
Section 5.23 Ownership of Parent Common Stock. Except as
--------------------------------
contemplated by this Agreement, the Parent Option Agreement and the Parent Stock
Proxy, as of the date hereof, neither the Company nor, to its knowledge without
independent investigation, any of its affiliates, (i) beneficially owns (as
defined in Rule 13d-3 under the Exchange Act, directly or indirectly, or (ii) is
party to any agreement, arrangement or understanding for the purpose of
acquiring, holding, voting or disposing of, in each case, shares of capital
stock of Parent.
Section 5.24 Pooling. Neither the Company nor any Subsidiary has
-------
knowledge of any fact or information which causes, or should reasonably cause,
the Company or any Subsidiary to believe that the transactions contemplated by
this Agreement could not be accounted for as a pooling of interests under
Opinion 16 of the Accounting Principles Board and applicable SEC rules and
regulations.
43
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
--------------------------------------
Section 6.1 Conduct of Business by the Company Pending the Merger.
-----------------------------------------------------
Prior to the Effective Time, unless Parent shall otherwise agree in writing, or
as set forth in Schedule 6.1 or may be expressly permitted pursuant to this
Agreement:
(a) the respective businesses of the Company and the Subsidiaries
shall be conducted only in the ordinary and usual course of business and
consistent with past practices, and there shall be no material changes in the
conduct of the Company's operations;
(b) the Company shall not (i) sell or pledge or agree to sell or
pledge any stock owned by it in any of the Subsidiaries; (ii) amend its
Certificate of Incorporation or By-Laws; or (iii) split, combine or reclassify
any shares of its outstanding capital stock or declare, set aside or pay any
dividend or other distribution payable in cash, stock or property, or redeem or
otherwise acquire any shares of its capital stock or shares of the capital stock
of any of the Subsidiaries;
(c) neither the Company nor any of the Subsidiaries shall (i)
authorize for issuance, issue or sell or agree to issue or sell any additional
shares of, or rights of any kind to acquire any shares of, its capital stock of
any class (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise), except for the
4,580,003 unissued Shares reserved for issuance upon the exercise of currently
outstanding employee stock options and except for employee options to purchase
not more than 50,000 shares, the 7,228,153 Shares reserved for issuance upon
conversion of the Company's 5 1/4% Convertible Subordinated Notes due 2003, or
the 180,000 Shares reserved for issuance upon
44
exercise of warrants; (ii) acquire, dispose of, transfer, lease, license,
mortgage, pledge or encumber any fixed or other assets other than in the
ordinary course of business and consistent with past practices; (iii) except for
certain indebtedness not in excess of $15,000,000, incur, assume or prepay any
indebtedness or any other material liabilities other than in the ordinary course
of business and consistent with past practices; (iv) assume, guarantee, endorse
or otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person other than a Subsidiary in
the ordinary course of business and consistent with past practices; (v) make any
loans, advances or capital contributions to, or investments in, any other
person, other than to Subsidiaries; (vi) authorize capital expenditures not in
the ordinary course of business in excess of $1,000,000; (vii) make any Tax
election or settle or compromise any Tax liability; (viii) change its fiscal
year; (ix) except as disclosed in the Company SEC Reports filed prior to the
date of this Agreement, or as required by a governmental body or authority,
change its methods of accounting (including, without limitation, make any
material write-off or reduction in the carrying value of any assets) in effect
at September 30, 1997, except as required by changes in GAAP as concurred in by
the Company's independent auditors; or (x) enter into any contract, agreement,
commitment or arrangement with respect to any of the foregoing;
(d) the Company shall use its reasonable best efforts to preserve
intact the business organization of the Company and the Subsidiaries, to keep
available the services of its and their present officers and key employees, and
to preserve the goodwill of those having business relationships with it and the
Subsidiaries;
45
(e) neither the Company nor any of the Subsidiaries will enter into
any employment agreements with any officers or employees or grant any increases
in the compensation of their respective officers and employees other than
increases in the ordinary course of business and consistent with past practice,
or enter into, adopt or amend any Plan (as that term is defined in Schedule 5.17
hereto); and
(f) neither the Company nor any of the Subsidiaries shall (i) take or
allow to be taken any action which would jeopardize the treatment of Parent's
acquisition of the Company as a pooling of interests for accounting purposes; or
(ii) take any action which would jeopardize qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code.
Section 6.2 Conduct of Business by Parent Pending the Merger. Prior
------------------------------------------------
to the Effective Time, unless the Company shall otherwise agree in writing, or
as otherwise expressly permitted by this Agreement:
(a) the respective businesses of Parent and the Parent Subsidiaries
shall be conducted only in the ordinary and usual course of business and
consistent with past practices, and there shall be no material changes in the
conduct of Parent's operations;
(b) Parent shall not (i) sell or pledge or agree to sell or pledge
any stock owned by it in any of the Parent Subsidiaries; (ii) amend its
Certificate of Incorporation or By-Laws; (iii) split, combine or reclassify any
shares of its outstanding capital stock or declare, set aside or pay any
dividend or other distribution payable in cash, stock or property, or redeem or
otherwise acquire any shares of its capital stock or shares of the capital stock
of any of the Parent Subsidiaries or (iv) consolidate with or merge with or into
another company unless at least 50% of the members of the Board of Directors of
the surviving entity are members of the Board of
46
Directors of Parent immediately prior to such merger or consolidation or are
otherwise designated by Parent.
