Agreement and Plan of Merger - Pacific Data Imaes Inc. and DreamWorks Animation Inc.
APPENDIX A
FORM OF AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger (the "Agreement") is made and entered
into as of October 7, 2004 between Pacific Data Images, Inc., a California
corporation ("Target" and after the Effective Time of the Merger (as defined
below) the "Surviving Corporation"), DreamWorks Animation, Inc., a Delaware
corporation (the "Acquiror"), and DWA Acquisition Corp., a Delaware corporation
("Sub"). Target and Sub are hereinafter collectively referred to as the
"Constituent Corporations."
The Constituent Corporations hereby agree as follows:
1. THE MERGER.
(a) MERGER OF SUB WITH AND INTO TARGET.
(i) AGREEMENT TO ACQUIRE TARGET. Subject to the terms of this
Agreement (the "Merger Agreement"), Target shall be acquired by Acquiror through
a merger (the "Merger") of Sub with and into Target. The closing of the Merger
(the "Closing") will take place at 10:00 a.m., New York time, on a date to be
specified by the parties (the "Closing Date") at the offices of Cravath, Swaine
& Moore LLP, 825 Eighth Avenue, New York, NY 10019.
(ii) EFFECTIVE TIME OF THE MERGER. The Merger shall become
effective (the "Effective Time") upon the filing of this Agreement and the
officers' certificate of Target with the Secretary of State of the State of
California pursuant to Section 1103 of the California General Corporation Law
(the "CGCL") and upon the filing of a certificate of merger with the Secretary
of State of the State of Delaware pursuant to Section 252 of the General
Corporation Law of the State of Delaware (the "DGCL").
(iii) SURVIVING CORPORATION. At the Effective Time of the
Merger, Sub shall be merged with and into Target and the separate corporate
existence of Sub shall thereupon cease. Target shall be the surviving
corporation in the Merger and the separate corporate existence of Target, with
all its purposes, objects, rights, privileges, powers, immunities and
franchises, shall continue unaffected and unimpaired by the Merger.
(b) EFFECT OF THE MERGER; ADDITIONAL ACTIONS.
(i) EFFECTS. The Merger shall have the effects set forth in
Section 1107 of the CGCL and Section 259 of the DGCL.
(ii) ADDITIONAL ACTIONS. If, at any time after the Effective
Time of the Merger, Target shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable (i) to vest, perfect or confirm of record or otherwise in Target its
right, title or interest in, to or under any of the rights, properties or assets
of either Constituent Corporation acquired or to be acquired by Target as a
result of, or in connection with, the Merger or (ii) to otherwise carry out the
purposes of this Agreement, each Constituent Corporation and its officers and
directors shall be deemed to have granted to Target
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an irrevocable power of attorney to execute and deliver all such deeds, bills of
sale, assignments and assurances and to take and do all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, properties or assets in
Target and otherwise to carry out the purposes of this Agreement; and the
officers and directors of Target are fully authorized in the name of each
Constituent Corporation or otherwise to take any and all such actions.
2. THE CONSTITUENT CORPORATIONS.
(a) ORGANIZATION OF TARGET.
(i) INCORPORATION. Target was incorporated under the laws of
the State of California on August 13, 1980.
(ii) AUTHORIZED STOCK. Target is authorized to issue one class
of shares designated Common Stock in the aggregate amount of 30,000,000 shares
("Target Common Stock") .
(iii) OUTSTANDING STOCK. As of the date of this Agreement,
11,356,610 shares of Target Common Stock were outstanding.
(b) ORGANIZATION OF SUB.
(i) INCORPORATION. Sub was incorporated under the laws of the
State of Delaware on September 14, 2004.
(ii) AUTHORIZED STOCK. Sub is authorized to issue an aggregate
of 1,000 shares of Common Stock ("Sub Stock").
(iii) OUTSTANDING STOCK. On the date hereof, an aggregate of
1,000 shares of Sub Stock are outstanding.
(c) TARGET SHAREHOLDER APPROVAL. The holders of a majority of the
outstanding shares of Target's Common Stock duly approved and adopted this
Agreement without a meeting by written consent dated October 12, 2004, in
accordance with the provisions of Section 603 of the CGCL.
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3. AMENDED ARTICLES OF INCORPORATION; BY-LAWS AND DIRECTORS AND
OFFICERS OF TARGET.
(a) AMENDMENT OF TARGET'S ARTICLES OF INCORPORATION.
(i) AUTHORIZED STOCK AT MERGER. At the Effective Time of the
Merger, Article V of the Articles of Incorporation of Target shall be amended in
its entirety to read as set forth on Exhibit A attached hereto.
(ii) ARTICLES OF INCORPORATION OF SURVIVING CORPORATION. The
Articles of Incorporation of Target in effect at the Effective Time of the
Merger, as amended as provided in clause (a)(i) above, shall be the Articles of
Incorporation of the Surviving Corporation unless and until amended as provided
by applicable law.
