1
EXHIBIT 99.1
AGREEMENT AND PLAN OF REORGANIZATION
AND MERGER
AMONG
LSI LOGIC CORPORATION,
STEALTH ACQUISITION CORPORATION
AND
SEEQ TECHNOLOGY INCORPORATED
Dated as of February 21, 1999,
and amended March 5, 1999
2
TABLE OF CONTENTS
PAGE
----
ARTICLE I THE MERGER..................................................................................................2
1.1 The Merger..........................................................................................2
1.2 Effective Time; Closing.............................................................................2
1.3 Effect of the Merger................................................................................2
1.4 Certificate of Incorporation; Bylaws................................................................2
1.5 Directors and Officers..............................................................................2
1.6 Effect on Capital Stock.............................................................................3
1.7 Surrender of Certificates...........................................................................4
1.8 No Further Ownership Rights in Company Common Stock.................................................6
1.9 Lost, Stolen or Destroyed Certificates..............................................................6
1.10 Tax and Accounting Consequences.....................................................................6
1.11 Taking of Necessary Action; Further Action..........................................................7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF COMPANY..................................................................7
2.1 Organization and Qualification; No Subsidiaries.....................................................7
2.2 Certificate of Incorporation and Bylaws.............................................................8
2.3 Capitalization......................................................................................8
2.4 Authority Relative to this Agreement................................................................9
2.5 No Conflict; Required Filings and Consents..........................................................9
2.6 Compliance; Permits................................................................................10
2.7 SEC Filings; Financial Statements..................................................................11
2.8 No Undisclosed Liabilities.........................................................................11
2.9 Absence of Certain Changes or Events...............................................................11
2.10 Absence of Litigation..............................................................................12
2.11 Employee Benefit Plans.............................................................................12
2.12 Labor Matters......................................................................................14
2.13 Registration Statement; Proxy Statement............................................................14
2.14 Restrictions on Business Activities................................................................15
2.15 Title to Property..................................................................................15
2.16 Taxes..............................................................................................15
2.17 Environmental Matters..............................................................................17
2.18 Brokers............................................................................................18
2.19 Intellectual Property..............................................................................18
2.20 Agreements, Contracts and Commitments..............................................................21
2.21 Company Rights Agreement...........................................................................22
2.22 Insurance..........................................................................................23
2.23 Opinion of Financial Advisor.......................................................................23
2.24 Board Approval.....................................................................................23
2.25 Vote Required......................................................................................23
-i-
3
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
2.26 State Takeover Statutes............................................................................23
2.27 Pooling of Interests...............................................................................24
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB.........................................................24
3.1 Organization and Qualification; Subsidiaries.......................................................24
3.2 Certificate of Incorporation and Bylaws............................................................24
3.3 Capitalization.....................................................................................24
3.4 Authority Relative to this Agreement...............................................................25
3.5 No Conflict; Required Filings and Consents.........................................................25
3.6 SEC Filings........................................................................................26
3.7 Registration Statement; Proxy Statement............................................................26
3.8 Pooling of Interests. ............................................................................27
3.9 Absence of Certain Changes or Events...............................................................27
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME.......................................................................27
4.1 Conduct of Business by Company.....................................................................27
4.2 Conduct of Business by Parent......................................................................30
ARTICLE V ADDITIONAL AGREEMENTS......................................................................................30
5.1 Proxy Statement/Prospectus; Registration Statement; Other Filings; Board
Recommendations....................................................................................30
5.2 Meeting of Company Stockholders....................................................................31
5.3 Confidentiality; Access to Information.............................................................32
5.4 No Solicitation....................................................................................33
5.5 Public Disclosure..................................................................................34
5.6 Reasonable Efforts; Notification...................................................................34
5.7 Third Party Consents...............................................................................35
5.8 Stock Options and Employee Benefits................................................................36
5.9 Form S-8...........................................................................................37
5.10 Indemnification....................................................................................37
5.11 NYSE Listing.......................................................................................37
5.12 Company Affiliate Agreement........................................................................38
5.13 Regulatory Filings; Reasonable Efforts.............................................................38
5.14 No Rights Plan Amendment...........................................................................38
5.15 Termination of 401(k) Plan.........................................................................38
5.16 Termination of Severance and Salary Continuation Plans.............................................39
-ii-
4
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE VI CONDITIONS TO THE MERGER..................................................................................39
6.1 Conditions to Obligations of Each Party to Effect the Merger.......................................39
6.2 Additional Conditions to Obligations of Company....................................................40
6.3 Additional Conditions to the Obligations of Parent and Merger Sub..................................40
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER........................................................................42
7.1 Termination........................................................................................42
7.2 Notice of Termination; Effect of Termination.......................................................43
7.3 Fees and Expenses..................................................................................44
7.4 Amendment..........................................................................................45
7.5 Extension; Waiver..................................................................................45
ARTICLE VIII GENERAL PROVISIONS......................................................................................45
8.1 Non-Survival of Representations and Warranties.....................................................45
8.2 Notices............................................................................................45
8.3 Interpretation; Knowledge..........................................................................46
8.4 Counterparts.......................................................................................47
8.5 Entire Agreement; Third Party Beneficiaries........................................................47
8.6 Severability.......................................................................................47
8.7 Other Remedies; Specific Performance...............................................................47
8.8 Governing Law......................................................................................48
8.9 Rules of Construction..............................................................................48
8.10 Assignment.........................................................................................48
8.11 WAIVER OF JURY TRIAL...............................................................................48
-iii-
5
INDEX OF EXHIBITS
-----------------
Exhibit A Form of Company Voting Agreement
Exhibit B Form of Stock Option Agreement
Exhibit C Form of Company Affiliate Agreement
-iv-
6
AGREEMENT AND PLAN OF REORGANIZATION
AND MERGER
This AGREEMENT AND PLAN OF REORGANIZATION AND MERGER is made and
entered into as of February 21, 1999, and amended March 5, 1999, among LSI Logic
Corporation, a Delaware corporation ("Parent"), Stealth Acquisition Corporation,
a Delaware corporation and a wholly-owned subsidiary of Parent ("Merger Sub"),
and SEEQ Technology Incorporated, a Delaware corporation ("Company").
RECITALS
--------
A. Upon the terms and subject to the conditions of this Agreement (as
defined in Section 1.2 below) and in accordance with the Delaware General
Corporation Law ("Delaware Law"), Parent and Company intend to enter into a
business combination transaction.
B. The Board of Directors of Company (i) has determined that the Merger
(as defined in Section 1.1) is consistent with and in furtherance of the
long-term business strategy of Company and fair to, and in the best interests
of, Company and its stockholders, (ii) has approved this Agreement, the Merger
and the other transactions contemplated by this Agreement and (iii) has
determined to recommend that the stockholders of Company adopt and approve this
Agreement and approve the Merger.
C. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, certain
affiliates of Company are entering into Voting Agreements in substantially the
form attached hereto as Exhibit A (the "Company Voting Agreements").
D. Concurrently with the execution of this Agreement, and as a condition
and inducement to Parent's willingness to enter into this Agreement, Company
shall execute and deliver a Stock Option Agreement in favor of Parent in
substantially the form attached hereto as Exhibit B (the "Company Stock Option
Agreement"). The Board of Directors of Company has approved the Company Stock
Option Agreement.
E. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
F. It is also intended by the parties hereto that the Merger shall
qualify for accounting treatment as a pooling of interests.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
7
ARTICLE I
THE MERGER
1.1 The Merger. At the Effective Time (as defined in Section 1.2) and
subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware Law, Merger Sub shall be merged with and into
Company (the "Merger"), the separate corporate existence of Merger Sub shall
cease and Company shall continue as the surviving corporation. Company as the
surviving corporation after the Merger is hereinafter sometimes referred to as
the "Surviving Corporation."
1.2 Effective Time; Closing. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a Certificate of Merger with the Secretary of State of the State of Delaware in
accordance with the relevant provisions of Delaware Law (the "Certificate of
Merger") (the time of such filing (or such later time as may be agreed in
writing by Company and Parent and specified in the Certificate of Merger) being
the "Effective Time") as soon as practicable on or after the Closing Date (as
herein defined). Unless the context otherwise requires, the term "Agreement" as
used herein refers collectively to this Agreement and Plan of Reorganization and
Merger and the Certificate of Merger. The closing of the Merger (the "Closing")
shall take place at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, at a time and date to be specified by the parties,
which shall be no later than the second business day after the satisfaction or
waiver of the conditions set forth in Article VI, or at such other time, date
and location as the parties hereto agree in writing (the "Closing Date").
1.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and the applicable provisions of
Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time all the property, rights, privileges, powers and
franchises of Company and Merger Sub shall vest in the Surviving Corporation,
and all debts, liabilities and duties of Company and Merger Sub shall become the
debts, liabilities and duties of the Surviving Corporation.
1.4 Certificate of Incorporation; Bylaws.
(a) At the Effective Time, the Certificate of Incorporation of
Merger Sub, as in effect immediately prior to the Effective Time, shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided by law and such Certificate of Incorporation of the
Surviving Corporation; provided, however, that at the Effective Time the
Certificate of Incorporation of the Surviving Corporation shall be amended so
that the name of the Surviving Corporation shall be SEEQ Technology
Incorporated.
(b) The Bylaws of Merger Sub, as in effect immediately prior to the
Effective Time, shall be, at the Effective Time, the Bylaws of the Surviving
Corporation until thereafter amended.
1.5 Directors and Officers. The initial directors of the Surviving
Corporation shall be the directors of Merger Sub immediately prior to the
Effective Time, until their respective successors are
-2-
8
duly elected or appointed and qualified. The initial officers of the Surviving
Corporation shall be the officers of Merger Sub immediately prior to the
Effective Time, until their respective successors are duly appointed.
1.6 Effect on Capital Stock. Subject to the terms and conditions of this
Agreement, at the Effective Time, by virtue of the Merger and without any action
on the part of Merger Sub, Company or the holders of any of the following
securities, the following shall occur:
(a) Conversion of Company Common Stock. Each share of Common Stock,
$0.01 par value per share, of Company including, with respect to each such share
of Company Common Stock, the associated Rights (as defined in that certain
Rights Agreement (the "Company Rights Plan") dated as of April 21, 1995, as
amended, between the Company and American Stock Transfer and Trust Company as
Rights Agent) (the "Company Common Stock") issued and outstanding immediately
prior to the Effective Time, other than any shares of Company Common Stock to be
canceled pursuant to Section 1.6(b), will be canceled and extinguished and
automatically converted (subject to Sections 1.6(e) and (f)) into the right to
receive that number of shares of Common Stock of Parent equal to the Exchange
Ratio (as defined below) (the "Parent Common Stock") upon surrender of the
certificate representing such shares of Company Common Stock in the manner
provided in Section 1.7 (or in the case of a lost, stolen or destroyed
certificate, upon delivery of an affidavit (and bond, if required) in the manner
provided in Section 1.9). "Exchange Ratio" shall mean 0.1095; provided, that if
the average closing sale price of one share of Parent Common Stock as reported
on the New York Stock Exchange (the "NYSE") for the ten (10) consecutive trading
days ending on the trading day immediately preceding the Closing Date (the
"Average Price") is less than $24.00, Exchange Ratio shall mean the quotient
determined by dividing 2.628 by the Average Price; provided, further, that if
the Average Price is higher than $30.00, Exchange Ratio shall mean the quotient
determined by dividing 3.285 by the Average Price. If any shares of Company
Common Stock outstanding immediately prior to the Effective Time are unvested or
are subject to a repurchase option, risk of forfeiture or other condition under
any applicable restricted stock purchase agreement or other agreement with the
Company, then the shares of Parent Common Stock issued in exchange for such
shares of Company Common Stock will also be unvested and subject to the same
repurchase option, risk of forfeiture or other condition, and the certificates
representing such shares of Parent Common Stock may accordingly be marked with
appropriate legends. The Company shall take all action that may be necessary to
ensure that, from and after the Effective Time, Parent is entitled to exercise
any such repurchase option or other right set forth in any such restricted stock
purchase agreement or other agreement.
(b) Cancellation of Parent-Owned Stock. Each share of Company Common
Stock held by Company or owned by Merger Sub, Parent or any direct or indirect
wholly-owned subsidiary of Parent immediately prior to the Effective Time shall
be canceled and extinguished without any conversion thereof.
(c) Stock Options; Employee Stock Purchase Plan. At the Effective
Time, all options to purchase Company Common Stock then outstanding under
Company's Restated 1982 Stock Option Plan (the "1982 Option Plan") and under
Company's 1989 Nonemployee Director Stock Option
-3-
9
Plan (the "Nonemployee Director Plan") shall be assumed by Parent in accordance
with Section 5.8 hereof. Purchase rights outstanding under Company's Restated
Periodic Purchase Plan (the "Purchase Plan") shall be treated as set forth in
Section 5.8.
(d) Capital Stock of Merger Sub. Each share of Common Stock, $0.01
par value per share, of Merger Sub (the "Merger Sub Common Stock") issued and
outstanding immediately prior to the Effective Time shall be converted into one
(1) validly issued, fully paid and nonassessable share of Common Stock, $0.01
par value per share, of the Surviving Corporation. Each certificate evidencing
ownership of shares of Merger Sub Common Stock shall evidence ownership of such
shares of capital stock of the Surviving Corporation.
(e) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into Parent Common Stock or Company Common Stock), reorganization,
recapitalization, reclassification or other like change with respect to Parent
Common Stock or Company Common Stock occurring on or after the date hereof and
prior to the Effective Time.
(f) Fractional Shares. No fraction of a share of Parent Common Stock
will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of Company Common Stock who would otherwise be entitled to a fraction of
a share of Parent Common Stock (after aggregating all fractional shares of
Parent Common Stock that otherwise would be received by such holder) shall, upon
surrender of such holder's Certificates(s) (as defined in Section 1.7(c))
receive from Parent an amount of cash (rounded to the nearest whole cent),
without interest, equal to the product of (i) such fraction, multiplied by (ii)
the average closing price of one share of Parent Common Stock for the five (5)
most recent days that Parent Common Stock has traded ending on the trading day
immediately prior to the Effective Time, as reported on the NYSE.
1.7 Surrender of Certificates.
(a) Exchange Agent. Parent shall select a bank or trust company
reasonably acceptable to Company to act as the exchange agent (the "Exchange
Agent") in the Merger.
(b) Parent to Provide Common Stock. Promptly after the Effective
Time, Parent shall make available to the Exchange Agent for exchange in
accordance with this Article I, the shares of Parent Common Stock issuable
pursuant to Section 1.6 in exchange for outstanding shares of Company Common
Stock, and cash in an amount sufficient for payment in lieu of fractional shares
pursuant to Section 1.6(f) and any dividends or distributions to which holders
of shares of Company Common Stock may be entitled pursuant to Section 1.7(d).
