EXHIBIT 1
CONFORMED COPY
AGREEMENT AND PLAN OF MERGER
dated as of
April 9, 1997
among
MICROCOM, INC.
COMPAQ COMPUTER CORPORATION
and
COMPAQ-BOSTON, INC.
1
TABLE OF CONTENTS
Page
ARTICLE 1
THE OFFER
SECTION 1.1. The Offer....................................... 1
SECTION 1.2. Company Action.................................. 2
SECTION 1.3. Directors....................................... 3
ARTICLE 2
THE MERGER
SECTION 2.1. The Merger...................................... 3
SECTION 2.2. Conversion of Shares............................ 4
SECTION 2.3. Surrender and Payment........................... 4
SECTION 2.4. Dissenting Shares............................... 6
SECTION 2.6 Employee Stock Purchase Plan.................... 7
SECTION 2.7 Option Restricted Stock......................... 7
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.1. Articles of Organization........................ 8
SECTION 3.2. Bylaws.......................................... 8
SECTION 3.3. Directors and Officers.......................... 8
2
Page
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 4.1. Corporate Existence and Power................... 8
SECTION 4.2. Corporate Authorization......................... 9
SECTION 4.3. Governmental Authorization...................... 9
SECTION 4.4. Non-Contravention............................... 9
SECTION 4.5. Capitalization.................................. 10
SECTION 4.6. Subsidiaries.................................... 10
SECTION 4.7. SEC Filings..................................... 11
SECTION 4.8. Financial Statements............................ 11
SECTION 4.9. Disclosure Documents............................ 12
SECTION 4.10. Absence of Certain Changes...................... 12
SECTION 4.11. No Undisclosed Material Liabilities............. 14
SECTION 4.12. Litigation...................................... 14
SECTION 4.13. Taxes........................................... 14
SECTION 4.14. ERISA........................................... 15
SECTION 4.15. Compliance with Laws............................ 16
SECTION 4.16. Finders' Fees................................... 16
SECTION 4.17. Patents and Other Proprietary Rights............ 16
SECTION 4.18. Environmental Matters........................... 17
SECTION 4.19. Approvals; Antitakeover Provisions.............. 18
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
SECTION 5.1. Corporate Existence and Power.................... 19
SECTION 5.2. Corporate Authorization.......................... 19
SECTION 5.3. Governmental Authorization....................... 19
SECTION 5.4. Non-Contravention................................ 19
SECTION 5.5. Disclosure Documents............................. 20
SECTION 5.6. Finders' Fees.................................... 20
3
Page
ARTICLE 6
COVENANTS OF THE COMPANY
SECTION 6.1. Conduct of the Company........................... 20
SECTION 6.2. Stockholder Meeting; Proxy Material.............. 21
SECTION 6.3. Access to Information............................ 21
SECTION 6.4. Other Offers..................................... 22
ARTICLE 7
COVENANTS OF BUYER
SECTION 7.1. Obligations of Merger Subsidiary................. 23
SECTION 7.2. Voting of Shares................................. 23
SECTION 7.3. Director and Officer Liability................... 23
SECTION 7.4. Tax Certification................................ 23
ARTICLE 8
COVENANTS OF BUYER AND THE COMPANY
SECTION 8.1. Best Efforts..................................... 24
SECTION 8.2. Certain Filings.................................. 24
SECTION 8.3. Public Announcements............................. 24
SECTION 8.4. Notices of Certain Events........................ 24
SECTION 8.5. Employee Benefits................................ 25
SECTION 8.6. Further Assurances............................... 25
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Page
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.1. Conditions to the Obligations of Each Party...... 25
ARTICLE 10
TERMINATION
SECTION 10.1. Termination..................................... 26
SECTION 10.2. Effect of Termination........................... 26
SECTION 11.1. Notices......................................... 26
SECTION 11.2. Survival of Representations and Warranties...... 27
SECTION 11.3. Amendments; No Waivers.......................... 28
SECTION 11.4. Fees and Expenses............................... 28
SECTION 11.5. Successors and Assigns.......................... 29
SECTION 11.6. Governing Law................................... 29
SECTION 11.7. Counterparts; Effectiveness..................... 29
SECTION 11.8. Entire Agreement................................ 29
SECTION 11.9. Definitions..................................... 30
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of April 9, 1997 among Microcom,
Inc., a Massachusetts corporation (the "COMPANY"), Compaq Computer Corporation,
a Delaware corporation ("BUYER"), and Compaq-Boston, Inc., a Massachusetts
corporation and a wholly-owned subsidiary of Buyer ("MERGER SUBSIDIARY").
The parties hereto agree as follows:
ARTICLE 1
THE OFFER
SECTION 1.1. The Offer. (a) Provided that nothing shall have occurred
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that would result in a failure to satisfy any of the conditions set forth in
Annex I hereto, Merger Subsidiary shall, as promptly as practicable after the
date hereof, but in no event later than five business days following the public
announcement of the terms of this Agreement, commence an offer (the "OFFER") to
purchase all of the outstanding shares (the "SHARES") of common stock, $0.01 par
value per share, of the Company (the "COMMON STOCK") at a price of $16.25 per
Share, net to the seller in cash. The Offer shall be subject to the condition
that a number of Shares which, together with the Shares then owned by Buyer,
represents at least a majority of the Shares outstanding on a fully diluted
basis shall be validly tendered in accordance with the terms of the Offer prior
to the expiration date of the Offer and not withdrawn (the "MINIMUM CONDITION")
and to the other conditions set forth in Annex I hereto. Merger Subsidiary
expressly reserves the right to waive the Minimum Condition or any of the other
conditions to the Offer and to make any change in the terms or conditions of the
Offer; provided that no change may be made which changes the form of
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consideration to be paid or decreases the price per Share or the number of
Shares sought in the Offer or which imposes conditions to the Offer in addition
to those set forth in Annex I or amends the terms and conditions of the Offer in
a manner adverse to the Company.
(b) As soon as practicable on the date of commencement of the Offer,
Merger Subsidiary shall file with the SEC (as defined in Section 4.7) a Tender
Offer Statement on Schedule 14D-1 with respect to the Offer which will contain
the offer to purchase and form of the related letter of transmittal (together
with any supplements or amendments thereto, collectively the "OFFER DOCUMENTS").
Buyer and the Company each agrees promptly to correct any information provided
by it for use in the Offer
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Documents if and to the extent that it shall have become false or misleading in
any material respect. Merger Subsidiary agrees to take all steps necessary to
cause the Offer Documents as so corrected to be filed with the SEC and to be
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws. The Company and its counsel shall be given
an opportunity to review and comment on the Schedule 14D-1 prior to its being
filed with the SEC.
SECTION 1.2. Company Action. (a) The Company hereby consents to the
--------------
Offer and represents that its Board of Directors, at a meeting duly called and
held, has (i) unanimously determined that this Agreement and the transactions
contemplated hereby, including the Offer and the Merger (as defined in Section
2.1), are fair to and in the best interest of the Company's stockholders, (ii)
unanimously approved this Agreement and the transactions contemplated hereby,
including the Offer and the Merger, which approval satisfies in full any
applicable requirements of the Business Corporation Law of the Commonwealth of
Massachusetts ("MASSACHUSETTS LAW" OR "MBCL") and any applicable requirements of
Chapters 110C, 110D, 110E and 110F of the Massachusetts General Laws, and (iii)
unanimously resolved, except as may be required, in response to an unsolicited
bona fide written Acquisition Proposal (as defined in Section 6.4), in order to
comply with the fiduciary duties of the Board of Directors under applicable law
as advised in writing by Xxxxxx, Xxxx & Xxxxxxx ("COMPANY COUNSEL"), to
recommend acceptance of the Offer and approval and adoption of this Agreement
and the Merger by its stockholders. The Company further represents that Xxxxxx
Xxxxxxx & Co. Incorporated has delivered to the Company's Board of Directors its
written opinion that the consideration to be paid in the Offer and the Merger is
fair to the holders of Shares from a financial point of view. The Company has
been advised that all of its directors and executive officers intend either to
tender their Shares pursuant to the Offer or to vote in favor of the Merger.
The Company will promptly furnish Buyer with a list of its stockholders, mailing
labels and any available listing or computer file containing the names and
addresses of all record holders of Shares and lists of securities positions of
Shares held in stock depositories, in each case true and correct as of the most
recent practicable date, and will provide to Buyer such additional information
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Buyer may
reasonably request in connection with the Offer. Buyer will return such
materials promptly if the Offer is not consummated.
(b) As soon as practicable on the day that the Offer is commenced, the
Company will file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (the "SCHEDULE 14D-9") which shall reflect the recommendations of
the Company's Board of Directors referred to above. The Company and Buyer each
agree promptly to correct any information provided by it for use in the Schedule
14D-9 if and to the extent that it shall have become false or misleading in any
material respect. The Company agrees to take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and to be disseminated
to holders of Shares, in each case as and
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to the extent required by applicable federal securities laws. Buyer and its
counsel shall be given an opportunity to review and comment on the Schedule 14D-
9 prior to its being filed with the SEC.
