EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
TELLABS, INC.
A DELAWARE CORPORATION,
CARDINAL MERGER CO.
A DELAWARE CORPORATION AND WHOLLY OWNED
SUBSIDIARY OF TELLABS, INC.,
AND
COHERENT COMMUNICATIONS SYSTEMS CORPORATION
A DELAWARE CORPORATION
DATED AS OF FEBRUARY 16, 1998
TABLE OF CONTENTS
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ARTICLE I THE MERGER
Section 1.1. Merger
Section 1.2. Closing; Effective Time
Section 1.3. Effects of the Merger
Section 1.4. Directors and Officers
ARTICLE II CONVERSION OF SECURITIES
Section 2.1. Conversion of Capital Stock
Section 2.2. Exchange of Certificates
Section 2.3. No Dissenters Rights
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 3.1. Organization
Section 3.2. Company Subsidiaries and Joint Ventures
Section 3.3. Company Capital Structure
Section 3.4. Authority; No Conflict; Required Filings and Consent
Section 3.5. SEC Filings; Financial Statements
Section 3.6. Absence of Undisclosed Liabilities
Section 3.7. Absence of Certain Changes or Events
Section 3.8. Taxes
Section 3.9. Properties
Section 3.10. Intellectual Property
Section 3.11. Agreements, Contracts and Commitments
Section 3.12. Litigation
Section 3.13. Environmental Matters
Section 3.14. Employee Benefit Plans
Section 3.15. Compliance with Laws
Section 3.16. Pooling
Section 3.17. Affiliates
Section 3.18. Interested Party Transactions
Section 3.19. Registration Statement; Proxy Statement/Prospectus
Section 3.20. No Excess Parachute Payments
Section 3.21. Opinion of Financial Advisor
Section 3.22. Section 203 of the DGCL Not Applicable
Section 3.23. Voting Requirements
Section 3.24. Brokers
Section 3.25. Additional Disclosure
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Section 4.1. Organization
Section 4.2. Parent Subsidiaries
Section 4.3. Parent Capital Structure
Section 4.4. Authority; No Conflict;
Required Filings and Consents
Section 4.5. SEC Filings; Financial Statements
Section 4.6. Absence of Undisclosed Liabilities
Section 4.7. Absence of Certain Changes or Events
Section 4.8. Taxes
Section 4.9. Properties
Section 4.10. Intellectual Property
Section 4.11. Agreements, Contracts and Commitments
Section 4.12. Litigation
Section 4.13. Environmental Matters
Section 4.14. Pooling
Section 4.15. Affiliates
Section 4.16. Compliance with Laws
Section 4.17. Registration Statement; Proxy Statement/Prospectus
Section 4.18. Interim Operations of Sub
Section 4.19. Voting Requirements
Section 4.20. Brokers
ARTICLE V CONDUCT OF BUSINESS
Section 5.1. Covenants of the Company
Section 5.2. Covenants of Parent
Section 5.3. Employment Agreements
Section 5.4. Cooperation
Section 5.5. Material Adverse Effect
ARTICLE VI ADDITIONAL AGREEMENTS
Section 6.1. No Solicitation
Section 6.2. Proxy Statement/Prospectus; Registration Statement
Section 6.3. Consents
Section 6.4. Current Nasdaq Quotation
Section 6.5. Access to Information
Section 6.6. Stockholders Meeting
Section 6.7. Legal Conditions to Merger
Section 6.8. Public Disclosure
Section 6.9. Tax-Free Reorganization
Section 6.10. Pooling Accounting
Section 6.11. Affiliate Letters
Section 6.12. Nasdaq Quotation
Section 6.13. Stock Plans and Options
Section 6.14. Indemnification
Section 6.15. Additional Agreements; Reasonable Efforts
Section 6.16. Termination of Certain Agreements
Section 6.17. Real Estate Transfer Taxes
ARTICLE VII CONDITIONS TO MERGER
Section 7.1. Conditions to Each Party's Obligation to
Effect the Merger
Section 7.2. Additional Conditions to Obligations
of Parent and Sub
Section 7.3. Additional Conditions to Obligations
of the Company
ARTICLE VIII TERMINATION AND AMENDMENT
Section 8.1. Termination
Section 8.2. Effect of Termination
Section 8.3. Fees and Expenses
Section 8.4. Amendment
Section 8.5. Extension; Waiver
ARTICLE IX MISCELLANEOUS
Section 9.1. Nonsurvival of Representations,
Warranties and Agreements
Section 9.2. Notices
Section 9.3. Interpretation
Section 9.4. Counterparts
Section 9.5. Entire Agreement; No Third Party Beneficiaries
Section 9.6. Governing Law
Section 9.7. Assignment
Exhibit A Form of Company Affiliate Letter
Exhibit B Form of Parent Affiliate Letter
TABLE OF DEFINED TERMS
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SECTION
Agreement
Acquisition Agreement
Alternative Transaction
Approval
Closing
Closing Date
Code
Company
Company Affiliate Letter
Company Auditors
Company Balance Sheet
Company Certificate
Company Certificates
Company Common Stock
Company Employee Plans
Company Financial Statements
Company Intellectual Property Rights
Company Letter
Company Material Contracts
Company Preferred Stock
Company SEC Reports
Company Stock Plans
Company Stock Options
Company Tax Certificate
Confidentiality Agreement
Constituent Corporations
DGCL
Effective Time
Environmental Permits
ERISA
Exchange Act
Exchange Agent
Exchange Fund
Exchange Ratio
GAAP
Government Entity
Hazardous Material
Hazardous Materials Activities
HSR Act
Joint Venture
Material Adverse Effect
Merger
Parent
Parent Affiliate Letter
Parent Auditors
Parent Balance Sheet
Parent Common Stock
Parent Letter
Parent Material Contracts
Parent Option Plans
Parent Preferred Stock
Parent SEC Reports
Parent Tax Certificate
Proxy Statement
Registration Statement
Returns
Rule 145
Safeguard
Services Agreement
SEC
Securities Act
Senior Officers
Stockholders Meeting
Sub
Subsidiary
Superior Proposal
Surviving Corporation
Takeover Proposal
Tax
Taxes
Termination Fee
Third Party
Transfer Taxes
1998 Bonus Plan
AGREEMENT AND PLAN OF MERGER
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AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of February
16, 1998, by and among Tellabs, Inc., a Delaware corporation ("Parent"),
Cardinal Merger Co., a Delaware corporation and a wholly owned
subsidiary of Parent ("Sub"), and Coherent Communications Systems
Corporation, a Delaware corporation (the "Company").
RECITALS
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WHEREAS, Sub will merge with and into the Company (the "Merger"),
pursuant to the General Corporation Law of the State of Delaware, as
amended (the "DGCL") and upon the terms and subject to the conditions
herein set forth, whereby each issued and outstanding share of Common
Stock, $.01 par value per share, of the Company ("Company Common
Stock"), not owned directly or indirectly by Parent or the Company, will
be converted into shares of Common Stock, $.01 par value per share, of
Parent ("Parent Common Stock");
WHEREAS, as a result of the Merger, the Company will become a wholly
owned subsidiary of Parent and the stockholders of the Company will
become stockholders of Parent;
WHEREAS, the Board of Directors of the Company has determined that the
Merger is consistent with and in furtherance of the long-term business
strategy of the Company and is fair to, and in the best interests of,
the Company and its stockholders, has approved and adopted this
Agreement and the transactions contemplated hereby and has recommended
adoption of this Agreement by the stockholders of the Company;
WHEREAS, the Board of Directors of Parent has determined that the Merger
is consistent with and in furtherance of the long-term business strategy
of Parent and is in the best interests of Parent and its stockholders
and has approved and adopted this Agreement and the transactions
contemplated hereby;
WHEREAS, the Board of Directors of Sub has approved and adopted this
Agreement and Parent, as the sole stockholder of Sub, has adopted this
Agreement;
WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a)
of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a pooling of interests;
WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with
the Merger and also to prescribe various conditions to the Merger; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, certain stockholders of the Company, including each of the
directors of the Company, in order to induce Parent and Sub to enter
into this Agreement, entered into stockholder agreements with Parent,
agreeing, among other things, to vote in favor of this Agreement and the
Merger and against any competing proposals.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below,
the parties agree as follows:
ARTICLE I
THE MERGER
Section 1.1. Merger. Subject to the provisions of this Agreement and
in accordance with the DGCL, Sub shall be merged with and into the
Company. As a result of the Merger, the outstanding shares of
capital stock of Sub and the Company shall be converted or canceled
in the manner provided in Article II of this Agreement, the
separate corporate existence of Sub shall cease and the Company
shall be the surviving corporation in the Merger and shall succeed
to and assume all the rights and obligations of Sub in accordance
with the DGCL.
Section 1.2. Closing; Effective Time. The closing of the Merger (the
"Closing") will take place at 10:00 a.m., local time, on a date to
specified by Parent and the Company, which shall be no later than
the second business day after satisfaction or waiver of the
conditions set forth in Article VII (the "Closing Date"), at the
offices of Sidley & Austin, Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx, unless another date or place is agreed to in writing by
Parent and the Company. At or concurrently with the Closing, the
parties hereto shall cause the Merger to become effective by filing
a Certificate of Merger with the Secretary of State of the State of
Delaware, in accordance with the relevant provisions of the DGCL
(the time of such filing being the "Effective Time") and shall make
all other filings or recordings required under the DGCL.
Section 1.3. Effects of the Merger.
(a) At the Effective Time, (i) the separate existence of Sub shall
cease and Sub shall be merged with and into the Company (Sub and
the Company are sometimes referred to herein as the "Constituent
Corporations" and the Company after the Effective Time is
sometimes referred to herein as the "Surviving Corporation"),
(ii) the Certificate of Incorporation of the Company, as in
effect immediately prior to the Effective Time, shall be amended
as of the Effective Time so that Article Fourth of such
Certificate of Incorporation reads in its entirety as follows:
"The total number of shares of all classes of stock which the
Corporation shall have authority to issue is 1,000 shares of
Common Stock, $.01 par value per share" and, as so amended, such
Certificate of Incorporation shall be the Certificate of
Incorporation of the Surviving Corporation, and (iii) the Bylaws
of Sub as in effect immediately prior to the Effective Time
shall be the Bylaws of the Surviving Corporation.
(b) The Merger shall have the effects set forth in the DGCL.
Section 1.4. Directors and Officers. The directors of Sub
immediately prior to the Effective Time and the directors of the
Company listed in Item 1.4 of the Company Letter (as defined below)
shall be the directors of the Surviving Corporation until their
resignation or removal or until their respective successors have
been elected and qualified. The officers of the Company immediately
prior to the Effective Time shall continue as officers of the
Surviving Corporation until their resignation or removal or until
their respective successors have been elected and qualified.
ARTICLE II
CONVERSION OF SECURITIES
Section 2.1. Conversion of Capital Stock. As of the Effective Time,
by virtue of the Merger and without any action on the part of the
holder of any shares of Company Common Stock or capital stock of
Sub:
(a) Capital Stock of Sub. Each issued and outstanding share of the
capital stock of Sub shall be converted into and become one
fully paid and nonassessable share of Common Stock, $.01 par
value per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Any
shares of the Company Common Stock owned by the Company or by
any Subsidiary (as defined in Section 3.2(b)) of the Company and
each share of Company Common Stock owned by Parent, Sub or any
other wholly owned Subsidiary of Parent shall be canceled and
retired and shall cease to exist, and no stock of Parent or
other consideration shall be delivered in exchange therefor.
(c) Exchange Ratio for Company Common Stock. Subject to Section
2.2, each issued and outstanding share of Company Common Stock
(other than shares to be canceled in accordance with Section
2.1(b)) shall be converted into the right to receive seventy-two
hundredths (.72) (the "Exchange Ratio") of a fully paid and
nonassessable share of Parent Common Stock. All such shares of
the Company Common Stock, when so converted, shall no longer be
outstanding and shall automatically be canceled and retired and
shall cease to exist, and each holder of a certificate
representing any such shares shall cease to have any rights with
respect thereto, except the right to receive the shares of
Parent Common Stock and any cash in lieu of fractional shares of
Parent Common Stock to be issued or paid in consideration
therefor upon the surrender of such certificate in accordance
with Section 2.2, without interest.
(d) Company Stock Options. At the Effective Time, all then
outstanding options to purchase shares of Company Common Stock
issued under the Company's 1982 Stock Option Plan and 1993
Equity Compensation Plan, as amended and restated (collectively,
the "Company Stock Plans"), not exercised as of the Effective
Time will be assumed by Parent in accordance with Section 6.13.
Section 2.2. Exchange of Certificates. The procedures for exchanging
outstanding shares of Company Common Stock for Parent Common Stock
upon consummation of the Merger are as follows:
(a) Exchange Agent. As soon as practicable after the Effective
Time, Parent shall deposit with a bank or trust company
designated by Parent and reasonably acceptable to the Company
(the "Exchange Agent"), for the benefit of the holders of shares
of Company Common Stock, for exchange in accordance with this
Section 2.2, through the Exchange Agent, certificates
representing the shares of Parent Common Stock (such shares of
Parent Common Stock, together with any dividends or
distributions with respect thereto, being hereinafter referred
to as the "Exchange Fund") issuable pursuant to Section 2.1 in
exchange for outstanding shares of Company Common Stock, which
shares of Parent Common Stock shall be deemed to be issued at
the Effective Time subject to the other provisions of this
Section 2.2.
