1
CONFORMED COPY
__________________________________________________
AGREEMENT AND PLAN OF MERGER
by and among
SOFTKEY INTERNATIONAL INC.,
SCHOOLCO INC.
and
MINNESOTA EDUCATIONAL COMPUTING CORPORATION (MECC)
Dated as of October 30, 1995
__________________________________________________
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TABLE OF CONTENTS
ARTICLE I
THE MERGER
Section 1.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.2 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 1.3 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
THE SURVIVING CORPORATION
Section 2.1 Articles of Incorporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.2 By-Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.3 Directors and Officers of
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
CONVERSION OF SHARES
Section 3.1 Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 3.2 Exchange of Company Common
Stock; Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Section 3.3 Dividends; Escheat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Section 3.4 No Fractional Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.5 Closing of Company Transfer
Books . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 3.6 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 4.1 Corporate Organization;
Related Entities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 4.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.3 Authority Relative to This
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4.4 Consents and Approvals;
No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 4.5 Reports and Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.6 Absence of Certain Changes
or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3
Section 4.8 Absence of Undisclosed
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.9 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.11 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.12 Stockholder Rights Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.13 Information in Disclosure Documents
and Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.14 Employee Benefit Plans; ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.15 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.16 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.17 MBCA Sections 302A.671
and 302A.673 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.18 Affiliate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.19 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
Section 5.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 5.2 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 5.3 Authority Relative to This
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.4 Consents and Approvals;
No Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 5.5 Reports and Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 5.6 Absence of Certain Changes or
Events; Material Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.7 Absence of Undisclosed
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.8 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.9 Information in Disclosure Documents
and Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 5.10 Vote Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 5.11 Opinion of Financial Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
Section 6.1 Conduct of Business by the Company
Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 6.2 Conduct of Business by Parent
Pending the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.3 Conduct of Business of Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
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ARTICLE VII
ADDITIONAL AGREEMENTS
Section 7.1 Access and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 7.2 No Other Negotiations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.3 Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 7.4 Proxy Statement-Prospectus;
Stockholder Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 7.5 Compliance with the Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 7.6 Best Efforts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.7 Voting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.8 Company Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.9 Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.10 Directors' and Officers'
Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.11 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 7.12 Listing Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 7.13 Supplemental Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 7.14 Letters of Accountants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 7.15 Conveyance Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 7.16 Non-solicitation of Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 7.17 Exchange Act Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
Section 8.1 Conditions to Each Party's
Obligation to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 8.2 Conditions to Obligations of Parent
and Sub to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 8.3 Conditions to Obligation of the
Company to Effect the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE IX
TERMINATION
Section 9.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 9.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE X
GENERAL PROVISIONS
Section 10.1 Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 10.2 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 10.3 Survivability; Investigations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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Section 10.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 10.5 Descriptive Headings; Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.6 Entire Agreement; Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 10.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.8 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 10.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Exhibits
A Voting Agreement
B Form of Affiliate Letter
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Glossary of Defined Terms
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Term Section
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Acquisition Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9.2(b)
Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5(a)
Affiliate Letters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5(b)
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Xxxxx & Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16
Alternative Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2(a)
Bear Xxxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11
Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2(b)
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.3
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Company Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1(d)
Company Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.14(a)
Company SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5
Company Stock Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(d)
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
Contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
DGCL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(a)
Effective Time . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.2
ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.14(a)
ERISA Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.14(a)
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
Exchange Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.2(a)
Exchange Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(a)
GAAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5
Xxxxxxx, Carton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.3(c)
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11
Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
MBCA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
NASD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
New Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.8
NNM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1
North American . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.7
Parent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Parent Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(a)
Parent Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1
Parent SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5
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Parent Stock Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2(a)
Parent Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.1(b)
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.5
Proxy Statement-Prospectus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.13
Registration Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.13
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.5
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4
Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10(b)(iv)
Skadden, Arps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8.2(d)
Stockholder Rights Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.12
Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
Sub Common Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(c)
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.1(b)
Superior Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.2(a)
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.1
Tax(es) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10(c)
Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10(b)(i)
Voting Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Preamble
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of October 30, 1995
(this "AGREEMENT"), by and among SoftKey International Inc., a Delaware
corporation ("PARENT"), SchoolCo Inc., a Minnesota corporation and a wholly
owned subsidiary of Parent ("SUB"), and Minnesota Educational Computing
Corporation (MECC), a Minnesota corporation (the "COMPANY").
WHEREAS, the Boards of Directors of Parent and Sub and the
Company deem it advisable and in the best interests of their respective
stockholders that Parent acquire the Company pursuant to the terms and
conditions of this Agreement, and, in furtherance of such acquisition, such
Boards of Directors (and Parent as the sole stockholder of Sub) have approved
this Agreement and the merger of Sub with and into the Company in accordance
with the terms of this Agreement and, in the case of Parent, the General
Corporation Law of the State of Delaware (the "DGCL") and, in the case of Sub
and the Company, the Minnesota Business Corporation Act (the "MBCA"); and
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to Parent's willingness to enter
into this Agreement, a holder of shares of the Common Stock, par value $.01 per
share (the "COMPANY COMMON STOCK"), of the Company, is entering into an
agreement with Parent in the form attached hereto as Exhibit A (the "VOTING
AGREEMENT") to vote certain shares of Company Common Stock according to the
terms set forth in the Voting Agreement; and
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "CODE");
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein, the parties hereto agree as follows:
9
ARTICLE ARTICLE I
THE MERGER
----------
Section 1.1 THE MERGER. In accordance with the provisions
of this Agreement and the MBCA, at the Effective Time (as defined
in Section 1.2), Sub shall be merged with and into the Company (the "MERGER"),
the separate existence of Sub shall thereupon cease, and the Company shall be
the surviving corporation in the Merger (sometimes hereinafter called the
"SURVIVING CORPORATION") and shall continue its corporate existence
under the laws of the State of Minnesota. The Merger shall have the effects
set forth in Section 302A.641 of the MBCA. At Parent's option, the Merger may
be structured so that (i) any direct subsidiary of Parent other than Sub is
merged with and into the Company or (ii) the Company is merged with and into
Parent or any direct subsidiary of Parent. In the event of such an election by
Parent, the parties hereto agree to execute an appropriate amendment to this
Agreement in order to reflect such election.
Section 1.2 EFFECTIVE TIME OF THE MERGER. The Merger
shall become effective at the time of filing of properly executed Articles of
Merger in the form required by and executed in accordance with the provisions of
Section 302A.615 of the MBCA. The parties hereto shall cause such filing to be
made as soon as practicable after the Closing (as defined in Section 1.3). When
used in this Agreement, the term "EFFECTIVE TIME" shall mean the date and time
at which the Merger shall become effective.
Section 1.3 CLOSING. The closing of the transactions
contemplated by this Agreement (the "CLOSING") shall take place at the offices
of Skadden, Arps, Slate, Xxxxxxx & Xxxx, Xxx Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx, at 10:00 a.m., local time, on the day on which all of the
conditions set forth in Article VIII are satisfied or waived or on such other
date and at such other time and place as Parent and the Company shall agree
(such date, the "CLOSING DATE").
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ARTICLE ARTICLE II
THE SURVIVING CORPORATION
-------------------------
Section 2.1 ARTICLES OF INCORPORATION. The Articles of
Incorporation of Sub in effect at the Effective Time shall be the Articles of
Incorporation of the Surviving Corporation until amended in accordance with
applicable law, except that the name of the Surviving Corporation shall be
"Minnesota Educational Computing Corporation (MECC)."
Section 2.2 BY-LAWS. The By-Laws of Sub as in effect at
the Effective Time shall be the By-Laws of the Surviving Corporation until
amended in accordance with applicable law.
Section 2.3 DIRECTORS AND OFFICERS OF SURVIVING CORPORATION.
(a) The directors of Sub at the Effective Time
shall be the initial directors of the Surviving Corporation and shall hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualified in the manner provided in the Articles of
Incorporation or By-Laws of the Surviving Corporation or as otherwise provided
by law.
(b) The officers of the Company at the Effective
Time shall be the initial officers of the Surviving Corporation and shall hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualified in the manner provided in the Articles of
Incorporation or By-Laws of the Surviving Corporation or as otherwise provided
by law.
ARTICLE ARTICLE III
CONVERSION OF SHARES
--------------------
Section 3.1 EXCHANGE RATIO. At the Effective Time, by
virtue of the Merger and without any action on the part of the holder thereof:
(a) Each share of Company Common Stock issued and
outstanding immediately prior to the Effective
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Time (other than (i) shares to be cancelled in accordance with Section 3.1(b)
and (ii) shares as to which dissenters rights shall have been duly demanded
pursuant to Sections 302A.471 and 302A.473 of the MBCA ("DISSENTING SHARES"))
shall be converted into the right to receive a number of shares of Common
Stock, par value $.01 per share (the "PARENT COMMON STOCK"), of Parent, equal
to the result obtained by dividing $40 by the volume weighted average of the
closing prices for the Parent Common Stock on the Nasdaq National Market
("NNM") for the twenty full trading days ending on the third full trading day
prior to the Effective Time (the "EXCHANGE RATIO"), payable upon the surrender
of the certificate formerly representing such share of Company Common Stock in
accordance with Section 3.2 hereof; PROVIDED, HOWEVER, that in no event shall
the Exchange Ratio be greater than 1.14286 or less than .88889;
(b) All shares of Company Common Stock that, in
either case, are (i) held by the Company as treasury shares or (ii) owned by
Parent or any wholly-owned Subsidiary of Parent, shall be cancelled and
retired and cease to exist, and no securities of Parent or other consideration
shall be delivered in exchange therefor. As used in this Agreement, the term
"SUBSIDIARY" means, with respect to any party, any corporation or other
organization, whether incorporated or unincorporated, of which (x) such party or
any other Subsidiary of such party is a general partner (excluding partnerships,
the general partnership interests of which held by such party or any Subsidiary
of such party do not have a majority of the voting interest in such partnership)
or (y) at least a majority of the securities or other interests having by their
terms ordinary voting power to elect a majority of the board of directors or
others performing similar functions with respect to such corporation or other
organization is directly or indirectly owned or controlled by such party and/or
one or more of its Subsidiaries.
(c) The share of Common Stock, no par value per
share ("SUB COMMON STOCK"), of Sub issued and outstanding immediately prior to
the Effective Time shall be converted into and become one fully paid and
nonassessable share of Common Stock, par value $.01 per share, of the Surviving
Corporation.
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(d) Each outstanding option to purchase Company
Common Stock (each, a "COMPANY STOCK OPTION") shall be assumed by Parent as
more specifically provided in Section 7.8.
(e) The holders of Dissenting Shares, if any, shall
be entitled to payment by the Surviving Corporation (or at the election of
Parent, by Parent or an affiliate of Parent) of the fair value of such shares
in cash to the extent permitted by and in accordance with the provisions of
Sections 302A.471 and 302A.473 of the MBCA; PROVIDED, HOWEVER, that (i) if any
holder of Dissenting Shares shall deliver a written withdrawal of such holder's
demand for fair value of such shares, or (ii) if any holder fails to establish
such holder's entitlement to rights to payment as provided in such Section
302A.473, such holder or holders (as the case may be) shall forfeit such right
to payment for such shares and such shares shall thereupon be deemed to have
been converted into the right to receive shares of Parent Common Stock pursuant
to Section 3.1(a) as of the Effective Time. Unless Parent shall have made the
election referred to in the first sentence of this Section 3.2(e), the Surviving
Corporation shall be solely responsible for, and shall pay out of its own funds,
any amounts which become due and payable to holders of Dissenting Shares, and
such amounts shall not be paid directly or indirectly by Parent. The Company
shall notify Parent of each demand for dissenters' rights under the MBCA
promptly after such demand is received by the Company.
Section 3.2 EXCHANGE OF COMPANY COMMON STOCK; PROCEDURES.
(a) Prior to the Closing Date, Parent shall
designate a bank or trust company reasonably acceptable to the Company to act as
Exchange Agent hereunder (the "EXCHANGE AGENT"). As soon as practicable
after the Effective Time, Parent shall deposit with or for the account of the
Exchange Agent stock certificates representing the number of shares of Parent
Common Stock issuable pursuant to Section 3.1 in exchange for outstanding shares
of Company Common Stock, which shares of Parent Common Stock shall be deemed to
have been issued at the Effective Time.
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(b) As soon as practicable after the Effective Time,
Parent shall cause the Exchange Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "CERTIFICATES") that
were converted pursuant to Section 3.1 into the right to receive shares of
Parent Common Stock (i) a form of letter of transmittal specifying 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 Exchange Agent and (ii)
instructions for use in surrendering such Certificates in exchange for
certificates representing shares of Parent Common Stock. Upon surrender of a
Certificate for cancellation to the Exchange Agent, together with such letter of
transmittal, duly executed, the holder of such Certificate shall be entitled to
receive in exchange therefor (x) a certificate representing that number of whole
shares of Parent Common Stock which such holder has the right to receive
pursuant to the provisions of this Article III, (y) cash in lieu of any
fractional shares of Parent Common Stock to which such holder is entitled
pursuant to Section 3.4, after giving effect to any required tax withholdings,
and the Certificate so surrendered shall forthwith be cancelled and (z) any
dividends or distributions to which such holder may be entitled pursuant to
Section 3.3. In the event of a transfer of ownership of Company Common Stock
which is not registered in the transfer records of the Company, a certificate
representing the proper number of shares of Parent Common Stock may be issued to
a transferee if the Certificate representing such Company Common Stock is
presented to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer, and by evidence that any applicable stock
transfer taxes have been paid. Until surrendered as contemplated by this
Section 3.2(b), each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender a certificate
representing shares of Parent Common Stock, cash in lieu of any fractional
shares of Parent Common Stock and any dividends or distributions, which may be
payable pursuant to Section 3.3 hereof.
