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) March 22, 1995
ACCLAIM ENTERTAINMENT, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-16986 38-2698904
(Commission File Number) (IRS Employer Identification Number)
One Acclaim Plaza, Glen Cove, New York 11542-2708
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (516) 656-5000
71 Audrey Avenue, Oyster Bay, New York 11771
(Former Name or Former Address, if Changed Since Last Report)
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Page 1 of 64 Pages
Exhibit Index located at page 5
ITEM 5. OTHER EVENTS.
On March 22, 1995, Acclaim Entertainment, Inc. (the
"Registrant") entered into an Agreement and Plan of Merger (the
"Agreement") with Lazer-Tron Corporation ("Lazer") pursuant to
which the Registrant agreed to acquire Lazer through the merger
(the "Merger") of Acclaim Arcade Holdings, Inc., a wholly owned
subsidiary of the Registrant, with and into Lazer. As a result
of the Merger, Lazer will be the surviving corporation and will
become a wholly-owned subsidiary of the Registrant. Consummation
of the Merger is subject to various conditions including certain
regulatory approvals, third party consents and the approval of
Lazer's shareholders. Acclaim intends to account for the Merger
as a pooling of interests.
Lazer shareholders holding the right to vote approximately
20% of the outstanding shares of Lazer common stock entitled to
vote on the Merger have agreed to vote in favor of the Merger.
Lazer's Board of Directors has agreed, subject to its fiduciary
obligations, to recommended that its shareholders vote in favor
of the Merger.
Pursuant to the Agreement, all issued and outstanding shares
of Lazer's common stock will be exchanged for shares of Acclaim
common stock utilizing a formula which values Lazer's shares of
common stock based on the average of Acclaim's common stock price
for the 20 days prior to the second day prior to the closing of
the Merger. If the average Acclaim share price for such 20 day
period is less than $16 per share, Lazer's shares will be valued
at $8 per share. If the average Acclaim share price for such 20
day period is between $16 and $20 per share, the Lazer shares
will be valued at 50 percent of such average Acclaim share price.
If the average Acclaim share price for such 20 day period is
greater than $20 per share, the Lazer shares will be valued at
$10 per share. However, if the average Acclaim share price for
such 20 day period is less than $12.50, each of the Registrant
and Lazer shall have the right to terminate the Agreement.
In connection with entering into the Agreement, Lazer has granted
to the Registrant an option to acquire 250,000 shares of Lazer
common stock at an exercise price of $8.00 per share, exercisable
for a period of two years if the Merger is not consummated as a
result of Lazer's Board exercising its fiduciary duties to
consider competing transactions. In addition, the Registrant would
receive a payment from Lazer of $200,000 in the event the
Agreement is terminated and an amount equal to 5% (net of such
$200,000 payment) of the consideration paid by a third party in
connection with consummation of such a competing transaction.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
1. Agreement and Plan of Merger by and among Lazer-Tron
Corporation, Acclaim Entertainment, Inc. and Acclaim Arcade
Holdings, Inc., dated as of March 22, 1995.
2. Acclaim Entertainment, Inc. Press Release, dated March 23,
1995.
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.
ACCLAIM ENTERTAINMENT, INC.
By /s/ Anthony R. Williams
Name: Anthony R. Williams
Title: Executive Vice President
Date: March 31, 1995
EXHIBIT INDEX
Exhibit DESCRIPTION Page
------- ----------- ----
2 Agreement and Plan of Merger by and 6
among Lazer-Tron Corporation, Acclaim
Entertainment, Inc. and Acclaim Arcade
Holdings, Inc., dated as of March 22, 1995.
99 Acclaim Entertainment, Inc. Press 62
Release, dated March 23, 1995.
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of March 22, 1995, by and among
Lazer-Tron Corporation ("Lazer"), a California corporation, Acclaim
Entertainment, Inc. ("Acclaim"), a Delaware corporation, and Acclaim Arcade
Holdings, Inc. ("Holdings"), a Delaware corporation organized solely for the
purpose of consummating the transactions contemplated hereby and a wholly owned
subsidiary of Acclaim.
WHEREAS, the Board of Directors of each of Lazer and Acclaim have
determined that it is in the best interests of their respective companies and
stockholders to consummate the business combination transaction provided for
herein and in the Agreement of Merger required to be filed under California law
(the "California Certificate") in form and substance reasonably satisfactory to
Acclaim and Lazer pursuant to which Holdings will, subject to the terms and
conditions set forth herein, merge with and into Lazer (the "Merger") so that
Lazer will be the surviving entity and a wholly owned subsidiary of Acclaim.
Upon the effectiveness of the Merger, all the outstanding capital stock of
Lazer will be converted into common stock of Acclaim subject to Section 2.05
hereof, and Acclaim will substitute comparable obligations of Acclaim for all
obligations relating to the outstanding options and warrants to purchase
securities of Lazer, as provided in this Agreement and the California
Certificate and the applicable provisions of the Delaware General Corporation
Law (the "DGCL") and the California General Corporation Law (the "CGCL");
WHEREAS, the Merger is intended to be treated as a tax-free reorganization
pursuant to the provisions of Section 368(a)(1)(A) of the Internal Revenue Code
of 1986, as amended (the "Code"), by virtue of the provisions of Section
368(a)(2)(E) of the Code and it is a condition to Acclaim's and Holdings'
obligations hereunder that the Merger be treated as a "pooling of interests"
("Pooling") for accounting purposes; and
WHEREAS, the parties hereto desire to make certain representations,
warranties and agreements in connection with the Merger and also to prescribe
certain conditions to the Merger.
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained herein, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
ARTICLE I
The Merger
Section 1.01 The Merger. (a) Upon the terms and subject to the
conditions hereof and in accordance with Section 252 of the DGCL and Sections
1103 and 1108 of the CGCL, as promptly as practicable following the
satisfaction or waiver of the conditions set forth in Article VI and Article
VII hereof, but in no event later than five days thereafter (unless the parties
shall otherwise agree) a closing (the "Closing") of the Merger shall take place
at the offices of Rosenman & Colin, 575 Madison Avenue, New York, New York, or
such other place and at such time as the parties shall agree in writing (the
"Closing Date").
(b) Concurrently with the Closing, (i) a certificate of merger
(the "Certificate of Merger"), in form and substance reasonably satisfactory to
Acclaim and Lazer, providing for the merger of Holdings with and into Lazer
shall be duly prepared, executed and filed by Lazer, as the surviving
corporation (the "Surviving Corporation"), with the Delaware Secretary of State
in accordance with the relevant provisions of the DGCL and (ii) the appropriate
officers of Lazer, Acclaim and Holdings shall execute and acknowledge the
California Certificate and it shall be filed with the California Secretary of
State in accordance with the CGCL, and the Merger shall become effective upon
completion of the latest of such filings as are required under the DGCL and the
CGCL. The date and time the Merger becomes effective is referred to herein as
the "Effective Time".
Section 1.02 Effects of the Merger. (a) The Merger shall have the
effects set forth in the DGCL and the CGCL and as hereinafter set forth.
Following the Merger, the Surviving Corporation shall (i) continue its
corporate existence under the laws of the State of California, (ii) be a wholly
owned subsidiary of Acclaim, (iii) retain its name "Lazer-Tron Corporation",
and (iv) succeed to all rights, assets, liabilities and obligations of Lazer
and Holdings in accordance with the DGCL and the CGCL. At the Effective Time,
pursuant to Section 1107 of the CGCL, the separate existence of Holdings shall
cease and the Surviving Corporation shall succeed, without other transfer, to
all the rights and property of each of Holdings and Lazer (sometimes
hereinafter referred to collectively as the "Constituent Corporations") and
shall be subject to all the debts and liabilities of each in the same manner as
if the Surviving Corporation had itself incurred them. All rights of creditors
and all liens upon the property of each of the Constituent Corporations shall
be preserved unimpaired, provided that such liens upon property of Holdings
shall be limited to the property affected thereby immediately prior to the time
the Merger is effective. Any action or proceeding pending by or against
Holdings may be prosecuted to judgment, which shall bind the Surviving
Corporation, or the Surviving Corporation may be proceeded against or
substituted in its place.
(b) At the Effective Time each share of common stock of Holdings issued
and outstanding, immediately prior to the Effective Time shall by reason of the
Merger and without any action by the holder thereof be converted into one
validly issued, fully paid and non-assessable share of common stock of the
Surviving Corporation.
Section 1.03 Merger Consideration. (a) At the Effective Time, each
share of common stock, no par value, of Lazer (the "Lazer Common Stock") issued
and outstanding immediately prior to the Effective Time shall, by reason of the
Merger and without any action by the holder thereof, be converted into the
right to receive the following consideration (the "Merger Consideration"):
(i) if the average of the closing sale price of a share of common
stock, par value $0.02 per share, of Acclaim (the "Acclaim Common Stock")
on the Nasdaq Stock Market's National Market System (as reported in the
Wall Street Journal) for the 20 business days immediately preceding the
second business day prior to the Closing Date (the "Acclaim Common Stock
Price") shall be at least $12.50 but less than $16.00, that number of
shares of Acclaim Common Stock equal to the product (rounded up to the
nearest one thousandth) of (i) one (1) and (ii) a fraction, the numerator
of which is $8.00 and the denominator of which is the Acclaim Common Stock
Price;
(ii) if the Acclaim Common Stock Price shall be at least $16.00 and
not more than $20.00, one half (1/2) of a share of Acclaim Common Stock;
or
(iii) if the Acclaim Common Stock Price shall be more than $20.00,
that number of shares of Acclaim Common Stock equal to the product
(rounded up to the nearest one thousandth) of (i) one (1) and (ii) a
fraction, the numerator of which is $10.00 and the denominator of which is
the Acclaim Common Stock Price.
(b) The issuance of the Acclaim Common Stock to be delivered to the
holders of the Lazer Common Stock (the "Lazer Stockholders") in connection with
the Merger shall be registered by Acclaim under the Securities Act of 1933, as
amended (the "1933 Act"), on a registration statement on Form S-4 (the "S-4")
which shall have been declared effective by the Securities and Exchange
Commission (the "SEC") at or prior to the Effective Time.
(c) No fractional shares of Acclaim Common Stock shall be issued or
delivered to a Lazer Stockholder in payment of the Merger Consideration; cash
shall be paid in lieu of any such fractional shares pursuant to Section 2.02
hereof. The fractional shares of Acclaim Common Stock to be received by each
Lazer Stockholder will be aggregated so that no Lazer Stockholder will receive
cash in an amount equal to or greater than the value of one full share of
Acclaim Common Stock.
(d) Dissenting Shares (hereinafter defined) shall not be converted into
the right to receive the Merger Consideration and the holders thereof shall
have only such rights as are provided under Chapter 13 of the CGCL unless and
until the holders of any Dissenting Shares (the "Dissenting Shareholders")
withdraw their demand for purchase of the Dissenting Shares in accordance with
Chapter 13 of the CGCL or such Dissenting Shares or the Dissenting Shareholders
otherwise lose their status as Dissenting Shares or Dissenting Shareholders
under Section 1309 of the CGCL.
(e) Notwithstanding the foregoing provisions of this Section 1.03, if the
Acclaim Common Stock Price shall be less than $12.50, each of Acclaim and
Lazer, at its sole option, shall have the right to give notice pursuant to
Section 8.01 hereof of its election to terminate this Agreement.
Section 1.04 Directors and Officers; Articles of Incorporation; By-laws.
At the Effective Time, the Board of Directors of the Surviving Corporation
shall consist of Messrs. Gregory E. Fischbach, James Scoroposki, Robert Holmes,
Anthony R. Williams and Norman B. Petermeier and the officers of the Surviving
Corporation shall be the existing officers of Lazer, each to hold office in
accordance with the Articles of Incorporation and By-laws of the Surviving
Corporation. The Articles of Incorporation and By-laws of Lazer at the
Effective Time shall be the Articles of Incorporation and By-laws of the
Surviving Corporation after the Effective Time, and thereafter may be amended
in accordance with their respective terms and applicable law.
Section 1.05 Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of the holders thereof, and
subject to Section 2.02, each issued and outstanding share of Lazer Common
Stock (including shares issued pursuant to the 1994 Employee Stock Purchase
Plan (the "Employee Purchase Plan") as provided in Section 1.06) other than
Dissenting Shares, if any, shall be converted into the right to receive a
fraction (rounded up to the nearest one-thousandth of a share) of a fully paid
and nonassessable share of Acclaim Common Stock, determined in accordance with
Section 1.03 hereof.
Section 1.06 Stock Plans and Warrants. (a) At the Effective Time, each
outstanding option to purchase Lazer Common Stock (a "Stock Option") granted
under the Lazer's 1989 Stock Option Plan (the "Employee Option Plan",
collectively with the Director Stock Option Plan (the "Director Option Plan"),
the "Lazer Stock Option Plans") and each outstanding warrant (the "Warrants")
described on Schedule 3.02 hereto, whether vested or unvested, shall, by virtue
of the Merger and without any further action on the part of any holder thereof,
be deemed substituted with an option or warrant (hereinafter referred to as an
"Acclaim Option or Warrant"), as applicable, on substantially the same terms
and conditions as were applicable under such Stock Option or Warrant, to
acquire that number of shares of Acclaim Common Stock (and with respect to the
Sales Agent Warrants (as hereinafter defined) listed on Schedule 3.02 which are
exercisable for Lazer Common Stock and a warrant to buy one-half of a share of
Lazer Common Stock (the "Underlying Warrant"), in addition to such number of
shares of Acclaim Common Stock, that number of warrants to purchase shares of
Acclaim Common Stock (herein referred to as the "Underlying Acclaim Warrant")
as the holder of such Stock Option or Warrant would have been entitled to
receive pursuant to the Merger had such holder exercised such Stock Option or
Warrant in full immediately prior to the Effective Time (without taking into
account whether or not such Stock Option or Warrant was in fact exercisable),
and the exercise price per share for such shares of Acclaim Common Stock shall
be equal to (x) the aggregate exercise price for Lazer Common Stock purchasable
pursuant to such substituted Stock Option or Warrant (and with respect to the
Sales Agent Warrants, the aggregate exercise price to acquire the Lazer Common
Stock and Underlying Acclaim Warrant) divided by (y) the number of shares of
Acclaim Common Stock deemed directly purchasable pursuant to such Stock Option
or Warrant; and, with respect to any Underlying Acclaim Warrant the exercise
price for the Acclaim Common Stock purchasable upon exercise of any Underlying
Acclaim Warrant shall be determined in the same manner as set forth above with
respect to any other Stock Option or Warrant as though the Underlying Warrants
were outstanding immediately prior to the Closing Date. Immediately prior to
the Effective Time, each outstanding right to acquire Lazer Common Stock
("Lazer Stock Purchase Rights") issued pursuant to the Employee Purchase Plan
shall be exercised or deemed exercised (such deemed exercise shall nevertheless
require application of the funds held in the applicable employee's account
under the Employee Purchase Plan) to purchase shares of Lazer Common Stock at
an exercise price per share determined in accordance with the formula set forth
in the Employee Purchase Plan and for that number of shares of Lazer Common
Stock and upon the terms and conditions determined in accordance with the terms
of the Employee Purchase Plan. After such exercise or deemed exercise of all
outstanding Lazer Stock Purchase Rights, but in any event no later than July 1,
1995, including without limitation with respect to rights outstanding on the
date hereof and/or outstanding through June 30, 1994, the Employee Purchase
Plan and any other unexercised rights shall be terminated (unless the closing
shall occur prior to said date in which event the Employee Purchase Plan and
all such rights shall terminate as of the date two business days prior to such
Closing Date) provided, that the Closing subsequently occurs. All such shares
of Lazer Common Stock issued upon the exercise or deemed exercise of Lazer
Stock Purchase Rights under the Employee Purchase Plan shall be converted into
the right to receive Acclaim Common Stock as provided in Sections 1.03 or 1.05.
If the foregoing calculation results in a substituted Acclaim Option or Warrant
(or would result in an Underlying Acclaim Warrant) being exercisable for a
fraction of a share of Acclaim Common Stock, then the number of shares of
Acclaim Common Stock subject to such Acclaim Option or Warrant (or underlying
Acclaim Warrant) will be rounded down to the nearest whole number of shares
with no cash being paid for such fractional share. The exercise price of such
Acclaim Option or Warrant (or underlying Acclaim Warrant) shall be rounded to
the nearest whole cent. In the case of any Stock Option to which Section 421
of the Code applies by reason of its qualification under any of Sections 422-
423 of the Code ("statutory stock options"), the option price, the number of
shares purchasable pursuant to such Stock Option and the terms and conditions
of exercise thereof shall comply with Section 424(a) of the Code. Continuous
employment or service with Lazer will be credited to an optionee for purposes
of determining the number of shares of Acclaim Common Stock subject to exercise
under a converted Stock Option. Stock Options under the Director Option Plan
shall by the terms thereof accelerate and thereafter terminate concurrently
with or immediately prior to the Effective Time.
(b) As soon as practicable after the Effective Time, Acclaim shall
deliver to each holder of an outstanding Stock Option or Warrant an appropriate
notice setting forth such holder's rights pursuant thereto and such Stock
Option or Warrant shall continue in effect on the same terms and conditions
(subject to the adjustments required by this Section 1.06 after giving effect
to the Merger). Acclaim shall comply with the terms of all such Stock Options
and Warrants and use it best efforts to ensure, to the extent required by, and
subject to the provisions of, any such Lazer Stock Plan that Stock Options
which qualified as qualified stock options prior to the Effective Time continue
to qualify as qualified stock options after the Effective Time. Acclaim shall
take all corporate action necessary to reserve for issuance a sufficient number
of shares of Acclaim Common Stock for delivery pursuant to the terms set forth
in this Section 1.06. Acclaim shall use reasonable efforts to cause the
Acclaim Common Stock to be issued pursuant to exercise of the substituted
Options and Warrants to be issued under Acclaim's existing stock option plans
or otherwise with respect to not more than 10,000 non-qualified stock options
and, if not already registered, to register such Acclaim Common Stock issuable
pursuant to such plans or otherwise, as applicable, as soon as reasonably
practicable following the Effective Time on a registration statement on Form S-
8 or other applicable form.
(c) If necessary to effect the adjustments contemplated by this Section
1.06, Lazer will use its reasonable efforts to obtain the consent of each
holder of a Stock Option or Warrant.
Section 1.07 Tax Free Reorganization. The parties intend to adopt this
Agreement and the Merger as a tax-free plan of reorganization under Section
368(a)(1)(A) of the Code by virtue of the provisions of Section 368(a)(2)(E) of
the Code. The Acclaim Common Stock issued in the Merger will be issued solely
in exchange for the Lazer Stock, and no other transaction other than the Merger
and as provided in this Agreement is intended to be an adjustment to the
consideration paid for the Lazer Stock. Except for cash paid in lieu of
fractional shares and dissenters rights, no consideration that could constitute
"other property" within the meaning of Section 356(a) of the Code is being
transferred by Acclaim for the Lazer Common Stock in the Merger. The parties
shall not take a position on any tax return inconsistent with this Section 1.07
unless otherwise required by law.
Section 1.08 Pooling of Interests. The parties acknowledge that it is a
condition of Acclaim's and Holdings' obligations hereunder that the Merger be
treated as a Pooling for accounting purposes under and in accordance with the
applicable provisions of GAAP, including without limitation Opinion No. 16 of
the Accounting Principles Board ("APB 16"). The affiliates of Lazer shall
execute and deliver to Acclaim Affiliates Agreements (as defined below) as
contemplated by Section 6.20 below, to ensure compliance by such affiliates
with the restrictions required to allow such accounting treatment to be
utilized.
