SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 25, 1998
COMPAQ COMPUTER CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 1-9026 76-0011617
(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
20555 SH 249 77070
HOUSTON, TEXAS (Zip Code)
(Address of Principal Executive Offices)
----------------------------------------------------
(281) 370-0670
(Registrant's telephone number, including area code)
----------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
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Item 5. Other Events.
On January 25, 1998, Compaq Computer Corporation, a Delaware corporation
("Compaq"), and Digital Equipment Corporation, a Massachusetts corporation
("Digital"), entered into an Agreement and Plan of Merger (the "Merger
Agreement"). Pursuant to the Merger Agreement and subject to the terms and
conditions set forth therein, a newly formed wholly owned subsidiary of Compaq
will be merged with and into Digital, with Digital to be the surviving
corporation of such merger (the "Merger"), and as a result of the Merger,
Digital will become a wholly owned subsidiary of Compaq.
The foregoing description of the terms of the transactions is qualified in
its entirety by reference to the Merger Agreement. A copy of the Merger
Agreement is filed as Exhibit 2.1 and is incorporated herein by reference.
Item 7. Exhibits.
Exhibit 2.1 Agreement and Plan of Merger dated as of January 25, 1998 among
Digital Equipment Corporation and Compaq Computer Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMPAQ COMPUTER CORPORATION
Dated: February 11, 1998 By: /s/ Linda S. Auwers
--------------------------
Linda S. Auwers
Vice President and
Associate General Counsel
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INDEX TO EXHIBITS
EXHIBIT NO. DESCRIPTION SEQUENTIAL
PAGE NO.
Exhibit 2.1 Agreement and Plan of Merger dated
as of January 25, 1998 among Digital
Equipment Corporation and Compaq
Computer Corporation
Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
dated as of
January 25, 1998
between
DIGITAL EQUIPMENT CORPORATION
and
COMPAQ COMPUTER CORPORATION
<PAGE>
TABLE OF CONTENTS
Page
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ARTICLE 1
The Merger
SECTION 1.01. The Merger 1
SECTION 1.02. Shareholder Approval 1
SECTION 1.03. Conversion of Shares 2
SECTION 1.04. Dissenter's Rights 3
SECTION 1.05. Surrender and Payment 4
SECTION 1.06. Stock Options 5
SECTION 1.07. Employee Stock Purchase Plans 6
SECTION 1.08. Stock Units 6
SECTION 1.09. Adjustments 7
SECTION 1.10. Fractional Shares; Options on Fractional Shares 7
SECTION 1.11. Withholding Rights 7
SECTION 1.12. Lost Certificates 8
SECTION 1.13. Closing 8
ARTICLE 2
The Surviving Corporation
SECTION 2.01. Articles of Organization 8
SECTION 2.02. Bylaws 8
SECTION 2.03. Directors and Officers 8
ARTICLE 3
Representations and Warranties of the Company
SECTION 3.01. Corporate Existence and Power 9
SECTION 3.02. Corporate Authorization 9
SECTION 3.03. Governmental Authorization 10
SECTION 3.04. Non-contravention 10
SECTION 3.05. Capitalization 10
SECTION 3.06. Subsidiaries 11
SECTION 3.07. SEC Filings 12
SECTION 3.08. Financial Statements 12
SECTION 3.09. Disclosure Documents 13
SECTION 3.10. Absence of Certain Changes 13
SECTION 3.11. No Undisclosed Material Liabilities 15
SECTION 3.12. Compliance with Laws and Court Orders 15
SECTION 3.13. Litigation 16
SECTION 3.14. Finder's Fees 16
SECTION 3.15. Taxes 16
SECTION 3.16. Employees Benefit Plans 17
SECTION 3.17. Environmental Matters 18
SECTION 3.18. Purchase Accounting Treatment 19
SECTION 3.19. Opinion of Financial Advisor 19
SECTION 3.20. Patents and Other Proprietary Rights 19
SECTION 3.21. Antitakeover Statutes and Rights Agreement 20
ARTICLE 4
Representations and Warranties of Parent
SECTION 4.01. Corporate Existence and Power 21
SECTION 4.02. Corporate Authorization 21
SECTION 4.03. Governmental Authorization 21
SECTION 4.04. Non-contravention 21
SECTION 4.05. Capitalization 22
SECTION 4.06. Subsidiaries 23
SECTION 4.07. SEC Filings 23
SECTION 4.08. Financial Statements 24
SECTION 4.09. Disclosure Documents 24
SECTION 4.10. Absence of Certain Changes 25
SECTION 4.11. No Undisclosed Material Liabilities 26
SECTION 4.12. Compliance with Laws and Court Orders 26
SECTION 4.13. Litigation 26
SECTION 4.14. Finder's Fees 26
SECTION 4.15. Taxes 26
<PAGE>
SECTION 4.16. Employee Benefit Plans 27
SECTION 4.17. Environmental Matters 28
SECTION 4.18. Purchase Accounting Treatment 29
SECTION 4.19. Opinion of Financial Advisor 29
SECTION 4.20. Patents and Other Proprietary Rights 29
ARTICLE 5
Covenants of the Company
SECTION 5.01. Conduct of the Company 30
SECTION 5.02. Stockholder Meeting; Proxy Material 31
SECTION 5.03. Other Offers 32
ARTICLE 6
Covenants of Parent
SECTION 6.01. Conduct of Parent 33
SECTION 6.02. Obligations of Merger Subsidiary 34
SECTION 6.03. Voting of Shares 34
SECTION 6.04. New Parent Preferred Stock 34
SECTION 6.05. Director and Officer Liability 34
SECTION 6.06. Registration Statement; Form S-8 35
SECTION 6.07. Stock Exchange Listing 35
SECTION 6.08. Employee Benefits 35
SECTION 6.09. Board Candidate 35
ARTICLE 7
Covenants of Parent and the Company
SECTION 7.01. Reasonable Best Efforts 35
SECTION 7.02. Filings; Other Action 36
SECTION 7.03. Public Announcements 37
SECTION 7.04. Further Assurances 37
SECTION 7.05. Notices of Certain Events 37
SECTION 7.06. Affiliates 38
SECTION 7.07. Access to Information; Confidentiality 38
ARTICLE 8
Conditions to the Merger
SECTION 8.01. Conditions to the Obligations of Each Party 39
SECTION 8.02. Conditions to the Obligations of Parent and Merger Subsidiary 39
SECTION 8.03. Conditions to the Obligations of the Company 40
ARTICLE 9
Termination
SECTION 9.01. Termination 40
SECTION 9.02. Effect of Termination 41
ARTICLE 10
Miscellaneous
SECTION 10.01. Notices 41
SECTION 10.02. Survival of Representations and Warranties 42
SECTION 10.03. Amendments; No Waivers 42
SECTION 10.04. Expenses 43
SECTION 10.05. Successors and Assigns 44
SECTION 10.06. Governing Law 44
SECTION 10.07. Jurisdiction 44
SECTION 10.08. Waiver of Jury Trial 45
SECTION 10.09. Counterparts; Effectiveness 45
SECTION 10.10. Entire Agreement 45
SECTION 10.11. Captions 45
SECTION 10.12. Severability 45
SECTION 10.13. Merger Subsidiary 46
SECTION 10.14. Specific Performance 46
SECTION 10.15. Definition and Usage 46
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER dated as of January 25, 1998 (the "Agreement")
between Digital Equipment Corporation, a Massachusetts corporation (the
"Company"), and Compaq Computer Corporation, a Delaware corporation
("Parent").
The parties hereto agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.01. The Merger. (a) At the Effective Time, a newly formed
wholly-owned subsidiary (as defined in Section 10.15) of Parent ("Merger
Subsidiary") shall be merged (the "Merger") with and into the Company in
accordance with the Massachusetts Business Corporation Law ("MBCL"), whereupon
the separate existence of Merger Subsidiary shall cease, and the Company shall
be the surviving corporation (the "Surviving Corporation").
(b) As soon as practicable after satisfaction or, to the extent
permitted hereunder, waiver of all conditions to the Merger set forth herein,
the Company and Merger Subsidiary will file articles of merger (the "Articles
Of Merger") with the Secretary of State of the Commonwealth of Massachusetts
and make all other filings or recordings required by the MBCL in connection
with the Merger. The "Effective Time" shall be the date and time specified in
the Articles of Merger.
(c) From and after the Effective Time, the Surviving Corporation
shall possess all the rights, powers, privileges and franchises and be subject
to all of the obligations, liabilities, restrictions and disabilities of the
Company and Merger Subsidiary, all as provided under the MBCL.
SECTION 1.02. Shareholder Approval. This Agreement shall be submitted
for adoption and approval to the holders of shares of common stock, par value
$1.00 per share, of the Company ("Company Common Stock"), and the conversion
of the Series A 8-7/8% Cumulative Preferred Stock, par value $1.00 per share
("Company Preferred Stock", and together with Company Common Stock, "Company
Stock") contemplated by the Agreement shall be submitted to the holders of
shares of Company Preferred Stock, in each case at the Company Stockholder
Meeting (as defined herein) in accordance with the provisions of this
Agreement. The affirmative vote of the holders of two-thirds of the issued
<PAGE>
and outstanding shares of Company Common Stock, voting as a class (the "Common
Stockholder Approval"), is required to approve this Agreement. The
affirmative vote of the holders of two-thirds of the issued and outstanding
shares of Company Preferred Stock, voting as a class (the "Preferred
Stockholder Approval"), is required to approve the conversion of the Company
Preferred Stock contemplated by this Agreement, it being understood that
obtaining the Preferred Stockholder Approval shall not be required in order to
consummate the Merger.
SECTION 1.03. Conversion of Shares. At the Effective Time:
(a) Each share of Company Common Stock outstanding immediately prior
to the Effective Time, together with the rights ("Rights") attached thereto
issued pursuant to the Rights Agreement dated as of December 11, 1989, between
the Company and First Chicago Trust Company of New York, as Rights Agent (the
"Rights Agreement"), shall (except as otherwise provided in Section 1.03(c)
and except for shares held by a Dissenting Holder (as defined herein)) be
converted into the right to receive (i) 0.945 shares (the "Common Stock
Consideration") of common stock, par value $.01 per share, of Parent ("Parent
Common Stock") and (ii) $30.00 in cash (the "Cash Consideration"). The Common
Stock Consideration and the Cash Consideration shall be referred to
collectively herein as the "Merger Consideration."
(b) Each share of Company Preferred Stock outstanding immediately
prior to the Effective Time shall (except as otherwise provided in Section
1.03(c) and except for shares held by a Dissenting Holder) be converted into
the right to receive one validly issued, fully paid and nonassessable share of
Series A Cumulative Preferred Stock of Parent (the "New Parent Preferred
Stock") which shall have the same rights, privileges and preferences with
respect to Parent as the Company Preferred Stock now has with respect to the
Company, and the terms of the New Parent Preferred Stock shall be identical to
those contained in the Company's Restated Articles of Organization, as amended
(the "Articles of Organization") as currently in effect, except that (i) as a
result of the Merger the issuer thereof shall be Parent rather than the
Company and (ii) the par value shall be $0.01 per share; provided, however,
that if the Preferred Stockholder Approval is not obtained, then each share
of Company Preferred Stock outstanding immediately prior to the Effective Time
shall (except as otherwise provided in Section 1.03(c)) remain issued and
outstanding after the Merger as Company Preferred Stock. The rights,
privileges and preferences of the New Parent Preferred Stock will be set forth
in the "Parent Certificate of Designation". If the Preferred Stockholder
Approval is obtained, in accordance with the Deposit Agreement dated as of
March 1, 1994 among the Company, Citibank, N.A., as depositary, and the
holders from time to time of the receipts described therein (the "Deposit
Agreement"), the depositary shares of the Company representing one-fourth of a
<PAGE>
share of Company Preferred Stock (the "Company Depositary Shares") will
represent one-fourth of a share of the New Parent Preferred Stock and any
required action to issue depositary shares of Parent representing one-fourth
of a share of New Parent Preferred Stock ("Parent Depositary Shares") in
exchange for Company Depositary Shares shall be promptly taken.
(c) Each share of Company Stock held by the Company as treasury stock
or owned by Parent or any of its subsidiaries immediately prior to the
Effective Time shall be canceled, and no payment shall be made with respect
thereto; and
(d) Each share of common stock of Merger Subsidiary outstanding
immediately prior to the Effective Time shall be converted into and become one
share of common stock of the Surviving Corporation with the same rights,
powers and privileges as the shares so converted and shall constitute the only
outstanding shares of capital stock of the Surviving Corporation (other than
any Company Preferred Stock if the Preferred Stockholder Approval is not
obtained).
SECTION 1.04. Dissenter's Rights. (a) No conversion under Section 1.03
hereof shall be made with respect to the shares of Company Common Stock or
Company Preferred Stock held by a Dissenting Holder; provided, however, that
each share of Company Common Stock or, if the Preferred Stockholder Approval
is obtained, Company Preferred Stock, as the case may be, outstanding
immediately prior to the Effective Time and held by a Dissenting Holder who
shall, after the Effective Time, withdraw his demand for appraisal or lose his
right of appraisal, in either case pursuant to the applicable provisions of
the MBCL, shall be deemed to be converted, as of the Effective Time, into the
Merger Consideration or the New Parent Preferred Stock (if the Preferred
Stockholder Approval has been obtained), as the case may be, as set forth in
Section 1.03 hereof. The term "Dissenting Holder" shall mean a holder of the
Company Common Stock or, if the Preferred Stockholder Approval is obtained,
Company Preferred Stock, as the case may be, who has demanded appraisal rights
in compliance with the applicable provisions of the MBCL concerning the right
of such holder to dissent from the Merger and demand appraisal of such
holder's shares of Company Common Stock or Company Preferred Stock, as the
case may be.
