EXHIBIT (C)(1)
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PROJECT GOLDEN GATE
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
ELSEVIER SCIENCE INC.
GOLDEN GATE ACQUISITION CORP.
AND
MDL INFORMATION SYSTEMS, INC.
DATED AS OF MARCH 23, 1997
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "AGREEMENT") is made and entered into
as of this 23rd day of March, 1997, by and among Elsevier Science Inc., a New
York corporation ("PARENT"), Golden Gate Acquisition Corp., a Delaware
corporation and a wholly-owned subsidiary of Parent ("PURCHASER"), and MDL
Information Systems, Inc., a Delaware corporation (the "COMPANY").
RECITALS
A. The Boards of Directors of Parent, Purchaser and the Company have each
unanimously approved the terms and conditions of a merger of Purchaser with
and into the Company (the "MERGER") upon the terms and subject to the
conditions set forth herein.
B. Pursuant to the Merger, Purchaser will acquire each issued and
outstanding share of Common Stock of the Company at a price of $32 net per
Share (as defined below) to the seller in cash and without interest thereon
(the "OFFER PRICE"). In order to accomplish the Merger, Purchaser shall first
commence a tender offer (the "OFFER") by Purchaser under Section 14(d)(1) of
the Securities and Exchange Act of 1934, as amended (the "EXCHANGE ACT"), to
purchase all outstanding shares of the Common Stock, par value $0.01 per
share, of the Company (shares of the Common Stock are referred to herein as
the "SHARES").
C. The Board of Directors of the Company has unanimously resolved to
recommend the acceptance of the Offer and approval of the Merger to the
holders of Shares and 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
that the Offer and the Merger are in the best interests of the holders of such
Shares.
NOW, THEREFORE, intending to be legally bound hereby, the parties agree as
follows:
ARTICLE I
THE TENDER OFFER
1.1 THE OFFER.
(a) Provided that this Agreement shall not have been terminated pursuant to
Section 7.1, Purchaser shall, and Parent shall cause Purchaser to, within five
business days after the public announcement (on the date hereof or the
following day) of the execution of this Agreement commence (within the meaning
of Rule 14d-2 under the Exchange Act) the Offer at the Offer Price.
(b) The obligations of Purchaser to consummate the Offer and to accept for
payment and pay for any of the Shares tendered shall be subject to the
conditions set forth on Annex I, including that a majority of the Shares
outstanding on a fully diluted basis (including for purposes of such
calculation all Shares issuable upon exercise of all vested and unvested stock
options, and conversion of convertible securities or other rights to purchase
or acquire Shares) being validly tendered and not withdrawn prior to the
expiration of the Offer (the "MINIMUM CONDITION"). The per Share amount shall
be net to the seller in cash, upon the terms and subject to the conditions of
the Offer and subject to reduction for any applicable federal back-up or other
applicable withholding or stock transfer taxes. The Offer shall remain open
until 12:00 Midnight, New York City time, on April 24, 1997 (twenty (20)
business days following the commencement of the Offer). As used in this
Agreement, the "EXPIRATION DATE" means 12:00 Midnight, New York City time, on
April 24, 1997, unless Purchaser extends the Offer as permitted by this
Agreement, in which case the "Expiration Date" means the latest time and date
to which the Offer is extended.
(c) Purchaser expressly reserves the right to waive any conditions to the
Offer (other than the condition set forth in clause (ii) or (iii)(D) of Annex
I), to increase the price per Share payable in the Offer, to extend the
duration of the Offer, or to make any other changes in the terms and
conditions of the Offer; provided, however, that no such change may be made
which decreases the price per Share payable in the Offer, reduces the maximum
number of Shares to be purchased in the Offer, imposes conditions to the Offer
in addition to those set forth in Annex I or amends any other material terms
of the Offer in a manner materially adverse to the Company's stockholders, and
provided, further, that the Offer may not, without the Company's prior written
consent, be extended beyond May 31, 1997 except as necessary to provide time
to satisfy the conditions set forth in Annex I, and except that Purchaser may
extend the Offer for up to 10 business days, if as of such date, there shall
not have been tendered at least ninety percent (90%) of the outstanding Shares
so that the Merger could be effected without a meeting of the Company's
stockholders in accordance with applicable provisions of the Delaware General
Corporation Law ("DGCL") .
(d) 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 I. Concurrently with the commencement of the Offer, Parent
and Purchaser shall file with the Securities and Exchange Commission (the
"SEC") a tender offer statement on Schedule 14D-1 reflecting the Offer
(together with all exhibits, amendments and supplements thereto, the "SCHEDULE
14D-1"). The Schedule 14D-1 will contain or will incorporate by reference the
Offer to Purchase (or portions thereof) and forms of the related letter of
transmittal and summary advertisements (which Schedule 14D-1, Offer to
Purchase and other documents, together with any supplements or amendments
thereto, are referred to herein collectively as the "OFFER DOCUMENTS"). The
Company and its counsel shall be given a reasonable opportunity to review and
comment on the Offer Documents prior to their filing with the SEC or
dissemination to the stockholders of the Company. Parent and Purchaser agree
to provide the Company and its counsel with any comments which Parent,
Purchaser or their counsel may receive from the SEC or the staff of the SEC
with respect to such documents promptly after receipt thereof. Upon the terms
and subject to the conditions of the Offer (including, if the Offer is
extended or amended, the terms and conditions of any such extension or
amendment), Purchaser will purchase by accepting for payment and will pay for
Shares validly tendered and not properly withdrawn, as promptly as practicable
after the Expiration Date. Parent, Purchaser and the Company agree promptly to
correct any information provided by any of them for use in the Offer Documents
that shall have become false or misleading, and Parent and Purchaser further
agree to take all steps necessary to cause the Schedule 14D-1 as so corrected
to be filed with the SEC and the other Offer Documents as so corrected to be
disseminated to the holders of Shares, in each case as and to the extent
required by applicable federal securities laws. The Offer Documents will, on
the date filed and on the date first published, sent or given to the Company's
stockholders, comply in all material respects with all provisions of
applicable federal securities laws and the rules and regulations promulgated
thereunder.
1.2 COMPANY ACTION.
(a) The Company hereby approves of and consents to the Offer and represents
and warrants that (i) its Board of Directors has unanimously (A) determined
that this Agreement and the transactions contemplated hereby, including each
of the Offer and the Merger, are fair to and in the best interests of the
holders of the Shares, (B) approved and adopted this Agreement and the
transactions contemplated hereby and (C) resolved to recommend that the
stockholders of the Company accept the Offer and approve and adopt this
Agreement and the transactions contemplated hereby and thereby (provided,
however, that subject to the provisions of Section 5.4 such recommendation may
be withdrawn, modified or amended in connection with a Superior Proposal (as
defined in Section 5.4)) and (ii) ▇▇▇▇▇▇▇ ▇▇▇▇▇ and Co. ("▇▇▇▇▇▇▇ ▇▇▇▇▇") has
rendered to the Board of Directors of the Company its opinion (which opinion
is permitted to be included in writing in the Schedule 14D-9 (as defined in
Section 1.2(b)), to the effect that the consideration to be received by the
holders of Shares pursuant to each of the Offer and the Merger is fair to the
holders of Shares. The Company hereby consents to the inclusion in the Offer
Documents of the recommendation of the Company's Board of Directors described
in the first sentence of this Section 1.2(a), and has obtained the consent of
▇▇▇▇▇▇▇ ▇▇▇▇▇ to the inclusion in the Schedule 14D-9 of a copy of the written
opinion referred to in clause (ii) above.
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(b) The Company shall file with the SEC, concurrently, or promptly
thereafter on the same day, with the filing by Parent and Purchaser of the
Schedule 14D-1, a Solicitation/Recommendation Statement on Schedule 14D-9
under the Exchange Act relating to the Offer (together with all exhibits,
amendments and supplements thereto as well as the Information Statement
required pursuant to Section 14(f) under the Exchange Act, collectively the
"SCHEDULE 14D-9"), which shall contain the recommendation of the Company's
Board of Directors described in Section 1.2(a), and shall disseminate the
Schedule 14D-9 as required by Rule 14d-9 promulgated under the Exchange Act.
The Schedule 14D-9, and each amendment thereto, will, on the date filed,
comply in all material respects with the provisions of applicable federal
securities laws. The Company, Parent and Purchaser agree promptly to correct
any information provided by any of them for use in the Schedule 14D-9 that
shall have become false or misleading, and the Company further agrees to take
all steps necessary to cause the Schedule 14D-9 as so corrected to be filed
with the SEC and the Schedule 14D-9 as so corrected to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Parent and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 in the form in which
such document is originally filed with the SEC, and all amendments and
supplements thereto, prior to the time at which such documents and all
documents related thereto are filed with the SEC. The Company shall provide
Purchaser and its counsel with any comments the Company or its counsel may
receive from the SEC with respect to the Schedule 14D-9 promptly after receipt
of such comments.
(c) The Company currently believes that all of its directors and executive
officers, intend to tender all outstanding Shares beneficially owned by such
person to Purchaser pursuant to the Offer unless to do so would subject such
person to liability under Section 16(b) of the Exchange Act.
(d) The Company shall promptly furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and
security position listings of Shares held in stock depositories, each of a
recent date, and shall promptly furnish Purchaser with such additional
information, including updated lists of stockholders, mailing labels and
security position listings, and such other assistance as Parent, Purchaser or
their agents may reasonably request in connection with communicating the Offer
and any amendments or supplements thereto to the Company's stockholders.
Subject to the requirements of applicable laws and except for such steps as
are necessary to disseminate the Offer Documents and any other documents
necessary to consummate the Merger, Parent and Purchaser (and their agents)
shall hold in confidence the information contained in any of such labels and
lists and, if this Agreement shall be terminated, will upon request, promptly
deliver to the Company or destroy all copies of such information then in their
possession or control.
1.3 DIRECTORS. Promptly upon the acquisition by Purchaser pursuant to the
Offer of such number of Shares which satisfies the Minimum Condition and from
time to time thereafter, Parent shall be entitled to designate a majority of
the members of the Company's Board of Directors, subject to compliance with
Section 14(f) of the Exchange Act. The Company shall, upon request by ▇▇▇▇▇▇,
promptly increase the size of the Board of Directors to the extent permitted
by its Certificate of Incorporation and/or secure the resignations of such
number of directors as is necessary to enable Parent's designees to be elected
to the Board of Directors and shall cause Parent's designees to be so elected.
The Company shall take, at its expense, all action necessary to effect any
such election, including mailing to its stockholders the information required
by Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder in
form and substance reasonably satisfactory to Parent and its counsel.
Following the election or appointment of ▇▇▇▇▇▇'s designees pursuant to this
Section 1.3 and prior to the Effective Time, any amendment or termination of
this Agreement, extension for the performance or waiver of the obligations or
other acts of Parent or Purchaser or waiver of the Company's rights hereunder,
shall require the concurrence of a majority of the Company's directors (or the
concurrence of the director, if there is only one remaining) then in office
who are directors on the date hereof, or are directors (other than directors
designated by Parent in accordance with this Section 1.3) designated by such
persons to fill any vacancy (the "CONTINUING DIRECTORS").
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ARTICLE II
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions hereof and in
accordance with the DGCL, Purchaser shall be merged with and into the Company
as soon as practicable following the satisfaction or waiver, if permissible,
of the conditions set forth in Article VI of this Agreement. Following the
Merger, the Company shall continue as the surviving corporation (the
"SURVIVING CORPORATION") and the separate corporate existence of Purchaser
shall cease. At the election of Parent or Purchaser, any direct or indirect
wholly-owned subsidiary of Parent incorporated under the laws of the State of
Delaware may be substituted for Purchaser as a constituent corporation in the
Merger. As used herein, the term "PURCHASER" shall, upon such substitution,
refer to any such substituted corporation.
