1
Exhibit (d)(1)
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AGREEMENT AND PLAN OF MERGER
Among
XXXX ELSEVIER INC.,
REH MERGERSUB INC.
and
HARCOURT GENERAL, INC.
Dated as of October 27, 2000
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TABLE OF CONTENTS
Page
ARTICLE I THE OFFER ...........................................................................................2
SECTION 1.1 The Offer..................................................................................2
SECTION 1.2 Company Action.............................................................................3
ARTICLE II THE MERGER ...........................................................................................4
SECTION 2.1 The Merger.................................................................................4
SECTION 2.2 Closing; Effective Time....................................................................4
SECTION 2.3 Effects of the Merger......................................................................4
SECTION 2.4 Certificate of Incorporation; By-Laws......................................................5
SECTION 2.5 Directors and Officers.....................................................................5
SECTION 2.6 Conversion of Securities...................................................................5
SECTION 2.7 Treatment of Employee Options and Restricted Stock.........................................6
SECTION 2.8 Appraisal Rights...........................................................................6
SECTION 2.9 Surrender of Shares........................................................................7
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................................8
SECTION 3.1 Organization and Qualification; Subsidiaries...............................................8
SECTION 3.2 Certificate of Incorporation and By-laws...................................................9
SECTION 3.3 Capitalization.............................................................................9
SECTION 3.4 Authority Relative to This Agreement......................................................10
SECTION 3.5 No Conflict; Required Filings and Consents................................................11
SECTION 3.6 Compliance................................................................................12
SECTION 3.7 SEC Filings; Financial Statements.........................................................12
SECTION 3.8 Absence of Certain Changes or Events......................................................13
SECTION 3.9 Absence of Litigation.....................................................................14
SECTION 3.10 Employee Benefit Plans...................................................................14
SECTION 3.11 Tax Matters..............................................................................16
SECTION 3.12 Offer Documents; Proxy Statement.........................................................16
SECTION 3.13 Brokers..................................................................................17
SECTION 3.14 Takeover Statutes; Rights Plans..........................................................17
SECTION 3.15 Intellectual Property....................................................................17
SECTION 3.16 Environmental Matters....................................................................18
SECTION 3.17 Contracts................................................................................18
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER................................................20
SECTION 4.1 Corporate Organization....................................................................20
SECTION 4.2 Authority Relative to This Agreement......................................................20
SECTION 4.3 No Conflict; Required Filings and Consents................................................20
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Page
SECTION 4.4 Offer Documents; Proxy Statement..........................................................21
SECTION 4.5 Brokers...................................................................................21
SECTION 4.6 Financing.................................................................................22
SECTION 4.7 Operations of Purchaser...................................................................22
SECTION 4.8 Ownership of Shares.......................................................................22
SECTION 4.9 Vote/Approval Required....................................................................22
SECTION 4.10 Subsequent Transaction...................................................................22
ARTICLE V CONDUCT OF BUSINESS PENDING THE MERGER.................................................................23
SECTION 5.1 Conduct of Business of the Company Pending the Merger.....................................23
ARTICLE VI ADDITIONAL AGREEMENTS.................................................................................26
SECTION 6.1 Stockholders Meeting......................................................................26
SECTION 6.2 Proxy Statement...........................................................................26
SECTION 6.3 Company Board Representation; Section 14(f)...............................................27
SECTION 6.4 Access to Information; Confidentiality....................................................27
SECTION 6.5 Acquisition Proposals.....................................................................29
SECTION 6.6 Employment and Employee Benefits Matters..................................................31
SECTION 6.7 Directors' and Officers' Indemnification and Insurance....................................33
SECTION 6.8 Further Action; Reasonable Best Efforts...................................................35
SECTION 6.9 Third Party Standstill Agreements.........................................................37
SECTION 6.10 Notification of Certain Matters..........................................................37
SECTION 6.11 Integration Committee....................................................................37
SECTION 6.12 Public Announcements.....................................................................37
ARTICLE VII CONDITIONS OF MERGER.................................................................................38
SECTION 7.1 Conditions to Obligation of Each Party to Effect the Merger...............................38
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER...................................................................38
SECTION 8.1 Termination...............................................................................38
SECTION 8.2 Effect of Termination.....................................................................39
SECTION 8.3 Expenses..................................................................................40
SECTION 8.4 Amendment.................................................................................40
SECTION 8.5 Waiver....................................................................................40
ARTICLE IX GENERAL PROVISIONS....................................................................................40
SECTION 9.1 Non-Survival of Representations, Warranties and Agreements................................40
SECTION 9.2 Notices...................................................................................41
SECTION 9.3 Certain Definitions.......................................................................41
SECTION 9.4 Severability..............................................................................42
SECTION 9.5 Entire Agreement; Assignment..............................................................43
SECTION 9.6 Parties in Interest.......................................................................43
SECTION 9.7 Governing Law.............................................................................43
SECTION 9.8 Headings..................................................................................43
SECTION 9.9 Counterparts..............................................................................43
SECTION 9.10 Specific Performance; Jurisdiction.......................................................43
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Page
SECTION 9.11 Performance..............................................................................44
SECTION 9.12 Interpretation...........................................................................44
SECTION 9.13 WAIVER OF JURY TRIAL.....................................................................44
Annex A - Offer Conditions
Exhibit A - Restated Certificate of Incorporation of the Company
Exhibit B - By-laws of the Company
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INDEX OF PRINCIPAL TERMS
Acquisition Proposal.............................................................................................30
Adverse Recommendation Change....................................................................................31
Affected Employees...............................................................................................33
affiliate........................................................................................................43
Agreement.........................................................................................................2
Antitrust Law....................................................................................................37
beneficial owner.................................................................................................43
beneficially owned...............................................................................................43
Book-Entry Shares.................................................................................................7
business day.....................................................................................................44
By-Laws..........................................................................................................10
Certificate of Merger.............................................................................................5
Certificates......................................................................................................7
Class C Stock....................................................................................................10
Closing...........................................................................................................4
Closing Date......................................................................................................4
Common Stock Merger Consideration.................................................................................5
Company.......................................................................................................2, 44
Company Common Stock..............................................................................................2
Company Plans....................................................................................................15
Company Preferred Stock..........................................................................................10
Company Representatives..........................................................................................30
Company Requisite Vote...........................................................................................11
Company Securities...............................................................................................11
control..........................................................................................................44
controlled.......................................................................................................44
controlled by....................................................................................................44
Costs............................................................................................................34
DGCL..............................................................................................................2
Disclosure Schedule...............................................................................................9
Dissenting Shares.................................................................................................7
DOJ .............................................................................................................37
Effective Time....................................................................................................5
Elsevier.........................................................................................................43
employee benefit plan............................................................................................15
Employee Option...................................................................................................6
Employment Agreements............................................................................................15
Environmental Laws...............................................................................................19
Environmental Permits............................................................................................19
ERISA............................................................................................................15
Exchange Act......................................................................................................2
Financial Advisor.................................................................................................3
Financing Representatives........................................................................................29
FTC .............................................................................................................37
GCX .............................................................................................................26
generally accepted accounting principles.........................................................................44
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Page
HSR Act..........................................................................................................12
Indemnified Parties..............................................................................................34
Intellectual Property............................................................................................18
knowledge........................................................................................................44
Material Adverse Effect...........................................................................................9
Materials of Environmental Concern...............................................................................19
Merger............................................................................................................2
Merger Agreement..................................................................................................1
Merger Consideration..............................................................................................6
Minimum Condition.................................................................................................1
NMG .............................................................................................................17
Offer.............................................................................................................2
Offer Conditions..................................................................................................2
Offer Documents...................................................................................................3
Outside Date......................................................................................................2
Parent........................................................................................................2, 44
Parent Plans.....................................................................................................33
Paying Agent......................................................................................................7
person...........................................................................................................44
Proxy Statement..................................................................................................17
Purchaser.....................................................................................................2, 44
Xxxx ............................................................................................................43
Reimbursement Agreement..........................................................................................26
Representatives..................................................................................................29
Restated Certificate..............................................................................................5
Restrictive Covenant.............................................................................................20
Schedule 14D-9....................................................................................................3
Schedule TO.......................................................................................................2
SEC ..............................................................................................................2
SEC Reports......................................................................................................13
Securities Act...................................................................................................13
Series A Stock....................................................................................................2
Series A Stock Merger Consideration...............................................................................6
Severance Plans..................................................................................................15
Shares............................................................................................................2
Stockholders Meeting.............................................................................................27
Subsequent Transaction...........................................................................................29
subsidiaries.....................................................................................................44
subsidiary.......................................................................................................44
Surviving Corporation.............................................................................................4
Tax Return.......................................................................................................17
Taxes............................................................................................................17
Termination Fee..................................................................................................41
TP Representatives...............................................................................................29
under common control with........................................................................................44
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 27, 2000
(this "Agreement"), among XXXX ELSEVIER INC., a Massachusetts corporation
("Parent"), REH MERGERSUB INC., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Purchaser"), and HARCOURT GENERAL, INC., a Delaware
corporation (the "Company").
WHEREAS, as promptly as practicable (but in no event later
than five business days after the date hereof), the Purchaser shall commence
(within the meaning of Rule 14d-2 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) an offer (the "Offer") to purchase for cash all of
the issued and outstanding shares of (i) Common Stock, par value $1.00 per share
(the "Company Common Stock"), of the Company at a price of $59.00 per share, and
(ii) Series A Cumulative Convertible Stock (the "Series A Stock" and, together
with the Company Common Stock, the "Shares") at a price of $77.29 per share, in
the case of each of clauses (i) and (ii), net to the seller in cash, subject to
the conditions set forth in Annex A hereto;
WHEREAS, the Board of Directors of the Company has (i)
determined that it is in the best interests of the Company and the stockholders
of the Company and declared it advisable to enter into this Agreement with
Parent and Purchaser providing for the merger (the "Merger") of Purchaser with
and into the Company in accordance with the General Corporation Law of the State
of Delaware (the "DGCL"), upon the terms and subject to the conditions set forth
herein, and (ii) resolved to recommend acceptance of the Offer and adoption of
this Agreement by the stockholders of the Company; and
WHEREAS, the Board of Directors of the Company, Parent and
Purchaser have each approved this Agreement pursuant to which Purchaser will
merge with and into the Company in accordance with the DGCL upon the terms and
subject to the conditions set forth herein; and
WHEREAS, as a condition and inducement to Parent entering this
Agreement, concurrently with the execution and delivery of this Agreement,
Parent and certain significant stockholders of the Company are entering into a
Stockholder Agreement (the "Stockholder Agreement"), pursuant to which, among
other things, such stockholders have agreed to tender their Shares (including
Shares issuable upon conversion of the Class B Stock, par value $1.00 per share,
of the Company (the "Class B Stock")) in the Offer;
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, Parent, Purchaser and the Company hereby
agree as follows:
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ARTICLE I
THE OFFER
SECTION 1.1 The Offer. (a) Provided that this Agreement shall not have
been terminated in accordance with Section 8.1 and no event shall have occurred
and no circumstance shall exist which would result in a failure to satisfy the
condition set forth in clause (ii)(a) of Annex A hereto, Purchaser shall
commence the Offer as soon as practicable after the date hereof, and in any
event within eight business days from the date hereof. The obligation of
Purchaser to accept for payment and pay for Shares validly tendered and not
withdrawn shall be subject only to the satisfaction or waiver by Purchaser of
the conditions or events set forth in Annex A hereto (the "Offer Conditions").
Purchaser expressly reserves the right, in its sole discretion, to waive any
such condition and make any other changes in the terms and conditions of the
Offer; provided that, unless previously approved by the Company in writing, (i)
Purchaser may not waive the Minimum Condition (as defined in Annex A) or any of
clauses (ii)(a), (e) or (f) of the Offer Conditions, (ii) Purchaser may not
extend the expiration date of the Offer beyond the initial expiration date of
the Offer except (A) as required by applicable law, (B) that if any condition to
the Offer has not been satisfied or waived (other than as a result of the
failure by Parent or Purchaser to perform any of its obligations under this
Agreement), Purchaser may, in its sole discretion, extend the expiration date of
the Offer for one or more periods (not in excess of 10 business days each) but
in no event later than the Outside Date (as defined below) or (C) as provided
hereafter in this Section 1.1(a), (iii) no change may be made which decreases
the price per Share payable in the Offer, (iv) there shall be no change to the
form of consideration payable in the Offer (other than by adding consideration),
(v) there shall be no reduction in the maximum number of Shares to be purchased
in the Offer and (vi) there shall be no imposition of any condition to the Offer
in addition to those set forth herein, there shall be no modification or
amendment to the Offer Conditions and the Offer shall not be otherwise modified
or amended, in each case, in a manner which is adverse to holders of the Shares.
On the terms and subject to the prior satisfaction or waiver of the Offer
Conditions, Parent shall provide funds to Purchaser and Purchaser shall accept
for payment and pay for Shares as soon as it is permitted to do so under
applicable law; provided that (i) at each scheduled expiration date of the
Offer, if any of the Offer Conditions shall not be satisfied or waived,
Purchaser shall, at the request of the Company, extend the expiration date of
the Offer for one or more periods (not in excess of 10 business days each) but
in no event later than the Outside Date and (ii) Purchaser shall extend the
Offer for any period required by any rule, regulation, interpretation or
position of the Securities and Exchange Commission ("the SEC") or the staff
thereof applicable to the Offer. The initial expiration date of the Offer shall
be 20 business days from the commencement of the Offer in accordance with
applicable law.
As used herein, "Outside Date" shall mean the date which is 270 days
from the date hereof.
(b) As soon as reasonably practicable after the date hereof, and in any
event within eight business days from the date hereof, Purchaser and Parent
shall file their Tender Offer Statement on Schedule TO (the "Schedule TO") with
respect to the Offer with the SEC. The Schedule TO shall contain an Offer to
Purchase and a related letter of transmittal and other documents (which Schedule
TO, Offer to Purchase and other documents, together with any supplements or
amendments thereto, are referred to herein collectively as the "Offer
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Documents"). Parent, Purchaser and the Company each agrees promptly to correct
any information provided by it for use in the Offer Documents that shall have
become false or misleading in any material respect and Parent and Purchaser
further agree to take all steps necessary to cause the Schedule TO as so
corrected to be filed with the SEC and the other Offer Documents as so corrected
to be disseminated to the stockholders of the Company, in each case as and to
the extent required by applicable federal securities laws. The Company and its
counsel shall be given a reasonable opportunity to review and comment on the
Offer Documents prior to their filing with the SEC. Parent and Purchaser agree
to provide the Company with any comments that may be received from the SEC or
its staff with respect to the Offer Documents promptly after receipt thereof.
(c) Notwithstanding any other provision contained herein, the Offer
shall terminate upon termination of this Agreement pursuant to Section 8.1.
(d) In connection with the Offer, the Purchaser shall include in the
Offer to Purchase any information required by Sections Fourth(B)(4)(b)(vii) and
(4)(c) of the Restated Certificate (as defined in Section 2.4).
SECTION 1.2 Company Action. (a) The Company hereby approves of and
consents to the Offer and represents and warrants that subject to Section 6.5(b)
hereof (i) its Board of Directors at a meeting duly called and held has
unanimously (A) determined that this Agreement and the transactions contemplated
hereby, including each of the Offer and the Merger, are advisable and fair to
and in the best interests of the holders of Shares, (B) approved this Agreement
and the transactions contemplated hereby, including each of the Offer and the
Merger, and (C) resolved to recommend that the stockholders of the Company
accept the Offer, tender their Shares to Purchaser thereunder and adopt this
Agreement; and (ii) Xxxxxxx, Xxxxx & Co. (the "Financial Advisor") has delivered
to the Board of Directors of the Company its written opinion (or oral opinion to
be confirmed in writing), dated as of the date hereof, that the consideration to
be received by holders of shares of Company Common Stock (other than members of
the Xxxxx Family Group) pursuant to each of the Offer and the Merger is fair to
such holders from a financial point of view. The Company has been authorized by
the Financial Advisor to permit, subject to prior review and consent by such
Financial Advisor, the inclusion of such fairness opinion (or a reference
thereto) in the Offer Documents and in the Schedule 14D-9 referred to below and
the Proxy Statement referred to in Section 3.12. The Company hereby consents to
the inclusion in the Offer Documents of the recommendations of the Company's
Board of Directors described in this Section 1.2(a).
(b) The Company shall file with the SEC, contemporaneously with the
filing of the Schedule TO pursuant to Section 1.1, a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9"), containing the recommendations of the Company's
Board of Directors described in Section 1.2(a)(i) and shall promptly mail the
Schedule 14D-9 to the stockholders of the Company; provided that the Company
shall not be required to make such filing with such recommendations or make such
mailing if the Company's Board of Directors shall have determined in good faith,
after consultation with outside counsel to the Company, that refraining from
taking such action is reasonably necessary for the Board of Directors to comply
with its fiduciary duties under applicable law. The Schedule 14D-9 and all
amendments thereto shall comply in all material respects with the Exchange Act
and the rules and regulations promulgated thereunder. The Company, Parent and
Purchaser each agrees promptly to correct any information provided by it for use
in the Schedule 14D-9 that shall have become false or misleading in any material
respect
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and the Company further agrees to take all steps necessary to cause the Schedule
14D-9 as so corrected to be filed with the SEC and disseminated to the
stockholders of the Company, in each case as and to the extent required by
applicable federal securities laws.