(b) Any Dissenting Holder (i) who files with the Company a written
objection to the Merger before the taking of the votes to approve this
Agreement by the shareholders of the Company and who states in such objection
that he intends to demand payment for his shares if the Merger is concluded
and (ii) whose shares are not voted in favor of the Merger shall be entitled
to demand payment from the Company for his shares of Company Common Stock or
Company Preferred Stock, as the case may be, and an appraisal of the value
<PAGE>
thereof, in accordance with the provisions of Sections 86 through 98 of the
MBCL.
SECTION 1.05. Surrender and Payment. (a) Prior to the Effective Time,
Parent shall appoint an agent (the "Exchange Agent") for the purpose of
Exchanging certificates representing Company Common Stock and Company Preferred
Stock (if the Preferred Stockholder Approval is obtained) (other than shares
held by a Dissenting Holder) (collectively, the "Certificates") for the Merger
Consideration and shares of New Parent Preferred Stock (if the Preferred
Stockholder Approval is obtained), respectively. As of the Effective Time,
Parent will make available to the Exchange Agent, as needed, the Merger
Consideration and the New Parent Preferred Stock (if the Preferred Stockholder
Approval is obtained) to be paid in respect of shares of Company Common Stock
and Company Preferred Stock (if the Preferred Stockholder Approval is
obtained). Promptly after the Effective Time, Parent will send, or will cause
the Exchange Agent to send, to each holder of shares of Company Common Stock
and Company Preferred Stock (if the Preferred Stockholder Approval is
obtained) (other than a Dissenting Holder), at the Effective Time a letter of
transmittal for use in such exchange (which shall specify that the delivery
shall be effected, and risk of loss and title shall pass, only upon proper
delivery of the Certificates to the Exchange Agent).
(b) Each holder of shares of Company Common Stock and Company
Preferred Stock (if the Preferred Stockholder Approval is obtained) that have
been converted into the right to receive the Merger Consideration or New
Parent Preferred Stock (if the Preferred Stockholder Approval is obtained),
respectively, will be entitled to receive, upon surrender to the Exchange
Agent of a Certificate, together with a properly completed letter of
transmittal, the Merger Consideration or the New Parent Preferred Stock (if
the Preferred Stockholder Approval is obtained) in respect of the Company
Common Stock and Company Preferred Stock (if the Preferred Stockholder
Approval is obtained), respectively, represented by such Certificate. Until
so surrendered, each such Certificate shall, after the Effective Time,
represent for all purposes only the right to receive such Merger Consideration
or New Parent Preferred Stock (if the Preferred Stockholder Approval is
obtained), as applicable.
(c) If any portion of the Merger Consideration or the New Parent
Preferred Stock is to be paid to a person (as defined in Section 10.15) other
than the person in whose name the Certificate is registered, it shall be a
condition to such payment that the Certificate so surrendered shall be
properly endorsed or otherwise be in proper form for transfer and that the
person requesting such payment shall pay to the Exchange Agent any transfer or
other taxes (as defined in Section 10.15) required as a result of such payment
to a person other than the registered holder of such Certificate or establish
to the satisfaction of the Exchange Agent that such tax has been paid or is
not payable.
<PAGE>
(d) After the Effective Time, there shall be no further registration
of transfers of shares of Company Common Stock or Company Preferred Stock (if
the Preferred Stockholder Approval is obtained). If, after the Effective Time,
Certificates (other than Certificates representing Company Preferred Stock if
the Preferred Stockholder Approval is not obtained) are presented to the
Surviving Corporation, they shall be canceled and exchanged for the
consideration provided for, and in accordance with the procedures set forth,
in this Article.
(e) Any portion of the Merger Consideration or New Parent Preferred
Stock (if the Preferred Stockholder Approval is obtained) made available to
the Exchange Agent pursuant to Section 1.05(a) that remains unclaimed by the
holders of shares of Company Common Stock or Company Preferred Stock (if the
Preferred Stockholder Approval is obtained), respectively, six months after
the Effective Time shall be returned to Parent, upon demand, and any such
holder who has not exchanged shares of Company Common Stock or Company
Preferred Stock (if the Preferred Stockholder Approval is obtained) for the
Merger Consideration or New Parent Preferred Stock, respectively, in
accordance with this Section prior to that time shall thereafter look only to
Parent for payment of the Merger Consideration or issuance of New Parent
Preferred Stock (if the Preferred Stockholder Approval is obtained) in respect
of such shares of Company Common Stock or Company Preferred Stock (if the
Preferred Stockholder Approval is obtained). Notwithstanding the foregoing,
Parent shall not be liable to any holder of shares of Company Common Stock or
Company Preferred Stock for any amount paid to a public official pursuant to
applicable abandoned property laws. Any amounts remaining unclaimed by
holders of shares of Company Common Stock or Company Preferred Stock (if
Preferred Stockholder Approval is obtained) two years after the Effective Time
(or such earlier date immediately prior to such time as such amounts would
otherwise escheat to or become property of any governmental entity) shall, to
the extent permitted by applicable law, become the property of Parent free and
clear of any claims or interest of any person previously entitled thereto.
(f) No dividends, interest or other distributions with respect to
securities of Parent constituting part of the Merger Consideration or New
Parent Preferred Stock (if the Preferred Stockholder Approval is obtained)
shall be paid to the holder of any unsurrendered Certificates until such
Certificates are surrendered as provided in this Section. Upon such
surrender, there shall be paid, without interest, to the person in whose name
the securities of Parent have been registered, all dividends, interest and
other distributions payable in respect of such securities on a date subsequent
to, and in respect of a record date after, the Effective Time.
SECTION 1.06. Stock Options. As of the Effective Time, each option to
purchase shares of Company Common Stock outstanding under any employee or
<PAGE>
director stock option or compensation plan or arrangement of the Company shall
be canceled, and Parent shall issue in exchange therefor a fully vested and
exercisable option to purchase shares of Parent Common Stock (a "Substitute
Option"). Such Substitute Option shall be a non-qualified stock option and
shall not be subject to favorable tax treatment in the United States or any
other jurisdiction. The number of shares of Parent Common Stock subject to
such Substitute Option (rounded to the nearest whole share) and the exercise
price thereunder (rounded to the nearest whole cent) shall be computed in
compliance with the requirements of Section 424(a) of the Internal Revenue
Code of 1986 (the "Code") and such Substitute Option shall be subject to all
of the other terms and conditions of the original option to which it relates.
Prior to the Effective Time, the Company will obtain such consents, if any, as
may be necessary to give effect to the transactions contemplated by this
Section. In addition, prior to the Effective Time, the Company will make any
amendments to the terms of such stock option or compensation plans or
arrangements that are necessary to give effect to the transactions
contemplated by this Section. Except as expressly set forth in this Section,
the Company will not, after the date hereof, without the written consent of
Parent, (i) amend any outstanding option to acquire shares of Company Stock or
(ii) grant any stock option or other stock-based compensation award.
Notwithstanding the foregoing, all options to acquire shares of Company Common
Stock will be amended to allow employees who are holders of outstanding
options on the date of their termination of employment to exercise such
options for a period of thirty (30) days (or until the end of the original
option term if earlier) following a termination of employment for any reason
(unless the applicable option agreement provides for a longer period of
post-termination exercise with respect to such termination, in which case such
longer period shall apply).
SECTION 1.07. Employee Stock Purchase Plans. As of the earlier of May 31,
1998 or Effective Time (the "Termination Date"), the Company's 1968 Employee
Stock Purchase Plan and the 1981 International Employee Stock Purchase Plan
shall be terminated. The rights of participants in such Plans with respect to
any offering period then underway under such Plan shall be determined by
treating the last business day prior to the Termination Date as the last day
of such offering period and by making such other pro-rata adjustments as may
be necessary to reflect the reduced offering period but otherwise treating
such offering period as a fully effective and completed offering period for
all purposes of such Plans. Prior to the Termination Date, the Company shall
take all actions (including, if appropriate, amending the terms of such Plans)
that are necessary to give effect to the transactions contemplated by this
Section.
SECTION 1.08. Stock Units. As of the Effective Time, each outstanding
Stock unit under the Company's Deferred Compensation Plan for Executives and
the Company's Deferred Compensation Plan for Non-Employee Directors shall be
amended or converted into a similar instrument of Parent, in each case with
<PAGE>
such adjustments as are appropriate to preserve the value inherent in such
Company stock units with no detrimental effects on the holders thereof. The
other terms of each such Company stock units, and the plans or agreements
under which they were issued to the extent they relate to such Company stock
units, shall continue to apply in accordance with their terms. Nothing herein
shall require Parent or any of its subsidiaries to allow any additional
deferrals into stock units under any such plans on and after the Effective
Time.
SECTION 1.09. Adjustments. If at any time during the period between the
date of this Agreement and the Effective Time, any change (other than
cancellation of the Company's 1968 Employee Stock Purchase Plan and the 1981
International Employee Stock Purchase Plan) in the outstanding shares of
capital stock of Parent shall occur, including by reason of any
reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, or any stock dividend thereon with a record date during
such period, the Merger Consideration shall be adjusted appropriately.
SECTION 1.10. Fractional Shares; Options on Fractional Shares. No
fractional shares of Parent Common Stock shall be issued in the Merger. All
fractional shares of Parent Common Stock that a holder of shares of Company
Stock would otherwise be entitled to receive as a result of the Merger shall
be aggregated and if a fractional share results from such aggregation, such
holder shall be entitled to receive, in lieu thereof, an amount in cash
determined by multiplying the closing sale price of the Parent Common Stock on
the New York Stock Exchange ("NYSE") on the trading day immediately preceding
the Effective Time by the fraction of a share of Parent Common Stock to which
such holder would otherwise have been entitled. No options covering
fractional shares of Parent Common Stock shall be issued in the Merger.
SECTION 1.11. Withholding Rights. Each of the Surviving Corporation and
Parent shall be entitled to deduct and withhold from the consideration
otherwise payable to any person pursuant to this Article such amounts as it is
required to deduct and withhold with respect to the making of such payment
under any provision of federal, state, local or foreign tax law. To the extent
that amounts are so withheld by the Surviving Corporation or Parent, as the
case may be, such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the shares of Company Stock in
respect of which such deduction and withholding was made by the Surviving
Corporation or Parent, as the case may be.
SECTION 1.12. Lost Certificates. If any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Surviving Corporation, the posting by such person of a bond,
<PAGE>
in such reasonable amount as the Surviving Corporation may direct, as
indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen
or destroyed Certificate the Merger Consideration or New Parent Preferred
Stock (if the Preferred Stockholder Approval is obtained) to be paid in
respect of the shares of Company Common Stock or Company Preferred Stock (if
the Preferred Stockholder Approval is obtained), respectively, represented by
such Certificates as contemplated by this Article.
SECTION 1.13. Closing. The closing of the Merger (the "CLOSING") will
take place at 10:00 a.m. on a date to be specified by the parties (the "CLOSING
DATE"), which shall be no later than the second business day after
satisfaction or waiver of the conditions set forth in Article 8, unless
another time or date is agreed to by the parties hereto. The Closing will be
held at such location as is agreed to by the parties hereto.
ARTICLE 2
THE SURVIVING CORPORATION
SECTION 2.01. Articles of Organization. The Articles of Organization of
the Company in effect at the Effective Time shall be the Articles of
Organization of the Surviving Corporation until amended in accordance with
applicable law.
SECTION 2.02. Bylaws. The bylaws of the Company in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until amended
in accordance with applicable law.
SECTION 2.03. Directors and Officers. From and after the Effective Time,
until successors are duly elected or appointed and qualified in accordance
with applicable law, (i) the directors of Merger Subsidiary at the Effective
Time shall be the directors of the Surviving Corporation and (ii) the officers
(as defined in Section 10.15) of the Company at the Effective Time shall be
the officers of the Surviving Corporation.
<PAGE>
ARTICLE 3
Representations and Warranties of the Company
The Company represents and warrants to Parent that, except for
inaccuracies in the representations and warranties resulting from compliance
by the Company with any of its obligations under this Agreement or actions
taken by the Company in accordance with Sections 5.02, 5.03, 7.01 or 7.02 and
except as disclosed in the Company Schedule of Exceptions or in the Company
SEC Filings (as defined herein) filed prior to the date hereof:
SECTION 3.01. Corporate Existence and Power. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
Commonwealth of Massachusetts and has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would
not, individually or in the aggregate, have a material adverse effect (as
defined in Section 10.15) on the Company. The Company is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
where such qualification is necessary, except for those jurisdictions where
failure to be so qualified would not, individually or in the aggregate, have a
material adverse effect on the Company. The Company has heretofore delivered
to Parent true and complete copies of the Articles of Organization and bylaws
of the Company as currently in effect.
SECTION 3.02. Corporate Authorization. (a) The execution, delivery and
performance by the Company of this Agreement and the consummation of the
transactions contemplated hereby are within the Company's corporate powers
and, except for the required approval of the holders of Company Common Stock
in connection with the consummation of the Merger, have been duly authorized
by all necessary corporate action. The affirmative vote of the holders of
two-thirds of the outstanding shares of Company Common Stock is the only vote
of the holders of any of the Company's capital stock necessary in connection
with the consummation of the Merger. Except for the vote of the holders of
Company Preferred Stock contemplated by Section 1.02 (which is not necessary
to permit the consummation of the Merger), no other vote of the holders of the
Company's capital stock is necessary in connection with the conversion of the
Company Preferred Stock contemplated by this Agreement. This Agreement
constitutes a valid and binding agreement of the Company.