2.2 EFFECTIVE TIME. The Merger shall be consummated by and shall be
effective at the time there has been filed as provided by Section 2.13 with
the Delaware Secretary of State a certificate or agreement of merger in such
form as is required by, and executed in accordance with, the relevant
provisions of the DGCL, and such other documents as may be required by the
provisions of the DGCL. The time of such filing is referred to as the
"EFFECTIVE TIME."
2.3 EFFECTS OF THE MERGER. The Merger shall have the effects set forth in
applicable sections of the DGCL. As of the Effective Time, the Company shall
be a wholly-owned subsidiary of Parent.
2.4 CERTIFICATE OF INCORPORATION. The Certificate of Incorporation of the
Surviving Corporation shall be amended to contain the substantive provisions
of the Certificate of Incorporation of the Purchaser as in effect at the
Effective Time.
2.5 BYLAWS. The Bylaws of Purchaser, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation, until
thereafter duly amended in accordance with applicable law.
2.6 DIRECTORS. The directors of Purchaser immediately prior to the Effective
Time shall be the initial directors of the Surviving Corporation and will hold
office from the Effective Time until their respective successors are duly
elected or appointed and qualified in the manner provided in the Certificate
of Incorporation and Bylaws of the Surviving Corporation, as such instruments
may be amended from time to time, either before or after the Effective Time,
or as otherwise provided by law.
2.7 OFFICERS. The officers of the Purchaser immediately prior to the
Effective Time shall be the initial officers of the Surviving Corporation.
Such officers of the Surviving Corporation will hold office from the Effective
Time until their respective successors are duly elected or appointed and
qualified in the manner provided in the Certificate of Incorporation and
Bylaws of the Surviving Corporation, as such instruments may be amended from
time to time, either before or after the Effective Time, or as otherwise
provided by law.
2.8 CONVERSION OF SHARES.
At the Effective Time, by virtue of the Merger and without any action on the
part of Parent, Purchaser, the Company or the holders of the Shares:
(i) Each Share issued and outstanding immediately prior to the Effective
Time (other than Shares held, directly or indirectly, by Parent, Purchaser,
the Company or any of their majority-owned subsidiaries, and any Dissenting
Shares (as defined in Section 2.9)) shall automatically be canceled and
extinguished and be converted into the right to receive $32, or such higher
amount per Share as is paid pursuant to the Offer (the "MERGER
CONSIDERATION"), in cash, without interest thereon.
(ii) Each Share issued and outstanding immediately prior to the Effective
Time which is owned or held, directly or indirectly, by Parent, Purchaser,
the Company or any of their majority-owned subsidiaries
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shall be canceled and extinguished and cease to exist, without any
conversion thereof, and no payment shall be made with respect thereto.
(iii) Each holder (other than holders referred to in Section 2.8(a)(ii))
of a certificate representing any Shares shall after the Effective Time
cease to have any rights with respect to such Shares, except either to
receive the Merger Consideration upon surrender of such certificate, or to
exercise such holder's appraisal rights as provided in Section 2.9 and the
DGCL.
(iv) Each share of Common Stock of Purchaser issued and outstanding
immediately prior to the Effective Time shall, by virtue of the Merger and
without any action on the part of the holder thereof, be converted into and
thereafter represent one validly issued, fully paid and nonassessable share
of Common Stock of the Surviving Corporation.
2.9 DISSENTING SHARES. Notwithstanding anything in this Agreement to the
contrary, Shares which are outstanding immediately prior to the Effective Time
and which are held by a holder who has not voted in favor of the Merger or
consented thereto in writing and who has demanded appraisal for such Shares in
accordance with Section 262 of the DGCL ("DISSENTING SHARES") shall not be
converted into a right to receive the Merger Consideration pursuant to Section
2.8, but the holders of Dissenting Shares shall instead be entitled to receive
such consideration as shall be determined pursuant to Section 262 of the DGCL;
provided, however, that if any such holder shall have failed to perfect or
shall withdraw or lose such holder's right of appraisal and payment under the
DGCL, such holder's Shares shall be treated as if they had been converted as
of the Effective Time into the right to receive the Merger Consideration,
without interest thereon, as provided in Section 2.8, and such Shares shall no
longer be Dissenting Shares. The Company shall give Parent and Purchaser
prompt notice of any demands received by the Company for appraisal of Shares,
and of any withdrawals of demands for appraisal, or of any other instruments
served pursuant to Section 262 of the DGCL and received by the Company. Prior
to the Effective Time, Parent and Purchaser shall have the right to
participate in all negotiations and proceedings with respect to such demands
for appraisal. Prior to the Effective Time, the Company shall not, except with
the prior written consent of ▇▇▇▇▇▇ and Purchaser, make any payment with
respect to, or settle or offer to settle, any such demands. Each holder of
Dissenting Shares shall have only such rights and remedies as are granted to
such holder under Section 262 of the DGCL.
2.10 PAYMENT FOR SHARES.
(a) Prior to the Effective Time, Purchaser shall select and appoint a bank
to act as agent for the holders of Shares (the "PAYING AGENT") to receive and
disburse the Merger Consideration to which holders of Shares shall become
entitled pursuant to Section 2.8. At the Effective Time, Purchaser or Parent
shall provide the Paying Agent with sufficient cash to allow the Merger
Consideration to be paid by the Paying Agent for each Share then entitled to
receive the Merger Consideration.
(b) As soon as practicable after the Effective Time, Purchaser or Parent
shall cause the Paying Agent to mail to each record holder of a certificate or
certificates representing Shares which as of the Effective Time represents the
right to receive the Merger Consideration (the "CERTIFICATES"), a form of
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the Certificates shall pass, only upon proper
delivery of the Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the Certificates for payment therefor. Upon
surrender to the Paying Agent of a Certificate, together with such letter of
transmittal duly executed and completed in accordance with the instructions
thereto, and such other documents as may be requested, the holder of such
Certificate shall be entitled to receive in exchange therefor the Merger
Consideration and such Certificate shall forthwith be canceled. No interest
shall be paid or accrued on the Merger Consideration upon the surrender of the
Certificates. Until surrendered in accordance with the provisions of this
Section, each Certificate shall be deemed for all purposes to evidence only
the right to receive the Merger Consideration (without interest thereon), and
shall, subject to Section 2.9, have no other right.
(c) If the Merger Consideration (or any portion thereof) is to be delivered
to a person other than the person in whose name the Certificates surrendered
in exchange therefor are registered, it shall be a condition to the
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payment that the Certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the person requesting such
payment or delivery shall pay any transfer or other taxes payable by reason of
the foregoing or establish to the satisfaction of the Surviving Corporation
that such tax has been paid or is not applicable. Notwithstanding the
foregoing, neither the Paying Agent nor any party hereto shall be liable to a
holder of Shares for any Merger Consideration delivered to a public official
pursuant to applicable abandoned property, escheat and similar laws.
(d) Promptly following the date that is six months after the Effective Date,
the Paying Agent shall return to the Surviving Corporation all Merger
Consideration and other cash, property and instruments in its possession
relating to the transactions described in this Agreement, and the Paying
Agent's duties shall terminate. Thereafter, each holder of a Certificate
formerly representing a Share may surrender such Certificate to the Surviving
Corporation and (subject to applicable abandoned property, escheat and similar
laws) receive in exchange therefor the Merger Consideration (without interest
thereon). Notwithstanding the foregoing, the Surviving Corporation shall be
entitled to receive from time to time all interest or other amounts earned
with respect to any cash deposited with the Paying Agent as such amounts
accrue or become available.
2.11 NO FURTHER RIGHTS OR TRANSFERS. At and after the Effective Time the
holders of Certificates to be exchanged for the Merger Consideration pursuant
to this Agreement shall cease to have any rights as to stockholders of the
Company except for the right to surrender such holder's Certificates in
exchange for payment of the Merger Consideration, and after the Effective Time
there shall be no transfers on the stock transfer books of the Surviving
Corporation of the Shares which were outstanding immediately prior to the
Effective Time. Any Certificates formerly representing Shares presented to the
Surviving Corporation or Paying Agent shall be canceled and exchanged for the
Merger Consideration, as provided in this Article II, subject to applicable
law in the case of Dissenting Shares.
2.12 SUPPLEMENTARY ACTION. If at any time after the Effective Time, any
further assignments or assurances in law or any other things are necessary or
desirable to vest or to perfect or confirm of record in the Surviving
Corporation the title to any property or rights of either the Company or
Purchaser, or otherwise to carry out the provisions of this Agreement, the
officers and directors of the Surviving Corporation are hereby authorized and
empowered, in the name of and on behalf of the Company and Purchaser, to
execute and deliver any and all things necessary or proper to vest or to
perfect or confirm title to such property or rights in the Surviving
Corporation, and otherwise to carry out the purposes and provisions of this
Agreement.
2.13 CLOSING. Upon the terms and subject to the conditions of this
Agreement, as soon as practicable after all the conditions to the obligations
of the parties hereto to effect the Merger under Article VI of this Agreement
shall have been satisfied or waived, the Company and Purchaser shall (i) file
with the Secretary of the State of Delaware a certificate or agreement of
merger or a certificate of ownership and merger in such form as may be
required by, and executed in accordance with, the relevant provisions of the
DGCL and (ii) take all such other and further actions as may be required by
law to make the Merger effective. Contemporaneous with the filing referred to
in this Section, a closing (the "CLOSING") will be held at the offices of
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such other location as the parties may establish for
the purpose of confirming all the foregoing. The date and the time of such
Closing are referred to as the "CLOSING DATE."
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company (which for purposes of this Article III shall include the
Company and each of its subsidiaries unless the context otherwise requires)
represents and warrants to Parent and Purchaser, subject to the exceptions
specifically disclosed in writing in the disclosure letter supplied by the
Company to Parent and Purchaser dated as of the date hereof and certified by a
duly authorized officer of the Company (the "COMPANY SCHEDULES"), as follows:
3.1 ORGANIZATION OF THE COMPANY.
(i) The Company and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; has the corporate power and authority to
own, lease and operate its assets and property and to carry on its business as
now being conducted; and is duly qualified or licensed to do business and is
in good standing in each jurisdiction where the character of the properties
owned, leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified would not have a Material Adverse Effect (as defined below) on the
Company.
(ii) The Company has delivered or made available to Parent a true and
complete list of all of the Company's subsidiaries, indicating the
jurisdiction of incorporation of each subsidiary, the jurisdictions in which
such subsidiary is qualified or licensed, and the Company's and any other
person's equity interest therein. All shares of subsidiaries owned indirectly
by the Company or owned of record by persons other than the Company are owned
beneficially (or the substantive equivalent) by the Company.
(iii) The Company has delivered or made available to Parent a true and
correct copy of the Certificate of Incorporation and Bylaws of the Company and
similar governing instruments of each of its subsidiaries, each as amended to
date, and each such instrument is in full force and effect. Neither the
Company nor any of its subsidiaries is in violation of any of the provisions
of its Certificate of Incorporation or Bylaws or equivalent governing
instruments.
(iv) When used in connection with the Company, the term "MATERIAL ADVERSE
EFFECT" means, for purposes of this Agreement, any change, event or effect
that is materially adverse to the business, assets (including intangible
assets), financial condition or results of operations of Company and its
subsidiaries taken as a whole; provided, however, that the following shall not
be considered a "Material Adverse Effect": (1) the filing, initiation and
subsequent prosecution, by or on behalf of stockholders of the Company, of (a)
litigation that challenges or otherwise seeks damages with respect to the
transactions contemplated herein or (b) a securities litigation against the
Company and (2) a shortfall in revenues of the Company as a result of delays
in customer orders (including any effects on the Company's operating income
which result directly from such revenue shortfall).