(b) Exchange Procedures. As soon as reasonably practicable after
the Effective Time, the Exchange Agent shall mail to each holder
of record of a certificate or certificates which immediately
prior to the Effective Time represented outstanding shares of
Company Common Stock (each a "Company Certificate" and,
collectively, the "Company Certificates") whose shares were
converted pursuant to Section 2.1 into the right to receive
shares of Parent Common Stock (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss
and title to the Company Certificates shall pass, only upon
delivery of the Company Certificates to the Exchange Agent and
shall be in such form and have such other provisions as Parent
may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Company Certificates in exchange
for certificates representing shares of Parent Common Stock.
Upon surrender of a Company Certificate for cancellation to the
Exchange Agent or to such other agent or agents as may be
appointed by Parent, together with such letter of transmittal,
duly executed, and such other documents as may be reasonably
required by the Exchange Agent or Parent, the holder of such
Company Certificate shall be entitled to receive in exchange
therefor a certificate representing that number of whole shares
of Parent Common Stock which such holder has the right to
receive pursuant to the provisions of this Article II, and the
Company Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Company Common Stock
that is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent
Common Stock may be issued to a transferee if the Company
Certificate representing such Company Common Stock is presented
to the Exchange Agent, accompanied by all documents required to
evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until
surrendered as contemplated by this Section 2.2, each Company
Certificate shall be deemed at any time after the Effective Time
to represent only the right to receive upon such surrender the
certificate representing shares of Parent Common Stock and cash
in lieu of any fractional shares of Parent Common Stock as
contemplated by this Section 2.2. Parent or the Exchange Agent
shall be entitled to deduct and withhold from the consideration
otherwise payable pursuant to this Agreement such amounts as
Parent or the Exchange Agent are required to deduct and withhold
under the Code, or any provision of state, local or foreign tax
law, with respect to the making of such payment. To the extent
that amounts are so withheld by Parent or the Exchange Agent,
such withheld amounts shall be treated for all purposes of this
Agreement as having been paid to the person in respect of whom
such deduction and withholding was made by Parent or the
Exchange Agent.
(c) Distributions with Respect to Unexchanged Shares. No dividends
or other distributions declared or made after the Effective Time
with respect to Parent Common Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered
Company Certificate with respect to the shares of Parent Common
Stock represented thereby, and no cash payment in lieu of
fractional shares shall be paid to any such holder pursuant to
Section 2.2(e), until the holder of record of such Company
Certificate shall surrender such Company Certificate. Subject to
the effect of applicable laws, following surrender of any such
Company Certificate, there shall be paid to the record holder of
the certificates representing whole shares of Parent Common
Stock issued in exchange therefor, without interest, (i) at the
time of such surrender, the amount of any cash payable in lieu
of a fractional share of Parent Common Stock to which such
holder is entitled pursuant to Section 2.2(e) and the amount of
dividends or other distributions with a record date after the
Effective Time previously paid with respect to such whole shares
of Parent Common Stock, and (ii) at the appropriate payment
date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and
a payment date subsequent to surrender payable with respect to
such whole shares of Parent Common Stock.
(d) No Further Ownership Rights in Company Common Stock. All shares
of Parent Common Stock issued upon the surrender for exchange of
shares of Company Common Stock in accordance with the terms
hereof, including any cash paid pursuant to Sections 2.2(c) and
2.2(e), shall be deemed to have been issued in full satisfaction
of all rights pertaining to such shares of Company Common Stock,
and there shall be no further registration of transfers on the
stock transfer books of the Surviving Corporation of the shares
of Company Common Stock which were outstanding immediately prior
to the Effective Time. If, after the Effective Time, Company
Certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this
Section 2.2.
(e) No Fractional Shares. No certificate or scrip representing
fractional shares of Parent Common Stock shall be issued upon
the surrender for exchange of the Company Certificates, and such
fractional share interests will not entitle the owner thereof to
vote or to any rights of a stockholder of Parent.
Notwithstanding any other provision of this Agreement, each
holder of shares of Company Common Stock exchanged in connection
with the Merger who would otherwise have been entitled to
receive a fraction of a share of Parent Common Stock (after
taking into account all Company Certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest)
in an amount equal to such fractional part of a share of Parent
Common Stock multiplied by the average of the last reported sale
prices of Parent Common Stock on The Nasdaq National Market on
the ten (10) trading days immediately preceding the Effective
Time. Parent shall make available to the Exchange Agent the
cash necessary for this purpose.
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the stockholders of the Company
for one year after the Effective Time shall be delivered to
Parent, upon demand, and any stockholders of the Company who
have not previously complied with this Section 2.2 shall
thereafter look only to Parent for payment of their claim for
Parent Common Stock, cash in lieu of fractional shares of Parent
Common Stock and dividends or distributions with respect to
Parent Common Stock.
(g) No Liability. Neither Parent nor the Company, nor any of their
respective directors, officers, employees or agents, shall be
liable to any holder of shares of Company Common Stock or Parent
Common Stock, as the case may be, for such shares (or dividends
or distributions with respect thereto) delivered to a public
official pursuant to any applicable abandoned property, escheat
or similar law.
(h) Adjustment of Exchange Ratio. In the event of any
reclassification, stock split or stock dividend with respect to
Parent Common Stock between the date hereof and the Effective
Time, appropriate adjustments, if any, shall be made by Parent
to the Exchange Ratio, and all references to the Exchange Ratio
in this Agreement shall be deemed to be to the Exchange Ratio as
so adjusted.
(i) Further Assurances. If, at any time after the Effective Time,
the Surviving Corporation shall consider or be advised that any
deeds, bills of sale, assignments or assurances or any other
acts or things are necessary, desirable or proper (i) to vest,
perfect or confirm, of record or otherwise, in the Surviving
Corporation its right, title and interest in, to or under any of
the rights, privileges, powers, franchises, properties or assets
of either of the Constituent Corporations or (ii) otherwise to
carry out the purposes of this Agreement, the Surviving
Corporation and its proper officers and directors or their
designees shall be authorized to execute and deliver, in the
name and on behalf of either Constituent Corporation, all such
deeds, bills of sale, assignments and assurances and to do, in
the name and on behalf of either Constituent Corporation, all
such other acts and things as may be necessary, desirable or
proper to vest, perfect or confirm the Surviving Corporation's
right, title and interest in, to and under any of the rights,
privileges, powers, franchises, properties or assets of such
Constituent Corporation and otherwise to carry out the purposes
of this Agreement.
Section 2.3. No Dissenters Rights. The holders of shares of Company
Common Stock shall not be entitled to appraisal rights with respect
to the Merger.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
Section 3.1. Organization. The Company and each of its Subsidiaries
(i) is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation,
(ii) has all requisite corporate power to own, lease and operate its
property and to carry on its business as now being conducted and as
proposed to be conducted, and (iii) is duly qualified to do business
and is in good standing as a foreign corporation in each
jurisdiction in which the nature of its activities requires it to be
so qualified, except that, in the case of the clauses (i) and (ii),
with respect to Subsidiaries that in the aggregate do not constitute
a "significant subsidiary" within the meaning of Regulation S-X,
Rule 1-02 (w), such representations are being made to the best
knowledge of the Company, and except, in the case of clause (iii),
where the failure to have such power or the failure to be so
qualified could not reasonably be expected to have a Material
Adverse Effect on the Company (as defined below).
Section 3.2. Company Subsidiaries and Joint Ventures.
(a) Item 3.2 of the letter from the Company to Parent and Sub dated
and delivered as of the date hereof (the "Company Letter"),
which relates to this Agreement and is designated therein as
being the Company Letter sets forth a list of all Subsidiaries
and Joint Ventures (as defined below) of the Company, including
the name of each Subsidiary and Joint Venture and the
jurisdiction in which such Subsidiary or Joint Venture is
organized. Except as set forth in Item 3.2 of the Company
Letter, there are no outstanding subscriptions, options, calls,
contracts, voting trusts, proxies or other commitments,
understandings, restrictions, arrangements, rights or warrants
with respect to any such Subsidiary's capital stock, including
any right obligating any such Subsidiary to issue, deliver, or
sell additional shares of its capital stock, and no obligations,
contingent or otherwise, of the Company or any of its
Subsidiaries to repurchase, redeem, or otherwise acquire any
shares of the capital stock of any Subsidiary of the Company or
make any investment (in the form of a loan, capital contribution
or otherwise) in any such Subsidiary or any other entity other
than guarantees of bank obligations of such Subsidiaries entered
into in the ordinary course of business. All of the outstanding
shares of capital stock of each Subsidiary of the Company are
duly authorized, validly issued, fully paid and nonassessable,
and all such shares are owned by the Company or another
Subsidiary of the Company free and clear of all security
interests, liens, claims, pledges, agreements, limitations on
the Company's voting rights, charges or other encumbrances of
any nature. Item 3.2 of the Company Letter sets forth the nature
and extent of the ownership and voting interests held by the
Company in each such Joint Venture. The Company has no
obligation to make any capital contributions, or otherwise
provide assets or cash, to any Joint Venture. Except as set
forth in Item 3.2 of the Company Letter, neither the Company nor
any of its Subsidiaries directly or indirectly owns any material
equity or similar interest in, or any interest convertible into
or exchangeable or exercisable for any such equity or similar
interest in, any corporation, limited liability company,
partnership, joint venture or other business association or
entity.
(b) As used in this Agreement, "Subsidiary" means, with respect to
any party, any corporation, limited liability company,
partnership, joint venture, or other business association or
entity, at least a majority of the voting securities or economic
interests of which is directly or indirectly owned or controlled
by such party or by any one or more of its Subsidiaries. As used
in this Agreement, "Joint Venture" means, with respect to any
party, any corporation, limited liability company, partnership,
joint venture or other entity in which (i) such party, directly
or indirectly, owns or controls more than five percent (5%) and
less than a majority of any class of the outstanding voting
securities or economic interests, or (ii) such party or a
Subsidiary of such party is a general partner.
Section 3.3. Company Capital Structure.
(a) The authorized capital stock of the Company consists of
100,000,000 shares of Company Common Stock and 3,000,000 shares
of Preferred Stock, $.01 par value per share ("Company Preferred
Stock"). As of February 12, 1998: (i) 15,519,944 shares of
Company Common Stock were issued and outstanding, all of which
are validly issued, fully paid and nonassessable; (ii) no shares
of Company Preferred Stock were issued or outstanding; (iii) no
shares of Company Common Stock were held in the treasury of the
Company or by Subsidiaries of the Company; and (iv) 1,082,284
shares of the Company Common Stock were reserved for issuance
under Company Stock Plans (including (A) 6,925 shares reserved
for issuance under the 1982 Stock Option Plan, of which 6,925
were subject to outstanding options and none of which were
reserved for future option grants and (B) 1,075,359 shares of
Company Common Stock reserved for issuance under the 1993 Equity
Compensation Plan, as amended and restated, 755,114 of which
were subject to outstanding options and 320,245 of which were
reserved for future option grants. Since February 12, 1998, (i)
no additional shares of capital stock have been reserved for
issuance by the Company and (ii) the only issuances of shares of
capital stock of the Company have been issuances of Company
Common Stock upon the exercise of outstanding Company Stock
Options (as defined below) listed in Item 3.3 of the Company
Letter. All of the shares of Company Common Stock subject to
issuance as specified above, upon issuance pursuant to the terms
and conditions specified in the instruments pursuant to which
they are issuable, shall be duly authorized, validly issued,
fully paid and nonassessable. Except as provided in Item 3.3 of
the Company Letter, there are no obligations, contingent or
otherwise, of the Company or any of its Subsidiaries to
repurchase, redeem or otherwise acquire any shares of Company
Common Stock.
(b) Except as set forth in this Section 3.3, there are no equity
securities of any class of the Company or any of its
Subsidiaries, or any security exchangeable into or exercisable
for such equity securities, issued, reserved for issuance or
outstanding. Except for the stock options issued pursuant to the
Company Stock Plans (the "Company Stock Options") as set forth
in this Section 3.3, there are no options, warrants, equity
securities, calls, rights, commitments or agreements of any
character to which the Company or any of its Subsidiaries is a
party or by which it is bound obligating the Company or any of
its Subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock of
the Company or any of its Subsidiaries or any security or other
instrument convertible into shares of capital stock 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, and, to the best 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 the shares of capital stock of the Company.
Item 3.3 of the Company Letter sets forth for each of the Senior
Officers (as defined below) by name, and for each other holder
of options (i) the number of shares of Company Common Stock
subject to each Company Stock Option held by such holder, (ii)
the dates of grant of Company Stock Options to such holder,
(iii) the vesting schedule for the Company Stock Options held by
such holder, (iv) the exercise prices for the Company Stock
Options held by such holder and (v) the expiration dates of
Company Stock Options held by such holder. Item 3.3 of the
Company Letter contains all forms of stock option agreements
pursuant to which Company Stock Options have been issued.