<PAGE>
(b) The Company's Board of Directors, at a meeting duly called and
held, has unanimously (i) determined that this Agreement and the transactions
contemplated hereby (including the Merger) are fair to and in the best
interests of the Company's stockholders, (ii) approved and adopted this
Agreement and the transactions contemplated hereby (including the Merger),
which approval satisfies in full any applicable requirements of the MBCL and
any applicable requirements of Chapters 110C, 110D and 110F of the
Massachusetts General Law, and (iii) resolved (subject to Section 5.02(b)) to
recommend approval and adoption of this Agreement by the holders of Company
Common Stock.
SECTION 3.03. Governmental Authorization. The execution, delivery and
performance by the Company of this Agreement and the consummation by the
Company of the transactions contemplated hereby require no action by or in
respect of, or filing with, any governmental body, agency, official or
authority other than (a) the filing of the Articles of Merger in accordance
with the MBCL, (b) compliance with any applicable requirements of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 ("HSR Act"), the
Securities Act of 1933 ("1933 Act"), the Securities Exchange Act of 1934
("1934 Act"), foreign or state securities or Blue Sky laws and Council
Regulation No. 4064/89 of the European Community (the "EC Merger Regulation"),
and (c) any other filings, approvals or authorizations which, if not obtained,
would not, individually or in the aggregate, have a material adverse effect on
the Company or materially impair the ability of the Company to consummate the
transactions contemplated by this Agreement.
SECTION 3.04. Non-contravention. The execution, delivery and performance
by the Company of this Agreement and the consummation by the Company of the
transactions contemplated hereby does not and will not (i) violate the
Articles of Organization or bylaws of the Company, (ii) assuming compliance
with the matters referred to in Section 3.03, violate any applicable law,
rule, regulation, judgment, injunction, order or decree, (iii) require any
consent or other action by any person under, constitute a default under, or
give rise to any right of termination, cancellation or acceleration of any
right or obligation of the Company or any of its subsidiaries or to a loss of
any benefit to which the Company or any of its subsidiaries is entitled under
any provision of any agreement or other instrument binding upon the Company or
any of its subsidiaries or any license, franchise, permit, certificate,
approval or other similar authorization affecting, or relating in any way to,
the assets or business of the Company or any of its subsidiaries or (iv)
result in the creation or imposition of any Lien (as defined herein) on any
asset of the Company or any of its subsidiaries except, in the case of clauses
(ii), (iii) and (iv), for such matters as would not, individually or in the
aggregate, have a material adverse effect on the Company or materially impair
the ability of the Company to consummate the transactions contemplated by this
Agreement. "Lien" means, with respect to any property or asset, any mortgage,
<PAGE>
lien, pledge, charge, security interest, encumbrance or other adverse claim of
any kind in respect of such property or asset.
SECTION 3.05. Capitalization. The authorized capital stock of the
Company consists of 450,000,000 shares of Company Common Stock and 25,000,000
shares of preferred stock of the Company (of which 4,000,000 shares are
designated as Series A 8-7/8% Cumulative Preferred Stock). As of December 27,
1997, there were outstanding 146,789,296 shares of Company Common Stock,
4,000,000 shares of Company Preferred Stock, options to purchase an aggregate
of approximately 14,470,000 shares of Company Common Stock at an average
exercise price of $43.70 per share and an aggregate of 214,638 shares of
Company Common Stock issued or relating to restricted stock awards or other
stock-based compensation arrangements. All outstanding shares of capital
stock of the Company have been duly authorized and validly issued and are
fully paid and non-assessable. Except as set forth in this Section and except
for changes since December 27, 1997 resulting from the exercise of employee
stock options outstanding on such date, there are no outstanding (i) shares of
capital stock or voting securities of the Company, (ii) securities of the
Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company or (iii) options, restricted stock, other
stock-based compensation awards or other rights to acquire from the Company or
other obligation of the Company to issue, any capital stock, voting securities
or securities convertible into or exchangeable for capital stock or voting
securities of the Company. There are no outstanding obligations of the Company
or any of its subsidiaries to repurchase, redeem or otherwise acquire any
securities referred to in clauses (i), (ii) or (iii) above.
SECTION 3.06. Subsidiaries. (a) Each subsidiary of the Company is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would
not, individually or in the aggregate, have a material adverse effect on the
Company. Each subsidiary of the Company is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified would not, individually or in the aggregate, have a material
adverse effect on the Company. All material subsidiaries of the Company and
their respective jurisdictions of incorporation are identified in the
Company's annual report on Form 10-K for the fiscal year ended June 28, 1997
("Company 10-K").
(b) All of the outstanding capital stock of, or other voting
securities or ownership interests in, each material subsidiary of the Company
<PAGE>
is owned by the Company, directly or indirectly, free and clear of any Lien
and free of any other limitation or restriction (including any restriction on
the right to vote, sell or otherwise dispose of such capital stock or other
voting securities or ownership interests), other than any restrictions imposed
under the 1933 Act. Except as set forth in this Section, there are no
outstanding (i) shares of capital stock or other voting securities or
ownership interests in any of the Company's subsidiaries, (ii) securities of
the Company or any of its subsidiaries convertible into or exchangeable for
shares of capital stock or other voting securities or ownership interests in
any of the Company's subsidiaries or (iii) options or other rights to acquire
from the Company or any of its subsidiaries, or other obligation of the
Company or any of its subsidiaries to issue, any capital stock or other voting
securities or ownership interests in, or any securities convertible into or
exchangeable for any capital stock or other voting securities or ownership
interests in, any of the Company's subsidiaries. There are no outstanding
obligations of the Company or any of its subsidiaries to repurchase, redeem or
otherwise acquire any of the securities referred to in clauses (i), (ii) or
(iii) above.
SECTION 3.07. SEC Filings. (a) The Company has delivered to Parent (i)
the Company's annual report on Form 10-K for its fiscal year ended June 28,
1997, (ii) its quarterly report on Form 10-Q for its fiscal quarter ended
September 28, 1997, (iii) its proxy or information statements relating to
meetings of, or actions taken without a meeting by, the stockholders of the
Company held since June 28, 1997 and (iv) all of its other reports,
statements, schedules and registration statements filed with the Securities
and Exchange Commission ("SEC") since June 28, 1997 (the documents referred to
in this Section 3.07(a) being referred to collectively as the "COMPANY SEC
FILINGS"). The Company's quarterly report on Form 10-Q for its fiscal quarter
ended September 28, 1997 is referred to herein as the "COMPANY 10-Q".
(b) As of its filing date, each Company SEC Filing complied as to
form in all material respects with the applicable requirements of the 1933 Act
and the 1934 Act.
(c) As of its filing date, each Company SEC Filing filed pursuant to
the 1934 Act did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(d) Each such registration statement, as amended or supplemented, if
applicable, filed pursuant to the 1933 Act did not, as of the date such
statement or amendment became effective, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
<PAGE>
SECTION 3.08. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of the
Company included in the Company SEC Filings fairly present, in conformity with
United States generally accepted accounting principles ("GAAP") applied on a
consistent basis (except as may be indicated in the notes thereto), the
consolidated financial position of the Company and its subsidiaries as of the
dates thereof and their consolidated results of operations and cash flows for
the periods then ended (subject to normal year-end adjustments in the case of
any unaudited interim financial statements). For purposes of this Agreement,
"Company Balance Sheet" means the consolidated balance sheet of the Company as
of September 28, 1997 set forth in the Company 10-Q and "Company Balance Sheet
Date" means September 28, 1997.
SECTION 3.09. Disclosure Documents. (a) The proxy or information
statement of the Company to be filed with the SEC in connection with the Merger
(the "Company Proxy Statement") and any amendments or supplements thereto will,
when filed, comply as to form in all material respects with the applicable
requirements of the 1934 Act. At the time the Company Proxy Statement or any
amendment or supplement thereto is first mailed to stockholders of the Company
and at the time such stockholders vote on the approval and adoption of this
Agreement, the Company Proxy Statement, as supplemented or amended, if
applicable, will not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements contained
therein, in the light of the circumstances under which they were made, not
misleading. The foregoing representations and warranties will not apply to
statements or omissions included in the Company Proxy Statement or any
amendment or supplement thereto based upon information furnished to the
Company by Parent for use therein.
(b) None of the information furnished to Parent for use in (or
incorporation by reference in) the Registration Statement (as defined in
Section 4.09(a)) or any amendment or supplement thereto will contain, at the
time the Registration Statement or any amendment or supplement thereto becomes
effective or at the Effective Time, 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 contained therein not misleading.
SECTION 3.10. Absence of Certain Changes. Since the Company Balance
Sheet Date, the business of the Company and its subsidiaries has been
conducted in the ordinary course consistent with past practices and there has
not been:
(a) any event, occurrence, development or state of circumstances or
facts which would, individually or in the aggregate, have a material adverse
effect on the Company (other than adverse effects resulting from the execution
<PAGE>
and performance of this Agreement, changes in general economic conditions or
general changes in the computer industry);
(b) any declaration, setting aside or payment of any dividend or
other distribution with respect to any shares of capital stock of the Company
other than dividends not exceeding $8,875,000 in the aggregate per quarter on
the Company Preferred Stock, or any repurchase, redemption or other
acquisition by the Company or any of its subsidiaries of any outstanding
shares of capital stock or other securities of, or other ownership interests
in, the Company or any of its subsidiaries;
(c) except for amendments to the Company's Rights Agreement
contemplated by Section 3.21, any amendment of any material term of any
outstanding security of the Company or any of its subsidiaries;
(d) any incurrence, assumption or guarantee by the Company or any of
its subsidiaries of any material indebtedness for borrowed money other than in
the ordinary course and in amounts and on terms consistent with past
practices;
(e) any creation or other incurrence by the Company or any of its
subsidiaries of any Lien on any material asset other than in the ordinary
course consistent with past practices;
(f) any making of any material loan, advance or capital contributions
to or investment in any person other than loans, advances or capital
contributions to or investments in wholly-owned subsidiaries of the Company
made in the ordinary course consistent with past practices;
(g) as of the date hereof, any damage, destruction or other casualty
loss (whether or not covered by insurance) affecting the business or assets of
the Company or any of its subsidiaries which would, individually or in the
aggregate, have a material adverse effect on the Company;
(h) any transaction or commitment made, or any contract or agreement
entered into, by the Company or any of its subsidiaries relating to its assets
or business (including the acquisition or disposition of any assets) or any
relinquishment by the Company or any of its subsidiaries of any contract or
other right, in either case, material to the Company and its subsidiaries,
taken as a whole, other than transactions and commitments in the ordinary
course consistent with past practices and those contemplated by this
Agreement;
(i) any change in any method of accounting, method of tax accounting,
or accounting practice by the Company or any of its subsidiaries, except for
<PAGE>
any such change required by reason of a concurrent change in GAAP or
Regulation S-X promulgated under the 1934 Act;
(j) any (i) grant of any severance or termination pay to any current
or former director, officer or employee of the Company or any of its
subsidiaries, (ii) increase in benefits payable under any existing severance
or termination pay policies or employment agreements, (iii) entering into of
any employment, deferred compensation or other similar agreement (or any
amendment to any such existing agreement) with any current or former director,
officer or employee of the Company or any of its subsidiaries, (iv)
establishment, adoption or amendment (except as required by applicable law) of
any collective bargaining, bonus, profit sharing, thrift, pension, retirement,
deferred compensation, compensation, stock option, restricted stock or other
benefit plan or arrangement covering any current or former director, officer
or employee of the Company or any of its subsidiaries, or (v) increase in
compensation, bonus or other benefits payable or otherwise made available to
any current or former director, officer or employee of the Company or any of
its subsidiaries (other than ordinary course salary increases for employees
other than officers and directors);
(k) any material labor dispute, other than routine individual
grievances, or, to the knowledge (as defined in Section 10.15) of the Company,
any activity or proceeding by a labor union or representative thereof to
organize any employees of the Company or any of its subsidiaries, which
employees were not subject to a collective bargaining agreement at the Company
Balance Sheet Date, or any material lockouts, strikes, slowdowns, work
stoppages or threats thereof by or with respect to such employees; or
(l) any tax election or any settlement or compromise of any tax
liability, in either case that is material to the Company and its
subsidiaries, taken as a whole.
SECTION 3.11. No Undisclosed Material Liabilities. As of the date
hereof, there are no liabilities of the Company or any of its subsidiaries of
any kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, and there is no existing condition, situation or
set of circumstances which could reasonably be expected to result in such a
liability, other than:
(a) liabilities or obligations provided for in the Company Balance
Sheet or disclosed in the notes thereto;
(b) other liabilities or obligations, which would not, individually
or in the aggregate, have a material adverse effect on the Company; and
(c) liabilities or obligations under this Agreement.
<PAGE>
SECTION 3.12. Compliance with Laws and Court Orders. The Company and
each of its subsidiaries is and has been in compliance with, and to the
knowledge of the Company, is not under investigation with respect to and has
not been threatened to be charged with or given notice of any violation of,
any applicable law, rule, regulation, judgment, injunction, order or decree,
except for such matters as would not, individually or in the aggregate, have a
material adverse effect on the Company.
