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Exhibit A
AGREEMENT AND PLAN OF MERGER
by and among
HASBRO, INC.,
NEW HIAC II CORP.
and
GALOOB TOYS, INC.
dated as of
September 27, 1998
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 27, 1998,
by and among HASBRO, INC., a Rhode Island corporation ("Parent"), NEW HIAC II
CORP., a Delaware corporation and a wholly-owned Subsidiary of Parent
("Purchaser"), and GALOOB TOYS, INC., a Delaware corporation (the "Company").
WHEREAS, the Board of Directors of each of Parent, Purchaser
and the Company have approved, and deem it fair to, advisable and in the best
interests of their respective stockholders to consummate, the acquisition of the
Company by Parent and Purchaser upon the terms and subject to the conditions set
forth herein;
WHEREAS, in furtherance thereof, it is proposed that Purchaser
make a cash tender offer to acquire all shares of the issued and outstanding
common stock, $.01 par value, of the Company (the "Shares") (including the
related Preferred Stock Purchase Rights (as herein defined)) for $12.00 per
share, net to the seller in cash, upon the terms and subject to the conditions
set forth herein;
WHEREAS, also in furtherance of such acquisition, the Board of
Directors of each of Parent, Purchaser and the Company have approved this Agree-
ment and the Merger (as herein defined) following the Offer (as herein defined)
pursuant to which Purchaser shall merge with and into the Company and
outstanding Shares shall be converted into the right to receive the Offer Price
(as herein defined) in cash, without interest, all in accordance with the DGCL
(as herein defined) and upon the terms and subject to the conditions set forth
herein;
WHEREAS, the Board of Directors of the Company has determined
that the consideration to be paid for each Share in the Offer and the Merger is
fair to the holders of such Shares and has resolved to recommend that the
holders of such Shares tender their Shares pursuant to the Offer and approve and
adopt this Agree ment and the Merger upon the terms and subject to the
conditions set forth herein;
WHEREAS, the Company, Parent and Purchaser desire to make
certain representations, warranties, covenants and agreements in connection with
the Offer and the Merger; and
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NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements set forth herein, the
parties hereto, intending to be legally bound hereby, agree as follows:
ARTICLE I
THE OFFER AND MERGER
Section 1.1 The Offer.
(a) As promptly as practicable (but in no event later than
five business days after the public announcement of the execution hereof),
Purchaser shall commence (within the meaning of Rule 14d-2 under the Securities
Exchange Act of 1934, as amended (the "Exchange Act")) a tender offer (the
"Offer") for all of the outstanding Shares (including the related Preferred
Stock Purchase Rights) at a price of $12.00 per Share, net to the seller in cash
(such price, or such higher price per Share as may be paid in the Offer, being
referred to herein as the "Offer Price"), subject to the conditions set forth in
Annex A hereto.
(b) The obligations of Purchaser to commence the Offer and to
accept for payment and to pay for any Shares validly tendered on or prior to the
expiration of the Offer and not withdrawn shall be subject only to the
conditions set forth in Annex A hereto; provided, that Purchaser's right in
Annex A hereto to terminate the Offer shall be subject to Purchaser's
obligations under this Agreement. The Offer shall be made by means of an offer
to purchase (the "Offer to Purchase") containing the terms set forth in this
Agreement and the conditions set forth in Annex A hereto.
(c) Purchaser expressly reserves the right to modify the terms
of the Offer; provided, that, without the Company's prior written consent,
Purchaser shall not decrease the Offer Price, change the form of consideration
to be paid in the Offer, waive the Minimum Condition or decrease the number of
Shares sought or amend any other condition of the Offer in any manner adverse to
the holders of the Shares (other than with respect to insignificant changes or
amendments and subject to the penultimate sentence of this Section 1.1) or
impose additional conditions without the written consent of the Company;
provided further, however, that, if on the initial scheduled expiration date of
the Offer, which shall be 20 business days after the date that the Offer is
commenced, all conditions to the Offer shall not have been satisfied or waived,
Purchaser may, from time to time until such time as all
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such conditions are satisfied or waived, in its sole discretion, extend the
expiration date provided, however, that the expiration date of the Offer may not
be extended beyond March 1, 1999. Parent and Purchaser agree that if all of the
conditions set forth on Annex A hereto are not satisfied on any scheduled
expiration date of the Offer then, provided that all such conditions are
reasonably capable of being satisfied, Purchaser shall extend the Offer from
time to time until such conditions are satisfied or waived, provided that
Purchaser shall not be required to extend the Offer beyond March 1, 1999. In
addition, the Offer Price may be increased and the Offer may be extended to the
extent required by applicable Law in connection with such increase, in each case
without the consent of the Company. Purchaser shall, on the terms and subject to
the prior satisfaction or waiver of the conditions of the Offer, accept for
payment and pay for Shares validly tendered as promptly as practicable;
provided, however, that if, immediately prior to the initial expiration date of
the Offer, the Shares validly tendered and not withdrawn pursuant to the Offer
equal less than 90% of the outstanding Shares, Purchaser may extend the Offer
for a period not to exceed 10 business days, notwithstanding that all conditions
to the Offer are satisfied as of such expiration date of the Offer so long as
Purchaser irrevocably waives the satisfaction of any of the conditions to the
Offer (other than the Minimum Condition and the condition set forth in paragraph
(b) of Annex A hereto) that subsequently may not be satisfied during such
extension to the Offer.
Section 1.2 Company Actions.
(a) The Company hereby approves of and consents to the Offer
and represents that the Board of Directors of the Company, at a meeting duly
called and held, has (i) unanimously determined that each of the Agreement, the
Offer and the Merger (as defined in Section 1.5) are fair to and in the best
interests of the stockholders of the Company, (ii) unanimously approved this
Agreement, the Offer, the acquisition of Shares pursuant to the Offer and the
Merger for purposes of Section 203 of the DGCL (the "Section 203 Approval"),
(iii) received the opinion of Xxxxx & Company Incorporated, financial advisor to
the Company, to the effect that the Offer Price to be received by holders of
Shares pursuant to the Offer and the Merger Consideration (as defined herein)
pursuant to the Merger is fair to the stockholders of the Company from a
financial point of view, (iv) approved this Agreement and the transactions
contemplated hereby including the Offer and the Merger (collectively, the
"Transactions") and (v) resolved to recommend that the stockholders of the
Company accept the Offer, tender their Shares thereunder to Purchaser and
approve and adopt this Agreement and the Merger. The Company has been advised by
each of its directors and by each executive officer who as of the
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date hereof is actually aware (to the Knowledge of the Company) of the
Transactions that each such Person either intends to tender pursuant to the
Offer all Shares owned by such Person or vote all Shares owned by such Person in
favor of the Merger.
(b) In connection with the Offer, the Company will promptly
furnish or cause to be furnished to Purchaser mailing labels, security position
listings and any available listings or computer files containing the names and
addresses of all holders of record of the Shares as of a recent date, and shall
furnish Purchaser with such additional information (including, but not limited
to, updated lists of holders of the Shares and their addresses, mailing labels
and lists of security positions) and such assistance as Purchaser or its agents
may reasonably request in communicating the Offer to the record and beneficial
holders of the Shares. 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 Merger, Purchaser and its affiliates and
associates shall hold in confidence the information contained in any such
labels, listings and files and all other information delivered pursuant to this
Section 1.2(b), will use such information only in connection with the Offer and
the Merger and, if this Agreement shall be terminated, will deliver to the
Company all copies, extracts or summaries of such information in their
possession or the possession of their agents.
Section 1.3 SEC Documents.
(a) On the date the Offer is commenced, Parent and Purchaser
shall file with the United States Securities and Exchange Commission (the "SEC")
a Tender Offer Statement on Schedule 14D-1 in accordance with the Exchange Act
with respect to the Offer (together with all amendments and supplements thereto
and including the exhibits thereto, the "Schedule 14D-1"). The Schedule 14D-1
will include, as exhibits, the Offer to Purchase and a form of letter of
transmittal (collectively, together with any amendments and supplements
thereto, the "Offer Documents"). Concurrently with the filing of the Schedule
14D-1 by Parent and Purchaser, the Company shall file with the SEC a
Solicitation/Recommendation State ment on Schedule 14D-9 in accordance with the
Exchange Act (together with all amendments and supplements thereto and including
the exhibits thereto, the "Schedule 14D-9"), which shall, except as otherwise
provided herein, contain the recommendation referred to in clause (v) of
Section 1.2(a) hereof.
(b) Parent and Purchaser will take all steps necessary to
ensure that the Offer Documents, and the Company will take all steps necessary
to
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ensure that the Schedule 14D-9, will comply in all material respects with the
provisions of applicable Federal and state securities Laws. Each of Parent and
Purchaser will take all steps necessary to cause the Offer Documents, and the
Company will take all steps necessary to cause the Schedule 14D-9, to be filed
with the SEC and to be disseminated to holders of the Shares, in each case as
and to the extent required by applicable Federal and state securities Laws. Each
of Parent and Purchaser, on the one hand, and the Company, on the other hand,
will promptly correct any information provided by it for use in the Offer
Documents and the Schedule 14D-9 if and to the extent that it shall have become
false and misleading in any material respect and Purchaser will take all steps
necessary to cause the Offer Documents, and the Company will take all steps
necessary to cause the Schedule 14D-9, as so corrected to be filed with the SEC
and to be disseminated to holders of the Shares, in each case as and to the
extent required by applicable Federal and state securities Laws. Parent and its
counsel shall be given a reasonable opportunity to review and comment upon the
Schedule 14D-9 and all amendments and supplements thereto prior to their filing
with the SEC or dissemination to stockholders of the Company. The Company and
its counsel shall be given a reasonable opportunity to review and comment upon
the Offer Documents prior to their filing with the SEC or dissemination to
stockholders of the Company. The Company agrees to provide Parent and its
counsel with copies of any written comments that the Company or its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after the receipt of such comments and each of Parent and Purchaser agrees to
provide the Company and its counsel with copies of any written comments that
Parent, Purchaser or their counsel may receive from the SEC or its staff with
respect to the Offer Documents promptly after the receipt of such comments.
Section 1.4 Directors.
(a) Promptly after (i) the purchase of and payment for any
Shares by Purchaser or any of its affiliates pursuant to the Offer as a result
of which Purchaser and its affiliates own beneficially at least a majority of
then outstanding Shares and (ii) compliance with Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder, whichever shall occur later, Parent
shall be entitled to designate such number of directors, rounded up to the next
whole number, on the Company's Board of Directors as is equal to the product of
the total number of directors on such Board (giving effect to the increase in
the size of such Board pursuant to this Section 1.4) multiplied by the
percentage that the number of Shares beneficially owned by Purchaser (including
Shares so accepted for payment) bears to the total number of Shares then
outstanding. In furtherance thereof, the Company
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shall, upon request of Parent and compliance with Section 14(f) of the Exchange
Act and Rule 14f-1 promulgated thereunder, use its best efforts promptly either
to increase the size of its Board of Directors or to secure the resignations of
such number of its incumbent directors, or both, as is necessary to enable such
designees of Parent to be so elected or appointed to the Company's Board of
Directors, and the Company shall take all actions available to the Company to
cause such designees of Parent to be so elected or appointed. At such time, the
Company shall, if requested by Parent, also take all action necessary to cause
Persons designated by Parent to constitute at least the same percentage (rounded
up to the next whole number) as is on the Company's Board of Directors of (i)
each committee of the Company's Board of Directors, (ii) each board of directors
(or similar body) of each Subsidiary of the Company and (iii) each committee (or
similar body) of each such board.
(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 Section 1.4(a), including
mailing to stockholders the information required by such Section 14(f) and Rule
14f-1 (or, at Parent's request, furnishing such information to Parent for
inclusion in the Offer Documents initially filed with the SEC and distributed to
the stockholders of the Company) as is necessary to enable Parent's designees to
be elected to the Company's Board of Directors. Parent or Purchaser will supply
to the Company in writing 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. The provisions of this Section
1.4 are in addition to and shall not limit any rights which Purchaser, Parent or
any of their affiliates may have as a holder or beneficial owner of Shares as a
matter of applicable Law with respect to the election of directors or otherwise.
(c) Notwithstanding the provisions of this Section 1.4, the
parties hereto shall use their respective reasonable best efforts to ensure that
at least two of the members of the Board shall, at all times prior to the
Effective Time (as defined in Section 1.6 hereof) be, Continuing Directors. From
and after the time, if any, that Parent's designees constitute a majority of the
Company's Board of Directors, any amendment or modification of this Agreement,
any amendment to the Company's Certificate of Incorporation or By-Laws
inconsistent with this Agree ment, any termination of this Agreement by the
Company, any extension of time for performance of any of the obligations of
Parent or Purchaser hereunder, any waiver of any condition to the Company's
obligations hereunder or any of the Company's rights hereunder or other action
by the Company hereunder may be effected only by
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the action of a majority of the Continuing Directors of the Company, which
action shall be deemed to constitute the action of any committee specifically
designated by the Board of Directors of the Company to approve the actions
contemplated hereby and the Transactions and the full Board of Directors of the
Company; provided, that, if there shall be no Continuing Directors, such actions
may be effected by majority vote of the entire Board of Directors of the
Company, except that no such action shall amend the terms of this Agreement or
modify the terms of the Offer or the Merger in a manner materially adverse to
the holders of Shares.
Section 1.5 The Merger. (a) Subject to the terms and
conditions of this Agreement, and in accordance with the DGCL, at the Effective
Time (as defined in Section 1.6 hereof), the Company and Purchaser shall
consummate a merger (the "Merger") pursuant to which (x) Purchaser shall be
merged with and into the Company and the separate corporate existence of
Purchaser shall thereupon cease and (y) the Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation") and shall continue to be governed by the Laws of the State of
Delaware.
(b) Pursuant to the Merger, at the Effective Time, (x) the
Certificate of Incorporation of the Company, as in effect immediately prior to
the Effective Time, shall be the certificate of incorporation of the Surviving
Corporation and (y) the By-Laws of the Company, as in effect immediately prior
to the Effective Time, shall be the by-laws of the Surviving Corporation, each
until thereafter changed or amended as provided therein and by the DGCL.
(c) The directors of Purchaser at the Effective Time shall be
the initial directors of the Surviving Corporation until their respective
successors are duly elected and qualified or until their earlier death,
resignation or removal in accordance with the Surviving Corporation's
certificate of incorporation and by-laws. The officers of the Company at the
Effective Time shall be the initial officers of the Surviving Corporation until
their respective successors are duly elected and qualified or until their
earlier death, resignation or removal in accordance with the Surviving
Corporation's certificate of incorporation and by-laws.
(d) The Merger shall have the effects specified in the
applicable provisions of the DGCL.
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Section 1.6 Effective Time. Subject to the terms and
conditions of this Agreement, Parent, Purchaser and the Company will cause a
certificate of merger or, if applicable, a certificate of ownership and merger
(as applicable, the "Certificate of Merger"), to be executed and filed on the
date of the Closing (as defined in Section 1.7) (or on such other date as Parent
and the Company may agree) with the Secretary of State of Delaware (the
"Secretary of State") as provided in the DGCL. The Merger shall become effective
on the date on which the Certificate of Merger has been duly filed with the
Secretary of State or such time as is agreed upon by the parties and specified
in the Certificate of Merger, and such time is hereinafter referred to as the
"Effective Time."
Section 1.7 Closing. The closing of the Merger (the "Closing")
shall take place at 10:00 a.m., local time, on a date to be specified by the
parties, which shall be no later than the second business day after satisfaction
or waiver of all of the conditions set forth in Article VI hereof (the "Closing
Date"), at the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, unless another date or place is agreed to in
writing by the parties hereto.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1 Conversion of Capital Stock. As of the Effective
Time, by virtue of the Merger and without any action on the part of the holders
of any Shares or any shares of capital stock of Purchaser:
(a) Purchaser Capital Stock. Each issued and
outstanding share of common stock, par value $.01 per share, of Purchaser shall
be converted into and become one fully paid and nonassessable share of common
stock, par value $.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Purchaser-
Owned Stock. All Shares that are owned by the Company or any Subsidiary of the
Company and any Shares owned by Parent, Purchaser or any Subsidiary of Parent or
Purchaser shall be cancelled and retired and shall cease to exist and no
consideration shall be delivered in exchange therefor.
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(c) Exchange of Shares. Each issued and outstanding
Share (other than Shares to be cancelled in accordance with Section 2.1(b) and
Dissenting Shares (as herein defined)) shall be converted into the right to
receive the Offer Price in cash, without interest (the "Merger Consideration").
