THIS CONFORMING PAPER FORMAT DOCUMENT IS BEING SUBMITTED
PURSUANT TO
RULE 901 (d) OF REGULATIONS S-T.
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
August 12, 2001
(Date of Report)
(Date of earliest event reported)
JOHN WILEY & SONS, INC.
(Exact name of registrant as specified in its charter)
New York
(State or jurisdiction of incorporation)
0-11507 13-5593032
- ------------------------------------ ---------------------------------
Commission File Number IRS Employer Identification Number
605 Third Avenue, New York, NY 10158-0012
- ----------------------------------- ----------------------------------
Address of principal executive offices Zip Code
Registrant's telephone number, including area code: (212) 850-6000
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This is the first page of a 3 page document.
Item 5. Other Events
On August 13, 2001, the Company announced that it had signed a
definitive agreement to acquire Hungry Minds, Inc., the publisher of
the best-selling For Dummies series, the technological Bible and
Visual series, Frommer's travel guides, CliffsNotes, Webster's New
World Dictionary, and other market-leading brands.
Under the terms of the merger agreement, the Company has agreed to pay
an aggregate consideration of approximately $182.5 million,
consisting of $90 million for the fully diluted equity of Hungry
Minds, Inc. and an estimated $92.5 million of outstanding funded debt
that the Company will pay or assume at closing. The acquisition will
be accomplished via a cash tender offer at $6.09 per share by the
Company, to be commenced shortly, for all of Hungry Minds, Inc.
outstanding stock, followed by a cash merger. The tender offer is
expected to be consummated around mid-September 2001. The acquisition
is subject to regulatory clearance, Hungry Minds, Inc. stockholder
approval (if required), and customary closing conditions.
International Data Group, Inc. (IDG), which owns about 76% of Hungry
Minds Inc. outstanding stock, has agreed to support the transaction
and to tender its Hungry Minds, Inc. shares into the Company's tender
offer. It is anticipated that the transaction will be financed by a
new five-year term loan banking facility.
Item 7. Financial Statements, Pro Forma Financial Information, and Exhibits
(c) Exhibits
2.1 Agreement and Plan of Merger dated as of August 12, 2001 among the Company,
HMI Acquistion Corp. and Hungry Minds Inc.
2.2 Voting and Tender Agreement dated as of August 12, 2001 among the Company,
HMI Acquistion Corp., International Data Group, Inc. and IDG
Enterprises, Inc.
2.3 Press Release dated August 13, 2001 entitled, "Wiley to Acquire Hungry
Minds."
"Safe Harbor" Statement under the
Private Securities Litigation Reform Act of 1995
This report contains certain forward-looking statements concerning the Company's
operations, performance, and financial condition. Reliance should not be placed
on forward-looking statements, as actual results may differ materially from
those in any forward-looking statements. Any such forward-looking statements are
based upon a number of assumptions and estimates that are inherently subject to
uncertainties and contingencies, many of which are beyond the control of the
Company, and are subject to change based on many important factors. Such factors
include, but are not limited to (i) the level of investment in new technologies
and products; (ii) subscriber renewal rates for the Company's journals; (iii)
the financial stability and liquidity of journal subscription agents; (iv) the
consolidation of book wholesalers and retail accounts; (v) the market position
and financial stability of key online retailers; (vi) the seasonal nature of the
Company's educational business and the impact of the used book market; (vii)
worldwide economic and political conditions; and (viii) other factors detailed
from time to time in the Company's filings with the Securities and Exchange
Commission. The Company undertakes no obligation to update or revise any such
forward-looking statements to reflect subsequent events or circumstances.
Signature
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.
John Wiley & Sons, Inc.
/S/ Ellis E. Cousens
--------------------------------
Ellis E. Cousens
Executive Vice President and
Chief Financial Officer
Date: August 15, 2001
AGREEMENT AND PLAN OF MERGER
dated as of
August 12, 2001
among
HUNGRY MINDS, INC.,
JOHN WILEY & SONS, INC.
and
HMI ACQUISITION CORP.
TABLE OF CONTENTS
page
ARTICLE 1 THE OFFER............................................................1
Section 1.01 The Offer.......................................1
Section 1.02 Company Action..................................3
Section 1.03 Directors.......................................5
ARTICLE 2 THE MERGER...........................................................6
Section 2.01 The Merger......................................6
Section 2.02 Effective Time..................................6
Section 2.03 Closing.........................................6
Section 2.04 Effects of the Merger...........................7
Section 2.05 Certificate of Incorporation....................7
Section 2.06 Bylaws..........................................7
Section 2.07 Directors and Officers..........................7
ARTICLE 3 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES.........................................7
Section 3.01 Conversion of Company Common Stock..............7
Section 3.02 Dissenting Shares...............................8
Section 3.03 Payment for Shares in the Merger................8
Section 3.04 Stock Options..................................10
Section 3.05 Adjustments....................................11
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF THE COMPANY.......................11
Section 4.01 Organization and Qualification; Subsidiaries...11
Section 4.02 Capitalization.................................12
Section 4.03 Corporate Authorization........................13
Section 4.04 Governmental Authorization.....................13
Section 4.05 Non-contravention..............................13
Section 4.06 SEC Reports; Financial Statements..............14
Section 4.07 Information Supplied...........................14
Section 4.08 Absence of Certain Changes or Events...........15
Section 4.09 Litigation.....................................15
Section 4.10 Compliance with Laws...........................15
Section 4.11 Taxes..........................................15
Section 4.12 Employee Benefit Plans.........................17
Section 4.13 Environmental Matters..........................19
Section 4.14 Intellectual Property..........................20
Section 4.15 Title and Condition of Properties..............22
Section 4.16 Insurance......................................22
Section 4.17 Certain Contracts..............................22
Section 4.18 Employment Matters.............................23
Section 4.19 Finders' Fees..................................24
Section 4.20 Opinion of Financial Advisor...................24
Section 4.21 Voting Requirements............................24
Section 4.22 Inventories; Receivables; Payables.............24
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER..............25
Section 5.01 Organization, Standing and Corporate Power.....25
Section 5.02 Corporate Authorization........................25
Section 5.03 Governmental Authorization.....................25
Section 5.04 Non-contravention..............................25
Section 5.05 Information Supplied...........................26
Section 5.06 Litigation.....................................26
Section 5.07 Finders' Fees..................................26
ARTICLE 6 COVENANTS...........................................................26
Section 6.01 Conduct of Business by the Company.............26
Section 6.02 Other Actions..................................30
Section 6.03 Stockholder Meeting; Proxy Material; Merger
Without Stockholder Meeting....................30
Section 6.04 Access to Information..........................31
Section 6.05 No Solicitation; Other Offers..................31
Section 6.06 Commercially Reasonable Efforts; Notification..33
Section 6.07 Indemnification and Insurance..................35
Section 6.08 Employee Benefits..............................37
Section 6.09 Public Announcements...........................38
Section 6.10 Further Assurances.............................38
Section 6.11 Notices of Certain Events......................38
Section 6.12 Pay-off of Credit Facilities...................39
ARTICLE 7 CONDITIONS TO THE MERGER............................................40
Section 7.01 Conditions to Obligations of Each Party........40
ARTICLE 8 TERMINATION, AMENDMENT AND WAIVER...................................40
Section 8.01 Termination....................................40
Section 8.02 Effect of Termination..........................42
Section 8.03 Fees and Expenses..............................42
Section 8.04 Amendment......................................43
Section 8.05 Extension; Waiver..............................44
Section 8.06 Procedure for Termination, Amendment, Extension
or Waiver......................................44
ARTICLE 9 MISCELLANEOUS.......................................................44
Section 9.01 Non-Survival of Representations and Warranties.44
Section 9.02 Notices........................................44
Section 9.03 No Waivers.....................................45
Section 9.04 Successors and Assigns.........................45
Section 9.05 Governing Law..................................46
Section 9.06 Jurisdiction...................................46
Section 9.07 WAIVER OF JURY TRIAL...........................46
Section 9.08 Counterparts; Effectiveness; Benefit...........46
Section 9.09 Entire Agreement...............................46
Section 9.10 Captions.......................................46
Section 9.11 Severability...................................46
Section 9.12 Specific Performance...........................47
Section 9.13 Interpretation.................................47
Section 9.14 Company Disclosure Memorandum..................47
Section 9.15 Parties in Interest............................47
Section 9.16 Obligation of Parent and the Company...........47
Section 9.17 Certain Definitions............................48
INDEX OF DEFINED TERMS
Term Section
Acquisition Proposal.....................................................6.05(e)
Affiliate................................................................9.17(a)
Agreement...............................................................Recitals
Beneficially.............................................................9.17(b)
Board of Directors.......................................................1.02(a)
Business Day.............................................................9.17(c)
Cancellation Instrument.....................................................3.04
Certificates.............................................................3.03(a)
Closing.....................................................................2.03
Code.....................................................................4.12(b)
COBRA....................................................................4.12(i)
Company.................................................................Recitals
Company Common Stock....................................................Recitals
Company Disclosure Memorandum..........................................Article 4
Company Employees........................................................6.08(a)
Company's Form 10-K ........................................................4.15
Company SEC Reports......................................................4.06(a)
Company Securities.......................................................4.02(b)
Company Stockholder Meeting..............................................6.03(a)
Confidentiality Agreement................................................6.04(c)
Continuing Directors.....................................................1.03(a)
Control..................................................................9.17(a)
Corporate Agent..........................................................6.07(b)
DGCL.....................................................................1.02(a)
Dissenting Shares...........................................................3.02
DOJ......................................................................6.06(b)
Effective Time..............................................................2.02
Employee Plans...........................................................4.12(a)
Environmental Laws....................................................4.13(b)(i)
Environmental Permits................................................4.13(b)(ii)
ERISA....................................................................4.12(a)
Exchange Act.............................................................1.01(a)
Fairness Opinion.........................................................1.02(a)
FTC......................................................................6.06(b)
Governmental Entity.........................................................4.04
Hazardous Substance.................................................4.13(b)(iii)
HSR Act.....................................................................4.04
Indemnified Party........................................................6.07(c)
Information Statement.......................................................4.07
Initial Expiration Date..................................................1.01(a)
Intellectual Property....................................................4.14(g)
IRS......................................................................4.11(f)
Knowledge................................................................9.17(d)
Law......................................................................9.17(e)
Licensed Intellectual Property...........................................4.14(f)
Liens.......................................................................4.01
Material Adverse Effect.....................................................4.01
Material Contract........................................................4.17(a)
Merger..................................................................Recitals
Merger Consideration..................................................3.01(a)(i)
Minimum Condition........................................................1.01(a)
Morgan Stanley...........................................................1.02(a)
Offer...................................................................Recitals
Offer Completion Date....................................................6.03(a)
Offer Documents..........................................................1.01(c)
Offer Price.............................................................Recitals
Option......................................................................3.04
Option Consideration........................................................3.04
Option Plan.................................................................3.04
Other Enterprise.........................................................6.07(d)
Owned Intellectual Property..............................................4.14(f)
Parent..................................................................Recitals
Paying Agent.............................................................3.03(a)
Payment Fund.............................................................3.03(a)
Permits.....................................................................4.10
Person...................................................................9.17(f)
Proxy Statement.............................................................4.04
Purchaser...............................................................Recitals
Required Vote............................................................9.17(g)
Schedule 14D-9...........................................................1.02(b)
Schedule TO..............................................................1.01(c)
SEC......................................................................1.01(b)
Securities Act...........................................................4.06(a)
Shares...................................................................1.01(a)
Significant Subsidiaries.................................................9.17(h)
Subsidiary..................................................................4.01
Superior Proposal........................................................6.05(e)
Surviving Corporation.......................................................2.01
Tax Return...............................................................4.11(f)
Taxes....................................................................4.11(f)
Taxing Authority.........................................................4.11(f)
Termination Fee..........................................................8.03(b)
Transactions.............................................................1.02(a)
Voting and Tender Agreement.............................................Recitals
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as of August 12, 2001
among Hungry Minds, Inc., a Delaware corporation (the "Company"), John Wiley &
Sons, Inc., a New York corporation ("Parent"), and HMI Acquisition Corp., a
Delaware corporation and a direct or indirect wholly-owned subsidiary of Parent
("Purchaser").
WHEREAS, the respective Boards of Directors of Parent, Purchaser and the Company
have determined that it would be advisable and in the best interests of their
respective stockholders for Parent to acquire the Company on the terms and
conditions set forth herein;
WHEREAS, to effectuate the acquisition, it is proposed that Purchaser commence a
cash tender offer, as it may be amended from time to time as permitted under
this Agreement (the "Offer"), to purchase all of the issued and outstanding
shares of Class A Common Stock, $.001 par value per share of the Company (the
"Company Common Stock"), at a purchase price, net to seller in cash, without
interest, of $6.09 per share (the "Offer Price"), upon the terms and subject to
the conditions set forth in this Agreement;
WHEREAS, to effectuate the acquisition, it is further proposed that following
the consummation of the Offer, Purchaser will be merged with and into the
Company (the "Merger"), with (i) the Company continuing as the surviving
corporation in the Merger and (ii) each outstanding share of Company Common
Stock not owned directly or indirectly by Parent or the Company being converted
into the right to receive the highest per share cash consideration paid pursuant
to the Offer;
WHEREAS, also in furtherance of such acquisition, the Board of Directors of each
of Parent, Purchaser and the Company have approved this Agreement and the Merger
following the Offer pursuant to which Purchaser shall merge with and into the
Company and outstanding Shares of Company Common Stock shall be converted into
the right to receive the Offer Price in cash, without interest, all in
accordance with the DGCL and upon the terms and subject to the conditions set
forth herein;
WHEREAS, the Board of Directors of the Company has determined that the
consideration to be paid for each share of Company Common Stock in the Offer and
the Merger is fair to all holders of such shares and has resolved to recommend
that the holders of such shares tender all of their shares pursuant to the Offer
and approve and adopt this Agreement and the Merger upon the terms and subject
to the conditions set forth herein; and
WHEREAS, contemporaneously with the execution and delivery of this Agreement, as
a condition and an inducement to the willingness of Parent and Purchaser to
enter into this Agreement, certain stockholders have executed and delivered to
Parent an agreement pursuant to which they have agreed to take certain actions
with respect to the Offer and the Merger (the "Voting and Tender Agreement");
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements contained in this
Agreement, the parties hereto agree as follows:
ARTICLE 1
THE OFFER
Section 1.01 The Offer. (a) Provided that this Agreement shall not have been
terminated in accordance with Article 8 and none of the events set forth in
Annex A hereto shall have occurred and be continuing, Purchaser shall, and
Parent shall cause Purchaser to, as promptly as practicable after the date
hereof (but in no event later than August 20, 2001) commence (within the meaning
of Rule 14d-2(a) under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) the Offer to purchase any and all outstanding shares of Company
Common Stock (the "Shares"), at a price per share equal to the Offer Price, net
to the seller in cash, without interest, subject to reduction for any applicable
withholding taxes and, if such payment is to be made other than to the
registered holder, any applicable stock transfer taxes payable by such holder.
The Offer will be made pursuant to an offer to purchase and related letter of
transmittal containing the terms and conditions set forth in this Agreement and
Annex A hereto. The initial expiration date of the Offer shall be the twentieth
Business Day from and after the date the Offer is commenced as determined in
accordance with Rule 14d-2(a) under the Exchange Act (the "Initial Expiration
Date"). The obligation of Purchaser to accept for payment, purchase and pay for
any Shares validly tendered pursuant to the Offer and not withdrawn shall be
subject only to the satisfaction of (i) the condition that at least a majority
of the shares of Company Common Stock outstanding on a fully-diluted basis
(taking into account any shares of Company Common Stock owned by Parent or
Purchaser or any affiliate of Parent or Purchaser on the date such Shares are
purchased pursuant to the Offer) have been validly tendered and not withdrawn
prior to the expiration of the Offer (the "Minimum Condition") and (ii) the
other conditions set forth in Annex A hereto; provided, however, that Purchaser
expressly reserves the right to waive any of the conditions to the Offer (other
than the Minimum Condition) and to make any change in the terms or conditions of
the Offer (other than the Minimum Condition) in its sole discretion, subject to
Section 1.01(b).
(b) Purchaser expressly reserves the right to modify the terms
of the Offer; provided, however, that without the prior written consent of the
Company, which consent may be granted or withheld in the Company's sole
discretion, neither Parent nor Purchaser will (i) decrease the Offer Price, (ii)
decrease the number of Shares sought in the Offer, (iii) change the form of
consideration payable in the Offer, (iv) impose conditions to the Offer in
addition to the Minimum Condition and the other conditions set forth in Annex A,
(v) except as provided below or required by any rule, regulation, interpretation
or position of the Securities and Exchange Commission ("SEC") applicable to the
Offer, change the expiration date of the Offer, or (vi) otherwise amend or
change any term or condition of the Offer in a manner adverse to the holders of
Shares. Notwithstanding anything in this Agreement to the contrary, without the
consent of the Company, Purchaser shall have the right to extend the Offer
beyond the Initial Expiration Date in the following events: (i) from time to
time, but in no event later than the date that is ten (10) Business Days from
the Initial Expiration Date (or extended expiration date of the Offer, if
applicable), if, at the Initial Expiration Date (or extended expiration date of
the Offer, if applicable), one or more of the conditions to the Offer (other
than the Minimum Condition, to which this clause does not apply) shall not have
been satisfied or waived, until such conditions are satisfied or waived,
provided, however, that the expiration date of the Offer may not extend beyond
the 60th day after commencement of the Offer; (ii) for any period required by
any rule, regulation, interpretation or position of the SEC or the staff thereof
applicable to the Offer or any period required by applicable Law (as hereinafter
defined); or (iii) if all of the conditions to the Offer are satisfied or waived
but the number of Shares of Company Common Stock validly tendered and not
withdrawn is less than ninety percent (90%) of the then outstanding number of
Shares, provided, however, that the expiration date of the Offer may not extend
beyond the 60th day after the commencement of the Offer; and, provided further,
that Purchaser shall accept and pay for shares validly tendered and not
withdrawn, as soon as reasonably practical, prior to the date of such extension,
shall otherwise meet the requirements of Rule 14d-11 under the Exchange Act in
connection with such extension and shall waive any condition to the consummation
of the Merger other than the conditions in Section 7.01(c) that may fail to be
satisfied during such extension. In addition, Parent and Purchaser agree that
Purchaser shall, if requested by the Company, from time to time extend the Offer
if at the Initial Expiration Date (or any extended expiration date of the Offer,
including pursuant to this sentence, if applicable) no conditions to the Offer,
other than the conditions set forth in clause (a) or clause (b) of Annex A, then
excuse performance by Purchaser under Annex A, for ten (10) Business Days after
such previously scheduled expiration date, but in no event later than December
31, 2001. Upon the satisfaction or waiver of all the conditions to the Offer and
subject to the terms and conditions of this Agreement, Purchaser will, and
Parent will cause Purchaser to, accept for payment, purchase and pay for, in
accordance with the terms of the Offer, all Shares of Company Common Stock
validly tendered and not withdrawn pursuant to the Offer as soon as reasonably
practicable after the expiration of the Offer.
(c) As soon as reasonably practicable on the date of commencement of the Offer,
Parent and Purchaser shall file or cause to be filed with the SEC a Tender Offer
Statement on Schedule TO with respect to the Offer (together with any amendments
or supplements thereto, the "Schedule TO"), which shall contain or incorporate
by reference the offer to purchase and forms of the related letter of
transmittal and such other ancillary documents and instruments pursuant to which
the Offer will be made (such Schedule TO and such documents included therein
pursuant to which the Offer will be made, together with any supplements or
amendments thereto, the "Offer Documents"). Parent and Purchaser agree that the
Offer Documents will comply as to form and content in all material respects with
the applicable provisions of the federal securities Laws and, on the date filed
with the SEC and on the date first published, sent or given to the Company's
stockholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements made therein, in light of the circumstances under which
they were made, not misleading, except that no representation is made by Parent
or Purchaser with respect to information supplied by the Company in writing for
inclusion in the Offer Documents. Parent, Purchaser and the Company each agree
to correct promptly any information provided by it for use in the Offer
Documents if and to the extent that such information shall have become false or
misleading in any material respect and to supplement the information provided by
it specifically for use in the Schedule TO or the other Offer Documents to
include any information that shall become necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Parent and Purchaser agree to take all steps necessary to cause
the Offer Documents as so corrected or supplemented to be filed with the SEC and
to be disseminated to holders of Shares of Company Common Stock, in each case as
and to the extent required by applicable federal securities Laws. The Company
and its counsel shall be given a reasonable opportunity to review and comment on
the Offer Documents prior to their being filed with the SEC. Parent and
Purchaser agree to provide to the Company and its counsel any comments or other
communications which Parent, Purchaser or their counsel may receive from the
staff of the SEC with respect to the Offer Documents promptly after receipt
thereof.
(d) Parent shall provide or cause to be provided to Purchaser on a timely basis
the funds necessary to accept for payment, and pay for, any shares of Company
Common Stock that Purchaser becomes obligated to accept for payment, and pay
for, pursuant to the Offer.