(c) Exchange Procedures. Promptly after the Effective Time, Parent
shall cause the Exchange Agent to mail to each holder of record (as of the
Effective Time) of a certificate or certificates (the "Certificates"), which
immediately prior to the Effective Time represented outstanding shares of
-4-
10
Company Common Stock whose shares were converted into the right to receive
shares of Parent Common Stock pursuant to Section 1.6, cash in lieu of any
fractional shares pursuant to Section 1.6(f) and any dividends or other
distributions pursuant to Section 1.7(d), (i) a letter of transmittal in
customary form (which shall specify that delivery shall be effected, and risk of
loss and title to the Certificates shall pass, only upon delivery of the
Certificates to the Exchange Agent and shall contain such other provisions as
Parent may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing shares
of Parent Common Stock, cash in lieu of any fractional shares pursuant to
Section 1.6(f) and any dividends or other distributions pursuant to Section
1.7(d). Upon surrender of Certificates for cancellation to the Exchange Agent or
to such other agent or agents as may be appointed by Parent, together with such
letter of transmittal, duly completed and validly executed in accordance with
the instructions thereto, the holders of such Certificates shall be entitled to
receive in exchange therefor certificates representing the number of whole
shares of Parent Common Stock into which their shares of Company Common Stock
were converted at the Effective Time, payment in lieu of fractional shares which
such holders have the right to receive pursuant to Section 1.6(f) and any
dividends or distributions payable pursuant to Section 1.7(d), and the
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates will be deemed from and after the Effective Time, for
all corporate purposes, subject to Section 1.7(d) as to the payment of
dividends, to evidence only the ownership of the number of full shares of Parent
Common Stock into which such shares of Company Common Stock shall have been so
converted and the right to receive an amount in cash in lieu of the issuance of
any fractional shares in accordance with Section 1.6(f) and any dividends or
distributions payable pursuant to Section 1.7(d).
(d) Distributions With Respect to Unexchanged Shares. No dividends
or other distributions declared or made after the date of this Agreement with
respect to Parent Common Stock with a record date after the Effective Time will
be paid to the holders of any unsurrendered Certificates with respect to the
shares of Parent Common Stock represented thereby until the holders of record of
such Certificates shall surrender such Certificates. Subject to applicable law,
following surrender of any such Certificates, the Exchange Agent shall deliver
to the record holders thereof, without interest, certificates representing whole
shares of Parent Common Stock issued in exchange therefor along with payment in
lieu of fractional shares pursuant to Section 1.6(f) hereof and the amount of
any such dividends or other distributions with a record date after the Effective
Time payable with respect to such whole shares of Parent Common Stock.
(e) Transfers of Ownership. If certificates representing shares of
Parent Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the persons
requesting such exchange will have paid to Parent or any agent designated by it
any transfer or other taxes required by reason of the issuance of certificates
representing shares of Parent Common Stock in any name other than that of the
registered holder of the Certificates surrendered, or established to the
satisfaction of Parent or any agent designated by it that such tax has been paid
or is not payable.
-5-
11
(f) Required Withholding. Each of the Exchange Agent, Parent and the
Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Company Common Stock such amounts as may be required
to be deducted or withheld therefrom under the Code or under any provision of
state, local or foreign tax law or under any other applicable legal requirement.
To the extent such amounts are so deducted or withheld, such amounts shall be
treated for all purposes under this Agreement as having been paid to the person
to whom such amounts would otherwise have been paid.
(g) No Liability. Notwithstanding anything to the contrary in this
Section 1.7, neither the Exchange Agent, Parent, the Surviving Corporation nor
any party hereto shall be liable to a holder of shares of Parent Common Stock or
Company Common Stock for any amount properly paid to a public official pursuant
to any applicable abandoned property, escheat or similar law.
1.8 No Further Ownership Rights in Company Common Stock. All shares of
Parent Common Stock issued in accordance with the terms hereof (including any
cash paid in respect thereof pursuant to Section 1.6(f) and 1.7(d)) shall be
deemed to have been issued in full satisfaction of all rights pertaining to such
shares of Company Common Stock, and there shall be no further registration of
transfers on the records of the Surviving Corporation of shares of Company
Common Stock which were outstanding immediately prior to the Effective Time. If
after the Effective Time Certificates are presented to the Surviving Corporation
for any reason, they shall be canceled and exchanged as provided in this Article
I.
1.9 Lost, Stolen or Destroyed Certificates. In the event that any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, certificates
representing the shares of Parent Common Stock into which the shares of Company
Common Stock represented by such Certificates were converted pursuant to Section
1.6, cash for fractional shares, if any, as may be required pursuant to Section
1.6(f) and any dividends or distributions payable pursuant to Section 1.7(d);
provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance of such certificates representing shares of Parent
Common Stock, cash and other distributions, require the owner of such lost,
stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
1.10 Tax and Accounting Consequences.
(a) It is intended by the parties hereto that the Merger shall
constitute a reorganization within the meaning of Section 368 of the Code. The
parties hereto adopt this Agreement as a "plan of reorganization" within the
meaning of Sections 1.368-2(g) and 1.368-3(a) of the United States Income Tax
Regulations.
-6-
12
(b) It is intended by the parties hereto that the Merger shall be
treated as a pooling of interests for accounting purposes.
1.11 Taking of Necessary Action; Further Action. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of Company and Merger Sub, the officers and directors of Company
and Merger Sub will take all such lawful and necessary action. Parent shall
cause Merger Sub to perform all of its obligations relating to this Agreement
and the transactions contemplated thereby.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY
Company represents and warrants to Parent and Merger Sub, subject to
such exceptions as are specifically disclosed in writing in the disclosure
letter and referencing a specific representation supplied by Company to Parent
dated as of the date hereof and certified by a duly authorized officer of
Company (the "Company Schedule"), as follows:
2.1 Organization and Qualification; No Subsidiaries.
(a) Company has no subsidiaries. Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to own, lease and
operate its assets and properties and to carry on its business as it is now
being conducted. Company is in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates, approvals
and orders ("Approvals") necessary to own, lease and operate the properties it
purports to own, operate or lease and to carry on its business as it is now
being conducted, except where the failure to have such Approvals would not,
individually or in the aggregate, be material to the Company. Company is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing, in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not, either individually
or in the aggregate, be material to the Company.
(b) Company has not agreed nor is Company obligated to make or be
bound by any written, oral or other agreement, contract, sub-contract, lease,
binding understanding, instrument, note, option, warranty, purchase order,
license, sub-license, insurance policy, benefit plan, commitment, or undertaking
of any nature, as of the date hereof or as may hereafter be in effect under
which it may become obligated to make, any future investment in or capital
contribution to any other entity. Company does not directly or indirectly own
any equity or similar interest in or any interest convertible, exchangeable or
exercisable for, any equity or similar interest in, any corporation,
partnership, joint venture or other business, association or entity.
-7-
13
2.2 Certificate of Incorporation and Bylaws. Company has previously
furnished to Parent a complete and correct copy of its Certificate of
Incorporation and Bylaws as amended to date. Such Certificate of Incorporation
and Bylaws are in full force and effect. Company is not in violation of any of
the provisions of its Certificate of Incorporation or Bylaws.
2.3 Capitalization.
(a) The authorized capital stock of Company consists of 40,000,000
shares of Company Common Stock and 1,000,000 shares of Preferred Stock ("Company
Preferred Stock"), each having a par value of $0.01 per share. At the close of
business on the date hereof (i) 32,252,752 shares of Company Common Stock were
issued and outstanding (excluding 196,400 shares of Company Common Stock held in
treasury) all of which are validly issued, fully paid and nonassessable, (ii)
196,400 shares of Company Common Stock were held in treasury by Company, (iii)
105,693 shares of Company Common Stock were available for future issuance
pursuant to Company's Purchase Plan (iv) 4,907,820 shares of Company Common
Stock were reserved for issuance upon the exercise of outstanding options to
purchase Company Common Stock under the 1982 Option Plan, (v) 1,099,893 shares
of Company Common Stock were available for future grant under the 1982 Option
Plan, (vi) 190,000 shares of Company Common Stock were reserved for issuance
upon the exercise of outstanding options to purchase Company Common Stock under
the Company's Nonemployee Director Plan; and (vii) 110,000 shares of Company
Common Stock were available for future grants under the Nonemployee Director
Plan. As of the date hereof, no shares of Company Preferred Stock were issued or
outstanding and 350,000 shares of Company Series A Preferred were reserved for
issuance upon exercise of the Company Rights, and 100,000 shares of Company
Series B Preferred Stock were reserved for issuance pursuant to the Company
Option Agreement. Section 2.3(a) of the Company Schedule sets forth the
following information with respect to each Company Stock Option (as defined in
Section 5.8) outstanding as to the date of the Agreement: (i) the name of the
optionee; (ii) the particular plan pursuant to which such Company Stock Option
was granted; (iii) the number of shares of Company Common Stock subject to such
Company Stock Option; (iv) the exercise price of such Company Stock Option; (v)
the date on which such Company Stock Option was granted; and (vi) whether the
exercisability of such option will be accelerated in any way by the transactions
contemplated by this Agreement, and indicates the extent of acceleration.
Company has made available to Parent accurate and complete copies of all stock
option plans pursuant to which the Company has granted such Company Stock
Options that are currently outstanding and the form of all stock option
agreement evidencing such Company Stock Options. All shares of Company Common
Stock subject to the issuance aforesaid, upon issuance on the terms and
conditions specified in the instrument pursuant to which they are issuable,
would be duly authorized, validly issued, fully paid and non accessible. Except
as set forth in Section 2.3(a) of the Company Schedule, there are no commitments
or agreements of any character to which the Company is bound obligating the
Company to accelerate the vesting of any Company Stock Option as a result of the
Merger. All outstanding shares of Company Common Stock and all outstanding
Company Stock Options have been issued and granted in compliance with (i) all
applicable securities laws and other applicable federal, state, local,
municipal, foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issues, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any
-8-
14
Governmental Entity (as defined below) and (ii) all requirements set forth in
applicable contracts, agreements, and instruments.
(b) Except as set forth in Section 2.3(b) of the Company Schedule or
as set forth in Section 2.3(a) hereof and except for the Stock Option Agreement,
there are no subscriptions, options, warrants, equity securities, partnership
interests or similar ownership interests, calls, rights (including preemptive
rights), commitments or agreements of any character to which Company is a party
or by which it is bound obligating Company to issue, deliver or sell, or cause
to be issued, delivered or sold, or repurchase, redeem or otherwise acquire, or
cause the repurchase, redemption or acquisition of, any shares of capital stock,
partnership interests or similar ownership interests of the Company or
obligating the Company to grant, extend, accelerate the vesting of or enter into
any such subscription, option, warrant, equity security, call, right, commitment
or agreement. As of the date of this Agreement, except as contemplated by this
Agreement and except for the Company Rights Plan, there are no registration
rights and there is, except for the Company Voting Agreements and the Company
Rights Plan, no voting trust, proxy, rights plan, antitakeover plan or other
agreement or understanding to which the Company is a party or by which it is
bound with respect to any equity security of any class of the Company.
Stockholders of the Company will not be entitled to dissenters' rights under
applicable state law in connection with the Merger.
2.4 Authority Relative to this Agreement. Company has all necessary
corporate power and authority to execute and deliver this Agreement and the
Company Option Agreement and to perform its obligations hereunder and thereunder
and, subject to obtaining the approval of the stockholders of Company of the
Merger, to consummate the transactions contemplated hereby and thereby. The
execution and delivery of this Agreement and the Company Option Agreement by
Company and the consummation by Company of the transactions contemplated hereby
and thereby have been duly and validly authorized by all necessary corporate
action on the part of Company and no other corporate proceedings on the part of
Company are necessary to authorize this Agreement, the Company Option Agreement
or to consummate the transactions so contemplated (other than, with respect to
the Merger, the approval and adoption of this Agreement by holders of a majority
of the outstanding shares of Company Common Stock in accordance with Delaware
Law and Company's Certificate of Incorporation and Bylaws). This Agreement and
the Company Option Agreement have been duly and validly executed and delivered
by Company and, assuming the due authorization, execution and delivery by Parent
and Merger Sub, constitute legal and binding obligations of Company, enforceable
against Company in accordance with their respective terms.
2.5 No Conflict; Required Filings and Consents.
2.5.1 The execution and delivery of this Agreement and the Company
Option Agreement by Company do not, and the performance of this Agreement and
the Company Option Agreement by Company shall not, (i) conflict with or violate
the Certificate of Incorporation or Bylaws of Company, (ii) subject to obtaining
the approval of Company's stockholders of the Merger and compliance with the
requirements set forth in Section 2.5.2 below, conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to Company or by which
its properties is bound or
-9-
15
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
impair Company's rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of Company pursuant to, any material note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Company is a party or by which Company
or its properties are bound or affected.
2.5.2 The execution and delivery of this Agreement and the Company
Stock Option Agreement by Company do not, and the performance of this Agreement
by Company shall not, require any consent, approval, authorization or permit of,
or filing with or notification to, any court, administrative agency, commission,
governmental or regulatory authority, domestic or foreign (a "Governmental
Entity"), except (A) for applicable requirements, if any, of the Securities Act
of 1933, as amended (the "Securities Act"), the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), state securities laws ("Blue Sky Laws"), the
pre-merger notification requirements (the "HSR Approval") of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR Act")
and of foreign Governmental Entities and the rules and regulations thereunder,
the rules and regulations of the Nasdaq Stock Market, and the filing and
recordation of the Merger Certificate as required by the Delaware Law and (B)
where the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, would not be material to the Company
or Parent or have a material adverse effect on the parties hereto, prevent
consummation of the Merger or otherwise prevent the parties hereto from
performing their obligations under this Agreement.
2.6 Compliance; Permits.
2.6.1 Company is not in conflict with, or in default or violation
of, (i) any law, rule, regulation, order, judgment or decree applicable to
Company or by which its properties is bound or affected, or (ii) any material
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Company is a party or by
which Company or its properties is bound or affected, except in the case of
clauses (i) and (ii) above for any conflicts, defaults or violations that
(individually or in the aggregate) would not cause the Company to lose any
material benefit or incur any material liability. No investigation or review by
any governmental or regulatory body or authority is pending or, to the knowledge
of Company, threatened against Company, nor has any governmental or regulatory
body or authority indicated an intention to conduct the same, other than, in
each such case, those the outcome of which could not, individually or in the
aggregate, reasonably be expected to have the effect of prohibiting or
materially impairing any business practice of the Company, any acquisition of
material property by the Company or the conduct of business by the Company.
