1
EXHIBIT 2.1
-----------
AGREEMENT AND PLAN OF MERGER
among
The Learning Company, Inc.
TLC Merger Corp.
and
Broderbund Software, Inc.
June 21, 1998
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TABLE OF CONTENTS
Page
----
ARTICLE I
THE MERGER..................................................................1
Section 1.01 Effective Time of the Merger..................................1
Section 1.02 Closing.......................................................1
Section 1.03 Effects of the Merger.........................................2
Section 1.04 Directors and Officers........................................2
ARTICLE II
CONVERSION OF SECURITIES....................................................2
Section 2.01 Conversion of Capital Stock...................................2
Section 2.02 Exchange of Certificates......................................3
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER....................................6
Section 3.01 Organization of Seller........................................6
Section 3.02 Seller Capital Structure......................................7
Section 3.03 Authority; No Conflict; Required Filings and Consents.........8
Section 3.04 SEC Filings; Financial Statements.............................9
Section 3.05 No Undisclosed Liabilities...................................10
Section 3.06 Absence of Certain Changes or Events.........................10
Section 3.07 Taxes........................................................10
Section 3.08 Properties...................................................12
Section 3.09 Intellectual Property........................................12
Section 3.10 Agreements, Contracts and Commitments........................13
Section 3.11 Litigation...................................................13
Section 3.12 Environmental Matters........................................13
Section 3.13 Employee Benefit Plans.......................................14
Section 3.14 Compliance With Laws.........................................15
Section 3.15 Accounting and Tax Matters...................................16
Section 3.16 Registration Statement; Proxy Statement/Prospectus...........16
Section 3.17 Labor Matters................................................16
Section 3.18 Insurance....................................................17
Section 3.19 No Existing Discussions......................................17
Section 3.20 Opinion of Financial Advisor.................................17
Section 3.21 Section 203 of the DGCL Not Applicable.......................17
Section 3.22 Rights Agreement.............................................17
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND SUB............................17
Section 4.01 Organization of Buyer and Sub................................18
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Section 4.02 Buyer Capital Structure......................................18
Section 4.03 Authority; No Conflict; Required Filings and Consents........19
Section 4.04 SEC Filings; Financial Statements............................20
Section 4.05 No Undisclosed Liabilities...................................21
Section 4.06 Absence of Certain Changes or Events.........................21
Section 4.07 Taxes........................................................22
Section 4.08 Properties...................................................23
Section 4.09 Intellectual Property........................................23
Section 4.10 Agreements, Contracts and Commitments........................24
Section 4.11 Litigation...................................................24
Section 4.12 Environmental Matters........................................24
Section 4.13 Employee Benefit Plans.......................................25
Section 4.14 Compliance With Laws.........................................25
Section 4.15 Accounting and Tax Matters...................................25
Section 4.16 Registration Statement; Proxy Statement/Prospectus...........26
Section 4.17 Labor Matters................................................26
Section 4.18 Insurance....................................................26
Section 4.19 Opinion of Financial Advisor.................................27
Section 4.20 Interim Operations of Sub....................................27
ARTICLE V
CONDUCT OF BUSINESS........................................................27
Section 5.01 Covenants of Seller..........................................27
Section 5.02 Covenants of Buyer.......................................29
Section 5.03 Cooperation..................................................30
Section 5.04 Confidentiality..............................................30
ARTICLE VI
ADDITIONAL AGREEMENTS......................................................30
Section 6.01 No Solicitation..............................................30
Section 6.02 Proxy Statement/Prospectus; Registration Statement...........32
Section 6.03 Nasdaq Quotation.............................................33
Section 6.04 Access to Information........................................33
Section 6.05 Stockholders Meetings........................................33
Section 6.06 Legal Conditions to Merger...................................34
Section 6.07 Public Disclosure............................................35
Section 6.08 Tax-Free Reorganization......................................36
Section 6.09 Pooling Accounting...........................................36
Section 6.10 Affiliate Agreements.........................................36
Section 6.11 NYSE Listing.................................................36
Section 6.12 Stock Plans..................................................36
Section 6.13 Brokers or Finders...........................................37
Section 6.14 Indemnification..............................................38
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ARTICLE VII
CONDITIONS TO MERGER.......................................................38
Section 7.01 Conditions to Each Party's Obligation To Effect the Merger...38
Section 7.02 Additional Conditions to Obligations of Buyer and Sub........39
Section 7.03 Additional Conditions to Obligations of Seller...............40
ARTICLE VIII
TERMINATION AND AMENDMENT..................................................41
Section 8.01 Termination..................................................41
Section 8.02 Effect of Termination........................................42
Section 8.03 Fees and Expenses............................................43
Section 8.04 Amendment....................................................45
Section 8.05 Extension; Waiver............................................45
ARTICLE IX
MISCELLANEOUS..............................................................45
Section 9.01 Nonsurvival of Representations, Warranties and Agreements....45
Section 9.02 Notices......................................................45
Section 9.03 Interpretation...............................................46
Section 9.04 Counterparts.................................................46
Section 9.05 Entire Agreement; No Third Party Beneficiaries...............47
Section 9.06 Governing Law................................................47
Section 9.07 Jurisdiction.................................................47
Section 9.08 Assignment...................................................47
Section 9.09 Severability.................................................47
Section 9.10. WAIVER OF JURY TRIAL........................................48
Exhibit A-1 Form of Seller Affiliate Agreement
Exhibit A-2 Form of Buyer Affiliate Agreement
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TABLES OF DEFINED TERMS
Cross Reference
Terms in agreement
----- ------------
Acquisition Proposal............................................ Section 6.01(a)
Affiliate....................................................... Section 6.10
Affiliate Agreement............................................. Section 6.10
Agreement....................................................... Preamble
Agreement of Merger............................................. Section 1.01
Alternative Transaction......................................... Section 8.03(g)
Antitrust Laws.................................................. Section 6.06(b)
Bankruptcy and Equity Exception................................. Section 3.03(a)
Blue Sky........................................................ Section 7.02(d)
Buyer Balance Sheet............................................. Section 4.04(b)
Buyer Common Stock.............................................. Section 2.01(b)
Buyer Disclosure Schedule....................................... Article IV
Buyer Employee Plans............................................ Section 4.13(a)
Buyer Material Adverse Effect................................... Section 4.01
Buyer Material Contracts........................................ Section 4.10
Buyer Meeting................................................... Section 3.16
Buyer SEC Reports............................................... Section 4.04(a)
Buyer Stock Plans............................................... Section 4.02(a)
Buyer Voting Proposal........................................... Section 6.05(b)
Certificates.................................................... Section 2.02(b)
Closing......................................................... Section 1.02
Closing Date.................................................... Section 1.02
Code............................................................ Preamble
Confidentiality Agreement....................................... Section 5.04
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Constituent Corporations........................................ Section 1.03
Exchange Ratio.................................................. Section 2.01(c)
Effective Time.................................................. Section 1.01
Environmental Law............................................... Section 3.12(c)
ERISA........................................................... Section 3.13(a)
ERISA Affiliate................................................. Section 3.13(a)
Exchange Act.................................................... Section 3.03(c)
Exchange Agent.................................................. Section 2.02(a)
Exchange Fund................................................... Section 2.02(a)
Governmental Entity............................................. Section 3.03(c)
Hazardous Substance............................................. Section 3.12(c)
HSR Act......................................................... Section 3.03(c)
Indemnified Parties............................................. Section 6.14(a)
IRS............................................................. Section 3.07(b)
Joint Proxy Statement........................................... Section 3.16
Material Leases................................................. Section 3.08
Merger.......................................................... Preamble
Order........................................................... Section 6.06(b)
Outside Date.................................................... Section 8.01(b)
Registration Statement.......................................... Section 3.16
Rule 145........................................................ Section 6.10
SEC............................................................. Section 3.03(c)
Securities Act.................................................. Section 3.03(c)
Seller Balance Sheet ........................................... Section 3.04(b)
Seller Common Stock ............................................ Section 2.01(b)
Seller Disclosure Schedule ..................................... Article III
Seller Employee Plans .......................................... Section (a)
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Seller Material Adverse Effect ................................. Section 3.01
Seller Material Contract ....................................... Section 3.10
Seller Meeting ................................................. Section 3.16
Seller ......................................................... Section 3.02(b)
Seller Rights .................................................. Section 3.02(b)
Seller Rights Plan.............................................. Section 3.02(b)
Seller SEC Reports ............................................. Section 3.04(a)
Seller Stock Plans ............................................. Section 3.02(a)
Seller Voting Proposal ......................................... Section 6.05(a)
Subsidiary...................................................... Section 3.01
Superior Proposal............................................... Section 6.01(a)
Surviving Corporation........................................... Section 1.03(a)
Tax............................................................. Section 3.07(a)
Taxes........................................................... Section 3.07(a)
Third Party..................................................... Section 8.03(g)
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AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of June 21, 1998,
by and among The Learning Company, Inc., a Delaware corporation ("Buyer"), TLC
Merger Corp., a Delaware corporation and a direct, wholly-owned subsidiary of
Buyer ("Sub"), and Broderbund Software, Inc., a Delaware corporation ("Seller").
WHEREAS, the Boards of Directors of Buyer and Seller deem it advisable and
in the best interests of each corporation and its respective stockholders that
Buyer and Seller combine in order to advance the long-term business interests of
Buyer and Seller;
WHEREAS, the combination of Buyer and Seller shall be effected by the terms
of this Agreement through a merger of Sub into Seller, as a result of which the
stockholders of Seller will become stockholders of Buyer (the "Merger");
WHEREAS, for Federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the
Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a pooling of interests.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below, the
parties agree as follows:
ARTICLE I
THE MERGER
Section 1.01 EFFECTIVE TIME OF THE MERGER. Subject to the provisions of
this Agreement, a certificate of merger in such form as is required by the
relevant provisions of the Delaware General Corporation Law ("DGCL") (the
"Certificate of Merger") shall be duly executed and acknowledged by the
Surviving Corporation (as defined in Section 1.03) and thereafter delivered to
the Secretary of State of the State of Delaware for filing, as soon as
practicable on the Closing Date (as defined in Section 1.02). The Merger shall
become effective upon the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware (the "Effective Time").
Section 1.02 CLOSING. The closing of the Merger (the "Closing") will take
place at 10:00 a.m., E.S.T., on a date to be specified by Buyer and Seller (the
"Closing Date"), which shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in Article VII, at the
offices of Xxxx and Xxxx LLP,
9
00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, unless another date, place or time is
agreed to in writing by Buyer and Seller.
Section 1.03 EFFECTS OF THE MERGER. At the Effective Time (i) the separate
existence of Sub shall cease and Sub shall be merged with and into Seller (Sub
and Seller are sometimes referred to below as the "Constituent Corporations" and
Seller following the Merger is sometimes referred to below as the "Surviving
Corporation"), (ii) the Certificate of Incorporation of Seller shall be amended
so that Article 4 of such Certificate of Incorporation reads in its entirety as
follows: "The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 1,000, all of which shall consist
of Common Stock, $.01 par value per share, and, as so amended, such Certificate
of Incorporation shall be the Certificate of Incorporation of the Surviving
Corporation, and (iii) the Bylaws of Sub as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation. The Merger
shall have the effects set forth in Section 259 of the DGCL.
Section 1.04 DIRECTORS AND OFFICERS. The directors and officers of Sub
immediately prior to the Effective Time shall be the initial directors and
officers of the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and Bylaws of the Surviving Corporation.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.01 CONVERSION OF CAPITAL STOCK. As of the Effective Time, by
virtue of the Merger and without any action on the part of the holder of any
shares of Seller Common Stock or capital stock of Sub:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of the capital
stock of Sub shall be converted into and become one fully paid and nonassessable
share of Common Stock of the Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK AND BUYER-OWNED STOCK. All shares of
common stock $.01 par value per share, of Seller ("Seller Common Stock") that
are owned by Seller as treasury stock and any shares of Seller Common Stock
owned by Buyer, Sub or any other wholly-owned Subsidiary (as defined in Section
3.01) of Buyer shall be cancelled and retired and shall cease to exist and no
stock of Buyer or other consideration shall be delivered in exchange therefor.
All shares of Common Stock, $.01 par value per share, of Buyer ("Buyer Common
Stock") owned by Seller shall be unaffected by the Merger.
(c) EXCHANGE RATIO FOR SELLER COMMON STOCK. Subject to Section 2.02, each
issued and outstanding share of Seller Common Stock (other than shares to be
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cancelled in accordance with Section 2.01(b)), together with the Seller Rights
(as defined below) attached thereto or associated therewith, shall be converted
into the right to receive .8 shares (the "Exchange Ratio") of Buyer Common
Stock. All such shares of Seller Common Stock and all Seller Rights, when so
converted, shall no longer be outstanding and shall automatically be cancelled
and retired and shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with respect
thereto, except the right to receive the shares of Buyer Common Stock and any
cash in lieu of fractional shares of Buyer Common Stock to be issued or paid in
consideration therefor upon the surrender of such certificate in accordance with
Section 2.02, without interest.
(d) ADJUSTMENTS TO EXCHANGE RATIO. The Exchange Ratio shall be adjusted to
reflect fully the effect of any stock split, reverse split, stock dividend
(including any dividend or distribution of securities convertible into Buyer
Common Stock or Seller Common Stock), reorganization, recapitalization or other
like change with respect to Buyer Common stock or Seller Common Stock occurring
after the date hereof and prior to the Effective Time.
Section 2.02 EXCHANGE OF CERTIFICATES. The procedures for exchanging
outstanding shares of Seller Common Stock for Buyer Common Stock pursuant to the
Merger are as follows:
(a) EXCHANGE AGENT. As of the Effective Time, Buyer shall deposit with a
bank or trust company designated by Buyer and Seller (the "Exchange Agent"), for
the benefit of the holders of shares of Seller Common Stock, for exchange in
accordance with this Section 2.02, through the Exchange Agent, (i) certificates
representing the shares of Buyer Common Stock (such shares of Buyer Common
Stock, together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund") issuable pursuant to Section
2.01 in exchange for outstanding shares of Seller Common Stock, (ii) cash in an
amount sufficient to make payments required pursuant to Section 2.02(e), and
(iii) any dividends or distributions to which holders of Certificates (as
defined below) may be entitled pursuant to Section 2.02(c)
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Seller Common Stock (the "Certificates") whose
shares were converted pursuant to Section 2.01 into the right to receive shares
of Buyer Common Stock (i) a letter of transmittal in customary form (which shall
specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Buyer and
Seller may reasonably specify) and (ii) instructions for effecting the surrender
of the Certificates in exchange for certificates representing
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shares of Buyer Common Stock (plus cash in lieu of fractional shares, if any, of
Buyer Common Stock and any dividends or distributions as provided below). Upon
surrender of a Certificate for cancellation to the Exchange Agent or to such
other agent or agents as may be appointed by Buyer, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor a certificate representing that number of whole
shares of Buyer Common Stock which such holder has the right to receive pursuant
to the provisions of this Article II plus cash in lieu of fractional shares
pursuant to Section 2.02(e) and any dividends or distributions pursuant to
Section 2.02(c), and the Certificate so surrendered shall immediately be
cancelled. In the event of a transfer of ownership of Seller Common Stock which
is not registered in the transfer records of Seller, a certificate representing
the proper number of shares of Buyer Common Stock plus cash in lieu of
fractional shares pursuant to Section 2.02(e) and any dividends or distributions
pursuant to Section 2.02(c) may be issued to a transferee if the Certificate
representing such Seller Common Stock is presented to the Exchange Agent,
accompanied by all documents required to evidence and effect such transfer and
by evidence that any applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.02, each Certificate shall be
deemed at any time after the Effective Time to represent only the right to
receive upon such surrender the certificate representing shares of Buyer Common
Stock plus cash in lieu of fractional shares pursuant to Section 2.02(e) and any
dividends or distributions pursuant to Section 2.02(c) as contemplated by this
Section 2.02.