(c) neither Parent nor any of the Parent Subsidiaries shall (i)
authorize for issuance, issue or sell or agree to issue or sell any additional
shares of, or rights of any kind to acquire any shares of, its capital stock of
any class (whether through the issuance or granting of options, warrants,
commitments, subscriptions, rights to purchase or otherwise), except for (a)
unissued shares of Parent Common Stock reserved for issuance upon the exercise
of Parent Employee Stock Options, (b) the shares of Parent Common Stock to be
granted pursuant to Parent's Employee Stock Benefit and Recognition Program, and
(c) the shares of Parent Common Stock reserved for issuance upon the exercise of
certain rights by Trans Union Corporation ("Trans Union") pursuant to the Data
Center Management Agreement between Trans Union and Parent, or (ii) enter into
any contract, agreement, commitment or arrangement with respect to any of the
foregoing;
(d) Parent shall use its reasonable best efforts to preserve intact
the business organization of Parent and the Parent Subsidiaries, to keep
available the services of its and their present officers and key employees, and
to preserve the goodwill of those having business relationships with it and the
Parent Subsidiaries;
(e) neither Parent nor any of the Parent Subsidiaries shall (i) take
or allow to be taken any action which would jeopardize the treatment of the
transaction as a pooling of interests for accounting purposes or (ii) take any
action which would jeopardize qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code.
47
(f) Nothing set forth in Section 6.2(a), (b), (c) or (d) above shall
limit Parent's ability to authorize or propose, enter into, or consummate
agreements relating to acquisitions, mergers or other business combinations,
including any such transaction pursuant to which Parent issues shares of its
capital stock; provided that in connection with any such transaction Parent will
not consolidate or merge with or into another company unless at least 50% of the
members of the Board of Directors of the surviving entity are members of the
Board of Directors of Parent immediately prior to such merger or consolidation
or otherwise designated by Parent.
Section 6.3 Conduct of Business of Sub. During the period from the
--------------------------
date of this Agreement to the Effective Time, Sub shall not engage in any
activities of any nature except as provided in or contemplated by this
Agreement.
ARTICLE VII
ADDITIONAL AGREEMENTS
---------------------
Section 7.1 Access and Information. The Company and Parent shall
----------------------
each afford to the other and to the other's financial advisors, legal counsel,
accountants consultants and other representatives full access upon reasonable
notice and during normal business hours throughout the period prior to the
Effective Time to all of its books, records, properties, plants and personnel
and, during such period, each shall furnish promptly to the other (a) a copy of
each report, schedule and other document filed or received by it pursuant to the
requirements of federal or state securities laws, and (b) all other information
as such other party may reasonably request, provided that no investigation
pursuant to this Section 7.1 shall affect any representations or warranties made
herein or the conditions to the obligations of the respective
48
parties to consummate the Merger. Each party shall hold in confidence all
nonpublic information until such time as such information is otherwise publicly
available and, if this Agreement is terminated, each party will deliver to the
other all documents, work papers and other material (including copies) obtained
by such party or on its behalf from the other party as a result of this
Agreement or in connection herewith, whether so obtained before or after the
execution hereof.
Section 7.2 Acquisition Proposals. From and after the date hereof,
---------------------
the Company will not and the Company and the Subsidiaries will use their best
efforts to cause their respective directors, officers, employees, financial
advisors, legal counsel, accountants and other agents and representatives not to
initiate or solicit, directly or indirectly, any inquiries or the making of any
proposal or offer with respect to, engage in negotiations concerning, provide
any information or data to, any person relating to any acquisition, business
combination or purchase (including by way of a tender or exchange offer) of (i)
all or any significant portion of the assets of the Company and the
Subsidiaries, (ii) 15% or more of the outstanding shares of Company Common Stock
or (iii) 15% or more of the outstanding shares of capital stock of any
Subsidiary of the Company (a "Takeover Proposal"), other than the Merger;
provided, however, that nothing contained in this Section 7.2 shall prohibit the
Board of Directors of the Company from (i) furnishing information to (but only
pursuant to a confidentiality agreement in customary form) or entering into
discussions or negotiations with any person or group that makes a Superior
Proposal that was not solicited by the Company or which did not otherwise result
from a breach of this Section 7.2, if, and only to the extent that, (A) the
Board of Directors of the Company, based upon the advice of outside legal
counsel, determines in good faith that such action is reasonably necessary for
the Board of Directors to comply with its fiduciary duties to
49
stockholders imposed by law, (B) concurrently with furnishing such information
to, or entering into discussions or negotiations with, such person or group
making this Superior Proposal, the Company provides written notice to Parent to
the effect that it is furnishing information to, or entering into discussions or
negotiations with, such person or group, and (C) the Company keeps Parent
informed of the status and all material information including the identity of
such person or group with respect to any such discussions or negotiations to the
extent such disclosure would not constitute a violation of any applicable law.