2.6.2 Company holds all permits, licenses, variances, exemptions,
orders and approvals from governmental authorities which are material to
operation of the business of Company (collectively, the "Company Permits").
Company is in compliance in all material respects with the terms of the Company
Permits.
-10-
16
2.7 SEC Filings; Financial Statements.
2.7.1 Company has made available to Parent a correct and complete
copy of each report, schedule, registration statement and definitive proxy
statement filed by Company with the Securities and Exchange Commission ("SEC")
since June 30, 1997 (the "Company SEC Reports"), which are all the forms,
reports and documents required to be filed by Company with the SEC since June
30, 1997. The Company SEC Reports (A) were prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
(B) did not at the time they were filed and if amended or superseded by a filing
prior to the date of this Agreement then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
2.7.2 Each set of financial statements (including, in each case, any
related notes thereto) contained in the Company SEC Reports was prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of unaudited statements, do not contain
footnotes as permitted by Form 10-Q of the Exchange Act) and each fairly
presents the financial position of Company as at the respective dates thereof
and the results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal adjustments which were not or are not expected to be material in amount.
2.7.3 Company has previously furnished to Parent a complete and
correct copy of any amendments or modifications, which have not yet been filed
with the SEC but which are required to be filed, to agreements, documents or
other instruments which previously had been filed by Company with the SEC
pursuant to the Securities Act or the Exchange Act.
2.8 No Undisclosed Liabilities. Company does not have any liabilities
(absolute, accrued, contingent or otherwise) of a nature required to be
disclosed on a balance sheet or in the related notes to the financial statements
prepared in accordance with GAAP which are, individually or in the aggregate,
material to the business, results of operations or financial condition of
Company, except (i) liabilities provided for in Company's balance sheet as of
December 31, 1998 (the "Company Balance Sheet") or (ii) liabilities incurred
since December 31, 1998 in the ordinary course of business, none of which is
material to the business, results of operations, financial condition or
prospects of Company.
2.9 Absence of Certain Changes or Events. Since December 31, 1998, there
has not been: (i) any Material Adverse Effect on Company, (ii) any declaration,
setting aside or payment of any dividend on, or other distribution (whether in
cash, stock or property) in respect of, any of Company's capital stock, or any
purchase, redemption or other acquisition by Company of any of Company's capital
stock or any other securities of Company or any options, warrants, calls or
rights to acquire any such shares or other securities except for repurchases
from employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements, (iii) any split, combination
or reclassification of any of Company's capital stock, (iv) any granting by
Company of any increase in
-11-
17
compensation or fringe benefits, except for normal increases of cash
compensation in the ordinary course of business consistent with past practice,
or any payment by Company of any bonus, except for bonuses made in the ordinary
course of business consistent with past practice, or any granting by Company of
any increase in severance or termination pay or any entry by Company into any
currently effective employment, severance, termination or indemnification
agreement or any agreement the benefits of which are contingent or the terms of
which are materially altered upon the occurrence of a transaction involving
Company of the nature contemplated hereby, (v) entry by Company into any
licensing or other agreement with regard to the acquisition or disposition of
any Intellectual Property (as defined in Section 2.19) other than licenses in
the ordinary course of business consistent with past practice or any amendment
or consent with respect to any licensing agreement filed or required to be filed
by Company with the SEC, (vi) any material change by Company in its accounting
methods, principles or practices, except as required by concurrent changes in
GAAP, or (vii) any revaluation by Company of any of its assets, including,
without limitation, writing down the value of capitalized inventory or writing
off notes or accounts receivable.
2.10 Absence of Litigation. There are no claims, actions, suits or
proceedings pending or, to the knowledge of Company, threatened (or, to the
knowledge of Company, any governmental or regulatory investigation pending or
threatened) against Company or any properties or rights of Company, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign.
2.11 Employee Benefit Plans.
2.11.1 All employee compensation, incentive, fringe or benefit
plans, programs, policies, commitments or other arrangements (whether or not set
forth in a written document and including, without limitation, all "employee
benefit plans" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) covering any active, former
employee, director or consultant of Company, or any trade or business (whether
or not incorporated) which is a member of a controlled group or which is under
common control with Company within the meaning of Section 414 of the Code, or
with respect to which Company has or may in the future have liability, are
listed in Section 2.11.1 of the Company Schedule (the "Plans"). Company has
provided to Parent: (i) correct and complete copies of all documents embodying
each Plan including (without limitation) all amendments thereto, all related
trust documents, and all material written agreements and contracts relating to
each such Plan; (ii) the three (3) most recent annual reports (Form Series 5500
and all schedules and financial statements attached thereto), if any, required
under ERISA or the Code in connection with each Plan; (iii) the most recent
summary plan description together with the summary(ies) of material
modifications thereto, if any, required under ERISA with respect to each Plan;
(iv) all IRS determination, opinion, notification and advisory letters; (v) all
material correspondence to or from any governmental agency relating to any Plan;
(vi) all COBRA forms and related notices and (vii) all discrimination tests for
each Plan for the most recent three (3) plan years.
2.11.2 Each Plan has been maintained and administered in all
material respects in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and
-12-
18
regulations (foreign or domestic), including but not limited to ERISA, and the
Code, which are applicable to such Plans. No suit, action or other litigation
(excluding claims for benefits incurred in the ordinary course of Plan
activities) has been brought, or to the knowledge of Company is threatened,
against or with respect to any such Plan. There are no audits, inquiries or
proceedings pending or, to the knowledge of Company, threatened by the Internal
Revenue Service (the "IRS") or Department of Labor with respect to any Plans.
All contributions, reserves or premium payments required to be made or accrued
as of the date hereof to the Plans have been timely made or accrued. Section
2.11.2 of the Company Schedule includes a listing of the accrued vacation
liability of Company as of December 31, 1998. Any Plan intended to be qualified
under Section 401(a) of the Code and each trust intended to qualify under
Section 501(a) of the Code (i) has either obtained a favorable determination,
notification, advisory and/or opinion letter, as applicable, as to its qualified
status from the IRS or still has a remaining period of time under applicable
Treasury Regulations or IRS pronouncements in which to apply for such letter and
to make any amendments necessary to obtain a favorable determination, and (ii)
incorporates or has been amended to incorporate all provisions required to
comply with the Tax Reform Act of 1986 and subsequent legislation. Company does
not have any plan or commitment to establish any new Plan, to modify any Plan
(except to the extent required by law or to conform any such Plan to the
requirements of any applicable law, in each case as previously disclosed to
Parent in writing, or as required by this Agreement), or to enter into any new
Plan. Each Plan can be amended, terminated or otherwise discontinued after the
Effective Time in accordance with its terms, without liability to Parent,
Company or any of its Affiliates (other than ordinary administration expenses).
2.11.3 Neither Company nor any of its Affiliates has at any time
ever maintained, established, sponsored, participated in, or contributed to any
plan subject to Title IV of ERISA or Section 412 of the Code and at no time has
Company contributed to or been requested to contribute to any "multiemployer
plan," as such term is defined in ERISA. Neither Company nor any officer or
director of Company is subject to any liability or penalty under Section 4975
through 4980B of the Code or Title I of ERISA. There are no audits, inquiries or
proceedings pending or, to the knowledge of Company, threatened by the IRS or
DOL with respect to any Company Employee Plan. No "prohibited transaction,"
within the meaning of Section 4975 of the Code or Sections 406 and 407 of ERISA,
and not otherwise exempt under Section 408 of ERISA, has occurred with respect
to any Company Employee Plan.
2.11.4 Neither Company nor any of its Affiliates has, prior to the
Effective Time and in any material respect, violated any of the health
continuation requirements of the Consolidated Omnibus Budget Reconciliation Act
of 1985, as amended ("COBRA"), the requirements of FMLA or any similar
provisions of state law applicable to Company employees. None of the Plans
promises or provides retiree medical or other retiree welfare benefits to any
person except as required by applicable law and Company has not represented,
promised or contracted (whether in oral or written form) to provide such retiree
benefits to any employee, former employee, director, consultant or other person,
except to the extent required by statute.
2.11.5 Company is not bound by or subject to (and none of its assets
or properties is bound by or subject to) any arrangement with any labor union.
No employee of Company is represented
-13-
19
by any labor union or covered by any collective bargaining agreement and, to the
knowledge of Company, no campaign to establish such representation is in
progress. There is no pending or, to the knowledge of Company, threatened labor
dispute involving Company and any group of its employees nor has Company
experienced any labor interruptions over the past three years, and Company
considers its relationship with its employees to be good. The Company is in
compliance in all material respects with all applicable material foreign,
federal, state and local laws, rules and regulations respecting employment,
employment practices, terms and conditions of employment and wages and hours.
2.11.6 Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, bonus
or otherwise) becoming due to any stockholder, director or employee of Company
under any Plan or otherwise, (ii) materially increase any benefits otherwise
payable under any Plan, or (iii) result in the acceleration of the time of
payment or vesting of any such benefits.
2.11.7 Each International Employee Plan (as defined below) has been
established, maintained and administered in compliance with its terms and
conditions and with the requirements prescribed by any and all statutory or
regulatory laws that are applicable to such International Employee Plan.
Furthermore, no International Employee Plan has unfunded liabilities, that as of
the Effective Time, will not be offset by insurance or fully accrued. Except as
required by law, no condition exists that would prevent the Company or Parent
from terminating or amending any International Employee Plan at any time for any
reason. For purposes of this Section "International Employee Plan" shall mean
each Plan that has been adopted or maintained by the Company, whether informally
or formally, for the benefit of current or former employees of the Company
outside the United States.
2.12 Labor Matters. (i) There are no controversies pending or, to the
knowledge of Company, threatened, between Company and any of its employees; (ii)
as of the date of this Agreement, Company is not a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by Company nor does Company know of any activities or proceedings of
any labor union to organize any such employees; and (iii) as of the date of this
Agreement, Company has no knowledge of any strikes, slowdowns, work stoppages or
lockouts, or threats thereof, by or with respect to any employees of Company.
2.13 Registration Statement; Proxy Statement. None of the information
supplied or to be supplied by Company for inclusion or incorporation by
reference in (i) the registration statement on Form S-4 to be filed with the SEC
by Parent in connection with the issuance of the Parent Common Stock in or as a
result of the Merger (the "S-4") will, at the time the S-4 becomes effective
under the Securities Act, 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; and (ii) the proxy statement/prospectus (the
"Proxy Statement/Prospectus") to be filed with the SEC by Company pursuant to
Section 5.1(a) hereof will, at the dates mailed to the stockholders of Company,
at the times of the stockholders meeting of Company (the "Company Stockholders'
Meeting") in connection with the transactions contemplated hereby and
-14-
20
as of the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Proxy Statement will comply as to form in all
material respects with the provisions of the Exchange Act and the rules and
regulations promulgated by the SEC thereunder. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to any information
supplied by Parent or Merger Sub which is contained in any of the foregoing
documents.
2.14 Restrictions on Business Activities. Except as set forth in Section
2.14 of the Company Schedule, there is no agreement, commitment, judgment,
injunction, order or decree binding upon Company or to which the Company is a
party which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of Company, any
acquisition of property by Company or the conduct of business by Company as
currently conducted.
2.15 Title to Property. Company does not own any material real property.
Section 2.15 of the Company Schedule lists all real and personal property leases
to which the Company is a party as of the date of this Agreement that provide
for annual payments in excess of $100,000. Company has good and defensible title
to all of its material properties and assets, free and clear of all liens,
charges and encumbrances except liens for taxes not yet due and payable and such
liens or other imperfections of title, if any, as do not materially detract from
the value of or interfere with the present use of the property affected thereby;
and all leases pursuant to which Company leases from others material amounts of
real or personal property are in good standing, valid and effective in
accordance with their respective terms, and there is not, under any of such
leases, any existing material default or event of default (or any event which
with notice or lapse of time, or both, would constitute a material default and
in respect of which Company has not taken adequate steps to prevent such default
from occurring). All the plants, structures and equipment of Company, except
such as may be under construction, are in good operating condition and repair,
in all material respects.
2.16 Taxes.
2.16.1 Definition of Taxes. For the purposes of this Agreement,
"Tax" or "Taxes" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
-15-
21
2.16.2 Tax Returns and Audits.
(a) The Company has timely filed all federal, state, local
and foreign returns, estimates, information statements and reports ("Returns")
relating to Taxes required to be filed by the Company with any Tax authority,
except such Returns which are not material to the Company. The Company has paid
all Taxes shown to be due on such Returns.
(b) The Company as of the Effective Time will have withheld
with respect to its employees all federal and state income taxes, Taxes pursuant
to the Federal Insurance Contribution Act ("FICA"), Taxes pursuant to the
Federal Unemployment Tax Act ("FUTA") and other Taxes required to be withheld,
except such Taxes which are not material to the Company.
(c) Except to the extent accrued or reserved on the Company
Balance Sheet, the Company has not been delinquent in the payment of any
material Tax nor is there any material Tax deficiency outstanding, proposed (to
the knowledge of the Company) or assessed against the Company, nor has the
Company executed any unexpired waiver of any statute of limitations on or
extending the period for the assessment or collection of any Tax.
(d) To the knowledge of the Company, no audit or other
examination of any Return of the Company by any Tax authority is presently in
progress, nor has the Company been notified of any request for such an audit or
other examination.
(e) No adjustment relating to any Returns filed by the
Company has been proposed in writing formally or informally by any Tax authority
to the Company or any representative thereof.
(f) The Company does not have any liability for any material
unpaid Taxes which has not been accrued for or reserved on the Company Balance
Sheet in accordance with GAAP, whether asserted or unasserted, contingent or
otherwise, which is material to the Company, other than any liability for unpaid
Taxes that may have accrued since the date of the Company Balance Sheet in
connection with the operation of the business of the Company in the ordinary
course.
(g) There is no contract, agreement, plan or arrangement to
which the Company is a party as of the date of this Agreement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of the Company that, individually or collectively, would reasonably be
expected to give rise to the payment of any amount that would not be deductible
pursuant to Sections 280G, 404 or 162(m) of the Code. There is no contract,
agreement, plan or arrangement to which the Company is a party or by which it is
bound to compensate any individual for excise taxes paid pursuant to Section
4999 of the Code.
-16-
22
(h) The Company has not filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
the Code) owned by the Company.
(i) The Company is not a party to nor does the Company have
any obligation under any tax-sharing, tax indemnity or tax allocation agreement
or arrangement.
(j) None of the Company's assets are tax exempt use property
within the meaning of Section 168(h) of the Code.