ARTICLE II
Exchange of Shares
Section 2.01 Surrender of Certificates. Prior to the Effective Time,
Acclaim shall make available to American Securities Transfer, Inc., or a bank
reasonably acceptable to Lazer (the "Exchange Agent"), in trust for the benefit
of the holders of Lazer Common Stock for exchange in accordance with this
Article II, certificates representing the aggregate number of shares of Acclaim
Common Stock issuable pursuant to Section 1.05. Promptly after the Effective
Time, the Exchange Agent shall mail to each holder of record of a certificate
or certificates which immediately prior to the Effective Time represented Lazer
Common Stock (the "Certificates") a letter of transmittal and instructions for
use in effecting the surrender of the Certificates in exchange for certificates
representing Acclaim Common Stock and cash in lieu of fractional shares, if
applicable. Upon surrender of a Certificate to the Exchange Agent, together
with such letter of transmittal, duly executed, the holder of such Certificate
shall be entitled to receive in exchange therefor the Merger Consideration for
each share of Lazer Common Stock formerly represented by such Certificate, and
the Certificate so surrendered shall forthwith be canceled. Until surrendered
as contemplated by this Article II, from and after the Effective Time each
Certificate shall be deemed to represent only the right to receive the Merger
Consideration for each share of Lazer Common Stock formerly represented by such
Certificate, and shall not evidence any interest in, or any right to exercise
the rights of a stockholder of, Acclaim. If a certificate representing Acclaim
Common Stock is to be issued or a cash payment in lieu of fractional share
interests is to be made to a person other than the one in whose name the
Certificate surrendered in exchange therefor is registered, it shall be a
condition to such issuance or payment that such Certificate be properly
endorsed (or accompanied by an appropriate instrument of transfer) and
accompanied by evidence that any applicable stock transfer taxes have been paid
or provided for.
Section 2.02 No Fractional Shares. No certificate or scrip representing
fractional shares of Acclaim Common Stock shall be issued upon the surrender
for exchange of Certificates, and such fractional share interests will not
entitle the owner thereof to vote or to any rights of a stockholder of Acclaim.
The fractional shares of Acclaim Common Stock to be received by each Lazer
Stockholder will be aggregated so that no Lazer Stockholder will receive cash
in an amount equal to or greater than the value of one full share of Acclaim
Common Stock. In lieu of any such fractional share, the Exchange Agent shall
pay to each Lazer Stockholder who otherwise would be entitled to receive a
fractional share of Acclaim Common Stock an amount of cash determined by
multiplying (i) the Acclaim Common Stock Price by (ii) the fraction of a share
of Acclaim Common Stock to which such holder would otherwise be entitled.
Acclaim shall make available to the Exchange Agent sufficient funds as and when
necessary to enable the Exchange Agent to make the cash payments contemplated
hereby. In no event shall interest be paid or accrued on any such cash
payments. The transfer of cash to Lazer Stockholders in lieu of fractional
shares of Acclaim Common Stock, if any, is solely for the purpose of avoiding
the expense and inconvenience to Acclaim of accounting for fractional shares
and does not represent separately bargained for consideration.
Section 2.03 No Dividends. No dividends or other distributions declared
or made after the Effective Time with respect to Acclaim Common Stock with a
record date after the Effective Time shall be paid to the holder of any
Certificate with respect to the Acclaim Common Stock represented thereby until
the holder of record of such Certificate shall surrender such Certificate and
comply with all requirements necessary to avoid "backup withholding" under
Section 3406 of the Code. Dividends or other distributions with a record date
after the Effective Time payable in respect of Acclaim Common Stock held by the
Exchange Agent shall be held in trust for the benefit of such holders of
Certificates. Following surrender of any previously unsurrendered Certificate
and compliance with such requirements under Section 3406 of the Code, there
shall be paid to the record holder of the certificates representing whole
shares of Acclaim Common Stock issued in exchange therefor, without interest,
(i) at the time of such surrender, the amount of any dividends or other
distributions with a record date after the Effective Time theretofore paid with
respect to such whole shares of Acclaim Common Stock and (ii) at the date of
payment of any dividends or other distributions with a record date after the
Effective Time but prior to surrender and a payment date subsequent to
surrender, the amount of such dividends or other distributions payable with
respect to such whole shares of Acclaim Common Stock.
Section 2.04 Return to Acclaim. Any shares of Acclaim Common Stock and
any cash in lieu of fractional share interests made available to the Exchange
Agent and not exchanged for Certificates within six months after the Effective
Time and any dividends and distributions held by the Exchange Agent for payment
or delivery to the holders of unsurrendered Certificates representing Lazer
Common Stock and unclaimed at the end of such six-month period shall be
redelivered or repaid by the Exchange Agent to Acclaim, after which time any
holder of Certificates who has not theretofore delivered or surrendered such
Certificates to the Exchange Agent, subject to applicable law, shall look as a
general creditor only to Acclaim for payment of the Merger Consideration, cash
in lieu of fractional share interests, and any such dividends or distributions.
Notwithstanding the foregoing, none of the Exchange Agent, the Surviving
Corporation or any other party hereto shall be liable to a holder of Lazer
Common Stock for any Merger Consideration, cash in lieu of fractional share
interests or dividends or distributions delivered to a public official pursuant
to applicable escheat laws.
Section 2.05 Dissenting Shares. If demands for payment under Chapter 13
of the CGCL are filed with respect to 5% or more of the outstanding shares of
the Lazer Stock, the holders of which vote against the Merger, then such
holders shall be entitled to exercise dissenters' rights to the extent
available under Chapter 13 of the CGCL with respect to the shares for which
such demand has been filed in accordance with Chapter 13 of the CGCL. In
addition, any shares of Lazer Common Stock whose transfer is restricted by law
or regulation or by Lazer and that are voted against the Merger shall be
entitled to exercise dissenters' rights to the extent available under Chapter
13 of the CGCL. If and to the extent dissenters' rights are available under
the CGCL to holders of Lazer Common Stock in connection with the Merger, who
have voted against the Merger and with respect to which dissenters' rights
shall have been properly demanded in accordance with the provisions of Chapter
13 of the CGCL ("Dissenting Shares"), such Dissenting Shares shall not be
converted into the right to receive the Merger Consideration and the holders
thereof shall have only such rights as are provided in such Chapter 13 of the
CGCL unless and until the holder of any such Dissenting Shares withdraws his
demand for such purchase of such Dissenting Shares or such Dissenting Shares or
holders otherwise lose their status as Dissenting Shares or shareholders,
respectively, under Section 1309 of the CGCL or otherwise loses his right to
such appraisal. If a holder of Dissenting Shares shall properly withdraw his
demand for purchase of such Dissenting Shares or such Dissenting Shares or
holders of Dissenting Shares shall otherwise lose their status as Dissenting
Shares or shareholders, respectively, under Section 1309 of the CGCL, then, as
of the Effective Time or the occurrence of such event, whichever last occurs,
such holder's Dissenting Shares shall cease to be Dissenting Shares and shall
be converted into and represent the right to receive the Merger Consideration.
Prior to the Effective Time, Lazer shall give Acclaim prompt notice of any
written demands for appraisal or withdrawals of demands for appraisal received
by Lazer and, except with the prior written consent of Acclaim, shall not
settle or offer to settle any such demands.
Section 2.06 No Further Transfer. Following the Effective Time, there
shall be no further registration of transfers on the stock transfer books of
the Surviving Corporation of the Lazer Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation for any reason, they
shall be canceled and exchanged for the Merger Consideration as provided in
this Article II.
ARTICLE III
Representations and Warranties of Lazer
Lazer represents and warrants to Acclaim and Holdings as follows:
Section 3.01 Organization and Good Standing. Each of Lazer and its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to own, lease and operate its
properties and to carry on its business as now being conducted. Each of Lazer
and its subsidiaries is duly qualified or licensed and in good standing to do
business in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification or
licensing necessary, except in such jurisdictions where the failure to be so
duly qualified or licensed and in good standing would not, in the aggregate,
have a Material Adverse Effect. "Material Adverse Effect" means, with respect
to Lazer, any event that could have a material adverse effect on the business,
assets, results of operations or financial condition of and its subsidiaries
taken as a whole; provided that a Material Adverse Effect shall not include any
effect that results from general economic conditions affecting the video and
coin-operated arcade game market. Lazer has heretofore delivered to Acclaim
accurate and complete copies of the Articles of Incorporation and By-laws of
and its subsidiaries, as currently in effect.
Section 3.02 Capitalization. (a) As of the date hereof the authorized
capital stock of consists of 10,000,000 shares of Common Stock of which
3,554,852 shares were issued and outstanding as of February 28, 1995 and
1,000,000 shares of preferred stock, no par value (" Preferred Stock") of which
there were no shares outstanding as of February 28, 1995. An aggregate of
518,127 shares of Common Stock were reserved and authorized for issuance
pursuant to the Employee Option Plan, of which options to purchase a total of
413,414 shares of Common Stock were outstanding as of February 28, 1995. An
aggregate of 85,000 shares of Common Stock were reserved and authorized for
issuance pursuant to the Director Option Plan, of which options to purchase a
total of 36,000 shares of Common Stock were outstanding as of February 28,
1995. An aggregate of 45,034 shares of Common Stock were reserved and
authorized for issuance pursuant to the Employee Purchase Plan. An aggregate
of 667,166 shares of Common Stock were reserved and authorized for issuance
pursuant to redeemable warrants ("Redeemable Warrants") outstanding as of
February 28, 1995. An aggregate of 192,646 shares of Common Stock were
reserved and authorized for issuance pursuant to sales agent warrants as set
forth on Schedule 3.02 (the "Sales Agent Warrants") outstanding as of
February 28, 1995. An aggregate of 55,000 shares of Common Stock were
reserved and authorized for issuance pursuant to a warrant held by Van Kasper &
Co. (the "Underwriter Warrant"). All of the issued and outstanding shares of
Lazer Common Stock have been duly authorized and validly issued and are fully
paid, nonassessable and free of preemptive rights, with no personal liability
attaching to the ownership thereof. All prior sales of Lazer's securities have
been made in compliance with or under an exemption from the registration
requirements of the 1933 Act and applicable state securities laws, and no
shareholders of Lazer have any rescission rights with respect to any Lazer
securities. Except as referred to above or reflected in Schedule 3.02(a), Lazer
does not have and is not bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character to or by which Lazer
is a party or is bound which, directly or indirectly, obligate Lazer to issue,
deliver or sell any shares of Lazer Common Stock or Lazer Preferred Stock or any
other equity security of Lazer or any securities representing the right to
purchase or otherwise receive any shares of Lazer Common Stock or any other
equity security of Lazer. The names of the optionees and warrantholders holding
Stock Options and Warrants, the date of grant of each Stock Option or Warrant to
purchase Lazer Common Stock granted and outstanding as of February 28, 1995, the
number of shares of Lazer Common Stock subject to each such Stock Option or
Warrant, the expiration date of each such Stock Option or Warrant, and the price
at which each such Stock Option or Warrant may be exercised under Lazer's Stock
Option Plans are set forth in Schedule 3.02(a). Assuming the conversion of
Stock Options and Warrants under Section 1.06 hereof, at the Effective Time
there will not be any outstanding subscriptions, options, warrants, calls,
commitments or agreements of any character by which Lazer or any of its
subsidiaries will be bound calling for the sale or issuance by Lazer of any
shares of the capital stock of Lazer or any of its subsidiaries. No vesting
restrictions of any Stock Options (except with respect to 36,000 Stock Options
outstanding under the Director Option Plan) or Warrants will, as a consequence
of the Merger, lapse so as to accelerate the vesting of any such Stock Options
or Warrants and the Board of Directors of Lazer has not and will not have, as of
the Closing Date, taken any action to permit such acceleration and will take any
action necessary to prevent such acceleration.
(b) Schedule 3.02(b) sets forth a true and correct list of all of Lazer's
subsidiaries as of the date of this Agreement. Except as set forth on Schedule
3.02(b), Lazer owns, directly or indirectly, all of the issued and outstanding
shares of capital stock of each of Lazer's subsidiaries, free and clear of all
Liens (as defined below) whatsoever, and all of such shares are duly authorized
and validly issued and are fully paid, nonassessable and free of preemptive
rights, with no personal liability attaching to the ownership thereof. None of
Lazer's subsidiaries has or is bound by any outstanding subscriptions, options,
warrants, calls, commitments or agreements of any character calling for the
sale or issuance by such subsidiary of any shares of capital stock or any other
equity security of such subsidiary or any securities representing the right to
purchase or otherwise receive any shares of capital stock or any other equity
security of such subsidiary.
(c) All existing option agreements subject to the Lazer Stock Option
Plans and all existing Warrants set forth on Schedule 3.02(a) hereof are in
form and substance substantially the same as the forms of option agreements and
warrant agreements previously provided to Acclaim or as filed with the Lazer
SEC Reports, as applicable and each conforms to the expressly enumerated
provisions of the Lazer Stock Option Plans or such Warrant Agreement, as
applicable, under which each was issued including without limitation as to
exercise and vesting and the Lazer Board of Directors has not taken (except
with respect to 36,000 options outstanding under the Director Option Plan) and
will not take any action pursuant to the Lazer Stock Option Plans or such
Warrant Agreements or otherwise which would permit the acceleration of the
exercisability of any Options or Warrants whether in connection with the Merger
or the transactions contemplated hereby or otherwise.
Section 3.03 Authority Relating to this Agreement. Lazer has full
corporate power and authority to execute and deliver this Agreement and all
other documents hereby contemplated and, subject to obtaining requisite
shareholder approval, to consummate the transactions contemplated hereby and to
take all other actions required to be taken by it pursuant to the provisions
hereof. The execution and delivery of this Agreement by Lazer and the
consummation by Lazer of the transactions contemplated hereby have been duly
and validly authorized and approved by the Board of Directors of Lazer and no
other corporate proceedings on the part of Lazer are necessary to authorize
this Agreement or to consummate the transactions so contemplated (other than,
with respect to the Merger, the approval and adoption of this Agreement by the
holders of a majority of the outstanding shares of Lazer Common Stock in
accordance with the CGCL and Lazer's Articles of Incorporation and Bylaws).
This Agreement has been duly and validly executed and delivered by Lazer and
constitutes a valid and binding agreement of Lazer, enforceable against Lazer,
in accordance with its terms, except as such enforcement may be limited by
bankruptcy and other laws affecting the enforceability of creditors' rights
generally or laws governing the availability of specific performance or other
equitable remedies, or restrictions on the enforcement of securities
indemnification and contribution provisions imposed by public policy.
Section 3.04 Consents and Approvals; No Violations. Except for
applicable requirements of the 1933 Act, Securities Exchange Act of 1934, as
amended (the "1934 Act"), state Blue Sky laws, the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), the filing and
recordation of the Certificate of Merger, as required by the DGCL, the
California Certificate as required by the CGCL, appropriate documents with the
relevant authorities of States in which Lazer is qualified to do business, and
such filings, authorizations, orders and approvals as may be required under
State "control share acquisition", "antitrust" or other similar statutes or
regulations, and such filings, authorizations, orders and approvals as may be
required under foreign laws and NASD Bylaws, or as set forth in Schedule 3.04
hereto, no filing with, and no permit, authorization, consent or approval of,
any public body or authority, including courts of competent jurisdiction,
domestic or foreign ("Governmental Entity"), or of any third party, is
necessary for the entering into and/or consummation by Lazer of the
transactions contemplated by this Agreement. Except as set forth in Schedule
3.04, subject to obtaining requisite shareholder approval, neither the
execution and delivery of this Agreement by Lazer nor the consummation by Lazer
of the transactions contemplated hereby nor compliance by Lazer with any of the
provisions hereof will (i) constitute any violation or breach of any provision
of the Articles of Incorporation or By-laws of Lazer or its subsidiaries,
(ii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation or acceleration or result in the creation of any
lien) under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, contract, agreement or other instrument or
obligation to which Lazer or its subsidiaries is a party or by which either
they or their properties or assets may be bound or (iii) other than filings and
consents under the 1933 Act, 1934 Act, the HSR Act or as otherwise set forth on
Schedule 3.04, violate any order, writ, injunction, decree, statute, rule or
regulation applicable to Lazer, its subsidiaries or any of their properties or
assets, except in the case of subclause (ii) or (iii) of this sentence for
violations, breaches, defaults, rights which arose or liens which would not, in
the aggregate, have a Material Adverse Effect and which would not prevent or
materially delay the consummation of the transactions contemplated hereby.
Section 3.05 Public Reports. Except as disclosed in Schedule 3.05
hereto, Lazer has and at the Effective Time will have filed all required forms,
reports and documents with the SEC since the effectiveness of the registration
statement relating to its initial public offering in May 1994 (collectively,
the "Lazer SEC Reports"), all of which forms, reports and documents have and
shall have complied in all material respects with all applicable requirements
of the 1933 Act and the 1934 Act. Except as disclosed in Schedule 3.05, as of
their respective dates of filing in final or definitive form (or, if amended or
superseded by a subsequent filing, then on the date of such subsequent filing),
none of the Lazer SEC Reports, including, without limitation, any financial
statements or schedules included therein, contained or shall contain any untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light
of the circumstances in which they were made, not misleading. Each of the
balance sheets (including the related notes) included in the Lazer SEC Reports
fairly presents and shall present the consolidated financial position of Lazer
and its subsidiaries as of the respective dates thereof, and the other related
financial statements (including the related notes) included therein fairly
presented the consolidated results of operations and changes in financial
position of Lazer and its subsidiaries for the respective periods indicated,
except, in the case of interim financial statements, for year-end audit
adjustments, consisting only of normal recurring accruals. Each of the
financial statements (including the related notes) included in the Lazer SEC
Reports has been and shall have been prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied during the periods
involved, except as otherwise noted therein or, in the case of the unaudited
financial statements, as permitted by the applicable rules and regulations of
the SEC.
Section 3.06 Absence of Certain Changes. Except as contemplated herein
or set forth in Schedule 3.06, since December 31, 1994 neither Lazer nor its
subsidiaries (i) has taken any of the actions set forth in Sections 5.01(a)
through 5.01(c) and/or 5.01(e) through 5.01(l) or agreed to take any of such
actions, (ii) suffered a Material Adverse Effect or (iii) entered into any
transaction, or conducted its business or operations, other than in the
ordinary course of business and consistent with past practice.
Section 3.07 No Undisclosed Liabilities. Except as and to the extent
provided in Lazer's unaudited balance sheet as at December 31, 1994 and the
notes thereto (the "Lazer Balance Sheet"), neither Lazer nor its subsidiaries
had at December 31, 1994 any liabilities absolute, accrued, unaccrued,
contingent or otherwise required by GAAP to be reflected on a consolidated
balance sheet of Lazer and its subsidiaries in excess of $50,000 in the
aggregate. Except as and to the extent set forth in Schedule 3.07, since
December 31, 1994 neither Lazer nor its subsidiaries has incurred any
liabilities (absolute, accrued, contingent or otherwise) which are, in the
aggregate, material to the business, operations or financial condition of Lazer
and its subsidiaries taken as a whole, except liabilities (i) adequately
provided for in the Lazer Balance Sheet, (ii) incurred since December 31, 1994
in the ordinary course of business, (iii) consistent with past practice or
(iv) incurred in connection with this Agreement.
Section 3.08 No Default. Except as set forth in Schedule 3.08, neither
Lazer nor any of its subsidiaries is in default or violation (and no event has
occurred which with notice or the lapse of time or both would constitute a
default or violation) of any term, condition or provision of (i) its Articles
of Incorporation or its By-laws, (ii) any note, bond, mortgage, indenture,
license, contract, agreement or other instrument or obligation to which Lazer
or any of its subsidiaries is a party or by which they or any of their
properties or assets may be bound or (iii) any order, writ, injunction, decree,
statute, rule or regulation applicable to Lazer or any of its subsidiaries,
except in the case of subclause (ii) or (iii) of this sentence for defaults or
violations which would not, in the aggregate, have a Material Adverse Effect
and which would not prevent or materially delay the consummation of the
transactions contemplated hereby.
Section 3.09 Litigation. Except as set forth in Schedule 3.09 or in the
Lazer SEC Reports, there is no suit, action or proceeding pending or, to the
knowledge of Lazer, any investigation pending or any suit, action, proceeding
or investigation threatened against, involving or affecting Lazer or its
officers and directors in such capacities, any of its subsidiaries, or any of
its or their respective properties or rights seeking equitable relief or
claiming damages in excess of $250,000, nor is there any judgment, decree,
injunction, rule or order of any court, governmental department, commission,
agency, instrumentality or arbitrator outstanding against Lazer or its officers
and directors in such capacities, or any of its subsidiaries, which does or
might reasonably be expected to (i) result in the modification, termination,
suspension, impairment or reformation of any contract to which Lazer or any of
its subsidiaries is a party, which modification, termination, suspension,
impairment or reformation would have a Material Adverse Effect; (ii) materially
adversely affect the manner in which Lazer conducts its business; (iii) affect
the ability of Lazer or Acclaim to consummate any of the transactions
contemplated hereby; or (iv) have a Material Adverse Effect. Except as set
forth in Schedule 3.09, there is no suit, action or proceeding pending by Lazer
against any third party.