(c) In connection with the Offer, if requested in writing by Purchaser,
the Company shall as soon as reasonably practicable furnish Purchaser with
mailing labels, security position listings, any non-objecting beneficial owner
lists and any available listings or computer files containing the names and
addresses of the record holders of Shares, each as of a recent date, and shall
as soon as reasonably practicable furnish Purchaser with such additional
information (including but not limited to updated lists of stockholders, mailing
labels, security position listings and non-objecting beneficial owner lists) and
such other assistance as Parent, Purchaser or their agents may reasonably
require in communicating the Offer to the record and beneficial holders of
Shares. Subject to the requirements of law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer and the Merger, Parent and Purchaser and each of their
respective affiliates and representatives shall hold in confidence the
information contained in any of such lists, labels or additional information,
will use such information only in connection with the Offer and the Merger and,
if this Agreement is terminated, shall promptly deliver to the Company all
copies of such information. The Company agrees to use reasonable best efforts to
cooperate to enable the timely conversion of the Class B Stock into Company
Common Stock prior to the expiration of the Offer, including without limitation,
causing the Company's transfer agent to take all actions necessary to facilitate
such conversion as promptly as practicable.
ARTICLE II
THE MERGER
SECTION 2.1 The Merger. Upon the terms and subject to the conditions of
this Agreement and in accordance with the DGCL, at the Effective Time (as
defined in Section 2.2), Purchaser shall be merged with and into the Company. As
a result of the Merger, the separate corporate existence of Purchaser shall
cease and the Company shall continue as the surviving corporation of the Merger
(the "Surviving Corporation").
SECTION 2.2 Closing; Effective Time. Subject to the provisions of
Article VII, the closing of the Merger (the "Closing") shall take place in New
York City at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx, as soon as practicable, but in no event later than the first
business day after the satisfaction or waiver of the conditions set forth in
Article VII, or at such other place or at such other date as Parent and the
Company may mutually agree. The date on which the Closing actually occurs is
hereinafter referred to as the "Closing Date". At the Closing, the parties
hereto shall cause the Merger to be consummated by filing this Agreement or a
certificate of merger or a certificate of ownership and merger (the "Certificate
of Merger") with the Secretary of State of the State of Delaware, in such form
as required by and executed in accordance with the relevant provisions of the
DGCL (the date and time of the filing of the Certificate of Merger with the
Secretary of State of the State of Delaware, or such later time as is specified
in the Certificate of Merger and as is agreed to by the parties hereto, being
the "Effective Time") and shall make all other filings or recordings required
under the DGCL in connection with the Merger.
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SECTION 2.3 Effects of the Merger. The Merger shall have the effects
set forth in Section 259 of the DGCL.
SECTION 2.4 Certificate of Incorporation; By-Laws. (a) At the Effective
Time and without any further action on the part of the Company and Purchaser,
the Restated Certificate of Incorporation of the Company (as amended, the
"Restated Certificate") as in effect immediately prior to the Effective Time
shall be amended so as to read in its entirety in the form set forth in Exhibit
A hereto and, as so amended, shall be the Certificate of Incorporation of the
Surviving Corporation until thereafter amended as provided therein and under the
DGCL.
(b) At the Effective Time and without any further action on the part of
the Company and Purchaser, the by-laws of the Company as in effect immediately
prior to the Effective Time shall be amended so as to read in their entirety in
the form set forth in Exhibit B hereto and, as so amended, shall be the by-laws
of the Surviving Corporation until thereafter amended in accordance with their
terms or the Certificate of Incorporation of the Surviving Corporation and as
provided by applicable law.
SECTION 2.5 Directors and Officers. The directors of the Company
immediately prior to the Effective Time shall submit their resignations to be
effective as of the Effective Time. The directors of Purchaser immediately prior
to the Effective Time shall be the initial directors of the Surviving
Corporation, each to hold office in accordance with the Certificate of
Incorporation and by-laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until the earlier of their resignation
or removal or their respective successors are duly elected or appointed (as the
case may be) and qualified.
SECTION 2.6 Conversion of Securities. At the Effective Time, by virtue
of the Merger and without any action on the part of Purchaser, the Company or
the holders of any of the following securities:
(a) each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (other than any shares to be canceled
pursuant to Section 2.6(c), shares described in Section 2.6(e), or any
Dissenting Shares (as defined in Section 2.8(a))) shall be converted into the
right to receive $59.00 in cash or any higher price that may be paid pursuant to
the Offer (the "Common Stock Merger Consideration") payable to the holder
thereof, without interest, upon surrender of the certificate formerly
representing such share in the manner provided in Section 2.9, less any required
withholding taxes;
(b) each share of Series A Stock issued and outstanding immediately
prior to the Effective Time (other than any shares to be canceled pursuant to
Section 2.6(c), or any Dissenting Shares) shall be converted into the right to
receive $77.29 in cash or any higher price that may be paid pursuant to the
Offer (the "Series A Stock Merger Consideration", and together with the Common
Stock Merger Consideration, the "Merger Consideration") payable to the holder
thereof, without interest, upon surrender of the certificate formerly
representing such share in the manner provided in Section 2.9, less any required
withholding taxes;
(c) each Share held in the treasury of the Company or owned by Parent
or Purchaser immediately prior to the Effective Time, shall automatically be
canceled and retired without any conversion thereof and shall cease to exist and
no payment or distribution shall be made with respect thereto;
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(d) each share of common stock of Purchaser issued and outstanding
immediately prior to the Effective Time shall be converted into and become one
validly issued, fully paid and nonassessable share of common stock of the
Surviving Corporation; and
(e) each share of Company Common Stock held by the subsidiaries of the
Company shall not be canceled pursuant to Section 2.6(c) and shall remain
issued.
SECTION 2.7 Treatment of Employee Options and Restricted Stock (a) The
Company shall take all action necessary so that, immediately prior to the
Effective Time, each outstanding employee stock option that is, or shall become,
vested and exercisable as of the Effective Time (an "Employee Option"), shall be
canceled and the holder thereof shall be entitled to receive at the Effective
Time from the Company or as soon as practicable thereafter (but in no event
later than 10 days after the Effective Time) from the Surviving Corporation in
consideration for such cancellation an amount in cash equal to the product of
(A) the number of Shares previously subject to such Employee Option and (B) the
excess, if any, of the Common Stock Merger Consideration over the exercise price
per Share previously subject to such Employee Option, less any required
withholding taxes. If requested by Parent or deemed necessary by the Company,
the Company shall use its reasonable best efforts to obtain the consent of the
holders of Employee Options to the cancellation of such Employee Options as
provided in this Section 2.7; provided, however, that notwithstanding anything
in this Section 2.7, the failure of any holder of an Employee Option to so
consent shall not in any way affect the obligation of the parties to effect the
Merger as provided herein.
(b) Each restricted share of Company Common Stock granted pursuant to
the Company Plans which is outstanding immediately prior to the Effective Time
shall vest and become free of restrictions as of the Effective Time to the
extent provided by the terms thereof and the holder thereof shall be entitled to
receive at the Effective Time the Common Stock Merger Consideration with respect
to each such share, less any required withholding taxes.
SECTION 2.8 Appraisal Rights. (a) Notwithstanding anything in this
Agreement to the contrary, Shares that are issued and outstanding immediately
prior to the Effective Time and which are held by stockholders of the Company
who have not voted in favor of or consented to the Merger and who are entitled
to demand appraisal of such Shares pursuant to, and have delivered a written
demand for appraisal of such Shares in the time and manner provided in, Section
262 of the DGCL (the "Dissenting Shares") shall not be converted into the right
to receive the Merger Consideration, but the holders thereof shall be entitled
to receive the consideration as shall be determined pursuant to Section 262 of
the DGCL; provided, however, that if any such stockholder of the Company shall
fail to perfect or shall effectively waive, withdraw or lose the right to
appraisal and payment under the DGCL or a court of competent jurisdiction shall
determine that such holder is not entitled to the relief provided by Section 262
of the DGCL, then the right of such holder to receive the consideration as
determined pursuant to Section 262 of the DGCL shall cease and such holder's
Shares shall thereupon be deemed to have been converted, at the Effective Time,
into the right to receive the Common Stock Merger Consideration or the Series A
Stock Merger Consideration, as set forth in Section 2.6 of this Agreement,
without any interest thereon.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal of any Shares pursuant to Section 262 of the DGCL received by the
Company, withdrawals of such demands and any other instruments served pursuant
to the DGCL and received by the Company and (ii) the opportunity to participate
in and direct all negotiations and
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proceedings with respect to demands for appraisal under the DGCL. The Company
shall not, except with the prior written consent of Parent or as otherwise
required by applicable law, make any payment with respect to any such demands
for appraisal or offer to settle or settle any such demands.
SECTION 2.9 Surrender of Shares. (a) Prior to the Effective Time,
Purchaser shall appoint a bank or trust company reasonably acceptable to the
Company (the "Paying Agent") to receive the Merger Consideration to which the
stockholders of the Company shall become entitled pursuant to Section 2.6. When
and as needed, Parent or Purchaser will make available to the Paying Agent
sufficient funds to make all payments pursuant to Section 2.9(b). Such funds
shall be invested by the Paying Agent as directed by Purchaser or, after the
Effective Time, the Surviving Corporation; provided that such investments shall
be in obligations of or guaranteed by the United States of America, in
commercial paper obligations rated A-1 or P-1 or better by Xxxxx'x Investors
Service, Inc. or Standard & Poor's Corporation, respectively, or in certificates
of deposit, bank repurchase agreements or banker's acceptances of commercial
banks with capital exceeding $500 million. Any net profit resulting from, or
interest or income produced by, such investments will be payable to the
Surviving Corporation or Parent, as Parent directs.
(b) As soon as reasonably practicable after the Effective Time, the
Surviving Corporation shall cause the Paying Agent to mail to each record
holder, as of the Effective Time, of (i) an outstanding certificate or
certificates which immediately prior to the Effective Time represented Shares
(the "Certificates") or (ii) Shares represented by book-entry ("Book-Entry
Shares"), a form of letter of transmittal (which shall specify that delivery
shall be effected, and risk of loss and title to the Certificates shall pass,
only upon proper delivery of the Certificates to the Paying Agent or, in the
case of Book-Entry Shares, upon adherence to the procedures set forth in the
letter of transmittal) and instructions for use in effecting the surrender of
the Certificates or, in the case of Book-Entry Shares, the surrender of such
Shares for payment of the Merger Consideration therefor. Upon surrender to the
Paying Agent of a Certificate or of Book-Entry Shares, together with such letter
of transmittal, duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant to
such instructions, the holder of such Certificate or Book-Entry Shares shall be
entitled to receive in exchange therefor the Merger Consideration for each Share
formerly represented by such Certificate or Book-Entry Shares and such
Certificate or book-entry shall then be canceled. No interest shall be paid or
accrued for the benefit of holders of the Certificates or Book-Entry Shares on
the Merger Consideration payable upon the surrender of the Certificates or
Book-Entry Shares. If payment of the Merger Consideration is to be made to a
person other than the person in whose name the surrendered Certificate is
registered, it shall be a condition of payment that the Certificate so
surrendered shall be properly endorsed or shall be otherwise in proper form for
transfer and that the person requesting such payment shall have paid any
transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such tax either has been paid or is not applicable.
(c) All cash paid upon the surrender of a Certificate or of Book-Entry
Shares in accordance with the terms of this Article II shall be deemed to have
been paid in full satisfaction of all rights pertaining to the Shares formerly
represented by such Certificate, or Book-Entry Shares, as the case may be. At
the close of business on the day on which the Effective Time occurs, the stock
transfer books of the Company shall be closed and there shall be no further
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registration of transfers on the stock transfer books of the Surviving
Corporation of the Shares that were outstanding immediately prior to the
Effective Time. If, after the Effective Time, Certificates or Book-Entry Shares
are presented to the Surviving Corporation or the Paying Agent for transfer or
any other reason, they shall be cancelled and exchanged as provided in this
Article II.
(d) None of Parent, Purchaser, the Company or the Paying Agent shall be
liable to any person in respect of any cash delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law. If any
Certificates or Book-Entry Shares shall not have been surrendered prior to
twelve months after the Effective Time (or immediately prior to such earlier
date on which any Merger Consideration would otherwise escheat to or become the
property of any Governmental Authority), any such Merger Consideration in
respect thereof shall, to the extent permitted by applicable law, become the
property of the Surviving Corporation, free and clear of all claims or interest
of any person previously entitled thereto.
(e) If any Certificate shall have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming such Certificate
to be lost, stolen or destroyed and, if required by the Surviving Corporation,
the posting by such person of a bond in such reasonable amount as the Surviving
Corporation may direct as indemnity against any claim that may be made against
it with respect to such Certificate, the Paying Agent shall pay in respect of
such lost, stolen or destroyed Certificate the Merger Consideration.
(f) Parent, the Surviving Corporation or the Paying Agent shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of Shares such amounts as Parent, the
Surviving Corporation or the Paying Agent is required to deduct and withhold
with respect to the making of such payment under the Internal Revenue Code of
1986, as amended (the "Code") or any provision of state, local or foreign tax
law. To the extent that amounts are so withheld and paid over to the appropriate
taxing authority by Parent, the Surviving Corporation or the Paying Agent, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the Shares in respect of which such deduction and
withholding was made by Parent, the Surviving Corporation or the Paying Agent.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser
that, except as set forth on the Disclosure Schedule delivered by the Company to
the Parent and Purchaser prior to the execution of this Agreement (the
"Disclosure Schedule") and except as disclosed in the SEC Reports filed prior to
the date of this Agreement (the "Filed SEC Reports"):
SECTION 3.1 Organization and Qualification; Subsidiaries. (a) The
Company and each of its subsidiaries (i) is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization and (ii)
has the requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
(other than in the case of clause (i) with respect to the Company) where any
such failure to be so organized, existing or in good standing or to have such
power or authority would not
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have a Material Adverse Effect (as defined below). The Company and each of its
subsidiaries is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its business or activities makes such
qualification or licensing necessary, except for any such failure to be so
qualified or licensed or in good standing which would not have a Material
Adverse Effect. When used in connection with the Company or any of its
subsidiaries, the term "Material Adverse Effect" means any change or effect that
would be materially adverse to the business, financial condition, assets or
results of operations of the Company and its subsidiaries taken as a whole,
other than any change or effect resulting from (i) changes in general economic
conditions, (ii) the announcement and performance of this Agreement and the
transactions contemplated hereby and compliance with the covenants set forth
herein, (iii) general changes or developments in the industries in which the
Company and its subsidiaries operate or (iv) changes in any tax laws or
regulations or applicable accounting regulations or principles.
(b) All material subsidiaries of the Company and their respective
jurisdictions of incorporation are identified in the SEC Reports. All of the
outstanding capital stock of, or other voting securities or ownership interests
in, each subsidiary of the Company, is owned by the Company, directly or
indirectly, free and clear of all pledges, claims, liens, charges, encumbrances
and security interests of any kind or nature whatsoever (collectively, "Liens"),
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
voting securities or ownership interests), and are duly authorized, validly
issued, fully paid and nonassessable. There are no outstanding (i) securities of
the Company or any of its subsidiaries convertible into or exchangeable for
shares of capital stock or other voting securities or ownership interests in any
subsidiary of the Company or (ii) options or other rights to acquire from the
Company or any of its subsidiaries, or other obligations of the Company or any
of its subsidiaries to issue, any capital stock or other voting securities or
ownership interests in, or any securities convertible into or exchangeable for
any capital stock or other voting securities or ownership interests in, any
subsidiary of the Company (the items in clauses (i) and (ii) being referred to
collectively as the "Company Subsidiary Securities"). There are no outstanding
obligations of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any of the Company Subsidiary Securities.
SECTION 3.2 Certificate of Incorporation and By-laws. The Company has
heretofore furnished to Parent a complete and correct copy of the Restated
Certificate and the Amended and Restated By-Laws (the "By-Laws") of the Company
as currently in effect. The Restated Certificate and By-Laws are in full force
and effect and no other organizational documents are applicable to or binding
upon the Company. The Company is not in violation of any provisions of the
Restated Certificate or By-Laws in any material respect.