Section 1.02 Company Action. (a) The Company hereby approves of and consents to
the Offer and represents and warrants that the board of directors of the Company
(the "Board of Directors"), at a meeting duly called and held, has (i)
[unanimously] determined that this Agreement and the transactions contemplated
hereby, including, without limitation, the Offer, the Merger and the purchase of
Shares of Company Common Stock contemplated by the Offer (collectively the
"Transactions"), are advisable and fair to and in the best interests of the
Company and the Company's stockholders, (ii) [unanimously] approved of and
adopted this Agreement and the Transactions in accordance with the requirements
of the General Corporation Law of the State of Delaware (the "DGCL") so that the
provisions of Section 203 of the DGCL are not applicable to the Transactions
provided for, referred to or contemplated by, this Agreement, and (iii) resolved
to recommend that the stockholders of the Company accept the Offer, tender their
Shares of Company Common Stock pursuant to the Offer and approve and adopt this
Agreement and the Merger. Notwithstanding the foregoing, such recommendation may
be withdrawn, modified or amended as permitted by Section 6.05(c). The Company
hereby consents to the inclusion in the Offer Documents, the Schedule 14D-9 (as
herein defined) and the Proxy Statement (as herein defined), if any, of such
recommendation of the Board of Directors. The Company represents and warrants
that the Board of Directors has received the written opinion (the "Fairness
Opinion") of Morgan Stanley & Co. Incorporated ("Morgan Stanley"), stating that,
as of the date of such opinion, the proposed consideration to be received by the
holders of Shares of Company Common Stock pursuant to the Offer and the Merger
is fair to such holders from a financial point of view. The Company acknowledges
that the Voting and Tender Agreement is being executed and delivered
contemporaneously herewith by holders of a majority of the outstanding Shares
[and that the Company has also been advised by each of its directors and by each
corporate officer who, as of the date hereof, is aware of the Transactions and
is not a party to or bound by such Voting and Tender Agreement, that each such
person intends to tender pursuant to the Offer all Shares of Company Common
Stock owned, of record or beneficially, by such person which he or she may sell
without liability under Section 16(b) of the Exchange Act, unless the Company's
recommendation shall have been withdrawn or materially modified as permitted by
Section 6.05(c).]
(b) As soon as reasonably practicable on the date of
commencement of the Offer, the Company shall file with the SEC and disseminate
to holders of Shares of Company Common Stock, in each case as and to the extent
required by applicable federal securities Laws, a Solicitation/Recommendation
Statement on Schedule 14D-9 (together with any amendments or supplements
thereto, the "Schedule 14D-9") that shall reflect the recommendation of the
Board of Directors referred to in clause (iii) of Section 1.02(a) hereof. The
Schedule 14D-9 will comply in all material respects with the provisions of
applicable federal securities Laws and, on the date filed with the SEC and on
the date first published, sent or given to the Company's stockholders, shall not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation is made by the Company with respect to
information supplied by Parent or Purchaser in writing for inclusion in the
Schedule 14D-9. The Company, Parent and Purchaser each agree to correct promptly
any information provided by it for use in the Schedule 14D-9 if and to the
extent that such information shall have become false or misleading in any
material respect and to supplement the information provided by it specifically
for use in the Schedule 14D-9 to include any information that shall become
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. The Company agrees to take all steps
necessary to cause the Schedule 14D-9 as so corrected or supplemented to be
filed with the SEC and to be disseminated to holders of Shares of Company Common
Stock, in each case as and to the extent required by applicable federal and
state securities Laws. Parent and its counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 prior to its being filed
with the SEC. The Company agrees to provide to Parent and its counsel any
comments or other communications which the Company or its counsel may receive
from the staff of the SEC with respect to the Schedule 14D-9 promptly after
receipt thereof. Parent, Purchaser and the Company each hereby agree to provide
promptly such information necessary to prepare the exhibits and schedules to the
Schedule 14D-9 and the Offer Documents which the respective party responsible
therefor may reasonably request.
(c) The Company will cause its transfer agent promptly to furnish Parent and
Purchaser with a list of the Company's stockholders, mailing labels and any
available listings or computer file containing the names and addresses of all
record holders of Shares of Company Common Stock and lists of securities
positions of Shares of Company Common Stock held in stock depositories as of a
recent date and to provide to Parent and Purchaser such additional information
(including, without limitation, updated lists of stockholders, mailing labels
and lists of securities positions) and such other assistance as Parent or
Purchaser or their agents may reasonably request in connection with the Offer.
Subject to the requirements of applicable Law, and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Transactions, Parent and Purchaser and each of their
affiliates, associates and agents will hold in confidence the information
contained in any such labels, listings and files, will use such information only
in connection with the Offer and the Merger and, if this Agreement is
terminated, will deliver, and will cause their agents to deliver, to the Company
all copies and any extracts or summaries from such information then in their
possession or control.
Section 1.03 Directors. (a) Promptly following the purchase of and payment for
the number of Shares of Company Common Stock that satisfies the Minimum
Condition, and from time to time thereafter, Purchaser shall be entitled to
designate for election as directors of the Company such number of directors,
rounded up to the next whole number, as is equal to the product of (i) the total
number of directors of the Company constituting the whole Board of Directors
(giving effect to any increase in the number of directors in order to comply
with this Section 1.03) and (ii) the percentage that the voting power of Shares
of Company Common Stock beneficially owned by Parent and Purchaser (including
Shares of Company Common Stock paid for pursuant to the Offer), upon such
payment, bears to the total voting power of Shares of Company Common Stock then
outstanding, and the Company shall take all action within its power to cause
Purchaser's designees to be elected or appointed to the Board of Directors,
including, without limitation, increasing the number of directors, and seeking
and accepting resignations of incumbent directors. At such time, the Company
will also, upon the request of Parent or Purchaser, use its reasonable best
efforts to cause individual directors designated by Purchaser to constitute the
number of members, rounded up to the next whole number, on (i) each committee of
the Board of Directors other than any such committee of the Board of Directors
established to take action under this Agreement and (ii) the board of directors
of each Significant Subsidiary (as herein defined) of the Company, and each
committee thereof, that represents the same percentage as Purchaser's designees
represent on the Board of Directors. Notwithstanding the foregoing, in the event
that Purchaser's designees are appointed or elected to the Board of Directors,
the Board of Directors shall at all times until the Effective Time (as defined
herein) have at least two directors who are directors on the date of this
Agreement or otherwise not affiliates of Parent (the "Continuing Directors");
provided that in the event that the number of Continuing Directors shall be
reduced below two for any reason whatsoever, the Board of Directors shall cause
the person designated by the remaining Continuing Director to fill such vacancy
and such person shall be deemed to be a Continuing Director for all purposes of
this Agreement or, if no Continuing Directors then remain, the other directors
of the Company then in office shall designate two persons to fill such vacancies
who are not officers, directors, employees or affiliates of the Company or
Parent or any of their respective Subsidiaries and such persons shall be deemed
to be Continuing Directors for all purposes of this Agreement.
(b) The Company's obligations to appoint Purchaser's designees to the Board of
Directors shall be subject to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder. The Company shall promptly take all actions and shall
include in the Schedule 14D-9 (or an amendment thereto or an information
statement pursuant to Rule 14f-1 if Purchaser has not theretofore designated
directors) such information with respect to the Company and its officers and
directors, as Section 14(f) and Rule 14f-1 require in order to fulfill its
obligations under this Section. Parent and Purchaser shall supply to the
Company, and be solely responsible for, any information with respect to
themselves and their nominees, officers, directors and affiliates required by
Section 14(f) and Rule 14f-1.
(c) Following the election or appointment of Purchaser's designees pursuant to
Section 1.03(a) and until the Effective Time, the approval of the Continuing
Directors shall be required to authorize (and such authorization shall
constitute the authorization of the Company's Board of Directors and no other
action on the part of the Company, including any action by any other directors
of the Company, shall be required to authorize) any termination of this
Agreement by the Company, any amendment of this Agreement, any amendment of the
certificate of incorporation or bylaws of the Company inconsistent with this
Agreement, any extension of time for performance of any obligation or action
hereunder by Parent or Purchaser, any waiver of any condition to Parent's or
Purchaser's obligations hereunder or any of the Company's rights hereunder or
any material transaction with Parent, Purchaser or any affiliate thereof (other
than the loan transaction contemplated in Section 6.12 hereof).
ARTICLE 2
THE MERGER
Section 2.01 The Merger. At the Effective Time and upon the terms and subject to
the conditions of this Agreement, Purchaser shall be merged with and into the
Company in accordance with applicable Law, whereupon the separate existence of
Purchaser shall cease, and the Company shall be the surviving corporation (the
"Surviving Corporation"). Subject to the terms and conditions of this Agreement,
Parent, Purchaser and the Company shall cause the Effective Time (as hereinafter
defined) to occur as soon as practicable after the earlier of (i) the Company
Stockholder Meeting (as herein defined) or (ii) the purchase by Purchaser
pursuant to the Offer of ninety percent (90%) or more of the Shares.
Section 2.02 Effective Time. The Merger shall become effective at such time as a
certificate of merger executed in accordance with the relevant provisions of the
DGCL is duly filed with the Secretary of State of the State of Delaware in
accordance with the DGCL or at such later time as may be specified in the
certificate of merger (the "Effective Time").
Section 2.03 Closing. Unless this
Agreement shall have been terminated and the Transactions contemplated herein
abandoned pursuant to Section 8.01 and subject to the satisfaction and waiver of
the conditions set forth in Article 7, the closing of the Merger (the "Closing")
shall take place at 10:00 a.m. on a date to be specified by the parties, which
shall be no later than the second Business Day after satisfaction or waiver of
the conditions set forth in Article 7 (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to the fulfillment or
waiver of those conditions), at the offices of Fulbright & Jaworski L.L.P., 666
Fifth Avenue, New York, New York 10103, unless the parties agree to another
time, date or place in writing. At the Closing, subject to satisfaction or
waiver of all of the conditions to the Merger set forth in Article 7, the
Purchaser and the Company shall cause the certificate of merger to be filed with
the Secretary of State of the State of Delaware in accordance with the DGCL and
make all other filings, if any, required by applicable Law in connection with
the Merger.
Section 2.04 Effects of the Merger. From and after the Effective
Time, the Merger shall have the effects set forth in Section 259 of the DGCL.
Section 2.05 Certificate of Incorporation. The certificate of incorporation of
the Purchaser at the Effective Time shall be the certificate of incorporation of
the Surviving Corporation, until amended in accordance with applicable Law.
Section 2.06 Bylaws. The bylaws of the Purchaser at the Effective Time shall be
the bylaws of the Surviving Corporation, until amended in accordance with
applicable Law.
Section 2.07 Directors and Officers. From and after the Effective Time, until
successors are duly elected or appointed and qualified, or until their earlier
death, resignation or removal, in accordance with applicable Law, (i) the
directors of Purchaser at the Effective Time shall be the directors of the
Surviving Corporation and (ii) the officers of the Company at the Effective Time
shall be the initial officers of the Surviving Corporation; provided that, upon
the request of Parent or Purchaser, the Company shall cause any officers of the
Company to be removed at the Effective Time.
ARTICLE 3
EFFECT OF THE MERGER ON THE CAPITAL
STOCK OF THE CONSTITUENT CORPORATIONS;
EXCHANGE OF CERTIFICATES
Section 3.01 Conversion of Company Common Stock. (a) At the Effective Time, by
virtue of the Merger and without any other action on the part of the holder
thereof:
(i) each Share of Company Common Stock outstanding immediately
prior to the Effective Time (other than Shares to be canceled
in accordance with Section 3.01 (a)(iii) below and Dissenting
Shares (as defined in Section 3.02 below)) shall be converted
into the right to receive the Offer Price, net to the seller
in cash, without interest (the "Merger Consideration"), upon
the surrender of the certificate representing such Share; and
(ii) each share of common stock of Purchaser outstanding
immediately prior to the Effective Time shall be converted
into and become such number of fully paid and non-assessable
shares of common stock of the Surviving Corporation as is
equal to (A) the aggregate number of shares that would be
subject to any Options (as hereinafter defined) that remain
outstanding after the Effective Time, if any, plus (B) one,
and such shares shall constitute the only outstanding shares
of capital stock of the Surviving Corporation; and
(iii) each Share of Company Common Stock that is held by the Company
in its treasury and all Shares of Company Common Stock that
are owned, directly or indirectly, by Parent or the Company or
any of their respective Subsidiaries shall automatically be
canceled and retired and shall cease to exist and shall not be
converted into the right to receive the Merger Consideration
or any other consideration whatsoever.
(b) At the Effective Time, holders of Company Common Stock shall cease to be,
and shall have no voting or other rights as, stockholders of the Company, other
than to receive the Merger Consideration and any dividend or other distribution
with respect to the Company Common Stock with a record date occurring prior to
the Effective Time. From and after the Effective Time, there shall be no
transfers on the stock transfer records of the Company of any Shares of Company
Common Stock that were outstanding immediately prior to the Effective Time.
Section 3.02 Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, Shares outstanding immediately prior to the Effective Time and
held by a holder who has not voted in favor of the Merger or consented thereto
in writing and who has complied with the relevant provisions of Section 262 of
the DGCL, if such Section 262 provides for appraisal rights for such Shares in
the Merger ("Dissenting Shares"), shall not be converted into or be exchangeable
for the right to receive the Merger Consideration as provided in Section
3.01(a)(i) and instead such holder of Dissenting Shares shall be entitled to
receive payment of the appraised value of such Dissenting Shares in accordance
with the provisions of such Section 262 unless and until such holder fails to
perfect or withdraws or otherwise loses his right to appraisal and payment under
the DGCL. If, after the Effective Time, any such holder fails to perfect or
withdraws or loses his right to appraisal, such Dissenting Shares shall
thereupon be treated as if they had been converted as of the Effective Time into
the right to receive the Merger Consideration, if any, to which such holder is
entitled, without interest or dividends thereon, upon the surrender in the
manner provided in Section 3.03 of the certificate(s) which formerly represented
Shares. The Company shall give Parent prompt written notice of any demands
received by the Company for appraisal of Shares, attempted withdrawals of such
demands and any other instruments served pursuant to the DGCL and received by
the Company relating to stockholders' rights of appraisal and, prior to the
Effective Time, Parent shall have the right to direct all negotiations and
proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands. If any
dissenting stockholder shall fail to perfect or shall have effectively withdrawn
or lost the right to dissent, the Shares held by such dissenting stockholder
shall thereupon be treated as though such Shares had been converted into the
right to receive the Merger Consideration pursuant to Section 3.01.
Section 3.03 Payment for Shares in the Merger. (a) Prior to the Effective Time,
Parent shall appoint an agent (the "Paying Agent") reasonably acceptable to the
Company for the purpose of exchanging certificates representing Shares of
Company Common Stock (the "Certificates") for the Merger Consideration. At or
prior to the Effective Time, Parent or Purchaser shall deposit with the Paying
Agent, in trust for the benefit of the holders of Shares of Company Common
Stock, cash in immediately available funds sufficient to pay the Merger
Consideration to be paid in respect of all Shares of Company Common Stock then
outstanding (such cash being hereinafter referred to as the "Payment Fund");
provided, however, that no such deposit shall relieve Parent or Purchaser of its
obligation to pay the Merger Consideration. The Payment Fund shall not be used
for any other purpose. The Payment Fund shall be invested by the Paying Agent as
directed by Parent or the Surviving Corporation pending payment thereof by the
Paying Agent to the holders of record of Shares of Company Common Stock.
Earnings from such investment shall be the sole and exclusive property of Parent
and the Surviving Corporation, and no part of such earnings shall accrue to the
benefit of holders of record of Shares of Company Common Stock.
(b) As soon as reasonably practicable after the Effective Time, Parent will
cause the Paying Agent to send to each holder of record of Shares of Company
Common Stock at the Effective Time (other than holders of Shares of Company
Common Stock referred to in Section 3.01(a)(iii)) a letter of transmittal (which
shall specify that delivery shall be effective, and risk of loss and title shall
pass, only upon proper delivery of the Certificates representing such Shares to
the Paying Agent and will be in such form and have such other provisions as
Parent reasonably specifies) and instructions for use in effecting the surrender
of Certificate(s) for payment of the Merger Consideration for the Shares
represented thereby.
(c) Each holder of record of Shares of Company Common Stock that have been
converted into the right to receive the Merger Consideration will be entitled to
receive, upon surrender to the Paying Agent of one or more Certificates,
together with a properly completed letter of transmittal, the Merger
Consideration in respect of each Share of Company Common Stock represented by
such Certificates. Until so surrendered, each such Certificate shall represent
after the Effective Time for all purposes only the right to receive such Merger
Consideration. No interest shall be paid or accrued on any amount payable upon
surrender of any Certificate.
(d) If any portion of the Merger Consideration is to be paid to a Person (as
herein defined) other than the Person in whose name the surrendered Certificate
is registered, it shall be a condition to such payment that the Certificate so
surrendered shall be properly endorsed or otherwise be in proper form for
transfer and that the Person requesting such payment shall pay to the Paying
Agent any transfer or other taxes required as a result of such payment to a
Person other than the registered holder of such Certificate or establish to the
satisfaction of the Paying Agent that such tax has been paid or is not payable.
(e) Each of the Surviving Corporation and Parent shall be entitled to deduct and
withhold from the consideration otherwise payable to any Person pursuant to this
Article 3 such amounts as it is required to deduct and withhold with respect to
the making of such payment under any provision of federal, state, local or
foreign tax Law. If the Surviving Corporation or Parent, as the case may be, so
withholds amounts, such amounts shall be treated for all purposes of this
Agreement as having been paid to the holder of the Shares of Company Common
Stock in respect of which the Surviving Corporation or Parent, as the case may
be, made such deduction and withholding.
(f) If any Certificate shall have been lost, stolen or destroyed, upon the
making of an affidavit of that fact by the Person claiming such Certificate to
be lost, stolen or destroyed and, if required by the Surviving Corporation, the
posting by such Person of a bond, in such reasonable amount as the Surviving
Corporation may direct, as indemnity against any claim that may be made against
it with respect to such Certificate, the Paying Agent will pay, in exchange for
such lost, stolen or destroyed Certificate, the Merger Consideration to be paid
in respect of the Shares of Company Common Stock represented by such
Certificate, as contemplated by this Article.
(g) At the Effective Time, the stock transfer books of the Company shall be
closed and there shall be no further registration of transfers of Shares of
Company Common Stock. If, after the Effective Time, Certificates evidencing
ownership of the Shares outstanding immediately prior to the Effective Time are
presented to the Surviving Corporation, they shall be canceled and exchanged for
the Merger Consideration provided for, and in accordance with the procedures set
forth, in this Article 3.
(h) Any portion of the Payment Fund (and any interest or other income earned
thereon) that remains unclaimed by the holders of Shares of Company Common Stock
one year after the Effective Time shall be returned to Parent, upon demand, and
any such holder who has not exchanged Shares of Company Common Stock for the
Merger Consideration in accordance with this Section 3.03 prior to that time
shall thereafter look only to the Surviving Corporation for payment of the
Merger Consideration in respect of such Shares, without any interest thereon.
Notwithstanding the foregoing, neither the Paying Agent nor any party hereto
shall be liable to any holder of Shares of Company Common Stock for any amount
paid to a public official pursuant to applicable abandoned property, escheat or
similar Laws.
(i) The Surviving Corporation shall pay all charges and expenses of the Paying
Agent.
Section 3.04 Stock Options. As of the Effective Time, each outstanding stock
option or warrant to purchase Shares of Company Common Stock (an "Option" and,
collectively, the "Options"), whether granted under the 1998 Stock Plan (the
"Option Plan") or otherwise, whether or not then vested or exercisable, shall be
converted (to the extent any such Option is convertible by the Company under its
terms) into the right to receive from the Company an amount of cash equal to the
product of (i) the number of shares of Company Common Stock subject to the
Option and (ii) the excess, if any, of the Merger Consideration over the
exercise price per share of Company Common Stock of such Option (the "Option
Consideration"). Prior to the Effective Time, the Company shall take all steps
necessary to give written notice to each holder of an Option (to the extent that
notice is required under the terms of such Option) that (i) all Options shall be
canceled (to the extent that the Company can terminate any such Option under its
terms) effective as of the Effective Time and (ii) upon the execution and
delivery to the Company by such holder of an instrument acknowledging
cancellation of all Options held by such holder effective as of the Effective
Time ("Cancellation Instrument"), the Company shall pay such holder, promptly
following the Effective Time, the Option Consideration for all Options held by
such holder. The Board of Directors or any committee thereof responsible for the
administration of the Option Plan shall take any and all action necessary to
effectuate the matters described in this Section 3.04 on or before the Effective
Time. Section 4.02 sets forth the number of shares of Company Common Stock
reserved for issuance upon exercise of outstanding Options. Any amounts payable
pursuant to this Section 3.04 shall be subject to any required withholding of
taxes and shall be paid without interest. Parent agrees to provide the Company
with sufficient funds to permit the Company to satisfy its obligations under
this Section 3.04.