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or other
distributions declared or made after the Effective Time with respect to Buyer
Common Stock with a record date after the Effective Time shall be paid to the
holder of any unsurrendered Certificate with respect to the shares of Buyer
Common Stock represented thereby and no cash payment in lieu of fractional
shares shall be paid to any such holder pursuant to subsection (e) below until
the holder of record of such Certificate shall surrender such Certificate.
Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the record holder of the certificates
representing whole shares of Buyer Common Stock issued in exchange therefor,
without interest, (i) at the time of such surrender, the amount of any cash
payable in lieu of a fractional share of Buyer Common Stock to which such holder
is entitled pursuant to subsection (e) below and the amount of dividends or
other distributions with a record date after the Effective Time previously paid
with respect to such whole shares of Buyer Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of Buyer
Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN SELLER COMMON STOCK. All shares of Buyer
Common Stock issued upon the surrender for exchange of Certificates in
accordance with the terms hereof (including any cash or other distributions paid
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pursuant to subsection (c) or (e) of this Section 2.02) shall be deemed to have
been issued in full satisfaction of all rights pertaining to such shares of
Seller Common Stock, subject, however, to the Surviving Corporation's obligation
to pay any dividends or make any other distributions with a record date prior to
the Effective Time which may have been declared or made by Seller on such shares
of Seller Common Stock in accordance with the terms of this Agreement (to the
extent permitted under Section 5.01) prior to the date hereof and which remain
unpaid at the Effective Time, and from and after the Effective Time there shall
be no further registration of transfers on the stock transfer books of the
Surviving Corporation of the shares of Seller Common Stock which were
outstanding immediately prior to the Effective Time. If, after the Effective
Time, Certificates are presented to the Surviving Corporation for any reason,
they shall be cancelled and exchanged as provided in this Section 2.02.
(e) NO FRACTIONAL SHARES. No certificate or scrip representing fractional
shares of Buyer Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the owner
thereof to vote or to any other rights of a stockholder of Buyer.
Notwithstanding any other provision of this Agreement, each holder of shares of
Seller Common Stock exchanged pursuant to the Merger who would otherwise have
been entitled to receive a fraction of a share of Buyer Common Stock (after
taking into account all Certificates delivered by such holder) shall receive, in
lieu thereof, cash (without interest) in an amount equal to such fractional part
of a share of Buyer Common Stock multiplied by the average of the last reported
sales prices of Buyer Common Stock, as reported on the New York Stock Exchange,
on each of the ten trading days immediately preceding the Closing Date.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund which
remains undistributed to the stockholders of Seller for 180 days after the
Effective Time shall be delivered to Buyer, upon demand, and any stockholders of
Seller who have not previously complied with this Section 2.02 shall thereafter
look only to Buyer for payment of their claim for Buyer Common Stock, any cash
in lieu of fractional shares of Buyer Common Stock and any dividends or
distributions with respect to Buyer Common Stock.
(g) NO LIABILITY. To the extent permitted by applicable law, neither Buyer
nor Seller shall be liable to any holder of shares of Seller Common Stock or
Buyer Common Stock, as the case may be, for such shares (or dividends or
distributions with respect thereto) properly delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(h) WITHHOLDING RIGHTS. Each of Buyer and the Surviving Corporation shall
be entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Seller Common Stock such
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amounts as it is required to deduct and withhold with respect to the making of
such payment under the Code, or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld by Surviving Corporation or
Buyer, as the case may be, such withheld amounts shall be treated for all
purposes of this Agreement as having been paid to the holder of the shares of
Seller Common Stock in respect of which such deduction and withholding was made
by Surviving Corporation or Buyer, as the case may be.
(i) LOST CERTIFICATES. If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by the
Surviving Corporation, the posting by such person of a bond in such reasonable
amount as the Surviving Corporation may direct as indemnity against any claim
that may be made against it with respect to such Certificate, the Exchange Agent
will issue in exchange for such lost, stolen or destroyed Certificate the shares
of Buyer Common Stock and any cash in lieu of fractional shares, and unpaid
dividends and distributions on shares of Buyer Common Stock deliverable in
respect thereof pursuant to this Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer and Sub that the statements
contained in this Article III are true and correct, except as set forth herein
or in the disclosure schedule delivered by Seller to Buyer on or before the date
of this Agreement (the "Seller Disclosure Schedule"). The Seller Disclosure
Schedule shall be arranged in paragraphs corresponding to the numbered and
lettered paragraphs contained in this Article III and the disclosure in any
paragraph shall qualify other paragraphs in this Article III only to the extent
that it is reasonably apparent from a reading of such disclosure that it also
qualifies or applies to such other paragraphs.
Section 3.01 ORGANIZATION OF SELLER. Each of Seller and its Subsidiaries
(as defined below) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, has all
requisite corporate power to own, lease and operate its property and to carry on
its business as now being conducted and as proposed to be conducted, and is duly
qualified to do business and is in good standing as a foreign corporation in
each jurisdiction in which the failure to be so qualified would have a material
adverse effect on the business, properties, financial condition or results of
operations of Seller and its Subsidiaries, taken as a whole (a "Seller Material
Adverse Effect"); provided, however, that for purposes of this Agreement, any
adverse change in the stock price of Seller in and of itself, as quoted on the
Nasdaq National Market, shall not be taken into account in determining whether
there has been or would be a "Seller Material
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Adverse Effect" on or with respect to Seller and its Subsidiaries, taken as a
whole. Except as set forth in the Seller SEC Reports (as defined in Section
3.04) filed prior to the date hereof, neither Seller nor any of its Subsidiaries
directly or indirectly owns any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any corporation,
partnership, joint venture or other business association or entity, excluding
securities in any publicly traded company held for investment by Seller and
comprising less than five percent (5%) of the outstanding stock of such company.
As used in this Agreement, the word "Subsidiary" means, with respect to Seller,
any corporation or other organization, whether incorporated or unincorporated,
of which (i) such party or any other Subsidiary of such party is a general
partner (excluding partnerships, the general partnership interests of which held
by such party or any Subsidiary of such party do not have a majority of the
voting interest in such partnership) or (ii) at least a majority of the
securities or other interests having by their terms ordinary voting power to
elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
Subsidiaries, or by such party and one or more of its Subsidiaries and, with
respect to Buyer, those entities listed on Buyer Disclosure Schedule 4.01.
Section 3.02 SELLER CAPITAL STRUCTURE.
(a) The authorized capital stock of Seller consists of 120,000,000 shares
of Common Stock ("Seller Common Stock"). As of May 31, 1998, (i) 20,964,789
shares of Seller Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable and (ii) no shares of Seller Common
Stock were held in the treasury of Seller or by Subsidiaries of Seller. The
Seller Disclosure Schedule shows the number of shares of Seller Common Stock
reserved for future issuance pursuant to stock options granted and outstanding
as of May 31, 1998 and the plans under which such options were granted
(collectively, the "Seller Stock Plans"). No material change in such
capitalization has occurred between May 31, 1998 and the date of this Agreement.
As of the date hereof, all shares of Seller Common Stock subject to issuance as
specified above are duly authorized and, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be validly issued, fully paid and nonassessable. As of the date hereof,
there are no obligations, contingent or otherwise, of Seller or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of Seller
Common Stock or the capital stock of any Subsidiary or to provide funds to or
make any material investment (in the form of a loan, capital contribution or
otherwise) in any such Subsidiary or any other entity other than guarantees of
bank obligations of Subsidiaries entered into in the ordinary course of
business. As of the date hereof, all of the outstanding shares of capital stock
of each of Seller's Subsidiaries are duly authorized, validly issued, fully paid
and nonassessable and all such shares (other than directors' qualifying shares
in the case of foreign Subsidiaries) are owned by
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Seller or another Subsidiary free and clear of all security interests, liens,
claims, pledges, agreements, limitations in Seller's voting rights, charges or
other encumbrances of any nature.
(b) As of the date hereof, except as set forth in this Section 3.02 or as
reserved for future grants of options under the Seller Stock Plans and except
for the rights (the "Seller Rights") issued and issuable under the Preferred
Shares Rights Agreement dated as of May 1, 1996 between Seller and Chemical
Mellon Shareholder Services, L.L.C. (the "Seller Rights Plan"), there are no
equity securities of any class of Seller or any of its Subsidiaries, or any
security exchangeable into or exercisable for such equity securities, issued,
reserved for issuance or outstanding. As of the date hereof, there are no
options, warrants, equity securities, calls, rights, commitments or agreements
of any character to which Seller or any of its Subsidiaries is a party or by
which it is bound obligating Seller or any of its Subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of capital
stock of Seller or any of its Subsidiaries or obligating Seller or any of its
Subsidiaries to grant, extend, accelerate the vesting of, otherwise modify or
amend or enter into any such option, warrant, equity security, call, right,
commitment or agreement. As of the date hereof, to the best knowledge of Seller,
there are no voting trusts, proxies or other voting agreements or understandings
with respect to the shares of capital stock of Seller.
Section 3.03 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Seller has all requisite corporate power and authority to enter into
this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement and the consummation of
the transactions contemplated by this Agreement by Seller have been duly
authorized by all necessary corporate action on the part of Seller, subject only
to the approval of the Merger by Seller's stockholders under the DGCL. This
Agreement has been duly executed and delivered by Seller and constitutes the
valid and binding obligation of Seller, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles (the "Bankruptcy and Equity
Exception").
(b) The execution and delivery of this Agreement by Seller does not, and
the consummation of the transactions contemplated by this Agreement will not,
(i) conflict with, or result in any violation or breach of, any provision of the
Certificate of Incorporation or Bylaws of Seller, (ii) result in any violation
or breach of, or constitute (with or without notice or lapse of time, or both) a
default (or give rise to a right of termination, cancellation or acceleration of
any obligation or loss of any material benefit) under, or require a consent or
waiver under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, lease, contract or other agreement, instrument or
obligation to which Seller or any of its Subsidiaries is
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16
a party or by which any of them or any of their properties or assets may be
bound, or (iii) conflict with or violate any permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Seller or any of its Subsidiaries or any of its or their
properties or assets, except in the case of (ii) and (iii) for any such
conflicts, violations, defaults, terminations, cancellations or accelerations
which are not, individually or in the aggregate, reasonably likely to have a
Seller Material Adverse Effect.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any court, administrative agency or commission or
other governmental authority or instrumentality ("Governmental Entity") is
required by or with respect to Seller or any of its Subsidiaries in connection
with the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby, except for (i) the filing of the pre-merger
notification report under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, ("HSR Act"), (ii) the filing of the Certificate of Merger with
the Delaware Secretary of State, (iii) the filing of the Joint Proxy Statement
(as defined in Section 3.16 below) with the Securities and Exchange Commission
(the "SEC") in accordance with the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), (iv) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
state securities laws and the laws of any foreign country and (v) such other
consents, authorizations, filings, approvals and registrations which, if not
obtained or made, would not be reasonably likely to have a Seller Material
Adverse Effect.
Section 3.04 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Seller has filed and made available to Buyer all forms, reports and
documents required to be filed by Seller with the SEC since January 1, 1996
other than registration statements on Form S-8 (collectively, the "Seller SEC
Reports"). The Seller SEC Reports (i) at the time filed, complied in all
material respects with the applicable requirements of the Securities Act of
1933, as amended (the "Securities Act"), and the Exchange Act, as the case may
be, and (ii) did not at the time they were filed (or if amended or superseded by
a filing prior to the date of this Agreement, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated in such Seller SEC Reports or necessary in order to make
the statements in such Seller SEC Reports, in the light of the circumstances
under which they were made, not misleading. None of Seller's Subsidiaries is
required to file any forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each case,
any related notes) contained in the Seller SEC Reports complied as to form in
all material respects with the applicable published rules and regulations of the
SEC with
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respect thereto, was prepared in accordance with generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) and fairly presented
the consolidated financial position of Seller and its Subsidiaries as of the
dates and the consolidated results of its operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments which were not or
are not expected to be material in amount. The unaudited balance sheet of Seller
as of May 31, 1998 is referred to herein as the "Seller Balance Sheet."
Section 3.05 NO UNDISCLOSED LIABILITIES. Except as disclosed in the Seller
SEC Reports filed prior to the date hereof, and except for normal or recurring
liabilities incurred since May 31, 1998 in the ordinary course of business
consistent with past practices, Seller and its Subsidiaries do not have any
liabilities, either accrued, contingent or otherwise (whether or not required to
be reflected in financial statements in accordance with generally accepted
accounting principles), and whether due or to become due, which individually or
in the aggregate are reasonably likely to have a Seller Material Adverse Effect.
Section 3.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed in
the Seller SEC Reports filed prior to the date hereof, since the date of the
Seller Balance Sheet, Seller and its Subsidiaries have conducted their
businesses only in the ordinary course and in a manner consistent with past
practice and, since such date, there has not been (i) any change in the
financial condition, results of operations, business or properties of Seller and
its Subsidiaries, taken as a whole that has had, or is reasonably likely to
have, a Seller Material Adverse Effect; (ii) any damage, destruction or loss
(whether or not covered by insurance) with respect to Seller or any of its
Subsidiaries having a Seller Material Adverse Effect; (iii) any material change
by Seller in its accounting methods not required pursuant to generally accepted
accounting principles, principles or practices to which Buyer has not previously
consented in writing; (iv) any revaluation by Seller of any of its assets having
a Seller Material Adverse Effect; or (v) any other action or event that would
have required the consent of Buyer pursuant to Section 5.01 of this Agreement
had such action or event occurred after the date of this Agreement.
Section 3.07 TAXES.
(a) For the purposes of this Agreement, a "Tax" or, collectively, "Taxes,"
means any and all material federal, state, local and foreign taxes, assessments
and other governmental charges, duties, impositions and liabilities, including
taxes based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, gains, franchise,
withholding, payroll, recapture, employment, excise, unemployment insurance,
social security, business license,
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occupation, business organization, stamp, environmental and property taxes,
together with all interest, penalties and additions imposed with respect to such
amounts and any obligations under any agreements or arrangements with any other
person with respect to such amounts and including any liability for taxes of a
predecessor entity.