<PAGE>
SECTION 3.13. Litigation. Except as set forth in the Company SEC
Filings prior to the date hereof, there is no action, suit, investigation,
audit or proceeding pending against, or to the knowledge of the Company
threatened against or affecting, the Company or any of its subsidiaries or any
of their respective properties before any court or arbitrator or any
governmental body, agency or official which would, individually or in the
aggregate, have a material adverse effect on the Company.
SECTION 3.14. Finder's Fees. Except for Lehman Brothers, a copy of whose
engagement agreement has been provided to Parent, there is no investment
banker, broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of the Company or any of its subsidiaries who
might be entitled to any fee or commission in connection with the transactions
contemplated by this Agreement.
SECTION 3.15. Taxes. Except as set forth in the Company Balance Sheet
(including the notes thereto) and except as would not, individually or in the
aggregate, have a material adverse effect on the Company, (i) all tax returns,
statements, reports and forms (collectively, the "Company Returns") required
to be filed with any taxing authority by, or with respect to, the Company and
its subsidiaries and each affiliated, combined, consolidated or unitary group
of which the Company is a member are true, correct and complete and have been
filed in accordance with all applicable laws; (ii) the Company and its
subsidiaries have timely paid all taxes shown as due and payable on the
Company Returns that have been so filed (other than taxes which are being
contested in good faith and for which adequate reserves are reflected on the
Company Balance Sheet) and, as of the time of filing, the Company Returns
correctly reflected the facts regarding the income, business, assets,
operations, activities and the status of the Company and its subsidiaries;
(iii) the Company and its subsidiaries have made adequate provision in
accordance with GAAP for all taxes payable by the Company and its subsidiaries
for which no Company Return has yet been filed; (iv) the charges, accruals and
reserves for taxes with respect to the Company and its subsidiaries reflected
on the Company Balance Sheet are adequate under GAAP to cover the tax
liabilities accruing through the date thereof; (v) there is no action, suit,
proceeding, audit or claim now proposed or pending against or with respect to
the Company or any of its subsidiaries in respect of any tax where there is a
<PAGE>
reasonable possibility of an adverse determination; (vi) neither the Company
nor any of its subsidiaries has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code; and (vii)
neither the Company nor any of its subsidiaries has been a member of an
affiliated, consolidated, combined or unitary group other than one of which
the Company was the common parent.
SECTION 3.16. Employees Benefit Plans. (a Prior to the date hereof, the
Company has provided Parent with a list identifying each material "employee
benefit plan," as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974 ("ERISA"), each employment, severance or similar
contract, plan, arrangement or policy applicable to any director, former
director, employee or former employee of the Company or any of its affiliates
(as defined in Section 10.15) and each material plan or arrangement, (written
or oral), providing for compensation, bonuses, profit-sharing, stock option or
other stock related rights or other forms of incentive or deferred
compensation, vacation benefits, insurance coverage (including any
self-insured arrangements), health or medical benefits, disability benefits,
workers' compensation, supplemental unemployment benefits, severance benefits
and post-employment or retirement benefits (including compensation, pension,
health, medical or life insurance benefits) which is maintained, administered
or contributed to by the Company or any of its affiliates and covers any
employee or director or former employee or director of the Company or any of
its affiliates, or under which the Company or any of its affiliates has any
liability. Such plans are referred to collectively herein as the "Company
Employee Plans".
(b) Each Company Employee Plan has been maintained in compliance with
its terms and with the requirements prescribed by any and all statutes, order,
rules and regulations (including but not limited to ERISA and the Code) which
are applicable to such Plan, except where failure to so comply would not,
individually or in the aggregate, have a material adverse effect on the
Company.
(c) Neither the Company nor any affiliate of the Company has incurred
a liability under Title IV of ERISA that has not been satisfied in full, and
no condition exists that presents a material risk to the Company or any
affiliate of the Company of incurring any such liability other than liability
for premiums due the Pension Benefit Guaranty Corporation (which premiums have
been paid when due).
(d) Each Company Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during
the period from its adoption to date, and each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code.
<PAGE>
(e) No director or officer or other employee of the Company or any of
its subsidiaries will become entitled to any retirement, severance or similar
benefit or enhanced or accelerated benefit solely as a result of the
transactions contemplated hereby. Without limiting the generality of the
foregoing, no amount required to be paid or payable to or with respect to any
employee of the Company or any of its subsidiaries in connection with the
transactions contemplated hereby (either solely as a result thereof or as a
result of such transactions in conjunction with any other event) will be an
"excess parachute payment" within the meaning of Section 280G of the Code.
(f) Except as set forth in the Company SEC Filings prior to the date
hereof, no Company Employee Plan provides post-retirement health and medical,
life or other insurance benefits for retired employees of the Company or any
of its subsidiaries.
(g) There has been no amendment to, written interpretation or
announcement (whether or not written) by the Company or any of its affiliates
relating to, or change in employee participation or coverage under, any
Company Employee Plan which would increase materially the expense of
maintaining such Company Employee Plan above the level of the expense incurred
in respect thereof for the 12 months ended on the Company Balance Sheet Date.
SECTION 3.17. Environmental Matters. (a) Except as set forth in the
Company SEC Filings prior to the date hereof and except as would not,
individually or in the aggregate, have a material adverse effect on the
Company,
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed, no
penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review is pending or, to the knowledge of the Company, is
threatened by any governmental entity or other person relating to or arising
out of any Environmental Law;
(ii) the Company is and has been in compliance with all Environmental
Laws and all Environmental Permits; and
(iii) there are no liabilities of or relating to the Company or any of
its subsidiaries of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise arising under or relating to
any Environmental Law and there are no facts, conditions, situations or set of
circumstances which could reasonably be expected to result in or be the basis
for any such liability.
<PAGE>
(b) The following terms shall have the meaning set forth below:
"Company" and "its subsidiaries" shall, for purposes of this Section,
include any entity which is, in whole or in part, a corporate predecessor of
the Company or any of its subsidiaries.
"Environmental Laws" means any federal, state, local or foreign law
(including, without limitation, common law), treaty, judicial decision,
regulation, rule, judgment, order, decree, injunction, permit or governmental
restriction or requirement or any agreement with any governmental authority or
other third party, relating to human health and safety or the environment and
arising from the use, presence, disposal, discharge or release of pollutants,
contaminants, wastes or chemicals or any toxic, radioactive, ignitable,
corrosive, reactive or otherwise hazardous substances, wastes or materials.
"Environmental Permits" means, with respect to any person, all permits,
licenses, franchises, certificates, approvals and other similar authorizations
of governmental authorities relating to or required by Environmental Laws and
affecting, or relating in any way to, the business of such person as currently
conducted.
SECTION 3.18. Purchase Accounting Treatment. The Company intends that
the Merger be accounted for under the "purchase" method of accounting.
SECTION 3.19. Opinion of Financial Advisor. The Company's Board of
Directors has received the opinion of Lehman Brothers, financial advisor to the
Company, to the effect that, as of the date of this Agreement, the Merger
Consideration and the New Parent Preferred Stock (if the Preferred Stockholder
Approval is obtained) is fair to the holders of Company Common Stock and
Company Preferred Stock (if the Preferred Stockholder Approval is obtained),
respectively, from a financial point of view, and such opinion has not been
withdrawn.
SECTION 3.20. Patents and Other Proprietary Rights. The Company and its
subsidiaries have rights to use, whether through ownership, licensing or
otherwise, all patents, trademarks, service marks, trade names, copyrights,
trade secrets, and other proprietary rights and processes of which the Company
is aware that are material to its business as now conducted (collectively the
"Company Intellectual Property Rights"). Except for such matters as would
not, individually or in the aggregate, have a material adverse effect on the
Company, (a) the Company and its subsidiaries have not assigned, hypothecated
or otherwise encumbered any of the Company Intellectual Property Rights and
(b) none of the licenses included in the Company Intellectual Property Rights
<PAGE>
purports to grant sole or exclusive licenses to another person including,
without limitation, sole or exclusive licenses limited to specific fields of
use. To the best of the Company's knowledge, the patents owned by the Company
and its subsidiaries are valid and enforceable and any patent issuing from
patent applications of the Company and its subsidiaries will be valid and
enforceable, except as such invalidity or unenforceability would not,
individually or in the aggregate, have a material adverse effect on the
Company. The Company has no knowledge of any infringement by any other person
of any of the Company Intellectual Property Rights, and the Company and its
subsidiaries have not, to the Company's knowledge, entered into any agreement
to indemnify any other party against any charge of infringement of any of the
Company Intellectual Property Rights, except for such matters as would not,
individually or in the aggregate, have a material adverse effect on the
Company. To the best of the Company's knowledge, the Company and its
subsidiaries have not and do not violate or infringe any intellectual property
right of any other person, and neither the Company nor any of its subsidiaries
have received any communication alleging that it violates or infringes the
intellectual property right of any other person, except for such matters as
would not, individually or in the aggregate, have a material adverse effect on
the Company. Except for such matters as would not, individually or in the
aggregate, have a material adverse effect in the Company, the Company and its
subsidiaries have not been sued for infringing any intellectual property right
of another person. None of the Company Intellectual Property Rights or other
know-how relating to the business of the Company and its subsidiaries, the
value of which to the Company is contingent upon maintenance of the
confidentiality thereof, has been disclosed by the Company or any affiliate
thereof to any person other than those persons who are bound to hold such
information in confidence pursuant to confidentiality agreements or by
operation of law.
SECTION 3.21. Antitakeover Statutes and Rights Agreement. The Board of
Directors of the Company has approved this Agreement and the transactions
contemplated hereby, and neither the provisions of Chapter 110C, 110D, or 110F
of the Massachusetts General Laws nor any other antitakeover or similar
statute or regulation applies to the transactions contemplated hereby. The
Company has taken all action necessary to render the Rights issued pursuant to
the terms of the Company's Rights Agreement inapplicable to the Merger, this
Agreement, and the other transactions contemplated hereby.
<PAGE>
ARTICLE 4
Representations and Warranties of Parent
Parent represents and warrants to the Company that, except for
inaccuracies in the representations and warranties resulting from compliance
by Parent with any of its obligations under this Agreement or actions taken by
the Company in accordance with Sections 7.01 or 7.02, and except as disclosed
in the Parent Schedule of Exceptions or the Parent SEC Filings (as defined
herein) filed prior to the date hereof:
SECTION 4.01. Corporate Existence and Power. Parent is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware. At the Effective Time, Merger Subsidiary will be a
corporation duly incorporated, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts. Parent has all corporate powers
and all governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would
not, individually or in the aggregate, have a material adverse effect on
Parent. Parent is duly qualified to do business as a foreign corporation and
is in good standing in each jurisdiction where such qualification is
necessary, except for those jurisdictions where failure to be so qualified
would not, individually or in the aggregate, have a material adverse effect on
Parent. Parent has heretofore delivered to the Company true and complete
copies of the certificate of incorporation and bylaws of Parent as currently
in effect. From the date of its incorporation, Merger Subsidiary will not
engage in any activities other than in connection with or as contemplated by
this Agreement.
SECTION 4.02. Corporate Authorization. The execution, delivery and
performance by Parent of this Agreement and the consummation by Parent and
Merger Subsidiary of the transactions contemplated hereby are within the
corporate powers of Parent and Merger Subsidiary and have been duly authorized
by all necessary corporate action. This Agreement constitutes a valid and
binding agreement of Parent.
SECTION 4.03. Governmental Authorization. The execution, delivery and
performance by Parent of this Agreement and the consummation by Parent and
Merger Subsidiary of the transactions contemplated hereby require no action by
or in respect of, or filing with, any governmental body, agency, official or
authority other than (a) the filing of the Articles of Merger in accordance
with the MBCL, (b compliance with any applicable requirements of the HSR Act,
the 1933 Act, the 1934 Act, foreign or state securities or Blue Sky laws and
the EC Merger Regulation, and (c) any other filings, approvals or
<PAGE>
authorizations which, if not obtained, would not, individually or in the
aggregate, have a material adverse effect on Parent or materially impair the
ability of the Parent or Merger Subsidiary to consummate the transactions
contemplated by this Agreement.
SECTION 4.04. Non-contravention. The execution, delivery and performance
by Parent of this Agreement, and the consummation by Parent and Merger
Subsidiary of the transactions contemplated hereby do not and will not (i)
violate the certificate of incorporation or bylaws of Parent or the articles of
organization or bylaws of Merger Subsidiary, (ii) assuming compliance with the
matters referred to in Section 4.03, violate any applicable law, rule,
regulation, judgment, injunction, order or decree, (iii) require any consent
or other action by any person under, constitute a default under, or give rise
to any right of termination, cancellation or acceleration of any right or
obligation of Parent or any of its subsidiaries or to a loss of any benefit to
which Parent or any of its subsidiaries is entitled under any provision of any
agreement or other instrument binding upon Parent or any of its subsidiaries
or any license, franchise, permit, certificate, approval or other similar
authorization affecting, or relating in any way to, the assets or business of
Parent or any of its subsidiaries or (iv) result in the creation or
imposition of any Lien on any asset of Parent or any of its subsidiaries
except, in the case of clauses (ii), (iii) and (iv), for such matters as would
not, individually or in the aggregate, have a material adverse effect on
Parent or materially impair the ability of Parent to consummate the
transactions contemplated by this Agreement.