SECTION 1.3. Directors. (a) Effective upon the acceptance for payment
---------
pursuant to the Offer of a number of Shares that satisfies the Minimum
Condition, Buyer shall be entitled to designate the number of directors, rounded
up to the next whole number, on the Company's Board of Directors that equals the
product of (i) the total number of directors on the Company's Board of Directors
(giving effect to the election of any additional directors pursuant to this
Section) multiplied by (ii) the percentage that the number of Shares
beneficially owned by Buyer (including Shares accepted for payment) bears to the
total number of Shares outstanding; and the Company shall take all action
necessary to cause Buyer's designees to be elected or appointed to the Company's
Board of Directors, including, without limitation, increasing the number of
directors and seeking and accepting resignations of incumbent directors. At
such times, the Company will use its best efforts to cause individuals
designated by Buyer to constitute the same percentage as such individuals
represent on the Company's Board of Directors of (A) each committee of the Board
and (B) each board of directors (and committee thereof) of each Subsidiary (as
defined in Section 4.6). Notwithstanding the foregoing, the Company shall use
its best efforts to cause at least three members of the Company's Board of
Directors as of the date hereof who are not employees of the Company (the
"CONTINUING DIRECTORS") to remain members of the Board of Directors until the
Effective Time (as defined in Section 2.1(b)), and the Buyer consents thereto.
(b) The Company's obligations to appoint designees to the Board of
Directors shall be subject to Section 14(f) of the Exchange Act (as defined in
Section 4.3) and Rule 14f-1 promulgated thereunder. The Company shall promptly
take all actions required pursuant to Section 14(f) and Rule 14f-1 in order to
fulfill its obligations under this Section and shall include in the Schedule
14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill its
obligations under this Section. Buyer will supply to the Company in writing and
be solely responsible for any information with respect to itself and its
nominees, officers, directors and affiliates required by Section 14(f) and Rule
14f-1.
ARTICLE 2
THE MERGER
SECTION 2.1. The Merger. (a) At the Effective Time (as defined below),
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Merger Subsidiary shall be merged (the "MERGER") with and into the Company in
accordance with Section 78 of the MBCL, whereupon the separate existence of
Merger
8
Subsidiary shall cease, and the Company shall be the surviving corporation (the
"SURVIVING CORPORATION").
(b) As soon as practicable after satisfaction or, to the extent permitted
hereunder, waiver of all conditions to the Merger, the Company and Merger
Subsidiary will file articles of merger ("ARTICLES OF MERGER") with the
Secretary of State of the Commonwealth of Massachusetts and make all other
filings or recordings required by Massachusetts Law in connection with the
Merger. The Merger shall become effective at such time as the Articles of
Merger are duly filed with the Secretary of State of the Commonwealth of
Massachusetts (the "EFFECTIVE TIME").
(c) From and after the Effective Time, the Surviving Corporation shall
possess all the rights, privileges, powers and franchises and be subject to all
of the restric tions, disabilities and duties of the Company and Merger
Subsidiary, all as provided under Massachusetts Law.
SECTION 2.2. Conversion of Shares. At the Effective Time:
--------------------
(a) each Share held by the Company as treasury stock or owned by Buyer
or any subsidiary of Buyer immediately prior to the Effective Time shall be
canceled, and no payment shall be made with respect thereto;
(b) each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become
one share of common stock of the Surviving Corporation with the same
rights, powers and privileges as the shares so converted and shall
constitute the only outstanding shares of capital stock of the Surviving
Corporation; and
(c) each Share outstanding immediately prior to the Effective Time
shall, except as otherwise provided in Section 2.2(a) or as provided in
Section 2.4 with respect to Shares as to which appraisal rights have been
exercised or as provided in Section 2.7 with respect to Option Restricted
Stock, be converted into the right to receive $16.25 in cash, without
interest (the "MERGER CONSIDERATION").
SECTION 2.3. Surrender and Payment. (a) Prior to the Effective Time,
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Buyer shall appoint an agent (the "EXCHANGE AGENT") for the purpose of
exchanging certificates representing Shares for the Merger Consideration. Buyer
will make available to the Exchange Agent, in such amounts as may be needed from
time to time, the Merger Consideration to be paid in respect of the Shares.
Promptly after the Effective Time, Buyer will send, or will cause the Exchange
Agent to send, to each holder of Shares at the Effective Time a letter of
transmittal for use in such exchange (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the certificates representing Shares to the Exchange Agent).
9
(b) Each holder of Shares that have been converted into a right to receive
the Merger Consideration, upon surrender to the Exchange Agent of a certificate
or certi ficates representing such Shares, together with a properly completed
letter of transmittal covering such Shares, will be entitled to receive the
Merger Consideration payable in respect of such Shares. From and after the
Effective Time, all Shares which have been so converted shall no longer be
outstanding and shall automatically be canceled and retired, and each such
certificate shall, after the Effective Time, represent for all purposes, only
the right to receive such Merger Consideration.
(c) If any portion of the Merger Consideration is to be paid to a Person
other than the registered holder of the Shares represented by the certificate or
certificates surrendered in exchange therefor, it shall be a condition to such
payment that the certificate or certificates so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the Person
requesting such payment shall pay to the Exchange Agent any transfer or other
taxes required as a result of such payment to a Person other than the registered
holder of such Shares or establish to the satisfaction of the Exchange Agent
that such tax has been paid or is not payable. For purposes of this Agreement,
"PERSON" means an individual, a corporation, a limited liability company, a
partnership, an association, a trust or any other entity or organization,
including a government or political subdivision or any agency or instrumentality
thereof.
(d) After the Effective Time, there shall be no further registration of
transfers of Shares. If, after the Effective Time, certificates representing
Shares are presented to the Surviving Corporation, they shall be canceled and
exchanged for the consideration provided for, and in accordance with the
procedures set forth, in this Article 2.
(e) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.3(a) that remains unclaimed by the holders of Shares
six months after the Effective Time shall be returned to Buyer, upon demand, and
any such holder who has not exchanged Shares for the Merger Consideration in
accordance with this Section 2.3 prior to that time shall thereafter look only
to Buyer for payment of the Merger Consideration in respect of Shares.
Notwithstanding the foregoing, Buyer shall not be liable to any holder of Shares
for any amount paid to a public official pursuant to applicable abandoned
property laws. Any amounts remaining unclaimed by holders of Shares two years
after the Effective Time (or such earlier date immediately prior to such time as
such amounts would otherwise escheat to or become property of any governmental
entity) shall, to the extent permitted by applicable law, become the property of
Buyer free and clear of any claims or interest of any Person previously entitled
thereto.
(f) Any portion of the Merger Consideration made available to the Exchange
Agent pursuant to Section 2.3(a) to pay for Shares for which appraisal rights
have been perfected shall be returned to Buyer, upon demand.
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SECTION 2.4. Dissenting Shares. Notwithstanding Section 2.2, Shares
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which are held of record by stockholders who shall not have voted such Shares in
favor of the Merger, if applicable, and who shall have properly exercised rights
to demand payment of the fair value of such Shares in accordance with Sections
86 through 98, inclusive, of the MBCL shall not be converted into the right to
receive the Merger Consideration, but the holders thereof instead shall be
entitled to payment of the fair value of such Shares in accordance with the
provisions of Sections 86 to 92, inclusive, of the MBCL, provided, however, that
(i) if such a holder fails to file a notice of election to dissent in accordance
with Section 86 of the MBCL or, after filing such notice of election,
subsequently delivers an effective written withdrawal of such notice or fails to
establish his entitlement to appraisal rights as provided in Sections 87 through
98, inclusive, of the MBCL, or (ii) if such holder shall otherwise lose his
appraisal rights, then in either of such cases such Shares shall be treated as
if they had been converted as of the Effective Time into a right to receive the
Merger Consideration. The Company shall give Buyer prompt notice of any demands
received by the Company for the payment of fair value for Shares, and Buyer
shall have the right to participate in all negotiations and proceedings with
respect to such demands. The Company shall not, except with the prior written
consent of Buyer, make any payment with respect to, or settle or offer to
settle, any such demands.
SECTION 2.5 Stock Options. (a) At the Effective Time, each option to
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purchase shares of Common Stock outstanding under any employee stock option or
compensation plan or arrangement of the Company (except for the Microcom, Inc.
1987 Employee Stock Purchase Plan (the "COMPANY STOCK PURCHASE PLAN")) that is
vested and exercisable (including any option that becomes vested and exercisable
by its terms as a result of the transactions contemplated hereby) held by (i)
the Chief Executive Officer of the Company, (ii) the Chief Financial Officer of
the Company or (iii) any director or former director of the Company shall be
canceled, and Buyer shall pay each such holder in cash at the Effective Time for
each such option an amount determined by multiplying (A) the excess, if any, of
the Merger Consideration over the applicable exercise price per share of such
option by (B) the number of shares to which such option relates.