All such Shares, when so converted, shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of a certificate representing any such Shares shall cease to have any rights
with respect thereto, except the right to receive the Merger Consideration
therefor upon the surrender of such certificate in accordance with Section 2.2,
without interest.
Section 2.2 Exchange of Certificates.
(a) Paying Agent. Prior to the Effective Time,
Parent shall designate a bank, trust company or other Person, reasonably
acceptable to the Company, to act as agent for the holders of the Shares in
connection with the Merger (the "Paying Agent") to receive the funds to which
holders of the Shares shall become entitled pursuant to Section 2.1(c). Parent
shall, from time to time, make available to the Paying Agent funds in amounts
and at times necessary for the payment of the Merger Consideration as provided
herein. All interest earned on such funds shall be paid to Parent.
(b) Exchange Procedures. As soon as reasonably
practicable after the Effective Time, Parent shall cause the Paying Agent to
mail to each holder of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding Shares (the "Certificates")
whose Shares were converted into the right to receive the Merger Consideration
pursuant to Section 2.1, (i) a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Paying Agent and shall be in
such form not inconsistent with this Agreement as Parent may specify) and (ii)
instructions for use in surrendering the Certificates in exchange for payment of
the Merger Consideration. Upon surrender of a Certificate for cancellation to
the Paying Agent, together with such letter of transmittal, duly executed, and
such other documents as may reasonably be required by the Paying Agent, Parent
shall cause the Paying Agent to pay to the holder of such Certificate the Merger
Consideration, and the Certificate so surrendered shall forthwith be cancelled.
In the event of a surrender of a Certificate representing Shares which are not
registered in the transfer records of the Company under the name of the Person
surrendering such Certificate, payment may be made to a Person other than the
Person in whose name the Certificate so surrendered is registered if such
Certificate
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shall be properly endorsed or otherwise be in proper form for transfer and the
Person requesting such payment shall pay any transfer or other Taxes required by
reason of payment to a Person other than the registered holder of such
Certificate or establish to the satisfaction of the Paying Agent that such tax
has been paid or is not applicable. Until surrendered as contemplated by this
Section 2.2, each Certificate shall be deemed at any time after the Effective
Time to represent only the right to receive upon such surrender the Merger
Consideration which the holder thereof has the right to receive in respect of
such Certificate pursuant to the provisions of this Article II. No interest
shall be paid or will accrue on the Merger Consideration payable to holders of
Certificates pursuant to the provisions of this Article II.
(c) Transfer Books; No Further Ownership Rights in
Shares. At the Effective Time, the stock transfer books of the Company shall be
closed and thereafter there shall be no further registration of transfers of the
Shares on the records of the Company. From and after the Effective Time, the
holders of Certificates evidencing ownership of the Shares outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares, except as otherwise provided for herein or by applicable
Law. If, after the Effective Time, Certificates are presented to the Surviving
Corporation for any reason, they shall be cancelled and exchanged as provided in
this Article II.
(d) Termination of Fund; No Liability. At any time
following one year after the Effective Time, the Surviving Corporation shall be
entitled to require the Paying Agent to deliver to it any funds (including any
interest received with respect thereto) which had been made available to the
Paying Agent and which have not been disbursed to holders of Certificates, and
thereafter such holders shall be entitled to look to the Surviving Corporation
(subject to abandoned property, escheat or other similar Laws) only as general
creditors thereof with respect to the Merger Consideration payable upon due
surrender of their Certificates, without any interest thereon. Notwithstanding
the foregoing, none of Parent, the Company, the Surviving Corporation or the
Paying Agent shall be liable to any holder of a Certifi cate for Merger
Consideration delivered to a public official pursuant to any applica ble
abandoned property, escheat or similar Law.
(e) Lost Certificates. If any Certificate shall
have been lost, stolen or destroyed, upon the making of an affidavit of that
fact by the Person claiming such Certificate to be lost, stolen or destroyed
and, if required by the Surviving Corporation, the posting by such Person of a
bond in such reasonable amount as the Surviving Corporation may direct as
indemnity against any claim that
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may be made against it with respect to such Certificate, the Paying Agent shall
pay in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration pursuant to this Agreement.
Section 2.3 Withholding Taxes. Parent and Purchaser shall be
entitled to deduct and withhold, or cause the Paying Agent to deduct and
withhold, from the Offer Price or the Merger Consideration payable to a holder
of Shares pursuant to the Offer or the Merger any withholding and stock transfer
Taxes and such amounts as are required under the Code, or any applicable
provision of state, local or foreign Tax law. Parent shall take appropriate
steps to minimize such Taxes. To the extent that amounts are so withheld by
Parent or Purchaser, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of the Shares in respect of
which such deduction and withholding was made by Parent or Purchaser.
Section 2.4. Stock Options. (a) Immediately prior to the
Effective Time, each then outstanding option to purchase any shares of capital
stock of the Company (in each case, an "Option"), whether or not then vested or
exercisable, shall be cancelled by the Company and in consideration of such
cancellation and except to the extent that Parent or the Purchaser and the
holder of any such Option otherwise agree, the Company (or, at Parent's option,
the Purchaser) shall pay to such holders of Options an amount in respect thereof
equal to the product of (A) the excess, if any, of the Offer Price over the
exercise price of each such Option and (B) the number of Shares previously
subject to the Option immediately prior to its cancellation (such payment to be
net of withholding taxes and without interest).
(b) The Company shall use its reasonable best
efforts to take all actions necessary and appropriate so that all stock option
or other equity based plans maintained with respect to the Shares, including,
without limitation, the plans listed in Section 3.3 hereof ("Option Plans"),
shall terminate as of the Effective Time and the provisions in any other Benefit
Plan providing for the issuance, transfer or grant of any capital stock of the
Company or any interest in respect of any capital stock of the Company shall be
deleted as of the Effective Time, and the Company shall use its best efforts to
ensure that following the Effective Time no holder of an Option or any
participant in any Option Plan shall have any right thereunder to acquire any
capital stock of the Company, Parent, Purchaser or the Surviving Corporation.
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(c) Prior to the Effective Time, the Company shall
use its reasonable best efforts to (i) obtain all necessary consents from, and
provide (in a form acceptable to Parent) any required notices to, holders of
Options and (ii) amend the terms of the applicable Option Plan, in each case as
is necessary to give effect to the provisions of paragraphs (a) and (b) of this
Section 2.4.
Section 2.5. Appraisal Rights. Notwithstanding anything in
this Agreement to the contrary, Shares (the "Dissenting Shares") that are issued
and outstanding immediately prior to the Effective Time and which are held by
stock holders who did not vote in favor of the Merger and who comply with all of
the relevant provisions of Section 262 of the DGCL (the "Dissenting
Stockholders") shall not be converted into or be exchangeable for the right to
receive the Merger Consideration, unless and until such holders shall have
failed to perfect or shall have effectively withdrawn or lost their rights to
appraisal under the DGCL. If any Dissenting Stockholder shall have failed to
perfect or shall have effectively with drawn or lost such right, such holder's
Shares shall thereupon be converted into and become exchangeable for the right
to receive, as of the Effective Time, the Merger Consideration without any
interest thereon. The Company shall give Parent (i) prompt notice of any written
demands for appraisal of any Shares, attempted withdrawals of such demands and
any other instruments served pursuant to the DGCL and received by the Company
relating to stockholders' rights of appraisal, and (ii) the opportunity to
direct all negotiations and proceedings with respect to demands for appraisal
under the DGCL. Neither the Company nor the Surviving Corporation shall, except
with the prior written consent of Parent, voluntarily make any payment with
respect to, or settle or offer to settle, any such demand for payment. If any
Dissenting Stockholder shall fail to perfect or shall have effectively withdrawn
or lost the right to dissent, the Shares held by such Dissenting Stockholder
shall thereupon be treated as though such Shares had been converted into the
right to receive the Merger Consideration pursuant to Section 2.1(c).
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser as
follows:
Section 3.1 Organization, Standing and Corporate Power. Each
of the Company and each of its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the Laws of the jurisdiction in
which it is organized and has the requisite corporate power and authority to
carry on its business as is now being conducted. Each of the Company and its
Subsidiaries is duly qualified as a foreign corporation or licensed to do
business and is in good standing in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed (individually or in the aggregate) would not have a
Material Adverse Effect on the Company. The Company has delivered to Parent
complete and correct copies of the Certificate of Incorporation of the Company
and By-Laws of the Company, in each case as amended to the date of this
Agreement, and has delivered the certificates of incorporation and by-laws or
other organizational documents of its Subsidiaries that currently have
operations, in each case as amended as of the date of this Agreement. Except as
set forth on Schedule 3.2 of the Company Disclosure Schedule or in the Company's
SEC Documents, the respective certificates of incorporation and by-laws or other
organizational documents of the Subsidiaries of the Company do not contain any
provision limiting or otherwise restricting the ability of the Company to
control such Subsidiaries.
Section 3.2 Subsidiaries. (a) Exhibit 21.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 1997 and
Schedule 3.2 of the disclosure schedule delivered by the Company to Parent at or
prior to the execution of this Agreement (the "Company Disclosure Schedule")
together include the names, jurisdictions of incorporation and capitalization of
all of the Subsidiaries of the Company. Except as set forth on Schedule 3.2 of
the Company Disclosure Schedule or in the Company's SEC Documents, all the
outstanding shares of capital stock of, or other equity interests in, each
Subsidiary of the Company have been validly issued and are fully paid and
nonassessable and are owned directly or indirectly by the Company, free and
clear of all Liens and free of any other restric-
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tion (including any restriction on the right to vote, sell or otherwise dispose
of such capital stock or other ownership interests).
(b) The Company does not directly or indirectly
beneficially own any securities or other beneficial ownership interests in any
other entity (including through joint ventures or partnership arrangements)
other than (i) the Subsidiaries of the Company or (ii) as disclosed on Schedule
3.2 of the Company Disclosure Schedule.
Section 3.3 Capital Structure. The authorized capital stock of
the Company consists of 50,000,000 Shares and 1,000,000 shares of preferred
stock, par value $1.00 per share (the "Preferred Shares") of which 50,000 shares
have been designated as Series A Preferred Stock (the "Series A Preferred
Shares"). As of the date hereof, (i) 18,127,864 Shares were issued and
outstanding and no Preferred Shares were issued and outstanding, (ii) 511,810
Shares were reserved for issuance upon exercise of outstanding Options pursuant
to the Company's Amended and Restated 1984 Employee Stock Option Plan with an
exercise price range of a minimum exercise price of $3.00 and a maximum exercise
price of $30.63, (iii) 727,912 Shares were reserved for issuance upon exercise
of outstanding Options pursuant to the Company's 1994 Senior Management Stock
Option Plan with an exercise price range of a minimum exercise price of $9.00
and a maximum exercise price of $21.25, (iv) 28,000 Shares were reserved for
issuance upon exercise of outstanding Options pursuant to the 1995 Non-Employee
Directors' Stock Option Plan with an exercise price range of a minimum exercise
price of $8.00 and a maximum exercise price of $14.13, (v) 780,500 Shares were
reserved for issuance upon exercise of outstanding Options pursuant to the 1996
Share Incentive Plan with an exercise price range of a minimum exercise price of
$9.25 and a maximum exercise price of $15.75, (vi) 1,450,000 Shares were
reserved for issuance upon exercise of warrants (the "Lucasfilm Ltd. Warrants"),
expiring October 14, 2009, held by Lucasfilm Ltd., with an exercise price of
$15.00 per Share, (vii) 2,130,000 Shares were reserved for issuance upon
exercise of warrants (the "Xxxxx Licensing Ltd. Warrants"), expiring October 14,
2009, held by Xxxxx Licensing Ltd., with an exercise price of $15.00 per Share
and (viii) no Shares were issued and are held in the Company's treasury. Except
as set forth above or on Schedule 3.3 of the Company Disclosure Schedule, as of
the date of this Agreement: (i) no shares of capital stock or other voting
securities of the Company are issued, reserved for issuance or outstanding; (ii)
there are no stock appreciation rights, phantom stock units, restricted stock
grants, contingent stock grants or Benefit Plans which grant awards of any of
the foregoing, and there are no other outstanding contractual rights to which
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the Company is a party the value of which is based on the value of Shares; (iii)
all outstanding shares of capital stock of the Company are, and all Shares which
may be issued will be, when so issued, duly authorized, validly issued, fully
paid and nonassessable and not subject to preemptive rights; and (iv) there are
no bonds, debentures, notes or other indebtedness of the Company having the
right to vote (or convertible into, or exchangeable for, securities having the
right to vote) on any matters on which stockholders of the Company may vote.
Except for the Preferred Stock Purchase Rights, and except as set forth above,
as of the date of this Agree ment, there are no outstanding securities, options,
warrants, calls, rights, commitments, agreements, arrangements or undertakings
of any kind to which the Company or any of its Subsidiaries is a party or by
which any of them is bound obligating the Company or any of its Subsidiaries to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
shares of capital stock or other voting securities of the Company or of any of
its Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
grant, extend or enter into any such security, option, warrant, call, right,
commitment, agreement, arrangement or undertaking. There are no programs in
place, nor any outstanding contractual obligations of the Company or any of its
Subsidiaries, to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or any of its Subsidiaries. Schedule 3.3 of the Company
Disclosure Schedule accurately sets forth information regarding the current
exercise price, date of grant and number of granted Options for each holder of
Options pursuant to any Company Option Plan. Following the Effective Time, no
holder of Options will have any right to receive shares of common stock of the
Surviving Corporation upon exercise of Options.
Section 3.4 Authority; Noncontravention; Company Action. The
Company has the requisite corporate power and authority to enter into this Agree
ment and, subject to approval of this Agreement by the holders of a majority of
the outstanding Shares, to consummate the Merger contemplated by this Agreement.
The execution, delivery and performance of this Agreement by the Company and the
consummation by the Company of the Transactions have been duly authorized by all
necessary corporate action on the part of the Company, subject, in the case of
the Merger, to approval of this Agreement by the holders of a majority of the
outstanding Shares. This Agreement has been duly executed and delivered by the
Company and, assuming this Agreement constitutes the valid and binding
obligation of Parent and Purchaser, constitutes the valid and binding obligation
of the Company, enforceable against the Company in accordance with its terms,
except that (i) such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or other similar Laws now or hereafter in effect
relating to creditors' rights generally and (ii)
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the remedy of specific performance and injunctive relief may be subject to
equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought. Except as set forth on Schedule 3.4 of the
Company Disclosure Schedule or waivers or consents that have been obtained and
delivered to Parent, the execution, delivery and performance of this Agreement
do not, and the consummation of the Transactions (including the changes in the
composition of the Board of Directors of the Company) and compliance with the
provisions of this Agreement will not, conflict with, or result in any violation
of, or default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any obligation
or loss of a material benefit under, or result in the creation of any Lien upon
any of the material properties or assets of the Company or any of its
Subsidiaries under, or result in the termination of, or require that any consent
be obtained or any notice be given with respect to, (i) the Certificate of
Incorporation or By-laws of the Company or the comparable charter or organiza-
tional documents of any of its Subsidiaries, (ii) any loan or credit agreement
note, bond, mortgage, indenture, lease or other agreement, instrument or Permit
applicable to the Company or any of its Significant Subsidiaries or their
respective properties or assets, (iii) any Law applicable to the Company or any
of its Subsidiaries or their respective properties or assets or (iv) any
licenses to which the Company or any of its Subsidiaries is a party, other than,
in the case of clauses (ii), (iii) or (iv), any such conflicts, violations,
defaults, rights, Liens, losses of a material benefit, consents or notices that,
individually or in the aggregate, would not have a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole or the consents Parent and
Purchaser have obtained as described in Section 5.14 hereof. No consent,
approval, order or authorization of, or registration, declaration or filing
with, any Governmental Entity is required by the Company or any of its
Subsidiaries in connection with the execution and delivery of this Agreement by
the Company or the consummation by the Company of the Transactions, except for
(i) the filings, permits, authorizations, consents and approvals set forth in
Section 3.4 of the Company Disclosure Schedule, or as may be required under, and
other applicable requirements of, the Securities Act, the Exchange Act, the HSR
Act, any applicable state securities or "blue sky" Laws and the DGCL, and (ii)
such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, (x) impair, in any material respect, the
ability of the Company to perform its obligations under this Agreement, (y)
prevent or significantly delay the consummation of the Transactions or (z) have
a Material Adverse Effect on the Company and its Subsidiaries taken as a whole.