3.2 COMPANY CAPITAL STRUCTURE. The authorized capital stock of the Company
consists of 50,000,000 shares of Common Stock, $0.01 par value, of which there
were 8,782,265 shares issued and outstanding as of March 19, 1997 and
2,000,000 shares of Preferred Stock, $0.01 par value, of which no shares are
issued or outstanding. All outstanding shares of the Company Common Stock are
duly authorized, validly issued, fully paid and nonassessable and are not
subject to preemptive rights created by statute, the Certificate of
Incorporation or Bylaws of the Company or any agreement or document to which
the Company is a party or by which it is bound. As of March 19, 1997, the
Company had reserved an aggregate of 2,181,735 shares of the Company Common
Stock, net of exercises, for issuance to employees, consultants and non-
employee directors pursuant to the Company's 1993 Stock Option and Restricted
Stock Plan ("the 1993 Plan"). As of March 19, 1997, there were options
outstanding to purchase an aggregate of 1,985,851 shares of Common Stock,
issued to employees, consultants and non-employee directors pursuant to the
1993 Plan. All shares of the Company Common Stock subject to issuance as
aforesaid, upon issuance on the terms and conditions specified in the
instruments pursuant
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to which they are issuable, would be duly authorized, validly issued, fully
paid and nonassessable. The Company Schedules list for each person who held
restricted stock or options, the name of the holder of such shares or option,
the exercise price of such option, the number of shares which will have vested
at such date, the vesting schedule for such shares or option and whether the
lapsing of the Company's repurchase rights or exercisability of such option
will be accelerated in any way by the transactions contemplated by this
Agreement, and indicate the extent of acceleration, if any.
3.3 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set forth in
Section 3.2, there are no equity securities, partnership interests or similar
ownership interests of any class of the Company, or any securities
exchangeable or convertible into or exercisable for such equity securities,
partnership interests or similar ownership interests, issued, reserved for
issuance or outstanding. Except for securities the Company owns, directly or
indirectly through one or more subsidiaries, there are no equity securities,
partnership interests or similar ownership interests of any class of any
subsidiary of the Company, or any security exchangeable or convertible into or
exercisable for such equity securities, partnership interests or similar
ownership interests, issued, reserved for issuance or outstanding. Except as
set forth in Section 3.2, there are no options, warrants, equity securities,
partnership interests or similar ownership interests, calls, rights (including
preemptive rights), commitments or agreements of any character to which the
Company or any of its subsidiaries is a party or by which it is bound
obligating the Company or any of its subsidiaries to issue, deliver or sell,
or cause to be issued, delivered or sold, or repurchase, redeem or otherwise
acquire, or cause the repurchase, redemption or acquisition, of any shares of
capital stock, partnership interests or similar ownership interests of the
Company or any of its subsidiaries or obligating the Company or any of its
subsidiaries to grant, extend, accelerate the vesting of or enter into any
such option, warrant, equity security, call, right, commitment or agreement.
There are no registration rights and, to the knowledge of the Company, as of
the date of this Agreement, there are no voting trusts, proxies or other
agreements or understandings with respect to any equity security of any class
of the Company or with respect to any equity security, partnership interest or
similar ownership interest of any class of any of its subsidiaries.
3.4 AUTHORITY.
(i) The Company has all requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby, have been duly authorized by all
necessary corporate action on the part of the Company, subject only to the
approval and adoption of this Agreement and the approval of the Merger by the
Company's stockholders and the filing and recordation of the Certificate of
Merger pursuant to the DGCL. A vote of the holders of a majority of the
outstanding Shares is required for the Company's stockholders to approve and
adopt this Agreement and approve the Merger. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and, if applicable, Purchaser, constitutes a
valid and binding obligation of the Company, enforceable in accordance with
their respective terms, except as enforceability may be limited by bankruptcy
and other similar laws and general principles of equity. The execution and
delivery of this Agreement by the Company do not, and the performance of this
Agreement by the Company will not, (i) conflict with or violate the
Certificate of Incorporation or Bylaws of the Company or the equivalent
organizational documents of any of its subsidiaries, (ii) subject to obtaining
the approval and adoption of this Agreement and the approval of the Merger by
the Company's stockholders, conflict with or violate in any material respect
any law, rule, regulation, order, judgment or decree applicable to the Company
or any of its subsidiaries or by which its or any of their respective
properties is bound or affected or (iii) result in any breach of or constitute
(with or without due notice or lapse of time or both) a default (or give rise
to any right of termination, amendment, cancellation or acceleration) under,
or result in the creation of a lien or encumbrance on any of the properties or
assets of the Company or any of its subsidiaries pursuant to, any material
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective properties are bound or affected (except where
such breach, default, termination, amendment, cancellation, acceleration, lien
or encumbrance would not have a Material Adverse Effect on the Company). The
Company Schedules list all material consents, waivers
8
and approvals under any of the Company's or any of its subsidiaries'
agreements, contracts, licenses or leases required to be obtained in
connection with the consummation of the transactions contemplated hereby.
(ii) No consent, approval, order or authorization of, or registration,
declaration or filing with any court, administrative agency or commission or
other governmental authority or instrumentality, foreign or domestic
("GOVERNMENTAL ENTITY"), is required by or with respect to the Company in
connection with the execution and delivery of this Agreement or the
consummation of the Merger, except for (i) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware, (ii) such
consents, approvals, orders, authorizations, registrations, declarations and
filings as may be required under applicable federal and state securities laws
and the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the
"HSR ACT"), and the securities or antitrust laws of any foreign country, and
(iii) such other consents, authorizations, filings, approvals and
registrations which if not obtained or made would not be material to the
Company, or have a material adverse effect on the ability of the parties to
consummate the Offer or the Merger.
3.5 SEC FILINGS; THE COMPANY FINANCIAL STATEMENTS.
(i) The Company has filed in a timely manner all forms, reports and
documents required to be filed with the SEC since its initial public offering
and has made available to Parent such forms, reports and documents in the form
filed with the SEC. All such required forms, reports and documents (including
those that the Company may file subsequent to the date hereof) are referred to
herein as the "COMPANY SEC REPORTS." As of their respective dates, the Company
SEC Reports (i) were prepared, in all material respects, in accordance with
the requirements of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), or the Exchange Act, as the case may be, and the rules and regulations
of the SEC thereunder applicable to such the Company SEC Reports, and (ii) did
not at the time they were filed (or if amended or superseded by a filing prior
to the date of this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
None of the Company's subsidiaries is required to file any forms, reports or
other documents with the SEC.
(ii) Each of the consolidated financial statements (including, in each case,
any related notes thereto) contained in the Company SEC Reports (the "COMPANY
FINANCIALS"), including any the Company SEC Reports filed after the date
hereof until the Closing, (x) complied as to form in all material respects
with the published rules and regulations of the SEC with respect thereto, (y)
was prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto or, in the case of unaudited interim
financial statements, as may be permitted by the SEC on Form 10-Q under the
Exchange Act) and (z) fairly presented the consolidated financial position of
the Company and its subsidiaries as at the respective dates thereof and the
consolidated results of the Company's operations and cash flows for the
periods indicated, except that the unaudited interim financial statements were
or are subject to normal and recurring year-end adjustments. The balance sheet
of the Company contained in the Company SEC Reports as of December 31, 1996 is
hereinafter referred to as the "COMPANY BALANCE SHEET." Except as disclosed in
the Company Financials or as contemplated by this Agreement, since the date of
the Company Balance Sheet neither the Company nor any of its subsidiaries has
any liabilities (absolute, accrued, contingent or otherwise) of a nature
required to be disclosed on a balance sheet or in the related notes to the
consolidated financial statements prepared in accordance with GAAP which are,
individually or in the aggregate, material to the business, results of
operations or financial condition of the Company and its subsidiaries taken as
a whole, except liabilities (i) provided for in the Company Balance Sheet, or
(ii) incurred since the date of the Company Balance Sheet in the ordinary
course of business consistent with past practices.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the Company
Balance Sheet there has not been: (i) any change, event or condition that has
resulted in a Material Adverse Effect on the Company, (ii) any material change
by the Company in its accounting methods, principles or practices, except as
required by concurrent changes in GAAP, or (iii) any material revaluation by
the Company of any of its assets, including,
9
without limitation, writing down the value of capitalized inventory or writing
off notes or accounts receivable other than in the ordinary course of
business.
3.7 TAXES.
(i) Definition of Taxes. For the purposes of this Agreement, "TAX" or
"TAXES" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and
liabilities relating to taxes, including taxes based upon or measured by gross
receipts, income, profits, sales, use and occupation, and value added, ad
valorem, transfer, franchise, withholding, payroll, recapture, employment,
excise and property taxes, together with all interest, penalties and additions
imposed with respect to such amounts and any obligations under any agreements
or arrangements with any other person with respect to such amounts and
including any liability for taxes of a predecessor entity.
(ii) Tax Returns and Audits.
The Company and each of its subsidiaries have timely filed all federal,
state, local and foreign returns, estimates, information statements and
reports ("RETURNS") relating to Taxes required to be filed by the Company
and each of its subsidiaries, except such Returns which are not material to
the Company, and have timely paid all Taxes shown to be due on such
Returns.
Except as is not material to the Company, the Company and each of its
subsidiaries as of the Effective Time will have withheld with respect to
its employees all federal and state income taxes, its employees' share of
Federal Insurance Contribution Act ("FICA") taxes, and any Taxes required
to be withheld.
Except as is not material to the Company, to the Company's knowledge,
there is no Tax deficiency outstanding, proposed or assessed against the
Company or any of its subsidiaries, nor has the Company or any of its
subsidiaries executed any waiver of any statute of limitations on or
extending the period for the assessment or collection of any Tax.
Except as is not material to the Company, to the Company's knowledge, no
audit or other examination of any Return of the Company or any of its
subsidiaries is presently in progress, nor has the Company or any of its
subsidiaries been notified of any request for such an audit or other
examination.
Except as is not material to the Company, no adjustment relating to any
Returns filed by the Company or any of its subsidiaries has been proposed
formally or informally by any Tax authority to the Company or any of its
subsidiaries or any representative thereof.
Except as is not material to the Company, neither the Company nor any of
its subsidiaries has any liability for unpaid Taxes which has not been
accrued for or reserved on the Company Balance Sheet or disclosed in
related notes to the Company Financials, whether asserted or unasserted,
contingent or otherwise, which is material to the Company.
There is no contract, agreement, plan or arrangement, including but not
limited to the provisions of this Agreement, covering any employee or
former employee of the Company or any of its subsidiaries that,
individually or collectively, could give rise to the payment of any amount
that would not be deductible pursuant to Sections 280G, 404 or 162(m) of
the Code.
Neither the Company nor any of its subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as defined in Section 341(f)(4) of the Code) owned by the Company.
Neither the Company nor any of its subsidiaries is party to or has any
obligation under any tax-sharing or allocation agreement or arrangement.
10
3.8 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES.
(i) The Company Schedules list the real property owned by the Company. The
Company Schedules list all real property leases to which the Company is a
party and each amendment thereto. All such current leases are in full force
and effect, are valid and effective in accordance with their respective terms,
and there is not, under any of such leases, any existing default or event of
default (or event which with notice or lapse of time, or both, would
constitute a default) that would result in a Material Adverse Effect on the
Company.
(ii) The Company has good and valid title to, or, in the case of leased
properties and assets, valid leasehold interests in, all of its tangible
properties and assets, real, personal and mixed, used or held for use in its
business, free and clear of any liens, pledges, charges, claims, security
interests or other encumbrances of any sort ("LIENS"), except as reflected in
the Company Financials or in the Company Schedules and except for liens for
taxes not yet due and payable and such imperfections of title and
encumbrances, if any, which would not result in a Material Adverse Effect on
the Company.