SECTION 3.3 Capitalization. The authorized capital stock of the Company
consists of (i) 150,000,000 shares of Company Common Stock, (ii) 80,000,000
shares of Class B Stock, (iii) 100,000,000 shares of Class C Stock, par value
$1.00 per share (the "Class C Stock") and (iv) 40,000,000 shares of Preferred
Stock, par value $1.00 per share (the "Company Preferred Stock"), of which
10,000,000 shares are designated as Series A Stock. As of October 26, 2000, (i)
55,049,531 shares of Company Common Stock (excluding shares held in the treasury
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of the Company) and 18,111,768 shares of Class B Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable and
were issued free of preemptive rights, (ii) 2,276,750 shares of Company Common
Stock were held in the treasury of the Company, (iii) 775,713 shares of Series A
Stock were issued and outstanding, (iv) 3,289,353 shares of Company Common Stock
were reserved for issuance and issuable upon or otherwise deliverable in
connection with the exercise of outstanding Employee Options issued pursuant to
the Company Plans (as defined in Section 3.10), (v) 18,111,768 shares of Company
Common Stock were reserved for issuance upon the conversion of the Class B Stock
and (vi) 1,016,184 shares of Company Common Stock were reserved for issuance
upon the conversion of the Series A Stock. There are no outstanding stock
appreciation rights or other rights that are linked to the price of Company
Common Stock granted under any Company Plan that were not granted in tandem with
a related Employee Option. No shares of Company Common Stock are owned by any
subsidiary of the Company. The Company has delivered to Parent a true and
complete list, as of the close of business on October 23, 2000, of all Employee
Options and all other rights to purchase or receive Company Common Stock
(collectively, the "Company Stock Issuance Rights") granted under the Company
Plans, the number of shares subject to each such Employee Option or Company
Stock Issuance Right, the grant dates and exercise prices of each such Employee
Option or, as applicable, Company Stock Issuance Right and the names of the
holder thereof. Except as set forth above, as of the close of business on
October 26, 2000, no shares of capital stock of, or other equity or voting
interests in, the Company, or, to the extent issued or granted by the Company,
options, warrants or other rights to acquire any such stock or securities were
issued, reserved for issuance or outstanding. Since October 26, 2000, no
options, warrants, or other rights to purchase shares of Company Common Stock or
Company Preferred Stock or other equity or voting interests in the Company have
been granted and no shares of Company Common Stock or Company Preferred Stock or
other equity or voting interests in the Company have been issued, except (i) for
shares issued pursuant to the exercise of Employee Options outstanding on the
date of this Agreement, or (ii) for the conversion of shares of Series A Stock
or Class B Stock into shares of Company Common Stock. There are no bonds,
debentures, notes or other indebtedness of the Company or any of its
subsidiaries, and, except as set forth above, no securities or other instruments
or obligations of the Company or any of its subsidiaries, the value of which is
based upon or derived from any capital or voting stock of the Company having the
right to (or convertible into, or exchangeable for, securities having the right
to vote) vote on any matters on which stockholders of the Company or any of its
subsidiaries may vote. Except (i) as set forth above, (ii) as a result of the
exercise of Employee Options, (iii) as a result of or in connection with the
conversion of Series A Stock into Company Common Stock as provided for in the
Restated Certificate or (iv) as a result of or in connection with the conversion
of Class B Stock into Company Common Stock as provided for in the Restated
Certificate, (A) there are not outstanding or authorized any (I) shares of
capital stock or other voting securities of the Company, (II) securities of the
Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company or (III) options, warrants 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 (collectively, "Company Securities"),
(B) there are no outstanding obligations of the Company to repurchase, redeem or
otherwise acquire any Company Securities and (C) there are no other options,
calls, warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the Company or any
of its subsidiaries to which the Company or any of its subsidiaries is a party.
SECTION 3.4 Authority Relative to This Agreement. The Company has all
necessary corporate power and authority to execute and deliver this Agreement,
to perform its obligations hereunder and to consummate the transactions
contemplated hereby. The execution,
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delivery and performance of this Agreement by the Company and the consummation
by the Company of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or to consummate the transactions so contemplated (other than, with respect to
the Merger, the adoption of this Agreement by the holders of a majority in
voting power of the outstanding shares of each of the Company Common Stock and
the Class B Stock each voting separately as a class, if and to the extent
required by applicable law (the "Company Requisite Vote"), and the filing with
the Secretary of State of the State of Delaware of the Certificate of Merger as
required by the DGCL). This Agreement has been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery hereof by Parent and Purchaser, constitutes a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered in
a proceeding in equity or at law) and an implied covenant of good faith and fair
dealing. The Board of Directors of the Company at a meeting duly called and held
at which all directors of the Company were present, duly and unanimously has
approved this Agreement and the transactions contemplated hereby and approved,
if and to the extent such approval is required to effect a conversion of all of
the Class B Stock pursuant to the Stockholders Agreement, the conversion of all
of the Class B Stock into Company Common Stock pursuant to Article Fourth,
Section A.III(e) of the Restated Certificate. Subject to the applicability of
Section 253 of the DGCL, the only vote of the stockholders of the Company
required to adopt this Agreement is the Company Requisite Vote.
SECTION 3.5 No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby and compliance with the
provisions hereof by the Company do not and will not (i) conflict with or
violate the Restated Certificate or By-Laws of the Company, (ii) assuming that
all consents, approvals and authorizations contemplated by clauses (i), (ii),
(iii) and (iv) of subsection (b) below have been obtained and all filings
described in such clauses have been made, conflict with or violate any statute,
law, rule, regulation, ordinance, order, judgment or decree applicable to the
Company or any of its subsidiaries or by which its or any of their respective
properties or assets are bound or (iii) conflict with, or result in any breach
or violation of or constitute a default (or an event which with notice or lapse
of time or both would become a default) or result in the loss of a benefit
under, or give rise to any right of termination, cancellation, amendment or
acceleration of, or result in the creation of any Lien in or upon any of the
properties or assets of the Company or any of its subsidiaries under, or give
rise to any increased, additional, accelerated or guaranteed rights or
entitlements under any provision of any agreement or other instrument binding
upon the Company or any of its subsidiaries or any license, franchise, permit,
certificate, approval or other similar authorization affecting, or relating to
the assets or business of the Company and its subsidiaries, except, in the case
of clauses (ii) and (iii), for any such conflict, violation, breach, default or
other occurrence which would not be reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect.
(b) The execution, delivery and performance of this Agreement by the
Company and the consummation of the transactions contemplated hereby by the
Company do not and will not require any consent, approval, authorization or
permit of, action by, filing with or notification to, any governmental or
regulatory authority, domestic, foreign, or supranational except for (i)
applicable requirements, if any, of the Exchange Act and the rules and
regulations promulgated
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thereunder, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and state securities, takeover and Blue Sky laws, (ii) the
applicable requirements of the New York Stock Exchange, (iii) the filing with
the Secretary of State of the State of Delaware of the Certificate of Merger as
required by the DGCL, (iv) the applicable requirements of any applicable
Antitrust Law (as defined below) and (v) any such consent, approval,
authorization, permit, action, filing or notification the failure of which to
make or obtain would not (A) reasonably be expected to materially delay the
Company from performing its obligations under this Agreement or (B) be
reasonably expected to have a Material Adverse Effect.
SECTION 3.6 Compliance. (a) Neither the Company nor any of its
subsidiaries is, nor since January 1, 1999 has been, in violation of any law,
rule, regulation, statute, order, judgment or decree applicable to the Company
or any of its subsidiaries or by which its or any of their respective properties
or assets are bound, except for any such violation which would not reasonably be
likely to have a Material Adverse Effect, (b) the Company and its subsidiaries
have all permits, licenses, authorizations, exemptions, orders, consents,
approvals and franchises from governmental and regulatory agencies required to
conduct their respective businesses as now being conducted, and there has
occurred no violation of, default under or event giving to others the right of
termination, amendment or cancellation of any such permits, licenses,
authorizations, exemptions, orders, consents, approvals and franchises, except
for any such permit, license, authorization, exemption, order, consent, approval
or franchise, the absence of which would not reasonably be likely to have a
Material Adverse Effect and (c) none of the Company or any of its subsidiaries
has received, since January 1, 1997, a notice or other written communication
alleging or identifying a possible violation of any statute, law, ordinance,
rule, regulation, judgment, order or decree of any governmental entity
applicable to its business or operations, except for any such notices,
communications or violations which would not reasonably be expected to have a
Material Adverse Effect.
SECTION 3.7 SEC Filings; Financial Statements. (a) The Company has
filed all forms, reports, statements, schedules and other documents required to
be filed with the SEC (collectively, the "SEC Reports") since October 31, 1997,
each of which, when filed, and as finally amended, complied as to form in all
material respects with the applicable requirements of the Securities Act of
1933, as amended (the "Securities Act") and the rules and regulations
promulgated thereunder, or the Exchange Act and the rules and regulations
promulgated thereunder, each as in effect on the date so filed or amended, as
the case may be. None of the SEC Reports contained, when filed (or, if amended
or superseded by a filing prior to the date hereof, on the date of such filing),
and each such SEC Report filed subsequent to the date hereof will not contain,
when filed, any untrue statement of a material fact or omitted or will omit,
when filed, to state a material fact required to be stated or incorporated by
reference therein, necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. No
subsidiary of the Company is required to file any forms, reports, statements,
schedules or other documents with the SEC.
(b) The audited consolidated financial statements of the Company (including any
related notes thereto) for the fiscal years ended October 31, 1998 and October
31, 1999 included in the Company's Annual Report on Form 10-K for the fiscal
year ended October 31, 1999 filed with the SEC have been prepared in accordance
with generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto) and fairly present in all material respects the consolidated financial
position of the Company and its subsidiaries at the respective dates thereof and
the consolidated statements of
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operations, cash flows and changes in stockholders' equity for the periods
indicated. The unaudited consolidated financial statements of the Company
(including any related notes thereto) for the nine months ended July 31, 2000
included in the Company's quarterly report on Form 10-Q for the nine months
ended July 31, 2000 filed with the SEC have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except as may be indicated in the notes
thereto) and fairly present in all material respects the consolidated financial
position of the Company and its subsidiaries as of the date thereof and the
consolidated statements of operations and cash flows for the periods indicated
(subject to normal year-end audit adjustments).
(c) There are no liabilities or obligations of the Company or any of
its subsidiaries required to be disclosed on a balance sheet prepared in
accordance with generally accepted accounting principles, whether accrued,
contingent, absolute, determined, determinable or otherwise, and there is no
existing condition, situation or set of circumstances that would reasonably be
expected to result in such a liability other than: (i) liabilities or
obligations disclosed and provided for in the SEC Reports filed prior to the
date hereof, (ii) liabilities or obligations that would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect
and (iii) liabilities and obligations under this Agreement.
SECTION 3.8 Absence of Certain Changes or Events. Since July 31, 2000,
except as contemplated by this Agreement, the Company and its subsidiaries have
conducted their business in the ordinary course consistent with past practice
and, since such date, there has not been (i) any change, event or occurrence
which has had or would reasonably be expected to have a Material Adverse Effect,
(ii) prior to the date of this Agreement, any declaration, setting aside or
payment of any dividend on, or other distribution (whether in cash, stock or
property) in respect of, any of the Company's or any of its subsidiaries'
capital stock, except for dividends by a wholly owned subsidiary of the Company
to its parent, (iii) prior to the date of this Agreement, any purchase,
redemption or other acquisition of any shares of capital stock or any other
securities of the Company or any of its subsidiaries or any options, warrants,
calls or rights to acquire such shares or other securities, (iv) prior to the
date of this Agreement, any split, combination or reclassification of any of the
Company's or any of its subsidiaries' capital stock or any issuance or the
authorization of any issuance of any other securities in respect of, in lieu of
or in substitution for shares of capital stock or other securities of the
Company or any of its subsidiaries, (v) (x) any granting by the Company or any
of its subsidiaries to any current or former director, officer, employee or
consultant (other than third party consultants) of any increase in compensation,
bonus or other benefits or any such granting of any type of compensation or
benefits to any current or former director, officer, employee or consultant
(other than third party consultants) not previously receiving or entitled to
receive such type of compensation or benefit, except for increases of cash
compensation and other immaterial changes in benefits (except for changes in
benefits provided to officers other than as the result of immaterial changes
made to Company Plans that are generally applicable to the employees of the
Company or any of its subsidiaries, which changes are not specifically directed
at or do not disproportionately affect such officers) in each case (1) in the
ordinary course of business consistent with past practice or (2) required under
any agreement or benefit plan in effect as of December 31, 1999, (y) any
granting to any current or former director, officer, employee or consultant
(other than third party consultants) of the right to receive any severance or
termination pay, or increases therein, or (z) any entry by the Company or any of
its subsidiaries into, or any amendment of, any Severance Plan, Company Plan or
Employment Agreement (each as defined below), (vi) any payment of any benefit or
the grant or amendment of any award (including in
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respect of stock options, stock appreciation rights, performance units,
restricted stock or other stock-based or stock-related awards or the removal or
modification of any restrictions in any Severance Plan, Company Plan or
Employment Agreement or awards made thereunder) except as required to comply
with any applicable law or any Severance Plan, Company Plan or Employment
Agreement existing on such date, (vii) any damage or destruction, whether or not
covered by insurance, that individually or in the aggregate would reasonably be
expected to result in a Material Adverse Effect, (viii) any material change in
financial accounting principles by the Company or any of its subsidiaries,
except insofar as may have been required by a change in generally accepted
accounting principles or SEC accounting regulations or guidelines or applicable
law, (ix) on or prior to the date of this Agreement, any material election with
respect to taxes by the Company or any of its subsidiaries or any settlement or
compromise of any material tax liability or refund of the Company or any of its
subsidiaries (x) on or prior to the date of this Agreement, any material change
in tax accounting principles by the Company or any of its subsidiaries, except
insofar as may have been required by a change in generally accepted accounting
principles, SEC accounting regulations or guidelines or applicable law, or (xi)
any material write-off or write-down by the Company or any of its subsidiaries
of any of the material assets of the Company or any of its subsidiaries.
SECTION 3.9 Absence of Litigation. There are no suits, claims, actions,
proceedings or investigations pending or, to the knowledge of the Company,
threatened against or affecting the Company or any of its subsidiaries or any of
their respective properties that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect. As of the date hereof,
neither the Company nor any of its subsidiaries nor any of their respective
properties is or are subject to any order, writ, judgment, injunction, decree or
award of any governmental entity or arbitrator, or to the knowledge of the
Company, investigation, proceeding, notice of violation, order of forfeiture or
complaint by any governmental entity involving the Company or any of its
subsidiaries that individually or in the aggregate would reasonably be likely to
have a Material Adverse Effect.
SECTION 3.10 Employee Benefit Plans. Except as would not, individually
or in the aggregate, have a Material Adverse Effect:
(a) Section 3.10 of the Disclosure Schedule contains a true and
complete list of each "employee benefit plan" (within the meaning of section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")), and each other employee plan, program, agreement or arrangement
(including, without limitation, all director benefit plans, and all severance
guidelines, plans, policies, programs and practices ("Severance Plans")), and
each other plan or program providing benefits in the event of termination of
employment or a change in control or providing retention or "stay" bonuses, and
each plan or program providing for the issuance of stock options or restricted
shares to employees or directors or for employees or directors to acquire any
stock, and including any other plan or program providing for equity-based
compensation or providing for any bonuses to employees or directors and each
vacation or sick pay policy, and fringe benefit plan, including any such plan
which provides medical, life insurance or other benefits to any former employees
or to any beneficiary or dependent of any such former employee (collectively,
including the Severance Plans, the "Company Plans"), and each compensation,
severance, employment, change in control, retention bonus or similar agreement
(collectively, the "Employment Agreements") in existence as of the date hereof
for any employees (and former employees) and directors (and former directors) of
the Company and its subsidiaries.
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(b) With respect to each Company Plan, the Company has made available
to Parent a current, accurate and complete copy thereof and, to the extent
applicable, (i) any related trust agreement or other funding instrument, (ii)
the most recent determination letter, (iii) any summary plan description or
other written communications by the Company or any of its subsidiaries to their
employees concerning the extent of the benefits provided under a Company Plan
and (iv) for the most recent year (A) the Form 5500 and attached schedules, (B)
audited financial statements and (C) actuarial valuation reports.
(c) (i) Each Company Plan has been established and administered in all
respects in accordance with its terms and in compliance with the applicable
provisions of ERISA, the Code, and other applicable laws, rules and regulations,
(ii) each Company Plan which is intended to be qualified within the meaning of
Code section 401(a) has received a favorable determination letter as to its
qualification and nothing has occurred, whether by action or failure to act,
that would cause the loss of such qualification (iii) no plan which is subject
to Title IV of ERISA which is a Company Plan or a plan of any entity treated as
a single employer with the Company pursuant to Code section 414(b) or (c) (a
"Common Control Entity") has been terminated within the five year period prior
to the date hereof, (iv) no "reportable event" (as such term is defined in ERISA
Section 4043) with respect to which notice has not been waived, "prohibited
transaction" (as such term is defined in ERISA section 406 and Code section
4975) that is not exempt or "accumulated funding deficiency" (as such term is
defined in ERISA section 302 and Code section 412 (whether or not waived)) has
occurred with respect to any Company Plan and (v) other than the Company Plans,
there is no "employee benefit plan" (within the meaning of section 3(3) of
ERISA) of any other entity for which the Company or any Common Control Entity is
reasonably likely to have any liability.
(d) Neither the Company nor any Common Control Entity participates in
or has any liability to any multiemployer plan (within the meaning of ERISA
section 4001(a)(3)) and neither the Company nor any Common Control Entity has
incurred any withdrawal liability under Title IV of ERISA.