Section 3.3 DIVIDENDS; ESCHEAT. No dividends or
distributions that are declared on shares of Parent Common Stock will be paid
to persons entitled to receive
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certificates representing shares of Parent Common Stock until such persons
surrender their Certificates. Upon such surrender, there shall be paid to the
person in whose name the certificates representing such shares of Parent Common
Stock shall be issued, any dividends or distributions with respect to such
shares of Parent Common Stock which have a record date on or after the
Effective Time and shall have become payable between the Effective Time and the
time of such surrender. In no event shall the person entitled to receive such
dividends or distributions be entitled to receive interest thereon. Promptly
following the date which is six months after the Effective Time, the Exchange
Agent shall deliver to the Surviving Corporation all cash, certificates and
other documents in its possession relating to the transactions described in
this Agreement, and any holders of Company Common Stock who have not
theretofore complied with this Article III shall look thereafter only to the
Surviving Corporation for the shares of Parent Common Stock, any dividends or
distributions thereon, and any cash in lieu of fractional shares thereof to
which they are entitled pursuant to this Article III. Notwithstanding the
foregoing, neither the Exchange Agent nor any party hereto shall be liable to a
holder of Company Common Stock for any shares of Parent Common Stock, any
dividends or distributions thereon or any cash in lieu of fractional shares
thereof delivered to a public official pursuant to applicable abandoned
property, escheat or similar laws.
Section 3.4 NO FRACTIONAL SECURITIES. No certificates or
scrip representing fractional shares of Parent Common Stock shall be issued upon
the surrender for exchange of Certificates, and such fractional interests
shall not entitle the owner thereof to vote or to any rights of a security
holder. In lieu of any such fractional securities, each holder of Company
Common Stock who would otherwise have been entitled to a fraction of a share of
Parent Common Stock upon surrender of such holder's Certificates will be
entitled to receive a cash payment (without interest) determined by multiplying
(i) the fractional interest to which such holder would otherwise be entitled
(after taking into account all shares of Company Common Stock then held of
record by such holder) and (ii) the average of the per share closing prices for
Parent Common Stock on the NNM for the five trading days immediately preceding
the Effective Time.
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Section 3.5 CLOSING OF COMPANY TRANSFER BOOKS. At the
Effective Time, the stock transfer books of the Company shall be closed and no
transfer of shares of Company Common Stock shall thereafter be made. If, after
the Effective Time, Certificates are presented to the Surviving Corporation,
they shall be cancelled and exchanged as provided in this Article III.
Section 3.6 FURTHER ASSURANCES. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments, assurances or any other actions or things
are necessary or desirable to vest, perfect or confirm of record or otherwise in
the Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of either of Sub or the Company acquired or to
be acquired by the Surviving Corporation as a result of, or in connection with,
the Merger or otherwise to carry out this Agreement, the officers of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of each of Sub and the Company or otherwise, all such deeds, bills
of sale, assignments and assurances and to take and do, in such names and on
such behalves or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm any and all right, title and
interest in, to and under such rights, properties or assets in the Surviving
Corporation or otherwise to carry out the purposes of this Agreement.
ARTICLE ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company represents and warrants to Parent and Sub as follows:
Section 4.1 CORPORATE ORGANIZATION; RELATED ENTITIES.
(a) The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State of Minnesota
and has the corporate power and authority to own or lease its properties and to
carry on its business as it is presently being conducted. Schedule 4.1(a)
lists, and the Company is duly qualified
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or licensed as a foreign corporation to do business and is in good standing in,
every jurisdiction where the character of the Company's properties (owned or
leased) or the nature of its activities makes such qualification or licensure
necessary, except for failures, if any, to be so qualified or licensed which
would not in the aggregate have a Company Material Adverse Effect (as
hereinafter defined).
(b) Except as set forth on Schedule 4.1(b), the
Company does not own, directly or indirectly, any capital stock of any
corporation or have any direct or indirect equity or ownership interest of
any kind in any business, joint venture, partnership or other entity.
(c) The copies of the Articles of Incorporation and
By-Laws of the Company heretofore delivered to Parent are complete and correct
copies of such instruments as presently in effect.
(d) As used in this Agreement, any reference to any
event, change or effect having a "COMPANY MATERIAL ADVERSE EFFECT" shall
mean that such event, change or effect is, individually or in the aggregate,
materially adverse to the business, operations, prospects, properties, assets
(including intangible assets), liabilities (including contingent liabilities),
condition (financial or other) or results of operations of the Company or to the
ability of the Company to consummate the Merger and the other transactions
contemplated by this Agreement.
Section 4.2 CAPITALIZATION.
(a) As of the date of this Agreement, the
authorized capital stock of the Company consists of 20,000,000 shares of Company
Common Stock, 8,023,080 of which are issued and outstanding; 1,000,000 shares of
Series A redeemable preferred shares, par value $5.00 per share, none of which
are issued or outstanding; and 9,000,000 undesignated preferred shares, par
value $5.00 per share, none of which are issued or outstanding. As of the date
of this Agreement, 1,365,002 shares of Company Common Stock are reserved for
issuance pursuant to the Company Stock Options and all other employee benefit
plans of the Company. All of the issued and outstanding
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shares of Company Common Stock are validly issued, fully paid and
nonassessable.
(b) Except as disclosed in this Section 4.2 or on
Schedule 4.2(b), (i) there is no outstanding right, subscription, warrant, call,
unsatisfied preemptive right, option or other agreement or arrangement of any
kind to purchase or otherwise to receive from the Company any of the outstanding
authorized but unissued or treasury shares of the capital stock or any other
security of the Company, (ii) there is no outstanding security of any kind
convertible into or exchangeable for such capital stock, and (iii) there is no
voting trust or other agreement or understanding to which the Company is a party
or is bound with respect to the voting of the capital stock of the Company.
(c) Except as set forth on Schedule 4.2(c), none of
the awards, grants or other agreements pursuant to which Company Stock Options
were issued have provisions which accelerate the vesting or right to
exercise such options upon the execution of this Agreement (including the
documents attached as Exhibits hereto), the consummation of the transactions
contemplated hereby (or thereby) or any other "change of control" or similar
events.
Section 4.3 AUTHORITY RELATIVE TO THIS AGREEMENT. The
Company has the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by the Company and the consummation
by the Company of the transactions contemplated on its part hereby have been
duly authorized by the Company's Board of Directors and, except for the approval
of its stockholders to be sought at the stockholders meeting contemplated by
Section 7.4(a) with respect to this Agreement, no other corporate proceedings on
the part of the Company are necessary to authorize this Agreement or for the
Company to consummate the transactions contemplated hereby. This Agreement has
been duly and validly executed and delivered by the Company and constitutes a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms.
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Section 4.4 CONSENTS AND APPROVALS; NO VIOLATIONS.
Neither the execution, delivery and performance of this Agreement by the
Company, nor the consummation by the Company of the transactions
contemplated hereby, will (i) conflict with or result in any breach of any
provisions of the charter, by-laws or other organizational documents of the
Company, (ii) require a filing with, or a permit, authorization, consent or
approval of, any federal, state, local or foreign court, arbitral tribunal,
administrative agency or commission or other governmental or other regulatory
authority or administrative agency or commission (a "GOVERNMENTAL ENTITY"),
except in connection with or in order to comply with the applicable provisions
of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR ACT"), for the filing of a registration statement on Form S-4 under the
Securities Act of 1933, as amended (the "SECURITIES ACT") with respect to Parent
Common Stock to be offered to the Company stockholders, the filing of the Proxy
Statement-Prospectus under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), filings or approvals required under state securities or "blue
sky" laws, the By-Laws of the National Association of Securities Dealers (the
"NASD") and the filing and recordation of Articles of Merger as required by the
MBCA, (iii) except as set forth on Schedule 4.4 hereto, result in a violation or
breach of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, or result in the creation of any mortgage, pledge, security interest,
encumbrance, lien, claim or charge of any kind or right of others of whatever
nature ("LIENS"), on any property or asset of the Company pursuant to, any of
the terms, conditions or provisions of any material note, bond, mortgage,
indenture, lease, license, contract, agreement or other instrument or obligation
(each, a "CONTRACT") to which the Company is a party or by which it or any of
its properties or assets may be bound or (iv) violate any law, order, writ,
injunction, decree, statute, rule or regulation of any Governmental Entity
applicable to the Company or any of its properties or assets, except, in the
case of clauses (ii), (iii) and (iv), where failures to make such filing or
obtain such authorization, consent or approval would not have, or where such
violations, breaches or defaults or Liens would not have, in the aggregate, a
Company Material Adverse Effect.
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Section 4.5 REPORTS AND FINANCIAL STATEMENTS. The
Company has timely filed all reports required to be filed with the
Securities and Exchange Commission (the "SEC") pursuant to the Exchange Act
or the Securities Act since March 31, 1994 (collectively, the "COMPANY SEC
REPORTS"), and has previously made available to Parent true and complete copies
of all such Company SEC Reports. Such Company SEC Reports, as of their
respective dates, complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as the case may be,
and none of such Company SEC Reports, as of their respective dates, contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of the Company included in the Company SEC Reports have
been prepared in accordance with United States generally accepted accounting
principles ("GAAP") consistently applied throughout the periods indicated
(except as otherwise noted therein or, in the case of unaudited statements, as
permitted by Form 10-Q of the SEC) and fairly present (subject, in the case of
unaudited statements, to normal recurring year-end adjustments and any other
adjustments described therein) the financial position of the Company as at the
dates thereof and the results of operations and cash flows of the Company for
the periods then ended. Since March 31, 1994, there has been no change in any
of the significant accounting (including tax accounting) policies, practices or
procedures of the Company.
Section 4.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Except
as set forth on Schedule 4.6 or in the Company SEC Reports filed as of the
date of this Agreement, since March 31, 1995, (i) the Company has not conducted
its business and operations other than in the ordinary course of business and
consistent with past practices or taken any actions that, if it had been in
effect, would have violated or been inconsistent with the provisions of Section
6.1 and (ii) there has not been any fact, event, circumstance or change
affecting or relating to the Company which has had or is reasonably likely to
have a Company Material Adverse Effect. Except as set forth on Schedule 4.6 or
as would not represent a Company Material Adverse Effect, the transactions
contemplated by this Agreement will not constitute a change of control
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under or require the consent from or the giving of notice to a third party
pursuant to the terms, conditions or provisions of any Contract to which the
Company is a party.
Section 4.7 LITIGATION. Except as disclosed on
Schedule 4.7 and except for litigation disclosed in the notes to the
financial statements included in the Company's Annual Report to
Stockholders for the fiscal year ended March 31, 1995 or in the Company SEC
Reports filed subsequent thereto, as of the date hereof, there is no suit,
action, proceeding or investigation pending or, to the best knowledge of the
Company, threatened against the Company or with respect to which the Company
could be required to provide indemnification or to otherwise contribute to
liabilities or damages relating thereto, the outcome of which could reasonably
be expected to have a Company Material Adverse Effect; nor is there any
judgment, decree, injunction, rule or order of any Governmental Entity
outstanding against the Company having, or which, insofar as can reasonably be
foreseen, in the future may have a Company Material Adverse Effect.
Section 4.8 ABSENCE OF UNDISCLOSED LIABILITIES. Except
for liabilities or obligations which are accrued or reserved against in the
Company's financial statements (or reflected in the notes thereto) included
in the Company SEC Reports or which were incurred after June 30, 1995 in the
ordinary course of business and consistent with past practice, and except as set
forth on Schedule 4.8, the Company has no liabilities or obligations (whether
absolute, accrued, contingent or otherwise) of a nature required by GAAP to be
reflected in a balance sheet (or reflected in the notes thereto) or which could
reasonably be expected to have a Company Material Adverse Effect.
Section 4.9 NO DEFAULT. Except as set forth in
Schedule 4.9, the Company is not in breach or violation of, or in default
under (and no event has occurred which with notice or lapse of time
or both would constitute such a breach, violation or default), any term,
condition or provision of (a) the Company's Articles of Incorporation or
By-Laws, or (b) (x) any order, writ, decree, statute, rule or regulation of any
Governmental Entity applicable to the Company or any of its properties or
assets or (y) any Contract to which the Company is a
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party or by which the Company or any of its properties or assets may be bound,
except in the case of this clause (b), which breaches, violations or defaults,
individually or in the aggregate, would not have a Company Material Adverse
Effect. The Company has, and is in compliance with, all licenses, permits,
variances, exemptions, orders, approvals and other authorizations of all
Governmental Entities as are necessary in order to enable it to own its
business and conduct its business as currently conducted and as currently
proposed to be conducted by the Company and to enter into the transactions
contemplated hereby, the lack of which, under applicable law, rule or
regulation, (x) would render legally impermissible the transactions
contemplated hereby or (y) could reasonably be expected to result in the
material impairment of the continued use or exercise by the Company after the
date hereof of any material right used or exercised (or reasonably expected to
be used or exercised) by the Company, in the conduct of the Company's business
as currently conducted and as currently proposed to be conducted by the Company
or (z) could reasonably be expected to have a Company Material Adverse Effect.
Section 4.10 TAXES.
(a) The Company has heretofore delivered or will
make available to Parent true, correct and complete copies of the federal,
state, local and foreign income, franchise sales and other Tax Returns (as
hereinafter defined) filed by the Company for the period from January 3, 1991 to
March 31, 1991, and for each of the Company's years ended March 31, 1992, 1993
and 1994, inclusive.
(b) Except as disclosed in Schedule 4.10(b):
(i) All returns, declarations,
reports, estimates, statements, schedules or other information or document
with respect to Taxes (as hereinafter defined)(collectively, "TAX RETURNS")
required to be filed by the Company have been timely filed (giving effect to
extensions granted with respect thereto), and all such Tax Returns are true,
correct and complete. The Company is not required to file any state Tax Returns
other than in the State of Minnesota.
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(ii) The Company has timely paid
all Taxes due or claimed to be due from it by any federal, state, local,
foreign or other taxing authority.
(iii) There are no liens for Taxes
upon the assets of the Company except Liens for Taxes not yet due and payable.