(b) Except as otherwise provided in Section 2.5(a) above, at the Effective
Time, each option to purchase shares of Common Stock outstanding under any
employee stock option or compensation plan or arrangement of the Company (except
for the Company Stock Purchase Plan), whether or not vested or exercisable,
shall be canceled, and Buyer shall issue in exchange therefor an option to
purchase shares of common stock of Buyer (a "SUBSTITUTE OPTION"). The number of
shares of Buyer's common stock subject to such Substitute Option and the
exercise price thereunder shall be computed in compliance with the requirements
of Section 424(a) of the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder (the "CODE"). Such Substitute
Option shall vest in accordance with the same schedule and shall have
11
the same term as the original option in respect of which it is granted, and
shall otherwise be subject to all of the other terms and conditions of options
granted under the employee stock option or compensation plan or arrangement of
Buyer. The Substitute Option will not qualify as an incentive stock option under
Section 422 of the Code. Notwithstanding the foregoing, in the case of any
Substitute Option issued in exchange for an option exercisable for shares of
Common Stock which shares would upon exercise, as of the Effective Time, be
subject to contractual forfeiture or resale restrictions ("FORFEITURE
PROVISIONS"), the Substitute Option shall become exercisable according to a
schedule that mirrors the expiration of such Forfeiture Provisions, but the
shares of Buyer's common stock acquired upon exercise of the Substitute Option
shall not be subject to Forfeiture Provisions.
(c) Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of the Company's stock option or
compensation plans or arrangements) that are necessary to give effect to the
transactions contemplated by Sections 2.5(a) and 2.5(b).
SECTION 2.6 Employee Stock Purchase Plan. (a) As of the Effective Time,
----------------------------
the Company Stock Purchase Plan shall be terminated. Buyer shall pay each
participant in any current offering under such Plan in cash at or promptly after
the Effective Time, in cancellation of all rights under such Plan, the amount of
such participant's account balance under the Plan.
(b) Prior to the Effective Time, the Company shall take all actions
(including, if appropriate, amending the terms of the Company Stock Purchase
Plan) that are necessary to give effect to the transactions contemplated by
Section 2.6(a).
SECTION 2.7 Option Restricted Stock. The provisions of this Section 2.7
-----------------------
shall apply to each share of Common Stock acquired upon exercise of an option
granted under any stock option or incentive plan of the Company that as of the
Effective Date is subject to Forfeiture Provisions ("OPTION RESTRICTED STOCK").
Notwithstanding Section 2.2, the Option Restricted Stock shall not be tendered
by any holder thereof into the Offer and shall be canceled immediately prior to
the Effective Time. In consideration of such forbearance and cancellation,
Buyer shall grant, as of the Effective Time, to each former holder of Option
Restricted Stock, a number of shares of Buyer common stock having a market
value, based on the most recent per share closing price of Buyer common stock on
the New York Stock Exchange prior to the Effective Date, equal to the product of
(i) the number of shares of Option Restricted Stock formerly held by such holder
and (ii) the Merger Consideration. Such Buyer common stock shall be subject to
the same Forfeiture Provisions as applied to the Option Restricted Stock
immediately prior to the cancellation thereof. The Company shall use its best
efforts to obtain such consents by the affected
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holders of Option Restricted Stock as are necessary to effect the provisions of
this Section 2.7.
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.1. Articles of Organization. (a) The Articles of Organization
------------------------
of the Surviving Corporation shall be amended pursuant to the Articles of Merger
to read in their entirety as set forth in the Articles of Organization of Merger
Subsidiary, except that the name of the Surviving Corporation shall be
"Microcom, Inc."
(b) The Surviving Corporation shall initially be authorized to issue up to
100,000 shares of its common stock, par value $.01 per share.
(c) The purposes of the Surviving Corporation shall be as set forth in the
Articles of Organization of Merger Subsidiary as in effect on the date hereof
until such time as such purposes may be amended as provided in the Articles of
Organization of the Surviving Corporation and by applicable law.
SECTION 3.2. Bylaws. The bylaws of Merger Subsidiary in effect at the
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Effective Time shall be the bylaws of the Surviving Corporation until amended in
accordance with applicable law.
SECTION 3.3. Directors and Officers. From and after the Effective Time,
----------------------
until successors are duly elected or appointed and qualified in accordance with
applicable law, (a) the directors of Merger Subsidiary at the Effective Time
shall be the directors of the Surviving Corporation and (b) the officers of the
Company at the Effective Time shall be the officers of the Surviving
Corporation.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company represents and warrants to Buyer that:
SECTION 4.1. Corporate Existence and Power. The Company is a corporation
-----------------------------
duly incorporated, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has all corporate powers and all material
govern-
13
mental licenses, authorizations, consents and approvals required to carry on its
business as now conducted. The Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where the
failure to be so qualified would not, individually or in the aggregate, have a
material adverse effect on the financial condition, business, assets or results
of operations of the Company and the Subsidiaries taken as a whole (a "MATERIAL
ADVERSE EFFECT"). The Company has heretofore delivered to Buyer true and
complete copies of the Company's Articles of Organization and bylaws as
currently in effect.
SECTION 4.2. Corporate Authorization. The execution, delivery and
-----------------------
performance by the Company of this Agreement and the consummation by the Company
of the transactions contemplated hereby are within the Company's corporate
powers and, except as set forth in the following sentence, have been duly
authorized by all necessary corporate action. The affirmative vote of the
holders of a majority of the Shares approving this Agreement is the only vote of
the holders of the Company's capital stock necessary to approve the transactions
contemplated by this Agreement. This Agreement constitutes a valid and binding
agreement of the Company.
SECTION 4.3. Governmental Authorization. The execution, delivery and
--------------------------
performance by the Company of this Agreement and the consummation of the Merger
by the Company require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (a) the filing of
the Articles of Merger in accordance with Massachusetts Law; (b) compliance with
any applicable requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 0000 (xxx "XXX XXX"); and (c) compliance with any applicable requirements of
the Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder (the "EXCHANGE ACT").
SECTION 4.4. Non-Contravention. The execution, delivery and performance
-----------------
by the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby do not and will not (a) contravene or conflict
with the Articles of Organization or bylaws of the Company, (b) assuming
compliance with the matters referred to in Section 4.3, contravene or conflict
with or constitute a violation of any provision of any law, regulation,
judgment, injunction, order or decree binding upon or applicable to the Company
or any Subsidiary, (c) constitute a default under or give rise to a right of
termination, cancellation or acceleration of any right or obligation of the
Company or any Subsidiary or to a loss of any benefit to which the Company or
any Subsidiary is entitled under any provision of any agreement, contract or
other instrument binding upon the Company or any Subsidiary or any license,
franchise, permit or other similar authorization held by the Company or any
Subsidiary, or (d) result in the creation or imposition of any Lien on any asset
of the Company or any Subsidiary except, in the case of clauses (b), (c) and
(d), for such matters as would not, individually
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or in the aggregate, have a Material Adverse Effect. For purposes of this
Agreement, "LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
SECTION 4.5. Capitalization. The authorized capital stock of the Company
--------------
consists of 30,000,000 shares of Common Stock, $0.01 par value per share. As of
April 9, 1997, there were outstanding 16,288,011 shares of Common Stock and
stock options to purchase an aggregate of 2,102,346 shares of Common Stock (all
of which are currently exercisable) at an average exercise price of $8.24 per
share (of which options to purchase an aggregate of 687,608 shares of Common
Stock were vested). All outstanding shares of capital stock of the Company have
been duly authorized and validly issued and are fully paid and nonassessable.
All shares of Common Stock issuable upon exercise of outstanding stock options
have been duly authorized and will have been validly issued and will be fully
paid and nonassessable. Except as set forth in this Section and except for
changes since April 9, 1997 resulting from the exercise of stock options and
purchase rights outstanding on such date, there are outstanding (a) no shares of
capital stock or other voting securities of the Company, (b) no securities of
the Company convertible into or exchangeable for shares of capital stock or
voting securities of the Company and (c) no options or other rights to acquire
from the Company, and no obligation of the Company to issue, any capital stock,
voting securities or securities convertible into or exchangeable for capital
stock or voting securities of the Company (the items in clauses (a), (b) and (c)
being referred to collectively as the "COMPANY SECURITIES"). There are no
outstanding obligations of the Company or any Subsidiary to repurchase, redeem
or otherwise acquire any Company Securities.
SECTION 4.6. Subsidiaries. (a) Each Subsidiary is a corporation duly
------------
incorporated, validly existing and, if applicable, in good standing under the
laws of its jurisdiction of incorporation, has all corporate powers and all
material governmental licenses, authorizations, consents and approvals required
to carry on its business as now conducted and is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
character of the property owned or leased by it or the nature of its activities
makes such qualification necessary, except for those jurisdictions where failure
to be so qualified would not, individually or in the aggregate, have a Material
Adverse Effect. For purposes of this Agreement, "SUBSIDIARY" means any
corporation or other entity of which securities or other ownership interests
having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are directly or indirectly owned by
the Company. All Subsidiaries and their respective jurisdictions of
incorporation are identified in the Company's annual report on Form 10-K for the
fiscal year ended March 31, 1996 (the "COMPANY 10-K").