SECTION 4.05. Capitalization. (a) The authorized capital stock of Parent
consists of 3,000,000,000 shares of Parent Common Stock, and 10,000,000 shares
of preferred stock, par value $0.01 per share ("Parent Preferred Stock"). No
shares of Parent Preferred Stock have been issued. As of December 31, 1997
(adjusted to reflect the two-for-one stock split with a record date of
December 31, 1997) there were outstanding 1,518,576,494 shares of Parent
Common Stock, 3,337,354 shares of Parent Common Stock held as treasury shares,
options to purchase an aggregate of 117,172,850 shares of Parent Common Stock
and warrants to purchase an aggregate of 1,050,000 shares of Parent Common
Stock. All outstanding shares of capital stock of Parent have been duly
authorized and validly issued and are fully paid and non-assessable. Except
as set forth in this Section and except for changes since December 31, 1997
resulting from the transactions contemplated hereby, the exercise of stock
options or the grant of stock based compensation to directors or employees or
from the issuance of stock in connection with a merger or other acquisition or
business combination determined by Parent's Board of Directors to be in the
best interests of Parent and its stockholders, there are no outstanding (i)
shares of capital stock or voting securities of Parent, (ii) securities of
Parent convertible into or exchangeable for shares of capital stock or voting
securities of Parent or (iii) options or other rights to acquire from Parent
<PAGE>
or other obligation of Parent to issue, any capital stock, voting securities
or securities convertible into or exchangeable for capital stock or voting
securities of Parent. There are no outstanding obligations of Parent or any
of its subsidiaries to repurchase, redeem or otherwise acquire any securities
referred to in clauses (i), (ii) or (iii) above.
(b) The shares of Parent Common Stock to be issued as part of the
Merger Consideration have been duly authorized and when issued and delivered
in accordance with the terms of this Agreement, will have been validly issued
and will be fully paid and non-assessable and the issuance thereof is not
subject to any preemptive or other similar right.
SECTION 4.06. Subsidiaries. (a) Each subsidiary of Parent is a
corporation duly incorporated, validly existing and in good standing under the
laws of its jurisdiction of incorporation, has all corporate powers and all
governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except for those licenses,
authorizations, permits, consents and approvals the absence of which would
not, individually or in the aggregate, have a material adverse effect on
Parent. Each subsidiary of Parent is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified would not, individually or in the aggregate, have a material
adverse effect on Parent. All material subsidiaries of Parent and their
respective jurisdictions of incorporation are identified in Parent's annual
report on Form 10-K for the fiscal year ended December 31, 1996 ("Parent
10-K").
(b) All of the outstanding capital stock of, or other voting
securities or ownership interests in, each material subsidiary of Parent, is
owned by Parent, directly or indirectly, free and clear of any Lien and free
of any other limitation or restriction (including any restriction on the right
to vote, sell or otherwise dispose of such capital stock or other voting
securities or ownership interests), other than any restrictions imposed under
the 1933 Act. Except as set forth in this Section, there are no outstanding
(i) shares of capital stock or other voting securities or ownership interests
in any of Parent's subsidiaries, (ii) securities of Parent or any of its
subsidiaries convertible into or exchangeable for shares of capital stock or
other voting securities or ownership interests in any of its subsidiaries or
(iii) options or other rights to acquire from Parent or any of its
subsidiaries, or other obligation of Parent or any of its subsidiaries to
issue, any capital stock or other voting securities or ownership interests in,
or any securities convertible into or exchangeable for any capital stock or
other voting securities or ownership interests in, any of Parent's
subsidiaries. There are no outstanding obligations of Parent or any of its
subsidiaries to repurchase, redeem or otherwise acquire any of the securities
referred to in clauses (i), (ii) or (ii) above.
<PAGE>
SECTION 4.07. SEC Filings. (a) Parent has delivered to the Company (i)
its annual report on Form 10-K for its fiscal year ended December 31, 1996,
(ii) its quarterly reports on Form 10-Q for its fiscal quarters ended after
December 31, 1996, (iii) its proxy or information statements relating to
meetings of or actions taken without a meeting by Parent's stockholders held
since December 31, 1996, and (iv) all of its other reports, statements,
schedules and registration statements filed with the SEC since December 31,
1996 (the documents referred to in this Section 4.07(a) being referred to
collectively as the "Parent SEC Filings"). The Parent's quarterly report on
Form 10-Q for its fiscal quarter ended September 30, 1997 is referred to
herein as the "Parent 10-Q".
(b) As of its filing date, each Parent SEC Filing complied as to form
in all material respects with the applicable requirements of the 1933 Act and
the 1934 Act.
(c) As of its filing date, each Parent SEC Filing filed pursuant to
the 1934 Act did not contain any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading.
(d) Each such registration statement as amended or supplemented, if
applicable, filed pursuant to the 1933 Act did not, as of the date such
statement or amendment became effective, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading.
SECTION 4.08. Financial Statements. The audited consolidated financial
statements and unaudited consolidated interim financial statements of Parent
included in the Parent SEC Filings fairly present, in conformity with GAAP
applied on a consistent basis (except as may be indicated in the notes
thereto), the consolidated financial position of Parent and its subsidiaries
as of the dates thereof and their consolidated results of operations and cash
flows for the periods then ended (subject to normal year-end adjustments in
the case of any unaudited interim financial statements). For purposes of this
Agreement, "Parent Balance Sheet" means the consolidated balance sheet of
Parent as of September 30, 1997 set forth in the Parent 10-Q and "Parent
Balance Sheet Date" means September 30, 1997.
SECTION 4.09. Disclosure Documents. (a) The registration statement of
Parent to be filed with the SEC with respect to the offering of Parent Common
Stock, Parent Preferred Stock, if any, and Parent Depositary Shares, if any, in
connection with the Merger (the "Registration Statement") and any amendments
or supplements thereto will, when filed, comply as to form in all material
respects with the applicable requirements of the 1933 Act. At the time the
Registration Statement or any amendment or supplement thereto becomes
<PAGE>
effective and at the Effective Time, the Registration Statement, as amended or
supplemented, if applicable, shall not 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 contained therein not misleading.
The foregoing representations and warranties will not apply to statements or
omissions included in the Registration Statement or any amendment or
supplement thereto based upon information furnished to Parent or Merger
Subsidiary by the Company for use therein.
(b) None of the information furnished to the Company for use in (or
incorporation by reference in) the Company Proxy Statement or any amendment or
supplement thereto will contain, at the time the Company Proxy Statement or
any amendment or supplement thereto is first mailed to stockholders of the
Company or at the time the stockholders vote on the approval and adoption of
this Agreement, any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements contained therein, in
the light of the circumstances under which they were made, not misleading.
SECTION 4.10. Absence of Certain Changes. Since the Parent Balance
Sheet Date, the business of Parent and its subsidiaries has been conducted in
the ordinary course consistent with past practices, and there has not been:
(a) any event, occurrence, development or state of circumstances or
facts which would, individually or in the aggregate, have a material adverse
effect on Parent (other than adverse effects resulting from the execution and
performance of this Agreement, changes in general economic conditions or
general changes in the computer industry);
(b) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of Parent other than
Parent's quarterly cash dividend, or any repurchase, redemption or other
acquisition by Parent or any of its subsidiaries of any outstanding shares of
capital stock or other securities of, or other ownership interests in, the
Parent or any of its subsidiaries;
(c) any change in any method of accounting, method of tax accounting,
or accounting practice by Parent or any of its subsidiaries, except for any
such change required by reason of a concurrent change in GAAP or Regulation
S-X promulgated under the 1934 Act;
(d) as of the date hereof, any damage, destruction or other casualty
loss (whether or not covered by insurance) affecting the business or assets of
Parent or any of its subsidiaries which would, individually or in the
aggregate, have a material adverse effect on Parent; or
<PAGE>
(e) any material labor dispute, other than routine individual
grievances, or, to the knowledge of Parent, any activity or proceeding by a
labor union or representative thereof to organize any employees of Parent or
any of its subsidiaries, which employees were not subject to a collective
bargaining agreement at the Parent Balance Sheet Date, or any material
lockouts, strikes, slowdowns, work stoppages or threats thereof by or with
respect to such employees.
SECTION 4.11. No Undisclosed Material Liabilities. As of the date
hereof, there are no liabilities of Parent or any of its subsidiaries of any
kind whatsoever, whether accrued, contingent, absolute, determined,
determinable or otherwise, and there is no existing condition, situation or
set of circumstances which could reasonably be expected to result in such a
liability, other than:
(a) liabilities or obligations provided for in the Parent Balance
Sheet or disclosed in the notes thereto;
(b) other liabilities or obligations, which would not, individually or
in the aggregate, have a material adverse effect on Parent; and
(c) liabilities or obligations under this Agreement.
SECTION 4.12. Compliance with Laws and Court Orders. Parent and each of
its subsidiaries is and has been in compliance with, and to the knowledge of
Parent, is not under investigation with respect to and has not been threatened
to be charged with or given notice of any violation of, any applicable law,
rule, regulation, judgment, injunction, order or decree, except for such
matters as would not, individually or in the aggregate, have a material
adverse effect on Parent.
SECTION 4.13. Litigation. Except as set forth in the Parent SEC Filings
prior to the date hereof, there is no action, suit, investigation, audit, or
proceeding pending against, or to the knowledge of Parent threatened against
or affecting, Parent or any of its subsidiaries or any of their respective
properties before any court or arbitrator or any governmental body, agency or
official which would, individually or in the aggregate, have a material
adverse effect on Parent.
SECTION 4.14. Finder's Fees. Except for Greenhill & Co. L.L.C. and
Morgan Stanley & Co. Incorporated, a copy of whose respective engagement
agreements have been provided to the Company, there is no investment banker,
broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of Parent or any of its subsidiaries who might be
entitled to any fee or commission in connection with the transactions
contemplated by this Agreement.
<PAGE>
SECTION 4.15. Taxes. Except as set forth in the Parent Balance Sheet
(including the notes thereto) and except as would not, individually or in the
aggregate, have a material adverse effect on Parent, (i) all tax returns,
statements, reports and forms (collectively, the "Parent Returns") required to
be filed with any taxing authority by, or with respect to, Parent and its
subsidiaries and each affiliated, combined, consolidated or unitary group of
which Parent is a member are true, correct and complete and have been filed in
accordance with all applicable laws; (ii) Parent and its subsidiaries have
timely paid all taxes shown as due and payable on the Parent Returns that have
been so filed (other than taxes which are being contested in good faith and
for which adequate reserves are reflected on the Parent Balance Sheet) and, as
of the time of filing, the Parent Returns correctly reflected facts regarding
the income, business, assets, operations, activities and the status of Parent
and its subsidiaries; (iii) Parent and its subsidiaries have made adequate
provision in accordance with GAAP for all taxes payable by Parent and its
subsidiaries for which no Parent Return has yet been filed; (iv) the charges,
accruals and reserves for taxes with respect to Parent and its subsidiaries
reflected on Parent Balance Sheet are adequate under GAAP to cover the tax
liabilities accruing through the date thereof; (v) there is no action, suit,
proceeding, audit or claim now proposed or pending against or with respect to
Parent or any of its subsidiaries in respect of any tax where there is a
reasonable possibility of an adverse determination; (vi) neither the Parent
nor any of its subsidiaries has been a United States real property holding
corporation within the meaning of Section 897(c)(2) of the Code during the
applicable period specified in Section 897(c)(1)(A)(ii) of the Code; and (vii)
neither the Parent nor any of its subsidiaries has been a member of an
affiliated, consolidated, combined or unitary group other than one of which
the Parent was the common parent.
SECTION 4.16. Employee Benefit Plans. (a) Each Parent Employee Plan, as
hereinafter defined, has been maintained in compliance with its terms and with
the requirements prescribed by any and all statutes, order, rules and
regulations (including but not limited to ERISA and the Code) which are
applicable to such Plan, except where failure to so comply would not,
individually or in the aggregate, have a material adverse effect on Parent.
For purposes of this Agreement, "Parent Employee Plan" shall mean each
material "Employee Benefit Plan" as defined in Section 3(3) of ERISA, each
employment, severance or similar contract, plan, arrangement or policy and
each plan or arrangement, (written or oral), providing for compensation,
bonuses, profit-sharing, stock option or other stock related rights or other
forms of incentive or deferred compensation, vacation benefits, insurance
coverage (including any self-insured arrangements), health or medical
benefits, disability benefits, workers' compensation, supplemental
unemployment benefits, severance benefits and post-employment or retirement
<PAGE>
benefits (including compensation, pension, health, medical or life insurance
benefits) which is maintained, administered or contributed to by Parent or any
affiliate of Parent and covers any employee or director or former employee or
director of Parent or any affiliate of Parent or under which Parent or any
affiliate of Parent has any liability.
(b) At no time has Parent or any person who was at that time an
affiliate of Parent maintained an employee benefit plan subject to Title IV of
ERISA.
(c) Each Parent Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified during
the period from its adoption to date, and each trust forming a part thereof is
exempt from tax pursuant to Section 501(a) of the Code.
(d) Except as disclosed in writing to the Company prior to the date
hereof, there has been no amendment to, written interpretation or announcement
(whether or not written) by Parent or any of its affiliates relating to, or
change in employee participation or coverage under, any Parent Employee Plan
which would increase materially the expense of maintaining such Parent
Employee Plan above the level of the expense incurred in respect thereof for
the 12 months ended on the Parent Balance Sheet Date.