(iv) No Tax Returns of the
Company have been examined by the Internal Revenue Service (the "SERVICE"). No
deficiency for any Taxes has been proposed, asserted or assessed against
the Company which has not been resolved and paid in full. There are no
outstanding waivers, extensions or comparable consents regarding the application
of the statute of limitations with respect to any Taxes or Tax Returns that have
been given by the Company (including the time for filing of Tax Returns or
paying Taxes).
(v) The Company has not made any
change in accounting methods, received a ruling from any taxing authority or
signed an agreement with any taxing authority which could reasonably be expected
to have a Company Material Adverse Effect.
(vi) The Company has complied in
all material respects with all applicable laws, rules and regulations relating
to the payment and withholding of Taxes (including, without limitation,
withholding of Taxes pursuant to Sections 1441 and 1442 of the Code or similar
provisions under any foreign laws) and has, within the time and the manner
prescribed by law, withheld from employee wages and paid over to the proper
governmental authorities all amounts required to be so withheld and paid over
under applicable laws.
(vii) Other than as set forth in
Schedule 4.10(b)(vii), no audit or other proceeding by any federal, state,
local or foreign court, governmental, regulatory, administrative or similar
authority is presently pending with respect to any Taxes or Tax Return of the
Company, and the Company has not received a written notice of any pending audits
or proceedings. Schedule 4.10(b)(vii) shall set forth the nature of any such
audit or proceeding, the type of Tax Return, any deficiencies proposed, asserted
or assessed and the amount thereof and the tax year in question.
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(viii) The Company is not a
party to, is bound by or has any obligation under, any Tax sharing,
allocation or indemnity agreement or similar contract or arrangement.
(ix) There are no outstanding
requests, agreements, consents or waivers to extend the statutory period
of limitations applicable to the assessment of any Taxes or deficiencies against
the Company.
(x) No power of attorney granted
by the Company with respect to any Taxes is currently in force.
(xi) The Company has not, with
regard to any assets or property held, acquired or to be acquired by any
of them, filed a consent to the application of Section 341(f) of the Code, or
agreed to have Section 341(f)(2) of the Code apply to any disposition of a
subsection (f) asset (as such term is defined in Section 341(f)(4) of the Code)
owned by the Company.
(xii) The Company has identified
for Parent all agreements, contracts and arrangements with the Company, and
has provided to Parent all such information as of the date hereof concerning the
Company and its employees as may be necessary to enable Parent to determine the
amount, if any, of any "excess parachute payment" within the meaning of Section
280G of the Code that could result solely from the transactions contemplated by
this Agreement.
(xiii) The Company is not and has not been
during the applicable period specified in Section 897(c)(1)(A)(ii) of the
Code a "United States real property holding company" (as defined in
Section 897(c)(2) of the Code).
(xiv) The Company has not
participated in, or cooperated with, an "international boycott" within the
meaning of Section 999 of the Code.
(xv) The charges, accruals and
reserves for Taxes reflected on the books of the Company are adequate under
GAAP to cover the Tax liabilities accruing or payable by the Company in respect
of periods prior to the date hereof.
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(xvi) The Company is not subject
to any joint venture, partnership or other arrangement or contract that is
treated as a partnership for U.S. federal income tax purposes.
(xvii) The Company is not
subject to liability for Taxes of any other person (other than with
respect to the Company), including, without limitation, liability arising from
the application of U.S. Treasury Regulation Section 1.1502-6 or any analogous
provision of Tax law.
(xviii) The shares of Company Common Stock
are of "a class of stock that is regularly traded on an established
securities market" within the meaning of Section 1445(b)(6) of the Code.
(c) For purposes of this Agreement, "TAXES"
(including, with correlative meaning, the term "Tax") shall include all taxes,
charges, fees, levies or other assessments, including, without limitation, all
net income, gross income, gross receipts, sales, use, service, service use, ad
valorem, transfer, franchise, profits, license, withholding, social security,
payroll, employment, excise, estimated, severance, stamp, recording, occupation,
property or other taxes, customs duties, fees, assessments or charges of any
kind whatsoever, whether computed on a separate consolidated, unitary, combined
or other basis, together with any interest, fines, penalties, additions to tax
or other additional amounts imposed thereon or with respect thereto imposed by
any taxing authority (domestic or foreign).
Section 4.11 INTELLECTUAL PROPERTY. The Company owns,
licenses or otherwise has such rights to use, sell, license or dispose of all
industrial and intellectual property rights, including without limitation all
patents, patent applications, patent rights, trademarks, trademark applications,
trade names, service marks, service xxxx applications, copyrights, copyright
registrations, computer programs, content and other computer software (including
CD-ROMs), source code and object code for the software programs already
published, currently being published, or proposed to be published by the
Company, technology, know-how, trade secrets, proprietary processes and formulae
(collectively, "INTELLECTUAL PROPERTY") as are material to the conduct of the
business
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of the Company as currently conducted. Set forth on Schedule 4.11 is a true
and complete listing of (i) all titles currently marketed by the Company,
whether owned by the Company or licensed from others, indicating which are
owned by the Company and, for any that are licensed from others, the identity
of the licensor, (ii) all of the Company's registered trademarks and pending
applications for trademark registrations, (iii) trademarks that are used in
conjunction with the titles currently marketed by the Company and are licensed
from third parties, indicating the identity of the licensor, and (iv) the
Company's registered copyrights and pending applications for copyright
registration. The rights of the Company to all such Intellectual Property are
in full force. Except as set forth on Schedule 4.11:
(a) the Company has the rights to bring
actions for the infringement of its rights to the Intellectual Property
necessary to protect such rights in the Intellectual Property, with
such exceptions as could not reasonably be expected to have in the aggregate a
Company Material Adverse Effect; Schedule 4.11(a) sets forth a list, for the
period from April 1, 1995 through September 30, 1995, of the twenty-one titles
the distribution of which generated for the Company the highest net revenue
during such period, such twenty-one titles accounting for at least 65% of the
net revenue generated from distribution of titles during such period,
indicating the net revenue generated during such period attributable to each of
such titles, and the aggregate amount of all ongoing, periodic royalties,
honoraria, fees or other payments paid by the Company during such period for
each such title to any individual, corporation, partnership, joint venture,
association, organization or other entity by reason of ownership, use,
licensure, sale or disposition of any Intellectual Property contained in or
relating to the use, sale or license of such title; and the consummation of the
transactions contemplated hereby will not (i) give rise to any right of
termination, amendment, renegotiation, cancellation or acceleration with
respect to any license or other agreement to use, sell, license or dispose of
such Intellectual Property which could reasonably be expected to have in the
aggregate a Company Material Adverse Effect or (ii) in any way impair any
currently existing right of the Company to use, sell, license or dispose of or
to bring any action for the in-
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fringement of any of the rights of the Company to the Intellectual
Property or any portion thereof;
(b) none of the former or present employees,
officers or directors of the Company holds any right, title or interest,
directly or indirectly, in whole or in part, in or to any Intellectual Property
owned by the Company; the Company does not license from any present or, to the
Company's knowledge, former employees, officers or directors of the Company any
Intellectual Property which is necessary for the business of the Company as
presently conducted; the Company is not a party to any employment contract,
patent disclosure agreement or any other contract or agreement with any employee
of the Company relating to any Intellectual Property;
(c) each license and other agreement with respect
to the use of any Intellectual Property currently used in the Company's business
is a valid, legally binding obligation of the Company and, to the best
knowledge of the Company, all other parties thereto, enforceable in accordance
with its terms, with such exceptions as could not reasonably be expected to have
in the aggregate a Company Material Adverse Effect and except as enforcement may
be limited by general principles of equity whether applied in a court of law or
a court of equity and by bankruptcy, insolvency and similar laws affecting
creditors' rights and remedies generally, and the Company is not in breach,
violation or default thereof (and no event has occurred which with the giving of
notice or the passage of time or both would constitute such a breach, violation
or default or give rise to any right of termination, amendment, renegotiation,
cancellation or acceleration under any such license or agreement), and the
Company has no reason to believe that any other party to any such license or
other agreement is in breach, violation or default thereof, other than, in each
case, such breaches, violations and defaults as could not reasonably be expected
to have in the aggregate a Company Material Adverse Effect;
(d) the manufacture, marketing, use, sale,
licensure or disposition of any Intellectual Property in the manner currently
used, sold, licensed or disposed of by the Company or in the manner currently
proposed to be used, sold, licensed or disposed of by the
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Company does not and will not violate any license or agreement between the
Company and any third party or to the knowledge of the Company based on
representations and warranties from third parties from whom Intellectual
Property is licensed by the Company, infringe on the rights of any person, nor
has such an infringement been alleged within three years preceding the date of
this Agreement (other than such as have been resolved); there is no pending or
threatened claim or litigation challenging or questioning the validity,
ownership or right to use, sell, license or dispose of any Intellectual
Property in the manner in which currently used, sold, licensed or disposed of
by the Company, nor is there a valid basis for any such claim or litigation,
nor has the Company received any notice asserting that the proposed use, sale,
license or disposition by the Company of any of the Intellectual Property of
the Company conflicts or will conflict with the rights of any other party, nor
is there a valid basis for any such assertion in each case, with such
exceptions as could not reasonably be expected in the aggregate to have a
Company Material Adverse Effect; and the Company has not asserted any claim of
infringement, misappropriation or misuse within the past three years.
Section 4.12 STOCKHOLDER RIGHTS PLAN. The Company has
not proposed, adopted, approved or implemented any stockholder rights plan, or
authorized the issuance of any similar dividend or the distribution of any
securities to its stockholders, or entered into any agreement with respect to
the foregoing (any such plan, authorization, dividend, distribution or agreement
being referred to herein as a "STOCKHOLDER RIGHTS PLAN"), which could have the
effect of restricting, prohibiting, impeding or otherwise affecting the
consummation of the transactions contemplated by this Agreement or the Voting
Agreement, in each case by the respective parties thereto.
Section 4.13 INFORMATION IN DISCLOSURE DOCUMENTS AND
REGISTRATION STATEMENT. None of the information to be supplied by the Company
for inclusion in (i) the Registration Statement to be filed with the SEC by
Parent on Form S-4 under the Securities Act for the purpose of registering the
shares of Parent Common Stock to be issued in connection with the Merger (the
"REGISTRATION STATEMENT") or (ii) the joint proxy statement-
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prospectus to be distributed in connection with Parent's and the Company's
meetings of stockholders to vote upon this Agreement (the "PROXY
STATEMENT-PROSPECTUS") will, in the case of the Registration Statement, at the
time it becomes effective and at the Effective Time, or, in the case of the
Proxy Statement-Prospectus or any amendments thereof or supplements thereto, at
the time of the mailing of the Proxy Statement-Prospectus and any amendments or
supplements thereto, and at the time of the meeting of stockholders of the
Company to be held in connection with the Merger, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The Proxy
Statement-Prospectus will comply as to form in all material respects with the
applicable provisions of the Exchange Act, and the rules and regulations
promulgated thereunder, except that no representation is made by the Company
with respect to statements made therein based on information supplied by Parent
or its representatives for inclusion in the Proxy Statement-Prospectus or with
respect to information concerning Parent or any of the Parent Subsidiaries
incorporated by reference in the Proxy Statement-Prospectus.
Section 4.14 EMPLOYEE BENEFIT PLANS; ERISA.
(a) Schedule 4.14 hereto sets forth a true and
complete list of each employee benefit plan, arrangement or agreement that is
maintained, or was maintained or contributed to at any time during
the six (6) calendar years preceding the date of this Agreement
(the "COMPANY PLANS"), by the Company or by any trade or business, whether or
not incorporated (an "ERISA AFFILIATE"), which together with the Company would
be deemed a "single employer" within the meaning of Section 4001 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"). Neither
the Company nor any ERISA Affiliate has any formal plan or commitment to create
any additional plan or modify any existing Company Plan.
(b) Each of the Company Plans that is subject to
ERISA is in compliance with ERISA in all material respects; each of the
Company Plans intended to be "qualified" within the meaning of
Section 401(a) of the Code is so qualified, no event has occurred which may
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affect such qualification and the trusts maintained thereunder are exempt from
taxation under Section 501(a) of the Code; no Company Plan has an accumulated
or waived funding deficiency within the meaning of Section 412 of the Code;
neither the Company nor an ERISA Affiliate has incurred, directly or
indirectly, any material liability (including any material contingent
liability) to or on account of a Company Plan pursuant to Title IV of ERISA; no
proceedings have been instituted to terminate any Company Plan that is subject
to Title IV of ERISA; no "reportable event," as such term is defined in Section
4043(b) of ERISA, has occurred with respect to any Company Plan; and no
condition exists that presents a material risk to the Company or an ERISA
Affiliate of incurring a liability to or on account of a Company Plan pursuant
to Title IV of ERISA.
(c) The current value of the assets of
each of the Company Plans that are subject to Title IV of ERISA,
based upon the actuarial assumptions (to the extent reasonable) presently used
by the Company Plans, exceeds the present value of the accrued benefits under
each such Company Plan; no Company Plan is a multiemployer plan (within the
meaning of Section 4001(a)(3) of ERISA) and no Company Plan is a multiple
employer plan as defined in Section 413 of the Code; and all contributions or
other amounts payable by the Company as of the Effective Time with respect to
each Company Plan in respect of current or prior plan years have been either
paid or accrued on the balance sheet of the Company. There are no pending,
threatened or anticipated claims (other than routine claims for benefits) by,
on behalf of or against any of the Company Plans or any trusts related thereto.
(d) Neither the Company nor any ERISA
Affiliate, nor any Company Plan, nor any trust created thereunder, nor
any trustee or administrator thereof has engaged in a transaction in
connection with which the Company or any ERISA Affiliate, any Company
Plan, any such trust, or any trustee or administrator thereof, or any
party dealing with any Company Plan or any such trust could be subject to
either a material civil penalty assessed pursuant to Section 409 or 502(i) of
ERISA or a material tax imposed pursuant to Section 4975 or 4976 of the Code.