Section 3.4. Authority; No Conflict; Required Filings and Consents.
(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 and
stockholder action on the part of the Company, subject only to
the adoption of this Agreement and the approval of the Merger by
the Company's stockholders under the DGCL. This Agreement has
been duly executed and delivered by the Company and constitutes
the valid and binding obligation of the Company, enforceable in
accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium
and other similar laws affecting creditors' rights generally and
general principles of equity, regardless of whether asserted in
a proceeding in equity or at law.
(b) The execution and delivery of this Agreement by the Company does
not, and the consummation of the transactions contemplated by
this Agreement will not, (i) conflict with, or result in any
violation or breach of, any provision of the Certificate of
Incorporation or Bylaws of the Company or the comparable charter
or organizational documents of any of its Subsidiaries (in each
case as heretofore amended), (ii) result in any violation or
breach of, or constitute (with or without notice or lapse of
time, or both) a default (or give rise to a right of
termination, cancellation or acceleration of any obligation or
loss of any material benefit) under, any of the terms,
conditions or provisions of any loan, credit agreement, note,
bond, mortgage, indenture, lease, contract or other agreement,
instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their
properties or assets may be bound, or (iii) subject to the
consents, approvals, orders, authorizations, filings,
declarations and registrations specified in Section 3.4(c),
conflict with or violate any judgment, order, decree, statute,
law, ordinance, rule or regulation or any permit, concession,
franchise or license applicable to the Company or any of its
Subsidiaries or any of their properties or assets, except in the
case of clause (ii) and (iii) for any such violations, breaches,
defaults, terminations, cancellations or accelerations which in
the aggregate could not reasonably be expected to have a
Material Adverse Effect on the Company and do not impair the
ability of the Company to perform its obligations under this
Agreement or prevent the consummation of any of the transactions
contemplated hereby.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any court,
administrative agency, commission or other governmental
authority or instrumentality ("Governmental Entity") is required
by or with respect to the Company or any of its Subsidiaries in
connection with the execution and delivery of this Agreement or
the consummation of the transactions contemplated hereby, except
for (i) the filing of pre-merger notification reports under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended
(the "HSR Act"), and the expiration or early termination of the
waiting period thereunder; (ii) the filing of the Registration
Statement (as defined in Section 3.19) with the Securities and
Exchange Commission (the "SEC") in accordance with the
Securities Act of 1933, as amended (the "Securities Act"), and
the entry of an order by the SEC permitting such registration
statement to become effective; (iii) the filing of the
Certificate of Merger with the Secretary of State of the State
of Delaware in accordance with the DGCL; (iv) the filing of the
Proxy Statement (as defined in Section 3.19) and related proxy
materials with the SEC in accordance with the Securities
Exchange Act of 1934, as amended (the "Exchange Act"); (v) such
consents, approvals, orders, authorizations, filings,
registrations, Returns (as defined in Section 3.8(b)) and
declarations as may be required under applicable federal and
state securities and Tax (as defined in Section 3.8(a)) laws and
the laws of any foreign country; (vi) such other consents,
orders, authorizations, filings, approvals, declarations and
registrations which, individually or in the aggregate, if not
obtained or made, could not reasonably be expected to have a
Material Adverse Effect on the Company or impair the ability of
the Company to perform its obligations under this Agreement.
Section 3.5. SEC Filings; Financial Statements.
(a) The Company has filed and made available to Parent or its legal
counsel all forms, reports and documents required to be filed by
the Company with the SEC (collectively, the "Company SEC
Reports") since January 1, 1995. The Company SEC Reports (i) at
the time filed, complied in all material respects with the
applicable requirements of the Securities Act and the Exchange
Act, as the case may be, and (ii) did not at the time they were
filed (or if amended or superseded by a subsequent filing, 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 in such Company SEC Reports or necessary in order to make
the statements in such the Company SEC Reports, 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 with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes) contained in the Company SEC
Reports, including any Company SEC Reports filed from the date
of this Agreement until the Closing (collectively, the "Company
Financial Statements"), complied or will comply in all material
respects with the applicable published rules and regulations of
the SEC with respect thereto, was or will be prepared in
accordance with United States generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to
such financial statements or, in the case of unaudited
statements, as permitted by Form 10-Q or 8-K promulgated by the
SEC), and fairly presented or will fairly present the
consolidated financial position of the Company and its
Subsidiaries as at the respective dates and the consolidated
results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in
amount. The unaudited consolidated balance sheet of the Company
as of September 30, 1997 is referred to herein as the "Company
Balance Sheet."
Section 3.6. Absence of Undisclosed Liabilities. Except as disclosed
in Item 3.6 of the Company Letter or as otherwise disclosed in the
Company SEC Reports filed and publicly available prior to the date
of this Agreement, the Company and its Subsidiaries do not have any
liabilities, either accrued or contingent (whether or not required
to be reflected in financial statements in accordance with United
States generally accepted accounting principles), and whether due or
to become due, which individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect on the
Company, other than liabilities reflected in the Company Balance
Sheet and normal or recurring liabilities incurred since September
30, 1997 in the ordinary course of business consistent with past
practices which would not individually or in the aggregate have a
Material Adverse Effect on the Company.
Section 3.7. Absence of Certain Changes or Events. Since the date of
the Company Balance Sheet, the Company and its Subsidiaries have
conducted their businesses only in the ordinary course in a manner
consistent with past practice (except as disclosed in the Company
SEC Reports filed and publicly available prior to the date of this
Agreement), and since such date there has not been: (a) any Material
Adverse Effect on the Company or any facts or circumstances that
could reasonably be expected to result in a Material Adverse Effect
on the Company; (b) any damage, destruction or loss (whether or not
covered by insurance) with respect to the Company or any of its
Subsidiaries having a Material Adverse Effect on the Company; (c)
any material change by the Company or any of its Subsidiaries in its
accounting methods, principles or practices; (d) any revaluation by
the Company or any of its Subsidiaries of any of its assets having a
Material Adverse Effect on the Company, including writing down the
value of capitalized software or inventory or writing off notes or
accounts receivable other than in the ordinary course of business
consistent with past practice; or (e) except as disclosed in Item
3.7 of the Company Letter, any other action or event that would have
required the consent of Parent pursuant to clauses (a), (c) or (g)
of Section 5.1 of this Agreement had such action or event occurred
after the date of this Agreement.
Section 3.8. Taxes.
(a) For purposes of this Agreement, a "Tax" or, collectively,
"Taxes" means any and all federal, state, local and foreign
taxes, assessments and other governmental charges, duties,
impositions and liabilities of any kind whatsoever, including,
without limitation, any of the foregoing 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 (in
all cases, together with all interest, penalties and additions
imposed with respect to such amounts) and including any
liability for taxes of a predecessor entity.
(b) Except as disclosed in Item 3.8 of the Company Letter, each of
the Company and its Subsidiaries has prepared and timely filed
(or will so file) all federal, state, local and foreign returns,
estimates, information statements and reports ("Returns")
required to be filed at or before the Effective Time relating to
any and all Taxes concerning or attributable to the Company or
any of its Subsidiaries or to their operations, and such Returns
are true and correct in all material respects and have been
completed in all material respects in accordance with applicable
law.
(c) Except as disclosed in Item 3.8 of the Company Letter, each of
the Company and its Subsidiaries as of the Effective Time will
have paid all Taxes it is required to pay prior to the Effective
Time.
(d) Except as disclosed in Item 3.8 of the Company Letter, there is
no material Tax deficiency outstanding, proposed or assessed
against the Company or any of its Subsidiaries that has not been
paid in full or fully reflected as a liability on the Company
Balance Sheet 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
material Tax.
(e) Except as disclosed in Item 3.8 of the Company Letter, neither
the Company nor any of its Subsidiaries has any material
liability for unpaid federal, state, local or foreign Taxes that
has not been accrued for or reserved on the Company Balance
Sheet, whether asserted or unasserted, contingent or otherwise.
(f) Except as disclosed in Item 3.8 of the Company Letter, the
returns referred to in clause (b) above, to the extent relating
to federal and state income or franchise Taxes, have been
examined by the appropriate taxing authority or the period for
assessment of the Taxes in respect of which such Returns were
required to be filed has expired.
(g) Except as disclosed in Item 3.8 of the Company Letter, there is
no action, suit, investigation, audit, claim or assessment
pending or proposed or threatened in writing with respect to
Taxes of the Company or any of its Subsidiaries.
(h) Except as disclosed in Item 3.8 of the Company Letter, there are
no liens for Taxes upon the assets of the Company or any of its
Subsidiaries except liens relating to current Taxes not yet due.
(i) Except as disclosed in Item 3.8 of the Company Letter, all Taxes
which the Company or any of its Subsidiaries are required by law
to withhold or to collect for payment have been duly withheld
and collected, and have been paid or accrued, reserved against
and entered on the books of the Company.
(j) Except as disclosed in Item 3.8 of the Company Letter, none of
the Company or any of its Subsidiaries has been a member of any
group of corporations filing Returns on a consolidated,
combined, unitary or similar basis other than each such group of
which it is currently a member.
(k) Except as disclosed in Item 3.8 of the Company Letter, no
transaction contemplated by this Agreement is subject to
withholding under Section 1445 of the Code (relating to
"FIRPTA").
(l) Neither the Company nor any of its Subsidiaries, nor any of its
other affiliates (i) has taken any action, agreed to take any
action, or failed to take any action, or (ii) has knowledge of
any fact or circumstance that (without regard to any action
taken or agreed to be taken by Parent or any of its affiliates),
in each case, the Company, such Subsidiary or such other
affiliate has actual knowledge could reasonably be expected to
cause the Merger to fail to qualify as a "reorganization" within
the meaning of Section 368(a) of the Code.
Section 3.9. Properties. The Company and its Subsidiaries own or
have valid leasehold interests in all real property necessary for
the conduct of their businesses in all material respects as
presently conducted. All material leases to which the Company or any
of its Subsidiaries is a party are in good standing, valid and
effective in accordance with their respective terms, and neither the
Company nor its Subsidiaries is in default under any of such leases,
except where the lack of such good standing, validity and
effectiveness or the existence of such default could not reasonably
be expected to have a Material Adverse Effect on the Company.
Section 3.10. Intellectual Property.
(a) Except as disclosed in Item 3.10(a) of the Company Letter, the
Company and its Subsidiaries own, or are licensed or otherwise
possess, legally enforceable rights to use, all patents,
trademarks, trade names, service marks, copyrights and mask
works, any applications for and registrations of such patents,
trademarks, trade names, service marks, copyrights and mask
works, and all processes, formulae, methods, schematics,
technology, know how, computer software programs or applications
and tangible or intangible proprietary information or material
that are necessary to conduct the business of the Company and
its Subsidiaries as currently conducted or planned to be
conducted by the Company and its Subsidiaries (the "Company
Intellectual Property Rights").
(b) Except as disclosed in Item 3.10(b) of the Company Letter,
neither the Company nor any of its Subsidiaries is, or will be
as a result of the execution and delivery of this Agreement or
the performance of its obligations under this Agreement, in
breach of any material license, sublicense or other agreement
relating to the Company Intellectual Property Rights or any
material license, sublicense or other agreement pursuant to
which the Company or any of its Subsidiaries is authorized to
use any third party patents, trademarks or copyrights, including
software, which are incorporated in or form a part of any
product of the Company or any of its Subsidiaries that is
material to the business of the Company and its Subsidiaries
taken as a whole.
(c) Except as disclosed in Item 3.10(c) of the Company Letter, (i)
all patents, registered trademarks, service marks and copyrights
which are held by the Company or any of its Subsidiaries, and
which are material to the business of the Company and its
Subsidiaries, taken as a whole, are to the best knowledge of the
Company valid and subsisting; (ii) the Company has not been sued
in any suit, action or proceeding which involves a claim of
infringement of any patents, trademarks, service marks,
copyrights or violation of any trade secret or other proprietary
right of any third party; and (iii) to the best knowledge of the
Company the manufacturing, marketing, licensing or sale of the
Company's products does not infringe any patent, trademark,
service xxxx, copyright, trade secret or other proprietary right
of any third party, which infringement, either individually or
in the aggregate, could reasonably be expected to have a
Material Adverse Effect on the Company.
(d) Item 3.10(d) of the Company Letter contains a list of (i) all
registered United States, state and foreign trademarks, service
marks, logos, trade dress and trade names and pending
applications to register the foregoing, (ii) all United States
and foreign patents and patent applications and (iii) all
registered United States and foreign copyrights and pending
applications to register the same, in each case owned by the
Company and its Subsidiaries.