Section 3.10 Compliance with Applicable Law. The businesses of Lazer and
its subsidiaries are not being conducted in violation of any applicable law,
ordinance, rule, regulation, decree or order of any Governmental Entity, except
for violations which, in the aggregate, do not and would not reasonably be
expected to have a Material Adverse Effect. Lazer and its subsidiaries hold
all permits, licenses, variances, exemptions, orders and approvals of all
Governmental Entities necessary for the lawful conduct of their respective
businesses (the "Lazer Permits"), except for failures to hold such Lazer
Permits which would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect. Lazer and its subsidiaries are in compliance with the
terms of the Lazer Permits, except where the failure so to comply would not, in
the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 3.11 Taxes. Lazer and each of its subsidiaries have duly and
timely filed all material federal, state, local and foreign tax returns
required to be filed by it, and except for Taxes (as hereinafter defined) not
in excess of $100,000, Lazer has duly and timely paid, caused to be paid or
made adequate provision for the payment of all Taxes required to be paid in
respect of the periods covered by such returns, except such as are being
contested in good faith by appropriate proceedings or otherwise and/or as
described on Schedule 3.11 hereto, and has made adequate provision for payment
of all Taxes anticipated to be payable in respect of all periods since the
periods covered by such returns. Except as disclosed in Schedule 3.11 and
except for taxes not in excess of $100,000, Lazer and each of its subsidiaries
have fully collected, withheld and/or paid over all Taxes required to be
collected, withheld and/or paid over to a taxing authority. Except as
disclosed in Schedule 3.11, all deficiencies and assessments asserted as a
result of any examinations or other audits by federal, state, local or foreign
taxing authorities have been paid, fully settled or adequately provided for in
the financial statements contained in the Lazer SEC Reports, and no issue or
claim has been asserted for Taxes by any taxing authority for any prior period,
the adverse determination of which would result in a deficiency which would
have a Material Adverse Effect, other than those heretofore paid or provided
for. Except as set forth in Schedule 3.11, there are no outstanding agreements
or waivers extending the statutory period of limitation applicable to any
federal, state, local or foreign tax return of Lazer or its subsidiaries.
Except as set forth in Schedule 3.11, neither Lazer nor any of its subsidiaries
has filed any consent under Section 341(f) of the Code (or any corresponding
provision of state, local or foreign tax law), is a party to any agreement,
contract or arrangement providing for the allocation or sharing of any Taxes or
providing for a contractual or other obligation to indemnify or reimburse any
other person or entity with respect to any Taxes, or is a party to any
agreement, contract or arrangement that would result, separately or in the
aggregate, in the payment of any "excess parachute payment" within the meaning
of Section 280G of the Code. Neither the Merger nor any other transaction
contemplated by this Agreement will result in any payment or series of payments
by Lazer, Acclaim or any subsidiaries of either that will constitute a
parachute payment within the meaning of Section 280G of the Code. For purposes
of this Agreement, "Taxes" shall mean any and all taxes, fees, levies, duties,
charges or other assessments imposed by any federal, state, county, local or
foreign government, taxing authority, subdivision or agency thereof, including
interest, penalties, additions to tax or additional amounts relating thereto.
Section 3.12 Employee Benefit Plans; ERISA. (a) The name of each plan,
program, arrangement, agreement or commitment sponsored or maintained by or on
behalf of Lazer or any ERISA Affiliate or to which Lazer or any ERISA Affiliate
makes or is obligated to make contributions or to which Lazer or any ERISA
Affiliate made or was obligated to make contributions during the five (5) year
period ending on the date hereof, which is a pension, profit sharing, savings,
thrift or other retirement plan (including, without limitation, each "employee
pension benefit plan" as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), deferred compensation,
stock purchase, stock option, performance share, bonus or other incentive plan,
severance pay plan, policy or procedure, life, health, disability or accident
insurance plan (including, without limitation, each "employee welfare benefit
plan" as defined in Section 3(1) of ERISA) or vacation or other employee
benefit plan, program, arrangement, agreement or commitment, whether or not
written (all of the foregoing being hereinafter referred to individually as a
"Plan" and collectively as the "Plans"), is set forth on Schedule 3.12(a)
hereto. Except as set forth in Schedule 3.12(a), Lazer and each of its ERISA
Affiliates have complied with all of the provisions of each such Plan and all
applicable provisions of ERISA and the Code, have administered each such Plan
(including the payment of benefits thereunder) in accordance with the
provisions of each such Plan and all applicable provisions of ERISA and the
Code and have timely made all required contributions thereto.
(b) Copies of the two most recent annual reports (Form 5500, including,
if applicable, Schedule B thereto) prepared in connection with each Plan with
respect to which such a report is required have been delivered to Acclaim. All
Plans which individually or collectively would constitute an "employee pension
benefit plan," as defined in Section 3(2) of ERISA (collectively, the "Lazer
Pension Plans"), are identified as such in Schedule 3.12(b). All contributions
due from Lazer or any ERISA Affiliate with respect to any of the Plans have
been made as required under ERISA or have been accrued on Lazer's or any such
ERISA Affiliate's financial statements as of March 31, 1995. Each Plan has
been maintained in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations, including,
without limitation, ERISA and the Code, which are applicable to such Plans,
except as would not have a Material Adverse Effect.
(c) No Lazer Pension Plan constitutes, or has since the enactment of
ERISA constituted, a "multiemployer plan," as defined in Section 3(37) or
4001(a)(3) of ERISA. Lazer or any ERISA Affiliate does not maintain or
contribute to and during the last five years has not maintained or contributed
to a Lazer Pension Plan which is subject to the provisions of Title IV of ERISA
and does not have any liability with respect to any Lazer Pension Plan which is
subject to the provisions of Title IV of ERISA. No Lazer Pension Plans are
subject to Title IV of ERISA. No "prohibited transaction", as defined in
Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to
any Plan which is covered by Title I of ERISA, which would result in any
material liability to Lazer and its ERISA Affiliates taken as a whole,
excluding transactions effected pursuant to a statutory or administrative
exemption. Nothing done or omitted to be done and no transaction or holding of
any asset under or in connection with any Plan has or will make Lazer or any
officer or director of Lazer subject to any material liability under Title I of
ERISA or liable for any material Tax or penalty pursuant to Section 4972, 4975,
4976 or 4979 of the Code or Section 502 of ERISA.
(d) With respect to each Lazer Pension Plan that is intended to be
qualified under Section 401(a) of the Code (a "Lazer 401(a) Plan"), either (A)
a favorable determination letter has been received from the (Internal Revenue
Service) (the "IRS") as to such qualification under the Code as in effect
immediately after the Tax Reform Act of 1986 or (B) an application for a
favorable determination letter is pending or will be duly filed with the IRS
prior to the expiration of the time within which retroactive amendment relating
back to the effective date of such plan may be made under Section 401(b) of the
Code and regulations or IRS pronouncements thereunder, and there is no reason
to believe that any favorable determination letter will not be received and
that no amendments will be required in order to receive the same which will
result in a material cost increase thereto. Lazer has delivered to Acclaim or
its counsel a complete and correct copy of the most recent IRS determination
letter with respect to each Lazer 401(a) Plan.
(e) Lazer or, if applicable, any ERISA Affiliate, is entitled to cease
its participation in each Plan referred to in this Section 3.12 without
default, penalty, premium or any additional cost to Lazer in excess of $100,000
in the aggregate and each such Plan, by its provisions, permits Lazer or, if
applicable, any ERISA Affiliate, to amend or terminate, in whole or in part,
each Plan referred to in this Section 3.12 without default, penalty, premium or
any additional cost to Lazer in excess of $100,000.
(f) The consummation of the transactions contemplated by this Agreement
will not, except as disclosed in Schedule 3.12(f) hereto, result in or entitle
any employee or former employee (or any other person) of Lazer or any ERISA
Affiliate (including any such person who becomes an employee of Acclaim or
Holdings) to severance pay, or any other payment becoming due from Lazer or any
ERISA Affiliate.
(g) Except as set forth in Schedule 3.12(g) hereto, with respect to each
Plan which is an "employee welfare benefit plan" within the meaning of Section
3(1) of ERISA (a "Welfare Plan"): (i) the applicable requirements of Part III
of Subchapter B of Chapter 1 of the Code are satisfied if benefits under such
Welfare Plan are intended to qualify for tax-favored treatment; and (ii) each
such Welfare Plan which is a group health plan within the meaning of Section
4980B of the Code is in compliance with the applicable requirements of Section
4980B of the Code and Sections 601 through 608 of ERISA.
(h) There are no leased employees within the meaning of Section 414(n) of
the Code who perform services for Lazer or any ERISA Affiliate.
(i) No Plan is funded by a trust described in Section 501(c)(9) of the
Code.
(j) Lazer is not a member of an affiliated service group within the
meaning of Section 414(m) of the Code.
(k) Schedule 3.12(k) hereto sets forth the aggregate of the annual
employer contributions and other direct expenses (which expenses are equal to
or in excess of $9,000 with respect to any Plan) paid by Lazer in connection
with each Plan for each of the last three plan years of such Plan.
(l) Except as set forth in Schedule 3.12(l), all reports and other
information required under ERISA or any other applicable law or regulation to
be filed by Lazer or any ERISA Affiliate, or, with respect to a Plan, the
administrator (as defined in Section 3(16) of ERISA) thereof or any other
person on or prior to the date hereof or on or prior to the Closing Date with
the relevant Governmental Body and/or distributed or made available to any Plan
participant and beneficiary (including "alternate payees", as defined in
Section 206(d)(3)(K) of ERISA), as the case may be, have been timely filed,
distributed or made available in accordance with ERISA or such other applicable
law or regulation, as the case may be, and all such reports and other
information are, and at the Closing Date will be, as the case may be, true and
correct in all material respects as of the date given and no penalties under
ERISA or any other applicable law or regulation are and at the Closing Date
will be owed to any Plan participant and/or beneficiary and/or any Governmental
Body with respect to the failure to file any such reports or to distribute or
make available any such reports or other information.
(m) None of the Plans is under investigation or audit by either the
United States Department of Labor or the Internal Revenue Service.
(n) None of the Plans provides any benefits including, without
limitation, life insurance or medical benefits (whether or not insured) with
respect to any current or former employee of Lazer or any ERISA Affiliate
beyond their retirement or other termination of service other than (i) coverage
mandated by Sections 601-608 of ERISA or any other applicable law or
(ii) disability benefits under any Welfare Plan that have been fully provided
for by insurance or otherwise.
(o) There has been delivered to Acclaim with respect to each Plan set
forth in Schedule 3.12(a) a copy of the Plan, and where required, a copy of the
summary plan description, together with each Summary of Material Modifications
required under ERISA with respect to such Plan and all material employee
communications relating to such Plan.
(p) For purposes of this Section 3.12, the term "ERISA Affiliate" shall
mean all members of a controlled group of corporations and all trades and
businesses (whether or not incorporated) under common control and all other
entities which, together with Lazer are treated as a single employer under any
or all of Section 414(b), (c), (m), (n) or (o) of the Code at any time during
the period of ten (10) years ending on the Closing Date. Lazer has no ERISA
Affiliates other than Lazer Tron Limited.
Section 3.13 Intellectual Property. Schedule 3.13 hereto is a complete
list of the trademarks, trade names, patents, copyrights, fictitious business
names, service marks and pending applications therefor that are owned by Lazer
and a complete list of the trademarks, trade names, patents, copyrights,
fictitious business names, service marks and pending applications therefor that
are used by Lazer or which Lazer has the right or license to use. The
trademarks, trade names, patents, copyrights, fictitious business names,
service marks and pending applications appearing on Schedule 3.13 hereto,
together with any other trademarks, trade names, patents, copyrights,
fictitious business names and service marks owned, used or licensed by Lazer,
are collectively herein referred to as the "Proprietary Rights". Prior to
using a name for any game held out for sale or lease, Lazer performs a search
under both United States and common law seeking to determine whether, based on
such search, it is reasonable to use such name or mark in the manner in which
Lazer believes its intended use will not infringe any other third parties'
rights therein, whether statutory or common law rights of such third parties
(including, without limitation, trademark and the rights of privacy and
publicity). Except as disclosed on Schedule 3.13, Lazer owns and/or has the
right or license to use each of the Proprietary Rights for the categories of
goods and services to the extent that each such Proprietary Right is currently
being used. Except as disclosed on Schedule 3.13 hereto, (i) Lazer is not
bound by or a party to any options, licenses, or material agreements of any
kind with respect to the Proprietary Rights and (ii) has not assigned, licensed
or in any manner encumbered or materially impaired any rights in the
Proprietary Rights. As used solely in this Section 3.13, "material" or
"materially" refers to a state of facts which, if present, would restrict,
impair, diminish or adversely affect Lazer's ability to use any or all of the
Proprietary Rights in the manner presently used by Lazer or would result in the
loss of a significant economic benefit presently received or receivable by
Lazer from or in respect of such Proprietary Right. To Lazer's knowledge, the
Proprietary Rights owned or used by Lazer are free and clear of all mortgages,
charges, pledges, liens, security interests, claims or encumbrances
(hereinafter "Liens"), of any kind or nature. Except as disclosed on Schedule
3.09 hereto, no Proprietary Right owned or used by Lazer to Lazer's knowledge
infringes or violates any personal, property, statutory or common law or any
other rights of any third parties (including, without limitation, copyright,
trademark and the rights of privacy and publicity) and no claim alleging any
such infringement or violation has been received by Lazer. Except as disclosed
in Schedule 3.09 hereto, no unresolved claims or notices to Lazer's knowledge
have been asserted or given during the past three years by any person
challenging the use by Lazer of any of the Proprietary Rights or challenging or
questioning the validity, enforceability or effectiveness of or the title of
Lazer or any of its subsidiaries to any of the Proprietary Rights or any
agreement relating thereto nor is there any action, suit, investigation or
proceeding by or before any court or other governmental entity reasonably
likely to materially adversely affect the validity or enforceability of or
impair the title or right of Lazer or any of its subsidiaries to use any of the
Proprietary Rights owned or used by Lazer or any of its subsidiaries. Except
as disclosed on Schedule 3.09 or 3.13 hereto, (i) Lazer has not been informed
of any claims or suits pending or threatened against Lazer that relate to the
business of Lazer claiming an infringement by Lazer of any patents, licenses,
trademarks, service marks or trade names of others and Lazer has not to Lazer's
knowledge infringed any Proprietary Rights of any third party under any
personal, property, statutory or common law or any other rights of third
parties, and (ii) Lazer has not commenced any claims or suits or threatened any
claims or suits relating to Lazer's business, claiming an infringement by a
third party of any patents, licenses, trademarks, service marks or trade names
of Lazer and, to Lazer's knowledge, no third party is infringing any of Lazer's
Proprietary Rights. All such Proprietary Rights are not breached or terminated
as a result of the Merger and the transactions contemplated hereby.
Section 3.14 Pooling Matters. Except as set forth in Schedule 3.14,
neither Lazer nor any of its affiliates has taken or agreed to take, nor will
any of them take, any action (other than any action taken or agreed to be
taken as expressly provided herein or as requested in writing by Acclaim in
connection with the transactions contemplated hereby) that would adversely
affect the ability of Acclaim to account for the business combination to be
effected by the Merger as a Pooling under and in accordance with the applicable
provisions of GAAP including without limitation APB 16.
Section 3.15 Change in Control. Except as set forth in Schedule 3.15,
neither Lazer nor any of its subsidiaries is a party to any contract, agreement
or understanding which contains a "change in control," "potential change in
control" or similar provision.
Section 3.16 Employees and Other Matters. Schedule 3.16 hereto is a
correct and complete list of (i) the directors and officers of Lazer and
independent contractors regularly employed by Lazer and not otherwise
identified in the Schedules hereto, together with a statement of the full
amount payable by way of salary, bonuses perquisites and other direct or
indirect compensation to each such person; (ii) the name of each bank in which
Lazer has an account or safety deposit box; and (iii) the names of all persons,
if any, holding currently effective powers of attorney from Lazer and a summary
statement of the terms thereof. With respect to each officer and director
listed in Schedule 3.16 hereto, a copy of any existing employment contract has
been made available to Acclaim.
Section 3.17 Labor Disputes. (a) Lazer is not a party to any collective
bargaining agreements, whether or not expired. There are no labor unions or
other organizations representing or, to Lazer's knowledge, purporting to
represent or attempting to represent any employee of Lazer.
(b) Lazer has not violated any provision of federal or state law or any
governmental rule or regulation, or any order, ruling, decree, judgment or
arbitration award of any court, arbitrator or any government agency regarding
the terms and conditions of employment of employees, former employees or,
without limitation, laws, rules, regulations, orders, rulings, decrees,
judgments and awards relating to discrimination (including, without limitation,
discrimination on the basis of age, sex, race or religion), fair labor
standards and occupational health and safety, wrongful discharge or violation
of the person rights of employees, former employees or prospective employees or
state temporary disability laws, rules or regulations, except where such
failure would not have a Material Adverse Effect.
(c) There is no unfair labor practice charge or complaint pending or, to
Lazer's knowledge, threatened against Lazer before the National Labor Relations
Board or any State Labor Relations Board. There are no claims of
discrimination of any kind pending or, to Lazer's knowledge, threatened against
Lazer before any Governmental Body.
(d) There is no labor strike or dispute, slowdown, work stoppage,
lockout, disturbance, grievance, litigation or claim relating to labor matters
involving any employees, including, without limitation, violation of any
federal, state or local labor, safety or employment laws (domestic or foreign),
charges of unfair labor practices or discrimination complaints, pending or
threatened against Lazer.
(e) To Lazer's knowledge, Lazer does not have any liability to any or all
of its employees arising as a result of the Worker Adjustment and Retraining
Notification Act (29 U.S.C. Section 2101 et seq.).
Section 3.18 Contracts. (a) Schedule 3.18 hereto contains a complete
and correct list of all contracts, arrangements and agreements as in effect on
the date hereof (the "Contracts") to which Lazer is a party, including
evidences of indebtedness, whether written or oral, purchase or sale agreements
(other than purchase and sales orders entered into in the ordinary course),
agency or advertising contracts, agreements with employees, sales
representatives and distributors, and agreements with factors, banks or other
lending institutions, (other than the Contracts listed in Schedules 3.16, 3.19
and 3.22 hereto), except for any Contracts which are not reasonably expected to
involve an expenditure of more than $25,000 individually or more than $100,000
in the aggregate from the date of this Agreement. A true and complete copy of
each written Contract has heretofore been made available to Acclaim. Except as
specifically identified on Schedule 3.18, Lazer has performed all of its
material obligations required to be performed by it, has paid all advances and
royalties required to be paid by it and is not in default in any material
respect under any Contract, and no event has occurred thereunder in each case
which, with the lapse of time or the giving of notice or both, would constitute
such a default and to Lazer's knowledge no other party to any Contract is in
default in any material respect thereunder. Each of the Contracts listed in
Schedule 3.18 hereto constitutes a valid, binding, enforceable and legal
obligation of Lazer in accordance with its terms, except as such enforcement
may be limited by bankruptcy and other laws affecting the enforceability of
creditors' rights generally or laws governing the availability of specific
performance or other equitable remedies, or other restriction on the
enforcement of securities indemnification and contribution provisions imposed
by public policy. Lazer has not received notice that any other party to any of
the Contracts is, and to the best of Lazer's knowledge none of the other
parties to such contracts is, in material default thereunder.
(b) Except as set forth on Schedule 3.18(b) hereto, none of the
Contracts' terms requires the consent or waiver of a third party in connection
with the transactions contemplated hereby.
Section 3.19 Suppliers and Customers. Schedule 3.19 hereto is a complete
and accurate list of all agreements, understandings and commitments in
existence as of the date of this Agreement with all suppliers of Lazer each of
which individually accounted for 5% or more of Lazer's invoiced amount from its
vendors and a complete and accurate list of all agreements, understandings and
commitments with all customers of Lazer each of which individually accounted
for 5% or more of Lazer's net sales, respectively, during the immediately
preceding fiscal year of Lazer ended June 30, 1994, and for the eight months
ended February 28, 1995, respectively.
Section 3.20 Accounts Receivable. All accounts receivable reflected in
the Lazer Balance Sheet and on the books of Lazer at the date hereof do, and on
the date of the Closing Balance Sheet (as hereinafter defined) shall, represent
receivables which, net of reserves therein reflected (which reserves are in
accordance with the requirements of GAAP), are at December 31, 1994, the date
hereof and at the date of the Closing Balance Sheet, fully collectible and
subject to no counterclaims or set-offs.