Section 3.05 Adjustments. Subject to Section 6.01(b), if,
during the period between the date of this Agreement and the Effective Time, any
change in the outstanding shares of capital stock of the Company shall occur by
reason of any reclassification, recapitalization, stock split or combination,
exchange or readjustment of shares, or stock dividend thereon with a record date
during such period, the Merger Consideration and any other amounts payable
pursuant to this Agreement shall be appropriately adjusted.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the disclosure memorandum delivered by the
Company to Parent on or prior to the execution of this Agreement (the "Company
Disclosure Memorandum") (with specific reference to the section or subsection of
this Agreement to which the information stated in such disclosure relates and
such other sections or subsections to the extent a matter is disclosed in such a
way to make its relevance to such other sections or subsections readily
apparent) or in the Company SEC Reports (as defined herein), the Company
represents and warrants to Parent and Purchaser as follows:
Section 4.01 Organization and Qualification; Subsidiaries. The Company and each
of its Significant Subsidiaries is a corporation duly organized, validly
existing and in good standing under the Laws of the jurisdiction in which it is
incorporated and has the requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
The Company and each of its Significant Subsidiaries is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
the nature of its business or the ownership or leasing of its properties makes
such qualification or licensing necessary, other than in such jurisdictions
where the failure to be so qualified or licensed (individually or in the
aggregate) would not reasonably be expected to have a Material Adverse Effect on
the Company. As used in this Agreement, "Material Adverse Effect" means, with
respect to any Person, any change, result, effect, event, occurrence or state of
facts (or any development that has had or is reasonably likely to have any
change or effect) that, individually or in the aggregate with any such other
change, result, effect, event, occurrence or state of facts, is or would
reasonably be expected to be, materially adverse (even if not (i) foreseeable or
known as of the date of this Agreement or (ii) constituting a breach of a
representation, warranty or covenant set forth herein) to the business,
condition (financial or otherwise), assets, liabilities, results of operations
or prospects (including EBITDA) of such Person and its Subsidiaries, taken as a
whole, or which is or would reasonably be expected to be materially adverse to
the ability of such Person to perform on a timely basis any of its material
obligations under this Agreement or to consummate the Transactions contemplated
hereby, provided, however, none of the following shall be deemed in themselves,
either alone or in combination, to constitute, and none of the following shall
be taken into account in determining whether there has been, a Material Adverse
Effect: (i) any change in the market price or trading volume of the capital
stock of such Person after the date hereof, (ii) changes, events or occurrences
in the United States securities markets which are not specific to such Person,
(iii) any adverse changes, events, developments or effects arising from or
relating to general business or economic conditions which are not specific to
such Person and its Subsidiaries, (iv) any adverse change, result, event,
development, state of facts or effect attributable to the announcement or
pendency of the Transactions (including any cancellations of or delays in
customer agreements, any reduction in sales, any disruption in supplier,
distributor, partner or similar relationships or any loss of employees), or
resulting from or relating to compliance with the terms of, or the taking of any
action required by, this Agreement, and (v) any adverse change, result, event,
development or effect arising from or relating to any change in U.S. generally
accepted accounting principles. The term "Subsidiary" means as to any Person any
corporation or other legal entity of which such Person controls (either alone or
through or together with any other Subsidiary) or owns, directly or indirectly,
more than 50% of the capital stock or other ownership interests the holders of
which are generally entitled to vote for the election of the board of directors
or other governing body of such corporation or other legal entity. Section 4.01
of the Company Disclosure Memorandum lists each Subsidiary of the Company.
Unless the context otherwise requires, when used herein "Subsidiary" refers to
each Subsidiary of the Company. The Company has made available to Parent
complete and correct copies of its certificate of incorporation and bylaws and
the certificates of incorporation and bylaws (or comparable charter documents)
of its Significant Subsidiaries, in each case as amended to the date hereof. All
of the outstanding shares of capital stock or other ownership interests of each
such Subsidiary have been validly issued and are duly authorized, fully paid and
nonassessable and are owned by the Company, by a wholly-owned Subsidiary of the
Company or by the Company and another wholly-owned Subsidiary, in each case,
free and clear of all pledges, claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever (collectively, "Liens"), and free of
any restriction on the right to vote, sell or otherwise dispose of such capital
stock or other ownership interests, except for restrictions imposed by
applicable securities Laws and except as set forth in the Company Disclosure
Memorandum. Other than director qualifying shares, there are no outstanding (i)
securities of any Subsidiary of the Company convertible into or exchangeable for
shares of capital stock or other ownership interests in the Company or any
Subsidiary of the Company or (ii) options or other rights (including, without
limitation, any subscriptions, warrants, calls, stock appreciation rights,
commitments or agreements of any character) to acquire from any of the Company's
Subsidiaries, or other obligation of any of the Company's Subsidiaries to issue,
any capital stock or other ownership interests in, or any securities convertible
into or exchangeable for any capital stock or other ownership interests in, any
Subsidiary. Other than ownership securities representing an investment of less
than 2% in any publicly traded company and the capital stock or other ownership
interests of its Subsidiaries, the Company does not own, directly or indirectly,
any capital stock or other ownership interest in any corporation, partnership,
joint venture or other entity.
Section 4.02 Capitalization. (a) The authorized capital stock of the Company
consists of 25,400,000 shares of common stock, $.001 par value per share, of
which 25,000,000 shares have been designated as Class A Common Stock, and
400,000 shares have been designated as Class B Common Stock, and 5,000,000
shares of $.001 par value preferred stock. As of June 30, 2001 there were
outstanding: (1) 14,780,548 shares of Class A Common Stock; (2) no shares of
Class B Common Stock; (3) no shares of preferred stock; and (4) Options to
purchase an aggregate of 2,200,113 shares of Class A Common Stock. Since June
30, 2001, there have been no issuances of shares of the capital stock of the
Company or any other securities of the Company and since June 30, 2001, no
Options of the Company have been granted. All shares of Company Common Stock
outstanding as of the date hereof have been duly authorized and validly issued
and are fully paid and nonassessable. All shares of Class A Common Stock
issuable upon exercise of outstanding Options have been duly authorized and,
when issued in accordance with the terms thereof, will be validly issued, fully
paid and nonassessable.
(b) Except as set forth in Section 4.02(a), there are no outstanding (i) shares
of capital stock or voting securities of the Company, (ii) securities of the
Company convertible into or exchangeable for shares of capital stock or voting
securities of the Company or (iii) Options or other rights (including, without
limitation, any subscriptions, warrants, calls, stock appreciation rights,
commitments or agreements of any character) to acquire from the Company or other
obligation of the Company to issue, any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company (the items in clauses (i), (ii) and (iii) being
referred to collectively as the "Company Securities"). There are no outstanding
obligations of the Company or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any of the Company Securities. Without limiting the generality
of the foregoing, neither the Company nor any of its Subsidiaries has adopted a
shareholder rights plan or similar plan or arrangement.
(c) There are no bonds, debentures, notes or other indebtedness of the Company
having the right to vote (or convertible into securities having the right to
vote) on any matters on which stockholders of the Company may vote.
(d) There are no contracts, voting, trusts or other agreements or understandings
(other than the Voting and Tender Agreement) to which the Company or any of its
Subsidiaries is a party or by which it is bound with respect to the voting of
any shares of capital stock of the Company or any of the Subsidiaries.
Section 4.03 Corporate Authorization. (a) The Company has the requisite
corporate power and authority to enter into this Agreement and, subject to
approval, if necessary, of the Merger by the Company's stockholders in
accordance with the DGCL, to consummate the transactions contemplated by this
Agreement. The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of the Company, subject to approval, if necessary, of the Merger by the
Company's stockholders in accordance with the DGCL. This Agreement has been duly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except that such enforceability (i) may be limited by bankruptcy,
insolvency, moratorium or other similar laws affecting or relating to the
enforcement of creditors' rights generally and (ii) is subject to general
principles of equity.
(b) The Board of Directors has adopted such resolutions as are necessary so that
the provisions of Section 203 of the DGCL are inapplicable to the Transactions
contemplated by this Agreement.
Section 4.04 Governmental Authorization. No consent, approval, notice to,
permit, order or authorization of, or registration, declaration or filing with,
any federal, state or local government or any court, administrative agency,
commission or other governmental or regulatory authority or agency, domestic or
foreign (a "Governmental Entity") or any Person, is required by or with respect
to the Company or any of its Subsidiaries in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated hereby, except for (a) the filing of a premerger
notification and report form by the Company under the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), (b) the filing
with the SEC of (i) the Schedule 14D-9, (ii) a proxy statement relating to the
approval by the Company's stockholders of this Agreement (as amended or
supplemented from time to time, the "Proxy Statement"), if required, and (iii)
such reports and information statements under the Exchange Act as may be
required in connection with this Agreement and the transactions contemplated by
this Agreement, (c) the filing of the certificate of merger with the Delaware
Secretary of State and appropriate documents with the relevant authorities of
other states in which the Company is qualified to do business, (d) in connection
with any state or local tax which is attributable to the beneficial ownership of
the Company's or its Subsidiaries' real property, if any, (e) as may be required
by any applicable state securities or "blue sky" Laws or state takeover Laws,
(f) such filings, consents, approvals, orders, registrations and declarations as
may be required under the Laws of any foreign country in which the Company or
any of its Subsidiaries conducts any business or owns any assets, and (g) such
other consents, approvals, notices to, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.
Section 4.05 Non-contravention. The execution and delivery of this Agreement by
the Company does not, and performance by the Company of its obligations under
this Agreement and the consummation of the transactions contemplated hereby will
not (a) contravene, conflict with, constitute or result in any violation,
default or breach of or require the consent, waiver or notice under any term or
provision of, or result in the reduction or the loss of any benefit to the
Company or the creation or acceleration of any rights of any third party or any
obligations of the Company under (i) the certificate of incorporation of the
Company, (ii) the bylaws of the Company (b), assuming compliance with the
matters referred to in Section 4.04, contravene, conflict with, constitute or
result in any violation, default or breach of any provision of any applicable
Law, regulation, judgment, injunction, order or decree, (c) require any consent
or other action by any Person under, constitute a default under, or cause or
permit the termination, cancellation, acceleration or other change of any right
or obligation or the loss of any benefit to which the Company or any of its
Subsidiaries is entitled under any provision of any agreement or other
instrument binding upon the Company or any of its Subsidiaries or any license,
franchise, permit, certificate, approval or other similar authorization
affecting, or relating in any way to, the assets, or business of the Company and
its Subsidiaries or (d) result in the creation or imposition of any Lien on any
asset of the Company or any of its Subsidiaries, except, in the case of clauses
(b), (c) and (d), for such matters as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
Section 4.06 SEC Reports; Financial Statements. (a) The Company has filed with
the SEC all reports, schedules, forms, statements and other documents required
to be filed with the SEC since July 27, 1998, including the financial statements
and schedules provided therein or incorporated by reference therein (the
"Company SEC Reports"). As of their respective dates, the Company SEC Reports
complied as to form in all material respects with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), or the Exchange Act,
as the case may be, and the rules and regulations of the SEC promulgated
thereunder applicable to such Company SEC Reports, and none of the Company SEC
Reports 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 under which they were made,
not misleading.
(b) The consolidated financial statements of the Company included or
incorporated by reference in the Company SEC Reports, in each case: (i) comply
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto, (ii) have
been prepared in accordance with U.S. generally accepted accounting principles
(except, in the case of unaudited statements, as permitted by Form 10-Q of the
SEC) applied on a consistent basis during the periods involved (except as may be
indicated in the notes to such financial statements) and (iii) fairly present in
all material respects the consolidated financial position of the Company and its
consolidated Subsidiaries as of the date thereof and the consolidated results of
their operations and cash flows for the period then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments). Except as set
forth in the Company Disclosure Memorandum or in the Company SEC Reports and,
except for liabilities and obligations incurred under this Agreement or in
connection with the Transactions, neither the Company nor any of its
Subsidiaries has any liabilities or obligations of any nature (whether or not
accrued, absolute, contingent, due, to become due, determined, determinable,
asserted, unasserted or otherwise) which were material to the Company and its
Subsidiaries, taken as a whole, required to be set forth in the balance sheets
or notes thereto in accordance with U.S. generally accepted accounting
principles. The Company has not drawn down any amounts under the Subordinated
Loan Agreement (as hereinafter defined).
Section 4.07 Information Supplied. None of the information supplied or to be
supplied by the Company for inclusion or incorporation by reference in the Offer
Documents, the Schedule 14D-9, the information statement to be filed by the
Company in connection with the Offer pursuant to Rule 14f-1 promulgated under
the Exchange Act (as amended or supplemented from time to time, the "Information
Statement") or the Proxy Statement will, in the case of the Offer Documents, the
Schedule 14D-9 and the Information Statement, at the respective times such
documents are filed with the SEC and first published, sent or given to the
Company's stockholders, or, in the case of the Proxy Statement or any amendment
thereof or supplement thereto, at the date it is first mailed to the Company's
stockholders and at the time of the Company Stockholder Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading, except
that no representation is made by the Company with respect to statements made or
incorporated by reference therein based on information supplied in writing by
Parent or Purchaser specifically for inclusion or incorporation by reference
therein. The Schedule 14D-9, the Information Statement and the Proxy Statement
will comply as to form in all material respects with the requirements of the
Exchange Act and the rules and regulations thereunder.
Section 4.08 Absence of
Certain Changes or Events. Since September 30, 2000, except as set forth in the
Company Disclosure Memorandum or in the Company SEC Reports filed since such
date, the business of the Company and its Subsidiaries has been conducted only
in the ordinary course and (a) none of the Company or its Subsidiaries has
incurred any liabilities of any nature, whether or not accrued, contingent or
otherwise, which do or which would reasonably be expected to have a Material
Adverse Effect and no Material Adverse Effect on the Company has occurred; and
(b) the Company has not taken any action that would have been prohibited under
Section 6.01(b) hereof.
Section 4.09 Litigation. Except as disclosed in the Company Disclosure
Memorandum or in the Company SEC Reports, there is no suit, claim, action or
proceeding pending or, to the knowledge of the Company, threatened in writing
against or affecting the Company or any of its Subsidiaries that, individually
or in the aggregate, would reasonably be expected to have a Material Adverse
Effect on the Company (it being understood that this representation shall not
include any litigation of the nature described in paragraph (a) of Annex A), nor
is there any judgment, decree, injunction, rule or order of any Governmental
Entity or arbitrator outstanding against the Company or any of its Subsidiaries
having, or which, insofar as reasonably can be foreseen, in the future would
have, any such effect.
Section 4.10 Compliance with Laws. Except as disclosed in the Company Disclosure
Memorandum or in the Company SEC Reports, the Company and its Subsidiaries are
in compliance with all Laws applicable to their respective businesses or
operations, except for instances of possible noncompliance that, individually or
in the aggregate, would not reasonably be expected to have a Material Adverse
Effect on the Company (provided that no representation or warranty is made in
this Section 4.10 with respect to Environmental Laws, which are covered in
Section 4.13). Each of the Company and its Subsidiaries has in effect and holds
all federal, state, local and foreign governmental approvals, authorizations,
certificates, filings, franchises, exemptions, orders, licenses, notices,
permits and rights ("Permits") necessary for it to own, lease or operate its
properties and assets and to carry on its business as now conducted, and there
has occurred no default under any such Permit, except for the failure to hold
such Permits and for defaults under Permits which failure or default
individually or in the aggregate would not reasonably be expected to have a
Material Adverse Effect on the Company.
Section 4.11 Taxes. (a) The Company and each of its Subsidiaries has filed all
income Tax Returns which it has been required to file, has paid (or has had paid
on its behalf) all Taxes which have become due and payable by it and has made
adequate provision in reserves established in its financial statements and
accounts for all Taxes which have accrued but are not yet due and payable,
except where the failure to file Tax Returns, pay Taxes or provide adequate
reserves for Taxes would not have a Material Adverse Effect on the Company.
(b) Except as set forth in the Company Disclosure Memorandum, no audits or other
administrative proceedings or court proceedings are pending or, to the knowledge
of the Company, threatened with respect to Taxes or Tax Returns of the Company
or its Subsidiaries.
(c) No deficiencies for any Taxes have been proposed, asserted or assessed in
writing against the Company or any of its Subsidiaries and neither the Company
nor any of its Subsidiaries has waived any statute of limitations in respect of
the assessment and collection of Taxes or agreed to any extension of time with
respect to a Tax assessment or deficiency.
(d) Except as set forth in the Company Disclosure Memorandum or in the Company
SEC Reports, none of the Company and its Subsidiaries is a party to any Tax
allocation or sharing agreement other than between or among themselves.
(e) Except as set forth in the Company Disclosure Memorandum or in the Company
SEC Reports, none of the Company and its Subsidiaries has been a member of an
affiliated group filing a consolidated U.S. federal Tax Return.
(f) "Taxes" shall mean any and all taxes, charges, fees, levies or other
assessments, including income, gross receipts, excise, real or personal
property, sales, withholding, social security, retirement, unemployment,
occupation, use, goods and services, service use, license, value added, capital,
net worth, payroll, profits, withholding, franchise, business, transfer and
recording taxes, fees and charges, and any other taxes, assessments or similar
charges imposed by the Internal Revenue Service (the "IRS") or any taxing
authority (whether domestic or foreign, including any state, county, local or
foreign government or any subdivision or taxing agency thereof (including a
United States possession)) (a "Taxing Authority"), whether computed on a
separate, consolidated, unitary, combined or any other basis; and such term
shall include any interest, whether paid or received, fines, penalties or
additional amounts attributable to, or imposed upon, or with respect to, any
such taxes, charges, fees, levies or other assessments. "Tax Return" shall mean
any report, return, document, declaration or other information or filing
required to be supplied to any Taxing Authority or jurisdiction (foreign or
domestic) with respect to Taxes, including information returns, any documents
with respect to or accompanying payments of estimated Taxes, or with respect to
or accompanying requests for the extension of time in which to file any such
report, return, document, declaration or other information.
(g) No Liens for Taxes exist with respect to any assets or properties of the
Company or any of its Subsidiaries, except for statutory Liens for Taxes not yet
due.
(h) Neither the Company nor any of its Subsidiaries is a party to or is bound by
any Tax sharing, Tax indemnity or similar agreement with respect to Taxes
pursuant to which it will have any obligation to make any payment after the
Closing Date. Neither the Company nor any of its Subsidiaries has entered into a
closing agreement pursuant to Section 7121 of the Code or any predecessor
provision or any similar provision of state, local or foreign Tax law.
(i) The Company and its Subsidiaries have withheld and paid all material Taxes
required to be withheld in connection with any amounts paid or owing to any
employee, creditor, independent contractor or other third party.
(j) No written claim has been made by a taxing authority in a jurisdiction where
the Company or any of its Subsidiaries does not file Tax Returns to the effect
that the Company, or any of its Subsidiaries is or may be subject to Taxation by
that jurisdiction.
(k) Neither the Company nor any of its Subsidiaries has constituted either a
"distributing corporation" or a "controlled corporation" (within the meaning of
Section 355(a)(1)(A) of the Code) in a distribution of stock qualifying for
tax-free treatment under Section 355 of the Code (i) in the two years prior to
the date of this Agreement or (ii) in a distribution which could otherwise
constitute part of a "plan" or "series of related transactions" (within the
meaning of Section 355(e) of the Code) in conjunction with the Merger.
Section 4.12 Employee Benefit Plans. (a) Section 4.12 of the Company Disclosure
Memorandum lists each material "employee benefit plan," as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and each other material employment, consulting, bonus or other
incentive compensation, salary continuation during any absence from active
employment for disability or other reasons, supplemental retirement, cafeteria
benefit (Section 125 of the Code) or dependent care (Section 129 of the Code),
sick days, tuition assistance, club membership, employee discount, employee
loan, or vacation pay, severance, deferred compensation, incentive, fringe
benefit, change in control, retention, stock option, restricted stock or other
compensatory plan, policy, agreement or arrangement (including, without
limitation, any collective bargaining agreement) that (i) is maintained,
administered, contributed to or required to be contributed to by the Company or
any of its Subsidiaries or to which the Company or any Subsidiary is a party,
and (ii) covers any current or former officer, director or employee of the
Company or any of its Subsidiaries (collectively, the "Employee Plans"). The
Company has made available to Parent copies of the Employee Plans and, if
applicable, related trust agreements or other funding arrangements and all
material amendments thereto and material written interpretations thereof.
(b) The Company has made available to Parent the most recent determination
letter, if any, of the IRS relating to each Employee Plan intended to qualify
under Section 401(a) of the Internal Revenue Code of 1986, as amended (the
"Code"). Each Employee Plan has been administered in all respects in compliance
with its terms and with the requirements of applicable Law, including but not
limited to ERISA and the Code, except where the failure to be so administered
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on the Company.
(c) With respect to any Employee Plan covered by Title I of ERISA, no non-exempt
transaction prohibited by Section 406 of ERISA or Section 4975 of the Code has
occurred which will cause the Company to incur a liability under ERISA or the
Code that would reasonably be expected to have a Material Adverse Effect on the
Company. No "accumulated funding deficiency," as defined in Section 412 of the
Code, has been incurred with respect to any Employee Plan subject to such
Section 412, whether or not waived. All material contributions required to be
made under any Employee Plan as of the date hereof have been made or, if
required by U.S. generally accepted accounting principles, provided for on the
Company's financial statements. No "reportable event," within the meaning of
Section 4043 of ERISA, and no event described in Section 4062 or 4063 of ERISA,
has occurred in connection with any Employee Plan that is subject to Title IV of
ERISA. Neither the Company nor any of its Subsidiaries has incurred, or
reasonably expects to incur prior to the Effective Time, a liability (direct or
indirect) under Title IV of ERISA arising in connection with the termination of,
or a complete or partial withdrawal from, any plan covered or previously covered
by Title IV of ERISA which would reasonably be expected to have a Material
Adverse Effect on the Company. Neither the Company nor any of its Subsidiaries
contributes to any "multiemployer plan," as defined in Section 3(37) of ERISA.
The assets of the Company are not now, nor will they after the passage of time
be, subject to any lien imposed under Code Section 412(n) by reason of a failure
of the Company to make timely installments or other payments required under Code
Section 412 prior to the Effective Time.
(d) Except as specifically provided in this Agreement or as set forth in the
Company Disclosure Memorandum, no employee or former employee of the Company or
any Subsidiary will become entitled to any material bonus, severance or similar
benefit (including acceleration of vesting or exercise of an incentive award) as
a result of the transactions contemplated hereby, and there is no contract, plan
or arrangement covering any employee or former employee of the Company or any
Subsidiary that, individually or collectively, could reasonably be expected to
give rise to a payment that would not be deductible by Parent, the Company or
any Subsidiary by reason of Sections 280G or 162(m) of the Code.