Section 3.11. Agreements, Contracts and Commitments. Neither the
Company nor any of its Subsidiaries has breached, or received in
writing any claim or threat (for which there is a reasonable basis)
that it has breached, any of the terms or conditions of any material
agreement, contract or commitment to which it is a party or to which
any of its assets and properties is subject ("Company Material
Contracts") in such a manner as would permit any other party to
cancel, modify the terms of or terminate the same or would permit
any other party to collect material damages from the Company or any
of its Subsidiaries under any Company Material Contract. Each
Company Material Contract that has not expired or been terminated is
in full force and effect and is not subject to any material default
thereunder of which the Company is aware by any party obligated to
the Company or any of its Subsidiaries pursuant to such Company
Material Contract. All Company Material Contracts are filed as
exhibits to the Company SEC Reports or are listed in Item 3.11 of
the Company Letter. Except as set forth in Item 3.11 of the Company
Letter, neither the Company nor any of its Subsidiaries is a party
to or bound by any non-competition agreement or any other agreement
or obligation which purports to limit in any material respect the
manner in which, or the localities in which, the Company or any such
Subsidiary is entitled to conduct all or any material portion of the
business of the Company and its Subsidiaries taken as whole.
Section 3.12. Litigation. There is no action, suit or proceeding,
claim, arbitration or, to the knowledge of the Company,
investigation against the Company or any of its Subsidiaries pending
or, to the knowledge of the Company, threatened, or as to which the
Company or any of its Subsidiaries has received any written notice
of assertion, which, if decided adversely to the Company or such
Subsidiary, could reasonably be expected to have a Material Adverse
Effect on the Company or impair the ability of the Company to
consummate the transactions contemplated by this Agreement, nor is
there any judgment, decree, injunction, rule or order of any
Governmental Entity or arbitrator outstanding against the Company or
any of its Subsidiaries having or which, insofar as reasonably can
be foreseen, in the future would have any such effect.
Section 3.13. Environmental Matters.
(a) Except as set forth in Item 3.13 of the Company Letter, the
Company has no reason to believe (i) that any underground
storage tanks are present under any property that the Company or
any of its Subsidiaries has at any time owned, operated,
occupied or leased or (ii) that any 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
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
(a "Hazardous Material"), is present, as a result of actions of
the Company or any of its Subsidiaries or actions of any third
party or otherwise, in, on or under any property, including the
land and the improvements, ground water and surface water, that
the Company or any of its Subsidiaries has at any time owned,
operated, occupied or leased, where the presence of such
underground storage tanks or Hazardous Material would be
reasonably likely to have a Material Adverse Effect on the
Company; provided that the handling or use of a Hazardous
Material in compliance with applicable standards or permits
shall not be included in this representation.
(b) At no time has the Company or any of its Subsidiaries
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, 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 to prohibit,
regulate or control Hazardous Materials or any Hazardous
Material Activity, which violation has had or is reasonably
likely to have a Material Adverse Effect on the Company.
(c) The Company and its Subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and
consents (the "Environmental Permits") necessary for the conduct
of the Hazardous Material Activities and other businesses of the
Company and its Subsidiaries as such activities and businesses
are currently being conducted in all material respects.
(d) No action, proceeding, revocation proceeding, amendment
procedure, writ, injunction or claim is pending or, to the
knowledge of the Company, threatened concerning any
Environmental Permit or any Hazardous Materials Activity of the
Company or any of its Subsidiaries and the Company is not aware
of any fact or circumstance which could (i) involve the Company
or any of its Subsidiaries in any environmental litigation
which, if decided adversely to the Company and its Subsidiaries,
could have a Material Adverse Effect on the Company, or (ii)
impose upon the Company or any of its Subsidiaries any
environmental liability which would have a Material Adverse
Effect on the Company
Section 3.14. Employee Benefit Plans.
(a) The Company has made available to Parent all employee benefit
plans (as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")), all
employment, termination and consulting agreements, all bonus,
stock option, stock appreciation right, restricted stock, stock
purchase, incentive, deferred compensation, supplemental
retirement, severance and other similar employee benefit plans
and agreements, and all unexpired severance plans and
agreements, written or otherwise, for the benefit of, or
relating to, any current or former employee of the Company or
any of its Subsidiaries or any trade or business (whether or not
incorporated) or other organization that together with the
Company is treated as a single employer under Section 414 of the
Code (collectively, the "Company Employee Plans"). Neither the
Company nor any of its Subsidiaries, nor any trade or business
(whether or not incorporated) or other organization that
together with the Company is treated as a single employer under
Section 414 of the Code maintains or has ever in the past
maintained or contributed to any employee benefit plan subject
to Title IV of ERISA (including a multiemployer plan as defined
in Section 3(37) of ERISA). Item 3.14 of the Company Letter
contains a list of all of the Company Employee Plans.
(b) With respect to each Company Employee Plan, the Company has made
available to Parent, a true and correct copy of (i) the most
recent annual report (Form 5500) filed with the Internal Revenue
Service if such Company Employee Plan is subject to such filing
requirement, (ii) such Company Employee Plan, (iii) any trust
agreement or group annuity contract relating to such Company
Employee Plan and (iv) the most recent determination letter
issued with respect to any Company Employee Plan which is
intended to be qualified under Section 401(a) of the Code.
(c) With respect to the Company Employee Plans, no event has
occurred, and to the knowledge of the Company there exists no
condition or set of circumstances, in connection with which,
individually or in the aggregate, the Company or any of its
Subsidiaries could be subject to any material liability,
including the loss of income Tax deductions under ERISA, the
Code or any other applicable law.
(d) With respect to the Company Employee Plans, individually and in
the aggregate, there are no material funded benefit obligations
for which contributions have not been made or properly accrued
and there are no material unfunded benefit obligations that have
not been accounted for by reserves, or otherwise properly
footnoted in accordance with United States generally accepted
accounting principles, on the Company Financial Statements.
(e) Except as disclosed in Item 3.14 of the Company Letter, neither
the Company nor any of its Subsidiaries is a party to any oral
or written (i) union or collective bargaining agreement, (ii)
agreement with any officer or other key employee of the Company
or any of its Subsidiaries, the benefits of which are
contingent, or the terms of which are materially altered, upon
the occurrence of any of the transactions contemplated by this
Agreement or upon such occurrence coupled with a subsequent
event, (iii) agreement with any officer or key employee of the
Company or any of its Subsidiaries providing any term of
employment or compensation guarantee, or (iv) agreement or plan,
including any Company Employee Plan, any of the benefits of
which will be increased, or the vesting or exercisability of the
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.
Except as set forth in Item 3.14 of the Company Letter, Section
162 (m) of the Code does not limit the deductibility of any
compensation payable to any officer of the Company, including
compensation or benefits under any plan or agreement disclosed
pursuant to the preceding sentence.
Section 3.15. Compliance with Laws. The Company and its Subsidiaries
have complied with, are not in violation of, and have not received
any notices of violations with respect to, any federal, state, local
or foreign statute, law or regulation with respect to the conduct of
their business, or ownership or operation of their business, except
for failures to comply or violations which could not reasonably be
expected to have a Material Adverse Effect on the Company or impair
the ability of the Company to consummate the transactions
contemplated by this Agreement. There are no situations with
respect to the Company which involved or involve (i) the use of any
corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses related to political activity, (ii) the
making of any direct or indirect unlawful payments to government
officials or others from corporate funds or the establishment or
maintenance of any unlawful or unrecorded funds, (iii) the violation
of any of the provisions of The Foreign Corrupt Practices Act of
1977, or any rules or regulations promulgated thereunder, or (iv)
the receipt of any illegal discounts or rebates or any other
violation of the antitrust laws.
Section 3.16. Pooling. Neither the Company nor any of its
Subsidiaries, nor, to the knowledge of the Company, any of its
affiliates, has taken or agreed to take any action that would
prevent the Merger from being treated as a "pooling of interests"
for financial accounting purposes in accordance with GAAP and
applicable SEC regulations. The factual information to be provided
by the Company to KPMG Peat Marwick LLP (the "Company Auditors"), in
connection with their written opinion to be delivered pursuant to
Section 7.1(f) will be correct in all material respects and will be
provided to Parent
Section 3.17. Affiliates. Except for the persons listed on Item 3.17
of the Company Letter, there are no persons who, to the knowledge of
the Company, may be deemed to be affiliates of the Company under
Rule 1-02 of Regulation S-X of the SEC.
Section 3.18. Interested Party Transactions. Except as set forth in
the Company SEC Reports or by virtue of the Merger, since the date
of the Company's last proxy statement to its stockholders, no event
has occurred that would be required to be reported by the Company
pursuant to paragraphs (a), (b) or (c) of Item 404 of Regulation S-K
promulgated by the SEC. Other than the Services Agreement (as
defined below) there are no agreements between the Company and any
of its affiliates which are not required to be listed in Item 3.14
of the Company Letter. The loan agreement between the Company and
Safeguard referenced in the Company's Proxy Statement for its 1997
Annual Meeting of Stockholders has terminated and is of no force or
effect and there are no amounts outstanding thereunder.
Section 3.19. Registration Statement; Proxy Statement/Prospectus. The
information supplied by the Company for inclusion in the
registration statement of Parent on Form S-4 pursuant to which
shares of Parent Common Stock issued in the Merger will be
registered with the SEC (the "Registration Statement") shall not
contain, at the time the Registration Statement is declared
effective by the SEC, any untrue statement of a material fact or
omit to state any material fact required to be stated in the
Registration Statement or necessary in order to make the statements
in the Registration Statement, in light of the circumstances under
which they were made, not misleading. The information supplied by
the Company for inclusion in the proxy statement/prospectus (the
"Proxy Statement") to be sent to the stockholders of the Company in
connection with the special meeting of the Company's stockholders to
consider this Agreement and the Merger (the "Stockholders Meeting")
shall not, on the date the Proxy Statement is first mailed to
stockholders of the Company, at the time of the Stockholders Meeting
or at the Effective Time, contain any statement which, at such time
and in light of the circumstances under which it was made, is false
or misleading with respect to any material fact, or omit to state
any material fact necessary in order to make the statements made in
the Proxy Statement not false or misleading or omit to state any
material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the
Stockholders Meeting which has become false or misleading. If at any
time prior to the Effective Time any event relating to the Company
or any of its affiliates should be discovered by the Company which
should be set forth in an amendment to the Registration Statement or
a supplement to the Proxy Statement, the Company shall promptly
inform Parent.
Section 3.20. No Excess Parachute Payments. Any amount that could be
received (whether in cash or property or the vesting of property) as
a result of any of the transactions contemplated by this Agreement
by any employee, officer or director of the Company or any of its
affiliates who is a "disqualified individual" (as such term is
defined in Proposed Treasury Regulation Section 1.280G-1) under any
employment, severance or termination agreement, other compensation
arrangement or Company Employee Plan currently in effect would not
be characterized as an "excess parachute payment" (as such term is
defined in Section 280G of the Code).
Section 3.21. Opinion of Financial Advisor. The financial advisor to
the Company, Xxxxxx X. Xxxxx & Co., Inc., has delivered to the
Company an opinion dated as of the date of this Agreement to the
effect that the Exchange Ratio is fair from a financial point of
view to the holders of the Company Common Stock and a copy of such
opinion has been made available to Parent.
Section 3.22. Section 203 of the DGCL Not Applicable. The
restrictions contained in Section 203 of the DGCL applicable to a
"business combination" (as defined in Section 203) will not apply to
the execution, delivery or performance of this Agreement or the
consummation of the Merger or the other transactions contemplated
hereby.
Section 3.23. Voting Requirements. The affirmative vote of the
holders of a majority of the outstanding shares of Company Common
Stock approving this Agreement is the only vote of holders of any
class or series of the Company's capital stock necessary to approve
this Agreement and the transactions contemplated hereby.
Section 3.24. Brokers. No broker, investment banker, financial
advisor or other person, other than Xxxxxx X. Xxxxx & Co., Inc., the
fees and expenses of which will be paid by the Company, is entitled
to any broker's, finder's, financial advisor's or other similar fee
or commission in connection with the transactions contemplated by
this Agreement based upon arrangements made by or on behalf of the
Company. A true and complete copy of the Company's engagement lette
with Xxxxxx X. Xxxxx & Co., Inc. has been made available to Parent.
Section 3.25. Additional Disclosure. The information set forth in
Item 3.25 of the Company Letter is complete and correct in all
material respects as of the date hereof and the Company will use its
reasonable best efforts to cause such information to continue to be
so correct and complete as of the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant to the Company as follows:
Section 4.1. Organization. Parent and each of its material
Subsidiaries (i) is a corporation or other business entity duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its formation, (ii) has all requisite corporate
or similar power to own, lease and operate its property and to carry
on its business as now being conducted and as proposed to be
conducted, and (iii) is duly qualified to do business and is in good
standing as a foreign corporation or other business entity in each
jurisdiction in which the nature of its activities requires it to be
so qualified, except where the failure to have such power or the
failure to be so qualified could not reasonably be expected to have
a Material Adverse Effect on Parent.