For purposes of this Agreement "Superior Proposal" means any Takeover Proposal
which the Board of Directors of the Company concludes in its good faith judgment
(based on the advice of outside legal counsel and a financial advisor of a
nationally recognized reputation) to be more favorable to the Company's
stockholders than the Merger and for which financing, to the extent required, is
fully committed, subject to customary conditions; provided, however, that the
reference to "15%" in clauses (ii) and (iii) of the definition of Takeover
Proposal shall be deemed to be references to "51%". The Company will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any person conducted heretofore with respect to any of the
foregoing and will notify Parent immediately in writing if any such inquiries or
proposals (including the material terms and conditions thereof) are received by,
any such information is requested from, or any such negotiations or discussions
are sought to be initiated or continued with, the Company. Nothing contained in
this Section 7.2 shall prohibit the Company from taking and disclosing to its
stockholders a position contemplated by Rule 14e-2(a) promulgated under the
Exchange Act or from making any disclosure to its stockholders if, in the good
faith judgment of the Board of
50
Directors of the Company, after consultation with outside legal counsel, failure
so to disclose may be inconsistent with its obligations under applicable law.
Section 7.3 Registration Statement. As promptly as practicable,
----------------------
Parent and the Company shall prepare and file with the SEC the Proxy Statement
and Parent shall prepare and file with the SEC the Registration Statement. Each
of Parent and the Company shall use its best efforts to have the Registration
Statement declared effective. Parent shall also use its best efforts to take any
action required to be taken under state securities or blue sky laws in
connection with the issuance of the Parent Shares pursuant hereto. Parent and
the Company shall furnish each other with all information concerning Parent and
the Company, as the case may be, and the holders of their capital stock and
shall take such other action as each party may reasonably request in connection
with the preparation of the Proxy Statement and the Registration Statement and
issuance of Parent Shares. Each such party agrees promptly to advise the other
if at any time prior to the Effective Time any information provided by any party
hereto in the Proxy Statement becomes incorrect or incomplete in any material
respect, and to provide the information needed to correct such inaccuracy or
omission. To the extent the issuance of Parent Shares pursuant to the Merger to
Xxxxxxxx X. Xxxx or Xxxxxx X. Xxxx, Xx., (or to any other stockholder of the
Company granting proxies pursuant to Section 7.7) are not permitted by the rules
and regulations of the SEC to be registered on the Registration Statement,
Parent will use its best efforts to register such issuance of Parent Shares to
such stockholders of the Company on a Form S-3 or other appropriate form.
51
Section 7.4 Proxy Statements; Stockholder Approvals. (a) The
---------------------------------------
Company, acting through its Board of Directors, shall, in accordance with
applicable law and its Certificate of Incorporation and By-Laws:
(i) promptly and duly call, give notice of, convene and hold
as soon as practicable following the date upon which the Registration
Statement becomes effective a meeting of its stockholders for the purpose
of voting to approve and adopt this Agreement and shall use its reasonable
best efforts to obtain such stockholder approval; and
(ii) recommend approval and adoption of this Agreement by the
stockholders of the Company and include in the Proxy Statement such
recommendation, and take all lawful action to solicit such approval.
(b) Parent, acting through its Board of Directors, shall, in
accordance with applicable law and its Certificate of Incorporation and By-Laws:
(i) promptly and duly call, give notice of, convene and hold
as soon as practicable following the date upon which the Registration
Statement becomes effective a meeting of its stockholders for the purpose
of voting to approve the issuance of the Parent Shares pursuant to the
Merger and shall use its reasonable best efforts to obtain such stockholder
approval; and
(ii) recommend approval and adoption of the issuance of the
Parent Shares pursuant to the Merger by the stockholders of Parent and
include in the Proxy Statement such recommendation, and take all lawful
action to solicit such approval.
52
(c) Parent and the Company shall cause the definitive Proxy
Statement to be mailed to their stockholders as promptly as practicable after
the Registration Statement is declared effective under the Securities Act. At
the stockholders' meetings, each of Parent and the Company shall vote or cause
to be voted in favor of approval and adoption of this Agreement all Shares as to
which it holds proxies at such time.