(e) With respect to each Employee Plan, where applicable, the Company has made
available to Parent true and complete copies of (i) the most recent IRS Form
5500 filing and (ii) the most recent financial statement.
(f) There are no pending or, to the knowledge of the Company, threatened
actions, suits, proceedings, or claims against or relating to any Employee Plans
other than routine benefit claims by persons entitled to benefits thereunder.
(g) Neither the Company nor its Subsidiaries has any obligation or liability
under any retiree life or retiree health plans that provide for continuing
coverage for current or former officers, directors, or employees of the Company
or its Subsidiaries except (i) as may be required under Part 6 of Title I of
ERISA and at the sole expense of the participant or the participant's
beneficiary or (ii) a medical expense reimbursement account plan pursuant to
Section 125 of the Code.
(h) Neither the Company nor any Subsidiary has liability (contingent or
otherwise) under Section 4069 of ERISA by reason of a transfer of an underfunded
pension plan.
(i) The Company is in substantial compliance with all obligations under Part 6
of Title I of ERISA and Section 4980B of the Code arising in connection with its
employment or termination of employment of any person and their eligible
beneficiaries ("COBRA").
Section 4.13 Environmental Matters. (a) Except as would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company:
(i) no written notice, demand, request for information, citation, summons or
order has been received, no penalty has been assessed, and no action, suit,
proceeding or, to the knowledge of the Company, investigation is pending
or, to the knowledge of the Company, threatened by any Governmental Entity
or Person against the Company or any Subsidiary alleging a violation of a
potential liability under any Environmental Law;
(ii) the Company and its Subsidiaries are in compliance with all applicable
Environmental Laws and all Environmental Permits; and
(iii)no release, emission or discharge into the environment of Hazardous
Substances by the Company or, to the knowledge of the Company, by any other
Person, has occurred or is presently occurring on the real property owned,
operated or leased by the Company that would require notification,
investigation or remediation under any Environmental Law. No Hazardous
Substance has been disposed of by the Company except in compliance with
applicable Environmental Laws and, to the Company's knowledge, no Hazardous
Substance resulting from the Company's activities or operations has been
disposed of by any other Person except in compliance with applicable
Environmental Laws.
(b) As used herein,
(i) "Environmental Laws" means any federal, state, local or foreign law,
regulation, rule, order, decree or requirement relating to: (a) pollution,
contamination, cleanup, preservation, protection, or reclamation of the
environment; (b) public or employee health or safety; (c) notification,
investigation, monitoring, or remediation of, or other response to, a
release of Hazardous Substances; or (d) the handling, use, manufacture,
distribution, treatment, storage, disposal, or recycling of or exposure to
Hazardous Substances;
(ii) "Environmental Permits" means all permits, licenses, certificates or
approvals necessary for the operation of the business of the Company or any
of its Subsidiaries as currently conducted to comply with all applicable
Environmental Laws; and
(iii)"Hazardous Substance" means any pollutant, contaminant, chemical,
petroleum or any fraction thereof, asbestos or asbestos-containing
material, polychlorinated biphenyls, or industrial, toxic, radioactive,
infectious, disease-causing or hazardous substance, material, waste or
agent.
Section 4.14 Intellectual Property. Except as, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect on the
Company and except as disclosed in the Company Disclosure Memorandum or in the
Company SEC Reports:
(a) To the knowledge of the Company, (i) the Owned
Intellectual Property and the Licensed Intellectual Property (in each case, as
hereinafter defined), and the use thereof in the operation of the business as
conducted by the Company on the date hereof, do not infringe upon any copyright,
trademark or other Intellectual Property right of any Person, and (ii) except as
disclosed on Section 4.09 and Section 4.14 of the Company Disclosure Memorandum,
no claim, written or oral, has been asserted which threatens that the use of
such Owned Intellectual Property or Licensed Intellectual Property does or may
infringe upon the intellectual property rights of any Person.
(b) Except as set forth in Section 4.14 of the Company Disclosure Memorandum, to
the knowledge of the Company, no Person is engaging in any activity that
infringes in any material respect upon the Owned Intellectual Property or the
Company's rights in or to any Licensed Intellectual Property.
(c) Neither the Company nor any of its Subsidiaries is in breach of, or default
under, any term of any Material Contract relating to the Licensed Intellectual
Property, and, to Company's knowledge, no other party to any such Material
Contract is in breach thereof or default thereunder, except in each case for
such breaches or defaults as would not, individually or in the aggregate, have a
material adverse effect on the Company's rights under such Material Contract.
(d) Except as disclosed in Section 4.14 of the Company Disclosure Memorandum,
with respect to registrations and applications relating to any Owned
Intellectual Property that have been filed with or recorded by any Governmental
Entity (including patent, trademark, copyright and other registrations and
applications), all of such registrations and applications are valid and in full
force and effect and all necessary registration, maintenance and renewal fees in
connection therewith have been paid and all necessary documents and certificates
in connection therewith have been filed with the relevant patent, copyright,
trademark or other authorities in the United States or foreign jurisdictions, as
applicable, for the purpose of maintaining the registrations or applications for
registration of such Owned Intellectual Property, except for such failures to
pay such fees or make such filings as would not, individually or in the
aggregate, have a Material Adverse Effect on the Company.
(e) To the knowledge of the Company, the Titles do not contain defamatory or
unlawful statements, or statements that violate any Person's privacy, publicity
or similar right. To the knowledge of the Company, the Company uses commercially
reasonable efforts consistent with industry practice to attempt to make the
factual statements and data contained in the Titles true and accurate in all
material respects.
(f) The Company owns or has the right to use, in each case as and to the extent
currently used in its business, all Intellectual Property that is material to
the operation of the business, including the (i) copyrights (including
copyrights in and to the works published or under contract to be published
(collectively, the "Titles"), work-in-process, internet websites, promotional
and marketing materials, catalogs and brochures, graphic design materials,
characters, cartoons and other copyrightable works as used in the business),
(ii) domain name registrations, and (iii) trademarks (as applicable, "Owned
Intellectual Property" or "Licensed Intellectual Property") and, within the
territory in which the Company publishes each Title, the Company has all
necessary rights with respect to the media in which such rights are currently
exercised or under contract to be exercised. With respect to any and all
Intellectual Property used in the business which is not owned by the Company,
the Company is the licensee of all rights necessary to publish such
copyrightable material in the Titles and to use such trademarks in connection
with the Titles except for excerpts from third party publications incorporated
in the Titles by permission of the copyright owner as to which the Company
possesses all consents and permissions required by law from the respective
copyright owners for the publication, sale, distribution and other exploitation
of such copyrightable material as used in its business, except in each case for
such invalidities which would not, and such consents and permissions which if
not possessed would not, individually or in the aggregate, have a Material
Adverse Effect on the Company.
(g) For purposes of this Agreement, "Intellectual Property" shall mean writings
and other works, whether copyrightable or not, in any jurisdiction;
registrations or applications for registration of copyrights in any
jurisdiction, and any renewals or extensions thereof; trademarks, tradenames,
service marks, brand names, certification marks, trade dress, domain names,
imprints, logos and other indications of origin, the goodwill associated with
the foregoing and registrations in any jurisdiction of, and applications in any
jurisdiction to register, the foregoing, including any extension, modification
or renewal of any such registration or application; inventions, discoveries and
ideas, whether patentable or not, in any jurisdiction; patents, applications for
patents (including, without limitation, design patents, utility patents, utility
models and all divisions, continuations, continuations in part and renewal
applications), and any renewals, re-examinations, extensions, confirmations or
reissues thereof, and inventors' certificates and invention disclosures in any
jurisdiction; nonpublic information, trade secrets, electronic databases,
computer software, know-how and confidential or proprietary information and
rights in any jurisdiction to limit the use or disclosure thereof by any Person;
and any similar intellectual property or proprietary rights.
Section 4.15 Title and Condition of Properties. The Company or one of its
Subsidiaries (a) has good and marketable fee title to or a valid leasehold
interest under a real property or a capitalized lease in all assets recorded on
the Company's balance sheet as of September 30, 2000 included in the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 2000 (the
"Company's Form 10-K") or otherwise described in Item 2 of the Company's Form
10-K, free and clear of all Liens, except for (i) assets disposed of in the
ordinary course of business since such date, (ii) Liens disclosed in the Company
Disclosure Memorandum or in the Company SEC Reports, (iii) Liens or
imperfections of title which are not, individually or in the aggregate, material
in character, amount or extent and which do not materially detract from the
value or materially interfere with the present or presently contemplated use of
the assets subject thereto or affected thereby, and (iv) Liens for current Taxes
not yet due and payable and (b) has a valid leasehold or other interest in all
other assets used by it in its business, except in each case for exceptions to
the foregoing that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company. All of the
improvements on real property and fixtures, machinery, equipment and other
tangible personal property and assets owned or used by the Company are in good
condition and repair, except for ordinary wear and tear not caused by neglect,
and are usable in the ordinary course of business, except for any matter
otherwise covered by this sentence which would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
Section 4.16 Insurance. Section 4.16 of the Company Disclosure Memorandum sets
forth a list of insurance policies (including information on the premiums
payable in connection therewith and the amount of coverage provided thereunder)
maintained by the Company, which policies have been issued by issuers, which, to
the Company's knowledge, are reputable and financially sound. All material risks
of the Company and its Subsidiaries in respect of their business are covered by
valid and currently effective insurance policies or binders of insurance or
programs of self-insurance in such types and amounts as are reasonable in the
context of the businesses and operations engaged in by the Company and its
Subsidiaries. The Company has paid all premiums due under such policies and is
not in default with respect to its obligations under any such policies other
than any default that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company.
Section 4.17 Certain
Contracts. (a) Section 4.17 of the Company Disclosure Memorandum sets forth a
list of all Material Contracts (as hereinafter defined). The Company has
heretofore made available to Parent true, correct and complete copies of all
written, and true, correct and complete summaries of all oral, contracts,
commitments and agreements (and all amendments, modifications and supplements
thereto and all side letters to which the Company or any of its Subsidiaries is
a party affecting the obligations of any party thereunder) to which the Company
or any of its Subsidiaries is a party or by which any of its properties or
assets are bound that are material to the business, properties or assets of the
Company and its Subsidiaries taken as a whole, including, without limitation, to
the extent any of the following are material to the business, properties or
assets of the Company and its Subsidiaries taken as a whole, all: (i)
employment, severance, product design or development, personal services,
consulting, non-competition or indemnification contracts (including, without
limitation, any contract to which the Company or any of its Subsidiaries is a
party involving employees of the Company); (ii) licensing, merchandising or
distribution agreements; (iii) contracts granting a right of first refusal or
first negotiation; (iv) partnership or joint venture agreements; (v) agreements
for the acquisition, sale or lease of material properties or assets of the
Company (by merger, purchase or sale of assets or stock or otherwise) entered
into since September 30, 2000 (other than agreements relating to the sale of
inventory in the ordinary course); (vi) contracts or agreements with any
Governmental Entity; (vii) loan or credit agreements, mortgages, indentures or
other agreements or instruments evidencing, indebtedness for borrowed money by
the Company or any of its Subsidiaries or any such agreement pursuant to which
indebtedness for borrowed money may be incurred; (viii) agreements that purport
to limit, curtail or restrict the ability of the Company or any of its
Subsidiaries to compete in any geographic area or line of business; (ix)
contracts or agreements that would be required to be filed as an exhibit to a
Form 10-K filed by the Company with the SEC on the date hereof; (x) contracts,
licenses, assignments or other agreements pursuant to which the Company or any
of its Subsidiaries acquired or licensed, granted or otherwise disposed of
rights in the Intellectual Property including, but not limited to, author,
editor, illustrator, contributor and work-made-for-hire agreements, packaging
and co-publishing agreements, software development agreements, software
licenses, trademark licenses and assignment agreements and permission
agreements; and (xi) written or oral contracts, commitments and agreements to
enter into any of the foregoing (collectively, the "Material Contracts").
(b) Each of the Material Contracts constitutes a valid and legally binding
obligation of the Company or its Subsidiaries, enforceable in accordance with
its terms (except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance and similar Laws
of general applicability relating to or affecting creditors' rights or by
general equity principles), and is in full force and effect. There is no default
under any Material Contract so listed either by the Company or, to the Company's
knowledge, by any other party thereto, and no event has occurred that with the
lapse of time or the giving of notice or both would constitute a default
thereunder by the Company or, to the Company's knowledge, any other party, in
any such case in which such default or event does or would reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect on
the Company.
(c) No party to any such Material Contract has given notice to the Company of or
made a claim against the Company with respect to any breach or default
thereunder, in any such case in which such breach or default does or would
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect on the Company.
Section 4.18 Employment Matters. (a) (a) Neither the Company nor any of its
Subsidiaries is a party to any labor or collective bargaining agreement, and no
employees of the Company or any of its Subsidiaries are represented by any labor
organization. Within the preceding three years, there have been no
representation or certification proceedings, or petitions seeking a
representation proceeding, pending or, to the knowledge of the Company,
threatened in writing to be brought or filed with the National Labor Relations
Board or any other labor relations tribunal or authority. Within the preceding
three years, to the knowledge of the Company, there have been no organization
activities involving the Company or any of its Subsidiaries in respect of any
group of employees of the Company or any of its Subsidiaries.
(b) There are no strikes, work stoppages, slowdowns, lockouts, material
arbitrations, or material grievances or other material labor disputes pending
or, to the knowledge of the Company, threatened in writing against or involving
the Company or any of its Subsidiaries. There are no unfair labor practice
charges, grievances, or complaints pending or, to the knowledge of the Company,
threatened in writing by or on behalf of any employee or group of employees of
the Company or its Subsidiaries that, if individually or collectively resolved
against the Company or its Subsidiaries, would have a Material Adverse Effect on
the Company.
(c) There are no complaints, charges, or claims against the Company or its
Subsidiaries pending or, to the knowledge of the Company, threatened to be
brought or filed with any Governmental Entity based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment of any individual by the Company or its Subsidiaries.
(d) Each of the Company and its Subsidiaries is in material compliance with all
laws and orders relating to the employment of labor, including all such laws and
orders relating to wages, hours, WARN, collective bargaining, discrimination,
civil rights, safety and health, workers' compensation, and the collection and
payment of withholding and/or social security Taxes and any similar Tax.
(e) There has been no "mass layoff' or "plant closing" as defined by WARN in
respect of the Company or its Subsidiaries within the six months prior to the
Closing.
Section 4.19 Finders' Fees. Except for Morgan Stanley, there is no investment
banker, broker, finder or other intermediary that has been retained by or is
authorized to act on behalf of the Company or any of its Subsidiaries who is
entitled to any fee or commission from the Company or any of its Subsidiaries in
connection with the transactions contemplated by this Agreement.
Section 4.20 Opinion of Financial Advisor. The Company has received an opinion
of Morgan Stanley to the effect that, as of the date of such opinion, the
consideration to be received by the holders of Shares of Company Common Stock
pursuant to the Offer and the Merger is fair to such holders from a financial
point of view and such opinion has not been withdrawn or modified by Morgan
Stanley. The Company has been authorized by Morgan Stanley to permit the
inclusion of such opinion in its entirety in the Offer Documents and the
Schedule 14D-9 and the Proxy Statement, so long as such inclusion is in form and
substance reasonably satisfactory to Morgan Stanley and its independent counsel.
Section 4.21 Voting Requirements. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock is the only vote of
the holders of any class or series of the Company's capital stock necessary to
approve this Agreement and the transactions contemplated by this Agreement
unless the Merger may be consummated in accordance with Section 253 of the DGCL,
in which case no such consent of the Company's stockholders is required.
Section 4.22 Inventories; Receivables; Payables. (a) The inventories of the
Company and its Subsidiaries are in good and saleable condition and may be sold
consistent with the Company's historical pricing policies in the ordinary course
of business at normal profit margins. Adequate financial reserves for obsolete,
defective or otherwise unusable inventory have been calculated and made in a
manner consistent with past practices.
(b) All accounts receivable of the Company and its Subsidiaries have arisen from
bona fide transactions in the ordinary course of business consistent with past
practices and in accordance with SEC regulations and generally accepted
accounting principles applied on a consistent basis. The Company's reserve for
returns and doubtful accounts is adequate and has been calculated in a manner
consistent with past practices. Since June 30, 2001, neither the Company nor any
of its Subsidiaries has modified or changed in any material respects its sales
practices or methods including, without limitation, such practices or methods in
accordance with which the Company and any of its Subsidiaries sell goods, fill
orders or record sales.
(c) All accounts payable of the Company and its Subsidiaries are the result of
bona fide transactions in the ordinary course of business and have been paid or
are not yet due and payable. Since June 30, 2001, the Company and its
Subsidiaries have not altered in any material respects their practices for the
payment of such accounts payable, including the timing of such payment.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser, jointly and severally, represent and warrant to the
Company that:
Section 5.01 Organization, Standing and Corporate Power. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good standing
under the Laws of the jurisdiction in which it is incorporated and has the
requisite corporate power and authority to carry on its business as now being
conducted.
Section 5.02 Corporate Authorization. Parent and Purchaser have all requisite
corporate power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement. The execution and delivery of this
Agreement, and the consummation of the transactions contemplated by this
Agreement, in each case by Parent and/or Purchaser, as the case may be, have
been duly authorized by all necessary corporate action on the part of Parent and
Purchaser. This Agreement has been duly executed and delivered by Parent and
Purchaser and constitutes a valid and binding obligation of each such party,
enforceable against each such party in accordance with its terms, except that
such enforceability may be limited by bankruptcy, insolvency, moratorium or
other similar Laws affecting or relating to the enforcement of creditors' rights
generally and is subject to general principles of equity.
Section 5.03 Governmental Authorization. No consent, approval, order or
authorization of, or registration, declaration or filing with, any Governmental
Entity is required by or with respect to Parent, Purchaser or any other
Subsidiary of Parent in connection with the execution and delivery of this
Agreement by Parent and Purchaser or the consummation by Parent and Purchaser of
the transactions contemplated by this Agreement, except for (a) the filing of a
premerger notification and report form under the HSR Act, (b) the filing with
the SEC of (i) the Offer Documents and (ii) such reports under the Exchange Act
as may be required in connection with this Agreement and the transactions
contemplated by this Agreement, (c) the filing of the certificate of merger with
the Delaware Secretary of State and (d) appropriate documents with the relevant
authorities of other states in which the Company is qualified to do business and
such other consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to be obtained or made would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent. Neither Parent nor any of its "affiliates" or
"associates" (as each such term is defined in Section 203 of the DGCL) was,
prior to the execution of this Agreement, an "interested stockholder" (as such
term is defined in Section 203 of the DGCL) of the Company.
Section 5.04 Non-contravention. The execution and delivery of this Agreement by
Parent and Purchaser do not and performance by Parent and Purchaser of this
Agreement and the consummation by Parent and Purchaser of the transactions
contemplated hereby will not (a) contravene, conflict with, or result in any
violation or breach of any provision of the certificate of incorporation or
bylaws of Parent or Purchaser, (b) assuming compliance with the matters referred
to in Section 5.03, contravene, conflict with or result in any violation or
breach of any provision of any Law, regulation, judgment, injunction, order or
decree or (c) require any consent or other action by any Person under,
constitute a default under, or cause or permit the termination, cancellation,
acceleration or other change of any right or obligation or the loss of any
benefit to which Parent or Purchaser is entitled under any provision of any
agreement or other instrument binding upon Parent or Purchaser, except, in the
case of clauses (b) and (c), for such matters as would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect on
Parent.
Section 5.05 Information Supplied. None of the information supplied or
to be supplied by Parent or Purchaser for inclusion or incorporation by
reference in the Offer Documents, the Schedule 14D-9, the Information Statement
or the Proxy Statement will, in the case of the Offer Documents, the Schedule
14D-9 and the Information Statement, at the respective times such documents are
filed with the SEC or first published, sent or given to the Company's
stockholders, or, in the case of the Proxy Statement or any amendment thereof or
supplement thereto, at the date it is first mailed to the Company's stockholders
and at the time of the Company Stockholder Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading, except that no
representation is made by Parent or Purchaser with respect to statements made or
incorporated by reference therein based on information supplied in writing by
the Company. The Offer Documents will comply as to form in all material respects
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder.
Section 5.06 Litigation. There is no suit, action or proceeding pending or, to
the knowledge of the Parent, overtly threatened in writing against or affecting
the Parent, any Subsidiary of Parent or Purchaser that would prevent or
substantially delay any of the transactions contemplated by this Agreement or
otherwise prevent the Parent or Purchaser from performing its obligations
hereunder (it being understood that this representation shall not include any
litigation of the nature described in paragraph (a) of Annex A), nor is there
any judgment, decree, injunction, rule or order of any Governmental Entity or
arbitrator outstanding against the Parent or Purchaser or any Subsidiary of
Parent having, or which, insofar as reasonably can be foreseen, in the future
would have, any such effect.
Section 5.07 Finders' Fees. There is no investment banker, broker, finder or
other intermediary that has been retained by or is authorized to act on behalf
of the Parent or Purchaser who is entitled to any fee or commission from the
Parent or Purchaser in connection with the transactions contemplated by this
Agreement.
ARTICLE 6
COVENANTS
Section 6.01 Conduct of Business by the Company. (a) From the date hereof until
the Effective Time, the Company shall, and shall cause each of its Subsidiaries
to, conduct its business in the ordinary course consistent with past practice
and use its commercially reasonable efforts to preserve intact its business
organization, goodwill and relationships with third parties and to keep
available the services of its officers and employees and maintain existing
relations with customers, suppliers, officers, employees and creditors.