3.9 INTELLECTUAL PROPERTY.
For the purposes of this Agreement, the following terms have the following
definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following and all
rights in, arising out of, or associated therewith: (i) all United States,
international and foreign patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof; (ii) all inventions (whether patentable or
not), invention disclosures, improvements, trade secrets, proprietary
information, know how, technology, technical data and customer lists, and
all documentation relating to any of the foregoing; (iii) all copyrights,
copyrights registrations and applications therefor, and all other rights
corresponding thereto throughout the world; (iv) all industrial designs and
any registrations and applications therefor throughout the world; (v) all
trade names, logos, common law trademarks and service marks, trademark and
service mark registrations and applications therefor throughout the world;
(vi) all databases and data collections and all rights therein throughout
the world; and (vii) any similar or equivalent rights to any of the
foregoing anywhere in the world.
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual Property that
is owned by, or exclusively licensed to, the Company.
"REGISTERED INTELLECTUAL PROPERTY" means all United States, international
and foreign: (i) patents and patent applications (including provisional
applications); (ii) registered trademarks, applications to register
trademarks, intent-to-use applications, or other registrations or
applications related to trademarks; (iii) registered copyrights and
applications for copyright registration; and (iv) any other Intellectual
Property that is the subject of an application, certificate, filing,
registration or other document issued, filed with, or recorded by any
state, government or other public legal authority.
(i) Section 3.9 of the Company Schedules lists all of the Registered
Intellectual Property owned by, or filed in the name of, the Company (the
"COMPANY REGISTERED INTELLECTUAL PROPERTY").
(ii) Section 3.9 of the Company Schedules lists all proceedings or actions
before any court, tribunal (including the United States Patent and Trademark
Office ("PTO") or equivalent authority anywhere in the world) related to any
Company Intellectual Property.
(iii) To the Company's knowledge, no Company Intellectual Property or
product or service of the Company is subject to any proceeding or outstanding
decree, order, judgment, agreement, or stipulation restricting in any manner
the use, transfer, or licensing thereof by the Company, or which may affect
the validity, use or enforceability of such Company Intellectual Property.
(iv) Each item of Company Registered Intellectual Property is valid (to the
Company's knowledge) and subsisting, all necessary registration, maintenance
and renewal fees currently due in connection with such
11
Registered Intellectual Property have been made and all necessary documents
and certificates in connection with such Registered Intellectual Property have
been filed with the relevant patent, copyright, trademark or other authorities
in the United States or foreign jurisdictions, as the case may be, for the
purposes of maintaining such Registered Intellectual Property.
(v) Except as set forth in Section 3.9 of the Company Schedules: (i) the
Company owns and has good and exclusive title to, or has license to, each item
of Company Intellectual Property, including all Company Registered
Intellectual Property listed in Section 3.9 of the Company Schedules, free and
clear of any lien or encumbrance (excluding licenses and related
restrictions); and (ii) to its knowledge, the Company is the exclusive owner
of all trademarks and trade names used in connection with the operation or
conduct of the business of the Company, including the sale of any products or
the provision of any services by the Company.
(vi) The Company owns exclusively, and has good title to, all copyrighted
works that are Company products or which the Company otherwise expressly
purports to own.
(vii) To the extent that any work, invention, or material has been developed
or created by a third party for the Company, the Company has a written
agreement with such third party with respect thereto and the Company thereby
either (i) has obtained ownership of, and is the exclusive owner of, or (ii)
has obtained a license to all such third party's Intellectual Property in such
work, material or invention by operation of law or by valid assignment, to the
extent it is legally possible to do so.
(viii) Except as set forth in Section 3.9 of the Company Schedules, the
Company has not transferred ownership of, or granted any exclusive license
with respect to, any Intellectual Property that is or was Company Intellectual
Property, to any third party.
(ix) Section 3.9 of the Company Schedules lists all material contracts,
licenses and agreements to which the Company is a party (i) with respect to
Company Intellectual Property licensed or transferred to any third party
(other than end-user licenses in the ordinary course); or (ii) pursuant to
which a third party has licensed or transferred any material Intellectual
Property to the Company, with, in the case of either (i) or (ii), cost in
excess of $25,000 on a one-time or annual basis.
(x) The contracts, licenses and agreements listed on Section 3.9 of the
Company Schedules are in full force and effect. The consummation of the
transactions contemplated by this Agreement will neither violate nor result in
the breach, modification, cancellation, termination, or suspension of such
contracts, licenses and agreements. The Company is in material compliance
with, and has not materially breached any term any of such contracts, licenses
and agreements and, to the knowledge of the Company, all other parties to such
contracts, licenses and agreements are in compliance with, and have not
materially breached any term of, such contracts, licenses and agreements.
Following the Closing Date, the Company will be permitted to exercise all of
the Company's rights under the contracts, licenses and agreements listed in
Section 3.9 of the Company Schedules to the same extent the Company would have
been able to had the transactions contemplated by this Agreement not occurred
and without the payment of any additional amounts or consideration other than
ongoing fees, royalties or payments which the Company would otherwise be
required to pay.
(xi) Section 3.9 of the Company Schedules lists or specifically refers to
all contracts, licenses and agreements between the Company and any third party
wherein or whereby the Company has agreed to, or assumed, any obligation or
duty to warrant, indemnify, hold harmless or otherwise assume or incur any
obligation or liability with respect to the infringement or misappropriation
by the Company or such third party of the Intellectual Property of any third
party, except such contracts entered into in the ordinary course of the
Company's business.
(xii) The operation of the business of the Company as such business
currently is conducted, including the Company's design, development,
manufacture, marketing and sale of the products or services of the Company
(including with respect to products currently under development) has not, does
not and will not infringe or
12
misappropriate the Intellectual Property of any third party (provided that
with respect to patent rights, rights regarding marks, names and designations,
and moral rights, such representation is limited to the Company's knowledge)
or, to its knowledge, constitute unfair competition or trade practices under
the laws of any jurisdiction.
(xiii) The Company has not received notice from any third party that the
operation of the business of the Company or any act, product or service of the
Company, infringes or misappropriates the Intellectual Property of any third
party or constitutes unfair competition or trade practices under the laws of
any jurisdiction.
(xiv) Except as set forth in Section 3.9 of the Company Schedules, to the
knowledge of the Company, no Person has or is infringing or misappropriating
any Company Intellectual Property.
(xv) Except as set forth in Section 3.9 of the Company Schedules, there have
been, and are, no claims asserted against the Company or, to its knowledge,
against any customer of the Company, related to any product or service of the
Company.
(xvi) The Company has taken reasonable steps to protect the Company's rights
in the Company's confidential information and trade secrets that it wishes to
protect or any trade secrets or confidential information of third parties
provided to the Company, and, without limiting the foregoing, the Company has
and enforces a policy requiring each employee and contractor to execute a
proprietary information / confidentiality agreement substantially in the
Company's standard form and all current and former employees and contractors
of the Company have executed such an agreement, except where the failure to do
so is not reasonably expected to be material to the Company.
3.10 COMPLIANCE; PERMITS; RESTRICTIONS.
(i) Neither the Company nor any of its subsidiaries is, in any material
respect, in conflict with, or in default or violation of (i) any law, rule,
regulation, order, judgment or decree applicable to the Company or any of its
subsidiaries or by which the Company or any of its subsidiaries or any of
their respective properties is bound or affected, or (ii) any material note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective properties is bound or affected (except such
default or violation which would not have a Material Adverse Effect on the
Company). To the knowledge of the Company, no investigation or review by any
Governmental Entity is pending or threatened against the Company or any of its
subsidiaries, nor has any Governmental Entity indicated an intention to
conduct the same. There is no material agreement, judgment, injunction, order
or decree binding upon the Company or any of its subsidiaries which has or
could reasonably be expected to have the effect of prohibiting or materially
impairing any business practice of the Company or any of its subsidiaries, any
acquisition of material property by the Company or any of its subsidiaries or
the conduct of business by the Company as currently conducted (except such
prohibition or impairment which would not have a Material Adverse Effect on
the Company).
(ii) The Company and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities that, if not
held by the Company or its subsidiaries, would have a Material Adverse Effect
on the Company (collectively, the "Company Permits"). The Company and its
subsidiaries are in compliance in all material respects with the terms of the
Company Permits (except where such non-compliance would not have a Material
Adverse Effect on the Company).
3.11 LITIGATION. Except for suits filed in connection with this Offer, which
as of the date hereof there are none, there is no action, suit, proceeding,
claim, arbitration or investigation pending, or as to which the Company or any
of its subsidiaries has received any notice of assertion nor, to the Company's
knowledge, is there a threatened action, suit, proceeding, claim, arbitration
or investigation against the Company or any of its subsidiaries which could
reasonably be expected to have a Material Adverse Effect on the Company. To
the knowledge of the Company, no Governmental Entity has at any time
challenged or questioned in writing the legal right of the Company to
manufacture, offer or sell any of its products in the present manner or style
thereof.
13
3.12 BROKERS' AND FINDERS' FEES. Except for fees payable to ▇▇▇▇▇▇▇ ▇▇▇▇▇
pursuant to an engagement letter dated February 29, 1996, a copy of which has
been provided to Parent, the Company has not incurred, nor will it incur,
directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement
or any transaction contemplated hereby.
3.13 EMPLOYEE BENEFIT PLANS.
(i) With respect to each material employee benefit plan, program,
arrangement and contract (including, without limitation, any "EMPLOYEE BENEFIT
PLAN" as defined in Section 3(3) of ERISA) maintained or contributed to by the
Company or any trade or business which is under common control with the
Company within the meaning of Section 414 of the Code (the "COMPANY EMPLOYEE
PLANS"), the Company has made available to Parent a true and complete copy of,
to the extent applicable, (i) such Company Employee Plan, (ii) the most recent
annual report (Form 5500), (iii) each trust agreement related to such Company
Employee Plan, (iv) the most recent summary plan description for each Company
Employee Plan for which such a description is required, (v) the most recent
actuarial report relating to any Company Employee Plan subject to Title IV of
ERISA and (vi) the most recent IRS determination letter issued with respect to
any Company Employee Plan.
(ii) Each Company Employee Plan which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination from the IRS
covering the provisions of the Tax Reform Act of 1986 stating that such
Company Employee Plan is so qualified and nothing has occurred since the date
of such letter that could reasonably be expected to affect the qualified
status of such plan. Each Company Employee Plan has been operated in all
material respects in accordance with its terms and the requirements of
applicable law (except as would not have a Material Adverse Effect on the
Company). Neither the Company nor any ERISA Affiliate of the Company has
incurred or is reasonably expected to incur any liability under Title IV of
ERISA in connection with any Company Employee Plan (except as would not have a
Material Effect on the Company.
3.14 EMPLOYEES; LABOR MATTERS. To the Company's knowledge after reasonable
inquiry, no employee of the Company (i) is in violation of any term of any
employment contract, patent disclosure agreement, non-competition agreement,
or any restrictive covenant with a former employer relating to the right of
any such employee to be employed by the Company because of the nature of the
business conducted or presently proposed to be conducted by the Company or to
the use of trade secrets or proprietary information of others and (ii) has
given notice to the Company, nor is the Company otherwise aware, that any
employee intends to terminate his or her employment with the Company except
for terminations of a nature and number that are consistent with the Company's
prior experience. To the Company's knowledge, there are no activities or
proceedings of any labor union to organize any employees of the Company or any
of its subsidiaries and there are no strikes, or material slowdowns, work
stoppages or lockouts, or threats thereof by or with respect to any employees
of the Company or any of its subsidiaries. The Company and its subsidiaries
are and have been in compliance with all applicable laws regarding employment
practices, terms and conditions of employment, and wages and hours (including,
without limitation, OSHA, ERISA, WARN or any similar state or local law)
(except as would not have a Material Adverse Effect on the Company).