No amounts payable under the Company Plans will, individually or in the
aggregate, fail to be de-
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ductible for federal income tax purposes by virtue of Section 280G of the Code.
No Company Plan provides death or medical benefits (whether or not insured),
with respect to current or former employees of the Company or any ERISA
Affiliate beyond their retirement or other termination of service other than
(i) coverage mandated by applicable law or (ii) death benefits under any
"employee pension plan," as that term is defined in section 3(2) of ERISA. The
consummation of the transactions contemplated by this Agreement will not (i)
entitle any current or former employee or officer of the Company or any ERISA
Affiliate to severance pay, unemployment compensation or any other payment,
except as expressly provided in this Agreement or (ii) accelerate the time of
payment or vesting, or increase the amount of compensation due any such
employee or officer.
Section 4.15 VOTE REQUIRED. The affirmative vote
of the holders of a majority of the outstanding shares of Company Common
Stock is the only vote of the holders of any class or series of
the Company's capital stock necessary to approve the Merger. The Board of
Directors of the Company (at a meeting duly called and held) has unanimously
(i) approved this Agreement, (ii) determined that the transactions contemplated
hereby are in the best interests of the holders of Company Common Stock and
(iii) determined to recommend this Agreement, the Merger and the other
transactions contemplated hereby to such holders for approval and adoption.
Section 4.16 OPINION OF FINANCIAL ADVISOR. The Company
has received the opinion of Xxxxx & Company Incorporated ("Xxxxx & Company"),
dated October 30, 1995, substantially to the effect that the consideration to be
received in the Merger by the holders of Company Common Stock is fair to such
holders from a financial point of view, a copy of which opinion has been
delivered to Parent.
Section 4.17 MBCA SECTIONS 302A.671 AND 302A.673. Prior
to the date hereof, the full Board of Directors of the Company has approved
this Agreement and, assuming that Parent is not, and prior to the Effective Time
will not be, the "beneficial owner" (as such term is defined in Section 302A.011
of the MBCA) of any shares of Company Common Stock other than pursuant to the
Voting Agreement, the Merger and the other transactions contem-
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plated hereby will not be subject to the provisions of Section 302A.671 or
Section 302A.673 of the MBCA.
Section 4.18 AFFILIATE TRANSACTIONS. Except as
disclosed in the Company SEC Reports, there are no material Contracts or
other transactions between the Company, on the one hand, and any (i) officer or
director of the Company, (ii) record or beneficial owner of five percent
or more of the voting securities of the Company or (iii) affiliate (as such term
is defined in Regulation 12b-2 promulgated under the Exchange Act) of any such
officer, director or beneficial owner, on the other hand.
Section 4.19 BROKERS. Except for its financial advisor,
Xxxxx & Company, no broker, finder or financial advisor is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger or
the transactions contemplated by this Agreement based upon arrangements made by
or on behalf of the Company.
ARTICLE ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT
----------------------------------------
Parent represents and warrants to the Company as follows:
Section 5.1 ORGANIZATION. (a) Parent is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power to carry on its business as
it is now being conducted or presently proposed to be conducted. Parent is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of its properties owned or held under
lease or the nature of its activities make such qualification necessary, except
where the failure to be so qualified will not have a Parent Material Adverse
Effect (as hereinafter defined). Sub is a corporation duly organized, validly
existing and in good standing under the laws of the State of Minnesota. Sub has
not engaged in any business (other than in connection with this Agreement and
the transactions contemplated hereby) since the date of its incorporation.
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32
(b) Schedule 5.1(b) lists all of the Subsidiaries
of Parent which would be required to be set forth as an exhibit to Parent's
Annual Report on Form 10-K pursuant to the rules and regulations under the
Exchange Act (the "PARENT SUBSIDIARIES"). Each of the Parent Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of its jurisdiction of organization or incorporation and has the corporate power
and authority to own or lease its properties and to carry on its business as it
is presently being conducted, except for failures, if any, to be so organized,
validly existing or in good standing or to have such corporate power and
authority which would not in the aggregate have a Parent Material Adverse
Effect.
(c) The copies of the Certificate of
Incorporation and By-Laws of Parent heretofore delivered to the Company
are complete and correct copies of such instruments as presently in
effect.
(d) As used in this Agreement, any reference to
any event, change or effect having a "PARENT MATERIAL ADVERSE EFFECT" shall
mean that such event, change or effect is, individually or in the
aggregate, materially adverse to the business, operations, prospects,
properties, assets (including intangible assets), liabilities (including
contingent liabilities), condition (financial or other) or results of operations
of the Parent and the Parent Subsidiaries taken as a whole or to the ability of
Parent to consummate the Merger and the other transactions contemplated by this
Agreement.
Section 5.2 CAPITALIZATION.
(a) As of the date of this Agreement, the
authorized capital stock of Parent consists of 60,000,000 shares of
Parent Common Stock, of which 25,152,779 shares are issued and outstanding;
5,000,000 shares of Preferred Stock, par value $.01 per share, none of
which are issued and outstanding and one share of special voting stock,
par value $1.00 per share (the "Special Voting Share") which is issued and
outstanding. The Special Voting Share entitles the holder thereof, a Parent
Subsidiary, to vote, together with the holders of Parent Common Stock, on all
matters submitted for the vote of the holders of Parent Common Stock. The
number of votes represented by the Special Voting Share is equal to the
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33
number of shares of such Parent Subsidiary outstanding which are exchangeable
into shares of Parent Common Stock. As of the date of this Agreement, options
to acquire 3,317,331 shares of Parent Common Stock (the "PARENT STOCK OPTIONS")
are outstanding under all stock option plans of Parent; 4,128,719 shares of
Parent Common Stock are reserved for issuance pursuant to the Parent Stock
Options and all other employee benefit plans of Parent and Parent Common Stock
warrants; 1,641,082 shares of Parent Common Stock are reserved for issuance
related to shares of capital stock of a Parent Subsidiary exchangeable into
shares of Parent Common Stock; and 7,594,340 shares of Parent Common Stock are
reserved for issuance in exchange for Parent's 5 1/2% Senior Convertible Notes
due 2000. All of the shares of Parent Common Stock issuable in exchange for
shares of Company Common Stock at the Effective Time in accordance with this
Agreement will be, when so issued, duly authorized, validly issued, fully paid
and nonassessable.
(b) The authorized capital stock of Sub
consists of one share of Sub Common Stock, which share, as of the date hereof,
is issued and outstanding, owned by Parent and is validly issued, fully
paid and nonassessable.
(c) Except as disclosed in this Section 5.2 or in
the Parent SEC Reports (as hereinafter defined), (i) there is no outstanding
right, subscription, warrant, call, unsatisfied preemptive right, option or
other agreement or arrangement of any kind to purchase or otherwise to receive
from Parent or Sub any of the outstanding authorized but unissued or treasury
shares of the capital stock or any other security of Parent or Sub, (ii) there
is no outstanding security of any kind convertible into or exchangeable for such
capital stock, and (iii) other than the Voting and Exchange Trust Agreement
dated as of February 4, 1994 among Parent, SoftKey Software Products Inc. and
the R-M Trust Company with respect to the Special Voting Share, there is no
voting trust or other agreement or understanding to which Parent or Sub is a
party or is bound with respect to the voting of the capital stock of Parent or
Sub.
(d) Except for qualifying shares required by
certain foreign jurisdictions, all of the issued and outstanding capital stock
of each of the Parent Subsid-
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iaries has been validly issued, is fully paid and nonassessable and is owned of
record and beneficially, directly or indirectly, by Parent, free of any Liens,
preemptive rights or other restrictions with respect thereto.
Section 5.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Each
of Parent and Sub has the requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement by each of Parent and Sub and the
consummation by Parent and Sub of the transactions contemplated on their part
hereby have been duly authorized by their respective Boards of Directors, and by
Parent as the sole stockholder of Sub, and, except for the approval of Parent's
stockholders (including the votes represented by the Special Voting Share) to be
sought at the stockholders' meeting contemplated by Section 7.4(b), no other
corporate proceedings on the part of Parent or Sub are necessary to authorize
this Agreement or for Parent and Sub to consummate the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by each
of Parent and Sub and constitutes a valid and binding agreement of each of
Parent and Sub, enforceable against Parent and Sub in accordance with its terms.
Section 5.4 CONSENTS AND APPROVALS; NO VIOLATIONS.
Neither the execution, delivery and performance of this Agreement by Parent or
Sub, nor the consummation by Parent or Sub of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provisions of (x)
the Certificate of Incorporation or By-Laws of Parent or of Sub or (y) the
organizational documents of the Parent Subsidiaries, (ii) require a filing with,
or a permit, authorization, consent or approval of, any Governmental Entity
except in connection with or in order to comply with the applicable provisions
of the HSR Act, the filing of the Proxy Statement-Prospectus under the Exchange
Act, filings or approvals required under state or foreign laws relating to
takeovers, if applicable, state securities or "blue sky" laws, the By-Laws of
the NASD, and the filing and recordation of Articles of Merger as required by
the MBCA, (iii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under, or result in the
creation of a Lien on any
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35
property or asset of Parent or any Parent Subsidiaries pursuant to, any of the
terms, conditions or provisions of any material Contract to which Parent or Sub
or any other Parent Subsidiary is a party or by which any of them or any of
their properties or assets may be bound or (iv) violate any law, order, writ,
injunction, decree, statute, rule or regulation of any Governmental Entity
applicable to Parent, Sub or any other Parent Subsidiary or any of their
properties or assets, except, in the case of clauses (ii), (iii) and (iv),
where the failure to make such filing or obtain such authorization, consent or
approval would not have, or where such violations, breaches or defaults or
Liens would not have, in any such case, a Parent Material Adverse Effect.
Section 5.5 REPORTS AND FINANCIAL STATEMENTS. Parent
has timely filed all reports required to be filed with the SEC pursuant to the
Exchange Act or the Securities Act since January 1, 1994 (collectively,
the "PARENT SEC REPORTS"), and has previously made available to the Company true
and complete copies of all such Parent SEC Reports. Such Parent SEC Reports, as
of their respective dates, complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as the case may be, and
none of such SEC Reports contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading. The financial statements of Parent included in the Parent
SEC Reports have been prepared in accordance with GAAP consistently applied
throughout the periods indicated (except as otherwise noted therein or, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC) and fairly
present (subject, in the case of unaudited statements, to normal, recurring
year-end adjustments and any other adjustments described therein) the
consolidated financial position of Parent and its consolidated Subsidiaries as
at the dates thereof and the consolidated results of operations and cash flows
of Parent and its consolidated Subsidiaries for the periods then ended. Since
January 1, 1994, there has been no change in any of the significant accounting
(including tax accounting) policies, practices or procedures of the Parent or
any of its consolidated Subsidiaries.
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Section 5.6 ABSENCE OF CERTAIN CHANGES OR EVENTS;
MATERIAL AGREEMENTS. Except as set forth in the Parent SEC Reports filed as of
the date of this Agreement, since December 31, 1994, (i) neither Parent
nor the Parent Subsidiaries has conducted its business and operations other than
in the ordinary course of business and consistent with past practices (except
for the discontinuation of operations in certain Subsidiaries acquired by
Parent) and (ii) there has not been any fact, event, circumstance or change
affecting or relating to Parent and the Parent Subsidiaries which has had or is
reasonably likely to have a Parent Material Adverse Effect.
Section 5.7 ABSENCE OF UNDISCLOSED LIABILITIES. Except
for liabilities or obligations which are accrued or reserved against in Parent's
financial statements (or reflected in the notes thereto) included in the
Parent SEC Reports filed as of the date of this Agreement or which were incurred
after June 30, 1995 in the ordinary course of business and consistent with past
practices, none of Parent and the Parent Subsidiaries has any liabilities or
obligations (whether absolute, accrued, contingent or otherwise) of a nature
required by GAAP to be reflected in a consolidated balance sheet (or reflected
in the notes thereto) or which could reasonably be expected to have a Parent
Material Adverse Effect.
Section 5.8 NO DEFAULT. Neither Parent nor any Parent
Subsidiary is in breach or violation, or in default under (and no event has
occurred which with notice or the lapse of time or both would constitute such
a breach, default or violation) of any term, condition or provision of (a) the
Parent's Certificate of Incorporation or By-Laws, or (b) (x) any order, writ,
decree, statute, rule or regulation of any Governmental Entity applicable to
Parent or any Parent Subsidiary or any of their properties or assets or (y) any
Contract to which the Parent or a Parent Subsidiary is a party or by which
Parent or a Parent Subsidiary or any of their properties or assets may be bound
except in the case of this clause (b), which breaches, violations or defaults,
individually or in the aggregate, would not have a Parent Material Adverse
Effect.
Section 5.9 INFORMATION IN DISCLOSURE DOCUMENTS AND
REGISTRATION STATEMENT. None of the information to be supplied by Parent
or Sub for inclusion in (i)
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the Registration Statement or (ii) the Proxy Statement-Prospectus will in the
case of the Registration Statement, at the time it becomes effective and at the
Effective Time, or, in the case of the Proxy Statement-Prospectus or any
amendments thereof or supplements thereto, at the time of the mailing of the
Proxy Statement-Prospectus and any amendments or supplements thereto, and at
the time of the meeting of stockholders of Parent to be held in connection with
the Merger, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are
made, not misleading. The Registration Statement and the Proxy Statement-
Prospectus will comply as to form in all material respects with the applicable
provisions of the Securities Act and the Exchange Act, and the rules and
regulations promulgated thereunder, except that no representation is made by
Parent with respect to statements made therein based on information supplied by
the Company or its representatives for inclusion in the Registration Statement
or the Proxy Statement-Prospectus or with respect to information concerning the
Company incorporated by reference in the Registration Statement or the Proxy
Statement-Prospectus.