(b) Except with the prior written consent of Parent or as contemplated or
permitted by this Agreement or as expressly set forth in the Company Disclosure
Memorandum, from the date hereof until the Effective Time the Company shall not,
and shall not permit any of its Subsidiaries to:
(i) make, declare, set aside or pay any dividend or other
distribution with respect to any shares of its capital stock,
other than dividends and other distributions paid by any
Subsidiary of the Company to the Company or any wholly-owned
Subsidiary of the Company;
(ii) adjust, split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its
capital stock;
(iii) directly or indirectly repurchase, redeem or otherwise acquire
any shares of capital stock or other securities of, or other
ownership interests in, the Company or any of its
Subsidiaries;
(iv) issue, deliver or sell any shares of any class or series of
its capital stock (including Company Common Stock), or any
securities convertible into or exercisable or exchangeable for
shares of any class or series of its capital stock (including
Company Common Stock, or any rights, warrants or options to
acquire any shares of Company Common Stock), other than
issuances pursuant to stock-based awards or Options that are
outstanding on the date hereof and pursuant to the Company's
1998 Employee Stock Purchase Plan;
(v) adopt or implement any amendment to its certificate of
incorporation or bylaws or other comparable organizational
documents or any plan of consolidation, merger or
reorganization or amend the terms of its outstanding
securities;
(vi) acquire or agree to acquire (A) by merging or consolidating
with, or by purchasing a substantial portion of the assets of,
or by any other manner, any business or any corporation,
partnership, joint venture, association or other business
organization or division thereof or (B) any assets for a
consideration exceeding $250,000 in any such case, except
purchases of inventory in the ordinary course of business
consistent with past practice;
(vii) transfer, sell, lease, license, mortgage or otherwise encumber
or subject to any Lien or otherwise dispose of any of its
properties or assets, except sales of assets for consideration
not exceeding $250,000 in any such case and except for sales
of inventory in the ordinary course;
(viii) except for the items currently contracted for by the Company
and the items contemplated by the Company's capital
expenditure budget made available to Parent, make or agree to
make any new capital expenditure or expenditures;
(ix) incur any indebtedness for borrowed money (whether or not
available under a credit line or agreement in effect on the
date hereof, including, but not limited to, the Subordinated
Loan Agreement) or guarantee any such indebtedness of another
Person, issue or sell any debt securities or warrants or other
rights to acquire any debt securities, or guarantee any debt
securities of another Person, except for the endorsement of
checks in the normal course of business and the extension of
credit in the normal course of business, or make any loans,
advances or capital contributions to, or investments in, any
other Person, other than to any direct or indirect
wholly-owned Subsidiary;
(x) enter into or adopt any new, or amend or renew any existing,
Employee Plan, or any collective bargaining agreement, other
than as required by Law;
(xi) except to the extent required by the terms of written
employment agreements as in effect on the date of this
Agreement, increase the compensation payable to or to become
payable to, or pension or other fringe benefits or perquisites
to its present or former directors, employees, officers or
consultants, except for increases already committed to or
increases in salary consistent with the Company's past
practices (of no more than 10%) made in connection with an
employee's annual review;
(xii) enter into any contracts of employment (other than contracts
terminable by the Company without liability immediately
following the Closing) or any severance, retention or similar
agreement except for agreements with new employees entered
into in the ordinary course of business and providing for a
term of less than one year and annual base and bonus
compensation not to exceed $100,000;
(xiii) pay, agree to pay or award any employee bonuses other than
those paid or awarded consistent with past practice and up to
a maximum of $25,000 per employee, or forgive any officer or
employee loan;
(xiv) adopt any change, other than as required by the SEC, changes
in U.S. generally accepted accounting principles or applicable
Law, in its accounting policies, procedures or practices;
(xv) (A) make any Tax election, (B) settle or compromise any
material income Tax liability;
(xvi) pay, discharge, settle or satisfy any claims, litigation,
arbitration, liabilities or other controversies (absolute,
accrued, asserted or unasserted, contingent or otherwise),
including the payment, discharge, settlement or satisfaction
of any claims, litigation, arbitration, liabilities or
controversies of any nature relating to the Transactions
contemplated hereby, 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 most recent consolidated financial
statements (or the notes thereto) included in the Company
SEC Reports or incurred in the ordinary course of business
consistent with past practice, or waive any material
benefits of, or agree to modify in any material respect, any
confidentiality, standstill or similar agreements to which
the Company or any of its Subsidiaries is a party;
(xvii) cancel or terminate any material insurance policy naming
the Company or any Subsidiary as a beneficiary or loss payable
payee;
(xviii) revalue in any material respect any of its assets, including,
without limitation, writing down the value of inventory or
writing-off notes or accounts receivable other than in the
ordinary and usual course of business consistent with past
practice or as required by generally accepted accounting
principles;
(xix) (i) enter into any contract or agreement, other than in the
ordinary and usual course of business consistent with past
practice, or amend in any material respect any of the Material
Contracts or the agreements referred to in Section 4.17; or
(ii) enter into any contract, agreement, commitment or
arrangement providing for, or amend any contract, agreement,
commitment or arrangement to provide for, the taking of any
action that would be prohibited hereunder;
(xx) enter into any agreement or arrangement that limits or
otherwise restricts the Company or any of its Subsidiaries or
any successor thereto or that could, after the Effective Time,
limit or restrict the Surviving Corporation and its affiliates
(including Parent) or any successor thereto, from engaging or
competing in any line of business or in any geographic area;
(xxi) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or
other reorganization of the Company or any of its Subsidiaries
(other than the Merger);
(xxii) alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate
structure or ownership of any Subsidiary;
(xxiii) make or agree to make (whether or not in the ordinary course
of business) any commitment or investment or enter into any
contract which obligates the Company or any of its
Subsidiaries to make payments exceeding $300,000;
(xxiv) renew or terminate any significant agreement relating to the
distribution, packaging or manufacture of the Company's
Intellectual Property outside the United States; or
(xxv) enter into, or agree or commit to enter into, any agreement,
contract, commitment or arrangement that if completed would be
in contravention of any of the foregoing.
Section 6.02 Other Actions. The Company, Parent and Purchaser shall not, and
shall not permit any of their respective Subsidiaries to, take any action that
would, or that could reasonably be expected to, result in (i) any of their
respective representations and warranties set forth in this Agreement that are
qualified as to materiality becoming untrue or incorrect in any material
respect, (ii) any of such representations and warranties that are not so
qualified becoming untrue or incorrect in any material respect so as to have a
Material Adverse Effect or (iii) any of the conditions to the Offer set forth in
Annex A or to the Merger set forth in Article 7 not being satisfied (subject to
the Company's right to take action specifically permitted by Section 6.05).
Section 6.03 Stockholder Meeting; Proxy Material; Merger Without Stockholder
Meeting. (a) If required by applicable Law to consummate the Merger, the Company
shall cause a meeting of its stockholders (the "Company Stockholder Meeting") to
be duly called and held as soon as practicable following the date on which the
Purchaser completes the purchase of Shares of Company Common Stock pursuant to
the Offer (the "Offer Completion Date"), for the purpose of voting on the
approval and adoption of this Agreement and the Merger. At the Company
Stockholder Meeting, Parent shall cause all of the shares of Company Common
Stock then actually or beneficially owned by Parent, Purchaser or any of their
Subsidiaries to be voted in favor of the Merger. Notwithstanding the foregoing,
if Purchaser or any other subsidiary of Parent shall acquire at least ninety
percent (90%) of the outstanding Shares of Company Common Stock, the parties
shall, at the request of Parent, take all necessary and appropriate action to
cause the Merger to become effective as soon as practicable after the expiration
of the Offer without a Company Stockholder Meeting in accordance with Section
253 of the DGCL.
(b) The Company will, if required and at Parent's request, as soon as
practicable following the expiration of the Offer, prepare and file a
preliminary Proxy Statement with the SEC and will use its reasonable best
efforts to respond to any comments of the SEC or its staff and to cause the
Proxy Statement to be mailed to the Company's stockholders as promptly as
practicable after responding to all such comments to the satisfaction of the
staff. The Company shall give Parent and its counsel the opportunity to review
the Proxy Statement and all amendments and supplements thereto, prior to their
being filed with the SEC. The Company will notify Parent 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 Proxy Statement or for additional
information and will supply Parent with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or the Merger. If
at any time prior to the Company Stockholder Meeting there shall occur any event
that should be set forth in an amendment or supplement to the Proxy Statement,
the Company will promptly prepare and mail to its stockholders such an amendment
or supplement. The Company will not mail any Proxy Statement, or any amendment
or supplement thereto, to which Parent reasonably objects.
Section 6.04 Access to Information. (a) From the date hereof until the Effective
Time and subject to applicable Law the Company shall and shall cause its
Subsidiaries to (i) give Parent and its authorized representatives, including
its counsel, financial advisors, auditors and other authorized representatives
reasonable access during normal business hours to the offices, properties, books
and records of the Company and its Subsidiaries, (ii) furnish Parent, its
officers, employees, counsel, financial advisors, auditors and other authorized
representatives with such financial and operating data and other information as
such Persons may reasonably request and (iii) instruct the employees, counsel,
financial advisors, auditors and other authorized representatives of the Company
and its Subsidiaries to cooperate with Parent in its investigation of the
Company and its Subsidiaries.
(b) Between the date hereof and the Effective
Time, the Company shall furnish to Parent and Purchaser (i) within five Business
Days after the delivery thereof to management, such monthly financial statements
and data as are regularly prepared for distribution to the Company management
and (ii) at the earliest time they are available, such quarterly and annual
financial statements as are prepared for the Company's SEC filings, which (in
the case of clause (ii)), shall be in accordance with the books and records of
the Company.
(c) Except as required by Law, Parent will hold, and will cause its officers,
directors, employees, accountants, counsel, consultants, advisors and agents to
hold in confidence all documents and information concerning the Company or any
of its Subsidiaries furnished to Parent or its affiliates in connection with the
transactions contemplated by this Agreement in accordance with the terms of the
letter agreement dated May 29, 2001 between the Company and Parent (the
"Confidentiality Agreement").
Section 6.05 No Solicitation; Other Offers. (a) The Company shall not, and shall
not permit any of its Subsidiaries to, and shall use its best efforts to ensure
that its officers, directors or employees, or any investment bankers,
consultants, financial advisors, accountants, agents or other representatives
retained by it or any of its Subsidiaries do not, solicit, initiate, encourage
the submission of any Acquisition Proposal or engage in discussions or
negotiations or furnish to any Person any information with respect to an
Acquisition Proposal or knowingly facilitate any effort or attempt to make an
Acquisition Proposal. The Company shall, and shall cause its Subsidiaries and
the officers, directors, employees or any investment bankers, attorneys,
consultants, financial advisors, agents or other representatives of the Company
and its Subsidiaries to, cease immediately and cause to be terminated all
activities, discussions and negotiations, if any, with any Persons conducted
prior to the date hereof with respect to any Acquisition Proposal and, to the
extent within its power, to recover or cause to be destroyed all information
concerning the Company and its Subsidiaries in the possession of such Persons
and their affiliates, representatives and advisors. Nothing contained in this
Agreement shall prevent the Board of Directors of the Company from complying
with Rule 14d-9 or Rule 14e-2 under the Exchange Act with respect to any
Acquisition Proposal or making any disclosure to the Company's stockholders if,
in the good faith judgment of the majority of the members of the Board of
Directors of the Company, after consultation with and advice from outside legal
counsel, failure to so disclose would reasonably be deemed to constitute a
breach of the fiduciary duties of the Board of Directors under applicable Law.
(b) Notwithstanding the first sentence of Section 6.05(a), until the receipt of
the Required Vote (as hereinafter defined), the Company may negotiate or
otherwise engage in substantive discussions with, and furnish nonpublic
information to, any Person in response to an unsolicited Acquisition Proposal by
such Person if (i) a majority of the Board of Directors of the Company
determines in good faith, after receiving the advice of a nationally recognized
financial advisor, that such Acquisition Proposal would reasonably be expected
to result in a Superior Proposal and, after consultation with and advice from
outside legal counsel, that the failure to take such action would reasonably be
deemed to constitute a breach of its fiduciary duties under applicable Law, and
(ii) such Person executes a confidentiality agreement in a form no less
favorable to the Company than the Confidentiality Agreement (including the
standstill provisions).
(c) Prior to providing any information to or entering into discussions or
negotiations with any person in connection with an Acquisition Proposal by such
person, the Company shall notify Parent of any Acquisition Proposal (including,
without limitation, the material terms and conditions thereof and the identity
of the person making it) as promptly as practicable (but in no case later than
24 hours) after its receipt thereof, and shall provide Parent with a copy of any
written Acquisition Proposal or amendments or supplements thereto, and shall
thereafter inform Parent on a prompt basis of the status of any discussions or
negotiations with such a third party, and any material changes to the terms and
conditions of such Acquisition Proposal, and shall promptly give Parent a copy
of any information delivered to such person which has not previously been
reviewed by Parent.
(d) Except as permitted by the second sentence of this Section 6.05(d), neither
the Board of Directors of the Company nor any committee thereof shall, (i)
withdraw or modify, or publicly propose to withdraw or modify, in a manner
adverse to Parent, its recommendation to its stockholders referred to in Section
1.02 hereof, or take any action not explicitly permitted by this Agreement that
would be inconsistent with, its approval of the Offer and the Merger, (ii)
approve or recommend, or publicly propose to approve or recommend, any
Acquisition Proposal or (iii) cause the Company to enter into any letter of
intent, agreement in principle, acquisition agreement, commitment or similar
agreement related to any Acquisition Proposal. Notwithstanding the foregoing,
until receipt of the Required Vote, the Board of Directors of the Company shall
be permitted (i) not to recommend to its stockholders acceptance of the Offer
and/or approval and adoption of this Agreement and the Merger, (ii) to withdraw,
or modify in a manner adverse to Parent, its recommendation to its stockholders
referred to in Section 1.02 hereof, (iii) to approve or recommend any Superior
Proposal or (iv) to terminate this Agreement in accordance with Section
8.01(c)(ii) hereof and in connection therewith enter into an agreement with
respect to such Superior Proposal, but only if (y) the Company has received an
Acquisition Proposal which the Board of Directors determines in good faith,
after receiving the advice of a nationally recognized financial advisor,
constitutes a Superior Proposal and (z) the Board of Directors of the Company
determines in good faith, after consultation with and advice from outside legal
counsel, that the failure to take such action could reasonably be deemed to
constitute a breach of its fiduciary duties under applicable Law. For purposes
of this Section 6.05, the parties agree that the scope of the fiduciary duty of
the Board of Directors of the Company shall not be deemed to be limited or
constrained by virtue of the fact that certain stockholders of the Company have
agreed in the Voting and Tender Agreement to tender their shares to the
Purchaser and to vote in favor of the Merger, and in considering whether its
failure to take any action specified above would reasonably be deemed to be a
breach of its fiduciary duties to the stockholders of the Company under
applicable Law, the Board of Directors shall be entitled to assume that the
Voting and Tender Agreement has been terminated.
(e) For purposes of this Agreement:
"Acquisition Proposal" means any bona fide offer,
inquiry or proposal for (i) a merger, reorganization,
consolidation, share exchange, business combination, or other
similar transaction involving the Company or any of its
Subsidiaries, (ii) any proposal or tender offer or exchange
offer to acquire, directly or indirectly, securities
representing more than 15% of the voting power of the Company
or the filing of a registration statement under the Securities
Act in connection therewith or (iii) any sale, lease,
exchange, mortgage, pledge, transfer or other disposition of
all or substantially all of the assets of the Company and its
Subsidiaries taken as a whole, other than the Offer and the
Merger contemplated by this Agreement.
"Superior Proposal" means any bona fide written
Acquisition Proposal, which was not solicited by the Company
or any affiliate or agent of the Company at the explicit or
implicit direction of the Company and which does not include
any financing condition, with respect to which the Board of
Directors of the Company determines in good faith (after
receiving the advice of a nationally recognized financial
advisor and taking into account all the terms and conditions
of the Acquisition Proposal, which terms and conditions shall
include all legal, financial and regulatory aspects of the
proposal, the Person making such Acquisition Proposal, and the
strategic benefits to be derived from the Offer and the Merger
and the long-term prospects of the Company and its
Subsidiaries) is more favorable to the Company's stockholders
(in their capacities as stockholders) from a financial point
of view than the Offer and Merger.
Section 6.06 Commercially Reasonable Efforts; Notification. (a) Upon the terms
and subject to the conditions set forth in this Agreement, each of the parties
agrees to use their commercially reasonable efforts (subject to paragraph (b)
below) to take, or cause to be taken, all actions, and to do, or cause to be
done, and to assist and cooperate with the other parties in doing, all things
necessary, proper or advisable to consummate and make effective, in the most
expeditious manner practicable, the Offer and the Merger and the other
transactions contemplated by this Agreement, including (i) the obtaining of all
necessary waivers, consents and approvals from Governmental Entities and the
making of all necessary registrations and filings (including filings with
Governmental Entities, if any) and the taking of all steps as may be necessary
to avoid an action or proceeding by any Governmental Entity, (ii) the obtaining
of all material consents, approvals or waivers from third parties, (iii) the
defending of any lawsuits or other legal proceedings, whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby, including, without limitation, seeking to have
any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (iv)the execution and delivery of
any additional instruments necessary to consummate the transactions contemplated
by, and to fully carry out the purposes of, this Agreement. In connection with
and without limiting the foregoing, the Company and its Board of Directors
shall, if any state takeover statute or similar statute or regulation is or
becomes applicable to the Offer, the Merger, this Agreement or the other
transactions contemplated by this Agreement, use their commercially reasonable
efforts to ensure that the Offer, the Merger and the other transactions
contemplated by this Agreement may be consummated as promptly as practicable on
the terms contemplated by this Agreement and otherwise to minimize the effect of
such statute or regulation on the Offer, the Merger and the other transactions
contemplated by this Agreement. Nothing herein shall limit or affect the
Company's taking actions specifically permitted by Section 6.05(b) and (c).
(b) In furtherance of and without limiting the above provisions, each of the
Company and Parent shall, as promptly as practicable following the execution and
delivery of this Agreement, (i) file with the United States Federal Trade
Commission (the "FTC") and the United States Department of Justice (the "DOJ")
the notification and report required by the HSR Act (but in no event later than
five (5) Business Days after the date of this Agreement) and, if so requested by
the other such party, request early termination of the waiting period thereunder
and (ii) file with the relevant Governmental Entities in other jurisdictions all
other antitrust filings, if any, required for consummation of the transactions
contemplated hereby under any applicable Laws and regulations and, in each case,
any supplemental information requested in connection therewith pursuant to the
HSR Act or such other Laws or regulations. Any such notification and report form
and supplemental information shall be in substantial compliance with the
requirements of the HSR Act and other relevant Law or regulation. Each of the
Company and Parent shall furnish to the other such necessary information and
reasonable assistance as the other may request in connection with its
preparation of any filing or submission which is necessary under the HSR Act and
other relevant Law or regulation. The Company and Parent shall cooperate and
keep each other apprised of the status of any communications with, and any
inquiries or requests for additional information from, the FTC, the DOJ, or any
other Governmental Entity, and shall comply promptly with any such inquiry or
request. The Company and Parent shall use commercially reasonable efforts to
permit each other party (or its respective counsel) to review any material
communication given by it to, and consult with each other in advance of any
meeting or conference with, the FTC, the DOJ or any such other Governmental
Entity or, in connection with any proceeding by a private party, with any other
Person, and to the extent permitted by the FTC, the DOJ or other such
Governmental Entity or other Person, give the other party (or its respective
counsel) the opportunity to attend and participate in such meetings and
conferences. The parties hereby agree that neither party will be required to
take any action including, without limitation, the proposing, negotiating,
committing to and effecting, by consent decree, hold separate order or
otherwise, the sale, divestiture or disposition of assets or businesses of
Parent (or any of its Subsidiaries) or otherwise taking or committing to take
actions that after the Closing Date would limit Parent or its Subsidiaries'
freedom of action with respect to, or its ability to retain, one or more of its
Subsidiaries' businesses, product lines or assets. Notwithstanding the
foregoing, Parent agrees that, if necessary to eliminate an impediment under any
antitrust law that may be asserted by a U.S. governmental antitrust authority to
the transactions contemplated hereby, Parent will consent to the reasonable sale
or disposition of one or more of the Company's Titles; provided, however, that
(a) Parent shall not be required to consent to the divestiture of any of its or
its affiliates' pre-Closing assets, (b) the divestiture of Titles that produced
aggregate net revenues for the 12-month period ended June 30, 2001 of up to $2.0
million shall be deemed reasonable within the meaning of this sentence, and the
divestiture of Titles in excess of such amount shall not be required, and (c)
Parent shall not be required to consent to any divestiture that must be
consummated prior to the Effective Time.
(c) Subject to the terms and conditions of this Agreement, in furtherance and
not in limitation of the covenants of the parties contained in Sections 6.06(a)
and 6.06(b), if any administrative or judicial action or proceeding, including
any proceeding by a Governmental Entity or a private party, is instituted (or
threatened to be instituted) challenging any transaction contemplated by this
Agreement as violative of any applicable Law, each of the parties shall
cooperate in all respects with each other and use its respective commercially
reasonable efforts in order to contest and resist any such action or proceeding
and to have vacated, lifted, reversed or overturned any decree, judgment,
injunction or other order, whether temporary, preliminary or permanent, that is
in effect and that prohibits, prevents or restricts consummation of the
transactions contemplated by this Agreement.