(e) With respect to each Company Plan, no actions, suits or claims
(other than routine claims for benefits in the ordinary course) are pending or,
to the knowledge of the Company, threatened.
(f) Schedule 3.10(f) contains a true and complete list of each
collective bargaining agreement to which the Company or any of its subsidiaries
is a party. Except as set forth on Schedule 3.10(f), none of the employees or
former employees of the Company or any of its subsidiaries is represented by any
collective bargaining agent or worker collective. Schedule 3.10(f) indicates the
date, if any, as of which any agreement with any collective bargaining
representative or worker collective expires.
(g) Except as set forth on Schedule 3.10(g)(i), the consummation of the
transactions contemplated by this Agreement will not, either alone or upon the
occurrence of any additional or subsequent events, result in any payment or
benefit under any Company Plan or Employment Agreement which would be an "excess
parachute payment" within the meaning of Section 280G(b)(1) of the Code. Except
as set forth on Schedule 3.10(g)(ii), no Company Plan or Employment Agreement
provides for the payment of any amount intended to make any employee whole for
any excise tax imposed under Code Section 4999(a).
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(h) The Company has delivered to Parent a schedule setting forth a list
of each stock option outstanding as of October 23, 2000 and each restricted
share for which restrictions have not, as of October 23, 2000, lapsed.
SECTION 3.11 Tax Matters. Except for matters which would not
individually or in the aggregate have a Material Adverse Effect, the Company and
each of its subsidiaries, and any consolidated, combined, unitary or aggregate
group for tax purposes of which the Company or any of its subsidiaries is or has
been a member, has timely filed all Tax Returns (as defined below) required to
be filed by it in the manner provided by law, has paid all Taxes (as defined
below) shown thereon to be due and has provided adequate reserves in its
financial statements for any Taxes that have not been paid, whether or not shown
as being due on any Tax Returns. There is no claim, audit, action, suit,
proceeding, or investigation now pending or threatened against or with respect
to the Company or any of its subsidiaries in respect of Taxes, except for
matters which would not individually or in the aggregate have a Material Adverse
Effect. No adjustment that would increase the Tax liability, or reduce any Tax
asset, of the Company or any of its subsidiaries in a manner that would have a
Material Adverse Effect has been made, proposed or threatened in writing by a
taxing authority (whether in connection with an audit or otherwise). The Company
and each of its subsidiaries have complied with all applicable laws with respect
to the withholding of Tax, including without limitation requirements relating to
the submission of withheld amounts to appropriate taxing authorities, except to
the extent such noncompliance would not individually or in the aggregate have a
Material Adverse Effect. The Company and its subsidiaries have no liability for
any Taxes imposed on any other persons as a result of being party to any
agreement or having any obligation to indemnify other persons except for
liabilities which would not individually or in the aggregate have a Material
Adverse Effect. The representations set forth in the private letter ruling
issued by the Internal Revenue Service to the Company with respect to the
Company's distribution to its stockholders of substantially all of its stock of
The Neiman Marcus Group, Inc. ("NMG") and the representations made by the
Company in its request (and any supplements thereto) for such private letter
ruling, were true, correct and complete in all material respects as of October
22, 1999. For purposes of this Agreement, "Taxes" shall mean any taxes of any
kind, including but not limited to those on or measured by or referred to as
income, gross receipts, capital, sales, use, ad valorem, franchise, profits,
license, withholding, payroll, employment, excise, severance, stamp, occupation,
premium, value added, property or windfall profits taxes, customs, duties or
similar fees, assessments or charges of any kind whatsoever, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any governmental authority, domestic or foreign. For purposes of this Agreement,
"Tax Return" shall mean any return, report or statement required to be filed
with any governmental authority with respect to Taxes, including any schedule or
attachment thereto or amendment thereof.
SECTION 3.12 Offer Documents; Proxy Statement. Neither the Schedule
14D-9, nor any of the information specifically supplied in writing by the
Company for inclusion in the Offer Documents, shall, at the respective times
such Schedule 14D-9, the Offer Documents or any amendments or supplements
thereto are filed with the SEC, first published, sent or given to the
stockholders of the Company and at the time Shares are purchased pursuant to 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 therein, in the light of the circumstances under which they were
made, not misleading. Neither the proxy statement to be sent to the stockholders
of the Company in connection with the Stockholders Meeting (as defined in
Section 6.1) nor the information statement to be sent to such stockholders, as
appropriate
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(such proxy statement or information statement, as amended or supplemented, is
herein referred to as the "Proxy Statement"), shall, at the date the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
such stockholders, at the time of the Stockholders Meeting, if any, and at the
Effective Time, be false or misleading with respect to any 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 are made, not false or misleading or necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Stockholders Meeting which has become false or misleading.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information supplied by Parent or Purchaser or any of their
respective representatives which is contained in or incorporated by reference in
the Schedule 14D-9 or the Proxy Statement. The Schedule 14D-9, as amended or
supplemented, and the Proxy Statement will comply in all material respects as to
form with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder.
SECTION 3.13 Brokers. No broker, finder, investment banker or other
intermediary (other than the Financial Advisor, a copy of whose engagement
agreement has been provided to Parent) is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement from the Company or any of its affiliates in connection with the
transactions contemplated by this Agreement.
SECTION 3.14 Takeover Statutes; Rights Plans. No "fair price",
"moratorium", "control share acquisition" or other similar antitakeover statute
or regulation enacted under state or federal laws in the United States (with the
exception of Section 203 of the DGCL) applicable to the Company is applicable to
the Offer or the Merger or the other transactions contemplated hereby. As of the
date of this Agreement, the Company does not have any stockholder rights plan in
effect. Assuming the accuracy of the representations and warranties of Parent
and Purchaser set forth in Section 4.8, the action of the Board of Directors of
the Company in approving the Offer, the Merger and this Agreement (and the
transactions provided for herein) is sufficient to render inapplicable to the
Offer, the Merger and this Agreement (and the transactions provided for herein)
the restrictions on "business combinations" (as defined in Section 203 of the
DGCL) set forth in Section 203 of the DGCL.
SECTION 3.15 Intellectual Property. (a) Except as would not have a
Material Adverse Effect, (i) the Company and its subsidiaries own, or are
validly licensed or otherwise have the right to use all patents, inventions,
copyrights, software, trademarks, service marks, domain names, trade dress,
trade secrets and all other intellectual property rights of any kind or nature
("Intellectual Property") used in their business as currently conducted, (ii)
such Intellectual Property does not infringe, misappropriate or otherwise
violate the Intellectual Property of any third party; (iii) none of the Company
or any of its subsidiaries has received any written charge, complaint, claim,
demand or notice alleging any such infringement, misappropriation or other
violation (including any claim that the Company or any of its subsidiaries must
license or refrain from using any Intellectual Property of any third party), and
(iv) to the Company's knowledge no other third party has infringed upon,
misappropriated or otherwise violated any Intellectual Property of the Company
or any of its subsidiaries. The Company and its subsidiaries make reasonable
best efforts to protect and maintain their material Intellectual Property.
(b) Except as would not have a Material Adverse Effect, the Company and
its subsidiaries own, lease, or are validly licensed or otherwise have the right
to use all hardware
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and software and any other necessary components which make up the information
technology systems (the "IT Systems") which the Company and its subsidiaries use
as of the date hereof to carry out their respective businesses as currently
conducted. Except as would not have a Material Adverse Effect, (i) to the
knowledge of the Company, neither the IT Systems nor any component of the IT
Systems, infringes, misappropriates or otherwise violates the Intellectual
Property of any third party, and (ii) the IT Systems have sufficient capacity to
satisfy the needs of the business of the Company as currently conducted.
SECTION 3.16 Environmental Matters. (a) Except as would not reasonably
be likely to have a Material Adverse Effect: (i) the Company and each of its
subsidiaries comply with all applicable Environmental Laws (as defined below),
and possess and comply with all applicable Environmental Permits (as defined
below) required under such laws to operate as it presently operates; (ii) there
are no Materials of Environmental Concern (as defined below) or other facts,
events, conditions or set of circumstances at any property currently or
previously owned, leased or operated by the Company or any of its subsidiaries
that are reasonably likely to result in liability of the Company or any
subsidiary under any applicable Environmental Law; and (iii) neither the Company
nor any of its subsidiaries has received any written notification alleging that
it is liable for, or request for information pursuant to section 104(e) of the
Comprehensive Environmental Response, Compensation and Liability Act or similar
state statute, concerning any release or threatened release of Materials of
Environmental Concern at any location.
(b) For purposes of this Agreement, the following terms shall have the
meanings assigned below:
"Environmental Laws" shall mean all foreign, Federal, state, or local
laws (including common law), statutes, regulations, rules, judgments,
orders, ordinances, codes, or decrees relating to the protection of the
environment, including, without limitation, the quality of the ambient
air, soil, surface water or groundwater, in effect as of the date of
this Agreement.
"Environmental Permits" shall mean all permits, licenses,
registrations, and other authorizations required under applicable
Environmental Laws.
"Materials of Environmental Concern" shall mean any hazardous, acutely
hazardous, or toxic substance or waste or any other words of similar
import defined and regulated as such under Environmental Laws,
including without limitation the federal Comprehensive Environmental
Response, Compensation and Liability Act and the federal Resource
Conservation and Recovery Act.
(c) Neither the Company nor any of its subsidiaries own, lease or
operate any properties located in New Jersey or Connecticut.
SECTION 3.17 Contracts. (a) Except for any loan or credit agreement,
bond, debenture, note, mortgage, indenture, guarantee, lease or other contract,
commitment, agreement, instrument, arrangement, understanding, obligation,
undertaking, permit, concession, franchise or license (each, including all
amendments thereto, a "Contract") filed as exhibits to the SEC Reports, as of
the date hereof there are no Contracts that are required to be filed as an
exhibit to any SEC Reports under the Exchange Act and the rules and regulations
promulgated thereunder.
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Except for Contracts filed in unredacted form as exhibits to the Filed SEC
Reports, Section 3.17 of the Disclosure Schedule sets forth a true and complete
list of:
(i) all Contracts to which the Company or any of its affiliates is
a party, or that purport to be binding upon the Company or any
of its affiliates that contain a covenant (a "Restrictive
Covenant") materially restricting the ability of the Company
or any of its subsidiaries (or which, following the
consummation of the Merger, could materially restrict the
ability of Parent or any of its subsidiaries, including the
Company and its subsidiaries) to compete in any business that
is material to the Company and its subsidiaries, taken as a
whole, or Parent and its subsidiaries, taken as a whole, or
with any person or in any geographic area, except for any such
Contract that may be canceled without penalty by the Company
or any of its subsidiaries upon notice of 60 days or less;
(ii) all material joint venture and partnership agreements
(excluding information technology contracts); and
(iii) as of the date hereof, all loan agreements, credit agreements,
notes, debentures, bonds, mortgages, indentures and other
Contracts pursuant to which any indebtedness of the Company or
any of its subsidiaries is outstanding or may be incurred and
all guarantees of or by the Company or any of its subsidiaries
of any indebtedness of another person (except for such
indebtedness or guarantees of indebtedness the aggregate
principal amount of which does not exceed $5 million).
None of the Company or any of its subsidiaries is in violation of or default
(with or without notice or lapse of time or both) under, or has waived or failed
to enforce any rights or benefits under, any Contract to which it is a party or
by which it or any of its properties or assets is bound, and, to the knowledge
of the Company or such subsidiary, no other party to any of its Contracts is in
violation or default (with or without notice or lapse of time or both) under, or
has waived or failed to enforce any rights or benefits under, and there has
occurred no event giving to others any right of termination, amendment or
cancellation of, with or without notice or lapse of time or both, any such
Contract except, in each case, for violations, defaults, waivers or failures to
enforce benefits that individually or in the aggregate would not be expected to
result in a Material Adverse Effect. Except as identified in writing by the
Company to Parent prior to the date of this Agreement, the Company has delivered
or made available to Parent or its representatives true and complete copies of
all Contracts listed on Section 3.17 of the Company Disclosure Schedule.
(b) The Company is and has been in substantial compliance since
November 1, 1999, with the Amended and Restated Intercompany Services Agreement
dated November 1, 1999 between the Company and NMG (the "Intercompany Services
Agreement") and, as of the date hereof, there are no suits or claims pending, or
to the knowledge of the Company threatened against it, by NMG arising out the
Intercompany Services Agreement.
(c) The Lease Resolution Agreement dated as of October 27, 2000 among
the Company, Xxxxxxx X. Xxxxx and Xxxxx Xxxxx Marks (the "Family Agreement") has
been duly
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and validly authorized, executed and delivered by the Company and constitutes
and will constitute, as at the date of the expiration of the Offer and the
Effective Time a legal, valid and binding obligation of the parties thereto and
is enforceable and will be enforceable, as of the date of the expiration of the
Offer and the Effective Time, against the parties thereto in accordance with its
terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:
SECTION 4.1 Corporate Organization. Each of Parent and Purchaser is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction in which it is incorporated and has the requisite corporate
power and authority to own, operate or lease its properties and to carry on its
business as it is now being conducted, except where the failure to be so
organized, existing or in good standing or to have such power or authority would
not prevent or materially delay the consummation of the transactions
contemplated hereby. Parent beneficially owns all of the outstanding capital
stock of Purchaser.
SECTION 4.2 Authority Relative to This Agreement. Each of Parent and
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby. The execution, delivery and performance of
this Agreement by each of Parent and Purchaser and the consummation by each of
Parent and Purchaser of the transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action (including by the Boards of
Directors of Parent and Purchaser and, prior to the Effective Time, by Parent as
the sole stockholder of Purchaser) and no other corporate proceedings on the
part of Parent or Purchaser (including shareholder actions) are necessary to
authorize this Agreement or to consummate the transactions so contemplated
(other than the filing with the Secretary of State of the State of Delaware of
the Certificate of Merger as required by the DGCL). This Agreement has been duly
executed and delivered by Parent and Purchaser and, assuming due authorization,
execution and delivery hereof by the Company, constitutes a legal, valid and
binding obligation of each such corporation enforceable against such corporation
in accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
SECTION 4.3 No Conflict; Required Filings and Consents. (a) The
execution, delivery and performance of this Agreement by Parent and Purchaser do
not and will not (i) conflict with or violate the respective certificates or
articles of incorporation or by-laws of Parent or Purchaser, (ii) assuming that
all consents, approvals and authorizations contemplated by clauses (i), (ii) and
(iii) of subsection (b) below have been obtained and all filings described in
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such clauses have been made, conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Parent or Purchaser or by which either
of them or their respective properties are bound or (iii) result in any breach
or violation of or constitute a default (or an event which with notice or lapse
of time or both would become a default) or result in the loss of a material
benefit under, or give rise to any right of termination, cancellation, material
amendment or material acceleration of, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit or other instrument or obligation to
which Parent or Purchaser is a party or by which Parent or Purchaser or any of
their respective properties are bound, except, in the case of clauses (ii) and
(iii), for any such conflict, violation, breach, default or other occurrence
which would not prevent or materially delay the consummation of the transactions
contemplated hereby.
(b) The execution, delivery and performance of this Agreement by Parent
and Purchaser and the consummation of the Offer and the Merger by Purchaser do
not and will not require any consent, approval, authorization or permit of,
action by, filing with or notification to, any governmental or regulatory
authority, except (i) for applicable requirements, if any, of the Exchange Act
and the rules and regulations promulgated thereunder, the HSR Act and state
securities, takeover and Blue Sky laws, (ii) the applicable requirements of the
New York Stock Exchange, London Stock Exchange and Amsterdam Stock Exchange,
(iii) the filing with the Secretary of State of the State of Delaware of the
Certificate of Merger as required by the DGCL, (iv) the applicable requirements
of any applicable Antitrust Law or investment laws relating to foreign ownership
and (v) any such consent, approval, authorization, permit, action, filing or
notification the failure of which to make or obtain would not prevent or
materially delay the consummation of the transactions contemplated hereby.
SECTION 4.4 Offer Documents; Proxy Statement. The Offer Documents, as
filed pursuant to Section 1.1, will not, at the time such Offer Documents (or
any amendments or supplements thereto) are filed with the SEC or are first
published, sent or given to the stockholders of the Company and at the time
Shares are purchased pursuant to the Offer contain any untrue statement of a
material fact or omit to state any material fact required to be stated or
incorporated by reference therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The information specifically supplied in writing by Parent for
inclusion in the Proxy Statement shall not, on the date the Proxy Statement (or
any amendments or supplements thereto) is first mailed to the stockholders of
the Company, at the time of the Stockholders Meeting, if any, and at the
Effective Time, contain any statement which is false or misleading with respect
to any 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 false or misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders Meeting which has become false
or misleading. Notwithstanding the foregoing, Parent and Purchaser make no
representation or warranty with respect to any information supplied by the
Company or any of its representatives which is contained in or incorporated by
reference in any of the Offer Documents or Proxy Statement. The Offer shall
comply in all material respects with the Exchange Act and the rules and
regulations promulgated thereunder. The Offer Documents, as amended and
supplemented, will comply in all material respects as to form with the
requirements of the Exchange Act and the rules and regulations promulgated
thereunder.