The Board of Directors of the Company has taken all appropriate action so that
neither Parent nor Purchaser will be an "interested stockholder" within
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the meaning of Section 203 of the DGCL by virtue of Parent, Purchaser and the
Company entering into this Agreement or any other agreement contemplated hereby
and consummating the Transactions.
Section 3.5 SEC Documents; Financial Statements. The Company
has filed all SEC Documents required to be filed by it since January 1, 1996
(the "Company's SEC Documents"). As of their respective dates, (i) the Company's
SEC Documents complied in all material respects with the requirements of the
Securities Act, or the Exchange Act, as the case may be, and the rules and
regulations of the SEC promulgated thereunder applicable to such SEC Documents,
and (ii) none of the Company's SEC Documents contained at the time of their
filing any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. The financial statements of the Company included in the Company's
SEC Documents, as of the dates of such SEC Documents, are true and complete and
complied as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with respect
thereto, have been prepared in accordance with generally accepted accounting
principles as in effect at such time ("GAAP") in the United States applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto) and fairly presented the consolidated financial position of the
Company and its consolidated Subsidiaries as of the dates thereof and the
consolidated results of their operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit
adjustments). Except as set forth on Schedule 3.5 of the Company Disclosure
Schedule and except as set forth in the Company's SEC Documents filed and
publicly available prior to the date of this Agreement, and except for
liabilities and obligations incurred in the ordinary course of business
consistent with past practice since the date of the most recent consolidated
balance sheet included in the Company's SEC Documents filed and publicly
available prior to the date of this Agreement, neither the Company nor any of
its Subsidiaries has any material liabilities or obligations of any nature
(whether accrued, absolute, contingent or otherwise).
Section 3.6 Schedule 14D-9; Offer Documents; Proxy Statement.
Neither the Schedule 14D-9, any other document required to be filed by the
Company with the SEC in connection with the Transactions, nor any information
supplied by the Company in writing for inclusion in the Offer Documents shall,
at the respective times the Schedule 14D-9, any such other filings by the
Company, the Offer Documents or any amendments or supplements thereto are filed
with the SEC
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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 light of the circumstances under which they are
made, not misleading. The Proxy Statement will not, on the date the Proxy
Statement (including any amendment or supplement thereto) is first mailed to
stockholders of the Company, 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 light of the circumstances under
which they are made, not misleading or shall, at the time of the Special Meeting
(as hereinafter defined) or at the Effective Time, omit to state any material
fact necessary to correct any statement in any earlier communication in light of
the circumstances in which they are made, with respect to the solicitation of
proxies for the Special Meeting which shall have become false or misleading in
any material respect. The Schedule 14D-9, any other document required to be
filed by the Company with the SEC in connection with the Transactions and the
Proxy Statement will, when filed by the Company with the SEC, comply as to form
in all material respects with the applicable provisions of the Exchange Act and
the rules and regulations thereunder. Notwithstanding the foregoing, the Company
makes no representation or warranty with respect to the statements made in any
of the foregoing documents based on and in conformity with information supplied
by or on behalf of Parent or Purchaser specifically for inclusion or
incorporation by reference therein.
Section 3.7 Absence of Certain Changes or Events. Except as
set forth in the Company's SEC Documents or on Schedule 3.7 of the Company
Disclosure Schedule, since December 31, 1997, the Company and its Subsidiaries
have conducted their respective businesses only in the ordinary course, and
there has not been any Material Adverse Change in the Company and its
Subsidiaries, taken as a whole.
Section 3.8 Litigation. Except as set forth in the Company's
SEC Documents or on Schedule 3.8 of the Company Disclosure Schedule or to the
extent reserved for as reflected on the Company's financial statements for the
fiscal year ended December 31, 1997, there are (i) no suits, actions or
proceedings pending or, to the Knowledge of the Company, threatened against the
company or any of its Subsidiaries that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on the Company, (ii) no
complaints, lawsuits, charges or other proceedings pending or, to the Knowledge
of the Company, threatened in any forum by or on behalf of any present or
former employee of the Com-
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pany or any of its Subsidiaries, any applicant for employment or classes of the
foregoing alleging breach of any express or implied contract of employment, any
applicable Law governing employment or the termination thereof or other
discriminatory, wrongful or tortious conduct in connection with the employment
relationship that, individually or in the aggregate, would reasonably be
expected to have a Material Adverse Effect on the Company, (iii) no judgments,
decrees, injunctions or orders of any Governmental Entity or arbitrator
outstanding against the Company that, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect on the Company and (iv)
no orders, writs, judgments, injunctions, decrees or determinations adverse to
the Trademarks or the Other Intellectual Property.
Section 3.9 Absence of Changes in Benefit Plans; SEC
Disclosure. Except as disclosed on Schedule 3.9 of the Company Disclosure
Schedule, there has not been any adoption or amendment by the Company or any of
its Subsidiaries or any ERISA Affiliate (as defined in Section 3.10 hereof) of
any Benefit Plan (as defined in Section 3.10 hereof) since December 31, 1997.
Except as disclosed on Schedule 3.9 of the Company Disclosure Schedule, neither
the Company nor any of its Subsidiaries has any formal plan or commitment to
create any additional Benefit Plan or modify or change any existing Benefit Plan
that would affect any employee or terminated employee of the Company or a
Subsidiary of the Company. All employment, consulting, severance, termination,
change in control or indemnification agreements, arrangements or understandings
between the Company or any of its Subsidiaries and any current or former officer
or director of the Company or any of its Subsidiaries which were required to be
disclosed in the Company's SEC Documents at the time such documents were filed
have been disclosed therein.
Section 3.10 Employee Benefits; ERISA. (a) Schedule 3.10 of
the Company Disclosure Schedule contains a true and complete list of each
material bonus, deferred compensation, incentive compensation, stock purchase,
stock option, employment, severance or termination pay, health insurance,
supplemental unemployment benefits, profit-sharing, pension, or retirement
plan, program, agreement or arrangement, and each other material (as determined
in the Company's reasonable good faith) employee benefit plan, program,
agreement or arrangement, other than a non-material fringe benefit plan,
sponsored, maintained or contributed to or required to be contributed to by the
Company or any of its Subsidiaries or by any trade or business, whether or not
incorporated (an "ERISA Affiliate"), that is a member of a "controlled group"
within the meaning of section 4001 of the Employee Retirement Income Security
Act of 1974, as amended, and the regulations promulgated thereun-
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der ("ERISA") of which the Company or a Subsidiary is a member or which is under
"common control" within the meaning of Section 4001 of ERISA, with the Company
or a Subsidiary, for the benefit of any employee or terminated employee of the
Company, its Subsidiaries or any ERISA Affiliate, whether formal or informal
(the "Benefit Plans").
(b) With respect to each Benefit Plan, the Company
has made available a true and complete copy thereof (including all amendments
thereto), as well as true and complete copies of the two most recent annual
reports, if required under ERISA, with respect thereto; the most recent Summary
Plan Description, together with each Summary of Material Modifications, if
required under ERISA with respect thereto; if the Benefit Plan is funded through
a trust or any third party funding vehicle, the trust or other funding agreement
(including all amendments thereto) and the latest financial statements thereof;
and the most recent determination letter received from the Internal Revenue
Service with respect to each Benefit Plan that is intended to be qualified under
section 401 of the Code.
(c) No material liability to the Pension Benefit
Guaranty Corporation ("PBGC") under Title IV of ERISA has been incurred by the
Company, its Subsidiaries or any ERISA Affiliate since the effective date of
ERISA that has not been satisfied in full, and no condition exists that presents
a material risk to the Company, its Subsidiaries or any ERISA Affiliate of
incurring a liability under such Title, other than liability for premiums due
the PBGC (which premiums have been paid when due). Each Benefit Plan has been
operated and administered in all respects in accordance with its terms and
applicable Law, including but not limited to ERISA and the Code, except for such
noncompliance which would not reasonably be expected to have a Material Adverse
Effect on the Company.
(d) No Benefit Plan is subject to Section 302 of the
Code or Title IV of ERISA.
(e) Neither the Company, nor any Subsidiary of the
Company, nor any trust created thereunder, nor, to the Knowledge of the Company,
any trustee or administrator thereof has engaged in a transaction in connection
with which the Company or any Subsidiary of the Company, any such trust, or any
trustee or administrator thereof, or any party dealing with any Benefit Plan or
any such trust could be subject to either a civil penalty assessed pursuant to
section 409 or 502(i) of ERISA or a tax imposed pursuant to section 4975 or 4976
of the Code and which assessment or imposition would have a Material Adverse
Effect on the Company.
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(f) All Benefit Plans that are subject to the laws of
any jurisdiction outside the United States are in material compliance with such
applicable laws, including relevant tax laws, and the requirements of any trust
deed under which they are established, except for such non-compliance which
would not reasonably be expected to have a Material Adverse Effect on the
Company.
(g) Each Benefit Plan which is intended to be
"qualified" within the meaning of section 401(a) of the Code is so qualified and
the trusts maintained thereunder are exempt from taxation under section 501(a)
of the Code.
(h) Except as set forth on Schedule 3.10 of the
Company Disclosure Schedule, no Benefit Plan that is subject to the laws of any
jurisdiction within the United States provides health, death or medical benefits
(whether or not insured) with respect to current or former employees of the
Company or its Subsidiaries beyond their retirement or other termination of
employment (other than (a) coverage mandated by applicable Law or (b) benefits
the full cost of which is borne by the current or former employee (or his
beneficiary)).
(i) Except as set forth on Schedule 3.10 of the
Company Disclosure Schedule, the consummation of the Transactions, alone, will
not (a) entitle any current or former employee or officer of the Company or any
Subsidiary to severance pay, unemployment compensation or any other payment, (b)
accelerate the time of payment or vesting, or increase the amount of
compensation or benefits due any such employee or officer or (c) require the
Company or any ERISA Affiliate to fund or make any payments to any trust or
other funding vehicle in respect of any Benefit Plan.
(j) There are no pending, anticipated or, to the
Knowledge of the Company, threatened claims by or on behalf of any Benefit Plan,
by any employee or beneficiary covered under any such Benefit Plan, or
otherwise involving any such Benefit Plan (other than routine claims for
benefits) which would result in a Material Adverse Effect on the Company.
Section 3.11 Taxes. Except as set forth on Schedule 3.11 of
the Company Disclosure Schedule:
(a) Each of the Company and each of its Subsidiaries has duly
and timely filed (or has had duly and timely filed on its behalf) all federal,
state and local
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income Tax Returns and all other material Tax Returns required to be filed by
it, and all such Tax Returns are true, complete and correct in all material
respects. Each of the Company and each of its Subsidiaries has either paid (or
has had paid on its behalf) all Taxes due and owing by them, or the most recent
financial statements contained in the Company's SEC Documents reflect adequate
reserves in accordance with generally accepted accounting principles for all
Taxes not yet paid, except as would not, individually or in the aggregate, have
a Material Adverse Effect on the Company and its Subsidiaries taken as a whole.
(b) Each of the Company and each of its Subsidiaries has
complied in all material respects with all applicable Laws relating to the
payment and withholding of Taxes (including, without limitation, the
withholding of Taxes pursuant to Sections 1441 and 1442 of the Code or similar
provisions under any applicable foreign Laws) and have, within the time and in
the manner prescribed by applicable Laws, withheld from employee wages and paid
over to the proper Governmental Entity all material amounts required to be so
withheld and paid over under all applicable Laws.
(c) (i) No material deficiencies for any Taxes have been
threatened, proposed, asserted or assessed (either in writing or orally) to the
Knowledge of the Company against the Company or any of its Subsidiaries which
have not been fully paid or finally settled, (ii) no Governmental Entity is
conducting or has proposed in writing to conduct an audit with respect to Taxes
or any Tax Returns of the Company or any of its Subsidiaries, (iii) no extension
or waiver of the statute of limitations with respect to Taxes or any Tax Return
has been granted by the Company or any of its Subsidiaries, which remains in
effect, (iv) neither the Company nor any of its Subsidiaries is a party to any
agreement or arrangement to allocate, share or indemnify another party for
Taxes, (v) there are no material Liens for Taxes upon the assets of the Company
or any of its Subsidiaries, except for Liens for Taxes not yet due, (vi) no
jurisdiction where either the Company or any of its Subsidiaries does not file a
Tax Return has asserted or otherwise made a claim that the Company or any of its
Subsidiaries is required to file a Tax Return for such jurisdiction, except as
would not, individually or in the aggregate, have a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole, (vii) neither the Company nor
any of its Subsidiaries has agreed to make, or is required to make, any
adjustment under Section 481(a) of the Code (or comparable provision under
state, local or foreign Tax laws) by reason of a change in accounting method or
otherwise and the Company and each of its Subsidiaries do not have knowledge
that the Internal Revenue Service has proposed any such adjustment or change in
accounting method, (viii) neither the
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Company nor any of its Subsidiaries is or has been a member of an affiliated
group (within the meaning of Section 1504(a) of the Code) filing a consolidated
return for federal income tax purposes (or a group filing consolidated, combined
or unitary income tax returns under comparable provisions of state, local or
foreign laws) for any taxable period beginning on or after January 1, 1994,
other than a group the common parent of which is the Company, (ix) neither the
Company nor any of its Subsidiaries has filed a consent pursuant to Section
341(f) of the Code (or any predecessor provision) or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
such term is defined in Section 341(f)(4) of the Code) owned by the Company or
any of its Subsidiaries, (x) the Company has filed, as a common parent
corporation of an affiliated group (within the meaning of Section 1504(a) of the
Code) a consolidated return for Federal income tax purposes on behalf of such
affiliated group and (xii) no power of attorney has been granted by or with
respect to the Company or any of its Subsidiaries with respect to any matter
relating to Taxes which remains in force.
(d) Schedule 3.11(d) of the Company Disclosure Schedule sets
forth a list of the Company's income Tax Returns for taxable years or periods
for which the statute of limitations has not expired.
Section 3.12 No Nondeductible Payments.
(a) Except as set forth on Schedule 3.12 of the Company
Disclosure Schedule, no amounts payable as a result of the Transactions under
the Benefit Plans or any other plans or arrangements will be nondeductible by
reason of Section 280G of the Code.
(b) Except as set forth on Schedule 3.12 of the Company
Disclosure Schedule, neither the Company nor any of its Subsidiaries is a party
to any contract, agreement or other arrangement which would result in the
payment of amounts prior to the Effective Time that will be nondeductible by
reason of Section 162(m) of the Code.
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Section 3.13 Compliance with Applicable Laws.
Except as set forth on Schedule 3.13 of the Company Disclosure
Schedule:
(a) The Company and each of its Subsidiaries have complied and
are presently complying in all material respects with all applicable Laws, and
neither the Company nor any of its Subsidiaries has received notification of any
asserted present or past failure to so comply, except, in each case, such
non-compliance that would not be reasonably expected to (x) result in a Material
Adverse Effect on the Company or (y) materially impair the ability of the
parties hereto to consummate the Transactions.
(b) Except as would not, individually or in the aggregate,
have a Material Adverse Effect on the Company or its Subsidiaries taken as a
whole, each of the Company and its Subsidiaries has in effect, or has timely
filed applications for, all material Permits necessary for it to own, lease or
operate its properties and assets and to carry on its business substantially as
now conducted and there are no appeals nor any other actions pending to revoke
any such Permits, and there has occurred no material default or violation under
any such Permits.
(c) Each of the Company and its Subsidiaries is, and has been,
and each of the Company's former Subsidiaries, while a Subsidiary of the
Company, was in compliance in all material respects with all applicable
Environmental Laws (and Permits issued thereunder), and there are no
circumstances or conditions that would be reasonably likely to prevent or
interfere with material compliance by the Company or its Subsidiaries in the
future with Environmental Laws (or Permits issued thereunder).
(d) Neither the Company nor any Subsidiary of the Company has
received any material written claim, demand, notice, complaint, court order,
administrative order or request for information from any Governmental Entity or
private party, alleging violation of, or asserting any noncompliance with or
liability under or potential liability under, any Environmental Laws, except for
matters which are no longer threatened or pending or for which the Company or
its Subsidiaries are not subject to further requirements pursuant to an
administrative or court order, judgment or settlement agreement.