(b) Seller and each of its Subsidiaries have (i) filed all federal, state,
local and foreign tax returns and reports required to be filed by them prior to
the date of this Agreement (taking into account extensions), (ii) paid or
accrued all Taxes due and payable, and (iii) paid or accrued all Taxes for which
a notice of assessment or collection has been received (other than amounts being
contested in good faith by appropriate proceedings), except in the case of
clause (i), (ii) or (iii) for any such filings, payments or accruals which are
not reasonably likely, individually or in the aggregate, to have a Seller
Material Adverse Effect. Unpaid Taxes for periods prior to the date hereof do
not materially exceed accruals and reserves for Taxes (other than accruals and
reserves for Taxes established to reflect timing differences between book and
Tax income) as set forth on the Seller Balance Sheet. Neither the Internal
Revenue Service (the "IRS") nor any other taxing authority has asserted any
claim for Taxes, or to the actual knowledge of the executive officers of Seller,
is threatening to assert any claims for Taxes, which claims, individually or in
the aggregate, are reasonably likely to have a Seller Material Adverse Effect.
Seller and each of its Subsidiaries have withheld or collected and paid over to
the appropriate governmental authorities (or are properly holding for such
payment) all Taxes required by law to be withheld or collected, except for
amounts which are not reasonably likely, individually or in the aggregate, to
have a Seller Material Adverse Effect. There are no liens for Taxes upon the
assets of Seller or any of its Subsidiaries (other than liens for Taxes that are
not yet due or that are being contested in good faith by appropriate
proceedings), except for liens which are not reasonably likely, individually or
in the aggregate, to have a Seller Material Adverse Effect.
(c) Seller is not and never has been a party to or bound by any Tax
indemnity, Tax sharing or Tax allocation agreement (whether written or unwritten
or arising under operation of federal law as a result of being a member of a
group filing consolidated Tax Returns, under operation of certain state laws as
a result of being a member of a unitary group, or under comparable laws of other
states or foreign jurisdictions) which includes a party other than Seller nor
does Seller owe any amount under any such agreement.
(d) Neither Seller nor any of its Subsidiaries is a "consenting
corporation" within the meaning of Section 341(f) of the Code, and none of the
assets of Seller or the Subsidiaries are subject to an election under Section
341(f) of the Code.
(e) Neither Seller nor any of its Subsidiaries has been a United States
real property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
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(f) Neither Seller nor any of its Subsidiaries has made any payments, is
obligated to make any payments, or is a party to any agreement that could
obligate it to make any payments that will be an "excess parachute payment"
under Section 280G of the Code.
Section 3.08 PROPERTIES.
(a) Seller has provided to Buyer a true and complete list of all real
property leased by Seller or its Subsidiaries pursuant to leases providing for
the occupancy of facilities in excess of 10,000 square feet (collectively
"Material Lease(s)") and the location of the premises. Seller is not in default
under any of such leases, except where the existence of such defaults,
individually or in the aggregate, is not reasonably likely to have a Seller
Material Adverse Effect.
(b) Seller has provided to Buyer a true and complete list of all real
property that Seller or any of its Subsidiaries owns. With respect to each such
item of real property, except for such matters that, individually or in the
aggregate, are not reasonably likely to have a Seller Material Adverse Effect:
(a) Seller or the identified Subsidiary has good and clear record and marketable
title to such property, insurable by a recognized national title insurance
company at standard rates, free and clear of any security interest, easement,
covenant or other restriction, except for recorded easements, covenants and
other restrictions which do not materially impair the current uses or occupancy
of such property; and (b) the improvements constructed on such property are in
good condition, and all mechanical and utility systems servicing such
improvements are in good condition, free in each case of material defects.
Section 3.09 INTELLECTUAL PROPERTY.
(a) Seller and its Subsidiaries own, or are licensed or otherwise
possess legally enforceable rights to use, all patents, trademarks, trade names,
service marks and copyrights, any applications for and registrations of such
patents, trademarks, trade names, service marks and copyrights, and all
processes, formulae, methods, schematics, technology, know-how, computer
software programs or applications and tangible or intangible proprietary
information or material that are necessary to conduct the business of Seller and
its Subsidiaries as currently conducted, or planned to be conducted, the absence
of which would be reasonably likely to have a Seller Material Adverse Effect
(the "Seller Intellectual Property Rights").
(b) The execution and delivery of this Agreement and consummation of
the Merger will not result in the breach of, or create on behalf of any third
party the right to terminate or modify, any license, sublicense or other
agreement relating to the Seller's Intellectual Property Rights, or any material
licenses, sublicenses and other agreements as to which Seller or any of its
Subsidiaries is a party and pursuant to which Seller or any of its Subsidiaries
is authorized to use any third party patents,
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trademarks, copyrights or trade secrets ("Seller Third Party Intellectual
Property Rights"), including software that is used in the manufacture of,
incorporated in, or forms a part of any product sold by or expected to be sold
by Seller or any of its Subsidiaries, the breach of which would be reasonably
likely to have a Seller Material Adverse Effect or would have a material adverse
effect on any product of Seller expected to account for more than $1 million of
revenue in the 12 months following the date hereof.
(c) All patents, registered trademarks, service marks and copyrights
which are held by Seller or any of its Subsidiaries the loss or invalidity of
which would cause a Seller Material Adverse Effect, are valid and subsisting.
Seller (i) has not been sued in any suit, action or proceeding, or received in
writing any claim or notice, which involves a claim of infringement of any
patents, trademarks, service marks, copyrights or violation of any trade secret
or other proprietary right of any third party; and (ii) has no knowledge that
the manufacturing, marketing, licensing or sale of its products infringes any
patent, trademark, service xxxx, copyright, trade secret or other proprietary
right of any third party, which infringement in the cases of clause (i) and (ii)
would reasonably be expected to have a Seller Material Adverse Effect.
Section 3.10 AGREEMENTS, CONTRACTS AND COMMITMENTS. Seller has not
breached, or received in writing any claim or notice that it has breached, any
of the terms or conditions of any material agreement, contract or commitment
filed as an exhibit to the Seller SEC Reports ("Seller Material Contracts") in
such a manner as, individually or in the aggregate, are reasonably likely to
have a Seller Material Adverse Effect. Each Seller Material Contract that has
not expired by its terms is in full force and effect.
Section 3.11 LITIGATION. Except as described in the Seller SEC Reports
filed prior to the date hereof, there is no action, suit or proceeding, claim,
arbitration or investigation against Seller pending or as to which Seller has
received any written notice of assertion, which, individually or in the
aggregate, is reasonably likely to have a Seller Material Adverse Effect or a
material adverse effect on the ability of Seller to consummate the transactions
contemplated by this Agreement.
Section 3.12 ENVIRONMENTAL MATTERS.
(a) Except as disclosed in the Seller SEC Reports filed prior to the
date hereof and except for such matters that, individually or in the aggregate,
are not reasonably likely to have a Seller Material Adverse Effect: (i) Seller
and its Subsidiaries have complied with all applicable Environmental Laws (as
defined in Section 3.12(b)); (ii) the properties currently owned or operated by
Seller and its Subsidiaries (including soils, groundwater, surface water,
buildings or other structures) are not contaminated with any Hazardous
Substances (as defined in
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Section 3.12(c)); (iii) the properties formerly owned or operated by Seller or
any of its Subsidiaries were not contaminated with Hazardous Substances during
the period of ownership or operation by Seller or any of its Subsidiaries; (iv)
neither Seller nor its Subsidiaries are subject to liability for any Hazardous
Substance disposal or contamination on any third party property; (v) neither
Seller nor any of its Subsidiaries have released any Hazardous Substance; (vi)
neither Seller nor any of its Subsidiaries has received any notice, demand,
letter, claim or request for information alleging that Seller or any of its
Subsidiaries may be in violation of or liable under any Environmental Law; (vii)
neither Seller nor any of its Subsidiaries is subject to any orders, decrees,
injunctions or other arrangements with any Governmental Entity or is subject to
any indemnity or other agreement with any third party relating to liability
under any Environmental Law or relating to Hazardous Substances; and (viii)
there are no circumstances or conditions involving Seller or any of its
Subsidiaries that could reasonably be expected to result in any material claims,
liability, investigations, costs or restrictions on the ownership, use or
transfer of any property of Seller pursuant to any Environmental Law.
(b) As used herein, the term "Environmental Law" means any federal,
state, local or foreign law, regulation, order, decree, permit, authorization,
opinion, common law or agency requirement relating to: (A) the protection,
investigation or restoration of the environment, health and safety, or natural
resources, (B) the handling, use, presence, disposal, release or threatened
release of any Hazardous Substance or (C) noise, wetlands, pollution,
contamination or any injury or threat of injury to persons or property.
(c) As used herein, the term "Hazardous Substance" means any substance
that is: (A) listed, classified or regulated pursuant to any Environmental Law;
(B) any petroleum product or by-product, asbestos-containing material,
lead-containing paint or plumbing, polychlorinated biphenyls, radioactive
materials or radon; or (C) any other substance which is the subject of
regulatory action by any Governmental Entity pursuant to any Environmental Law.
Section 3.13 EMPLOYEE BENEFIT PLANS.
(a) Seller has listed in Section 3.13 of the Seller Disclosure Schedule
all employee benefit plans (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) and all bonus,
stock option, stock purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar employee benefit plans, and all
unexpired severance agreements, written or otherwise, for the benefit of, or
relating to, any current or former employee of Seller or any trade or business
(whether or not incorporated) which is a member or which is under common control
with Seller (an "ERISA Affiliate") within the meaning of Section 414 of the
Code, or any Subsidiary of Seller (together, the "Seller Employee Plans").
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(b) With respect to each Seller Employee Plan, Seller has made
available to Buyer, a true and correct copy of (i) the most recent annual report
(Form 5500) filed with the IRS, (ii) such Seller Employee Plan, (iii) each trust
agreement and group annuity contract, if any, relating to such Seller Employee
Plan and (iv) the most recent actuarial report or valuation relating to a Seller
Employee Plan subject to Title IV of ERISA.
(c) With respect to the Seller Employee Plans, individually and in the
aggregate, no event has occurred, and to the knowledge of Seller, there exists
no condition or set of circumstances in connection with which Seller could be
subject to any liability that is reasonably likely to have a Seller Material
Adverse Effect under ERISA, the Code or any other applicable law.
(d) With respect to the Seller Employee Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no unfunded benefit obligations
which have not been accounted for by reserves, or otherwise properly footnoted
in accordance with generally accepted accounting principles, on the financial
statements of Seller, which obligations are reasonably likely to have a Seller
Material Adverse Effect.
(e) Except as disclosed in Seller SEC Reports filed prior to the date
of this Agreement, and except as provided for in this Agreement, neither Seller
nor any of its Subsidiaries is a party to any oral or written (i) agreement with
any officer or other key employee of Seller or any of its Subsidiaries, the
benefits of which are contingent, or the terms of which are materially altered,
upon the occurrence of a transaction involving Seller of the nature contemplated
by this Agreement, (ii) agreement with any officer of Seller providing any term
of employment or compensation guarantee extending for a period longer than one
year from the date hereof and for the payment of compensation in excess of
$100,000 per annum, or (iii) agreement or plan, including any stock option plan,
stock appreciation right plan, restricted stock plan or stock purchase plan, any
of the benefits of which will be increased, or the vesting of the benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of which will
be calculated on the basis of any of the transactions contemplated by this
Agreement.
Section 3.14 COMPLIANCE WITH LAWS. Seller has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state or local statute, law or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for
failures to comply or violations which, individually or in the aggregate, have
not had and are not reasonably likely to have a Seller Material Adverse Effect.
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Section 3.15 ACCOUNTING AND TAX MATTERS. To its knowledge, after
consulting with its independent auditors, neither Seller nor any of its
Affiliates (as defined in Section 6.10) has taken or agreed to take any action
which would (i) prevent Buyer from accounting for the business combination to be
effected by the Merger as a pooling of interests or (ii) prevent the Merger from
constituting a transaction qualifying as a reorganization under 368(a) of the
Code. Seller has provided or promptly following the date hereof (but in no event
later than June 30, 1998 upon request from Buyer) will provide to Buyer a letter
of its independent accountants, KPMG Peat Marwick LLP, as to the eligibility of
Buyer for a pooling of interests transaction.
Section 3.16 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The
information to be supplied by Seller for inclusion in the registration statement
on Form S-4 pursuant to which shares of Buyer Common Stock issued in the Merger
will be registered under the Securities Act (the "Registration Statement"),
shall not at the time the Registration Statement is declared effective by the
SEC contain any untrue statement of a material fact or omit to state any
material fact required to be stated in the Registration Statement or necessary
in order to make the statements in the Registration Statement, in light of the
circumstances under which they were made, not misleading. The information to be
supplied by Seller for inclusion in the joint proxy statement/prospectus to be
sent to the stockholders of Buyer and Seller in connection with the meeting of
Seller's stockholders to consider this Agreement and the Merger (the "Seller
Meeting") and in connection with the meeting of Buyer's stockholders (the "Buyer
Meeting") to consider the issuance of shares of Buyer Common Stock pursuant to
the Merger (the "Joint Proxy Statement") shall not, on the date the Joint Proxy
Statement is first mailed to stockholders of Seller or Buyer, at the time of the
Seller Stockholders' Meeting and the Buyer Stockholders' Meeting and at the
Effective Time, contain any statement which, at such time and in light of the
circumstances under which it shall be made, is false or misleading with respect
to any material fact, or omit to state any material fact necessary in order to
make the statements made in the Joint Proxy Statement not false or misleading;
or omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of proxies for the Seller
Meeting or the Buyer Meeting which has become false or misleading. If at any
time prior to the Effective Time any event relating to Seller or any of its
Affiliates, officers or directors should be discovered by Seller which should be
set forth in an amendment to the Registration Statement or a supplement to the
Joint Proxy Statement, Seller shall promptly inform Buyer.
Section 3.17 LABOR MATTERS. Neither Seller nor any of its Subsidiaries
is a party to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor, as of the date hereof, is Seller or any of its Subsidiaries
the subject of any material proceeding asserting that Seller or any of its
Subsidiaries has committed an unfair labor practice
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or is seeking to compel it to bargain with any labor union or labor organization
nor, as of the date of this Agreement, is there pending or, to the knowledge of
the executive officers of Seller, threatened, any material labor strike,
dispute, walkout, work stoppage, slow-down or lockout involving Seller or any of
its Subsidiaries.
Section 3.18 INSURANCE. All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by Seller or any of its Subsidiaries are
with reputable insurance carriers, provide full and adequate coverage for all
normal risks incident to the business of Seller and its Subsidiaries and their
respective properties and assets, and are in character and amount at least
equivalent to that carried by persons engaged in similar businesses and subject
to the same or similar perils or hazards, except for any such failures to
maintain insurance policies that, individually or in the aggregate, are not
reasonably likely to have a Seller Material Adverse Effect.
Section 3.19 NO EXISTING DISCUSSIONS. As of the date hereof, Seller has
ceased all discussions or negotiations with any other party with respect to an
Acquisition Proposal (as defined in Section 6.01).