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SECTION 4.5 Brokers. No broker, finder or investment banker (other than
Xxxxxx Xxxxxxx Xxxx Xxxxxx, ABN Amro and Cazenove is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by and on behalf of
Parent or Purchaser.
SECTION 4.6 Financing. Parent and Purchaser will have available to
them, upon consummation of the Offer and at the Effective Time, immediately
available funds necessary to consummate the transactions contemplated by this
Agreement and to pay all related fees and expenses.
SECTION 4.7 Operations of Purchaser. Purchaser has been formed solely
for the purpose of engaging in the transactions contemplated hereby and prior to
the Effective Time will have engaged in no other business activities and will
have incurred no liabilities or obligations other than as contemplated herein.
SECTION 4.8 Ownership of Shares. As of the date of this Agreement,
Parent, Purchaser or their respective affiliates do not own (directly or
indirectly, beneficially or of record) any Shares and none of Parent, Purchaser
or their respective affiliates hold any rights to acquire any Shares except
pursuant to this Agreement.
SECTION 4.9 Vote/Approval Required. No vote of the holders of any class
or series of capital stock of Xxxx International P.L.C., Elsevier NV, Parent,
Purchaser or any of their affiliates is necessary to approve this Agreement, the
Merger or the Offer or the financing thereof (including under the rules of any
stock exchange on which their shares are listed). None of Xxxx International
P.L.C., Elsevier NV, Parent, Purchaser nor any of their affiliates is required
to obtain the advice of any works council or workers council or similar body in
connection with this Agreement, the Merger or the Offer or the transactions
contemplated hereby or the financing thereof.
SECTION 4.10 Subsequent Transaction. Parent has furnished the Company
with true and correct copies of all agreements, understandings and
interpretations relating to the Subsequent Transaction (collectively, the
"Subsequent Transaction Agreements").
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ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.1 Conduct of Business of the Company Pending the Merger. The
Company covenants and agrees that, during the period from the date hereof until
the Effective Time, except as contemplated by this Agreement, as disclosed in
the SEC Reports filed prior to the date of this Agreement or in Section 5.1 of
the Disclosure Schedule or as required by law, or unless Purchaser shall
otherwise agree in writing, the business of the Company and its subsidiaries
shall be conducted in its ordinary course of business consistent with past
practice and the Company and its subsidiaries shall use their reasonable best
efforts to comply with all applicable laws, rules and regulations and, to the
extent consistent therewith, use their reasonable best efforts to preserve
substantially intact their business organizations, and to preserve their present
relationships with customers, suppliers, employees, licensors, licensees,
distributors, authors and other content providers and other persons with which
they have business relations. Without limiting the generality of the foregoing,
between the date of this Agreement and the Effective Time, except as otherwise
contemplated by this Agreement, as set forth in Section 5.1 of the Disclosure
Schedule or as required by law, neither the Company nor any of its subsidiaries
shall without the prior written consent of Parent (it being understood that
Parent will determine whether or not to give such consent based on its
reasonable business judgment):
(a) amend or otherwise change the certificate of incorporation
or by-laws or equivalent organizational documents of the Company and
its subsidiaries;
(b) issue, deliver, sell, pledge, dispose of or encumber any
shares of capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any
shares of capital stock, or any other ownership interest (including but
not limited to stock appreciation rights or phantom stock), of the
Company or any of its subsidiaries (except (A) for the issuance of
shares of Common Stock issuable in accordance with the terms of
Employee Options issued and outstanding as of the date hereof, (B) for
the conversion of shares of Series A Stock or Class B Stock into shares
of Common Stock, (C) for the grant of Employee Options (and issuances
of Common Stock pursuant thereto) in the ordinary course of business in
order to attract new employees or (D) in connection with the dividend
reinvestment plan of the Company existing on the date hereof);
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with
respect to any of its capital stock (except for (i)any dividend or
distribution by a wholly-owned subsidiary of the Company, (ii) regular
quarterly dividends of the Company in an amount not to exceed $0.21 per
share of Common Stock and regular quarterly dividends of the Company in
an amount not to exceed $0.189 per share of Class B Stock or (iii)
quarterly dividends on the Series A Stock as provided for in the
Restated Certificate);
(d) (i) purchase, redeem or otherwise acquire any shares of
its capital stock or any other securities of the Company or any of its
subsidiaries or any options, warrants, calls or rights to acquire any
such shares or other securities (other than in connection with the
dividend reinvestment plan of the Company existing on the date hereof
in accordance with past practice) or (ii) reclassify, combine, split or
subdivide any capital stock or other
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securities of the Company or any of its subsidiaries (except in
connection with the conversion of shares of Class B Stock or Series A
Stock into shares of Common Stock);
(e) (i) directly or indirectly, acquire or agree to acquire
(by merger, consolidation or acquisition of stock or assets or
otherwise) (A) any interest in a corporation, partnership or other
business organization or division thereof or any assets constituting a
business, including assets related to individual works, or (B) except
in the ordinary course of business consistent with past practice, any
other assets, (ii) directly or indirectly sell, lease, license, sell
and leaseback, mortgage, encumber or otherwise dispose of, (a) any of
its individual works or assets related thereto, (b) any other assets
(other than assets intended for sale to customers in the ordinary
course of business or consumed in the ordinary course of business),
having an aggregate fair market value in excess of $5 million; other
than in the case of clauses (a) and (b) pursuant to existing contracts
or commitments, (iii) other than in the ordinary course of business
consistent with past practice, enter into, renew, amend or terminate
any contract or agreement which is or would be material to the Company
and its subsidiaries taken as a whole or (iv) issue or authorize any
material new capital expenditures other than in accordance with the
capital expenditure schedule set forth as Section 5.1(e) of the
Disclosure Schedule;
(f) (i) repurchase, prepay or incur any indebtedness or
guarantee any indebtedness of another Person or issue or sell any debt
securities or options, warrants, calls or other rights to acquire any
debt securities of the Company or any of its subsidiaries, guarantee
any debt securities of another Person, enter into any "keep well" or
other agreement to maintain any financial statement condition of
another Person or enter into any arrangement having the economic effect
of any of the foregoing, other than under existing debt facilities in
the ordinary course of business consistent with past practice for
working capital purposes or other purposes permitted under this Section
5.1, or (ii) make any loans, advances or capital contributions to, or
investments in, any other Person, other than those (A) set forth in
Section 5.1(f) of the Disclosure Schedule or (B) made to or in the
Company or any direct or indirect wholly owned subsidiary of the
Company;
(g) except as required by law, (i) pay, discharge, settle or
satisfy any material claims (including claims of stockholders),
liabilities or obligations (whether absolute, accrued, asserted or
unasserted, contingent or otherwise), except (A) in the ordinary course
of business consistent with past practice or (B) as required by their
terms as in effect on the date of this Agreement, (ii) waive, release,
grant or transfer any right of material value other than in the
ordinary course of business consistent with past practice or (iii)
waive any material benefits of, or agree to modify in any respect
materially adverse to the Company, or fail to enforce, or consent to
any matter with respect to which its consent is required under, any
material confidentiality agreement (other than standstill provisions)
to which the Company or any of its subsidiaries is a party;
(h) except as contemplated by Section 6.6 or except to the
extent provided under any Company Plan or Employment Agreement,
increase the compensation or fringe benefits of any of its directors,
officers or employees, except for increases for employees of the
Company or its subsidiaries (other than directors and officers except
as provided in Schedule 5.1(h)) in the ordinary course of business
consistent with past practice, or grant any severance or termination
pay not provided for under any Company Plan or Employment Agreement or
enter into any employment, consulting or severance
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agreement or arrangement with any present or former director, officer
or other employee of the Company or any of its subsidiaries, or
establish, adopt, enter into or amend in any material respect or
terminate any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other
plan, agreement, trust, fund, policy, guideline, arrangement or
practice for the benefit of any directors, officers or employees,
except as required by applicable law;
(i) enter into any agreement containing any provision or
covenant materially limiting in any respect the ability of the Company
or any of its subsidiaries or, assuming the consummation of the
transactions contemplated herein, Parent or any of its affiliates, to
(i) sell any products or services of or to any other Person, (ii)
engage in any line of business or (iii) compete with any Person;
(j) make any significant change in any accounting principles,
except as may be appropriate to conform to changes in statutory or
regulatory accounting rules or generally accepted accounting principles
or regulatory requirements with respect thereto;
(k) accelerate the payment, right to payment or vesting of any
bonus, severance, profit sharing, retirement, deferred compensation,
stock option, insurance or other compensation or benefits;
(l) other than in the ordinary course of business consistent
with past practice, make any tax election or enter into settlement or
compromise of any tax liability that in either case is material to the
business of the Company and its subsidiaries as a whole;
(m) (a) agree to any modification, amendment, or waiver of any
provision of (i) the Amended and Restated Reimbursement and Security
Agreement (the "Reimbursement Agreement") dated as of January 26, 1999
between the Company and GC Companies, Inc. ("GCX") or (ii) the
Intercreditor Agreement dated as of January 26, 1999 among BankBoston,
N.A., the Company and GCX, without Parent's consent, which consent
shall not be unreasonably withheld; or (B) settle or compromise any
claim made by GCX, or any other person, or any liability or obligation
of the Company or its subsidiaries relating to GCX, any of its
properties or relating to any other matter arising in any
reorganization, recapitalization liquidation or bankruptcy proceeding
of GCX, without Parent's consent, which consent shall not be
unreasonably withheld (provided that the Company may directly or
indirectly make payments to any third party (which in the aggregate
will not exceed $1 million), or take any emergency or temporary action,
in order to preserve the assets or operations associated with any GCX
obligations for which the Company is liable). Further, the Company
agrees to assert and defend, consistent with advice of counsel, all
rights it may have with respect to any matter affecting GCX, and use
its reasonable best efforts, consistent with advice of counsel, to
mitigate any losses, obligations or claims relating to GCX or its
properties including any guarantee of leases or any other obligations
of GCX; provided, however, that Parent consents to the implementation
of the Company's agreement dated October 13, 2000 with DJM Asset
Management and W/S Discount Acquisition II, LLC. In addition, the
Company shall promptly notify Parent (but in no event later than 48
hours) of any material development or change with respect to any
matters related to GCX after the date hereof and shall thereafter keep
Parent informed in all respects as to the status of any such material
developments or changes.
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(n) authorize or agree to take any of the actions described in
Sections 5.1(a) through 5.1(m).
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Stockholders Meeting. (a) As soon as reasonably practicable
following consummation of the Offer, the Company, acting through its Board of
Directors, shall, if required in accordance with applicable law and the
Company's Restated Certificate and By-Laws, (i) duly call, give notice of,
convene and hold a meeting of its stockholders for the purpose of adopting this
Agreement (the "Stockholders Meeting") and (ii) use its reasonable best efforts
to obtain the necessary adoption of this Agreement by the stockholders of the
Company. At the Stockholders Meeting, Parent and Purchaser shall cause all
Shares then beneficially owned by them and their subsidiaries and controlled
affiliates to be voted in favor of adoption of this Agreement.
(b) Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 90% of the outstanding shares of each of the Company Common
Stock and the Class B Stock (if any shares thereof are then outstanding), Parent
and Purchaser agree, subject to Article VII, to take all necessary and
appropriate action to cause the Merger to become effective as soon as reasonably
practicable after such acquisition, without a meeting of the stockholders of the
Company, in accordance with Section 253 of the DGCL.
(c) Notwithstanding anything to the contrary contained in this
Agreement, the Company shall not be required to hold the Stockholders Meeting if
the Offer is not consummated.
SECTION 6.2 Proxy Statement. If required by applicable law, as soon as
reasonably practicable following Parent's request, the Company shall file with
the SEC under the Exchange Act and the rules and regulations promulgated
thereunder, and shall use its reasonable best efforts to have cleared by the
SEC, the Proxy Statement with respect to the Stockholders Meeting. Parent,
Purchaser and the Company will cooperate with each other in the preparation of
the Proxy Statement. Without limiting the generality of the foregoing, each of
Parent and Purchaser will furnish to the Company the information relating to it
required by the Exchange Act and the rules and regulations promulgated
thereunder to be set forth in the Proxy Statement. The Company agrees to use its
reasonable best efforts to respond as soon as reasonably practicable to any
comments made by the SEC with respect to the Proxy Statement and any preliminary
version thereof filed by it and cause such Proxy Statement to be mailed to the
stockholders of the Company as soon as reasonably practicable.
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SECTION 6.3 Company Board Representation; Section 14(f). (a) If
requested by Parent, the Company shall, as soon as reasonably practicable
following payment for the purchase of Shares pursuant to the Offer, and from
time to time thereafter, use its best efforts to cause a majority of directors
of the Company to consist of persons designated or elected by Parent (such
actions to include increasing the size of the Board of Directors or securing the
resignations of incumbent directors or both). At such times, if requested by
Parent, the Company will use its best efforts to cause persons designated by
Purchaser to constitute a majority of the members of (i) each committee of the
Board of Directors of the Company, (ii) each board of directors of each domestic
subsidiary of the Company and (iii) each committee of each such board, in each
case only to the extent permitted by law and as specifically designated by
Parent.
(b) The Company's obligations to cause Parent's designees to be elected
or appointed to its Board of Directors shall be subject to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall as soon as
reasonably practicable (subject to the provision of information by Parent and
Purchaser) take all actions required pursuant to Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section 6.3 and shall include in the
Schedule 14D-9 or a separate Rule 14f-1 information statement provided to the
stockholders of the Company 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 6.3. Parent or Purchaser will supply
to the Company as soon as reasonably practicable and be solely responsible for
any information with respect to either of them and their nominees, officers,
directors and affiliates required by Section 14(f) and Rule 14f-1.
(c) In addition to any vote of the Board of Directors of the Company
required by law or the Restated Certificate or the By-Laws, following the
election or appointment of Purchaser's designees pursuant to this Section 6.3
and prior to the Effective Time, any amendment of this Agreement or the Restated
Certificate or By-Laws, any termination of this Agreement by the Company, any
extension by the Company of the time for the performance of any of the
obligations or other acts of Parent or Purchaser hereunder, any extension or
alteration of the Effective Time or any waiver or assertion of any of the
Company's rights hereunder or any term or condition of this Agreement or the
Restated Certificate or By-Laws or any action by the Company hereunder which
adversely affects holders of Shares other than Parent or Purchaser, and any
other consent or action by the Board of Directors of the Company with respect to
this Agreement, will require the concurrence of a majority of the directors of
the Company then in office who are directors as of the date of this Agreement
and who voted to approve this Agreement or are designated by a majority of the
directors of the Company who are directors on the date of this Agreement and who
voted to approve this Agreement; provided that, notwithstanding Section 6.3(a),
the number of such directors shall be not less than three; provided, further,
that, if the number of such directors shall be reduced below three for any
reason, such remaining directors shall be entitled to designate persons to fill
such vacancies so that there will continue to be three such directors and such
persons shall be deemed for purposes of this Section 6.3(c) to have been
directors as of the date of this Agreement.
SECTION 6.4 Access to Information; Confidentiality. (a) From the date
hereof to the Effective Time, upon reasonable prior written notice, and subject
to applicable law, the Company (i) shall, and shall cause its subsidiaries,
officers, directors and employees to, afford the officers, employees, counsel,
accountants, financial representatives and other authorized representatives (the
"Representatives") of Parent and representatives of the financial institutions
providing financing and their counsel, accountants and other representatives
(collectively, the
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"Financing Representatives") and Representatives of any Person which has entered
into an agreement with Parent with respect to purchasing certain assets and
subsidiaries of the Company from Parent after consummation of the Merger (such
Representatives, the "TP Representatives" and the transaction contemplated by
such agreement, the "Subsequent Transaction") reasonable access, during normal
business hours, to their respective properties, books, contracts and records
and, during such period, shall furnish promptly to Parent all information
concerning their respective businesses, properties and personnel as may
reasonably be requested in connection with the transactions contemplated by this
Agreement, including the financing and the Subsequent Transactions; (ii) subject
to applicable law relating to the exchange of information, furnish and cause its
subsidiaries to furnish, to Parent, Parent's Representatives, the Financing
Representatives and the TP Representatives such financial and operating data and
other information relating to the Company or any of its subsidiaries as such
persons may reasonably request; and (iii) instruct the employees, counsel and
financial advisors of the Company and its subsidiaries to cooperate with Parent,
Parent's Representatives, the Financing Representatives and the TP
Representatives in connection with the foregoing; provided that the foregoing
shall not require any such entity to permit any inspection, or to disclose any
information, that in its reasonable judgment would result in the disclosure of
any trade secrets of third parties or violate any such entity's obligations with
respect to confidentiality if such entity shall have attempted to obtain the
consent of such third party to such inspection or disclosure. Any investigation
pursuant to this Section shall be conducted in such manner as to not
unreasonably interfere with the conduct of the business of the Company or its
subsidiaries. No investigation pursuant to this Section 6.4 shall affect or be
deemed to modify any representation or warranty made by the Company. All
requests for information made pursuant to this Section 6.4 shall be directed to
an executive officer of the Company or such Person as may be designated by such
officers.
