1
AGREEMENT AND PLAN OF MERGER
Among
THOMSON U.S. HOLDINGS INC.,
SCS SUBSIDIARY, INC.
and
SCS/COMPUTE, INC.
Dated as of December 19, 1995
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Glossary of Defined Terms
Defined Term Location of Definition
affiliate ................................................ Section 9.03(a)
Agreement ................................................ Preamble
beneficial owner ......................................... Section 9.03(b)
Blue Sky Laws ............................................ Section 3.05(b)
Board .................................................... Recitals
business day ............................................. Section 9.03(c)
Certificate of Merger .................................... Section 2.02
Certificates ............................................. Section 2.09(b)
Code ..................................................... Section 3.10(a)
Company .................................................. Preamble
Competing Proposal ....................................... Section 8.03(a)
Confidentiality Agreement ................................ Section 6.04(b)
control .................................................. Section 9.03(d)
Delaware Law ............................................. Recitals
Disclosure Schedule ...................................... Section 3.03
Dissenting Shares ........................................ Section 2.08(a)
Effective Time ........................................... Section 2.02
Environmental Claims ..................................... Section 3.16(a)
Environmental Law ........................................ Section 3.16(a)
Environmental Permit ..................................... Section 3.16(a)
ERISA .................................................... Section 3.10(a)
Exchange Act ............................................. Section 1.02(b)
Expenses ................................................. Section 8.03(a)
Fee ...................................................... Section 8.03(a)
Governmental Authority ................................... Section 3.16(a)
Hazardous Materials ...................................... Section 3.16(a)
HSR Act .................................................. Section 3.05(b)
Indemnified Parties ...................................... Section 6.07(b)
Intellectual Property .................................... Section 3.14(a)
IRS ...................................................... Section 3.10(a)
leased property .......................................... Section 3.16(a)
Licensed Intellectual Property ........................... Section 3.14(a)
Liens .................................................... Section 3.13(b)
Material Adverse Effect .................................. Section 3.01
Material Contract ........................................ Section 3.17
Merger ................................................... Recitals
Merger Consideration ..................................... Section 2.06(a)
Minimum Condition ........................................ Section 1.01(a)
Multiemployer Plan ....................................... Section 3.10(b)
Multiple Employer Plan ................................... Section 3.10(b)
1994 Balance Sheet ....................................... Section 3.07(c)
Offer .................................................... Recitals
Offer Documents .......................................... Section 1.01(b)
Offer to Purchase ........................................ Section 1.01(b)
Option ................................................... Section 2.07
Owned Intellectual Property .............................. Section 3.14(a)
Parent ................................................... Preamble
Paying Agent ............................................. Section 2.09(a)
Permitted Liens .......................................... Section 3.13(b)
Per Share Amount ......................................... Recitals
person ................................................... Section 9.03(e)
Plans .................................................... Section 3.10(a)
Proxy Statement .......................................... Section 3.12
Purchaser ................................................ Preamble
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Schedule 14D-9 .......................................... Section 1.02(b)
Schedule 14D-1 .......................................... Section 1.01(b)
SEC ...................................................... Section 1.01(b)
SEC Reports .............................................. Section 3.07(a)
Securities Act ........................................... Section 3.07(a)
Shares ................................................... Recitals
Stockholders' Meeting .................................... Section 6.01(a)
subsidiary ............................................... Section 9.03(f)
Surviving Corporation .................................... Section 2.01
Transactions ............................................. Section 3.04
WARN ..................................................... Section 3.10(f)
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TABLE OF CONTENTS
Page
ARTICLE I
THE OFFER
SECTION 1.01. The Offer............................................. 2
SECTION 1.02. Company Action........................................ 3
ARTICLE II
THE MERGER
SECTION 2.01. The Merger............................................ 4
SECTION 2.02. Effective Time; Closing............................... 4
SECTION 2.03. Effect of the Merger.................................. 5
SECTION 2.04. Certificate of Incorporation; By-laws................. 5
SECTION 2.05. Directors and Officers................................ 5
SECTION 2.06. Conversion of Securities.............................. 5
SECTION 2.07. Stock Options......................................... 6
SECTION 2.08. Dissenting Shares..................................... 6
SECTION 2.09. Surrender of Shares; Stock Transfer Books............. 7
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.01. Organization and Qualification........................ 8
SECTION 3.02. Certificate of Incorporation and By-laws.............. 9
SECTION 3.03. Capitalization........................................ 9
SECTION 3.04. Authority Relative to this Agreement.................. 9
SECTION 3.05. No Conflict; Required Filings and Consents............ 10
SECTION 3.06. Compliance............................................ 10
SECTION 3.07. SEC Filings; Financial Statements..................... 11
SECTION 3.08. Absence of Certain Changes or Events.................. 12
SECTION 3.09. Absence of Litigation................................. 12
SECTION 3.10. Employee Benefit Plans................................ 13
SECTION 3.11. Labor Matters......................................... 15
SECTION 3.12. Offer Documents; Schedule 14D-9; Proxy Statement...... 15
SECTION 3.13. Real Property and Leases.............................. 16
SECTION 3.14. Trademarks, Patents and Copyrights.................... 16
SECTION 3.15. Taxes................................................. 19
SECTION 3.16. Environmental Matters................................. 19
SECTION 3.17. Material Contracts.................................... 21
SECTION 3.18. Brokers............................................... 21
SECTION 3.19. Opinion of Financial Advisor.......................... 22
SECTION 3.20. Related Party Transactions............................. 22
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
SECTION 4.01. Corporate Organization................................ 22
SECTION 4.02. Authority Relative to this Agreement.................. 22
SECTION 4.03. No Conflict; Required Filings and Consents............ 23
SECTION 4.04. Financing............................................. 23
SECTION 4.05. Offer Documents; Proxy Statement...................... 23
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SECTION 4.06. Brokers............................................... 24
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the Merger.. 24
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Stockholders' Meeting.................................. 26
SECTION 6.02. Proxy Statement........................................ 27
SECTION 6.03. Company Board Representation; Section 14(f)............ 27
SECTION 6.04. Access to Information; Confidentiality................. 28
SECTION 6.05. No Solicitation of Transactions........................ 28
SECTION 6.06. Employee Benefits Matters.............................. 29
SECTION 6.07. Directors' and Officers' Indemnification............... 29
SECTION 6.08. Notification of Certain Matters........................ 30
SECTION 6.09. Further Action; Reasonable Best Efforts................ 31
SECTION 6.10. Public Announcements................................... 31
SECTION 6.11. Confidentiality Agreement.............................. 31
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to the Merger............................... 31
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination............................................ 32
SECTION 8.02. Effect of Termination.................................. 33
SECTION 8.03. Fees and Expenses...................................... 34
SECTION 8.04. Amendment.............................................. 35
SECTION 8.05. Extension; Waiver...................................... 35
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements............................................. 35
SECTION 9.02. Notices................................................ 35
SECTION 9.03. Certain Definitions.................................... 36
SECTION 9.04. Severability........................................... 37
SECTION 9.05. Entire Agreement; Assignment........................... 37
SECTION 9.06. Parties in Interest.................................... 38
SECTION 9.07. Specific Performance................................... 38
SECTION 9.08. Governing Law.......................................... 38
SECTION 9.09. Headings............................................... 38
SECTION 9.10. Counterparts........................................... 38
ANNEX A Conditions to the Offer
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AGREEMENT AND PLAN OF MERGER, dated as of December 19, 1995 (this
"Agreement", which term shall include all Annexes and Exhibits hereto), among
THOMSON U.S. HOLDINGS INC., a Delaware corporation ("Parent"), SCS SUBSIDIARY,
INC., a Delaware corporation and a wholly owned subsidiary of Parent
("Purchaser"), and SCS/COMPUTE, INC., a Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Purchaser and
the Company have approved the acquisition of the Company by Parent on the terms
and subject to the conditions set forth in this Agreement;
WHEREAS, in furtherance of such acquisition, it is proposed that
Purchaser shall make a cash tender offer (the "Offer") to acquire all of the
issued and outstanding shares (other than shares subject to the Stock Purchase
Agreement referred to below) of common stock, par value $.10 per share, of the
Company (the "Shares"), at a price of $ 6.75 per Share (such amount, or any
greater amount per Share pursuant to the Offer, being hereinafter referred to as
the "Per Share Amount") net to the seller in cash, upon the terms and subject to
the conditions of this Agreement and the Offer;
WHEREAS, the Board of Directors of the Company (the "Board") has
approved the making of the Offer and resolved and agreed to recommend that
holders of Shares tender their Shares pursuant to the Offer;
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Parent, Purchaser and the Company have each approved the merger
(the "Merger") of Purchaser with and into the Company in accordance with the
General Corporation Law of the State of Delaware ("Delaware Law") following the
consummation of the Offer and upon the terms and subject to the conditions set
forth herein; and
WHEREAS, Parent, Purchaser and Robert W. Nolan, Sr. have entered into
a Stock Purchase Agreement, dated as of the date hereof (the "Stock Purchase
Agreement"), pursuant to which Mr. Nolan has agreed to sell 1,082,570 Shares to
Purchaser for a purchase price per Share equal to the Per Share Amount;
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, Parent, Purchaser and the Company hereby
agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. The Offer. (a) Provided that this Agreement shall not
have been terminated in accordance with Section 8.01 and none of the events set
forth in Annex A hereto shall have occurred or be existing, Purchaser shall
commence the Offer as promptly as reasonably practicable after the date hereof,
but in no event later than five business days after the initial public
announcement of Purchaser's intention to commence the Offer. The obligation of
Purchaser to accept for payment and pay for Shares tendered pursuant to the
Offer shall be subject to the condition (the "Minimum Condition") that at least
the number of Shares that when added to the Shares already owned by Parent and
the number of Shares to be purchased by Purchaser pursuant to the Stock Purchase
Agreement shall constitute more than 50% of the then outstanding Shares on a
fully diluted basis (including, without limitation, all Shares issuable upon the
conversion of any convertible securities or upon the exercise of any options,
warrants or rights) shall have been validly tendered and not withdrawn prior to
the expiration of the Offer and also shall be subject to the satisfaction of the
other conditions set forth in Annex A hereto. Purchaser expressly reserves the
right to waive any such condition, to increase the Per Share Amount, and to make
any other changes in the terms and conditions of the Offer; provided, however,
that no change may be made
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without the consent of the Company which decreases the Per Share Amount or which
reduces the maximum number of Shares to be purchased in the Offer or which
imposes conditions to the Offer in addition to those set forth in Annex A
hereto. The Per Share Amount shall, subject to applicable withholding of taxes,
be net to the seller in cash, upon the terms and subject to the conditions of
the Offer. Subject to the terms and conditions of the Offer, Purchaser shall
pay, as promptly as practicable after expiration of the Offer, for all Shares
validly tendered and not withdrawn.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, Purchaser shall file with the Securities and Exchange Commission (the
"SEC") a Tender Offer Statement on Schedule 14D-1 (together with all amendments
and supplements thereto, the "Schedule 14D-1") with respect to the Offer. The
Schedule 14D-1 shall contain or shall incorporate by reference an offer to
purchase (the "Offer to Purchase") and forms of the related letter of
transmittal and any related summary advertisement (the Schedule 14D-1, the Offer
to Purchase and such other documents, together with all supplements and
amendments thereto, being referred to herein collectively as the "Offer
Documents"). Parent, Purchaser and the Company agree to correct promptly any
information provided by any of them for use in the Offer Documents which shall
have become false or misleading, and Parent and Purchaser further agree to take
all steps necessary to cause the Schedule 14D-1 as so corrected to be filed with
the SEC and the other Offer Documents as so corrected to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. In the event that the Offer is terminated or withdrawn
by Purchaser, Parent and Purchaser shall cause all tendered Shares to be
returned pursuant to the instructions set forth in the letter of transmittal.