Section 3.21 Financial Statements and Condition. (a) The audited
balance sheets of Lazer as of June 30, 1993 and 1994, and related statements of
operations, cash flows and shareholders' equity, including the notes thereto,
have been certified by Lazer's independent certified public accountants and
delivered to Acclaim. The Lazer Balance Sheet and the related financial
statements have been delivered to Acclaim. Such financial statements present
fairly, in all material respects, the financial position of Lazer as of June
30, 1992, 1993 and 1994 and December 31, 1994, respectively, and the results of
Lazer's operations, cash flows and shareholders' equity for each of the three
years in the three year period ended June 30, 1994 and the six month period
ended December 31, 1994, respectively, all in conformity with GAAP applied on a
consistent basis, except that the unaudited financial statements may not
include all notes required under GAAP.
(b) As of December 31, 1994, the Net Worth and Working Capital of Lazer
were $12,709,000 and $12,258,000, respectively, and Net Sales for the six month
period ended December 31, 1994 was $7,200,000. As at, or for the period ended
on, the last day of the month immediately preceding the month in which the
Closing Date occurs, as applicable, Net Worth, Working Capital and Net Sales
(calculated on a pro forma basis without deduction of any transaction expenses
and fees incurred by Lazer in connection with the Merger and the transactions
contemplated thereby up to an aggregate of $750,000) shall be as follows:
(i) as at, and with respect to Net Sales for the eleven months
ended May 31, 1995, at least $12,800,000, $12,400,000 and $12,900,000,
respectively if the Closing Date occurs in June 1995;
(ii) as at, and with respect to Net Sales for the twelve months
ended June 30, 1995, at least $12,900,000, $12,500,000 and $14,400,000,
respectively if the Closing Date occurs in July 1995; and
(iii) as at, and with respect to Net Sales for the thirteen months
ended July 31, 1995, at least $12,900,000, $12,500,000 and $15,400,000,
respectively if the Closing Date occurs in August 1995 or thereafter.
For purposes of this section, "Net Worth" means the net book value of Total
Assets less Total Liabilities in each case in the manner calculated in the
December Balance Sheet. "Working Capital" means Current Assets less Current
Liabilities in each case in the manner calculated in the December Balance
Sheet.
Section 3.22 Real Property; Leases. (a) Schedule 3.22(a) hereto
identifies and describes each item of real property leased by Lazer or in which
Lazer has an interest (the "Leased Property"). Lazer does not own any real
property.
(b) Except as set forth in Schedule 3.22(b) hereto, each Leased Property
is subject to a lease agreement constituting valid, binding and enforceable
obligations of Lazer in accordance with its terms, except as such enforcement
may be limited by bankruptcy and other laws affecting the enforceability of
creditors' rights generally or laws governing the availability of specific
performance or other equitable remedies, or restrictions on the enforcement of
securities indemnification and contribution provisions imposed by public
policy. A true and complete copy of each such lease agreement has been made
available to Acclaim. Lazer has performed all material obligations required to
be performed by each such lease agreement, and no material default exists under
any provision thereof, nor has any event occurred thereunder which, with the
lapse of time or the giving of notice or both, would constitute a material
default by Lazer thereunder.
Section 3.23 Environmental Matters. (a) Except as set forth in Schedule
3.23(a) hereto (or in such cases which would not reasonably be expected to have
a Material Adverse Effect), (i) Lazer has obtained or caused to be obtained and
continues to maintain or cause the maintenance of permits, licenses, consents
and approvals (the "Environmental Approvals") necessary for conducting the
business of Lazer which are required under Environmental Laws (as defined
below), and (ii) Lazer has not operated in violation of any Environmental Law
or the terms of any Environmental Approval.
(b) To Lazer's knowledge, except as set forth in Schedule 3.23(b) hereto
(or in such cases which would not reasonably be expected to have a Material
Adverse Effect), (i) Lazer has not used, stored, generated, discharged,
emitted, transported, disposed of or treated Hazardous Substances (as defined
in Section 101 of CERCLA (as defined below)) except in the manner which
complies with Environmental Laws; (ii) to the knowledge of Lazer, after due
inquiry, no prior owner, occupant, tenant or user of the Leased Property or any
Facility (as defined in Section 101 of CERCLA) has ever used, stored,
generated, discharged, emitted, transported, disposed of or treated Hazardous
Substances, at, on or from the Leased Property or any Facility except in
compliance with all Environmental Laws; (iii) to the knowledge of Lazer, after
due inquiry, there is not, and there has not been, any release or threat of
release (as those terms are defined in Section 101 of CERCLA) of any Hazardous
Substances at, or from the Leased Property or any Facility, nor is there or has
there been any Environmental Condition (as defined below) relating to the
Leased Property or any Facility.
(c) Except as set forth on Schedule 3.23(c) hereto, Lazer has not
received written notice of any pending or threatened investigation, claims,
enforcement proceedings, citizen suits or other actions instituted by any
private party, employee or Governmental Body arising out of the conduct or the
operations of Lazer, in connection with any Environmental Laws, or as a result
of any Environmental Condition at the Leased Property or any Facility.
For purposes of this Agreement, "Environmental Condition" shall mean any
condition with respect to the Environment on or off the Leased Property or any
Facility, whether or not yet discovered, which could or does result in any
damage, loss, cost, expense, claim, demand, order, or liability to or against
Lazer or Acclaim by any third party (including, without limitation, any
government entity), including, without limitation, any condition resulting from
the operation of Lazer's business and/or the operation of the business of any
other property owner or operator in the vicinity of the Leased Property or any
Facility and/or any activity or operation formerly conducted by any person or
entity on or off the Leased Property or any Facility.
For purposes of this Agreement, "Environmental Laws" shall mean (a) the
Resource Conservation and Recovery Act, as amended, the Comprehensive
Environmental Response, Compensation, and Liability Act, as amended ("CERCLA"),
the Federal Clean Water Act, as amended, or any other federal, state, or local
law, regulation, ordinance, rule, guideline or by-law regulating Hazardous
Substances or the Environment, whether existing as of the date hereof,
previously enforced, or subsequently enacted; (b) any present or previously
enforced law, ordinance, regulation, rule, guideline or by-law of any federal,
state, local, administrative agency, or any other governmental or quasi-
governmental entity or authority that asserts or may assert jurisdiction over
the Leased Property or any Facility or the operations or activity at the Leased
Property or any Facility, that regulates the presence, release, threat of
release, use, handling, manufacturing, generation, production, storage,
treatment, processing, transportation or disposal of any Hazardous Substances,
including, but not limited to (i) requiring any permit, license, approval,
consent or authorization, or the renewal thereof; (ii) regulating the amount,
form, manner of storage, transport and/or disposal of Hazardous Substances; or
(iii) requiring any reporting, inspection report, business plan, notification,
or any other dissemination of or access to information regarding Hazardous
Substances, including warnings or notices to tenants, subtenants, employees,
occupants, invitees or consumers.
Section 3.24 Personal Property and Inventories. (a) Except as set forth
in Schedule 3.24(a) hereto and except for Liens (i) for any current taxes or
assessments not yet delinquent, (ii) reflected on the Lazer Balance Sheet,
(iii) which do not materially detract from the value, or interfere with the
present use of, Lazer's personal property or (iv) created by statute of
carriers, warehousemen, mechanics, laborers and materialmen incurred in the
ordinary course of business for sums not yet due, Lazer has good and marketable
title, free and clear of all Liens, to all of the personal property reflected
on the Lazer Balance Sheet and all personal property acquired since that date,
except such personal property as has been disposed of in the ordinary course of
business since such date.
(b) All inventories reflected on the Lazer Balance Sheet other than those
previously sold are, and all inventories reflected on the Closing Balance Sheet
(as hereinafter defined) shall be, as of the respective dates thereof,
merchantable, containing no amount of obsolete or damaged goods which have not
been written down or reserved in conformity with GAAP. Such inventories are
located at the location(s) set forth in Schedule 3.24(b) hereto.
(c) The inventory reflected on the Lazer Balance Sheet shall be the
inventory owned by Lazer as of the Closing Date, except for inventory items
acquired, distributed or disposed of in the ordinary course of business.
(d) Cash appearing on the Lazer Balance Sheet is at the date hereof, and
until the Closing Date shall be, invested in investment grade money market
accounts and short term federal government securities other than amounts held
in checking and payroll accounts in accordance and in amounts consistent with
past practice.
Section 3.25 Insurance. (a) Lazer has adequate insurance coverage for
the assets and operations of its business which is of the type and in the
amounts customarily carried by persons conducting businesses similar to that of
Lazer; (b) Schedule 3.25 hereto is a complete and correct list of all policies
of insurance carried by Lazer or pursuant to which Lazer is a named beneficiary
or pursuant to which the business or properties of Lazer are insured and true
and complete copies of which have been provided to Acclaim; (c) on the date
hereof, all of such policies are in full force and effect; (d) all premiums due
and payable in respect of such policies have been paid in full; and (e) there
exists no default or other circumstance which would create the substantial
likelihood of the cancellation or non-renewal of any such policy. Lazer has
notified such insurers of any claim know to Lazer which it believes is covered
by any such insurance policy and has provided Acclaim with a copy of such
claim.
Section 3.26 [Intentionally omitted]
Section 3.27 Affiliates. (a) Schedule 3.27(a) sets forth as of the date
hereof the names of each Principal set forth on Schedule 1A, each officer and
director of Lazer and each "affiliate" (as such term is defined in the 1933
Act) of Lazer as set forth on Schedule 1C (each a "Lazer Affiliate" and
collectively the "Lazer Affiliates"). Concurrently with the execution hereof,
each Lazer Affiliate has entered into an agreement in the form attached as
Exhibit A hereto as applicable (the "Lazer Affiliate Agreements").
(b) Other than the persons listed on Schedule 3.27(a) and other than any
person who becomes a 10% shareholder of Lazer subsequent to the date hereof
(other than the Kelly Family Trust or 1992 Kelly Family Trust, or any person so
listed on Schedule 3.27(a)), there shall not be as of the Closing Date, any
other persons who could be included as Lazer Affiliates as defined in
Section 3.27(a) who shall not have entered into a Lazer Affiliate Agreement.
(c) Neither Lazer nor any of the Lazer Affiliates has taken or agreed to
take, nor will any of them take any action (other than any action taken or
agreed to be taken as expressly provided herein or as requested in writing by
Acclaim in connection with the transactions contemplated hereby) that would
already affect the ability of Acclaim to account for the business combination
to be effected by the Merger as a Pooling under and in accordance with the
applicable provisions of GAAP including, without limitation, APB 16.
Section 3.28 Indemnification. Except as set forth on Schedule 3.28 no
indemnification or similar arrangements exist provided by Lazer for officers or
directors of Lazer except as provided by applicable California statute, the
Certificate of Incorporation or the By-laws of Lazer.
Section 3.29 Brokers or Finders. Except as set forth on Schedule 3.29
Lazer, its subsidiaries and its affiliates, represent that no agent, broker,
investment banker, financial advisor or other firm or person is or will be
entitled to any broker's or finder's fee or any other commission or similar fee
payable by Lazer or any of its affiliates or subsidiaries in connection with
any of the transactions contemplated by this Agreement.
ARTICLE IV
Representations and Warranties of Acclaim and Holdings
Acclaim and Holdings, jointly and severally, represent and warrant to
Lazer that:
Section 4.01 Organization and Good Standing. Each of Acclaim and
Holdings is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to own, operate or lease all of its properties and assets and
carry on its business as it is now being conducted.
Section 4.02 Foreign Qualification. Acclaim is duly licensed or
qualified to do business as a foreign corporation and is in good standing in
the State of New York. The property and assets owned, operated or leased by
Acclaim or the nature or conduct of its business as it is now being conducted
do not make qualification or licensing necessary in any other jurisdiction
except for those jurisdictions where Acclaim's failure to become so qualified
or licensed and in good standing would not affect materially and adversely the
business, assets or financial condition of Acclaim.
Section 4.03 Capitalization of Acclaim and Holdings. (a) At the date
hereof, the authorized capital stock of Acclaim consists of (i) 100,000,000
shares of Acclaim Common Stock and (ii) 1,000,000 shares of Preferred Stock,
par value $.01 per share (the "Acclaim Preferred Stock"), of which 200,000
shares have been designated "Series A Preferred Stock." As of the close of
business on February 28, 1995: (i) 44,487,046 shares of Acclaim Common Stock
were issued and outstanding, 15,065,573 shares of Acclaim Common Stock were
reserved for issuance upon exercise of outstanding stock options and warrants
and under the Acclaim 1988 Stock Option Plan, 272,727 shares of Acclaim Common
Stock were held by Acclaim in its treasury and no shares of Acclaim Common
Stock were held by any subsidiary of Acclaim; and (ii) no shares of Acclaim
Preferred Stock were issued or outstanding or held by Acclaim in its treasury
or by any subsidiary of Acclaim. All of the issued and outstanding shares of
Holdings are owned by Acclaim and there are not any outstanding or authorized
subscriptions, options, warrants, calls, rights, commitments or any other
agreements of any character to or by which Holdings is a party or is bound.
Except as set forth in the Acclaim SEC Reports (as hereinafter defined) or in
this Section 4.03, there are not as of the date hereof any outstanding or
authorized subscriptions, options, warrants, calls, rights, commitments or any
other agreements of any character to or by which Acclaim or any of its
subsidiaries is a party or is bound which, directly or indirectly, obligate
Acclaim or any of it subsidiaries to issue, deliver or sell or cause to be
issued, delivered or sold any shares of Acclaim Common Stock or Acclaim
Preferred Stock or any other capital stock or equity interest of Acclaim or any
securities convertible into, or exercisable or exchangeable for, or evidencing
the right to subscribe for any such shares or interests or obligating Acclaim
or any of its subsidiaries to grant, extend or enter into any such
subscription, option, warrant, call or right. All of the issued and
outstanding shares of capital stock of Acclaim and each corporate subsidiary of
Acclaim have been duly authorized and are validly issued, fully paid and
nonassessable and free of preemptive rights with no personal liability
attaching to the ownership thereof.
Section 4.04 Authority Relative to Agreement. Each of Acclaim and
Holdings has the corporate power and authority to execute and deliver this
Agreement and all other documents hereby contemplated, and to consummate,
subject to Article VI hereof, the transactions hereby and thereby contemplated
and to take all other actions required to be taken by it pursuant to the
provisions hereof and thereof. The execution, delivery and, subject to Article
VI hereof, performance of this Agreement and all other documents hereby
contemplated to be executed by Acclaim and Holdings and, subject to Article VI
hereof, the consummation by Acclaim and Holdings of the transactions hereby
contemplated have been, duly and validly authorized by any and all necessary
corporate action of Acclaim and Holdings. This Agreement and all other
documents hereby contemplated to be executed by Acclaim and Holdings constitute
legal, valid and binding obligations of Acclaim and Holdings, respectively,
enforceable in accordance with their respective terms, except as such
enforcement may be limited by bankruptcy and other laws affecting the
enforceability of creditors' rights generally or laws governing the
availability of specific performance or other equitable remedies, or
restrictions on the enforcement of securities indemnification and contribution
provisions imposed by public policy. The issuance by Acclaim of shares of
Acclaim Common Stock in payment of the Merger Consideration for the Merger does
not require any further corporate action and will not be subject to preemptive
rights or other preferential rights of any present or future stockholders of
Acclaim and, at the Effective Time, the shares of Acclaim Common Stock, if any,
to be issued to Lazer in connection with the Merger will be duly authorized,
validly issued, fully paid and non-assessable with no personal liability
attaching to the ownership thereof. The options and warrants to be substituted
by Acclaim for the Stock Options and Warrants (and the warrants received upon
exercise of the Sales Agent Warrants) pursuant to Section 1.06 hereof have been
duly authorized and when issued and delivered in connection with the Merger
will have been duly issued and delivered and will constitute valid and legally
binding obligations of Acclaim enforceable in accordance with their terms. The
shares of Acclaim Common Stock issuable upon exercise of the options and
warrants so substituted (and upon exercise of the warrants received upon
exercise of the Sales Agent Warrants) have been reserved and authorized for
issuance and, when issued in accordance with the terms of such options and
warrants, will be duly authorized, validly issued, fully paid and non-
assessable and free of preemptive rights, with no personal liability attaching
to the ownership thereof.
Section 4.05 No Violation of Other Instruments or Obligations. Neither
the execution and delivery by Acclaim and Holdings of this Agreement and all
other documents hereby or thereby contemplated nor the consummation by Acclaim
and Holdings of the transactions hereby and thereby contemplated nor compliance
by Acclaim and Holdings with any of the provisions hereof shall (i) constitute
any violation or breach of the respective Certificates of Incorporation or
By-laws of Acclaim or Holdings; (ii) except as listed in Schedule 4.05 hereto,
constitute (with or without due notice or lapse of time or both) a default
under or a violation or breach of, or result in acceleration of any obligation
or give rise to any right of termination, cancellation or result in the
creation of any lien under, any provision of any contract, lease, mortgage or
other instrument or obligation to which either Acclaim or Holdings is a party
or by which either of its properties or assets may be bound, which default,
breach or acceleration has not been waived; (iii) violate any judgment, order,
writ, injunction, decree, statute, rule or regulation affecting Acclaim or any
of its assets or Holdings or any of its assets; (iv) except as listed in
Schedule 4.05 hereto, result in the creation of any Lien on any of the assets
or properties of Acclaim or Holdings; or (v) result in the termination of any
license, franchise, lease or permit to which Acclaim or Holdings is a party or
by which each is bound, except in the case of those items specified in clause
(ii), (iii), (iv) or (v) above, which would not, individually or in the
aggregate, limit or delay either Acclaim's or Holdings' ability to consummate
the transactions hereby contemplated or have a Material Adverse Effect on
either Acclaim or Holdings. "Material Adverse Effect" means, with respect to
Acclaim and Holdings, any event that could have a material adverse effect on
the business, assets, results of operations or financial condition of Acclaim
and its consolidated subsidiaries, treated in the aggregate including without
limitation the termination or suspension of Acclaim's relationship with either
Nintendo of America, Inc. or Sega Enterprises Ltd.; provided that a Material
Adverse Effect shall not include any effect that results from general economic
conditions affecting the comic book, the interactive entertainment, software
distribution, publishing or development; or video game industries within which
Acclaim conducts its business.
Section 4.06 Consents and Approvals. Except for applicable requirements
of the 1933 Act, the 1934 Act, state Blue Sky laws, the HSR Act, the filing and
recordation of the Certificate of Merger, as required by the DGCL, the
California Certificate as required by the CGCL, appropriate documents with the
relevant authorities of States in which Acclaim or Holdings is qualified to do
business, and such filings, authorizations, orders and approvals as may be
required under State "control share acquisition", "antitrust" or other similar
states or regulations, and such filings, authorizations, orders and approvals
as may be required under foreign laws and NASD Bylaws, or as set forth in
Schedule 4.06 hereto, no filing with, and no permit, authorization, consent or
approval of, any Government Entity, or of any third party, is necessary for the
entering into and/or consummation by Acclaim or Holdings of the transactions
contemplated by this Agreement.
Section 4.07 Public Reports. Acclaim has and, at the Effective Time will
have, filed all required forms, reports and documents with the SEC since August
31, 1992, (collectively, the "Acclaim SEC Reports") all of which have and shall
have complied in all material respects with all applicable requirements of the
1933 Act and 1934 Act, and Acclaim is current in all of its required filings
under the 1934 Act. Except as disclosed in Schedule 4.07, as of their
respective dates of filing in final or definitive form (or, if amended or
superseded by a subsequent filing, then on the date of such subsequent filing),
none of the Acclaim SEC Reports, including, without limitation, any financial
statements or schedules included therein, contained or shall have contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances in which they were made, not misleading.
Each of the balance sheets (including the related notes) included in the
Acclaim SEC Reports fairly presents the consolidated financial position of
Acclaim and its subsidiaries as of the respective dates thereof, and the other
related financial statements (including the related notes) included therein
fairly presented the consolidated results of operations and changes in
financial position of Acclaim and its subsidiaries for the respective periods
indicated, except, in the case of interim financial statements, for year-end
audit adjustments, consisting only of normal recurring accruals. Each of the
financial statements (including the related notes) included in the Acclaim SEC
Reports has been prepared in accordance with GAAP consistently applied during
the periods involved, except as otherwise noted therein.