2.17 Environmental Matters. The Company (i) has obtained all applicable
and material permits, licenses and other authorizations that are required under
Environmental Laws; (ii) is in compliance with all material terms and conditions
of such required permits, licenses and authorizations, and also is in compliance
with all other material limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
such laws or contained in any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder;
(iii) is not aware of and has not received notice of any event, condition,
circumstance, activity, practice, incident, action or plan that is reasonably
likely to interfere with or prevent continued compliance or that would give rise
to any common law or statutory liability, or otherwise form the basis of any
Environmental Claim with respect to the Company or any person or entity whose
liability for any Environmental Claim the Company has retained or assumed either
contractually or by operation of law; (iv) has not disposed of, released,
discharged or emitted any Hazardous Materials into the soil or groundwater at
any properties owned or leased at any time by the Company, or at any other
property, or exposed any employee or other individual to any Hazardous Materials
or condition in such a manner as would result in any material liability or
result in any corrective or remedial action obligation; and (v) has taken all
actions necessary under Environmental Laws to register any products or materials
required to be registered by the Company (or any of its agents) thereunder. No
Hazardous Materials are present in, on, or under (or, to the knowledge of the
Company, in the vicinity of) any properties owned, leased or used at any time
(including both land and improvements thereon) by the Company so as to give rise
to any material liability or corrective or remedial obligation of the Company
under any Environmental Laws. For the purposes of this Section 2.17,
"Environmental Claim" means any notice, claim, act, cause of action or
investigation by any person alleging potential liability (including potential
liability for investigatory costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal injuries or penalties)
arising out of, based on or resulting from (i) the presence, or release into the
environment, of any Hazardous Materials or (ii) any violation, or alleged
violation, of any Environmental Laws. "Environmental Laws" means all Federal,
state, local and foreign laws and regulations relating to pollution or the
environment (including ambient air, surface water, ground water, land surface or
subsurface strata) or the protection of human health and worker safety,
including, without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of Hazardous Materials, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials. "Hazardous Materials"
means chemicals,
-17-
23
pollutants, contaminants, wastes, toxic substances, radioactive and biological
materials, asbestos- containing materials (ACM), hazardous substances, petroleum
and petroleum products or any fraction thereof, excluding, however, Hazardous
Materials contained in products typically used for office and janitorial
purposes properly and safely maintained in accordance with Environmental Laws.
2.18 Brokers. Except for the fees payable to Broadview International LLC
pursuant to an engagement letter dated October 23, 1998, a copy of which has
been provided to Parent, Company has not incurred, nor will it incur, directly
or indirectly, any liability for brokerage or finders fees or agent's
commissions or any similar charges in connection with this Agreement or any
transaction contemplated hereby.
2.19 Intellectual Property. For the purposes of this Agreement, the
following terms have the following definitions:
"Intellectual Property" shall mean any or all of the following and
all rights in, arising out of, or associated therewith: (i) all
United States, international and foreign patents and applications
therefor and all reissues, divisions, renewals, extensions,
provisionals, continuations and continuations-in-part thereof; (ii)
all inventions (whether patentable or not), invention disclosures,
improvements, trade secrets, proprietary information, know how,
technology, technical data and customer lists, and all
documentation relating to any of the foregoing; (iii) all
copyrights, copyrights registrations and applications therefor, and
all other rights corresponding thereto throughout the world; (iv)
all industrial designs and any registrations and applications
therefor throughout the world; (v) all trade names, logos, common
law trademarks and service marks, trademark and service xxxx
registrations and applications therefor throughout the world; (vi)
all databases and data collections and all rights therein
throughout the world; (vii) all moral and economic rights of
authors and inventors, however denominated, throughout the world,
and (viii) any similar or equivalent rights to any of the foregoing
anywhere in the world.
"Company Intellectual Property" shall mean any Intellectual
Property that is now or hereafter owned by, or exclusively licensed
to, Company.
"Registered Intellectual Property" means all United States,
international and foreign: (i) patents and patent applications
(including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent-to-use applications, or
other registrations or applications related to trademarks; (iii)
registered copyrights and applications for copyright registration;
and (iv) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document
issued, filed with, or recorded by any state, government or other
public legal authority.
"Company Registered Intellectual Property" means all of the
Registered Intellectual Property owned by, or filed in the name of,
the Company.
-18-
24
2.19.1 Section 2.19.1 of the Company Schedule is a complete and
accurate list of all Company Registered Intellectual Property and specifies,
where applicable, the jurisdictions in which each such item of Company
Registered Intellectual Property has been issued or registered.
2.19.2 No Company Intellectual Property or product or service of
Company is subject to any proceeding or outstanding decree, order, judgment,
contract, license, agreement, or stipulation restricting in any manner the use,
transfer, or licensing thereof by Company, or which may affect the validity, use
or enforceability of such Company Intellectual Property.
2.19.3 To the best of Company's knowledge, each material item of
Company Registered Intellectual Property is valid and subsisting, all necessary
registration, maintenance and renewal fees currently due in connection with such
Company Registered Intellectual Property have been made and all necessary
documents, recordations and certificates in connection with such Company
Registered Intellectual Property have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or foreign
jurisdictions, as the case may be, for the purposes of maintaining such Company
Registered Intellectual Property.
2.19.4 To the best of Company's knowledge, Company owns and has
good and exclusive title to each material item of Company Intellectual Property
free and clear of any lien or encumbrance (excluding licenses and related
restrictions); and Company is the exclusive owner of all trademarks and trade
names used in connection with the operation or conduct of the business of
Company, including the sale of any products or the provision of any services by
Company.
2.19.5 Company owns exclusively, and has good title to, all
copyrighted works that are Company products or which Company otherwise expressly
purports to own.
2.19.6 To the extent that any material Intellectual Property has
been developed or created by a third party for Company, Company has a written
agreement with such third party with respect thereto and Company thereby either
(i) has obtained ownership of, and is the exclusive owner of, or (ii) has
obtained a license (sufficient for the conduct of its business as currently
conducted and as proposed to be conducted) to all such third party's
Intellectual Property in such work, material or invention by operation of law or
by valid assignment, to the fullest extent it is legally possible to do so.
2.19.7 Company has not transferred ownership of, or granted any
exclusive license with respect to, any Intellectual Property that is or was
material Company Intellectual Property, to any third party.
2.19.8 Section 2.19.8 of the Company Schedule lists all material
contracts, licenses and agreements to which Company is a party (i) with respect
to Company Intellectual Property licensed or transferred to any third party
(other than end-user licenses in the ordinary course); or (ii) pursuant to which
a third party has licensed or transferred any material Intellectual Property to
Company.
-19-
25
2.19.9 All contracts, licenses and agreements relating to Company
Intellectual Property are in full force and effect. The consummation of the
transactions contemplated by this Agreement will neither violate nor result in
the breach, modification, cancellation, termination, or suspension of such
contracts, licenses and agreements. Company is in material compliance with, and
has not materially breached any term of any such contracts, licenses and
agreements and, to the knowledge of Company, all other parties to such
contracts, licenses and agreements are in compliance with, and have not
materially breached any term of, such contracts, licenses and agreements.
Following the Closing Date, the Surviving Corporation will be permitted to
exercise all of Company's rights under such contracts, licenses and agreements
to the same extent Company would have been able to had the transactions
contemplated by this Agreement not occurred and without the payment of any
additional amounts or consideration other than ongoing fees, royalties or
payments which Company would otherwise be required to pay. Neither this
Agreement nor the transactions contemplated by this Agreement, including the
assignment to Parent or Merger Sub by operation of law or otherwise of any
contracts or agreements to which the Company is a party, will result in (i)
either Parent's or the Merger Sub's granting to any third party any right to or
with respect to any material Intellectual Property right owned by, or licensed
to, either of them, (ii) either the Parent's or the Merger Sub's being bound by,
or subject to, any non-compete or other material restriction on the operation or
scope or their respective businesses, or (iii) either the Parent's or the Merger
Sub's being obligated to pay any royalties or other material amounts to any
third party in excess of those payable by Parent or Merger Sub, respectively,
prior to the Closing.
2.19.10 To the best of Company's knowledge, the operation of the
business of the Company as such business currently is conducted, including
Company's design, development, manufacture, marketing and sale of the products
or services of Company (including products currently under development) has not,
does not and will not infringe or misappropriate the Intellectual Property of
any third party or, to its knowledge, constitute unfair competition or trade
practices under the laws of any jurisdiction.
2.19.11 Company has not received notice from any third party that
the operation of the business of Company or any act, product or service of
Company, infringes or misappropriates the Intellectual Property of any third
party or constitutes unfair competition or trade practices under the laws of any
jurisdiction.
2.19.12 To the knowledge of Company, no person has or is infringing
or misappropriating any Company Intellectual Property.
2.19.13 The Company has taken reasonable steps to protect Company's
rights in Company's confidential information and trade secrets that it wishes to
protect or any trade secrets or confidential information of third parties
provided to Company, and, without limiting the foregoing, Company has and
enforces a policy requiring each employee to execute a proprietary
information/confidentiality agreement substantially in the form provided to
Parent and each contractor to enter into an agreement containing provisions
protecting the Company's Intellectual Property and confidential information and
all current and former employees and contractors of Company have
-20-
26
executed such agreements, except where the failure to do so is not reasonably
expected to be material to Company.
2.19.14 All of the Company's products (including products currently
under development) (i) will record, store, process, calculate and present
calendar dates falling on and after (and if applicable, spans of time including)
January 1, 2000, and will calculate any information dependent on or relating to
such dates in the same manner, and with the same functionality, data integrity
and performance, as the products record, store, process, calculate and present
calendar dates on or before December 31, 1999, or calculate any information
dependent on or relating to such dates (collectively, "Year 2000 Compliant"),
and (ii) will lose no functionality with respect to the introduction of records
containing dates falling on or after January 1, 2000. To the best of the
Company's knowledge after reasonable investigation, all of the Company's
Information Technology (as defined below) is Year 2000 Compliant, and will not
cause an interruption in the ongoing operations of the Company's business on or
after January 1, 2000. For purposes of the foregoing, the term "Information
Technology" shall mean and include all software, hardware, firmware,
telecommunications systems, network systems, embedded systems and other systems,
components and/or services (other than general utility services including gas,
electric, telephone and postal) that are owned or used by the Company in the
conduct of their business, or purchased by the Company from third-party
suppliers.
2.20 Agreements, Contracts and Commitments. Except as set forth in
Section 2.20 of the Company Schedule, the Company is not a party to nor is the
Company bound by:
2.20.1 any employment or consulting agreement, contract or
commitment with any officer or director or higher level employee or member of
Company's Board of Directors, other than those that are terminable by Company on
no more than thirty (30) days' notice without liability or financial obligation
to the Company;
2.20.2 any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
2.20.3 any agreement of indemnification or any guaranty other than
any agreement of indemnification entered into in connection with the sale or
license of software products in the ordinary course of business;
2.20.4 any agreement, contract or commitment containing any
covenant limiting in any respect the right of Company to engage in any line of
business or to compete with any person or granting any exclusive distribution
rights;
2.20.5 any agreement, contract or commitment currently in force
relating to the disposition or acquisition by Company after the date of this
Agreement of a material amount of assets
-21-
27
not in the ordinary course of business or pursuant to which Company has any
material ownership interest in any corporation, partnership, joint venture or
other business enterprise;
2.20.6 any dealer, distributor, joint marketing or development
agreement currently in force under which Company has continuing obligations to
jointly market any product, technology or service and which may not be canceled
without penalty upon notice of ninety (90) days or less, or any agreement
pursuant to which Company has continuing material obligations to jointly develop
any intellectual property and which may not be canceled without penalty upon
notice of ninety (90) days or less;
2.20.7 any agreement, contract or commitment currently in force to
provide source code to any third party for any product or technology that is
material to Company;
2.20.8 any agreement, contract or commitment currently in force to
license any third party to manufacture or reproduce any Company product, service
or technology or any agreement, contract or commitment currently in force to
sell or distribute any Company products, service or technology except agreements
with distributors or sales representative in the normal course of business
cancelable without penalty upon notice of ninety (90) days or less and
substantially in the form previously provided to Parent;
2.20.9 any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit;
2.20.10 any settlement agreement entered into within five (5) years
prior to the date of this Agreement; or
2.20.11 any other agreement, contract or commitment that has a
value of $500,000 or more individually.
Neither Company nor to Company's knowledge any other party to a Company
Contract (as defined below), is in breach, violation or default under, and
Company has not received written notice that it has breached, violated or
defaulted under, any of the material terms or conditions of any of the
agreements, contracts or commitments to which Company is a party or by which it
is bound that are required to be disclosed in the Company Schedule (any such
agreement, contract or commitment, a "Company Contract") in such a manner as
would permit any other party to cancel or terminate any such Company Contract,
or would permit any other party to seek material damages or other remedies (for
any or all of such breaches, violations or defaults, in the aggregate).
2.21 Company Rights Agreement. The Company Rights Plan has been amended
to (i) render the Company Rights Plan inapplicable to the Merger and the other
transactions contemplated by this Agreement, the Stock Option Agreement, the
Company Affiliate Agreements and the Company Voting Agreements, (ii) ensure that
(x) neither Parent nor Merger Sub, nor any of their affiliates shall be deemed
to have become an Acquiring Person (as defined in the Company Rights Plan)
pursuant to the Company
-22-
28
Rights Plan solely by virtue of the execution of this Agreement, the Stock
Option Agreement, the Company Affiliate Agreements and the Company Voting
Agreements of the consummation of the transactions contemplated hereby or
thereby and (y) a Distribution Date, a Shares Acquisition Date (as such terms
are defined in the Company Rights Plan) or similar event does not occur by
reason of the execution of this Agreement, the Company Stock Option Agreement,
the Company Affiliate Agreements and the Company Voting Agreements, the
consummation of the Merger, or the consummation of the other transactions,
contemplated hereby and thereby, and (iii) provide that the exercise of rights
under the Company Rights Plan shall expire immediately prior to the Effective
Time.
2.22 Insurance. Company maintains insurance policies covering the
assets, business, equipment, properties, operations, employees, officers and
directors of Company (collectively, the "Insurance Policies") which are of the
type and in amounts customarily carried by persons conducting businesses similar
to those of Company. There is no material claim by Company pending under any of
the material Insurance Policies as to which coverage has been questioned, denied
or disputed by the underwriters of such policies or bonds.
2.23 Opinion of Financial Advisor. Company has been advised in writing
by its financial advisor, Broadview International LLC, that in its opinion, as
of the date of this Agreement, the Exchange Ratio is fair to the stockholders of
Company from a financial point of view.
2.24 Board Approval. The Board of Directors of Company has, as of the
date of this Agreement unanimously (i) approved and deemed advisable, subject to
stockholder approval, this Agreement and the Company Option Agreement and the
transactions contemplated hereby and thereby, (ii) determined that the Merger is
in the best interests of the stockholders of Company and is on terms that are
fair to such stockholders and (iii) recommended that the stockholders of Company
approve this Agreement and the Merger.
2.25 Vote Required. The affirmative vote of a majority of the votes that
holders of the outstanding shares of Company Common Stock are entitled to vote
thereon is the only vote of the holders of any class or series of Company's
capital stock necessary to approve this Agreement and the transac tions
contemplated hereby.
2.26 State Takeover Statutes. The Board of Directors of the Company has
approved the Merger, this Agreement, the Stock Option Agreement, the Company
Affiliate Agreements and the Company Voting Agreements, and such approval is
sufficient to render inapplicable to the Merger, this Agreement, the Stock
Option Agreement, the Company Affiliate Agreements and the Company Voting
Agreements and the transactions contemplated by this Agreement, the Stock Option
Agreement, the Company Affiliate Agreements and the Company Voting Agreements,
the provisions of Section 203 of the Delaware Law to the extent, if any, such
Section is applicable to the Merger, this Agreement, the Stock Option Agreement,
the Company Affiliate Agreements and the Company Voting Agreements and the
transactions contemplated by this Agreement, the Stock Option Agreement, the
Company Affiliate Agreements and the Company Voting Agreements. No other state
takeover statute or similar statute or regulation applies to or purports to
apply to the Merger, this Agreement, the Company Stock Option
-23-
29
Agreement, the Company Affiliate Agreements and the Company Voting Agreements or
the transactions contemplated by this Agreement, the Company Stock Option
Agreement, the Company Affiliate Agreements and the Company Voting Agreements.
2.27 Pooling of Interests. To its knowledge, based on consultation with
its independent accountants, neither the Company nor any of its directors,
officers or stockholders has taken any action which would (i) preclude the
Company from being a party to a business combination accounted for as a pooling
of interests or (ii) interfere with Parent's, Surviving Corporation's or the
Company's ability to continue to account for as a pooling of interests any past
acquisition by the Company currently accounted for as a pooling of interests.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Merger Sub jointly and severally represent and warrant to
Company, subject to such exceptions as are specifically disclosed in writing in
the disclosure letter and referencing a specific representation supplied by
Parent to Company dated as of the date hereof and certified by a duly authorized
officer of Parent (the "Parent Schedule"), as follows:
3.1 Organization and Qualification; Subsidiaries. Each of Parent and its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. Each of
Parent and its subsidiaries is in possession of all Approvals necessary to own,
lease and operate the properties it purports to own, operate or lease and to
carry on its business as it is now being conducted, except where the failure to
have such Approvals would not, individually or in the aggregate, have a Material
Adverse Effect on Parent. Each of Parent and its subsidiaries is duly qualified
or licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that would not, either individually or in the
aggregate, have a Material Adverse Effect on Parent.
3.2 Certificate of Incorporation and Bylaws. Parent has previously
furnished to Company a complete and correct copy of its Certificate of
Incorporation and Bylaws as amended to date. Such Certificate of Incorporation,
Bylaws and equivalent organizational documents of each of its subsidiaries are
in full force and effect. Neither Parent nor any of its subsidiaries is in
violation of any of the provisions of its Certificate of Incorporation or Bylaws
or equivalent organizational documents.
3.3 Capitalization. The authorized capital stock of Parent consists of
(i) 450,000,000 shares of Parent Common Stock and of (ii) 2,000,000 shares of
Preferred Stock, par value $0.01 per share ("Parent Preferred Stock"). At the
close of business on December 31, 1998 (i) 141,419,000 shares of Parent Common
Stock were issued and outstanding, all of which are validly issued, fully paid
and
-24-
30
nonassessable, (ii) no shares of Parent Common Stock were held in treasury by
Parent or by subsidiaries of Parent, (iii) 542,000 shares of Parent Common Stock
were reserved for future issuance pursuant to Parent's employee stock purchase
plan, (iv) 24,160,000 shares of Parent Common Stock were reserved for issuance
upon the exercise of outstanding options ("Parent Options") to purchase Parent
Common Stock. As of the date hereof, no shares of Parent Preferred Stock were
issued or outstanding and 500,000 shares of Parent's Series A Preferred Stock
were reserved for issuance under Parent's Amended and Restated Preferred Shares
Rights Agreement between Parent and BankBoston, N.A., as Right Agent dated
November 20, 1998. The authorized capital stock of Merger Sub consists of 1,000
shares of common stock, par value $0.01 per share, 100 of which, as of the date
hereof, are issued and outstanding. All of the outstanding shares of Parent's
and Merger Sub's respective capital stock have been duly authorized and validly
issued and are fully paid and nonassessable. All shares of Parent Common Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, shall, and the
shares of Parent Common Stock to be issued pursuant to the Merger will be, duly
authorized, validly issued, fully paid and nonassessable. All of the outstanding
shares of capital stock (other than directors' qualifying shares) of each of
Parent's subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and all such shares (other than directors' qualifying shares) are
owned by Parent or another subsidiary free and clear of all security interests,
liens, claims, pledges, agreements, limitations in Parent's voting rights,
charges or other encumbrances of any nature whatsoever.
3.4 Authority Relative to this Agreement. Each of Parent and Merger Sub
has all necessary corporate power and authority to execute and deliver this
Agreement and the Company Option Agreement, and to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby. The execution and delivery of this Agreement and the Company Option
Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub
of the transactions contemplated hereby and thereby have been duly and validly
authorized by all necessary corporate action on the part of Parent and Merger
Sub and no other corporate proceedings on the part of Parent or Merger Sub are
necessary to authorize this Agreement and the Company Option Agreement, or to
consummate the transactions so contemplated. This Agreement and the Company
Option Agreement have been duly and validly executed and delivered by Parent and
Merger Sub and, assuming the due authorization, execution and delivery by
Company, constitute legal and binding obligations of Parent and Merger Sub,
enforceable against Parent and Merger Sub in accordance with their respective
terms.
3.5 No Conflict; Required Filings and Consents.
3.5.1 The execution and delivery of this Agreement by Parent and
Merger Sub and the Company Option Agreement by Parent do not, and the
performance of this Agreement by Parent and Merger Sub and the Company Option
Agreement by Parent shall not, (i) conflict with or violate the Certificate of
Incorporation, Bylaws or equivalent organizational documents of Parent or any of
its subsidiaries, (ii) subject to compliance with the requirements set forth in
Section 3.5.2 below, conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or any of its subsidiaries or by which
it or their respective properties are bound or affected, or (iii) result in any
-25-
31
breach of or constitute a default (or an event that with notice or lapse of time
or both would become a default) under, or impair Parent's or any such
subsidiary's rights or alter the rights or obligations of any third party under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of Parent or any of its subsidiaries pursuant to, any
material note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Parent or any of
its subsidiaries is a party or by which Parent or any of its subsidiaries or its
or any of their respective properties are bound or affected, except to the
extent such conflicts, violation, breach, default, impairment or other effect
could not in the case of clauses (ii) or (iii) individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect on Parent.
3.5.2 The execution and delivery of this Agreement by Parent and
Merger Sub and the Company Option Agreement by Parent do not, and the
performance of this Agreement by Parent and Merger Sub shall not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity except (i) for applicable requirements, if any, of
the Securities Act, the Exchange Act, Blue Sky Laws, the pre-merger notification
requirements of the HSR Act and of foreign governmental entities and the rules
and regulations thereunder, the rules and regulations of the NYSE, and the
filing and recordation of the Certificate of Merger as required by the Delaware
Law and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, (x) would
not prevent consummation of the Merger or otherwise prevent Parent or Sub from
performing their respective obligations under this Agreement or (y) could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Parent.
3.6 SEC Filings. Parent has made available to Company a correct and
complete copy of each report, schedule, registration statement and definitive
proxy statement filed by Parent with the SEC on or after January 1, 1998 and
prior to the date of this Agreement (the "Parent SEC Reports"), which are all
the forms, reports and documents required to be filed by Parent with the SEC
since January 1, 1998. The Parent SEC Reports (A) were prepared in accordance
with the requirements of the Securities Act or the Exchange Act, as the case may
be, and (B) did not at the time they were filed (or if amended or superseded by
a filing prior to the date of this Agreement then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading. None of Parent's subsidiaries is required to file any reports or
other documents with the SEC. The balance sheet of Parent contained in the
Parent SEC Reports as of September 30, 1998 is hereinafter referred to as the
Parent Balance Sheet.
3.7 Registration Statement; Proxy Statement. None of the information
supplied or to be supplied by Parent for inclusion or incorporation by reference
in (i) the S-4 will, at the time the S-4 becomes effective under the Securities
Act, 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; and (ii) the Proxy Statement/Prospectus will, at the dates mailed to
the stockholders of Company, at the time of the Company Stockholders' Meeting
and as of the Effective Time, contain any untrue statement of a material
-26-
32
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. The S-4 will comply as to form in all
material respects with the provisions of the Securities Act and the rules and
regulations promulgated by the SEC thereunder. Notwithstanding the foregoing,
Parent makes no representation or warranty with respect to any information
supplied by the Company which is contained in any of the foregoing documents.
3.8 Pooling of Interests. To its knowledge, based on consultation with
its independent accountants, neither Parent nor any of its directors, officers
or stockholders has taken any action which would interfere with Parent's ability
to account for the Merger as a pooling of interests.
3.9 Absence of Certain Changes or Events. Since the date of the Parent
Balance Sheet, there has not been any Material Adverse Effect on Parent.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
4.1 Conduct of Business by Company. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, Company shall, except to
the extent that Parent shall otherwise consent in writing, carry on its
business, in the usual, regular and ordinary course, in substantially the same
manner as heretofore conducted and in compliance with all applicable laws and
regulations, pay its debts and taxes when due subject to good faith disputes
over such debts or taxes, pay or perform other material obligations when due,
and use its commercially reasonable efforts consistent with past practices and
policies to (i) preserve intact its present business organization, (ii) keep
available the services of its present officers and employees and (iii) preserve
its relationships with customers, suppliers, distributors, licensors, licensees,
and others with which it has business dealings. In addition, Company will
promptly notify Parent of any material event involving its business or
operations.
In addition, except as permitted by the terms of this Agreement, and
except as provided in Section 4.1 of the Company Schedule, without the prior
written consent of Parent, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement pursuant to
its terms or the Effective Time, Company shall not do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or change
the period of exercisability of options or restricted stock, or reprice options
granted under any employee, consultant, director or other stock plans or
authorize cash payments in exchange for any options granted under any of such
plans;
(b) Grant any severance or termination pay to any officer or
employee except pursuant to written agreements outstanding, or policies
existing, on the date hereof and as previously disclosed in writing or made
available to Parent, or adopt any new severance plan;
-27-
33
(c) Transfer or license to any person or entity or otherwise
extend, amend or modify any rights to the Company Intellectual Property, or
enter into grants to transfer or license to any person future patent rights;
(d) Declare, set aside or pay any dividends on or make any other
distributions (whether in cash, stock, equity securities or property) in respect
of any capital stock or split, combine or reclassify any capital stock or issue
or authorize the issuance of any other securities in respect of, in lieu of or
in substitution for any capital stock;
(e) Purchase, redeem or otherwise acquire, directly or indirectly,
any shares of capital stock of Company, except repurchases of unvested shares at
cost in connection with the termination of the employment relationship with any
employee pursuant to stock option or purchase agreements in effect on the date
hereof;
(f) Issue, deliver, sell, authorize, pledge or otherwise encumber
or propose any of the foregoing of, any shares of capital stock or any
securities convertible into shares of capital stock, or subscriptions, rights,
warrants or options to acquire any shares of capital stock or any securities
convertible into shares of capital stock, or enter into other agreements or
commitments of any character obligating it to issue any such shares or
convertible securities, other than (x) the issuance delivery and/or sale of (i)
shares of Company Common Stock pursuant to the exercise of stock options
therefor outstanding as of the date of this Agreement, and (ii) shares of
Company Common Stock issuable to participants in the Periodic Purchase Plan
consistent with the terms thereof and (y) the granting of stock options (and the
issuance of Common Stock upon exercise thereof), in the ordinary course of
business and consistent with past practices, in an amount not to exceed options
to purchase (and the issuance of Common Stock upon exercise thereof) 150,000
shares in the aggregate or 50,000 shares to any one individual;
(g) Cause, permit or propose any amendments to its Certificate of
Incorporation, Bylaws or other charter documents;
(h) Acquire or agree to acquire by merging or consolidating with,
or by purchasing any equity interest in or a portion of the assets of, or by any
other manner, any business or any corporation, partnership, association or other
business organization or division thereof, or otherwise acquire or agree to
acquire any assets or enter into any joint ventures, strategic partnerships or
alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets except sales of inventory in the ordinary course of
business consistent with past practice and except for the sale, lease or
disposition (other than through licensing) of a property or assets which are not
material, individually or in the aggregate, to the business of Company;
(j) Incur any indebtedness for borrowed money or guarantee any such
indebtedness of another person, issue or sell any debt securities or options,
warrants, calls or other rights to acquire any debt securities of Company, enter
into any "keep well" or other agreement to maintain any financial
-28-
34
statement condition or enter into any arrangement having the economic effect of
any of the foregoing other than (i) in connection with the financing of ordinary
course trade payables consistent with past practice or (ii) pursuant to existing
credit facilities in the ordinary course of business;
(k) Adopt or amend any employee benefit plan or employee stock
purchase or employee stock option plan, or enter into any employment contract or
collective bargaining agreement (other than offer letters and letter agreements
entered into in the ordinary course of business consistent with past practice
with employees who are terminable "at will"), pay any special bonus or special
remuneration to any director or employee, or increase the salaries or wage rates
or fringe benefits (including rights to severance or indemnification) of its
directors, officers, employees or consultants;
(l) Make any individual or series of related payments outside of
the ordinary course of business in excess of $100,000;
(m) Except in the ordinary course of business consistent with past
practice, modify, amend or terminate any material contract or agreement to which
Company is a party or waive, delay the exercise of, release or assign any
material rights or claims thereunder;
(n) Enter into or materially modify any contracts, agreements, or
obligations relating to the distribution, sale, license or marketing by third
parties of Company's products or products licensed by Company;
(o) Revalue any of its assets or, except as required by GAAP, make
any change in accounting methods, principles or practices;
(p) Incur or enter into any agreement or commitment in excess of
$100,000 individually; provided, however, Company may place orders and incur
obligations to purchase products from its existing foundry suppliers to satisfy
Company's demands in its ordinary course of business, such obligations to be
limited to orders requiring delivery of products within 90 days of the order
date;
(q) Engage in any action that could reasonably be expected to (i)
cause the Merger to fail to qualify as a "reorganization" under Section 368(a)
of the Code or (ii) interfere with Parent's ability to account for the Merger as
a pooling of interests, whether or not (in each case) otherwise permitted by the
provisions of this Article IV;
(r) Engage in any action with the intent to directly or indirectly
adversely impact any of the transactions contemplated by this Agreement; or
(s) Hire any employee with an annual compensation level in excess
of $100,000; or
(t) Agree in writing or otherwise to take any of the actions
described in Section 4.1 (a) through (s) above.