SECTION 1.02. Company Action. (a) The Company hereby approves of and
consents to the Offer and represents that (i) the Board, at a meeting duly
called and held on December 14, 1995, has unanimously (except for abstentions of
interested directors) (A) determined that this Agreement and the transactions
contemplated hereby, including each of the Offer and the Merger, are fair to and
in the best interests of the holders of Shares, (B) approved and adopted this
Agreement and the transactions contemplated hereby and (C) resolved to recommend
that the stockholders of the Company accept the Offer and approve and adopt this
Agreement and the transactions contemplated hereby, and (ii) Fister & Associates
have delivered to the Board a written opinion that the consideration to be
received by the holders of Shares pursuant to each of the Offer and the Merger
is fair to the holders of Shares from a financial point of view. Subject only to
the fiduciary duties of the Board under applicable law as advised in writing by
independent counsel, the Company hereby consents to the inclusion in the Offer
Documents of the recommendation of the Board described in the immediately
preceding sentence. The Company has been advised by each of its directors and
executive officers (other than Robert W. Nolan, Sr. with respect to the Shares
to be sold pursuant to the Stock Purchase Agreement) that they intend either to
tender all Shares beneficially owned by them to Purchaser pursuant to the Offer
or to vote such Shares in favor of the approval and adoption by the stockholders
of the Company of this Agreement and the transactions contemplated hereby.
(b) As soon as reasonably practicable on the date of commencement of
the Offer, the Company shall file with the SEC a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with all amendments and supplements
thereto, the "Schedule 14D-9") containing the recommendation of the Board
described in Section 1.02(a) and shall disseminate the Schedule 14D-9 to the
extent required by Rule 14d-9 promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and any other applicable federal
securities laws. The Company, Parent and Purchaser agree to correct promptly any
information provided by any of them for use in the Schedule 14D-9 which shall
have become false or misleading, and the Company further agrees to take all
steps necessary to cause the Schedule 14D-9 as so corrected to be filed with the
SEC and disseminated to holders of Shares, in each case as and to the extent
required by applicable federal securities laws. Purchaser and its counsel shall
be given an opportunity to review and comment on the Schedule 14D-9 and any
amendments thereto prior to the filing thereof with the SEC. The Company shall
provide Purchaser and its counsel with a copy of any written comments or
telephonic notification of any verbal comments the Company may receive from the
SEC or
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its staff with respect to the Schedule 14D-9 promptly after the receipt thereof
and shall provide Purchaser and its counsel with a copy of any written responses
and telephonic notification of any verbal responses of the Company or its
counsel.
(c) The Company shall promptly furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of Shares. The Company shall furnish Purchaser with such
additional information, including, without limitation, updated listings and
computer files of stockholders, mailing labels and security position listings,
and such other assistance as Parent, Purchaser or their agents may reasonably
request. Subject to the requirements of applicable law, and except for such
steps as are necessary to disseminate the Offer Documents and any other
documents necessary to consummate the Offer or the Merger, Parent and Purchaser
shall hold in confidence the information contained in such labels, listings and
files, shall use such information only in connection with the Offer and the
Merger, and, if this Agreement shall be terminated in accordance with Section
8.01, shall deliver to the Company all copies of such information then in their
possession.
ARTICLE II
THE MERGER
SECTION 2.01. The Merger. Upon the terms and subject to the conditions
set forth in Article VII, and in accordance with Delaware Law, at the Effective
Time (as hereinafter defined) Purchaser shall be merged with and into the
Company. As a result of the Merger, the separate corporate existence of
Purchaser shall cease and the Company shall continue as the surviving
corporation of the Merger (the "Surviving Corporation"). Notwithstanding
anything to the contrary contained in this Section 2.01, Parent may elect
instead, at any time prior to the fifth business day immediately preceding the
date on which the Proxy Statement (as hereinafter defined) is mailed initially
to the Company's stockholders, to merge the Company into Purchaser or another
direct or indirect wholly owned subsidiary of Parent. In such event, the parties
agree to execute an appropriate amendment to this Agreement in order to reflect
the foregoing and to provide, as the case may be, that Purchaser or such other
wholly owned subsidiary of Parent shall be the Surviving Corporation.
SECTION 2.02. Effective Time; Closing. As promptly as practicable
after the satisfaction or, if permissible, waiver of the conditions set forth in
Article VII, the parties hereto shall cause the Merger to be consummated by
filing this Agreement or a certificate of merger or certificate of ownership and
merger (in either case, the "Certificate of Merger") with the Secretary of State
of the State of Delaware, in such form as is required by, and executed in
accordance with the relevant provisions of, Delaware Law (the date and time of
such filing being the "Effective Time"). Prior to such filing, a closing shall
be held at the offices of Shearman & Sterling, 599 Lexington Avenue, New York,
New York 10022, or such other place as the parties shall agree, for the purpose
of confirming the satisfaction or waiver, as the case may be, of the conditions
set forth in Article VII.
SECTION 2.03. Effect of the Merger. At the Effective Time, the effect
of the Merger shall be as provided in the applicable provisions of Delaware Law.
Without limiting the generality of the foregoing, and subject thereto, at the
Effective Time all the property, rights, privileges, powers and franchises of
the Company and Purchaser shall vest in the Surviving Corporation, and all
debts, liabilities, obligations, restrictions, disabilities and duties of the
Company and Purchaser shall become the debts, liabilities, obligations,
restrictions, disabilities and duties of the Surviving Corporation.
SECTION 2.04. Certificate of Incorporation; By-laws. (a) Unless
otherwise determined by Parent prior to the Effective Time, at the Effective
Time the Certificate of Incorporation of Purchaser, as in effect immediately
prior to the Effective Time, shall be the
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Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation; provided,
however, that, at the Effective Time, Article I of the Certificate of
Incorporation of the Surviving Corporation shall be amended to read as follows:
"The name of the corporation is SCS/Compute, Inc."
(b) Unless otherwise determined by Parent prior to the Effective Time,
the By-laws of Purchaser, as in effect immediately prior to the Effective Time,
shall be the By-laws of the Surviving Corporation until thereafter amended as
provided by law, the Certificate of Incorporation of the Surviving Corporation
and such By-laws.
SECTION 2.05. Directors and Officers. The directors of Purchaser
immediately prior to the Effective Time shall be the initial directors of the
Surviving Corporation, each to hold office in accordance with the Certificate of
Incorporation and By-laws of the Surviving Corporation, and the officers of the
Company immediately prior to the Effective Time shall be the initial officers of
the Surviving Corporation, in each case until their respective successors are
duly elected or appointed and qualified.
SECTION 2.06. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the following securities:
(a) Each of the Shares issued and outstanding immediately prior
to the Effective Time (other than any Shares to be cancelled pursuant to
Section 2.06(b) and any Dissenting Shares) (as hereinafter defined) shall
be cancelled and shall be converted automatically into the right to receive
an amount equal to the Per Share Amount, in cash (the "Merger
Consideration") payable, without interest, to the holder of such Share,
upon surrender, in the manner provided in Section 2.08, of the certificate
that formerly evidenced such Share;
(b) Each Share held in the treasury of the Company and each Share
owned by Purchaser, Parent or any direct or indirect wholly owned
subsidiary of Parent or of the Company immediately prior to the Effective
Time shall be cancelled without any conversion thereof and no payment or
distribution shall be made with respect thereto; and
(c) Each share of Common Stock, par value $.10 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of Common Stock, par value $.10 per share, of the
Surviving Corporation.
SECTION 2.07. Stock Options. Immediately prior to the Effective Time,
each outstanding option to purchase Shares (each, an "Option"), whether or not
then exercisable, shall be cancelled by the Company, and each holder of a
cancelled Option shall be entitled to receive from Purchaser at the same time as
payment for Shares is made by Purchaser in connection with the Merger, in
consideration for the cancellation of such Option, an amount in cash equal to
the product of (i) the number of Shares previously subject to such Option and
(ii) the excess, if any, of the Per Share Amount over the exercise price per
Share previously subject to such Option.
SECTION 2.08. Dissenting Shares. (a) Notwithstanding any provision of
this Agreement to the contrary, Shares that are outstanding immediately prior to
the Effective Time and which are held by stockholders who shall not have voted
in favor of the Merger or consented thereto in writing and who shall have
demanded properly in writing appraisal for such Shares in accordance with
Section 262 of Delaware Law (collectively, the "Dissenting Shares") shall not be
converted into or represent the right to receive the Merger Consideration. Such
stockholders shall be entitled to receive payment of the appraised value of such
Shares held by them in accordance with the provisions of such Section 262,
except that all Dissenting Shares held by stockholders who shall have failed to
perfect or who effectively shall have withdrawn or lost their rights to
appraisal of such Shares under such Section 262 shall thereupon be deemed to
have been converted into and to have become
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exchangeable for, as of the Effective Time, the right to receive the Merger
Consideration, without any interest thereon, upon surrender, in the manner
provided in Section 2.09, of the certificate or certificates that formerly
evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of any demands for
appraisal received by the Company, withdrawals of such demands, and any other
instruments served pursuant to Delaware Law and received by the Company and (ii)
the opportunity to direct all negotiations and proceedings with respect to
demands for appraisal under Delaware Law. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to any demands
for appraisal or offer to settle or settle any such demands.
SECTION 2.09. Surrender of Shares; Stock Transfer Books. (a) Prior to
the Effective Time, Purchaser shall designate a bank or trust company to act as
agent (the "Paying Agent") for the holders of Shares in connection with the
Merger to receive the funds to which holders of Shares shall become entitled
pursuant to Section 2.06(a). Such funds shall be invested by the Paying Agent as
directed by the Surviving Corporation, provided that such investments shall be
in obligations of or guaranteed by the United States of America or of any agency
thereof and backed by the full faith and credit of the United States of America,
in commercial paper obligations rated A-1 or P-1 or better by Moody's Investors
Services, Inc. or Standard & Poor's Corporation, respectively, or in deposit
accounts, certificates of deposit or banker's acceptances of, repurchase or
reverse repurchase agreements with, or Eurodollar time deposits purchased from,
commercial banks with capital, surplus and undivided profits aggregating in
excess of $500 million (based on the most recent financial statements of such
bank which are then publicly available at the SEC or otherwise); provided,
however, that no loss on any investment made pursuant to this Section 2.09 shall
relieve the Surviving Corporation of its obligation to pay the Per Share Amount
for each Share outstanding immediately prior to the Effective Time (other than
Shares cancelled pursuant to Section 2.06(b) and any Dissenting Shares). The
Surviving Corporation and Parent shall be responsible for the fees and expenses
of or incurred by the Paying Agent.
(b) Promptly after the Effective Time, the Surviving Corporation shall
cause to be mailed to each person who was, at the Effective Time, a holder of
record of Shares entitled to receive the Merger Consideration pursuant to
Section 2.06(a) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "Certificates") shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor the Merger Consideration for each Share formerly
evidenced by such Certificate, and such Certificate shall then be cancelled. No
interest shall accrue or be paid on the Merger Consideration payable upon the
surrender of any Certificate for the benefit of the holder of such Certificate.