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(e) During the period of ownership or operation by the Company
and its Subsidiaries of any of their respective current or previously owned or
leased properties, there have been no Releases of Hazardous Material in, on,
under or affecting such properties at concentrations requiring reporting,
investigation, or remediation under Environmental Laws or which would otherwise
pose a significant threat to human health or the environment. None of the
Company or its Subsidiaries have disposed of any Hazardous Material or any other
substance at other properties, in a manner that has led, or could reasonably be
anticipated to lead, to a Release that could have a Material Adverse Effect on
the Company and its Subsidiaries taken as a whole. Prior to the period of
ownership or operation by the Company and its Subsidiaries of any of their
respective current or previously owned or leased proper ties, to the Knowledge
of the Company, no Hazardous Material was disposed of at such current or
previously owned or leased properties, and there were no Releases of Hazardous
Material in, on, under or affecting any such property, except for disposal or
Releases that would not require investigation or remediation under Environmental
Laws and do not pose a significant threat to human health or the environment.
(f) Except for leases and credit agreements entered into in
the ordinary course of business, as to which no notice of a claim for indemnity
or reimbursement has been received and is outstanding by the Company, neither
the Company nor any of its Subsidiaries has entered into any agreement that may
require it to pay to, reimburse, guarantee, pledge, defend, indemnify, or hold
harmless any Person for or against any Environmental Liabilities and Costs.
(g) Neither the Company nor any of its Subsidiaries has
treated, stored or disposed of "hazardous waste", as that term is defined in the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et seq.,
analogous state Laws, or the regulations promulgated thereunder, such that the
Company or any of its Subsidiaries would be required to obtain a permit (as
compared to a registration or identification number) under said Laws for such
treatment, storage or disposal.
(h) The Company has provided to Parent true and correct copies
of all environmental studies and reports in its possession or in the possession
of its representative, agents or consultants, prepared within the last five
years, relating to the environmental condition of the Company's and its
Subsidiaries' currently owned or leased properties, including, but not limited
to, the extent of any on-site contamination at any of such properties, results
of investigations at such properties, remedial action plans for such properties,
and asbestos surveys.
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Section 3.14 Intellectual Property.
(a) (i) Except as set forth on Schedule 3.14(a)(i) of the
Company Disclosure Schedule, the Company or one of its Subsidiaries is the sole
and exclusive owner of, or has the valid right to use and enforce, the
Trademarks and Internet domain names, free and clear of all Liens. Schedule
3.14(a)(i) of the Company Disclosure Schedule sets forth a complete and accurate
list of all such U.S., state and foreign Trademark registrations and
applications and Internet domain names, registrations and applications. Except
as set forth in Schedule 3.14(a)(i) of the Company Disclosure Schedule, the
Company or one of its Subsidiaries currently is listed in the records of the
appropriate United States, state or foreign agency as the sole owner of record
for each application and registration listed on Schedule 3.14(a)(i) of the
Company Disclosure Schedule that is currently owned by the Company or one of its
Subsidiaries.
(ii) Except as set forth on Schedule 3.14(a)(ii) of
the Company Disclosure Schedule, the Company is the sole and exclusive owner of,
or has the valid right to use and enforce the Other Intellectual Property, free
and clear of all Liens. Schedule 3.14(a)(ii) of the Company Disclosure Schedule
sets forth a complete and accurate list of all U.S. and foreign:
(1) patents and patent applications, and
(2) copyright registrations and applications.
Except as set forth on Schedule 3.14(a)(ii) of the Company
Disclosure Schedule, the Company or one of its Subsidiaries currently is listed
in the records of the appropriate United States, state or foreign agency as the
sole owner of record for each patent, patent application, copyright application,
and copyright registration listed on Schedule 3.14(a)(ii) of the Company
Disclosure Schedule that is currently owned by the Company or one of its
Subsidiaries.
(b) The patents, applications and registrations listed on
Schedules 3.14(a)(i) and 3.14(a)(ii) of the Company Disclosure Schedule are
valid and subsisting, in full force and effect in all material respects, and
have not been cancelled, expired or abandoned. There is no material pending,
existing or, to the Company's Knowledge, threatened, opposition, interference,
cancellation proceeding or other legal or governmental proceeding before any
court or registration authority in any jurisdiction against the foregoing. To
the Company's Knowledge, there is no
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pending, existing or threatened, opposition, interference, cancellation
proceeding or other legal or governmental proceeding before any court or
registration authority in any jurisdiction against any of the Trademarks or any
of the Other Intellectual Property owned by the Company or its Subsidiaries.
(c) Schedule 3.14(c)(i) of the Company Disclosure Schedule
sets forth a complete and accurate list of all agreements granting to third
parties any right to use or practice any rights under any of the Trademarks or
any of the Other Intellectual Property owned by the Company. Schedule
3.14(c)(ii) of the Company Disclosure Schedule sets forth a complete and
accurate list of all agreements permitting the Company or its Subsidiaries to
use any third party's Trademarks or Other Intellectual Property (such
agreements, together with the agreements referenced on Schedule 3.14(c)(i) of
the Company Disclosure Schedule are collectively referred to herein as the
"Licenses"). The Licenses are valid and binding agreements of the Company or one
or more of its Subsidiaries, as applicable, enforceable in accordance with their
terms, and the Company and the Subsidiaries, and to the Company's Knowledge, the
other parties thereto, as applicable, are not in material breach or default
thereunder.
(d) The Company has taken reasonable measures to protect the
confidentiality of its material trade secrets, including requiring employees
having access thereto to execute written non-disclosure agreements. To the
Company's Knowledge, no trade secret or confidential know-how material to the
business of the Company or any of its Subsidiaries as currently operated has
been disclosed or authorized to be disclosed to any third party, other than
pursuant to a non-disclosure agreement that protects the Company's or such
Subsidiary's proprietary interests in and to such trade secrets and confidential
know-how.
(e) To the Company's Knowledge, except as set forth on
Schedule 3.14(e) of the Company Disclosure Schedule the conduct of the business
of the Company and each of its Subsidiaries does not infringe upon any
intellectual property right owned or controlled by any third party. Except as
set forth in the Company's SEC Documents or on Schedule 3.14(e) of the Company
Disclosure Schedule, there are no claims or suits pending or, to the Company's
Knowledge, threatened, and neither the Company nor any of its Subsidiaries has
received any written notice of a third party claim or suit:
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(i) alleging that the Company's or such Subsidiary's
activities or the conduct of its business infringes
upon or constitutes the unauthorized use of the
proprietary rights of any third party, or
(ii) challenging the ownership, use, validity or
enforceability of the Trademarks or the Other
Intellectual Property owned or used by the Company or
its Subsidiaries.
(f) To the Company's Knowledge, except as set forth on
Schedule 3.14(f) of the Company Disclosure Schedule, no third party is
infringing upon any of the Trademarks or the Other Intellectual Property owned
by the Company or any of its Subsidiaries and, except as set forth on Schedule
3.14(f) of the Company Disclosure Schedule, no such claims have been made
against a third party by the Company or any of its Subsidiaries.
(g) Except as set forth on Schedule 3.14(g) of the Company
Disclosure Schedule, there are no settlements, consents, judgments or orders or
other agreements which restrict the Company's or any of its Subsidiaries' rights
to use any of the Trademarks or the Other Intellectual Property, and no
concurrent use or other agreements (aside from license and other like
agreements) which restrict the Company's or any of its Subsidiaries' rights to
use any of the Trademarks or the Other Intellectual Property owned by the
Company or any of its Subsidiaries.
(h) Except as set forth on Schedule 3.14(h) of the Company
Disclosure Schedule, the consummation of the Transactions will not result in the
loss or impairment of the Company's or any of its Subsidiaries' rights to own or
use any of the Trademarks or the Other Intellectual Property owned by or
licensed to the Company or its Subsidiaries nor will it require the consent of
any Governmental Authority or third party in respect of any such Trademarks or
the Other Intellectual Property.
Section 3.15 Properties. Each of the Company and each of its
Subsidiaries has sufficiently good and valid title to, or an adequate leasehold
interest in, its material properties and assets (including the Real Property) in
order to allow it to conduct, and continue to conduct, its business as currently
conducted in all material respects. Except as set forth on Schedule 3.15 of the
Company Disclosure Schedule such material tangible properties and assets
(including the Real Property) are sufficiently free of Liens to allow the
Company and each of its Subsidiaries to conduct, and continue to conduct, its
business as currently conducted in all material
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respects and the consummation of the Transactions will not alter or impair such
ability in any material respect. Except as set forth on Schedule 3.15 of the
Company Disclosure Schedule the Company and/or its Subsidiaries have good,
valid, market able and fee simple title to all the Fee Property, free and clear
of all Liens other than Liens the enforcement of which is not reasonably likely
to have a material impact on the continued use (as currently used) or value of
such properties.
Section 3.16 Contracts. (a) Except as set forth in the
Company's SEC Documents or Schedule 3.16 of the Company Disclosure Schedule,
neither the Company nor any of its Subsidiaries is a party to or bound by any
(i) "material contract" (as such term is defined in Item 601(b)(10) of
Regulation S-K of the SEC), (ii) non-competition agreement or any other
agreement or obligation which purports to limit in any respect the manner in
which, or the localities in which, all or any material portion of the business
of the Company and its Subsidiaries, taken as a whole, may be conducted, (iii)
transaction, agreement, arrangement or understanding with any Affiliate that
would be required to be disclosed under Item 404 of regulation S-K under the
Securities Act, (iv) voting or other agreement governing how any Shares shall be
voted, (v) material agreement with any stockholders of the Company, (vi)
acquisition, merger, asset purchase or sale agreement related to the acquisition
or sale of a business or (vii) contract or other agreement which would prohibit
or materially delay the consummation of the Merger or any of the Transactions
(all contracts of the type described in clauses (i) - (vii) being referred to
herein as "Company Material Contracts"). Each Company Material Contract is valid
and binding on the Company (or, to the extent a Subsidiary of the Company is a
party, such Subsidiary) and is in full force and effect. Neither the Company nor
any Subsidiary of the Company is in default or knows of, or has received notice
of, any violation or default under (nor, to the Knowledge of the Company, does
there exist any condition which with the passage of time or the giving of notice
or both would result in such a violation or default under) any Company Material
Contract; except as would not, individually or in the aggregate have a Material
Adverse Effect on the Company.
(b) Except as disclosed in the Company's SEC Documents or on
Schedule 3.16 of the Company Disclosure Schedule or as provided for in this
Agreement, neither the Company nor any of its Subsidiaries is a party to any
oral or written (i) employment agreements or consulting agreements (in excess of
$50,000 per year) not terminable on thirty (30) days' or less notice, (ii) union
or collective bargaining agreement, (iii) agreement with any executive officer
or other key employee of the Company or any of its Subsidiaries the benefits of
which are
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contingent or vest, or the terms of which are materially altered, upon the
occurrence of a transaction involving the Company or any of its Subsidiaries of
the nature contemplated by this Agreement, or (iv) agreement with respect to any
executive officer or other key employee of the Company or any of its
Subsidiaries providing any term of employment or compensation guarantee.
Section 3.17 Labor Relations. Except to the extent set forth
in the Company's SEC Documents or Schedule 3.17 of the Company Disclosure
Schedule, there is no labor strike, slowdown, stoppage or lockout actually
pending, or, to the Knowledge of the Company, threatened against or affecting
the Company or any of its Subsidiaries, and neither the Company nor any of its
Subsidiaries is a party to or bound by any collective bargaining or similar
agreement with any labor organization.
Section 3.18 Products Liability; Recalls. (a) Except as set
forth in the Company's SEC Documents or on Schedule 3.18 of the Company
Disclosure Schedule, (i) there is no notice, demand, claim, action, suit,
inquiry, hearing, proceeding, notice of violation or investigation of a civil,
criminal or administrative nature (collectively, "Notices") pending, or to the
Company's Knowledge, threatened before any Governmental Entity in which a
Product is alleged to have a Defect or relating to or resulting from any alleged
failure to warn or from any alleged breach of express or implied warranties or
representations, nor, to the Company's Knowledge, is there any valid basis for
any such demand, claim, action, suit, inquiry, hearing, proceeding, notice of
violation or investigation; (ii) no demand, claim, action, suit, inquiry,
hearing, proceeding, notice of violation or investigation referred to in clause
(i) of this Section 3.18 would, if adversely determined, have, individually or
in the aggregate, a Material Adverse Effect on the Company; (iii) there has not
been any recall, rework, retrofit or post-sale general consumer warning since
January 1, 1993 (collectively, "Recalls") of any Product, or any investigation
or consideration of or decision made by any person or entity concerning whether
to undertake or not to undertake any Recalls and the Company has received no
Notices from any Governmental Entity or any other person with respect to the
foregoing; and (iv) to the Company's Knowledge, there are currently no material
defects in design, manufacturing, materials, or workmanship, including, without
limitation, any failure to warn, or any breach of express or implied warranties
or representations, which involve any Product that accounts for a material
portion of the Company's sales.
(b) Section 3.18 of the Company Disclosure Schedule sets forth
all Notices received by the Company or its Subsidiaries since January 1, 1996
and the Company's best estimate of the reserves provided therefor.
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Section 3.19 Applicability of State Takeover Statutes. The
Section 203 Approval is valid and in full force and effect. Section 203 of the
DGCL will not apply to the Offer, the acquisition of Shares pursuant to the
Offer or the Merger. No other state takeover statute or similar statute or
regulation applies or purports to apply to the Offer, the Merger or the other
Transactions.
Section 3.20 Voting Requirements. In the event that Section
253 of the DGCL is inapplicable and unavailable to effectuate the Merger, the
affirmative vote of the holders of a majority of all the outstanding Shares
entitled to vote approving this Agreement at the Special Meeting is the only
vote of the holders of any class or series of the Company's capital stock
necessary to approve this Agreement and the Transactions.
Section 3.21 Brokers. No broker, investment banker, financial
advisor or other Person, other than Xxxxx & Company Incorporated, the fees and
expenses of which will be paid by the Company, is entitled to any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of the
Company. The Company has provided Parent true and correct copies of all
agreements between the Company and Xxxxx & Company Incorporated, including,
without limitations, any fee arrangements.
Section 3.22 Opinion of Financial Advisor. The Company has
received the opinion of Xxxxx & Company Incorporated, to the effect that, as of
the date of this Agreement, the consideration to be received in the Offer and
the Merger by the Company's stockholders is fair to the Company's stockholders
from a financial point of view, and a complete and correct signed copy of such
opinion has been, or promptly upon receipt thereof will be, delivered to Parent.
The Company has been authorized by Xxxxx & Company Incorporated to permit the
inclusion of such opinion in its entirety in the Schedule 14D-9 and the Proxy
Statement, so long as such inclusion is in form and substance reasonably
satisfactory to Xxxxx & Company Incorporated and its counsel.
Section 3.23 Year 2000.
Except as set forth on Schedule 3.23 of the Company Disclosure
Schedule or the Company's SEC Documents, or as would not have, individually or
in the aggregate, a Material Adverse Effect on the Company:
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(a) all of the Computer Programs, computer firmware, computer
hardware (whether general or special purpose) and other similar or related items
of automated, computerized and/or software system(s) that are used or relied on
by the Company or by any of its Subsidiaries in the conduct of their respective
businesses will not malfunction, will not cease to function, will not generate
incorrect data, and will not provide incorrect results when processing,
providing, and/or receiving (i) date-related data into and between the twentieth
and twenty-first centuries and (ii) date-related data in connection with any
valid date in the twentieth and twenty-first centuries; and
(b) all of the products and services sold, licensed, rendered
or otherwise provided by the Company or by any of its Subsidiaries in the
conduct of their respective businesses will not malfunction, will not cease to
function, will not generate incorrect data and will not produce incorrect
results when processing, providing and/or receiving (i) date-related data into
and between the twentieth and twenty-first centuries and (ii) date-related data
in connection with any valid date in the twentieth and twenty-first centuries;
and neither the Company nor any of its Subsidiaries is or shall be subject to
claims or liabilities arising from their failure to do so; and
(c) neither the Company nor any of its Subsidiaries has made
other representations or warranties regarding the ability of any product or
service sold, licensed, rendered or otherwise provided by the Company or by any
of its Subsidiaries in the conduct of their respective businesses to operate
without malfunction, to operate without ceasing to function, to generate
correct data and to produce correct results when processing, providing and/or
receiving (i) date-related data into and between the twentieth and twenty-first
centuries and (ii) date-related data in connection with any valid date in the
twentieth and twenty-first centuries.