Section 4.08 No Material Adverse Effect. Except as disclosed in Schedule
4.08 or as otherwise permitted hereunder, since November 30, 1994, there has
not occurred any event which has resulted in the occurrence of (a) any Material
Adverse Effect on Acclaim or Holdings, or (b) any damage, destruction or loss,
whether or not covered by insurance, which would have a Material Adverse Effect
on Acclaim or Holdings.
Section 4.09 Holdings. Holdings will not conduct any business or have
any liabilities other than those hereunder nor will it have any operating
assets except as contemplated hereby and Acclaim will have good and valid title
to all of the issued and outstanding shares of Holdings.
Section 4.10 Finder's Fees. Acclaim, Holdings and their respective
affiliates and subsidiaries have not incurred any liability for finder's or
brokerage fees or agent's commissions in connection with this Agreement or the
transactions hereby contemplated.
Section 4.11 No Undisclosed Liabilities. Except as and to the extent
provided in Acclaim's unaudited balance sheet as at November 30, 1994 and the
notes thereto (the "Acclaim Balance Sheet"), neither Acclaim nor its
subsidiaries had at November 30, 1994 any liabilities, absolute, accrued,
unaccrued contingent or otherwise, which were in the aggregate, material to the
business, operations or financial condition of Acclaim and its subsidiaries
taken as a whole, and which were required by GAAP to be reflected on a
consolidated balance sheet of Acclaim and its subsidiaries. Except as and to
the extent set forth in Schedule 4.11, as of the date hereof since November 30,
1994 neither Acclaim nor its subsidiaries has incurred any liabilities
(absolute, accrued, contingent or otherwise) which are, in the aggregate,
material to the business, operations or financial condition of Acclaim and its
subsidiaries taken as a whole, except liabilities (i) adequately provided for
in the Acclaim Balance Sheet, (ii) incurred since November 30, 1994 in the
ordinary course of business, (iii) consistent with past practice or
(iv) incurred in connection with this Agreement.
Section 4.12 No Default. Except as set forth in Schedule 4.12, neither
Acclaim nor any of its subsidiaries is in default or violation (and no event
has occurred which with notice or the lapse of time or both would constitute a
default or violation) of any term, condition or provision of (i) its
Certificate of Incorporation or its By-laws, (ii) any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation to
which Acclaim or any of its subsidiaries is a party or by which they or any of
their properties or assets may be bound or (iii) any order, writ, injunction,
decree, statute, rule or regulation applicable to Acclaim or any of its
subsidiaries, except in the case of subclause (ii) or (iii) for defaults or
violations which would not, in the aggregate, have a Material Adverse Effect
and which would not prevent or materially delay the consummation of the
transactions contemplated hereby.
Section 4.13 Litigation. Except as set forth in Schedule 4.13 or in the
Acclaim SEC Reports, there is no suit, action or proceeding pending or, to the
knowledge of Acclaim, any investigation pending or any suit, action, proceeding
or investigation threatened against, involving or affecting Acclaim or its
officers and directors in such capacities, any of its subsidiaries, or any of
its or their respective properties or rights seeking equitable relief, nor is
there any judgment, decree, injunction, rule or order of any court,
governmental department, commission, agency, instrumentality or arbitrator
outstanding against Acclaim or its officers and directors in such capacities,
or any of its subsidiaries, which does or might reasonably be expected to
(i) result in the modification, termination, suspension, impairment or
reformation of any contract to which Acclaim or any of its subsidiaries is a
party, which modification, termination, suspension, impairment or reformation
would have a Material Adverse Effect; (ii) materially adversely affect the
manner in which Acclaim conducts its business; (iii) adversely affect the
ability of Lazer or Acclaim to consummate any of the transactions contemplated
hereby; or (iv) have a Material Adverse Effect.
Section 4.14 Compliance with Applicable Law. To Acclaim's knowledge, the
business of Acclaim and its subsidiaries are not being conducted in violation
of any applicable law, ordinance, rule, regulation, decree or order of any
Governmental Entity, except for violations which, in the aggregate, do not and
would not reasonably be expected to have a Material Adverse Effect. Acclaim
and its subsidiaries hold all permits, licenses, variances, exemptions, orders
and approvals of all Governmental Entities necessary for the lawful conduct of
their respective businesses (the "Acclaim Permits"), except for failures to
hold such Acclaim Permits which would not, in the aggregate, have a Material
Adverse Effect. Acclaim and its subsidiaries are in compliance with the terms
of the Acclaim Permits, except where the failure so to comply would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
Section 4.15 [Intentionally Omitted.]
Section 4.16 Operation of the Surviving Corporation. Immediately
following the Effective Time, the Surviving Corporation will continue to
operate the prior Lazer business as a separate subsidiary of Acclaim. Acclaim
represents that it has no current plans or intentions following the Effective
Time to (i) materially change the operations or location of operations of Lazer
as conducted immediately prior to the Effective Time, (ii) cause the Surviving
Corporation to sell, transfer or otherwise dispose of any of its assets, except
for dispositions made in the ordinary course of business or for the payment of
expenses incurred by the Surviving Corporation in the Merger, (iii) liquidate
the Surviving Corporation, (iv) merge the Surviving Corporation with or into
another corporation, including Acclaim or its affiliates, (v) sell, distribute
or otherwise dispose of the Common Stock of the Surviving Corporation,
(vi) issue additional shares of stock (or rights to acquire shares of stock) of
the Surviving Corporation that would result in Acclaim losing control of the
Surviving Corporation within the meaning of Section 368(c) of the Code, or
(vii) reacquire any of its Common Stock issued in the Merger.
Section 4.17 Lazer Stock. As of the date hereof, neither Acclaim nor
Holdings is the beneficial owner of Lazer Common Stock or except as provided
herein has any rights to acquire Lazer Common Stock.
ARTICLE V
Covenants
Section 5.01 Lazer Pre-Closing Obligations. Except as expressly
contemplated by this Agreement (including any actions that are permitted to be
taken under Section 5.03) or as set forth in Schedule 5.01 attached hereto,
during the period from the date of this Agreement and continuing until the
earlier of the Effective Time or the termination of this Agreement in
accordance with its terms, (x) Lazer and its subsidiaries will each carry on
their respective businesses in the regular and ordinary course, consistent with
past practice, and use their best efforts to preserve intact their present
business organizations, keep available the services of their present officers
and employees and preserve their relationships with customers, suppliers,
licensors, licensees, contractors, distributors and others having business
dealings with them and (y) without limiting the generality of the foregoing,
neither Lazer nor any of its subsidiaries will:
(a) (i) declare, set aside or pay any dividend or other distribution
(whether in cash, stock or property or any combination thereof) in respect
of any of its capital stock, except that a wholly owned subsidiary of
Lazer may declare and pay a dividend to its parent, (ii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock or (iii) amend the terms of,
repurchase, redeem or otherwise acquire, or permit any subsidiary to
repurchase, redeem or otherwise acquire, any of its securities or any
securities of its subsidiaries, or propose to do any of the foregoing
except as expressly permitted hereby;
(b) authorize for issuance, issue, sell, deliver or agree or commit
to issue, sell or deliver (whether through the issuance or granting of
options, warrants, commitments, subscriptions, rights to purchase or
otherwise) any stock of any class or any other securities (including
indebtedness having the right to vote) or equity equivalents (including,
without limitation, stock appreciation rights), except as required
pursuant to the agreements and instruments outstanding on the date hereof
and which have been disclosed in writing to Acclaim (provided that no
additional issuances of options will be made under the Lazer Stock Option
Plans without the consent of Acclaim, and no additional sales of Lazer
Common Stock will be made under the Employee Purchase Plan except for
issuances under the Employee Purchase Plan for the offering period ending
June 30, 1995), or amend in any material respect any of the terms of any
such securities or agreements outstanding on the date hereof except as
expressly permitted hereby, or permit the acceleration of any Options
(other than Options under the Director Option Plan) or Warrants by the
lapsing of any vesting restrictions as a result of the Merger or otherwise
in connection with any of such securities;
(c) amend or propose to amend its charter or by-laws;
(d) acquire, sell, lease, encumber, transfer or dispose of any
assets in excess of $100,000 in any instance or $500,000 in the aggregate,
or make any capital expenditures in excess of $100,000 in any instance or
over $250,000 in the aggregate, except in each case pursuant to
obligations in effect on the date hereof and sales of inventory in the
ordinary course of business and which have been disclosed in writing to
Acclaim, or enter into any contract, commitment, agreement or transaction
other than in the ordinary course of business (unless such contract,
commitment, agreement or transaction is for less than $25,000 and
consistent with past practice and in any event enter into any contract,
commitment, agreement or transaction in excess of $100,000) other than
purchase orders for materials and supplies in the ordinary course of
business. In no event shall Lazer make, other than after consultation
with, and approval of, Acclaim (which approval shall be deemed given if
Acclaim does not give written notice of its objection within three
business days after such consultation), any business decision or enter
into any transaction which might reasonably be expected to have a
significant financial or operational effect on Lazer or its operations;
(e) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire any debt securities of Lazer or any of its subsidiaries or
guarantee (or become liable for) any debt of others or make any loans,
advances or capital contributions or mortgage, pledge or otherwise
encumber any material assets or create or suffer any material Lien
thereupon, other than in the ordinary course of business consistent with
past practice and, in any event, not in excess of $25,000 in any instance
or $100,000 in the aggregate;
(f) pay, discharge or satisfy any claims, liabilities or obligations
(absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course
of business consistent with past practice or in accordance with their
terms, of liabilities reflected or reserved against in, or contemplated
by, the consolidated financial statements (or the notes thereto) of Lazer
and its consolidated subsidiaries or incurred in the ordinary course of
business consistent with past practice, and in any event not in excess of
$100,000 in any instance or $150,000 in the aggregate, or settle any
lawsuits relating to intellectual property;
(g) change any of the accounting principles or practices used by it
in the preparation of the quarterly report on Form 10-QSB for the quarter
ended December 31, 1994 (except as required by GAAP);
(h) except as required by law or this Agreement, (i) enter into,
adopt, amend or terminate any Plan or any agreement, arrangement or policy
between itself and one or more of its directors or executive officers
including, without limitation, the Executive Bonus Program or
(ii) increase in any manner the compensation or fringe benefits of any
director, officer or employee of Lazer or pay any benefit to any officer,
director or employee not required by any Plan or arrangement between
itself and that officer, director or employee as in effect as of the date
hereof, except in the case of non-officer employees of Lazer for normal
increases in the ordinary course of business consistent with past practice
that, in the aggregate, do not result in a material increase in benefits
or compensation expense to Lazer and its subsidiaries taken as a whole, or
enter into any contract, agreement, commitment or arrangement to do any of
the foregoing;
(i) other than in the ordinary and regular course of Lazer's
business, retain at the Closing Date, or agreed to retain, subsequent to
the Closing Date, any person for the purpose of providing services to
Lazer, except with Acclaim's prior written consent, which consent shall
not be unreasonably withheld;
(j) cancel, modify or change any of the insurance policies listed in
Schedule 3.26 hereto prior to the Effective Time without the express
written consent of Acclaim, which consent shall not be unreasonably
withheld, except to extend the maturity dates thereof;
(k) take any action, or omit to take any action, that would have an
adverse effect on the Pooling and/or that would impede, frustrate or lend
to the failure of the condition set forth in Section 6.19 hereof; or
(l) (A) agree to take any of the foregoing actions or (B) take or
agree to take any action or omit to take any action that would or is
reasonably likely to result in any of Lazer's representations and
warranties set forth in this Agreement being untrue or result in any of
the conditions to the Merger set forth in Article VI not being satisfied.
Section 5.02 Acclaim Pre-Closing Obligations. Except as expressly
contemplated by this Agreement or as set forth in Schedule 5.02 attached
hereto, during the period from the date of this Agreement and continuing until
the earlier of the Effective Time or the termination of this Agreement in
accordance with its terms, Acclaim and its subsidiaries will each carry on
their respective businesses in the regular and ordinary course, consistent with
past practice, and use their best efforts to preserve intact their present
business organizations, keep available the services of their present officers
and employees and preserve their relationships with customers, suppliers,
licensors, licensees, contractors, distributors and others having business
dealings with them.
Section 5.03 No Solicitations. Lazer will immediately cease any existing
discussions or negotiations with any third parties conducted prior to the date
hereof with respect to any merger, business combination, sale of a significant
amount of assets outside of the ordinary course of business, sale of shares of
capital stock outside of the ordinary course of business or similar transaction
involving such party or any of its subsidiaries or divisions (an "Acquisition
Transaction"). Neither Lazer nor any of its subsidiaries shall, and Lazer
shall use its best efforts to ensure that none of its affiliates, officers,
directors, representatives, agents or affiliates shall, directly or indirectly,
solicit, initiate or encourage (including by way of furnishing information) any
person, entity or group (including any set forth in the first sentence of this
Section 5.03) concerning any Acquisition Transaction (other than the
transactions contemplated by this Agreement); provided, however, that (i)
nothing in this Agreement shall preclude Lazer's Board of Directors, pursuant
to its fiduciary duties as determined by Lazer's Board of Directors after
consultation with outside legal counsel of Lazer, from entering into, or
causing Lazer's officers, representatives, agents or affiliates from entering
into, negotiations with or furnishing information to a third party which has
initiated contact with Lazer, from passing on to Lazer's shareholders
information regarding any such third party proposal or inquiry consistent with
such fiduciary duties, or otherwise fulfilling such fiduciary duties, and (ii)
Lazer may participate in negotiations with or furnish information to a third
party which has initiated contact with Lazer with respect to an Acquisition
Transaction consistent with the fiduciary obligations of its Board of
Directors. Lazer shall advise Acclaim within 24 hours of receipt of any such
inquiries or proposals regarding an Acquisition Transaction, including the
terms thereof. In the event Lazer receives a proposal relating to an
Acquisition Transaction, nothing contained in this Agreement shall prevent
Lazer's Board of Directors from approving such proposal or recommending such
Acquisition Transaction to Lazer's Stockholders if Lazer's Board of Directors
determines in good faith that failure to take such action would result in a
breach of its fiduciary duties as determined by Lazer's Board of Directors
after consultation with Lazer's outside legal counsel, and in such case the
Board of Directors of Lazer may amend, withhold or withdraw its recommendation
regarding the Merger. However, the taking of such action in connection with an
Acquisition Transaction as contemplated in the preceding sentence will not
relieve Lazer of its obligations under and as contemplated by Section 5.14 and
Section 5.15 hereunder. Nothing in this Agreement shall prevent Lazer or its
Board of Directors from complying with the provisions of the 1934 Act and the
rules and regulations thereunder.
Section 5.04 Access to Information. (a) Upon reasonable notice and
subject to restrictions contained in confidentiality agreements to which it is
subject (from which it shall use reasonable efforts to be released), Lazer
shall (and shall cause each of its subsidiaries to) afford to the officers,
employees, accountants, counsel and other representatives of Acclaim ("Acclaim
Representatives"), reasonable access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, Lazer shall (and shall cause
each of its subsidiaries to) furnish promptly to Acclaim all information
concerning its business, properties and personnel as Acclaim may reasonably
request. Acclaim Representatives shall be permitted to make copies of and
extracts from, the accounts, minute books, other records, books of account,
other books, deeds, leases, title documents, insurance policies, licenses,
contracts, commitments, sales orders, purchase orders, tax returns, records and
files of Lazer, and such other information relating to Lazer as Acclaim shall
request. Acclaim Representatives shall be permitted to discuss the affairs,
finances and accounts of Lazer with the officers, employees, distributors,
sales representatives, licensees, licensors, suppliers, customers, insurance
agents, actuaries, auditors and counsel of Lazer upon prior request and as to
distributors, sales representatives, licensees, licensors, suppliers,
customers, insurance agents, actuaries, only upon consent. The foregoing
covenant shall include allowing Acclaim to conduct a Phase I environmental
audit of the Lazer offices and facilities located in Pleasanton, California, at
Acclaim's cost and expense.
(b) Upon reasonable notice and subject to restrictions contained in
confidentiality agreements to which it is subject (from which it shall use
reasonable efforts to be released), Acclaim shall (and shall cause each of its
subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of Lazer ("Lazer Representatives"), reasonable access,
during normal business hours during the period prior to the Effective Time, to
all its properties, books, contracts, commitments and records and, during such
period, Acclaim shall (and shall cause each of its subsidiaries to) furnish
promptly to Lazer all information concerning its business, properties and
personnel as Lazer may reasonably request. Lazer Representatives shall be
permitted to make copies of and extracts from, the accounts, minute books,
other records, books of account, other books, deeds, leases, title documents,
insurance policies, licenses, contracts, commitments, sales orders, purchase
orders, tax returns, records and files of Acclaim, and such other information
relating to Acclaim as Lazer shall request. Lazer Representatives shall be
permitted to discuss the affairs, finances and accounts of Acclaim with the
officers, employees, distributors, sales representatives, licensees, licensors,
suppliers, customers, insurance agents, actuaries, auditors and counsel of
Acclaim upon prior request and as to distributors, sales representatives,
licensees, licensors, suppliers, customers, insurance agents, actuaries, only
upon consent.
(c) Lazer and Acclaim and any such Lazer Representatives or Acclaim
Representatives, as applicable, shall keep such information confidential in
accordance with the terms of the confidentiality agreement, dated March 6, 1995
(the "Confidentiality Agreement"), between Lazer and Acclaim.
Section 5.05 Lazer Stockholder Meeting. Lazer will take all action
necessary in accordance with California law, Lazer's Articles of Incorporation,
as amended, its By-laws and the requirements of the Nasdaq Stock Market to
convene a meeting of its stockholders (the "Lazer Stockholders Meeting") as
promptly as practicable following effectiveness of the registration statement
on Form S-4 filed by Acclaim in connection with the issuance of Acclaim Common
Stock pursuant to the transactions contemplated hereby (the "S-4") and the
clearance by the SEC of the proxy statement included in the S-4 and relating to
the Lazer Stockholders Meeting (the "Proxy Statement") to consider and vote
upon the Merger and the transactions contemplated hereby. The Lazer Board
shall, subject to its fiduciary obligations as herein provided recommend that
the stockholders of Lazer vote in favor of the Merger and the transactions
contemplated hereby and cause Lazer to use its best efforts to solicit from its
stockholders proxies in favor of such approval.
Section 5.06 Proxy Statement. (a) Lazer shall prepare (and Acclaim
shall assist where appropriate) and file with the SEC, as promptly as
practicable upon execution of this Agreement, the Proxy Statement and a form of
proxy for use at the Lazer Stockholders Meeting relating to the vote of Lazer's
stockholders with respect to the Merger and the transactions contemplated by
this Agreement (together with any amendments or supplements thereto, in each
case in the form or forms mailed to Lazer's stockholders). Each of Lazer and
Acclaim (if appropriate) will use its reasonable efforts to have, or cause, the
Proxy Statement to be cleared by the SEC as promptly as practicable and Lazer
shall cause the Proxy Statement to be mailed to stockholders of Lazer at the
earliest possible date. Acclaim and Holdings shall promptly furnish to Lazer
such information regarding each of Acclaim and Holdings and their respective
officers and directors as may be reasonably requested by Lazer for inclusion in
the Proxy Statement.
(b) Lazer covenants that none of the information concerning Lazer or any
of its affiliates, directors, officers, employees, agents or representatives
which is included or incorporated by reference in the Proxy Statement will, at
the time the Proxy Statement or any amendment or supplement thereto is filed
with the SEC, at the time of mailing of the Proxy Statement or any amendment or
supplement thereto to Lazer's stockholders or at the time of the Lazer
Stockholders Meeting, be false or misleading with respect to any material fact,
or omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Lazer covenants that the Proxy Statement shall comply as to form
in all material respects with the applicable provisions of the 1934 Act and the
rules and regulations thereunder, except that no representation is made by
Lazer with respect to statements made therein based on information supplied by
Acclaim or Holdings in writing for inclusion or incorporation by reference
therein or with respect to omitted information regarding Acclaim or Holdings so
required to be included therein.