Section 7.5 Affiliate Agreements. (a) Prior to the mailing of the
--------------------
Proxy Statement to the stockholders of the Company the Company shall cause to be
delivered to Parent a list in form and substance reasonably satisfactory to
Parent identifying all persons who are at the time of the Company stockholders'
meeting convened in accordance with Section 7.4 hereof, "affiliates" of the
Company as that term is used in Rule 145 under the Securities Act or under
applicable SEC accounting releases with respect to pooling of interests
accounting treatment. The Company shall use its reasonable best efforts to cause
each person who is identified as a possible "affiliate" in the list furnished
pursuant to this Section 7.5 to deliver to Parent at or prior to the mailing of
the Proxy Statement a written agreement, in substantially the form attached
hereto as Exhibit C.
(b) Prior to the mailing of the Proxy Statement to the stockholders
of Parent, Parent shall deliver to the Company a list, in form and substance
reasonably satisfactory to the Company, identifying all persons who are, at the
time of the Parent stockholders' meeting convened in accordance with Section 7.4
hereof, "affiliates" of Parent under applicable SEC accounting releases with
respect to pooling of interests accounting treatment. Parent shall use its
reasonable best efforts to cause each person who is identified as a possible
"affiliate" in the list
53
furnished pursuant to this Section 7.5 to deliver to Parent at or prior to the
mailing of the Proxy Statement, a written agreement substantially in the form of
Exhibit D hereto.
Section 7.6 Antitrust Laws. As promptly as practicable, the
--------------
Company, Parent and Sub shall make all filings and submissions under the HSR Act
as may be reasonably required to be made in connection with this Agreement and
the transactions contemplated hereby. Subject to Section 7.1 hereof, the
Company will furnish to Parent and Sub, and Parent and Sub will furnish to the
Company, such information and assistance as the other may reasonably request in
connection with the preparation of any such filings or submissions. Subject to
Section 7.1 hereof, the Company will provide Parent and Sub, and Parent and Sub
will provide the Company, with copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof) between such
party or any of its representatives, on the one hand, and any governmental
agency or authority or members of their respective staffs, on the other hand,
with respect to this Agreement and the transactions contemplated hereby.
Section 7.7 Proxies. Concurrently herewith, the Parent is entering
-------
into the Company Stock Proxies with each of Xxxxxxxx X. Xxxx and Xxxxxx X. Xxxx,
Xx. in the form attached hereto as Exhibits A-2 and A-3, respectively.
Concurrently herewith, the Company is entering into the Parent Stock Proxy with
Xxxxxxx X. Xxxxxx in the form attached hereto as Exhibit A-1. Parent will use
its reasonable best efforts to obtain proxies within ten business days following
the date hereof from the stockholders listed on Schedule 7.7(a) hereto, such
proxies to be substantially in the form of Exhibit A-1. The Company will use
its reasonable best efforts to obtain proxies within ten business days following
the date hereof from the record holders of all shares of Company Common Stock
reflected as being beneficially owned by each of Xxxxxxxx X.
54
Xxxx and Xxxxxx X. Xxxx, Xx., as set forth on Schedule 7.7(b), such proxies to
be substantially in the form of Exhibits A-2 and A-3.
Section 7.8 Employees, Employee Benefits. (a) Parent agrees that
----------------------------
individuals who are employed by the Company as of the Effective Time shall
become employees of the Surviving Corporation following the Effective Time (each
such employee, an "Affected Employee"); provided, however, that nothing
contained in this Section 7.8 shall require the Surviving Corporation to
continue the employment of any Affected Employee for any period of time
following the Effective Time.
(b) Parent shall, or shall cause the Surviving Corporation to, give
Affected Employees full credit for purposes of eligibility, vesting and
determination of the level of benefits (but not for the purpose of benefit
accrual under any defined benefit plan) under any employee benefit plans or
arrangements maintained by the Parent, the Surviving Corporation or any
Subsidiary of the Parent for such Affected Employees' service with the Company
or any Subsidiary of the Company to the same extent recognized by the Company
immediately prior to the Effective Time.
(c) Parent shall, or shall cause the Surviving Corporation to, (i)
waive all limitations as to preexisting conditions exclusions and waiting
periods with respect to participation and coverage requirements applicable to
the Affected Employees under any welfare benefit plans that such Affected
Employees may be eligible to participate in after the Effective Time, other than
limitations or waiting periods that are already in effect with respect to such
Affected Employees and that have not been satisfied as of the Effective Time
under any welfare plan maintained for the Affected Employees immediately prior
to the Effective Time, and (ii)
55
provide each Affected Employee with credit for any co-payments and deductibles
paid prior to the Effective Time in satisfying any applicable deductible or out-
of-pocket requirements under any welfare plans that such Affected Employees are
eligible to participate in after the Effective Time.