If payment of the Merger Consideration is to be made to a person other than the
person in whose name the surrendered Certificate is registered on the stock
transfer books of the Company, it shall be a condition of payment that the
Certificate so surrendered shall be endorsed properly or otherwise be in proper
form for transfer and that the person requesting such payment shall have paid
all transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the Certificate
surrendered or shall have established to the satisfaction of the Surviving
Corporation that such taxes either have been paid or are not applicable.
(c) At any time following the sixth month after the Effective Time,
the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds which had been made available to the Paying Agent and
not disbursed to holders of Shares (including, without limitation, all interest
and other income received by the Paying Agent in respect of all funds made
available to it), and thereafter such holders shall be entitled to look
11
to the Surviving Corporation (subject to abandoned property, escheat and other
similar laws) only as general creditors thereof with respect to any Merger
Consideration that may be payable upon due surrender of the Certificates held by
them. Notwithstanding the foregoing, neither the Surviving Corporation nor the
Paying Agent shall be liable to any holder of a Share for any Merger
Consideration delivered in respect of such Share to a public official pursuant
to any abandoned property, escheat or other similar law.
(d) At the close of business on the day of the Effective Time, the
stock transfer books of the Company shall be closed and thereafter there shall
be no further registration of transfers of Shares on the records of the Company.
From and after the Effective Time, the holders of Shares outstanding immediately
prior to the Effective Time shall cease to have any rights with respect to such
Shares except as otherwise provided herein or by applicable law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Purchaser
that:
SECTION 3.01. Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or in
the aggregate, have a Material Adverse Effect (as defined below). The Company is
duly qualified or licensed as a foreign corporation to do business, and is in
good standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its business makes such qualification
or licensing necessary, except for such failures to be so qualified or licensed
and in good standing that would not, individually or in the aggregate, have a
Material Adverse Effect. "Material Adverse Effect", when used in connection with
the Company, means any change or effect that when taken together with all other
adverse changes and effects that are within the scope of the representations and
warranties made by the Company in this Agreement is or is reasonably likely to
be materially adverse to the business, operations, properties, condition
(financial or otherwise), assets or liabilities (including, without limitation,
contingent liabilities) or prospects of the Company. The Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.
SECTION 3.02. Certificate of Incorporation and By-laws. The Company
has heretofore furnished to Parent a complete and correct copy of the
Certificate of Incorporation and the By-laws or equivalent organizational
documents, each as amended to date, of the Company. Such Certificate of
Incorporation and By-laws are in full force and effect. The Company is not in
violation of any provision of its Certificate of Incorporation or By-laws.
SECTION 3.03. Capitalization. The authorized capital stock of the
Company consists of 15,000,000 Shares and 2,000,000 shares of Series A Preferred
Stock. As of the date hereof, (i) 2,571,977 Shares are issued and outstanding,
all of which are validly issued, fully paid and nonassessable, (ii) 514,300
Shares are held in the treasury of the Company and (iii) 300,000 Shares are
reserved for future issuance pursuant to Options. Except as set forth in this
Section 3.03, and except as set forth in Section 3.03 of the Disclosure Schedule
previously delivered by the Company to Parent (the "Disclosure Schedule"), which
sets forth the holder of each Option, the date of grant and the applicable
exercise price, there are no options, warrants or other rights (including those
commonly referred to as "shareholder rights" or "poison pill" rights),
agreements, arrangements or commitments of any character relating to the issued
or unissued capital stock of the Company or obligating the Company to issue or
sell any shares of capital stock of, or other equity interests in, the Company.
As of
12
the date hereof, 100,000 shares of Series A Preferred Stock are issued and
outstanding. All Shares subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable.
SECTION 3.04. Authority Relative to this Agreement. The Company has
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated hereby (the "Transactions"). The execution and
delivery of this Agreement by the Company and the consummation by the Company of
the Transactions have been duly and validly authorized by all necessary
corporate action on the part of the Company and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Transactions (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the then
outstanding Shares if and to the extent required by applicable law, and the
filing and recordation of appropriate merger documents as required by Delaware
Law). This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Parent
and Purchaser, constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally (including,
without limitation, the effect of statutory and other law regarding fraudulent
conveyances, fraudulent transfers and preferential transfers) and as may be
limited by the exercise of judicial discretion and the application of principles
of equity including, without limitation, requirements of good faith, fair
dealing, conscionability and materiality (regardless of whether considered in a
proceeding in equity or at law). The Company has taken all appropriate actions
so that the restrictions on business combinations contained in Section 203 of
Delaware Law will not apply with respect to or as a result of the Transactions
or the Stock Purchase Agreement or the transactions contemplated thereby.
SECTION 3.05. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by the Company do not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Certificate of Incorporation or By-laws of the Company, (ii)
conflict with or violate any law, rule, regulation, order, judgment or decree
applicable to the Company or by which any property or asset of the Company is
bound or affected or (iii) except as set forth in Section 3.05(a) of the
Disclosure Schedule, result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default) under,
or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance on any
property or asset of the Company pursuant to, any Material Contract, note, bond,
mortgage, indenture, contract, agreement, lease, license, permit or franchise or
other instrument or obligation to which the Company is a party or by which the
Company or any property or asset of the Company is bound or affected.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any governmental or regulatory authority, domestic or foreign, except (i)
for applicable requirements, if any, of the Exchange Act, state securities or
"blue sky" laws ("Blue Sky Laws") and state takeover laws, the pre-merger
notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder (the "HSR Act") and
filing and recordation of appropriate merger documents as required by Delaware
Law and (ii) where failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or delay
consummation of the Offer or the Merger, or otherwise prevent the Company from
performing its obligations under this Agreement, and would not, individually or
in the aggregate, have a Material Adverse Effect.
SECTION 3.06. Compliance. The Company is not in conflict with, or in
default or violation of, (i) any law, rule, regulation, order, judgment or
decree applicable to the Company or by which any property or asset of the
Company is bound or affected, or (ii) any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit,
13
franchise or other instrument or obligation to which the Company is a party or
by which the Company or any property or asset of the Company is bound or
affected, except for any such conflicts, defaults or violations that would not,
individually or in the aggregate, have a Material Adverse Effect.
SECTION 3.07. SEC Filings; Financial Statements. (a) The Company has
filed all forms, reports and documents required to be filed by it with the SEC
since January 31, 1993, and has heretofore made available to Parent, in the form
filed with the SEC, (i) its Annual Reports on Form 10-K for the fiscal years
ended January 31, 1993, 1994 and 1995, respectively, (ii) its Quarterly Reports
on Form 10-Q for the periods ended April 30, 1995, July 31, 1995 and October 31,
1995 and (iii) all proxy statements relating to the Company's meetings of
stockholders (whether annual or special) held since January 31, 1993, and (iv)
all other forms, reports and other registration statements (other than Quarterly
Reports on Form 10-Q not referred to in clause (ii) above) filed by the Company
with the SEC since January 31, 1993 (the forms, reports and other documents
referred to in clauses (i), (ii), (iii) and (iv) above being referred to herein,
collectively, as the "SEC Reports"). The SEC Reports (i) were prepared in
accordance with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Exchange Act, as the case may be, and the rules and
regulations thereunder and (ii) did not at the time they were filed (or at the
effective date thereof in the case of registration statements) contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements made therein, in
the light of the circumstances under which they were made, not misleading.
(b) Each of the financial statements (including, in each case, any
notes thereto) contained in the SEC Reports was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto) and each fairly presented the financial position, results of operations
and changes in financial position of the Company as at the respective dates
thereof and for the respective periods indicated therein (subject, in the case
of unaudited statements, to normal and recurring year-end adjustments which were
not and are not expected, individually or in the aggregate, to have a Material
Adverse Effect).
(c) Except as and to the extent set forth on the balance sheet of the
Company as at January 31, 1995, including the notes thereto (the "1994 Balance
Sheet") or disclosed in any SEC Report filed by the Company after January 31,
1995, the Company has no liability or obligation of any nature (whether accrued,
absolute, contingent or otherwise) which would be required to be reflected on a
balance sheet, or in the notes thereto, prepared in accordance with generally
accepted accounting principles, except for liabilities and obligations incurred
in the ordinary course of business consistent with past practice since January
31, 1995 which would not, individually or in the aggregate, have a Material
Adverse Effect.
(d) The Company has heretofore furnished to Parent complete and
correct copies of all amendments and modifications (if any) listed in Section
3.07(d) of the Disclosure Schedule that have not been filed by the Company with
the SEC to all agreements, documents and other instruments that previously had
been filed by the Company with the SEC and are currently in effect.
SECTION 3.08. Absence of Certain Changes or Events. Since January 31,
1995, except as contemplated by this Agreement or disclosed in any SEC Report
filed since January 31, 1995 and prior to the date of this Agreement, the
Company has conducted its business only in the ordinary course and in a manner
consistent with past practice and, since January 31, 1995, there has not been
(i) any change in the business, operations, properties, condition (financial or
otherwise), assets or liabilities (including, without limitation, contingent
liabilities) or prospects of the Company having, individually or in the
aggregate, a Material Adverse Effect, (ii) any damage, destruction or loss
(whether or not covered by insurance) with respect to any property or asset of
the Company and having, individually or in the aggregate, a Material Adverse
Effect, (iii) any change by the Company in its accounting methods, principles or
practices, (iv) any revaluation by the Company of any
14
asset (including, without limitation, any writing down of the value of inventory
or writing off of notes or accounts receivable), other than in the ordinary
course of business consistent with past practice, (v) any entry by the Company
into any commitment or transaction material to the Company, (vi) except as set
forth in Section 3.08 of the Disclosure Schedule, any declaration, setting aside
or payment of any dividend or distribution in respect of any capital stock of
the Company or any redemption, purchase or other acquisition of any of its
securities, (vii) prior to the date of this Agreement, no breach of any of the
contracts referred to in Section 3.17, and, to the best knowledge of the
Company, no threat of any such breach, or (viii) except as set forth in Section
3.08 of the Disclosure Schedule, any increase in or establishment of any bonus,
insurance, severance, deferred compensation, pension, retirement, profit
sharing, stock option (including, without limitation, the granting of stock
options, stock appreciation rights, performance awards, or restricted stock
awards), stock purchase or other employee benefit plan, or any other increase in
the compensation payable or to become payable to any officers or key employees
of the Company, except in the ordinary course of business consistent with past
practice.
SECTION 3.09. Absence of Litigation. Except as disclosed in the SEC
Reports filed prior to the date of this Agreement, there is no claim, action,
proceeding or investigation pending or, to the best knowledge of the Company,
threatened against the Company or any property or asset of the Company before
any court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign. As of the date hereof, neither the Company nor any
property or asset of the Company is subject to any order, writ, judgment,
injunction, decree, determination or award having, or that could reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
SECTION 3.10. Employee Benefit Plans. (a) Section 3.10 of the
Disclosure Schedule contains a true and complete list of (i) all employee
benefit plans (within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) and all bonus, stock option,
stock purchase, restricted stock, incentive, deferred compensation, retiree
medical or life insurance, supplemental retirement, severance or other benefit
plans, programs or arrangements, and all employment, termination, severance or
other contracts or agreements to which the Company is a party, with respect to
which the Company has any obligation or which are maintained, contributed to or
sponsored by the Company for the benefit of any current or former employee,
officer or director of the Company and (ii) each employee benefit plan for which
the Company could incur liability under Section 4069 of ERISA, in the event such
plan were terminated, or under Section 4212(c) of ERISA, or in respect of which
the Company remains secondarily liable under Section 4204 of ERISA
(collectively, the "Plans"). Each Plan is in writing and the Company has
previously furnished to Parent a true and complete copy of each Plan and a true
and complete copy of each material document prepared in connection with each
such Plan, including, without limitation, (i) a copy of each trust or other
funding arrangement, (ii) each summary plan description and summary of material
modifications, (iii) the most recently filed Internal Revenue Service ("IRS")
Form 5500, (iv) the most recently received IRS determination letter for each
such Plan and (v) the most recently prepared actuarial report and financial
statement in connection with each such Plan. The Company has no express or
implied commitment (i) to create, incur liability with respect to or cause to
exist any other employee benefit plan, program or arrangement, (ii) to enter
into any contract or agreement to provide compensation or benefits to any
individual or (iii) to modify, change or terminate any Plan, other than with
respect to a modification, change or termination required by ERISA or the
Internal Revenue Code of 1986, as amended (the "Code").