Section 3.20 OPINION OF FINANCIAL ADVISOR. The financial advisor of
Seller, Xxxxxxxxx, Xxxxxx & Xxxxxxxx Incorporated, has delivered to Seller an
opinion dated on or about the date of this Agreement to the effect, as of such
date, that the Exchange Ratio is fair to the holders of Seller Common Stock from
a financial point of view.
Section 3.21 SECTION 203 OF THE DGCL NOT APPLICABLE. The Board of
Directors of Seller has taken all actions so that the restrictions contained in
Section 203 of the DGCL applicable to a "business combination" (as defined in
Section 203) will not apply to the execution, delivery or performance of this
Agreement or the consummation of the Merger or the other transactions
contemplated by this Agreement.
Section 3.22 RIGHTS AGREEMENT. The entering into this Agreement and the
consummation of the transactions contemplated hereby do not and will not result
in the grant of any rights to any person under the Seller Rights Plan or enable
or require the Seller Rights to be exercised, distributed or triggered.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER AND SUB
Buyer and Sub represent and warrant to Seller that the statements
contained in this Article IV are true and correct, except as set forth herein or
in the disclosure schedule delivered by Buyer to Seller on or before the date of
this Agreement (the
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25
"Buyer Disclosure Schedule"). The Buyer Disclosure Schedule shall be arranged in
paragraphs corresponding to the numbered and lettered paragraphs contained in
this Article IV and the disclosure in any paragraph shall qualify other
paragraphs in this Article IV only to the extent that it is reasonably apparent
from a reading of such document that it also qualifies or applies to such other
paragraphs.
Section 4.01 ORGANIZATION OF BUYER AND SUB. Each of Buyer and Sub and
Buyer' other Subsidiaries is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation, has
all requisite corporate power to own, lease and operate its property and to
carry on its business as now being conducted and as proposed to be conducted,
and is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the failure to be so qualified would
have a material adverse effect on the business, properties, financial condition
or results of operations of Buyer and its Subsidiaries, taken as a whole (a
"Buyer Material Adverse Effect"); provided, however, that for purposes of this
Agreement, any adverse change in the stock price of Buyer in and of itself, as
quoted on the New York Stock Exchange, shall not be taken into account in
determining whether there has been or would be an "Buyer Material Adverse
Effect" on or with respect to Buyer and its Subsidiaries, taken as a whole.
Except as set forth in the Buyer SEC Reports (as defined in Section 4.04) filed
prior to the date hereof, neither Buyer nor any of its Subsidiaries directly or
indirectly owns any equity or similar interest in, or any interest convertible
into or exchangeable or exercisable for, any corporation, partnership, joint
venture or other business association or entity, excluding securities in any
publicly traded company held for investment by Buyer and comprising less than
five percent (5%) of the outstanding stock of such company.
Section 4.02 BUYER CAPITAL STRUCTURE.
(a) The authorized capital stock of Buyer consists of (i) 120,000,000
shares of Common Stock, $.01 par value ("Buyer Common Stock"), (ii) 1,700,000
shares of Preferred Stock, $.01 par value, of which 750,000 shares have been
designated as Series A Convertible Participating Preferred Stock ("Series A
Preferred Stock") and (iii) one share of special voting stock, $1.00 par value
per share (the "Special Voting Share"). The stockholders of Buyer have approved
an increase in the authorized Buyer Common Stock to 200,000,000 shares. The
Special Voting Share entitles the holder thereof, which is a Subsidiary of
Buyer, to vote, together with the holders of Buyer Common Stock, on all matters
submitted for the vote of the holders of Buyer Common Stock. The number of votes
represented by the Special Voting Share is equal to the number of shares of such
Subsidiary outstanding which are exchangeable into shares of Buyer Common Stock
("Exchangeable Shares"). As of June 15, 1998, there were outstanding 59,109,756
shares of Buyer Common Stock, 750,000 shares of Series A Preferred Stock
(currently convertible into 15,000,000 shares of Common stock), 12,510,457
Exchangeable Shares (including 8,687,500 Exchangeable Shares
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26
subject to outstanding warrants) and $200,955,000 principal amount of 5 1/2%
Senior Convertible Notes due 2000 (convertible into approximately 3,791,600
shares of Common Stock). The Buyer Disclosure Schedule shows the number of
shares of Buyer Common Stock reserved for future issuance pursuant to stock
options granted and outstanding as of April 30, 1998, and the plans under which
such options were granted (collectively, the "Buyer Stock Plans"). No material
change in such capitalization has occurred between June 15, 1998 and the date of
this Agreement. All shares of Buyer Common Stock subject to issuance as
specified above are duly authorized and, upon issuance on the terms and
conditions specified in the instruments pursuant to which they are issuable,
shall be validly issued, fully paid and nonassessable. There are no obligations,
contingent or otherwise, of Buyer or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of Buyer Common Stock or the capital
stock of any Subsidiary or to provide funds to or make any material investment
(in the form of a loan, capital contribution or otherwise) in any such
Subsidiary or any other entity other than guarantees of bank obligations of
Subsidiaries entered into in the ordinary course of business. All of the
outstanding shares of capital stock of each of Buyer' Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable and all such shares
(other than directors' qualifying shares and similar shares in the case of
foreign Subsidiaries) are owned by Buyer or another Subsidiary free and clear of
all security interests, liens, claims, pledges, agreements, limitations in
Buyer' voting rights, charges or other encumbrances of any nature.
(b) Except as set forth in this Section 4.02 or as reserved for future
grants of options under the Buyer Stock Plans, there are no equity securities of
any class of Buyer, or any security exchangeable into or exercisable for such
equity securities, issued, reserved for issuance or outstanding. There are no
options, warrants, equity securities, calls, rights, commitments or agreements
of any character to which Buyer or any of its Subsidiaries is a party or by
which it is bound obligating Buyer or any of its Subsidiaries to issue, deliver
or sell, or cause to be issued, delivered or sold, additional shares of capital
stock of Buyer or any of its Subsidiaries or obligating Buyer or any of its
Subsidiaries to grant, extend, accelerate the vesting of or enter into any such
option, warrant, equity security, call, right, commitment or agreement. To the
best knowledge of Buyer, there are no voting trusts, proxies or other voting
agreements or understandings with respect to the shares of capital stock of
Buyer.
Section 4.03 AUTHORITY; NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Each of Buyer and the Sub has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated by this Agreement. The execution and delivery of this Agreement and
the consummation of the transactions contemplated by this Agreement have been
duly authorized by all necessary corporate action on the part of each of Buyer
and Sub (including the approval of the Merger by Buyer as the sole stockholder
of Sub),
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subject only to the approval of the Buyer Voting Proposal (as defined in Section
6.05) by Buyer stockholders. This Agreement and has been duly executed and
delivered by each of Buyer and Sub and constitutes the valid and binding
obligation of each of Buyer and Sub, enforceable in accordance with their terms,
subject to the Bankruptcy and Equity Exception.
(b) The execution and delivery of this Agreement by each of Buyer and
Sub does not, and the consummation of the transactions contemplated by this
Agreement will not, (i) conflict with, or result in any violation or breach of,
any provision of the Certificate of Incorporation or Bylaws of Buyer or Sub,
(ii) result in any violation or breach of, or constitute (with or without notice
or lapse of time, or both) a default (or give rise to a right of termination,
cancellation or acceleration of any obligation or loss of any material benefit)
under, or require a consent or waiver under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, contract or other
agreement, instrument or obligation to which Buyer 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 (iii) conflict with or violate any permit, concession, franchise,
license, judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Buyer or any of its Subsidiaries or any of its or their properties
or assets, except in the case of (ii) and (iii) for any such conflicts,
violations, defaults, terminations, cancellations or accelerations which are
not, individually or in the aggregate, reasonably likely to have a Buyer
Material Adverse Effect.
(c) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Buyer or any of its Subsidiaries in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby or thereby, except for (i) the filing of the pre-merger notification
report under the HSR Act, (ii) the filing of the Registration Statement with the
SEC in accordance with the Securities Act, (iii) the filing of the Certificate
of Merger with the Delaware Secretary of State, (iv) the filing of the Joint
Proxy Statement with the SEC in accordance with the Exchange Act, (v) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable state securities laws and the laws
of any foreign country, (vi) the approval by the New York Stock Exchange of the
listing of the shares of Buyer Common Stock to be issued in the transactions
contemplated by this Agreement, and (vii) such other consents, authorizations,
filings, approvals and registrations which, if not obtained or made, would not
be reasonably likely to have a Buyer Material Adverse Effect.
Section 4.04 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Buyer has filed and made available to Seller all forms, reports and
documents required to be filed by Buyer with the SEC since January 1, 1996 other
than registration statements on Form S-8 (collectively, the "Buyer SEC
Reports"). The
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Buyer SEC Reports (i) at the time filed, complied in all material respects with
the applicable requirements of the Securities Act and the Exchange Act, as the
case may be, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated in such Buyer SEC Reports or necessary in
order to make the statements in such Buyer SEC Reports, in the light of the
circumstances under which they were made, not misleading. None of Buyer'
Subsidiaries is required to file any forms, reports or other documents with the
SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes) contained in the Buyer SEC Reports complied as to form
in all material respects with the applicable published rules and regulations of
the SEC with respect thereto, was prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes to such financial statements
or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC)
and fairly presented the consolidated financial position of Buyer and its
Subsidiaries as of the dates and the consolidated results of its operations and
cash flows for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount. The
unaudited balance sheet of Buyer as of March 31, 1998 is referred to herein as
the "Buyer Balance Sheet."
Section 4.05 NO UNDISCLOSED LIABILITIES. Except as disclosed in the
Buyer SEC Reports filed prior to the date hereof, and except for normal or
recurring liabilities incurred since March 31, 1998 in the ordinary course of
business consistent with past practices, Buyer and its Subsidiaries do not have
any liabilities, either accrued, contingent or otherwise (whether or not
required to be reflected in financial statements in accordance with generally
accepted accounting principles), and whether due or to become due, which
individually or in the aggregate, are reasonably likely to have a Buyer Material
Adverse Effect.
Section 4.06 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except as disclosed
in the Buyer SEC Reports filed prior to the date hereof, since the date of the
Buyer Balance Sheet, Buyer and its Subsidiaries have conducted their businesses
only in the ordinary course and in a manner consistent with past practice and,
since such date, there has not been (i) any change in the financial condition,
results of operations, business or properties of Buyer and its Subsidiaries,
taken as a whole, that has had, or is reasonably likely to have, a Buyer
Material Adverse Effect; (ii) any damage, destruction or loss (whether or not
covered by insurance) with respect to Buyer or any of its Subsidiaries having a
Buyer Material Adverse Effect; (iii) any material change by Buyer in its
accounting methods not required pursuant to generally accepted accounting
principles, principles or practices to which Seller has not
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previously consented in writing; (iv) any revaluation by Buyer of any of its
assets having a Buyer Material Adverse Effect; or (v) any other action or event
that would have required the consent of Seller pursuant to Section 5.02 of this
Agreement had such action or event occurred after the date of this Agreement.
Section 4.07 TAXES.
(a) Buyer and each of its Subsidiaries have (i) filed all federal,
state, local and foreign tax returns and reports required to be filed by them
prior to the date of this Agreement (taking into account extensions), (ii) paid
or accrued all Taxes due and payable, and (iii) paid or accrued all Taxes for
which a notice of assessment or collection has been received (other than amounts
being contested in good faith by appropriate proceedings), except in the case of
clause (i), (ii) or (iii) for any such filings, payments or accruals which are
not reasonably likely, individually or in the aggregate, to have a Buyer
Material Adverse Effect. Unpaid Taxes for periods prior to the date hereof do
not materially exceed accruals and reserves for Taxes (other than accruals and
reserves for Taxes established to reflect timing differences between book and
Tax income) as set forth on the Seller Balance Sheet. Neither the IRS nor any
other taxing authority has asserted any claim for Taxes, or to the actual
knowledge of the executive officers of Buyer, is threatening to assert any
claims for Taxes, which claims, individually or in the aggregate, are reasonably
likely to have a Buyer Material Adverse Effect. Buyer and each of its
Subsidiaries have withheld or collected and paid over to the appropriate
governmental authorities (or are properly holding for such payment) all Taxes
required by law to be withheld or collected, except for amounts which are not
reasonably likely, individually or in the aggregate, to have a Buyer Material
Adverse Effect. There are no liens for Taxes upon the assets of Buyer or any of
its Subsidiaries (other than liens for Taxes that are not yet due or that are
being contested in good faith by appropriate proceedings), except for liens
which are not reasonably likely, individually or in the aggregate, to have a
Buyer Material Adverse Effect.
(b) Buyer is not and never has been a party to or bound by any Tax
indemnity, Tax sharing or Tax allocation agreement (whether written or unwritten
or arising under operation of federal law as a result of being a member of a
group filing consolidated Tax Returns, under operation of certain state laws as
a result of being a member of a unitary group, or under comparable laws of other
states or foreign jurisdictions) which includes a party other than Buyer nor
does Buyer owe any amount under any such agreement.
(c) Neither Buyer nor any of its Subsidiaries is a "consenting
corporation" within the meaning of Section 341(f) of the Code, and none of the
assets of Buyer or the Subsidiaries are subject to an election under Section
341(f) of the Code.
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(d) Neither Buyer nor any of its Subsidiaries has been a United States
real property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code.
Section 4.08 PROPERTIES.
(a) Buyer is not in default under any of its Material Leases, except
where the existence of such defaults, individually or in the aggregate, is not
reasonably likely to have a Buyer Material Adverse Effect.
(b) With respect to any item of real property owned by Buyer, except
for such matters that, individually or in the aggregate, are not reasonably
likely to have a Buyer Material Adverse Effect: (a) Buyer or the identified
Subsidiary has good and clear record and marketable title to such property,
insurable by a recognized national title insurance company at standard rates,
free and clear of any security interest, easement, covenant or other
restriction, except for recorded easements, covenants and other restrictions
which do not materially impair the current uses or occupancy of such property;
and (b) the improvements constructed on such property are in good condition, and
all mechanical and utility systems servicing such improvements are in good
condition, free in each case of material defects.
Section 4.09 INTELLECTUAL PROPERTY.
(a) Buyer and its Subsidiaries own, or are licensed or otherwise
possess legally enforceable rights to use, all patents, trademarks, trade names,
service marks and copyrights, any applications for and registrations of such
patents, trademarks, trade names, service marks and copyrights, and all
processes, formulae, methods, schematics, technology, know-how, computer
software programs or applications and tangible or intangible proprietary
information or material that are necessary to conduct the business of Buyer and
its Subsidiaries as currently conducted, or planned to be conducted, the absence
of which would be reasonably likely to have a Buyer Material Adverse Effect (the
"Buyer Intellectual Property Rights").