(d) Parent and Purchaser, on the one hand, and the Company, on the other hand,
each hereby agrees promptly to provide such information necessary to the
preparation of the Schedule 14D-9 and the Offer Documents, respectively, which
the respective party responsible therefor shall reasonably request.
(e) The existence of the conditions set forth in Section 7.01 and clauses (a)
and (b) of Annex A shall not limit or diminish Parent's or Purchaser's
obligations pursuant to this Section 6.06 or relieve Parent or Purchaser of any
liability or damages that may result from its breach of its obligations under
this Section 6.06.
Section 6.07 Indemnification and Insurance. (a) The Company shall (to the
fullest extent permitted by the DGCL and regardless of whether the Merger
becomes effective), and after the Effective Time, the Parent and the Surviving
Corporation shall, jointly and severally (to the fullest extent permitted by the
DGCL), indemnify, defend and hold harmless each Corporate Agent against all
losses, liabilities, expenses (including attorneys' fees), claims, fines,
penalties or damages incurred or suffered by such Corporate Agent in connection
with any civil, criminal or arbitrative suit, action, proceeding or
investigation by reason of his or her being or having been such a Corporate
Agent prior to and including the Effective Time (including but not limited to
the transactions contemplated by this Agreement). The obligations under this
Section 6.07(a) shall continue for a period of six years following the Effective
Time; provided, however, that if any claim is asserted or any situation,
proceeding or investigation commenced within such six-year period, all rights to
indemnification with respect thereto shall continue until the final disposition
thereof, including appeals.
(b) "Corporate Agent" shall mean any person who is or was at any time prior to
and including the Effective Time (A) a director or officer of the Company, or
(B) a director, officer, trustee, employee or agent of any Other Enterprise,
serving as such at the request of the Company, or the legal representatives of
any such director, officer, trustee, employee or agent.
(c) "Indemnified Party" shall mean individually, and "Indemnified Parties" shall
mean collectively, the person or persons entitled to be indemnified, defended
and held harmless under this Section 6.07 or the legal representative of such
person or persons.
(d) "Other Enterprise" shall mean any domestic or foreign corporation, other
than the Company, and any domestic or foreign partnership, joint venture, sole
proprietorship, trust, or other enterprise (including any employee benefit
plan), whether or not for profit.
(e) Parent and Purchaser agree that all rights to indemnification existing in
favor of the Indemnified Parties as provided in the certificate of incorporation
and bylaws of the Company and its Subsidiaries as in effect as of the date
hereof with respect to matters occurring prior to the Effective Time shall
survive the Merger and shall continue in full force and effect for a period of
not less than the statutes of limitations applicable to such matters, and Parent
agrees to cause the Surviving Corporation to comply fully with its obligations
hereunder and thereunder. The certificate of incorporation and bylaws of the
Surviving Corporation shall not be amended, repealed or otherwise modified in
any manner adverse to persons who, as of the date hereof, are Indemnified
Parties, without the prior written consent of any such persons, for a period of
six years from and after the Effective Time and shall contain indemnification
and exculpation provisions which are no less favorable to the Indemnified
Parties than those provisions contained in the Company's certificate of
incorporation and bylaws as in effect immediately prior to the date of this
Agreement.
(f) For six years after the Effective Time, Parent shall maintain, or cause the
Surviving Corporation to maintain, with respect to matters occurring prior to
the Effective Time, policies of directors and officers' liability insurance
comparable to those currently maintained by the Company for the benefit of
persons currently covered by the Company's directors' and officers' liability
insurance policies (except to the extent any provisions in such insurance are no
longer generally available in the market), provided that in no event shall the
Surviving Corporation be required in order to maintain such directors' and
officers' liability insurance policies to expend in any one year an amount in
excess of 200% of the aggregate annual premiums currently paid by the Company
for such insurance, and provided further, that if the annual premiums of such
insurance coverage exceed such amount, the Surviving Corporation shall only be
obligated to obtain as much coverage as can be obtained for a cost not exceeding
such amount.
(g) In the event of any suit, action, proceeding or investigation referred to in
Section 6.07(a) above, (i) the Company or the Surviving Corporation, as
applicable, shall pay the reasonable fees and expenses of counsel selected by
the Indemnified Parties, which counsel shall be reasonably satisfactory to the
Company or the Surviving Corporation; provided, however, that neither the
Company nor the Surviving Corporation shall be obligated pursuant to this
Section 6.07(d) to pay the fees and disbursements of more than one counsel for
all Indemnified Parties in any single action except to the extent that, in the
opinion of counsel for the Indemnified Parties, two or more of such Indemnified
Parties have conflicting interests in the outcome of such action, and (ii) the
Company and the Surviving Corporation will cooperate in the defense of any such
matter; and provided, however, that neither the Company nor the Surviving
Corporation shall be liable for any settlement effected without its written
consent (which consent shall not be unreasonably withheld).
(h) In the event Parent, the Surviving Corporation or any of their successors or
assigns merges into any other Person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or transfers all
or substantially all of its properties and assets to any person, then and in
each such case, proper provisions shall be made so that the successors and
assigns of Parent or the Surviving Corporation, as the case may be, shall assume
the obligations set forth in this Section 6.07. In the event the Surviving
Corporation transfers any material portion of its assets, in a single
transaction or in a series of transactions, Parent will either guarantee the
indemnification obligations referred to in Section 6.07(a) or take such other
action to ensure that the ability of the Surviving Corporation to satisfy such
indemnification obligations will not be diminished in any material respect.
(i) This Section 6.07 shall survive the consummation of the Merger at the
Effective Time, is intended to benefit the Company, Parent, the Surviving
Corporation and the Indemnified Parties, and shall be binding on all successors
and assigns of Parent and the Surviving Corporation.
Section 6.08 Employee Benefits. (a) For at least one year from and after the
Effective Time, Parent shall provide or cause to be provided to the individuals
who, immediately prior to the Effective Time, are employed by the Company or any
Subsidiary ("Company Employees") compensation opportunities (consisting of base
pay, commissions and bonus opportunities) and employee benefits that are
comparable, in the aggregate, to the compensation and the benefits (exclusive of
any such compensation and benefits consisting of or based on any equity
securities) provided under the Employee Plans by the Company and its
Subsidiaries to Company Employees immediately prior to the Effective Time. The
preceding sentence shall not preclude the Parent or the Surviving Corporation or
its Subsidiaries at any time following the Effective Time from terminating the
employment of any Company Employee and such compensation opportunities shall,
subject to the provisions of any Employee Plan, be required to be provided to
any such Company Employee only during his or her period of employment, so long
as any such terminated employee receives severance and other termination
benefits upon or in connection with such termination in an amount which is at
least equal to the severance and other termination benefits which would have
been provided to such employee under the terms of the severance or other
applicable agreements or arrangements of the Company or a Subsidiary in effect
immediately prior to the Effective Time. Nothing contained herein shall be
construed to limit the rights and obligations of the Company, any Subsidiary of
the Company and any current or former employee or other personnel (and where
applicable, the dependents and beneficiaries of any such employees or other
personnel) under each Employee Plan. Further, nothing herein shall be construed
to prohibit the Surviving Corporation from amending or terminating any
contracts, agreements, arrangements, policies, plans and commitments with
respect to any Employee Plan in accordance with the terms thereof and with
applicable Law.
(b) Each Company Employee shall be given full credit for all service with the
Company and its Subsidiaries and their respective predecessors under any plans
or arrangements providing vacation, sick pay, severance, retirement, pension or
retiree welfare benefits maintained by Parent or the Surviving Corporation or
any of their respective affiliates in which such Company Employees participate
solely for purposes of vesting, eligibility to participate and seniority. For
purposes of clarification, prior service shall not be credited for benefit
accrual under any pension plan or retiree welfare plan.
(c) In the event of any change in the welfare benefits provided to Company
Employees following the Effective Time that become effective in the plan year
that includes the Effective Time, Parent shall or shall cause the Surviving
Corporation to waive all limitations as to pre-existing conditions, exclusions
and waiting periods with respect to participation and coverage requirements
applicable to the Company Employees under any such welfare benefits to the
extent that such conditions, exclusions or waiting periods would not apply in
the absence of such change and credit each Company Employee with any co-payments
and deductibles paid prior to any such change in satisfying any applicable
deductible or out-of-pocket requirements after such change for the relevant plan
year.
(d) Without limiting any of its other obligations hereunder, Parent shall cause
all of the agreements with individuals listed in Section 4.12 of the Company
Disclosure Memorandum to be honored in accordance with their terms and shall
assume the obligations of the Company and its Subsidiaries thereunder.
Section 6.09 Public Announcements. Parent and the Company will consult with each
other before issuing any press release or making any public statement (including
any broadly issued statement or announcement to employees) with respect to this
Agreement or the transactions contemplated hereby and, except as may be required
by applicable Law or any listing agreement with any national securities
exchange, will not issue any such press release or make any such public
statement without the prior consent of the other (which consent shall not be
unreasonably withheld).
Section 6.10 Further Assurances. At and after the Effective Time, the officers
and directors of the Surviving Corporation will be authorized to execute and
deliver, in the name and on behalf of the Company or Purchaser, any deeds, bills
of sale, assignments or assurances and to take and do, in the name and on behalf
of the Company or Purchaser, any other actions and things to vest, perfect or
confirm of record or otherwise in the Surviving Corporation any and all right,
title and interest in, to and under any of the rights, properties or assets of
the Company acquired or to be acquired by the Surviving Corporation as a result
of, or in connection with, the Merger.
Section 6.11 Notices of Certain Events. Each of the Company and Parent shall
promptly notify the other of:
(a) any representation or warranty made by it
contained in this Agreement that is qualified as to materiality becoming untrue
or inaccurate in any respect or any such representation or warranty that is not
so qualified becoming untrue or inaccurate in any material respect at or prior
to the Effective Time;
(b) the failure by it to perform, or comply with, in any material respect, any
of its obligations, covenants, or agreements contained in this Agreement, which
failure, either individually or in the aggregate, has had or would reasonably be
expected to have a Material Adverse Effect;
(c) the Company obtaining knowledge of a material breach by Parent, or Parent
obtaining knowledge of a material breach by the Company, of their respective
representations, warranties or covenants hereunder of which the breaching party
has not already given notice pursuant to clauses (a) or (b) above;
(d) any notice or other communication from any third party alleging that the
consent of such third party is or may be required in connection with the
transactions contemplated by this Agreement;
(e) any notice or other communication from any Governmental Entity in connection
with the transactions contemplated by this Agreement;
(f) any actions, suits, claims, investigations, orders, decrees, complaints or
proceedings commenced or, to its knowledge, threatened against, relating to or
involving or otherwise affecting the Company, Parent or any of their respective
Subsidiaries that relate to the consummation of the transactions contemplated by
this Agreement; or
(g) the occurrence of any other event which would reasonably be likely to have a
Material Adverse Effect on the Company or cause any condition set forth in Annex
A hereto to be unsatisfied in any material respect at any time prior to
consummation of the Offer; provided, however, that the delivery of any notice
pursuant to this Section 6.11 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
Section 6.12 Pay-off of Credit Facilities. Simultaneously with its purchase of
and payment for Shares of Company Common Stock pursuant to the Offer, Purchaser
will, and Parent will cause Purchaser to, lend to the Company on customary
market terms a sum equal to all amounts which are then due and owing pursuant to
(i) the Credit Agreement, dated as of July 30, 1999, as amended, by and among
the Company, the several financial institutions party thereto as lenders, Fleet
National Bank (formerly known as BankBoston, N.A.), as issuing lender, Wells
Fargo Bank, National Association, as syndication agent, Bank One (formerly known
as The First National Bank of Chicago), as documentation agent, and Fleet
National Bank, as administrative agent, and (ii) the Subordinated Loan
Agreement. Payment of the amount to be loaned shall be made by wire transfer of
immediately available funds to an account designated by the Company.
ARTICLE 7
CONDITIONS TO THE MERGER
Section 7.01 Conditions to Obligations of Each Party. The respective obligations
of the Company, Parent and Purchaser to consummate the Merger are subject to the
satisfaction or waiver of the following conditions at or prior to the Effective
Time: (a) Purchaser shall have purchased Shares of Company Common Stock pursuant
to the Offer; provided that this condition shall be deemed to have been
satisfied with respect to the obligation of Parent and Purchaser to effect the
Merger if Purchaser fails to accept for payment or pay for Shares of Company
Common Stock validly tendered and not withdrawn pursuant to the Offer in
violation of the terms of the Offer or of this Agreement;
(b) if required by applicable Law, this Agreement shall have been approved and
adopted by the required vote of the stockholders of the Company in accordance
with the DGCL; and
(c) no statute, rule or regulation shall have been enacted, promulgated or
deemed applicable to the Merger by any Governmental Entity which prevents the
consummation of the Merger or makes the consummation of the Merger unlawful, and
no temporary restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction preventing the consummation
of the Merger shall be in effect; provided, however, that each of the parties
shall have used commercially reasonable efforts to prevent the entry of any such
injunction or other order and to appeal as promptly as possible any injunction
or other order that may be entered.
ARTICLE 8
TERMINATION, AMENDMENT AND WAIVER
Section 8.01 Termination. This Agreement may be terminated, and the Merger
contemplated hereby may be abandoned, at any time prior to the Effective Time,
whether before or after approval of the Merger by the stockholders of the
Company:
(a) by mutual written consent of Parent, Purchaser and the Company;
(b) by either the Company (by action of the Continuing Directors only following
the purchase of Shares of Company Common Stock pursuant to the Offer) or Parent:
(i) if any court or Governmental Entity shall have issued an order
(other than a temporary restraining order), decree or ruling
or taken any other action (which order, decree, ruling or
other action the parties hereto shall use their best efforts,
subject to Section 6.06 hereof, to lift) restraining,
enjoining, prohibiting or otherwise making illegal, the Merger
and such order, decree, ruling or other action shall have
become final and nonappealable; or
(ii) if (x) the Offer shall have expired without any Company Common
Stock being purchased therein or (y) Parent or Purchaser shall
not have accepted for payment all Company Common Stock
tendered pursuant to the Offer by December 31, 2001, provided
that the right to terminate this Agreement under this Section
8.01(b)(ii) shall not be available to any party whose failure
to fulfill any obligation under this Agreement has been the
cause of, or resulted in, the failure of Parent or Purchaser
to purchase the Company Common Stock pursuant to the Offer;
(c) by the Company:
(i) if Parent and/or Purchaser fails to commence the Offer as
provided in Section 1.01 hereof; provided, that the Company
may not terminate this Agreement pursuant to this Section
8.01(c)(i) if the Company is at such time in breach of its
obligations under this Agreement such as to (A) cause a
Material Adverse Effect on the Company or (B) prevent or
materially hinder or delay the purchase of the Company Common
Stock pursuant to the Offer or the Merger;
(ii) in connection with entering into a definitive agreement with
respect to a Superior Proposal, as permitted by the second
sentence of Section 6.05(d), if (x) the Company provides written
notice to Parent and Purchaser of the material terms and
conditions of the Acquisition Proposal which the Board of
Directors determines in good faith, after consultation with and
advice from a nationally recognized financial advisor and its
outside legal counsel, constitutes a Superior Proposal, attaching
the most current version of such Acquisition Proposal with
respect thereto and identifying the Person making such
Acquisition Proposal, (y) after five Business Days immediately
following delivery of such written notice, the Board of Directors
reasonably determines, based upon the advice of a nationally
recognized financial advisor, that any proposal made by Parent
and Purchaser in writing with respect to the Offer, within such
time period, supplementing the terms and conditions of the Offer,
is not at least as favorable to the Company and the Company's
stockholders as the terms and conditions of such Acquisition
Proposal specified in (i) above, and (z) upon entering into a
definitive agreement with respect to a Superior Proposal, the
Board of Directors causes the Company simultaneously to pay
Parent the Termination Fee and Expenses (as hereinafter defined);
(iii) if Parent or Purchaser shall have made a material
misrepresentation or have breached in any material respect any
of their respective representations, warranties, covenants or
other agreements contained in this Agreement, which breach
cannot be or has not been cured, in all material respects,
within 15 days after the giving of written notice to Parent or
Purchaser, as applicable;
(d) by Parent:
(i) if, due to an occurrence, not resulting from a breach by
Parent or Purchaser of their obligations hereunder, which
makes it impossible to satisfy any one or more of the
conditions set forth in Annex A hereto, Parent or Purchaser
shall have failed to commence the Offer on or prior to five
Business Days following the date of the initial public
announcement of the Offer;
(ii) if, prior to the purchase of Shares of Company Common Stock
pursuant to the Offer, the Company shall have breached any
representation, warranty, covenant or other agreement
contained in this Agreement which (A) would give rise to the
failure of a condition set forth in paragraph (d) or (e) of
Annex A hereto and (B) cannot be or has not been cured, in all
material respects, within 15 days after the giving of written
notice to the Company;
(iii) if, whether or not permitted to do so, (A) the Board of
Directors of the Company shall have withdrawn or modified in a
manner adverse to Parent or Purchaser (or shall have failed,
at the request of Parent, to reaffirm) its approval or
recommendation of the Offer, the Merger or the Agreement, or
approved or recommended any Acquisition Proposal or (B) the
Company shall have entered into any agreement with respect to
any Acquisition Proposal, including a Superior Proposal
entered into in accordance with the second sentence of Section
6.05(c) of this Agreement.
Section 8.02 Effect of Termination. In the event of termination of this
Agreement by either the Company or Parent as provided in Section 8.01, this
Agreement shall forthwith become void and have no effect, without any liability
or obligation on the part of Parent, Purchaser or the Company, other than the
provisions of Section 6.04(b), this Section 8.02, Section 8.03, and Article 9
and except to the extent that such termination results from fraud or from the
willful and material breach by a party of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
Section 8.03 Fees and Expenses. (a) Except as otherwise provided herein, all
fees and expenses incurred in connection with the Offer, the Merger, this
Agreement and the transactions contemplated by this Agreement shall be paid by
the party incurring such fees or expenses, whether or not the Offer or the
Merger is consummated.
(b) If (x) Parent terminates this Agreement pursuant to Section 8.01(d) (iii) or
(y) the Company terminates this Agreement pursuant to Section 8.01(c)(ii), then,
in any such case, the Company shall pay, or cause to be paid to Parent, at the
time of termination, a termination fee in the amount of $4,000,000 (the
"Termination Fee") plus an amount equal to Parent's actual and reasonably
documented out-of-pocket expenses incurred by Parent after the date hereof in
connection with the Offer, the Merger, this Agreement and the consummation of
the Transactions, including, without limitation, the fees and out-of-pocket
expenses payable to all banks, investment banking firms and other financial
institutions and persons and their respective agents and counsel incurred in
connection with acting as Parent's financial advisor with respect to, or
arranging or committing to provide or providing any financing for, the
Transactions up to an aggregate of $2,000,000 (the "Expenses"). In addition, if
this Agreement is terminated by Parent prior to consummation of the Offer, by
reason of the non-fulfillment of any of the conditions set forth in paragraph
(d), (e) and (g) of Annex A and at the time of such termination, Parent and
Purchaser are not in material breach of their respective obligations under this
Agreement, then the Company shall pay to Parent, at the time of termination, the
Expenses, and, if the Company shall thereafter, within 18 months after such
termination, announce its intention to enter into an agreement with respect to
an Acquisition Proposal and the Company subsequently consummates the
transaction(s) contemplated by such agreement, then the Company shall pay the
Termination Fee simultaneously with such consummation. Any payments required to
be made pursuant to this Section 8.03(b) shall be made by wire transfer of same
day funds to an account designated by Parent.
(c) The Company shall pay all Taxes, such as (a) transfer, stamp and documentary
Taxes or fees and (b) sales, use, gains, real property transfer and other or
similar Taxes or fees, incident to preparing for, entering into and carrying out
this Agreement and the consummation of the Transactions contemplated hereby.
(d) The Company acknowledges that the agreements contained in Section 8.01(b)
are an integral part of the Transactions contemplated by this Agreement, and
that, without these agreements Parent would not have entered into this
Agreement; accordingly, if the Company fails to promptly pay the amount due
pursuant to Section 8.01(b), and, in order to obtain such payment, Parent
commences a suit which results in a judgment against the Company for the fee set
forth in this Section 8.01(b), the Company shall pay to Parent its costs and
expenses (including attorneys' fees) in connection with such suit, together with
interest from the date of termination of this Agreement on the amounts owed at
the prime rate of Citibank N.A. in effect from time to time during such period
plus two percent.
Section 8.04 Amendment. This Agreement may be amended by the parties hereto at
any time before or after any required approval of the Merger by the stockholders
of the Company; provided, however, that after any such approval, there shall be
made no amendment that by Law requires further approval by such stockholders
without the further approval of such stockholders. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 8.05 Extension; Waiver. At any time prior to the Effective Time, the
parties may (a) extend the time for the performance of any of the obligations or
other acts of the other parties, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto on the part of the other parties or (c) subject to the proviso
of Section 8.04, waive compliance with any of the agreements or conditions
contained herein on the part of the other parties. Any agreement on the part of
a party to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party. The failure of any party
to this Agreement to assert any of its rights under this Agreement or otherwise
shall not constitute a waiver of such rights.