(b) Other than as specifically disclosed in Section 3.10 of the
Disclosure Schedule, none of the Plans is a multiemployer plan, within the
meaning of Section 3(37) or 4001(a)(3) of ERISA (a "Multiemployer Plan"), or a
single employer pension plan, within the meaning of Section 4001(a)(15) of
ERISA, for which the Company or any Subsidiary could incur liability under
Section 4063 or 4064 of ERISA (a "Multiple Employer Plan"). None of the Plans
(i) provides for the payment of separation, severance, termination or
similar-type benefits to any person, (ii) obligates the Company or any
Subsidiary to pay separation, severance, termination or other benefits as a
result of any Transaction or (iii) obligates the Company or any Subsidiary to
make any payment or provide any benefit
15
that could be subject to a tax under Section 4999 of the Code. None of the Plans
provides for or promises retiree medical, disability or life insurance benefits
to any current or former employee, officer or director of the Company. With
respect to each Multiemployer Plan and Multiple Employer Plan, Section 3.10(b)
of the Disclosure Schedule sets forth an accurate statement of the total amount
of withdrawal liability that the Company would incur in the event of a complete
withdrawal, within the meaning of Title IV of ERISA, from each such Plan.
(c) Each Plan which is intended to be qualified under Section 401(a)
of the Code has received a favorable determination letter from the IRS that such
Plan is so qualified, and each trust established in connection with any Plan
which is intended to be exempt from federal income taxation under Section 501(a)
of the Code has received a determination letter from the IRS that such trust is
so exempt. No fact or event has occurred since the date of any such
determination letter from the IRS that could adversely affect the qualified
status of any such Plan or the exempt status of any such trust. Each trust
maintained or contributed to by the Company or any Subsidiary which is intended
to be qualified as a voluntary employees' beneficiary association exempt from
federal income taxation under Sections 501(a) and 501(c)(9) of the Code has
received a favorable determination letter from the IRS that it is so qualified
and so exempt, and no fact or event has occurred since the date of such
determination by the IRS that could adversely affect such qualified or exempt
status.
(d) There has been no prohibited transaction (within the meaning of
Section 406 of ERISA or Section 4975 of the Code) with respect to any Plan not
exempt pursuant to Section 408 of ERISA or Section 4975 of the Code. Neither the
company nor any Subsidiary is currently liable or has previously incurred any
liability for any tax or penalty arising under Section 4971, 4972, 4979, 4980 or
4980B of the Code or Section 502(c) of ERISA, and no fact or event exists which
could give rise to any such liability. Neither the Company nor any Subsidiary
has incurred any liability under, arising out of or by operation of Title IV of
ERISA (other than liability for premiums to the Pension Benefit Guaranty
Corporation arising in the ordinary course), including, without limitation, any
liability in connection with (i) the termination or reorganization of any
employee pension benefit plan subject to Title IV of ERISA or (ii) the
withdrawal from any Multiemployer Plan or Multiple Employer Plan, and no fact or
event exists which could give rise to any such liability. No complete or partial
termination has occurred within the five years preceding the date hereof with
respect to any Plan. No reportable event (within the meaning of Section 4043 of
ERISA) has occurred or is expected to occur with respect to any Plan subject to
Title IV of ERISA. No asset of the Company is the subject of any lien arising
under Section 302(f) of ERISA or Section 412(n) of the Code; the Company has not
been required to post any security under Section 307 of ERISA or Section
401(a)(29) of the Code; and no fact or event exists which could give rise to any
such lien or requirement to post any such security.
(e) Each Plan is now and has been operated in all material respects in
accordance with the requirements of all applicable laws, including, without
limitation, ERISA and the Code, and the Company has performed all obligations
required to be performed by it under, is not in any respect in default under or
in violation of, and has no knowledge of any default or violation by any party
to, any Plan. No Plan has incurred an "accumulated funding deficiency" (within
the meaning of Section 302 of ERISA or Section 412 of the Code), whether or not
waived. All contributions, premiums or payments required to be made with respect
to any Plan are fully deductible for income tax purposes and no such deduction
previously claimed has been challenged by any government entity. The 1994
Balance Sheet reflects an accrual of all amounts of employer contributions and
premiums accrued but unpaid with respect to the Plans. With respect to each Plan
subject to Title IV of ERISA, the accumulated benefit obligations of such Plan
(determined as of the date of the most recent actuarial valuation prepared for
such Plan) does not exceed the fair market value of the assets of such Plan
(determined as of the date of such valuation) attributable to such obligations.
(f) The Company has not incurred any liability under, and has complied
in
16
all respects with, the Worker Adjustment Retraining Notification Act and the
regulations promulgated thereunder ("WARN") and does not reasonably expect to
incur any such liability as a result of actions taken or not taken prior to the
Effective Time. Section 3.10(f) of the Disclosure Schedule lists (i) all the
employees terminated or laid off by the Company during the 90 days prior to the
date hereof and (ii) all the employees of the Company who have experienced a
reduction in hours of work of more than 50% during any month during the 90 days
prior to the date hereof and describes all notices given by the Company in
connection with WARN. The Company will, by written notice to Parent and
Purchaser, update Section 3.10(f) of the Disclosure Schedule to include any such
terminations, layoffs and reductions in hours from the date hereof through the
Effective Time and will provide Parent and Purchaser with any related
information which they may reasonably request.
SECTION 3.11. Labor Matters. (i) There are no controversies pending
or, to the best knowledge of the Company, threatened between the Company and any
of its employees, which controversies have or could have a Material Adverse
Effect; (ii) the Company is not a party to any collective bargaining agreement
or other labor union contract applicable to persons employed by the Company,
nor, to the best knowledge of the Company, are there any activities or
proceedings of any labor union to organize any such employees; (iii) there are
no unfair labor practice complaints pending against the Company before the
National Labor Relations Board or any current union representation questions
involving employees of the Company; and (iv) there is no strike, slowdown, work
stoppage or lockout existing, or, to the best knowledge of the Company,
threatened, by or with respect to any employees of the Company.
SECTION 3.12. Offer Documents; Schedule 14D-9; Proxy Statement.
Neither the Schedule 14D-9 nor any information supplied by the Company for
inclusion in the Offer Documents shall, at the respective times the Schedule
14D-9, the Offer Documents or any amendments or supplements thereto are filed
with the SEC or are first published, sent or given to stockholders of the
Company, as the case may be, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading. Neither the proxy statement to be
sent to the stockholders of the Company in connection with the Stockholders'
Meeting or the information statement to be sent to such stockholders, as
appropriate (such proxy statement or information statement, as amended or
supplemented, being referred to herein as the "Proxy Statement"), shall, at the
date the Proxy Statement (or any amendment or supplement thereto) is first
mailed to stockholders of the Company, at the time of the Stockholders' Meeting
(as hereinafter defined) and at the Effective Time, be false or misleading with
respect to any material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders' Meeting which shall have
become false or misleading. The Schedule 14D-9 and the Proxy Statement shall
comply in all material respects as to form with the requirements of the Exchange
Act and the rules and regulations thereunder.
SECTION 3.13. Real Property and Leases. (a) The Company has sufficient
title to all its properties and assets to conduct its business as currently
conducted or as contemplated to be conducted.
(b) Each parcel of real property owned or leased by the Company (i)
except as set forth in Section 3.13 of the Disclosure Schedule, is owned or
leased free and clear of all mortgages, pledges, liens, security interests,
conditional and installment sale agreements, encumbrances, charges or other
claims of third parties of any kind (collectively, "Liens"), other than (A)
Liens for current taxes and assessments not yet past due, (B) inchoate
mechanics' and materialmen's Liens for construction in progress, (C) workmen's,
repairmen's, warehousemen's and carriers' Liens arising in the ordinary course
of business of the Company consistent with past practice, and (D) all matters of
record, Liens and other imperfections of title and encumbrances which,
individually or in the aggregate, would not have a Material Adverse Effect
(collectively, "Permitted Liens"), and
17
(ii) is neither subject to any governmental decree or order to be sold nor is
being condemned, expropriated or otherwise taken by any public authority with or
without payment of compensation therefor, nor, to the best knowledge of the
Company, has any such condemnation, expropriation or taking been proposed.
(c) All leases of real property leased for the use or benefit of the
Company to which the Company is a party and all amendments and modifications
thereto are in full force and effect and have not been modified or amended, and
there exists no default under any such lease by the Company, nor any event which
with notice or lapse of time or both would constitute a default thereunder by
the Company.
SECTION 3.14. Trademarks, Patents and Copyrights. (a) Section
3.14(a)(i) of the Disclosure Schedule sets forth a true and complete list and a
brief description of all patents, patent rights, trademarks, trademark rights,
trade names, trade name rights, copyrights and service marks ("Intellectual
Property", which term shall also include all trade secrets, know-how and other
proprietary rights and information) to which the Company holds, or has a right
to hold, right, title and interest ("Owned Intellectual Property"), including a
complete identification of each patent, registration or application for such
patent and trademark registration, and Section 3.14(a)(ii) of the Disclosure
Schedule sets forth a true and complete list of all Intellectual Property
licensed or sublicensed to the Company (other than mass distributed software
licenses on a shrink-wrap basis) ("Licensed Intellectual Property"), including a
list of any license or sublicense thereof. Except as otherwise described in
Section 3.14(a)(i) of the Disclosure Schedule, in each case where a registration
or patent or application for registration or patent listed in Section 3.14(a)(i)
of the Disclosure Schedule is held by assignment, the assignment has been duly
recorded with the U.S. Patent and Trademark Office or other appropriate
government agency. Except as disclosed in Section 3.14(a)(iii) of the Disclosure
Schedule, the Company has not received any written notice or claim that the
rights of the Company in or to such Intellectual Property conflict with or
infringe on the rights of any other Person.
(b) (i) Except as set forth in Section 3.14(b) of the Disclosure
Schedule, the Company's interest in all the Owned Intellectual Property is owned
by the Company free and clear of any security interest, pledge, mortgage, lien,
charge, encumbrance, existing adverse claim or preferential arrangement and (ii)
no claim, action, suit, arbitration, inquiry, proceeding or investigation by or
before any Governmental Authority (other than ex parte patent office
proceedings) has been made or asserted or is pending (nor, to the best knowledge
of the Company, has any such claim, action, suit, arbitration, inquiry,
proceeding or investigation been threatened) against the Company either (A)
based upon or challenging or seeking to deny or restrict the use by the Company
of any of the Owned Intellectual Property or (B) alleging that any services
provided, or products manufactured or sold by the Company are being provided,
manufactured or sold in violation of any patents or trademarks, or any other
rights of any person. To the best knowledge of the Company, no person is using
any trademarks, service marks or trade names that are confusingly similar to
trademarks, service marks or trade names included in the Owned Intellectual
Property. To the best knowledge of the Company, no person is using any patents,
copyrights, trade secrets or similar property which infringe granted patents or
copyrights included in the Owned Intellectual Property. The Company has not
granted any license or other right to any other person with respect to the
Company's interest in the Owned Intellectual Property. The consummation of the
Transactions will not result in the termination or impairment of the Company's
interest in any of the Owned Intellectual Property.