(b) The execution and delivery of this Agreement and the consummation
of the Merger will not result in breach of, or create on behalf of any third
party the right to terminate or modify, any license, sublicense or other
agreement relating to the Buyer's Intellectual Property Rights, or any material
licenses, sublicenses and other agreements as to which Buyer or any of its
Subsidiaries is a party and pursuant to which Buyer or any of its Subsidiaries
is authorized to use any third party patents, trademarks, copyrights or trade
secrets ("Buyer Third Party Intellectual Property Rights"), including software
that is used in the manufacture of, incorporated in, or forms a part of any
product sold by or expected to be sold by Buyer or any of its Subsidiaries, the
breach of which would be reasonably likely to have a Buyer Material Adverse
Effect.
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(c) All patents, registered trademarks, service marks and copyrights
which are held by Buyer or any of its Subsidiaries the loss or invalidity of
which would cause a Buyer Material Adverse Effect, are valid and subsisting.
Buyer (i) has not been sued in any suit, action or proceeding, or received in
writing any claim or notice, which involves a claim of infringement of any
patents, trademarks, service marks, copyrights or violation of any trade secret
or other proprietary right of any third party, and (ii) has no knowledge that
the manufacturing, marketing, licensing or sale of its products infringes any
patent, trademark, service xxxx, copyright, trade secret or other proprietary
right of any third party, which such infringement in the cases of clause(i) and
(ii) would reasonably be expected to have a Buyer Material Adverse Effect.
Section 4.10 AGREEMENTS, CONTRACTS AND COMMITMENTS. Buyer has not
breached, or received in writing any claim or notice that it has breached, any
of the terms or conditions of any material agreement, contract or commitment
filed as an exhibit to the Buyer SEC Reports ("Buyer Material Contracts") in
such a manner as, individually or in the aggregate, are reasonably likely to
have a Buyer Material Adverse Effect. Each Buyer Material Contract that has not
expired by its terms is in full force and effect.
Section 4.11 LITIGATION. Except as described in the Buyer SEC Reports
filed prior to the date hereof, there is no action, suit or proceeding, claim,
arbitration or investigation against Buyer pending or as to which Buyer has
received any written notice of assertion, which, individually or in the
aggregate, is reasonably likely to have a Buyer Material Adverse Effect or a
material adverse effect on the ability of Buyer to consummate the transactions
contemplated by this Agreement.
Section 4.12 ENVIRONMENTAL MATTERS. Except as disclosed in the Buyer
SEC Reports filed prior to the date hereof and except for such matters that,
individually or in the aggregate, are not reasonably likely to have a Buyer
Material Adverse Effect: (i) Buyer and its Subsidiaries have complied with all
applicable Environmental Laws; (ii) the properties currently owned or operated
by Buyer and its Subsidiaries (including soils, groundwater, surface water,
buildings or other structures) are not contaminated with any Hazardous
Substances; (iii) the properties formerly owned or operated by Buyer or any of
its Subsidiaries were not contaminated with Hazardous Substances during the
period of ownership or operation by Buyer or any of its Subsidiaries; (iv)
neither Buyer nor its Subsidiaries are subject to liability for any Hazardous
Substance disposal or contamination on any third party property; (v) neither
Buyer nor any of its Subsidiaries has released any Hazardous Substance; (vi)
neither Buyer nor any of its Subsidiaries has received any notice, demand,
letter, claim or request for information alleging that Buyer or any of its
Subsidiaries may be in violation of or liable under any Environmental Law; (vii)
neither Buyer nor any of its Subsidiaries is subject to any orders, decrees,
injunctions or other arrangements with any Governmental Entity or is subject to
any indemnity or other agreement with any
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third party relating to liability under any Environmental Law or relating to
Hazardous Substances; and (viii) there are no circumstances or conditions
involving Buyer or any of its Subsidiaries that could reasonably be expected to
result in any material claims, liability, investigations, costs or restrictions
on the ownership, use or transfer of any property of Buyer pursuant to any
Environmental Law.
Section 4.13 EMPLOYEE BENEFIT PLANS.
(a) With respect to each of the employee benefit plans (as defined in
Section 3(3) of ERISA) and all bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance and other similar
employee benefit plans, and all unexpired severance agreements, written or
otherwise, for the benefit of, or relating to, any current or former employee of
Buyer or any ERISA Affiliate of Buyer, or any Subsidiary of Buyer (together, the
"Buyer Employee Plans"), Buyer has made available to Seller, a true and correct
copy of (i) the most recent annual report (Form 5500) filed with the IRS, (ii)
such Buyer Employee Plan, (iii) each trust agreement and group annuity contract,
if any, relating to such Buyer Employee Plan and (iv) the most recent actuarial
report or valuation relating to a Buyer Employee Plan subject to Title IV of
ERISA.
(b) With respect to the Buyer Employee Plans, individually and in the
aggregate, no event has occurred, and to the knowledge of Buyer, there exists no
condition or set of circumstances in connection with which Buyer could be
subject to any liability that is reasonably likely to have a Buyer Material
Adverse Effect under ERISA, the Code or any other applicable law.
(c) With respect to the Buyer Employee Plans, individually and in the
aggregate, there are no funded benefit obligations for which contributions have
not been made or properly accrued and there are no unfunded benefit obligations
which have not been accounted for by reserves, or otherwise properly footnoted
in accordance with generally accepted accounting principles, on the financial
statements of Buyer, which obligations are reasonably likely to have a Buyer
Material Adverse Effect.
Section 4.14 COMPLIANCE WITH LAWS. Buyer has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
federal, state or local statute, law or regulation with respect to the conduct
of its business, or the ownership or operation of its business, except for
failures to comply or violations which, individually or in the aggregate, have
not had and are not reasonably likely to have a Buyer Material Adverse Effect.
Section 4.15 ACCOUNTING AND TAX MATTERS. To its knowledge, after
consulting with its independent auditors, neither Buyer nor any of its
Affiliates has taken or agreed to take any action which would (i) prevent Buyer
from accounting for the
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business combination to be effected by the Merger as a pooling of interests, or
(ii) prevent the Merger from constituting a transaction qualifying as a
reorganization under Section 368(a) of the Code.
Section 4.16 REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS. The
information in the Registration Statement (except for information supplied by
Seller for inclusion in the Registration Statement, as to which Buyer makes no
representation) shall not at the time the Registration Statement is declared
effective by the SEC contain any untrue statement of a material fact or omit to
state any material fact required to be stated in the Registration Statement or
necessary in order to make the statements in the Registration Statement, in
light of the circumstances under which they were made, not misleading. The
information (except for information to be supplied by Seller for inclusion in
the Joint Proxy Statement, as to which Buyer makes no representation) in the
Joint Proxy Statement shall not, on the date the Joint Proxy Statement is first
mailed to stockholders of Buyer or Seller, at the time of the Buyer Meeting and
the Seller Meeting and at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it shall be made, is
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements made in the Joint Proxy
Statement not false or misleading; or omit to state any material fact necessary
to correct any statement in any earlier communication with respect to the
solicitation of proxies for the Buyer Meeting or the Seller Meeting which has
become false or misleading. If at any time prior to the Effective Time any event
relating to Buyer or any of its Affiliates, officers or directors should be
discovered by Buyer which should be set forth in an amendment to the
Registration Statement or a supplement to the Joint Proxy Statement, Buyer shall
promptly inform Seller.
Section 4.17 LABOR MATTERS. Neither Buyer nor any of its Subsidiaries
is a party to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor, as of the date hereof, is Buyer or any of its Subsidiaries
the subject of any material proceeding asserting that Buyer or any of its
Subsidiaries has committed an unfair labor practice or is seeking to compel it
to bargain with any labor union or labor organization nor, as of the date of
this Agreement, is there pending or, to the knowledge of the executive officers
of Buyer, threatened, any material labor strike, dispute, walkout, work
stoppage, slow-down or lockout involving Buyer or any of its Subsidiaries.
Section 4.18 INSURANCE. All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and water
damage insurance policies maintained by Buyer or any of its Subsidiaries are
with reputable insurance carriers, provide full and adequate coverage for all
normal risks incident to the business of Buyer and its Subsidiaries and their
respective properties and assets, and are in character and amount at least
equivalent to that carried by persons engaged in similar businesses and subject
to the same or similar perils or hazards, except for any
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such failures to maintain insurance policies that, individually or in the
aggregate, are not reasonably likely to have a Buyer Material Adverse Effect.
Section 4.19 OPINION OF FINANCIAL ADVISOR. The financial advisor of
Buyer, BT Alex. Xxxxx Incorporated, has delivered to Buyer an opinion dated the
date of this Agreement, to the effect that, as of such date, the Exchange Ratio
is fair to Buyer from a financial point of view.
Section 4.20 INTERIM OPERATIONS OF SUB. Sub was formed solely for the
purpose of engaging in the transactions contemplated by this Agreement, has
engaged in no other business activities and has conducted its operations only as
contemplated by this Agreement.
ARTICLE V
CONDUCT OF BUSINESS
Section 5.01 COVENANTS OF SELLER. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, Seller agrees as to itself and its respective
Subsidiaries (except to the extent that Buyer shall otherwise consent in
writing), to carry on its business in the usual, regular and ordinary course in
substantially the same manner as previously conducted, to pay its debts and
Taxes and perform other obligations when due subject to good faith disputes over
such debts, Taxes or obligations, and, to the extent consistent with such
business, use commercially reasonable efforts consistent with past practices and
policies to preserve intact its present business organization, keep available
the services of its present officers and key employees and preserve its
relationships with customers, suppliers, distributors, and others having
business dealings with it. Except as expressly contemplated by this Agreement or
set forth in the Seller Disclosure Schedule, Seller shall not (and shall not
permit any of its respective Subsidiaries to), without the written consent of
Buyer:
(a) Accelerate, amend or change the period of exercisability of
outstanding options or restricted stock granted under any employee stock plan of
such party or authorize cash payments in exchange for any options granted under
any of such plans except as required by the terms of such plans or any related
agreements in effect as of the date of this Agreement;
(b) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock, or
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock except from former employees,
directors and consultants in accordance with
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agreements providing for the repurchase of shares in connection with any
termination of service to such party;
(c) Issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or securities convertible
into shares of its capital stock, or subscriptions, rights, warrants or options
to acquire, or other agreements or commitments of any character obligating it to
issue any such shares or other convertible securities, other than (i) the grant
of options consistent with past practices to new employees, which options
represent in the aggregate the right to acquire no more than 200,000 shares (net
of cancellations) of Seller Common Stock, or (ii) the issuance of shares of
Seller Common Stock pursuant to the exercise of options outstanding on the date
of this Agreement or granted pursuant to the foregoing Clause (i);
(d) Acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial equity interest in or substantial portion of the assets
of, or by any other manner, any business or any corporation, partnership or
other business organization or division, or otherwise acquire or agree to
acquire any assets (other than inventory and other items in the ordinary course
of business);
(e) Sell, lease, license or otherwise dispose of any of its material
properties or assets, except for transactions in the ordinary course of
business;
(f) (i) Increase or agree to increase the compensation payable or to
become payable to its officers or employees, except for increases in salary or
wages of employees (other than officers) in accordance with past practices, (ii)
grant any additional severance or termination pay to, or enter into any
employment or severance agreements with, any employees or officers, (iii) enter
into any collective bargaining agreement, (iv) establish, adopt, enter into or
amend any bonus, profit sharing, thrift, compensation, stock option, restricted
stock, pension, retirement, deferred compensation, employment, termination or
severance or other plan, trust, fund, policy or arrangement for the benefit of
any directors, officers or employees;
(g) Amend or propose to amend its charter or bylaws, except as
contemplated by this Agreement;
(h) Incur any indebtedness for borrowed money other than pursuant to
credit agreements in effect as of the date hereof; or
(i) Initiate, compromise, or settle any material litigation or
arbitration proceeding except in connection with the Agreement or the
transactions contemplated hereby;
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(j) Except in the ordinary course of business, modify, amend or
terminate any Seller Material Contract or waive, release or assign any material
rights or claims;
(k) Make any material Tax election, settle or compromise any material
Tax liability or amend any material Tax return except in the ordinary course of
business or consistent with past practice;
(l) Change its methods of accounting as in effect at May 31, 1998
except as required by generally accepted accounting principles;
(m) Make or commit to make any capital expenditures that exceed
$1,000,000 in the aggregate;
(n) License any intellectual property rights to or from any third party
pursuant to an arrangement that involves a minimum commitment or advance
exceeding $500,000 or royalties at a rate exceeding 20%;
(o) Except as required pursuant to commitments existing on the date
hereof or made without violation of this Section 5.01, make any cash
disbursement exceeding $1 million for any single item or related series of
items;
(p) Close any facility or office;
(q) Invest funds in debt securities or other instruments maturing more
than 90 days after the date of investment;
(r) Adopt or implement any stockholder rights plan that could have the
effect of impeding or restricting the consummation of the transactions
contemplated hereby; or
(s) Take, or agree in writing or otherwise to take, any of the actions
described in Sections (a) through (r) above.
Section 5.02 COVENANTS OF BUYER. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement or the Effective Time, Buyer agrees as to itself and its respective
Subsidiaries (except to the extent that Seller shall otherwise consent in
writing), to carry on its business in the usual, regular and ordinary course in
substantially the same manner as previously conducted, to pay its debts and
Taxes and perform its obligations when due subject to good faith disputes over
such debts, Taxes or obligations, and, to the extent consistent with such
business, use commercially reasonable efforts consistent with past practices and
policies to preserve intact is present business organization, keep available the
services of its present officers and key employees and preserve its
relationships with customers, suppliers, distributors, and others having
business
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dealings with it. Except as expressly contemplated by this Agreement, Buyer
shall not (and shall not permit any of its respective Subsidiaries to), without
the written consent of Seller:
(a) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital stock, or
split, combine or reclassify any of its capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in substitution
for shares of its capital stock, or purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock, except from former employees,
directors and consultants in accordance with agreements providing for the
repurchase of shares in connection with any termination of service by such
party;
(b) Amend or propose to amend its charter or bylaws, except as
contemplated by Section 4.02 of this Agreement; or
(c) Take, or agree in writing or otherwise to take, any of the actions
described in Sections (a) and (b) above.
Section 5.03 COOPERATION. Subject to compliance with applicable law,
from the date hereof until the Effective Time, each of Buyer and Seller shall
make its officers available to confer on a regular and frequent basis with one
or more representatives of the other party to report on the general status of
ongoing operations and shall promptly provide the other party or its counsel
with copies of all filings made by such party with any Governmental Entity in
connection with this Agreement, the Merger and the transactions contemplated
hereby and thereby.
Section 5.04 CONFIDENTIALITY. The parties acknowledge that Buyer and
Seller have previously executed a Confidentiality Agreement, dated as of on or
about April 10, 1998 (the "Confidentiality Agreement"), which Confidentiality
Agreement will continue in full force and effect in accordance with its terms,
except as expressly
modified herein.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.01 NO SOLICITATION.