(b) All of the outstanding capital stock of, or other voting securities or
ownership interests in, each Subsidiary, is owned by the Company, directly or
indirectly,
15
free and clear of any Lien and free of any other limitation or restriction
(including any restriction on the right to vote, sell or otherwise dispose of
such stock or other securities or ownership interests). There are no outstanding
(i) securities of the Company or any Subsidiary convertible into or exchangeable
for shares of capital stock or other voting securities or ownership interests in
any Subsidiary and (ii) options or other rights to acquire from the Company or
any Subsidiary, or other obligation of the Company or any Subsidiary to issue,
any capital stock, voting securities or other ownership interests in, or any
securities convertible into or exchangeable for any capital stock, voting
securities or ownership interests in, any Subsidiary (the items in clauses (i)
and (ii) being referred to collectively as the "SUBSIDIARY SECURITIES"). There
are no outstanding obligations of the Company or any Subsidiary to repurchase,
redeem or otherwise acquire any outstanding Subsidiary Securities.
SECTION 4.7. SEC Filings. (a) The Company has delivered to Buyer (i)
-----------
the Company's annual reports on Form 10-K for its fiscal years ended March 31,
1994, 1995, and 1996, (ii) its quarterly report on Form 10-Q for its fiscal
quarter ended December 31, 1996 (the "COMPANY 10-Q"), (iii) its proxy or
information statements relating to meetings of, or actions taken without a
meeting by, the stockholders of the Company held since March 31, 1996 and (iv)
all of its other reports, statements, schedules and registration statements
filed with the Securities and Exchange Commission (the "SEC") since March 31,
1996.
(b) As of its filing date, each such report or statement filed pursuant to
the Exchange Act did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(c) Each such registration statement, as amended or supplemented, if
applicable, filed pursuant to the Securities Act of 1933 as of the date such
statement or amendment became effective did not contain any untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
SECTION 4.8. Financial Statements. The audited consolidated financial
--------------------
statements and unaudited consolidated interim financial statements of the
Company included in its annual reports on Form 10-K referred to in Section 4.7
and the Company 10-Q fairly present, in conformity with generally accepted
accounting principles applied on a consistent basis (except as may be indicated
in the notes thereto), the consolidated financial position of the Company and
its consolidated subsidiaries as of the dates thereof and their consolidated
results of operations and cash flows for the periods then ended (subject to
normal year-end adjustments in the case of any unaudited interim financial
statements). For purposes of this Agreement, "BALANCE SHEET" means the
consolidated
16
balance sheet of the Company as of December 31, 1996 set forth in the Company
10-Q and "BALANCE SHEET DATE" means December 31, 1996.
SECTION 4.9. Disclosure Documents. (a) Each document required to be
--------------------
filed by the Company with the SEC in connection with the transactions
contemplated by this Agreement (the "COMPANY DISCLOSURE DOCUMENTS"), including,
without limitation, the Schedule 14D-9, the proxy or information statement of
the Company (the "COMPANY PROXY STATEMENT"), if any, to be filed with the SEC in
connection with the Merger, and any amendments or supplements thereto will, when
filed, comply as to form in all material respects with the applicable
requirements of the Exchange Act.
(b) At the time the Company Proxy Statement or any amendment or supplement
thereto is first mailed to stockholders of the Company and at the time such
stockholders vote on adoption of this Agreement, the Company Proxy Statement, as
supplemented or amended, if applicable, will not contain any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading. At the time of the filing of any Company Disclosure
Document other than the Company Proxy Statement, at the time of any distribution
thereof and at the time of consummation of the Offer, such Company Disclosure
Document will not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading. The
representations and warranties contained in this Section 4.9(b) will not apply
to statements or omissions included in the Company Disclosure Documents based
upon information furnished to the Company in writing by Buyer specifically for
use therein.
(c) The information with respect to the Company or any Subsidiary that the
Company furnishes to Buyer in writing specifically for use in the Offer
Documents will not, at the time of the filing thereof, at the time of any
distribution thereof and at the time of the consummation of the Offer, 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 made
therein, in the light of the circumstances under which they were made, not
misleading.
SECTION 4.10. Absence of Certain Changes. Except as disclosed in writing
--------------------------
to Buyer prior to the date hereof, since the Balance Sheet Date, the Company and
Subsidiaries have conducted their business in the ordinary course consistent
with past practice and there has not been:
(a) any event, occurrence or development or state of circumstances or
facts which has had or could reasonably be expected to have a Material
Adverse Effect;
17
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company, or
any repurchase, redemption or other acquisition by the Company or any
Subsidiary of any outstanding shares of capital stock or other securities
of, or other ownership interests in, the Company or any Subsidiary;
(c) any amendment of any material term of any outstanding security of
the Company or any Subsidiary;
(d) any incurrence, assumption or guarantee by the Company or any
Subsidiary of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent with
past practices;
(e) any creation or assumption by the Company or any Subsidiary of any
Lien on any material asset other than in the ordinary course of business
consistent with past practices;
(f) any making of any loan, advance or capital contributions to or
investment in any Person other than loans, advances or capital
contributions to or investments in wholly-owned Subsidiaries made in the
ordinary course of business consistent with past practices or any amendment
of the terms of any loan to executive officers or directors;
(g) any damage, destruction or other casualty loss (whether or not
covered by insurance) affecting the business or assets of the Company or
any Subsidiary which, individually or in the aggregate, has had or could
reasonably be expected to have a Material Adverse Effect;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any Subsidiary relating to its assets or
business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any Subsidiary of any contract or other
right, in either case, material to the Company and the Subsidiaries taken
as a whole, other than transactions and commitments in the ordinary course
of business consistent with past practice and those contemplated by this
Agreement;
(i) any change in any method of accounting or accounting practice by the
Company or any Subsidiary, except for any such change required by reason of
a concurrent change in generally accepted accounting principles or in
Regulation S-X promulgated under the Exchange Act;
18
(j) any tax election, other than those consistent with past practice, not
required by law or any settlement or compromise of any tax liability in
either case that is material to the Company and the Subsidiaries;
(k) any (i) grant of any severance or termination pay to any director,
officer or employee of the Company or any Subsidiary, (ii) increase in
benefits payable under any existing severance or termination pay policies
or employment agreements, (iii) entering into of any employment, deferred
compensation or other similar agreement (or any amendment to any such
existing agreement) with any director, officer or employee of the Company
or any Subsidiary or (iv) increase in compensation, bonus or other benefits
payable to directors, officers or employees of the Company or any
Subsidiary, other than any such increases payable to employees other than
directors or officers in the ordinary course of business consistent with
past practice; or
(l) any labor dispute, other than routine individual grievances, or any
activity or proceeding by a labor union or representative thereof to
organize any employees of the Company or any Subsidiary, which employees
were not subject to a collective bargaining agreement at the Balance Sheet
Date, or any lockouts, strikes, slowdowns, work stoppages or threats
thereof by or with respect to such employees.
SECTION 4.11. No Undisclosed Material Liabilities. There are no material
-----------------------------------
liabilities or obligations of the Company or any Subsidiary of any kind
whatsoever, whether accrued, contingent, absolute, determined, determinable or
otherwise, and there is no existing condition, situation or set of circumstances
which could reasonably be expected to result in such a liability or obligation,
other than:
(a) liabilities or obligations disclosed or provided for in the Balance
Sheet;
(b) liabilities or obligations incurred in the ordinary course of
business consistent with past practice since the Balance Sheet Date,
which in the aggregate are not material to the Company and the
Subsidiaries,taken as a whole; and
(c) liabilities or obligations under this Agreement.
SECTION 4.12. Litigation. Except as set forth in the Company 10-K, there
----------
is no action, suit, investigation or proceeding pending, or to the knowledge of
the Company threatened, against or affecting the Company or any Subsidiary or
any of their respective properties or any of their respective officers or
directors in their capacity as officers or directors of the Company (or any
basis therefor) before any court or arbitrator or before or by any governmental
body, agency or official (x) as of the date hereof, or (y)
19
which could reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect.
SECTION 4.13. Taxes. The Company has filed all material tax returns,
-----
statements, reports and forms required to be filed with any tax authority when
due and in accordance with all applicable laws, and all taxes shown as due and
payable thereon have been timely paid, or withheld and remitted, to the
appropriate taxing authority. No deficiency in payment of any taxes for any
period has been asserted by any taxing authority which remains unsettled at the
date hereof except for deficiencies which would not have a Material Adverse
Effect. The Company and Subsidiaries do not own any interest in real property
in the State of New York or in any other jurisdiction in which a tax is imposed
on the transfer of a controlling interest in an entity that owns any interest in
real property.