(c) The Company has, or has caused to be, made available to Parent
correct and complete copies of all the licenses and sublicenses for Licensed
Intellectual Property listed in Section 3.14(a)(ii) of the Disclosure Schedule
and any and all ancillary documents pertaining thereto (including, but not
limited to, all amendments, consents and evidence of commencement dates and
expiration dates). With respect to each of such licenses and sublicenses:
(i) such license or sublicense, together with all ancillary documents
delivered pursuant to the first sentence of this Section 3.14(c), is valid
and binding
18
obligation of the Company and in full force and effect and represents the
entire agreement between the respective licensor and licensee with respect
to the subject matter of such license or sublicense;
(ii) such license or sublicense will not cease to be valid and
binding obligation of the Company and in full force and effect on terms
identical to those currently in effect as a result of the consummation of
the transactions contemplated by this Agreement, nor will the consummation
of the transactions contemplated by this Agreement constitute a breach or
default under such license or sublicense or otherwise give the licensor or
sublicensor a right to terminate such license or sublicense;
(iii) with respect to each such license or sublicense: (A) the Company
has not received any notice of termination or cancellation under such
license or sublicense and no licensor or sublicensor has any right of
termination or cancellation under such license or sublicense except in
connection with the default of the Company thereunder, (B) the Company has
not received any notice of a breach or default under such license or
sublicense, which breach or default has not been cured and (C) the Company
has not granted to any other person any rights, adverse or otherwise, under
such license or sublicense;
(iv) neither the Company nor, to the best knowledge of the Company,
any other party to such license or sublicense is in breach or default in
any material respect which breach has not been waived or cured, and, to the
best knowledge of the Company, no event has occurred that, with notice or
lapse of time or both would constitute such a breach or default or permit
termination, modification or acceleration under such license or sublicense;
(v) no claim, action, suit, arbitration, inquiry, proceeding or
investigation by or before any Governmental Authority (other than ex parte
patent office proceedings) has been made or asserted or is pending (nor, to
the best knowledge of the Company, has any such claim, action, suit,
arbitration, inquiry, proceeding or investigation been threatened) against
the Company either (A) based upon or challenging or seeking to deny or
restrict the use by the Company of any of the Licensed Intellectual
Property or (B) alleging that any Licensed Intellectual Property is being
licensed, sublicensed or used in violation of any patents or trademarks, or
any other rights of any person; and
(vi) to the best knowledge of the Company, no person is infringing
any granted patents, copyrights, trademarks, service marks or trade names,
or has misappropriated trade secrets or similar property, included in the
Licensed Intellectual Property.
(d) The Company has taken reasonable measures to assure and maintain
the confidentiality of the processes and formulae, research and development
results and other know-how of the Company, the value of which is contingent upon
maintenance of the confidentiality thereof and, to the best knowledge of the
Company, there have not been any material breaches of any confidentiality
obligations owing to the Company.
SECTION 3.15. Taxes. The Company has timely filed all federal, state,
local and foreign tax returns and reports required to be filed by it, all such
returns are true, correct and complete and it has timely paid and discharged all
taxes shown as due thereon and has paid all applicable ad valorem taxes as are
due. Neither the IRS nor any other taxing authority or agency, domestic or
foreign, is now asserting or, to the best knowledge of the Company, threatening
to assert against the Company any deficiency or claim for additional taxes or
interest thereon or penalties in connection therewith. The Company has not
granted any waiver of any statute of limitations with respect to, or any
extension of a period for the assessment of, any federal, state, county,
municipal or foreign income tax. The accruals and reserves for taxes reflected
in the 1994 Balance Sheet are adequate to cover all taxes accruable through such
date (including interest and penalties, if any, thereon) in accordance with
generally accepted accounting principles. The Company has not made an
19
election under Section 341(f) of the Code. There are no tax liens on any assets
of the Company. The Company is not a party to any agreement or arrangement what
would result in the payment of any "excess parachute payments" within the
meaning of section 280G of the Internal Revenue Code. No acceleration of the
vesting schedule for any property that is substantially unvested, within the
meaning of the regulations under section 83 of the Internal Revenue Code, will
occur in connection with the Merger. The Company has not been includible in a
consolidated return for any taxable period for which the statute of limitations
has not expired. The Company is not subject to any accumulated earnings tax
penalty or personal holding company tax.
SECTION 3.16. Environmental Matters. (a) For purposes of this
Agreement, the following terms shall have the following meanings: (i)
"Environmental Claims" means any and all actions, suits, demands, demand
letters, claims, liens, notices of non-compliance or violation, notices of
liability or potential liability, proceedings, consent orders or consent
agreements relating in any way to any Environmental Law, any Environmental
Permit or any Hazardous Materials; (ii) "Environmental Law" means any statute,
law, rule, ordinance or code, in effect now or any time prior to the Closing,
and any judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decree or judgment, relating to
pollution or protection of the environment, health, safety or natural resources,
including without limitation, those relating to the use, handling,
transportation, treatment, storage, disposal, release or discharge of Hazardous
Materials; (iii) "Environmental Permit" means any permit, approval,
identification number, license or other authorization required under any
applicable Environmental Law; (iv) "Governmental Authority" means any United
States federal, state or local or any foreign government, governmental,
regulatory or administrative authority, agency or commission or any court,
tribunal, or judicial or arbitral body; (v) "Hazardous Materials" means (A)
petroleum and petroleum products, by products or breakdown products, radioactive
materials, asbestos-containing materials and polychlorinated biphenyls, and (B)
any other chemicals, materials or substances defined or regulated as toxic or
hazardous or as a pollutant or contaminant or as a waste under any applicable
Environmental Law; and (vi) "leased property" and "leased properties" means the
real property which the Company has the right to control pursuant to its lease
and not any property which the Company does not have the right to control.
(b) Except as described in Section 3.16 of the Disclosure Schedule:
(i) the Company is and has been in material compliance with all applicable
Environmental Laws; (ii) the Company has obtained all necessary Environmental
Permits and is and has been in material compliance with their requirements;
(iii) to the best knowledge of the Company, there are no underground or
aboveground storage tanks or any surface impoundments, septic tanks, pits, sumps
or lagoons in which Hazardous Materials are being or have been treated, stored
or disposed of on any of the owned or leased properties or, with respect to the
period of the Company's ownership, tenancy or operation of such property, on any
real property formerly owned, leased or occupied by the Company; (iv) to the
best knowledge of the Company, no owned or leased properties or any property
adjoining any owned or leased properties is listed or proposed for listing on
the National Priorities List under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended through the date hereof, or
on the Comprehensive Environmental Response, Compensation and Liability
Information System, as updated through the date hereof, or any analogous state
list of sites requiring investigation or cleanup; (v) to the best knowledge of
the Company, there is no asbestos or asbestos-containing material on any of the
owned or leased properties; (vi) the Company has not released, discharged or
disposed of Hazardous Materials on any of the owned or leased properties or on
any real property formerly owned, leased or occupied by the Company in any
manner or quantity that can give rise to a Material Adverse Effect; (vii) the
Company is not undertaking, has not completed, and, to the best knowledge of the
Company, is not required to conduct, any investigation or assessment or remedial
or response action relating to any release, discharge or disposal of or
contamination with Hazardous Materials at any site, location or operation,
either voluntarily or pursuant to the order of any Governmental Authority or the
requirements of any Environmental Law; and (viii) there are no past, pending or,
to the best knowledge of the Company, threatened Environmental Claims against
the Company or any of its properties,
20
and, to the best knowledge of the Company, there are no facts which can form the
basis of any such Environmental Claim, including without limitation with respect
to any off-site disposal location presently or formerly used by the Company or
any of its predecessors.
(c) The Company has made available to Parent copies of any
environmental audit reports, studies or analyses in its possession or under its
control relating to the owned or leased properties or the operations of the
Company.
SECTION 3.17. Material Contracts. Section 3.17 of the Disclosure
Schedule lists each contract or agreement to which the Company is a party (i)
that is required to be filed pursuant to Item 601(b)(10) of Regulation S-K under
the Securities Act (each of which has been so filed as an Exhibit to the SEC
Reports), (ii) that grants to a third party any commercial rights to exploit any
of the Intellectual Property or (iii) the absence of which would have a Material
Adverse Effect (each, a "Material Contract"). Each Material Contract is in full
force and effect and is enforceable against the parties thereto (other than the
Company) in accordance with its terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors' rights
generally (including, without limitation, the effect of statutory and other law
regarding fraudulent conveyances, fraudulent transfers and preferential
transfers) and as may be limited by the exercise of judicial discretion and the
application of principles of equity, including, without limitation, requirements
of good faith, fair dealing, conscionability and materiality (regardless of
whether considered in a proceeding in equity or at law), and no condition or
state of facts exists that, with notice or the passage of time, or both, would
constitute a material default by the Company or, to the best knowledge of the
Company, any third party under any Material Contract. The Company has duly
complied in all material respects with the provision of each Material Contract
to which it is a party.
SECTION 3.18. Brokers. No broker, finder or investment banker (other
than Aylward and Associates) is entitled to any brokerage, finder's or other fee
or commission in connection with the Transactions based upon arrangements made
by or on behalf of the Company. The Company has heretofore furnished to Parent a
complete and correct copy of all agreements between the Company and Aylward and
Associates
SECTION 3.19. Opinion of Financial Advisor. The Board of Directors of
the Company has received the written opinion of Fister & Associates, dated the
date of this Agreement, to the effect that the cash consideration to be received
in the Offer and the Merger by the Company's public stockholders is fair to the
Company's public stockholders from a financial point of view, a copy of such
opinion has been delivered to Parent and such opinion has not been withdrawn or
modified.
SECTION 3.20. Related Party Transactions. Except as disclosed in the
SEC Reports, there are no material agreements, arrangements or understandings
between the Company, on the one hand, and any affiliate of the Company, on the
other hand.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser hereby, jointly and severally, represent and
warrant to the Company that:
SECTION 4.01. Corporate Organization. Each of Parent and Purchaser is
a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization.
SECTION 4.02. Authority Relative to this Agreement. Each of Parent and
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Parent and
Purchaser and the consummation by
21
Parent and Purchaser of the Transactions have been duly and validly authorized
by all necessary corporate action on the part of Parent and Purchaser and no
other corporate proceedings on the part of Parent or Purchaser are necessary to
authorize this Agreement or to consummate the Transactions (other than, with
respect to the Merger, the filing and recordation of appropriate merger
documents as required by Delaware Law). This Agreement has been duly and validly
executed and delivered by Parent and Purchaser and, assuming the due
authorization, execution and delivery by the Company, constitutes a legal, valid
and binding obligation of each of Parent and Purchaser enforceable against each
of Parent and Purchaser in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors' rights generally (including, without limitation, the
effect of statutory and other law regarding fraudulent conveyances, fraudulent
transfers and preferential transfers) and as may be limited by the exercise of
judicial discretion and the application of principles of equity including,
without limitation, requirements of good faith, fair dealing, conscionability
and materiality (regardless of whether considered in a proceeding in equity or
at law).