Section 7.9 Stock Options. (a) As of the Effective Time, (i) each
-------------
outstanding Employee Stock Option shall be converted into an option (an
"Adjusted Option") to purchase the number of Parent Shares equal to the number
of Shares subject to such Employee Stock Option immediately prior to the
Effective Time multiplied by the Exchange Ratio (rounded to the nearest whole
number of Parent Shares), at an exercise price per share equal to the exercise
price for each such Share subject to such option divided by the Exchange Ratio
(rounded down to the nearest whole cent), and all references in each such
Employee Stock Option to the Company shall be deemed to refer to Parent, where
appropriate; provided, however, that the adjustments provided in this clause (i)
-------- -------
with respect to any Employee Stock Options which are "incentive stock options"
(as defined in Section 422 of the Code) or which are described in Section 423 of
the Code, shall be affected in a manner consistent with the requirements of
Section 424(a) of the Code, and (ii) Parent shall assume the obligations of the
Company under the Company's stock option plans pursuant to which such Employee
Stock Options were issued. The other terms of each Adjusted Option, and the
plans or agreements under which they were issued, shall continue to apply in
accordance with their terms. The date of grant of each Adjusted Option shall be
the date on which the corresponding Employee Stock Option was granted.
(b) Parent shall (i) reserve for issuance the number of Parent Shares
that will become subject to the benefit plans, programs and arrangements
referred to in this Section 7.9
56
and (ii) issue or cause to be issued the appropriate number of Parent Shares
pursuant to applicable plans, programs and arrangements, upon the exercise or
maturation of rights existing thereunder on the Effective Time or thereafter
granted or awarded. No later than the Effective Time, Parent shall prepare and
file with the SEC a registration statement on Form S-8 (or other appropriate
form) registering a number of Parent Shares necessary to fulfill Parent's
obligations under this Section 7.9. Such registration statement shall be kept
effective (and the current status of the prospectus required thereby shall be
maintained) for at least as long as Adjusted Options remain outstanding.
(c) As soon as practicable after the Effective Time, Parent shall
deliver to the holders of Employee Stock Options appropriate notices setting
forth such holders' rights pursuant to the respective Company stock option plans
and the agreements evidencing the grants of such Employee Stock Options and that
such Employee Stock Options and the related agreements shall be assumed by
Parent and shall continue in effect on the same terms and conditions (subject to
the adjustments required by this Section 7.9 after giving effect to the Merger).
Section 7.10 Public Announcements. Parent and Sub, on the one hand,
--------------------
and the Company, on the other hand, agree that they will not issue any press
release or otherwise make any public statement or respond to any press inquiry
with respect to this Agreement or the transactions contemplated hereby without
the prior approval of the other party, except as may be required by Law.
Section 7.11 By-Law Indemnification and Insurance. Parent shall
-------------------------------------
cause the Surviving Corporation to keep in effect in its By-Laws a provision for
a period of not less than six years from the Effective Time (or, in the case of
matters occurring prior to the Effective Time
57
which have not been resolved prior to the sixth anniversary of the Effective
Time, until such matters are finally resolved) which provides for
indemnification of the past and present officers and directors (the "Indemnified
Parties") of the Company to the fullest extent permitted by the GCL. For six
years from the Effective Time, Parent shall indemnify the Indemnified Parties to
the same extent as such Indemnified Parties are entitled to indemnification
pursuant to the preceding sentence. For a period of six years from the
Effective Time, Parent shall either cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by the
Company or provide substitute policies of at least the same coverage and amounts
containing terms and conditions which are, in the aggregate, no less
advantageous to the insured with respect to claims arising from facts or events
that occurred on or before the Effective Time, except that in no event shall
Parent be required to pay with respect to such insurance policies in any one
year more than $200,000.
Section 7.12 Expenses. (a) Except as set forth in this Section
--------
7.12, whether or not the Merger is consummated all costs and expenses incurred
in connection with this Agreement and the transactions contemplated hereby and
thereby shall be paid by the party incurring such expenses; provided that those
expenses incurred in connection with printing the Registration Statement and the
related Proxy Statement, as well as the filing fee relating to the Registration
Statement will be shared equally by Parent and the Company.
(b) As a condition and inducement to Parent's and Sub's willingness
to enter this Agreement, (i) if this Agreement is terminated by Parent and Sub
pursuant to Section 9.1(e) or 9.1(g), (ii) if this Agreement is terminated by
Parent and Sub or by the Company pursuant to 9.1(h) or (iii)(x) prior to the
termination of this Agreement, a bona fide Takeover Proposal is
58
commenced, publicly proposed or publicly disclosed and not withdrawn, (y) this
Agreement is terminated by the Parent and Sub or the Company pursuant to Section
9.1(f) (but only due to the failure of the Company stockholders to approve the
Merger) and (z) concurrently with or within twelve months after such termination
a Takeover Proposal shall have been consummated, then, in each case, the Company
shall (i) pay to Parent a fee (the "Company Termination Fee") of $20,000,000 in
immediately available funds and (ii) reimburse Parent and Sub for all out-of-
pocket expenses and fees (including, without limitation, the fees and expenses
of their counsel and investment banking firms) incurred by them or on their
behalf in connection with the Merger, this Agreement or the transactions
contemplated hereby; provided, however, that such fees and expenses shall not
-------- -------
exceed $2,500,000. The Company will pay the Company Termination Fee promptly,
but in no event later than the second business day following any such
termination by Parent and Sub and will reimburse Parent and Sub for the
foregoing fees and expenses promptly, but in no event later than the second
business day following submission of statements therefor.