Section 4.2. Parent Subsidiaries. Except as set forth in Item 4.2 of
the letter from Parent to the Company dated and delivered as of the
date hereof (the "Parent Letter"), which relates to this Agreement
and is designated therein as being the Parent Letter, there are no
outstanding subscriptions, options, calls, voting trusts, proxies or
warrants with respect to any capital stock of any of the material
Subsidiaries of Parent, including any right obligating any such
material Subsidiary to issue, deliver, or sell additional shares of
its capital stock, in each case other than with Parent or one of its
Subsidiaries. Except as required by applicable law and except for
director or qualifying shares, all of the outstanding shares of
capital stock of each material Subsidiary listed on Item 4.2 of the
Parent Letter are duly authorized, validly issued, fully paid and
nonassessable, and all such shares are owned by Parent or another
Subsidiary of Parent.
Section 4.3. Parent Capital Structure.
(a) The authorized capital stock of Parent consists of 500,000,000
shares of Parent Common Stock and 5,000,000 shares of Preferred
Stock, $.01 par value per share ("Parent Preferred Stock"). As
of January 2, 1998: (i) 181,626,660 shares of Parent Common
Stock were issued and outstanding, all of which are validly
issued, fully paid and nonassessable; (ii) no shares of Parent
Preferred Stock are issued or outstanding; (iii) no shares of
Parent Common Stock or Parent Preferred Stock were held in the
treasury of Parent or by Subsidiaries of Parent; and (iv)
10,903,494 shares of Parent Common Stock were reserved for
issuance pursuant to stock options granted and outstanding under
Parent's stock option plans (the "Parent Option Plans").
Between January 2, 1998 and the date hereof, (i) no additional
shares of capital stock have been reserved for issuance by
Parent and (ii) the only issuances of shares of capital stock of
Parent Common Stock have been issuances of Parent Common Stock
upon the exercise of outstanding stock options. All shares of
Parent Common Stock subject to issuance as specified above, upon
issuance pursuant to the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be duly
authorized, validly issued, fully paid and nonassessable. There
are no obligations, contingent or otherwise, of Parent or any of
its Subsidiaries to repurchase, redeem or otherwise acquire any
shares of Parent Common Stock.
(b) Except as set forth in this Section 4.2 or as reserved for
future grants of options under the Parent Option Plans, there
are no equity securities of any class of Parent, or any security
exchangeable into or exercisable for such equity securities,
issued, reserved for issuance or outstanding.
Section 4.4. Authority; No Conflict; Required Filings and Consents.
(a) Parent 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 Parent. This Agreement has been duly
executed and delivered by Parent and constitutes the valid and
binding obligations of Parent, enforceable in accordance with
the terms hereof, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other
similar laws affecting creditors' rights generally and general
principles of equity, regardless of whether asserted in a
proceeding in equity or at law.
(b) The execution and delivery of this Agreement by Parent and Sub
do not, and the consummation of the transactions contemplated by
this Agreement will not, (i) conflict with, or result in any
violation or breach of, any provision of the Certificate of
Incorporation or Bylaws of Parent or Sub (in each case as
heretofore amended), (ii) result in any violation or breach of,
or constitute (with or without notice or lapse of time, or both)
a default (or give rise to a right of termination, cancellation
or acceleration of any obligation or loss of any material
benefit) under, any of the terms, conditions or provisions of
any loan, credit agreement, note, bond, mortgage, indenture,
lease, contract or other agreement, instrument or obligation to
which Parent or any of its Subsidiaries is a party or by which
any of them or any of their properties or assets may be bound,
or (iii) subject to the consents, approvals, orders,
authorizations, filings, declarations and registrations
specified in Section 4.3(c), conflict with or violate any
judgment, order, decree, statute, law, ordinance, rule or
regulation or any permit, concession, franchise or license
applicable to Parent or any of its Subsidiaries or any of their
properties or assets, except in the case of clause (ii) and
(iii) for any such violations, breaches, defaults, terminations,
cancellations or accelerations which in the aggregate could not
reasonably be expected to have a Material Adverse Effect on
Parent and do not impair the ability of Parent to perform its
obligations under this Agreement or prevent the consummation of
any of the transactions contemplated hereby.
(c) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental
Entity is required by or with respect to Parent or any of its
Subsidiaries in connection with the execution and delivery of
this Agreement or the consummation of the transactions
contemplated hereby, except for (i) the filing of pre-merger
notification reports under the HSR Act and the expiration or
early termination of the waiting period thereunder; (ii) the
filing of the Registration Statement with the SEC in accordance
with the Securities Act and the entry of an order by the SEC
permitting the Registration Statement to become effective; (iii)
the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware in accordance with the DGCL; (iv)
the filing of the Proxy Statement and related proxy materials
with the SEC in accordance with the Exchange Act; (v) such
consents, approvals, orders, authorizations, filings,
registrations, Returns, and declarations as may be required
under applicable federal and state securities and Tax laws and
the laws of any foreign country; and (vi) such other consents,
approvals, orders, authorizations, filings, declarations and
registrations which, in the aggregate, if not obtained or made,
could not reasonably be expected to have a Material Adverse
Effect on Parent or impair the ability of Parent to perform its
obligations under this Agreement.
Section 4.5. SEC Filings; Financial Statements.
(a) Parent has filed and made available to the Company or its legal
counsel all forms, reports and documents required to be filed by
Parent with the SEC (collectively, the "Parent SEC Reports")
since January 1, 1995. The Parent SEC Reports (i) at the time
filed, complied in all material respects with the applicable
requirements of the Securities Act and the Exchange Act, as the
case may be, and (ii) did not at the time they were filed (or if
amended or superseded by a subsequent filing, 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 in such
Parent SEC Reports or necessary in order to make the statements
in such Parent SEC Reports, in the light of the circumstances
under which they were made, not misleading. None of Parent's
Subsidiaries is required to file any forms, reports or other
documents with the SEC.
(b) Each of the consolidated financial statements (including, in
each case, any related notes) contained in the Parent SEC
Reports, including any Parent SEC Reports filed from the date of
this Agreement until the Closing, complied or will comply in all
material respects with the applicable published rules and
regulations of the SEC with respect thereto, was or will be
prepared in accordance with GAAP applied on a consistent basis
throughout the periods involved (except as may be indicated in
the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-Q or 8-K
promulgated by the SEC), and fairly presented or will fairly
present the consolidated financial position of Parent and its
Subsidiaries as at the respective dates and the consolidated
results of its operations and cash flows for the periods
indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in
amount. The unaudited consolidated balance sheet of Parent as of
September 30, 1997 is referred to herein as the "Parent Balance
Sheet."
Section 4.6. Absence of Undisclosed Liabilities. Except as disclosed
in Item 4.6 of the Parent Letter or as otherwise disclosed in the
Parent SEC Reports filed and publicly available prior to the date of
this Agreement, Parent and its Subsidiaries do not have any
liabilities, either accrued or contingent (whether or not required
to be reflected in financial statements in accordance with United
States generally accepted accounting principles), and whether due or
to become due, which individually or in the aggregate could
reasonably be expected to have a Material Adverse Effect on Parent,
other than (i) liabilities reflected in the Parent Balance Sheet,
and (ii) normal or recurring liabilities incurred since September
30, 1997 in the ordinary course of business consistent with past
practices which would not individually or in the aggregate have a
Material Adverse Effect on Parent.
Section 4.7. Absence of Certain Changes or Events. Between the date
of the Parent Balance Sheet and the date hereof, Parent and its
Subsidiaries have conducted their businesses only in the ordinary
course in a manner consistent with past practice (except as
disclosed in the Parent SEC Reports filed and publicly available
prior to the date of this Agreement). Except with respect to the
matters set forth in Item 4.6 of the Parent Letter, since the Parent
Balance Sheet Date there has not been: (a) any Material Adverse
Effect on Parent or any facts or circumstances that could reasonably
be expected to result in a Material Adverse Effect on Parent; (b)
any damage, destruction or loss (whether or not covered by
insurance) with respect to Parent or any of its Subsidiaries having
a Material Adverse Effect on Parent; (c) any material change by
Parent or any of its Subsidiaries in its accounting methods,
principles or practices; or (d) any revaluation by Parent or any of
its Subsidiaries of any of its assets having a Material Adverse
Effect on Parent, including writing down the value of capitalized
software or inventory or writing off notes or accounts receivable
other than in the ordinary course of business consistent with past
practice.
Section 4.8. Taxes.
(a) Except as disclosed in Item 4.8 of the Parent Letter, each of
Parent and its Subsidiaries has prepared and timely filed (or
will so file) all United States federal, state and local Returns
required to be filed at or before the Effective Time relating to
any and all Taxes concerning or attributable to Parent or any of
its Subsidiaries or to their operations, and such Returns are
true and correct and have been completed in accordance with
applicable law, except where any such failure to prepare or file
timely or any such failure to be true and correct, or any such
failure to be completed in accordance with applicable law would
not individually, or in the aggregate, have a Material Adverse
Effect on Parent.
(b) Except as disclosed in Item 4.8 of the Parent Letter, each of
Parent and its Subsidiaries as of the Effective Time will have
paid all Taxes it is required to pay prior to the Effective
Time, except where any such failure to pay would not have a
Material Adverse Effect on Parent.
(c) Except as disclosed in Item 4.8 of the Parent Letter, there is
no material United States federal or state income Tax deficiency
outstanding or assessed against Parent or any of its
Subsidiaries that has not been paid in full or fully reflected
as a liability on the Parent Balance Sheet nor has Parent 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 material United States federal or state income
Tax.
(d) Except as disclosed in Item 4.8 of the Parent Letter, there is
no action, suit, investigation, audit, claim or assessment
pending or proposed or threatened in writing with respect to
Taxes of Parent or any of its Subsidiaries that, if decided
adversely to Parent, would have a Material Adverse Effect on
Parent.
(e) Except as disclosed in Item 4.8 of the Parent Letter, there are
no liens for Taxes upon the assets of Parent or any of its
Subsidiaries except liens relating to current Taxes not yet due
and except where such liens would not have a Material Adverse
Effect on Parent.
(f) Except as disclosed in Item 4.8 of the Parent Letter, all Taxes
which Parent or any of its Subsidiaries are required by law to
withhold or to collect for payment have been duly withheld and
collected, and have been paid or accrued, reserved against and
entered on the books of Parent, except where any such failure to
withhold or collect or such failure to pay or accrue, reserve
against and enter would not individually, or in the aggregate,
have a Material Adverse Effect on Parent.
(g) Except as disclosed in Item 4.8 of the Parent Letter, neither
Parent nor any of its Subsidiaries has any material liability
for unpaid federal, state, local or foreign Taxes that has not
been accrued for or reserved on the Parent Balance Sheet,
whether asserted or unasserted, contingent or otherwise, except
where such liability would not have a Material Adverse Affect on
Parent.
(h) Neither Parent nor any of its Subsidiaries, nor any of its other
affiliates (i) has taken any action, agreed to take any action,
or failed to take any action, or (ii) has knowledge of any fact
or circumstance that (without regard to any action taken or
agreed to be taken by the Company or any of its affiliates), in
each case, Parent, such Subsidiary or such other affiliate has
actual knowledge could reasonably be expected to cause the
Merger to fail to qualify as a "reorganization" within the
meaning of Section 368(a) of the Code.
Section 4.9. Properties. Parent and its Subsidiaries own or have
valid leasehold interests in all real property necessary for the
conduct of their businesses in all material respects as presently
conducted. All material leases to which Parent or any of its
Subsidiaries is a party are in good standing, valid and effective in
accordance with their respective terms, and neither Parent nor its
Subsidiaries is in default under any of such leases, except where
the lack of such good standing, validity and effectiveness or the
existence of such default could not reasonably be expected to have a
Material Adverse Effect on Parent.
Section 4.10. Intellectual Property. Except with respect to the
matters set forth in Item 4.6 of the Parent Letter, Parent and its
Subsidiaries own, or are licensed or otherwise possess, legally
enforceable rights to use, all patents, trademarks, trade names,
service marks, copyrights and mask works, any applications for and
registrations of such patents, trademarks, trade names, service
marks, copyrights and mask works, and all processes, formulae,
methods, schematics, technology, know how, computer software
programs or applications and tangible or intangible proprietary
information or material that are necessary to conduct the business
of Parent and its Subsidiaries as currently conducted or planned to
be conducted by Parent and its Subsidiaries except where the failure
to have such ownership or possession could not reasonably be
expected to have a Material Adverse Effect on Parent.
Section 4.11. Agreements, Contracts and Commitments. Neither Parent
nor any of its Subsidiaries has breached, or received in writing any
claim or threat (for which there is a reasonable basis) that it has
breached, any of the terms or conditions of any material agreement,
contract or commitment to which it is a party or to which any of its
assets is subject ("Parent Material Contracts") in such a manner as
would permit any other party to cancel, modify the terms of or
terminate the same or would permit any other party to collect
material damages from Parent or any of its Subsidiaries under any
Parent Material Contract. Each Parent Material Contract that has
not expired or been terminated is in full force and effect and is
not subject to any material default thereunder of which Parent is
aware by any party obligated to Parent or any of its Subsidiaries
pursuant to such Parent Material Contract.