Section 5.10 VOTE REQUIRED. The affirmative vote of
the holders of a majority of the shares of Parent Common Stock (including
the votes represented by the Special Voting Share) present in person or
represented by proxy at the stockholders meeting of Parent contemplated by
Section 7.4(b) (provided that the shares so present or represented constitute a
majority of the outstanding shares of Parent Common Stock) is the only vote of
the holders of any class or series of Parent capital stock necessary to approve
the issuance of shares of Parent Common Stock pursuant to the Merger. The
affirmative vote of Parent, as the sole stockholder of all outstanding shares of
Sub Common Stock, is the only vote of the holders of any class or series of Sub
capital stock necessary to approve the Merger. The Board of Directors of Parent
(at a meeting duly called and held) has unanimously (i) approved this Agreement,
(ii) determined that the transactions contemplated hereby are fair to and in the
best interests of Parent and the holders of Parent Common Stock, and (iii)
determined to cause Parent, as the sole stockholder of Sub, to approve and adopt
this
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Agreement. The Board of Directors of Sub (by unanimous written consent) has
approved this Agreement.
Section 5.11 OPINION OF FINANCIAL ADVISOR. Parent has
received the opinion of Bear, Xxxxxxx & Co. Inc. ("BEAR XXXXXXX"), dated
October 30, 1995, substantially to the effect that the Merger is fair to
the stockholders of Parent from a financial point of view, a copy of which
opinion has been delivered to the Company.
ARTICLE ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
--------------------------------------
Section 6.1 CONDUCT OF BUSINESS BY THE COMPANY PENDING
THE MERGER. Prior to the Effective Time, unless Parent shall otherwise agree
in writing, or as set forth on Schedule 6.1 or as otherwise expressly
contemplated by this Agreement:
(a) the Company shall conduct its business only in
the ordinary and usual course consistent with past practice, and the
Company shall use its reasonable efforts to preserve intact the present business
organization, keep available the services of its present officers and key
employees, and preserve the goodwill of those having business relationships with
it; the Company shall not hire any person to any position within the Company or
as a consultant to the Company where the total annual compensation payable to
such person, whether in cash or otherwise, would exceed $75,000;
(b) the Company shall not (i) amend its charter,
by-laws or other organizational documents, (ii) split, combine or reclassify any
shares of its outstanding capital stock, (iii) declare, set aside or pay any
dividend or other distribution payable in cash, stock or property, or (iv)
directly or indirectly redeem or otherwise acquire any shares of its capital
stock;
(c) the Company shall not (i) authorize for
issuance, issue or sell or agree to issue or sell any shares of, or rights or
securities of any kind to acquire, rights or securities convertible into any
shares of, its capital stock (whether through the issuance or granting of
options, warrants, commitments, subscrip-
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39
tions, rights to purchase or otherwise), except for the issuance of shares of
Company Common Stock upon the exercise of Company Stock Options outstanding on
the date of this Agreement; (ii) merge or consolidate with another entity
(other than transactions pending as of the date hereof that have been disclosed
to Parent); (iii) acquire or purchase an equity interest in or a substantial
portion of the assets of another corporation, partnership or other business
organization or otherwise acquire any assets outside the ordinary and usual
course of business and consistent with past practice or otherwise enter into
any material contract, commitment or transaction outside the ordinary and usual
course of business consistent with past practice; (iv) sell, lease, license,
waive, release, transfer, encumber or otherwise dispose of any of its assets
outside the ordinary and usual course of business and consistent with past
practice; (v) incur, assume or prepay any material indebtedness or any other
material liabilities other than in the ordinary course of business and
consistent with past practice; (vi) assume, guarantee, endorse or otherwise
become liable or responsible (whether directly, contingently or otherwise) for
the obligations of any other person in the ordinary course of business and
consistent with past practice; (vii) make any loans, advances or capital
contributions to, or investments in, any other person; (viii) authorize or make
capital expenditures in excess of the amounts currently budgeted therefor; (ix)
permit any insurance policy naming the Company as a beneficiary or a loss payee
to be cancelled or terminated other than in the ordinary course of business; or
(x) enter into any contract, agreement, commitment or arrangement with respect
to any of the foregoing;
(d) the Company shall not (i) adopt, enter into,
terminate or amend (except as may be required by applicable law) any
Company Plan or other arrangement for the current or future benefit or welfare
of any director, officer or current or former employee, (ii) increase in any
manner the compensation or fringe benefits of, or pay any bonus to, any
director, officer or employee (except for normal increases in salaried
compensation in the ordinary course of business consistent with past practice),
or (iii) take any action to fund or in any other way secure, or to accelerate or
otherwise remove restrictions with respect to, the payment of compensation or
benefits under any employee plan, agreement,
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contract, arrangement or other Company Plan (including the Company Stock
Options);
(e) the Company shall not take any action with
respect to, or make any material change in, its accounting policies or
procedures;
(f) the Company shall not knowingly take any
action which would jeopardize qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code;
(g) the Company shall not make any Tax election
or settle or compromise any income Tax liability or file any income tax
return prior to the last day (including extensions) prescribed by law, in the
case of any of the foregoing, material to the business, financial condition or
results of operations of the Company;
(h) the Company shall not propose, adopt, approve
or implement any Stockholder Rights Plan which could have the effect of
restricting, prohibiting, impeding or otherwise affecting the consummation of
the transactions contemplated by this Agreement or the Voting Agreement, in each
case by the respective parties thereto.
Section 6.2 CONDUCT OF BUSINESS BY PARENT PENDING THE
MERGER. Prior to the Effective Time, unless the Company shall otherwise
agree in writing, or as otherwise expressly contemplated by this Agreement:
(a) the business of Parent and the Parent
Subsidiaries shall be conducted only in the ordinary and usual course
consistent with past practice, and Parent shall use its reasonable efforts to
preserve intact the present business organization, to keep available the
services of its present officers and key employees, and preserve the goodwill of
those having business relationships with it;
(b) Parent shall not declare, set aside or pay
any dividend or other distribution payable in cash, stock or property;
(c) Parent shall not split, combine or reclassify
the outstanding Parent Common Stock;
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(d) neither Parent nor Sub shall take any action
with respect to, or make any material change in, its accounting policies
or procedures;
(e) neither Parent nor Sub shall knowingly take any
action which would jeopardize qualification of the Merger as a reorganization
within the meaning of Section 368(a) of the Code.
Section 6.3 CONDUCT OF BUSINESS OF SUB. During the period
from the date of this Agreement to the Effective Time, Sub shall not engage in
any activities of any nature except as provided in or contemplated by
this Agreement.
ARTICLE ARTICLE VII
ADDITIONAL AGREEMENTS
---------------------
Section 7.1 ACCESS AND INFORMATION. Each of the Company
and Parent shall (and shall cause its Subsidiaries and its and their
respective officers, directors, employees, auditors and agents to) afford to the
other and to the other's officers, employees, financial advisors, legal counsel,
accountants, consultants and other representatives reasonable access during
normal business hours throughout the period prior to the Effective Time to all
of its books and records (other than privileged documents and subject to any
confidentiality provisions applicable to communications between any party and
its counsel) and its properties, plants and personnel and, during such period,
each shall furnish promptly to the other a copy of each report, schedule and
other document filed or received by it pursuant to the requirements of federal
securities laws, provided that no investigation pursuant to this Section 7.1
shall affect any representations or warranties made herein or the conditions to
the obligations of the respective parties to consummate the Merger. Unless
otherwise required by law, each party agrees that it (and its Subsidiaries and
its and their respective representatives) shall hold in confidence all
non-public information so acquired in accordance with the terms of the
confidentiality agreement, dated October 18, 1995 between Parent and the Company
(the "CONFIDENTIALITY AGREEMENT").
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Section 7.2 NO OTHER NEGOTIATIONS. (a) Upon execution of
this Agreement, the Company is not engaged in or shall immediately terminate,
any discussions with any third party concerning an Alternative Acquisition
(as defined below). From and after the date of this Agreement until the earlier
of the Effective Time or the termination of this Agreement in accordance with
its terms, the Company shall not, directly or indirectly, (a) solicit, engage in
discussions or negotiate with any person (whether such discussions or
negotiations are initiated by the Company or otherwise) or take any other action
intended or designed to facilitate the efforts of any person, other than Parent,
relating to the possible acquisition of the Company (whether by way of merger,
purchase of capital stock, purchase of assets or otherwise) or any material
portion of its capital stock or assets (with any such efforts by any such
person, including a firm proposal to make such an acquisition, to be referred to
as an "ALTERNATIVE ACQUISITION"), (b) provide information with respect to the
Company to any person, other than Parent, relating to a possible Alternative
Acquisition by any person, other than Parent, (c) enter into an agreement with
any person, other than Parent, providing for a possible Alternative Acquisition,
or (d) make or authorize any statement, recommendation or solicitation in
support of any possible Alternative Acquisition by any person, other than by
Parent.
Notwithstanding the foregoing, the restrictions set forth in
this Agreement shall not prevent the Board of Directors of the Company (or its
agents pursuant to its instructions) from taking any of the following actions:
(a) furnishing information concerning the Company and its business, properties
and assets to any third party or (b) negotiating with such third party
concerning an Alternative Acquisition provided that all of the following events
shall have occurred: (1) such third party has made a written proposal to the
Board of Directors of the Company (which proposal may be conditional) to
consummate an Alternative Acquisition which proposal identifies a price or
range of values to be paid for the outstanding securities or substantially all
of the assets of the Company, and if consummated, based on the advice of the
Company's investment bankers, the Board of Directors of the Company has
determined is financially more favorable to the stockholders of the Company
than the terms of the Merger (a "SUPERIOR PROPOSAL"); (2) the
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Company's Board of Directors has determined, based on the advice of its
investment bankers, that such third party is financially capable of
consummating such Superior Proposal; (3) the Board of Directors of the Company
shall have determined, after consultation with its outside legal counsel, that
the fiduciary duties of the Board of Directors of the Company require the
Company to furnish information to and negotiate with such third party; and (4)
Parent shall have been notified in writing of such Superior Proposal, including
all of its terms and conditions, and shall have been given copies of such
proposal. Notwithstanding the foregoing, the Company shall not provide any
non-public information to such third party unless (1) the Company has prior to
the date thereof provided such information to Parent's representatives; (2) the
Company has notified Parent in advance of any such proposed disclosure of
non-public information to any such third party, with a description of the
information proposed to be disclosed; and (3) the Company provides such
non-public information pursuant to a nondisclosure agreement with terms which
are at least as restrictive as the nondisclosure agreement heretofore entered
into between Parent and the Company.
In addition to the foregoing, the Company shall not accept or
enter into any agreement concerning an Alternative Acquisition for a period of
not less than 48 hours after Parent's receipt of a copy of such proposal of an
Alternative Acquisition. Upon compliance with the foregoing, the Company shall
be entitled to (1) not recommend or change its recommendation concerning the
Merger; and (2) enter into an agreement with such third party concerning an
Alternative Acquisition provided that the Company shall immediately make
payment in full to Parent of the Termination Fee as defined in Section 9.2(b)
below.
(b) If the Company receives any unsolicited offer
or proposal to enter into discussions or negotiations relating to an
Alternative Acquisition, the Company shall notify Parent thereof within
twenty-four hours of the Company's receipt thereof, including information as to
the identity of the party making any such offer or proposal and the specific
terms of such offer or proposal, as the case may be.
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The Company shall be entitled to provide copies of this
Section 7.2 to third parties who on an entirely unsolicited basis after the
date hereof, contact the Company concerning an Alternative Acquisition;
provided that Parent shall concurrently be notified of such contact and the
delivery of such copy.
Section 7.3 REGISTRATION STATEMENT. As promptly as
practicable, Parent and the Company shall in consultation with each other
prepare and file with the SEC the Proxy Statement-Prospectus and Parent, in
consultation with the Company, shall prepare and file with the SEC the
Registration Statement. Each of Parent and the Company shall use its reasonable
best efforts to have the Registration Statement declared effective as soon as
practicable. Parent shall also use its reasonable best efforts to take any
action required to be taken under state securities or blue sky laws in
connection with the issuance of the shares of Parent Common Stock pursuant to
this Agreement in the Merger. The Company shall furnish Parent with all
information concerning the Company and the holders of its capital stock and
shall take such other action as Parent may reasonably request in connection with
the Registration Statement and the issuance of shares of Parent Common Stock.
If at any time prior to the Effective Time any event or circumstance relating to
Parent, any Subsidiary of Parent, the Company, or their respective officers or
directors, should be discovered by such party which should be set forth in an
amendment or a supplement to the Registration Statement or the Proxy
Statement-Prospectus, such party shall promptly inform the other thereof and
take appropriate action in respect thereof.
Section 7.4 PROXY STATEMENT-PROSPECTUS; STOCKHOLDER
APPROVALS.
(a) The Company, acting through its Board
of Directors, shall, subject to and in accordance with applicable law and its
Articles of Incorporation and By-Laws, promptly and duly call, give notice of,
convene and hold as soon as practicable following the date upon which the
Registration Statement becomes effective a meeting of the holders of Company
Common Stock for the purpose of voting to approve and adopt this Agreement and
the transactions contemplated hereby, and, subject to the fiduciary duties of
the Board of Directors of the Company under
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applicable law as advised by outside legal counsel, (i) recommend approval and
adoption of this Agreement and the transactions contemplated hereby by the
stockholders of the Company and include in the Proxy Statement-Prospectus such
recommendation, and (ii) take all reasonable and lawful action to solicit and
obtain such approval.
(b) Parent, acting through its Board of Directors,
shall, subject to and in accordance with applicable law and its
Certificate of Incorporation and By-Laws, promptly and duly call, give notice
of, convene and hold as soon as practicable following the date upon which the
Registration Statement becomes effective a meeting of the holders of Parent
Common Stock for the purpose of voting to approve the issuance of the shares of
Parent Common Stock to be issued in the Merger, and, subject to the fiduciary
duties of the Board of Directors of Parent under applicable law as advised by
outside counsel, (i) recommend approval of such issuance by the stockholders of
Parent and include in the Proxy Statement-Prospectus such recommendation, and
(ii) take all reasonable and lawful action to solicit and obtain such approval.