(c) Acclaim covenants that none of the information supplied or to be
supplied to Acclaim or any of its affiliates, directors, officers, employees,
agents or representatives in writing specifically for inclusion in the Proxy
Statement will, at the time the Proxy Statement or any amendment or supplement
thereto is filed with the SEC, at the time of mailing of the Proxy Statement or
any amendment or supplement thereto to Lazer's stockholders or at the time of
the Lazer Stockholders Meeting, be false or misleading with respect to any
material fact, or omit to state any material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
Section 5.07 Registration on Form S-4. (a) The Acclaim Common Stock to
be issued in the Merger shall be registered under the 1933 Act on the S-4. As
promptly as practicable after the date of this Agreement, Acclaim shall
prepare, with the assistance of Lazer, as appropriate (including, but not
limited to, preparation by Lazer and its counsel of applicable disclosure in
the Proxy Statement and the S-4 relating to tax consequences of the Merger on
Lazer Stockholders and submission of any required tax opinions addressed to
Lazer), and file with the SEC the S-4, together with the Prospectus/Proxy
Statement to be included therein and any other documents required by the 1933
Act or the 1934 Act in connection with the Merger. Each of Acclaim and Lazer
shall use its best efforts to respond promptly to any comments of the SEC and
to have the S-4 declared effective under the 1933 Act as promptly as
practicable after such filing. Acclaim shall also take any action required to
be taken under any applicable state securities or "blue sky" laws and
regulations of the NASDAQ Stock Market in connection with the issuance of the
Acclaim Common Stock in connection with the Merger. Lazer shall promptly
furnish to Acclaim all information concerning Lazer and the Lazer Stockholders
as may be reasonably required in connection with any action contemplated by
this Section 5.07. Each of Acclaim and Lazer will notify the other promptly of
the receipt of any comments from the SEC or its staff and of any request by the
SEC or its staff for amendments or supplements to the S-4 or the
Prospectus/Proxy Statement or for additional information and will supply the
other with copies of all correspondence with the SEC or its staff with respect
to the S-4 or the Prospectus/Proxy Statement. Whenever any event occurs which
should be set forth in an amendment or supplement to the S-4 or the
Prospectus/Proxy Statement, Acclaim or Lazer, as the case may be, shall
promptly inform the other of such occurrence and cooperate in filing with the
SEC or its staff, and/or mailing to stockholders of Acclaim and Lazer, such
amendment or supplement.
(b) Lazer covenants that none of the information supplied in writing by
Lazer for inclusion or incorporation by reference in the S-4 to be filed with
the SEC in connection with the issuance of Acclaim Common Stock pursuant to the
transactions contemplated hereby will, at the time the S-4 is filed with the
SEC and at the time it becomes effective under the 1933 Act, 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, in light of the
circumstance under which they were made, not misleading. The S-4 together with
the prospectus/proxy statement included therein (the "Prospectus/Proxy
Statement"), will comply in all material respects with the provisions of the
1933 Act and the 1934 Act, as the case may be, and the rules and regulations
thereunder, except that no representation is made by Lazer with respect to
statements made therein based on information supplied by Acclaim or Holdings in
writing for inclusion or incorporation by reference therein or with respect to
omitted information regarding Acclaim or Holdings so required to be included
therein.
(c) Acclaim covenants that none of the information supplied in writing by
Acclaim or Holdings for inclusion or incorporation by reference in the S-4
will, at the time the S-4 is filed with the SEC and at the time it becomes
effective under the 1933 Act, 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, in light of the circumstances in which they
were made, not misleading. Acclaim covenants that the S-4 and the
Prospectus/Proxy Statement will comply in all material respects with the
provisions of the 1933 Act and the 1934 Act, as the case may be, and the rules
and regulations thereunder, except that no representation is made by Acclaim
with respect to statements made therein based on information supplied by Lazer
in writing for inclusion or incorporation by reference therein or with respect
to omitted information regarding Lazer so required to be included therein.
Section 5.08 Best Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its 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 and make effective the transactions contemplated by this Agreement
including, without limitation, (i) the prompt preparation and filing with the
SEC of the S-4 in compliance with the 1933 Act and the Proxy Statement of Lazer
in compliance with Section 14 of the 1934 Act, (ii) such actions as may be
required to have the S-4 declared effective under the 1933 Act and to have the
Proxy Statement cleared by the staff of the SEC, in each case as promptly as
practicable, including by consulting with each other as to, and responding
promptly to, any comments of the SEC staff with respect thereto, (iii) in the
case of Acclaim, such actions as may be required to be taken under applicable
state securities or Blue Sky laws in connection with the issuance of Acclaim
Common Stock contemplated hereby, (iv) the prompt preparation and filing of all
applicable forms required to be filed under the HSR Act and the prompt
compliance with any requests from the Federal Trade Commission or United States
Department of Justice for additional information, (v) the preparation and
filing of all other forms, registrations and notices required to be filed to
consummate the transactions contemplated hereby and the taking of such actions
as are necessary to obtain any requisite approvals, consents, orders,
exemptions, or waivers by any public or private third party, (vi) such actions
as may be required to cause, prior to the Effective Time, the Acclaim Common
Stock to be issued pursuant hereto, to be listed on the NASDAQ National Market
System (subject to official notice of issuance), and (vii) such actions as may
be reasonable to cause, concurrently with the Effective Time, the delisting of
Lazer's securities from the NASDAQ Stock Market and the deregistration of
Lazer's securities under the 1934 Act; provided, however, that in order to
obtain any consent, approval, waiver, license, permit, authorization,
registration, qualification or other permission or action referred to in clause
(v) of this sentence, no party shall be required to (x) pay any consideration,
to divest itself of any of, or otherwise rearrange the composition of, its
assets or to agree to any conditions or requirements which are materially
adverse or burdensome or (y) amend, or agree to amend, in any material respect
any Contract. Each party shall promptly consult with the other and provide any
necessary information with respect to and provide the other (or its counsel)
with copies of, all filings made by such party with any Governmental Entity in
connection with this Agreement and the transactions contemplated hereby.
Section 5.09 Letters of Accountants. Each of Lazer and Acclaim shall use
its respective best efforts to cause to be delivered to the other, letters from
their respective independent public accountants to each such party, dated a
date within two business days before the date on which the S-4 shall become
effective and addressed to the other, in form and substance reasonably
satisfactory to the other and customary in scope and substance for "cold
comfort" letters delivered by independent public accountants in connection with
registration statements similar to the S-4. Acclaim shall have provided Ernst
& Young LLP and Lazer shall have provided Grant Thornton, LLP, a letter
acknowledging that its review process applied to the information contained in
the S-4 relating to Lazer or Acclaim, as the case may be, will be substantially
consistent with the procedures that it would perform if the placement of
securities pursuant to the S-4 were being underwritten pursuant to the 1933
Act. Such letter shall also indicate Acclaim or Lazer, as the case may be, is
knowledgeable with respect to the due diligence review process that would be
performed if this placement of securities were being underwritten in connection
with a registered offering pursuant to the 1933 Act.
Section 5.10 Affiliates. (a) Lazer shall immediately advise Acclaim if
any such person listed on Schedule 3.27(b). should cease to be Affiliate and/or
of any person who becomes a Lazer Affiliate after the date hereof and on or
prior to the Closing Date. Lazer shall use its best efforts to cause each
person who becomes a Lazer Affiliate after the date hereof to deliver to
Acclaim at or prior to 31 days (or as promptly as practicable after such person
becomes a Lazer Affiliate if sooner) prior to the Effective Time a Lazer
Affiliate Agreement to the effect contemplated by Exhibit A hereto.
Section 5.11 Indemnification of Managers. (a) Acclaim and Holdings each
agree that all rights to indemnification existing on the date hereof in favor
of the present or former officers and directors of Lazer (the "Managers") with
respect to actions taken in their capacity as Managers prior to or at the
Effective Time as provided in Lazer's Articles of Incorporation, By-laws or
written indemnity agreements which have been previously provided to Acclaim
prior to the date hereof and which shall not be amended, modified or
supplemented after the date hereof and prior to the Effective Time, shall
survive the Merger and the Surviving Corporation shall assume, honor and be
bound by the terms of such indemnity agreements, Articles of Incorporation and
By-laws with respect to their actions and omissions in such capacity taken
prior to the Effective Time, whether or not such persons continue in their
positions with the Surviving Corporation following the Effective Time, and
shall continue in full force and effect for a period of six (6) years following
the Effective Time, and all such rights in any such agreement, Articles of
Incorporation and By-laws in effect as of the date hereof between Lazer or any
of its subsidiaries and any Manager shall survive the Merger and continue in
full force and effect in accordance with its terms as between such Managers and
the Surviving Corporation except as provided in Section 5.11(b) hereof.
(b) For the entire period from and after the Effective Time until at
least six years after the Effective Time, Acclaim shall cause the Surviving
Corporation to use its best efforts to maintain in effect directors' and
officers' liability insurance covering those persons who are currently covered
by Lazer's directors' and officers' liability insurance policy (a copy of which
has been heretofore delivered to Acclaim) of at least the same coverage and
amounts (not to exceed $1 million), containing terms that are no less
advantageous to such persons with respect to claims made after the Effective
Time arising from such person's actions or omissions in their capacity as
Managers occurring at or before the Effective Time than Lazer's policies in
effect immediately prior to the Effective Time. In the event the Surviving
Corporation is unable to maintain such directors' and officers' liability
insurance, Acclaim agrees that it will indemnify such persons currently covered
by Lazer's directors' and officers' liability insurance policy on the same or
similar terms and conditions and dollar limitations (not to exceed $1 million)
in force and effect under such policy immediately prior to the Effective Time.
(c) The provisions of this Section shall survive the Effective Time and
are intended to be for the benefit of, and shall be enforceable by, each
officer and director of Lazer and his or her heirs and representatives.
(d) In the event of a breach of any of the covenants set forth in 5.23,
Acclaim will assume all of the obligations of the Surviving Corporation under
this Section 5.11.
(e) In the event (i) any third party institutes any suit or proceeding of
the nature contemplated by Section 7.14 hereof (the "Claim Relating to the
Merger") and (ii) if at such time Acclaim has determined, notwithstanding any
such suit or proceeding, to consummate the Merger and to provide the indemnity
set forth in this Section 5.11(e), then, subject to the conditions set forth
below, Acclaim agrees to indemnify and hold harmless Lazer, its officers and
directors (each, a "Lazer Indemnified Party") from and against any and all
losses, liabilities, obligations, suits, proceedings, demands, judgments,
damages, claims, expenses and costs (including, without limitation, reasonable
fees, expenses and disbursements of counsel) as and when incurred, arising out
of, based upon, or in connection with the Claim Relating to the Merger on the
terms set forth in this Section 5.11(e). If any Claim Relating to the Merger
is brought against one or more Lazer Indemnified Parties in respect of which
indemnity may be sought against Lazer pursuant to this Section 5.11(e), such
Lazer Indemnified Party(ies) shall promptly and in any event within five days
notify Acclaim in writing of the institution of such Claim Relating to the
Merger and Acclaim shall promptly and in any event within 25 days notify Lazer
of Acclaim's intent to proceed to consummate the Merger and shall thereupon
assume the defense of such Claim Relating to the Merger, including the
employment of counsel (reasonably satisfactory to such Lazer Indemnified
Party(ies); it being acknowledged that Rosenman & Colin is satisfactory)
provided that the Lazer Indemnified Party(ies) shall have the right to employ
its or their own additional counsel in any such case, but the fees and expenses
of such counsel shall be at the expense of such Lazer Indemnified Party(ies)
unless (i) the employment of such counsel shall have been authorized in writing
by Acclaim in connection with the defense of such Claim Relating to the Merger
or (ii) Acclaim shall not have promptly employed counsel reasonably
satisfactory to such Lazer Indemnified Party(ies) to have charge of the defense
of such Claim Relating to the Merger or (iii) such Lazer Indemnified Party(ies)
shall have reasonably concluded that there may be one or more legal defenses
available to it or them or to other Lazer Indemnified Parties which are
different from or additional to those available to Acclaim, in any of which
events such fees and expenses of one such additional counsel shall be borne by
Acclaim as they are incurred by such Lazer Indemnified Party(ies) and Acclaim
shall not have the right to direct the defense of such Claim Relating to the
Merger on behalf of the Lazer Indemnified Party(ies) who have retained separate
counsel. Anything in this Section 5.11(e) to the contrary notwithstanding,
Acclaim shall not be liable for any settlement of any such Claim Relating to
the Merger effected without its prior written consent. Acclaim shall not,
without the prior written consent of each Lazer Indemnified Party that is not
released as described in this sentence, settle or compromise any Claim Relating
to the Merger, or permit a default or consent to the entry of judgment in or
otherwise seek to terminate any pending or threatened Claim Relating to the
Merger, in respect of which indemnity may be sought under this Section 5.11(e)
unless such settlement, compromise, consent, or termination includes an
unconditional release of such Lazer Indemnified Party from all liability in
respect of such Claim Relating to the Merger.
Section 5.12 No Breach of Representations and Warranties. Each of
Acclaim, Holdings, the Principals and Lazer agree that they will not take any
action which would cause or constitute a material breach, or would, if it had
been taken prior to the date hereof, have caused or constituted a material
breach of, any of the representations and warranties set forth in Article III
or IV hereof, as the case may be. Each of the parties hereto shall, in the
event of, or promptly after the occurrence of, or promptly after obtaining
knowledge of the occurrence of or the impending or threatened occurrence of,
any fact or event which would cause or constitute a Material Adverse Effect
with regard to Lazer or Acclaim or a breach of any of the representations and
warranties set forth in Article III or IV hereof, as the case may be, as of the
Closing Date, give detailed notice thereof to the other parties hereto; and
such notifying party shall use its or their best efforts to prevent or promptly
to remedy such breach.
Section 5.13 Consents; Notices. Lazer shall obtain and deliver to
Acclaim written consents, in form and substance satisfactory to Acclaim, to the
change in control of Lazer or assignments to the Surviving Corporation of the
Contracts set forth in Schedules 3.18(a) and 3.18(b) hereto and any other
consents required in connection with this Agreement or the transactions hereby
contemplated including without limitation those identified in a schedule
hereto. Lazer shall also deliver all notices to third parties required to be
delivered in connection with the execution of this Agreement and the
transactions hereby contemplated.
Section 5.14 Fees and Expenses. (a) Except as set forth in Section
5.14(b), (c) and (d), whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses, except
that expenses incurred in connection with the printing and mailing of the Proxy
Statement and the S-4 shall be shared equally by Lazer and Acclaim.
(b) Subject to Sections 5.14(c) and (d), in the event that Lazer shall
have breached any of its obligations representations, warranties or covenants
or prevents the satisfaction of Acclaim's conditions to the Merger, Acclaim
shall have the right to avail itself of all available remedies, whether at law
or equity, and Lazer shall, in addition to any damages or other relief granted
to Acclaim, to the extent Acclaim prevails on any claim or action, pay all
costs and expenses (including attorneys fees and expenses) incurred by Acclaim
in pursuit of such remedies. In the event that Acclaim shall have breached any
of its obligations representations, warranties or covenants or prevents the
satisfaction of Lazer's conditions to the Merger, Lazer shall have the right to
avail itself of all available remedies, whether at law or equity, and Acclaim
shall, in addition to any damages or other relief granted to Lazer, to the
extent Lazer prevails on any claim or action, pay all costs and expenses
(including attorneys fees and expenses) incurred by Lazer in pursuit of such
remedies.
(c) Provided that the circumstances contemplated by the first sentence of
Section 5.14(b) hereof shall not then be in existence as a result of or arising
from the willful action or inaction of Lazer, its officers, directors,
employees or agents, in the event Lazer or its Board of Directors shall have
exercised its right under Section 5.03 in connection with an Acquisition
Transaction, and as a result of any of the foregoing the Merger is not
consummated and/or this Agreement is terminated, then Lazer shall promptly, but
in no event later than one business day following the termination of this
Agreement, pay to Acclaim, in immediately available funds, the sum of Two
Hundred Thousand Dollars $200,000, which amount shall be Acclaim's sole remedy
hereunder in such circumstances.
(d) Provided that the circumstances contemplated by the first sentence of
Section 5.14(b) hereof shall not then be in existence as a result of or arising
from the willful action or inaction of Lazer, its officers, directors,
employees or agents, in the event Lazer or its Board of Directors shall have
exercised its rights under Section 5.03 in connection with an Acquisition
Transaction and as a result the Merger is not consummated or this Agreement is
terminated, and shall have consummated such Acquisition Transaction within one
year, then Lazer shall, or shall cause any other party succeeding to its
business or which is a party to such Acquisition Transaction, as a condition to
consummation of any such Acquisition Transaction, pay to Acclaim, in
immediately available funds, a sum in cash equal to 5% of the value (less any
amounts paid or payable to Acclaim pursuant to Section 5.03(c)), which amount
shall be Acclaim's sole remedy hereunder in such circumstances, of the
aggregate consideration actually received in connection with such Acquisition
Transaction by (i) Lazer's Stockholders, in the case that such Acquisition
Transaction is a merger, business combination, sale of shares of capital stock
outside the ordinary course of business or similar transaction, or (ii) Lazer,
in the case that such Acquisition Transaction is a sale of a significant amount
of Lazer's assets outside the ordinary course of business or similar
transactions, in each case at such times that such consideration is actually
distributed to Lazer Stockholders or Lazer, as applicable. The value of such
consideration shall be determined in a manner consistent with the manner by
which it is valued or determined in the agreements governing that Acquisition
Transaction.
(e) Notwithstanding any other provision of this Agreement, the provisions
of this Section 5.14 shall not be conditioned on the vote of the stockholders
of Lazer. This Section 5.14 shall survive the termination of the Merger or
this Agreement.
Section 5.15 The Option. Lazer hereby grants Acclaim an option (the
"Option") to purchase shares of Lazer Common Stock for $8.00 per share in cash
on the terms and conditions set forth in the Option Agreement attached as
Exhibit C hereto. Notwithstanding any other provision of this Agreement, the
grant of the Option under this Section 5.15 shall not be conditioned upon the
vote of the stockholders of Lazer. The Option shall survive the termination of
the Merger or this Agreement. Lazer further grants to Acclaim registration
rights relating to the Lazer Common Stock underlying the Option on
substantially the terms set forth in the registration rights agreement attached
as Exhibit C hereto.
Section 5.16 Pooling. Each of Acclaim and Lazer agree not to take any
action that would adversely affect the ability of Acclaim to treat the Merger
as a pooling of interests and each of Lazer and Acclaim agree to take such
action as may be reasonably required to negate the impact of any past or future
actions that would adversely impact the ability of Acclaim to treat the Merger
as a pooling of interests.
Section 5.17 Public Announcements. Acclaim and Lazer shall consult with
each other before issuing any press releases or otherwise making any public
statements with respect to the Merger or this Agreement and shall not issue any
press release or make any such public statement prior to such consultation,
except as may be required by law or any listing agreement with a national
securities exchange or NASDAQ.
Section 5.18 Registration Right Agreements and Warrants. Acclaim agrees
as part of the Merger to assume all of Lazer's obligations in connection with
the registration rights granted by Lazer prior to the date hereof and described
on Schedule 5.18 with respect to any Lazer securities which had rights under
such agreements and were exchanged or substituted in the Merger, subject to
Acclaim's reasonable renegotiation with Van Kasper & Co. and with Cohig &
Associates, Inc. of their rights thereunder.
Section 5.19 NASDAQ Listing. As soon as practicable after the Effective
Time, Acclaim will use its best efforts (i) to cause the Acclaim Common Stock
to be issued in the Merger to be quoted on the Nasdaq Stock Market or listed on
such securities exchange as Acclaim Common Stock is then listed and (ii) to
cause the shares of Acclaim Common Stock issued upon exercise of substituted
Lazer Stock Options or Warrants to be quoted upon issuance on the Nasdaq Stock
Market or listed on such securities exchange as the Acclaim Common Stock is
then listed.
Section 5.20 Acclaim Employee Option Plans and Benefit Arrangements.
Acclaim shall use its best efforts to arrange that, as soon as practicable
after the Effective Time, all Acclaim benefit arrangements and Acclaim employee
plans (the "Acclaim Benefits") provide the same or a comparable benefit or plan
to each employee of Lazer as is provided to Acclaim's employees who are
similarly situated. The Acclaim Benefits shall give full credit for each
participant's period of service with Lazer prior to the Effective Time for all
purposes for which such service was recognized under the Plans prior to the
Effective Time and full credit for deductibles satisfied under the Plans toward
any deductibles for the same period following the Effective Time, and shall
waive any pre-existing condition limitation for any employee covered under the
Plans immediately prior to the Effective Time. From and after the Effective
Time, Acclaim and the Surviving Corporation shall provide all employees of
Lazer with the opportunity to participate in any employee stock option or other
incentive compensation plan of Acclaim on substantially the same terms and
subject to substantially the same conditions as are available to similarly
situated employees of Acclaim.
