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