(a) From and after the date of this Agreement until the earlier of the
Effective Time or termination of this Agreement pursuant to its terms, Seller
shall not, directly or indirectly, through any officer, director, employee,
financial advisor, representative or agent of such party (i) solicit, initiate,
or encourage any inquiries or
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proposals that constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, business combination, sale of
substantial assets (other than the sale of Seller's products or used equipment
in the ordinary course of business), sale of shares of capital stock (including
without limitation by way of a tender offer but excluding sales pursuant to
existing employee and director stock plans) or similar transaction involving
Seller or any of its Subsidiaries, other than the transactions contemplated by
this Agreement (any of the foregoing inquiries or proposals being referred to in
this Agreement as an "Acquisition Proposal"), (ii) engage in negotiations or
discussions concerning, or provide any non-public information to any person or
entity relating to, any Acquisition Proposal, or (iii) agree to or recommend any
Acquisition Proposal; PROVIDED, HOWEVER, that nothing contained in this
Agreement shall prevent Seller or its Board of Directors, from (A) furnishing
non-public information to, or entering into discussions or negotiations with,
any person or entity in connection with an unsolicited bona fide written
Acquisition Proposal by such person or entity or agreeing to (with the terms of
any such agreement being subject to termination of this Agreement in accordance
with Article VIII) or recommending an unsolicited bona fide written Acquisition
Proposal to the stockholders of Seller, if and only to the extent that (1) the
Board of Directors of Seller believes in good faith (after consultation with its
financial advisor) that such Acquisition Proposal is reasonably capable of being
completed on the terms proposed and would, if consummated, result in a
transaction more favorable than the transaction contemplated by this Agreement
(any such more favorable Acquisition Proposal being referred to in this
Agreement as a "Superior Proposal") and Seller's Board of Directors determines
in good faith after consultation with outside legal counsel that such action is
necessary for such Board of Directors to comply with its fiduciary duties to
stockholders under applicable law and (2) prior to furnishing such non-public
information to, or entering into discussions or negotiations with, such person
or entity, such Board of Directors receives from such person or entity an
executed confidentiality agreement with terms no less favorable to such party
than those contained in the Confidentiality Agreement; or (B) complying with
Rule 14d-9 and 14e-2 promulgated under the Exchange Act with regard to an
Acquisition Proposal or making any disclosure to Seller's stockholders if, in
the good faith judgment of Seller's Board of Directors, after consultation with
outside legal counsel, such disclosure is required by applicable law.
(b) Seller shall notify Buyer within one day after receipt by Seller
(or its advisors) of any Acquisition Proposal or any request for nonpublic
information in connection with an Acquisition Proposal or for access to the
properties, books or records of Seller by any person or entity that informs
Seller that it is considering making, or has made, an Acquisition Proposal. Such
notice shall be made orally and in writing and shall indicate in reasonable
detail the identity of the offeror and the terms and conditions of such
proposal, inquiry or contact. Seller shall continue to keep Buyer informed, on a
current basis, of the status of any such discussions or negotiations and all
material terms being discussed or negotiated, which shall
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include, without limitation, any change to the proposed price and terms and form
of payment.
Section 6.02 PROXY STATEMENT/PROSPECTUS; REGISTRATION STATEMENT.
(a) As promptly as practical after the execution of this Agreement,
Buyer and Seller shall prepare and file with the SEC the Joint Proxy Statement,
and Buyer shall prepare and file with the SEC the Registration Statement, in
which the Joint Proxy Statement will be included as a prospectus, provided that
Buyer may delay the filing of the Registration Statement until approval of the
Joint Proxy Statement by the SEC. Buyer and Seller shall use all reasonable
efforts to cause the Registration Statement to become effective as soon after
such filing as practicable. Each of Buyer and Seller will respond to any
comments of the SEC and will use its respective commercially reasonable efforts
to have the Joint Proxy Statement cleared by the SEC and the Registration
Statement declared effective under the Securities Act as promptly as practicable
after such filings and will cause the Joint Proxy Statement and the prospectus
contained within the Registration Statement to be mailed to its stockholders at
the earliest practicable time after both the Proxy Statement is cleared by the
SEC and the Registration Statement is declared effective under the Securities
Act. Each of Buyer and Seller will notify the other promptly upon the receipt of
any comments from the SEC or its staff or any other government officials and of
any request by the SEC or its staff or any other government officials for
amendments or supplements to the Registration Statement, the Joint Proxy
Statement or any filing pursuant to Section 6.02(b) or for additional
information and will supply the other with copies of all correspondence between
such party or any of its representatives, on the one hand, and the SEC, or its
staff or any other government officials, on the other hand, with respect to the
Registration Statement, the Joint Proxy Statement, the Merger or any filing
pursuant to Section 6.02(b). Each of Buyer and Seller will cause all documents
that it is responsible for filing with the SEC or other regulatory authorities
under this Section 6.02 to comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder.
Whenever any event occurs which is required to be set forth in an amendment or
supplement to the Joint Proxy Statement, the Registration Statement or any
filing pursuant ot Section 6.02(b), Buyer or Seller, as the case may be, will
promptly inform the other of such occurrence and cooperate in filing with the
SEC or its staff or any other government officials, and/or mailing to
stockholders of Buyer and/or Seller, such amendment or supplement.
(b) Buyer and Seller shall make all necessary filings with respect to
the Merger under the Securities Act, the Exchange Act, applicable state blue sky
laws and the rules and regulations thereunder.
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Section 6.03 NASDAQ QUOTATION. Seller agrees to use commercially
reasonable efforts to continue the quotation of Seller Common Stock on the
Nasdaq National Market during the term of this Agreement.
Section 6.04 ACCESS TO INFORMATION. Upon reasonable notice, Seller and
Buyer shall each (and shall cause each of their respective Subsidiaries to)
afford to the officers, employees, accountants, counsel and other
representatives of the other, reasonable access, during normal business hours
during the period prior to the Effective Time, to all its properties, books,
contracts, commitments and records and, during such period, each of Seller and
Buyer shall (and shall cause each of their respective Subsidiaries to) furnish
promptly to the other (a) a copy of each report, schedule, registration
statement and other document filed or received by it during such period pursuant
to the requirements of federal securities laws and (b) all other information
concerning its business, properties and personnel as such other party may
reasonably request. Unless otherwise required by law, the parties will hold any
such information which is nonpublic in confidence in accordance with the
Confidentiality Agreement. No information or knowledge obtained in any
investigation pursuant to this Section 6.04 or otherwise shall affect or be
deemed to modify any representation or warranty contained in this Agreement or
the conditions to the obligations of the parties to consummate the Merger.
Section 6.05 STOCKHOLDERS MEETINGS.
(a) The Seller, acting through its Board of Directors, shall, subject
to and according to applicable law and its Certificate of Incorporation and
Bylaws, promptly and duly call, give notice of, convene and hold as soon as
practicable to ensure obtaining requisite stockholder approval following the
date on which the Registration Statement becomes effective the Seller Meeting
for the purpose of voting to approve and adopt this Agreement and the Merger
(the "Seller Voting Proposal"). The Board of Directors of the Seller shall,
subject to the fiduciary duties of the Board of Directors of Seller under
applicable law as advised in a written opinion by outside counsel, (i) recommend
approval and adoption of the Seller Voting Proposal by the stockholders of the
Seller and include in the Joint Proxy Statement such recommendation and (ii)
take all reasonable and lawful action to solicit and obtain such approval;
provided, however, that in the context of an Acquisition Proposal the Board of
Directors of Seller may withdraw such recommendation (and be relieved of its
duty to solicit approval of Seller's shareholders) if (but only if) (i) the
Board of Directors of Seller has received a Superior Proposal and (ii) such
Board of Directors upon advice of its outside legal counsel determines that it
is required, in order to comply with its fiduciary duties under applicable law,
to recommend such Superior Proposal to the stockholders of Seller. The Seller
stockholder vote required for the approval of the Seller Voting Proposal shall
be a majority of the outstanding shares of Seller Common stock on the record
date for the Seller Meeting.
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(b) Buyer, acting through its Board of Directors, shall, subject to and
in accordance with applicable law and its Certificate of Incorporation and
Bylaws, promptly and duly call, give notice of, convene and hold as soon as
practicable to ensure obtaining requisite stockholder approval following the
date on which the Registration Statement becomes effective, the Buyer Meeting
for the purpose of voting to approve the issuance of the shares of Buyer Common
Stock to be issued in the Merger (the "Buyer Voting Proposal"). The Board of
Directors of Buyer shall, subject to the fiduciary duties of the Board of
Directors of Buyer under applicable law as advised in a written opinion by
outside counsel, (i) recommend approval of the Buyer Voting Proposal and include
in the Joint Proxy Statement such recommendation and (ii) take all reasonable
and lawful action to solicit and obtain such approval. The Buyer stockholder
vote required for approval of the Buyer Voting Proposal shall be a majority of
the shares of Buyer Common Stock present or represented at the Buyer Meeting at
which a quorum is present.
Section 6.06 LEGAL CONDITIONS TO MERGER.
(a) Subject to the terms hereof, Seller and Buyer shall use their
respective commercially reasonable efforts to (i) take, or cause to be taken,
all appropriate action, and do, or cause to be done, all things necessary and
proper under applicable law to consummate and make effective the transactions
contemplated hereby as promptly as practicable, (ii) obtain from any
Governmental Entity or any other third party any consents, licenses, permits,
waivers, approvals, authorizations, or orders required to be obtained or made by
Seller or Buyer or any of their Subsidiaries in connection with the
authorization, execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby including, without limitation, the Merger,
(iii) as promptly as practicable, make all necessary filings, and thereafter
make any other required submissions, with respect to this Agreement and the
Merger required under (A) the Securities Act and the Exchange Act, and any other
applicable federal or state securities laws, (B) the HSR Act and any related
governmental request thereunder, and (C) any other applicable law and (iv)
execute or deliver any additional instruments necessary to consummate the
transactions contemplated by, and to fully carry out the purposes of, this
Agreement. Seller and Buyer shall cooperate with each other in connection with
the making of all such filings, including providing copies of all such documents
to the non-filing party and its advisors prior to filing and, if requested, to
accept all reasonable additions, deletions or changes suggested in connection
therewith. Seller and Buyer shall use their respective commercially reasonable
efforts to furnish to each other all information required for any application or
other filing to be made pursuant to the rules and regulations of any applicable
law (including all information required to be included in the Joint Proxy
Statement and the Registration Statement) in connection with the transactions
contemplated by this Agreement.
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(b) Subject to the terms hereof, Buyer and Seller agree, and shall
cause each of their respective Subsidiaries, to cooperate and to use their
respective commercially reasonable efforts to obtain any government clearances
or approvals required for Closing under the HSR Act, the Xxxxxxx Act, as
amended, the Xxxxxxx Act, as amended, the Federal Trade Commission Act, as
amended, and any other Federal, state or foreign law or, regulation or decree
designed to prohibit, restrict or regulate actions for the purpose or effect of
monopolization or restraint of trade (collectively "Antitrust Laws"), to respond
to any government requests for information under any Antitrust Law, and to
contest and resist any action, including any legislative, administrative or
judicial action, and to have vacated, lifted, reversed or overturned any decree,
judgment, injunction or other order (whether temporary, preliminary or
permanent) (an "Order") that restricts, prevents or prohibits the consummation
of the Merger or any other transactions contemplated by this Agreement under any
Antitrust Law. The parties hereto will consult and cooperate with one another,
and consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings under or relating to any Antitrust Law. Buyer shall be entitled
to direct any proceedings or negotiations with any Governmental Entity relating
to any of the foregoing, provided that it shall afford Seller a reasonable
opportunity to participate therein. Notwithstanding anything to the contrary in
this Section 6.06, neither Buyer nor any of its Subsidiaries shall be required
to (i) divest any of their respective businesses, product lines or assets, or to
take or agree to take any other action or agree to any limitation, that could
reasonably be expected to have a material adverse effect on Buyer or of Buyer
combined with Seller after the Effective Time, or (ii) take any action under
this Section 6.06 if the United States Department of Justice or the United
States Federal Trade Commission authorizes its staff to seek a preliminary
injunction or restraining order to enjoin consummation of the Merger.
(c) Each of Seller and Buyer shall give (or shall cause their
respective Subsidiaries to give) any notices to third parties, and use, and
cause their respective Subsidiaries to use, their commercially reasonable
efforts to obtain any third party consents related to or required in connection
with the Merger that are (A) necessary to consummate the transactions
contemplated hereby, (B) disclosed or required to be disclosed in the Seller
Disclosure Schedule or the Buyer Disclosure Schedule, as the case may be, or (C)
required to prevent a Seller Material Adverse Effect or a Buyer Material Adverse
Effect from occurring prior to or after the Effective Time.
Section 6.07 PUBLIC DISCLOSURE. Buyer and Seller shall use commercially
reasonable efforts to consult with each other before issuing any press release
or otherwise making any public statement with respect to the Merger or this
Agreement and shall not issue any such press release or make any such public
statement prior to using such efforts, except as may be required by law.
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Section 6.08 TAX-FREE REORGANIZATION. Buyer and Seller shall each use
its best efforts to cause the Merger to be treated as a reorganization within
the meaning of Section 368(a) of the Code. The parties hereto hereby adopt this
Agreement as a plan of reorganization.
Section 6.09 POOLING ACCOUNTING. From and after the date hereof and
until the Effective time, neither Seller nor Buyer, nor any of their respective
Subsidiaries, shall knowingly take any action, or knowingly fail to take any
action, that is reasonably likely to jeopardize the treatment of the Merger as a
pooling of interests for accounting purposes.
Section 6.10 AFFILIATE AGREEMENTS. Upon the execution of this
Agreement, Buyer and Seller will provide each other with a list of those persons
who are, in Buyer' or Seller's respective reasonable judgment, "affiliates" of
Buyer or Seller, respectively, within the meaning of Rule 145 (each such person
who is an "affiliate" of Buyer or Seller within the meaning of Rule 145 is
referred to as an "Affiliate") promulgated under the Securities Act ("Rule
145"). Buyer and Seller shall provide each other such information and documents
as Seller or Buyer shall reasonably request for purposes of reviewing such list
and shall notify the other party in writing regarding any change in the identity
of its Affiliates prior to the Closing Date. Seller and Buyer shall each use its
commercially reasonable efforts to deliver or cause to be delivered to each
other by July 3, 1998 (and in any case prior to the mailing of the Joint Proxy
Statement) from each of its Affiliates, an executed Affiliate Agreement, in
substantially the form appended hereto as Exhibit A-1 (in the case of Seller
Affiliates) and Exhibit A-2 (in the case of Buyer Affiliates) (collectively, the
"Affiliate Agreements"). Buyer shall be entitled to place appropriate legends on
the certificates evidencing any Buyer Common Stock to be received by such
Affiliates of Seller pursuant to the terms of this Agreement, and to issue
appropriate stop transfer instructions to the transfer agent for the Buyer
Common Stock, consistent with the terms of the Affiliate Agreements (provided
that such legends or stop transfer instructions shall be removed, two years
after the Effective Date, upon the request of any stockholder that is not then
an Affiliate of Buyer).
Section 6.11 NYSE LISTING. Buyer shall use commercially reasonable
efforts to cause the shares of Buyer Common Stock to be issued in the Merger to
be listed on the New York Stock Exchange, subject to official notice of
issuance, on or prior to the Closing Date.