-29-
35
4.2 Conduct of Business by Parent. During the period from the date of
this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms or the Effective Time, except as permitted by
the terms of this Agreement and the Company Stock Option Agreement and except as
provided in Section 4.2 of the Parent Schedule, without the prior written
consent of Company, Parent shall not engage in any action that could reasonably
be expected to (i) cause the Merger to fail to qualify as a "reorganization"
under Section 368(a) of the Code or (ii) interfere with Parent's ability to
account for the Merger as a pooling of interests.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Proxy Statement/Prospectus; Registration Statement; Other Filings;
Board Recommendations.
(a) As promptly as practicable after the execution of this
Agreement, Company and Parent will prepare, and file with the SEC, the Proxy
Statement/Prospectus and Parent will prepare and file with the SEC the S-4 in
which the Proxy Statement/Prospectus will be included as a prospectus. Each of
Company and Parent will respond to any comments of the SEC, will use its
respective commercially reasonable efforts to have the S-4 declared effective
under the Securities Act as promptly as practicable after such filing and
Company will cause the Proxy Statement/Prospectus to be mailed to its
stockholders at the earliest practicable time after the S-4 is declared
effective by the SEC. As promptly as practicable after the date of this
Agreement, each of Company and Parent will prepare and file any other filings
required to be filed by it under the Exchange Act, the Securities Act or any
other Federal, foreign or Blue Sky or related laws relating to the Merger and
the transactions contemplated by this Agreement (the "Other Filings"). Each of
Company and Parent will notify the other promptly upon the receipt of any
comments from the SEC or its staff or any other government officials and of any
request by the SEC or its staff or any other government officials for amendments
or supplements to the S-4, the Proxy Statement/Prospectus or any Other Filing or
for additional information and will supply the other with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the other
hand, with respect to the S-4, the Proxy Statement/Prospectus, the Merger or any
Other Filing. Each of Company and Parent will cause all documents that it is
responsible for filing with the SEC or other regulatory authorities under this
Section 5.1(a) to comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder.
Whenever any event occurs which is required to be set forth in an amendment or
supplement to the Proxy Statement/Prospectus, the S-4 or any Other Filing,
Company or Parent, as the case may be, will promptly inform the other of such
occurrence and cooperate in filing with the SEC or its staff or any other
government officials, and/or mailing to stockholders of Company, such amendment
or supplement.
(b) The Proxy Statement/Prospectus will include the
recommendation of the Board of Directors of Company in favor of adoption and
approval of this Agreement and approval of the Merger.
-30-
36
5.2 Meeting of Company Stockholders.
(a) Promptly after the date hereof, Company will take all action
necessary in accordance with the Delaware Law and its Certificate of
Incorporation and Bylaws to convene the Company Stockholders' Meeting to be held
as promptly as practicable, and in any event (to the extent permissible under
applicable law) within 45 days after the declaration of effectiveness of the
S-4, for the purpose of voting upon this Agreement and the Merger. Company will
use its commercially reasonable efforts to solicit from its stockholders proxies
in favor of the adoption and approval of this Agreement and the approval of the
Merger and will take all other action necessary or advisable to secure the vote
or consent of its stockholders required by the rules of Nasdaq or Delaware Law
to obtain such approvals. Notwithstanding anything to the contrary contained in
this Agreement, Company may adjourn or postpone the Company Stockholders'
Meeting to the extent necessary to ensure that any necessary supplement or
amendment to the Prospectus/Proxy Statement is provided to Company's
stockholders in advance of a vote on the Merger and this Agreement or, if as of
the time for which Company Stockholders' Meeting is originally scheduled (as set
forth in the Prospectus/Proxy Statement) there are insufficient shares of
Company Common Stock represented (either in person or by proxy) to constitute a
quorum necessary to conduct the business of the Company Stockholders' Meeting.
Company shall ensure that the Company Stockholders' Meeting is called, noticed,
convened, held and conducted, and that all proxies solicited by the Company in
connection with the Company Stockholders' Meeting are solicited, in compliance
with the Delaware Law, its Certificate of Incorporation and Bylaws, the rules of
Nasdaq and all other applicable legal requirements. Company's obligation to
call, give notice of, convene and hold the Company Stockholders' Meeting in
accordance with this Section 5.2(a) shall not be limited to or otherwise
affected by the commencement, disclosure, announcement or submission to Company
of any Acquisition Proposal, or by any withdrawal, amendment or modification of
the recommendation of the Board of Directors of Company with respect to the
Merger and/or this Agreement.
(b) Subject to Section 5.2(c): (i) the Board of Directors of
Company shall unanimously recommend that Company's stockholders vote in favor of
and adopt and approve this Agreement and the Merger at the Company Stockholders'
Meeting; (ii) the Prospectus/Proxy Statement shall include a statement to the
effect that the Board of Directors of the Company has unanimously recommended
that Company's stockholders vote in favor of and adopt and approve this
Agreement and the Merger at the Company Stockholders' Meeting; and (iii) neither
the Board of Directors of Company nor any committee thereof shall withdraw,
amend or modify, or propose or resolve to withdraw, amend or modify in a manner
adverse to Parent, the unanimous recommendation of the Board of Directors of
Company that Company's stockholders vote in favor of and adopt and approve this
Agreement and the Merger. For purposes of this Agreement, said recommendation of
the Board of Directors shall be deemed to have been modified in a manner adverse
to Parent if said recommendation shall no longer be unanimous.
(c) Nothing in this Agreement shall prevent the Board of
Directors of Company from withholding, withdrawing, amending or modifying its
unanimous recommendation in favor of the Merger if (i) a Superior Offer (as
defined below) is made to the Company and is not withdrawn,
-31-
37
(ii) neither Company nor any of its representatives shall have violated any of
the restrictions set forth in Section 5.4, and (iii) the Board of Directors of
Company concludes in good faith, after consultation with its outside counsel,
that, in light of such Superior Offer, the withholding, withdrawal, amendment or
modification of such recommendation is required in order for the Board of
Directors of Company to comply with its fiduciary obligations to Company's
stockholders under applicable law. Nothing contained in this Agreement shall
limit the Company's obligation to hold and convene the Company Stockholders'
Meeting (regardless of whether the unanimous recommendation of the Board of
Directors of the Company shall have been withdrawn, amended or modified). For
purposes of this Agreement, "Superior Offer" shall mean an unsolicited, bona
fide written offer made by a third party to consummate any of the following
transactions: (i) a merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
Company pursuant to which the stockholders of Company immediately preceding such
transaction hold less than 15% of the equity interest in the surviving or
resulting entity of such transaction; (ii) a sale or other disposition by
Company of assets (excluding inventory and used equipment sold in the ordinary
course of business) representing in excess of 85% of the fair market value of
Company's business immediately prior to such sale, or (iii) the acquisition by
any person or group (including by way of a tender offer or an exchange offer or
issuance by Company), directly or indirectly, of beneficial ownership or a right
to acquire beneficial ownership of shares representing in excess of 85% of the
voting power of the then outstanding shares of capital stock of the Company, in
each case on terms that the Board of Directors of Company determines, in its
reasonable judgment (based on advice of a financial advisor of nationally
recognized reputation) to be more favorable to the Company stockholders from a
financial point of view than the terms of the Merger; provided, however, that
any such offer shall not be deemed to be a "Superior Offer" if any financing
required to consummate the transaction contemplated by such offer is not
committed and is not likely in the judgment of Company's Board of Directors to
be obtained by such third party on a timely basis.
5.3 Confidentiality; Access to Information.
(a) The parties acknowledge that Company and Parent have
previously executed a Confidentiality Agreement, dated as of February 3, 1999
(the "Confidentiality Agreement"), which Confidentiality Agreement will continue
in full force and effect in accordance with its terms.
(b) Access to Information. Company will afford Parent and its
accountants, counsel and other representatives reasonable access during normal
business hours to the properties, books, records and personnel of Company during
the period prior to the Effective Time to obtain all information concerning the
business, including the status of product development efforts, properties,
results of operations and personnel of Company, as Parent may reasonably
request. No information or knowledge obtained by Parent in any investigation
pursuant to this Section 5.3 will affect or be deemed to modify any
representation or warranty contained herein or the conditions to the obligations
of the parties to consummate the Merger.
-32-
38
5.4 No Solicitation.
(a) From and after the date of this Agreement until the Effective
Time or termination of this Agreement pursuant to Article VII, Company will not,
nor will it authorize or permit any of its officers, directors, affiliates or
employees or any investment banker, attorney or other advisor or representative
retained by any of them to, directly or indirectly, (i) solicit, initiate,
encourage or induce the making, submission or announcement of any Acquisition
Proposal (as hereinafter defined), (ii) participate in any discussions or
negotiations regarding, or furnish to any person any non-public information with
respect to, or take any other action to facilitate any inquiries or the making
of any proposal that constitutes or may reasonably be expected to lead to, any
Acquisition Proposal, (iii) engage in discussions with any person with respect
to any Acquisition Proposal, except as to the existence of these provisions,
(iv) subject to Section 5.2(c), approve, endorse or recommend any Acquisition
Proposal or (v) enter into any letter of intent or similar document or any
contract agreement or commitment contemplating or otherwise relating to any
Acquisition Transaction; provided, however, that prior to the approval of this
Agreement by the required Company Stockholder Vote, this Section 5.4(a) shall
not prohibit Company from furnishing nonpublic information regarding Company to,
entering into a confidentiality agreement with or entering into discussions
with, any person or group in response to a Superior Offer submitted by such
person or group (and not withdrawn) if (1) neither Company nor any
representative of Company shall have violated any of the restrictions set forth
in this Section 5.4, (2) the Board of Directors of Company concludes in good
faith, after consultation with its outside legal counsel, that such action is
required in order for the Board of Directors of Company to comply with its
fiduciary obligations to Company's stockholders under applicable law, (3) prior
to furnishing any such nonpublic information to, or entering into discussions or
negotiations with, such person or group, Company gives Parent written notice of
the identity of such person or group and of Company's intention to furnish
nonpublic information to, or enter into discussions or negotiations with, such
person or group and the Company receives from such person or group an executed
confidentiality agreement containing customary limitations on the use and
disclosure of all nonpublic written and oral information furnished to such
person or group by or on behalf of the Company, and (4) contemporaneously with
furnishing any such nonpublic information to such person or group, Company
furnishes such nonpublic information to Parent (to the extent such nonpublic
information has not been previously furnished by the Company to Parent). Company
will immediately cease any and all existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any
Acquisition Proposal. Without limiting the foregoing, it is understood that any
violation of the restrictions set forth in the preceding two sentences by any
officer, director or employee of Company or any investment banker, attorney or
other advisor or representative of Company shall be deemed to be a breach of
this Section 5.4 by Company. In addition to the foregoing, the Company shall (i)
provide Parent with at least 24 hours prior notice (or such lesser prior notice
as provided to the members of Company's Board of Directors but in no event less
than four (4) hours) of any meeting of Company's Board of Directors at which
Company's Board of Directors is reasonably expected to consider a Superior Offer
and (ii) provide Parent with at least two (2) business days or forty-eight (48)
hours prior written notice of a meeting of Company's Board of Directors at which
Company's Board of Directors is reasonably expected to recommend a Superior
Offer to its stockholders and together with such notice a copy of the definitive
documentation relating to such Superior Offer.
-33-
39
For purposes of this Agreement, "Acquisition Proposal" shall mean any
offer or proposal (other than an offer or proposal by Parent) relating to any
Acquisition Transaction. For the purposes of this Agreement, "Acquisition
Transaction" shall mean any transaction or series of related transactions other
than the transactions contemplated by this Agreement involving: (A) any
acquisition or purchase from the Company by any person or "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) of more than a 5% interest in the total outstanding voting
securities of the Company or any of its subsidiaries or any tender offer or
exchange offer that if consummated would result in any person or "group" (as
defined under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) beneficially owning 5% or more of the total outstanding voting
securities of the Company or any of its subsidiaries or any merger,
consolidation, business combination or similar transaction involving the Company
pursuant to which the stockholders of the Company immediately preceding such
transaction hold less than 95% of the equity interests in the surviving or
resulting entity of such transaction; (B) any sale, lease (other than in the
ordinary course of business), exchange, transfer, license (other than in the
ordinary course of business), acquisition or disposition of more than 5% of the
assets of the Company; or (C) any liquidation or dissolution of the Company.
(b) In addition to the obligations of Company set forth in
paragraph (a) of this Section 5.4, Company as promptly as practicable shall
advise Parent orally and in writing of any request for non-public information
which Company reasonably believes would lead to an Acquisition Proposal or of
any Acquisition Proposal, or any inquiry with respect to or which Company
reasonably should believe would lead to any Acquisition Proposal, the material
terms and conditions of such request, Acquisition Proposal or inquiry, and the
identity of the person or group making any such request, Acquisition Proposal or
inquiry. Company will keep Parent informed in all material respects of the
status and details (including material amendments or proposed amendments) of any
such request, Acquisition Proposal or inquiry.
5.5 Public Disclosure. Parent and Company will consult with each other,
and to the extent practicable, agree, before issuing any press release or
otherwise making any public statement with respect to the Merger, this Agreement
or an Acquisition Proposal and will not issue any such press release or make any
such public statement prior to such consultation, except as may be required by
law or any listing agreement with a national securities exchange. The parties
have agreed to the text of the joint press release announcing the signing of
this Agreement.