(e) No director or officer or, to the knowledge of Parent, other
employee of Parent or any of its subsidiaries will become entitled to any
retirement, severance or similar benefit or enhanced or accelerated benefit
solely as a result of the transactions contemplated hereby. Without limiting
the generality of the foregoing, no amount required to be paid or payable to
or with respect to any employee of Parent or any of its subsidiaries in
connection with the transactions contemplated hereby (either solely as a
result thereof or as a result of such transactions in conjunction with any
other event) will be an "excess parachute payment" within the meaning of
Section 280G of the Code.
SECTION 4.17. Environmental Matters. Except as set forth in the Parent
SEC Filings prior to the date hereof and except as would not, individually or
in the aggregate, have a material adverse effect on Parent,
(i) no notice, notification, demand, request for information,
citation, summons or order has been received, no complaint has been filed, no
penalty has been assessed, and no investigation, action, claim, suit,
proceeding or review is pending or, to the knowledge of Parent, is threatened
by any governmental entity or other person relating to or arising out of any
Environmental Law;
(ii) Parent is and has been in compliance with all Environmental Laws
and all Environmental Permits; and
<PAGE>
(iii) there are no liabilities of or relating to Parent or any of its
subsidiaries of any kind whatsoever, whether accrued, contingent, absolute,
determined, determinable or otherwise arising under or relating to any
Environmental Law, and there are no facts, conditions, situations or set of
circumstances which could reasonably be expected to result in or be the basis
for any such liability.
"Parent" and "its subsidiaries" shall, for purposes of this Section,
include any entity which is, in whole or in part, a corporate predecessor of
Parent or any of its subsidiaries.
SECTION 4.18. Purchase Accounting Treatment. Parent intends that the
Merger be accounted for under the "purchase" method of accounting.
SECTION 4.19. Opinion of Financial Advisor. Parent's Board of Directors
has received the opinion of Greenhill & Co. L.L.C. and the opinion of Morgan
Stanley & Co. Incorporated, financial advisors to Parent, to the effect that,
as of the date of this Agreement, the Merger Consideration and the New Parent
Preferred Stock (if the Preferred Stockholder Approval is obtained) is fair to
Parent's stockholders from a financial point of view, and such opinion has not
been withdrawn.
SECTION 4.20. Patents and Other Proprietary Rights. (a Parent and its
subsidiaries have rights to use, whether through ownership, licensing or
otherwise, all patents, trademarks, service marks, trade names, copyrights,
trade secrets, and other proprietary rights and processes of which the Parent
is aware that are material to its business as now conducted (collectively the
"Parent Intellectual Property Rights"). Except for such matters as would not,
individually or in the aggregate, have a material adverse effect on Parent,
(a) Parent and its subsidiaries have not assigned, hypothecated or otherwise
encumbered any of the Parent Intellectual Property Rights and (b) none of the
licenses included in the Parent Intellectual Property Rights purports to grant
sole or exclusive licenses to another person, including, without limitation,
sole or exclusive licenses limited to specific fields of use. To the best of
Parent's knowledge, the patents owned by Parent and its subsidiaries are valid
and enforceable and any patent issuing from patent applications of Parent and
its subsidiaries will be valid and enforceable, except as such invalidity or
unenforceability would not, individually or in the aggregate, have a material
adverse effect on Parent. Parent has no knowledge of any infringement by any
other person of any of the Parent Intellectual Property Rights, and Parent and
its subsidiaries have not, to Parent's knowledge, entered into any agreement
to indemnify any other party against any charge of infringement of any of the
Parent Intellectual Property Rights, except for such matters as would not,
individually or in the aggregate, have a material adverse effect on Parent.
<PAGE>
To the best of Parent's knowledge, Parent and its subsidiaries have not and do
not violate or infringe any intellectual property right of any other person,
and neither Parent nor any of its subsidiaries have received any communication
alleging that it violates or infringes the intellectual property right of any
other person, except for such matters as would not, individually or in the
aggregate, have a material adverse effect on Parent. Except for such matters
as would not, individually or in the aggregate, have a material effect on
Parent, Parent and its subsidiaries have not been sued for infringing any
intellectual property right of another person. None of the Parent
Intellectual Property Rights or other know-how relating to the business of
Parent and its subsidiaries, the value of which to Parent is contingent upon
maintenance of the confidentiality thereof, has been disclosed by Parent or
any affiliate thereof to any person other than those persons who are bound to
hold such information in confidence pursuant to confidentiality agreements or
by operation of law.
ARTICLE 5
Covenants of the Company
The Company agrees that:
SECTION 5.01. Conduct of the Company. The Company agrees that from the
date hereof until the Effective Time, except with the prior written consent of
Parent (which shall not be unreasonably withheld or delayed), as set forth in
the Company Schedule of Exceptions or as contemplated by this Agreement, the
Company and its subsidiaries shall conduct their business in the ordinary
course consistent with past practice and shall use their reasonable best
efforts to preserve intact their business organizations and relationships with
third parties and to keep available the services of their present officers and
employees. Without limiting the generality of the foregoing and subject to the
exceptions set forth in the preceding sentence, from the date hereof until the
Effective Time:
(a) the Company will not adopt or propose any change in its Articles
of Organization or bylaws;
(b) the Company will not, and will not permit any of its subsidiaries
to, merge or consolidate with any other person or acquire a material amount of
assets of any other person;
(c) the Company will not, and will not permit any of its subsidiaries
to, sell, lease, license or otherwise dispose of any material assets or
property except (i) pursuant to existing contracts or commitments and (ii) in
the ordinary course consistent with past practice;
<PAGE>
(d) the Company will not, and will not permit any of its subsidiaries,
to take any action that would make any representation and warranty of the
Company hereunder inaccurate in any material respect at the Effective Time;
(e) except in the ordinary course consistent with past practice, the
Company will not, and will not permit any of its subsidiaries to enter into
any licensing agreement or other similar arrangement with respect to any
Company Intellectual Property Right;
(f) the Company will not, and will not permit any of its subsidiaries
to, (i) grant any severance or termination pay to any current or former
employee, officer or director of the Company or any of its subsidiaries, (ii)
increase benefits payable under any existing severance or termination pay
policies or employment agreements, (iii) enter into any employment, deferred
compensation or other similar agreement (or any amendment to any such existing
agreement) with any current or former director, officer or employee of the
Company or any of its subsidiaries, (iv) establish, adopt or amend (except as
required by applicable law) any collective bargaining, bonus, profit sharing,
thrift, pension, retirement, deferred compensation, compensation, stock
option, restricted stock or other benefit plan or arrangement covering any
current or former director, officer or employee of the Company or any of its
subsidiaries, or (v) increase compensation, bonus or other benefits payable to
any current or former director, officer or employee of the Company or any of
its subsidiaries, without the prior written consent of the Parent;
(g) the Company will not, and will not permit any of its subsidiaries
to, agree or commit to do any of the foregoing.
SECTION 5.02. Stockholder Meeting; Proxy Material. (a) The Company
shall, in accordance with applicable law and the Articles of Organization and
bylaws of the Company, cause a meeting of its stockholders (the "Company
Stockholder Meeting") to be duly called and held as soon as reasonably
practicable for the purpose of voting on the approval and adoption of this
Agreement. In connection with such meeting, the Company will (i) promptly
prepare and file with the SEC, use its reasonable best efforts to have cleared
by the SEC and thereafter mail to its stockholders as promptly as practicable
the Company Proxy Statement and all other proxy materials for such meeting,
(ii) use its reasonable best efforts to obtain the necessary approvals by its
stockholders of this Agreement and the transactions contemplated hereby and
(iii) otherwise comply with all legal requirements applicable to such meeting.
The Company may, if it receives a bona fide unsolicited Acquisition Proposal
(as defined herein), delay the filing or mailing, as the case may be, of the
Company Proxy Statement or delay the holding of the Company Stockholder
Meeting, in each case for such reasonable period as would provide a reasonable
opportunity for the Company's Board of Directors to consider such Acquisition
Proposal and to disseminate its recommendation with respect to such
<PAGE>
Acquisition Proposal to the Company's stockholders a reasonable period of time
prior to the Company Stockholder Meeting.
(b) Except as provided in the next sentence, the Board of Directors
of the Company shall recommend approval and adoption of this Agreement by the
Company's stockholders. The Board of Directors of the Company shall be
permitted to withdraw or modify in a manner adverse to Parent its
recommendation to its stockholders, but only if and to the extent that (i) an
Acquisition Proposal has been made prior to the time that the Board of
Directors of the Company determines to withdraw or modify its recommendation,
(ii) the Board of Directors of the Company reasonably concludes in good faith
based on advice from its outside counsel that failure to make such withdrawal
or modification would present a reasonable probability of violating the
fiduciary duties of the Board of Directors under applicable law, and (iii) the
Company shall have delivered to Parent, at least one business day prior to
such withdrawal or modification, a written notice advising Parent that the
Company has received an Acquisition Proposal, identifying the person making
such an Acquisition Proposal, setting forth the material terms and conditions
of the Acquisition Proposal and indicating that the Board of Directors
proposes to withdraw or modify its recommendation.
SECTION 5.03. Other Offers. From the date hereof until the termination
hereof, the Company and its subsidiaries will not, the Company will cause the
officers and directors of the Company and any of its subsidiaries not to, and
the Company will use reasonable best efforts to cause the financial or legal
advisors of the Company and its subsidiaries not to, directly or indirectly,
(i) take any action (including, without limitation, redeeming Rights issued
pursuant to the Rights Agreement or amending or modifying in any respect the
Rights Agreement to facilitate an Acquisition Proposal) to solicit, initiate
or knowingly encourage any Acquisition Proposal or (ii) engage in negotiations
with, or disclose any nonpublic information relating to the Company or any of
its subsidiaries or afford access to the properties, books or records of the
Company or any of its subsidiaries to, any person that may be considering
making, or has made, an Acquisition Proposal; provided, however, that the
Company may engage in negotiations with, disclose nonpublic information
relating to the Company and any of its subsidiaries and afford access to the
properties, books and records of the Company and any of its subsidiaries to,
any person who has made an Acquisition Proposal and take such other actions as
are customarily undertaken in connection with the negotiation and evaluation
and shareholder considerations as contemplated by the final sentence of
Section 5.02(b) of an Acquisition Proposal if the Board of Directors of the
<PAGE>
Company reasonably concludes in good faith based on advice from its outside
counsel that the failure to take such action would present a reasonable
probability of violating the fiduciary duties of the Board of Directors under
applicable law and, in such case, may also redeem Rights issued pursuant to
the Rights Agreement or amend or modify in any respect the Rights Agreement to
permit another person to effect an Acquisition Proposal; provided further
that, prior to any such negotiations, disclosure of nonpublic information,
affording of access or taking of other related actions, such person enters
into an agreement with the Company on terms substantially identical to the
terms of the Confidentiality Agreements as in effect on the date hereof. The
Company will promptly (and in no event later than 24 hours after receipt of
the relevant Acquisition Proposal or request for information) notify Parent in
writing of the receipt of any Acquisition Proposal or request for information
(which notice shall identify the person making the Acquisition Proposal or
request and set forth the material terms and conditions thereof). The Company
will keep Parent fully informed of the status and details of any Acquisition
Proposal and any request for information. The Company shall, and shall cause
its subsidiaries and the directors, officers and financial and legal advisors
of the Company and its subsidiaries to, cease immediately and cause to be
terminated all activities, discussions or negotiations, if any, with any
persons conducted heretofore with respect to any Acquisition Proposal.
Notwithstanding any provision of this Section, nothing in this Section shall
prohibit the Company or its Board of Directors from taking and disclosing to
the Company's stockholders a position with respect to an Acquisition Proposal
by a third party to the extent required under the 1934 Act or from making such
disclosure to the Company's stockholders which, in the judgment of the Board
of Directors with the advice of outside counsel, is required under applicable
law; provided that nothing in this sentence shall affect the obligations of
the Company and its Board of Directors under any other provision of this
Agreement. For purposes of this Agreement, "Acquisition Proposal" means any
offer or proposal for, or any indication of interest in, a merger,
consolidation or other business combination involving the Company or any of
its subsidiaries or the acquisition of any equity interest in, or a
substantial portion of the assets of, the Company or any of its subsidiaries,
other than the transactions contemplated by this Agreement.
ARTICLE 6
Covenants of Parent
Parent agrees that:
SECTION 6.01. Conduct of Parent. Parent agrees that from the date hereof
until the Effective Time, Parent and its subsidiaries shall conduct their
<PAGE>
business in the ordinary course consistent with past practice and shall use
their reasonable best efforts to preserve intact their business organizations
and relationships with third parties and to keep available the services of
their present officers and employees. Without limiting the generality of the
foregoing, and except with the prior written consent of the Company (which
shall not be unreasonably withheld or delayed), as disclosed in the Parent
Schedule of Exceptions or as contemplated by this Agreement, from the date
hereof until the Effective Time:
(a) Parent will not adopt or propose any change in its certificate of
incorporation or bylaws;
(b) Parent will not, and will not permit any of its subsidiaries to,
take any action that would make any representation and warranty of Parent
hereunder inaccurate in any material respect at the Effective Time; and
(c) Parent will not, and will not permit any of its subsidiaries to,
agree or commit to do any of the foregoing.
SECTION 6.02. Obligations of Merger Subsidiary. Parent will take all
action necessary to incorporate Merger Subsidiary and cause it to perform its
obligations under this Agreement and to consummate the Merger on the terms and
conditions set forth in this Agreement.
SECTION 6.03. Voting of Shares. Parent agrees to vote all shares of
Company Common Stock and Company Preferred Stock beneficially owned by it in
favor of adoption of this Agreement and the conversion of the Company Preferred
Stock, respectively, at the Company Stockholder Meeting.