3.15 ENVIRONMENTAL MATTERS. Except in all cases as, in the aggregate, have
not had and would not be reasonably expected to have a Material Adverse Effect
on the Company, the Company and each of its subsidiaries (i) have obtained all
applicable permits, licenses and other authorizations that are required under
Federal, state or local laws relating to pollution or protection of the
environment, including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous or toxic
materials or wastes into ambient air, surface water, ground water or land or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of pollutants,
contaminants or hazardous or toxic materials or wastes by the Company or its
subsidiaries (of their respective agents); (ii) are in compliance with all
terms and conditions of such required permits, licenses and authorizations,
and also are in compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in such laws or contained in any regulation, code, plan,
order, decree,
14
judgment, notice or demand letter issued, entered, promulgated or approved
thereunder; (iii) as of the date hereof, are not aware of and have not
received notice of any event, condition, circumstance, activity, practice,
incident, action or plan that is reasonably likely to interfere with or
prevent continued compliance or that would give rise to any common law or
statutory liability, or otherwise form the basis of any claim, action, suit or
proceeding, based on or resulting from the Company's or any of its
subsidiaries (or any of their respective agents) manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or handling, or
the emission, discharge or release into the environment of any pollutant,
contaminant or hazardous or toxic material or waste; (iv) has not disposed of
any pollutants, contaminants or hazardous or toxic materials or wastes into
the soil or groundwater at any properties owned or leased by the Company,
either now or in the past, or at any other property that would result in any
assessment or remedial action; and (v) have taken all actions necessary under
application requirements of Federal, state or local laws, rules or regulations
to register any products or materials required to be registered by the Company
or its subsidiaries (or any of their respective agents) thereunder.
3.16 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as set forth in the
Company Schedules, neither the Company nor any of its subsidiaries is a party
to or is bound by:
(i) any employment or consulting agreement, contract or commitment with any
officer or director level employee or member of the Company's Board of
Directors, other than those that are terminable by the Company or any of its
subsidiaries on no more than thirty days notice without liability or financial
obligation, except to the extent general principles of wrongful termination
law may limit the Company's or any of its subsidiaries' ability to terminate
employees at will;
(ii) any agreement or plan, including, without limitation, any stock option
plan, stock appreciation right plan, stock purchase plan or restricted stock
purchase agreement, any of the benefits of which will be increased, or the
vesting of benefits of which will be accelerated, by the occurrence of any of
the transactions contemplated by this Agreement or the value of any of the
benefits of which will be calculated on the basis of any of the transactions
contemplated by this Agreement;
(iii) any agreement of indemnification or guaranty not entered into in the
ordinary course of business other than indemnification agreements between the
Company or any of its subsidiaries and any of its officers or directors;
(iv) any agreement, contract or commitment containing any covenant
prohibiting or materially impairing conduct of the business by the Company or
any of its subsidiaries (as currently conducted or as presently proposed to be
conducted by the Company or its subsidiaries) or granting any exclusive
distribution rights;
(v) any agreement, contract or commitment currently in force relating to the
disposition or acquisition of assets not in the ordinary course of business or
any ownership interest in any corporation, partnership, joint venture or other
business enterprise; or
(vi) any material joint marketing or development agreement.
Neither the Company nor any of its subsidiaries, nor to the Company's
knowledge any other party to a Company Contract (as defined below), has
breached, violated or defaulted under, or received notice that it has breached
violated or defaulted under, any of the material terms or conditions of any of
the agreements, contracts or commitments to which the Company or any of its
subsidiaries is a party or by which it is bound of the type described in
clauses (i) through (vi) above (any such agreement, contract or commitment, as
well as any agreement, contract or commitment that is an exhibit to any
Company SEC Report, a "COMPANY CONTRACT") in such a manner as would permit any
other party to cancel or terminate any such Company Contract, or would be
reasonably likely to have a Material Adverse Effect on the Company.
3.17 CHANGE OF CONTROL PAYMENTS. The Company Schedules set forth each plan
or agreement pursuant to which any amounts may become payable (whether
currently or in the future) to current or former officers and
15
directors of the Company as a result of or in connection with the Offer and/or
the Merger, and the nature and amount of any such obligation.
3.18 BOARD APPROVAL. The Board of Directors of the Company has, as of the
date of this Agreement (A) determined that this Agreement and the transactions
contemplated hereby, including each of the Offer and the Merger, are fair to
and in the best interests of the holders of the Shares, (B) approved and
adopted this Agreement and the transactions contemplated hereby and (C)
resolved to recommend that the stockholders of the Company accept the Offer
and approve and adopt this Agreement and the transactions contemplated hereby
and thereby.
3.19 FAIRNESS OPINION. The Company's Board of Directors has received an
opinion from ▇▇▇▇▇▇▇ ▇▇▇▇▇ to the effect that the consideration to be received
by the holders of Shares pursuant to each of the Offer and the Merger is fair
to the holders of Shares. A copy of the written opinion will be delivered to
Parent no later than March 26, 1997.
3.20 OFFER DOCUMENTS; PROXY STATEMENT. Neither the Schedule 14D-9, nor any
of the information supplied by the Company for inclusion in the Offer
Documents, shall, at the respective times that the Schedule 14D-9, the Offer
Documents or any amendments or supplements thereto are filed with the SEC or
are first published, sent or given to stockholders, 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 therein, in the light of the circumstances under which they were
made, not misleading. Neither the proxy statement to be sent to the
stockholders of the Company in connection with the meeting of the Company's
stockholders to consider the Merger (the "COMPANY STOCKHOLDERS' MEETING") or
the information statement to be sent to such stockholders, as appropriate
(such proxy statement or information statement, as amended or supplemented, is
referred to as the "PROXY STATEMENT"), shall, at the date the Proxy Statement
(or any amendment thereof or supplement thereto) is first mailed to
stockholders, at the time of the Company Stockholders' Meeting and at the
Effective Time, 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 necessary to correct any statement in
any earlier communication with respect to the solicitation of proxies for the
Company Stockholders' Meeting which has become false or misleading. The
Schedule 14D-9 and the Proxy Statement will comply in all material respects as
to form and substance with the requirements of the Exchange Act and the rules
and regulations thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser, jointly and severally, represent and warrant to the
Company that:
4.1 ORGANIZATION AND QUALIFICATION. Each of Parent and Purchaser is a
corporation duly organized validly existing and in good standing under the
laws of the jurisdiction of its incorporation, and has all requisite corporate
power and authority to own, operate and lease its properties and to carry on
its business as it is now being conducted.
4.2 CORPORATE POWER, AUTHORIZATION AND ENFORCEABILITY. Each of Parent and
Purchaser has full corporate power and authority to enter into this Agreement
and to perform its obligations hereunder and to consummate all the
transactions contemplated hereby. The execution and delivery of this Agreement
by ▇▇▇▇▇▇ and Purchaser, the performance by each of Parent and Purchaser of
their respective obligations hereunder and the consummation by Parent and
Purchaser of the transactions contemplated hereby have been duly and validly
authorized by the Board of Directors of each of Parent and Purchaser and no
other corporate action on the part of Parent or Purchaser are necessary to
authorize this Agreement or to consummate the transactions contemplated hereby
(other than the filing and recordation of appropriate merger documents as
required by the DGCL). This Agreement has been duly executed and delivered by
each of Parent and Purchaser and is a legal, valid and
16
binding obligation of each of Parent and Purchaser, enforceable against Parent
and Purchaser in accordance with its terms.
4.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Assuming satisfaction of all applicable requirements referred to in
Section 4.3 (b) below, the execution and delivery of this Agreement by Parent
and Purchaser, the compliance by Parent and Purchaser with the provisions
hereof and the consummation by Parent and Purchaser of the transactions
contemplated hereby will not conflict with or violate (i) any statute, law,
ordinance, rule, regulation, order, writ, judgment, award, injunction, decree
or ruling applicable to Parent or Purchaser or any of their properties, other
than such conflicts or violations which individually or in the aggregate do
not and will not have a material adverse effect on the business, properties,
assets, results of operations or financial condition of Parent and Purchaser,
taken as a whole, or (ii) conflict with or violate the Certificate of
Incorporation or Bylaws of Parent or Purchaser.
(b) Other than in connection with or in compliance with the provisions of
the DGCL, the Exchange Act, the "takeover" or "blue sky" laws of various
states and the HSR Act, (i) neither Parent nor Purchaser is required to submit
any notice, report, registration, declaration or other filing with any
Governmental Entity in connection with the execution or delivery of this
Agreement by Parent and Purchaser or the performance by Parent and Purchaser
of their obligations hereunder or the consummation by Parent and Purchaser of
the transactions contemplated by this Agreement and (ii) no waiver, consent,
approval, order or authorization of any Governmental Entity is required to be
obtained by Parent or Purchaser in connection with the execution or delivery
of this Agreement by Parent and Purchaser or the performance by ▇▇▇▇▇▇ and
Purchaser of their obligations hereunder or the consummation by Parent and
Purchaser of the transactions contemplated by this Agreement. None of the
information supplied by Parent or Purchaser for inclusion in the Proxy
Statement shall, at the date the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to stockholders or at the time of the
Company Stockholders' Meeting, contain any untrue statement of a 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 were made, not
misleading.
4.4 SCHEDULE 14D-1. Neither the Schedule 14D-1 nor the Offer Documents, nor
any of the information supplied by Parent and Purchaser for inclusion in the
Schedule 14D-9 and the Information Statement, shall at the respective times
they are filed with the SEC or are first published, sent or given to
stockholders or upon the expiration of the Offer, 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
therein in the light of the circumstances under which they were made not
misleading (except for information supplied by the Company for inclusion in
the Schedule 14D-1 and the Offer Documents, as to which Parent and Purchaser
make no representation). None of the information supplied by Parent or
Purchaser for inclusion in the Proxy Statement shall, at the date the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
stockholders, at the time of the Company Stockholders' Meeting and at the
Effective Time, contain any untrue statement of a 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 were made, not misleading.
4.5 AVAILABLE FUNDS. Parent has or has available to it, and will make
available to Purchaser, all funds necessary to satisfy all of Parent's and
Purchaser's obligations under this Agreement and in connection with the
transaction contemplated hereby, including, without limitation, the obligation
to purchase all outstanding Shares pursuant to the Offer and the Merger and to
pay all related fees and expenses in connection with the Offer and the Merger.
17
ARTICLE V
COVENANTS
5.1 CONDUCT OF BUSINESS BY THE COMPANY. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms and the Effective Time or such time as
Parent's designees shall constitute a majority of the Board of Directors of
the Company, the Company (which for the purposes of this Article 5 shall
include the Company and each of its subsidiaries) agrees, except to the extent
that Parent shall otherwise consent, to carry on its business diligently and
in accordance with good commercial practice and to carry on its business in
the usual, regular and ordinary course, in substantially the same manner as
heretofore conducted and in compliance in all material respects with all
applicable laws and regulations, to pay its debts and taxes when due subject
to good faith disputes over such debts or taxes, to pay or perform in all
material respects other material obligations when due and use its commercially
reasonable efforts consistent with past practices and policies to preserve
intact its present business organization, keep available the services of its
present officers and employees and preserve its relationships with customers,
suppliers, distributors, licensors, licensees and others with which it has
business dealings.