(c) As a condition and inducement to the Company's willingness to
enter this Agreement, if (i) this Agreement is terminated by the Company
pursuant to Section 9.1(i) or (ii) (x) prior to the termination of this
Agreement, a bona fide proposal or offer with respect to any acquisition,
business combination or purchase (including by way of a tender or exchange
offer) of all or any significant portion of the assets of, or 15% or more of the
outstanding shares of capital stock of Parent (a "Parent Takeover Proposal") is
commenced, publicly proposed or publicly disclosed and not withdrawn, (y) this
Agreement is terminated by the Company pursuant to Section 9.1(f) (but only due
to the failure of the Parent stockholders to approve the
59
issuance of Parent Shares pursuant to the Merger) and (z) concurrently with or
within twelve months after such termination a Parent Takeover Proposal shall
have been consummated, then Parent shall (i) pay to the Company a fee (the
"Parent Termination Fee") of $20,000,000 in immediately available funds, and
(ii) reimburse the Company for all out-of-pocket expenses and fees (including,
without limitation, the fees and expenses of its counsel and investment banking
firms) incurred by it or on its behalf in connection with the Merger, this
Agreement or the transactions contemplated hereby; provided, however, that such
-------- -------
fees and expenses shall not exceed $2,500,000. Parent will pay the Parent
Termination Fee promptly, but in no event later than the second business day
following any such termination by the Company and will reimburse the Company for
the foregoing fees and expenses promptly, but in no event later than the second
business day following submission of statements therefor.
Section 7.13 Additional Agreements. Subject to the terms and
---------------------
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including using all reasonable efforts to obtain all necessary
waivers, consents and approvals and to effect all necessary registrations and
filings. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers and/or directors of Parent, Sub and the Company shall take all such
necessary action.
Section 7.14 Control of the Company's and Parent's Operations.
------------------------------------------------
Nothing contained in this Agreement shall give Parent or the Company, directly
or indirectly, rights to
60
control or direct the operations of the other prior to the Effective Time.
Prior to the Effective Time, each of Parent and the Company shall exercise,
consistent with the terms and conditions of this Agreement, complete control and
supervision of its operations.
Section 7.15 Company Rights Plan. No later than the date hereof, the
-------------------
Company shall amend the Company Rights Plan to effect the changes thereto
contemplated by the form of amendment attached hereto as Exhibit B. Except as
set forth in Exhibit B, the Company shall not amend, modify or supplement the
Company Rights Plan without the prior written consent of Parent.
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
----------------------------------------
Section 8.1 Conditions to Each Party's Obligation to Effect the
---------------------------------------------------
Merger. The respective obligations of each party to effect the Merger shall be
------
subject to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Any waiting period applicable to the consummation of the Merger
under the HSR Act shall have expired or been terminated, and no action shall
have been instituted by the Department of Justice or Federal Trade Commission
challenging or seeking to enjoin the consummation of this transaction, which
action shall have not been withdrawn or terminated.
(b) The Registration Statement shall have become effective in
accordance with the provisions of the Securities Act.
(c) This Agreement and the transactions contemplated hereby shall
have been approved and adopted by the requisite vote of the stockholders of each
of the Company and Parent in accordance with applicable law.
61
(d) No preliminary or permanent injunction or other order by any
federal or state court in the United States which prohibits the consummation of
the Merger shall have been issued and remain in effect.
(e) Each of the Company and Parent shall have obtained such
consents from third parties and government instrumentalities in addition to
pursuant to the HSR Act as shall be required and which are material to Parent
and the Company and to consummation of the transactions contemplated hereby.
(f) Parent and Sub and the Company shall have each received a
letter of KPMG Peat Marwick LLP, dated the Effective Time, in form and substance
satisfactory to Parent addressed to Parent and Sub and the Company stating that
the Merger will qualify as a pooling of interests transaction under Opinion No.
16 of the Accounting Principles Board.
Section 8.2 Conditions to Obligation of the Company to Effect the
-----------------------------------------------------
Merger. The obligation of the Company to effect the Merger shall be subject to
------
the satisfaction at or prior to the Effective Time of the following additional
conditions:
(a) Each of Parent and Sub shall have performed in all material
respects its obligations under this Agreement required to be performed by it at
or prior to the Effective Time and the representations and warranties of Parent
and Sub contained in this Agreement shall be true and correct in all material
respects at and as of the Effective Time as if made at and as of such time,
except as contemplated by this Agreement, and the Company shall have received a
certificate of the Chief Executive Officer or the President of Parent as to the
satisfaction of this condition.