(b) BYLAWS. The Bylaws of Target, as in effect immediately prior to the
Effective Time, shall be the Bylaws of the Surviving Corporation until
thereafter amended as provided by California law and such Bylaws.
(c) OFFICERS AND DIRECTORS OF SURVIVING CORPORATION. The directors of
Sub in effect immediately prior to the Effective Time of the Merger shall be the
directors of the Surviving Corporation, and the officers of Target immediately
prior to the Effective Time of the Merger shall be the officers of the Surviving
Corporation, in each case until the earlier of their resignation or removal or
until their respective successors shall have been duly elected and qualified.
4. EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT
CORPORATIONS; EXCHANGE OF CERTIFICATES.
(a) EFFECT ON CAPITAL STOCK. As of the Effective Time of the Merger, by
virtue of the Merger and without any action on the part of the holder of any
shares of Target Common Stock:
(i) CAPITAL STOCK OF SUB. Each issued and outstanding share of
capital stock of Sub shall be converted into and become one fully paid and
non-assessable share of Target Common Stock. Each stock certificate of Sub
evidencing ownership of any such shares shall continue to evidence ownership of
such shares of capital stock of the Surviving Corporation.
(ii) CANCELLATION OF TREASURY STOCK; ACQUIROR-OWNED STOCK TO
REMAIN OUTSTANDING. All shares of Target Common Stock that are owned by Target
(as treasury stock), Acquiror or Sub shall be canceled and retired and shall
cease to exist and no consideration shall be delivered in exchange therefor.
(iii) CONVERSION OF TARGET COMMON STOCK. Each issued and
outstanding share of Target capital stock (other than shares to be cancelled
pursuant to Section 4(a)(ii) hereof and shares, if any, held by persons
exercising dissenter's rights in accordance with Section 1300 of the CGCL) held
by a holder of record of Target capital stock immediately prior to the Effective
Time shall be converted, without any action on the part of the holders thereof,
into the right to receive a number of whole shares of Class A common stock of
Acquiror, $.01 par value ("Acquiror
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Common Stock"), determined by multiplying the number of shares of Target capital
stock held by such holder of Target capital stock by a fraction (the "Exchange
Ratio"), the numerator of which is $6.50, and the denominator of which is the
initial public offering price per share of Class A common stock of the Acquiror
in connection with its initial public offering, without deduction for
underwriters' fees or commissions (the "Merger Consideration") and rounding the
product up for any fraction equal to or greater than one half, and rounding the
product down for any fraction that is less than one half.
(iv) CONVERSION OF TARGET OPTIONS. As of the Effective Time,
each outstanding option to purchase shares of Target Common Stock granted
pursuant to the PDI Inc. 1996 Equity Incentive Plan and the PDI Inc. 1998 Stock
Plan (the "Target Stock Option Plans"), whether vested or unvested (a "Target
Option"), will be converted into an option to purchase shares of Acquiror Common
Stock (each, an "Acquiror Option"). In addition, the Target Stock Option Plans
shall be terminated by resolution of the Target's board of directors. Except as
provided below, each such Target Option converted by Acquiror under this
Agreement shall retain its respective vesting schedule as set forth under the
applicable Target Stock Option Plan; however, the converted Target Options will
be governed by the 2004 Omnibus Incentive Compensation Plan as of the Effective
Time. The 2004 Omnibus Incentive Compensation Plan shall provide for terms and
conditions such that the converted Target Options shall continue to be subject
to the same terms and conditions that are comparable to those set forth in the
applicable Target Stock Option Plan, except that (i) each such option will be
exercisable for that number of whole shares of Acquiror Common Stock obtained by
multiplying the number of shares of Target Common Stock that would be issuable
upon exercise of such option immediately prior to the Effective Time, assuming
that all vesting conditions applicable to such option were then satisfied, by
the Exchange Ratio and rounded down to the nearest whole number of shares of
Acquiror Common Stock, and (ii) the per share exercise price for the shares of
Acquiror Common Stock issuable upon exercise of such converted Target Option
will be equal to the quotient determined by dividing the exercise price per
share of Target Common Stock at which such option was exercisable immediately
prior to the Effective Time by the Exchange Ratio, rounded up to the nearest
cent. Consistent with the terms of the Target Stock Option Plans and the
documents governing the outstanding Target Options under such plans, the Merger
will not terminate any of the outstanding Target Options under the Target Stock
Option Plans or accelerate the exercisability or vesting of such options or the
shares of Target Common Stock which will be subject to those options upon the
conversion of the Target Options in connection with the Merger. It is the
intention of the parties that the Target Options converted to Acquiror Options
qualify, to the maximum extent permissible, following the Effective Time, as
incentive stock options, as defined in Section 422 of the Code, to the extent,
and only to the extent, the Target Options so converted qualified as incentive
stock options prior to the Effective Time.