(c) Parent and the Company, as promptly as
practicable (or with such other timing as Parent and the Company mutually
agree), shall cause the definitive Proxy Statement-Prospectus to be mailed to
the Company's stockholders.
(d) At or prior to the Closing, each of Parent
and the Company shall deliver to the other a certificate of its Secretary
setting forth the voting results from its stockholder meeting.
Section 7.5 COMPLIANCE WITH THE SECURITIES ACT.
(a) At least 30 days prior to the Effective Time,
the Company shall cause to be delivered to Parent a list identifying all
persons who were, in its reasonable judgment, at the record date for the
Company's stockholders' meeting convened in accordance with Section 7.4(a)
hereof, "affiliates" of the Company as that term is used in paragraphs (c) and
(d) of Rule 145 under the Securities Act (the "AFFILIATES").
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(b) The Company shall use its reasonable best
efforts to cause each person who is identified as one of its Affiliates in its
list referred to in Section 7.5(a) above to deliver to Parent (with a copy to
the Company), at or prior to the Effective Time, a written agreement, in the
form attached hereto as Exhibit B, (the "AFFILIATE LETTERS").
(c) If any Affiliate of the Company refuses to
provide an Affiliate Letter, Parent may place appropriate legends on the
certificates evidencing the shares of Parent Common Stock to be received by such
Affiliate pursuant to the terms of this Agreement and to issue appropriate stop
transfer instructions to the transfer agent for shares of Parent Common Stock to
the effect that the shares of Parent Common Stock received by such Affiliate
pursuant to this Agreement only may be sold, transferred or otherwise conveyed
(i) pursuant to an effective registration statement under the Securities Act,
(ii) in compliance with Rule 145 promulgated under the Securities Act, or (iii)
pursuant to another exemption under the Securities Act.
Section 7.6 BEST EFFORTS. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use its best
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement, including, without limitation, the obtaining of all necessary
waivers, consents and approvals and the effecting of all necessary registrations
and filings. Without limiting the generality of the foregoing, as promptly as
practicable, the Company, Parent and Sub shall make all filings and submissions
under the HSR Act as may be reasonably required to be made in connection with
this Agreement and the transactions contemplated hereby. Subject to the
Confidentiality Agreement, the Company will furnish to Parent and Sub, and
Parent and Sub will furnish to the Company, such information and assistance as
the other may reasonably request in connection with the preparation of any such
filings or submissions. Subject to the Confidentiality Agreement, the Company
will provide Parent and Sub, and Parent and Sub will provide the Company, with
copies of all material written correspondence, filings and communications (or
memoranda setting forth the sub-
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stance thereof) between such party or any of its representatives and any
Governmental Entity, with respect to the obtaining of any waivers, consent or
approvals and the making of any registrations or filings, in each case that is
necessary to consummate the Merger and the other transactions contemplated
hereby. In case at any time after the Effective Time any further action is
necessary or desirable to carry out the purposes of this Agreement, the proper
officers or directors of Parent and the Surviving Corporation shall take all
such necessary action. Each of the parties will use its reasonable efforts to
ensure that the tax opinion to be delivered by its counsel pursuant to Section
8.2(d) or 8.3(c), as the case may be, be delivered and not withdrawn or
modified in any material respect (including with respect to any restructuring
of the Merger contemplated by Section 1.1 hereof).
Section 7.7 VOTING AGREEMENT. Concurrently herewith,
and as an essential inducement for Parent's entering into this Agreement,
Parent is entering into the Voting Agreement with North American Fund II, L.P.
("NORTH AMERICAN") with respect to certain shares of Company Common Stock owned
(beneficially or of record) by North American.
Section 7.8 COMPANY STOCK OPTIONS. At the Effective Time,
each of the Company Stock Options which is outstanding immediately prior to
the Effective Time shall be assumed by Parent and converted automatically into
an option to purchase shares of Parent Common Stock (a "NEW OPTION") in an
amount and at an exercise price determined as provided below:
(a) The number of shares of Parent Common Stock
to be subject to the New Option shall be equal to the product of the number of
shares of Company Common Stock remaining subject (as of immediately prior to the
Effective Time) to the original option and the Exchange Ratio, provided that any
fractional shares of Parent Common Stock resulting from such multiplication
shall be rounded down to the nearest share; and
(b) The exercise price per share of Parent
Common Stock under the New Option shall be equal to the exercise price per share
of Company Common Stock under the original option divided by the Exchange Ratio,
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provided that such exercise price shall be rounded up to the nearest cent.
The adjustment provided herein with respect to any options which are "incentive
stock options" (as defined in Section 422 of the Code) shall be and is intended
to be effected in a manner which is consistent with Section 424(a) of the Code.
After the Effective Time, each New Option shall be exercisable and shall vest
upon the same terms and conditions as were applicable to the related Company
Stock Option immediately prior to the Effective Time, except that all
references to the Company shall be deemed to be references to Parent and
provided that as to each employee of the Company identified on SCHEDULE 7.8,
Parent agrees to take all necessary action to provide that upon such employee's
termination of employment with Parent or with any Subsidiary of Parent for any
reason, other than a voluntary termination by such employee or termination for
Cause (as defined herein), each New Option held by each such employee shall
become fully vested. As used herein the term "Cause" means (x) the willful and
continued failure of the employee to perform his duties and responsibilities
with the Surviving Corporation or to comply with reasonable directions of his
superiors that is not cured to the Surviving Corporation's satisfaction within
15 days after written notice to the employee by such superiors specifying in
reasonable detail the manner in which the employee has failed to perform such
duties and responsibilities or comply with such directions; (y) the conviction
of the employee of a criminal offense involving fraud, dishonesty or moral
turpitude; or (z) the engaging by the employee in any act which is intended to
be, and is, materially injurious to the Parent, monetarily or otherwise which
is not cured (if curable) to the Surviving Corporation's satisfaction within 15
days after notice to the employee by such employee's superiors. Parent shall
file with the SEC a registration statement on Form S-8 (or other appropriate
form) or a post-effective amendment to the Registration Statement for purposes
of registering all shares of Parent Common Stock issuable after the Effective
Time upon exercise of the New Options, and use all reasonable efforts to have
such registration statement or post-effective amendment become effective with
respect thereto as promptly as practicable after the Effective Time.
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Section 7.9 PUBLIC ANNOUNCEMENTS. Each of Parent,
Sub, and the Company agrees that it will not issue any press release or
otherwise make any public statement with respect to this Agreement (including
the Exhibits hereto) or the transactions contemplated hereby or thereby without
the prior consent of the other party, which consent shall not be unreasonably
withheld or delayed; PROVIDED, HOWEVER, that such disclosure can be made without
obtaining such prior consent if (i) the disclosure is required by law or by
obligations imposed pursuant to any listing agreement with the NNM or any
national securities exchange and (ii) the party making such disclosure has first
used its best efforts to consult with the other party about the form and
substance of such disclosure.
Section 7.10 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
All rights to indemnification, advancement of litigation expenses and
limitation of personal liability existing in favor of the directors and officers
of the Company under the provisions existing on the date hereof in the Company's
Articles of Incorporation or By-Laws shall, with respect to any matter existing
or occurring at or prior to the Effective Time (including the transactions
contemplated by this Agreement), survive the Effective Time, and, as of the
Effective Time, the Surviving Corporation shall assume all obligations of the
Company in respect thereof as to any claim or claims asserted prior to or within
a six-year period immediately after the Effective Time.
Section 7.11 EXPENSES. Except as otherwise set forth in
Section 9.2(b), whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement (including the Exhibits
hereto) and the transactions contemplated hereby shall be paid by the party
incurring such expenses, except that sixty percent (60%) and forty percent (40%)
of the following expenses shall be borne by Parent and the Company,
respectively: (i) the filing fee in connection with filings under the HSR Act,
(ii) the expenses incurred in connection with printing the Registration
Statement and the Proxy Statement and (iii) the filing fee with the SEC relating
to the Registration Statement or the Proxy Statement.
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Section 7.12 LISTING APPLICATION. Parent will use
its reasonable best efforts to cause the shares of Parent Common Stock to
be issued pursuant to this Agreement in the Merger to be listed for quotation on
the NNM.
Section 7.13 SUPPLEMENTAL DISCLOSURE. The Company shall give prompt notice
to Parent, and Parent shall give prompt notice to the Company, of (i) the
occurrence, or non-occurrence, of any event the occurrence, or non-occurrence,
of which would be likely to cause (x) any representation or warranty contained
in this Agreement to be untrue or inaccurate or (y) any covenant, condition or
agreement contained in this Agreement not to be complied with or satisfied and
(ii) any failure of the Company or Parent, as the case may be, to comply with
or satisfy any covenant, condition or agreement to be complied with or
satisfied by it hereunder; PROVIDED, HOWEVER, that the delivery of any notice
pursuant to this Section 7.13 shall not have any effect for the purpose of
determining the satisfaction of the conditions set forth in Article VIII of
this Agreement or otherwise limit or affect the remedies available hereunder to
any party.
Section 7.14 LETTERS OF ACCOUNTANTS.
(a) Parent shall use all reasonable efforts to
cause to be delivered to the Company a letter of Coopers & Xxxxxxx
L.L.P., Parent's independent auditors, dated a date within two business days
before the date on which the Registration Statement shall become effective and
addressed to the Company, in form and substance reasonably satisfactory to the
Company and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement, which letter shall be brought down to the
Effective Time.
(b) The Company shall use all reasonable best
efforts to cause to be delivered to Parent a letter of Deloitte & Touche, the
Company's independent auditors, dated a date within two business days before the
date on which the Registration State shall become effective and addressed to
Parent, in form and substance reasonably satisfactory to Parent and customary in
scope and substance for letters delivered by independent public accountants in
connection with registration statements
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similar to the Registration Statement, which letter shall be brought down to
the Effective Time.
Section 7.15 CONVEYANCE TAXES. Parent and the
Company shall cooperate in the preparation, execution and filing of all
returns, questionnaires, applications, or other documents regarding (i) any real
property transfer gains, sales, use, transfer, value-added, stock transfer, and
stamp taxes, (ii) any recording, registration and other fees, and (iii) any
similar taxes or fees that become payable in connection with the transactions
contemplated hereby that are required or permitted to be filed on or before the
Effective Time.
Section 7.16 NON-SOLICITATION OF EMPLOYEES. Each of
Parent and the Company agree, for a period of one year from the date hereof,
not to directly or indirectly solicit any employee of the other or to induce or
encourage any employee of the other to terminate such employee's employment.
Section 7.17 EXCHANGE ACT FILINGS. For so long as Parent
may be required to do so pursuant to the Purchase Agreements with the
purchasers of its 5 1/2% Senior Convertible Notes Due 2000, Parent shall timely
file with the SEC all reports required to be filed with the SEC pursuant to the
Exchange Act.
ARTICLE ARTICLE VIII
CONDITIONS TO CONSUMMATION OF THE MERGER
----------------------------------------
Section 8.1 CONDITIONS TO EACH PARTY'S OBLIGATION TO
EFFECT THE MERGER. The respective obligations of each party to effect the
Merger shall be subject to the satisfaction at or prior to the Effective Time of
the following conditions:
(a) HSR Approval. Any waiting period applicable to
the consummation of the Merger under the HSR Act shall have expired or
been terminated, and no action shall have been instituted by the Department of
Justice or Federal Trade Commission challenging or seeking to enjoin the
consummation of this transaction, which action shall have not been withdrawn or
terminated.
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(b) Stockholder Approval. This Agreement and
the transactions contemplated hereby shall have been approved and adopted by the
requisite vote (as described in Section 4.15) of the stockholders of the Company
in accordance with applicable law and the issuance of the shares of Parent
Common Stock to be issued in the Merger shall have been approved by the
requisite vote (as described in Section 5.10) of the stockholders of Parent in
accordance with the requirements of the rules of the NNM.
(c) NNM Listing for Quotation. The shares
of Parent Common Stock issuable to the holders of Company Common Stock
pursuant to this Agreement in the Merger shall have been authorized for listing
on the NNM, upon official notice of issuance.
(d) Registration Statement. The Registration
Statement shall have become effective under the Securities Act and shall not be
the subject of any stop order or proceeding by the SEC seeking a stop order.
(e) No Order. No Governmental Entity (including
a federal or state court) of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, injunction or other order (whether temporary, preliminary or
permanent) which is in effect and which materially restricts, prevents or
prohibits consummation of the Merger or any transaction contemplated by this
Agreement; PROVIDED, HOWEVER, that the parties shall use their reasonable best
efforts to cause any such decree, judgment, injunction or other order to be
vacated or lifted.
(f) Approvals. Other than the filing of Merger
documents in accordance with the MBCA, all authorizations, consents,
waivers, orders or approvals of, or declarations or filings with, or expirations
of waiting periods imposed by, any Governmental Entity that are listed on
Schedule 8.1(f), or the failure of which to obtain, make or occur would have a
material adverse effect at or after the Effective Time on Parent or the
Surviving Corporation shall have been obtained, been filed or have occurred.
Parent shall have received all state securities or "blue sky" permits and other
authorizations necessary to issue the shares of Parent Common Stock pursuant to
this Agreement in the Merger.
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Section 8.2 CONDITIONS TO OBLIGATIONS OF PARENT AND SUB
TO EFFECT THE MERGER. The obligations of Parent and Sub to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of
the following additional conditions, unless waived in writing by Parent:
(a) Representations and Warranties. (i) The
aggregate effect of all inaccuracies in the representations and warranties of
the Company set forth in this Agreement does not and will not have a material
adverse effect on the business, operations, prospects, properties, assets
(including intangible assets), liabilities (including contingent liabilities)
condition (financial or other) or results of operations of the Company and (ii)
the representations and warranties of the Company that are qualified with
reference to a Company Material Adverse Effect or materiality shall be true and
correct and the representations and warranties that are not so qualified shall
be true and correct in all material respects, in each case as of the date
hereof, and, except to the extent such representations and warranties speak as
of an earlier date, as of the Effective Time as though made at and as of the
Effective Time, and Parent shall have received a certificate signed on behalf of
the Company by the chief executive officer or the chief financial officer of the
Company to such effect.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the Effective
Time, and Parent shall have received a certificate signed on behalf of the
Company by the chief executive officer or the chief financial officer of the
Company to such effect.
