AGREEMENT AND PLAN OF MERGER
dated as of
November 5, 1995
among
NetWorth, Inc.
Compaq Computer Corporation
and
Compaq-Dallas, Inc.
TABLE OF CONTENTS(1)
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................................................ 4
SECTION 2.2. Conversion of Shares...................................... 4
SECTION 2.3. Surrender and Payment..................................... 5
SECTION 2.4. Dissenting Shares......................................... 6
SECTION 2.5. Stock Options............................................. 7
SECTION 2.6 Employee Stock Purchase Plan.............................. 8
-------------
(1) The Table of Contents is not a part of this Agreement.
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation.............................. 8
SECTION 3.2. Bylaws.................................................... 8
SECTION 3.3. Directors and Officers.................................... 8
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
SECTION 4.1. Corporate Existence and Power............................ 9
SECTION 4.2. Corporate Authorization.................................. 9
SECTION 4.3. Governmental Authorization............................... 10
SECTION 4.4. Non-Contravention........................................ 10
SECTION 4.5. Capitalization........................................... 10
SECTION 4.6. Subsidiaries............................................. 11
SECTION 4.7. SEC Filings.............................................. 12
SECTION 4.8. Financial Statements..................................... 13
SECTION 4.9. Disclosure Documents..................................... 13
SECTION 4.10. Absence of Certain Changes............................... 14
SECTION 4.11. No Undisclosed Material Liabilities...................... 16
SECTION 4.12. Litigation............................................... 16
SECTION 4.13. Taxes.................................................... 16
SECTION 4.14. ERISA.................................................... 16
SECTION 4.15. Compliance with Laws..................................... 18
SECTION 4.16. Finders' Fees............................................ 18
SECTION 4.17. Patents and Other Property Rights........................ 18
SECTION 4.18. Environmental Matters.................................... 19
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
OF BUYER
SECTION 5.1. Corporate Existence and Power............................. 21
SECTION 5.2. Corporate Authorization................................... 21
SECTION 5.3. Governmental Authorization................................ 21
SECTION 5.4. Non-Contravention......................................... 21
SECTION 5.5. Disclosure Documents...................................... 22
SECTION 5.6. Finders' Fees............................................. 22
ARTICLE 6
COVENANTS OF THE COMPANY
SECTION 6.1. Conduct of the Company.................................... 22
SECTION 6.2. Stockholder Meeting; Proxy Material....................... 23
SECTION 6.3. Access to Information..................................... 24
SECTION 6.4. Other Offers.............................................. 24
SECTION 6.5. Certain Events............................................ 25
ARTICLE 7
COVENANTS OF BUYER
SECTION 7.1. Obligations of Merger Subsidiary.......................... 25
SECTION 7.2. Voting of Shares.......................................... 25
SECTION 7.3. Director and Officer Liability............................ 25
ARTICLE 8
COVENANTS OF BUYER
AND THE COMPANY
SECTION 8.1. Best Efforts.............................................. 26
SECTION 8.2. Certain Filings........................................... 26
SECTION 8.3. Public Announcements...................................... 26
SECTION 8.4. Further Assurances........................................ 27
ARTICLE 9
CONDITIONS TO THE MERGER
SECTION 9.1. Conditions to the Obligations of Each Party............... 27
ARTICLE 10
TERMINATION
SECTION 10.1. Termination.............................................. 27
SECTION 10.2. Effect of Termination.................................... 28
ARTICLE 11
MISCELLANEOUS
SECTION 11.1. Notices.................................................. 28
SECTION 11.2. Survival of Representations and Warranties............... 29
SECTION 11.3. Amendments; No Waivers................................... 30
SECTION 11.4. Fees and Expenses........................................ 30
SECTION 11.5. Successors and Assigns................................... 31
SECTION 11.6. Governing Law............................................ 32
SECTION 11.7. Counterparts; Effectiveness.............................. 32
SECTION 11.8. Entire Agreement......................................... 32
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of November 5, 1995 among
NetWorth, Inc., a Delaware corporation (the "Company"), Compaq Computer
Corporation, a Delaware corporation ("Buyer"), and Compaq-Dallas, Inc., a
Delaware 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 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, of the Company (the "Common Stock")at a price of $42
per Share, net to the seller in cash. The Offer shall be subject to the
condition that there shall be validly tendered in accordance with the terms of
the Offer prior to the expiration date of the Offer and not withdrawn 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 (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 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 such conditions 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 Documents if and to the extent
that it shall have become false or misleading in any material respect. Buyer
and Merger Subsidiary agree 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) 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)
approved this Agreement and the transactions contemplated hereby, including
the Offer and the Merger, which approval satisfies the requirements of the
General Corporation Law of the State of Delaware (the "Delaware Law"), and
(iii) resolved, subject to the fiduciary duties of the Board of Directors
under applicable laws as advised by Xxxxxx & Xxxx, L.L.P. ("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 Xxxxx & Company 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 (other than Xx. Xxxxxx who has not
advised the Company as to what he intends to do) 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 to the best knowledge of the Company 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 or this Agreement is
terminated.
(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 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 of any Shares pursuant to the Offer, 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) and (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).
(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, Merger
Subsidiary shall be merged (the "Merger") with and into the Company in
accordance with the Delaware Law, whereupon the separate existence of Merger
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 a certificate of merger with the Secretary of
State of the State of Delaware and make all other filings or recordings
required by Delaware Law in connection with the Merger. The Merger shall
become effective at such time as the certificate of merger is duly filed with
the Secretary of State of the State of Delaware or at such later time as is
specified in the certificate of merger (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 restrictions, disabilities and duties of the Company and Merger
Subsidiary, all as provided under Delaware Law.
SECTION 2.2. Conversion of Shares. At the Effective Time:
(a) each share of Common Stock held by the Company as treasury
stock or owned by Buyer or any subsidiary of Buyer immediately prior to
the Effective Time shall be cancelled, 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, be converted into the right to receive $42 in
cash, without interest (the "Merger Consideration").
SECTION 2.3. Surrender and Payment. (a) Prior to the Effective
Time, 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, as needed, the Merger
Consideration to be paid in respect of the Shares. For purposes of
determining the Merger Consideration to be made available, Buyer shall assume
that no holder of Shares will perfect rights to appraisal of 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).
(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 certificates 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. Until so
surrendered, 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 cancelled 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 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.
SECTION 2.4. Dissenting Shares. Notwithstanding Section 2.2,
Shares outstanding immediately prior to the Effective Time and held by a
holder who has not voted in favor of the Merger or consented thereto in
writing and who has demanded appraisal for such Shares in accordance with
Delaware Law shall not be converted into a right to receive the Merger
Consideration, unless such holder fails to perfect or withdraws or otherwise
loses the right to appraisal. If after the Effective Time such holder fails
to perfect or withdraws or loses the right to appraisal, 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 appraisal of 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)(i) Buyer has been advised by the Company that in
accordance with the terms of the outstanding options to purchase
shares of Common Stock under the Company's employee and director
stock option plans, all such options will be fully vested and
exercisable prior to the consummation of the Offer. At the
Effective Time (except as provided in clauses (ii) and (iii)
below), each such option which remains outstanding and which is
held by any then current employee of the Company shall be cancelled
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 and the rules and regulations promulgated
thereunder (the "Code"). Such Substitute Option shall be fully
vested, shall have 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.
(ii) At the Effective Time, each then outstanding option to
purchase shares of Common Stock held by a non-employee director or
a former employee of the Company, or Ungermann-Bass Networks, Inc.
("UB Networks") shall be cancelled and Buyer shall pay each such
holder in cash at or promptly after the Effective Time for each
such option an amount determined by multiplying (A) the excess, if
any, of the Merger Consideration per share over the applicable
exercise price per share of such option by (B) the number of
shares such holder could have purchased (assuming full vesting of
all options) had such holder exercised such option in full
immediately prior to the Effective Time.
(iii) At the Effective Time, the warrants (the "Warrants")
issued by Network Resources Corporation that were originally
exercisable to purchase preferred stock of Network Resources
Corporation and are now exercisable to purchase an aggregate of
112,043 shares of Common Stock (the "Common Stock Amount") and
$224,086 in cash (the "Cash Amount") shall be converted, by their
terms, into warrants to purchase the Merger Consideration which
would be payable with respect to the Common Stock Amount and the
Cash Amount; provided that to the extent required under the NRC
Merger Agreement a portion of the amount receivable upon exercise
of the Warrants shall be delivered to the Escrow Agent in
accordance with the Escrow Agreement (as such terms are defined
in such Merger Agreement).
(b) Prior to the Effective Time, the Company shall use its best
efforts (i) to obtain any consents from holders of options to purchase shares
of Common Stock and (ii) to make any amendments to the terms of the Company's
stock option or compensation plans or arrangements or warrant agreements that
in the case of either (i) or (ii) are necessary to give effect to the
transactions contemplated by Section 2.5(a). Notwithstanding any other
provision of this Section, payment may be withheld in respect of any employee
stock option until necessary consents are obtained.
SECTION 2.6 Employee Stock Purchase Plan. Prior to the Effective
Time, the Company shall take all action necessary to terminate the Company's
1995 Employee Stock Purchase Plan in accordance with its terms, subject to
consummation of the Merger.
ARTICLE 3
THE SURVIVING CORPORATION
SECTION 3.1. Certificate of Incorporation. The certificate of
incorporation of Merger Subsidiary in effect at the Effective Time shall be
the certificate of incorporation of the Surviving Corporation until amended in
accordance with applicable law, except that the name of the Surviving
Corporation shall be changed to "NetWorth, Inc.".
SECTION 3.2. Bylaws. The bylaws of Merger Subsidiary in effect
at the 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 State of Delaware, and has all corporate powers and all material
governmental 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 where the failure to be
so qualified would not, individually or in the aggregate, have a Material
Adverse Effect. For purposes of this Agreement, "Material Adverse Effect"
means a material adverse effect on the condition (financial or otherwise),
business, assets or results of operations of the Company and the Subsidiaries
taken as a whole, provided that any changes in the existing OEM or distributor
relationships or other existing ordinary course business relationships (which
shall in no event include litigation) between the Company, on the one hand,
and International Business Machines Corporation ("IBM") or UB Networks, on the
other hand, shall not be considered in determining whether there has been a
Material Adverse Effect. The Company has heretofore delivered to Buyer true
and complete copies of the Company's amended and restated certificate of
incorporation 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 for any required approval by the Company's
stockholders in connection with the consummation of the Merger, have been duly
authorized by all necessary corporate action. 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 a certificate of merger in accordance with Delaware 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 certificate of incorporation 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
material agreement, contract or other instrument binding upon the Company
(other than the Bank Agreement (as defined in Section 4.6)) 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 material asset of the Company or any Subsidiary except, in the
case of (b), (c) and (d), for such matters as would not, individually 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 (a) 20,000,000 shares of Common Stock, $0.01 par value;
and (b) 100,000 shares of Preferred Stock, $0.01 par value. As of October 30,
1995, there were outstanding no shares of Preferred Stock, 7,714,932 Shares,
employee stock options to purchase an aggregate of 735,275 shares of Common
Stock at an average exercise price of $12.46 per share, non-executive director
stock options to purchase an aggregate of 36,000 shares of Common Stock at an
average exercise price of $19.26 per share, options held by UB Networks to
purchase an aggregate of 253,875 shares of Common Stock at an average exercise
price of $11.19 per share and Warrants held by UB Networks to purchase an
aggregate of 112,043 shares of Common Stock and $224,086 in cash at an
aggregate exercise price of $585,386.55. Upon consummation of the Merger, the
Company shall have no obligation to issue shares of Common Stock or pay or
deliver any other consideration other than to Buyer under the Merger Agreement
and Plan of Reorganization (the "NRC Merger Agreement") among the Company, NRC
Acquisition Corp. and Network Resources Corporation dated March 10, 1995. 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 options and Warrants, upon
issuance thereof in accordance with their terms, will have been duly
authorized and validly issued and will be fully paid and nonassessable.
Except as set forth in this Section and except for changes since October 30,
1995 resulting from the exercise of stock options and warrants 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 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 where the 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 June 30, 1995 (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, 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 capital stock or other ownership
interests) (other than the security interest in the capital stock of
Subsidiaries granted pursuant to Company's Loan and Security Agreement (the
"Bank Agreement") with Bank One Texas, N.A.). 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, and no 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 report on Form 10-K for its fiscal year ended
June 30, 1995, (ii) its quarterly report on Form 10-Q for its fiscal quarter
ended September 30, 1995 (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 June 30, 1995, and (iv) all of its
other reports, statements, schedules and registration statements filed with
the Securities and Exchange Commission (the "SEC") since June 30, 1995.
(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 the Company 10-K 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 balance sheet of the Company as of September 30, 1995 set forth
in the Company 10-Q and "Balance Sheet Date" means September 30, 1995.
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, at the time
such stockholders vote on adoption of this Agreement and at the Effective
Time, 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 and at the time of any distribution thereof, 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 by Buyer
specifically for use therein.
(c) The information with respect to the Company or any Subsidiary
that the Company furnishes to Buyer 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. 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;
(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) except as disclosed in writing to Buyer prior to the
execution hereof, 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;
(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;
(j) any tax election not required by law or 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)
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, (iii)
increase in benefits payable under any existing severance or termination
pay policies or employment agreements or (iv), except as disclosed in
writing to Buyer prior to the execution hereof, increase in
compensation, bonus or other benefits payable to directors, officers or
employees of the Company or any Subsidiary, other than 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 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, other than:
(a) liabilities disclosed or provided for in the Balance Sheet;
(b) liabilities 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 under or related to this Agreement and the
transactions contemplated hereby.
SECTION 4.12. Litigation. Except as set forth in the Company
10-K, there is no action, suit, investigation or proceeding pending against,
or to the knowledge of the Company threatened against or affecting, the
Company or any Subsidiary or any of their respective properties before any
court or arbitrator or any governmental body, agency or official 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 tax returns,
statements, reports and forms required to be filed with any tax authority when
due and materially 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
material 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 insurance coverage
(including any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, retirement
benefits or for deferred compensation, profit-sharing, bonuses, stock options,
stock appreciation or other forms of incentive compensation or post-retirement
insurance, compensation or benefits which (i) 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 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 (other
than UB Networks or Tandem Computers Incorporated) 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.
(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) There is no contract, agreement, plan or arrangement covering
any employee or former employee of the Company or any affiliate that,
individually or collectively, could give rise to the payment of any amount
that would not be deductible pursuant to the terms of Section 280G of the Code.
(e) Except as disclosed in writing to Buyer prior to the date
hereof and except as provided in Section 4980B of the Code, 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 fiscal year 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 providing for annual
future compensation of $100,000 or more 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 has not had and could not reasonably be expected to have a Material
Adverse Effect.
SECTION 4.16. Finders' Fees. Except for Xxxxx & Company, a copy
of whose engagement agreement has 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 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 own or have rights to use all material patents, trademarks,
service marks, trade names, copyrights, trade secrets, licenses, information,
proprietary rights and processes necessary for its business as now conducted
(collectively the "Intellectual Property Rights"). Other than pursuant to the
Bank Agreement, 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. The Company has no knowledge of any infringement by any other
party of any of the 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 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. 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 by obligations of confidentiality 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 Company or any Subsidiary, 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) 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, 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.
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
a certificate of merger in accordance with Delaware 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 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.
SECTION 5.5. Disclosure Documents. (a) The information with
respect to Buyer and its subsidiaries that Buyer furnishes to the Company
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, at the time the stockholders vote on adoption of this Agreement and
at the Effective Time, and (ii) in the case of any Company Disclosure Document
other than the Company Proxy Statement, at the time of the filing thereof and
at the time of any distribution thereof.
(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 by the Company
specifically for use therein.
SECTION 5.6. Finders' Fees. Except for Xxxxxx Xxxxxxx & Co.
Incorporated, 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
SECTION 6.1. Conduct of the Company. Except as otherwise
contemplated by this Agreement, 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
certificate of incorporation or bylaws;
(b) the Company will not, and will not permit any Subsidiary to,
merge or consolidate with any other Person or, other than purchases of
materials or products in the ordinary course of business consistent with
past practice, acquire a material amount of assets of any other Person;
(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) without the prior written consent of Buyer, the Company will
not, and will not permit any Subsidiary to, enter into any agreement or
amendment to any agreement with IBM or UB Networks;
(f) the Company will not, and will not permit any Subsidiary to,
agree or commit to do any of the foregoing; and
(g) 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
material 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 and the Merger unless a vote of stockholders of the
Company is not required by Delaware Law. The Directors of the Company shall,
except as otherwise required by their fiduciary duties as advised by Company
Counsel, recommend approval and adoption of this Agreement and the Merger 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 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, will furnish to Buyer, its counsel, financial advisors, auditors
and other authorized representatives 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 shall affect any
representation or warranty given by the Company to Buyer hereunder.
SECTION 6.4. Other Offers. (a) 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) solicit, initiate or (except as permitted by
(ii)) encourage any Acquisition Proposal or (ii) except as otherwise required
by the fiduciary duties of the Board of Directors under applicable law as
advised 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 inform Buyer after receipt of any
Acquisition Proposal or 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 may be considering making,
or has made, an Acquisition Proposal and will keep Buyer fully informed of the
status and details of any such Acquisition Proposal or request. For purposes
of this 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.
SECTION 6.5. Certain Events. The Company shall promptly inform
Buyer 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
(c) any actions, suits, claims, investigations or proceedings
commenced or, to the best of its knowledge threatened against, relating
to or involving or otherwise affecting the Company or any Subsidiary
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.
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 up to and including the
Effective Time to the extent provided under the Company's certificate of
incorporation 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
up to and including 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 no event shall
Buyer be obligated to pay in any year premiums in excess of the amount per
annum the Company paid in its last full fiscal year, which amount has been
disclosed to Buyer. Buyer shall guaranty the Surviving Corporation's
obligations under this Section; provided that Buyer shall not be obligated to
pay an aggregate amount in excess of the Company's net worth immediately prior
to the consummation of the Offer less any payments made by the Surviving
Corporation pursuant to this Section.
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, and (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. 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 Delaware 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 which is in effect at the
Effective Time shall prohibit the consummation of the Merger; and
(d) Buyer shall have purchased Shares pursuant to the Offer;
provided that the foregoing will not be a condition to the obligations
of Buyer and Merger Subsidiary if Buyer's failure to purchase Shares
violates the terms of the Offer.
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 February 29, 1996;
(c) by either the Company or Buyer, if there shall be any law or
regulation that makes consummation of the Merger illegal or otherwise
prohibited or if any judgment, injunction, order or decree enjoining
Buyer or the Company from consummating the Merger is entered and such
judgment, injunction, order or decree shall become final and
nonappealable;
(d) by the Company, upon the occurrence of any Trigger Event
described in clause (i) of Section 11.4(b); or
(e) by Buyer, upon the occurrence of any Trigger Event described
in clauses (i) through (iii) of Section 11.4(b).
The party desiring to terminate this Agreement pursuant to clauses (b), (c),
(d) or (e) 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,
if to Buyer or Merger Subsidiary, to:
Compaq Computer Corporation
00000 XX 000
Xxxxxxx, XX 00000
FAX: (000) 000-0000
Attention: General Counsel
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
FAX: (000) 000-0000
Attention: Xxxxx Xxxxx
if to the Company, to:
NetWorth, Inc.,
0000 Xxxxxx Xxxxxxxxx
Xxxxxx, XX 00000
FAX: (000) 000-0000
Attention: Xxxx XxXxxx
with a copy to:
Xxxxxx & Xxxx, L.L.P.,
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
FAX: (000) 000-0000
Attention: R. Xxxxxxx Xxxxxxx
Xxxxx Xxxx
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.