SECTION 4.14. ERISA. (a) The Company has provided Buyer with a list
-----
identifying each "EMPLOYEE BENEFIT PLAN", as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), each employment,
severance or similar contract, plan, arrangement or policy and each plan or
arrangement (written or oral) providing for compensation, bonuses, profit-
sharing, stock option or other stock related rights or other forms of incentive
or deferred compensation, vacation benefits, insurance coverage (including any
self-insured arrangements), health or medical benefits, disability benefits,
workers' compensation, supplemental unemployment benefits, severance benefits
and post-employment or retirement benefits (including compensation, pension,
health, medical or life insurance benefits) which is maintained, administered or
contributed to by the Company or any affiliate (as defined below) and covers any
employee or former employee of the Company or any affiliate or under which the
Company or any affiliate has any liability. Copies of such plans (and, if
applicable, related trust agreements) and all amendments thereto and written
interpretations thereof have been furnished to Buyer together with the three
most recent annual reports (Form 5500 including, if applicable, Schedule B
thereto) prepared in connection with any such plan. Such plans are referred to
collectively herein as the "EMPLOYEE PLANS". For purposes of this Section,
"AFFILIATE" of any Person means any other Person which, together with such
Person, would be treated as a single employer under Section 414 of the Code. At
no time has the Company or any Person who from time to time is or was an
affiliate of the Company ever maintained an employee benefit plan that is
subject to Title IV of ERISA.
(b) Nothing done or omitted to be done and no transaction or holding of
any asset under or in connection with any Employee Plan has or will make the
Company or any Subsidiary, any officer or director of the Company or any
Subsidiary subject to any liability under Title I of ERISA or liable for any tax
pursuant to Section 4975 of the Code that could have a Material Adverse Effect.
20
(c) Each Employee Plan which is intended to be qualified under Section
401(a) of the Code is so qualified and has been so qualified during the period
from its adoption to date, and each trust forming a part thereof is exempt from
tax pursuant to Section 501(a) of the Code. The Company has furnished to the
Buyer copies of the most recent Internal Revenue Service determination letters
with respect to each such Plan. Each Employee Plan has been maintained in
material compliance with its terms and with the requirements prescribed by any
and all statutes, orders, rules and regulations, including but not limited to
ERISA and the Code, which are applicable to such Plan.
(d) Subject to Section 8.5 and except as disclosed in writing to Buyer
prior to the date hereof, no employee of the Company or any Subsidiary will
become entitled to any retirement, severance or similar benefit or enhanced or
accelerated benefit solely as a result of the transactions contemplated hereby.
Without limiting the generality of the foregoing, no amount required to be paid
or payable to or with respect to any employee of the Company or any Subsidiary
in connection with the transactions contemplated hereby (either solely as a
result thereof or as a result of such transactions in conjunction with any other
event) will be an "excess parachute payment" within the meaning of Section 280G
of the Code.
(e) No Employee Plan provides post-retirement health and medical, life or
other insurance benefits for retired employees of the Company and its
affiliates.
(f) Except as disclosed in writing to Buyer prior to the date hereof,
there has been no amendment to, written interpretation or announcement (whether
or not written) by the Company or any of its affiliates relating to, or change
in employee participation or coverage under, any Employee Plan which would
increase materially the expense of maintaining such Employee Plan above the
level of the expense incurred in respect thereof for the twelve months ended on
the Balance Sheet Date.
(g) Except as disclosed in writing to Buyer prior to the date hereof,
neither the Company nor any Subsidiary is a party to or subject to any union
contract or any employment contract or arrangement with any officer, consultant,
director or employee.
SECTION 4.15. Compliance with Laws. Neither the Company nor any
--------------------
Subsidiary is in violation of, or has violated, any applicable provisions of any
laws, statutes, ordinances or regulations, except for any such violation that,
individually or in the aggregate, has not had and could not reasonably be
expected to have a Material Adverse Effect.
SECTION 4.16. Finders' Fees. Except for Xxxxxx Xxxxxxx & Co.
-------------
Incorporated and Xxxxxxxx Management, Inc., copies of whose engagement
agreements have been provided to Buyer, there is no investment banker, broker,
finder or other intermediary which has been retained by or is authorized to act
on behalf, of the
21
Company or any Subsidiary who might be entitled to any fee or commission from
Buyer or any of its affiliates upon consummation of the transactions
contemplated by this Agreement.
SECTION 4.17. Patents and Other Proprietary Rights. The Company and
------------------------------------
Subsidiaries have rights to use, whether through ownership, licensing or
otherwise, all patents, trademarks, service marks, trade names, copyrights,
trade secrets, licenses, information, proprietary rights and processes of which
the Company is aware that are necessary for its business as now conducted
(collectively the "INTELLECTUAL PROPERTY RIGHTS"). The Company and Subsidiaries
have not assigned, hypothecated or otherwise encumbered any of the Intellectual
Property Rights and none of the licenses included in the Intellectual Property
Rights purport to grant sole or exclusive licenses to another entity or person,
including, without limitation sole or exclusive licenses limited to specific
fields of use. To the best of the Company's knowledge, the patents owned by the
Company and Subsidiaries are valid and enforceable and any patent issuing from
patent applications of the Company and Subsidiaries will be valid and
enforceable, except as such invalidity or unenforceability would not have a
Material Adverse Effect. Except as disclosed in writing to Buyer prior to the
date hereof: (i) the Company has no knowledge of any infringement by any other
party of any of the Intellectual Property Rights, and (ii) the Company and
Subsidiaries have not entered into any agreement to indemnify any other party
against any charge of infringement of any of its Intellectual Property Rights
except for such matters as would not, individually or in the aggregate, have a
Material Adverse Effect. To the best of the Company's knowledge, the Company
and Subsidiaries have not and do not violate or infringe any intellectual
property right of any other person or entity, and the Company and Subsidiaries
have not received any communication alleging that it violates or infringes the
intellectual property right of any other person or entity, except as disclosed
in writing to Buyer prior to the date hereof and except for any such violations
or infringements as would not, individually or in the aggregate, have a Material
Adverse Effect. The Company and Subsidiaries have not been sued for infringing
any intellectual property right of another entity or person. Except as
disclosed in writing to Buyer prior to the date hereof, none of the processes,
techniques and formulae, research and development results and other know-how
relating to the business of the Company and Subsidiaries, the value of which to
the Company is contingent upon maintenance of the confidentiality thereof, has
been disclosed by the Company or any affiliate thereof to any person or entity
other than those persons or entities who are bound to hold such information in
confidence pursuant to confidentiality agreements or by operation of law.
SECTION 4.18. Environmental Matters. (a) Except as set forth in the
---------------------
Company 10-K:
(i) no notice, notification, demand, request for information, citation,
summons, complaint or order has been received by, or, to the knowledge of
the
22
Company, is pending or threatened by any Person against, the Company or
any Subsidiary nor has any material penalty been assessed against the
Company or any Subsidiary with respect to any (A) alleged violation of any
Environmental Law or liability thereunder, (B) alleged failure to have any
permit, certificate, license, approval, registration or authorization
required under any Environmental Law, (C) generation, treatment, storage,
recycling, transportation or disposal of any Hazardous Substance or (D)
discharge, emission or release of any Hazardous Substance; and
(ii) there are no Environmental Liabilities that have had or could
reasonably be expected to have a Material Adverse Effect.
(b) Except as disclosed in writing to Buyer prior to the date hereof, there
has been no environmental investigation, study, audit, test, review or other
analysis conducted of which the Company has knowledge in relation to the current
or prior business of the Company or any property or facility now or previously
owned or leased by the Company or any Subsidiary which has not been delivered to
Buyer prior to the date hereof.
(c) For purposes of this Section 4.18, the following terms shall have the
meanings set forth below:
"COMPANY" and "SUBSIDIARY" shall include any entity which is, in whole
or in part, a predecessor of the Company or any Subsidiary;
"ENVIRONMENTAL LAWS" means any federal, state, local or foreign law,
treaty, judicial decision, regulation, rule, judgment, order, decree,
injunction, permit, agreement or governmental restriction or
requirement relating to human health, the environment or pollutants,
contaminants, chemicals, toxins, hazardous substances or wastes.
"ENVIRONMENTAL LIABILITIES" means any and all liabilities of or
relating to the Company and any Subsidiary, whether contingent or
fixed, actual or potential, known or unknown, which (i) arise under or
relate to matters covered by Environmental Laws and (ii) relate to
actions occurring or conditions existing on or prior to the Effective
Time; and
"HAZARDOUS SUBSTANCES" means any toxic, radioactive, corrosive or
otherwise hazardous substance, including petroleum, its derivatives,
by-products and other hydrocarbons, or any substance having any
constituent elements displaying any of the foregoing characteristics,
which in any event is regulated under Environmental Laws.
23
SECTION 4.19 Approvals; Antitakeover Provisions. The Company has taken
----------------------------------
all action necessary to approve the Offer and the Merger such that the approval
is sufficient to render entirely inapplicable to the Offer and Merger or Buyer
or Merger Subsidiary the provisions of Chapter 110C, 110D, 110E and 110F of the
Massachusetts General Laws. No other antitakeover or similar statute or
regulation applies or purports to apply to the transactions contemplated by this
Agreement.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF BUYER
Buyer represents and warrants to the Company that:
SECTION 5.1. Corporate Existence and Power. Each of Buyer and Merger
-----------------------------
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to carry on its business as now conducted.
Since the date of its incorporation, Merger Subsidiary has not engaged in any
activities other than in connection with or as contemplated by this Agreement or
in connection with arranging any financing required to consummate the
transactions contemplated hereby.
SECTION 5.2. Corporate Authorization. The execution, delivery and
-----------------------
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated
hereby are within the corporate powers of Buyer and Merger Subsidiary and have
been duly authorized by all necessary corporate action. This Agreement
constitutes a valid and binding agreement of each of Buyer and Merger
Subsidiary.