Section 3.24 Company Rights Agreement. The Company and its
Board of Directors have taken all action which may be necessary under the
Company Rights Agreement so that the Offer is deemed to be an "Approved
Transaction" (as defined in the Company Rights Agreement") and the execution and
delivery of this Agreement (and any amendments thereto by the parties hereto),
and the consummation of the Merger and the Transactions, will not cause (i)
Parent or Purchaser to constitute an "Acquiring Person" (as defined in the
Company Rights Agreement), (ii) a "Distribution Date," "Section 13 Event,"
"Triggering Event," or "Stock Acquisition Date" (each as defined in the Company
Rights Agreement) to occur or (iii) the Rights
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(as defined in the Company Rights Agreement) to become exercisable pursuant to
Section 11(a)(ii) thereof or otherwise.
Section 3.25 Absence of Questionable Payments. To the
Company's Knowledge, neither the Company nor any of its Subsidiaries nor any
director, officer, agent, employee or other person acting on behalf of the
Company or any of its Subsidiaries, has used any corporate or other funds for
unlawful contributions, payments, gifts, or entertainment, or made any unlawful
expenditures relating to political activity to government officials or others or
established or maintained any unlawful or unrecorded funds in violation of
Section 30A of the Exchange Act. To the Company's Knowledge, neither the Company
nor any of its Subsidiaries nor any current director, officer, agent, employee
or other person acting on behalf of the Company or any of its Subsidiaries, has
accepted or received any unlawful contributions, payments, gifts, or
expenditures. To the Company's Knowledge, the Company and each of its
Subsidiaries which is required to file reports pursuant to Section 12 or 15(d)
of the Exchange Act is in compliance with the provisions of Section 13(b) of the
Exchange Act.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF
PARENT AND PURCHASER
Parent and Purchaser represent and warrant to the Company as
follows:
Section 4.1 Organization, Standing and Corporate Power. Each
of Parent and Purchaser is a corporation duly organized, validly existing and in
good standing under the Laws of the jurisdiction in which each is incorporated
and has the requisite corporate power and authority to carry on its business as
now being conducted. Each of Parent and Purchaser is duly qualified or licensed
to do business and is in good standing in each jurisdiction in which the nature
of its business or the ownership or leasing of its properties makes such
qualification or licensing necessary, other than in such jurisdictions where
the failure to be so qualified or licensed (individually or in the aggregate)
would not have a Material Adverse Effect on Parent.
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Section 4.2 Authority; Noncontravention. Parent and Purchaser
have the requisite corporate power and authority to enter into this Agreement
and to consummate the Transactions. The execution and delivery of this Agreement
by Parent and Purchaser and the consummation by Parent and Purchaser of the
Transactions have been duly authorized by all necessary corporate action on the
part of Parent and Purchaser, as applicable. This Agreement has been duly
executed and delivered by Parent and Purchaser and, assuming this Agreement
constitutes the valid and binding obligation of the Company, constitutes a valid
and binding obligation of each such party, enforceable against each such party
in accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, reorganization, moratorium or other similar Laws now or
hereafter in effect relating to creditors' rights generally and (ii) the remedy
of specific performance and injunctive relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought. The execution and delivery of this Agreement do not, and the
consummation of the Transactions will not, conflict with, or result in any
violation of, or default (with or without notice or lapse of time, or both)
under, or give rise to a right of termination, cancellation or acceleration of
any obligation or to loss of a material benefit under, or result in the creation
of any lien upon any of the material properties or assets of Parent under, (i)
the certificate of incorporation or by-laws of Parent or Purchaser, (ii) any
loan or credit agreement, note, bond, indenture, lease or other agreement,
instrument or Permit applicable to the Company or any of its Significant
Subsidiaries or their respective properties or assets, (iii) any Law applicable
to Parent or Purchaser or their respective properties or assets, other than, in
the case of clause (ii) and (iii), any such conflicts, violations, defaults,
rights or Liens that individually or in the aggregate would not (x) impair in
any material respect the ability of Parent and Purchaser to perform their
respective obligations under this Agreement or (y) prevent or impede the
consummation of any of the Transactions. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity or any other Person is required by Parent or Purchaser in connection with
the execution and delivery of this Agreement or the consummation by Parent or
Purchaser, as the case may be, of any of the Transactions, except for (i) the
filings, permits, authorizations, consents and approvals set forth in Schedule
4.2 of the disclosure schedule delivered by Parent to the Company at or prior to
the execution of this Agreement (the "Parent Disclosure Schedule"), or as may be
required under, and other applicable requirements of, the Securities Act, the
Exchange Act, the HSR Act, any applicable state securities or "blue sky" Laws
and the DGCL, and (ii) such other consents, approvals, orders, authorizations,
registrations, declarations and filings the failure of which to be obtained or
made would not, individually or in the
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aggregate, prevent the consummation of or materially impair the ability of
Parent or Purchaser to consummate the Transactions.
Section 4.3 Proxy Statement; Offer Documents. The Offer
Documents and any other documents to be filed by Parent with the SEC or any
other Government Entity in connection with the Merger and the other Transactions
will (in the case of the Offer Documents and any such other documents filed with
the SEC under the Securities Act or the Exchange Act) comply as to form in all
material respects with the applicable provisions of the Exchange Act and the
Securities Act, respectively, and the rules and regulations thereunder. None of
the Offer Documents, any other documents required to be filed by Parent or
Purchaser with the SEC in connection with the Transactions, nor any information
supplied by Parent or Purchaser in writing for inclusion in the Schedule 14D-9
shall, at the respective times the Offer Documents or any amendments and
supplements thereto, any such other filings by Parent or Purchaser or the
Schedule 14D-9 are filed with SEC or are first published, sent or given to
stockholders of the Company, as the case may be, or, in the case of the Proxy
Statement, on the date the Proxy Statement is first mailed to stockholders of
the Company, 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 or shall, at the time of the Special Meeting (as
defined in Section 5.3) or at the Effective Time, omit to state any material
fact necessary to correct any statement in any earlier communication in light of
the circumstances in which they are made, with respect to the solicitation of
proxies for the Special Meeting which shall have become false or misleading in
any material respect. Notwithstanding the foregoing, neither Parent nor
Purchaser makes any representation or warranty with respect to the statements
made in any of the foregoing documents based on and in conformity with
information supplied by or on behalf of the Company specifically for inclusion
or incorporation by reference therein.
Section 4.4 Operations of Purchaser. Purchaser is a wholly
owned Subsidiary of Parent and was formed solely for the purpose of engaging in
the Transactions and has not engaged in any business activities or conducted any
operations other than in connection with the Transactions.
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Section 4.5 Brokers. No broker, investment banker, financial
advisor or other Person is entitled to any broker's, finder's, financial
advisor's or other similar fee or commission in connection with the Transactions
based upon arrangements made by or on behalf of Parent or Purchaser.
Section 4.6 Financing.
(a) Parent or a wholly owned subsidiary thereof owns all of
the outstanding capital stock of Purchaser. At all times prior to the Effective
Time, no person other than Parent has owned, or will own, any of the outstanding
capital stock of Purchaser. Purchaser has not incurred, and prior to the
Effective Time will not incur, directly or though any Subsidiary, any
liabilities or obligations for borrowed money or otherwise, except incidental
liabilities or obligations not for borrowed money incurred in connection with
its organization and except in connection with the Transactions.
(b) Parent and Purchaser have, and, at all times between the
date hereof and the payment for Shares validly tendered and not withdrawn in the
Offer or converted in the Merger, will have sufficient financial capacity to
accept for payment, purchase and pay for all of the Shares validly tendered and
not withdrawn pursuant to the Offer, and will have sufficient financial capacity
to pay the Merger Consideration payable in the Merger.
ARTICLE V
COVENANTS
Section 5.1 Interim Operations of the Company. After the date
hereof and prior to the time the designees of Parent have been elected or
appointed to, and shall constitute a majority of, the Board of Directors of the
Company pursuant to Section 1.4 or the date, if any, on which this Agreement is
earlier terminated pursuant to Section 7.1, and except (i) as expressly
contemplated by this Agreement, (ii) as set forth on Schedule 5.1 of the Company
Disclosure Schedule or (iii) as agreed in writing by Parent:
(a) the Company shall and shall cause its
Subsidiaries to carry on their respective businesses in the ordinary course;
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(b) the Company shall and shall cause its
Subsidiaries to use all reasonable best efforts consistent with good business
judgment to preserve intact their current business organizations, keep available
the services of their current officers and key employees and preserve their
relationships consistent with past practice with desirable customers, suppliers,
licensors, licensees, distributors and others having business dealings with
them;
(c) neither the Company nor any of its Subsidiaries
shall, directly or indirectly, amend its certificate of incorporation or by-laws
or similar organizational documents;
(d) Representatives of the Company and its
Subsidiaries shall confer at such times as Parent may reasonably request with
one or more Representatives of Parent to report material operational matters
and the general status of ongoing operations;
(e) neither the Company nor any of its Subsidiaries
shall: (i)(A) declare, set aside or pay any dividend or other distribution
payable in cash, stock or property with respect to the Company's capital stock
or that of its Subsidiaries, except that a wholly-owned Subsidiary of the
Company may declare and pay a dividend or make advances to its parent or the
Company or (B) redeem, purchase or otherwise acquire directly or indirectly any
of the Company's capital stock or that of its Subsidiaries; (ii) issue, sell,
pledge, dispose of or encumber any additional shares of, or securities
convertible into or exchangeable for, or options, warrants, calls, commitments
or rights of any kind to acquire, any shares of capital stock of any class of
the Company or its Subsidiaries, other than Shares issued upon the exercise of
Options outstanding on the date hereof in accordance with the Option Plans as in
effect on the date hereof or additional warrants issued in accordance with the
terms of the Warrants; or (iii) split, combine or reclassify the outstanding
capital stock of the Company or of any of the Subsidiaries of the Company;
(f) neither the Company nor any of its Subsidiaries
shall enter into any agreement or arrangement with respect to the distribution
of any of the Company's products;
(g) except as permitted by this Agreement, neither
the Company nor any of its Subsidiaries shall acquire or agree to acquire (A) by
merging or consolidating with, or by purchasing a substantial portion of the
assets of, or by any other manner, any business or any corporation, partnership,
joint venture,
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association or other business organization or division thereof (including
entities which are Subsidiaries of the Company or any of the Company's
Subsidiaries) or (B) any assets, including real estate, except purchases in the
ordinary course of business consistent with past practice;
(h) neither the Company nor any of its Subsidiaries
shall make any new capital expenditure or expenditures in excess of $50,000
individually, or $500,000 in the aggregate, other than the specific capital
expenditures disclosed and set forth on Schedule 5.1 of the Company Disclosure
Schedule;
(i) neither the Company nor any of its Subsidiaries
shall, except in the ordinary course of business and except as otherwise
permitted by this Agreement, amend or terminate any Company Material Contract
where such amendment or termination would have a Material Adverse Affect on the
Company, or waive, release or assign any material rights or claims;
(j) neither the Company nor any of its Subsidiaries
shall transfer, lease, license, sell, mortgage, pledge, dispose of or encumber
any property or assets other than in the ordinary course of business and
consistent with past practice;
(k) neither the Company nor any of its Subsidiaries
shall: (i) enter into any employment or severance agreement with or grant any
severance or termination pay to any officer, director or key employee of the
Company or any its Subsidiaries; or (ii) hire or agree to hire any new or
additional key employees or officers;
(l) neither the Company nor any of its Subsidiaries
shall, except as required to comply with applicable Law or expressly provided in
this Agreement, (A) adopt, enter into, terminate, amend or increase the amount
or accelerate the payment or vesting of any benefit or award or amount payable
under any Benefit Plan or other arrangement for the current or future benefit or
welfare of any director, officer or current or former employee, except to the
extent necessary to coordinate any such Benefit Plans with the terms of this
Agreement, (B) increase in any manner the compensation or fringe benefits of, or
pay any bonus to, any director, officer or employee provided that employees with
annual compensation of $100,000 or less may receive increases of not more than
5.0% on the anniversary date of their employment in the ordinary course of
business and consistent with past practice, (C) pay any benefit not provided for
under, or contemplated by, any Benefit Plan, (D)
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grant any awards under any bonus, incentive, performance or other compensation
plan or arrangement or Benefit Plan (including the grant of stock options, stock
appreciation rights, stock based or stock related awards, performance units or
restricted stock, or the removal of existing restrictions in any Benefit Plans
or agreements or awards made thereunder) or (E) take any action to fund or in
any other way secure the payment of compensation or benefits under any employee
plan, agreement, contract or arrangement or Benefit Plan;
(m) neither the Company nor any of its Subsidiaries
shall: (i) incur or assume any long-term debt, or except in the ordinary course
of business, incur or assume any short-term indebtedness in amounts not
consistent with past practice; (ii) incur or modify any material indebtedness or
other liability except as set forth on Schedule 5.1 of the Company Disclosure
Schedule; (iii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other Person, except in the ordinary course of business and consistent with
past practice; (iv) make any loans, advances or capital contributions to, or
investments in, any other Person (other than to wholly owned Subsidiaries of the
Company or customary loans or advances to employees in the ordinary course of
business and consistent with past practice); or (v) settle any material claims
other than in the ordinary course of business, in accordance with past practice
and without admission of liability;
(n) neither the Company nor any of its Subsidiaries
shall change any of the accounting methods used by it unless required by GAAP,
the SEC or Law;
(o) neither the Company nor any of its Subsidiaries
shall make any Tax election, amend any material Tax Return, make a claim for any
material Tax Refund or settle or compromise any material Tax liability (whether
with respect to amount or timing);
(p) neither the Company nor any of its Subsidiaries
shall pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise), other than
the payment, discharge or satisfaction of any such claims, liabilities or
obligations, in the ordinary course of business and consistent with past
practice, of claims, liabilities or obligations reflected or reserved against
in, or contemplated by, the consolidated financial statements (or the notes
thereto) of the Company and its consolidated Subsidiaries; or, except in the
ordinary course of business consistent with past practice, waive the
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benefits of, or agree to modify in any manner, any confidentiality, standstill
or similar agreement to which the Company or any of its Subsidiaries is a party;
(q) neither the Company nor any of its Subsidiaries
shall (by action or inaction) amend, renew, terminate or cause to be extended
any lease, agreement or arrangement relating to any of the Leased Properties or
enter into any lease, agreement or arrangement with respect to any real
property;
(r) neither the Company nor any of its Subsidiaries
will enter into an agreement, contract, commitment or arrangement to do any of
the foregoing, or to authorize, recommend, propose or announce an intention to
do any of the foregoing; and
(s) neither the Company nor any of its Subsidiaries
shall take any action that would result in (i) any of its representations and
warranties set forth in this Agreement that are qualified as to materiality
becoming untrue, (ii) any of such representations and warranties that are not so
qualified becoming untrue in any material respect or (iii) any of the conditions
to the Offer set forth in Annex A not being satisfied (subject to the Company's
right to take action specifically permitted by Section 5.5).
Section 5.2 Access; Confidentiality. The Company shall (and
shall cause each of its Subsidiaries to) afford to the Representatives of Parent
reasonable access on reasonable prior notice during normal business hours,
throughout the period prior to the earlier of the Effective Time or the
termination of this Agreement, to all of its properties, offices, employees,
contracts, commitments, books and records (including but not limited to Tax
Returns) and any report, schedule or other document filed or received by it
pursuant to the requirements of federal or state securities laws and shall (and
shall cause each of its Subsidiaries to) furnish promptly to Parent such
additional financial and operating data and other information as to its and its
Subsidiaries' respective businesses and properties as Parent may from time to
time reasonably request. Parent and Purchaser will make all reasonable efforts
to minimize any disruption to the businesses of the Company and its Subsidiaries
which may result from the requests for data and information hereunder and
pursuant to Section 5.1(d) hereof. Parent agrees that it will not, and will
cause its Representatives not to, use any information obtained pursuant to this
Section 5.2 for any purpose unrelated to the Transactions. Except as otherwise
agreed to by the Company, unless and until Parent and Purchaser shall have
purchased Shares pursuant to the Offer, Parent will be bound by the terms of a
confidentiality agreement (the
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"Confidentiality Agreement"), dated as of April 2, 1998 and amended as of June
23, 1998, by and between Parent and the Company. Except as otherwise agreed to
by Parent or Purchaser, unless and until Parent and Purchaser shall have
purchased Shares pursuant to the Offer, the Company will be bound by the terms
of the Confidentiality Agreement.