(b) The Company acknowledges that Parent may need to cause an
information memoranda to be prepared and used in connection with consummation of
certain financing transactions, and agrees to use its reasonable best efforts to
furnish Parent with reasonable access to, and to cause the cooperation of, all
personnel reasonably requested by Parent to assist in arranging, consummating
and obtaining any such financing, and using its reasonable best efforts to cause
its management to participate in such meetings with third parties as Parent may
reasonably request; provided that Parent shall provide the Company with drafts
of any such information memoranda reasonably in advance of any proposed
circulation thereof. In addition, the Company agrees to (i) request its
accountants, at Parent's request and expense, to consent to the inclusion of
their report or reports in, and to issue a comfort letter on customary terms in
connection with, any information memoranda relating to such financing and (ii)
at the reasonable request of Parent, (A) enter into such agreements and use
reasonable best efforts to deliver such officers certificates and opinions as
are customary in such a financing and as are, in the good faith determination of
the persons executing such certificates or opinions, accurate and (B) pledge,
grant security interests in and otherwise grant liens on its assets pursuant to
such agreements; provided that no obligation of the Company under any such
agreement, pledge or grant shall be effective until the Effective Time.
(c) Each of Parent and Purchaser will hold and treat and will cause its
officers, employees, auditors and other authorized representatives to hold and
treat in confidence all documents and information concerning the Company and its
subsidiaries furnished to Parent or Purchaser in connection with the
transactions contemplated in this Agreement in accordance with the
Confidentiality Agreement, dated June 28, 2000, between the Company and Xxxx
Elsevier
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PLC, which Confidentiality Agreement shall remain in full force and effect in
accordance with its terms.
SECTION 6.5 Acquisition Proposals. (a) The Company agrees that (i) it
and its officers, directors and employees shall not, (ii) its subsidiaries and
its subsidiaries' officers and directors shall not and (iii) it shall use
reasonable best efforts to ensure that its and its subsidiaries' agents and
representatives ("Company Representatives") shall not, (A) directly or
indirectly, initiate, solicit or knowingly encourage or facilitate any inquiries
or the making of any proposal or offer with respect to (i) any tender offer or
exchange offer, (ii) merger, consolidation, share exchange, business
combination, sale of substantially all of the assets, reorganization,
recapitalization, liquidation, dissolution or other similar transaction
involving the Company or any of its subsidiaries whose assets, individually or
in the aggregate, constitute more than 20% of the consolidated assets or the
earning power of the Company or (iii) any acquisition or purchase, direct or
indirect, of more than 20% of the consolidated assets of the Company and its
subsidiaries or more than 20% of any class of equity or voting securities of the
Company or any of its subsidiaries whose assets, individually or in the
aggregate, constitute more than 20% of the consolidated assets or earning power
of the Company (other than the transactions contemplated by this Agreement) (any
such proposal or offer being hereinafter referred to as an "Acquisition
Proposal") or (B) directly or indirectly, continue, enter into or engage in any
negotiations or discussions concerning, any Acquisition Proposal, furnish any
information relating to the Company or any of its subsidiaries or provide access
to the properties, books and records or any confidential information or data of
the Company or any of its subsidiaries to, any Person relating to an Acquisition
Proposal. Notwithstanding the foregoing, nothing contained in this Agreement
shall prevent the Company or its Board of Directors from (i) taking and
disclosing to its stockholders a position contemplated by Rule 14d-9 and Rule
14e-2(a) promulgated under the Exchange Act (or any similar communication to
stockholders in connection with the making or amendment of a tender offer or
exchange offer) or from making any legally required disclosure to stockholders
with regard to an Acquisition Proposal, (ii) prior to the purchase of any Shares
pursuant to the Offer, providing access to properties, books and records and
providing information or data in response to a request therefor by a Person who
has made an unsolicited bona fide written Acquisition Proposal if the Board of
Directors receives from the Person so requesting such information an executed
confidentiality agreement on terms substantially similar to those contained in
the Confidentiality Agreement (except for such changes specifically necessary in
order for the Company to be able to comply with its obligations under this
Agreement and it being understood that the Company may enter into a
confidentiality agreement without a standstill provision or with a standstill
provision less favorable to the Company if it waives or similarly modifies the
standstill provision in the Confidentiality Agreement) (provided that all such
written information is also provided on a prior or substantially concurrent
basis to Parent), or (iii) prior to the purchase of any Shares pursuant to the
Offer, engaging in any negotiations or discussions with any Person who has made
an unsolicited bona fide written Acquisition Proposal; if and only to the extent
that in connection with the foregoing clauses (ii) and (iii), (1) the Board of
Directors of the Company shall have determined in good faith, after consultation
with its legal counsel and financial advisors, that such actions would
reasonably be expected to lead to a Superior Proposal (as defined below), and
(2) the Board of Directors of the Company determines in good faith after
consultation with outside legal counsel that such action is necessary in order
for the directors to comply with their fiduciary duties under applicable law.
The Company agrees that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any Persons conducted
heretofore with respect to any Acquisition Proposal and will use its reasonable
best efforts to cause any such Person (or its
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Exhibit (d)(1)
30
agents or advisors) in possession of confidential information about the Company
or any of its subsidiaries that was furnished by or on behalf of the Company to
return or destroy all such information. The Company shall also notify Parent
promptly (but in no event later than 24 hours) after receipt of any Acquisition
Proposal or any indication of interest in making an Acquisition Proposal after
the date hereof, which notice shall include the identity of the Person making
such Acquisition Proposal or indication and the material terms and conditions of
such Acquisition Proposal or indication (including any subsequent material
amendment or modification to such terms and conditions). The Company shall keep
Parent informed in all material respects of the status and details of any such
Acquisition Proposal.
(b) Neither the Board of Directors of the Company nor any committee
thereof shall (i) withdraw (or modify in a manner adverse to Parent or
Purchaser) or propose publicly to withdraw (or modify in a manner adverse to
Parent or Purchaser) the recommendation or declaration of advisability by the
Board of Directors or any such committee of this Agreement, the Offer or the
Merger, or recommend, or propose publicly to recommend, the approval or adoption
of any Acquisition Proposal (other than an Acquisition Proposal made by Parent),
(each such action being referred to herein as an "Adverse Recommendation
Change") (it being understood and agreed that a communication by the Board of
Directors of the Company to the stockholders of the Company pursuant to Rule
14d-9(e)(3) of the Exchange Act (or any similar communication to the
stockholders of the Company in connection with the commencement of a tender
offer or exchange offer containing the substance of the communication pursuant
to such Rule 14d-9(e)(3) shall not be deemed to constitute an Adverse
Recommendation Change), unless the Board of Directors or a committee thereof
determines in good faith, based on such matters as it deems appropriate, after
consulting with legal counsel, that such action is necessary for the Board of
Directors to comply with its fiduciary duties under applicable law, (ii) adopt
or approve, or propose publicly to adopt or approve, any Acquisition Proposal,
(iii) cause or permit the Company to enter into any letter of intent, memorandum
of understanding, agreement in principle, acquisition agreement, merger
agreement, option agreement, joint venture agreement, partnership agreement or
similar agreement which is intended to, or is reasonably likely to lead to, any
Acquisition Proposal (other than a confidentiality agreement referred to in
Section 6.5(a)) or (iv) agree or resolve to take any of the actions prohibited
by clauses (i), (ii) or (iii) of this sentence. Notwithstanding anything in this
Section 6.5 to the contrary, if, at any time prior to the purchase of any Shares
pursuant to the Offer, the Company's Board of Directors determines in good
faith, after consultation with its financial advisors and outside counsel, in
response to an Acquisition Proposal that was unsolicited and that did not
otherwise result from a breach of Section 6.5(a), that such proposal is a
Superior Proposal, the Company or its Board of Directors may terminate this
Agreement pursuant to Section 8.1(d)(iii) hereof; provided, however, that the
Company shall not terminate this Agreement pursuant to Section 8.1(d)(iii)
hereof, and any purported termination pursuant to Section 8.1(d)(iii) hereof
shall be void and of no force or effect, unless (i) the Company prior to or
concurrently with such termination pays to Parent the fee payable pursuant to
Section 8.2(b) and enters into a definitive agreement concerning the Superior
Proposal; (ii) the Company shall have complied in all material respects with
this Section 6.5(a), (iii) the Company shall have given Parent at least three
business days written prior notice of its intention to terminate the Agreement,
attaching a description of all material terms and conditions of the Superior
Proposal to such notice together with the most current draft of an agreement
relating to such Superior Proposal (it being understood and agreed that any
amendment to the amount or form of consideration of the Superior Proposal shall
require a new notice and a new three business day period), (iv) during such
three business days or greater period, the Company engages in good faith
negotiations with Parent with respect to such changes
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as Parent may propose to the terms of the Merger and this Agreement, and (v)
Parent does not make prior to such termination of this Agreement a definitive
and binding offer to enter into a definitive agreement which the Board of
Directors of the Company determines, in good faith after consultation with its
financial advisors, is at least as favorable to the stockholders of the Company
as the Superior Proposal (it being understood that neither the delivery of a
notice of a Superior Proposal in accordance with this Section 6.5(b) nor any
subsequent public announcement thereof shall in of themselves constitute an
Adverse Recommendation Change or a breach of clause (ii), (iii) or (iv) of the
first sentence of this Section 6.5(b)).
The term "Superior Proposal" means any bona fide written Acquisition
Proposal not solicited by or on behalf of the Company or any of its subsidiaries
made by a third party that the Board of Directors of the Company determines in
its good faith judgment (after consultation with a financial advisor of
nationally recognized reputation) would, if consummated, be superior from a
financial point of view to the stockholders of the Company, taking into account,
among other things, any changes to the terms of this Agreement proposed by
Parent in response to such Superior Proposal (provided that, for purposes of
this definition of "Superior Proposal," the term Acquisition Proposal shall have
the meaning assigned to such term in this Section 6.5, except that the reference
to "more than 20%" in the definition of "Acquisition Proposal" shall be deemed
to be a reference to "a majority").
SECTION 6.6 Employment and Employee Benefits Matters. (a) As of the
Effective Time, the obligations of the Company and its subsidiaries under each
Company Plan and Employment Agreement shall continue as obligations of the
Surviving Corporation and its subsidiaries, respectively.
(b) On and after the Effective Time, Parent shall cause the
Surviving Corporation and its subsidiaries to pay promptly or provide when due
all compensation and benefits earned through or prior to the Effective Time as
provided pursuant to the terms of any Company Plan, (and expressly assume the
obligations thereunder). Parent and the Company agree that the Surviving
Corporation and its subsidiaries shall pay promptly or provide when due all
compensation and benefits required to be paid pursuant to the terms of any
Employment Agreement (and expressly assume the obligations thereunder).
(c) Without limiting any additional rights that any employee may
have under any Employment Agreement or Company Plan, Parent shall cause the
Surviving Corporation and each of its subsidiaries, for a period commencing at
the Effective Time and ending on the first anniversary thereof (or such longer
period provided for in any such Employment Agreement or Company Plan), to
maintain the severance-related provisions of existing Company Plans and to
provide 100% of the cash severance payments required thereunder, reduced by any
severance payments otherwise required under existing severance and employment
agreements or applicable law, to any Affected Employee (as defined below)
terminated during that twelve-month period (or such longer period provided for
in any such Employment Agreement or Company Plan) (unless no such reduction is
permitted or provided for).
(d) Without limiting any additional rights that any employee may
have under any Employment Agreement or Company Plan, Parent shall cause the
Surviving Corporation and each of its subsidiaries, for the period commencing at
the Effective Time and ending on the first anniversary thereof, to maintain for
any individual who is actively employed by the Company or any of its
subsidiaries immediately prior to the Effective Time (the "Affected Employees")
(other than employees covered by a collective bargaining agreement)
(i)compensation levels
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(such term to include salary, bonus opportunities and commissions) that in the
aggregate are no less favorable, (ii) Company Plans that in the aggregate are no
less favorable, and (iii) Severance Plans that are no less favorable, than the
overall compensation levels and Company Plans, and the Severance Plans,
respectively, such Affected Employees are entitled to immediately prior to the
Effective Time, and employees covered by collective bargaining agreements shall
be provided with such benefits as shall be required under the terms of any
applicable collective bargaining agreement; provided, however, subject to the
foregoing, that nothing herein shall prevent the amendment or termination of any
Company Plan or interfere with the Surviving Corporation's right or obligation
to make such changes as are necessary to conform with applicable law. Without
limiting any additional rights that any employee may have under any Employment
Agreement or Company Plan after the expiration of such one-year period, Parent
shall provide Affected Employees (other than those covered by collective
bargaining agreements) with employee benefits, in the aggregate, that are no
less favorable in the aggregate than those employee benefits provided to
similarly situated employees of the Parent or its subsidiaries; provided that,
notwithstanding any of the provisions set forth above, nothing herein shall
require the establishment, amendment or continuation of any stock option,
restricted stock, stock purchase, employee stock ownership or any other
equity-based plan or program and the value of benefits of any such program shall
not be included for purposes of determining whether (i), (ii) or (iii) above in
the aggregate is "no less favorable".
(e) Affected Employees shall be given credit for all service with
the Company and its subsidiaries, to the same extent as such service was
credited for such purpose by the Company, under each employee benefit plan,
program or arrangement, including the vacation policies, of Parent or its
subsidiaries in which such Affected Employees are eligible to participate (the
"Parent Plans") for all purposes; provided, however, that no such service shall
be credited for purposes of determining benefit accruals with respect to any
defined benefit pension plan except for any plan formerly maintained by the
Company to the extent such service is recognized under such plan or any
successor thereof. With respect to each Parent Plan that is a "welfare benefit
plan" (as defined in Section 3(1) of ERISA), the Parent or its subsidiaries
shall (a) cause there to be waived any pre-existing condition or eligibility
limitations and (b) to the extent administratively feasible, give effect, in
determining any deductible and maximum out-of-pocket limitations, to claims
incurred and amounts paid by, and amounts reimbursed to, Affected Employees
under similar plans maintained by the Company and its subsidiaries immediately
prior to the Closing Date.
(f) With respect to any accrued but unused vacation time to which
any Affected Employee is entitled pursuant to the vacation policy applicable to
such Affected Employee immediately prior to the Closing Date, Parent and its
subsidiaries shall assume the liability for such accrued vacation and allow such
Affected Employee to use such accrued vacation in accordance with the provisions
of the applicable vacation policy. Notwithstanding the foregoing, such
assumption and allowance for accrued but unused vacation time accrued before
January 1, 2000 shall only take place if such accrued but unused vacation time
has been documented in the applicable personnel files and records related to
such Affected Employee.
(g) The Company shall take all action necessary to provide for full
vesting of the account balances of all Affected Employees after one year of
service under the Harcourt Savings Plan
(h) The Company will amend the Harcourt Inc. Severance Pay Plan, the
Harcourt General Inc. Manager/Director Change of Control Severance Plan and the
Harcourt General Inc.
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Employee Change of Control Severance Plan, and any other severance plan program
or policy of the Company or its subsidiaries not previously made available to
Parent, if such Plan can be unilaterally amended by the Company, in such manner
as may be reasonably necessary to provide that no severance or termination
benefits would be payable thereunder solely as a result of the Merger or the
Subsequent Transaction.
SECTION 6.7 Directors' and Officers' Indemnification and Insurance.
(a) Without limiting any additional rights that any employee may have under any
Employment Agreement or Company Plan, from the Effective Time through the sixth
anniversary of the date on which the Effective Time occurs, Parent shall, or
shall cause the Surviving Corporation to, indemnify and hold harmless each
present (as of the Effective Time) and former officer or director of the Company
and its subsidiaries (the "Indemnified Parties"), against all claims, losses,
liabilities, damages, judgments, fines and reasonable fees, costs and expenses,
including, without limitation, attorneys' fees and disbursements (collectively,
"Costs"), incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to (i) the fact that the Indemnified Party is or was an
officer or director of the Company or any of its subsidiaries and (ii) acts or
omissions occurring at or prior to the Effective Time (including, without
limitation, this Agreement and the transactions and actions contemplated
hereby), whether asserted or claimed prior to, at or after the Effective Time,
provided that such indemnifications shall be subject to any limitation imposed
from time to time under applicable law. Each Indemnified Party will be entitled
to advancement of reasonable expenses incurred in the defense of any claim,
action, suit, proceeding or investigation from Parent or the Surviving
Corporation within ten business days of receipt by Parent from the Indemnified
Party of a request therefor; provided that any person to whom expenses are
advanced provides an undertaking, if and only to the extent required by the
DGCL, to repay such advances if it is ultimately determined that such person is
not entitled to indemnification.