SECTION 4.03. No Conflict; Required Filings and Consents. (a) The
execution and delivery of this Agreement by Parent and Purchaser do not, and the
performance of this Agreement by Parent and Purchaser will not, (i) conflict
with or violate the Certificate of Incorporation or By-laws of either Parent or
Purchaser, (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or Purchaser or by which any property or
asset of either of them is bound or affected, or (iii) result in any breach of
or constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or other encumbrance on any property or asset of Parent or Purchaser pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or Purchaser
is a party or by which Parent or Purchaser or any property or asset of either of
them is bound or affected, except for any such conflicts, violations, breaches,
defaults or other occurrences which would not, individually or in the aggregate,
prevent Parent or Purchaser from performing their respective obligations under
this Agreement and consummating the Transactions.
(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with or notification to, any governmental or regulatory authority to be obtained
or made by Parent or Purchaser, domestic or foreign, except (i) for applicable
requirements, if any, of the Exchange Act, Blue Sky Laws and state takeover
laws, the HSR Act and filing and recordation of appropriate merger documents as
required by Delaware Law and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not prevent or delay consummation of the Offer or the Merger, or otherwise
prevent Parent or Purchaser from performing their respective obligations under
this Agreement.
SECTION 4.04. Financing. Parent has, or will have available to it at
the time Purchaser is required to pay for Shares under the terms of the Offer,
and will make available to Purchaser, sufficient funds to permit Purchaser to
acquire all of the outstanding Shares in the Offer and the Merger.
SECTION 4.05. Offer Documents; Proxy Statement. The Offer Documents
will not, at the time the Offer Documents are filed with the SEC or are first
published, sent or given to stockholders of the Company, as the case may be,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they are made, not
misleading. The information supplied by Parent for inclusion in the Proxy
Statement will not, on the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of the Company, at the time
of the Stockholders' Meeting or at the Effective Time, contain any statement
which, at such time and in light of the circumstances under which it is made, is
false or misleading with respect to any material
22
fact, or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders' Meeting which shall have
become false or misleading. Notwithstanding the foregoing, Parent and Purchaser
make no representation or warranty with respect to any information supplied by
the Company or any of its representatives which is contained in any of the
foregoing documents or the Offer Documents. The Offer Documents shall comply in
all material respects as to form with the requirements of the Exchange Act and
the rules and regulations thereunder.
SECTION 4.06. Brokers. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Parent or
Purchaser.
ARTICLE V
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 5.01. Conduct of Business by the Company Pending the Merger.
The Company covenants and agrees that, between the date of this Agreement and
the Effective Time, unless Parent shall otherwise agree in writing, the business
of the Company shall be conducted only in, and the Company shall not take any
action except in, the ordinary course of business and in a manner consistent
with past practice; and the Company shall use its best efforts to preserve
substantially intact the business organization of the Company, to keep available
the services of the current officers, employees and consultants of the Company
and to preserve the current relationships of the Company with customers,
suppliers and other persons with which the Company has significant business
relations. By way of amplification and not limitation, except as contemplated by
this Agreement, the Company shall not, between the date of this Agreement and
the Effective Time, directly or indirectly do, or propose to do, any of the
following without the prior written consent of Parent:
(a) amend or otherwise change its Certificate of Incorporation or
By-laws;
(b) issue, sell, pledge, dispose of, grant, encumber, or
authorize the issuance, sale, pledge, disposition, grant or encumbrance of,
(i) any shares of capital stock of any class of the Company, or any
options, warrants, convertible securities or other rights of any kind to
acquire any shares of such capital stock, or any other ownership interest
(including, without limitation, any phantom interest), of the Company
(except for the issuance of a maximum of 130,000 Shares issuable pursuant
to Options outstanding on the date hereof) or (ii) any assets of the
Company except for sales in the ordinary course of business and in a manner
consistent with past practice;
(c) except as set forth in Section 5.01 of the Disclosure
Schedule, declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock;
(d) except as set forth in Section 5.01 of the Disclosure
Schedule, reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any corporation,
partnership, other business organization or any division thereof or any
material amount of assets; (ii) incur any indebtedness for borrowed money
or issue any debt securities or assume, guarantee or endorse, or otherwise
as an accommodation become responsible for, the obligations of any person,
or make any loans or advances, except in the ordinary course of business
and consistent with past practice; (iii) enter into any
23
contract or agreement other than in the ordinary course of business,
consistent with past practice; (iv) authorize any single capital commitment
which is in excess of $50,000 or capital expenditures which are, in the
aggregate, in excess of $100,000 for the Company; or (v) enter into or
amend any contract, agreement, commitment or arrangement with respect to
any matter set forth in this Section 5.01(e);
(f) except as set forth in Section 5.01 of the Disclosure
Schedule, increase the compensation payable or to become payable to its
officers or employees, except for increases in accordance with past
practices in salaries or wages of employees of the Company who are not
officers of the Company, or grant any severance or termination pay to, or
enter into any employment or severance agreement with any director, officer
or other employee of the Company, or establish, adopt, enter into or amend
any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement, trust, fund,
policy or arrangement for the benefit of any director, officer or employee;
(g) take any action, other than reasonable and usual actions in
the ordinary course of business and consistent with past practice, with
respect to accounting policies or procedures (including, without
limitation, procedures with respect to the payment of accounts payable and
collection of accounts receivables);
(h) make any tax election or settle or compromise any material
federal, state, local or foreign income tax liability;
(i) settle or compromise any pending or threatened suit, action
or claim which is material or which relates to any of the Transactions;
(j) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business and consistent with past practice, of liabilities reflected or
reserved against in the 1994 Balance Sheet or subsequently incurred in the
ordinary course of business and consistent with past practice;
(k) sell, assign, transfer, license, sublicense, pledge or
otherwise encumber any of the Intellectual Property; or
(l) announce an intention, commit or agree to do any of the
foregoing.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.01. Stockholders' Meeting. (a) If required by applicable law
in order to consummate the Merger, the Company, acting through the Board, shall,
in accordance with applicable law and the Company's Certificate of Incorporation
and By-laws, (i) duly call, give notice of, convene and hold an annual or
special meeting of its stockholders as soon as practicable following
consummation of the Offer for the purpose of considering and taking action on
this Agreement and the transactions contemplated hereby (the "Stockholders'
Meeting") and (ii) subject to its fiduciary duties under applicable law as
advised in writing by independent counsel, (A) include in the Proxy Statement
the unanimous recommendation of the Board that the stockholders of the Company
approve and adopt this Agreement and the transactions contemplated hereby and
(B) use its best efforts to obtain such approval and adoption. At the
Stockholders' Meeting, Parent and Purchaser shall cause all Shares then owned by
them to be voted in favor of the approval and adoption of this Agreement and the
transactions contemplated hereby.
24
(b) Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 90 percent of the then outstanding Shares, the parties hereto
agree, at the request of Purchaser, subject to Article VII, to take all
necessary and appropriate action to cause the Merger to become effective, in
accordance with Section 253 of Delaware Law, as soon as reasonably practicable
after such acquisition, without a meeting of the stockholders of the Company.
SECTION 6.02. Proxy Statement. If required by applicable law, as soon
as practicable following consummation of the Offer, the Company shall file the
Proxy Statement with the SEC under the Exchange Act, and shall use its best
efforts to have the Proxy Statement cleared as promptly as practicable by the
SEC. Parent, Purchaser and the Company shall cooperate with each other in the
preparation of the Proxy Statement, and the Company shall notify Parent of the
receipt of any comments of the SEC with respect to the Proxy Statement and of
any requests by the SEC for any amendment or supplement thereto or for
additional information and shall provide to Parent promptly copies of all
correspondence between the Company or any representative of the Company and the
SEC. The Company shall give Parent and its counsel the opportunity to review the
Proxy Statement prior to its being filed with the SEC and shall give Parent and
its counsel the opportunity to review all amendments and supplements to the
Proxy Statement and all responses to requests for additional information and
replies to comments prior to their being filed with, or sent to, the SEC. Each
of the Company, Parent and Purchaser agrees to use its reasonable best efforts,
after consultation with the other parties hereto, to respond promptly to all
such comments of and requests by the SEC and to cause the Proxy Statement and
all required amendments and supplements thereto to be mailed to the holders of
Shares entitled to vote at the Stockholders' Meeting at the earliest practicable
time.
SECTION 6.03. Company Board Representation; Section 14(f). (a)
Promptly upon the purchase by Purchaser of Shares pursuant to the Offer, and
from time to time thereafter, Purchaser shall be entitled to designate up to
such number of directors, rounded up to the next whole number, on the Board as
shall give Purchaser representation on the Board equal to the product of the
total number of directors on the Board (giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by Purchaser and affiliates of Purchaser
following such purchase bears to the total number of Shares then outstanding,
and the Company shall, at such time, promptly take all actions necessary to
cause Purchaser's designees to be elected as directors of the Company, including
increasing the size of the Board or securing the resignations of incumbent
directors or both. At such times, the Company shall use its best efforts to
cause persons designated by Purchaser to constitute the same percentage as
persons designated by Purchaser shall constitute of the Board of each committee
of the Board, in each case only to the extent permitted by applicable law.
Notwithstanding the foregoing, until the earlier of (i) the time Purchaser
acquires a majority of the then outstanding Shares on a fully diluted basis and
(ii) the Effective Time, the Company shall use its best efforts to ensure that
all the members of the Board and each committee of the Board as of the date
hereof who are not employees of the Company shall remain members of the Board
and of such committees.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in order
to fulfill its obligations under this Section 6.03 and shall include in the
Schedule 14D-9 such information with respect to the Company and its officers and
directors as is required under Section 14(f) and Rule 14f-1 to fulfill such
obligations. Parent or Purchaser shall supply to the Company and be solely
responsible for any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1.
(c) Following the election of designees of Purchaser pursuant to this
Section 6.03, prior to the Effective Time, any amendment of this Agreement or
the Certificate of Incorporation or By-laws of the Company, any termination of
this Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Purchaser or
waiver of any of the Company's rights
25
hereunder shall require the concurrence of a majority of the directors of the
Company then in office who are neither (i) designees of Purchaser nor (ii)
employees of the Company.
SECTION 6.04. Access to Information; Confidentiality. (a) From the
date hereof to the Effective Time, the Company shall, and shall cause the
officers, directors, employees, auditors and agents of the Company to, afford
the officers, employees and agents of Parent and Purchaser and persons providing
or committing to provide Parent or Purchaser with financing for the Transactions
complete access at all reasonable times to the officers, employees, agents,
properties, offices, plants and other facilities, books and records of the
Company, and shall furnish Parent and Purchaser and persons providing or
committing to provide Parent or Purchaser with financing for the Transactions
with all financial, operating and other data and information as Parent or
Purchaser, through its officers, employees or agents, may reasonably request.
(b) All information obtained by Parent or Purchaser pursuant to this
Section 6.04 shall be kept confidential in accordance with the confidentiality
agreement, dated October 10, 1995 (the "Confidentiality Agreement"), between
Parent and the Company.
(c) No investigation pursuant to this Section 6.04 shall affect any
representation or warranty in this Agreement of any party hereto or any
condition to the obligations of the parties hereto.