(c) Affiliate Letters. Parent shall have received
the Affiliate Letters from each of the Affiliates of the Company, as
contemplated in Section 7.5.
(d) Tax Opinion of Counsel. Parent shall have
received an opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx ("SKADDEN, ARPS")
dated on or about the date that is two business days prior to the date the Proxy
Statement-Prospectus is first mailed to stockholders of the Company to the
effect that the Merger will constitute a
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reorganization for federal income tax purposes within the meaning of Section
368(a) of the Code, which opinion shall not have been withdrawn or modified in
any material respect.
In rendering such opinion, Skadden, Arps may require and rely upon
representations contained in certificates of officers of Parent, Sub and the
Company, certain stockholders and others dated on or before the date of such
opinion and shall not have been withdrawn or modified in any material respect;
PROVIDED, HOWEVER, that the condition set forth in this Section 8.2(d) shall be
deemed to be satisfied if Skadden, Arps is unable to render such opinion solely
by reason of any of the holders of Company Common Stock refusing or failing to
provide Skadden, Arps with requested representations. The specific provisions
of each such certificate and representation shall be in form and substance
satisfactory to Skadden, Arps.
Section 8.3 CONDITIONS TO OBLIGATION OF THE COMPANY TO
EFFECT THE MERGER. The obligation of the Company to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following additional conditions:
(a) Representations and Warranties. (i) The
aggregate effect of all inaccuracies in the representations and warranties
of Parent set forth in this Agreement does not and will not have a material
adverse effect on the business, operations, prospects, properties, assets
(including intangible assets), liabilities (including contingent liabilities),
condition (financial or other) or results of operations of the Parent and (ii)
the representations and warranties of Parent contained in this Agreement that
are qualified with reference to a Parent Material Adverse Effect or materiality
shall be true and correct and the representations and warranties that are not so
qualified shall be true and correct in all material respects as of the date
hereof, and, except to the extent such representations and warranties speak as
of an earlier date, as of the Effective Time as though made on and as of the
Effective Time, and the Company shall have received a certificate signed on
behalf of Parent by the chief executive officer or the chief operating officer
of Parent to such effect.
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(b) Performance of Obligations of Parent and Sub.
Each of Parent and Sub shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or prior to
the Effective Time, and the Company shall have received a certificate signed on
behalf of Parent by the chief executive officer or the chief operating officer
of Parent to such effect.
(c) Tax Opinion of Counsel. The Company shall
have received an opinion of Xxxxxxx, Carton & Xxxxxxx ("XXXXXXX, CARTON") dated
on or about the date that is two business days prior to the date the Proxy
Statement-Prospectus is first mailed to stockholders of the Company to the
effect that the Merger will constitute a reorganization for federal income tax
purposes within the meaning of Section 368(a) of the Code, which opinion shall
not have been withdrawn or modified in any material respect.
In rendering such opinion, Xxxxxxx, Carton may require and
rely upon representations contained in certificates of officers of Parent, Sub
and the Company, certain stockholders and others dated on or before the date of
such opinion and shall not have been withdrawn or modified in any material
respect; PROVIDED, HOWEVER, that the condition set forth in this Section 8.3(c)
shall be deemed to be satisfied if Xxxxxxx, Carton is unable to render such
opinion solely by reason of any of the holders of Company Common Stock refusing
or failing to provide Xxxxxxx, Carton with requested representations. The
specific provisions of each such certificate and representation shall be in
form and substance satisfactory to Xxxxxxx, Carton.
ARTICLE ARTICLE IX
TERMINATION
-----------
Section 9.1 TERMINATION. This Agreement may be
terminated at any time prior to the Effective Time, whether before or after
approval by the stockholders of Parent or the Company:
(a) by mutual consent of Parent and the Company;
48
56
(b) by either Parent or the Company, if the
Merger shall not have been consummated before June 30, 1996 (unless the
failure to so consummate the Merger by such date shall be due to the action or
failure to act of the party (or its Subsidiaries, if any) seeking to terminate
this Agreement, which action or failure to act constitutes a breach of this
Agreement);
(c) by either Parent or the Company, if any
permanent injunction or action by any Governmental Entity of competent
jurisdiction preventing the consummation of the Merger shall have become final
and nonappealable;
(d) by Parent, if (i) there has been a breach of
any representations or warranties of the Company set forth herein the effect
of which is a Company Material Adverse Effect, (ii) there has been a breach in
any material respect of any of the covenants or agreements set forth in this
Agreement on the part of the Company, which breach is not curable or, if
curable, is not cured within 30 days after written notice of such breach is
given by Parent to the Company, or (iii) the Board of Directors of the Company
(x) fails to recommend approval and adoption of this Agreement and the Merger by
the stockholders of the Company or withdraws or amends or modifies in a manner
adverse to Parent and Sub its recommendation or approval in respect of this
Agreement or the Merger, (y) makes any recommendation with respect to an
Alternative Acquisition other than a recommendation to reject such Alternative
Acquisition, or (z) takes any action prohibited by Section 7.2;
(e) by the Company, if (i) there has been a
breach of any representations or warranties of Parent set forth herein the
effect of which is a Parent Material Adverse Effect, (ii) there has been a
breach in any material respect of any of the covenants or agreements set forth
in this Agreement on the part of Parent, which breach is not curable or, if
curable, is not cured within 30 days after written notice of such breach is
given by the Company to Parent or (iii) such termination is necessary to allow
the Company to enter into an agreement with respect to a Superior Proposal
(provided that the termination described in this clause (iii) shall not be
effective unless and until the Company shall have paid to
49
57
Parent in full the fee and expense reimbursement described in Section 9.2(b))
Section 9.2 EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement
pursuant to this Article IX, the Merger shall be deemed abandoned and
this Agreement shall forthwith become void, without liability on the part of any
party hereto, except as provided in this Section 9.2, Section 7.1 and Section
7.11, and except that nothing herein shall relieve any party from liability for
any breach of this Agreement, except that Parent and the Company shall have no
rights with respect to the recovery of expenses, except as provided for in
Sections 9.2(b)(i) and 9.2(b)(ii), respectively.
(b)(i) If Parent shall have terminated this
Agreement pursuant to Section 9.1(d)(i) or (ii) or if this Agreement is
terminated pursuant to Section 9.1(a) or 9.1(b) and this Agreement and the
Merger shall have failed to receive the requisite vote of the stockholders of
the Company at the meeting of the stockholders of the Company called to vote
thereon, then the Company shall promptly reimburse Parent for all out-of-pocket
expenses, up to an amount of Two Million Dollars ($2,000,000), incurred in
connection with the transactions contemplated hereby.
(ii) If the Company shall have terminated
this Agreement pursuant to Section 9.1(e)(i) or (ii) or if this Agreement is
terminated pursuant to Section 9.1(a) or 9.1(b) and this Agreement and the
issuance of shares of Parent Common Stock pursuant hereto shall have failed to
receive the requisite vote of the stockholders of Parent called to vote
thereon, then Parent shall promptly reimburse the Company for all out-of-pocket
expenses, up to an amount of Two Million Dollars ($2,000,000), incurred in
connection with the transactions contemplated hereby.
(iii) If Parent shall have terminated this
Agreement pursuant to Section 9.1(d)(iii) or the Company shall have terminated
this Agreement pursuant to Section 9.1(e)(iii), then in any such case the
Company shall promptly, but in no event later than two business days after the
date of such termination, pay Parent a
50
58
termination fee of Ten Million Dollars ($10,000,000) and shall have no
obligation to pay any amounts under Section 9.2(b)(i).
(iv) If this Agreement is terminated
pursuant to Section 9.1(a) or 9.1(b) and the Board of Directors of Parent (A)
withdraws or amends or modifies in any manner adverse to the Company its
recommendation with respect to this Agreement or (B) makes any recommendation
with respect to any proposed acquisition of Parent (whether by way of merger,
purchase of capital stock, purchase of assets or otherwise) or any material
portion of its capital stock or assets (an "ACQUISITION TRANSACTION") other
than a recommendation to reject such Acquisition Transaction and in either such
case the stockholders of Parent shall not approve the issuance of the shares of
Parent Common Stock in the Merger, then Parent shall promptly, but in no event
later than two business days after the date of such termination, pay the
Company a termination fee of Ten Million Dollars ($10,000,000) and shall have
no obligation to pay any amounts under Section 9.2(b)(ii).
(v) Notwithstanding any other provision
hereof, no fee or expense reimbursement shall be paid pursuant to this Section
9.2(b) to any party who shall be in material breach of its obligations
hereunder.
ARTICLE ARTICLE X
GENERAL PROVISIONS
------------------
Section 10.1 AMENDMENT AND MODIFICATION. At any time
prior to the Effective Time, this Agreement may be amended, modified or
supplemented only by written agreement (referring specifically to this
Agreement) of Parent, Sub and the Company with respect to any of the terms
contained herein; PROVIDED, HOWEVER, that after any approval and adoption of
this Agreement by the stockholders of the Company, no such amendment,
modification or supplementation shall be made which under applicable law
requires the approval of such stockholders, without the further approval of such
stockholders.
Section 10.2 WAIVER. At any time prior to the
Effective Time, Parent and Sub, on the one hand, and the
51
59
Company, on the other hand, may (i) extend the time for the performance of any
of the obligations or other acts of the other, (ii) waive any inaccuracies in
the representations and warranties of the other contained herein or in any
documents delivered pursuant hereto and (iii) waive compliance by the other
with any of the agreements or conditions contained herein which may legally be
waived. Any such extension or waiver shall be valid only if set forth in an
instrument in writing specifically referring to this Agreement and signed on
behalf of such party.
Section 10.3 SURVIVABILITY; INVESTIGATIONS. The
respective representations and warranties of Parent and the Company contained
herein or in any certificates or other documents delivered prior to or as
of the Effective Time (i) shall not be deemed waived or otherwise affected by
any investigation made by any party hereto and (ii) shall not survive beyond the
Effective Time.
Section 10.4 NOTICES. All notices and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or by next-day courier or telecopied with confirmation of
receipt, to the parties at the addresses specified below (or at such other
address for a party as shall be specified by like notice; provided that notices
of a change of address shall be effective only upon receipt thereof). Any such
notice shall be effective upon receipt, if personally delivered or telecopied,
or one day after delivery to a courier for next-day delivery.
(a) If to Parent or Sub, to:
SoftKey International Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Office of the General
Counsel
Telecopier No.: (000) 000-0000
52
60
with copies to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
Xxx Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopier No.: (000) 000-0000
and
(b) if to the Company, to:
Minnesota Educational Computing
Corporation (MECC)
0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxxxxx, XX 0000-0000
Attention: Chief Executive Officer
Telecopier No.: (000) 000-0000
with a copy to:
Xxxxxxx, Carton & Xxxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Xx., Esq.
Telecopier No.: (000) 000-0000
Section 10.5 DESCRIPTIVE HEADINGS; INTERPRETATION. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
References in this Agreement to Sections, Schedules, Exhibits or Articles mean a
Section, Schedule, Exhibit or Article of this Agreement unless otherwise
indicated. References to this Agreement shall be deemed to include the Exhibits
and Schedules hereto, unless the context otherwise requires. The term "person"
shall mean and include an individual, a partnership, a joint venture, a
corporation, an association, a trust, a Governmental Entity or an unincorporated
organization or other entity.
Section 10.6 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement
(including the Schedules and other documents and instruments referred to
herein), together with the Confidentiality Agreement, constitute the entire
agreement and supersede all other prior agreements and understandings, both
written and oral, among the parties
53
61
or any of them, with respect to the subject matter hereof. Except for Sections
7.8, 7.10 and 7.17, this Agreement is not intended to confer upon any person
not a party hereto any rights or remedies hereunder. This Agreement shall not
be assigned by operation of law or otherwise; PROVIDED that Parent or Sub may
assign its rights and obligations hereunder to a direct or indirect subsidiary
of Parent, but no such assignment shall relieve Parent or Sub, as the case may
be, of its obligations hereunder.
Section 10.7 GOVERNING LAW. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Delaware without giving effect to the provisions thereof relating to
conflicts of law.
Section 10.8 SEVERABILITY. In case any one or more of
the provisions contained in this Agreement should be invalid, illegal or
unenforceable in any respect against a party hereto, the validity, legality
and enforceability of the remaining provisions contained herein shall not
in any way be affected or impaired thereby and such invalidity, illegality or
unenforceability shall only apply as to such party in the specific
jurisdiction where such judgment shall be made.
Section 10.9 COUNTERPARTS. This Agreement may be
executed in two or more counterparts, each of which shall be deemed to be an
original but all of which shall constitute one and the same agreement.
54
62
IN WITNESS WHEREFORE, each of Parent, Sub and the Company has caused
this Agreement to be executed under seal on its behalf by its officers
thereunto duly authorized, all as of the date first above written.
PARENT:
------
SOFTKEY INTERNATIONAL INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman and Chief
Executive Officer
SUB:
---
SCHOOLCO INC.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chairman and Chief
Executive Officer
THE COMPANY:
-----------
MINNESOTA EDUCATIONAL COMPUTING
CORPORATION (MECC)
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Chairman
55
63
EXHIBIT A
---------
VOTING AGREEMENT
----------------
VOTING AGREEMENT (the "Agreement"), dated as of October 30,
1995, between North American Fund II, L.P., a Delaware limited partnership and
a stockholder (the "Stockholder") of Minnesota Educational Computing
Corporation (MECC), a Minnesota corporation (the "Company"), and SoftKey
International Inc., a Delaware corporation ("Parent").