Section 5.3. Special Meeting, Proxy Statement.
(a) If required by applicable Law in order to
consummate the Merger, the Company, acting through its Board of Directors,
shall, in accordance with applicable Law, its Certificate of Incorporation and
By-laws:
(i) as promptly as practicable following the
acceptance for payment and purchase of Shares by Purchaser pursuant to
the Offer duly call, give notice of, convene and hold a special meeting
of its stockholders (the "Special Meeting") for the purposes of
considering and taking action upon the approval of the Merger and the
approval and adoption of this Agreement;
(ii) prepare and file with the SEC a preliminary
proxy or information statement relating to the Merger and this
Agreement and (x) obtain and furnish the information required to be
included by the SEC in the Proxy Statement (as hereinafter defined)
and, after consultation with Parent, respond promptly to any comments
made by the SEC with respect to the preliminary proxy or information
statement and cause a definitive proxy or information statement,
including any amendment or supplement thereto (the "Proxy Statement")
to be mailed to its stockholders at the earliest practicable date;
provided that no amendment or supplement to the Proxy Statement will be
made by the Company without consultation with Parent and its counsel
and (y) use its reasonable best efforts to obtain the necessary
approvals of the Merger and this Agreement by its stockholders; and
(iii) unless this Agreement has been terminated in
accordance with Article VII, subject to its rights pursuant to Section
5.5, include in the Proxy Statement the recommendation of its Board of
Directors that stockholders of the Company vote in favor of the
approval of the Merger and the approval and adoption of this Agreement.
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(b) Parent shall vote, or cause to be voted, all of
the Shares then owned by it, Purchaser or any of its other Subsidiaries in favor
of the approval and adoption of this Agreement.
(c) Notwithstanding anything else herein or in this
Section 5.3, in the event that Parent, Purchaser and any other Subsidiaries of
Parent shall acquire in the aggregate a number of the outstanding shares of each
class of capital stock of the Company, pursuant to the Offer or otherwise,
sufficient to enable Purchaser or the Company to cause the Merger to become
effective under applicable Law without a meeting of stockholders of the Company,
the parties hereto shall, at the request of Parent and subject to Article VI,
take all necessary and appropriate action to cause the Merger to become
effective as soon as practicable after the consummation of such acquisition,
without a meeting of stockholders of the Company, in accordance with Section
253 of the DGCL.
Section 5.4. Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions
hereof, each of the parties hereto will (i) make promptly its respective
filings, and thereafter make any other required submissions, under the HSR Act,
the Securities Act and the Exchange Act, with respect to the Transactions and
(ii) use all reasonable 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 to satisfy the conditions to the Offer and the Merger and to
consummate and make effective the Transactions. In case at any Time after the
Effective Time any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement will use all reasonable efforts to take all such action.
(b) Parties hereby agree that they will, and they
will cause each of their respective affiliates to, use all reasonable efforts to
obtain any government clearances required for completion of the Offer and the
Merger (including through compliance with the HSR Act), to respond to any
government requests for information, and to contest and resist any action,
including any legislative, administrative or judicial action, and to have
vacated, lifted, reversed or overturned any decree, judgment, injunction or
other order (whether temporary, preliminary or permanent) (an "Order") that
restricts, prevents or prohibits the consummation of the Merger, including by
vigorously pursuing all available avenues of administrative and judicial appeal.
Notwithstanding the foregoing, in no event shall the Parent, Purchaser or the
Surviving Corporation be required to divest any of their respective
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assets or agree to any restriction in their businesses as currently or proposed
to be conducted. The parties hereto will consult and cooperate with one another,
and consider in good faith the views of one another, in connection with any
analyses, appearances, presentations, memoranda, briefs, arguments, opinions and
proposals made or submitted by or on behalf of any party hereto in connection
with proceedings under or relating to the HSR Act or any other federal, state
or foreign antitrust or fair trade law.
(c) Each of the Company, Parent and Purchaser
shall give prompt notice to the other of (i) any of their representations or
warranties contained in this Agreement becoming untrue or inaccurate in any
respect (including in the case of representations or warranties receiving
knowledge of any fact, event or circumstance which may cause any representation
qualified as to the knowledge to be or become untrue or inaccurate in any
respect) or (ii) the failure by them to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied
by them under this Agreement; provided, however, that no such notification shall
affect the representations, warranties, covenants or agreements of the parties
or the conditions to the obligations of the parties under this Agreement.
Section 5.5 No Solicitation. (a) The Company shall not, nor
shall it permit any of its Subsidiaries to, nor shall it authorize (and shall
use its best efforts not to permit) any officer, director or employee of, or any
investment banker, attorney or other advisor or representative of, the Company
or any of its Subsidiaries to, (i) solicit or initiate, or encourage, directly
or indirectly, any inquiries or the submission of, any Takeover Proposal, (ii)
participate in any discussions or negotiations regarding, or furnish to any
Person any information or data with respect to or access to the properties of,
or take any other action to knowingly facilitate the making of any proposal that
constitutes, or may reasonably be expected to lead to, any Takeover Proposal or
(iii) enter into any agreement with respect to any Takeover Proposal or approve
or resolve to approve any Takeover Proposal; provided, that nothing contained in
this Section 5.5 or any other provision hereof shall prohibit the Company or the
Company's Board of Directors from (i) taking and disclosing to the Company's
stockholders a position with respect to a tender or exchange offer by a third
party pursuant to Rules 14d-9 and 14e-2 promulgated under the Exchange Act, or
(ii) making such disclosure to the Company's stockholders as, in the good faith
judgment of the Company's Board of Directors, after receiving advice from
outside counsel, is required under, or is necessary to comply with, applicable
Law, provided that the Company may not, except as permitted by Section 5.5(b),
withdraw or modify, or propose to withdraw or modify, its position with respect
to the Offer or
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the Merger or approve or recommend, or propose to approve or recommend any
Takeover Proposal, or enter into any agreement with respect to any Takeover
Proposal. Upon execution of this Agreement, the Company will immediately cease
any existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. Notwithstanding the foregoing,
prior to the time of acceptance of Shares for payment pursuant to the Offer, the
Company may withdraw or modify its recommendation of the Offer, may furnish
information concerning its business, properties or assets to any Person or group
and may negotiate and participate in discussions and negotiations with such
Person or group concerning a Takeover Proposal if:
(x) such Person or group has submitted a Superior
Proposal; and
(y) in the opinion of the Company's Board of
Directors such action is required to discharge the Board's fiduciary
duties to the Company's stockholders under applicable Law, determined
only after receipt of advice from independent legal counsel to the
Company that the failure to provide such information or access or to
engage in such discussions or negotiations may cause the Company's
Board of Directors to violate its fiduciary duties to the Company's
stockholders under applicable Law.
The Company will promptly (but in no case later than 24 hours) notify Parent of
the existence of any proposal, discussion, negotiation or inquiry received by
the Company regarding any Takeover Proposal, and the Company will promptly
communicate to Parent the terms of any proposal, discussion, negotiation or
inquiry which it may receive regarding any Takeover Proposal (and will promptly
provide to Parent copies of any written materials received by the Company in
connection with such proposal, discussion, negotiation or inquiry) and the
identity of the party making such proposal or inquiry or engaging in such
discussion or negotiation. The Company will promptly provide to Parent any
non-public information concerning the Company provided to any other Person in
connection with any Takeover Proposal which was not previously provided to
Parent. The Company will keep Parent informed of the status and details of any
such Takeover Proposal and of any amendments or proposed amendments to any
Takeover Proposal and will promptly (but in no case later than 24 hours) notify
Parent of any determination by the Company's Board of Directors that a Superior
Proposal has been made.
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(b) Except as set forth in this Section 5.5(b),
neither the Board of Directors of the Company nor any committee thereof shall
(i) withdraw or modify, or propose to withdraw or modify, in a manner adverse to
Parent or Purchaser, the approval or recommendation by the Board of Directors of
the Company or any such committee of the Offer, this Agreement or the Merger,
(ii) approve or recommend, or propose to approve or recommend, any Takeover
Proposal or (iii) enter into any agreement with respect to any Takeover
Proposal. Notwithstanding the foregoing, subject to compliance with the
provisions of this Section 5.5, prior to the time of acceptance for payment of
Shares pursuant to the Offer, the Company's Board of Directors may withdraw or
modify its approval or recommendation of the Offer, this Agreement or the
Merger, approve or recommend a Superior Proposal, or enter into an agreement
with respect to a Superior Proposal, in each case at any time after the third
business day following Parent's receipt of written notice (including by
facsimile) from the Company advising Parent that the Board of Directors of the
Company has received a Superior Proposal which it intends to accept, specifying
the material terms and conditions of such Superior Proposal and identifying the
Person making such Superior Proposal, but only if the Company shall have caused
its financial and legal advisors to negotiate with Parent to make such
adjustments to the terms and conditions of this Agreement as would enable the
Company to proceed with the Transactions on such adjusted terms.
Section 5.6 Publicity. Except as required by Law or as
permitted by Section 5.5, so long as this Agreement is in effect, neither the
Company, Parent nor any of their respective affiliates shall issue or cause the
publication of any press release or other announcement with respect to the
Merger, this Agreement or the other Transactions without the prior consultation
of the other party.
Section 5.7 Transfer Taxes. All liability for transfer or
other similar Taxes arising out of or related to the Offer and the Merger or the
consummation of any other Transaction, and due to the property owned by the
Company or any of its Subsidiaries or affiliates ("Transfer Taxes") shall be
borne by the Company, and the Company shall file or cause to be filed all Tax
Returns relating to such Transfer Taxes which are due.
Section 5.8 State Takeover Laws. Notwithstanding any other
provision in this Agreement, in no event shall the Section 203 Approval be
withdrawn, revoked or modified by the Board of Directors of the Company. If any
state takeover statute other than Section 203 of the DGCL becomes or is deemed
to become applicable to the Company Stockholder Agreement, the Offer, the
acquisi-
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tion of Shares pursuant to the Offer or the Merger, the Company shall take all
reasonable action necessary to render such statute inapplicable to all of the
foregoing.
Section 5.9 Indemnification and Insurance.
(a) Parent, and from and after the Effective Time, the
Surviving Corporation, shall indemnify, defend and hold harmless each person who
is now, or has been at any prior time to the date hereof or who becomes prior to
the Effective Time, an officer, director, employee or agent of the Company or
any of its Subsidiaries (the "Indemnified Parties") against all losses, claims,
damages, costs, expenses (including reasonable attorneys' fees and expenses),
liabilities or judgments or amounts of or in connection with any threatened or
actual claim, action, suit, proceeding or investigation based on or arising out
of the fact that such person is or was serving in such person's capacity as a
director, officer, employee or agent of the Company or any of its Subsidiaries,
whether pertaining to any matter existing or occurring at or prior to the
Effective Time or any acts or omissions occurring or existing at or prior to the
Effective Time and whether asserted or claimed prior to, or at or after, the
Effective Time ("Indemnified Liabilities"), including all Indemnified
Liabilities based on, or arising out of, or pertaining to this Agreement or the
Transactions, in each case to the fullest extent a corporation is permitted
under the DGCL and the Company's Certificate of Incorporation or By-Laws as
currently in effect to indemnify such persons (and the Company and the Surviving
Corporation, as the case may be, will pay expenses promptly after statements
thereof are received, to each Indemnified Party to the fullest extent permitted
by Delaware law, subject to delivery of the undertaking described below).
Without limiting the foregoing, in the event any such claim, action, suit,
proceeding or investigation is brought against any Indemnified Party (whether
arising before or after the Effective Time), (i) such Indemnified Party may
retain counsel satisfactory to the Indemnified Party and reasonably satisfactory
to the Company (and reasonably satisfactory to the Surviving Corporation after
the Effective Time) and the Company (or after the Effective Time, the Surviving
Corporation) will pay all reasonable fees and expenses of such counsel for the
Indemnified Parties promptly as statements and supporting documentation thereof
are received; and (ii) the Company (or after the Effective Time, the Surviving
Corporation) will use all reasonable best efforts to assist in the vigorous
defense of any such matter, provided that neither the Company nor the Surviving
Corporation will be liable for any settlement effected without its prior written
consent which written consent will not unreasonably be withheld. Any Indemnified
Party, upon learning of any such claim, action, suit, proceeding or
investigation, will notify the Company (or after the Effective Time, the
Surviving Corporation) promptly (but the
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failure so to notify will not relieve a party from any liability which it may
have under this Section 5.9 except to the extent such failure materially
prejudices such party's position with respect to such claims), and will deliver
to the Company (or after the Effective Time, the Surviving Corporation) the
undertaking contemplated by Section 145(e) of the DGCL. The Indemnified Parties
as a group may retain only one law firm (and one local counsel) to represent
them with respect to each such matter unless there is, under applicable
standards of professional conduct, an existing or potential conflict on any
significant issue between the positions of any two or more Indemnified Parties
in which case such additional counsel reasonably acceptable to the Indemnified
Parties, the Company or, after the Effective Time, the Surviving Corporation as
may be required may be retained by the Indemnified Parties at the cost and
expense of the company (or Surviving Corporation). Furthermore, the provisions
with respect to indemnification set forth in the Certificate of Incorporation
and By-Laws of the Surviving Corporation will not be amended following the
Effective Time in any way that would materially and adversely affect the rights
thereunder of individuals who at any time prior to the Effective Time were
directors, officers, employees or agents of the Company in respect of actions or
omissions occurring at or prior to the Effective Time.
(b) For a period of three years after the Effective Time,
Parent shall cause the Surviving Corporation to maintain in effect, if
available, directors' and officers' liability insurance covering those Persons
who are currently covered by the Company's directors' and officers' liability
insurance policy with respect to acts prior to the Effective Time (a copy of
which has been made available to Parent) on terms (including the amounts of
coverage and the amounts of deductibles, if any) that are no less favorable to
the terms now applicable to them under the Company's current policies; provided,
however, that in no event shall Parent or the Surviving Corporation be required
to expend in excess of 150% of the annual premium currently paid by the Company
for such coverage; and provided further, that, if the premium for such coverage
exceeds such amount, Parent or the Surviving Corporation shall purchase a
policy with the greatest coverage available for such 150% of the annual premium.
(c) This Section 5.9 shall survive the consummation of the
Merger at the Effective Time, is intended to benefit the Company, the Surviving
Corporation and the Indemnified Parties, shall be binding on all successors and
assigns of the Surviving Corporation and shall be enforceable by the Indemnified
Parties.
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Section 5.10 Certain Employment Matters. (a) Parent will cause
the Surviving Corporation to honor the obligations of the Company or any of its
Subsidiaries under the provisions of all employment, consulting, termination,
severance, change in control and indemnification agreements between or among the
Company or any of its Subsidiaries and any current or former officer, director,
consultant or employee of the Company or any of its Subsidiaries.
(b) Immediately following the consummation of the Offer,
Parent shall cause the Company and the Surviving Corporation, and, in either
case, its Subsidiaries, through December 31, 1998 (except in the case of
employees of Galco International Toys, Ltd. ("Galco"), which date shall be the
first day of the Chinese New Year 4697 (February 16, 1999) and not December 31,
1998), to continue the employment of each employee of the Company and its
Subsidiaries who is employed by the Company or any of its Subsidiaries
immediately prior to the consummation of the Offer (other than officers of the
Company who have written agreements with the Company that are disclosed pursuant
to Schedule 3.4(ii) of the Company Disclosure Schedule) at the compensation in
effect immediately prior to the consummation of the Offer. In addition, all such
employees shall be entitled to receive through December 31, 1998 (except in the
case of employees of Galco, which date shall be the first day of the Chinese New
Year 4697 (February 16, 1999) and not December 31, 1998) health and welfare
benefits, and qualified retirement benefits, on terms that are not substantially
less favorable, in the aggregate, to those currently provided to employees of
the Company and its Subsidiaries under the Company's existing plans. The Company
may provide severance payments to each domestic employee of the Company or its
Subsidiaries (other than those officers of the Company who have written
agreements with the Company that are disclosed pursuant to Schedule 3.4(ii) of
the Company Disclosure Schedule) who is employed by the Company or its
Subsidiaries immediately following the consummation of the Offer, and who is
thereafter involuntarily terminated without cause by the Company or the
Surviving Corporation or, in either case, any of its Subsidiaries after such
time, in an amount per such employee equal to two weeks' base salary for each
full year of any such employee's service with the Company or any of its
Subsidiaries, subject to a receipt from such employee of a full and complete
release of all claims against Parent, Purchaser, the Surviving Corporation, the
Company and their respective affiliates, directors, officers, agents and
representatives. For purposes of eligibility for the paid vacation and the
health and welfare benefit plans of the Surviving Corporation, such employees
will be credited for their years of service with the Company or any of its
Subsidiaries.