Section 8.06 Procedure for Termination, Amendment, Extension or Waiver. A
termination of this Agreement pursuant to Section 8.01, an amendment of this
Agreement pursuant to Section 8.04 or an extension or waiver pursuant to Section
8.05 shall, in order to be effective, require in the case of Parent, Purchaser
or the Company, action by its Board of Directors or the duly authorized designee
of its Board of Directors; provided, however, that in the event that Purchaser's
designees are appointed or elected to the Board of Directors of the Company as
provided in Section 1.03, after the acceptance for payment of Shares of Company
Common Stock pursuant to the Offer and prior to the Effective Time, the
affirmative vote of a majority of the Continuing Directors of the Company shall
be required to amend or terminate this Agreement by the Company, exercise or
waive any of the Company's rights or remedies under this Agreement, extend the
time for performance of Parent's and Purchaser's respective obligations under
this Agreement, take any action to amend or otherwise modify the Company's
certificate of incorporation or bylaws or take any action that would adversely
affect the rights of the stockholders of the Company or the holders of Options
with respect to the transactions contemplated hereby.
ARTICLE 9
MISCELLANEOUS
Section 9.01 Non-Survival of Representations and Warranties. The representations
and warranties contained herein and in any certificate or other writing
delivered pursuant hereto shall not survive the Effective Time or the
termination of this Agreement. This Section 9.01 shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time.
Section 9.02 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including facsimile transmission) and shall
be given,
if to Parent or Purchaser, to:
John Wiley & Sons, Inc.
605 Third Avenue
New York, NY 10158-0012
Attention: William J. Pesce,
Chief Executive Officer
Fax: (212) 850-6088
with a copy to:
John Wiley & Sons, Inc.
605 Third Avenue
New York, NY 10158-0012
Attention: Richard S. Rudick, Esq.
General Counsel
Fax: (212) 850-6088
with an additional copy (which shall not constitute notice) to:
Weil Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Facsimile: (212) 310-8007
Attention: Simeon Gold, Esq.
if to the Company, to:
Hungry Minds, Inc.
909 Third Avenue
New York, NY 10022
Attention: President
Fax: (212) 884-5561
with a copy (which shall not constitute notice) to:
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Attention: Warren Nimetz, Esq.
Fax: (212) 318-3400
or such other address or facsimile number as such party may hereafter specify
for the purpose by notice to the other parties hereto. All such notices,
requests and other communications shall be deemed received on the date of
receipt by the recipient thereof if received prior to 5 p.m. in the place of
receipt and such day is a Business Day in the place of receipt. Otherwise, any
such notice, request or communication shall be deemed not to have been received
until the next succeeding Business Day in the place of receipt. Rejection or
other refusal to accept or the inability to deliver because of changed address
of which no notice was given shall be deemed to be receipt of the notice as of
the date of such rejection, refusal or inability to deliver. Section 9.03 No
Waivers. No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by Law.
Section 9.04 Successors and Assigns. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, provided that no party may assign, delegate or otherwise
transfer any of its rights or obligations under this Agreement without the
consent of each other party hereto, except that Parent or Purchaser may transfer
or assign, in whole or from time to time in part, to one or more of its
affiliates, the right to enter into the transactions contemplated by this
Agreement, but no such transfer or assignment will relieve Parent or Purchaser
of its obligations hereunder.
Section 9.05 Governing Law. Except as required by
mandatory provisions of the DGCL, this Agreement shall be governed by and
construed in accordance with the Law of the State of Delaware, without regard to
the conflicts of Law rules of such state.
Section 9.06 Jurisdiction. Any suit,
action or proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby may be brought in any court of the United States located in
the State of Delaware or in a Delaware state court, and each of the parties
hereby expressly submits to the jurisdiction and venue of any such court (and of
the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by Law, any
objection that it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding brought in any such court has been brought in an inconvenient
forum. Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such
court. Without limiting the foregoing, each party irrevocably consents to the
service of process in any of the aforementioned courts in any such suit, action
or proceeding by the mailing of copies thereof, by registered or certified mail,
postage prepaid, to the address set forth or referred to in Section 9.02, such
service to become effective 10 days after mailing.
Section 9.07 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF
OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 9.08 Counterparts; Effectiveness; Benefit. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto. Except as
expressly provided in Sections 6.07 and 6.08, no provision of this Agreement is
intended to confer any rights, benefits, remedies, obligations or liabilities
hereunder upon any Person other than the parties hereto and their respective
successors and assigns. Execution of this Agreement may be made by facsimile
signature which, for all purposes, shall be deemed to be an original signature.
Section 9.09 Entire Agreement. This Agreement, the Company Disclosure
Memorandum, the Voting and Tender Agreement and the Confidentiality Agreement
constitute the entire agreement between the parties with respect to the subject
matter hereof and thereof and supersede all prior representations, warranties,
agreements and understandings, both oral and written, between the parties with
respect to such subject matter. No prior drafts of this Agreement or portions
thereof shall be admissible into evidence in any action, suit or other
proceeding involving this Agreement.
Section 9.10 Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
Section 9.11 Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable, the remainder of the
terms, provisions, covenants and restrictions of this Agreement shall remain in
full force and effect and shall in no way be affected, impaired or invalidated
so long as the economic or legal substance of the transactions contemplated
hereby is not affected in any manner materially adverse to any party. Upon such
a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner in order that the transactions contemplated
hereby be consummated as originally contemplated to the fullest extent possible.
Section 9.12 Specific Performance. The parties hereto agree that irreparable
damage would occur if any provision of this Agreement were not performed in
accordance with the terms hereof and that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement or to enforce
specifically the performance of the terms and provisions hereof in any federal
court located in the State of Delaware, in addition to any other remedy to which
they are entitled at Law or in equity.
Section 9.13 Interpretation. When a reference is made in this Agreement to an
Article or Section, such reference shall be to an Article or Section of this
Agreement unless otherwise indicated. The table of contents to this Agreement is
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include," "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The words "hereof," "herein" and "hereunder" and
words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. All
terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant thereto unless
otherwise defined therein. The definitions contained in this Agreement are
applicable to the singular as well as the plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such term. Any
agreement, instrument or statute defined or referred to herein or in any
agreement or instrument that is referred to herein means such agreement,
instrument or statute as from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by waiver or consent and
(in the case of statutes) by succession of comparable successor statutes and
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns. Each of
the parties has participated in the drafting and negotiation of this Agreement.
If an ambiguity or question of intent or interpretation arises, this Agreement
must be construed as if it is drafted by all the parties and no presumption or
burden of proof will arise favoring or disfavoring any party by virtue of
authorship of any of the provisions of this Agreement.
Section 9.14 Company Disclosure Memorandum. The Company Disclosure Memorandum
referred to in this Agreement is hereby incorporated in this Agreement and made
a part of this Agreement for all purposes as if fully set forth in this
Agreement. No disclosure in the Company Disclosure Memorandum shall be deemed to
be an admission or representation as to the materiality of the item so
disclosed.
Section 9.15 Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of each party hereto, and, except as specifically set
forth herein, nothing in this Agreement is intended to or shall confer upon any
other Person, any rights, benefits or remedies of any nature whatsoever under or
by reason of this Agreement. Without limiting the foregoing, except for the
obligations under the Voting and Tender Agreement and except for Parent's
obligations as a direct or indirect shareholder of Purchaser, no direct or
indirect holder of any equity interests or securities (whether such holder is a
limited or general partner, member, stockholder or otherwise), nor any affiliate
of any party hereto, nor any director, officer, employee, representative, agent
or other controlling Person of each of the parties hereto and their respective
affiliates shall have any liability or obligation arising under this Agreement
or the Transactions contemplated hereby.
Section 9.16 Obligation of Parent and the Company. Whenever this Agreement
requires Purchaser or another Subsidiary of Parent to take any action, such
requirement shall be deemed to include an undertaking on the part of Parent to
cause Purchaser or such Subsidiary to take such action and a guarantee of the
performance thereof. Whenever this Agreement requires the Surviving Corporation
to take any action, from and after the Offer Completion Date, such requirement
shall be deemed to include an undertaking on the part of Parent to cause the
Surviving Corporation to take such action and a guarantee of the performance
thereof. Whenever this Agreement requires a Subsidiary of the Company to take
any action, such requirement shall be deemed to include an undertaking on the
part of the Company to cause such Subsidiary to take such action and a guarantee
of the performance thereof.
Section 9.17 Certain Definitions. As used in this Agreement:
(a) The term "affiliate," as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control with,
that Person; for purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by," and "under
common control with"), as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through the ownership of voting securities,
by contract or otherwise.
(b) A Person will be deemed to "beneficially" own securities if such Person
would be the beneficial owner of such securities under Rule 13d-3 under the
Exchange Act, including securities which such Person has the right to acquire
(whether such right is exercisable immediately or only after the passage of
time).
(c) The term "Business Day" means any day on which commercial banks are open for
business in New York, New York other than a Saturday, a Sunday or a day observed
as a holiday in New York, New York under the Laws of the State of New York or
the federal Laws of the United States.
(d) The term "knowledge" or any similar formulation of "knowledge" means, with
respect to the Company, the actual knowledge of Marc Mikulich, Richard Swadley,
Mark Reichenthal and the Company's executive officers after due inquiry, and
with respect to the Parent, the actual knowledge of the Parent's executive
officers after due inquiry.
(e) The term "Law" means any foreign or domestic law, regulation, judgement,
order, writ, injunction, decree, rule, ordinance, award, stipulation, statute,
judicial or administrative doctrine, rule or regulation entered by a
Governmental Entity or arbitrator.
(f) The term "Person" includes individuals, corporations, partnerships, trusts,
limited liability companies, associations, unincorporated organizations, joint
ventures, other entities, groups (which term shall include a "group" as such
term is defined in Section 13(d)(3) of the Exchange Act), labor unions or
Governmental Entities.
(g) The term "Required Vote" means the affirmative vote of the holders of a
majority of the issued and outstanding Shares of the Company Common Stock
entitled to vote.
(h) The term "Significant Subsidiaries" means Macmillan General Reference
USA Inc.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
HUNGRY MINDS, INC.
By:
Name:
Title:
JOHN WILEY & SONS, INC.
By:
Name:
Title:
HMI ACQUISITION CORP.
By:
Name:
Title:
ANNEX A
CONDITIONS TO THE OFFER
Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Agreement and Plan of Merger (the
"Agreement") of which this Annex A is a part. Notwithstanding any other
provision of the Offer, Purchaser shall not be required to accept for payment
or, subject to any applicable rules and regulations of the SEC, including Rule
14e-1(c) promulgated under the Exchange Act (relating to the obligation of
Purchaser to pay for or return tendered Shares of Company Common Stock promptly
after termination or withdrawal of the Offer), pay for any tendered Shares of
Company Common Stock and (subject to any such rules or regulations) may delay
the acceptance for payment of or the payment for any tendered Shares of Company
Common Stock and (except as provided in the Agreement) amend or terminate the
Offer and not accept for payment any tendered shares if (i) there are not
validly tendered (and not properly withdrawn) prior to the expiration date for
the Offer that number of Shares of Company Common Stock which, when added to any
such Shares, if any, beneficially owned by Parent or any of its affiliates, will
at least satisfy the Minimum Condition, (ii) any applicable waiting period under
the HSR Act has not expired or been terminated prior to the expiration of the
Offer or (iii) at any time on or after the date of the Agreement and before the
expiration date of the Offer, any of the following events shall have occurred
and be continuing:
(a) there shall be threatened or pending any suit, action or
proceeding (i) seeking to prohibit or impose any material limitations on
Parent's or Purchaser's ownership or operation (or that of any of their
respective subsidiaries or affiliates) of all or a material portion of their or
the Company's businesses or assets, (ii) seeking to compel Parent or Purchaser
or their respective subsidiaries and affiliates to dispose of or hold separate
any material portion of the business or assets of the Company or Parent and
their respective subsidiaries, in each case taken as a whole, (iii) challenging
the acquisition by Parent or Purchaser of any Shares of Company Common Stock
pursuant to the Offer or the Merger, (iv) seeking to restrain or prohibit the
making or consummation of the Offer or the Merger or the performance of any of
the other Transactions, (v) seeking to obtain from the Company any damages that
would be reasonably likely to have a Material Adverse Effect on the Company,
(vi) seeking to impose material limitations on the ability of Purchaser, or
rendering Purchaser unable, to accept for payment, pay for or purchase some or
all of the Shares of Company Common Stock pursuant to the Offer and the Merger,
(vii) seeking to impose material limitations on the ability of Purchaser or
Parent effectively to exercise full rights of ownership of the Shares of Company
Common Stock, including, without limitation, the right to vote the Shares of
Company Common Stock purchased by it on all matters properly presented to the
Company's stockholders, or (viii) which otherwise is reasonably likely to have a
Material Adverse Effect on the Company or, as a result of the Transactions, a
Material Adverse Effect on the Parent and its subsidiaries; provided that, any
such suit, action or proceeding which is instituted or threatened by a Person
that is not a Governmental Entity has a reasonable likelihood of success on the
merits; or
(b) there has been any statute, rule, regulation, injunction,
order or decree enacted, enforced, promulgated, issued or deemed applicable to
the Offer or the Merger by any Governmental Entity that results in any of the
consequences referred to in clauses (i) or (ii) of paragraph (a) above; or
(c) the Agreement shall have been terminated in accordance
with its terms or any event shall have occurred which gives the Parent or
Purchaser the right to terminate the Agreement or not consummate the Merger; or
(d) any representation or warranty of the Company contained in
the Agreement (disregarding all qualifications and exceptions contained therein
relating to materiality or Material Adverse Effect or any similar standard or
qualification) shall not be true and correct in all respects as of the date of
consummation of the Offer, as if made at and as of such time (except to the
extent that any such representation or warranty, by its terms, is expressly
limited to a specific date, in which case such representation or warranty shall
not be true and correct as of such date), and the failure of such representation
or warranty to be true and correct would reasonably be expected to have a
Material Adverse Effect on the Company, provided that such breach is incapable
of being cured or has not been cured prior to the Initial Expiration Date (or
such later date upon which the Offer shall expire in accordance with Section
1.01(b) of the Agreement); or
(e) the Company shall have failed to perform or comply with
any of its obligations, covenants or agreements contained in the Agreement
required to be performed or complied with at or prior to the date of
determination, and such failure would reasonably be expected to have a Material
Adverse Effect on the Company, provided that such failure to perform or comply
with is incapable of being cured or has not been cured prior to the Initial
Expiration Date (or such later date upon which the Offer shall expire in
accordance with Section 1.01(b) of the Agreement); or
(f) there shall have occurred and be continuing (i)any general
suspension of trading in, or limitation on prices for, securities on any
national securities exchange or in the over-the-counter market in the United
States (other than a shortening of trading hours or any coordinated trading halt
triggered solely as a result of a specified increase or decrease in a market
index), (ii) a declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States whether or not mandatory, (iii) any
limitation (whether or not mandatory) by any Governmental Entity on, or other
event that materially and adversely affects, the extension of credit by banks or
other lending institutions, (iv) a commencement of a war or armed hostilities or
other national or international calamity directly or indirectly involving the
United States, (v) any change in the general financial bank or capital market
conditions which has a material adverse effect on the ability of financial
institutions in the United States to extend credit or syndicate loans, or (vi)
in the case of any of the foregoing existing at the time of the execution of the
Agreement, a material acceleration or worsening thereof; or
(g) the Board of Directors of the Company or any committee
thereof (i) shall have withdrawn or modified in a manner adverse to Parent or
Purchaser (including by amendment of the Schedule 14D-9) its approval or
recommendation of the Offer, the Merger or the Agreement or recommended or
approved any Acquisition Proposal, (ii) upon request of the Purchaser, shall
fail to reaffirm its approval recommendation of the Offer, the Merger Agreement,
or the Merger; or (iii)shall have resolved to do any of the foregoing;
(h) a Material Adverse Effect on the Company shall have
occurred after the date hereof;
(i) Parent and the Company shall have agreed that Purchaser
shall terminate the Offer or postpone the acceptance for payment of or payment
for Shares of Company Common Stock thereunder;
(j) the consent of the lenders under the Company's credit
agreement referred to in clause (i) of Section 6.12 hereof to the consummation
of the Offer or the Merger shall not have been obtained as of the close of
business on the day prior to the date the Offer is consummated; and
(k) the consolidated funded debt of the Company and its
Subsidiaries, computed in accordance with U.S. generally accepted accounting
principles applied on a consistent basis and in accordance with the Company's
past practice, shall be greater than $92,500,000 in the aggregate as of the
close of business on the date the Offer is consummated. For the purposes of this
paragraph (k), "consolidated funded debt of the Company and its Subsidiaries"
shall mean outstanding indebtedness under the $110,000,000 Credit Agreement,
dated as of July 30, 1999, as may be amended from time to time, by and between
the Company and the lenders party thereto, the Subordinated Loan Agreement,
dated as of May 7, 2001, by and between the Company and International Data
Group, Inc. (the "Subordinated Loan Agreement"), any agreement for the factoring
of the Company's accounts receivable, and any other outstanding long-term,
short-term or subordinated consolidated funded debt of the Company and its
Subsidiaries. The Company shall provide Parent with an opportunity to verify the
Company's computation of consolidated funded debt for purposes of this paragraph
(k); which in the good faith judgment of Parent or Purchaser, in any such case,
and regardless of the circumstances giving rise to such condition, and provided
that Purchaser and Parent have performed all of their respective obligations
under Section 6.06 herein, makes it inadvisable to proceed with the Offer or the
acceptance for payment of or payment for the Company Common Stock.
The foregoing conditions (x) are for the sole benefit of Parent and
Purchaser and (y) may be asserted by Parent and Purchaser regardless of the
circumstances giving rise to such condition, and, except for the Minimum
Condition, and otherwise subject to the terms of the Agreement, may be waived by
Parent and Purchaser, in whole or in part, at any time and from time to time, in
the sole discretion of Parent and Purchaser. The failure of Parent or Purchaser
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right, the waiver of any such right with respect to particular facts
and circumstances shall not be deemed a waiver with respect to any other facts
and circumstances, and each right shall be deemed a continuing right which may
be asserted at any time and from time to time. Should the Offer be terminated
pursuant to the foregoing provisions, all tendered Shares of Company Common
Stock not theretofore accepted for payment pursuant thereto shall forthwith be
returned to the tendering stockholders.
Exhibit 2.2
VOTING AND TENDER AGREEMENT
Voting and Tender Agreement (this "Agreement"), dated as of August 12, 2001, by
and among John Wiley & Sons, Inc., a New York corporation ("Parent"), HMI
Acquisition Corp., a Delaware corporation and a direct or indirect wholly-owned
subsidiary of Parent ("Sub"), International Data Group, Inc., a Delaware
corporation ("Stockholder Parent"), and IDG Enterprises, Inc., a Delaware
corporation and a wholly-owned subsidiary of Stockholder Parent ("Stockholder
Sub" and, together with Stockholder Parent, the "Stockholder Parties").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Parent, Sub and Hungry Minds, Inc., a Delaware corporation
("Company"), are entering into an Agreement and Plan of Merger (the
"Merger Agreement") pursuant to which Sub has agreed to make a tender
offer (the "Offer") for all outstanding shares of Class A Common Stock,
par value $.001 per share, of the Company (the "Common Stock"), at a
price per share of $6.09, net to the seller in cash, without interest
(such price, or such higher price per share of Common Stock as may be
paid in the Offer, being referred to herein as the "Offer Price"), to
be followed by a merger (the "Merger") of Sub with and into the Company
(all capitalized terms not otherwise defined herein shall have the
meanings given to them in the Merger Agreement);
WHEREAS, the Stockholder Parties collectively hold 11,161,949 shares of
the Common Stock (the "Shares");
WHEREAS, as a condition to the willingness of Parent and Sub to enter
into the Merger Agreement, each of Parent and Sub has required that the
Stockholder Parties agree, and in order to induce Parent and Sub to
enter into the Merger Agreement, each Stockholder Party has agreed, to
enter into this Agreement simultaneously with the execution and
delivery by the parties thereto of the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the
adequacy of which is hereby acknowledged, and intending to be legally
bound hereby, the parties hereto agree as follows:
1. Tender by Stockholder Parties.
1.01 Tender of Shares. Subject to Section 6 below, the Stockholder
Parties, jointly and severally, agree to tender and sell to Parent and/or Sub,
not later than one (1) business day prior to the Initial Expiration Date of the
Offer, all the Shares (and any shares of Common Stock acquired by any
Stockholder Party subsequent to the date hereof) pursuant to and in accordance
with the Offer. The Stockholder Parties, jointly and severally, agree that they
shall deliver to the depositary for the Offer, not later than one (1) business
day before the Initial Expiration Date of the Offer, either a letter of
transmittal together with the certificates for the Shares, if available, or a
"Notice of Guaranteed Delivery", if the Shares are not available. After such
tender the Stockholder Parties shall not withdraw any such Shares.
1.2 Adjustments Upon Changes in Capitalization. In the event of any
change in the number of issued and outstanding shares of Common Stock by reason
of any stock dividend, subdivision, merger, recapitalization, combination,
conversion or exchange of shares, or any other change in the corporate or
capital structure of the Company (including, without limitation, the declaration
or payment of an extraordinary dividend of cash or securities), the term
"Shares" shall be deemed to refer to and include the Shares as well as all such
stock dividends and distributions and any shares into which or for which any or
all of the Shares may be changed or exchanged.
2. Representations and Warranties of the Stockholder Parties. The Stockholder
Parties, jointly and severally, represent and warrant to Parent and Sub that:
2.1 Power and Authority. Each Stockholder Party has all necessary
power and authority to enter into and perform all of its obligations under this
Agreement and to sell, assign, transfer and deliver to Parent and/or Sub,
pursuant to the terms and subject to the conditions of this Agreement and the
Merger Agreement, the Shares that it legally and/or beneficially owns. This
Agreement and each Stockholder Party's consummation of the transactions
contemplated hereby have been duly and validly authorized, executed and
delivered by such Stockholder Party, and no other corporate action or
proceedings on the part of any Stockholder Party are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby.