Section 5.21 Employment Agreements. Acclaim covenants and agrees that it
shall cause the Surviving Corporation to, concurrently with the Effective Time,
execute the employment agreements substantially in the form attached hereto as
Exhibit D.
Section 5.22 Closing Balance Sheet. No later than five days prior to the
Closing and in any event no later than the tenth day of the month within which
the Closing is anticipated to take place, Lazer shall furnish Acclaim with a
balance sheet dated as of the last day of the month immediately preceding the
month in which the Closing Date occurs and a Net Sales presentation for the
applicable period described in Section 3.21(b) ended with the date of such
balance sheet (together, the "Closing Balance Sheet"). The Closing Balance
Sheet shall be prepared in accordance with GAAP (without footnotes) and reflect
the applicable minimum amounts set forth in Section 3.21(b) hereof with respect
to Lazer's Working Capital, Net Worth and Net Sales, prepared on a pro forma
basis after deduction of expenses and fees incurred by Lazer in connection with
the Merger and transactions contemplated hereby up to an aggregate of $750,000.
Such Closing Balance Sheet shall be certified by the President and Chief
Financial Officer of Lazer in their respective capacity as such . Within three
days of its receipt of the Closing Balance Sheet, Acclaim shall notify Lazer in
writing (a "Dispute Notice") whether Acclaim in good faith accepts or rejects
the calculations set forth in the Closing Balance Sheet, and in the case of a
rejection thereof specifying the ground of such rejection in reasonable detail
(a "Dispute"). In the event of a Dispute, Lazer and Acclaim shall seek within
15 days from the date of Acclaim's Dispute Notice to resolve such Dispute to
the satisfaction of Acclaim and Acclaim's independent public accountants.
Section 5.23 Operation of the Surviving Corporation. So long as the
Surviving Corporation has any obligations under Section 5.11 hereof, Acclaim
shall not (i) take any affirmative action to materially adversely change the
operations of the Surviving Corporation; (ii) cause the Surviving Corporation
to sell, transfer or otherwise dispose of any of its assets other than
Proprietary Rights, except for (a) dispositions, pledges and transfers to
Acclaim's lenders or to bona fide third party lenders providing financing to
Lazer, in each case for collateral purposes, (b) dispositions made in the
ordinary course of business, (c) the payment of expenses incurred by the
Surviving Corporation other than Acclaim's or Lazer in the Merger or (d) unless
the Surviving Corporation shall have received, in the good faith determination
of its Board of Directors, fair value therefor; (iii) liquidate the Surviving
Corporation; (iv) merge the Surviving Corporation with or into another
corporation, including Acclaim or its Affiliates, unless such corporation
agrees to be bound by the provisions of Section 5.11 and this Section 5.23 and
such corporation has a net worth at least equal to Acclaim's as of the date
hereof or Acclaim agrees to guarantee such obligations; (v) sell, distribute or
otherwise dispose of the Common Stock of the Surviving Corporation, unless the
corporation receiving such Common Stock agrees to be bound by the provisions of
Section 5.11 and this Section 5.23 and such corporation has a net worth at
least equal to Acclaim's as of the date hereof or Acclaim agrees to guarantee
such obligations; (vi) issue additional shares of Common Stock (or rights to
purchase shares of Common Stock) of the Surviving Corporation that result in
Acclaim losing control of the Surviving Corporation unless the purchaser
thereof agrees to be bound by the provisions of Section 5.11 and this Section
5.23 and such corporation has a net worth at least equal to Acclaim's as of the
date hereof or Acclaim agrees to guarantee such obligations; or (vii) cause the
Surviving Corporation to make dividends, distributions or loans to Acclaim or
its Affiliates or enter into other transactions (other than transfers of
Proprietary Rights) on other than an arm's length basis.
Section 5.24 Each of Acclaim and Lazer agree to use its best efforts not
to take any actions that would adversely affect the ability of the Merger to be
treated as a tax free reorganization pursuant to the provisions of Section
368(a) of the Code and will provide appropriate factual statements to Lazer's
counsel with respect to matters pertaining to the treatment of the Merger as a
tax free reorganization under Section 368(a) of the Code.
Section 5.25 Intellectual Property. Lazer covenants that prior to using
a name for any game which is being held out for sale or lease, Lazer shall
perform a search under both U.S. and common law seeking to determine whether,
based on such search, it is reasonable to use such name or mark in the manner
in which Lazer believes its intended use will not infringe any other third
parties' rights therein, whether statutory or common law rights (including,
without limitation, trademark and the rights of privacy and publicity).
Section 5.26 Executive Bonus. Acclaim shall cause the Surviving
Corporation to pay to persons covered thereunder, not later than 120 days after
June 30, 1995, any accrued and unpaid bonus payable to such persons by the
Surviving Corporation in respect of the Surviving Corporation's fiscal year
ended June 30, 1995.
ARTICLE VI
Conditions to Acclaim's and Holding's Obligations
All obligations of Acclaim and Holdings under this Agreement are subject
to the fulfillment, at the Closing Date, of each of the following conditions,
any or all of which may be waived in whole or in part, at or prior to the
Closing Date, by Acclaim in its sole discretion:
Section 6.01 Representations and Warranties. The representations and
warranties contained in Article III hereof shall be true and correct at and as
of the Closing Date as though such representations and warranties were made at
and as of such time, except for those representations and warranties that are
expressly made as of a specified earlier date.
Section 6.02 Covenants. Lazer shall have performed and complied in all
material respects with all agreements and conditions on their part required by
this Agreement to be performed or complied with prior to or on the Closing
Date.
Section 6.03 Officer's Certificate. The Purchaser shall have received
(i) a certificate of the chief executive officer of Lazer, dated the Closing
Date, certifying to the fulfillment of the conditions specified in Sections
6.01 and 6.02 hereof and (ii) such other evidence with respect to the
fulfillment of any of said conditions as Acclaim may reasonably request.
Section 6.04 Opinion of Counsel. (a) Acclaim shall have received an
opinion of counsel for Lazer, dated the Closing Date, in form and substance
reasonably satisfactory to Acclaim and its counsel.
(b) Acclaim shall have received opinions of counsel for Lazer, dated the
date of the effective date of the S-4 and as of the Closing Date regarding the
tax free nature of the Merger as contemplated by Section 1.07 hereof in form
and substance reasonably satisfactory to Acclaim and its counsel.
Section 6.05 Consents. (a) Acclaim shall have received (in form and
substance satisfactory to Acclaim) all approvals set forth in Schedule 4.05 and
4.06 hereto from all governmental and regulatory authorities of the United
States and the several States and from any third party set forth in Schedule
4.05 and 4.06 hereto in connection with the execution, delivery and performance
of this Agreement and the consummation of the transactions hereby contemplated.
(b) Lazer shall have obtained all necessary consents and approvals to the
transactions contemplated hereby under the agreements listed on Schedule 3.04
and 3.18 hereto, which consents shall be in form and substance acceptable to
Acclaim.
Section 6.06 HSR Act. Lazer shall have made all pre-merger notification
filings required to be made by it under the HSR Act, all applicable waiting
periods thereunder shall have expired or been terminated without any request
from any appropriate governmental agency for additional information or, if
additional information has been requested, all applicable extended waiting
periods shall have expired.
Section 6.07 Legality. No change shall have occurred in any law, rule or
regulation which would prohibit or infringe the performance of Acclaim's
obligations under Article I hereof.
Section 6.08 Injunctions. (a) No court, agency or other authority shall
have issued any order, decree or judgment to set aside, restrain, enjoin or
prevent the performance of Acclaim's obligations in Article I hereof.
(b) No statute, rule, regulation, executive order, decree or injunction
shall have been enacted, entered, promulgated or enforced by any United States
court or Governmental Entity of competent jurisdiction which prohibits
restrains, enjoins, sets aside or prevents the consummation of the Merger and
shall be in effect.
Section 6.09 Closing Balance Sheet; Material Adverse Effect. Acclaim
shall have received from Lazer the Closing Balance Sheet in accordance with
Section 5.23 herein and reflecting the summary amounts set forth in Section
3.21(b) hereof with respect to Lazer's Working Capital and Net Worth and there
shall be no dispute with respect thereto. From the date hereof through and
including the Closing Date, Lazer shall not have suffered a Material Adverse
Effect.
Section 6.10 Resignations. Lazer shall have caused to be delivered to
Acclaim written resignations, effective as of the Closing Date, of each of the
directors and officers of Lazer and its subsidiaries specified in Schedule 6.10
hereof from all offices and directorships of Lazer and its subsidiaries.
Section 6.11 Employment Agreements. At the Effective Time, each of the
Principals shall have entered into an Employment Agreement with the Surviving
Corporation in the form attached as Exhibit D hereto, as applicable.
Section 6.12 Stockholder Approval. This Agreement shall have been
approved and adopted by the affirmative vote of the holders of a majority of
the outstanding Lazer Common Stock in accordance with applicable law and
Dissenting Shares and/or shares of common stock of Lazer capable of becoming
Dissenting Shares after the Closing shall not constitute in excess of 10% of
the shares eligible to vote for such approval and adoption.
Section 6.13 Due Diligence. Completion of Acclaim's due diligence of
Lazer's operations and financial condition to the satisfaction of Acclaim and
its counsel, including, without limitation, analysis and review of matters and
documents listed on Schedules to this Agreement and/or otherwise provided to
Acclaim prior to the date hereof and satisfaction with Environmental Conditions
relating to Lazer's offices and facilities located in Pleasanton, California.
Section 6.14 Benefit Plans; Stock Option Plans. Termination of all Lazer
Stock Option Plans and employee cash bonus or cash incentive performance plans
(including, without limitation, the Executive Bonus Plan, except for the
payments provided under Section 5.26 hereof) and receipt prior to the Closing
Date of all necessary consents from the holders of all outstanding Stock
Options and Warrants and registration rights with respect to changes therein
reasonably requested by Acclaim.
Section 6.15 Stock Price. If the Acclaim Common Stock Price shall be
less than $12.50.
Section 6.16 Merger. The Certificate of Merger and the California
Certificate shall have been executed and delivered by Lazer to Acclaim.
Section 6.17 Institution of Proceedings. There shall not have been
instituted by any third party any suit or proceeding to enjoin, prevent, set
aside, restrain or invalidate this Agreement or the transactions hereby
contemplated or seeking damages from or to impose obligations upon Lazer or its
directors or officers or Acclaim by reason of this Agreement or the
transactions hereby contemplated which, in Acclaim's good faith judgment, would
involve liabilities, expenses or lapse of time that would be materially adverse
to Acclaim's interests.
Section 6.18 Registration Statement. The S-4 shall have become effective
under the 1933 Act and shall not be the subject of any stop order or
proceedings seeking a stop order.
Section 6.19 Accountants' Letters. (a) Acclaim shall have received a
letter from Grant Thornton LLP, Acclaim's independent public accountants, with
respect to Acclaim, and from Ernst & Young, LLP Lazer's independent public
accountants, with respect to Lazer, dated the date of the Proxy Statement, and
confirmed in writing at the Effective Date, to the effect that each of Lazer
and Acclaim, as applicable, may participate in a transaction such as the Merger
in a manner so as to permit the Merger to qualify as a Pooling, provided that
Acclaim may not exercise its rights to terminate this Agreement as a result of
the failure of the conditions provided in this Section 6.19 if the reason that
such letters cannot be delivered is solely as a result of the actions or
omissions of Acclaim or its affiliates.
(b) Acclaim shall have received a "cold comfort" letter from Ernst &
Young, LLP dated within two days prior to the effectiveness of the S-4 with
respect to the operations of Lazer in the form and substance of such letters
delivered by independent public accountants in connection with registration
statements on Form S-4 and reasonably satisfactory to Acclaim and its counsel.
Section 6.20 Lazer Affiliate Agreements. Each of the persons listed on
Schedules 3.27(a) shall have entered into a Lazer Affiliate Agreement, which
Lazer Affiliate Agreements, as of the Closing Date, (i) shall be in full force
and effect, (ii) shall be the legal, valid and binding obligation of the
signatory thereto, enforceable in accordance with its terms and not conflict
with any other agreement to which such person is a party and (iii) the
provisions of which shall not have been challenged or modified by any legal
proceeding or otherwise changed or amended without the prior written consent of
Acclaim.
Section 6.21 FIRPTA. Acclaim shall have received from Lazer an affidavit
meeting the requirements of Section 1445(b)(3) of the Code and the Treasury
Regulations promulgated thereunder.
ARTICLE VII
Conditions to Lazer's Obligations
All obligations of Lazer under this Agreement are subject to the
fulfillment, at the Closing Date, of each of the following conditions, any or
all of which may be waived in whole or in part, at or prior to the Closing Date
by Lazer in its sole discretion:
Section 7.01 Representations and Warranties. The representations and
warranties contained in Article IV hereof shall be true and correct at and as
of the Closing Date as though such representations and warranties were made at
and as of such time, except for those representations and warranties that are
expressly made as of a specified earlier date.
Section 7.02 Covenants. Acclaim and Holdings shall each have performed
and complied in all material respects with all agreements and conditions on
their respective parts required by this Agreement to be performed or complied
with prior to or on the Closing Date.
Section 7.03 Officer's Certificate. Lazer shall have received a
certificate of an executive officer of each of Acclaim and Holdings, dated the
Closing Date, certifying to the fulfillment of the conditions specified in
Sections 7.01 and 7.02 hereof.
Section 7.04 Opinion of Counsel. Lazer shall have received an opinion of
counsel for Acclaim, dated the Closing Date, in form and substance reasonably
satisfactory to Lazer and its counsel.
Section 7.05 Consents. (a) All approvals set forth in Schedule 3.04
hereto from all Governmental Entities in connection with the execution,
delivery and performance of this Agreement and the consummation of the
transactions hereby contemplated shall have been received.
(b) Acclaim shall have obtained all necessary consents and approvals to
the transactions contemplated hereby under the agreements listed on Schedule
4.05 and 4.06 hereto.
Section 7.06 HSR Act. Acclaim shall have made all pre-merger
notification filings required to be made by it under the HSR Act, all
applicable waiting periods thereunder shall have expired or been terminated
without any request from any appropriate governmental agency for additional
information or, if additional information has been requested, all applicable
extended waiting periods shall have expired.
Section 7.07 Legality. No change shall have occurred in any law, rule or
regulation which would prohibit the performance of Lazer's obligations under
Article I hereof.
Section 7.08 Injunctions. (a) No court, agency or other governmental
authority shall have issued any order, decree or judgment to set aside,
restrain, enjoin or prevent the performance of Lazer's obligations in Article I
hereof other than any of the foregoing, which is also covered by Section 7.14
hereof.
(b) No statute, rule, regulation, executive order, decree or injunction
shall have been enacted, entered, promulgated or enforced by any United States
court or Governmental Entity of competent jurisdiction which prohibits,
restrains, sets aside, enjoins or prevents the consummation of the Merger and
shall be in effect other than any of the foregoing, which is also covered by
Section 7.14 hereof.
Section 7.09 Effectiveness of Registration Statement. The S-4, which
includes the Proxy Statement, shall have been declared effective under the 1933
Act and shall not be the subject of any stop order or proceedings seeking a
stop order.
Section 7.10 Employment Agreements. At the Effective Time, the Surviving
Corporation shall have entered into an Employment Agreement with each of the
Principals applicable in the form attached as Exhibit D hereto.
Section 7.11 Stockholder Approval. This Agreement shall have been
approved and adopted by the affirmative vote of the holders of a majority of
the outstanding Lazer Common Stock in accordance with applicable law.
Section 7.12 Merger. The Certificate of Merger at the California
Certificate shall have been executed and delivered by Acclaim to Lazer.
Section 7.13 Accountants' Letters. Lazer shall have received a "cold
comfort" letter from Grant Thornton, LLP, Acclaim's independent public
accountants, dated within two days prior to effectiveness of the S-4 in form
and substance of such letters delivered by independent public accountants in
connection with registration statements on Form S-4 and reasonably satisfactory
to Lazer and its counsel.
Section 7.14 Institution of Proceedings. Prior to the Effective Time,
there shall not have been instituted by any third party any suit or proceeding
to restrain, enjoin, prevent, set aside or invalidate this Agreement or the
transactions hereby contemplated or seeking damages from or to impose
obligations upon Lazer or its directors or officers by reason of this Agreement
or the transactions hereby contemplated which in Lazer's good faith judgment
would involve expenses, liabilities, or lapse of time that would be materially
adverse to Lazer's or to such person's interests, as to any of which Acclaim,
in its sole discretion, upon review and assessment thereof with Lazer and its
other advisers, Lazer's and Acclaim's counsel and such other review as Acclaim
reasonably requires (as to which Lazer will, and will cause its counsel and
advisers to, cooperate with Acclaim and its counsel with respect to such
review), has not agreed to indemnify Lazer and/or its directors and officers
pursuant to Section 5.11(e).
Section 7.15 Stock Price. If the Acclaim Common Stock Price shall be
less than $12.50.
ARTICLE VIII
Termination and Amendment
Section 8.01 Termination. This Agreement may be terminated at any time
prior to the Closing Date:
(a) by mutual consent of Lazer and Acclaim;
(b) by either Lazer or Acclaim, if the Merger shall not have been
consummated on or before July 31, 1995 (unless the failure to consummate
the Merger by such date shall be due to a breach of a representation and
warranty or of a covenant by such party and/or the action or failure to
act of the party seeking to terminate this Agreement); provided however,
that (i) in the event the Closing Balance Sheet shall be dated as of July
31, 1995, such consummation date shall automatically be extended to August
15, 1995 and (ii) in the event the Closing Balance Sheet shall be dated as
of July 31, 1995 and Acclaim shall dispute the calculations therein
pursuant to Section 5.22 hereof, such consummation date shall be
automatically extended to August 31, 1995.
(c) by either Lazer or Acclaim, if (i) the conditions to such
party's obligations shall have become impossible to satisfy or shall not
have been satisfied, other than as a result of its own acts or omissions
in violation of its obligation hereunder or (ii) any permanent injunction
or other order of a court or other competent authority preventing the
consummation of the Merger shall have become final and nonappealable;
(d) by Acclaim, if (i) subject to Section 7.06 hereof, there has
been a material violation or breach by Lazer or any party to an
Affiliate's Agreement of any representation, warranty or any agreement
contained in this Agreement or therein, as applicable, or any failed
condition to Acclaim's obligations under Article VI hereof, (ii) if the
Acclaim Common Stock Price shall be less than $12.50 or (iii) Lazer has
breached its covenants under Section 5.04 hereof.
(e) by Lazer if (i) subject to Section 6.06 hereof, there has been a
material violation or breach by Acclaim of any representation, warranty or
any agreement contained in this Agreement or any failed condition to
Lazer's obligations under Article VII hereof, (ii) if the Acclaim Common
Stock Price shall be less than $12.50, or (iii) Acclaim has breached its
covenant under Section 5.04 hereof.
(f) by either party if approval of the Merger by the Lazer
Stockholders shall not have been obtained by reason of the failure to
obtain the required vote upon a vote taken at the Lazer Stockholders
Meeting or any adjournments thereof; provided however, that termination
pursuant to this Section 8.01(f) shall not relieve Lazer of any
obligations or consequences by reason of any breach of any representation,
warranty or covenant of Lazer or any other failed condition to Acclaim's
obligation under Article VI hereof.
(g) by either party if, in accordance with Section 5.03 Lazer's
Board of Directors accepts, approves or recommends to the Lazer
stockholders a proposal relating to an Acquisition Transaction or the
Lazer Board of Directors amends, withholds or withdraws its recommendation
of the Merger; provided, however, that termination by either party
pursuant to this Section 8.01(g) shall not relieve Lazer of its
obligations pursuant to Section 5.14, Section 5.15 and Article IX of this
Agreement.