SECTION 6.05. No Solicitation of Transactions. Unless this Agreement
shall have been terminated pursuant to Section 8.01, the Company shall not,
directly or indirectly, through any officer, director, agent or otherwise,
solicit, initiate or encourage the submission of any proposal or offer from any
person relating to any acquisition or purchase of all or (other than in the
ordinary course of business) any portion of the assets of, or any equity
interest in, the Company or any business combination with the Company or
participate in any negotiations regarding, or furnish to any other person any
information with respect to, or otherwise cooperate in any way with, or assist
or participate in, facilitate or encourage, any effort or attempt by any other
person to do or seek any of the foregoing; provided, however, that nothing
contained in this Section 6.05 shall prohibit the Board from responding to any
unsolicited proposal made in writing to acquire the Company pursuant to a
merger, consolidation, share exchange, business combination or other similar
transaction or to acquire all or substantially all of the assets of the Company,
to the extent the Board, after consultation with independent legal counsel,
determines in good faith that such action is required for the Board to comply
with its fiduciary duty to stockholders imposed by Delaware Law. The Company
immediately shall cease and cause to be terminated all existing discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. The Company shall notify Parent promptly if any such proposal or
offer, or any inquiry or contact with any person with respect thereto, is made
and shall, in any such notice to Parent, indicate in reasonable detail the
identity of the person making such proposal, offer, inquiry or contact and the
terms and conditions of such proposal, offer, inquiry or contact. The Company
agrees not to release any third party from, or waive any provision of, any
confidentiality or standstill agreement to which the Company is a party.
SECTION 6.06. Employee Benefits Matters. Parent intends that, for a
period of one year immediately following the Effective Time, it shall, or shall
cause the Surviving Corporation to, continue to maintain employee benefit and
welfare plans, programs, contracts, agreements policies and executive incentives
and perquisites, other than equity- based plans, for the benefit of active and
retired employees of the Company or the Surviving Corporation which in the
aggregate provide benefits that are no less favorable to employees than the
benefits provided to such active and retired employees on the date hereof.
SECTION 6.07. Directors' and Officers' Indemnification. (a) The
By-laws of the Surviving Corporation shall contain provisions no less favorable
with respect to indemnification, advancement of expenses and related matters
than are set forth in Article VII of the By-laws of the Company as in effect on
the date hereof, which provisions shall not be amended, repealed or otherwise
modified for a period of three years from the
26
Effective Time in any manner that would affect adversely the rights thereunder
of individuals who at the Effective Time were directors, officers, employees,
fiduciaries or agents of the Company, unless such modification shall be required
by law.
(b) The Company shall, to the fullest extent permitted under
applicable law and regardless of whether the Merger becomes effective, indemnify
and hold harmless, and, after the Effective Time, the Surviving Corporation
shall, to the fullest extent permitted under applicable law, indemnify and hold
harmless, each present and former director, officer, employee, fiduciary and
agent of the Company (collectively, the "Indemnified Parties") against all costs
and expenses (including attorneys' fees), judgments, fines, losses, claims,
damages, liabilities and settlement amounts paid in connection with any claim,
action, suit, proceeding or investigation (whether arising before or after the
Effective Time), whether civil, criminal, administrative or investigative,
arising out of or pertaining to any action or omission in their capacity as an
officer, director, employee, fiduciary or agent, whether occurring before, at or
after the Effective Time, whether asserted or claimed prior to, at or after the
Effective Time, for a period of three years after the date hereof. In the event
of any such claim, action, suit, proceeding or investigation, (i) the Company or
the Surviving Corporation, as the case may be, shall pay the reasonable fees and
expenses of counsel selected by the Indemnified Parties, which counsel shall be
reasonably satisfactory to the Company or the Surviving Corporation, promptly
after statements therefor are received and (ii) the Company and the Surviving
Corporation shall cooperate in the defense of any such matter; provided,
however, that neither the Company nor the Surviving Corporation shall be liable
for any settlement effected without its written consent (which consent shall not
be unreasonably withheld); and provided, further, that neither the Company nor
the Surviving Corporation shall be obligated pursuant to this Section 6.07(b) to
pay the fees and expenses of more than one counsel for all Indemnified Parties
in any single action except to the extent that two or more of such Indemnified
Parties shall have conflicting interests in the outcome of such action; and
provided, further, that, in the event that any claim for indemnification is
asserted or made within such three-year period, all rights to indemnification in
respect of such claim shall continue until the disposition of such claim.
(c) In the event the Company or the Surviving Corporation or any of
their respective successors or assigns (i) consolidates with or merges into any
other person and shall not be the continuing or surviving corporation or entity
of such consolidation or merger or (ii) transfers all or substantially all of
its properties and assets to any person, then, and in each such case, proper
provision shall be made so that the successors and assigns of the Company or the
Surviving Corporation, as the case may be, or at Parent's option, Parent, shall
assume the obligations set forth in this Section 6.07.
SECTION 6.08. Notification of Certain Matters. 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 any representation or warranty
of the Company contained in this Agreement to be untrue or inaccurate and (ii)
any failure of the Company, Parent or Purchaser, 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 6.08 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
SECTION 6.09. Further Action; Reasonable Best Efforts. Upon the terms
and subject to the conditions hereof, each of the parties hereto shall (i) make
promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act with respect to the Transactions and (ii) use its
reasonable best efforts to take, or cause to be taken, all appropriate 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, including, without limitation, using its reasonable best efforts
to obtain all licenses, permits (including, without limitation, Environmental
Permits), consents, approvals, authorizations, qualifications and orders of
governmental authorities and parties to contracts with the Company as are
necessary for the consummation of the Transactions and to fulfill the conditions
to the Offer and the Merger. In case at any time after the Effective Time any
27
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall use their reasonable best efforts to take all such action.
SECTION 6.10. Public Announcements. Parent, Purchaser and the Company
shall consult with each other before issuing any press release or otherwise
making any public statements with respect to this Agreement or any Transaction
and shall not issue any such press release or make any such public statement
without the consent of the other parties, except as may be required by law or
the Company's listing agreement with the Nasdaq National Market.
SECTION 6.11. Confidentiality Agreement. The Company hereby waives the
provisions of the Confidentiality Agreement as and to the extent necessary to
permit the consummation of each Transaction as contemplated by this Agreement.
Upon the acceptance for payment of Shares pursuant to the Offer, the
Confidentiality Agreement shall be deemed to have terminated without further
action by the parties thereto.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.01. Conditions to 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) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved and adopted by the affirmative
vote of the stockholders of the Company to the extent required by Delaware
Law and the Certificate of Incorporation of the Company;
(b) HSR Act. Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated;
(c) No Order. No foreign, United States or state governmental
authority or other agency or commission or foreign, United States or state
court of competent jurisdiction shall have enacted, issued, promulgated,
enforced or entered any law, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent)
which is then in effect and has the effect of making the acquisition of
Shares by Parent or Purchaser or any affiliate of either of them illegal or
otherwise restricting, preventing or prohibiting consummation of the
Transactions; and
(d) Offer. Purchaser or its permitted assignee shall have
purchased all Shares validly tendered and not withdrawn pursuant to the
Offer; provided, however, that this condition shall not be applicable to
the obligations of Parent or Purchaser if, in breach of this Agreement or
the terms of the Offer, Purchaser fails to purchase any Shares validly
tendered and not withdrawn pursuant to the Offer.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.01. Termination. This Agreement may be terminated and the
Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the transactions contemplated hereby by the stockholders of the
Company:
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(a) By mutual written consent duly authorized by the Boards of
Directors of Parent, Purchaser and the Company; or
(b) By either Parent, Purchaser or the Company if (i) the
Effective Time shall not have occurred on or before March 31, 1996;
provided, however, that the right to terminate this Agreement under this
Section 8.01(b) shall not be available to any party whose failure to
fulfill any obligation under this Agreement has been the cause of, or
resulted in, the failure of the Effective Time to occur on or before such
date; or (ii) any court of competent jurisdiction in the United States or
other United States governmental authority shall have issued an order,
decree, ruling or taken any other action restraining, enjoining or
otherwise prohibiting the Merger and such order, decree, ruling or other
action shall have become final and nonappealable; or
(c) By Parent if (i) due to an occurrence or circumstance that
would result in a failure to satisfy any condition set forth in Annex A
hereto, Purchaser shall have (A) failed to commence the Offer within 30
days following the date of this Agreement, (B) terminated the Offer without
having accepted any Shares for payment thereunder or (C) failed to pay for
Shares pursuant to the Offer within 60 days following the commencement of
the Offer, unless such failure to pay for Shares shall have been caused by
or resulted from the failure of Parent or Purchaser to perform in any
material respect any material covenant or agreement of either of them
contained in this Agreement or the material breach by Parent or Purchaser
of any material representation or warranty of either of them contained in
this Agreement or (ii) prior to the purchase of Shares pursuant to the
Offer, the Board or any committee thereof shall have withdrawn or modified
in a manner adverse to Purchaser or Parent its approval or recommendation
of the Offer, this Agreement, the Merger or any other Transaction or shall
have recommended another merger, consolidation, business combination with,
or acquisition of, the Company or its assets or another tender offer for
Shares, or shall have resolved to do any of the foregoing; or
(d) By the Company, upon approval of the Board, if (i) Purchaser
shall have (A) failed to commence the Offer within 30 days following the
date of this Agreement, (B) terminated the Offer without having accepted
any Shares for payment thereunder or (C) failed to pay for Shares pursuant
to the Offer within 60 days following the commencement of the Offer, unless
such failure to pay for Shares shall have been caused by or resulted from
the failure of the Company to perform in any material respect any material
covenant or agreement of the Company contained in this Agreement or the
material breach by the Company of any material representation or warranty
of the Company contained in this Agreement or (ii) prior to the purchase of
Shares pursuant to the Offer the Board shall have withdrawn or modified in
a manner adverse to Purchaser or Parent its approval or recommendation of
the Offer, this Agreement or the Merger in order to approve the execution
by the Company of a definitive agreement providing for the acquisition of
the Company or its assets or a merger or other business combination or in
order to approve a tender offer or exchange offer for Shares by a third
party, in either case, as determined by the Board in the exercise of its
good faith judgment and after consultation with its legal counsel and
financial advisors, on terms more favorable to the Company's stockholders
than the Offer and the Merger taken together; provided, however, that such
termination under this clause (ii) shall not be effective until the Company
has made payment to Parent of the Fee (as hereinafter defined) required to
be paid pursuant to Section 8.03(a) and has deposited with a mutually
acceptable escrow agent $500,000 for reimbursement to Parent and Purchaser
of Expenses (as hereinafter defined).
SECTION 8.02. Effect of Termination. In the event of the termination
of this Agreement pursuant to Section 8.01, this Agreement shall forthwith
become void, and there shall be no liability on the part of any party hereto,
except (i) as set forth in Sections 8.03 and 9.01 and (ii) nothing herein shall
relieve any party from liability for any breach hereof.
SECTION 8.03. Fees and Expenses. (a) In the event that
29
(i) any person shall have commenced a tender or exchange offer for
10% or more (or which, assuming the maximum amount of securities which
could be purchased, would result in any person beneficially owning 10% or
more) of the then outstanding Shares or otherwise for the direct or
indirect acquisition of the Company or all or substantially all of its
assets for per Share consideration having a value greater than the Per
Share Amount (a "Competing Proposal") and (w) the Board does not recommend
against the Competing Proposal, (x) the Offer shall have remained open for
at least 20 business days, (y) the Minimum Condition shall not have been
satisfied and (z) this Agreement shall have been terminated pursuant to
Section 8.01; or
(ii) this Agreement is terminated (x) pursuant to Section 8.01(c)(ii)
or (y) pursuant to Section 8.01(d)(ii);
then, in any such event, the Company shall pay Parent promptly (but in no event
later than one business day after the first of such events shall have occurred)
a fee of U.S.$1,000,000 (the "Fee"), which amount shall be payable in
immediately available funds, plus all Expenses up to $500,000 in the aggregate.