Section 4.12. Litigation. Except with respect to the matters set
forth in Item 4.6 of the Parent Letter, there is no action, suit or
proceeding, claim, arbitration or, to the knowledge of Parent,
investigation against Parent or any of its Subsidiaries pending or,
to the knowledge of Parent, threatened, or as to which Parent or any
of its Subsidiaries has received any written notice of assertion,
which, if decided adversely to Parent or such Subsidiary, could
reasonably be expected to have a Material Adverse Effect on Parent
or impair the ability of Parent to consummate the transactions
contemplated by this Agreement, nor is there any judgment, decree,
injunction, rule or order of any Governmental Entity or arbitrator
outstanding against Parent or any of its Subsidiaries having or
which, insofar as reasonably can be foreseen, in the future would
have any such effect.
Section 4.13. Environmental Matters.
(a) Except as set forth in Item 4.13 of the Parent Letter, Parent
has no reason to believe (i) that any underground storage tanks
are present under any property that Parent or any of its
Subsidiaries has at any time owned, operated, occupied or leased
or (ii) that any Hazardous Material is present, as a result of
actions of Parent or any of its Subsidiaries or actions of any
third party or otherwise, in, on or under any property,
including the land and the improvements, ground water and
surface water, that Parent or any of its Subsidiaries has at any
time owned, operated, occupied or leased, where the presence of
such underground storage tanks or Hazardous Material would be
reasonably likely to have a Material Adverse Effect on Parent;
provided that the handling and use of a Hazardous Material in
compliance with applicable standards or permits shall not be
included in this representation.
(b) At no time has Parent or any of its Subsidiaries 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 Parent or
any of its Subsidiaries engaged in Hazardous Materials
Activities in violation of any rule, regulation, treaty or
statute promulgated by any Governmental Entity to prohibit,
regulate or control Hazardous Materials or any Hazardous
Materials Activity, which violation has had or is reasonably
likely to have a Material Adverse Effect on Parent.
(c) Parent and its Subsidiaries currently hold all Environmental
Permits necessary for the conduct of the Hazardous Materials
Activities and other businesses of Parent and its Subsidiaries
as such activities and businesses are currently being conducted.
(d) Parent is not aware of any fact or circumstance which could (i)
involve Parent or any of its Subsidiaries in any environmental
litigation which, if decided adversely to Parent and its
Subsidiaries, could have a Material Adverse Effect on Parent, or
(ii) impose upon Parent or any of its Subsidiaries any
environmental liability which would have a Material Adverse
Effect on Parent.
Section 4.14. Pooling. Neither Parent nor any of its Subsidiaries,
nor, to the knowledge of Parent, any of its affiliates has taken or
agreed to take any action that would prevent the Merger from being
treated as a "pooling of interests" for financial accounting
purposes in accordance with GAAP and applicable SEC regulations. The
factual information to be provided by Parent to the Ernst & Young
LLP, ("Parent Auditors") in connection with their written opinion
to be delivered pursuant to Section 7.1(f) will be correct in all
material respects.
Section 4.15. Affiliates. Except for the persons listed on Item 4.15
of the Parent Letter, there are no persons who, to the knowledge of
Parent, may be deemed to be affiliates of Parent under Rule 1-02 of
Regulation S-X of the SEC.
Section 4.16. Compliance with Laws. Parent and its Subsidiaries have
complied with, are not in violation of, and have not received any
notices of violations with respect to, any federal, state, local or
foreign statute, law or regulation with respect to the conduct of
their business, or ownership or operation of their business, except
for failures to comply or violations which could not reasonably be
expected to have a Material Adverse Effect on Parent or impair the
ability of Parent to consummate the transactions contemplated by
this Agreement. There are no situations with respect to Parent which
involved or involve (i) the use of any corporate funds for unlawful
contributions, gifts, entertainment or other unlawful expenses
related to political activity, (ii) the making of any direct or
indirect unlawful payments to government officials or others from
corporate funds or the establishment or maintenance of any unlawful
or unrecorded funds, (iii) the violation of any of the provisions of
The Foreign Corrupt Practices Act of 1977, or any rules or
regulations promulgated thereunder, or (iv) the receipt of any
illegal discounts or rebates or any other violation of the antitrust
laws.
Section 4.17. Registration Statement; Proxy Statement/Prospectus. The
information supplied by Parent for inclusion in the Registration
Statement shall not contain, at the time the Registration Statement
is declared effective by the SEC, any untrue statement of a material
fact or omit to state any material fact required to be stated in the
Registration Statement or necessary in order to make the statements
in the Registration Statement, in light of the circumstances under
which they were made, not misleading. The information supplied by
Parent for inclusion in the Proxy Statement to be sent to the
stockholders of the Company in connection with the Stockholders
Meeting shall not, on the date the Proxy Statement is first mailed
to stockholders of the Company, at the time of the Stockholders
Meeting or at the Effective Time, contain any statement which, at
such time and in light of the circumstances under which it was made,
is false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements
made in the Proxy Statement not false or misleading or omit to state
any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the
Stockholders Meeting which has become false or misleading. If at any
time prior to the Effective Time any event relating to Parent or any
of its affiliates should be discovered by Parent which should be set
forth in an amendment to the Registration Statement or a supplement
to the Proxy Statement, Parent shall promptly inform the Company.
Section 4.18. Interim Operations of Sub. Sub was formed solely for
the purpose of engaging in the transactions contemplated by this
Agreement, has engaged in no other business activities, and has
conducted its operations only as contemplated by this Agreement.
Section 4.19. Voting Requirements. No action by the stockholders of
Parent is required to approve this Agreement and the transactions
contemplated hereby.
Section 4.20. Brokers. No broker, investment banker, financial
advisor or other person, other than Xxxxxxx, Xxxxx & Co., the fees
and expenses of which will be paid by Parent, is entitled to any
broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent or
Sub.
ARTICLE V
CONDUCT OF BUSINESS
Section 5.1. Covenants of the Company. During the period from the
date of this Agreement to the Effective Time, the Company agrees as
to itself and its Subsidiaries (except to the extent that Parent
shall otherwise consent in writing), to carry on its business in the
usual, regular and ordinary course in substantially the same manner
as previously conducted, to pay its debts and Taxes when due subject
to good faith disputes over such debts or Taxes, to pay or perform
its other obligations when due, and, to the extent consistent with
the foregoing, to use all reasonable best efforts consistent with
past practices and policies to (i) preserve intact its present
business organization, (ii) keep available the services of its
present officers and key employees, and (iii) preserve its
relationships with customers, suppliers, distributors, licensors,
licensees and others having business dealings with it. The Company
shall notify Parent promptly after becoming aware of any event or
occurrence that would result in a material breach of any covenant or
agreement of the Company set forth in this Agreement or cause any
representation or warranty of the Company set forth in this
Agreement to be untrue if made as of the date of, and giving effect
to, such event or occurrence, which if uncured, could reasonably be
expected to cause any condition set forth in Section 7.2(a) or
7.2(b) not to be satisfied. Except as expressly contemplated by this
Agreement, the Company shall not (and shall not permit any of its
Subsidiaries to), without the prior written consent of Parent:
(a) accelerate, amend or change the period of exercisability of
options or restricted stock granted under any of the Company
Stock Plans or authorize cash payments in exchange for any
options granted under any of such plans;
(b) transfer or license to any person or entity or otherwise extend,
amend or modify any rights to the Company Intellectual Property
Rights other than licenses to customers in the ordinary course
of business consistent with past practices on a non-exclusive
basis;
(c) declare or pay any dividends on or make any other distributions
(whether in cash, stock or property, other than dividends or
distributions by a direct or indirect wholly owned subsidiary of
the Company to its parent) in respect of any of its capital
stock, or split, combine or reclassify any of its capital stock
or issue or authorize the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its
capital stock, or purchase or otherwise acquire, directly or
indirectly, any shares of its capital stock;
(d) issue, deliver, sell, pledge or otherwise encumber, or authorize
or propose the issuance, delivery, sale, pledge or encumbrance
of, any shares of its capital stock or securities convertible
into shares of its capital stock, or subscriptions, rights,
warrants or options to acquire, or other agreements or
commitments of any character obligating it to issue any such
shares or other convertible securities, other than the issuance
of the Company Common Stock upon the exercise of Company Stock
Options outstanding on the date of this Agreement and in
accordance with their present terms, except for issuances of
Company Stock Options pursuant to the Company Stock Plans
relating to not more than one hundred fifty thousand (150,000)
shares of Company Common Stock in the aggregate, in connection
with the hiring of new employees or the promotion of officers
and employees (other than Senior Officers), in each case in the
ordinary course of business, consistent with past practice;
(e) acquire or agree to acquire, by merging or consolidating with,
by purchasing any equity interest in or the assets of, or by any
other means, any business or any corporation, partnership,
limited liability company or other business organization or
division or any interest therein;
(f) sell, lease, license, mortgage, encumber or otherwise dispose of
any of its properties or assets, except for sales, leases or
licenses of products or services in the ordinary course of
business in accordance with past practices;
(g) take any action to: (i) increase or agree to increase the
compensation payable or to become payable to its officers or
employees, except for regularly scheduled increases in salary or
wages (not in excess of ten percent (10%) in the aggregate for
each person) of employees (other than Senior Officers) in
accordance with past practices, (ii) grant any severance or
termination pay to, or enter into any employment or severance
agreements with, directors or Senior Officers, (iii) grant any
severance or termination pay to, or enter into any employment or
severance agreement with, any other employees, except in the
ordinary course of business consistent with past practice,
provided that the aggregate of such payments shall not be in
excess of one hundred thousand dollars ($100,000), (iv) enter
into any collective bargaining agreement, or (v) establish,
adopt or enter into any bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination,
severance or other plan, trust, fund, policy or arrangement for
the benefit of any directors, officers or employees or amend any
Company Employee Plan;
(h) revalue any of its assets, including writing down the value of
inventory or writing off notes or accounts receivable, other
than in the ordinary course of business pursuant to arm's length
transactions on commercially reasonable terms;
(i) (y) incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or
warrants or rights to acquire any debt securities or guarantee
any debt securities of others, enter into any "keep well" or
other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic
effect of any of the foregoing, or (z) make any loans, advances
or capital contributions to, or investments in, any other
person, other than to the Company or any of its wholly owned
Subsidiaries;
(j) amend or propose to amend its Certificate of Incorporation or
Bylaws or other comparable charter or organizational documents;
(k) incur or commit to incur capital expenditures in excess of five
hundred thousand dollars ($500,000) individually, or four
million dollars ($4,000,000) in the aggregate;
(l) make any material amendments to any OEM agreement or enter into
or make any amendments to any agreements pursuant to which any
third party is granted exclusive marketing, manufacturing or
other rights with respect to any Company product, process or
technology, other than granting to specific customers
non-territorial exclusive rights to physical packaging and
related interfaces developed by the Company for such customer's
equipment;
(m) amend in any respect that, taken as a whole, is material and
adverse to the Company or terminate any material contract,
agreement or license to which it is a party;
(n) (y) waive or release any material right or claim (except in
connection with amendments that comply with clause (m)
immediately above), or (z) pay, discharge or satisfy any
material claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the
payment, discharge or satisfaction, in the ordinary course of
business consistent with past practice or in accordance with
their terms, of liabilities reflected or reserved against in, or
contemplated by, the most recent Company Financial Statements
(or the notes thereto) filed prior to the date hereof, or
incurred in the ordinary course of business consistent with past
practice;
(o) settle or compromise Tax liabilities in excess of five hundred
thousand dollars ($500,000) in the aggregate, or prepare or file
any Return inconsistent with past practice or, on any such
Return, take any position, make any election, or adopt any
method that is inconsistent with positions taken, elections made
or methods used in preparing or filing similar Returns in prior
periods;
(p) initiate any litigation or arbitration proceeding, other than
litigation involving Parent relating to this Agreement and
counterclaims or other proceedings responsive to litigation
filed by a third party; or
(q) take, or agree in writing or otherwise to take, any of the
actions described in the foregoing clauses (a) through (p), or
any action (other than actions of the type contemplated by
clauses (a) through (p) above which are permitted thereby) which
(i) would make any of the Company's representations or
warranties in this Agreement, if made on and as of the date of
such action or agreement, untrue or incorrect in any material
respect, or (ii) could prevent it from performing, or cause it
not to perform, its obligations under this Agreement.
Section 5.2. Covenants of Parent. Parent shall notify the Company
promptly after becoming aware of any event or occurrence that would
result in a material breach of any covenant or agreement of Parent
set forth in this Agreement or cause any representation or warranty
of Parent set forth in this Agreement to be untrue if made as of the
date of, and giving effect to, such event or occurrence, which if
uncured, could reasonably be expected to cause any condition set
forth in Section 7.2(a) or 7.2(b) not to be satisfied. Between the
date hereof and April 16, 1998, except as expressly contemplated by
this Agreement, Parent shall not (and shall not permit any of its
Subsidiaries to), without the prior written consent of the Company:
(a) declare or pay any dividends on or make any other distributions
(whether in cash, stock or property, other than dividends or
distributions by a direct or indirect wholly owned subsidiary of
Parent to its parent) in respect of any of its capital stock, or
split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock,
or spend more than $50,000,000 to purchase or otherwise acquire,
directly or indirectly, any shares of its capital stock;
(b) issue or authorize the issuance or delivery of, any shares of
its capital stock or securities convertible into shares of its
capital stock, or subscriptions, rights, warrants or options to
acquire, or other agreements or commitments of any character
obligating it to issue any such shares or other convertible
securities, other than (i) the issuance of the Parent Common
Stock upon the exercise of Parent stock options outstanding on
the date of this Agreement and (ii) issuances not involving more
than five percent (5%) of the currently issued and outstanding
Parent Common Stock;
(c) acquire or agree to acquire, by merging or consolidating with,
by purchasing any equity interest in or the assets of, or by any
other means, any business or any corporation, partnership,
limited liability company or other business organization or
division or any interest therein to the extent all such
acquisitions together involve purchase prices in excess of five
hundred million dollars ($500,000,000) in the aggregate, it
being agreed that nothing in this Agreement shall prohibit
Parent or any of its Subsidiaries from engaging in discussions
or negotiations or from furnishing information in connection
with any acquisitions or transactions;
(d) sell, lease, license, mortgage, encumber or otherwise dispose of
any of its properties or assets, except for sales, leases or
licenses of products or services (i) in the ordinary course of
business or (ii) to the extent involving sale prices of less
than five hundred million dollars ($500,000,000) in the
aggregate;
(e) amend or propose to amend its Certificate of Incorporation or
Bylaws or other comparable charter or organizational documents;
(f) (x) incur any indebtedness for borrowed money or guarantee any
such indebtedness or issue or sell any debt securities or
warrants or rights to acquire any debt securities or guarantee
any debt securities of others, enter into any "keep well" or
other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic
effect of any of the foregoing, or (y) make any loans, advances
or capital contributions to, or investments in, any other
person, other than to the Parent or any of its wholly owned
Subsidiaries, to the extent involving in the case of all of the
matters described in clauses (x) and (y) more than two hundred
fifty million dollars ($250,000,000) in the aggregate; or
(g) take, or agree in writing or otherwise to take, any of the
actions described in the foregoing clauses (a) through (f), or
any action (other than actions of the type contemplated by
clauses (a) through (f) above which are permitted thereby) which
(i) would make any of Parent's representations or warranties in
this Agreement, if made on and as of the date of such action or
agreement, untrue or incorrect in any material respect, or (ii)
could prevent it from performing, or cause it not to perform,
its obligations under this Agreement. Nothing contained in this
Agreement shall prohibit Parent from adopting a stockholders
rights plan or issuing securities pursuant thereto.
Section 5.3. Employment Agreements. The Company may enter into
employment agreements, effective as of the Effective Time, with the
officers of the Company listed in Item 5.3(a) of the Parent Letter
(the "Senior Officers"), which employment agreements shall be in the
form attached as Item 5.3(b) of the Parent Letter and shall be
subject to the terms specified in Item 5.3(c) of the Parent Letter.
Section 5.4. Cooperation. Subject to compliance with applicable law,
from the date hereof until the Effective Time, (i) the Company shall
confer on a regular and frequent basis with one or more
representatives of Parent to report operational matters of
materiality and the general status of ongoing operations and (ii)
each of Parent and the Company shall promptly provide the other
party or its counsel with copies of all filings made by the Company
with any Governmental Entity in connection with this Agreement, the
Merger and the other transactions contemplated hereby.
Section 5.5. Material Adverse Effect For purposes of this
Agreement, "Material Adverse Effect" means, when used in connection
with the Company or Parent, any change or effect that is materially
adverse to the business, properties, assets, condition (financial or
otherwise), or results of operations of such party and its
Subsidiaries taken as a whole but excluding (i) any change resulting
from general economic conditions or general industry conditions or
(ii) any change caused by the transactions contemplated by this
Agreement and the public announcement thereof.
ARTICLE VI
ADDITIONAL AGREEMENTS
Section 6.1. No Solicitation.
(a) The Company agrees that, from the date of this Agreement until
the earlier of the Effective Time or the termination of this
Agreement in accordance with Section 8.1, it shall not, directly
or indirectly, and shall cause its officers, directors,
employees, representatives, agents, and affiliates, to not (i)
solicit, initiate, or encourage any inquiries or proposals that
constitute, or could reasonably be expected to lead to, a
proposal or offer for a merger, consolidation, sale or purchase
of substantial assets or stock, tender or exchange offer, or
other business combination or change in control or similar
transaction involving the Company or any of its Subsidiaries,
other than the transactions contemplated or permitted by this
Agreement (any of the foregoing inquiries or proposals being
referred to in this Agreement as a "Takeover Proposal"), (ii)
engage in negotiations or discussions concerning, or provide any
non-public information to any person or entity relating to, any
Takeover Proposal, or (iii) enter into any agreement with
respect to, agree to, approve or recommend any Takeover
Proposal; provided, however, that nothing contained in this
Agreement shall prevent the Company or its Board of Directors,
directly or through representatives or agents on behalf of the
Board of Directors, from (A) furnishing non-public information
to, or entering into discussions or negotiations with, any
person or entity in connection with an unsolicited bona fide
written Takeover Proposal by such person or entity, if and only
to the extent that (1) such Takeover Proposal would, if
consummated, result in a transaction that would, in the
reasonable good faith judgment of the Board of Directors of the
Company, after consultation with its financial advisors, result
in a transaction more favorable to the Company's stockholders
from a financial point of view than the Merger (any such more
favorable Takeover Proposal being referred to in this Agreement
as a "Superior Proposal") and, in the reasonable good faith
judgment of the Board of Directors of the Company, after
consultation with its financial advisors, the person or entity
making such Superior Proposal has the financial means to
conclude such transaction, (2) the failure to take such action
would in the reasonable good faith judgment of the Board of
Directors of the Company, on the basis of the advice of the
outside corporate counsel of the Company, be contrary to the
fiduciary duties of the Board of Directors of the Company to the
Company's stockholders under applicable law; (3) prior to
furnishing such non-public information to, or entering into
discussions or negotiations with, such person or entity, such
Board of Directors receives from such person or entity an
executed confidentiality agreement with provisions not less
favorable to the Company than those contained in the
Confidentiality and Non Disclosure Agreement dated December 29,
1997 between Parent and the Company, except for the provision of
Section 7 thereof (the "Confidentiality Agreement") and (4) the
Company shall have fully complied with this Section 6.1; or (B)
complying with Rule 14d-9 and Rule 14e-2 promulgated under the
Exchange Act with regard to a Takeover Proposal.
(b) The Company shall notify Parent no later than twenty-four (24)
hours after receipt by the Company (or its advisors) of any
Takeover Proposal or any request for nonpublic information in
connection with a Takeover Proposal or for access to the
properties, books or records of the Company by any person or
entity that informs the Company that it is considering making,
or has made, a Takeover Proposal. Such notice to Parent shall
be made orally and in writing and shall indicate in reasonable
detail the identity of the person or entity making the Takeover
Proposal and the terms and conditions of such proposal, inquiry
or contact. If the financial terms of such Takeover Proposal are
modified, then the Company shall notify Parent of the terms and
conditions of such modification within twenty-four (24) hours of
the receipt of such modification. The Company shall also notify
Parent simultaneously with the delivery of notice to the
directors of the Company of, and in any event at least
twenty-four (24) hours prior to (unless a longer period is
required by Section 6.1(c)), each meeting of the Board of
Directors at which the Company will consider taking definitive
action with respect to withdrawing or modifying, in a manner
adverse to Parent, its recommendation to the Company's
stockholders in favor of approval of the Merger.
(c) Notwithstanding the foregoing, in the event that there exists a
Superior Proposal before the Board of Directors of the Company
and in the reasonable good faith judgment of the Company, on the
basis of the advice of the outside corporate counsel of the
Company, the failure to accept such Superior Proposal would be
contrary to the fiduciary duties of the Board of Directors of
the Company to the Company's stockholders under applicable law,
the Board of Directors of the Company may pursuant to Section
8.1(h) (subject to this and the following sentences) terminate
this Agreement prior to the Stockholders Meeting (and
concurrently with such termination, cause the Company to enter
into an acquisition agreement with respect to such Superior
Proposal), but only at a time that is (i) after the third day
following Parent's receipt of written notice advising Parent
that the Board of Directors of the Company is prepared to accept
a Superior Proposal, specifying the material terms and
conditions of such Superior Proposal and identifying the person
making such Superior Proposal; (ii) after the payment by the
Company to Parent of the Termination Fee in full and in
immediately available funds; and (iii) after the Company shall
have, and shall have caused its financial and legal advisors to,
negotiate in good faith with Parent to make such changes to the
terms and conditions of this Agreement as would enable the
Company to proceed with the transactions contemplated hereby.
(d) During the period from the date of this Agreement through the
Effective Time, the Company shall not terminate, amend, modify
or waive any provision of any confidentiality or standstill
agreement (other than any entered into in the ordinary course of
business not in connection with any possible Takeover Proposal)
to which it or any of its Subsidiaries is a party (other than
any between the Company and its Subsidiaries). During such
period, the Company shall enforce, to the fullest extent
permitted under applicable law, the provisions of any such
agreement, including, but not limited to, by obtaining
injunctions to prevent any breaches of such agreements and to
enforce specifically the terms and provisions thereof in any
court of the United States of America or of any state having
jurisdiction.
Section 6.2. Proxy Statement/Prospectus; Registration.
(a) As promptly as practicable after the execution of this
Agreement, Parent and the Company shall prepare and file with
the SEC the Proxy Statement, and Parent shall prepare and file
with the SEC the Registration Statement, in which the Proxy
Statement will be included. Parent and the Company shall use all
reasonable best efforts to cause the Registration Statement to
become effective as soon after such filing as reasonably
practicable. The Proxy Statement shall include the
recommendation of the Board of Directors of the Company to the
stockholders of the Company in favor of approval and adoption of
this Agreement and the Merger; provided, however, that such
Board of Directors shall not be required to make, and shall be
entitled to withdraw or modify, such recommendation if (i) the
Company has complied with Section 6.1 and (ii) in the reasonable
good faith judgment of such Board of Directors, on the basis of
the advice of outside corporate counsel of the Company, the
making of, or the failure to withdraw or modify, such
recommendation would be contrary to the fiduciary duties of such
Board of Directors to the Company's stockholders under
applicable law. The Board of Directors of the Company shall not
rescind its declaration that this Agreement and the Merger are
advisable unless, in any such case, each of the conditions set
forth in clauses (i) and (ii) immediately above is satisfied.
(b) Each of Parent and the Company shall make all necessary filings
with respect to the Merger under the Securities Act and the
Exchange Act and applicable state securities laws and the rules
and regulations thereunder, and shall use its reasonable best
efforts to obtain all permits and other authorizations required
under applicable state securities laws for the issuance of the
shares of Parent Common Stock pursuant to the Merger.
Section 6.3. Consents. Each of Parent and the Company shall use
reasonable best efforts to obtain all necessary consents, waivers
and approvals under its respective material agreements, contracts,
licenses or leases required for the consummation of the Merger and
the other transactions contemplated by this Agreement.
Section 6.4. Current Nasdaq Quotation. Parent shall continue the
quotation of Parent Common Stock, and the Company shall continue the
quotation of the Company Common Stock, on The Nasdaq National Market
during the term of this Agreement to the extent necessary so that
appraisal rights will not be available to stockholders of the
Company under Section 262 of the DGCL.
Section 6.5. Access to Information. Upon reasonable notice, the
Company shall (and shall cause each of its Subsidiaries to) afford
to the officers, employees, accountants, financial advisors, counsel
and other representatives of Parent, access, during normal business
hours during the period prior to the Effective Time, to all its
properties, books, contracts, commitments, Returns, and records and,
during such period, the Company shall (and shall cause each of its
Subsidiaries to) furnish promptly to Parent (i) a copy of each
report, schedule, registration statement and other document filed or
received by it during such period pursuant to the requirements of
federal securities laws and (ii) all other information concerning
its business, properties and personnel as Parent may reasonably
request; provided, however, that the Company's obligation to provide
information pursuant to this Section 6.5 shall be subject to Item
6.5 of the Company Letter. During the period prior to the Effective
Time, Parent shall provide the financial advisor of the Company
identified in Section 3.24 and the Chief Executive Officer of the
Company reasonable access to senior executive officers of Parent, as
appropriate, in connection with the transactions contemplated by
this Agreement. No information or knowledge obtained in any
investigation pursuant to this Section 6.5 shall affect or be deemed
to modify any representation or warranty contained in this Agreement
or the conditions to the obligations of the parties to consummate
the Merger. Unless otherwise required by law, Parent and the Company
will hold, and will use its reasonable best efforts to cause their
respective officers, employees, affiliates and representatives to
hold, any nonpublic information received from the other party to
this Agreement, any of their respective Subsidiaries or any of their
respective representatives (other than information already in the
possession of such party at the time of receipt of such information
from the other party) in confidence until such time as such
information becomes publicly available (otherwise than through the
wrongful act of any such person) and shall use its reasonable best
efforts to ensure that such officers, employees, affiliates and
representatives do not disclose such information to others without
the prior written consent of the Company or Parent, as the case may
be. In the event of termination of this Agreement for any reason,
Parent and the Company shall promptly return or destroy all
documents containing nonpublic information so obtained from the
Company, Parent or any of their Subsidiaries and any copies of such
documents.