WHEREAS, concurrently with the execution of this Agreement,
the Company, Parent and SchoolCo Inc., a Minnesota corporation and a wholly
owned subsidiary of Parent ("Sub"), have entered into an Agreement and Plan of
Merger (as the same may be amended from time to time, the "Merger Agreement"),
providing for the merger (the "Merger") of Sub with and into the Company
pursuant to the terms and conditions of the Merger Agreement; and
WHEREAS, upon consummation the Merger, the stockholders of the
Company will receive a number of shares of common stock, par value $.01 per
share, of Parent ("Parent Common Stock") equal to the Exchange Ratio (as
defined in the Merger Agreement) for each share of common stock, par value $.01
per share (the "Company Common Stock") of the Company owned by them;
WHEREAS, the Stockholder owns of record and beneficially
1,461,762 shares of Company Common Stock wishes to enter into this Agreement
with respect to 794,284 of such shares (such 794,284 shares of Company Common
Stock being referred to as the "Shares"); and
WHEREAS, in order to induce Parent to enter into the Merger
Agreement, the Stockholder has agreed, upon the terms and subject to the
conditions set forth herein, to vote the Shares and to deliver an irrevocable
proxy to Parent to vote the Shares at a meeting of the Company's stockholders,
in favor of approval and adoption of the Merger Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt, sufficiency and adequacy of which is hereby acknowledged, the parties
hereto agree as follows:
64
1. AGREEMENT TO VOTE SHARES. The Stockholder agrees
during the term of this Agreement to vote the Stockholder's Shares, in person
or by proxy, (a) in favor of approval and adoption of the Merger Agreement and
the Merger at every meeting of the stockholders of the Company at which such
matters are considered and at every adjournment thereof, and (b) against an
Alternative Acquisition (as such term is defined in the Merger Agreement). The
Stockholder agrees to deliver to Parent upon request immediately prior to any
vote contemplated by clause (a) or (b) above a proxy substantially in the form
attached hereto as Annex A (a "Proxy"), which Proxy shall be irrevocable during
the term of this Agreement to the extent permitted under Minnesota law, and
Parent agrees to vote the Shares subject to each such Proxy in favor of
approval and adoption of the Merger Agreement and the Merger. Notwithstanding
anything herein to the contrary, the obligation of the Stockholder to vote its
Shares in accordance with the terms of this Agreement and to deliver the Proxy,
and the validity of a Proxy delivered hereunder, will be conditional on the
Parent Price (as hereinafter defined) being at least $30. The "Parent Price,"
as used herein, refers to the volume weighted average of the closing prices of
Parent Common Stock on the Nasdaq National Market for the twenty full trading
days immediately preceding the meeting of the stockholders of the Company (or
adjournment thereof) at which the Merger and the Merger Agreement are
considered.
2. NO VOTING TRUSTS. The Stockholder agrees that the
Stockholder will not, nor will the Stockholder permit any entity under the
Stockholder's control to, deposit any of the Stockholder's Shares in a voting
trust or subject any of its Shares to any arrangement with respect to the
voting of the Shares inconsistent with this Agreement.
3. LIMITATION ON DISPOSITIONS AND PROXIES. During the
term of this Agreement, the Stockholder agrees not to sell, assign, pledge,
transfer or otherwise dispose of, or grant any proxies with respect to
(except for a Proxy or a proxy which is not inconsistent with the terms of this
Agreement) any of the Stockholder's Shares.
2
65
4. SPECIFIC PERFORMANCE. Each party hereto acknowledges
that it will be impossible to measure in money the damage to the other party if
a party hereto fails to comply with the obligations imposed by this Agreement,
that, in the event of any such failure, the other party will not have an
adequate remedy at law or in damages. Accordingly, each party hereto agrees
that injunctive relief or other equitable remedy, in addition to remedies at
law or damages, is the appropriate remedy for any such failure and will not
oppose the granting of such relief on the basis that the other party has an
adequate remedy at law. Each party hereto agrees that it will not seek, and
agrees to waive any requirement for, the securing or posting of a bond in
connection with any other party's seeking or obtaining such equitable relief.
5. TERM OF AGREEMENT; TERMINATION. Subject to Section
9(e), the term of this Agreement shall commence on the date hereof and such
term and this Agreement shall terminate upon the earliest to occur of (i) the
Effective Time, and (ii) the date on which the Merger Agreement is terminated
in accordance with its terms. Upon such termination, no party shall have any
further obligations or liabilities hereunder; provided, that such termination
shall not relieve any party from liability for any breach of this Agreement
prior to such termination.
6. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS.
Each Stockholder represents and warrants to Parent that, as of the date
hereof, (a) such Stockholder has full legal power and authority to execute and
deliver this Agreement and the Proxy, and (b) such Stockholder's Shares are free
and clear of all proxies (except for a proxy which is not inconsistent with the
terms of this Agreement).
7. ENTIRE AGREEMENT. This Agreement supersedes all
prior agreements, written or oral, among the parties hereto with respect to the
subject matter hereof and contains the entire agreement among the parties with
respect to the subject matter hereof. This Agreement may not be amended,
supplemented or modified, and no provisions hereof may be modified or waived,
except by an instrument in writing signed by all parties hereto. No waiver of
any provisions hereof by any party shall be deemed a waiver of any other
provisions hereof by any
3
66
such party, nor shall any such waiver be deemed a continuing waiver of any
provision hereof by such party.
8. NOTICES. All notices, requests, claims, demands or other
communications hereunder shall be in writing and shall be deemed given when
delivered personally, upon receipt of a transmission confirmation if sent by
telecopy or like transmission (with confirmation) and on the next business day
when sent by Federal Express, Express Mail or other reputable overnight courier
service to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
If to Parent:
SoftKey International Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: Office of the General Counsel
Telecopy: (000) 000-0000
With a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx
Xxx Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
If to Stockholder:
North American Fund II, L.P.
000 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxx, Xxxxxx & Xxxxxxx
Xxxxxx Xxxxx, Xxxxx 0000
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Xx., Esq.
Telecopy: (000) 000-0000
4
67
9. MISCELLANEOUS.
(a) This Agreement shall be deemed a contract made
under, and for all purposes shall be construed in accordance with, the laws of
the State of Delaware, without reference to its conflicts of law principles.
(b) If any provision of this Agreement or the
application of such provision to any person or circumstances shall be held
invalid or unenforceable by a court of competent jurisdiction, such provision or
application shall be unenforceable only to the extent of such invalidity or
unenforceability, and the remainder of the provision held invalid or
unenforceable and the application of such provision to persons or circumstances,
other than the party as to which it is held invalid, and the remainder of this
Agreement, shall not be affected.
(c) This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
(d) All Section headings herein are for convenience of
reference only and are not part of this Agreement, and no construction or
reference shall be derived therefrom.
(e) The obligations of the Stockholder set forth in
this Agreement shall not be effective or binding upon the Stockholder until
after such time as the Merger Agreement is executed and delivered by the
Company, Parent and Sub, and the parties agree that there is not and has not
been any other agreement, arrangement or understanding between the parties
hereto with respect to the matters set forth herein.
5
68
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first written above.
SOFTKEY INTERNATIONAL INC.
By:________________________
Name: Xxxxxxx X. Xxxxx
Title: Chairman and Chief
Executive Officer
NORTH AMERICAN FUND II, L.P.
By:________________________
Name:
Title:
6
69
(ANNEX A)
FORM OF PROXY
The undersigned, for consideration received, hereby appoints
SoftKey International Inc., a Delaware corporation ("Parent"), its proxy to
vote 794,284 shares of Common Stock, par value $.01 per share, of Minnesota
Educational Computing Corporation (MECC), a Minnesota corporation (the
"Company"), owned by the undersigned and described in the Voting Agreement
referred to below and which the undersigned is entitled to vote at any meeting
of stockholders of the Company, and at any adjournment thereof, to be held for
the purpose of considering and voting upon a proposal to approve and adopt the
Agreement and Plan of Merger, dated as of October 30, 1995 (the "Merger
Agreement"), by and among the Company, Parent, and SchoolCo Inc., a Minnesota
corporation and a wholly owned subsidiary of Parent ("Sub"), providing for the
merger (the "Merger") of Sub with and into the Company, FOR such proposal and
AGAINST any Alternative Acquisition (as such term is defined in the Merger
Agreement). This proxy is subject to the terms of the Voting Agreement, is
coupled with an interest and revokes all prior proxies granted by the
undersigned with respect to such 794,284 shares, is irrevocable and shall
terminate and be of no further force or effect automatically at such time as
the Voting Agreement, dated as of October 30, 1995 between the undersigned and
Parent, a copy of such Agreement being attached hereto, terminates in
accordance with its terms.
Dated __________________, 199_
NORTH AMERICAN FUND II, L.P.
By:________________________
Name:
Title:
70
EXHIBIT B
---------
FORM OF AFFILIATE LETTER
[ ], 1995
SoftKey International Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
ATTENTION: General Counsel
Gentlemen:
I have been advised that as of the date of this letter I may
be deemed to be an "affiliate" of Minnesota Educational Computing Corporation
(MECC), a Minnesota corporation (the "Company"), as the term "affiliate" is
defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act"). Pursuant to the terms of the Agreement and Plan of Merger dated as of
October 30, 1995 (the "Agreement"), by and among SoftKey International Inc., a
Delaware corporation ("Parent"), SchoolCo Inc., a Minnesota corporation and a
wholly owned subsidiary of Parent ("Sub"), and the Company, Parent will acquire
all of the issued and outstanding shares of common stock, par value $.01 per
share, of the Company ("Company Common Stock") and Sub will merge with and into
the Company (the "Merger").
As a result of the Merger, I may receive shares of Common
Stock, par value $.01 per share of Parent ("Parent Common Stock"). I would
receive the Parent Common Stock in exchange for shares (or options for shares)
owned by me of Company Common Stock.
I represent, warrant and covenant to Parent that in the event
I receive Parent Common Stock as a result of the Merger:
71
SoftKey International Inc.
[ ], 1995
Page 2 of 4 Pages
A. I shall not make any sale, transfer or other disposition of the
Parent Common Stock in violation of the Act or the Rules and Regulations.
B. I have carefully read this letter and the Agreement and discussed
the requirements of such documents and other applicable limitations upon my
ability to sell, transfer or otherwise dispose of Parent Common Stock to the
extent I felt necessary, with my counsel or counsel for the Company.
C. I have been advised that the issuance of Parent Common Stock to me
pursuant to the Merger has been registered with the Commission under the Act on
a Registration Statement Form S-4. However, I have also been advised that,
because at the time the Merger is submitted for a vote of the stockholders of
the Company, (a) I may be deemed to be an affiliate of the Company and (b) the
distribution by me of the Parent Common Stock has not been registered under the
Act, I may not sell, transfer or otherwise dispose of Parent Common Stock
issued to me in the Merger unless (i) such sale, transfer or other disposition
is made in conformity with the volume and other limitations of Rule 145
promulgated by the Commission under the Act, (ii) such sale, transfer or other
disposition has been registered under the Act or (iii) in the opinion of
counsel reasonably acceptable to Parent, such sale, transfer or other
disposition is otherwise exempt from registration under the Act.
D. I understand that Parent is under no obligation to register the
sale, transfer or other disposition of the Parent Common Stock by me or on my
behalf under the Act or to take any other action necessary in order to make
compliance with an exemption from such registration available solely as a
result of the Merger.
E. I also understand that there will be placed on the certificates
for the Parent Common Stock issued to me, or any substitutions therefor, a
legend stating in substance:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE SECURITIES ACT OF
1933 APPLIES. THE
72
SoftKey International Inc.
[ ], 1995
Page 3 of 4 Pages
SHARES REPRESENTED BY THIS CERTIFICATE MAY ONLY BE TRANSFERRED IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT DATED , 1995 BETWEEN
THE REGISTERED HOLDER HEREOF AND SOFTKEY INTERNATIONAL INC., A COPY OF
WHICH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICES OF SOFTKEY
INTERNATIONAL INC."
F. I also understand that unless a sale or transfer is made in
conformity with the provisions of Rule 145, or pursuant to a registration
statement, Parent reserves the right to put the following legend on the
certificates issued to any transferee:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AND WERE ACQUIRED FROM A PERSON WHO
RECEIVED SUCH SHARES IN A TRANSACTION TO WHICH RULE 145 PROMULGATED
UNDER THE SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE IN
CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE MEANING OF THE
SECURITIES ACT OF 1933 AND MAY NOT BE SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT IN ACCORDANCE WITH AN EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933."
It is understood and agreed that the legends set forth in paragraphs E
and F above shall be removed by delivery of substitute certificates without
such legend if the undersigned shall have delivered to Parent a copy of a
letter from the staff of the Commission, or an opinion of counsel reasonably
satisfactory to Parent in form and substance reasonably satisfactory to Parent,
to the effect that such legend is not required for purposes of the Act.
*[We understand, and you agree, that, notwithstanding anything
herein to the contrary, we may distribute the Parent Common Stock received by
us in the Merger to our partners in accordance with the terms of our
partnership agreement so long as each partner receiving a
__________________________________
* To be inserted only into the Affiliate Letter to be executed by North
American Fund II, L.P.
73
SoftKey International Inc.
[ ], 1995
Page 4 of 4 Pages
distribution of Parent Common Stock from us agrees to execute a letter
agreement addressed to you containing substantially the same terms as this
letter agreement.]
Execution of this letter should not be considered an admission
on my part that I am an "affiliate" of the Company as described in the first
paragraph of this letter, as or a waiver of any rights I may have to object to
any claim that I am such an affiliate or on after the date of this letter.
Very truly yours,
------------------------
Name:
Accepted this day of
, 1995, by
SOFTKEY INTERNATIONAL INC.
By
----------------------
Name:
Title:
