1
Exhibit 1
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AGREEMENT AND PLAN OF MERGER
By and Among
Diamond Multimedia Systems, Inc.
Boardwalk Acquisition Corporation
and
Micronics Computers, Inc.
Dated as of May 11, 1998
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TABLE OF CONTENTS
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ARTICLE I THE TENDER OFFER . . . . . . . . . . . . . . . . . . . . . . 1
1.1 The Offer . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Company Action . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Directors . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.2 Effective Time . . . . . . . . . . . . . . . . . . . . . . . 5
2.3 Effects of the Merger . . . . . . . . . . . . . . . . . . . 5
2.4 Certificate of Incorporation . . . . . . . . . . . . . . . . 5
2.5 Bylaws . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.6 Directors . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.7 Officers . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.8 Conversion of Shares . . . . . . . . . . . . . . . . . . . . 6
2.10 Dissenting Shares . . . . . . . . . . . . . . . . . . . . . 7
2.11 Payment For Shares . . . . . . . . . . . . . . . . . . . . . 7
2.12 No Further Rights or Transfers . . . . . . . . . . . . . . . 8
2.13 Supplementary Action . . . . . . . . . . . . . . . . . . . . 8
2.14 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . 9
3.1 Organization of the Company . . . . . . . . . . . . . . . . 9
3.2 Company Capital Structure . . . . . . . . . . . . . . . . . 10
3.3 Obligations With Respect to Capital Stock . . . . . . . . . 10
3.4 Authority . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.5 SEC Filings; the Company Financial Statements . . . . . . . 12
3.6 Absence of Certain Changes or Events . . . . . . . . . . . . 13
3.7 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.8 Title to Properties; Absence of Liens and Encumbrances . . . 14
3.9 Intellectual Property . . . . . . . . . . . . . . . . . . . 15
3.10 Compliance; Permits; Restrictions . . . . . . . . . . . . . 18
3.11 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.12 Brokers' and Finders' Fees . . . . . . . . . . . . . . . . . 19
3.13 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . 19
3.14 Employees; Labor Matters . . . . . . . . . . . . . . . . . . 19
3.15 Environmental Matters . . . . . . . . . . . . . . . . . . . 20
3.16 Agreements, Contracts and Commitments . . . . . . . . . . . 21
3.17 Change of Control Payments . . . . . . . . . . . . . . . . . 22
3.18 Board Approval . . . . . . . . . . . . . . . . . . . . . . . 22
3.19 Fairness Opinion . . . . . . . . . . . . . . . . . . . . . . 22
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TABLE OF CONTENTS
(continued)
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3.20 Offer Documents . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER . . . 22
4.1 Organization and Qualification . . . . . . . . . . . . . . . 22
4.2 Corporate Power, Authorization and Enforceability . . . . . 22
4.3 No Conflict; Required Filings and Consents . . . . . . . . . 23
4.4 Schedule 14D-1 . . . . . . . . . . . . . . . . . . . . . . . 24
4.5 Available Funds . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE V COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 24
5.1 Conduct of Business by the Company . . . . . . . . . . . . . 24
5.2 Access to Information; Confidentiality . . . . . . . . . . . 26
5.3 Proxy Material; Stockholders' Meeting . . . . . . . . . . . 27
5.4 No Solicitation . . . . . . . . . . . . . . . . . . . . . . 28
5.5 Public Announcements . . . . . . . . . . . . . . . . . . . . 29
5.6 Notification of Certain Matters . . . . . . . . . . . . . . 30
5.7 Actions by Company . . . . . . . . . . . . . . . . . . . . . 30
5.8 Officers' and Directors' Indemnification . . . . . . . . . . 30
5.9 intentionally left blank] . . . . . . . . . . . . . . . . . 31
5.10 Additional Agreements . . . . . . . . . . . . . . . . . . . 31
5.11 Other Actions by the Company . . . . . . . . . . . . . . . . 31
5.12 Section 203 of the DGCL . . . . . . . . . . . . . . . . . . 32
5.13 Stockholder Litigation . . . . . . . . . . . . . . . . . . . 32
5.14 Section 401(k) Plan Termination; ESPP Termination . . . . . 32
ARTICLE VI CONDITIONS OF MERGER . . . . . . . . . . . . . . . . . . . . 32
6.1 Conditions to the Obligations of Each Party to Effect the
Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER . . . . . . . . . . . . . 33
7.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . 33
7.2 Procedure and Effect of Termination . . . . . . . . . . . . 35
7.3 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 35
7.4 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 36
7.5 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 37
8.1 Severability . . . . . . . . . . . . . . . . . . . . . . . . 37
8.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.3 Entire Agreement; No Third Party Beneficiaries; No
Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.4 Interpretation; Knowledge . . . . . . . . . . . . . . . . . 39
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TABLE OF CONTENTS
(continued)
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8.5 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 39
8.6 Other Remedies; Specific Performance . . . . . . . . . . . . 39
8.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 39
8.8 Rules of Construction . . . . . . . . . . . . . . . . . . . 40
8.9 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . 40
8.10 Survival of Representations and Warranties . . . . . . . . . 40
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (THE "AGREEMENT") is made and
entered into as of this 11th day of May, 1998, by and among Diamond Multimedia
Systems, Inc., a Delaware corporation ("PARENT"), Boardwalk Acquisition
Corporation, a Delaware corporation and a wholly-owned subsidiary of Parent
("PURCHASER"), and Micronics Computers, Inc., a Delaware corporation (the
"COMPANY").
RECITALS
A. The Boards of Directors of Parent, Purchaser and the Company
have each unanimously approved the terms and conditions of a merger of
Purchaser with and into the Company (the "MERGER") upon the terms and subject
to the conditions set forth herein.
B. Pursuant to the Merger, Purchaser will acquire each issued and
outstanding share of Common Stock par value $0.01 per share, of the Company
(shares of the Common Stock are referred to herein as the "SHARES") at a price
of $2.45 net per Share to the seller in cash and without interest thereon (the
"OFFER PRICE"). In order to accomplish the Merger, Purchaser shall first
commence a tender offer (the "OFFER") by Purchaser under Section 14(d)(1) of
the Securities and Exchange Act of 1934, as amended (the "EXCHANGE ACT"), to
purchase all outstanding Shares.
C. The Board of Directors of the Company has unanimously resolved
to recommend the acceptance of the Offer and approval of the Merger to the
holders of Shares and determined that the consideration to be paid for each
Share in the Offer and the Merger is fair to the holders of such Shares and
that the Offer and the Merger are in the best interests of the holders of such
Shares.
NOW, THEREFORE, intending to be legally bound hereby, the parties
agree as follows:
ARTICLE I
THE TENDER OFFER
1.1 THE OFFER.
(a) Provided that this Agreement shall not have been
terminated pursuant to Section 7.1 and none of the events set forth in clause
(iii) of Annex I shall have occurred or be existing, Purchaser shall, and
Parent shall cause Purchaser to, within five business days after the public
announcement of the execution of this Agreement commence (within the meaning of
Rule 14d-2 under the Exchange Act) the Offer at the Offer Price.
(b) The obligations of Purchaser to consummate the Offer
and to accept for payment and pay for any of the Shares tendered shall be
subject to the conditions set forth on
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Annex I, including that a minimum of not less than fifty-one percent (51%) of
the Shares outstanding on a fully diluted basis (including for purposes of such
calculation all Shares issuable upon exercise of all stock options vested or
scheduled to vest prior to July 31, 1998, and conversion of convertible
securities or other rights to purchase or acquire Shares) being validly
tendered and not withdrawn prior to the expiration of the Offer (the "MINIMUM
CONDITION"). The per Share amount shall be net to the seller in cash, upon the
terms and subject to the conditions of the Offer and subject to reduction for
any applicable federal back-up or other applicable withholding or stock
transfer taxes. The Offer shall remain open until 12:00 Midnight, New York
City time, on such date as is twenty (20) business days following the
commencement of the Offer. As used in this Agreement, the "EXPIRATION DATE"
means 12:00 Midnight, New York City time, on such date, unless Purchaser
extends the Offer as permitted by this Agreement, in which case the "Expiration
Date" means the latest time and date to which the Offer is extended.
(c) Purchaser expressly reserves the right to waive any
condition to the Offer (other than the condition set forth in clause (ii) or
(iii)(E) of Annex I), to increase the price per Share payable in the Offer, to
extend the duration of the Offer, or to make any other changes in the terms and
conditions of the Offer; provided, however, that no such change may be made
which decreases the price per Share payable in the Offer, reduces the maximum
number of Shares to be purchased in the Offer, imposes conditions to the Offer
in addition to those set forth in Annex I or amends any other material terms of
the Offer in a manner materially adverse to the Company's stockholders, and
provided, further, that the Offer may not, without the Company's prior written
consent, be extended beyond 120 days from the commencement of the Offer except
as necessary to provide time to satisfy the conditions set forth in Annex I or
as required by any rule, regulation, interpretation or position of the
Securities Exchange Commission (the "SEC") and except that Purchaser may extend
the Offer for up to 20 business days, if as of such date, there shall not have
been tendered at least ninety percent (90%) of the outstanding Shares so that
the Merger could be effected without a meeting of the Company's stockholders in
accordance with applicable provisions of the Delaware General Corporation Law
("DGCL").
(d) The Offer shall be made by means of an offer to
purchase (the "OFFER TO PURCHASE") containing the terms set forth in this
Agreement and the conditions set forth in Annex I. Concurrently with the
commencement of the Offer, Parent and Purchaser shall file with the SEC a
tender offer statement on Schedule 14D-1 reflecting the Offer (together with
all exhibits, amendments and supplements thereto, the "SCHEDULE 14D-1"). The
Schedule 14D-1 will contain or will incorporate by reference the Offer to
Purchase (or portions thereof) and forms of the related letter of transmittal
and summary advertisements (which Schedule 14D-1, Offer to Purchase and other
documents, together with any supplements or amendments thereto, are referred to
herein collectively as the "OFFER DOCUMENTS"). The Company and its counsel
shall be given a reasonable opportunity to review and comment on the Offer
Documents prior to their filing with the SEC or dissemination to the
stockholders of the Company. Parent and Purchaser agree to provide the Company
and its counsel with any comments which Parent, Purchaser or their counsel may
receive from the SEC or the staff of the SEC with respect to such documents
promptly after receipt thereof. Upon the terms and subject to the conditions
of the Offer (including, if the Offer is extended or amended, the terms and
conditions of any such extension or amendment), Purchaser will purchase by
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accepting for payment and will pay for Shares validly tendered and not properly
withdrawn, as promptly as practicable after the Expiration Date. Parent,
Purchaser and the Company agree promptly to correct any information provided by
any of them for use in the Offer Documents that shall have become false or
misleading in any material respect and to provide any information, the omission
of which would make any previously provided information false or misleading in
any material respect, and Parent and Purchaser further agree to take all steps
necessary to cause the Schedule 14D-1 as so corrected to be filed with the SEC
and the other Offer Documents as so corrected to be disseminated to the holders
of Shares, in each case as and to the extent required by applicable federal
securities laws. The Offer Documents will, on the date filed and on the date
first published, sent or given to the Company's stockholders, comply in all
material respects with all provisions of applicable federal securities laws and
the rules and regulations promulgated thereunder.
1.2 COMPANY ACTION.
(a) The Company hereby approves of and consents to the
Offer and represents and warrants that (i) its Board of Directors has
unanimously (A) determined that this Agreement and the transactions
contemplated hereby, including each of the Offer and the Merger, are fair to
and in the best interests of the holders of the Shares, (B) approved and
adopted this Agreement and the transactions contemplated hereby and (C)
resolved to recommend that the stockholders of the Company accept the Offer and
approve and adopt this Agreement and the transactions contemplated hereby and
thereby (provided, however, that subject to the provisions of Section 5.4 such
recommendation may be withdrawn, modified or amended in connection with a
Superior Proposal (as defined in Section 5.4)) and (ii) Alliant Partners
("ALLIANT PARTNERS") has rendered to the Board of Directors of the Company its
written opinion (which opinion is permitted to be included in writing in the
Schedule 14D-9 (as defined in Section 1.2(b)), to the effect that the
consideration to be received by the holders of Shares pursuant to each of the
Offer and (so long as the price per Share equals or exceeds $2.45) the Merger
is fair to the holders of Shares. The Company hereby consents to the inclusion
in the Offer Documents of the recommendation of the Company's Board of
Directors described in clause (i) of this Section 1.2(a), and has obtained the
consent of Alliant Partners to the inclusion in the Schedule 14D-9 of a copy of
the written opinion referred to in clause (ii) above.
(b) The Company shall file with the SEC, concurrently
with the filing by Parent and Purchaser of the Schedule 14D-1, a
Solicitation/Recommendation Statement on Schedule 14D-9 under the Exchange Act
relating to the Offer (together with all exhibits, amendments and supplements
thereto as well as the Information Statement required pursuant to Section 14(f)
under the Exchange Act, collectively the "SCHEDULE 14D-9"), which shall contain
the recommendation of the Company's Board of Directors described in Section
1.2(a), and shall disseminate the Schedule 14D-9 as required by Rule 14d-9
promulgated under the Exchange Act. The Schedule 14D-9, and each amendment
thereto, will, on the date filed, comply in all material respects with the
provisions of applicable federal securities laws. The Company, Parent and
Purchaser agree promptly to correct any information provided by any of them for
use in the Schedule 14D-9 that shall have become false or misleading in any
material respect and to provide any information, the omission of which would
make any previously provided information false or misleading in any material
respect, and the Company further agrees to take all steps necessary to cause
the Schedule 14D-9 as so corrected to be
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filed with the SEC and the Schedule 14D-9 as so corrected to be disseminated to
holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Parent and its counsel shall be given the opportunity
to review and comment on the Schedule 14D-9, and all amendments and supplements
thereto, prior to the time at which such documents and all documents related
thereto are filed with the SEC. The Company shall provide Purchaser and its
counsel with any comments the Company or its counsel may receive from the SEC
with respect to the Schedule 14D-9 promptly after receipt of such comments.
(c) The Company has been advised by all of its directors
and executive officers, that, as of the date of this Agreement, each intends to
tender all outstanding Shares beneficially owned by such person to Purchaser
pursuant to the Offer unless to do so would subject such person to liability
under Section 16(b) of the Exchange Act.
(d) The Company shall promptly furnish Purchaser with
the names and addresses either on preprinted mailing labels or in such
electronic or other form reasonably requested by Parent of all record holders
of Shares and security position listings of Shares held in stock depositories,
each of a recent date, and shall promptly furnish Purchaser with such
additional information, including updated lists of stockholders, mailing labels
and security position listings, and such other assistance as Parent, Purchaser
or their agents may reasonably request in connection with communicating the
Offer and any amendments or supplements thereto to the Company's stockholders.
Subject to the requirements of applicable laws and except for such steps as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Merger, Parent and Purchaser shall hold in confidence the
information contained in any of such labels and lists.
1.3 DIRECTORS. Promptly upon the acquisition by Purchaser
pursuant to the Offer of such number of Shares which satisfies the Minimum
Condition and from time to time thereafter, Parent shall be entitled to
designate a majority of the members of the Company's Board of Directors,
subject to compliance with Section 14(f) of the Exchange Act. The Company
shall, upon request by Parent, promptly increase the size of the Board of
Directors to the extent permitted by its Certificate of Incorporation and/or
secure the resignations of such number of directors as is necessary to enable
Parent's designees to be elected to the Board of Directors and shall use its
reasonable efforts to cause Parent's designees to be so elected. The Company
shall take, at its expense, all action necessary to effect any such election,
including mailing to its stockholders the information required by Section 14(f)
of the Exchange Act and Rule 14f-1 promulgated thereunder in form and substance
reasonably satisfactory to Parent and its counsel. Following the election or
appointment of Parent's designees pursuant to this Section 1.3 and prior to the
Effective Time, any amendment or termination of this Agreement, extension for
the performance or waiver of the obligations or other acts of Parent or
Purchaser or waiver of the Company's rights hereunder, shall require the
concurrence of a majority of the Company's directors (or the concurrence of the
director, if there is only one remaining) then in office who are directors on
the date hereof, or are directors (other than directors designated by Parent in
accordance with this Section 1.3) designated by such persons to fill any
vacancy (the "CONTINUING DIRECTORS"); provided, however, that, if there shall
be no Continuing Directors, such actions may be affected by majority vote of
the entire Board of Directors, except that
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no such action shall amend the terms of this Agreement or waive any right or
obligation under this Agreement in a manner adverse to the stockholders of the
Company.
ARTICLE II
THE MERGER
2.1 THE MERGER. Upon the terms and subject to the conditions
hereof and in accordance with the DGCL, Purchaser shall be merged with and into
the Company as soon as practicable following the satisfaction or waiver, if
permissible, of the conditions set forth in Article VI of this Agreement.
Following the Merger, the Company shall continue as the surviving corporation
(the "SURVIVING CORPORATION") and the separate corporate existence of Purchaser
shall cease. At the election of Parent or Purchaser, any direct or indirect
wholly-owned subsidiary of Parent incorporated under the laws of the State of
Delaware may be substituted for Purchaser as a constituent corporation in the
Merger. As used herein, the term "PURCHASER" shall, upon such substitution,
refer to any such substituted corporation.
2.2 EFFECTIVE TIME. The Merger shall be consummated by and
shall be effective at the time there has been filed as provided by Section 2.14
with the Delaware Secretary of State a certificate or agreement of merger in
such form as is required by, and executed in accordance with, the relevant
provisions of the DGCL, and such other documents as may be required by the
provisions of the DGCL. The time of such filing is referred to as the
"EFFECTIVE TIME."
2.3 EFFECTS OF THE MERGER. The Merger shall have the effects
set forth in applicable sections of the DGCL. As of the Effective Time, the
Company shall be a wholly-owned subsidiary of Parent.
2.4 CERTIFICATE OF INCORPORATION. The Certificate of
Incorporation of the Surviving Corporation shall be amended to contain the
substantive provisions of the Certificate of Incorporation of the Purchaser as
in effect at the Effective Time.
2.5 BYLAWS. Subject to Section 5.8 below, the Bylaws of
Purchaser, as in effect immediately prior to the Effective Time, shall be the
Bylaws of the Surviving Corporation, until thereafter duly amended in
accordance with applicable law.
2.6 DIRECTORS. The directors of Purchaser immediately prior to
the Effective Time shall be the initial directors of the Surviving Corporation
and will hold office from the Effective Time until their respective successors
are duly elected or appointed and qualified in the manner provided in the
Certificate of Incorporation and Bylaws of the Surviving Corporation, as such
instruments may be amended from time to time, either before or after the
Effective Time, or as otherwise provided by law.
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2.7 OFFICERS. The officers of the Purchaser immediately prior
to the Effective Time shall be the initial officers of the Surviving
Corporation, except as Parent may determine and notify the Company in writing
prior to the Effective Time. Such officers of the Surviving Corporation will
hold office from the Effective Time until their respective successors are duly
elected or appointed and qualified in the manner provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation, as such instruments may
be amended from time to time, either before or after the Effective Time, or as
otherwise provided by law.
2.8 CONVERSION OF SHARES.
(a) At the Effective Time, by virtue of the Merger and
without any action on the part of Parent, Purchaser, the Company or the holders
of the Shares:
(i) Each Share issued and outstanding
immediately prior to the Effective Time (other than Shares held,
directly or indirectly, by Parent, Purchaser, the Company or any of
their majority-owned subsidiaries, and any Dissenting Shares (as
defined in Section 2.10)) shall automatically be canceled and
extinguished and be converted into the right to receive $2.45, or the
highest amount per Share as is paid pursuant to the Offer (the "MERGER
CONSIDERATION"), in cash, without interest thereon.
(ii) Each Share issued and outstanding
immediately prior to the Effective Time which is owned or held,
directly or indirectly, by Parent, Purchaser, the Company or any of
their majority-owned subsidiaries shall be canceled and extinguished
and cease to exist, without any conversion thereof, and no payment
shall be made with respect thereto.
(iii) Each holder (other than holders referred to
in Section 2.8(a)(ii)) of a certificate representing any Shares shall
after the Effective Time cease to have any rights with respect to such
Shares, except either to receive the Merger Consideration upon
surrender of such certificate, or to exercise such holder's appraisal
rights as provided in Section 2.10 and the DGCL.
(iv) Each share of Common Stock of Purchaser
issued and outstanding immediately prior to the Effective Time shall,
by virtue of the Merger and without any action on the part of the
holder thereof, be converted into and thereafter represent one validly
issued, fully paid and nonassessable share of Common Stock of the
Surviving Corporation.
2.9 COMPANY STOCK OPTIONS. The Company, Parent and Purchaser
hereby acknowledge and agree that Parent shall not assume or continue any
outstanding stock options (the "OUTSTANDING OPTIONS") under any of the
Company's 1989 Stock Option Plan (the "1989 PLAN"), 1992 Directors Stock Option
Plan (the "1992 PLAN"), the 1998 Equity Incentive Plan (the "1998 PLAN") and
options assumed in connection with the Company's acquisition of Orchid
Technology (the "ASSUMED ORCHID OPTIONS") or any other agreement or
arrangement, or substitute any additional options for such outstanding options
(collectively, the "STOCK PLANS"). The Company shall take all actions
necessary to provide that at the Effective Time, (i) each Outstanding Option
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shall be canceled and (ii) in consideration for such cancellation, each holder
of an Outstanding Option shall receive in consideration thereof an amount
(subject to applicable withholding requirements) in cash equal to the product
of (x) the excess, if any, of the Merger Consideration over the per Share
exercise price of each Outstanding Option and (y) the number of Shares subject
to such Outstanding Option. The Company shall take all actions necessary to
effectuate the foregoing including without limitation amending the Stock Plans
and obtaining any necessary consents from holders of Outstanding Options.
2.10 DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, Shares which are outstanding immediately prior to
the Effective Time and which are held by a holder who has not voted in favor of
the Merger or consented thereto in writing and who has demanded appraisal for
such Shares in accordance with Section 262 of the DGCL ("DISSENTING SHARES")
shall not be converted into a right to receive the Merger Consideration
pursuant to Section 2.8, but the holders of Dissenting Shares shall instead be
entitled to receive such consideration as shall be determined pursuant to
Section 262 of the DGCL; provided, however, that if any such holder shall have
failed to perfect or shall withdraw or lose such holder's right of appraisal
and payment under the DGCL, such holder's Shares shall be treated as if they
had been converted as of the Effective Time into the right to receive the
Merger Consideration, without interest thereon, as provided in Section 2.8, and
such Shares shall no longer be Dissenting Shares. The Company shall give
Parent and Purchaser prompt notice of any demands received by the Company for
appraisal of Shares, and of any withdrawals of demands for appraisal, or of any
other instruments served pursuant to Section 262 of the DGCL and received by
the Company. Prior to the Effective Time, Parent and Purchaser shall have the
right to participate in all negotiations and proceedings with respect to such
demands for appraisal. Prior to the Effective Time, the Company shall not,
except with the prior written consent of Parent and Purchaser, make any payment
with respect to, or settle or offer to settle, any such demands. Each holder
of Dissenting Shares shall have only such rights and remedies as are granted to
such holder under Section 262 of the DGCL.
2.11 PAYMENT FOR SHARES.
(a) Prior to the Effective Time, Purchaser shall select
and appoint a bank or trust Company to act as agent for the holders of Shares
(the "PAYING AGENT") to receive and disburse the Merger Consideration to which
holders of Shares shall become entitled pursuant to Section 2.8. At the
Effective Time, Purchaser or Parent shall provide the Paying Agent with
sufficient cash to allow the Merger Consideration to be paid by the Paying
Agent for each Share then entitled to receive the Merger Consideration.
(b) As soon as practicable after the Effective Time,
Purchaser or Parent shall cause the Paying Agent to mail to each record holder
of a certificate or certificates representing Shares which as of the Effective
Time represents the right to receive the Merger Consideration (the
"CERTIFICATES"), a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates
shall pass, only upon proper delivery of the Certificates to the Paying Agent)
and instructions for use in effecting the surrender of the Certificates for
payment therefor. Upon surrender to the Paying Agent of a Certificate,
together with such letter of transmittal
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duly executed and completed in accordance with the instructions thereto, and
such other documents as may be requested, the holder of such Certificate shall
be entitled to receive in exchange therefor the Merger Consideration and such
Certificate shall forthwith be canceled. No interest shall be paid or accrued
on the Merger Consideration upon the surrender of the Certificates. Until
surrendered in accordance with the provisions of this Section, each Certificate
shall be deemed for all purposes to evidence only the right to receive the
Merger Consideration (without interest thereon), and shall, subject to Section
2.9, have no other right.
(c) If the Merger Consideration (or any portion thereof)
is to be delivered to a person other than the person in whose name the
Certificates surrendered in exchange therefor are registered, it shall be a
condition to the payment that the Certificates so surrendered shall be properly
endorsed or otherwise be in proper form for transfer and that the person
requesting such payment or delivery shall pay any transfer or other taxes
payable by reason of the foregoing or establish to the satisfaction of the
Surviving Corporation that such tax has been paid or is not applicable.
Notwithstanding the foregoing, neither the Paying Agent nor any party hereto
shall be liable to a holder of Shares for any Merger Consideration delivered to
a public official pursuant to applicable abandoned property, escheat and
similar laws.
(d) Promptly following the date that is nine months
after the Effective Date, the Paying Agent shall return to the Surviving
Corporation all Merger Consideration and other cash, property and instruments
in its possession relating to the transactions described in this Agreement, and
the Paying Agent's duties shall terminate. Thereafter, each holder of a
Certificate formerly representing a Share may surrender such Certificate to the
Surviving Corporation and (subject to applicable abandoned property, escheat
and similar laws) receive in exchange therefor the Merger Consideration
(without interest thereon). Notwithstanding the foregoing, the Surviving
Corporation shall be entitled to receive from time to time all interest or
other amounts earned with respect to any cash deposited with the Paying Agent
as such amounts accrue or become available.
2.12 NO FURTHER RIGHTS OR TRANSFERS. At and after the Effective
Time the holders of Certificates to be exchanged for the Merger Consideration
pursuant to this Agreement shall cease to have any rights as to stockholders of
the Company except for the right to surrender such holder's Certificates in
exchange for payment of the Merger Consideration, and after the Effective Time
there shall be no transfers on the stock transfer books of the Surviving
Corporation of the Shares which were outstanding immediately prior to the
Effective Time. Any Certificates formerly representing Shares presented to the
Surviving Corporation or Paying Agent shall be canceled and exchanged for the
Merger Consideration, as provided in this Article II, subject to applicable law
in the case of Dissenting Shares.
2.13 SUPPLEMENTARY ACTION. If at any time after the Effective
Time, any further assignments or assurances in law or any other things are
necessary or desirable to vest or to perfect or confirm of record in the
Surviving Corporation the title to any property or rights of either the Company
or Purchaser, or otherwise to carry out the provisions of this Agreement, the
officers and directors of the Surviving Corporation are hereby authorized and
empowered, in the name of and on behalf of the Company and Purchaser, to
execute and deliver any and all things necessary or proper
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to vest or to perfect or confirm title to such property or rights in the
Surviving Corporation, and otherwise to carry out the purposes and provisions
of this Agreement.
2.14 CLOSING. Upon the terms and subject to the conditions of
this Agreement, as soon as practicable after all the conditions to the
obligations of the parties hereto to effect the Merger under Article VI of this
Agreement shall have been satisfied or waived, the Company, Parent and
Purchaser shall (i) file with the Secretary of State of the State of Delaware a
certificate or agreement of merger or a certificate of ownership and merger in
such form as may be required by, and executed in accordance with, the relevant
provisions of the DGCL and (ii) take all such other and further actions as may
be required by law to make the Merger effective. Contemporaneous with the
filing referred to in this Section, a closing (the "CLOSING") will be held at
the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C., 000 Xxxx Xxxx Xxxx, Xxxx
Xxxx, Xxxxxxxxxx 00000 or at such other location as the parties may establish
for the purpose of confirming all the foregoing. The date and the time of such
Closing are referred to as the "CLOSING DATE."
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Purchaser, subject
to the exceptions specifically disclosed in writing in the disclosure letter
supplied by the Company to Parent and Purchaser dated as of the date hereof and
certified by a duly authorized officer of the Company (the "COMPANY
SCHEDULES"), as follows:
3.1 ORGANIZATION OF THE COMPANY.
(a) The Company and each of its subsidiaries is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation; has the corporate power and
authority to own, lease and operate its assets and property and to carry on its
business as now being conducted (as disclosed by the Company in its publicly
filed reports and publicly announced press releases) and is duly qualified or
licensed 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 where
the failure to be so qualified would not have a Material Adverse Effect (as
defined below).
(b) The Company has delivered to Parent a true and
complete list of all of the Company's subsidiaries, indicating the jurisdiction
of incorporation of each subsidiary, the jurisdictions in which such subsidiary
is qualified or licensed, and the Company's and any other person's equity
interest therein. All shares of subsidiaries owned of record by persons other
than the Company are owned beneficially (or the substantive equivalent) by the
Company.
(c) The Company has delivered or made available to
Parent a true and correct copy of the Certificate of Incorporation and Bylaws
of the Company and similar governing
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instruments of each of its subsidiaries, each as amended to date, and each such
instrument is in full force and effect. Neither the Company nor any of its
subsidiaries is in violation of any of the provisions of its Certificate of
Incorporation or Bylaws or equivalent governing instruments.
(d) For the purposes of this Agreement, the term
"MATERIAL ADVERSE EFFECT" means any change, event, violation, inaccuracy,
circumstance or effect that is materially adverse to the business, prospects,
assets (including intangible assets), capitalization, financial condition or
results of operations of the Company and its subsidiaries taken as a whole.
3.2 COMPANY CAPITAL STRUCTURE. The authorized capital stock of
the Company consists of 30,000,000 shares of Common Stock, $0.01 par value per
share, of which there were 12,902,565 shares issued and outstanding as of the
date of this Agreement and 5,000,000 shares of Preferred Stock, $0.01 par value
per share, of which no shares are issued or outstanding as of the date of this
Agreement. All outstanding shares of the Company Common Stock are duly
authorized, validly issued, fully paid and nonassessable and are not subject to
preemptive rights created by statute, the Certificate of Incorporation or
Bylaws of the Company or any agreement or document to which the Company is a
party or by which it is bound. As of the date of this Agreement, the Company
had reserved an aggregate of 3,120,084 shares of the Company Common Stock for
issuance to employees, consultants and non-employee directors pursuant to the
1989 Plan, the 1992 Plan, the 1998 Plan and the Assumed Orchid Options, of
which, as of the date of this Agreement, options for an aggregate of 831,867
shares had been exercised, options to purchase an aggregate of 1,317,244 shares
were outstanding and an aggregate of 970,973 shares remained available for
future grants. There are no shares reserved for issuance or issuable under the
Company's Employee Stock Purchase Plan (the "ESPP"). All shares of the Company
Common Stock subject to issuance pursuant to outstanding stock options or
purchase agreements entered into in connection with such plans, upon issuance
on the terms and conditions specified in the instruments pursuant to which they
are issuable, would be duly authorized, validly issued, fully paid and
nonassessable. The Company Schedules list for each person who held restricted
stock or options, the name of the holder of such shares or option, the exercise
price of such option, the number of shares which will have vested at such date,
the vesting schedule for such shares or option and whether the lapsing of the
Company's repurchase rights or exercisability of such option will be
accelerated in any way by the transactions contemplated by this Agreement, and
indicate the extent of acceleration, if any.
3.3 OBLIGATIONS WITH RESPECT TO CAPITAL STOCK. Except as set
forth in Section 3.2, there are no shares of capital stock of the Company, or
any securities exchangeable or convertible into or exercisable for such capital
stock, issued, reserved for issuance or outstanding. Except for securities the
Company owns, directly or indirectly through one or more subsidiaries, there
are no equity securities, partnership interests or similar ownership interests
of any subsidiary of the Company, or any security exchangeable or convertible
into or exercisable for such equity securities, convertible securities,
partnership interests or similar ownership interests, issued, reserved for
issuance or outstanding. Except as set forth in Section 3.2, there are no
options, warrants, equity securities, convertible securities, partnership
interests or similar ownership interests, calls, rights (including preemptive
rights), commitments or agreements of any character to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries are bound,
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obligating the Company or any of its subsidiaries 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, equity interests, partnership interests or similar ownership
interests of the Company or any of its subsidiaries or obligating the Company
or any of its subsidiaries to grant, extend, accelerate the vesting of or enter
into any such option, warrant, equity security, call, right, commitment or
agreement. There are no registration rights and, to the knowledge of the
Company, as of the date of this Agreement, there are no voting trusts, proxies
or other agreements or understandings with respect to any equity security of
the Company or with respect to any equity security, partnership interest or
similar ownership interest of any of its subsidiaries.
3.4 AUTHORITY.
(a) The Company has all requisite corporate power and
authority to enter into this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, have been duly authorized
by all necessary corporate action on the part of the Company, subject only to
the approval and adoption of this Agreement and the approval of the Merger by
the Company's stockholders and the filing and recordation of the Certificate of
Merger pursuant to the DGCL. A vote of the holders of a majority of the
outstanding Shares is required for the Company's stockholders to approve and
adopt this Agreement and approve the Merger. This Agreement has been duly
executed and delivered by the Company and, assuming the due authorization,
execution and delivery by Parent and, if applicable, Purchaser, constitutes a
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
bankruptcy and other similar laws and general principles of equity. The
execution and delivery of this Agreement by the Company does not, and the
performance of this Agreement by the Company will not, (i) conflict with or
violate the Certificate of Incorporation or Bylaws of the Company or the
equivalent organizational documents of any of its subsidiaries, (ii) subject to
obtaining the approval and adoption of this Agreement and the approval of the
Merger by the Company's stockholders, and subject to such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal and state securities laws and the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), and the securities or antitrust laws of any foreign country
(collectively, the "REGULATORY FILINGS"), conflict with or violate any law,
rule, regulation, order, judgment or decree applicable to the Company or any of
its subsidiaries or by which its or any of their respective properties is bound
or subject, which conflict or violation could reasonably be expected to result
in a Material Adverse Effect, 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 the 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 the
Company 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 the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries or its or any of
their respective properties are bound or subject, which conflict
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16
or violation could reasonably be expected to result in a Material Adverse
Effect. The Company Schedules list all consents, waivers and approvals under
any of the Company's or any of its subsidiaries' agreements, contracts,
licenses or leases required to be obtained in connection with the consummation
of the transactions contemplated hereby.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any court, administrative agency or
commission or other governmental authority or instrumentality, foreign or
domestic ("GOVERNMENTAL ENTITY"), is required by or with respect to the Company
in connection with the execution and delivery of this Agreement or the
consummation of the Merger, except for (i) the filing of the Certificate of
Merger with the Secretary of State of the State of Delaware, (ii) the
Regulatory Filings, and (iii) such other consents, authorizations, filings,
approvals and registrations which if not obtained or made would not be material
to the Company, or the Surviving Corporation or have a material adverse effect
on the ability of the parties to consummate the Offer or the Merger.
3.5 SEC FILINGS; THE COMPANY FINANCIAL STATEMENTS.
(a) The Company has filed in a timely manner all forms,
reports and documents required to be filed with the SEC since its initial
public offering and has made available to Parent such forms, reports and
documents in the form filed with the SEC. All such required forms, reports and
documents (including those that the Company may file subsequent to the date
hereof) are referred to herein as the "COMPANY SEC REPORTS." As of their
respective dates, the Company SEC Reports (i) were prepared in accordance with
the requirements of the Securities Act of 1933, as amended (the "SECURITIES
ACT"), or the Exchange Act, as the case may be, and the rules and regulations
of the SEC thereunder applicable to such the Company SEC Reports, and (ii) 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
the light of the circumstances under which they were made, not misleading.
None of the Company's subsidiaries is required to file any forms, reports or
other documents as a public company pursuant to Section 13 of the Exchange Act
with the SEC.
(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained in the Company
SEC Reports (the "COMPANY FINANCIALS"), including any of the Company SEC
Reports filed after the date hereof until the Closing, (i) complied as to form
in all material respects with the published rules and regulations of the SEC
with respect thereto, (ii) 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 interim financial statements, as may be permitted by the SEC
on Form 10-Q under the Exchange Act and except that such unaudited interim
financial statements do not include all of the footnotes required under GAAP)
and (iii) fairly presented the consolidated financial position of the Company
and its subsidiaries as at the respective dates thereof and the consolidated
results of the Company's operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring
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year-end adjustments. The balance sheet of the Company contained in the
Company SEC Reports as of March 31, 1998 is hereinafter referred to as the
"COMPANY BALANCE SHEET." Except as disclosed in the Company Financials, since
the date of the Company Balance Sheet neither the Company nor any of its
subsidiaries has 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 consolidated 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 the Company and its subsidiaries taken as
a whole, except liabilities (i) provided for in the Company Balance Sheet, or
(ii) incurred since the date of the Company Balance Sheet in the ordinary
course of business consistent with past practices and immaterial in the
aggregate.
(c) The Company has previously furnished to Parent a
complete and correct copy of any amendments or modifications that have not yet
been filed with the SEC but are required to be so filed, with respect to
agreements, documents or other instruments have previously been filed by the
Company with the SEC pursuant to the Securities Act or the Exchange Act.
3.6 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since the date of the
Company Balance Sheet there has not been: (i) any Material Adverse Effect, (ii)
any material change by the Company in its accounting methods, principles or
practices, except as required by concurrent changes in GAAP, or (iii) any
material revaluation by the Company of any of its assets, including, without
limitation, writing down the value of capitalized inventory or writing off
notes or accounts receivable other than in the ordinary course of business.
3.7 TAXES.
(a) 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.
(b) The Company and each of its subsidiaries have 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 and each of its subsidiaries prior to the date hereof, except such
Returns which are not material to the Company, and have timely paid all Taxes
shown to be due on such Returns. The Company has provided adequate accruals in
accordance with generally accepted accounting principles in its financial
statements for any Taxes that have not been paid, whether or not shown as being
due on any Tax Returns.
(c) Except as is not material to the Company, the
Company and each of its subsidiaries as of the Effective Time will have
withheld with respect to its employees all federal and
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state income taxes, the Federal Insurance Contribution Act ("FICA"), the
Federal Unemployment Tax Act ("FUTA") and other Taxes required to be withheld.
(d) Except as is not material to the Company, neither
the Company nor any of its subsidiaries has been delinquent in the payment of
any Tax nor is there any Tax deficiency outstanding, proposed or assessed
against the Company or any of its subsidiaries, nor has the Company or any of
its subsidiaries executed any waiver of any statute of limitations on or
extending the period for the assessment or collection of any Tax.
(e) Except as is not material to the Company, no audit
or other examination of any Return of the Company or any of its subsidiaries is
presently in progress, nor has the Company or any of its subsidiaries been
notified of any request for such an audit or other examination by the Internal
Revenue Service or any state or foreign taxing agency or authority during the
past five fiscal years or in the current fiscal year or any interim period
within the past five fiscal years and/or the current fiscal year.
(f) Except as is not material to the Company, no
adjustment relating to any Returns filed by the Company or any of its
subsidiaries has been proposed formally or informally by any Tax authority to
the Company or any of its subsidiaries or any representative thereof.
(g) Except as is not material to the Company, neither
the Company nor any of its subsidiaries has any liability for unpaid Taxes
which has not been accrued for or reserved on the Company Balance Sheet,
whether asserted or unasserted, contingent or otherwise, which is material to
the Company.
(h) There is no contract, agreement, plan or
arrangement, including but not limited to the provisions of this Agreement,
covering any employee or former employee of the Company or any of its
subsidiaries that, individually or collectively, could give rise to the payment
of any amount that would not be deductible pursuant to Sections 280G, 404 or
162(m) of the Code.
(i) Neither the Company nor any of its subsidiaries has
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.
(j) Neither the Company nor any of its subsidiaries is
party to or has any obligation under any tax-sharing or allocation agreement or
arrangement with anyone outside of the Company's consolidated group of
companies.
3.8 TITLE TO PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES.
(a) The Company Schedules list all real property owned
by the Company. The Company Schedules list all real property leases to which
the Company or any of its subsidiaries is a party and each amendment thereto.
All such current leases are in full force and effect, are valid and
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effective in accordance with their respective terms, and there is not, under
any of such leases, any existing default or event of default (or event which
with notice or lapse of time, or both, would constitute a default) that would
give rise to a claim in an amount greater than $50,000.
(b) The Company and each of its subsidiaries have good
and marketable title to, or, in the case of leased properties and assets, valid
leasehold interests in, all of their tangible properties and assets, real,
personal and mixed, used or held for use in their respective businesses, free
and clear of any liens, pledges, charges, claims, security interests or other
encumbrances of any sort ("LIENS"), except as reflected in the Company
Financials or in the Company Schedules and except for liens for taxes not yet
due and payable and such imperfections of title and encumbrances, if any, which
are not material in character, amount or extent, and which do not materially
detract from the value, or materially interfere with the present use, of the
property subject thereto or affected thereby.
3.9 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, trademarks and service
marks, trademark and service xxxx registrations and
applications therefor throughout the world; (vi) all
proprietary databases and data collections and all rights
therein throughout the world; and (vii) any similar or
equivalent rights to any of the foregoing anywhere in the
world.
"COMPANY INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is owned by, or exclusively licensed to, the
Company or any of its subsidiaries.
"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 other than a
recordation of a Lien.
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(a) The Company Schedules lists all of the Registered
Intellectual Property owned by, or filed in the name of, the Company and each
of its subsidiaries (the "COMPANY REGISTERED INTELLECTUAL PROPERTY").
(b) The Company Schedules lists all proceedings or
actions before any court, tribunal (including the United States Patent and
Trademark Office ("PTO") or equivalent authority anywhere in the world) related
to any Company Intellectual Property.
(c) No Company Intellectual Property or product or
service of the Company or any of its subsidiaries is subject to any proceeding
or outstanding decree, order, judgment, agreement, or stipulation materially
restricting in any manner the use, transfer, or licensing thereof by the
Company or any of its subsidiaries, or which may affect the validity, use or
enforceability of such Company Intellectual Property.
(d) Each item of Company Registered Intellectual
Property is valid and subsisting, all necessary registration, maintenance and
renewal fees in connection with such Registered Intellectual Property have been
made and all necessary documents and certificates in connection with such
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
Registered Intellectual Property.
(e) Except as set forth in the Company Schedules: (i)
the Company and each of its subsidiaries owns and has marketable title and
exclusive rights to each item of Company Intellectual Property, including all
Company Registered Intellectual Property listed on the Company Schedules, free
and clear of any Lien; and (ii) the Company together with its subsidiaries is
the exclusive owner of all trademarks and trade names used in connection with
the operation or conduct of the business of such entities, including the sale
of any products or the provision of any services by such entities.
(f) The Company and each of its subsidiaries owns
exclusively, and has good and marketable title to, all copyrighted works that
are products produced, marketed or sold by the Company or any of its
subsidiaries or which any such entity otherwise purports to own.
(g) To the extent that any Intellectual Property has
been developed or created by a third party for the Company or any of its
subsidiaries and is material to the business of the Company and its
subsidiaries taken as a whole, the Company or a subsidiary of the Company has a
written agreement with such third party with respect thereto and such entity
thereby has obtained ownership of, and is the exclusive owner of, all such
Intellectual Property by operation of law or by valid assignment.
(h) Except as set forth in the Company Schedules,
neither the Company nor any of its subsidiaries has transferred ownership of,
or granted any exclusive license with respect to, any Intellectual Property
that is or was Company Intellectual Property, to any third party.
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(i) The Company Schedules list all material contracts,
licenses and agreements to which the Company or any of its subsidiaries is a
party (i) with respect to Company Intellectual Property licensed or transferred
to any third party; or (ii) pursuant to which a third party has licensed or
transferred any Intellectual Property to the Company, with a potential value or
cost in excess of $10,000. The Company Schedules lists any agreements pursuant
to which the Company or any of its subsidiaries has licensed any Company
Intellectual Property or products to any third party that differs in any
material respect from its standard form.
(j) The contracts, licenses and agreements listed on the
Company Schedules 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 any such
contract, license or agreement. The Company (either directly or through one of
its subsidiaries) is in compliance with, and has not breached any material
term of any such contract, license or agreement and, to the knowledge of the
Company, all other parties to such contract, license and agreement are in
compliance with, and have not breached any material term of, such contract,
license or agreement. Following the Closing Date, Parent and the Surviving
Corporation, either directly or through one or more of its subsidiaries, will
be permitted to exercise all of the Company's and its subsidiaries rights under
the contracts, licenses and agreements listed on the Company Schedules to the
same extent the 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 the Company or its subsidiaries would otherwise be required to
pay.
(k) The Company Schedules list all contracts, licenses
and agreements between the Company or any of its subsidiaries and any third
party (other than sales made to customers in the ordinary course of business
through the exchange of purchase orders, order acknowledgments and invoices
wherein or whereby the Company or any of its subsidiaries has agreed to, or
assumed, any obligation or duty to warrant, indemnify, hold harmless or
otherwise assume or incur any obligation or liability with respect to the
infringement or misappropriation by the Company or any of its subsidiaries or
such third party of the Intellectual Property of any third party.
(l) The operation of the business of the Company or its
subsidiaries as such business currently is conducted, or is reasonably
contemplated to be conducted, including the Company's design, development,
manufacture, marketing and sale of the products or services of the Company or
its subsidiaries (including with respect to products currently under
development) has not, does not and will not infringe or misappropriate the
Intellectual Property of any third party or constitute unfair competition or
trade practices under the laws of any jurisdiction.
(m) The Company has not received notice from any third
party that the operation of the business of the Company or any of its
subsidiaries or any act, product or service of the same, infringes or
misappropriates the Intellectual Property of any third party or constitutes
unfair competition or trade practices under the laws of any jurisdiction, other
than notice with respect to any claims which have previously been waived or
otherwise resolved (and any such claims which
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have been previously resolved have been fully paid or are fully provided for on
the Company Balance Sheet).
(n) Except as set forth in the Company Schedules, to the
knowledge of the Company, no Person has or is infringing or misappropriating
any Company Intellectual Property.
(o) Except as set forth in the Company Schedules, there
have been, and are, no material claims asserted against the Company or any of
its subsidiaries, or any customer of the Company or any of its subsidiaries
which have not previously been waived or otherwise resolved (and any such
claims which have been previously resolved have been fully paid or are fully
provided for on the Company Balance Sheet), related to infringement of
Intellectual Property.
(p) The Company and each of its subsidiaries have taken
all steps that are reasonably required to protect the rights of the Company and
its subsidiaries in the Company's confidential information and trade secrets or
any trade secrets or confidential information of third parties provided to the
Company or any of its subsidiaries, and, without limiting the foregoing, the
Company and each of its subsidiaries has and enforces a policy requiring each
employee and contractor to execute a proprietary information / confidentiality
agreement substantially in the Company's standard form and to the Company's
knowledge all current and former employees and contractors of the Company and
each of its subsidiaries have executed such an agreement.
3.10 COMPLIANCE; PERMITS; RESTRICTIONS.
(a) Neither the Company nor any of its subsidiaries is,
in any material respect, in conflict with, or in default or violation of (i)
any law, rule, regulation, order, judgment or decree applicable to the Company
or any of its subsidiaries or by which the Company or any of its subsidiaries
or any of their respective properties is bound or subject, or (ii) any material
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
its or any of their respective properties is bound or subject. To the
knowledge of the Company, no investigation or review by any Governmental Entity
is pending or threatened against the Company or any of its subsidiaries, nor
has any Governmental Entity currently indicated an intention to the Company or
any of its subsidiaries in writing to conduct the same. There is no material
agreement, judgment, injunction, order or decree binding upon the Company or
any of its subsidiaries which has or could reasonably be expected to have the
effect of prohibiting or materially impairing any material business practice of
the Company or any of its subsidiaries, any acquisition of material property by
the Company or any of its subsidiaries or the conduct of any material business
by the Company or any of its subsidiaries as currently conducted.
(b) The Company and its subsidiaries hold all permits,
licenses, variances, exemptions, orders and approvals from Governmental
Entities that are material to the operation of the business of the Company
(collectively, the "COMPANY PERMITS"). The Company and its subsidiaries are in
compliance in all material respects with the terms of the Company Permits.
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3.11 LITIGATION. There is no action, suit, proceeding, claim,
arbitration or investigation pending or as to which the Company or any of its
subsidiaries has received any notice of assertion, nor, to the Company's
knowledge, is there a threatened action, suit, proceeding, claim, arbitration
or investigation against the Company or any of its subsidiaries which if
determined adversely to the Company or such subsidiary, could reasonably likely
have a Material Adverse Effect. To the knowledge of the Company, no
Governmental Entity has at any time challenged or questioned in writing the
legal right of the Company or any of its subsidiaries, to manufacture, offer or
sell any of its products in the present manner or style thereof, which has not
been satisfactorily resolved.
3.12 BROKERS' AND FINDERS' FEES. Except for fees payable to
Alliant Partners pursuant to an engagement letter dated October 30, 1996, a
copy of which has been provided to Parent, the Company has not incurred, nor
will it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
3.13 EMPLOYEE BENEFIT PLANS.
(a) With respect to each material employee benefit plan,
program, arrangement and contract (including, without limitation, any "EMPLOYEE
BENEFIT PLAN" as defined in Section 3(3) of ERISA) maintained or contributed to
by the Company or any trade or business which is under common control with the
Company within the meaning of Section 414 of the Code (the "COMPANY EMPLOYEE
PLANS"), the Company has made available to Parent a true and complete copy of,
to the extent applicable, (i) such Company Employee Plan, (ii) the most recent
annual report (Form 5500), (iii) each trust agreement related to such Company
Employee Plan, (iv) the most recent summary plan description for each Company
Employee Plan for which such a description is required, (v) the most recent
actuarial report relating to any Company Employee Plan subject to Title IV of
ERISA and (vi) the most recent IRS determination letter issued with respect to
any Company Employee Plan.
(b) Each Company Employee Plan which is intended to be
qualified under Section 401(a) of the Code has received a favorable
determination from the IRS covering the provisions of the Tax Reform Act of
1986 stating that such Company Employee Plan is so qualified and nothing has
occurred since the date of such letter that could reasonably be expected to
affect the qualified status of such plan. Each Company Employee Plan has been
operated in all material respects in accordance with its terms and the
requirements of applicable law. Neither the Company nor any ERISA Affiliate of
the Company has incurred or is reasonably expected to incur any material
liability under Title IV of ERISA in connection with any Company Employee Plan.
3.14 EMPLOYEES; LABOR MATTERS. To the Company's knowledge, no
employee of the Company or any of its subsidiaries (i) is in violation of any
term of any employment contract, patent disclosure agreement, non-competition
agreement, or any restrictive covenant to a former employer relating to the
right of any such employee to be employed by the Company or any of its
subsidiaries because of the nature of the business conducted or presently
proposed to be conducted by the Company or any of its subsidiaries or to the
use of trade secrets or proprietary information of others
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and (ii) has given notice to the Company or any of its subsidiaries, nor is the
Company otherwise aware, that any employee intends to terminate his or her
employment with the Company or any of its subsidiaries except for terminations
of a nature and number that are consistent with the Company's prior experience.
To the Company's knowledge, there are no activities or proceedings of any labor
union to organize any employees of the Company or any of its subsidiaries and
there are no strikes, or material slowdowns, work stoppages or lockouts, or
threats thereof by or with respect to any employees of the Company or any of
its subsidiaries. The Company and its subsidiaries are and have been in
compliance in all material respects with all applicable laws regarding
employment practices, terms and conditions of employment, and wages and hours
(including, without limitation, OSHA, ERISA, WARN or any similar state or local
law).
3.15 ENVIRONMENTAL MATTERS.
(a) No underground storage tanks and, except as
reasonably would not be likely to result in a material liability to the Company
and its subsidiaries, no amount of any substance that has been designated by
any Governmental Entity or by applicable federal, state or local law to be
radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, but excluding office and janitorial
supplies, (a "HAZARDOUS MATERIAL"), are present, in, on or under any property,
including the land and the improvements, ground water and surface water
thereof, that the Company or any of its subsidiaries has at any time owned,
operated, occupied or leased.
(b) Except as would not be reasonably likely result in a
Material Adverse Effect, neither the Company nor any of its subsidiaries has
transported, stored, used, manufactured, disposed of, released or exposed its
employees or others to Hazardous Materials in violation of any law in effect on
or before the Closing Date, nor has the Company or any of its subsidiaries
disposed of, transported, sold, used, released, exposed its employees or others
to or manufactured any product containing a Hazardous Material (collectively
"HAZARDOUS MATERIALS ACTIVITIES") in violation of any rule, regulation, treaty
or statute promulgated by any Governmental Entity in effect prior to or as of
the date hereof to prohibit, regulate or control Hazardous Materials or any
Hazardous Material Activity.
(c) The Company and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the
"COMPANY ENVIRONMENTAL PERMITS") required for the conduct of the Company's and
its subsidiaries' Hazardous Material Activities and other businesses of the
Company and its subsidiaries as such activities and businesses are currently
being conducted.
(d) No material action, proceeding, revocation
proceeding, amendment procedure, writ, injunction or claim is pending, or to
the Company's knowledge, threatened concerning any Company Environmental
Permit, Hazardous Material or any Hazardous Materials
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Activity of the Company or any of its subsidiaries. The Company is not aware
of any fact or circumstance which could involve the Company or any of its
subsidiaries in any material environmental litigation or impose upon the
Company any material environmental liability.
3.16 AGREEMENTS, CONTRACTS AND COMMITMENTS. Except as set forth
in the Company Schedules, neither the Company nor any of its subsidiaries is a
party to or is bound by:
(a) any employment or consulting agreement, contract or
commitment with any officer or director level employee or member of the
Company's Board of Directors, other than those that are terminable by the
Company or any of its subsidiaries on no more than thirty days notice without
liability or financial obligation, except to the extent general principles of
wrongful termination law may limit the Company's or any of its subsidiaries'
ability to terminate employees at will and except for potential liabilities for
future actions by the Company to the extent covered by the WARN Act;
(b) any agreement or plan, including, without
limitation, any stock option plan, stock appreciation right plan, stock
purchase plan or restricted stock purchase agreement, 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;
(c) any agreement of indemnification or guaranty not
entered into in the ordinary course of business other than indemnification
agreements between the Company or any of its subsidiaries and any of its
officers or directors;
(d) any agreement, contract or commitment containing any
covenant limiting the freedom of the Company or any of its subsidiaries to
engage in any line of business or compete with any person or granting any
exclusive distribution rights;
(e) any agreement, contract or commitment currently in
force relating to the disposition or acquisition of a material portion of the
assets of the Company and its subsidiaries or any ownership interest in any
corporation, partnership, joint venture or other business enterprise; or
(f) any material joint marketing or development
agreement.
Neither the Company nor any of its subsidiaries, nor to the Company's
knowledge any other party to a Company Contract (as defined below), has
breached, violated or defaulted under, or received 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 the Company or any of its
subsidiaries is a party or by which it is bound of the type described in
clauses (a) through (f) above (any such agreement, contract or commitment, as
well as any agreement, contract or commitment that is an exhibit to any Company
SEC Report, a "COMPANY CONTRACT") in such a manner as would
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permit any other party to cancel or terminate any such Company Contract, or
would permit any other party to seek damages, which could reasonably likely
have a Material Adverse Effect.
3.17 CHANGE OF CONTROL PAYMENTS. The Company Schedules set forth
each plan, agreement or other arrangement or obligation pursuant to which any
amounts may become payable or any additional rights or benefits may accrue
(whether currently or in the future) in favor of any current or former
employee, officer or director of the Company as a result of or in connection
with the Offer and/or the Merger, and the nature and amount of any such
obligation.
3.18 BOARD APPROVAL. The Board of Directors of the Company has,
as of the date of this Agreement (i) determined that this Agreement and the
transactions contemplated hereby, including each of the Offer and the Merger,
are fair to and in the best interests of the holders of the Shares, (ii)
approved and adopted this Agreement and the transactions contemplated hereby
and (iii) resolved to recommend that the stockholders of the Company accept the
Offer and approve and adopt this Agreement and the transactions contemplated
hereby and thereby.
3.19 FAIRNESS OPINION. The Company's Board of Directors has
received a written opinion from Alliant Partners to the effect that the
consideration to be received by the holders of Shares pursuant to each of the
Offer and the Merger is fair to the holders of Shares.
3.20 OFFER DOCUMENTS. Neither the Schedule 14D-9, nor any of the
information supplied by the Company for inclusion in the Offer Documents,
shall, at the respective times that the Schedule 14D-9, the Offer Documents or
any amendments or supplements thereto are filed with the SEC or are first
published, sent or given to stockholders, as the case may be, 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
the light of the circumstances under which they were made, not misleading. The
Schedule 14D-9 will comply in all material respects as to form and substance
with the requirements of the Exchange Act and the rules and regulations
thereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
Parent and Purchaser, jointly and severally, represent and warrant to
the Company that:
4.1 ORGANIZATION AND QUALIFICATION. Each of Parent and
Purchaser is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation, and has all
requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as it is now being conducted.
4.2 CORPORATE POWER, AUTHORIZATION AND ENFORCEABILITY. Each of
Parent and Purchaser has full corporate power and authority to enter into this
Agreement and to perform its obligations hereunder and to consummate all the
transactions contemplated hereby. The execution
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and delivery of this Agreement by Parent and Purchaser, the performance by each
of Parent and Purchaser of their respective obligations hereunder and the
consummation by Parent and Purchaser of the transactions contemplated hereby
have been duly and validly authorized by the Board of Directors of each of
Parent and Purchaser and no other corporate action on the part of Parent or
Purchaser are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than the filing and recordation of
appropriate merger documents as required by the DGCL and the Regulatory Filings
which shall be made prior to the Closing). This Agreement has been duly
executed and delivered by each of Parent and Purchaser and is a legal, valid
and binding obligation of each of Parent and Purchaser, enforceable against
Parent and Purchaser in accordance with its terms.
4.3 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Assuming satisfaction of all applicable requirements
referred to in Section 4.3 (b) below, the execution and delivery of this
Agreement by Parent and Purchaser, the compliance by Parent and Purchaser with
the provisions hereof and the consummation by Parent and Purchaser of the
transactions contemplated hereby will not conflict with or violate (i) any
statute, law, ordinance, rule, regulation, order, writ, judgment, award,
injunction, decree or ruling applicable to Parent or Purchaser or any of their
properties, other than such conflicts or violations which individually or in
the aggregate do not and will not have a material adverse effect on the
business, properties, assets, results of operations or financial condition of
Parent and Purchaser, taken as a whole, or (ii) conflict with or violate the
Certificate of Incorporation or Bylaws of Parent or Purchaser.
(b) Other than in connection with or in compliance with
the provisions of the DGCL, the Exchange Act, the "takeover" or "blue sky" laws
of various states and the HSR Act, (i) neither Parent nor Purchaser is required
to submit any notice, report, registration, declaration or other filing with
any Governmental Entity in connection with the execution or delivery of this
Agreement by Parent and Purchaser or the performance by Parent and Purchaser of
their obligations hereunder or the consummation by Parent and Purchaser of the
transactions contemplated by this Agreement and (ii) no waiver, consent,
approval, order or authorization of any Governmental Entity is required to be
obtained by Parent or Purchaser in connection with the execution or delivery of
this Agreement by Parent and Purchaser or the performance by Parent and
Purchaser of their obligations hereunder or the consummation by Parent and
Purchaser of the transactions contemplated by this Agreement. None of the
information supplied by Parent or Purchaser for inclusion in the information
statement to be sent to the Company's stockholders to consider the Merger, as
appropriate (such proxy statement or information statement, as amended or
supplemented, is referred to as the "PROXY STATEMENT"), shall, at the date the
Proxy Statement (or any amendment thereof or supplement thereto) is first
mailed to stockholders or at the time of the meeting of the Company's
stockholders to consider the Merger (the "COMPANY STOCKHOLDERS' MEETING"),
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
made therein in light of the circumstances under which they were made, not
misleading.
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4.4 SCHEDULE 14D-1. Neither the Schedule 14D-1 nor the Offer
Documents, nor any of the information supplied by Parent and Purchaser for
inclusion in the Schedule 14D-9, shall at the respective times the Schedule
14D-1 or the Offer Documents or any amendments or supplements thereto are filed
with the SEC or are first published, sent or given to stockholders of the
Company or upon the expiration of the Offer, as the case may be, 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
the light of the circumstances under which they were made not misleading
(except for information supplied by the Company for inclusion in the Schedule
14D-1 and the Offer Documents, as to which Parent and Purchaser make no
representation). None of the information supplied by Parent or Purchaser for
inclusion in the Proxy Statement shall, at the date the Proxy Statement (or any
amendment thereof or supplement thereto) is first mailed to stockholders, at
the time of the Company Stockholders' Meeting and at the Effective Time,
contain any untrue statement of a material fact or omit to state a material
fact required to be stated or necessary in order to make the statements made
therein in light of the circumstances under which they were made, not
misleading.
4.5 AVAILABLE FUNDS. Parent has or has available to it, and
will make available to Purchaser, all funds necessary to satisfy all of
Parent's and Purchaser's obligations under this Agreement and in connection
with the transaction contemplated hereby, including, without limitation, the
obligation to purchase all outstanding Shares pursuant to the Offer and the
Merger and to pay all related fees and expenses in connection with the Offer
and the Merger and any financing necessary to consummate the Offer and the
Merger has been committed as of the date hereof.
ARTICLE V
COVENANTS
The following provisions shall apply during the period from the date
of this Agreement and continuing until the earlier of the termination of this
Agreement pursuant to its terms and the Effective Time (or, in the case of
Sections 5.8 and 5.14 until the covenant terminates by its term).
5.1 CONDUCT OF BUSINESS BY THE COMPANY. The Company (which for
the purposes of this Article 4 shall include the Company and its subsidiaries
taken as a whole) agrees, except to the extent that Parent shall otherwise
consent in writing, to carry on its business diligently and in accordance with
good commercial practice and to 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, to pay its debts and
taxes when due subject to good faith disputes over such debts or taxes, to pay
or perform other material obligations when due, and use its commercially
reasonable efforts consistent with past practices and policies to preserve
intact its present business organization, keep available the services of its
present officers and employees and preserve its relationships with customers,
suppliers, distributors, licensors, licensees, and others with which it has
business dealings. In addition, the Company will promptly notify Parent of any
material event involving its business or operations.
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In addition, except as permitted by the terms of this Agreement (other
than as provided in Article 5.1 of the Company Schedules or required under
agreements existing as of the date hereof and described in the Company
Schedules together with a description of any action contemplated thereunder),
without the prior written consent of Parent, the Company shall not do any of
the following, and shall not permit any of its subsidiaries to 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 or director 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
director, officer or employee except payments in amounts consistent with
policies and past practices or pursuant to written agreements outstanding, or
policies existing, on the date hereof and as previously disclosed in writing to
the other, or adopt any new severance plan, or provide any other compensation
or benefit to any employee, officer or director that would accrue or become
payable as a result of or in connection with the Offer and/or Merger;
(c) Transfer or license to any person or entity or
otherwise extend, amend or modify in any material respect any rights to the
Company Intellectual Property or other proprietary rights, or enter into grants
to future patent rights, other than in the ordinary course of business,
consistent with past practice;
(d) Declare or pay any dividends on or make any other
distributions (whether in cash, stock 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) Repurchase or otherwise acquire, directly or
indirectly, any shares of capital stock except pursuant to rights of repurchase
of any such shares under any employee, consultant or director stock plan
existing on the date hereof (which repurchase rights the Company shall be
obligated to exercise if the repurchase price is less than the Offer Price);
(f) Issue, deliver, sell, authorize or propose the
issuance, delivery or sale 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 the issuance of Shares pursuant to the exercise of stock options
therefor outstanding as of the date of this Agreement;
(g) Cause, permit or propose any amendments to any
charter document or Bylaw (or similar governing instruments of any
subsidiaries);
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(h) Acquire or agree to acquire by merging or
consolidating with, or by purchasing any equity interest in or a material
portion of the assets of, or by any other manner, any business or any
corporation, partnership interest, association or other business organization
or division thereof, or otherwise acquire or agree to acquire any assets which
are material, individually or in the aggregate, to the business of the Company,
or enter into any joint ventures, strategic partnerships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose
of any properties or assets which are material, individually or in the
aggregate, to the business of the Company, except in the ordinary course of
business consistent with past practice;
(j) Incur any indebtedness for borrowed money in excess
of $100,000 (other than ordinary course trade payables or pursuant to existing
credit facilities in the ordinary course of business) or guarantee any such
indebtedness or issue or sell any debt securities or warrants or rights to
acquire debt securities, or guarantee any debt securities of others;
(k) Adopt or amend any employee benefit or employee
stock purchase or employee option plan, or enter into any employment contract,
pay any special bonus or special remuneration to any director or employee, or
increase the salaries or wage rates of its officers or employees other than in
the ordinary course of business, consistent with past practice, or change in
any material respect any management policies or procedures;
(l) Pay, discharge or satisfy any claim, liability or
obligation (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction in the ordinary
course of business;
(m) Make any grant of exclusive distribution or other
resale rights to any third party; or
(n) Agree in writing or otherwise to take any of the
actions described in (a) through (m) above.
5.2 ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) Subject to and in accordance with the terms and
conditions of that certain letter dated April 8, 1998 between Parent and the
Company (the "CONFIDENTIALITY AGREEMENT"), the Company and its subsidiaries
shall, and the Company and its subsidiaries shall use all reasonable commercial
efforts to cause its officers, directors, employees and agents to, afford the
officers, employees and agents of Parent, Purchaser and their affiliates and
the attorneys, accountants, banks, other financial institutions and investment
banks working with Parent or Purchaser, and their respective officers,
employees and agents, complete access at all reasonable times to its officers,
employees, agents, properties, books, records and contracts, and shall furnish
Parent, Purchaser and their affiliates and the attorneys, banks, other
financial institutions and investment banks working
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with Parent or Purchaser, all financial, operating and other data and
information as they reasonably request.
(b) Subject to the requirements of law, Parent and
Purchaser shall, and shall use all commercially reasonable efforts to cause
their officers, employees and agents, and the attorneys, banks, other financial
institutions and investment banks who obtain such information to, hold all
information obtained pursuant to this Agreement or the Confidentiality
Agreement in accordance with the terms and conditions of the Confidentiality
Agreement.
(c) No investigation pursuant to this Section 5.2 shall
affect any representations or warranties of the parties herein or the
conditions to the obligations of the parties hereto.
5.3 PROXY MATERIAL; STOCKHOLDERS' MEETING.
(a) The Company and each of Parent and Purchaser shall
prepare and file, or shall cause to be prepared and filed, with the SEC those
documents, schedules and amendments and supplements thereto required to be
filed with respect to the transactions contemplated by this Agreement. To the
extent required by the DGCL or other applicable law, the Company, acting
through its Board of Directors, shall, cause the Company Stockholders' Meeting
to be duly called (including establishing the record date, if requested, to be
a date immediately after the date the Purchaser first purchases any Shares
pursuant to the Offer) and shall give notice of, convene and hold the Company
Stockholders' Meeting as soon as practicable, and at such time and place
designated by Parent or Purchaser, for the purpose of approving the Merger,
this Agreement and any other actions contemplated hereby which require the
approval of the Company's stockholders. The Company shall recommend to its
stockholders approval of the Merger and take all reasonable actions necessary
to solicit such approval. The Company shall use all reasonable commercial
efforts to obtain and furnish the information required to be included by it in
the Proxy Statement and, after consultation with Parent and Purchaser, shall
respond promptly to any comments of the SEC relating to any preliminary proxy
statement regarding the Merger and the other transactions contemplated by this
Agreement and to cause the Proxy Statement to be mailed to its stockholders,
all at the earliest practicable time. Whenever any event occurs which should
be set forth in an amendment or supplement to the Proxy Statement or any other
filing required to be made with the SEC with respect to the Proxy Statement or
the Company Stockholders' Meeting, each party shall promptly inform the other
of such occurrence and cooperate in filing with the SEC and/or mailing to the
Company's stockholders such amendment or supplement. The Proxy Statement and
all amendments and supplements thereto shall comply with applicable law and be
in form and substance reasonably satisfactory to each of Parent and Purchaser
and the Company. Subject to compliance with applicable fiduciary duties, the
Company, acting through its Board of Directors, shall include in the Proxy
Statement the unanimous recommendation of its Board of Directors that
stockholders of the Company vote in favor of the approval and adoption of this
Agreement and the Merger and shall disclose that each of the Company's
directors and executive officers intend to tender all outstanding shares
beneficially owned by such persons to Purchaser pursuant to the offer unless to
do so would subject such person to liability under Section 16(b) of the
Exchange Act. The Company shall use all reasonable commercial efforts to
solicit from stockholders of the Company proxies in favor of such
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approval and adoption and shall take all other actions necessary or, in the
reasonable judgment of Parent and Purchaser, advisable to secure the vote or
consent of the Company's stockholders required by the DGCL to effect the
Merger.
(b) Notwithstanding the foregoing, in the event that
Purchaser shall acquire at least ninety percent (90%) of the outstanding
Shares, the parties hereto agree, at the request of Purchaser, subject to
Article VI, to take all necessary and appropriate action to cause the Merger to
become effective as soon as reasonably practicable after such acquisition,
without a meeting and without a vote of the Company's stockholders, in
accordance with the DGCL.
5.4 NO SOLICITATION.
(a) From and after the date of this Agreement until the
earlier of the Effective Time or termination of this Agreement pursuant its
terms, the Company and its subsidiaries shall not, and will instruct their
respective directors, officers, employees, representatives, investment bankers,
agents and affiliates not to, directly or indirectly, (i) solicit or encourage
submission of, any proposals or offers by any person, entity or group of such
entity (other than Parent and its affiliates, agents and representatives), or
(ii) participate in any discussions or negotiations with, or disclose any
non-public information concerning the Company or any of its subsidiaries to, or
afford any access to the properties, books or records of the Company or any of
its subsidiaries to, or otherwise assist or facilitate, or enter into any
agreement or understanding with, any person, entity or group (other than Parent
and its affiliates, agents and representatives), in connection with any
Acquisition Proposal with respect to the Company. For the purposes of this
Agreement, an "ACQUISITION PROPOSAL" with respect to an entity means any
proposal or offer relating to (i) any merger, consolidation, sale or license of
substantial assets or similar transactions of such entity (other than sales of
assets or inventory in the ordinary course of business or as permitted under
the terms of this Agreement), (ii) sale of 10% or more of the outstanding
shares of capital stock of the Company (including without limitation by way of
a tender offer or an exchange offer), (iii) the acquisition by any person of
beneficial ownership or a right to acquire beneficial ownership of, or the
formation of any "group" (as defined under Section 13(d) of the Exchange Act
and the rules and regulations thereunder) which beneficially owns, or has the
right to acquire beneficial ownership of, 10% or more of the then outstanding
shares of capital stock of the entity (except for acquisitions for passive
investment purposes only in circumstances where the person or group qualifies
for and files a Schedule 13G with respect thereto or qualifies for and files a
Schedule 13D with respect thereto, indicating that the acquisition of such
shares is for passive investment purposes only, and such person or group does
not subsequently file an amendment to such 13D indicating that such shares were
not acquired for passive investment purposes only and the Minimum Condition is
not satisfied); or (iv) any public announcement of a proposal, plan or
intention to do any of the foregoing or any agreement to engage in any of the
foregoing. The Company will immediately cease any and all existing activities,
discussions or negotiations with any parties conducted previously with respect
to any of the foregoing. The Company will (i) notify Parent as promptly as
practicable if any inquiry or proposal is made or any information or access is
requested in connection with an Acquisition Proposal or potential Acquisition
Proposal and (ii) as promptly as practicable notify Parent of the terms and
conditions of any such Acquisition Proposal. In addition, subject to the other
provisions of this
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Section 5.4(a), from and after the date of this Agreement until the earlier of
the Effective Time and termination of this Agreement pursuant to its terms, the
Company and its subsidiaries will not, and will instruct their respective
directors, officers, employees, representatives, investment bankers, agents and
affiliates not to, directly or indirectly, make or authorize any public
statement, recommendation or solicitation in support of any Acquisition
Proposal made by any person, entity or group (other than Parent or Purchaser);
provided, however, that nothing herein shall prohibit the Company' Board of
Directors from taking and disclosing to the Company' stockholders a position
with respect to a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated
under the Exchange Act.
(b) Notwithstanding the provisions of paragraph (a)
above, prior to consummation of the Offer, the Company may, to the extent the
Board of Directors of the Company determines, in good faith, after consultation
with outside legal counsel, that the Board's fiduciary duties under applicable
law require it to do so, participate in discussions or negotiations with, and,
subject to the requirements of paragraph (c), below, furnish information to any
person, entity or group after such person, entity or group has delivered to the
Company in writing, an unsolicited bona fide Acquisition Proposal which the
Board of Directors of the Company in its good faith reasonable judgment
determines, after consultation with its independent financial advisors, would
result in a transaction more favorable than the Offer and the Merger to the
stockholders of the Company [from a financial point of view] and for which
financing, to the extent required, is then committed or which, in the good
faith reasonable judgment of the Board of Directors of the Company (based upon
the advice of independent financial advisors), is reasonably capable of being
financed by such person, entity or group and which is reasonably likely to be
consummated (a "SUPERIOR PROPOSAL"). In the event the Company receives a
Superior Proposal, nothing contained in this Agreement (but subject to the
terms hereof) will prevent the Board of Directors of the Company from
recommending such Superior Proposal to the Company's stockholders, if the Board
determines, in good faith, after consultation with outside legal counsel, that
such action is required by its fiduciary duties under applicable law; provided,
however, that the Company shall not recommend to its stockholders a Superior
Proposal for a period of not less than 48 hours after Parent's receipt of a
copy of such Superior Proposal (or a description of the terms and conditions
thereof, if not in writing).
(c) Notwithstanding anything to the contrary herein,
the Company will not provide any non-public information to a third party
unless: (x) the Company provides such non-public information pursuant to a
nondisclosure agreement with terms regarding the protection of confidential
information at least as restrictive as such terms in the Confidentiality
Agreement; and (y) such non-public information has been previously delivered to
Parent.
5.5 PUBLIC ANNOUNCEMENTS. Parent and Purchaser on the one hand
and the Company on the other hand will consult with each other before issuing
any press release or otherwise making any public statements with respect to
this Agreement, the Offer or the Merger or the other transactions contemplated
hereby, and shall not issue any such press release or make any such public
statement prior to such consultation, except as may be required by law. This
Section 5.5 shall supersede any conflicting provisions in the Confidentiality
Agreement.
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5.6 NOTIFICATION OF CERTAIN MATTERS.
(a) The Company shall give prompt notice (which notice
shall state that it is delivered pursuant to Section 5.6(a) of this Agreement)
in writing to Parent, and Parent and Purchaser shall give prompt notice in
writing to the Company, of (i) the occurrence, or failure to occur, of any
event which occurrence or failure would be likely to cause any representation
or warranty contained in this Agreement to be untrue or inaccurate in any
material respect at any time from the date of this Agreement through the
Effective Time and (ii) any failure of the Company, Parent or Purchaser, as the
case may be, or of any officer, director, employee or agent thereof, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement; provided, however, no such notification
shall affect the representations or warranties of the parties or the conditions
to the obligations of the parties hereunder.
(b) The Company shall give prompt notice in writing
(which notice shall state that it is delivered pursuant to Section 5.6(b) of
this Agreement) to Parent of (i) any act, omission to act, event or occurrence
which, with the passage of time or otherwise, would likely have a Material
Adverse Effect on the Company and (ii) any material contingent liability of the
Company or any of its subsidiaries for which such party reasonably believes it
will, with the passage of time or otherwise, become liable; provided, however,
that no such notification shall affect the representations or warranties of the
parties or the conditions to the obligations of the parties hereunder.
5.7 ACTIONS BY COMPANY. Subject to the terms and conditions
hereof, the Company shall, and shall cause its subsidiaries to, cooperate with
Parent and Purchaser and take all such actions as may be reasonably requested
by Parent and Purchaser to accomplish the Merger.
5.8 OFFICERS' AND DIRECTORS' INDEMNIFICATION.
(a) All rights to indemnification existing in favor of
the current directors and officers of the Company ( the "INDEMNIFIED PERSONS")
for acts and omissions occurring prior to the Effective Time, as provided in
the Company's Certificate of Incorporation and/or Bylaws (as in effect as of
the date of this Agreement) and as provided in the indemnification agreements
between the Company and the Indemnified Persons (as in effect as of the date of
this Agreement), shall survive the Offer and the Merger for a period of not
less than four years after the Effective Time; provided, however, that if, at
any time prior to the fourth anniversary of the Effective Time, any Indemnified
Persons delivers to Parent or the Surviving Corporation a written notice
asserting a claim for indemnification, then the claim asserted in such notice
shall survive the fourth anniversary of the Effective Time until such time as
such claim is fully and finally resolved. The Certificate of Incorporation and
Bylaws of the Surviving Corporation will contain provisions with respect to
exculpation and indemnification that are at least favorable to current
Indemnified Persons as those contained in the Certificate of Incorporation and
Bylaws of the Company as in effect on the date hereof, which provisions will
not be amended, repealed or otherwise modified from the Effective Time until
the fourth anniversary of the date on which the Merger becomes effective in any
manner that would adversely affect the rights thereunder of any such
Indemnified Person.
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(b) From the Effective Time until the fourth anniversary of the
date on which the Merger becomes effective, Parent shall maintain in effect,
for the benefit of the Indemnified Persons with respect to acts or omissions
occurring prior to the Effective Time, the directors' and officers' liability
insurance policy currently carried: provided, however, that Parent may
substitute for such policy or policies of materially equivalent coverage for
acts or commissions prior to the Effective Date and provided, further, that
Parent shall not be obligated to maintain such coverage for policy limits which
would cause the annual cost of such coverage to exceed $397,248, representing
150% of the cost of such coverage paid by the Company in fiscal year 1998 and,
provided, further, that if the annual premiums of such insurance coverage
exceed such amount, Parent shall be obligated to obtain a policy with the
greatest coverage available for a cost not exceeding such amount.
(c) The provisions of this Section 5.8 shall survive the
consummation of the Merger and expressly are intended to benefit each of the
Indemnified Persons.
[5.9 INTENTIONALLY LEFT BLANK]
5.10 ADDITIONAL AGREEMENTS.
(a) Subject to the terms and conditions hereof, each of
the parties to this Agreement agrees to use all commercially reasonable efforts
to take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement
(including consummation of the Offer and the Merger) and to cooperate with each
other in connection with the foregoing.
(b) Subject to the terms and conditions hereof, each of
the parties to this Agreement agrees to use (i) all commercially reasonable
efforts to obtain all necessary waivers, consents and approvals from other
parties to loan agreements, leases, licenses and other contracts, and (ii) all
commercially reasonable efforts to obtain all necessary consents, approvals and
authorizations as required to be obtained under any federal, state or foreign
law or regulations, including, but not limited to, those required under the HSR
Act, to defend all lawsuits or other legal proceedings challenging this
Agreement or the consummation of the transactions contemplated hereby, to lift
or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the transactions
contemplated hereby, to effect all necessary registrations and filings,
including, but not limited to, filings under the HSR Act and submissions of
information requested by Governmental Entities, and to fulfill all conditions
to this Agreement.
5.11 OTHER ACTIONS BY THE COMPANY. If any "fair price,"
"moratorium," "control share acquisition," "shareholder protection" or other
form of antitakeover statute, regulation or charter provision or contract is or
shall become applicable to the Offer or the Merger or the transactions
contemplated hereby, the Company shall grant such approvals and take such
actions as are necessary under such laws and provisions so that the
transactions contemplated hereby may be consummated as promptly as practicable
on the terms contemplated hereby and otherwise act to eliminate or minimize the
effects of such statute, regulation, provision or contract on the transactions
contemplated hereby.
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5.12 SECTION 203 OF THE DGCL. The Company will not approve any
acquisition of shares of Common Stock by any person (other than Parent,
Purchaser or their respective affiliates) which would result in such person
becoming an "interested stockholder" (as such term is defined in Section 203 of
the DGCL) or otherwise become subject to Section 203 of the DGCL.
5.13 STOCKHOLDER LITIGATION. The Company shall give Parent the
opportunity to participate in the defense or settlement of any stockholder
litigation against the Company and its directors relating to any of the
transactions contemplated by this Agreement until the purchase of Shares
pursuant to the Offer, and thereafter, notwithstanding the initial sentence of
this Article V, shall give Parent the opportunity to direct the defense of such
litigation and, if Parent so chooses to direct such litigation, Parent shall
give the Company and its directors an opportunity to participate in such
litigation; provided, however, that no settlement of such litigation shall be
agreed to without Parent's consent; and provided further that no settlement
requiring a payment by a director shall be agreed to without such director's
consent, which consent, in either case, shall not be unreasonably withheld or
delayed.
5.14 SECTION 401(K) PLAN TERMINATION; ESPP TERMINATION. The
Company will promptly take any and all actions necessary and appropriate to
terminate the Company's 401(k) plan and the ESPP, including without limitation
(i) adoption of resolutions by the Company's board of directors terminating the
401(k) plan and the ESPP immediately prior to the Effective Time and (ii)
timely delivery of any notices required under the terms of the 401(k) plan and
the ESPP. The Company's 401K in effect as of the date hereof shall, to the
extent practicable, remain in effect until Company employees are allowed to
participate in a comparable Employee Benefit Plan of Parent. With respect to
such comparable Employee Benefit Plan of Parent, such plan shall give full
credit to each Company employee for each participant's respective period of
service with the Company prior to the Effective Time for all purposes for which
such period of service is relevant to benefits provided under such benefit plan
of Parent. From and after the Effective Time, Parent shall provide employees
of the Company with the opportunity to participate in any employee stock option
or other incentive compensation plan of Parent or Purchaser on substantially
the same terms and subject to substantially the same conditions as are
available to similarly situated employees of Parent and Purchaser, provided for
any employee that such employee otherwise fulfills all eligibility criteria.
ARTICLE VI
CONDITIONS OF MERGER
6.1 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger shall be
subject to the fulfillment at or prior to the Effective Time of each of the
following conditions:
(a) If required by the DGCL, this Agreement and the
Merger shall have been approved and adopted by the requisite vote of the
stockholders of the Company.
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(b) Any waiting period (and any extension thereof)
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated.
(c) Shares shall have been purchased pursuant to the
Offer.
(d) No temporary restraining order, preliminary or
permanent injunction, judgment or other order, decree or ruling nor any
statute, rule, regulation or order shall be in effect which would (i) make the
acquisition or holding by Parent or its affiliates of Shares or shares of
Common Stock of the Surviving Corporation illegal or otherwise prevent the
consummation of the Merger, (ii) prohibit Parent's or Purchaser's ownership or
operation of, or compel Parent or Purchaser to dispose of or hold separate, all
or a material portion of the business or assets of Purchaser, the Company or
any subsidiary of the Company thereof, (iii) compel Parent, Purchaser or the
Company to dispose of or hold separate all or a material portion of the
business or assets of Parent or any such subsidiary or the Company or any such
subsidiary, (iv) impose material limitations on the ability of Parent or
Purchaser or their affiliates effectively to exercise full ownership and
financial benefits of the Surviving Corporation, or (v) impose any condition to
the Offer, this Agreement or the Merger that is materially adverse to the party
objecting thereto.
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 approval by the
stockholders of the Company:
(a) by mutual written agreement of the Boards of
Directors of Parent and the Company;
(b) by either Parent or the Company:
(i) if the Offer shall be terminated or
expire without any Shares having been purchased pursuant to the Offer;
provided, however, that a party shall not be entitled to terminate
this Agreement pursuant to this Section 7.1(b)(i) if it is in material
breach of its representations and warranties, covenants or other
obligations under this Agreement; or
(ii) if any court of competent
jurisdiction in the United States or other United States governmental
body shall have issued an order, decree or ruling or taken any other
action restraining, enjoining or otherwise prohibiting the Offer or
the Merger and such order, decree, ruling or other action shall have
become final and nonappealable;
(c) by Parent:
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(i) if the Board of Directors of the
Company or any committee thereof shall have approved, or recommended
(and not rescinded such recommendation within two (2) business days)
that stockholders of the Company accept or approve, an Acquisition
Proposal by a third party;
(ii) if the Board of Directors of the
Company or any committee thereof shall have withdrawn or modified (and
not rescinded such recommendation within two (2) business days) its
approval of, or recommendation that the stockholders of the Company
accept or approve (as the case may be), the Offer, this Agreement and
the Merger;
(iii) if the Company shall have failed to
include in the Schedule 14D-9 the recommendation of the Board of
Directors of the Company that the stockholders of the Company accept
the Offer;
(iv) prior to the purchase of Shares
pursuant to the Offer, in the event that the conditions to the Offer
set forth in clause (i) or (ii) of Annex I shall not be satisfied or
if any of the events set forth in clause (iii) thereof shall have
occurred; provided in the case of an event set forth in clause (iii),
item (A), (B), (C), (F) or (H) of Annex I that if such event is and
continues to be reasonably probable of being cured by the date which
is 20 business days after commencement of the Offer, Parent shall not
terminate this Agreement pursuant to this Section 7 (c)(iv) as a
result of such event until the date that is 20 business days after the
commencement of the Offer; or
(v) prior to the purchase of Shares
pursuant to the Offer if the Company is in material breach of any of
its covenants or obligations under this Agreement, or any
representation or warranty of the Company contained in this Agreement
shall have been incorrect, in any material respect, when made or shall
have since ceased to be true and correct in any material respect;
provided, that, if such breach is curable through exercise of the
Company's commercially reasonable efforts, then Parent may not
terminate this Agreement under this Section 7.1(c)(v) unless the
breach is not cured within 10 days after giving notice to the Company;
(d) by the Company:
(i) if the Offer shall not have been
commenced in accordance with Section 1.1, or Parent or Purchaser shall
have failed to purchase validly tendered Shares in violation of the
terms of the Offer within ten business days after the expiration of
the Offer; provided, however, that the Company shall not be entitled
to terminate this Agreement pursuant to Section 7.1(d)(i) if it is in
material breach of its representations and warranties, covenants or
other obligations under this Agreement;
(ii) if the Board of Directors of the
Company has resolved to, and in fact does, recommend to the Company's
Stockholders that they accept a Superior Proposal, provided that all
the provisions of Section 5.4 have been fully complied with, and
provided
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further that the Company shall have paid to Parent the entire Break-up
Fee as provided in Section 7.3(b); or
(iii) prior to the purchase of Shares
pursuant to the Offer, if Parent or Purchaser is in material breach of
any of its covenants or obligations under this Agreement, or any
representation or warranty of Parent or Purchaser contained in this
Agreement shall have been incorrect, in any material respect, when
made or shall have since ceased to be true and correct in any material
respect; provided, that, if such breach is curable through exercise of
the Parent's or Purchaser's commercially reasonable efforts, then the
Company may not terminate this Agreement under this Section
7.1(d)(iii) unless the breach is not cured within 10 days after giving
notice to the Parent.
7.2 PROCEDURE AND EFFECT OF TERMINATION.
(a) In the event of the termination of this Agreement by
the Company or Parent or both of them pursuant to Section 7.1, the terminating
party shall provide written notice of such termination to the other party and
this Agreement shall forthwith become void and there shall be no liability on
the part of Parent, Purchaser or the Company, except as set forth in this
Section 7.2 and in Sections 5.2(b) and 7.3, The foregoing shall not relieve any
party for liability for damages actually incurred as a result of any breach of
this Agreement. Sections 5.2(b), 7.2, 7.3 and Article VIII shall survive the
termination of this Agreement.
7.3 FEES AND EXPENSES.
(a) Except as otherwise provided in this Agreement and
whether or not the transactions contemplated by the Offer and this Agreement
are consummated, all costs and expenses incurred in connection with the
transactions contemplated by the Offer and this Agreement shall be paid by the
party incurring such expenses.
(b) The Company shall pay the Parent, in same day funds,
upon demand, a fee of $2,000,000 (the "BREAK-UP FEE"), if any of the following
shall occur:
(i) if the Board of Directors of the
Company or any committee thereof shall have approved, or recommended
that stockholders of the Company accept or approve, an Acquisition
Proposal by a third party, or shall have resolved to do any of the
foregoing;
(ii) if the Board of Directors of the
Company or any committee thereof shall have withdrawn or modified its
unanimous approval of, or unanimous recommendation that the
stockholders of the Company accept or approve (as the case may be),
the Offer, this Agreement and the Merger, or shall have resolved to do
any of the foregoing;
(iii) if the Company shall have failed to
include in the
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Schedule 14D-9 the unanimous recommendation of the Board of Directors
of the Company that the stockholders of the Company accept the Offer;
or
(iv) the following shall occur: (A)
prior to the Effective Time, any person, entity or "GROUP" (as that
term is used in Section 13(d)(3) of the Exchange Act), shall
beneficially own (as that term is used in Section 13(d)(3) of the
Exchange Act), or shall have acquired, 25% or more of the Shares, or
shall have been granted any option or right, conditional or otherwise,
to acquire 25% or more of the Shares (the "25% PERSON"), which Shares
are not tendered to Parent in connection with the Offer, (B) the
Minimum Condition shall not be met as of the Expiration Date and (C)
either (1) the 25% Person shall, at any time within twelve (12) months
of the expiration of the Offer, effect the Acquisition (as defined
below) of the Company or enter into an agreement with the Company or
commence a tender offer to effect such an Acquisition, and the
transactions contemplated thereby are subsequently consummated at any
time, or (2) any person other than Parent or any affiliate of Parent
effects the Acquisition of the Company during 1998, or during 1998
enters into an agreement with the Company or commences a tender offer
for the Acquisition of the Company and the transactions contemplated
thereby are subsequently consummated at any time, in any such case
under this clause (2) at a purchase price equivalent to a price per
Share in excess of $2.45. For the purposes hereof, an "ACQUISITION"
of the Company shall mean any merger, consolidation or other
reorganization, any tender offer or other transaction or series of
related transactions involoving the acquisition of securities of the
Company, or any sale or license of all or substantially all the
business or assets of the Company, unless the shareholders of the
Company prior to such transaction or series of related transactions
retain following such transaction or series of related transactions
(in respect of their equity interest in the Company prior thereto)
more than 50% of the voting equity securities of the surviving or
successor corporation to the business of the Company.