(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 6.7, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify the Surviving
Corporation thereof; provided, however, that any Indemnified Party's failure to
promptly notify the Surviving Corporation upon learning of any such claim,
action, suit, proceeding or investigation shall only reduce such Indemnified
Party's rights under paragraph (a) of this Section 6.7 to the extent such
failure to notify materially prejudices the Surviving Corporation's ability to
defend such claim, action, suit, proceeding or investigation. In the event of
any such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) the Surviving Corporation shall have
the right, from and after the Effective Time, to assume the defense thereof
(with counsel engaged by the Surviving Corporation to be reasonably acceptable
to the relevant Indemnified Party) and the Surviving Corporation shall not be
liable to such Indemnified Party for any legal expenses of other counsel or any
other expenses subsequently incurred by such Indemnified Party in connection
with the defense thereof, (ii) such Indemnified Party will cooperate in the
defense of any such matter and (iii) the Surviving Corporation shall not be
liable for any settlement effected without its prior written consent; provided
that the Surviving Corporation shall not have any obligation hereunder to any
Indemnified Party when and if a court of competent jurisdiction shall ultimately
determine, and such determination shall have become final, that the
indemnification of such Indemnified Party in the manner contemplated hereby is
prohibited by applicable law. The Surviving Corporation shall not, except with
the consent of any Indemnified Party, enter into any settlement that does not
include as an unconditional term thereof the giving by the Person or
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Persons making, asserting or conducting such claim, action suit, proceeding or
investigation to such Indemnified Party an unconditional release from all
liability with respect to such claim, action, suit, proceeding or investigation
if such claim, action, suit, proceeding or investigation is indemnifiable
pursuant to Section 6.7. Notwithstanding the right of the Surviving Corporation
to assume and control the defense of such claim, action, suit, proceeding or
investigation, such Indemnified Party shall have the right to employ separate
counsel and to participate in the defense of such claim, action, suit,
proceeding or investigation, and the Surviving Corporation shall bear the
reasonable fees, costs and expenses of such separate counsel and shall pay such
reasonable fees, costs and expenses promptly after receipt of an invoice from
such Indemnified Party if (i) the use of counsel chosen by the Surviving
Corporation to represent such Indemnified Party would present such counsel with
a conflict of interest, (ii) the Indemnifying Party shall not have employed
counsel reasonably acceptable to such Indemnified Party within a reasonable
period of time after notice of the relevant claim, action, suit, proceeding or
investigation or (iii) such Indemnified Party shall have been advised by counsel
that there may be legal defenses available to it which are different from or in
addition to those available to the Surviving Corporation.
(c) The Certificate of Incorporation and by-laws of the Surviving
Corporation shall contain provisions no less favorable with respect to
indemnification, advancement of expenses and exculpation of former or present
directors and officers than are presently set forth in the Certificate of
Incorporation and by-laws of the Company, which provisions shall not be amended,
repealed or otherwise modified for a period of six years from the Effective Time
in any manner that would adversely affect the rights thereunder of any such
individuals.
(d) Without limiting any additional rights that any employee may
have under any written Employment Agreement, Parent shall, or shall cause the
Surviving Corporation to maintain, at no expense to the beneficiaries, in effect
for six years from the Effective Time the current policies of the directors' and
officers' liability insurance maintained by the Company (provided that Parent or
the Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are not materially less
advantageous to any beneficiary thereof) with respect to acts or omissions
occurring at or prior to the Effective Time, provided that if the aggregate
annual premium for such insurance at any time during such period shall exceed
200% of the per annum rate of premium paid by the Company as of the date hereof
for such insurance, then Parent shall, or shall cause its subsidiaries to,
provide only such coverage as shall then be available at any annual premium
equal to 200% of such rate.
(e) Notwithstanding anything herein to the contrary, if any claim,
action, suit, proceeding or investigation (whether arising before, at or after
the Effective Time) is made against any Indemnified Party, on or prior to the
sixth anniversary of the Effective Time, the provisions of this Section 6.7
shall continue in effect until the final disposition of such claim, action,
suit, proceeding or investigation.
(f) This covenant is intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Parties and their respective heirs and
legal representatives. The indemnification provided for herein shall not be
deemed exclusive of any other rights to which an Indemnified Party is entitled,
whether pursuant to law, contract or otherwise.
(g) In the event that the Surviving Corporation or Parent or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii)
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transfers or conveys all or a majority of its properties and assets to any
person, then, and in each such case, proper provision shall be made so that the
successors and assigns of the Surviving Corporation or Parent, as the case may
be, shall succeed to the obligations set forth in this Section 6.7.
SECTION 6.8 Further Action; Reasonable Best Efforts. (a) Subject to
the terms and conditions of this Agreement, each party will use its reasonable
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 Offer, the Merger, the Subsequent Transaction and
the other transactions contemplated by this Agreement. In furtherance and not in
limitation of the foregoing, each party hereto agrees, and Parent agrees to use
its reasonable best efforts to cause any third party to the Subsequent
Transaction, (i) to make an appropriate filing of a Notification and Report Form
pursuant to the HSR Act and any other applicable Antitrust Law with respect to
the transactions contemplated hereby, including the Subsequent Transaction, as
promptly as practicable after the date hereof, (ii) to supply as promptly as
practicable any additional information and documentary material that may be
requested pursuant to the HSR Act and any other applicable Antitrust Law and
(iii) to use, subject to Section 6.8(b) and (c), its reasonable best efforts to
take all other actions necessary, proper or advisable to cause the expiration or
termination of the applicable waiting periods under the HSR Act and any other
applicable Antitrust Law as soon as practicable.
(b) Each of Parent, Purchaser and the Company shall, in connection
with the efforts referenced in Section 6.8(a) to obtain all requisite approvals
and authorizations for the transactions contemplated by this Agreement
including, but not limited to, the Offer, the Merger and the Subsequent
Transaction under the HSR Act or any other Antitrust Law, use its reasonable
best efforts to, and Parent shall use its reasonable best efforts to cause any
third party to the Subsequent Transaction to, subject to applicable law, (i)
cooperate in all respects with each of the other parties hereto and each of the
parties to the Subsequent Transaction in connection with any filing or
submission and in connection with any investigation or other inquiry, including
any proceeding initiated by a private party (including sharing copies of any
such filings or submissions reasonably in advance of the filing or submission
thereof); (ii) each of the other parties hereto and each of the parties to the
Subsequent Transaction informed of any communication received by such party
from, or given by such party to, the Federal Trade Commission (the "FTC"), the
Antitrust Division of the Department of Justice (the "DOJ") or any other U.S. or
foreign governmental authority ("Governmental Authority") and of any
communication received or given in connection with any proceeding by a private
party, in each case regarding any of the transactions contemplated hereby,
including the Subsequent Transaction; and (iii) permit each of the other parties
hereto and each of the parties to the Subsequent Transaction to review in
advance any communication intended to be given by it to, and consult with the
other parties in advance of any meeting or conference with, the FTC, the DOJ or
any such other Governmental Authority or, in connection with any proceeding by a
private party, with any other person, and to the extent permitted by the FTC,
the DOJ or such other applicable Governmental Authority or other person, give
the other parties the opportunity to attend and participate in such meetings and
conferences. For purposes of this Agreement, "Antitrust Law" means the Xxxxxxx
Act, as amended, the Xxxxxxx Act, as amended, the HSR Act, the Federal Trade
Commission Act, as amended, and all other federal, state and foreign, statutes,
rules, regulations, orders, decrees, administrative and judicial doctrines and
other laws that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization or restraint of trade or
lessening of competition through merger or acquisition.
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(c) In furtherance and not in limitation of the covenants of the
parties contained in Sections 6.8(a) and (b), if any objections are asserted
with respect to the transactions contemplated hereby, including the Subsequent
Transaction, under any Antitrust Law or if any suit is instituted (or threatened
to be instituted) by the FTC, the DOJ or any other applicable Governmental
Authority or any private party challenging any of the transactions contemplated
hereby, including the Subsequent Transaction, as violative of any Antitrust Law
or which would otherwise prohibit or materially impair or materially delay the
consummation of the transactions contemplated hereby, including the Subsequent
Transaction, each of Parent, Purchaser and the Company shall use its reasonable
best efforts to resolve any such objections or suits so as to permit
consummation of the transactions contemplated by this Agreement, including the
Subsequent Transaction, including, without limitation, in order to resolve such
objections or suits which, in any case if not resolved, could reasonably be
expected to prohibit or materially impair or delay the consummation of the
transactions contemplated hereby, including the Subsequent Transaction, beyond
the Outside Date, selling, holding separate or otherwise disposing of or
conducting its business in a manner which would resolve such objections or suits
or agreeing to sell, hold separate or otherwise dispose of or conduct its
business in a manner which would resolve such objections or suits or permitting
the sale, holding separate or other disposition of, any of its assets or the
assets of its subsidiaries or the conducting of its business in a manner which
would resolve such objections or suits, provided, however, that nothing in this
Agreement shall require Parent or Purchaser or any of Parent's subsidiaries to
agree to or take any action or limitation referred to in this paragraph (c)
which would reasonably be expected to have either (i) a Parent Material Adverse
Effect or (ii) a Material Adverse Effect on the Company. When used in connection
with Parent, Purchaser or any of Parent's other subsidiaries, the term "Parent
Material Adverse Effect" means any change or effect that would reasonably be
expected to be materially adverse to the business, financial condition, assets
or results of operations of Parent, Purchaser and any of Parent's other
affiliates taken as a whole.
(d) Subject to the obligations under Section 6.8(c), in the event
that any administrative or judicial action or proceeding is instituted (or
threatened to be instituted) by a Governmental Authority or private party
challenging any transaction contemplated by this Agreement, including the
Subsequent Transaction, each of Parent, Purchaser and the Company shall
cooperate in all respects with each other and any third party who is party to
the Subsequent Transaction to the extent any such action or proceeding
principally involves assets to be acquired by such third party in the Subsequent
Transaction and use its respective reasonable best efforts to defend, contest
and resist any such action or proceeding and to have vacated, lifted, reversed
or overturned any decree, judgment, injunction or other order, whether
temporary, preliminary or permanent, that is in effect and that prohibits,
prevents or restricts consummation of the transactions contemplated by this
Agreement.
(e) Without limiting the covenants contained in Section 6.8(a), to
the extent reasonably requested by Parent, the Company will use its reasonable
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 to facilitate the Subsequent
Transaction; provided that no action or conduct that causes the Company or its
subsidiaries to incur meaningful costs or liabilities will be required under
this Section 6.8(e).
(f) Parent shall not agree to any modification, amendment or waiver
of any provision of any Subsequent Transaction Agreement in any manner adverse
to the Company. Further, Parent agrees to assert and defend consistent with the
advice of counsel all rights, and
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perform and comply with all obligations, it may have under any Subsequent
Transaction Agreement with respect to compliance with any Antitrust Law.
(g) Notwithstanding the foregoing or any other provision of this
Agreement, nothing in this Section 6.8 shall limit a party's right to terminate
this Agreement pursuant to Section 8.1(b) so long as such party has up to then
complied in all material respects with its obligations under this Section 6.8.
SECTION 6.9 Third Party Standstill Agreements. During the period
from the date of this Agreement until the Effective Time or earlier termination
of this Agreement, the Company shall not terminate, amend, modify or waive any
provision of any confidentiality or standstill agreement relating to the making
of an Acquisition Proposal to which it or any of its subsidiaries is a party
(other than any involving Parent or its subsidiaries), unless, in response to a
Person who on an unsolicited basis has given a good faith indication of interest
in making an Acquisition Proposal, the Company's Board of Directors shall have
determined in good faith, after consultation with outside counsel to the
Company, that such action is necessary for the Board of Directors to comply with
its fiduciary duties under applicable law (in which event such termination,
amendment, modification or waiver shall be made only to the extent such
termination, amendment, modification or waiver enables an Acquisition Proposal
to be submitted to the Company and thereafter pursued and effected). Subject to
the immediately preceding sentence, during such period, the Company agrees to
use reasonable efforts to enforce, to the fullest extent permitted under
applicable law, the provisions of any such agreements, including seeking
injunctions to prevent any breaches of such agreements and to enforce
specifically the terms and provisions thereof in any court of the United States
or any state thereof having jurisdiction.
SECTION 6.10 Notification of Certain Matters. The Company shall give
prompt notice to Parent, and Parent and Purchaser shall give prompt notice to
the Company, of the occurrence, or failure to occur, of any event, which
occurrence or failure to occur would be likely to cause any representation or
warranty contained in this Agreement to be untrue in any material respect at any
time from the date of this Agreement to the Effective Time, in either case which
would reasonably be expected to cause any of the conditions set forth in
paragraph (c) of Annex A hereto to fail to be satisfied. Each of the Company and
Parent shall give prompt notice to the other party of any notice or other
communication from any third party alleging that the consent of such third party
is or may be required in connection with the transactions contemplated by this
Agreement. This Section 6.10 shall not constitute a covenant or agreement for
the purpose of Section 8.1(e)(i) or paragraph (d) of Annex A hereto.
SECTION 6.11 Integration Committee. Promptly after the date hereof,
subject to applicable law, Parent will establish an Integration Committee
chaired by an officer of Parent which will be composed of such employees of
Parent and the Company as selected by Parent (subject to the agreement of the
relevant employee) and such committee will be responsible for proposing
alternatives and recommendations to Parent regarding the matters and issues
arising in connection with the integration of the two companies and their
respective businesses, assets and organizations.
SECTION 6.12 Public Announcements. Each of the Company, Parent and
Purchaser agrees that no public release or announcement concerning the
transactions contemplated hereby shall be issued by any party without the prior
written consent of the Company and Parent (which consent shall not be
unreasonably withheld or delayed), except as
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such release or announcement may be required by law or the rules or regulations
of any applicable United States or foreign securities exchange, in which case
the party required to make the release or announcement shall use its reasonable
best efforts to allow each other party reasonable time to comment on such
release or announcement in advance of such issuance, it being understood that
the final form and content of any such release or announcement, to the extent so
required, shall be at the final discretion of the disclosing party.
ARTICLE VII.
CONDITIONS OF MERGER
SECTION 7.1 Conditions to Obligation of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall be
subject to the satisfaction or waiver at or prior to the Effective Time of the
following conditions:
(a) if required by the DGCL, this Agreement shall have been adopted
by the affirmative vote of the stockholders of the Company by the requisite vote
in accordance with the Company's Restated Certificate and the DGCL;
(b) no statute, rule, regulation, executive order, decree, ruling,
injunction or other permanent order shall have been enacted, entered,
promulgated or enforced by any court of competent jurisdiction or other
governmental body located or having jurisdiction within the United States, any
foreign state, county, city or other provincial subdivisions which prohibits,
restrains or enjoins the consummation of the Merger; provided however, that
prior to invoking this condition each party agrees to comply with Section 6.8;
and
(c) Purchaser shall have purchased Shares pursuant to the Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1 Termination. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, notwithstanding approval thereof by the stockholders of the Company:
(a) prior to the purchase of any Shares pursuant to the Offer, by
mutual written consent of Parent, Purchaser and the Company;
(b) by Parent or the Company if any court of competent jurisdiction
or other governmental body located or having jurisdiction within the United
States, any foreign country or any domestic or foreign state, county, city or
other provincial subdivisions (other than any such court or governmental body
having jurisdiction outside the United States in a territory in which no
significant assets, properties or rights of either the Company and its
subsidiaries or Parent and its affiliates are located and whose statutes, rules,
regulations, executive orders, decrees, rulings, injunctions or other orders
would not be reasonably expected to have a Material Adverse Effect or Parent
Material Adverse Effect ("Non-Material Jurisdictions")) shall have issued a
final order, decree or ruling or taken any other final action restraining,
enjoining or
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otherwise prohibiting the Offer or the Merger and such order, decree, ruling or
other action is or shall have become final and nonappealable;
(c) by Parent if, due to an occurrence or circumstance which
resulted in a failure to satisfy any of the Offer Conditions, Purchaser shall
have (i) not purchased Shares pursuant to the Offer and the Offer shall have
expired or been terminated or (ii) failed to pay for Shares pursuant to the
Offer on or prior to the Outside Date; provided that the right to terminate this
Agreement pursuant to this Section 8.1(c) shall not be available to Parent if
the failure by Parent or Purchaser to perform any of its obligations under this
Agreement (including Purchaser's failure to purchase or pay for Shares pursuant
to the terms and conditions of the Offer) results in the failure of the Offer to
be consummated;
(d) by the Company (i) if (A) Purchaser fails to commence the Offer
as provided in Section 1.1 or (B) there shall have been a breach of any
representation, warranty, covenant or agreement on the part of Parent or
Purchaser contained in this Agreement which materially adversely affects
Parent's or Purchaser's ability to consummate (or materially delays commencement
or consummation of) the Offer or the Merger, and (x) in the case of any such
representation or warranty, there is no reasonable possibility that such breach
can be cured prior to the Outside Date and (y) in the case of any such covenant
or agreement, such breach cannot be and has not been cured prior to the earlier
of (I) 10 business days following notice of such breach and (II) the expiration
date of the Offer as it may be extended pursuant hereto; provided that the
Company shall not have the right to terminate this Agreement pursuant to this
Section 8.1(d)(i) if the Company is then in material breach of any of its
covenants or agreements contained in this Agreement, (ii) if (A) Purchaser fails
to pay for Shares pursuant to the Offer on or prior to the Outside Date or (B)
Purchaser shall have not purchased Shares pursuant to the Offer and the Offer
shall have expired or been terminated; provided that the right to terminate this
Agreement pursuant to this Section 8.1(d)(ii) shall not be available to the
Company if the failure by the Company to perform any of its obligations under
this Agreement results in the failure of the Offer to be consummated, or (iii)
prior to the purchase of any Shares pursuant to the Offer, in accordance with,
and subject to the terms and conditions of, Section 6.5(b); or
(e) by Parent prior to the purchase of Shares pursuant to the Offer
if (i) there shall have been a breach of any representation, warranty, covenant
or agreement on the part of the Company contained in this Agreement such that
the conditions set forth in clause (c) or clause (d) of Annex A would not be
satisfied and (x) in the case of any such representation or warranty, there is
no reasonable possibility that such breach can be cured prior to the Outside
Date and (y) in the case of any such covenant or agreement, such breach cannot
be or has not been cured prior to the earlier of (A) 10 business days following
notice of such breach and (B) the expiration date of the Offer as it may be
extended pursuant hereto; provided that Parent shall not have the right to
terminate this Agreement pursuant to this Section 8.1(e)(i) if Parent or
Purchaser is then in material breach of any of its covenants or agreements
contained in this Agreement, or (ii) in the event an Adverse Recommendation
Change has occurred in accordance with Section 6.5(b).