(iv) DISSENTERS' RIGHTS. If any holder of Target Common Stock
(a "Dissenting Holder") duly demands purchase of his, her or its shares of
Target Common Stock in connection with the Merger under Chapter 13 of the CGCL
(such shares being "Dissenting Shares"), the Dissenting Shares shall not be
converted into Merger Consideration but shall be converted into the right to
receive an amount in cash equal to the fair market value of such shares as may
be determined to be due with respect to such Dissenting Shares pursuant to the
law of the State of California. After the Effective Time of the Merger, Acquiror
shall issue and deliver to
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any holder of shares of Target Common Stock who shall have withdrawn his, her or
its demand for purchase or have failed to perfect or shall have otherwise lost
his, her or its right of purchase, in any case pursuant to the CGCL, upon
surrender by such Dissenting Shareholder of his, her or its, certificate or
certificates representing shares of Target Common Stock, the Merger
Consideration to which such Dissenting Shareholder is then entitled under
Section 4(a)(iii) of this Agreement.
(b) EXCHANGE OF CERTIFICATES.
(i) EXCHANGE AGENT. Prior to the Closing Date, Acquiror shall
appoint to act as Exchange Agent (the "Exchange Agent") in the Merger.
(ii) EXCHANGE PROCEDURES. Prior to the Effective Time, the
Exchange Agent shall mail to each holder of record of a certificate (i) a form
of letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the certificates held by such person shall pass,
only upon proper delivery of the certificates to the Exchange Agent and shall be
in a form and have such other provisions as Acquiror may reasonably specify) and
(ii) instructions for use in effecting the surrender of the Certificates in
exchange for the applicable Merger Consideration. Upon surrender of a
certificate for cancellation to the Exchange Agent, together with such letter of
transmittal, duly completed and validly executed, and such other documents as
may reasonably be required by the Exchange Agent, the holder of such certificate
shall be entitled to receive in exchange therefor the Merger Consideration with
respect to such shares, without interest and the certificate so surrendered
shall forthwith be cancelled.
(iii) NO FURTHER OWNERSHIP RIGHTS IN TARGET COMMON STOCK. All
Merger Consideration delivered upon the surrender of certificates that
represented shares of Target Common Stock in accordance with the terms hereof
shall be deemed to have been paid in full satisfaction of all rights pertaining
to such shares of Target Common Stock theretofore represented by such
certificates. At the close of business on the day on which the Effective Time
occurs the stock transfer books of Target shall be closed, and there shall be no
further registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Target capital stock that were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
certificates are presented to the Surviving Corporation or the Exchange Agent
for transfer or any other reason, they shall be canceled and exchanged as
provided in this Section 4.
5. TERMINATION
(a) TERMINATION BY MUTUAL AGREEMENT. Notwithstanding the approval of
this Agreement by the shareholders of Target, this Agreement may be terminated
at any time prior to the Effective Time of the Merger by mutual written consent
of the Constituent Corporations.
(b) EFFECTS OF TERMINATION. In the event of the termination of this
Agreement, this Agreement shall become void and there shall be no liability on
the part of either Target or Sub or their respective officers or directors.
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6. GENERAL PROVISIONS.
(a) AMENDMENT. This Agreement may be amended by the parties hereto any
time prior to the effective time of the Merger; however, after approval hereof
by the shareholders of Target, no amendment shall be made which by law requires
the further approval of such shareholders without obtaining such further
approval. This Agreement may not be amended except by an instrument in writing
signed on behalf of each of the parties hereto.
(b) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
(c) GOVERNING LAW. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
New York, without giving effect to its principles governing conflicts of laws,
except to the extent the laws of California are mandatorily applicable to the
Merger.
(d) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
among such parties pertaining to the subject matter hereof and thereof, and the
agreements contemplated hereby and all negotiations and drafts of the parties
with regard to the transactions contemplated herein, and any and all written or
oral agreements existing between the parties hereto regarding such transactions
are expressly cancelled.
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APPENDIX A
The parties have duly executed this Agreement as of the date first
written above.
TARGET:
PACIFIC DATA IMAGES, INC.,
by /s/ Jeffrey Katzenberg
___________________________________
Name: Jeffrey Katzenberg
Title: President
by /s/ Ann Daly
___________________________________
Name: Ann Daly
Title: Vice President
SUB:
DWA ACQUISITION CORP.,
by /s/ Ann Daly
___________________________________
Name: Ann Daly
Title: President
by /s/ Katherine Kendrick
___________________________________
Name: Katherine Kendrick
Title: Secretary
ACQUIROR:
DREAMWORKS ANIMATION, INC.,
by /s/ Katherine Kendrick
___________________________________
Name: Katherine Kendrick
Title: General Counsel
by /s/ Kristina M. Leslie
___________________________________
Name: Kristina M. Leslie
Title: Chief Financial Officer
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EXHIBIT A
AMENDMENT TO PACIFIC DATA IMAGES, INC.'S ARTICLES OF INCORPORATION:
ARTICLE V
The Corporation is authorized to issue one class of shares designated
"Common Stock." The total number of shares of Common Stock that the Corporation
is authorized to issue is one thousand, par value $0.01 per share.
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