62
(b) The Company shall have received an opinion of Winston & Xxxxxx,
in form and substance reasonably satisfactory to the Company, dated as of the
Effective Time, substantially to the effect that the Merger will constitute a
reorganization for U.S. federal income tax purposes within the meaning of
Section 368(a) of the Code. The issuance of such opinion shall be conditioned
upon the receipt by Winston & Xxxxxx of representation letters from each of
Parent, Sub and the Company, in each case, in form and substance reasonably
satisfactory to Winston & Xxxxxx. The specific provisions of each such
representation letter shall be in form and substance reasonably satisfactory to
Winston & Xxxxxx, and each such representation letter shall be dated on or
before the date of such opinion and shall not have been withdrawn or modified in
any material respect.
Section 8.3 Conditions to Obligations of Parent and Sub to Effect
-----------------------------------------------------
the Merger. The obligations of Parent and Sub to effect the Merger shall be
----------
subject to the satisfaction at or prior to the Effective Time of the following
additional conditions:
(a) The Company shall have performed in all material respects its
obligations under this Agreement required to be performed by it at or prior to
the Effective Time and the representations and warranties of the Company
contained in this Agreement shall be true and correct in all material respects
at and as of the Effective Time as if made at and as of such time except as
contemplated by this Agreement, and Parent and Sub shall have received a
Certificate of the Chief Executive Officer or the President of the Company as to
the satisfaction of this condition.
(b) Parent shall have received an opinion of Skadden, Arps, Slate,
Xxxxxxx & Xxxx LLP, in form and substance reasonably satisfactory to Parent,
dated as of the Effective
63
Time, substantially to the effect that the Merger will constitute a
reorganization for U.S. federal income tax purposes within the meaning of
Section 368(a) of the Code. The issuance of such opinion shall be conditioned
upon the receipt by such tax counsel of representation letters from each of
Parent, Sub and the Company, in each case, in form and substance reasonably
satisfactory to such tax counsel. The specific provisions of each such
representation letter shall be in form and substance reasonably satisfactory to
such tax counsel, and each such representation letter shall be dated on or
before the date of such opinion and shall not have been withdrawn or modified in
any material respect.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
---------------------------------
Section 9.1 Termination. This Agreement may be terminated at any
-----------
time prior to the Effective Time, whether before or after approval by the
stockholders of the Company:
(a) by mutual consent of Parent, Sub and the Company;
(b) by either Parent and Sub, on the one hand, or the Company, on
the other hand, if the Merger shall not have been consummated on or before
December 31, 1998;
(c) by the Company if any of the conditions specified in Sections
8.1 and 8.2 hereof has not been met or waived by the Company prior to or at such
time as such condition can no longer be satisfied;
(d) by Parent and Sub if any of the conditions specified in
Sections 8.1 and 8.3 hereof has not been met or waived by Parent and Sub prior
to or at such time as such condition can no longer be satisfied;
64
(e) by Parent and Sub if a tender offer or exchange offer for 50%
or more of the outstanding shares of capital stock of the Company is commenced
prior to the meeting of Company stockholders contemplated by Section 7.4(a), and
the Board of Directors of the Company fails to recommend against acceptance of
such tender offer or exchange offer by its stockholders (including by taking no
position with respect to the acceptance of such tender offer or exchange offer
by its stockholders) within the time period specified by Rule 14e-2 of the
Exchange Act;
(f) by either Parent and Sub or the Company if the approvals of the
stockholders of either Parent or the Company contemplated by this Agreement
shall not have been obtained by reason of the failure to obtain the required
vote at a duly held meeting of stockholders or of any adjournment thereof;
(g) by Parent and Sub if the Board of Directors of the Company
shall have withdrawn or modified in a manner adverse to Parent its approval or
recommendation of this Agreement and the transactions contemplated hereby;
(h) by either the Company or Parent and Sub if the Board of
Directors of the Company reasonably determines that a Takeover Proposal
constitutes a Superior Proposal, except that the Company may not terminate this
Agreement pursuant to this clause 7.1(h) unless and until (i) three business
days have elapsed following delivery to Parent of a written notice of such
determination by the Board of Directors of the Company and during such three
business day period the Company (x) informs Parent of the terms and conditions
of the Takeover Proposal and the identity of the person making the Takeover
Proposal and (y) otherwise reasonably cooperates with Parent with respect
thereto (subject, in the case of this
65
clause (y), to the condition that the Board of Directors of the Company shall
not be required to take any action that it believes, after consultation with
outside legal counsel, would present a reasonable possibility of violating its
obligations to the Company or the Company's stockholders under applicable law)
with the intent of providing Parent with the opportunity to offer to modify the
terms and conditions of this Agreement so that the transactions contemplated
hereby may be effected, (ii) at the end of such three business day period the
Board of Directors of the Company continues reasonably to believe that the
Takeover Proposal constitutes a Superior Proposal, (iii) simultaneously with
such termination the Company enters into a definitive acquisition, merger or
similar agreement to effect the Superior Proposal and (iv) simultaneously with
such termination, the Company pays to Parent the amounts specified and within
the time periods specified in Section 7.12(b);
(i) by the Company if the Board of Directors of Parent shall have
withdrawn or modified in a manner adverse to the Company its approval or
recommendation of this Agreement and the transactions contemplated hereby; or
(j) by either the Company or Parent and Sub if there shall have
been a material breach by the other of any of its representations, warranties,
covenants or agreements contained in this Agreement or the Option Agreement,
which if not cured would cause the conditions set forth in Sections 8.2(a) or
8.3(a), as the case may be, not to be satisfied, and such breach shall not have
been cured within 30 days after notice thereof shall have been received by the
party alleged to be in breach.