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Section 5.11 Acceleration of Outstanding Indebtedness. If,
after the Offer is consummated, the Company's or any Subsidiary's obligation for
borrowed money outstanding is accelerated or the Company or such Subsidiary is
otherwise required to repurchase, repay or prepay any such obligation, Parent
agrees within ten business days after written notice thereof, to loan to the
Company an amount equal to the amount which the Company or any such Subsidiary
is required to so repurchase, repay or prepay (including any related prepayment
premiums or penalties) at an interest rate not to exceed the rate under Parent's
existing bank credit facility.
Section 5.12 The Company Rights Plan. The Company, acting
through its Board of Directors or otherwise, shall not, except as specifically
provided herein, (a) amend, alter or modify the Company Rights Plan or (b) take
any action with respect to, or make any determination under, the Company Rights
Plan, to facilitate a Takeover Proposal.
Section 5.13 Confidentiality and Standstill Agreements. (a)
The Company hereby waives any rights the Company may have under any "standstill"
or similar agreements to object to the transfer to Purchaser of all Shares held
by stockholders covered by such "standstill" or similar agreements and hereby
covenants not to consent to the transfer of any Shares held by such
stockholders to any other Person unless (i) the Company will have obtained the
specific, prior written consent of Parent with respect to any such transfer or
(ii) this Agreement will have been terminated pursuant to Article VII and (b)
the Company covenants not to alter, modify or amend the terms or conditions of
any confidentiality agreement to which it is a party or beneficiary in a manner
adverse to the interests of Parent or Purchaser, including, but not limited, to
authorizing any other Person to disclose or use any confidential information it
has received from the Company, whether to facilitate a Takeover Proposal or
otherwise.
Section 5.14 Certain Matters Related to Xxxxx Licensing Ltd.
and Lucasfilm Ltd. Notwithstanding anything contained in this Agreement to the
contrary, it shall be the obligation of Parent and not the Company to obtain all
necessary consents and approvals of Xxxxx Licensing Ltd. and Lucasfilm Ltd.
under the Toy Licensing Agreement, dated as of October 14, 1997, by and between
Xxxxx Licensing Ltd. and the Company, the Agreement of Strategic Relationship,
dated as of October 14, 1997, by and between Lucasfilm Ltd. and the Company, and
any other agreement between Xxxxx Licensing Ltd. and/or Lucasfilm Ltd. and the
Company that have been disclosed to Parent, to the consummation of the Offer,
the Merger and the other Transactions contemplated by this Agreement, and the
obtain-
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ing of any of such consents or approvals shall not be a condition to Parent or
Purchaser consummating the Offer, the Merger or the other Transactions, and the
failure to obtain any of such consents or approvals shall not under any
circumstances constitute a "Material Adverse Effect" or "Material Adverse
Change" under this Agreement or otherwise be a basis, in any respect, for Parent
or Purchaser to terminate this Agreement.
ARTICLE VI
CONDITIONS
Section 6.1 Conditions to Each Party's Obligation to Effect
the Merger. The respective obligation of each party to effect the Merger shall
be subject to the satisfaction on or prior to the Effective Time of each of the
following conditions, any and all of which may be waived in whole or in part by
the Company, Parent or Purchaser, as the case may be, to the extent permitted by
applicable Law:
(a) this Agreement shall have been approved and
adopted by the requisite vote of the holders of Shares, if required by
applicable Law and the Certificate of Incorporation, in order to consummate the
Merger;
(b) any waiting period applicable to the Merger
under the HSR Act shall have expired or been terminated;
(c) no statute, rule, regulation, order, decree or
injunction shall have been enacted, promulgated or issued by any Governmental
Entity precluding, restraining, enjoining or prohibiting consummation of the
Merger; and
(d) Parent, Purchaser or their affiliates shall have
purchased Shares pursuant to the Offer.
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ARTICLE VII
TERMINATION
Section 7.1 Termination. This Agreement may be terminated and
the Merger contemplated herein may be abandoned at any time prior to the
Effective Time, whether before or after approval of matters presented in
connection with the Merger by the stockholders of the Company:
(a) By the mutual written consent of Parent and the
Company; provided, however, that if Parent shall have a majority of the
directors pursuant to Section 1.4, such consent of the Company may only be given
if approved by the Continuing Directors.
(b) By either of Parent or the Company if (i) a
statute, rule or executive order shall have been enacted, entered or promulgated
prohibiting the Transactions on the terms contemplated by this Agreement or (ii)
any Governmental Entity shall have issued an order, decree or ruling or taken
any other action (which order, decree, ruling or other action the parties hereto
shall use their reasonable best efforts to lift), in each case permanently
restraining, enjoining or otherwise prohibiting the Transactions and such
order, decree, ruling or other action shall have become final and
non-appealable.
(c) By either of Parent or the Company if the
Effective Time shall not have occurred on or before March 31, 1999; provided,
however, that if the Effective Time shall not have occurred by such date solely
as a result of the failure of the condition set forth in Section 6.1(c) by
reason of the entry of a preliminary injunction, this Agreement may not be
terminated pursuant to this Section 7.1(c) until June 30, 1999; provided,
further, that the party seeking to terminate this Agreement pursuant to this
Section 7.1(c) shall not have breached in any material respect its obligations
under this Agreement in any manner that shall have been the cause of, or
resulted in, the failure to consummate the Merger on or before such date;
(d) By the Company:
(i) if the Company has entered into an
agreement with respect to a Superior Proposal or has approved or
recommended a Superior Proposal in accordance with Section 5.5(b),
provided the Company has complied with all provisions thereof,
including the notice provisions therein,
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and that it simultaneously terminates this Agreement and makes
simultaneous payment to the Parent of the Termination Fee; or
(ii) if Parent or Purchaser shall have
terminated the Offer or the Offer expires without Parent or Purchaser,
as the case may be, purchasing any Shares pursuant thereto; provided
that the Company may not terminate this Agreement pursuant to this
Section 7.1(d)(ii) if the Company is in material breach of this
Agreement; or
(iii) if Parent, Purchaser or any of their
affiliates shall have failed to commence the Offer on or prior to five
business days following the date of the initial public announcement of
the Offer; provided, that the Company may not terminate this Agreement
pursuant to this Section 7.1(d)(iii) if the Company is in material
breach of this Agreement.
(iv) if there shall be a material breach by
either Parent or Purchaser of any of their representations, warranties
covenants or agreements contained in this Agreement, except where such
breach does not have a material adverse effect on the ability of Parent
or Purchaser to consummate the Offer or the Merger.
(e) By Parent or Purchaser:
(i) (A) if prior to the purchase of the
Shares pursuant to the Offer, the Board of Directors of the Company
shall have withdrawn, or modified or changed in a manner adverse to
Parent or Purchaser its approval or recommendation of the Offer, this
Agreement or the Merger or shall have recommended or approved a
Takeover Proposal; or
(B) there shall have been a material breach
of any provision of Section 5.5, Parent shall have given at least 5
days' written notice of such breach and such breach shall not have been
cured within such 5 day period; or
(ii) if due to an occurrence that if
occurring after the commencement of the Offer would result in a failure
to satisfy any of the conditions set forth in Annex A hereto, Parent or
Purchaser shall have terminated the Offer without Parent or Purchaser
purchasing any Shares thereunder, provided that Parent or Purchaser may
not terminate this Agree-
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ment pursuant to this Section 7.1(e)(ii) if Parent or Purchaser is in
material breach of this Agreement; or
(iii) if, due to an occurrence that if
occurring after the commencement of the Offer would result in a failure
to satisfy any of the conditions set forth in Annex A hereto, Parent,
Purchaser or any of their affiliates shall have failed to commence the
Offer on or prior to five business days following the date of the
initial public announcement of the Offer, provided that Parent or
Purchaser may not terminate this Agreement pursuant to Section
7.1(e)(iii) if Parent of Purchaser is in material breach of this
Agreement; or
(iv) any Person or "group" (as defined in
Section 13(d)(3) of the Exchange Act), other than Parent, Purchaser or
their affiliates or any group of which any of them is a member, shall
have acquired beneficial ownership (as determined pursuant to Rule
13d-3 promulgated under the Exchange Act) of 30% or more of the Shares;
or
(v) if there shall be a breach by the
Company of any of its representations, warranties, covenants or
agreements contained in this Agreement and such breach (without giving
effect to any limitation as to "knowledge," "materiality" or "material
adverse effect" set forth herein) individually, or together with any
other breaches, has a Material Adverse Effect on the Company.
Section 7.2 Effect of Termination. In the event of termination
of this Agreement by either the Company or Parent or Purchaser as provided in
Section 7.1, this Agreement shall forthwith become void and have no effect,
without any liability or obligation on the part of Parent, Purchaser or the
Company, other than the provisions of Section 3.21, 4.5, 5.2 (only with respect
to the last two sentences thereof), this Section 7.2 and Article VIII and except
to the extent that such termination results from the wilful and material breach
by a party of any of its representations, warranties, covenants or agreements
set forth in this Agreement.
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ARTICLE VIII
MISCELLANEOUS
Section 8.1 Fees and Expenses. (a) Except as provided below,
all fees and expenses incurred in connection with the Offer, the Merger, this
Agreement and the Transactions shall be paid by the party incurring such fees or
expenses, whether or not the Offer or the Merger is consummated; provided, that
all printing expenses related to the Offer Documents, the Schedule 14D-9 and the
Proxy Statement shall be borne by Parent.
(b) If (x) Parent or Purchaser terminates this
Agreement pursuant to Section 7.1(e)(i) or 7.1(e)(iv) or (y) the Company
terminates this Agree ment pursuant to Section 7.1(d)(i), then in each case, the
Company shall pay, or cause to be paid to Parent, at the time of termination, an
amount equal to $6,000,000 (the "Termination Fee"). In addition, if this
Agreement is terminated by Parent pursuant to Section 7.1(e)(v) (other than by
reason of a breach of Section 5.5) and at the time of such termination, Parent
is not in material breach of this Agreement, then the Company shall pay to
Parent, at the time of termination, an amount equal to Parent's and Purchaser's
actual and reasonably documented out-of-pocket expenses incurred by Parent or
Purchaser in connection with the Offer, the Merger, this Agreement and the
consummation of the Transactions, including, without limitation, the fees and
expenses payable to all banks, investment banking firms, and other financial
institutions and Persons and their respective agents and counsel incurred in
connection with acting as Parent's or Purchaser's financial advisor with respect
to, or arranging or committing to provide or providing any financing for, the
Transactions (the "Expenses") and, if the breach referred to in Section
7.1(e)(v) was a willful breach and the Company shall thereafter, within 9 months
after such termination, enter into an agreement with respect to a Takeover
Proposal, then the Company shall pay the Termination Fee (less any Expenses
previously paid by the Company to Parent pursuant to this Section 8.1(b))
concurrently with entering into any such agreement. Any payments required to be
made pursuant to this Section 8.1 shall be made by wire transfer of same day
funds to an account designated by Parent.
Section 8.2 Amendment and Modification. Subject to applicable
Law, this Agreement may be amended, modified and supplemented in any and all
respects, whether before or after any vote of the stockholders of the Company
contemplated hereby, by written agreement of the parties hereto (which in the
case of the Company shall include approvals as contemplated in Section 1.4(c)),
at any time
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prior to the Closing Date with respect to any of the terms contained herein;
provided, however, that after the approval of this Agreement by the stockholders
of the Company, no such amendment, modification or supplement shall reduce the
amount or change the form of the Merger Consideration or otherwise adversely
affect the rights of stockholders, and provided, further, that there shall be no
decrease in the amount of the Merger Consideration after consummation of the
Offer.
Section 8.3 Nonsurvival. None of the representations,
warranties, covenants and agreements in this Agreement or in any schedule,
instrument or other document delivered pursuant to this Agreement shall survive
the Effective Time. This Section 8.3 shall not limit any covenant or agreement
of the parties which by its terms contemplates performance after the Effective
Time including, without limitation, those contained in Article III and Sections
5.9, 5.10, 8.1 and 8.8 hereto, and the last two sentences of Section 5.2 hereof.
Section 8.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given upon receipt, and shall
be given to the parties at the following addresses or telecopy numbers (or at
such other address or telecopy number for a party as shall be specified by like
notice):
(a) if to Parent or Purchaser, to:
Hasbro, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Executive Vice
President
Telecopy: (000) 000-0000
with a copy to:
Hasbro, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxx 00000
Attention: Xxxxxxx X. Xxxx, Senior Vice President
and General Counsel
Telecopy: (000) 000-0000
with a copy to:
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Hasbro, Inc.
00 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Senior Vice President-Corporate
Legal Affairs and Secretary
Telecopy: (000) 000-0000
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Telecopy: 000-000-0000
(b) if to the Company, to:
Galoob Toys, Inc.
000 Xxxxxx Xxxxxxxxx
Xxxxx Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Telecopy: 000-000-0000
with a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
Telecopy: 000-000-0000
Section 8.5 Interpretation. (a) The words "hereof," "herein"
and "herewith" and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement, and article, section, paragraph, exhibit and
schedule references are to the articles, sections, paragraphs, exhibits and
schedules of this Agreement unless otherwise specified. Whenever the words
"include," "includes" or "including" are used in this Agreement they shall be
deemed to be followed by the words "without
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limitation." All terms defined in this Agreement shall have the defined meanings
contained herein when used in any certificate or other document made or
delivered pursuant hereto unless otherwise defined therein. The definitions
contained in this Agreement are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such term. Any agreement, instrument or statute defined or referred
to herein or in any agreement or instrument that is referred to herein means
such agreement, instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements and instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns.
(b) The phrases "the date of this Agreement,"
"the date hereof" and terms of similar import, unless the context otherwise
requires, shall be deemed to refer to September 27, 1998. The phrase "made
available" in this Agreement shall mean that the information referred to has
been actually delivered to the party to whom such information is to be made
available.
(c) The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the authorship of any
provisions of this Agreement.
Section 8.6 Counterparts. This Agreement may be executed in
two or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 8.7 Entire Agreement; No Third Party Beneficiaries;
Rights of Ownership. This Agreement and the Confidentiality Agreement (including
the documents and the instruments referred to herein and therein): (a)
constitute the entire agreement and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, and (b) except as provided in Section 5.9 are not
intended to confer upon any Person other than the parties hereto any rights or
remedies hereunder.
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Section 8.8 Governing Law. This Agreement shall be governed by
and construed in accordance with the Laws of the State of Delaware without
giving effect to the principles of conflicts or choice of law thereof or of any
other jurisdiction.
Section 8.9 Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any of the
parties hereto (whether by operation of Law or otherwise) without the prior
written consent of the other parties, except that Purchaser may assign, in its
sole discretion, any or all of its rights, interests and obligations hereunder
to Parent or to any direct or indirect wholly owned Subsidiary of Parent,
provided that Parent shall remain primarily responsible for the obligations of
Purchaser or any other Subsidiary of Parent, and any of their permitted assigns.
Subject to the preceding sentence, this Agreement will be binding upon, inure to
the benefit of and be enforceable by the parties and their respective successors
and assigns.
Section 8.10 Enforcement. The parties agree that irreparable
damage would occur in the event that any of the provisions of this Agreement
were not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions of this Agreement in any court of the
United States located in the State of Delaware or in Delaware state court, this
being in addition to any other remedy to which they are entitled at law or in
equity. In addition, each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any Federal court located in the State of Delaware
or any Delaware state court in the event any dispute arises out of this
Agreement or any of the Transactions, (b) agrees that it will not attempt to
deny or defeat such personal jurisdiction by motion or other request for leave
from any such court and (c) agrees that it will not bring any action relating to
this Agreement or any of the Transactions in any court other than a Federal or
state court sitting in the State of Delaware.
Section 8.11 Extension; Waiver. At any time prior to the
Effective Time, the parties may (a) extend the time for the performance of any
of the obligations or other acts of the other parties, (b) waive any
inaccuracies in the representations and warranties of the other parties
contained in this Agreement or in any document delivered pursuant to this
Agreement or (c) subject to the proviso of Section 8.2, waive compliance by the
other parties with any of the agreements or conditions contained in this
Agreement. Any agreement on the part of a party to any
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such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. The failure of any party to this
Agreement to assert any of its rights under this Agreement or otherwise shall
not constitute a waiver of those rights.