Section 6.12 STOCK PLANS.
(a) At the Effective Time, each outstanding option to purchase shares
of Seller Common Stock ( "Seller Stock Option") under the Seller Stock Plans,
whether vested or unvested, shall be deemed to constitute an option to acquire,
on the same terms and conditions as were applicable under such Seller Stock
Option, the same
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number of shares of Buyer Common Stock as the holder of such Seller Stock Option
would have been entitled to receive pursuant to the Merger had such holder
exercised such option in full immediately prior to the Effective Time (rounded
downward to the nearest whole number), at a price per share (rounded upward to
the nearest whole cent) equal to (y) the aggregate exercise price for the shares
of Seller Common Stock purchasable pursuant to such Seller Stock Option
immediately prior to the Effective Time divided by (z) the number of full shares
of Buyer Common Stock deemed purchasable pursuant to such Seller Stock Option in
accordance with the foregoing.
(b) As soon as practicable after the Effective Time, Buyer shall
deliver to the participants in Seller Stock Plans appropriate notice setting
forth such participants' rights pursuant thereto and the grants pursuant to
Seller Stock Plans shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 6.12 after giving effect to
the Merger).
(c) Buyer shall take all corporate action necessary to reserve for
issuance a sufficient number of shares of Buyer Common Stock for delivery under
Seller Stock Plans assumed in accordance with this Section 6.12. As soon as
practicable after the Effective Time, Buyer shall file a registration statement
on Form S-8 (or any successor or other appropriate forms), or another
appropriate form with respect to the shares of Buyer Common Stock subject to
such options and shall use its best efforts to maintain the effectiveness of
such registration statement or registration statements (and maintain the current
status of the prospectus or prospectuses contained therein) for so long as such
options remain outstanding.
(d) The Board of Directors of Seller shall, prior to or as of the
Effective Time, take all necessary actions, pursuant to and in accordance with
the terms of the Seller Stock Plans and the instruments evidencing the Seller
Stock Options, to provide for the conversion of the Seller Stock Options into
options to acquire Buyer Common Stock in accordance with this Section 6.12, and
that no consent of the holders of the Seller Stock Options is required in
connection with such conversion.
(e) Seller shall terminate its Employee Stock Purchase Plan in
accordance with its terms as of or prior to the Effective Time.
Section 6.13 BROKERS OR FINDERS. Each of Buyer and Seller represents,
as to itself, its Subsidiaries and its Affiliates, that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
in connection with any of the transactions contemplated by this Agreement except
whose fees and expenses will be paid by Seller in accordance with Seller's
agreement with such firm (a copy of which has been delivered by Seller to Buyer
prior to the date of this Agreement), and whose fees and expenses will be paid
by Buyer in accordance with Buyer' agreement with
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such firm (a copy of which has been delivered by Buyer prior to the date of this
Agreement).
Section 6.14 INDEMNIFICATION.
(a) From and after the Effective Time, Buyer agrees that it will, and
will cause the Surviving Corporation to, indemnify and hold harmless each
present and former director and officer of Seller (the "Indemnified Parties"),
against any costs or expenses (including attorneys' fees), judgments, fines,
losses, claims, damages, liabilities or amounts paid in settlement incurred in
connection with any claim, action, suit, proceeding or investigation, whether
civil, criminal, administrative or investigative, arising out of or pertaining
to matters existing or occurring at or prior to the Effective Time, whether
asserted or claimed prior to, at or after the Effective Time, to the fullest
extent permitted under Delaware law(and Buyer and the Surviving Corporation
shall also advance expenses as incurred to the fullest extent permitted under
applicable law, provided the Indemnified Party to whom expenses are advanced
provides an undertaking to repay such advances if it is ultimately determined
that such Indemnified Party is not entitled to indemnification).
(b) For a period of six years after the Effective Time, Buyer shall
cause the Surviving Corporation to maintain (to the extent available in the
market) in effect a directors' and officers' liability insurance policy covering
those persons who are currently covered by Seller's directors' and officers'
liability insurance policy (a copy of which has been heretofore delivered to
Buyer) with coverage in amount and scope at least as favorable to such persons
as Seller's existing coverage; PROVIDED, that in no event shall Buyer or the
Surviving Corporation be required to expend in excess of 150% the annual premium
currently paid by Seller for such coverage.
(c) The provisions of this Section 6.14 are intended to be an addition
to the rights otherwise available to the current officers and directors of
Seller by law, charter, statute, bylaw or agreement, and shall operate for the
benefit of, and shall be enforceable by, each of the Indemnified Parties, their
heirs and their representatives.
ARTICLE VII
CONDITIONS TO MERGER
Section 7.01 CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to this Agreement to effect the
Merger shall be subject to the satisfaction prior to the Closing Date of the
following conditions:
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(a) STOCKHOLDER APPROVAL. The Seller Voting Proposal shall have been
approved and adopted by the affirmative vote of the holders of a majority of the
shares of Seller Common Stock outstanding on the record date for the Seller
Meeting and the Buyer Voting Proposal shall have been approved by the
affirmative vote of the holders of a majority of the shares of Buyer Common
Stock present or represented at the Buyer Meeting at which a quorum is present.
(b) HSR ACT. The waiting period applicable to the consummation of the
Merger under the HSR Act shall have expired or been terminated.
(c) APPROVALS. Other than the filing provided for by Section 1.02, all
authorizations, consents, orders or approvals of, or declarations or filings
with, or expirations of waiting periods imposed by, any Governmental Entity, the
failure of which to file, obtain or occur is reasonably likely to have a Buyer
Material Adverse Effect or Seller Material Adverse Effect shall have been filed,
been obtained or occurred.
(f) REGISTRATION STATEMENT. The Registration Statement shall have
become effective under the Securities Act and shall not be the subject of any
stop order or proceedings seeking a stop order.
(g) NO INJUNCTIONS. No Governmental Entity (including any federal,
state or court) of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any order, executive order, stay, decree,
judgment or injunction (each an "Order) or statute, rule, regulation which is in
effect and which has the effect of making the Merger illegal or otherwise
prohibiting consummation of the Merger.
(h) POOLING LETTER. Buyer and Seller shall have received a letter from
Coopers & Xxxxxxx LLP, addressed to Buyer regarding its concurrence with Buyer'
management conclusions, as to the appropriateness of the pooling of interests
accounting, under Accounting Principles Board Opinion No. 16 for the Merger, as
contemplated to be effected as of the date of the letter, it being agreed that
Buyer and Seller shall each provide reasonable cooperation to Coopers & Xxxxxxx
LLP to enable them to issue such a letter.
Section 7.02 ADDITIONAL CONDITIONS TO OBLIGATIONS OF BUYER AND SUB. The
obligations of Buyer and Sub to effect the Merger are subject to the
satisfaction of each of the following conditions, any of which may be waived in
writing exclusively by Buyer and Sub:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Seller set forth in this Agreement shall be true and correct as of the date
of this Agreement and (except to the extent such representations and warranties
speak as of an earlier date) as of the Closing Date as though made on and as of
the Closing Date,
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except for, (i) changes contemplated by this Agreement and (ii) where the
failures to be true and correct, individually or in the aggregate, have not had
and are not reasonably likely to have a Seller Material Adverse Effect or a
material adverse effect upon the consummation of the transactions contemplated
hereby; and Buyer shall have received a certificate signed on behalf of Seller
by the chief executive officer and the chief financial officer of Seller to such
effect.
(b) PERFORMANCE OF OBLIGATIONS OF SELLER. Seller shall have performed
in all material respects all obligations required to be performed by it under
this Agreement at or prior to the Closing Date; and Buyer shall have received a
certificate signed on behalf of Seller by the chief executive officer and the
chief financial officer of Seller to such effect.
(c) TAX OPINION. Buyer shall have received a written opinion from Xxxx
and Xxxx LLP counsel to Buyer, to the effect that the Merger will be treated for
Federal income tax purposes as a tax-free reorganization within the meaning of
Section 368(a) of the Code; provided that if Xxxx and Xxxx LLP does not render
such opinion, this condition shall nonetheless be deemed satisfied if Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, P.C. renders such opinion to Buyer (it being agreed
that Buyer and Seller shall each provide reasonable cooperation, including
making reasonable representations, to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C. or
Xxxx and Xxxx LLP, as the case may be, to enable them to render such opinion).
Section 7.03 ADDITIONAL CONDITIONS TO OBLIGATIONS OF SELLER. The
obligation of Seller to effect the Merger is subject to the satisfaction of each
of the following conditions, any of which may be waived, in writing, exclusively
by Seller:
(a) REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Buyer and Sub set forth in this Agreement shall be true and correct as of the
date of this Agreement and (except to the extent such representations speak as
of an earlier date) as of the Closing Date as though made on and as of the
Closing Date, except for, (i) changes contemplated by this Agreement and (ii)
where the failures to be true and correct, individually or in the aggregate,
have not had and are not reasonably likely to have a Buyer Material Adverse
Effect or a material adverse effect upon the consummation of the transactions
contemplated hereby; and Seller shall have received a certificate signed on
behalf of Buyer by the chief executive officer and the chief financial officer
of Buyer to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF BUYER AND SUB. Buyer and Sub shall
have performed in all material respects all obligations required to be performed
by them under this Agreement at or prior to the Closing Date, and Seller shall
have received a certificate signed on behalf of Buyer by the chief executive
officer and the chief financial officer of Buyer to such effect.
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(c) TAX OPINION. Seller shall have received the opinion of Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., counsel to Seller, to the effect that the
Merger will be treated for Federal income tax purposes as a tax-free
reorganization within the meaning of Section 368(a) of the Code; provided that
if Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C. does not render such opinion, this
condition shall nonetheless be deemed satisfied if Xxxx and Xxxx LLP renders
such opinion to Seller (it being agreed that Buyer and Seller shall each provide
reasonable cooperation, including making reasonable representations, to Xxxxxx
Xxxxxxx Xxxxxxxx & Xxxxxx, P.C. or Xxxx and Xxxx LLP, as the case may be, to
enable them to render such opinion).
(d) NYSE. The shares of Buyer Common Stock to be issued in the Merger
shall have been approved for listing on the New York Stock Exchange, subject
only to official notice of issuance.
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.01 TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time (with respect to Sections 8.01(b) through 8.01(g),
by written notice by the terminating party to the other party), whether before
or after approval of the matters presented in connection with the Merger by the
stockholders of Seller or Buyer:
(a) by mutual written consent of Buyer and Seller; or
(b) by either Buyer or Seller if the Merger shall not have been
consummated by December 31, 1998 (the "Outside Date") (provided that the right
to terminate this Agreement under this Section 8.01(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Merger to occur on or before such
date); or
(c) by either Buyer or Seller if a Governmental Entity of competent
jurisdiction shall have issued a nonappealable final order, decree or ruling or
taken any other nonappealable final action, in each case having the effect of
permanently restraining, enjoining or otherwise prohibiting the Merger; or
(d) by Buyer or Seller if (x) at the Seller Meeting (including any
adjournment or postponement), the requisite vote of the stockholders of Seller
in favor of the Seller Voting Proposal shall not have been obtained; or if (y)
at the Buyer Meeting (including any adjournment or postponement), the requisite
vote of the stockholders of Buyer in favor of the Buyer Voting Proposal shall
not have been
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obtained (provided that the right to terminate this Agreement under this Section
8.01(d) shall not be available to any party seeking termination who at the time
is in breach of or has failed to fulfill its obligations under this Agreement);
or
(e) by Buyer, if (i) the Board of Directors of Seller shall have
withdrawn or modified its recommendation of the Seller Voting Proposal; (ii)
after the receipt by Seller of an Acquisition Proposal, Buyer requests in
writing that the Board of Directors of Seller reconfirm its recommendation of
this Agreement or the Merger and the Board of Directors of Seller fails to do so
within 10 business days after its receipt of Buyer' request; (iii) the Board of
Directors of Seller shall have recommended to the stockholders of Seller an
Alternative Transaction (as defined in Section 8.03(g)); (iv) a tender offer or
exchange offer for 20% or more of the outstanding shares of Seller Common Stock
is commenced (other than by Buyer or an Affiliate of Buyer) and the Board of
Directors of Seller recommends that the stockholders of Seller tender their
shares in such tender or exchange offer; or (v) for any reason Seller fails to
call and hold the Seller Meeting by the Outside Date; or
(f) by Seller, if (i) the Board of Directors of Buyer shall have
withdrawn or modified its recommendation of the Buyer Voting Proposal; or (ii)
for any reason Buyer fails to call and hold the Buyer Meeting by the Outside
Date; or
(g) by Buyer or Seller, if there has been a breach of any
representation, warranty, covenant or agreement on the part of the other party
set forth in this Agreement, which breach (i) causes the conditions set forth in
Section 7.02(a) or (b) (in the case of termination by Buyer) or 7.03(a) or (b)
(in the case of termination by Seller) not to be satisfied, and (ii) shall not
have been cured within 30 days following receipt by the breaching party of
written notice of such breach from the other party.
Section 8.02 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 8.01, this Agreement shall immediately become
void and there shall be no liability or obligation on the part of Buyer, Seller,
Sub or their respective officers, directors, stockholders or Affiliates, except
as set forth in Sections 5.04, 6.13, 8.03 and Article IX; provided that any such
termination shall not limit liability for any willful breach of this Agreement
and the provisions of Sections 5.04, 6.13, 8.03 and Article IX of this Agreement
and the Confidentiality Agreement shall remain in full force and effect and
survive any termination of this Agreement.
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Section 8.03 FEES AND EXPENSES.
(a) Except as set forth in this Section 8.03, all fees and expenses
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such expenses, whether or not the
Merger is consummated; provided however, that Seller and Buyer shall share
equally all fees and expenses, other than attorneys' fees, incurred with respect
to the printing and filing of the Joint Proxy Statement (including any related
preliminary materials) and the Registration Statement (including financial
statements and exhibits) and any amendments or supplements.
(b) Seller shall pay Buyer up to $2,000,000 as reimbursement for
expenses of Buyer actually incurred relating to the transactions contemplated by
this Agreement prior to termination (including, but not limited to, fees and
expenses of Buyer' counsel, accountants and financial advisors, but excluding
any discretionary fees paid to such financial advisors), upon the termination of
this Agreement by Buyer pursuant to (i) Section 8.01(d); (ii) Section 8.01(e),
(iii) Section 8.01(b) as a result of the failure to satisfy the condition set
forth in Section 7.02(a); or (iv) Section 8.01(g).
(c) Seller shall pay Buyer a termination fee of $22,500,000 upon the
earliest to occur of the following events:
(i) the termination of this Agreement by Buyer pursuant to
Section 8.01(e); or
(ii) the termination of this Agreement by Buyer pursuant to
Section 8.01(g) after a breach by Seller of this Agreement; or
(iii) the termination of the Agreement by Buyer pursuant to
Section 8.01(d) as a result of the failure to receive the requisite vote for
approval of the Seller Voting Proposal by the stockholders of Seller at the
Seller Meeting if, at the time of such failure, there shall have been announced
an Alternative Transaction relating to Seller which shall not have been
absolutely and unconditionally withdrawn and abandoned.