Section 9.2 Effect of Termination. In the event of termination of
---------------------
this Agreement as provided above, this Agreement shall forthwith become void and
there shall be no
66
liability on the part of either Parent, Sub or the Company or their respective
officers or directors (i) except as set forth in Section 7.1 hereof and except
for Section 7.12 hereof which shall survive the termination and (ii) no such
termination shall release any party of any liabilities or damages resulting from
any wilful breach by that party of any provision of this Agreement.
Section 9.3 Amendment. This Agreement may be amended by action
---------
taken by Parent, Sub and the Company at any time before or after approval hereof
by the stockholders of the Company, but, after any such approval, no amendment
shall be made which alters the Exchange Ratio or which in any way materially
adversely affects the rights of such stockholders, without the further approval
of such stockholders. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
Section 9.4 Waiver. At any time prior to the Effective Time, the
------
parties hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party.
ARTICLE X
GENERAL PROVISIONS
------------------
Section 10.1 Survival of Representations, Warranties and Agreements.
------------------------------------------------------
No representations, warranties or agreements contained herein shall survive
beyond the Effective
67
Time except that the agreements contained in Sections 3.1, 3.2, 3.3, 3.4, 3.5,
3.6, 7.9, 7.11 and 7.12 hereof shall survive beyond the Effective Time.
Section 10.2 Brokers. The Company represents and warrants that, (i)
-------
except for its financial advisors, Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation ("DLJ"), no broker, finder or financial advisor is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of the Company and (ii) the Company's fee arrangements with DLJ
have been disclosed to Parent. Parent represents and warrants that, except for
its financial advisor, Xxxxxxxx Inc. ("Xxxxxxxx"), (i) no broker, finder or
financial advisor is entitled to any brokerage finder's or other fee or
commission in connection with the Merger or the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Parent or Sub and
(ii) Parent's fee arrangements with Xxxxxxxx have been disclosed to the Company.
Section 10.3 Notices. All notices, claims, demands and other
-------
communications hereunder shall be in writing and shall be deemed given if
delivered personally or by telex or telegram or mailed by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
68
(a) If to Parent or Sub, to:
ACXIOM CORPORATION
X.X. Xxx 0000
000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000-0000
fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
fax: (000) 000-0000
Attention: J. Xxxxxxx Xxxxxx
(b) if to the Company, to:
MAY & XXXX, INC.
0000 Xxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
fax: (000) 000-0000
Attention: Chief Executive Officer
with a copy to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000
fax: (000) 000-0000
Attention: Xxxxx X. Xxxx
Section 10.4 Descriptive Headings. The headings contained in this
--------------------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
Section 10.5 Entire Agreement; Assignment. This Agreement
----------------------------
(including the Exhibits, Schedules and other documents and instruments referred
to herein) (a) constitutes the
69
entire agreement and supersedes all other prior agreements and understandings,
both written and oral among the parties or any of them, with respect to the
subject matter hereof; (b) is not intended to confer upon any other person any
rights or remedies hereunder; and (c) shall not be assigned by operation of law
or otherwise, provided that Parent or Sub may assign its rights and obligations
hereunder to a direct or indirect subsidiary of Parent, but no such assignment
shall relieve Parent or Sub, as the case may be, of its obligations hereunder.
Section 10.6 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware without giving
effect to the provisions thereof relating to conflicts of law.
Section 10.7 Specific Performance. The parties hereto agree that
--------------------
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with the terms hereof and that the
parties shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity.
Section 10.8 Counterparts. This Agreement may be executed in two or
------------
more counterparts, each of which shall be deemed to be an original but all of
which shall constitute one and the same agreement.
70
IN WITNESS WHEREFORE, each of Parent, Sub and the Company has caused
this Agreement to be executed on its behalf by its officers thereunto duly
authorized, all as of the date first above written.
ACXIOM CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President and CEO
ACX ACQUISITION CO., INC.
By: /s/ Xxxxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxxxx Xxxxxx
Title: General Counsel
MAY & XXXX, INC.
By: /s/ Xxxxx X. Xxxxx
----------------------------------
Name: Xxxxx X. Xxxxx
Title: Chairman, President and CEO