In addition, except as permitted by the terms of this Agreement (and other
than as set forth in Section 5.1 of the Company Schedules), without the prior
consent of Parent, the Company shall not do any of the following, and shall
not permit any of its subsidiaries to do any of the following:
(i) Waive any stock repurchase rights, accelerate, amend or change the
period of exercisability of options or restricted stock, or reprice options
granted under any employee, consultant or director stock plans or authorize
cash payments in exchange for any options granted under any of such plans;
(ii) Grant any severance or termination pay to any officer or employee
except payments in amounts consistent with policies and past practices or
pursuant to written plans or agreements outstanding, or policies existing, on
the date hereof and as previously disclosed in writing to the other, or adopt
any new severance plan;
(iii) Transfer or license to any person or entity or otherwise extend, amend
or modify in any material respect any rights to the Company's intellectual
property or other proprietary rights, or enter into grants to future patent
rights, other than in the ordinary course of business, consistent with past
practice;
(iv) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any capital stock or split,
combine or reclassify any capital stock or issue or authorize the issuance of
any other securities in respect of, in lieu of or in substitution for any
capital stock.
(v) Repurchase or otherwise acquire, directly or indirectly, any shares of
capital stock except pursuant to rights of repurchase of any such shares under
any employee, consultant or director stock plan existing on the date hereof
(which repurchase rights the Company shall be obligated to exercise if the
repurchase price is less than the Merger Consideration).
(vi) Issue, deliver, sell, authorize or propose the issuance, delivery or
sale of, any shares of capital stock or any securities convertible into shares
of capital stock, or subscriptions, rights, warrants or options to acquire any
shares of capital stock or any securities convertible into shares of capital
stock, or enter into other agreements or commitments of any character
obligating it to issue any such shares or convertible securities, other than
the issuance of Shares, pursuant to the exercise of stock options therefor
outstanding as of the date of this Agreement;
(vii) Cause, permit or propose any amendments to any charter document or
Bylaw (or similar governing instruments of any subsidiaries);
(viii) Acquire or agree to acquire by merging or consolidating with, or by
purchasing equity interest in or a material portion of the assets of, or by
any other manner, any business or any corporation, partnership interest,
18
association or other business organization or division thereof, or otherwise
acquire or agree to acquire any assets which are material, individually or in
the aggregate, to the business of the Company, or enter into any joint
ventures, strategic partnerships or alliances;
(ix) Sell, lease, license, encumber or otherwise dispose of any properties
or assets which are material, individually or in the aggregate, to the
business of the Company, except in the ordinary course of business consistent
with past practice;
(x) Incur any indebtedness for borrowed money (other than ordinary course
trade payables or pursuant to existing credit facilities in the ordinary
course of business) or guarantee any such indebtedness or issue or sell any
debt securities or warrants or rights to acquire debt securities, or guarantee
any debt securities of others;
(xi) Adopt or amend any employee benefit or employee stock purchase or
employee option plan, or enter into any employment contract, pay any special
bonus or special remuneration to any director or employee, or increase the
salaries or wage rates of its officers or employees other than in the ordinary
course of business, consistent with past practice, or change in any material
respect any management policies or procedures;
(xii) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction in the ordinary course of
business;
(xiii) Make any grant of exclusive rights to any third party; or
(xiv) Agree in writing or otherwise to take any of the actions described in
(i) through (xiii) above.
5.2 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Subject to and in accordance with the terms and conditions of that
certain letter dated February 25, 1997 between Parent and the Company (the
"CONFIDENTIALITY AGREEMENT"), from the date of this Agreement to the Effective
Time, the Company shall, and shall cause its subsidiaries, officers,
directors, employees and agents to, afford the officers, employees and agents
of Parent, Purchaser and their affiliates and the attorneys, accountants,
banks, other financial institutions and investment banks working with Parent
or Purchaser, and their respective officers, employees and agents, complete
access at all reasonable times to its officers, employees, agents, properties,
books, records and contracts, and shall furnish Parent, Purchaser and their
affiliates and the attorneys, banks, other financial institutions and
investment banks working with Parent or Purchaser, all financial, operating
and other data and information as they reasonably request.
(b) Subject to the requirements of law, Parent and Purchaser shall, and
shall use their reasonable efforts to cause their officers, employees and
agents, and the attorneys, banks, other financial institutions and investment
banks who obtain such information to, hold all information obtained pursuant
to this Agreement or the Confidentiality Agreement in accordance with the
terms and conditions of the Confidentiality Agreement.
(c) No investigation pursuant to this Section 5.2 shall affect any
representations or warranties of the parties herein or the conditions to the
obligations of the parties hereto.
5.3 PROXY MATERIAL; STOCKHOLDERS' MEETING.
(a) The Company and each of Parent and Purchaser shall prepare and file, or
shall cause to be prepared and filed, with the SEC those documents, schedules
and amendments and supplements thereto required to be filed with respect to
the transactions contemplated by this Agreement. The Company, acting through
its Board of Directors, shall, if necessary, cause the Company Stockholders'
Meeting to be duly called (including establishing the record date, if
requested, to be a date immediately after the date the Purchaser first
purchases any Shares pursuant to the Offer) and shall give notice of, convene
and hold the Company Stockholders' Meeting as soon as practicable, and at such
time and place designated by Parent or Purchaser, for the purpose of approving
the Merger, this Agreement and any other actions contemplated hereby which
require the approval of the Company's stockholders. The Company shall
recommend to its stockholders approval of the Merger and take all reasonable
19
actions necessary to solicit such approval. The Company shall use its best
efforts to obtain and furnish the information required to be included by it in
the Proxy Statement and, after consultation with Parent and Purchaser, shall
respond promptly to any comments of the SEC relating to any preliminary proxy
statement regarding the Merger and the other transactions contemplated by this
Agreement and to cause the Proxy Statement to be mailed to its stockholders,
all at the earliest practicable time. Whenever any event occurs which should
be set forth in an amendment or supplement to the Proxy Statement or any other
filing required to be made with the SEC with respect to the Proxy Statement or
the Company Stockholders' Meeting, each party shall promptly inform the other
of such occurrence and cooperate in filing with the SEC and/or mailing to the
Company's stockholders such amendment or supplement. The Proxy Statement and
all amendments and supplements thereto shall comply with applicable law and be
in form and substance satisfactory to each of Parent and Purchaser and the
Company. The Company, acting through its Board of Directors, shall include in
the Proxy Statement the recommendation of its Board of Directors that
stockholders of the Company vote in favor of the approval and adoption of this
Agreement and the Merger. The Company shall use its best efforts to solicit
from stockholders of the Company proxies in favor of such approval and
adoption and shall take all other actions necessary or, in the reasonable
judgment of Parent and Purchaser, advisable to secure the vote or consent of
the Company's stockholders required by the DGCL to effect the Merger.
(b) Notwithstanding the foregoing, in the event that Purchaser shall acquire
at least ninety percent (90%) of the outstanding Shares, the parties hereto
agree, at the request of Purchaser, subject to Article VI, to take all
necessary and appropriate action to cause the Merger to become effective as
soon as reasonably practicable after such acquisition, without a meeting and
without a vote of the Company's stockholders, in accordance with the DGCL.
5.4 NO SOLICITATION.
(a) From and after the date of this Agreement until the earlier of the
Effective Time or termination of this Agreement pursuant to its terms, the
Company and its subsidiaries shall not, and will instruct their respective
directors, officers, employees, representatives, investment bankers, agents
and affiliates not to, directly or indirectly, (i) solicit or encourage
submission of, any proposals or offers by any person, entity or group (other
than Parent and its affiliates, agents and representatives), or (ii)
participate in any discussions or negotiations with, or disclose any non-
public information concerning the Company or any of its subsidiaries to, or
afford any access to the properties, books or records of the Company or any of
its subsidiaries to, or otherwise assist or facilitate, or enter into any
agreement or understanding with, any person, entity or group (other than
Parent and its affiliates, agents and representatives), in connection with any
Acquisition Proposal with respect to the Company. For the purposes of this
Agreement, an "ACQUISITION PROPOSAL" with respect to an entity means any
proposal or offer relating to (i) any merger, consolidation, sale of
substantial assets or similar transactions involving the entity or any
subsidiaries of the entity (other than sales of assets or inventory in the
ordinary course of business or as permitted under the terms of this
Agreement), (ii) the acquisition by any person of beneficial ownership or a
right to acquire beneficial ownership of, or the formation of any "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) which beneficially owns, or has the right to acquire beneficial
ownership of, 10% or more of the then outstanding shares of capital stock of
the entity (except for acquisitions for passive investment purposes only in
circumstances where the person or group qualifies for and files a Schedule 13G
with respect thereto); or (iii) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing. The Company will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. The Company will (i) notify Parent as promptly as
practicable if any inquiry or proposal is made or any information or access is
requested in connection with an Acquisition Proposal or potential Acquisition
Proposal and (ii) as promptly as practicable notify Parent of the terms and
conditions of any such Acquisition Proposal. In addition, subject to the other
provisions of this Section 5.4(a), from and after the date of this Agreement
until the earlier of the Effective Time and termination of this Agreement
pursuant to its terms, the Company and its subsidiaries will not, and will
instruct their respective directors, officers, employees, representatives,
investment bankers, agents and affiliates not to, directly or indirectly, make
or authorize any public statement, recommendation or solicitation in support
of any Acquisition
20
Proposal made by any person, entity or group (other than Parent); provided,
however, that nothing herein shall prohibit the Company' Board of Directors
from taking and disclosing to the Company' stockholders a position with
respect to a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated under
the Exchange Act.
(b) Notwithstanding the provisions of paragraph (a) above, prior to
consummation of the Offer, the Company may, to the extent the Board of
Directors of the Company determines, in good faith, after consultation with
outside legal counsel, that the Board's fiduciary duties under applicable law
require it to do so, participate in discussions or negotiations with, and,
subject to the requirements of paragraph (c), below, furnish information to
any person, entity or group after such person, entity or group has delivered
to the Company in writing, an unsolicited bona fide Acquisition Proposal which
the Board of Directors of the Company in its good faith reasonable judgment
determines, after consultation with its independent financial advisors, would
result in a transaction more favorable than the Offer and the Merger to the
stockholders of the Company from a financial point of view and 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 upon
the advice of independent financial advisors), is reasonably capable of being
financed by such person, entity or group and which is likely to be consummated
(a "SUPERIOR PROPOSAL"). In the event the Company receives a Superior
Proposal, nothing contained in this Agreement (but subject to the terms
hereof) will prevent the Board of Directors of the Company from recommending
such Superior Proposal to the Company's stockholders, if the Board determines,
in good faith, after consultation with outside legal counsel, that such action
is required by its fiduciary duties under applicable law, provided, however,
that the Company shall not recommend to its stockholders a Superior Proposal
for a period of not less than 48 hours after Parent's receipt of a copy of
such Superior Proposal (or a description of the terms and conditions thereof,
if not in writing).
(c) Notwithstanding anything to the contrary herein, the Company will not
provide any non-public information to a third party unless: (x) the Company
provides such non-public information pursuant to a nondisclosure agreement
with terms regarding the protection of confidential information at least as
restrictive as such terms in the Confidentiality Agreement; and (y) such non-
public information has been previously delivered to Parent.
5.5 PUBLIC ANNOUNCEMENTS. Parent and Purchaser on the one hand and the
Company on the other hand will consult with each other before issuing any
press release or otherwise making any public statements with respect to this
Agreement or the Merger or the other transactions contemplated hereby, and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by law. This Section 5.5 shall
supersede any conflicting provisions in the Confidentiality Agreement.
5.6 NOTIFICATION OF CERTAIN MATTERS.
(a) The Company shall give prompt notice (which notice shall state that it
is delivered pursuant to Section 5.6(a) of this Agreement) in writing to
Parent, and Parent and Purchaser shall give prompt notice in writing to the
Company, of (i) the occurrence, or failure to occur, of any event which
occurrence or failure would be likely to cause any representation or warranty
contained in this Agreement to be untrue or inaccurate in any material respect
at any time from the date of this Agreement through the Effective Time and
(ii) any failure of the Company, Parent or Purchaser, as the case may be, or
of any officer, director, employee or agent thereof, to comply with or satisfy
any covenant, condition or agreement to be complied with or satisfied by it
under this Agreement; provided, however, no such notification shall affect the
representations or warranties of the parties or the conditions to the
obligations of the parties hereunder.