Section 8.02 Effect of Termination. (a) Subject to subsection (b) of
this Section 8.02, in the event of the termination of this Agreement pursuant
to Section 8.01 hereof, this Agreement shall forthwith become void and have no
effect, without any liability on the part of any party hereto or its
affiliates, directors, officers or stockholders, other than the provisions of
Sections 5.14, 5.15, Article IX and the Confidentiality Agreement. Nothing
contained in this Section 8.02 shall relieve any party from liability for any
wilful breach of this Agreement. The indemnification provisions set forth in
Article IX hereof shall survive any such termination of this Agreement as to
any party who shall be in breach of this Agreement as at any such date of
termination or at any earlier date of the termination of this Agreement
pursuant hereto if the non-breaching party shall have given the appropriate
notice under Article IX hereof prior to any such termination, unless the
survival of such provisions is specifically waived by the non-breaching party
or parties hereto.
(b) If Acclaim or Lazer shall have the right to terminate this Agreement
then the party which does not have the right to terminate will use its best
efforts to cure the condition giving rise to such right. If such party is
unable to cure the condition giving rise to such right, the other party may
exercise its right to terminate this Agreement or waive such right and proceed
to consummate the transactions contemplated hereby. The giving of notice
pursuant to Section 5.12 of this Agreement shall not act as a waiver of any
breach hereunder. Notwithstanding the exercise of the foregoing right to
terminate or waive, the aggrieved party shall have and may pursue its rights to
recover damages for breach of contract or any representation, warranty or
covenant giving rise to such right subject to the limitations of Section
5.14(c) and 5.14(d).
Section 8.03 Amendment. This Agreement may be amended by the parties
hereto at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of Lazer, but, after any such
approval, no amendment shall be made which by law requires further approval by
such stockholders without such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 8.04 Extension; Waiver. At any time prior to the Effective Date,
the parties hereto may, to the extent legally allowed, (i) extend the time for
the performance of any of the obligations or other acts of the other parties
hereto, (ii) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (iii) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in a written instrument signed on behalf of such
party.
ARTICLE IX
Indemnification
Section 9.01 By Lazer. Lazer agrees to indemnify and hold harmless
Acclaim, Holdings and their respective directors, officers, employees and
agents (the "Acclaim Parties") against, and to reimburse the Acclaim Parties on
demand with respect to, any and all losses, liabilities, obligations, suits,
proceedings, demands, judgments, damages, claims, expenses and costs
(including, without limitation, reasonable fees, expenses and disbursements of
counsel) (collectively, "Losses") which each may suffer, incur or pay, by
reason of (i) the breach by Lazer, Lazer's affiliates or the Kelly Family Trust
and the 1992 Kelly Family Trust, or the Principals of any representation,
warranty or covenant contained in this Agreement or in any agreement,
certificate or other document executed by the Principals or Lazer, Lazer's
affiliates or the Kelly Family Trust and the 1992 Kelly Family Trust, and
delivered to Acclaim or Holdings pursuant to the provisions of this Agreement;
(ii) the failure of the Principals, Lazer, Lazer's affiliates or the Kelly
Family Trust and the 1992 Kelly Family Trust to execute, deliver and perform
any agreement required by this Agreement or any agreement executed pursuant to
the provisions of this Agreement or entered into concurrently herewith as
referenced in Section 10.05 hereof; and/or (iii) the allegation in writing by
any third party of the existence of any liability, obligation, lease,
agreement, contract, other commitment or state of facts which, if such
allegation were true, would constitute a breach by the Principals, Lazer,
Lazer's affiliates or the Kelly Family Trust and the 1992 Kelly Family Trust of
any representation or warranty contained in this Agreement or in any agreement,
certificate or other document delivered by or on behalf of the Principals,
Lazer, Lazer's affiliates or the Kelly Family Trust and the 1992 Kelly Family
Trust to Acclaim pursuant to the provisions of this Agreement or of any
covenant made by the Principals, Lazer, Lazer's affiliates or the Kelly Family
Trust and the 1992 Kelly Family Trust herein or therein.
Section 9.02 By Acclaim. Acclaim agrees to indemnify and hold harmless
Lazer, its directors, officers, employees and agents (the "Lazer Parties")
against, and to reimburse the Lazer Parties on demand with respect to, any and
all Losses which each may suffer, incur or pay by reason of (i) the breach by
Acclaim or Holdings of any representation, warranty or covenant contained in
this Agreement or in any agreement, certificate or other document executed by
Acclaim or Holdings and delivered to Lazer pursuant to the provisions of this
Agreement; (ii) the failure of Acclaim or Holdings to perform any agreement
required by this Agreement or any agreement executed pursuant to the provisions
of this Agreement and/or (iii) the allegation in writing by any third party of
the existence of any liability, obligation, lease, agreement, contract, other
commitment or state of facts which, if such allegation were true, would
constitute a breach by Acclaim or Holdings of any representation or warranty
contained in this Agreement or in any agreement, certificate or other document
delivered by or on behalf of Acclaim or Holdings to Lazer pursuant to the
provisions of this Agreement or of any covenant made by Acclaim or Holdings
herein or therein.
Section 9.03 Limitations on Indemnification. (a) Neither the Acclaim
Parties, on the one hand, nor the Lazer Parties, on the other hand, shall be
entitled to be indemnified pursuant to Section 9.01 hereof or pursuant to
Section 9.02 hereof, as the case may be, unless and until the aggregate of all
Losses (other than those hereinafter referred to in the proviso to this
sentence) incurred by the Acclaim Parties or the Lazer Parties, as the case may
be, exceeds $150,000 and, upon exceeding such amount, the Acclaim Parties or
the Lazer Parties, as the case may be, shall be entitled to be indemnified for
all Losses (including all Losses below such $150,000 threshold on a dollar for
dollar basis); provided, however, that notwithstanding the foregoing,
(i) Acclaim shall be entitled to be indemnified on a dollar-for-dollar basis
from and against all Losses arising under Section 9.01 hereof if the Principals
or Lazer shall have acted in bad faith or shall have engaged in willful
misconduct in respect thereof and (ii) Lazer shall be entitled to be
indemnified on a dollar-for-dollar basis from and against all Losses arising
under Section 9.02 hereof if Acclaim shall have acted in bad faith or shall
have engaged in willful misconduct in respect thereof.
Section 9.04 Indemnification Procedure for Third Party Claims. The
Acclaim Parties, in the case of Section 9.01 hereof, and the Lazer Parties, in
the case of Section 9.02 hereof (hereinafter, the applicable party or parties
providing indemnity, the "Indemnifying Party" and the party or parties being
indemnified, the "Indemnified Party") agree to give the Indemnifying Party
prompt written notice of the allegation by any third party of the existence of
any liability, obligation, lease, agreement, contract, other commitment or
state of facts referred to in clause (iii) of Sections 9.01 and 9.02 hereof, as
applicable (any of such claims being referred to as a "Third Party Claim");
provided, however, that the Indemnified Party's failure to notify, or a delay
in notifying, the Indemnifying Party of any Third Party Claim (provided that
such Third Party Claim is a claim solely for monetary damages) shall relieve
the Indemnifying Party of its obligations under this Article IX only to the
extent, if any, that it is materially prejudiced by reason of any such delay or
failure. The Indemnifying Party shall be entitled, at his or its sole cost and
expense, to participate in and to control the contest, defense, settlement or
compromise of any Third Party Claim (provided that such Third Party Claim is a
claim solely for monetary damages) if the Indemnifying Party shall agree in
writing within 15 days after the receipt of notice of such claim that it is
required, pursuant to this Article IX, to indemnify the Indemnified Party for
the full amount of Losses arising in respect of such claim (the "Claim
Acknowledgement Procedure"), subject to Section 9.03 hereof. If the
Indemnifying Party shall assume the defense of a claim hereunder, the
Indemnified Party shall be kept informed with respect to, and shall have the
right to participate in, the contest, defense, settlement or compromise of any
such claim. If the Indemnifying Party does not assume the defense of a claim
within a reasonable time after notice thereof or, after assumption, does not
thereafter diligently pursue such defense or does not comply with the Claim
Acknowledgement Procedure, the Indemnified Party shall be entitled to defend,
settle or compromise such matter for the account and at the expense of the
Indemnifying Party. Notwithstanding the foregoing provisions of this Section
9.04, (i) the Indemnified Parties shall have the sole right to control the
contest, defense, settlement or compromise of any claim if such claim is not a
claim solely for monetary damages and (ii) Acclaim shall have the sole right to
control the contest, defense, settlement or compromise of any claim if, by
reason of such claim, the rights of Acclaim or in or to any of its non-cash
assets including, but not limited to, any character, publication or license
might be, in Acclaim's sole discretion, adversely affected. Unless (x) a Third
Party Claim shall have been instituted against an Indemnified Party and (y) the
Indemnifying Party, if it shall have the right pursuant to this Section 9.04 to
assume the defense thereof, shall not have assumed such defense after
notification thereof in accordance with the Claim Acknowledgement Procedure,
the Indemnified Party shall not settle or compromise such claim without the
prior written consent of the Indemnifying Party; provided, however, that the
Indemnifying Party shall not be so entitled to consent if the settlement or
compromise of any single such Third Party Claim shall be $25,000 or less. If
the Indemnifying Party shall not have the right, pursuant to this Section 9.04,
to assume the defense of a Third Party Claim because such claim is not a claim
solely for monetary damages, the Indemnifying Party shall receive 20 days'
prior written notice of the Indemnified Party's proposed settlement and shall
be entitled to consent only to the monetary portion, if any, of the settlement
or compromise of the Third Party Claim as to which the Indemnifying Party is
being asked to indemnify the Indemnified Party; provided, however, that the
Indemnifying Party shall not be so entitled to consent if the monetary portion
of the settlement or compromise of any single such Third Party Claim shall be
$25,000 or less. If the Indemnifying Party shall have the right, pursuant to
this Section 9.04, to assume the defense of a Third Party Claim because such
claim is a claim solely for monetary damages, the Indemnified Party shall
receive 20 days' prior written notice of the Indemnifying Party's proposed
settlement and shall be entitled to consent to any such settlement or
compromise which exceeds the amount available for indemnification under Section
9.03(b) or (c) hereof.
Section 9.05 Indemnification Procedure for Claims Between Lazer and
Acclaim. The Acclaim Parties, in the case of Section 9.01 hereof, and the
Lazer Parties, in the case of Section 9.02 hereof agree to give the
Indemnifying Party prompt written notice with respect to which the Indemnifying
Party may become obligated to hold harmless or indemnify the Indemnified Party.
The Indemnified Party shall promptly deliver to the Indemnifying Party a
written notice describing such matter giving rise to any indemnification
hereunder (a "Claim") in reasonable detail and specifying the estimated amount
of the Losses that may be incurred by the Indemnified Party in connection
therewith. If the Indemnifying Party objects in writing to hold harmless or
indemnify the Indemnified Party within five (5) business days following receipt
of such notice, then the Indemnified Party and the Indemnifying Party will
negotiate in good faith to resolve such Claim. If the parties do not resolve
such Claim within ten (10) business days after the Indemnifying Party has first
objected in writing, then the parties may pursue their respective available
remedies hereunder or otherwise.
Section 9.06 Limitations on Indemnity. (a) An Indemnified Party shall
act in good faith and in a commercially reasonable manner to mitigate any
Losses it may suffer.
(b) Notwithstanding any provision of this Article IX, Lazer's obligations
and liabilities hereunder are subject to the limitations set forth in Section
5.14(c) and 5.14(d) hereof.
ARTICLE X
Miscellaneous
Section 10.01 Survival of Representations and Warranties. All
statements, certifications, indemnifications, representations and warranties
made hereby by the parties to this Agreement and their respective covenants,
agreements and obligations to be performed pursuant to the terms hereof shall
not survive the Closing, provided, however, that for purposes of determining
"termination for cause" as defined in the Employment Agreements attached as
Exhibit D hereto notwithstanding any examination by or on behalf of any party
hereto and notwithstanding the consummation of the transactions hereby
contemplated, such covenants, agreements, representations and warranties,
certifications and obligations of Lazer shall survive the closing of the
transactions hereby contemplated for a period of one (1) year from the Closing
Date, except in the case of Sections 3.07, 3.20, 3.21 and 3.24 (such enumerated
representations of Lazer hereinafter referred to as the "Audit
Representations") which shall survive the Closing for a period ending with the
issuance of an audit report relating to the combined audited financial
statements of Acclaim and Lazer for a period subsequent to the Closing,
provided further, however, any representation or warranty or agreement made
hereunder and any indemnity under Article IX hereof shall survive for such
purpose the time at which it would otherwise terminate pursuant to this
sentence, if notice of the inaccuracy or breach thereof (in the case of a
representation or warranty or agreement) or the claim thereunder (in the case
of an indemnity) shall have been given to the party from whom indemnity may be
sought in respect thereof (or to the appropriate entity under the applicable
insurance policy) prior to one (1) year from the Closing Date (or such shorter
period in the case the "Audit Representations").
Section 10.02 Notices. All notices and other communications hereunder
shall be in writing (and shall be deemed given upon receipt) if delivered
personally, sent by facsimile transmission (receipt of which is confirmed) or
by mail to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
1. if Lazer, to:
Lazer-Tron Corporation
4430 Willow Road
Pleasanton, CA 94588
Attention: Mr. Norman B. Petermeier
Facsimile No. (510) 460-0365
with a copy to:
Fenwick & West
Two Palo Alto Square
Palo Alto, CA 94306
Attention: Dennis R. DeBroeck, Esq.
Facsimile No. (415) 857-0361
and
2. if to Acclaim, to
Acclaim Entertainment, Inc.
One Acclaim Plaza
Glen Cove, New York 11542-2708
Attention: Mr. Anthony R. Williams
Facsimile No.: (516) 656-2040
with a copy to
Rosenman & Colin
575 Madison Avenue
New York, NY 10022
Attention: Eric M. Lerner, Esq.
Facsimile No.: (212) 940-8776
Section 10.03 Descriptive Headings. The descriptive headings herein are
inserted for convenience only and are not intended to be part of or to affect
the meaning or interpretation of this Agreement.
Section 10.04 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.
Section 10.05 Entire Agreement; Assignment. This Agreement, the side
letters dated the date hereof entered into concurrently with the execution
hereof (i.e. (i) the agreements of each of Norman Petermeier, Matthew Kelly and
Brian Kelly with respect to their employment agreements, (ii) the agreements of
the Kelly Family Trust and the 1992 Kelly Family Trust with respect to voting
for the Merger, and (iii) the agreement between Lazer and Acclaim regarding
breach of the foregoing agreements) and each of the exhibits hereto
(a) constitute the entire agreement and supersedes all prior agreements and
understandings including the Letter of Intent dated March 7, 1995, both written
and oral, among the parties with respect to the subject matter hereof other
than the Confidentiality Agreement, any provisions of which are inconsistent
with the transactions contemplated by this Agreement being waived hereby but
the provisions of which that are not inconsistent shall survive and (b) shall
not be assigned by operation of law or otherwise. The parties acknowledge that
neither party has any rights or obligations under the Letter of Intent.
Section 10.06 Governing Law and Consent to Jurisdiction. This Agreement
shall be governed and construed in accordance with the laws of the State of
Delaware without regard to any applicable principles of conflicts of law.
Section 10.07 Expenses. Except as otherwise set forth herein, each of
the parties hereto shall bear its own expenses associated with the negotiation
and execution of the Agreement and the consummation of the transactions
contemplated hereby including, without limitation, legal and accounting fees
and expenses.
Section 10.08 Costs of Enforcement. Except as otherwise set forth
herein, the prevailing party in any proceeding brought to enforce any provision
of the Agreement shall be entitled to recover the reasonable fees and costs of
its counsel, plus all other costs of such proceeding.
Section 10.09 Specific Performance. The parties hereto agree that if any
of the provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached, irreparable damage would occur, no
adequate remedy at law would exist and damages would be difficult to determine,
and that the parties shall be entitled to specific performance of the terms
hereof, in addition to any other remedy at law or equity.
Section 10.10 Publicity. Except as otherwise required by law or the
rules of the National Association of Securities Dealers, Inc., neither Lazer or
Acclaim shall, or shall permit any of its subsidiaries to, issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement without prior written approval
of the other party, which approval shall not be unreasonably withheld.
Section 10.11 Parties in Interest. This Agreement shall be binding upon
and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any other
person or persons any rights, benefits or remedies of any nature whatsoever
under or by reason of this Agreement, except pursuant to Article IX hereof.
* * * * *
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
ACCLAIM ENTERTAINMENT, INC. LAZER-TRON CORPORATION
By: /s/ Anthony R. Williams By: /s/ Norman B. Petermeier
Name: Anthony R. Williams Name: Norman B. Petermeier
Title: Executive Vice President Title: Chairman, CEO and President
ACCLAIM ARCADE HOLDINGS, INC.
By: /s/ Anthony R. Williams
Name: Anthony R. Williams
Title: Executive Vice President
Exhibit 99
FOR IMMEDIATE RELEASE
From: ACCLAIM ENTERTAINMENT, INC.
One Acclaim Plaza
Glen Cove, New York 11542-2708
Contact: FOR LAZER-TRON
Norman B. Petermeier
(510) 460-0873
FOR ACCLAIM
(FINANCIAL)
Anthony R. Williams
Dawn Berrie
(MEDIA)
Allyne Mills
(516) 656-5000
ACCLAIM AGREES TO ACQUIRE
LAZER-TRON CORPORATION
GLEN COVE, NY, March 23, 1995 -- Acclaim Entertainment, Inc.
(NASDAQ: AKLM) today announced that it has entered into a
definitive agreement to acquire all the outstanding shares of
Lazer-Tron Corporation (NASDAQ: LZTN), a leading CA-based coin-op
redemption company, in a stock for stock merger transaction.
Lazer-Tron's shares will be exchanged for shares of Acclaim common
stock utilizing a formula which values Lazer-Tron's shares based on
the average of Acclaim's common stock price for the 20 days prior
to the second day prior to the closing. If the average Acclaim
share price is less than $16 per share, Lazer-Tron's shares will be
valued at $8 per share. If the average Acclaim share price is
between $16 and $20 per share, the Lazer-Tron shares will be valued
at 50 percent of the Acclaim share price. If the average Acclaim
share price is greater than $20 per share, the Lazer-Tron shares
will be valued at $10 per share.
"Our acquisition of Lazer-Tron has been received with great
enthusiasm by many of our audiences, as they broaden Acclaim's
offerings in the coin-op segment," said Gregory Fischbach, chairman
of Acclaim. "Lazer-Tron also presents us with further
opportunities to expand our library and exploit new successful
properties across our growing entertainment businesses."
The transaction is subject to certain conditions usual in
transactions of this type, including regulatory approvals and third
party consents, as well as the consent of Lazer-Tron's
shareholders. Acclaim intends to account for the transaction as a
pooling of interests.
Founded in 1988, Lazer-Tron Corporation is an industry leader in
the creation of technologically advanced, coin-operated ticket
redemption games for use in family entertainment centers and other
entertainment venues. As designer, developer, manufacturer and
marketer, Lazer-Tron has created such successful games a Spin-To-
Win(TM), Ribbit Racin(TM), Aftershock(TM) and Pogger(TM), the first
arcade game featuring popular POG(TM) games pieces.
Acclaim's acquisition of Lazer-Tron follows the company's recent
entry into the coin-operated entertainment market through the
establishment of Acclaim Coin-Operated Entertainment, also based in
CA.
"We are proud to be joining forces with Acclaim and look forward to
expanding the reach of our properties into new media," said Norman
Petermeier, president of Lazer-tron. "By combining our coin-op
redemption expertise with Acclaim's marketing and technology we
will create a stronger force in this entertainment category."
Lazer-Tron designs, develops, manufactures and markets a line of
interactive, technologically advanced coin-operated ticket
redemption games for use in family entertainment centers and other
venues. Redemption games award tickets to players based on their
skill level in playing the games and these tickets may be redeemed
for prizes or merchandise. Lazer-Tron is publicly traded on the
NASDAQ National Market System under the symbol LZTN.
Acclaim Entertainment, Inc., with offices in Canada, France,
Germany, Japan, Spain and the United Kingdom, is a leading
worldwide publisher of: software and peripherals for Nintendo,
Sega, Sony, personal computer and CD-ROM hardware systems; coin-
operated arcade games; and comic books under the Valiant, Armada
and Windjammer imprints. Acclaim also operates blue screen and
motion capture studios, and A.D.I., a global sales and distribution
company for products from a variety of entertainment software
publishers, including Acclaim, Digital Pictures and Marvel.
Acclaim, which recently formed a new company with Tele-
Communications, Inc. for electronically distributed interactive
entertainment, is publicly traded on the NASDAQ National Market
System under the symbol AKLM.