2.2 No Other Rights. Except for this Agreement, there are no outstanding
options, warrants or rights to purchase or acquire any of the Shares.
2.3 Only Shares. The Stockholder Parties are the beneficial owners (as
defined in Section 9.17(b) of the Merger Agreement) of all of the Shares. On the
date hereof, the Shares constitute all of the shares of Common Stock of the
Company owned of record or beneficially owned by the Stockholder Parties. The
Stockholder Parties have sole voting power and sole power to issue instructions
with respect to the matters set forth in Section 1 hereof, sole power of
disposition and sole power to agree to all of the matters set forth in this
Agreement, in each case with respect to all of the Shares, with no limitations,
qualifications or restrictions on such rights (subject to applicable securities
laws). There is no beneficiary or holder of a voting trust certificate or other
interest of any trust of which the Stockholder Parties are settlor or trustee or
any other person whose consent is required for the execution, delivery and
performance of this Agreement or the consummation by the Stockholder Parties of
the transactions contemplated hereby.
2.4 Title. Each Stockholder Party is the record and beneficial owner
of all of its Shares held by such Stockholder Party and has, and upon the
closing of the Offer, Sub shall receive, good and marketable title to such
Shares, free and clear of all liens, claims, encumbrances and security interests
of any nature whatsoever.
2.5 Validity. This Agreement has been duly and validly executed and
delivered by each Stockholder Party and constitutes the legal, valid and binding
agreement of such Stockholder Party, enforceable against such Stockholder Party
in accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws relating to creditors' rights generally and except that the
availability of legal and equitable remedies, including specific performance, is
subject to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing and the discretion of the court
before which any proceeding therefor may be brought.
2.6 Non-Contravention. The execution, delivery and performance of this
Agreement does not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not, contravene, conflict with,
or result in any violation of, breach of or default by (with or without notice
or lapse of time, or both) any Stockholder Party under, or give rise to a right
of termination, cancellation or acceleration of any obligation under, or result
in the creation of any Lien, security interest, charge or encumbrance upon any
of the properties or assets of any Stockholder Party under, any provision of:
(i) the charter or organizational documents of such Stockholder Party, (ii) any
loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
such Stockholder Party or (iii) any judgment, order, decree, statute, Law,
ordinance, injunction, rule or regulation applicable to such Stockholder Party
or any of its properties or assets, other than, in the case of clauses (ii) and
(iii), any such conflicts, violations, defaults, rights, liens, security
interests, charges or encumbrances that, individually or in the aggregate, would
not materially impair the ability of such Stockholder Party to perform its
obligations hereunder or prevent, limit or restrict the consummation of any of
the transactions contemplated hereby.
3. Representations and Warranties of Parent and Sub. Parent and Sub, jointly and
severally, represent and warrant to the Stockholder Parties that:
3.1 Power and Authority. Each of Parent and Sub has the requisite
corporate power and authority to execute and deliver this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby. This Agreement and the consummation by Parent and Sub of the
transactions contemplated hereby have been duly and validly authorized by each
of Parent and Sub, and no other corporate action or proceedings on the part of
Parent and Sub are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby.
3.2 Validity. This Agreement has been duly and validly executed and
delivered by each of Parent and Sub and constitutes the legal, valid and binding
agreement of each of Parent and Sub, enforceable against each of them in
accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws relating to creditors' rights generally and except that the
availability of legal and equitable remedies, including specific performance, is
subject to general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing and the discretion of the court
before which any proceeding therefor may be brought.
3.3 Non-Contravention. The execution, delivery and performance of this
Agreement does not, and the consummation of the transactions contemplated hereby
and compliance with the provisions hereof will not, contravene, conflict with,
or result in any violation of, breach of or default by (with or without notice
or lapse of time, or both) either of Parent or Sub under, or give rise to a
right of termination, cancellation or acceleration of any obligation under, or
result in the creation of any Lien, security interest, charge or encumbrance
upon any of the properties or assets of either Parent or Sub under, any
provision of: (i) the charter or organizational documents of Parent or Sub, (ii)
any loan or credit agreement, note, bond, mortgage, indenture, lease or other
agreement, instrument, permit, concession, franchise or license applicable to
Parent or Sub or (iii) any judgment, order, decree, statute, Law, ordinance,
injunction, rule or regulation applicable to Parent or Sub or any of their
properties or assets, other than, in the case of clauses (ii) and (iii), any
such conflicts, violations, defaults, rights, liens, security interests, charges
or encumbrances that, individually or in the aggregate, would not materially
impair the ability of Parent or Sub to perform its obligations hereunder or
prevent, limit or restrict the consummation of any of the transactions
contemplated hereby.
4. Covenants of the Stockholder Parties.
4.1 No Disposition or Encumbrance of Shares; No Proxies. The
Stockholder Parties, jointly and severally, represent, covenant and agree that,
except for the proxy granted in Section 5 and as contemplated by this Agreement:
(a) they shall not, directly or indirectly, during the period commencing or the
date hereof and continuing until this provision terminates pursuant to Section 7
hereof: offer for sale or agree to sell, transfer, tender, assign, pledge,
hypothecate or otherwise dispose of or enter into any contract, option or other
arrangement or understanding with respect to, or consent to, the offer for sale,
sale, transfer, tender, assign, pledge, hypothecation, encumbrance, assignment
or other disposition of, or create any security interest, Lien, claim, pledge,
option, right of first refusal, agreement, limitation on voting rights, charge
or other encumbrance of any nature whatsoever with respect to any or all of the
Shares or any interest thereon now legally and/or beneficially owned by any
Stockholder Party, or that may hereafter be acquired by, any Stockholder Party;
(b) they shall not grant any proxy, irrevocable proxy or power of attorney or
deposit any Shares into a voting trust or enter into a voting agreement with
respect to the voting of Shares (each a "Voting Proxy") to any person except to
vote in favor of any of the transactions contemplated by this Agreement or the
Merger Agreement; (c) they have granted no Voting Proxy which is currently (or
which will hereafter become) effective with respect to the Shares, and if any
Voting Proxy has been granted to any person, such Voting Proxy is hereby
revoked; (d) no Voting Proxy shall be given or written consent executed by any
Stockholder Party after the date hereof with respect to the Shares (and if given
or executed, shall not be effective) so long as this Agreement remains in
effect; and (e) they shall not, and shall not offer to agree to, acquire any
additional shares of Common Stock, or options, warrants or other rights to
acquire shares of Common Stock (except upon exercise of stock options presently
held by any Stockholder Party), without the prior written consent of Parent or
Sub.
5. Voting Agreement. Each Stockholder Party, jointly and severally, hereby
agrees that, during the time this Agreement is in effect, at any meeting of the
stockholders of the Company, however called, and in any action by written
consent of the stockholders of the Company, it shall vote all of the Shares
legally and/or beneficially owned by it (i) in favor of the Merger, the Merger
Agreement (as amended from time to time, except for an amendment, modification
or waiver that results in termination of this Agreement pursuant to Section 7
hereof) and any of the transactions contemplated by the Merger Agreement; (ii)
against any action or agreement that would result in a breach in any material
respect of any covenant, representation or warranty or any other obligation
of the Company under the Merger Agreement; and (iii) against any action or
agreement that would materially impede, interfere with or attempt to discourage
the Offer or the Merger. The Stockholder Parties hereby irrevocably grant to and
appoint Parent as the Stockholder Parties' proxy and attorney-in-fact (with full
power and substitution), for and in the name, place and stead of the Stockholder
Parties, to vote, act by written consent or grant a consent, proxy or approval
in respect of all Shares held by the Stockholder Parties with respect to such
vote or action by written consent, solely for the purposes of voting in favor of
the Merger, the Merger Agreement (as amended from time to time, except for an
amendment, modification or waiver that results in termination of this Agreement
pursuant to Section 7 hereof) and any of the transactions contemplated by the
Merger Agreement. The Stockholder Parties hereby affirm that such proxy shall be
irrevocable and shall be deemed coupled with an interest, in accordance with
Section 212(e) of the Delaware General Corporation Law. This proxy shall lapse
and be of no further force and effect from and after the date of this Agreement
is terminated pursuant to Section 7 hereof.
6.Sophistication. The Stockholder Parties acknowledge being informed and
sophisticated investors and, together with the Stockholder Parties' financial
advisors and independent legal counsel, have undertaken such investigation as
they have deemed necessary, including the review of the Merger Agreement and
this Agreement, to enable the Stockholder Parties to make an informed and
intelligent decision with respect to the Merger Agreement and this Agreement and
the transactions contemplated hereby.
7. Effectiveness; Termination; No Survival. This Agreement shall become
effective upon its execution by each Stockholder Party, Parent and Sub and upon
the execution of the Merger Agreement. This Agreement may be terminated as to
any Stockholder Party at any time by mutual written consent of such Stockholder
Party, Parent and Sub. This Agreement, and all the obligations of the
Stockholder Parties hereunder, including, without limitation, their obligations
under Sections 1, 4 and 5 above, shall terminate, without any action by the
parties hereto, upon the earliest to occur of (a) in the event of an amendment
or modification to or wavier under the Merger Agreement, including without
limitation any reduction of the Offer Price, that is or would be economically
adverse to either of the Stockholder Parties, upon such amendment, modification
or wavier, (b) in the event the Merger Agreement is terminated by any party in
accordance with its terms, upon such termination, (c) in the event the Merger is
consummated, upon the Effective Time (as defined in the Merger Agreement) or (d)
December 31, 2001. The representations and warranties of the parties set forth
in Sections 2 and 3 hereof shall not survive the termination of this Agreement.
Notwithstanding anything to the contrary herein, no termination of this
Agreement shall relieve the parties of liability for breach hereof prior to such
termination.
8. Further Assurances. Subject to the terms of this Agreement, from time to
time, each Stockholder Party shall execute and deliver such additional documents
and use its best efforts to take, or cause to be taken, all such further
actions, and to do or cause to be done, all things necessary, proper or
advisable in the most expeditious manner possible, under applicable laws and
regulations to consummate and make effective the transactions contemplated by
this Agreement.
9. Miscellaneous.
9.1 Notices. Any notice request, instruction or other document to be
given hereunder by any party to the other parties shall be in writing and
delivered personally or sent by overnight courier, registered or certified mail,
postage prepaid, or by facsimile transmission, as follows:
(a) If to Parent or Sub, to:
John Wiley & Sons, Inc.
605 Third Avenue
New York, NY 10158-0012
Attention: William J. Pesce, Chief Executive Officer
Fax: (212) 850-6088
with a copy to:
John Wiley & Sons, Inc.
605 Third Avenue
New York, NY 10158-0012
Attention: Richard S. Rudick, Esq., General Counsel
Fax: (212) 850-6088
with an additional copy to (which shall not constitute notice):
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Simeon Gold, Esq.
Fax: (212) 310-8007
(b) If to any Stockholder Party, to:
International Data Group, Inc.
One Exeter Plaza
Boston, MA 02116
Attention: Vice President of Finance
Fax: (617) 262-3636
with a copy to:
Foley Hoag & Eliot LLP
One Post Office Square
Boston, MA 02103
Attention: Edward N. Gadsby, Esq.
Fax: (617) 832-7000
and in all cases, with copies to:
Hungry Minds, Inc.
909 Third Avenue
New York, NY 10022
Attention: President
Fax: (212) 884-5561
and
Fulbright & Jaworski L.L.P.
666 Fifth Avenue
New York, New York 10103
Attention: Warren J. Nimetz, Esq.
Fax: (212) 318-3400
9.2 Waivers and Amendment. Any provision of this Agreement may be
waived at any time by the party which is entitled to the benefits thereof and
this Agreement may be amended, changed, supplemented or otherwise modified or
terminated at any time. No such waiver, amendment, change, supplement,
modification or termination shall be effective except upon the execution and
delivery of a written agreement by the parties hereto.
9.3 Entire Agreement. This Agreement and the Merger Agreement contain
the entire agreement, and supersede all other prior and contemporaneous
agreements and understandings, both written and oral, among the parties hereto
with respect to the subject matter hereof. This Agreement is not intended to
confer upon any other person any rights or remedies hereunder.
9.4 Successors and Assigns. This Agreement shall not be assigned by
any party hereto, except that Parent or Sub may assign its rights under this
Agreement to another direct or indirect wholly-owned subsidiary of Parent, but
such assignment shall not relieve Parent or Sub of its respective obligations
hereunder. This Agreement shall be binding upon, inure solely to the benefit of
and be enforceable by and against the parties hereto and their successors
(including heirs, administrators and executors of individuals) and permitted
assigns. Nothing in this Agreement, express or implied, is intended to or shall
confer upon any other person, any rights, benefits or remedies of any nature
whatsoever under or by reason of this Agreement. Without limiting the foregoing,
no direct or indirect holder of any equity interests or securities (whether such
holder is a limited or general partner, member, stockholder or otherwise, or any
affiliate of any party hereto, nor any director, officer, employee,
representative, agent or other controlling person of each of the parties hereto
and their respective affiliates) shall have any liability or obligation arising
under this Agreement or the transactions contemplated hereby.
9.5 Remedies. Each of the parties hereto acknowledges and agrees that
each other party would be irreparably damaged in the event any of the provisions
of this Agreement were not performed by the other in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that each
party shall be entitled to an injunction or injunctions to redress any breaches
of this Agreement and to specifically enforce the terms and provisions hereof in
any action instituted in any court of the United States or any state thereof
having jurisdiction, in addition to any other remedy to which such party may be
entitled at law or in equity.
9.6 Expenses. Each of the parties shall pay its own expenses in connection with
the negotiation, execution and performance of this Agreement.
9.7 Counterparts. This Agreement and any amendments hereto may be
executed in two or more counterparts, each of which shall be considered to be an
original, both of which together shall constitute the same instrument.
9.8 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without regard to the
principles of conflicts of laws thereof.
9.9 Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
9.10 Effect of Headings. The section headings herein are for convenience only
and shall not affect the meaning or interpretation of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement to take
effect as of the date set forth above.
John Wiley & Sons, Inc.
By:_____________________
Name:
Title:
HMI Acquisition Corp.
By:_____________________
Name:
Title:
International Data Group, Inc.
By: ____________________
Name:
Title:
IDG Enterprises, Inc.
By: ____________________
Name:
Title:
Exhibit 2.3
Ellis E. Cousens (Wiley CFO)
(212) 850-6534
ecousens@wiley.com
Susan Spilka (Wiley Corporate Communications)
(212) 850-6147
sspilka@wiley.com
Alan Winnikoff (Hungry Minds)
(212) 884-5063
awinnikoff@hungryminds.com
WILEY TO ACQUIRE HUNGRY MINDS
New York, NY August 13, 2001 -- William J. Pesce, President and Chief Executive
Officer of John Wiley & Sons, Inc. (NYSE:JWa) (NYSE:JWb), announced today that
the global publishing company has signed a definitive agreement to acquire
Hungry Minds, Inc. (Nasdaq:HMIN), the publisher of the best-selling For Dummies
series, the technological Bible and Visual series, Frommer's travel guides,
CliffsNotes, Webster's New World Dictionary, and other market-leading brands.
Under the terms of the merger agreement, Wiley has agreed to pay an aggregate
consideration of $182.5 million, consisting of $90 million for the fully diluted
equity of Hungry Minds and an estimated $92.5 million of HMIN's outstanding
funded debt that Wiley will pay or assume at closing. The acquisition will be
accomplished via a cash tender offer at $6.09 per share by Wiley, to be
commenced shortly, for all of HMIN's outstanding stock, followed by a cash
merger. The tender offer is expected to be consummated around mid-September
2001. The acquisition is subject to regulatory clearance, HMIN stockholder
approval (if required), and customary closing conditions. International Data
Group, Inc. (IDG), which owns about 76% of HMIN's outstanding stock, has agreed
to support the transaction and to tender its HMIN shares into Wiley's tender
offer.
"The long-term value of Hungry Minds' world-renowned brands makes this a unique
opportunity to build on our proven track record with acquisitions and exploit
our strong global position," said Mr. Pesce. "The acquisition of HMIN is an
excellent opportunity to accelerate Wiley's revenue and earnings growth and
enhance our competitive position in the professional/trade market," he
continued. On a cash EPS basis the acquisition is estimated to be neutral in the
current fiscal year and accretive thereafter.
John Kilcullen, Chairman and CEO of Hungry Minds, said, "Over the last eleven
years we have built the leading portfolio of knowledge brands in the publishing
industry. Wiley is a company whose longstanding and distinguished publishing
tradition makes it an ideal home for our brands, customers, employees, and all
business partners."
Hungry Minds' and Wiley's publishing programs represent an excellent strategic
fit. Hungry Minds has 2,500 active titles in 39 languages, including 600
frontlist titles and revisions per year, which generated revenues of $136
million for the nine months ended June 30, 2001. They have best-selling brands
in both the consumer and technology areas, such as For Dummies, Betty Crocker,
Bible, CliffsNotes, Frommer's, the Unofficial Guide, Visual, Weight Watchers,
and Webster's New World. Hungry Minds also owns the Web sites
www.CliffsNotes.com, www.dummies.com, and www.frommers.com.
The acquisition will signficantly boost the already strong market presence of
Wiley's professional/trade business, which generated nearly one-third of the
company's $614 million fiscal 2001 revenues. Wiley's professional/trade business
publishes annually about 750 new and revised books and electronic products and
services in computers, business, accounting, psychology,
architecture/engineering, general interest, culinary arts, health, non-profit
sector management, and other subject areas. The company leverages multiple
distribution channels, including bookstores, the Internet, and direct marketing,
by developing products in the United States, Canada, Europe, Asia, and Australia
for customers worldwide.
Hungry Minds, Inc. (Nasdaq:HMIN), was founded in 1990 and is a leading global
knowledge company with a diverse portfolio of technology, business, consumer,
and how-to brands, computer-based learning tools, Web-based products and
Internet e-services. Over the past three years, HMIN made a number of
acquisitions, including Cliffs Notes (December 1998), Macmillan General
Reference (August 1999), and hungryminds.com (August 2000). More information
about Hungry Minds is available from the company's SEC filings or by visiting
their corporate Web site at www.hungryminds.com.
Founded in 1807, John Wiley & Sons, Inc., provides must-have content and
services to customers worldwide. Our core businesses include scientific,
technical, and medical journals, encyclopedias, books, and online products and
services; professional and consumer books and subscription services; and
educational materials for undergraduate and graduate students and lifelong
learners. Wiley has publishing, marketing, and distribution centers in the
United States, Canada, Europe, Asia, and Australia. The company is listed on the
New York Stock Exchange under the symbols JWa and JWb. Wiley's recently
relaunched Internet site can be accessed at www.wiley.com.
Wiley management will devote a significant portion of its previously scheduled
First Quarter Fiscal 2002 Conference Call, at 10:30 a.m. EDT on Tuesday,
September 4, 2001, to a discussion of the acquisition of HMIN. To participate in
the conference call, please dial the following number approximately ten minutes
prior to the scheduled starting time: (800) 289-0437
International callers may participate by dialing: (913) 981-5508. A live audio
Webcast will be accessible at www.wiley.com. A replay of the call will be
available from 1:30 p.m. (EDT) on Tuesday, September 4 through 8:00 p.m. (EDT)
on Tuesday, September 11, by dialing (888) 203-1112 or (719) 457-0820 and
entering Passcode 738727. If you have any questions regarding the call, please
call Susan Spilka at John Wiley & Sons, Inc., at (212) 850-6147 or Wendi Kopsick
at Kekst and Company at (212) 521-4867.
"Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995
This report contains certain forward-looking statements concerning the company's
operations, performance, and financial condition. Reliance should not be placed
on forward-looking statements, as actual results may differ materially from
those in any forward-looking statements. Any such forward-looking statements are
based upon a number of assumptions and estimates that are inherently subject to
uncertainties and contingencies, many of which are beyond the control of the
company, and are subject to change based on many important factors. Such factors
include, but are not limited to (i) the level of investment in new technologies
and products; (ii) subscriber renewal rates for the company's journals; (iii)
the financial stability and liquidity of journal subscription agents; (iv) the
consolidation of book wholesalers and retail accounts; (v) the market position
and financial stability of key online retailers; (vi) the seasonal nature of the
company's educational business and the impact of the used book market; (vii)
worldwide economic and political conditions; and (viii) other factors detailed
from time to time in the company's filings with the Securities and Exchange
Commission. The company undertakes no obligation to update or revise any such
forward-looking statements to reflect subsequent events or circumstances.
INVESTORS AND SECURITY HOLDERS ARE STRONGLY ADVISED TO READ BOTH THE TENDER
OFFER STATEMENT AND THE SOLICITATION/RECOMMENDATION STATEMENT REGARDING THE
TENDER OFFER REFERRED TO IN THIS PRESS RELEASE, WHEN THEY BECOME AVAILABLE,
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. THE TENDER OFFER STATEMENT WILL
BE FILED BY WILEY WITH THE SEC, AND THE SOLICITATION/RECOMMENDATION STATEMENT
WILL BE FILED BY HMIN WITH THE SEC. INVESTORS AND SECURITY HOLDERS MAY OBTAIN A
FREE COPY OF THESE STATEMENTS (WHEN AVAILABLE) AND OTHER DOCUMENTS FILED BY
WILEY AND HMIN AT THE SEC'S WEB SITE AT WWW.SEC.GOV.