(b) The Company shall give prompt notice in writing (which notice shall
state that it is delivered pursuant to Section 5.6(b) of this Agreement) to
Parent of (i) any act, omission to act, event or occurrence which, with the
passage of time or otherwise, would likely have a Material Adverse Effect on
the Company and (ii) any material contingent liability of the Company or any
of its subsidiaries for which such party reasonably believes it will, with the
passage of time or otherwise, become liable; provided, however, that no such
notification shall affect the representations or warranties of the parties or
the conditions to the obligations of the parties hereunder.
21
5.7 ACTIONS BY COMPANY. Subject to the terms and conditions hereof, the
Company shall, and shall cause its subsidiaries to, cooperate with Parent and
Purchaser and take all such actions as may be reasonably requested by Parent
and Purchaser to accomplish the Merger.
5.8 OFFICERS' AND DIRECTORS' INDEMNIFICATION.
(a) Parent and Purchaser agree that all rights to indemnification for acts
or omissions occurring prior to the Effective Time now existing in favor of
the current or former directors or officers (the "Indemnified Parties") of the
Company and its subsidiaries as provided in their respective certificates of
incorporation or by-laws (or similar organizational documents) or existing
indemnification contracts in the form filed with the SEC shall survive the
Merger and shall continue in full force and effect in accordance with their
terms.
(b) For six years from the Effective Time, Parent shall, unless Parent
agrees in writing to guarantee the indemnification obligations set forth in
Section 5.8(a) hereof, maintain in effect the Company's current directors' and
officers' liability insurance covering those persons who are currently covered
by the Company's directors' and officers' liability insurance policy (a copy
of which has been heretofore delivered to Parent); provided, however, that in
no event shall Parent be required to expend in any one year an amount in
excess of 150% of the annual premiums currently paid by the Company for such
insurance which the Company represents in not more than $250,000; and,
provided, further, that if the annual premiums of such insurance coverage
exceed such amount, Parent shall be obligated to obtain a policy with the
greatest coverage available for a cost not exceeding such amount.
(c) This Section 5.8 shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, Parent, the Surviving
Corporation and the Indemnified Parties, and shall be binding on all
successors and assigns of Parent and the Surviving Corporation.
5.9 RESERVED.
5.10 ADDITIONAL AGREEMENTS.
(a) Subject to the terms and conditions hereof, each of the parties to this
Agreement agrees to use all reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement (including consummation of the
Offer and the Merger) and to cooperate with each other in connection with the
foregoing.
(b) Subject to the terms and conditions hereof, each of the parties to this
Agreement agrees to use (i) all reasonable efforts to obtain all necessary
waivers, consents and approvals from other parties to loan agreements, leases,
licenses and other contracts, and (ii) all reasonable efforts to obtain all
necessary consents, approvals and authorizations as required to be obtained
under any federal, state or foreign law or regulations, including, but not
limited to, those required under the HSR Act, to defend all lawsuits or other
legal proceedings challenging this Agreement or the consummation of the
transactions contemplated hereby, to lift or rescind any injunction or
restraining order or other order adversely affecting the ability of the
parties to consummate the transactions contemplated hereby, to effect all
necessary registrations and filings, including, but not limited to, filings
under the HSR Act and submissions of information requested by Governmental
Entities, and to fulfill all conditions to this Agreement.
5.11 OTHER ACTIONS BY THE COMPANY. If any "fair price," "moratorium,"
"control share acquisition," "shareholder protection" or other form of
antitakeover statute, regulation or charter provision or contract is or shall
become applicable to the Offer or the Merger or the transactions contemplated
hereby, the Company and the Board of Directors of the Company shall grant such
approvals and take such actions as are necessary under such laws and
provisions so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of such statute, regulation, provision or
contract on the transactions contemplated hereby.
22
5.12 TREATMENT OF STOCK OPTIONS. Upon the Effective Time, each of the
options then outstanding under the 1993 Plan (the "OPTIONS") shall terminate
and be converted into a right to receive quarterly cash payments (the "OPTION
PAYMENTS") from the Surviving Corporation. With respect to each Option, the
amount of the Option Payment for each calendar quarter shall be equal to the
product of (a) the Merger Consideration minus the exercise price per Share of
such Option multiplied by (b) the number of shares for which such Option would
have become exercisable during such quarter if such Option had not been
terminated. The Option Payment for a quarter shall be made to the holder of
the Option (or his or her successors) not later than 15 days following the
close of such quarter. In the case of Options that are exercisable upon the
Effective Time, or would have become exercisable at the Effective Time as a
result of the transactions contemplated by this Agreement (including, without
limitation, all Options held by the non-employee directors of the Company),
the Option Payment shall be made upon the Effective Time. The provisions of
the 1993 Plan and the applicable stock option agreement shall control in
determining when an Option would have become exercisable and to what extent an
Option is forfeited in the event that the holder's service with the Company
terminates.
5.13 SECTION 203 OF THE DGCL. From and after the date of this Agreement, the
Company will not approve any acquisition of shares of Common Stock by any
person (other than Parent, Purchaser or their respective affiliates) which
would result in such person becoming an interested stockholder (as such term
is defined in Section 203 of the DGCL) or otherwise be subject to Section 203
of the DGCL.
5.14 STOCKHOLDER LITIGATION. The Company shall give Parent the opportunity
to participate in the defense or settlement of any stockholder litigation
against the Company and its directors relating to any of the transactions
contemplated by this Agreement until the purchase of Company Common Stock
pursuant to the Offer, and thereafter, shall give Parent the opportunity to
direct the defense of such litigation and, if Parent so chooses to direct such
litigation, Parent shall give the Company and its directors an opportunity to
participate in such litigation; provided, however, that no settlement of such
litigation shall be agreed to without Parent's consent; and provided further
that no settlement requiring a payment by a director shall be agreed to
without such director's consent.
5.15 EMPLOYEE BENEFITS. Following the Effective Time, the Surviving
Corporation will provide the persons employed by the Company immediately prior
to the Effective Time, for so long as such persons remain employed by the
Surviving Corporation, with salary and benefits (other than stock options) in
the aggregate which are substantially comparable to those provided to such
persons by the Company immediately prior to the Effective Time.
ARTICLE VI
CONDITIONS OF MERGER
6.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO EFFECT THE MERGER. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of each of the following
conditions:
(a) If required by the DGCL, this Agreement and the Merger shall have been
approved and adopted by the requisite vote of the stockholders of the Company.
(b) Any waiting period (and any extension thereof) applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated.
(c) Shares shall have been purchased pursuant to the Offer.
(d) No temporary restraining order, preliminary or permanent injunction,
judgment or other order, decree or ruling nor any statute, rule, regulation or
order shall be in effect which would (i) make the acquisition or holding by
Parent or its affiliates of Shares or shares of Common Stock of the Surviving
Corporation illegal or
23
otherwise prevent the consummation of the Merger, (ii) prohibit Parent's or
Purchaser's ownership or operation of, or compel Parent or Purchaser to
dispose of or hold separate, all or a material portion of the business or
assets of Purchaser, the Company or any Significant Subsidiary thereof, (iii)
compel Parent, Purchaser or the Company to dispose of or hold separate all or
a material portion of the business or assets of Parent or any of its
Subsidiaries or the Company or any of its Significant Subsidiaries, (iv)
impose material limitations on the ability of Parent or Purchaser or their
affiliates effectively to exercise full ownership and financial benefits of
the Surviving Corporation, or (v) impose any material condition to the Offer,
this Agreement or the Merger, which would be adverse to Parent.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated, at any time prior to the
Effective Time, whether before or after approval by the stockholders of the
Company:
(a) by mutual written agreement of the Boards of Directors of Parent and the
Company;
(b) by either Parent or the Company:
(i) if the Offer shall be terminated or expire without any Shares having
been purchased pursuant to the Offer; provided, however, that a party shall
not be entitled to terminate this Agreement pursuant to this Section
7.1(b)(i) if it is in material breach of its representations and
warranties, covenants or other obligations under this Agreement; or
(ii) if any court of competent jurisdiction in the United States or other
United States governmental body shall have issued an order, decree or
ruling or taken any other action restraining, enjoining or otherwise
prohibiting the Offer or the Merger and such order, decree, ruling or other
action shall have become final and nonappealable;
(c) by Parent:
(i) if the Board of Directors of the Company or any committee thereof
shall have approved, or recommended that stockholders of the Company accept
or approve, an Acquisition Proposal by a third party, or shall have
resolved to do any of the foregoing;
(ii) if the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified its approval of, or recommendation that
the stockholders of the Company accept or approve (as the case may be), the
Offer, this Agreement and the Merger, or shall have resolved to do any of
the foregoing;
(iii) if the Company shall have failed to include in the Schedule 14D-9
the recommendation of the Board of Directors of the Company that the
stockholders of the Company accept the Offer;
(iv) prior to the purchase of Shares pursuant to the Offer, in the event
that the conditions to the Offer set forth in clause (i) or (ii) of Annex I
shall not be satisfied or if any of the events set forth in clause (iii)
thereof shall have occurred; or
(v) if the Company is in material breach of any of its covenants or
obligations under this Agreement, or any representation or warranty of the
Company contained in this Agreement shall have been incorrect, in any
material respect, when made or shall have since ceased to be true and
correct in any material respect;
(d) by the Company
(i) if the Offer shall not have been commenced in accordance with Section
1.1, or Parent or Purchaser shall have failed to purchase validly tendered
Shares in violation of the terms of the Offer within ten business days
after the expiration of the Offer; provided, however, that the Company
shall not be entitled to
24
terminate this Agreement pursuant to this Section 7.1(d)(i) if it is in
material breach of its representations and warranties, covenants or other
obligations under this Agreement;
(ii) if the Board of Directors of the Company has resolved to, and in
fact does, recommend to the Company's Stockholders that they accept a
Superior Proposal, provided that all the provisions of Section 5.4 have
been fully complied with, and provided further that the Company shall have
paid to Parent the entire Initial Break-up Fee as provided in Section 7.3
(b); or
(iii) prior to the purchase of Shares pursuant to the Offer, if Parent or
Purchaser is in material breach of any of its covenants or obligations
under this Agreement, or any representation or warranty of Parent or
Purchaser contained in this Agreement shall have been incorrect, in any
material respect, when made or shall have since ceased to be true and
correct in any material respect.
7.2 PROCEDURE AND EFFECT OF TERMINATION.
(a) In the event of the termination of this Agreement by the Company or
Parent or both of them pursuant to Section 7.1, the terminating party shall
provide written notice of such termination to the other party and this
Agreement shall forthwith become void and there shall be no liability on the
part of Parent, Purchaser or the Company, except that Sections 5.2(b), 7.2,
7.3 and Article VIII shall survive the termination of this Agreement. The
foregoing shall not relieve any party for liability for damages actually
incurred as a result of any breach of this Agreement.
7.3 FEES AND EXPENSES.
(a) Except as otherwise provided in this Agreement and whether or not the
transactions contemplated by the Offer and this Agreement are consummated, all
costs and expenses incurred in connection with the transactions contemplated
by the Offer and this Agreement shall be paid by the party incurring such
expenses.