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
representations, warranties and 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; provided that
after the adoption of this Agreement by the stockholders of the Company, no
such amendment or waiver shall, without the further approval of such
stockholders, alter or change (i) the amount or kind of consideration to be
received in exchange for any shares of capital stock of the Company, (ii) any
term of the certificate of incorporation of the Surviving Corporation or (iii)
any of the terms or conditions of this Agreement if such alteration or change
would adversely affect the holders of any shares of capital stock of the
Company.
(b) 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 million 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) 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
which the Board of Directors has determined is more favorable to
the Company's shareholders than the transactions contemplated by
this Agreement, or the Board of Directors of the Company shall
have withdrawn or materially modified in any manner adverse to
Buyer the Board's approval or recommendation of the Offer or the
Merger;
(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) the failure to consummate the Offer by February 29,
1996 as a result of the Company's breach or failure to perform in
any material respect any of its covenants or agreements under this
Agreement.
(c) The Company agrees to pay Buyer an amount in immediately
available funds equal to Buyer's direct out-of-pocket expenses in connection
with the transactions contemplated hereby but not in excess of $5 million
promptly, but in no event later than two business days, after the termination
of this Agreement pursuant to Section 10.1(b) where the failure to consummate
the Offer resulted from the representations and warranties of the Company set
forth in this Agreement being untrue in any material respect as of the date
hereof;
(d) The Buyer agrees to pay Company a fee in immediately
available funds equal to $10 million promptly, but in no event later than two
business days, after the termination of this Agreement pursuant to Section
10.1(b) where the failure to consummate the Offer resulted from the Buyer's
breach or failure to perform in any material respect any of its covenants or
agreements under this Agreement.
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 law of the State of Delaware, without
regard to the conflict of laws principles thereof.
SECTION 11.7. Counterparts; Effectiveness. 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.
SECTION 11.8. Entire Agreement. This Agreement and the
Confidentiality and Nondisclosure Agreement dated September 18, 1995 between
Buyer and the Company 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.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be duly executed by their respective authorized officers as
of the day and year first above written.
NETWORTH, INC.
By /s/ Xxxx X. XxXxxx
Xxxx X. XxXxxx
Chief Executive Officer
COMPAQ COMPUTER CORPORATION
By /s/ Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx
President and
Chief Executive Officer
COMPAQ-DALLAS, INC.
By /s/ Xxxx Xxxxxxx
Xxxx Xxxxxxx
Vice President
ANNEX I
Notwithstanding any other provision of the Offer, Buyer shall not
be required to accept for payment or pay for any Shares, and, subject to this
Agreement, may terminate the Offer, if (i) the Minimum Condition has not been
satisfied, (ii) the applicable waiting period under the HSR Act shall not have
expired or been terminated or (iii) at any time on or after November 5, 1995
and prior to the acceptance for payment of Shares, any of the following
conditions exist:
(a) there shall be instituted or pending any action or proceeding
by any government or governmental authority or agency, 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 its
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 its 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 to 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 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, directly or
indirectly, to result in any of the consequences referred to in clauses
(i) through (v) of paragraph (a) above; or
(c) any change shall have occurred or been threatened in the
business, assets, liabilities, financial condition, capitalization,
operations or results of operations of the Company or any of its
subsidiaries that has had or is reasonably likely to have a Material
Adverse Effect; or
(d) 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 a date); or
(e) the Merger Agreement shall have been terminated in accordance
with its terms; 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 which the Board of
Directors has determined is more favorable to the Company's shareholders
than the transactions contemplated by this Agreement or the Board of
Directors of the Company shall have withdrawn or materially modified in
any 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;
which, in the sole judgment of Buyer in any such case, and regardless of the
circumstances (including any action or omission by Buyer other than any breach
or violation of its covenants or agreements under this Agreement) giving rise
to any such condition, makes it inadvisable to proceed with such acceptance
for payment or payment.