For purposes of this Section 8.03, the term "Expenses" shall mean all
out-of-pocket expenses and fees of each of Parent, Purchaser and their
respective shareholders and affiliates (including, without limitation, fees and
expenses payable to all banks, investment banking firms, other financial
institutions and other persons and their respective agents and counsel for
arranging, committing to provide or providing any financing for the Transactions
or structuring the Transactions and all fees of counsel, accountants, experts
and consultants to Parent and Purchaser, and all printing and advertising
expenses and all costs and expenses incurred by or on behalf of Parent and
Purchaser in connection with the collection under and enforcement of this
Section 8.03) actually incurred or accrued by any of them or on their behalf in
connection with the Transactions, including, without limitation, the financing
thereof, and actually incurred or accrued by banks, investment banking firms,
other financial institutions and other persons and assumed by Parent and
Purchaser in connection with the negotiation, preparation, execution and
performance of this Agreement, the structuring and financing of the Transactions
and any financing commitments or agreements relating thereto.
(b) Except as set forth in this Section 8.03, all costs and expenses
incurred in connection with this Agreement and the Transactions shall be paid by
the party incurring such expenses, whether or not any Transaction is
consummated.
SECTION 8.04. Amendment. Subject to Section 6.03(c), this Agreement
may be amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after the approval and adoption of this Agreement and
the transactions contemplated hereby by the stockholders of the Company, no
amendment may be made which would reduce the amount or change the type of
consideration into which each Share shall be converted upon consummation of the
Merger. This Agreement may not be amended except by an instrument in writing
signed by the parties hereto.
SECTION 8.05. Extension; Waiver. At any time prior to the Effective
Time, any party hereto may (i) extend the time for the performance of any
obligation or other act of any other party hereto, (ii) waive any inaccuracy in
the representations and warranties contained herein or in any document delivered
pursuant hereto and (iii) waive compliance with any agreement or condition
contained herein. Any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the party or parties to be bound thereby.
ARTICLE IX
GENERAL PROVISIONS
30
SECTION 9.01. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or upon the termination of this Agreement
pursuant to Section 8.01, as the case may be, except that the agreements set
forth in Articles II and Sections 6.06 and 6.07 shall survive the Effective Time
indefinitely and those set forth in Sections 6.04(b) and 8.03 shall survive
termination indefinitely. This Section 9.01 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time of the Merger.
SECTION 9.02. Notices. All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and shall
be deemed to have been duly given upon receipt) by delivery in person, by
telecopy or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in accordance
with this Section 9.02):
if to Parent or Purchaser:
Thomson U.S. Holdings Inc.
c/o The Thomson Corporation
Metro Center at One Station Place
Stamford, Connecticut 06902
Telecopier No. : (203) 348-5718
Attention: General Counsel
with a copy (which shall not by itself constitute notice) to:
Research Institute of America
90 Fifth Avenue
New York, New York 10011
Telecopier No.: (212) 337-4197
Attention: Euan C. Menzies
and a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Telecopier No.: (212) 848-7179
Attention: David W. Heleniak, Esq.
if to the Company:
SCS/Compute, Inc.
2252 Welsch Industrial Court
St. Louis, Missouri 63146
Telecopier No.: (314) 432-7308
Attention: Chief Executive Officer
with a copy (which shall not by itself constitute notice) to:
Peper, Martin, Jensen, Maichel and Hetlage
720 Olive Street, 24th floor
St. Louis, Missouri 63101
Telecopier No: (314) 621-4834
Attention: John R. Short, Esq.
SECTION 9.03. Certain Definitions. For purposes of this Agreement,
the term:
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(a) "affiliate" of a specified person means a person who directly
or indirectly through one or more intermediaries controls, is controlled
by, or is under common control with, such specified person;
(b) "beneficial owner" with respect to any Shares means a person
who shall be deemed to be the beneficial owner of such Shares (i) which
such person or any of its affiliates or associates (as such term is defined
in Rule 12b-2 promulgated under the Exchange Act) beneficially owns,
directly or indirectly, (ii) which such person or any of its affiliates or
associates has, directly or indirectly, (A) the right to acquire (whether
such right is exercisable immediately or subject only to the passage of
time), pursuant to any agreement, arrangement or understanding or upon the
exercise of conversion rights, exchange rights, warrants or options, or
otherwise, or (B) the right to vote pursuant to any agreement, arrangement
or understanding or (iii) which are beneficially owned, directly or
indirectly, by any other persons with whom such person or any of its
affiliates or associates or person with whom such person or any of its
affiliates or associates has any agreement, arrangement or understanding
for the purpose of acquiring, holding, voting or disposing of any Shares;
(c) "business day" means any day on which the principal offices
of the SEC in Washington, D.C. are open to accept filings, or, in the case
of determining a date when any payment is due, any day on which banks are
not required or authorized to close in the City of New York;
(d) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly or as
trustee or executor, of the power to direct or cause the direction of the
management and policies of a person, whether through the ownership of
voting securities, as trustee or executor, by contract or credit
arrangement or otherwise;
(e) "person" means an individual, corporation, partnership,
limited partnership, limited liability company, syndicate, person
(including, without limitation, a "person" as defined in Section 13(d)(3)
of the Exchange Act), trust, association or entity or government, political
subdivision, agency or instrumentality of a government; and
(f) "subsidiary" or "subsidiaries" of the Company, the Surviving
Corporation, Parent or any other person means an affiliate controlled by
such person, directly or indirectly, through one or more intermediaries.
SECTION 9.04. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the Transactions is not affected in any manner materially adverse
to any party. Upon such determination that any term or other provision is
invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 9.05. Entire Agreement; Assignment. Except as set forth in
Sections 6.04 and 6.11, this Agreement constitutes the entire agreement among
the parties with respect to the subject matter hereof and supersedes all prior
agreements and undertakings, both written and oral, among the parties, or any of
them, with respect to the subject matter hereof. This Agreement shall not be
assigned by operation of law or otherwise, except that Parent and Purchaser may
assign all or any of their rights and obligations hereunder to any affiliate of
Parent provided that no such assignment shall relieve the assigning party of its
obligations hereunder if such assignee does not perform such obligations.
32
SECTION 9.06. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of the parties hereto and their respective
successors and assigns, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement, other than
Section 6.07 (which is intended to be for the benefit of the persons covered
thereby and may be enforced by such persons).
SECTION 9.07. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or in equity.
SECTION 9.08. Governing Law. Except to the extent that Delaware Law
applies to the Transactions, this Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York applicable to contracts
executed in and to be performed entirely within that State.
SECTION 9.09. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect in
any way the meaning or interpretation of this Agreement.
SECTION 9.10. Counterparts. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
THOMSON U.S. HOLDINGS INC.
By /s/ Nigel R. Harrison
Name: Nigel R. Harrison
Title: Executive Vice President
SCS SUBSIDIARY, INC.
By /s/ Nigel R. Harrison
Name: Nigel R. Harrison
Title: Treasurer
SCS/COMPUTE, INC.
By /s/ Robert W. Nolan, Sr.
Name: Robert W. Nolan, Sr.
Title: President
33
ANNEX A
Conditions to the Offer
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment or pay for any Shares tendered pursuant to the
Offer, and may terminate or amend the Offer and may postpone the acceptance for
payment of and payment for Shares tendered, if (i) the Minimum Condition shall
not have been satisfied, (ii) any applicable waiting period under the HSR Act
shall not have expired or been terminated prior to the expiration of the Offer,
or (iii) at any time on or after the date of this Agreement, and prior to the
acceptance for payment of Shares, any of the following conditions shall exist:
(a) there shall have been instituted or be pending any action or
proceeding before any court or governmental, administrative or regulatory
authority or agency, domestic or foreign, (i) challenging or seeking to
make illegal, materially delay or otherwise directly or indirectly restrain
or prohibit or make materially more costly the making of the Offer, the
acceptance for payment of, or payment for, any Shares by Parent, Purchaser
or any other affiliate of Parent or the consummation of any other
Transaction, or seeking to obtain material damages in connection with any
Transaction; (ii) seeking to prohibit or limit materially the ownership or
operation by the Company, Parent or any of its subsidiaries of all or any
material portion of the business or assets of the Company, Parent or any of
its subsidiaries, or to compel the Company, Parent or any of its
subsidiaries to dispose of or hold separate all or any material portion of
the business or assets of the Company, Parent or any of its subsidiaries,
as a result of the Transactions; (iii) seeking to impose limitations on the
ability of Parent, Purchaser or any other affiliate of Parent to exercise
effectively full rights of ownership of any Shares, including, without
limitation, the right to vote any Shares acquired by Purchaser pursuant to
the Offer, the Stock Purchase Agreement or otherwise on all matters
properly presented to the Company's stockholders, including, without
limitation, the approval and adoption of this Agreement and the
transactions contemplated hereby; (iv) seeking to require divestiture by
Parent, Purchaser or any other affiliate of Parent of any Shares; or (v)
which otherwise has a Material Adverse Effect or which is reasonably likely
to materially adversely affect the business, operations, properties,
condition (financial or otherwise), assets or liabilities (including,
without limitation, contingent liabilities) or prospects of Parent.
(b) there shall have been any action taken, or any statute, rule,
regulation, legislation, interpretation, judgment, order or injunction
enacted, entered, enforced, promulgated, amended, issued or deemed
applicable to (i) Parent, the Company or any subsidiary or affiliate of
Parent or the Company or (ii) any Transaction, by any legislative body,
court, government or governmental, administrative or regulatory authority
or agency, domestic or foreign, other than the routine application of the
waiting period provisions of the HSR Act to the Offer, the Stock Purchase
Agreement or the Merger, which is reasonably likely to result, directly or
indirectly, in any of the consequences referred to in clauses (i) through
(v) of paragraph (a) above;
(c) there shall have occurred any change, condition, event or
development that, when taken together with all such other changes,
conditions, events and developments, has a Material Adverse Effect with
respect to the Company;
(d) (i) it shall have been publicly disclosed or Purchaser shall
have otherwise learned that beneficial ownership (determined for the
purposes of this paragraph as set forth in Rule 13d-3 promulgated under the
Exchange Act) of 25% or more of the then outstanding Shares has been
acquired by any person, other than
34
Parent or any of its affiliates or Mr. Robert W. Nolan, Sr. or (ii) (A) the
Board or any committee thereof shall have withdrawn or modified in a manner
adverse to Parent or Purchaser the approval or recommendation of the Offer,
the Merger, this Agreement, or approved or recommended any takeover
proposal or any other acquisition of Shares other than the Offer and the
Merger or (B) the Board or any committee thereof shall have resolved to do
any of the foregoing;
(e) any representation or warranty of the Company in this
Agreement which is qualified as to materiality shall not be true and
correct or any such representation or warranty that is not so qualified
shall not be true and correct in any material respect, in each case as if
such representation or warranty was made as of such time on or after the
date of this Agreement;
(f) the Company shall have failed to perform in any material
respect any obligation or to comply in any material respect with any
agreement or covenant of the Company to be performed or complied with by it
under this Agreement;
(g) this Agreement shall have been terminated in accordance with
its terms; or
(h) Purchaser and the Company shall have agreed that Purchaser
shall terminate the Offer or postpone the acceptance for payment of or
payment for Shares thereunder;
which, in the reasonable judgment of Purchaser in any such case, and regardless
of the circumstances (including any action or inaction by Parent or any of its
affiliates) giving rise to any such condition, makes it inadvisable to proceed
with such acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right; the waiver
of any such right with respect to particular facts and other circumstances shall
not be deemed a waiver with respect to any other facts and circumstances; and
each such right shall be deemed an ongoing right that may be asserted at any
time and from time to time.