(b) The Company shall pay to Parent, in same day funds, upon demand, an
amount equal to $1,500,000 (the "INITIAL BREAK-UP FEE"), if any of the
following shall occur:
(i) if the Board of Directors of the Company or any committee thereof
shall have approved, or recommended that stockholders of the Company accept
or approve, an Acquisition Proposal by a third party, or shall have
resolved to do any of the foregoing;
(ii) if the Board of Directors of the Company or any committee thereof
shall have withdrawn or modified its approval of, or recommendation that
the stockholders of the Company accept or approve (as the case may be), the
Offer, this Agreement and the Merger, or shall have resolved to do any of
the foregoing; or
(iii) if the Company shall have failed to include in the Schedule 14D-9
the recommendation of the Board of Directors of the Company that the
stockholders of the Company accept the Offer.
In addition, the Company shall pay to Parent, in same day funds, upon
demand, an amount equal to $6,500,000 (the "SUBSEQUENT BREAK-UP FEE"), if
within a six-month period following the occurrence of any of the events
specified in clauses (i), (ii), or (iii) above, (1) the Company shall
consummate any merger, consolidation or sale of all or substantially all of
its assets, or (2) any person, entity or "group" (as that term is used in
Section 13(d)(3) of the Exchange Act), shall beneficially own (as that term is
used in Section 13(d)(3) of the Exchange Act), or shall have acquired, 50% or
more of the Shares, or shall have been granted any option or right,
conditional or otherwise, to acquire 50% or more of the Shares.
(c) The Initial Break-up Fee and the Subsequent Break-up Fee shall not be
deemed (either individually or together) to be liquidated damages, and the
right to the payment of the such Break-up Fees shall be in addition to (and
not a maximum payment in respect of) any other damages or remedies at law or
in equity to which Parent or Purchaser may be entitled as a result of the
Company's violation or breach of any term or provision of this Agreement.
25
7.4 AMENDMENT. This Agreement may be amended by each of the parties by
action taken by or on behalf of their respective Boards of Directors at any
time prior to the Effective Time; provided, however, that (i) such amendment
shall be in writing signed by all of the parties, (ii) any such waiver,
amendment or supplement by the Company shall be effective as against the
Company only if approved by a majority of the Continuing Directors and (iii)
after adoption of this Agreement and the Merger by the stockholders of the
Company, no amendment may be made without the further approval of the
stockholders of the Company which reduces the Merger Consideration or changes
the form thereof or changes any other terms and conditions of this Agreement
if the changes, alone or in the aggregate, would materially adversely affect
the stockholders of the Company.
7.5 WAIVER. At any time prior to the Effective Time, whether before or after
the Company's Stockholders Meeting, any party hereto, by action taken by its
Board of Directors, may (i) extend the time for the performance of any of the
obligations or other acts of any other party hereto or (ii) subject to the
provisions of Section 7.4, waive compliance with any of the agreements of any
other party or with any conditions to its own obligations. Any agreement on
the part of a party hereto to any such extension or waiver shall be valid only
if set forth in an instrument in writing signed on behalf of such party by a
duly authorized officer of such party. Notwithstanding the above, any waiver
given shall not apply to any subsequent failure of compliance with agreements
of the other party or conditions to its own obligations.
ARTICLE VIII
MISCELLANEOUS
8.1 NONSURVIVAL OF REPRESENTATION AND WARRANTIES; SEVERABILITY. The
representations and warranties set forth in this Agreement shall not survive
the purchase of Shares, if any, pursuant to the Offer. If any term or other
provision of this Agreement is invalid, illegal or incapable of being enforced
by rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so
as to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the extent possible.
8.2 NOTICES. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duly given, or
made as of the date delivered if sent via telecopier or delivered personally
(including, without limitation, delivery by commercial carrier warranting
next-day delivery) to the parties at the following addresses (or at such other
address for a party as shall be specified by similar notice, except that
notices of changes of address shall be effective upon receipt):
(a) If to Parent or Purchaser:
Elsevier Science Inc.
c/o Reed Elsevier Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
With copies to:
Wilson, Sonsini, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
Professional Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
26
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
and to:
Golden Gate Acquisition Corp.
(b) If to the Company:
MDL Information Systems, Inc.
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Executive Officer
With copies to:
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Esq.
8.3 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; NO ASSIGNMENT. This
Agreement, ▇▇▇▇▇ ▇, the documents delivered pursuant hereto and the
Confidentiality Agreement (i) constitute the entire agreement and supersede
all other prior agreements and undertakings, both written and oral, among the
parties, or any of them, with respect to the subject matter hereof, (ii) are
not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder (except as expressly set forth in Section 5.8
with respect to present officers and directors of the Company), and (iii) may
not be assigned, except that Parent or Purchaser may assign their rights
hereunder in whole or in part to one or more direct or indirect subsidiaries
or affiliates of Parent which, in written instruments reasonably satisfactory
to the Company, shall agree to make all representations and warranties of
Purchaser set forth herein and shall agree to assume all of such party's
obligations hereunder and be bound by all of the terms and conditions of this
Agreement; provided, however, that no such assignment shall relieve the
assignor of its obligations hereunder.
8.4 INTERPRETATION; KNOWLEDGE.
(i) When a reference is made in this Agreement to Exhibits, such reference
shall be to an Exhibit to this Agreement unless otherwise indicated. The words
"INCLUDE," "INCLUDES" and "INCLUDING" when used herein shall be deemed in each
case to be followed by the words "without limitation." The table of contents
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
When reference is made herein to "the business of" an entity, such reference
shall be deemed to include the business of all direct and indirect
subsidiaries of such entity. Reference to the subsidiaries of an entity shall
be deemed to include all direct and indirect subsidiaries of such entity.
(ii) For purposes of this Agreement, the term "KNOWLEDGE" means, with
respect to any matter in question, that any of the Chief Executive Officer,
President or Chief Financial Officer (or principal accounting officer if
different from the foregoing) of the parties, as the case may be, have
knowledge of such matter.
(iii) In this Agreement, any reference to any "subsidiary" of any party
shall mean any association, corporation, individual, partnership, trust, or
any other entity or organization in which such party has a direct or indirect
equity ownership interest of more than 50%. In this Agreement, any reference
to any action, suit, proceeding, claim, arbitration, or investigation being
"pending" or "threatened" shall mean that the relevant party shall have either
been served thereunder or otherwise notified of the existence thereof.
8.5 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been
27
signed by each of the parties and delivered to the other party, it being
understood that all parties need not sign the same counterpart.
8.6 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
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 hereof
in any court of the United States or any state having jurisdiction, this being
in addition to any other remedy to which they are entitled at law or in
equity.
8.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law
thereof; provided that issues involving the corporate governance of any of the
parties hereto shall be governed by their respective jurisdictions of
incorporation. Each of the parties hereto irrevocably consents to the
exclusive jurisdiction of any state or federal court within Delaware, in
connection with any matter based upon or arising out of this Agreement or the
matters contemplated herein, other than issues involving the corporate
governance of any of the parties hereto, agrees that process may be served
upon them in any manner authorized by the laws of the State of Delaware for
such persons and waives and covenants not to assert or plead any objection
which they might otherwise have to such jurisdiction and such process.
8.8 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule
of construction providing that ambiguities in an agreement or other document
will be construed against the party drafting such agreement or document.
8.9 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE ACTIONS OF THE PARTIES IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
28
IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
ELSEVIER SCIENCE INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chairman
GOLDEN GATE ACQUISITION CORP.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Chairman
MDL INFORMATION SYSTEMS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chief Executive
Officer
*****SIGNATURE PAGE -- AGREEMENT AND PLAN OF MERGER*****
29
ANNEX I
CONDITIONS OF THE OFFER
The term "AGREEMENT" as used in this Annex I shall mean the Agreement and
Plan of Merger to which this Annex I is attached, and all capitalized terms
used in this Annex I and not defined in this Annex I shall have the respective
meanings set forth in the Agreement.
Notwithstanding any other provision of the Offer, and in addition to (and
not in limitation of) Purchaser's rights to extend and amend the Offer at any
time, Purchaser shall not be required to accept for payment, purchase or pay
for, or may terminate or amend the Offer and may postpone the acceptance of,
and payment for, subject to Rule 14e-1(c) under the Exchange Act (whether or
not any Shares have theretofore been accepted for payment or paid for pursuant
to the Offer), any Shares tendered pursuant to the Offer if:
(i) any waiting period (and any extension thereof) under the HSR Act
applicable to the purchase of Shares pursuant to the Offer shall not have
expired or been terminated;
(ii) the Minimum Condition is not satisfied;
(iii) at any time on or after the date of the Agreement, any of the
following events shall have occurred:
(A) there shall have been any action taken or threatened, or any
statute, rule, regulation, judgment, temporary restraining order,
preliminary or permanent injunction or other order, decree or ruling
proposed, sought, promulgated, enacted, entered, enforced or deemed
applicable to the Offer or the Merger by any Governmental Entity or
arbitration panel that could reasonably be expected to, directly or
indirectly, (1) make the acceptance for payment or the payment for, or
the purchase of some or all of the Shares pursuant to the Offer illegal
or otherwise delay, restrict or prohibit consummation of the Offer or
the Merger or the consummation of any transaction contemplated by the
Merger Agreement, (2) result in a delay in or restrict the ability of
Purchaser, or render Purchaser unable, to accept for payment, pay for
or purchase some or all of the Shares, (3) require the divestiture by
Parent, Purchaser, the Company or any of their respective Subsidiaries
or affiliates of all or any portion of the business, assets or property
of any of them or any Shares or impose any material limitation on the
ability of any of them to conduct their business and own such assets,
properties or Shares, (4) impose any material limitation on the ability
of Parent, Purchaser or their affiliates to acquire or hold or to
exercise effectively all rights of ownership of the Shares, including
the right to vote any Shares purchased by any of them on all matters
properly presented to the stockholders of the Company, including,
without limitation, the adoption and approval of the Agreement and the
Merger, (5) result in a material diminution in the benefits expected to
be derived by Parent or Purchaser as a result of the transactions
contemplated by the Offer or the Agreement, or (6) impose any material
condition to the Offer, the Agreement or the Merger, which would be
adverse to Parent; or
(B) the Company shall have breached, or failed to comply with, in any
material respect, any of its covenants or obligations under the
Agreement or any representation or warranty of the Company in the
Agreement shall have been incorrect, in any material respect, when made
or shall have since ceased to be true and correct in any material
respect; or
(C) the Board of Directors of the Company or any committee thereof
shall have (1) withdrawn or modified (including without limitation, by
amendment of the Company's Schedule 14D-9) in a manner adverse to
Parent or Purchaser its approval or recommendation of the Offer, the
Merger or the Agreement, (2) approved or recommended any Acquisition
Proposal by a third party other than the Offer and the Merger, (3)
publicly resolved to do any of the foregoing, or (4) upon a request to
reaffirm the Company's approval or recommendation of the Offer, the
Agreement or the Merger, the Board of Directors of the Company shall
fail to do so within two business days after such request is made; or
(D) the Agreement shall have been terminated in accordance with its
terms; or
1
(E) there shall have occurred any Material Adverse Effect on the
Company, or any event, fact or change which could reasonably be
expected to result in a Material Adverse Effect on the Company; or
(F) the Employment Agreements of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
shall not be in full force and effect other than by reason of their
respective deaths or incapacities.
The foregoing conditions are for the sole benefit of Parent, Purchaser and
their affiliates and may be asserted by Parent or Purchaser regardless of the
circumstances (including any action or inaction by Parent or Purchaser or any
of their affiliates) giving rise to such condition. All the foregoing
conditions may be waived by Parent or Purchaser in whole or in part at any
time and from time to time in the sole discretion of Parent or Purchaser. The
failure by Parent or Purchaser at any time to exercise its rights with respect
to the foregoing conditions shall not be deemed a waiver of any such
condition, and each condition shall be deemed an ongoing condition with
respect to which Parent or Purchaser may assert its rights at any time and
from time to time.
2