(d) Buyer shall pay Seller up to $2,000,000 as reimbursement for
expenses of Seller actually incurred relating to the transactions contemplated
by this Agreement prior to termination (including, but not limited to, but
excluding any discretionary fees paid to such financial advisors), upon the
termination of this Agreement by Seller pursuant to (i) Section 8.01(d), (ii)
Section 8.01(f), (iii) Section 8.01(b) as a result of the failure to satisfy the
condition set forth in Section 7.03(a), or (iv) Section 8.01(g).
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51
(e) Buyer shall pay Seller a termination fee of $22,500,000 upon the
earliest to occur of the following events:
(i) the termination of this Agreement by Seller pursuant to
Section 8.01(f); or
(ii) the termination of this Agreement by Seller pursuant to
Section 8.01(g) after a breach by Buyer of this Agreement; or
(iii) the termination of the Agreement by Seller pursuant to
Section 8.01(d) as a result of the failure to receive the requisite vote for
approval of this Agreement and the Merger by the stockholders of Buyer at the
Buyer Meeting if, at the time of such failure, there shall have been announced
an Alternative Transaction relating to Buyer which shall not have been
absolutely and unconditionally withdrawn and abandoned.
(f) The expenses and fees, if applicable, payable pursuant to Section
8.03(b), 8.03(c), 8.03(d) and 8.03(e) shall be paid within one business day
after demand therefor following the first to occur of the events giving rise to
the payment obligation described in Section 8.03(b), 8.03(c)(i), (ii) or (iii),
8.03(d) or 8.03(e)(i), (ii) or (iii); provided that in no event shall Buyer or
Seller, as the case may be, be required to pay the expenses and fees, if
applicable, to the other, if, immediately prior to the termination of this
Agreement, the party to receive the expenses and fees, if applicable, was in
material breach of its obligations under this Agreement.
(g) As used in this Agreement, "Alternative Transaction" means either
(i) a transaction pursuant to which any person (or group of persons) other than
Buyer or Seller or their respective affiliates (a "Third Party"), acquires more
than 20% of the outstanding shares of Seller Common Stock or Buyer Common stock,
as the case may be, pursuant to a tender offer or exchange offer or otherwise,
(ii) a merger or other business combination involving Seller or Buyer pursuant
to which any Third Party acquires more than 20% of the outstanding shares of
Seller Common Stock or Buyer Common Stock, as the case may be, or the entity
surviving such merger or business combination, (iii) any other transaction
pursuant to which any Third Party acquires control of assets (including for this
purpose the outstanding equity securities of Subsidiaries of Seller or Buyer,
and the entity surviving any merger or business combination including any of
them) of Seller or Buyer having a fair market value equal to more than 20% of
the fair market value of all the assets of Seller or Buyer, as the case may be,
immediately prior to such transaction (except for sale of products or used
equipment in the ordinary course of business), or (iv) any public announcement
by a Third Party of a proposal, plan or intention to do any of the foregoing or
any agreement to engage in any of the foregoing.
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52
Section 8.04 AMENDMENT. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of Directors,
at any time before or after approval of the matters presented in connection with
the Merger by the stockholders of Seller or of Buyer, but, after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 8.05 EXTENSION; WAIVER. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) 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 a written instrument signed on behalf of such party.
ARTICLE IX
MISCELLANEOUS
Section 9.01 NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
None of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Articles I and II, Sections 1.04,
2.01, 2.02, 6.12, 6.14 and Article IX, and the agreements of the Affiliates
delivered pursuant to Section 6.10. The Confidentiality Agreement shall survive
the execution and delivery of this Agreement.
Section 9.02 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (which is confirmed) or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
(a) if to Buyer or Sub, to
The Learning Company, Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: General Counsel
Telecopy: (000) 000-0000
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53
with a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
(b) if to Seller, to
Broderbund Software, Inc.
000 Xxxxxxx Xxxx
Xxxxxx, XX 00000-0000
Attn: General Counsel
Telecopy: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Attn: Xxxxx Xxxxxxx, Esq.
Xxxxx Xxxxxx, Esq.
Xxxxxx Xxxx, Esq.
Telecopy: (000) 000-0000
Section 9.03 INTERPRETATION. When a reference is made in this Agreement
to Sections, such reference shall be to a Section of this Agreement unless
otherwise indicated. The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. The phrases "the date of this
Agreement", "the date hereof," and terms of similar import, unless the context
otherwise requires, shall be deemed to refer to June 21, 1998. The words
"include," "includes" and "including" when used herein shall be deemed in each
case to be following by the words "without limitation." The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement. For
purposes of this Agreement the term "knowledge" means with respect to a party
hereto, with respect to any matter in question, that any of the Chief Executive
Officer, Chief Financial Officer, General Counsel, any Vice President or
Controller of such party, has actual knowledge of such matter.
Section 9.04 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the
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54
parties and delivered to the other parties, it being understood that all parties
need not sign the same counterpart.
Section 9.05 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES. This
Agreement (including the documents and the instruments referred to herein) (a)
constitute the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 6.14 are not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder; provided that the Confidentiality Agreement shall remain in
full force and effect until the Effective Time. Each party hereto agrees that,
except for the representations and warranties contained in this Agreement,
neither Seller nor Buyer makes any other representations or warranties, and each
hereby disclaims any other representations and warranties made by itself or any
of its officers, directors, employees, agents, financial and legal advisors or
other representatives, with respect to the execution and delivery of this
Agreement or the transactions contemplated hereby, notwithstanding the delivery
or disclosure to the other or the other's representatives of any documentation
or other information with respect to any one or more of the foregoing.
Section 9.06 GOVERNING LAW. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware without regard to
any applicable conflicts of law.
Section 9.07 JURISDICTION. Each of the parties hereto (i) consents to
submit itself to the personal jurisdiction of any Federal court located in the
State of Delaware or any Delaware state court in the event any dispute arises
out of this Agreement or any of the transactions contemplated by this Agreement,
(ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, and (iii)
agrees that it will not bring any action relating to this Agreement or any of
the transactions contemplated by this agreement in any court other than a
Federal court sitting in the State of Delaware or a Delaware state court.
Section 9.08 ASSIGNMENT. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties. Subject to the preceding sentence, this Agreement
will be binding upon, inure to the benefit of and be enforceable by the parties
and their respective successors and assigns.
Section 9.09 SEVERABILITY. In the event that any provision of this
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in
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55
full force and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of
such void or unenforceable provision.
Section 9.10. WAIVER OF JURY TRIAL. EACH OF BUYER, SELLER AND SUB
HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF BUYER, SELLER OR SUB IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
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56
IN WITNESS WHEREOF, Buyer, Sub and Seller have caused this Agreement to
be signed by their respective officers thereunto duly authorized as of the date
first written above.
THE LEARNING COMPANY, INC.
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Title: Senior Vice President
----------------------------
TLC MERGER CORP.
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Title: Vice President
BRODERBUND SOFTWARE, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Title: Chief Executive Officer
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57
Exhibit A-1
Seller Affiliate Agreement
AFFILIATE AGREEMENT
________________, 1998
The Learning Company, Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Broderbund Software, Inc.
000 Xxxxxxx Xxxxxxxxx
Xxxxxx, XX 00000-0000
Ladies and Gentlemen:
An Agreement and Plan of Merger dated as of June 21, 1998 (the
"Agreement") has been entered into by and among Broderbund Software, Inc., a
Delaware corporation ("Seller"), The Learning Company, Inc., a Delaware
corporation ("Buyer"), and TLC Merger Corp., a Delaware corporation and a wholly
owned subsidiary of Buyer (the "Sub"). The Agreement provides for the merger of
the Sub with and into Seller (the "Merger"). In accordance with the Agreement,
shares of common stock, $.01 par value per share, of Seller (the "Seller Common
Stock") shall be converted into shares of common stock, $.01 par value per
share, of Buyer (the "Buyer Common Stock"), as described in the Agreement.
The undersigned has been advised that as of the date of this agreement
the undersigned may be deemed to be an "affiliate" of Seller, as the term
"affiliate" is defined for purposes of paragraphs (c) and (d) of Rule 145 of the
Rules and Regulations of the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "securities
Act"), and/or as such term is used in, and for purposes of, Accounting Series
Releases Nos. 130 and 135, as amended, of the Commission.
In consideration of the mutual agreements, provisions and covenants set
forth in the Agreement and hereinafter in this agreement, the undersigned
represents and agree as follows:
1. POOLING REQUIREMENTS. The undersigned will not within the 30 day
period prior to the Effective Time (as defined in the Agreement), sell,
transfer, pledge, hypothecate or otherwise dispose of, or reduce the
undersigned's interest in or risk relating to, any shares of Seller Common Stock
or Buyer Common Stock owned by the undersigned. In addition, the undersigned
will not, from and after the
58
Effective Time, sell, transfer, pledge, hypothecate or otherwise dispose of, or
reduce the undersigned's interest in or risk relating to any Buyer common stock
issued to the undersigned pursuant to the Merger, or any other shares of Buyer
capital stock, until after such time as Buyer has published (within the meaning
of Accounting Series Release No. 135, as amended, of the Commission) financial
results covering at least 30 days of combined operations of Seller and Buyer.
2. [To be included in Xxxxxxx X. Xxxxxxxx' s Affiliate Agreement only]
REGISTRATION OF SHARES. Buyer shall file with the Commission, as promptly as
practicable after the Effective Time, a registration statement on Form S-3
covering the resale to the public by Buyer of Buyer Common Stock ( the "Buyer
Registration Statement"). Buyer shall use its reasonable efforts to cause the
Buyer Registration Statement to be declared effective by the Commission as soon
as practicable (the "Effective Date"). Buyer shall cause the Buyer Registration
Statement to remain effective for 6 months after the Effective Date or such
earlier time as all the Buyer Common Stock covered by the Buyer Registration
Statement has been sold pursuant thereto.
3. RULE 145. The undersigned will not offer, sell, pledge, hypothecate,
transfer or otherwise dispose of, or reduce its interest in or risk relating to,
any of the shares of Buyer common Stock issued to the undersigned in the Merger
unless at such time either: (i) such transaction is permitted pursuant to the
provisions of Rule 145 under the Securities Act; (ii) the undersigned shall have
furnished to Buyer an opinion of counsel, reasonably satisfactory to Buyer to
the effect that such transaction is otherwise exempt form the registration
requirements of the Securities Act; or (iii) a registration statement under the
Securities Act covering the proposed offer, sale, pledge, hypothecation,
transfer or other disposition shall be effective under the Securities Act.
4. LEGEND.
(a) The undersigned understands that all certificates
representing Buyer Common Stock delivered to the undersigned pursuant to the
Merger shall bear a legend in substantially the form set forth below, until the
earlier to occur of (i) one of the events referred to in Section 3 above or (ii)
the date on which the undersigned requests removal of such legend, provided,
that such request occurs at least two years from the Effective Time (as defined
in the Merger Agreement) and that the undersigned is not at the time of such
request, and has not been during the three months period preceding to such
request, an affiliate of Buyer.
"The shares represented by this certificate were issued in a
transaction to which Rule 145 of the Securities Act of 1933 applies and
may only be transferred in accordance with the provisions of such rule.
In addition, the shares represented by this certificate may only be
transferred in accordance with the terms of an affiliate agreement
dated ____________, 1998 between the initial holder hereof and The
Learning Company, Inc.,
59
a copy of which agreement may be inspected by the holder of this
certificate at the principal offices of The Learning Company, Inc., or
furnished by The Learning Company, Inc. to the holder of this
certificate upon written request without charge."
(b) Buyer in its discretion may cause stop transfer orders to
be placed with its transfer agent with respect to the certificates for the
shares of Buyer Common Stock that are required to bear the foregoing legend.
5. GENERAL PROVISIONS. This agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of laws. This agreement shall be binding on
the undersigned's successors and assigns, including his or her heirs, executors
and administrators.
The undersigned has carefully read this agreement and discussed its
requirements, to the extent the undersigned believed necessary, with its counsel
or counsel for Buyer.
Very truly yours,
----------------------------
Signature
----------------------------
Print Name
Accepted:
Broderbund Software, Inc.
By:______________________
Name:___________________
Title:____________________
Dated:___________________
The Learning Company, Inc.
By:______________________
Name:___________________
Title:____________________
Dated:___________________
60
Exhibit A-2
Buyer Affiliate Agreement
AFFILIATE AGREEMENT
_______________, 1998
The Learning Company, Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
An Agreement and Plan of Merger dated as of June 21, 1998 (the
"Agreement") has been entered into by and among Broderbund Software, Inc., a
Delaware corporation ("Seller"), The Learning Company, Inc., a Delaware
corporation ("Buyer"), and TLC Merger Corp., a Delaware corporation and a wholly
owned subsidiary of Buyer (the "Sub"). The Agreement provides for the merger of
the Sub with and into Seller (the "Merger"). In accordance with the Agreement,
shares of common stock, $.01 par value per share, of Seller (the "Seller Common
Stock") shall be converted into shares of common stock, $.01 par value per
share, of Buyer (the "Buyer Common Stock"), as described in the Agreement.
The undersigned has been advised that as of the date of this agreement
the undersigned may be deemed to be an "affiliate" of Buyer, as the term
"affiliate" is defined under the Rules and Regulations of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended, and/or as such term is used in, and for purposes of, Accounting Series
Releases Nos. 103 and 135, as amended, of the Commission.
In consideration of the mutual agreements, provisions and covenants set
forth in the Agreement and hereinafter in this agreement, the undersigned
represents and agree as follows:
1. POOLING REQUIREMENTS. The undersigned will not within the 30 day
period prior to the Effective Time (as defined in the Agreement), sell,
transfer, pledge, hypothecate or otherwise dispose of, or reduce the
undersigned's interest in or risk relating to, any shares of Seller Common Stock
or Buyer Common Stock owned by the undersigned. In addition, the undersigned
will not, from and after the Effective Time, sell, transfer, pledge, hypothecate
or otherwise dispose of, or reduce the undersigned's interest in or risk
relating to any shares of Buyer capital stock, until after such time as Buyer
has published (within the meaning of Accounting Series Release No. 135, as
amended, of the Commission) financial results covering at least 30 days of
combined operations of Seller and Buyer. The restrictions set forth herein
61
may be waived by the Buyer to the extent such waiver, in the opinion of Buyer's
independent accountants, does not jeopardize the treatment of the Merger as a
pooling of interests.
2. GENERAL PROVISIONS. This agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without giving
effect to principles of conflicts of laws. This agreement shall be binding on
the undersigned's successors and assigns, including his heirs, executors and
administrators.
The undersigned has carefully read this agreement and discussed its
requirements, to the extent the undersigned believed necessary, with its counsel
or counsel for Buyer.
Very truly yours,
----------------------------
Signature
----------------------------
Print Name
Accepted:
Broderbund Software, Inc.
By:______________________
Name:___________________
Title:____________________
Dated:___________________
The Learning Company, Inc.
By:______________________
Name:___________________
Title:____________________
Dated:___________________