SECTION 5.3. Governmental Authorization. The execution, delivery and
---------------------------
performance by Buyer and Merger Subsidiary of this Agreement and the
consummation by Buyer and Merger Subsidiary of the transactions contemplated by
this Agreement require no action by or in respect of, or filing with, any
governmental body, agency, official or authority other than (a) the filing of
the Articles of Merger in accordance with Massachusetts Law, (b) compliance with
any applicable requirements of the HSR Act; and (c) compliance with any
applicable requirements of the Exchange Act.
SECTION 5.4. Non-Contravention. The execution, delivery and performance
-----------------
by Buyer and Merger Subsidiary of this Agreement and the consummation by Buyer
and Merger Subsidiary of the transactions contemplated hereby do not and will
not (a) contravene or conflict with the certificate of incorporation or bylaws
of Buyer or
24
the Articles of Organization or bylaws of Merger Subsidiary, (b) assuming
compliance with the matters referred to in Section 5.3, contravene or conflict
with any provision of law, regulation, judgment, order or decree binding upon
Buyer or Merger Subsidiary, or (c) constitute a default under or give rise to
any right of termination, cancellation or acceleration of any right or
obligation of Buyer or Merger Subsidiary or to a loss of any benefit to which
Buyer or Merger Subsidiary is entitled under any agreement, contract or other
instrument binding upon Buyer or Merger Subsidiary, except, in the case of (b)
and (c), for such matters as would not materially adversely effect the ability
of Buyer and Merger Subsidiary to consummate the transactions contemplated by
this Agreement.
SECTION 5.5. Disclosure Documents. (a) The information with respect to
--------------------
Buyer and its subsidiaries that Buyer furnishes to the Company in writing
specifically for use in any Company Disclosure Document will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements made therein, in the light of the circumstances
under which they were made, not misleading (i) in the case of the Company Proxy
Statement at the time the Company Proxy Statement or any amendment or supplement
thereto is first mailed to stockholders of the Company and at the time the
stockholders vote on adoption of this Agreement, and (ii) in the case of any
Company Disclosure Document other than the Company Proxy Statement, at the time
of the filing thereof, at the time of any distribution thereof, and at the time
of consummation of the Offer.
(b) The Offer Documents, when filed, will comply as to form in all
material respects with the applicable requirements of the Exchange Act and will
not at the time of the filing thereof, at the time of any distribution thereof
or at the time of consummation of the Offer, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading, provided, that this representation and warranty will not
--------
apply to statements or omissions in the Offer Documents based upon information
furnished to Buyer or Merger Subsidiary in writing by the Company specifically
for use therein.
SECTION 5.6. Finders' Fees. Except for Xxxxxxxxx & Co., LLC, whose fees
-------------
will be paid by Buyer, there is no investment banker, broker, finder or other
intermediary who might be entitled to any fee or commission from the Company or
any of its affiliates upon consummation of the transactions contemplated by this
Agreement.
ARTICLE 6
COVENANTS OF THE COMPANY
25
SECTION 6.1. Conduct of the Company. From the date hereof until the
----------------------
Effective Time, the Company and the Subsidiaries shall conduct their business in
the ordinary course consistent with past practice and shall use their best
efforts to preserve intact their business organizations and relationships with
third parties and to keep available the services of their present officers and
employees. Without limiting the generality of the foregoing, from the date
hereof until the Effective Time:
(a) the Company will not adopt or propose any change in its Articles of
Organization or bylaws;
(b) the Company will not, and will not permit any Subsidiary to, merge
or consolidate with any other Person or acquire a material amount of assets
of any other Person, other than purchases of materials or products in the
ordinary course of business;
(c) the Company will not, and will not permit any Subsidiary to, sell,
lease, license or otherwise dispose of any material assets or property
except (i) pursuant to existing contracts or commitments and (ii) in the
ordinary course consistent with past practice;
(d) the Company will not, and will not permit any Subsidiary to, settle
or compromise any suit or claims or threatened suit or claim relating to
the transactions contemplated hereby;
(e) the Company will not, and will not permit any Subsidiary to, agree
or commit to do any of the foregoing; and
(f) the Company will not, and will not permit any Subsidiary to, take or
agree or commit to take any action that would make any representation and
warranty of the Company hereunder inaccurate in any respect at, or as of
any time prior to, the Effective Time.
SECTION 6.2. Stockholder Meeting; Proxy Material. The Company shall
-----------------------------------
cause a meeting of its stockholders (the "COMPANY STOCKHOLDER MEETING") to be
duly called and held as soon as reasonably practicable following the
consummation of the Offer for the purpose of voting on the approval and adoption
of this Agreement, unless a vote shall not be required under Massachusetts Law.
The Directors of the Company shall, except as may be required, in response to an
unsolicited bona fide written Acquisition Proposal (as defined in Section 6.4),
in order to comply with the fiduciary duties of the Board of Directors under
applicable law as advised in writing by Company Counsel, recommend approval and
adoption of this Agreement by the Company's stockholders. In connection with
such meeting, the Company (a) will promptly prepare and file with the SEC, will
use its best efforts to have cleared by the SEC and will
26
thereafter mail to its stockholders as promptly as practicable the Company Proxy
Statement and all other proxy materials for such meeting, (b) will use its best
efforts to obtain the necessary approvals by its stockholders of this Agreement
and the transactions contemplated hereby and (c) will otherwise comply with all
legal requirements applicable to such meeting.
SECTION 6.3. Access to Information. From the date hereof until the
---------------------
Effective Time, the Company will give Buyer, its counsel, financial advisors,
auditors and other authorized representatives reasonable access to the offices,
properties, books and records of the Company and the Subsidiaries and such
financial and operating data and other information as such Persons may
reasonably request and will instruct the Company's employees, counsel and
financial advisors to cooperate with Buyer in its investigation of the business
of the Company and the Subsidiaries; provided that no investigation pursuant to
--------
this Section 6.3, shall affect any representation or warranty given by the
Company to Buyer hereunder.
SECTION 6.4. Other Offers. From the date hereof until the termination
------------
hereof, the Company and the Subsidiaries and the officers, directors, employees
or other agents of the Company and the Subsidiaries will not, directly or
indirectly, (i) take any action to solicit, initiate or encourage any
Acquisition Proposal or (ii) except as may be required, in response to an
unsolicited bona fide written Acquisition Proposal, in order to comply with the
fiduciary duties of the Board of Directors under applicable law as advised in
writing by Company Counsel, engage in negotiations with, or disclose any
nonpublic information relating to the Company or any Subsidiary or afford access
to the properties, books or records of the Company or any Subsidiary to, any
Person. The Company will promptly (and in no event later than 24 hours after
receipt of the relevant Acquisition Proposal) notify (which notice shall be
provided orally and in writing and shall identify the Person making the relevant
Acquisition Proposal and set forth the material terms thereof) Buyer after (i)
the Company has received any Acquisition Proposal, (ii) the Company has actual
knowledge that any Person is considering making an Acquisition Proposal, or
(iii) the Company has received any request for nonpublic information relating to
the Company or any Subsidiary, or for access to the properties, books or records
of the Company or any Subsidiary, by any Person that the Company has actual
knowledge is considering making, or has made, an Acquisition Proposal. The
Company will keep Buyer fully informed of the status and details of any such
Acquisition Proposal or request. The Company shall not engage in negotiations
with, or disclose any nonpublic information to, any such Person unless it
receives from such Person an executed confidentiality agreement with terms no
less favorable to the Company than the Confidentiality Agreement (as defined in
Section 11.9). The Company shall, and shall cause its Subsidiaries and the
Company's directors, officers, employees, financial advisors and other agents or
representatives to, cease immediately and cause to be terminated all activities,
discussions or negotiations, if any, with any Persons conducted heretofore with
respect to any Acquisition Proposal. For purposes of this
27
Agreement, "ACQUISITION PROPOSAL" means any offer or proposal for a merger or
other business combination involving the Company or any Subsidiary or the
acquisition of any equity interest in, or a substantial portion of the assets
of, the Company or any Subsidiary, other than the transactions contemplated by
this Agreement.
ARTICLE 7
COVENANTS OF BUYER
SECTION 7.1. Obligations of Merger Subsidiary. Buyer will take all
--------------------------------
action necessary to cause Merger Subsidiary to perform its obligations under
this Agreement and to consummate the Merger on the terms and conditions set
forth in this Agreement.
SECTION 7.2. Voting of Shares. Buyer agrees to vote all Shares
----------------
beneficially owned by it in favor of adoption of this Agreement at the Company
Stockholder Meeting.