SECTION 6.04. New Parent Preferred Stock. If the Preferred Stockholder
Approval is obtained, (a) the Board of Directors of Parent shall, in
accordance with the Delaware General Corporation Law ("DGCL") and the Parent
Certificate of Incorporation, resolve that shares of New Parent Preferred
Stock be issued to holders of Company Preferred Stock in the Merger, and (b)
Parent shall execute, acknowledge and file the Parent Certificate of
Designation with the Secretary of State of the State of Delaware in accordance
with the DGCL.
SECTION 6.05. Director and Officer Liability. Parent agrees that all
rights to exculpation and 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 as provided in its
Articles of Organization or bylaws or in any agreement disclosed in writing to
Parent prior to the date hereof shall survive the Merger and shall continue in
full force and effect in accordance with their terms. For six years after the
<PAGE>
Effective Time, Parent will and will cause the Surviving Corporation to
indemnify and hold harmless the Indemnified Parties to the same extent as such
Indemnified Parties are entitled to indemnification pursuant to the preceding
sentence. For six years after the Effective Time, Parent shall and shall
cause the Surviving Corporation to maintain in effect the Company's directors'
and officers' liability insurance covering each such person currently covered
by the Company's officers' and directors' liability insurance policy on terms
with respect to coverage and amount no less favorable than those of such
policy in effect on the date hereof.
SECTION 6.06. Registration Statement; Form S-8. Parent shall promptly
prepare and file with the SEC under the 1933 Act the Registration Statement
(and Registration Statements on Form S-8 as necessary to register shares of
Parent Common Stock underlying Substitute Options), and shall use its
reasonable best efforts to cause the Registration Statement (and such
Registration Statements on Form S-8) to be declared effective by the SEC as
promptly as practicable. Parent shall promptly take any action required to be
taken under foreign or state securities or Blue Sky laws in connection with the
issuance of Parent Common Stock and Parent Preferred Stock (if the Preferred
Stockholder Approval is obtained) in connection with the Merger or pursuant to
Substitute Options.
SECTION 6.07. Stock Exchange Listing. Parent shall use its reasonable
best efforts to cause the shares of Parent Common Stock and, if the Preferred
Stockholder Approval is obtained, the Parent Depositary Shares, to be issued
in connection with the Merger (and the shares of Parent Common Stock
underlying Substitute Options) to be listed on the NYSE, subject to official
notice of issuance.
SECTION 6.08. Employee Benefits. Parent will implement the arrangements
previously agreed by the Company and Parent in writing and the Company (with
Parent's prior written consent) shall prior to the Effective Time formalize
such arrangements. Except with respect to the arrangements contemplated by
the prior sentence and subject to Sections 1.06 through 1.08, Parent agrees to
continue each of the Company's various compensation and benefit plans through
June 30, 1998. Parent agrees (1) to work with the Company's management with
respect to an appropriate transition of compensation and benefit programs for
subsequent periods, and (2) to recognize service with the Company and its
subsidiaries as service with Parent for all applicable purposes under any
compensation or benefit plan of Parent in which any employee of the Company or
any of its subsidiaries participates.
SECTION 6.09. Board Candidate. Parent agrees that, immediately following
the Effective Time, it will (a) increase the size of its Board of Directors
(the "Parent Board") by one, and (b) cause, subject to the following sentence,
the candidate recommended by the Company's Board of Directors immediately prior
to the Effective Time (the "Company Candidate") to be elected as a member of
<PAGE>
the Parent Board. The Company Candidate shall (i) be "independent" as such
term is applied under the corporate governance standards of the Parent Board
and (ii) be otherwise satisfactory to Parent, in its reasonable judgment. Such
candidate shall continue to serve as a director of Parent until the first
Annual Meeting of the Parent next following the Effective Time, and, subject
to meeting Parent's corporate governance standards applicable to all director
nominees, shall be nominated for reelection (to serve one additional one-year
term) at such Annual Meeting by the Parent Board.
ARTICLE 7
Covenants of Parent and the Company
The parties hereto agree that:
SECTION 7.01. Reasonable Best Efforts. Subject to the terms and
conditions of this Agreement, each party will use its reasonable best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate the transactions contemplated by this Agreement.
SECTION 7.02. Filings; Other Action. (a) Subject to the terms and
conditions herein provided, the Company and Parent shall (i) promptly make
their respective filings and thereafter make any other required submissions
under the HSR Act, (ii) use reasonable best efforts to cooperate with one
another in (A) connection with the preparation of the Company Proxy Statement
and the Registration Statement, (B) determining whether any filings are
required to be made with, or consents, permits, authorizations or approvals are
required to be obtained from, any third party, the United States government or
any agencies, departments or instrumentalities thereof or other governmental or
regulatory bodies or authorities of federal, state, local and foreign
jurisdictions in connection with the execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby and (C) timely
making all such filings and timely seeking all such consents, permits,
authorizations or approvals (including, without limitation, those required, if
any, to comply with the Connecticut Hazardous Waste Establishment Transfer Act
and the New Jersey Industrial Site Recovery Act), and (iii) subject to Section
7.02(b), use reasonable best efforts to take, or cause to be taken, all other
actions and do, or cause to be done, all other things necessary, proper or
advisable to consummate and make effective the transactions contemplated
hereby, including, without limitation, taking all such further action as
reasonably may be necessary to resolve such objections, if any, as the Federal
Trade Commission, the Antitrust Division of the Department of Justice, state
<PAGE>
antitrust enforcement authorities or competition authorities of any other
nation or other jurisdiction or any other person may assert under relevant
antitrust or competition laws with respect to the transactions contemplated
hereby.
(b) Parent and the Company agree to take or cause to be taken the
following actions: (i) provide promptly to governmental entities with
regulatory jurisdiction over enforcement of any applicable antitrust laws
("Government Antitrust Entity") information and documents requested by any
Government Antitrust Entity or necessary, proper or advisable to permit
consummation of the transactions contemplated by this Agreement; and (ii)
without in any way limiting the provisions of Section 7.02(b)(i) above, file
any Notification and Report Form and related material required under the HSR
Act as soon as practicable after the date hereof, and thereafter use its
reasonable best efforts to certify as soon as practicable its substantial
compliance with any requests for additional information or documentary
material that may be made under the HSR Act. Each of the Company and Parent
will provide to the other copies of all correspondence between it (or its
advisors) and any Government Antitrust Entity relating to this Agreement or
any of the matters described in this Section 7.02(b). The Company and Parent
agree to use its reasonable best efforts to ensure that all meetings and
reasonable efforts to ensure that all telephonic calls with a Government
Antitrust Entity regarding the transactions contemplated hereby or any of the
matters described in this Section 7.02(b) shall include representatives of
each of the Company and Parent. Notwithstanding any other provision of this
Agreement to the contrary, (i) in connection with seeking such approval of a
Governmental Antitrust Entity, neither party shall be obligated to commit to
any divestiture transaction and neither party shall be required to agree to
sell or hold separate, before or after the Effective Time, any of the
Company's or Parent's (or any of their respective subsidiaries') businesses,
product lines, properties or assets, or agree to any changes or restrictions
in the operation of such businesses, product lines, properties or assets, or
take any other action if such divestiture, such restrictions or such other
actions would, individually or in the aggregate, materially adversely affect
Parent and the Company, taken as a whole, and (ii) no failure to obtain
termination of the waiting period under the HSR Act shall be deemed to be a
breach hereunder by Parent or the Company.
SECTION 7.03. Public Announcements. Parent and the Company will consult
with each other before issuing any press release or making any public
statement with respect to this Agreement or the transactions contemplated
hereby and, except as may be required by applicable law or any listing
agreement with any national securities exchange, will not issue any such press
release or make any such public statement prior to such consultation.
SECTION 7.04. Further Assurances. At and after the Effective Time, the
officers and directors of the Surviving Corporation will be authorized to
execute and deliver, in the name and on behalf of the Company or Merger
<PAGE>
Subsidiary, any deeds, bills of sale, assignments or assurances and to take
and do, in the name and on behalf of the Company or Merger Subsidiary, any
other actions and things to vest, perfect or confirm of record or otherwise in
the Surviving Corporation any and all right, title and interest in, to and
under any of the rights, properties or assets of the Company acquired or to be
acquired by the Surviving Corporation as a result of, or in connection with,
the Merger.
SECTION 7.05. Notices of Certain Events. Each of the Company and Parent
Shall promptly notify the other party hereto of:
(a) any notice or other communication from any person alleging that
the consent of such person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings
commenced or, to its knowledge threatened against, relating to or involving or
otherwise affecting such party that, if pending on the date of this Agreement,
would have been required to have been disclosed pursuant to Section 3.12,
3.13, 3.17, 4.12, 4.13 or 4.17 (as the case may be) or that relate to the
consummation of the transactions contemplated by this Agreement.
SECTION 7.06. Affiliates. The Company shall, prior to the Effective
Time, deliver to Parent a letter identifying all known persons who are, at the
time of the Company Stockholder Meeting, in the Company's reasonable judgment,
"affiliates" of the Company under Rule 145 of the 1933 Act. The Company shall
furnish such information and documents as Parent may reasonably request for
the purpose of reviewing such list. The Company shall use its reasonable best
efforts to obtain a written agreement in customary form from each person who
may be so deemed as soon as practicable and, in any event, prior to the
Effective Time.
SECTION 7.07. Access to Information; Confidentiality. (a) From the date
hereof until the Effective Time, the Company and Parent will give to the other
party, its counsel, financial advisors, auditors and other authorized
representatives reasonable access to the offices, properties, books and
records of such party, furnish to the other party and its representatives
such financial and other data and information as such party and its
representatives may reasonably request and instruct its own employees and
representatives (including, without limitation, insurance agents and
underwriters) to cooperate with the other party in its investigations. Any
investigation pursuant to this Section shall be conducted in such manner as
<PAGE>
not to interfere unreasonably with the conduct of the business of the Company
and Parent, as the case may be. No investigation pursuant to this Section
shall affect any representation or warranty made by any party hereunder.
(b) All information obtained by Parent or the Company pursuant to
this Section shall be kept confidential in accordance with, and shall
otherwise be subject to the terms of, the two Confidentiality Agreements,
dated December 1, 1997 between Parent and the Company (the "Confidentiality
Agreements").
ARTICLE 8
Conditions to the Merger
SECTION 8.01. Conditions to the Obligations of Each Party. The
obligations of the Company, Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following conditions:
(a) this Agreement shall have been approved and adopted by the
requisite affirmative vote of the holders of Company Common Stock in
accordance with the Company's Articles of Organization and the MBCL;
(b) any applicable waiting period under the HSR Act and the EC Merger
Regulation relating to the Merger shall have expired or been terminated;
(c) no provision of any applicable law or regulation and no judgment,
injunction, order or decree of a court of competent jurisdiction shall
prohibit the consummation of the Merger;
(d) the Registration Statement shall have been declared effective
under the 1933 Act and no stop order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for such purpose
shall be pending before or threatened by the SEC;
(e) the shares of Parent Common Stock to be issued in the Merger (as
well as the shares of Parent Common Stock to be issued upon exercise of
Substitute Options) and the Parent Depositary Shares (if the Preferred
Stockholder Approval shall have been obtained) shall have been approved for
listing on the NYSE, subject to official notice of issuance; and
<PAGE>
(f) if the Preferred Stockholder Approval shall have been obtained,
Parent shall have executed, acknowledged and filed the Parent Certificate of
Designation in accordance with the DGCL.
SECTION 8.02. Conditions to the Obligations of Parent and Merger
Subsidiary. The obligations of Parent and Merger Subsidiary to consummate the
Merger are subject to the satisfaction of the following further conditions: the
Company shall have performed in all material respects all of its obligations
hereunder required to be performed by it at or prior to the Effective Time, the
representations and warranties of the Company contained in this Agreement and
in any certificate or other writing delivered by the Company pursuant hereto
shall be true in all material respects at and as of the Effective Time as if
made at and as of such time and Parent shall have received a certificate
signed by an executive officer of the Company (which certificate shall not
impose any personal liability on such officer) to the foregoing effect.
SECTION 8.03. Conditions to the Obligations of the Company. The
obligations of the Company to consummate the Merger are subject to the
satisfaction of the following further conditions: Parent shall have performed
in all material respects all of its obligations hereunder required to be
performed by it at or prior to the Effective Time, the representations and
warranties of Parent contained in this Agreement and in any certificate or
other writing delivered by Parent pursuant hereto shall be true in all material
respects at and as of the Effective Time as if made at and as of such time and
the Company shall have received a certificate signed by an executive officer of
Parent (which certificate shall not impose any personal liability on such
officer) to the foregoing effect.
ARTICLE 9
Termination
SECTION 9.01. Termination. Notwithstanding anything contained in this
Agreement to the contrary, this Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time (notwithstanding any
approval of this Agreement by the Board of Directors of the Company or Parent
or the stockholders of the Company):
(a) by mutual written agreement of the Company and Parent;
(b) by either the Company or Parent, if
<PAGE>
(i) the Merger has not been consummated on or before November 1,
1998; provided that the right to terminate this Agreement pursuant to this
clause 9.01(b)(i) shall not be available to any party whose breach of any
provision of this Agreement results in the failure of the Merger to be
consummated by such time;
(ii) there shall be any law or regulation that makes consummation of
the Merger illegal or otherwise prohibited or if any judgment, injunction,
order or decree enjoining any party from consummating the Merger is entered
and such judgment, injunction, order or decree shall have become final and
non-appealable; provided, that the party seeking to terminate this Agreement
pursuant to this clause 9.01(b)(ii) shall have used its reasonable best
efforts to remove such injunction, order or decree; or
(iii) the Common Stockholder Approval shall not have been obtained by
reason of the failure to obtain the required vote at a duly held meeting of
stockholders or any adjournment thereof; or
(c) by Parent, if (x) the Board of Directors of the Company shall
have withdrawn or modified in a manner adverse to Parent its approval or
recommendation of the Merger or (y) there shall have been any material breach
of any provision of Section 5.02(a) or 5.03.