SECTION 8.2 Effect of Termination. (a) In the event of the
termination of this Agreement pursuant to Section 8.1, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto, except as set forth in Section 6.4(c), this Section 8.2, Section 8.3 and
Article 9; provided, however, that nothing herein shall relieve any party from
liability for any breach hereof.
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(b) In the event that this Agreement is terminated by the Company
pursuant to Section 8.1(d)(iii) or by Parent pursuant to Section 8.1(e)(ii),
then the Company shall pay $180,000,000 to Parent (the "Termination Fee"), at or
prior to the time of termination in the case of a termination pursuant to
Section 8.1(d)(iii) or within two business days after such termination in the
case of a termination pursuant to Section 8.1(e)(ii), payable by wire transfer
of same day funds. In the event that this Agreement is terminated by Parent
pursuant to Section 8.1(c) (solely due to the failure to satisfy the Minimum
Condition or the conditions set forth in paragraphs (c) or (d) of Annex A) and
(x) after the date of this Agreement and prior to such termination, there shall
have been made and publicly announced or publicly communicated to the Company's
shareholders an Acquisition Proposal (which shall not have been withdrawn in
good faith) and (y) concurrently with or within twelve (12) months of the date
of such termination the Company enters into a definitive agreement with respect
to an Acquisition Proposal (which is subsequently consummated) or an Acquisition
Proposal is consummated, then the Company shall pay to Parent the Termination
Fee within two business days of the consummation of the Acquisition Proposal
(provided that, for purposes of this sentence, the term Acquisition Proposal
shall have the meaning assigned to such term in Section 6.5, except that the
reference to "more than 20%" in the definition of "Acquisition Proposal" shall
be deemed to be a reference to "a majority").
SECTION 8.3 Expenses. Except as otherwise specifically provided
herein, each party shall bear its own expenses in connection with this Agreement
and the transactions contemplated hereby.
SECTION 8.4 Amendment. Subject to Section 6.3(c), this Agreement may
be amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after adoption of this Agreement by the stockholders of
the Company, no amendment may be made which by law requires the further approval
of the stockholders of the Company without such further approval. This Agreement
may not be amended except by an instrument in writing signed by the parties
hereto.
SECTION 8.5 Waiver. Subject to Section 6.3(c), at any time prior to
the Effective Time, any party hereto may (i) extend the time for the performance
of any of the obligations or other acts of the other parties hereto, (ii) waive
any inaccuracies in the representations and warranties of the other parties
contained herein or in any document delivered pursuant hereto and (iii) subject
to the requirements of applicable law, waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver shall be
valid if set forth in an instrument in writing signed by the party or parties to
be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.1, as the case may be, except that the agreements set
forth in Article II, Section 6.6, Section 6.7, Section 6.12 and Article IX shall
survive the Effective Time and those set forth in Section 6.4(b), Section 6.12,
Section 8.2, Section 8.3 and Article IX shall survive termination of this
Agreement.
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SECTION 9.2 Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
facsimile or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified by like notice):
if to Parent or Purchaser:
Xxxx Elsevier Inc.
000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxxxxxxx, Esq.
Facsimile: (000) 000-0000
with an additional copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, Esq.
Facsimile: 000-000-0000
if to the Company:
Harcourt General, Inc.
00 Xxxxxxxx Xxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxxxx, Esq.
Facsimile: (000) 000-0000
with an additional copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
Facsimile: 000-000-0000
SECTION 9.3 Certain Definitions. For purposes of this Agreement, the
term:
(a) "affiliate" of a person means a person that directly or
indirectly, through one or more intermediaries, controls, is controlled
by, or is under common control with, the first mentioned person; for the
avoidance of confusion it is hereby stipulated that the affiliates of
Parent consist of Xxxx International P.L.C., an English public limited
company ("Xxxx"), Elsevier NV, a Netherlands public limited company
("Elsevier") and the affiliates of either Xxxx or Elsevier or of Xxxx and
Elsevier jointly.
(b) "beneficial owner" with respect to any Shares means a person who
shall be deemed to be the beneficial owner of such Shares (i) which such
person or any of its affiliates or associates (as defined in Rule 12b-2
under the Exchange Act) beneficially
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owns, directly or indirectly, (ii) which such person or any of its
affiliates or associates (as such term is defined in Rule 12b-2 of the
Exchange Act) has, directly or indirectly, (A) the right to acquire
(whether such right is exercisable immediately or subject only to the
passage of time), pursuant to any agreement, arrangement or understanding
or upon the exercise of consideration rights, exchange rights, warrants or
options, or otherwise, or (B) the right to vote pursuant to any agreement,
arrangement or understanding or (iii) which are beneficially owned,
directly or indirectly, by any other persons with whom such person or any
of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing
of any Shares (and the term "beneficially owned" shall have a
corresponding meaning);
(c) "business day" means any day on which the principal offices of
the SEC in Washington, D.C. are open to accept filings or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in Amsterdam, The Netherlands; London,
England; New York, New York; or Boston, Massachusetts;
(d) "control" (including the terms "controlled", "controlled by" and
"under common control with") means the possession, directly or indirectly
or as trustee or executor, of the power to direct or cause the direction
of the management policies of a person, whether through the ownership of
stock, as trustee or executor, by contract or credit arrangement or
otherwise;
(e) "generally accepted accounting principles" shall mean the
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board, in each case,
as applicable, as of the time of the relevant financial statements
referred to herein;
(f) "knowledge" (i) with respect to the Company means the actual
knowledge of any of the persons set forth in Section 9.3(f) of the
Disclosure Schedule under the heading "Company" and (ii) with respect to
Parent or Purchaser means the actual knowledge of any of the persons set
forth in Section 9.3(f) of the Disclosure Schedule under the headings
"Parent" or "Purchaser".
(g) "person" means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, other
entity or group (as defined in Section 13(d)(3) of the Exchange Act); and
(h) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means any corporation,
partnership, joint venture or other legal entity of which the Company, the
Surviving Corporation, Parent or such other person, as the case may be
(either alone or through or together with any other subsidiary), owns,
directly or indirectly, more than 50% of the stock or other equity
interests the holder of which is generally entitled to vote for the
election of the board of directors or other governing body of such
corporation or other legal entity.
SECTION 9.4 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so
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long as the economic or legal substance of the transactions contemplated hereby
is not affected in any manner adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.
SECTION 9.5 Entire Agreement; Assignment. This Agreement, the
Stockholder Agreement and the confidentiality agreement referred to in Section
6.4 constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and undertakings, both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof. This Agreement shall not be assignable without the consent of the
other party hereto, except that Parent may transfer or assign to one or more
affiliates its rights under this Agreement, but no such transfer or assignment
will relieve Parent of its obligations hereunder.
SECTION 9.6 Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person any rights, benefits or remedies of any nature whatsoever under or by
reason of this Agreement, other than with respect to the provisions of Section
6.7 which shall inure to the benefit of the persons or entities benefiting
therefrom who are intended to be third-party beneficiaries thereof.
SECTION 9.7 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware.
SECTION 9.8 Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.9 Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
SECTION 9.10 Specific Performance; Jurisdiction. The parties agree
that irreparable damage would occur in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached. It is accordingly agreed that the parties shall be
entitled to an injunction or injunctions to prevent breaches of this Agreement
and to enforce specifically the terms and provisions of this Agreement in any
court of the United States located in the State of Delaware or in any Delaware
state court, this being in addition to any other remedy to which such party is
entitled at law or in equity. In addition, solely for the purpose of the
transactions contemplated by this Agreement, each of the parties hereto (i)
consents to submit itself to the personal jurisdiction of any Federal court
located in the State of Delaware or any Delaware state court in the event any
dispute arises out of this Agreement or any of the transactions contemplated by
this Agreement, (ii) agrees that it will not attempt to deny or defeat such
personal jurisdiction by motion or other request for leave from any such court,
(iii) agrees that it will not bring any action relating to this Agreement or any
of the transactions contemplated by this Agreement in any court other than a
Federal or state court sitting in the State of Delaware and (iv) consents to
service being made through the
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notice procedures set forth in Section 9.2. Solely for the purpose of the
transactions contemplated by this Agreement, each of Parent and Purchaser hereto
irrevocably designates and appoints The Corporation Trust Company at Corporation
Trust Center, 0000 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 as its duly
appointed agent for service of process in the State of Delaware, for any suit or
proceeding in connection with this Agreement or the transactions contemplated
hereby.
SECTION 9.11 Performance. Xxxx Elsevier PLC agrees to take all
action necessary to cause Parent, Purchaser or the Surviving Corporation, as
applicable, to perform all of its respective agreements, covenants and
obligations under this Agreement and whenever this Agreement requires Purchaser
to take any action, such requirement shall be deemed to include an undertaking
of Parent and Xxxx Elsevier PLC to cause Purchaser to take such action.
SECTION 9.12 Interpretation. When reference is made in this
Agreement to a Section, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents and headings contained in this
Agreement are for convenience of reference purposes only and shall not affect in
any way the meaning or interpretation of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." This Agreement shall be
construed without regard to any presumption or rule requiring construction or
interpretation against the party drafting or causing any instrument to be
drafted.
SECTION 9.13 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
51
45
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused
this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
XXXX ELSEVIER INC.
By: /s/ Xxxxx X. Xxxxxxxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxxxxxxx
Title: Senior Vice President
REH MERGERSUB INC.
By: /s/ Xxxxx X. Xxxxxxxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxxxxxxx
Title: Vice President
HARCOURT GENERAL, INC.
By: /s/ Xxxx X. Xxxx
------------------------------------------
Name: Xxxx X. Xxxx
Title: SR VP & Chief Financial Officer
For the purpose of Section 9.11 only:
XXXX ELSEVIER PLC
By: /s/ Xxxxx X. Xxxxxxxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxxxxxxx
Title: Attorney-in-Fact
52
ANNEX A
Offer Conditions
The capitalized terms used in this Annex A have the meanings set
forth in the Agreement to which this Annex A is attached, except that the term
"Merger Agreement" shall be deemed to refer to the Agreement to which this Annex
A is attached.
Notwithstanding any other provision of the Offer, but subject to the
terms and conditions of the Merger Agreement, Purchaser shall not be required to
accept for payment or, subject to any applicable rules and regulations of the
SEC, including Rule 14e-1(c) under the Exchange Act (relating to Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for any Shares tendered pursuant to the Offer, and
may postpone the acceptance for payment or, subject to the restriction referred
to above, payment for any Shares tendered pursuant to the Offer (whether or not
any Shares have theretofore been purchased or paid for) and may terminate or
amend the Offer in accordance with the Merger Agreement if, (i) at the
expiration of the Offer as it may be extended pursuant to the provisions of the
Merger Agreement, a number of shares of Company Common Stock which, together
with any Shares owned, directly or indirectly, by Parent or Purchaser, or any
subsidiary or controlled affiliate thereof, representing (determined on a
fully-diluted basis), on the date of purchase, at least a majority in voting
power of the Company Common Stock shall not have been validly tendered and not
properly withdrawn prior to the expiration of the Offer (the "Minimum
Condition") or (ii) at any time on or after the date of the Merger Agreement and
at or prior to the acceptance for payment of Shares, any of the following
conditions occurs or has occurred:
(a) there shall have been entered any order, preliminary or
permanent injunction, decree, judgment or ruling in any action or
proceeding before any court of competent jurisdiction or governmental,
administrative or regulatory authority or agency, or any statute, rule or
regulation, enacted, entered, enforced, promulgated, amended or issued
that is applicable to Parent, Purchaser, the Company, or any third party
who is party to the Subsequent Transaction or any subsidiary of Parent,
such third party, or the Company or the Offer or the Merger, by any
legislative body, court, government or governmental, administrative or
regulatory authority or agency which (I) makes illegal or otherwise
restrains or prohibits the making of the Offer in accordance with the
Merger Agreement or the consummation of the Offer or the Merger, (II)
prohibits or limits in any material respect the ownership or operation by
(A) the Company, Parent, or any of their respective affiliates of a
material portion of the business or assets of the Company and its
subsidiaries, taken as a whole, or (B) any third party who is party to the
Subsequent Transaction or any of its affiliates of a material portion of
the business or assets to be acquired by such third party in the
Subsequent Transaction; or requires any such person to dispose of or hold
separate any material portion of the business or assets of the Company and
its subsidiaries, taken as a whole, or Parent and its subsidiaries, taken
as a whole, as result of the Offer, to the extent any such prohibition,
limitation or requirement would reasonably be expected to have either a
Material Adverse Effect on the Company or a Parent Material Adverse
Effect, (III) prohibits the ownership or operation of a portion of the
business of the Company or its subsidiaries, taken as a whole, by Parent
or Purchaser, to the extent any such prohibition would reasonably be
expected to have either a Material Adverse Effect on the Company or a
Parent Material Adverse Effect or (IV) other than in Non-Material
Jurisdictions, imposes material limitations on the ability of Parent or
Purchaser to acquire or hold or to exercise full rights of ownership of
the
53
Shares, including voting rights with respect to all matters properly
presented to stockholders of the Company;
(b) there shall have occurred (I) any general suspension of trading
in, or limitation on prices for, securities on the New York Stock Exchange
(other than suspensions or limitations triggered by price fluctuations on
a trading day) for a period in excess of three hours (excluding
suspensions or limitations resulting solely from physical damage or
interference with such exchange not related to market conditions) or (II)
a declaration of a banking moratorium in the United States or any
suspension of payments in respect of banks in the United States or Europe;
(c) (i) any representation or warranty of the Company contained in
the Agreement that is qualified as to Material Adverse Effect shall not be
true and correct; (ii) any representation or warranty of the Company in
the Agreement that is not so qualified shall not be true and correct in
all material respects, in each case as of the date of consummation of the
Offer as though made on or as of such date (other than representations and
warranties that by their terms address matters only as of another
specified date, which shall be true and correct only as of another
specified date), except where the failure of such representations and
warranties referred to in clause (ii) to be so true and correct,
individually or in the aggregate, has not had and would not reasonably be
expected to have a Material Adverse Effect on the Company; or (iii) except
to the extent disclosed in the Disclosure Schedules or the Filed SEC
Reports, since the date of the Merger Agreement, any change or event shall
have occurred that has had or is reasonably likely to have a Material
Adverse Effect on the Company;
(d) the Company shall have failed to perform in any material respect
any material obligation or to comply in any material respect with any
material agreement or material covenant of the Company to be performed or
complied with by it under the Merger Agreement;
(e) the Merger Agreement shall have been terminated in accordance
with its terms or the Offer shall have been terminated with the consent of
the Company;
(f) any (i) approvals, clearances or waiting periods under the HSR
Act applicable to the purchase of Shares pursuant to the Offer, the Merger
or the Subsequent Transaction shall not have been obtained, expired or
been terminated or (ii) any other requisite or advisable approvals,
clearances or waiting periods under any other material Antitrust Law
applicable to the purchase of Shares pursuant to the Offer, the Merger or
the Subsequent Transaction shall not have been obtained, expired or been
terminated; or
(g) all shares of Class B Stock shall not have been converted into
shares of Company Common Stock in accordance with the terms of the
Stockholder Agreement.
which, in the reasonable judgment of Purchaser with respect to each and every
matter referred to above and regardless of the circumstances giving rise to any
such condition, makes it inadvisable to proceed with the Offer or with such
acceptance for payment of or payment for Shares or to proceed with the Merger.
A-2
54
The foregoing conditions are for the sole benefit of Purchaser and
may be asserted by Purchaser regardless of the circumstances giving rise to any
such condition or may be waived by Purchaser in whole or in part at any time and
from time to time in its sole discretion (subject to the terms of the Merger
Agreement). The failure by Purchaser at any time to exercise any of the
foregoing rights shall not be deemed a waiver of any such right, the waiver of
any such right with respect to particular facts and other 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.
A-3