SECTION 7.3. Director and Officer Liability. For five years after the
------------------------------
Effective Time, Buyer will cause the Surviving Corporation to indemnify and hold
harmless the present and former officers and directors of the Company in respect
of acts or omissions occurring prior to the Effective Time to the extent
provided under the Company's Articles of Organization and bylaws in effect on
the date hereof; provided that such indemnification shall be subject to any
limitation imposed from time to time under applicable law. For five years after
the Effective Time, Buyer will cause the Surviving Corporation to use its best
efforts to provide officers' and directors' liability insurance in respect of
acts or omissions occurring prior to the Effective Time covering each such
Person currently covered by the Company's officers' and directors' liability
insurance policy on terms with respect to coverage and amount no less favorable
than those of such policy in effect on the date hereof, provided that in
--------
satisfying its obligation under this Section, Buyer shall not be obligated to
cause the Surviving Corporation to pay premiums in excess of 150% of the amount
per annum the Company paid in the twelve months ended December 31, 1996, which
amount has been disclosed to Buyer. Buyer, Merger Subsidiary and the Company
acknowledge and agree that any directors and officers, present or former, of the
Company are third party beneficiaries under this Section 7.3 and, as such, shall
be entitled to the benefits of all covenants and obligations of Buyer hereunder.
SECTION 7.4. Tax Certification. At any time during the period beginning
-----------------
on the date hereof and ending on the Effective Time, the Company shall provide
to Buyer, within two business days of a request by Buyer, a certificate meeting
the requirements of Treas. Reg. Sec. 1.897-2(h) to the effect that the Company
is not, nor has
28
it been within 5 years of the date thereof, a "United States real property
holding corporation" as defined in Section 897 of the Code.
ARTICLE 8
COVENANTS OF BUYER
AND THE COMPANY
SECTION 8.1. Best Efforts. Subject to the terms and conditions of this
------------
Agreement, each party will use its best efforts to take, or cause to be taken,
all actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement.
SECTION 8.2. Certain Filings. The Company and Buyer shall cooperate with
---------------
one another (a) in connection with the preparation of the Company Disclosure
Documents and the Offer Documents, (b) in determining whether any action by or
in respect of, or filing with, any governmental body, agency or official, or
authority is required, or any actions, consents, approvals or waivers are
required to be obtained from parties to any material contracts, in connection
with the consummation of the transactions contemplated by this Agreement and (c)
in seeking any such actions, consents, approvals or waivers or making any such
filings, furnishing information required in connection therewith or with the
Company Disclosure Documents or the Offer Documents and seeking timely to obtain
any such actions, consents, approvals or waivers.
SECTION 8.3. Public Announcements. Buyer and the Company will consult
--------------------
with each other before issuing any press release or making any public statement
with respect to this Agreement and the transactions contemplated hereby and,
except as may be required by applicable law or any listing agreement with any
national securities exchange or automated quotation system, will not issue any
such press release or make any such public statement prior to such consultation.
SECTION 8.4. Notices of Certain Events. The Company shall promptly
-------------------------
notify Buyer, and Buyer shall promptly notify the Company, of:
(a) any notice or other communication from any Person alleging that the
consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
29
(c) with respect only to the Company, any actions, suits, claims,
investigations or proceedings commenced or, to the best of its knowledge
threatened which, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 4.12 or which relate to
the consummation of the transactions contemplated by this Agreement.
SECTION 8.5. Employee Benefits. Buyer and the Company agree to appoint
-----------------
personnel from their respective human relations departments that will meet and
coordinate the manner of transition of the insurance, compensation and other
benefit plans of the Company following the Merger. The parties agree that for
two years following the Effective Time, the Company's employees will be provided
benefits that are substantially comparable in the aggregate to those provided by
the Company to its employees as of the date hereof, excluding all forms of
stock-based or equity-based compensation.
SECTION 8.6. Further Assurances. At and after the Effective Time, the
------------------
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
Subsidiary, any deeds, bills of sale, assignments or assurances and to take and
do, in the name and on behalf of the Company or Merger Subsidiary, any other
actions and things to vest, perfect or confirm of record or otherwise in the
Surviving Corporation any and all right, title and interest in, to and under any
of the rights, properties or assets of the Company acquired or to be acquired by
the Surviving Corporation as a result of, or in connection with, the Merger.
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.1. Conditions to the Obligations of Each Party. The
-------------------------------------------
obligations of the Company, Buyer and Merger Subsidiary to consummate the Merger
are subject to the satisfaction of the following conditions:
(a) if required by Massachusetts Law, this Agreement shall have been
adopted by the stockholders of the Company in accordance with such law;
(b) any applicable waiting period under the HSR Act relating to the
Merger shall have expired or has been terminated;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Merger;
and
(d) Buyer shall have purchased Shares pursuant to the Offer.
30
ARTICLE 10
TERMINATION
SECTION 10.1. Termination. This Agreement may be terminated and the
-----------
Merger may be abandoned at any time prior to the Effective Time (notwithstanding
any approval of this Agreement by the stockholders of the Company):
(a) by mutual written consent of the Company and Buyer;
(b) by either the Company or Buyer, if the Offer has not been
consummated by June 4, 1997;
(c) by either the Company or Buyer, if there shall be any law or
regulation that makes consummation of the Offer or the Merger illegal or
otherwise prohibited or if any judgment, injunction, order or decree
enjoining Buyer or the Company from consummating the Offer or the Merger is
entered and such judgment, injunction, order or decree shall become final
and nonappealable;
(d) by Buyer, upon the occurrence of any Trigger Event described in
clauses (i) or (ii) of Section 11.4(b); or
(e) by the Company, upon the occurrence of any Trigger Event described in
clause (i)(A) of Section 11.4(b).
The party desiring to terminate this Agreement pursuant to clauses (b), (c) or
(d) shall give written notice of such termination to the other party in
accordance with Section 11.1.
SECTION 10.2. Effect of Termination. If this Agreement is terminated
---------------------
pursuant to Section 10.1, this Agreement shall become void and of no effect with
no liability on the part of any party hereto, except that the agreements
contained in Section 11.4 shall survive the termination hereof.
ARTICLE 11
MISCELLANEOUS
SECTION 11.1. Notices. All notices, requests and other communications to
-------
any party hereunder shall be in writing (including telecopy or similar writing)
and shall be given,
31
if to Buyer or Merger
Subsidiary to: Xxxx X. Xxxx
Senior Vice President
Communication Products Group
Compaq Computer Corporation
00000 XX 000
Xxxxxxx, XX 00000
with copies to: J. Xxxxx Xxxxxxx, Esq.
Senior Vice President
General Counsel and Secretary
Compaq Computer Corporation
00000 XX 000
Xxxxxxx, XX 00000
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Att: Xxxxxxxxxxx Xxxxx, Esq.
if to the Company, to: Microcom, Inc.
000 Xxxxx Xxxxx Xxxxx
Xxxxxxx, XX 00000-0000
Att: Xxxxx X. Xxxxxxx
President and Chief Executive Officer
with a copy to: Xxxxxx, Hall & Xxxxxxx
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Att: Xxxxxxx X. Xxxxxx, Esq.
or such other address or telecopy number as such party may hereafter specify for
the purpose by notice to the other parties hereto. Each such notice, request or
other communication shall be effective (a) if given by telecopy, when such
telecopy is transmitted to the telecopy number specified in this Section and the
appropriate telecopy confirmation is received or (b) if given by any other
means, when delivered at the address specified in this Section.
32
SECTION 11.2. Survival of Representations and Warranties. The
------------------------------------------
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time or the termination of this Agreement except for the agreements
set forth in Section 11.4.
SECTION 11.3. Amendments; No Waivers. (a) Any provision of this
----------------------
Agreement may be amended or waived prior to the Effective Time if, and only if,
such amendment or waiver is in writing and signed, in the case of an amendment,
by the Company, Buyer and Merger Subsidiary or in the case of a waiver, by the
party against whom the waiver is to be effective.
(b) A termination of this Agreement pursuant to Section 10.01 or an
amendment of this Agreement in accordance with Section 11.3(a) shall, in order
to be effective, require in the case of the Company action by its Board of
Directors or the duly authorized designee of its Board of Directors. In the
event that Buyer's designees are appointed or elected to the Board of Directors
of the Company as provided in Section 1.3, after the consummation of the Offer
and prior to the Effective Time, the affirmative vote of at least a majority of
the Continuing Directors shall be required for the Company to agree to amend,
waive compliance with or terminate this Agreement.
(c) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 11.4. Fees and Expenses. (a) Except as otherwise provided in
-----------------
this Section, all costs and expenses incurred in connection with this Agreement
shall be paid by the party incurring such cost or expense.
(b) The Company agrees to pay Buyer a fee in immediately available funds
equal to $10,460,000 promptly, but in no event later than two business days,
after the termination of this Agreement as a result of the occurrence of any of
the events set forth below (a "TRIGGER EVENT"):
(i) (A) the Company shall have entered into, or shall have publicly
announced its intention to enter into, an agreement or an agreement in
principle with respect to any Acquisition Proposal, or (B) the Board
of Directors of the Company shall have withdrawn or materially
modified in a manner adverse to Buyer the Board's approval or
recommendation of the Offer or the Merger;
33
(ii) any person or group (as defined in Section 13(d)(3) of the
Exchange Act) (other than Buyer, the Merger Subsidiary or any
affiliate thereof) shall have become the beneficial owner (as defined
in Rule 13d-3 promulgated under the Exchange Act) of a majority of the
outstanding Shares; or
(iii) this Agreement shall have been terminated in accordance
with Section 10.1(b) and (x) the Company shall have failed to observe
or perform in any material respect any of its obligations under this
Agreement or (y) an Acquisition Proposal is received prior to June 4,
1997 and not publicly rejected by the Company's Board of Directors.