Section 8.12 Procedure for Termination, Amendment, Extension
or Waiver. A termination of this Agreement pursuant to Section 7.1, an amendment
of this Agreement pursuant to Section 8.2 or an extension or waiver pursuant to
Section 8.11 shall, in order to be effective, require in the case of Parent,
Purchaser or the Company, action by its Board of Directors or the duly
authorized designee of its Board of Directors; provided, however, that in the
event that Parent's designees are appointed or elected to the Board of Directors
of the Company as provided in Section 1.4, after the acceptance for payment of
Shares pursuant to the Offer and prior to the Effective Time, except as
otherwise contemplated by this Agreement the affirmative vote of a majority of
the Continuing Directors of the Company shall be required by the Company to
amend this Agreement by the Company.
Section 8.13 Certain Undertakings of Parent. Parent shall be
responsible for the performance of, and, if necessary, shall perform, or cause
to be performed any obligation of Purchaser or the Surviving Corporation, or
either of their permitted successors and assigns under this Agreement.
Section 8.14 Definitions. For purposes of this Agreement:
"Affiliate" has the meaning set forth in Rule 12b-2 of the Exchange
Act.
"Benefit Plans" has the meaning assigned thereto in Section 3.10.
"By-laws" means the by-laws of the Company as in effect on the date of
this Agreement.
"Certificate of Incorporation" means the certificate of incorporation
of the Company as in effect on the date of this Agreement.
"Certificate of Merger" has the meaning assigned thereto in Section
1.6.
"Certificates" has the meaning assigned thereto in Section 2.2.
"Closing" has the meaning assigned thereto in Section 1.7.
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"Closing Date" has the meaning assigned thereto in Section 1.7.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means Galoob Toys, Inc., a Delaware corporation.
"Company Disclosure Schedule" has the meaning assigned thereto in
Article III.
"Company Material Contract" has the meaning assigned thereto in Section
3.16.
"Company's SEC Documents" has the meaning assigned thereto in Section
3.5.
"Computer Programs" means:
(i) any and all computer software programs, including all
source and object code,
(ii) databases and compilations, including any and all
data and collections of data, whether machine
readable or otherwise,
(iii) billing, reporting, and other management information
systems,
(iv) all descriptions, flow-charts and other work product
used to design, plan, organize and develop any of the
foregoing,
(v) all content contained on any Internet site(s), and
(vi) all documentation, including user manuals and
training materials, relating to any of the
foregoing.
"Company Rights Agreement" means the Preferred Stock Rights Agreement,
dated as of January 17, 1990, by and between the Company and Mellon Securities
Trust Company.
"Confidentiality Agreement" has the meaning assigned thereto in Section
5.2.
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"Continuing Director" means (i) any member of the Board of Directors of
the Company as of the date hereof, or (ii) any successor of a Continuing
Director who is (A) unaffiliated with, and not a designee or nominee, of Parent
or Purchaser, and (B) recommended to succeed a Continuing Director by a majority
of the Continuing Directors then on the Board of Directors of the Company, and
in each case under clauses (i) and (ii), who is not an employee of the Company.
"Defect" means a defect or impurity of any kind, whether in design,
manufacture, processing, or otherwise, including, without limitation, any
dangerous propensity associated with any reasonably foreseeable use of a
Product, or the failure to warn of the existence of any defect, impurity, or
dangerous propensity.
"DGCL" means the Delaware General Corporation Law, as in effect on the
date of this Agreement and as amended from time to time.
"Dissenting Shares" has the meaning assigned thereto in Section 2.5.
"Dissenting Stockholders" has the meaning assigned thereto in Section
2.5.
"Effective Time" has the meaning assigned thereto in Section 1.6.
"Environmental Laws" means all applicable foreign, Federal, state and
local Laws relating to pollution or protection of human health, safety and the
environment, including, without limitation, Laws relating to Releases or
threatened Releases of Hazardous Materials into the indoor or outdoor
environment (including, without limitation, ambient air, surface water,
groundwater, land, surface and subsurface strata) or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, Release,
transport or handling of Hazardous Materials, and all Laws and regulations with
regard to record keeping, notification, disclosure and reporting requirements
respecting Hazardous Materials, and all Laws relating to endangered or
threatened species of fish, wildlife and plants and the management or use of
natural resources, provided, however, that the above definition does not include
the Occupational Safety and Health Act, 29 U.S.C.A. Section 651.
"Environmental Liabilities and Costs" means all liabilities,
obligations, responsibilities, obligations to conduct cleanup, losses, damages,
deficiencies, punitive damages, consequential damages, treble damages, costs and
expenses (including, without limitation, all reasonable fees, disbursements and
expenses of counsel, expert and consulting fees and costs of investigations and
feasibility studies
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and responding to government requests for information or documents), fines,
penalties, restitution and monetary sanctions or interest resulting from any
claim or demand, by any Person or entity under any Environmental Law, or arising
from the Release or threatened Release of Hazardous Materials by the Company
into the environment.
"ERISA" has the meaning assigned thereto in Section 3.10.
"ERISA Affiliate" has the meaning assigned thereto in Section 3.10.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expenses" has the meaning assigned thereto in Section 8.1.
"Fee Properties" means all real property and interests in real property
owned in fee by the Company or one of its Subsidiaries.
"GAAP" has the meaning assigned thereto in Section 3.5.
"Galco" has the meaning assigned thereto in Section 5.10.
"Governmental Entity" means any (i) nation, state, county, city, town,
village, district, or other jurisdiction of any nature; (ii) federal, state,
local, municipal, foreign or other government; (iii) governmental or
quasi-governmental authority of any nature (including any governmental agency,
branch, department, official, or entity and any court or other tribunal); or
(iv) body exercising, or entitled to exercise any administrative, executive,
judicial, legislative, police, regulatory, or taxing authority or power of any
nature.
"Hazardous Materials" means all substances defined as hazardous
substances in the National Oil and Hazardous Substances Pollution Contingency
Plan, 40 C.F.R. Section 300.5, or substances defined as hazardous substances,
hazardous materials, toxic substances, hazardous wastes, pollutants or
contaminants, under any Environmental Law, or substances regulated under any
Environmental Law, including, but not limited to, petroleum (including crude oil
or any fraction thereof), asbestos, and polychlorinated biphenyls.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
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"Indemnified Parties" has the meaning assigned thereto in Section 5.9.
"Indemnified Liabilities" has the meaning assigned thereto in Section
5.9.
"Knowledge" or "knowledge" means, with respect to the Company and/or
any Subsidiary thereof, knowledge of the President, Chief Financial Officer and
any Executive Vice President of the Company after reasonable investigation and
inquiry commensurate with that of a reasonable person holding such a position
with a public company.
"Laws" means any administrative order, constitution, law, ordinance,
principle of common law, rule, regulation, statute, treaty, judgment, decree,
license or permit enacted, promulgated, issued, enforced or entered by any
Governmental Entity.
"Leased Properties" means all real property and interests in real
property leased by the Company or one of its Subsidiaries.
"Licenses" has the meaning assigned thereto in Section 3.14 hereof.
"Lien" means any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, lien, mortgage, pledge,
reservation, restriction, security interest, title retention or other security
arrangement, or any adverse right or interest, charge or claim of any nature
whatsoever of, on, or with respect to any asset, property or property interest.
"Lucasfilm Ltd. Warrants" has the meaning assigned thereto in Section
3.3.
"Xxxxx Licensing Ltd. Warrants" has the meaning assigned thereto in
Section 3.3.
"Material Adverse Change" or "Material Adverse Effect" means, when used
in connection with the Company or Parent, any change or effect (or any
development that, insofar as can reasonably be foreseen, is likely to result in
any change or effect) that is materially adverse to the business, properties,
assets, financial condition or results of operations of such party and its
Subsidiaries taken as a whole (except for any such change or effect that (i) is
caused by or otherwise results from conditions affecting the United States or
world economy as a whole, (ii) is caused by or otherwise results from changes
in general political or regulatory conditions in the United
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States or any foreign jurisdiction in which the Company conducts business, (iii)
affects generally the industry in which the Company competes or (iv) arises as a
result of the announcement or pendency of the Offer or the Merger).
"Merger" has the meaning assigned thereto in Section 1.5.
"Merger Consideration" has the meaning assigned thereto in Section 2.1.
"Minimum Condition" has the meaning assigned thereto in Annex A.
"Occurrence" means any accident, happening or event which is caused or
allegedly caused by any alleged hazard or alleged defect in manufacture, design,
materials or workmanship including, without limitation, any alleged failure to
warn or any breach of express or implied warranties or representations with
respect to, or any such accident, happening or event otherwise involving, a
product (including any parts or components) which results or is alleged to have
resulted in injury or death to any person or damage to or destruction of
property, or other consequential damages, at any time.
"Offer" has the meaning assigned thereto in Section 1.1.
"Offer Documents" has the meaning assigned thereto in Section 1.3.
"Offer Price" has the meaning assigned thereto in Section 1.1.
"Offer to Purchase" has the meaning assigned thereto in Section 1.1.
"Option Plans" has the meaning assigned thereto in Section 2.4.
"Option" has the meaning assigned thereto in Section 2.4.
"Other Intellectual Property" shall mean all intellectual property
rights used in the business of the Company or any of its Subsidiaries as
currently conducted, including but not limited to all patents and patent
applications; copyrights, copyright registrations and applications (including
copyrights in Computer Programs); Computer Programs; technology, trade secrets,
know-how, confidential information, proprietary processes and formulae;
"semiconductor chip product" and "mask works" (as such terms are defined in 17
U.S.C. 901); and rights of publicity and privacy relating to the use of the
names, signatures, likenesses, voices and biographical
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information of real persons; together with any and all rights of renewal thereof
and the right to xxx for past, present or future infringements or
misappropriations thereof.
"Paying Agent" has the meaning assigned thereto in Section 2.2.
"Parent" means Hasbro, Inc., a Rhode Island Corporation.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permit" means any Federal, state, local and foreign governmental
approval, authorization, certificate, filing, franchise, license, notice, permit
or right.
"Person" means an individual, corporation, partnership, joint venture,
association, joint stock company, limited liability company, labor union,
estate, trust, unincorporated organization or other entity, including any
Governmental Entity.
"Preferred Shares" has the meaning assigned thereto in Section 3.3.
"Preferred Stock Purchase Rights" shall mean the preferred stock
purchase rights issued pursuant to the Company Rights Agreement.
"Product" means any product designed, manufactured, shipped, sold,
marketed, distributed and/or otherwise introduced into the stream of commerce
by or on behalf of the Company or any of its past or present Subsidiaries.
"Proxy Statement" has the meaning assigned thereto in Section 5.3.
"Purchaser" means New HIAC II Corp., a Delaware corporation.
"Real Property" means the Leased Properties and the Fee Properties.
"Recalls" has the meaning assigned thereto in Section 3.18
"Release" means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment (including, without limitation,
ambient air, surface water, groundwater, and surface or subsurface strata) or
into or out of any property of any Hazardous Material, including the movement of
Hazardous Materials through or in the air, soil, surface water, groundwater or
property.
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"Representative" means, with respect to any Person, such Person's
officers, directors, employees, agents and representatives (including any
investment banker, financial advisor, accountant, legal counsel, agent,
representative or expert retained by or acting on behalf of such Person or its
Subsidiaries).
"Schedule 14D-1" has the meaning assigned thereto in Section 1.3.
"Schedule 14D-9" has the meaning assigned thereto in Section 1.3.
"SEC" means the United States Securities and Exchange Commission or any
successor agency.
"SEC Documents" means reports, proxy statements, forms, and other
documents required to be filed with the SEC under the Securities Act and the
Exchange Act, including any schedules and exhibits thereto.
"Secretary of State" has the meaning assigned thereto in Section 1.6.
"Section 203 Approval" has the meaning assigned thereto in Section 1.2.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Preferred Shares" has the meaning assigned thereto in Section
3.3.
"Shares" has the meaning assigned thereto in the recitals.
"Significant Subsidiaries" has the meaning assigned thereto in Rule
1-02 of Regulation S-X of the SEC.
"Special Meeting" has the meaning assigned thereto in Section 5.3.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, joint venture or other entity, whether incorporated or
unincorporated, of which such Person or any other Subsidiary of such Person (i)
owns, directly or indirectly, 50% or more of the outstanding voting securities
or equity interests, (ii) is entitled to elect at least a majority of the Board
of Directors or similar governing body, or (iii) is a general partner (excluding
such partnerships where such Person or any Subsidiary of such Person do not have
a majority of the voting interests in such partnership).
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"Superior Proposal" means an unsolicited Takeover Proposal on terms
which the Board of Directors of the Company determines in good faith to be more
favorable to the Company's stockholders than the Offer and the Merger (based on
advice of the Company's independent financial advisor that the value of the
consideration provided for in such proposal is superior to the value of the
consideration provided for in the Offer and the Merger), for which financing, to
the extent required, is then committed or which, in the good faith reasonable
judgment of the Board of Directors of the Company, based on advice from the
Company's independent financial advisor, is reasonably capable of being financed
by such Third Party and which, in the good faith reasonable judgment of the
Board of Directors of the Company, is reasonably likely to be consummated within
a period of time not materially longer in duration that the period of time
reasonably believed to be necessary to consummate the Offer and the Merger.
"Surviving Corporation" has the meaning assigned thereto in Section
1.5.
"Takeover Proposal" means any bona fide proposal or offer, whether in
writing or otherwise, from any Person other than Parent, Purchaser or any
affiliates thereof (a "Third Party") to acquire beneficial ownership (as defined
under Rule 13(d) of the Exchange Act) of all or a material portion of the assets
of the Company and its Subsidiaries on a consolidated basis or 30% or more of
any class of equity securities of the Company pursuant to a merger,
consolidation or other business combination, sale of shares of capital stock,
sale of assets, tender offer, exchange offer or similar transaction with respect
to the Company including any single or related multi-step transaction or series
of related transactions, which is structured to permit such Third Party to
acquire beneficial ownership of any material portion of the assets of or 30% or
more of the equity interest in the Company.
"Tax" or "Taxes" mean all taxes, charges, fees, levies, penalties or
other assessments imposed by any federal, state, local or foreign Taxing
Authority including but not limited to net income, gross income, receipts,
windfall profit, severance, property, production, sales, use, license, excise,
franchise, employment, payroll, withholding, alternative or add-on minimum, ad
valorem, transfer, stamp or environmental tax, or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any Governmental Entity.
"Taxing Authority" shall mean a governmental authority or any
subdivision, agency, commission or authority thereof, any judicial body, or any
quasi-governmen-
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tal or private body having jurisdiction over the assessment, determination,
collection or imposition of any Tax (including, without limitation, the Internal
Revenue Service).
"Tax Returns" mean all returns, reports, or statements required to be
filed with any Governmental Entity with respect to any Tax (including any
attachments thereto), including, without limitation, any consolidated, unitary
or similar return, information return, claim for refund, amended return or
declaration of estimated Tax.
"Termination Fee" has the meaning assigned thereto in Section 8.1.
"Third Party" has the meaning assigned thereto in this Section 8.14
under "Takeover Proposal."
"Trademarks" shall mean all United States and foreign trademarks
(including service marks and trade names, whether registered or at common law),
registrations and applications therefor, owned or licensed by the Company or its
Subsidiaries, and the goodwill of the Company's and each of its Subsidiaries'
respective businesses associated therewith, together with any and all (i) rights
of renewal thereof and (ii) rights to xxx for past, present and future
infringements or misappropriation thereof.
"Transactions" has the meaning assigned thereto in Section 1.2.
"Transfer Taxes" has the meaning assigned thereto in Section 5.7.
"Warrants" means collectively the Lucasfilm Ltd. Warrants and the Xxxxx
Licensing Ltd. Warrants.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
HASBRO, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
______________________________________________
Name: Xxxxxx X. Xxxxxxxxxx
Title: Executive Vice President and President
- Global Operations
NEW HIAC II CORP.
By: /s/ Xxxxxx X. Xxxxxxxxxx
______________________________________________
Name: Xxxxxx X. Xxxxxxxxxx
Title: Executive Vice President and President
- Global Operations
GALOOB TOYS, INC.
By: /s/ Xxxx X. Xxxxxxx
______________________________________________
Name: Xxxx X. Xxxxxxx
Title: President and Chief Executive Officer