(c) The Break-up Fee is payable to compensate Parent and
Purchaser for their direct and indirect costs and expenses associated with the
negotiation and execution of this Agreement and the undertaking of the
transactions contemplated herein in the event of the occurrence of all of the
events set forth in clauses (i), (ii), (iii) and (iv) of paragraph (b) above,
and shall constitute liquidated damages with respect to (but solely with
respect to) the events itemized in clauses (i), (ii), (iii) and /or (iv) of
paragraph (b) above. However, the right to the payment of the Break-up Fee
shall be in addition to any other damages or remedies at law or in equity to
which Parent or Purchaser may be entitled as a result of the Company's
violation or breach of any other term or provision of this Agreement.
7.4 AMENDMENT. This Agreement may be amended by each of the
parties by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that (i) such
amendment shall be in writing signed by all of the parties hereto, (ii) any
such waiver, amendment or supplement by the Company shall be effective as
against the Company only if approved by a majority of the Continuing Directors
and (iii) after adoption of this Agreement and the Merger by the stockholders
of the Company, no amendment may be made without the further approval of the
stockholders of the Company which reduces the Merger
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Consideration or the Offer Price or changes the form thereof or changes any
other terms and conditions of this Agreement if the changes, alone or in the
aggregate, would materially adversely affect the stockholders of the Company.
7.5 WAIVER. At any time prior to the Effective Time, whether
before or after the Company's Stockholders Meeting, any party hereto, by action
taken by its Board of Directors, may (i) extend the time for the performance of
any of the obligations or other acts of any other party hereto or (ii) subject
to the provisions of Section 7.4, waive compliance with any of the agreements
of any other party or with any conditions to its own obligations. 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 by a duly authorized officer of such party; provided that any such
extension or waiver by the Company after the Offer has been completed shall be
effective against the Company only if approved by a majority of the Continuing
Directors. Notwithstanding the above, any waiver given shall not apply to any
other or subsequent failure of compliance with agreements of the other party or
conditions to its own obligations.
ARTICLE VIII
MISCELLANEOUS
8.1 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by rule of law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner to the end that transactions contemplated hereby are fulfilled to the
extent possible given the original intent of the parties.
8.2 NOTICES. All notices and other communications given or made
pursuant hereto shall be in writing, shall be effective when received and shall
in any event be deemed to have been received and to be effective (i) on the
date of delivery, if hand delivered (ii) three days after deposit in U.S. mail
if sent via certified mail return receipt requested, postage prepaid or (iii)
the first business day after the business day of deposit with Federal Express
or similar carrier for overnight delivery, as return receipt requested and
freight prepaid and shall be sent to the parties at the following addresses (or
at such other address for a party as shall be specified by similar notice,
except that notices of changes of address shall be effective upon receipt):
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(a) If to Parent or Purchaser:
Diamond Multimedia Systems, Inc.
0000 Xxxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Xxxxx Xxxxxx
Telecopier No.: (000) 000-0000
With copies to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esq.
Xxxxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
and to:
Boardwalk Acquisition Corporation
0000 Xxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxxx
Xxxxx Xxxxxx
Telecopier No.: (000) 000-0000
(b) If to the Company:
Micronics Computers, Inc.
00000 Xxxxxxxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
With copies to:
Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
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Alliant Partners
000 Xxxxx Xxxxxx, Xxxxx Xxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telecopier No.: (000) 000-0000
8.3 ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES; NO
ASSIGNMENT. This Agreement, Annex I, the documents delivered pursuant hereto
or in connection herewith and the Confidentiality Agreement (i) constitute the
entire agreement and supersede all other prior agreements and undertakings,
both written and oral, among the parties, or any of them, with respect to the
subject matter hereof, (ii) are not intended to confer upon any person other
than the parties hereto any rights or remedies hereunder (except as expressly
set forth in Section 5.9 with respect to present officers and directors of the
Company), and (iii) may not be assigned, except that Purchaser may assign their
rights hereunder in whole or in part to one or more direct or indirect
subsidiaries or affiliates of Parent which, in written instruments reasonably
satisfactory to the Company, shall agree to make all representations and
warranties of Purchaser set forth herein and shall agree to assume all of such
party's obligations hereunder and be bound by all of the terms and conditions
of this Agreement; provided, however, that no such assignment shall relieve the
assignor of its obligations hereunder.
8.4 INTERPRETATION; KNOWLEDGE.
(i) When a reference is made in this Agreement to
Exhibits, such reference shall be to an Exhibit to this Agreement unless
otherwise indicated. Unless otherwise specifically stated herein in any
particular case, 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.
(ii) For purposes of this Agreement, the term "KNOWLEDGE"
means, with respect to any matter in question, that any of the Chief Executive
Officer, Chief Operating Officer, Chief Financial Officer or Controller (or
principal accounting officer if different from the foregoing) of the parties,
as the case may be, have knowledge of such matter.
(iii) In this Agreement, any reference to any
"subsidiary"of any party shall mean any association, corporation, individual,
partnership, trust, or any other entity or organization in which such party has
a direct or indirect equity ownership interest of more than 50%. In this
Agreement, any reference to any action, suit, proceeding, claim, arbitration,
or investigation being "pending" or "threatened" shall mean that the relevant
party shall have either been served thereunder or otherwise notified of the
existence thereof.
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8.5 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.
8.6 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, by law or equity or otherwise 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 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 in
addition to any other remedy, without proving actual damages, to which they are
entitled at law or in equity.
8.7 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, regardless of
the laws that might otherwise govern under applicable principles of conflicts
of law thereof; provided that issues involving the corporate governance of any
of the parties hereto shall be governed by their respective jurisdictions of
incorporation. Each of the parties hereto irrevocably consents to the
exclusive jurisdiction of any state or federal court within the Northern
District of California, in connection with any matter based upon or arising out
of this Agreement or the matters contemplated herein, other than issues
involving the corporate governance of any of the parties hereto, agrees that
process may be served upon them in any manner authorized by the laws of the
State of California for such persons and waives and covenants not to assert or
plead any objection which they might otherwise have to such jurisdiction and
such process.
8.8 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.
8.9 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO 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 THE PARTIES IN THE NEGOTIATION,
ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
8.10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the parties set forth herein shall be deemed
to be continuing from the date hereof to the time Parent acquires the Shares
pursuant to the Offer.
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IN WITNESS WHEREOF, Parent, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
Diamond Multimedia Systems, Inc.
By: /s/ XXXXXXX X. XXXXXXXXX
--------------------------------------
Xxxxxxx X. Xxxxxxxxx, President and
Chief Executive Officer
Boardwalk Acquisition Corporation
By: /s/ XXXXXXX X. XXXXXXXXX
--------------------------------------
Xxxxxxx X. Xxxxxxxxx, President
Micronics Computers, Inc.
By: /s/ XXXXXXX X. XXXX
--------------------------------------
Xxxxxxx X. Xxxx, President and
Chief Executive Officer
*****SIGNATURE PAGE--AGREEMENT AND PLAN OF MERGER*****
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ANNEX I
CONDITIONS OF THE OFFER
The term "AGREEMENT" as used in this Annex I shall mean the Agreement
and Plan of Merger to which this Annex I is attached, and all capitalized terms
used in this Annex I and not defined in this Annex I shall have the respective
meanings set forth in the Agreement.
Notwithstanding any other provision of the Offer, and in addition to
(and not in limitation of) Purchaser's rights to extend and amend the Offer at
any time, Purchaser shall not be required to accept for payment, purchase or
pay for, or may terminate or amend the Offer and may postpone the acceptance
of, and payment for, subject to Rule 14e-1(c) under the Exchange Act (whether
or not any Shares have theretofore been accepted for payment or paid for
pursuant to the Offer), any Shares tendered pursuant to the Offer if:
(i) any waiting period (and any extension thereof) under
the HSR Act applicable to the purchase of Shares pursuant to the Offer
shall not have expired or been terminated;
(ii) the Minimum Condition is not satisfied;
(iii) at any time on or after the date of the Agreement,
any of the following events shall be determined by Parent or Purchaser
to have occurred through no fault of Parent or Purchaser:
(A) there shall have been any action taken or
threatened, or any statute, rule, regulation, judgment, temporary
restraining order, preliminary or permanent injunction or other order,
decree or ruling promulgated, enacted, entered, enforced or deemed
applicable to the Offer or the Merger by any Governmental Entity could
reasonably be expected to, directly or indirectly, (1) make the
acceptance for payment or the payment for, or the purchase of some or
all of the Shares pursuant to the Offer illegal or otherwise
materially prohibit, delay or restrict consummation of the Offer or
the Merger or the consummation of any transaction contemplated by the
Agreement, (2) require the divestiture by Parent, Purchaser, the
Company or any of their respective subsidiaries taken as a whole of
all or any material portion of the business, assets or property of any
of them or any Shares or impose any material limitation on the ability
of any of them to conduct their business and own such assets,
properties or Shares, in each case, as a result of the Offer the
Merger or the transactions contemplated thereby (3) impose any
material limitation on the ability of Parent or Purchaser to acquire
or hold or to exercise effectively all rights of ownership of the
Shares, including the right to vote any Shares purchased by any of
them on all matters properly presented to the stockholders of the
Company, including, without limitation, the adoption and approval of
the Agreement and the Merger (4) result in a material diminution in
the benefits expected to be derived by Parent or Purchaser as a result
of the transactions contemplated by
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the Offer or the Agreement, (5) impose any material condition to the
Offer, the Agreement or the Merger unacceptable to Parent or
Purchaser; or
(B) the Company shall have failed to obtain all
of the consents of third parties set forth in Schedule 3.9 of the
Agreement by the Expiration Date if such failure would result in a
Material Adverse Effect; or
(C) the Company shall have breached, or failed to
comply with, in any material respect, any of its covenants or
obligations under the Agreement or any representation or warranty of
the Company in the Agreement shall have been incorrect, in any
material respect when made or on and as of the date of any scheduled
expiration or consummation of the Offer.
(D) the Board of Directors of the Company or any
committee thereof shall have (1) withdrawn or modified (including
without limitation, by amendment of the Company's Schedule 14D-9) in a
manner adverse to Parent or Purchaser its approval or recommendation
of the Offer, the Merger or the Agreement, (2) approved or recommended
any Acquisition Proposal by a third party other than the Offer and the
Merger, (3) publicly resolved to do any of the foregoing, or (4) upon
a request to reaffirm the Company's approval or recommendation of the
Offer, the Agreement or the Merger, the Board of Directors of the
Company shall fail to do so within two business days after such
request is made, in any event described in the Section (D), so long as
such withdrawal modification, approval, recommendation, resolution or
failure has not been rescinded within two business days; or
(E) the Agreement shall have been terminated in
accordance with its terms; or
(F) there shall have occurred any Material
Adverse Effect on the Company, or any event, fact or change which
could reasonably be expected to result in a Material Adverse Effect on
the Company;
which in the sole but reasonable judgment of Parent in such case, and
regardless of the circumstances makes it inadvisable to proceed with the Offer
or with acceptance for payment or payment.
The foregoing conditions are for the sole benefit of Parent, Purchaser
and their permitted assignees and may be asserted by Parent or Purchaser
regardless of the circumstances (including any action or inaction by Parent or
Purchaser or any of their assignees) giving rise to such condition. Except as
specified in Section 1.1(c), all the foregoing conditions may be waived by
Parent or Purchaser in whole or in part at any time and from time to time in
the sole discretion of Parent or Purchaser. The failure by Parent or Purchaser
at any time to exercise its rights with respect to the foregoing conditions
shall not be deemed a waiver of any such condition, and each condition shall be
deemed an ongoing condition with respect to which Parent or Purchaser may
assert its rights at any time prior to the completion of the Offer and from
time to time. Any determination by Parent or
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Purchaser concerning any event described in this Annex I shall be
binding upon all persons to whom the Offer is made.
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