5.6 Reasonable Efforts; Notification.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use all reasonable efforts 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 Merger and the other transactions contemplated by this
Agreement, including using reasonable efforts to accomplish the following: (i)
the taking of all reasonable acts necessary to cause the conditions precedent
set forth in Article VI to be satisfied, (ii) the obtaining of all necessary
actions or nonactions, waivers, consents, approvals, orders and authorizations
from Governmental Entities and the making of all
-34-
40
necessary registrations, declarations and filings (including registrations,
declarations and filings with Governmental Entities, if any) and the taking of
all reasonable steps as may be necessary to avoid any suit, claim, action,
investigation or proceeding by any Governmental Entity, (iii) the obtaining of
all necessary consents, approvals or waivers from third parties, (iv) the
defending of any suits, claims, actions, investigations or proceedings, whether
judicial or administrative, challenging this Agreement or the consummation of
the transactions contemplated hereby, including seeking to have any stay or
temporary restraining order entered by any court or other Governmental Entity
vacated or reversed and (v) the execution or 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, Company and its Board of Directors shall, if any state
takeover statute or similar statute or regulation is or becomes applicable to
the Merger, this Agreement or any of the transactions contemplated by this
Agreement, use all reasonable efforts to ensure that 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 Merger, this Agreement
and the transactions contemplated hereby. Notwithstanding anything herein to the
contrary, nothing in this Agreement shall be deemed to require Parent or Company
or any subsidiary or affiliate thereof to agree to any divestiture by itself or
any of its affiliates of shares of capital stock or of any business, assets or
property, or the imposition of any material limitation on the ability of any of
them to conduct their businesses or to own or exercise control of such assets,
properties and stock.
(b) Company shall give prompt notice to Parent of any
representation or warranty made by it contained in this Agreement becoming
untrue or inaccurate, or any failure of Company to comply with or satisfy in any
material respect any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement, in each case, such that the conditions set
forth in Section 6.3(a) or 6.3(b) would not be satisfied, provided, however,
that no such notification shall affect the representations, warranties,
covenants or agreements of the parties or the conditions to the obligations of
the parties under this Agreement.
(c) Parent shall give prompt notice to Company of any
representation or warranty made by it or Merger Sub contained in this Agreement
becoming untrue or inaccurate, or any failure of Parent or Merger Sub to comply
with or satisfy in any material respect any covenant, condition or agreement to
be complied with or satisfied by it under this Agreement, in each case, such
that the conditions set forth in Section 6.2(a) or 6.2(b) would not be
satisfied, provided, however, that no such notification shall affect the
representations, warranties, covenants or agreements of the parties or the
conditions to the obligations of the parties under this Agreement.
5.7 Third Party Consents. As soon as practicable following the date
hereof, Parent and Company will each use its commercially reasonable efforts to
obtain any consents, waivers and approvals under any of its agreements,
contracts, licenses or leases required to be obtained in connection with the
consummation of the transactions contemplated hereby.
-35-
41
5.8 Stock Options and Employee Benefits.
(a) At the Effective Time, each outstanding option to purchase
shares of Company Common Stock under the Company's Nonemployee Director Plan and
the 1982 Option Plan (each, a "Company Stock Option"), whether or not
exercisable, whether or not vested, shall by virtue of the Merger be assumed by
Parent in such manner that Parent (i) is "assuming a stock option in a
transaction to which Section 424(a) applied" within the meaning of Section 424
of the Code, or (ii) to the extent that Section 424 of the Code does not apply
to any such Company Stock Options, would be a transaction within Section 424 of
the Code. Each Company Stock Option so assumed by Parent under this Agreement
will continue to have, and be subject to, the same terms and conditions of such
options immediately prior to the Effective Time (including, without limitation,
any repurchase rights or vesting provisions), except that (i) each Company Stock
Option will be exercisable (or will become exercisable in accordance with its
terms) for that number of whole shares of Parent Common Stock equal to the
product of the number of shares of Company Common Stock that were issuable upon
exercise of such Company Stock Option immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
shares of Parent Common Stock and (ii) the per share exercise price for the
shares of Parent Common Stock issuable upon exercise of such assumed Company
Stock Option will be equal to the quotient determined by dividing the exercise
price per share of Company Common Stock at which such Company Stock Option was
exercisable immediately prior to the Effective Time by the Exchange Ratio,
rounded up to the nearest whole cent. Parent shall, from and after the Effective
Time, upon exercise of the Company Stock Options in accordance with the terms
thereof, make available for issuance all shares of Parent Common Stock covered
thereby and shall, as promptly as practicable after the Effective Time, issue to
each holder of an outstanding Company Stock Option a document evidencing the
foregoing assumption by Parent. It is the intention of the parties that each
Company Stock Option assumed by Parent shall qualify following the Effective
Time as an incentive stock option as defined in Section 422 of the Code to the
extent permitted under Section 422 of the Code and to the extent such option
qualified as an incentive stock option prior to the Effective Time.
(b) Company Employee Stock Purchase Plan. Outstanding purchase
rights under Company's Purchase Plan shall be exercised in accordance with
Section 13(b) of the Purchase Plan and each share of Company Common Stock
purchased pursuant to such exercise shall by virtue of the Merger, and without
any action on the part of the holder thereof, be converted into the right to
receive a number of shares of Parent Common Stock equal to the Exchange Ratio
without issuance of certificates representing issued and outstanding shares of
Company Common Stock to Purchase Plan participants. The Company agrees that it
shall terminate the Purchase Plan immediately following the aforesaid purchase
of shares of Company Common Stock thereunder. Parent agrees that from and after
the Effective Time, Company employees may participate in the Parent Employee
Stock Purchase Plan (the "Parent Purchase Plan"), subject to the terms and
conditions of the Parent Purchase Plan, including with respect to a special
offering period for Company employees commencing at the Effective Time and
terminating at the earlier of (i) the end of the most recently commenced
offering period under the Parent Purchase Plan, or, (ii) 27 months after the
Effective Time.
-36-
42
(c) Benefit Arrangements. (a) Parent and Company agree that
Parent will provide benefits other than cash and equity compensation to Company
employees in their new positions with Parent following the Effective Time that
are substantially identical in the aggregate to the benefits currently provided
to similarly situated employees of Parent. From and after the Effective Time,
Parent shall grant all employees credit for all service (to the same extent as
service with Parent is taken into account with respect to similarly situated
employees of Parent) with Company prior to the Effective Time for (i)
eligibility and vesting purposes and (ii) for purposes of vacation accrual after
the Effective Time as if such service with Company was service with Parent,
except that no such service credit shall be extended with respect to the
Parent's sabbatical program. Parent and Company agree that where applicable with
respect to any medical or dental benefit plan of Parent, Parent shall waive any
pre-existing condition exclusion and actively-at-work requirements and provide
that any covered expenses incurred on or before the Effective Time by an
employee or an employee's covered dependents shall be taken into account for
purposes of satisfying applicable deductible, coinsurance and maximum
out-of-pocket provisions after the Effective Time to the same extent as such
expenses are taken into account for the benefit of similarly situated employees
of Parent.
(d) Severance. Any Company employee whose employment is
terminated after the Effective Time, to the extent such individual is eligible
under each such plan, will receive severance benefits in accordance with the
existing terms of the Company Officers Severance Plan or Company Employee
Severance Plan, which are set forth in Section 5.8(d) of the Company Schedule.
5.9 Form S-8. Parent agrees to file a registration statement on Form S-8
for the shares of Parent Common Stock issuable with respect to assumed Company
Stock Options as soon as is reasonably practicable after the Effective Time and
in any event no later than twenty-one days after the Effective Time.
5.10 Indemnification. From and after the Effective Time, Parent will
cause the Surviving Corporation to fulfill and honor in all respects the
obligations of Company pursuant to any indemnification agreements between
Company and its directors and officers in effect immediately prior to the
Effective Time (the "Indemnified Parties") and any indemnification provisions
under Company's Certificate of Incorporation or Bylaws as in effect on the date
hereof. The Certificate of Incorporation and Bylaws of the Surviving Corporation
will contain provisions with respect to exculpation and indemnification that are
at least as favorable to the Indemnified Parties as those contained in the
Certificate of Incorporation and Bylaws of Company as in effect on the date
hereof, which provisions will not be amended, repealed or otherwise modified for
a period of four years from the Effective Time in any manner that would
adversely affect the rights thereunder of individuals who, immediately prior to
the Effective Time, were directors, officers, employees or agents of Company,
unless such modification is required by law.
5.11 NYSE Listing. Parent agrees to authorize for listing on NYSE the
shares of Parent Common Stock issuable, and those required to be reserved for
issuance, in connection with the Merger, upon official notice of issuance.
-37-
43
5.12 Company Affiliate Agreement. Set forth in the Company Schedule is a
list of those persons who may be deemed to be, in Company's reasonable judgment,
affiliates of Company within the meaning of Rule 145 promulgated under the
Securities Act (each a "Company Affiliate"). Company will provide Parent with
such information and documents as Parent reasonably requests for purposes of
reviewing such list. Company will use its commercially reasonable efforts to
deliver or cause to be delivered to Parent, as promptly as practicable on or
following the date hereof, from each Company Affiliate an executed affiliate
agreement in substantially the form attached hereto as Exhibit C (the "Company
Affiliate Agreement"), each of which will be in full force and effect as of the
Effective Time. Parent will be entitled to place appropriate legends on the
certificates evidencing any Parent Common Stock to be received by a Company
Affiliate pursuant to the terms of this Agreement, and to issue appropriate stop
transfer instructions to the transfer agent for the Parent Common Stock,
consistent with the terms of the Company Affiliate Agreement.
5.13 Regulatory Filings; Reasonable Efforts. As soon as may be
reasonably practicable, Company and Parent each shall file with the United
States Federal Trade Commission (the "FTC") and the Antitrust Division of the
United States Department of Justice ("DOJ") Notification and Report Forms
relating to the transactions contemplated herein as required by the HSR Act, as
well as comparable pre- merger notification forms required by the merger
notification or control laws and regulations of any applicable jurisdiction, as
agreed to by the parties. Company and Parent each shall promptly (a) supply the
other with any information which may be required in order to effectuate such
filings and (b) supply any additional information which reasonably may be
required by the FTC, the DOJ or the competition or merger control authorities of
any other jurisdiction and which the parties may reasonably deem appropriate.
5.14 No Rights Plan Amendment. Except as expressly required by Section
6.3(e), prior to the Closing, Company and its Board of Directors shall not amend
or modify or take any other action with regard to the Company Rights Plan in any
manner or take another action so as to (i) render the Company Rights Plan
inapplicable to any transaction(s) other than the Merger and other transactions
contemplated by this Agreement, the Stock Option Agreement, the Company
Affiliate Agreements and the Company Voting Agreements, or (ii) permit any
person or group who would otherwise be an Acquiring Person (as defined in the
Company Rights Plan) not to be an Acquiring Person, or (iii) provide that a
Distribution Date or a Shares Acquisition Date (as such terms are defined in the
Company Rights Plan) or similar event does not occur as promptly as practicable
by reason of the execution of any agreement or transaction other than this
Agreement and the Merger and the agreements and transactions contemplated hereby
and thereby, or (iv) except as specifically contemplated by this Agreement,
otherwise affect the rights of holders of Rights.
5.15 Termination of 401(k) Plan. The Company agrees to terminate its
401(k) Plan immediately prior to the Closing, unless the Parent, in its sole and
absolute discretion, agrees to sponsor and maintain such plan by providing the
Company with written notice of its election at least three (3) days prior to the
Closing.
-38-
44
5.16 Termination of Severance and Salary Continuation Plans. Except for
the Officers Severance Plan and the Company Employee Severance Plan, which are
set forth in Section 5.8(d) of the Company Schedule, the Company agrees to
terminate any and all group severance, separation or salary continuation plans,
programs or arrangements that may be covered under ERISA immediately prior to
the Closing.
ARTICLE VI
CONDITIONS TO THE MERGER
6.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of the
following conditions:
(a) Company Stockholder Approval. This Agreement shall have been
approved and adopted, and the Merger shall have been duly approved, by the
requisite vote under applicable law, by the stockholders of Company.
(b) Registration Statement Effective; Proxy Statement. The SEC
shall have declared the S-4 effective. No stop order suspending the
effectiveness of the S-4 or any part thereof shall have been issued and no
proceeding for that purpose, and no similar proceeding in respect of the Proxy
Statement/Prospectus, shall have been initiated or threatened in writing by the
SEC.
(c) No Order; HSR Act. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of making
the Merger illegal or otherwise prohibiting consummation of the Merger. All
waiting periods, if any, under the HSR Act relating to the transactions
contemplated hereby will have expired or terminated early and all material
foreign antitrust approvals required to be obtained prior to the Merger in
connection with the transactions contemplated hereby shall have been obtained.
(d) Tax Opinions. Parent and Company shall each have received
written opinions from their respective tax counsel (Xxxxxx Xxxxxxx Xxxxxxxx &
Xxxxxx, Professional Corporation, and Xxxxxxxxx Xxxxxxx, respectively), in form
and substance reasonably satisfactory to them, to the effect that the Merger
will constitute a reorganization within the meaning of Section 368(a) of the
Code and such opinions shall not have been withdrawn; provided, however, that if
the counsel to either Parent or Company does not render such opinion, this
condition shall nonetheless be deemed to be satisfied with respect to such party
if counsel to the other party renders such opinion to such party. The parties to
this Agreement agree to make such reasonable representations as requested by
such counsel for the purpose of rendering such opinions.
-39-
45
(e) NYSE Listing. The shares of Parent Common Stock issuable to
the stockholders of Company pursuant to this Agreement and such other shares
required to be reserved for issuance in connection with the Merger shall have
been authorized for listing on the NYSE upon official notice of issuance.
6.2 Additional Conditions to Obligations of Company. The obligation of
Company to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Closing Date of each of the following conditions, any of
which may be waived, in writing, exclusively by Company:
(a) Representations and Warranties. Each representation and
warranty of Parent and Merger Sub contained in this Agreement (i) shall have
been true and correct as of the date of this Agreement and (ii) shall be true
and correct on and as of the Closing Date with the same force and effect as if
made on the Closing Date except, (A) in each case, or in the aggregate, as does
not constitute a Material Adverse Effect on Parent and Merger Sub, (B) for
changes contemplated by this Agreement and (C) for those representations and
warranties which address matters only as of a particular date (which
representations shall have been true and correct (subject to the qualifications
as set forth in the preceding clause A) as of such particular date) (it being
understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all "Material Adverse Effect" qualifications
and other qualifications based on the word "material" or similar phrases
contained in such representations and warranties shall be disregarded and (ii)
any update of or modification to the Parent Schedule made or purported to have
been made after the date of this Agreement shall be disregarded). Company shall
have received a certificate with respect to the foregoing signed on behalf of
Parent by an authorized officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by them on or prior
to the Closing Date, and Company shall have received a certificate to such
effect signed on behalf of Parent by an authorized officer of Parent.
(c) Material Adverse Effect. No Material Adverse Effect with
respect to Parent shall have occurred since the date of this Agreement.