The party desiring to terminate this Agreement pursuant to this Section
9.01 (other than pursuant to Section 9.01(a)) shall give notice of such
termination to the other party.
SECTION 9.02. Effect of Termination. If this Agreement is terminated
pursuant to Section 9.01, this Agreement shall become void and of no effect
with no liability on the part of any party hereto, except that (i) the
agreements contained in Sections 7.07(b), 10.04, 10.05, 10.06, 10.07 and 10.08
shall survive the termination hereof and (ii) no such termination shall
release any party of any liabilities or damages resulting from any willful or
grossly negligent breach by that party of any provision of this Agreement.
<PAGE>
ARTICLE 10
Miscellaneous
SECTION 10.01. Notices. All notices, requests and other communications
to any party hereunder shall be in writing (including facsimile transmission)
and shall be given,
if to Parent or Merger Subsidiary, to:
J. David Cabello, Esq.
Senior Vice President
General Counsel and Secretary
Compaq Computer Corporation
20555 SH 249
Houston, TX 77070
Fax: 281-518-8209
with a copy to:
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Fax: (212) 450-4800
Attention: Chris Mayer, Esq.
if to the Company, to:
Thomas C. Siekman, Esq.
Senior Vice President and General Counsel
Digital Equipment Corporation
111 Powder Mill Road
Maynard, MA 01754-1499
Fax: (978) 493-7374
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Fax: (212) 735-2000
Attention: Roger S. Aaron, Esq.
<PAGE>
or such other address or fax number as such party may hereafter specify for
the purpose by notice to the other parties hereto. All such notices, requests
and other communications shall be deemed received on the date of receipt by
the recipient thereof if received prior to 5 p.m. in the place of receipt and
such day is a business day in the place of receipt. Otherwise, any such
notice, request or communication shall be deemed not to have been received
until the next succeeding business day in the place of receipt.
SECTION 10.02. Survival of Representations and Warranties. The
representations and warranties and agreements contained herein and in any
certificate or other writing delivered pursuant hereto shall not survive the
Effective Time except for the agreements set forth in Sections 6.05, 6.08,
6.09, 7.07(b), 10.05, 10.06, 10.07 and 10.08.
SECTION 10.03. Amendments; No Waivers. (a) Any provision of this
Agreement may be amended or waived prior to the Effective Time if, but only
if, such amendment or waiver is in writing and is signed, in the case of an
amendment, by each party to this Agreement or in the case of a waiver, by the
party against whom the waiver is to be effective; provided that after the
adoption of this Agreement by the holders of Company Common Stock, no such
amendment or waiver shall, without the further approval of such stockholders,
reduce the amount or change the kind of consideration to be received in
exchange for any shares of capital stock of the Company.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. The rights and remedies
herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
SECTION 10.04. Expenses. (a) Except as otherwise provided in this
Section, and except for all transfer taxes which shall be paid by the Company,
all costs and expenses incurred in connection with this Agreement shall be
paid by the party incurring such cost or expense.
(b) The Company agrees to pay Parent in immediately available funds
by wire transfer an amount equal to $240 million (the "TERMINATION FEE") if:
(i) this Agreement is terminated by Parent pursuant to Section
9.01(c);
(ii) (A) prior to the termination of this Agreement, a bona fide
Acquisition Proposal is commenced, publicly proposed or publicly disclosed and
(B) this Agreement is terminated by the Company pursuant to Section 9.01(b)(i)
or by the Company or Parent pursuant to Section 9.01(b)(iii); or
<PAGE>
(iii) (A) this Agreement is terminated by Parent pursuant to Section
9.01(b)(i), (B) the Company Stockholder Meeting shall not have been held prior
to the date of such termination, and (C) the Company shall have delayed the
holding of the Company Stockholder Meeting pursuant to the final sentence of
Section 5.02.
The Company shall pay the Termination Fee promptly, but in no event later
than two business days, after the termination of this Agreement pursuant to
clause (i), (ii) or (iii) above. Notwithstanding the previous sentence, in
the event of a termination of the Agreement by Parent pursuant to clause (ii)
or (iii) above, 50% of the Termination Fee shall be payable at the time set
forth in the immediately preceding sentence and 50% of the Termination Fee
shall be payable concurrently with the consummation of a Significant
Acquisition Proposal within 12 months of the termination of this Agreement.
"Significant Acquisition Proposal" means an Acquisition Proposal involving the
acquisition of at least 50% of the Company Common Stock or at least 50% of the
assets of the Company.
(c) The Company agrees to pay Parent in immediately available funds
by wire transfer an amount equal to Parent's reasonable expenses incurred in
connection with this transaction (but not to exceed $25 million) if (x) this
Agreement shall have been terminated pursuant to Section 9.01(b)(i), (y) any
representation or warranty made by the Company in this Agreement shall not
have been true and correct as of the date hereof, and (z) the condition in
Section 8.02 relating to representations and warranties shall not have been
satisfied; provided, however, that in no event shall any payment be due
pursuant to this subsection (c) in the event that a Termination Fee is payable
pursuant to subsection (b) above. Such payment shall be made promptly, and in
no event later than two business days, after such termination.
(d) Parent agrees to pay the Company in immediately available funds
by wire transfer an amount equal to the Company's reasonable expenses incurred
in connection with this transaction (but not to exceed $25 million) if (x)
this Agreement shall have been terminated pursuant to Section 9.01(b)(i), (y)
any representation or warranty made by Parent in this Agreement shall not have
been true and correct as of the date hereof, and (z) the condition in Section
8.03 relating to representations and warranties shall not have been satisfied.
Such payment shall be made promptly, and in no event later than two business
days, after such termination.
<PAGE>
SECTION 10.05. Successors and Assigns. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns; provided that no party may assign, delegate
or otherwise transfer any of its rights or obligations under this Agreement
without the consent of each other party hereto, except that Parent or Merger
Subsidiary may transfer or assign, in whole or from time to time in part, to
one or more of their affiliates, the right to enter into the transactions
contemplated by this Agreement, but any such transfer or assignment will not
relieve Parent or Merger Subsidiary of its obligations hereunder.
SECTION 10.06. Governing Law. This Agreement shall be governed by and
construed in accordance with the law of the State of New York, except that the
Merger shall be governed by the law of Massachusetts.
<PAGE>
SECTION 10.07. Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may be
brought in any federal or state court located in the City of New York, Borough
of Manhattan, and each of the parties hereby consents to the jurisdiction of
such courts (and of the appropriate appellate courts therefrom) in any such
suit, action or proceeding and irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court
or that any such suit, action or proceeding which is brought in any such court
has been brought in an inconvenient forum. Process in any such suit, action
or proceeding may be served on any party anywhere in the world, whether within
or without the jurisdiction of any such court. Without limiting the
foregoing, each party agrees that service of process on such party as provided
in Section 10.01 shall be deemed effective service of process on such party.
SECTION 10.08. Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
SECTION 10.09. Counterparts; Effectiveness. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto
shall have received counterparts hereof signed by all of the other parties
hereto. Except for Sections 1.06, 1.07, 1.08 and 6.08, which shall not be
effective until the Effective Time, no provision of this Agreement is intended
to confer upon any person other than the parties hereto any rights or remedies
hereunder.
<PAGE>
SECTION 10.10. Entire Agreement. This Agreement and the Confidentiality
Agreements constitute the entire agreement between the parties with respect to
the subject matter of this Agreement and supersedes all prior agreements and
understandings, both oral and written, between the parties with respect to the
subject matter hereof and thereof.
SECTION 10.11. Captions. The captions herein are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
<PAGE>
SECTION 10.12. Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain
in full force and effect and shall in no way be affected, impaired or
invalidated so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
parts. Upon such a determination, the parties 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 in order that the transactions
contemplated hereby be consummated as originally contemplated to the fullest
extent possible.
SECTION 10.13. Merger Subsidiary. As soon as practicable hereafter,
Parent shall cause Merger Subsidiary to become a party to this Agreement in
accordance with the terms and provisions of the MBCL. Parent and the Company
each hereby agree that Merger Subsidiary shall become a party to this
Agreement upon the execution and delivery to Parent and the Company of a
supplemental agreement meeting the requirements of the MBCL without any
further action on the part of either Parent or the Company.
SECTION 10.14. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof in addition to
any other remedy to which they are entitled at law or in equity.
SECTION 10.15. Definition and Usage. (a) For purposes of this
Agreement:
"affiliate" means, with respect to any person, any other person directly
or indirectly controlling, controlled by, or under common control with such
person.
"knowledge" of any person which is not an individual means the knowledge
of such person's officers after reasonable inquiry.
<PAGE>
"material adverse effect" means, when used in connection with Parent or
the Company, any change, effect, event, occurrence or state of facts that has
had, or would reasonably be expected to have, a material adverse effect on the
business, operations, financial condition or results of operations of Parent
and its subsidiaries, taken as a whole, or the Company and its subsidiaries,
taken as a whole, as the case may be.
"officer" means any executive officer of Parent or the Company, as
applicable, within the meaning of Rule 3b-7 of the 1934 Act.
"person" means an individual, corporation, partnership, limited liability
company, association, trust or other entity or organization, including a
government or political subdivision or an agency or instrumentality thereof.
"subsidiary" means, with respect to any person, any entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar
functions are at any time directly or indirectly owned by such person.
"taxes" means any and all federal, state, local, foreign or other taxes
of any kind (together with any and all interest, penalties, additions to tax
and additional amounts imposed with respect thereto) imposed by any taxing
authority, including, without limitation, taxes or other charges on or with
respect to income, franchises, windfall or other profits, gross receipts,
sales, use, capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation, or net worth, and taxes or other
charges in the nature of excise, withholding, ad valorem or value added.
A reference in this Agreement to any statute shall be to such statute as
amended from time to time, and to the rules and regulations promulgated
thereunder.
(b) Each of the following terms is defined in the Section set forth
below:
1933 Act 3.03
1934 Act 3.03
Acquisition Proposal 5.03
Articles of Merger 1.01(b)
Articles of Organization 1.03(b)
Cash Consideration 1.03(a)
Certificates 1.05(a)
Closing 1.13
Closing Date 1.13
Code 1.06
<PAGE>
Common Stock Consideration 1.03(a)
Common Stockholder Approval 1.02
Company 10-K 3.06(a)
Company 10-Q 3.07(a)(iv)
Company Balance Sheet 3.08
Company Balance Sheet Date 3.08
Company Candidate 6.09
Company Common Stock 1.02
Company Depositary Shares 1.03(b)
Company Employee Plans 3.16(a)
Company Intellectual Property Rights 3.20
Company Preferred Stock 1.02
Company Proxy Statement 3.09(a)
Company Returns 3.15
Company SEC Filings 3.07(a)(iv)
Company Stock 1.02
Company Stockholder Meeting 5.02(a)
Confidentiality Agreements 7.07(b)
Deposit Agreement 1.03(b)
DGCL 6.04
Dissenting Holder 1.04(a)
EC Merger Regulation 3.03
Effective Time 1.01(b)
Environmental Laws 3.17(b)
Environmental Permits 3.17(b)
ERISA 3.16(a)
Exchange Agent 1.05(a)
Exchange Agent Agreement 1.10
GAAP 3.08
Government Antitrust Entity 7.02(b)
HSR Act 3.03
Indemnified Parties 6.05
Lien 3.04
MBCL 1.01(a)
Merger 1.01
Merger Consideration 1.03(a)
Merger Subsidiary 1.01
New Parent Preferred Stock 1.03(b)
NYSE 1.10
Parent 10-K 4.06(a)
Parent 10-Q 4.07(a)(iv)
Parent Balance Sheet 4.08
Parent Balance Sheet Date 4.08
<PAGE>
Parent Board 6.09
Parent Certificate of Designation 1.03(b)
Parent Common Stock 1.03(a)
Parent Depositary Shares 1.03(b)
Parent Employee Plan 4.16
Parent Intellectual Property Rights 4.20
Parent Preferred Stock 4.05(a)
Parent Returns 4.15
Parent SEC Filings 4.07(a)(iv)
Preferred Stockholder Approval 1.02
Registration Statement 4.09(a)
Rights 1.03(a)
Rights Agreement 1.03(a)
SEC 3.07(a)(iv)
Significant Acquisition Proposal
Substitute Option 1.06
Superior Proposal 5.03
Surviving Corporation 1.01(a)
Termination Date 1.07
Termination Fee 10.04
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed under seal by their respective authorized officers as of the day
and year first above written.
DIGITAL EQUIPMENT CORPORATION
By:/s/ Robert B. Palmer
__________________________
Robert B. Palmer
Chairman of the Board,
Vice President and
Chief Executive Officer
By:/s/ Vincent J. Mullarby
__________________________
Vincent J. Mullarby
Assistant Treasurer
COMPAQ COMPUTER CORPORATION
By:/s/ Eckhard Pfeiffer
__________________________
Eckhard Pfeiffer
President and
Chief Executive Officer