(c) The Company agrees to pay Buyer an amount in immediately available
funds equal to the sum of (i) Buyer's out-of-pocket expenses incurred in
connection with this transaction (but not to exceed $2 million ) and (ii) $ 2
million, if this Agreement shall have been terminated in accordance with Section
10.1(b) and any representation or warranty made by the Company in this Agreement
shall not have been true and correct as of the date hereof; provided that in the
-------- ----
event the Company has made a payment to Buyer pursuant to Section 11.4(b) it
shall not be required to make any further payment to Buyer pursuant to this
Section 11.4(c).
SECTION 11.5. Successors and Assigns. The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, provided that no party may assign, delegate
--------
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of the other parties hereto except that Buyer may transfer
or assign, in whole or from time to time in part, to one or more of its
affiliates, the right to purchase shares pursuant to the Offer, but any such
transfer or assignment will not relieve Buyer of its obligations under the Offer
or prejudice the rights of tendering stockholders to receive payment for Shares
validly tendered and accepted for payment pursuant to the Offer.
SECTION 11.6. Governing Law. This Agreement shall be construed in
-------------
accordance with and governed by the laws of the State of Delaware.
SECTION 11.7. Counterparts; Effectiveness; Third Party Beneficiaries.
------------------------------------------------------
This Agreement may be signed in any number of counterparts, each of which shall
be an original, with the same effect as if the signatures thereto and hereto
were upon the same instrument. This Agreement shall become effective when each
party hereto shall have received counterparts hereof signed by all of the other
parties hereto. Except for Section 7.3 hereof, no provision of this Agreement is
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
34
SECTION 11.8. Entire Agreement. This Agreement and the Confidentiality
----------------
and Nondisclosure Agreement effective as of April 9, 1997 between Buyer and the
Company ("CONFIDENTIALITY AGREEMENT") constitute the entire agreement among
Buyer, Merger Subsidiary and the Company with respect to the subject matter
hereof and supersede all prior agreements and understandings, both written and
oral, among Buyer, Merger Subsidiary and the Company with respect to the subject
matter hereof.
SECTION 11.9. Definitions. Each of the following terms is defined in the
-----------
Section set forth opposite such term:
Term Section
---- -------
Acquisition Proposal 6.4
Articles of Merger 2.1
Balance Sheet 4.8
Balance Sheet Date 4.8
Code 2.5
Common Stock 1.1
Company Counsel 1.2
Company Disclosure Documents 4.9
Company Proxy Statement 4.9
Company Securities 4.5
Company Stockholder Meeting 6.2
Company Stock Purchase Plan 2.5
Company 10-K 4.6
Company 10-Q 4.7
Confidentiality Agreement 11.8
Continuing Directors 1.3
Effective Time 2.1
Employee Plans 4.14
Environmental Laws 4.18
Environmental Liabilities 4.18
ERISA 4.14
Exchange Act 4.3
Exchange Agent 2.3
Hazardous Substances 4.18
HSR Act 4.3
Lien 4.4
Massachusetts Law 1.2
Material Adverse Effect 4.1
MBCL 1.2
Merger 2.1
Merger Consideration 2.2
35
Minimum Condition 1.1
Offer 1.1
Offer Documents 1.1
Option Restricted Stock 2.7
Person 2.3
Schedule 14D-9 1.2
SEC 4.7
Shares 1.1
Subsidiary 4.6
Subsidiary Securities 4.6
Substitute Option 2.5
Surviving Corporation 2.1
Trigger Event 11.4
36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as an instrument under seal by their respective authorized
officers as of the day and year first above written.
MICROCOM, INC.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Xxxxx X. Xxxxxxx
President
By: /s/ Xxxxx Xxxxxxxx
-------------------------------------
Xxxxx Xxxxxxxx
Treasurer
COMPAQ COMPUTER CORPORATION
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------
Xxxxxxx Xxxxxxxx
President and Chief Executive Officer
COMPAQ-BOSTON, INC.
By: /s/ Xxxx X. Xxxx
-------------------------------------
Xxxx X. Xxxx
President
By: /s/ Xxxx X. Xxxxx
-------------------------------------
Xxxx X. Xxxxx
Treasurer
37
ANNEX I
Notwithstanding any other provision of the Offer, Buyer shall not be
required to accept for payment or pay for any Shares, and may terminate the
Offer, if (i) the Minimum Condition has not been satisfied by June 4, 1997, (ii)
the applicable waiting period under the HSR Act shall not have expired or been
terminated by June 4, 1997, or (iii) at any time on or after April 9, 1997 and
prior to the acceptance for payment of Shares, any of the following conditions
exist:
(a) there shall be threatened, instituted or pending any action, suit,
investigation or proceeding by any government or governmental authority or
agency, domestic or foreign, or by any other person, domestic or foreign,
before any court or governmental authority or agency, domestic or foreign,
(i) challenging or seeking to make illegal, to delay materially or otherwise
directly or indirectly to restrain or prohibit the making of the Offer, the
acceptance for payment of or payment for some of or all the Shares pursuant
to the Offer or the consummation of the Merger, seeking to obtain material
damages or otherwise directly or indirectly relating to the transactions
contemplated by the Offer or the Merger, (ii) seeking to restrain or prohibit
Buyer's ownership or operation (or that of its respective subsidiaries or
affiliates) of all or any material portion of the business or assets of the
Company and the Subsidiaries, taken as a whole, or of Buyer and its
subsidiaries, taken as a whole, or to compel Buyer or any of its subsidiaries
or affiliates to dispose of or hold separate all or any material portion of
the business or assets of the Company and the Subsidiaries, taken as a whole,
or of Buyer and its subsidiaries, taken as a whole, (iii) seeking to impose
or confirm material limitations on the ability of Buyer or any of its
subsidiaries or affiliates effectively to exercise full rights of ownership
of the Shares, including, without limitation, the right to vote any Shares
acquired or owned by Buyer or any of its subsidiaries or affiliates on all
matters properly presented to the Company's stockholders, or (iv) seeking to
require divestiture by Buyer or any of its subsidiaries or affiliates of any
Shares, or (v) that otherwise is reasonably likely to have a Material Adverse
Effect or materially adversely affect Buyer and its subsidiaries, taken as a
whole; or
(b) there shall be any action taken, or any statute, rule, regulation,
injunction, order or decree proposed, enacted, enforced, promulgated, issued
or deemed applicable to the Offer or the Merger, by any court, government or
governmental authority or agency, domestic or foreign other than the
application of the waiting period provisions of the HSR Act to the Offer or
the Merger that is reasonably likely,
38
directly or indirectly, to result in any of the consequences referred to in
clauses (i) through (v) of paragraph (a) above; or
(c) (i) there shall be initiated, threatened, instituted or pending any
action, suit, investigation or proceeding by any government or governmental
authority or agency, domestic or foreign, that, in the reasonable judgment of
Buyer, would materially adversely affect the Company and its Subsidiaries,
taken as a whole, or (ii) except as disclosed in writing to Buyer prior to
the date hereof, there has been since the Balance Sheet Date any event,
occurrence or development or state of circumstances or facts which has had or
could reasonably be expected to have a Material Adverse Effect; or
(d) there shall have occurred a decline of at least 20% in either the Dow
Xxxxx Average of Industrial Stocks or the Standard & Poor's 500 Index from
the date of this Agreement through the date of termination or expiration of
the Offer; or
(e) the Company shall have breached or failed to perform in any material
respect any of its covenants or agreements under the Merger Agreement, or any
of the representations and warranties of the Company set forth in the Merger
Agreement shall not be true in any material respect when made or at any time
prior to consummation of the Offer as if made at and as of such time (except
as to any representation or warranty which speaks as of a specific date,
which must be untrue as of such date); or
(f) the Company shall have entered into, or shall have publicly announced
its intention to enter into, an agreement or an agreement in principle with
respect to any Acquisition Proposal or the Board of Directors of the Company
shall have withdrawn or materially modified in a manner adverse to Buyer the
Board's approval or recommendation of the Offer or the Merger; or
(g) any person or group (as defined in Section 13(d)(3) of the Exchange
Act) (other than Buyer, the Merger Subsidiary or any affiliate thereof) shall
have become the beneficial owner (as defined in Rule 13d-3 promulgated under
the Exchange Act) of a majority of the outstanding Shares; or
(h) the Merger Agreement shall have been terminated in accordance with its
terms.
The foregoing conditions are for the sole benefit of Buyer and Merger
Subsidiary and may, subject to the terms of the Agreement, be waived by Buyer
and Merger Subsidiary in whole or in part at any time and from time to time in
their discretion. The failure by Buyer or Merger Subsidiary at any time to
exercise any of the
39
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and circumstances shall not be
deemed a waiver with respect to any other facts and circumstances, and each such
right shall be deemed an ongoing right that may be asserted at any time and from
time to time prior to the Effective Time.
40