6.3 Additional Conditions to the Obligations of Parent and Merger Sub.
The obligations of Parent and Merger Sub to consummate and effect the Merger
shall be subject to the satisfaction at or prior to the Closing Date of each of
the following conditions, any of which may be waived, in writing, exclusively by
Parent:
(a) Representations and Warranties. Each representation and
warranty of Company contained in this Agreement (i) shall have been true and
correct as of the date of this Agreement and (ii) shall be true and correct on
and as of the Closing Date with the same force and effect as if made on and as
of the Closing Date except (A) in each case, or in the aggregate, as does not
constitute a Material Adverse Effect on Company provided, however, such Material
Adverse Effect qualifier shall be inapplicable with respect to representations
and warranties contained in Section 2.3, 2.23, 2.24 and 2.26,
-40-
46
(B) for changes contemplated by this Agreement and (C) for those representations
and warranties which address matters only as of a particular date (which
representations shall have been true and correct except as does not constitute a
Material Adverse Effect on Company as of such particular date) (it being
understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all "Material Adverse Effect" qualifications
and other qualifications based on the word "material" or similar phrases
contained in such representations and warranties shall be disregarded and (ii)
any update of or modification to the Company Schedule made or purported to have
been made after the date of this Agreement shall be disregarded). Parent shall
have received a certificate with respect to the foregoing signed on behalf of
Company by an authorized officer of Company.
(b) Agreements and Covenants. Company shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it at or prior to the Closing
Date, and Parent shall have received a certificate to such effect signed on
behalf of Company by the Chief Executive Officer and the Chief Financial Officer
of Company.
(c) Material Adverse Effect. No Material Adverse Effect with
respect to Company shall have occurred since the date of this Agreement. For the
purposes of this Section 6.3(c), neither (i) the absence of up to $1,000,000 of
non-product revenue associated with licensing of the Company's technology as the
result of restrictions set forth in Section 4.1 nor (ii) a shortfall in revenues
of the Company as a result of delays in customer orders (including any effects
on the Company's operating income which result directly from such revenue
shortfall) proximately caused by the announcement or pendency of the Merger will
be deemed a Material Adverse Effect.
(d) Affiliate Agreements. Each of the Company Affiliates shall
have entered into the Company Affiliate Agreement and each of such agreements
will be in full force and effect as of the Effective Time.
(e) Company Rights Plans. All actions necessary to extinguish and
cancel all outstanding Rights under the Company Rights Plan at the Effective
Time and to render such rights inapplicable to the Merger shall have been taken.
(f) Opinions of Accountants. Parent shall have received (i) from
PricewaterhouseCoopers LLP, independent accountants for the Company, a copy of a
letter addressed to the Company dated as of the Closing Date in substance
reasonably satisfactory to Parent (which may contain customary qualifications
and assumptions) to the effect that PricewaterhouseCoopers LLP concurs with
Company management's conclusion that no conditions exist that would preclude the
Company from being a party to a business combination accounted for as a
"pooling-of-interests" and (ii) from PricewaterhouseCoopers LLP, independent
accountants for Parent, a letter dated as of the Closing Date in substance
reasonably satisfactory to Parent (which may contain customary qualifications
and assumptions) to the effect that PricewaterhouseCoopers LLP concurs with
Parent management's conclusion that no conditions exist related to Parent that
would preclude Parent from accounting for the Merger as a
"pooling-of-interests."
-41-
47
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1 Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after the requisite approvals of the
stockholders of Company or Parent:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and Company;
(b) by either Company or Parent if the Merger shall not have been
consummated by August 27, 1999 for any reason; provided, however, that the right
to terminate this Agreement under this Section 7.1(b) shall not be available to
any party whose action or failure to act has been a principal cause of or
resulted in the failure of the Merger to occur on or before such date and such
action or failure to act constitutes a breach of this Agreement;
(c) by either Company or Parent if a Governmental Entity shall
have issued an order, decree or ruling or taken any other action, in any case
having the effect of permanently restraining, enjoining or otherwise prohibiting
the Merger, which order, decree, ruling or other action is final and
nonappealable;
(d) by either Company or Parent if the required approval of the
stockholders of Company contemplated by this Agreement shall not have been
obtained by reason of the failure to obtain the required vote at a meeting of
Company stockholders duly convened therefor or at any adjournment thereof;
(provided, however, that the right to terminate this Agreement under this
Section 7.1(d) shall not be available to Company where the failure to obtain
Company stockholder approval shall have been caused by the action or failure to
act of Company and such action or failure to act constitutes a breach by Company
of this Agreement);
(e) by Parent if a Triggering Event (as defined below) shall have
occurred;
(f) by Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement, or if
any representation or warranty of Parent shall have become untrue, in either
case such that the conditions set forth in Section 6.2(a) or Section 6.2(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided, that if such
inaccuracy in Parent's representations and warranties or breach by Parent is
curable by Parent through the exercise of its commercially reasonable efforts,
then Company may not terminate this Agreement under this Section 7.1(f) for
thirty (30) days after delivery of written notice from Company to Parent of such
breach, provided Parent continues to exercise commercially reasonable efforts to
cure such breach (it being understood that Company may not terminate this
Agreement pursuant to this paragraph (f) if it shall have materially breached
this Agreement or if such breach by Parent is cured during such thirty day
period); or
-42-
48
(g) by Parent, upon a breach of any representation, warranty,
covenant or agreement on the part of Company set forth in this Agreement, or if
any representation or warranty of Company shall have become untrue, in either
case such that the conditions set forth in Section 6.3(a) or Section 6.3(b)
would not be satisfied as of the time of such breach or as of the time such
representation or warranty shall have become untrue, provided, that if such
inaccuracy in Company's representations and warranties or breach by Company is
curable by Company through the exercise of its commercially reasonable efforts,
then Parent may not terminate this Agreement under this Section 7.1(g) for
thirty days after delivery of written notice from Parent to Company of such
breach, provided Company continues to exercise commercially reasonable efforts
to cure such breach (it being understood that Parent may not terminate this
Agreement pursuant to this paragraph (g) if it shall have materially breached
this Agreement or if such breach by Company is cured during such thirty day
period).
For the purposes of this Agreement, a "Triggering Event" shall be deemed
to have occurred if: (i) the Board of Directors of Company or any committee
thereof shall for any reason have withdrawn or shall have amended or modified in
a manner adverse to Parent its unanimous recommendation in favor of, the
adoption and approval of the Agreement or the approval of the Merger; (ii)
Company shall have failed to include in the Proxy Statement/Prospectus the
unanimous recommendation of the Board of Directors of Company in favor of the
adoption and approval of the Agreement and the approval of the Merger; (iii)
Board of Directors of Company fails to reaffirm its unanimous recommendation in
favor of the adoption and approval of the Agreement and the approval of the
Merger within five (5) business days after Parent requests in writing that such
recommendation be reaffirmed at any time following the announcement of an
Acquisition Proposal; (iv) the Board of Directors of Company or any committee
thereof shall have approved or recommended any Acquisition Proposal; (v) Company
shall have entered into any letter of intent or similar document or any
agreement, contract or commitment accepting any Acquisition Proposal; or (vi) a
tender or exchange offer relating to securities of Company shall have been
commenced by a Person unaffiliated with Parent and Company shall not have sent
to its securityholders pursuant to Rule 14e-2 promulgated under the Securities
Act, within ten (10) business days after such tender or exchange offer is first
published sent or given, a statement disclosing that Company recommends
rejection of such tender or exchange offer.
7.2 Notice of Termination; Effect of Termination. Any termination of
this Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 7.2, Section 7.3 and Article 8 (miscellaneous), each of which
shall survive the termination of this Agreement, and (ii) nothing herein shall
relieve any party from liability for any willful breach of this Agreement. No
termination of this Agreement shall affect the obligations of the parties
contained in the Confidentiality Agreement, all of which obligations shall
survive termination of this Agreement in accordance with their terms.
-43-
49
7.3 Fees and Expenses.
(a) General. Except as set forth in this Section 7.3, all fees
and expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated.
(b) Company Payments.
(i) The Company shall pay to Parent, in immediately
available funds, upon demand by Parent, an amount equal to $1,000,000, if this
Agreement is terminated by Parent pursuant to Section 7.1(e). In addition, if
this Agreement is terminated by Parent pursuant to Section 7.1(e), the Company
shall also pay to Parent, in immediately available funds, an amount equal to
$3,000,000 no later than two days after the earlier of (A) the entry by the
Company into an agreement or letter of intent with respect to an Acquisition
Proposal or (B) forty-five (45) days after the termination of this Agreement.
(ii) The Company shall pay to Parent in immediately
available funds, upon demand by Parent, an amount equal to $4,000,000 (the
"Termination Fee"), if this Agreement is terminated by Parent or the Company, as
applicable, pursuant to Sections 7.1(b) or (d) and any of the following shall
occur:
(1) if following the date hereof and prior to the
termination of this Agreement, a third party has announced an Acquisition
Proposal and within nine (9) months following the termination of this Agreement
a Company Acquisition (as defined below) is consummated; or
(2) if following the date hereof and prior to the
termination of this Agreement, a third party has announced an Acquisition
Proposal and within nine (9) months following the termination of this Agreement
the Company enters into an agreement or letter of intent providing for a Company
Acquisition.
(iii) The Company acknowledges that the agreements
contained in this Section 7.3(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these agreements, Parent would
not enter into this Agreement; accordingly, if the Company fails to pay in a
timely manner the amounts due pursuant to this Section 7.3(b) , and, in order to
obtain such payment, Parent makes a claim that results in a judgment against the
Company for the amounts set forth in this Section 7.3(b), the Company shall pay
to Parent its reasonable costs and expenses (including reasonable attorneys'
fees and expenses) in connection with such suit, together with interest on the
amounts set forth in this Section 7.3(b) at the prime rate of The Chase
Manhattan Bank in effect on the date such payment was required to be made.
Payment of the fees described in this Section 7.3(b) shall not be in lieu of
damages incurred in the event of breach of this Agreement. For the purposes of
this Agreement "Company Acquisition" shall mean any of the following
transactions (other than the transactions contemplated by this Agreement): (i) a
merger, consolidation, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company pursuant to which
-44-
50
the stockholders of the Company immediately preceding such transaction hold less
than 65% of the aggregate equity interests in the surviving or resulting entity
of such transaction, (ii) a sale or other disposition by the Company of assets
representing in excess of 35% of the aggregate fair market value of the
Company's business immediately prior to such sale or (iii) the acquisition by
any person or group (including by way of a tender offer or an exchange offer or
issuance by the Company), directly or indirectly, of beneficial ownership or a
right to acquire beneficial ownership of shares representing in excess of 35% of
the voting power of the then outstanding shares of capital stock of the Company.
7.4 Amendment. Subject to applicable law, this Agreement may be amended
by the parties hereto at any time by execution of an instrument in writing
signed on behalf of each of Parent and Company.
7.5 Extension; Waiver. At any time prior to the Effective Time any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 Non-Survival of Representations and Warranties. The representations
and warranties of Company, Parent and Merger Sub contained in this Agreement
shall terminate at the Effective Time, and only the covenants that by their
terms survive the Effective Time shall survive the Effective Time.
8.2 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to Parent or Merger Sub, to:
LSI Logic Corporation
0000 XxXxxxxx Xxxxxxxxx
Xxxxxxxx, Xxxxxxxxxx 00000
Attention: Vice President and General Counsel
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
-45-
51
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxx, Esq.
Xxxxxx X. Xxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
(b) if to Company, to:
SEEQ Technology Incorporated
00000 Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: President
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxxxx Xxxxxxx
Xxxxxx Xxxxxxxxxx Xxxxxxxx
& Xxxxxxxxx, LLP
000 Xxxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
Attention: Xxx X. Xxxxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
8.3 Interpretation; Knowledge.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of this Agreement. Unless otherwise indicated the words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. When reference is
made herein to "the business of" an entity, such reference shall be deemed to
include the business of all direct and indirect subsidiaries of such entity.
Reference to the subsidiaries of an entity shall be deemed to include all direct
and indirect subsidiaries of such entity.
-46-
52
(b) For purposes of this Agreement the term "knowledge" means (x)
with respect to the Company, with respect to any matter in question, that any of
the Chief Executive Officer, Chief Financial Officer, Vice President of Research
and Development or Controller of the Company, has actual knowledge of such
matter and (y) with respect to Parent, with respect to any matter in question,
and any of the Chief Executive Officer or Controller of Parent has actual
knowledge of such matters.
(c) For purposes of this Agreement, the term "Material Adverse
Effect" when used in connection with an entity means any change, event,
violation, inaccuracy, circumstance or effect that is materially adverse to the
business, assets (including intangible assets), capitalization, financial
condition or results of operations of such entity and its subsidiaries taken as
a whole.
(d) For purposes of this Agreement, the term "person" shall mean
any individual, corporation (including any non-profit corporation), general
partnership, limited partnership, limited liability partnership, joint venture,
estate, trust, company (including any limited liability company or joint stock
company), firm or other enterprise, association, organization, entity or
Governmental Entity.
8.4 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.5 Entire Agreement; Third Party Beneficiaries. This Agreement and the
documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including the Company Schedule and the
Parent Schedule (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, it being understood that the Confidentiality Agreement
shall continue in full force and effect until the Closing and shall survive any
termination of this Agreement; and (b) are not intended to confer upon any other
person any rights or remedies hereunder, except as specifically provided in
Section 5.10.
8.6 Severability. In the event that any provision of this Agreement or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
8.7 Other Remedies; Specific Performance. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not
-47-
53
performed in accordance with their specific terms or were otherwise breached. It
is accordingly agreed that the parties shall be entitled to seek an injunction
or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions hereof in any court of the United States or any state
having jurisdiction, this being in addition to any other remedy to which they
are entitled at law or in equity.
8.8 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
8.9 Rules of Construction. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
8.10 Assignment. No party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the other parties. Subject to the preceding sentence, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective successors and permitted assigns.
8.11 WAIVER OF JURY TRIAL. EACH OF PARENT, COMPANY AND MERGER SUB HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ACTIONS OF PARENT, COMPANY OR MERGER SUB IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
*****
-48-
54
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
LSI LOGIC CORPORATION
By: /s/ XXXX X. XXXXX
---------------------------------------------------
Name: Xxxx X. Xxxxx
-------------------------------------------------
Title: Executive Vice President
-------------------------------------------------
STEALTH ACQUISITION CORPORATION
By: /s/ XXXXX X. XXXXXXX
---------------------------------------------------
Name: Xxxxx X. Xxxxxxx
-------------------------------------------------
Title: Secretary and Vice President
-------------------------------------------------
SEEQ TECHNOLOGY INCORPORATED
By: /s/ XXXXXXX X. XXXXXXXX
---------------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
-------------------------------------------------
Title: President and Chief Executive Officer
-------------------------------------------------
**** REORGANIZATION AGREEMENT ****