Section 6.6. Stockholders Meeting. (a) The Company shall call and
hold the Stockholders Meeting as promptly as practicable after the
date hereof for the purpose of voting upon the adoption of this
Agreement and the approval of the Merger. Subject to Section 6.1,
the Company, through its Board of Directors, shall recommend that
the Company's stockholders vote in favor of the adoption of this
Agreement and the approval of the Merger (and shall not withdraw or
modify such recommendation) and shall otherwise use its best efforts
to solicit from its stockholders proxies in favor of such matters
and to obtain the requisite approval of the Company's stockholders;
provided, however, that such Board of Directors shall not be
required to make, and shall be entitled to withdraw or modify, such
recommendation if (i) the Company has complied with Section 6.1 and
(ii) in the reasonable good faith judgment of such Board of
Directors, on the basis of advice of outside corporate counsel of
the Company, the making of, or the failure to withdraw or modify,
such recommendation would be contrary to the fiduciary duties of
such Board of Directors to the Company's stockholders under
applicable law.
Section 6.7. Legal Conditions to Merger.
(a) Each of Parent and the Company shall take reasonable actions
necessary to comply promptly with all legal requirements which
may be imposed on such party with respect to the Merger (which
actions shall include, without limitation, furnishing all
information required under the HSR Act and in connection with
approvals of or filings with any other Governmental Entity) and
shall promptly cooperate with and, subject to applicable law,
furnish information to each other in connection with any such
requirements imposed upon either of them or any of their
Subsidiaries in connection with the Merger. Each of Parent and
the Company shall, and shall cause its Subsidiaries to take
reasonable actions necessary to obtain (and shall cooperate with
each other in obtaining) any consent, authorization, order or
approval of, or any exemption by, any Governmental Entity or
other third party, required to be obtained or made by the
Company, Parent or any of their Subsidiaries for any of the
conditions set forth in Article VII to be satisfied (any of the
foregoing, an "Approval") or the taking of any action required
in furtherance thereof or otherwise contemplated thereby or by
this Agreement.
(b) Notwithstanding anything to the contrary contained in this
Agreement, neither Parent nor the Company shall have any
obligation to oppose, challenge or appeal any suit, action or
proceeding by any Governmental Entity before any court or
governmental authority, agency or tribunal, domestic or foreign
or any order or ruling by any such body, (i) seeking to restrain
or prohibit or restraining or prohibiting the consummation of
the Merger or any of the other transactions contemplated by this
Agreement, (ii) seeking to prohibit or limit or prohibiting or
limiting the ownership, operation or control by the Company,
Parent or any of their respective Subsidiaries of any portion of
the business or assets of the Company, Parent or any of their
respective Subsidiaries, or (iii) seeking to compel or
compelling the Company, Parent or any of their respective
Subsidiaries to dispose of, grant rights in respect of, or hold
separate any portion of the business or assets of the Company,
Parent or any of their respective Subsidiaries. Further,
notwithstanding anything to the contrary contained in this
Agreement, Parent shall have no obligation to dispose of, grant
rights in respect of, or hold separate any portion of the
business or assets of the Company, Parent or any of their
respective Subsidiaries or to agree to any of the foregoing.
Neither the Company nor any of its Subsidiaries shall take any
of the actions described in preceding sentences of this Section
6.7(b) without the prior written consent of Parent.
Section 6.8. Public Disclosure. Except as otherwise required by
applicable law or the rules or regulations of any securities
exchange or market on which the securities of such party are listed
or traded, no party or any of its affiliates shall issue or cause
the publication of any press release or other public announcement or
disclosure with respect to the transactions contemplated by this
Agreement without the consent of each other party, and in any event,
each party agrees that it shall give each other party reasonable
opportunity to review and comment upon any such release or
announcement prior to publication of the same.
Section 6.9. Tax-Free Reorganization. Parent and the Company shall
each use its reasonable best efforts to cause the Merger to be
treated as a "reorganization" within the meaning of Section 368(a)
of the Code, and to enable its respective counsel to render the
opinions contemplated by Sections 7.2(e) and 7.3(d). Each party
shall make (to the extent it can truthfully do so), and shall use
all reasonable best efforts to cause those of its respective
stockholders that counsel to the parties shall reasonably request to
make, such representations and certifications as counsel to the
parties shall reasonably request to enable them to render such
opinions including, without limitation, the representations of
Parent contained in a certificate of Parent (the "Parent Tax
Certificate") substantially in the form of the Parent Tax
Certificate attached as Item 6.9 of the Parent Letter and
representations of the Company contained in a certificate of the
Company (the "Company Tax Certificate") substantially in the form of
the Company Tax Certificate attached as Item 6.9 of the Company
Letter.
Section 6.10. Pooling Accounting. Parent and the Company shall each
use its reasonable best efforts to cause the business combination to
be effected by the Merger to be accounted for as a pooling of
interests. The Company shall use its reasonable best efforts to
cause its affiliates not to take any action that would adversely
affect the ability of Parent to account for the business combination
to be effected by the Merger as a pooling of interests.
Section 6.11. Affiliate Letters. Between the date of this Agreement
and the Effective Time, the Company will use its reasonable best
efforts to cause each of the persons listed on Item 3.17 of the
Company Letter to execute and deliver to Parent an executed letter
agreement, substantially in the form of Exhibit A hereto (the
"Company Affiliate Letter"), and Parent will use its reasonable best
efforts to cause each of the persons listed on Item 4.15 of the
Parent Letter to execute and deliver to Parent an executed letter
agreement, substantially in the form of Exhibit B hereto (the
"Parent Affiliate Letter"). Between the date of this Agreement and
the Effective Time, the Company shall, if requested, promptly
provide Parent such information and documents as Parent shall
reasonably request for purposes of determining the affiliates of the
Company and upon the request of Parent use its reasonable best
efforts to cause any person who may in the reasonable judgment of
Parent be deemed an affiliate of the Company to execute and deliver
to Parent the Company Affiliate Letter. Parent shall be entitled to
place appropriate legends on the certificates evidencing any Parent
Common Stock to be received by affiliates of the Company pursuant to
this Agreement and to issue appropriate stop transfer instructions
to the transfer agent for the Parent Common Stock, consistent with
the terms of the Company Affiliate Letter.
Section 6.12. Nasdaq Quotation. Parent shall use its reasonable best
efforts to cause the shares of Parent Common Stock to be issued in
the Merger to be approved for quotation on The Nasdaq National
Market, subject to official notice of issuance, prior to the Closing
Date.
Section 6.13. Stock Plans and Options.
(a) The Company shall provide to each holder of an outstanding
Company Stock Option to purchase the Company Common Stock under
the Company Stock Plans the notice (if any) required pursuant to
such plans in connection with the Merger.
(b) From and after the Effective Time, each outstanding Company
Stock Option (including both vested and unvested Company Stock
Options) shall be assumed by Parent and shall pursuant to the
terms of such options, be deemed to constitute an option to
acquire, on the same terms and conditions as were applicable
under such Company Stock Option, the same number of shares of
Parent Common Stock as the holder of such Company Stock Option
would have been entitled to receive in the Merger pursuant to
this Agreement had such holder exercised such option in full
immediately prior to the Effective Time (rounded down to the
nearest whole number), at a price per share (rounded up to the
nearest whole cent) equal to the quotient of (i) the exercise
price per share of Company Common Stock pursuant to such Company
Stock Option divided by (ii) the Exchange Ratio. All other
terms of such Company Stock Options shall remain in effect.
(c) The Company shall take all actions necessary so that following
the Effective Time no holder of a Company Stock Option or any
participant in any Company Benefit Plan shall have any right
thereunder to acquire capital stock of the Company, Sub, or the
Surviving Corporation. The Company shall take all actions
necessary so that, as of the Effective Time, none of Sub, the
Company, the Surviving Corporation or any of their respective
Subsidiaries is or will be bound by any Company Stock Options,
other options, warrants, rights or agreements which would
entitle any person, other than Parent, Sub or its affiliates, to
own any capital stock of the Company, Sub, the Surviving
Corporation or any of their respective subsidiaries or to
receive any payment in respect thereof, except as otherwise
provided in Article I and Section 6.13(b).
Section 6.14. Indemnification. All rights to indemnification for acts
or omissions occurring prior to the Effective Time now existing in
favor of the current or former directors or officers of the Company
provided in the Company's Certificate of Incorporation and Bylaws
shall survive the Merger and shall continue in full force and effect
in accordance with their terms for a period of not less than six (6)
years from the Effective Time and to the extent the Surviving
Corporation fails to perform its obligations with respect thereto,
Parent shall perform such obligations. Parent and the Surviving
Corporation will cause to be maintained for a period of not less
than six (6) years from the Effective Time the Company's current
directors and officers insurance and indemnification policy (a copy
of which has been provided to Parent) to the extent that it provides
coverage for events occurring prior to the Effective Time for all
persons who are directors and officers of the Company on the date of
this Agreement; provided, however, that in no event shall the
Surviving Corporation be required to pay a premium in any one year
in excess of one hundred fifty thousand dollars ($150,000), and
provided, further, that if the annual premiums of such insurance
coverage exceed such amount or if such existing directors' and
officers' insurance and indemnification policy expires, is
terminated or canceled during such six-year period, the Surviving
Corporation shall be obligated to obtain a policy with the greatest
coverage available for a cost not exceeding one hundred fifty
thousand dollars ($150,000).
Section 6.15. Additional Agreements; Reasonable Efforts. Subject to
the terms and conditions of this Agreement, each of the parties
agrees to use all reasonable best efforts to take, or cause to be
taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations
to consummate and make effective the transactions contemplated by
this Agreement, subject to the appropriate vote of the stockholders
of the Company described in Section 6.6, including cooperating fully
with the other party, providing information and making all necessary
filings under the HSR Act.
Section 6.16. Termination of Certain Agreements. The Company shall
cause the Administrative Services Agreement (the "Services
Agreement"), dated as of May 7, 1997 between the Company and
Safeguard Scientifics, Inc. ("Safeguard"), to be terminated
effective as of the Effective Time (or such later time thereafter as
may be requested by Parent, not to exceed one hundred eighty (180)
days following the Effective Time) on terms that are reasonably
satisfactory to Parent, which terms shall include that the Company
shall have no continuing obligations under such agreement following
such termination and that Safeguard shall not be entitled to receive
any consideration in connection with such termination other than a
termination fee equal to the Services Fee (as defined in Section 3
of the Services Agreement) payable with respect to the period
commencing on the date of such termination and ending on December
31, 1998.
Section 6.17. Real Estate Transfer Taxes. Either the Company or the
Surviving Corporation shall pay all state or local real property
transfer, gains or similar Taxes, if any (collectively, the
"Transfer Taxes"), attributable to the transfer of the beneficial
ownership of the Company's and its Subsidiaries' real properties,
and any penalties or interest with respect thereto, payable in
connection with the consummation of the Merger. The Company shall
cooperate with Parent in the filing of any returns with respect to
the Transfer Taxes, including supplying in a timely manner a
complete list of all real property interests held by the Company and
its Subsidiaries and any information with respect to such properties
that is reasonably necessary to complete such returns. The portion
of the consideration allocable to the real properties of the Company
and its Subsidiaries shall be determined by Parent and the Company
in their reasonable discretion. The shareholders of the Company
(who are intended third-party beneficiaries of this Section 6.17)
shall be deemed to have agreed to be bound by the allocation
established pursuant to this Section 6.17 in the preparation of any
Return with respect to the Transfer Taxes.
ARTICLE VII
CONDITIONS TO MERGER
Section 7.1. Conditions to Each Party's Obligation to Effect the
Merger. The respective obligations of each party to this Agreement
to effect the Merger shall be subject to the satisfaction prior to
the Closing Date of the following conditions:
(a) Stockholder Approvals. This Agreement and the Merger shall have
been adopted and approved by the requisite vote of holders of
the Company Common Stock pursuant to the DGCL and the
Certificate of Incorporation of the Company.
(b) HSR Act. The waiting period applicable to the consummation of
the Merger under the HSR Act and any other material waiting
periods under applicable foreign laws (if any) shall have
expired or been terminated, and no action by the Department of
Justice or Federal Trade Commission or any foreign Governmental
Entity challenging or seeking to enjoin the consummation of the
Merger shall have been instituted and be pending.
(c) Registration Statement. The Registration Statement shall have
become effective under the Securities Act and shall not be the
subject of any stop order or proceedings seeking a stop order.
(d) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other
order issued by any court of competent jurisdiction or other
legal or regulatory restraint or prohibition shall have been
issued and be in effect (i) restraining or prohibiting the
consummation of the Merger or any of the transactions
contemplated hereby or (ii) prohibiting or limiting the
ownership, operation or control by the Company, Parent or any of
their respective Subsidiaries of any portion of the business or
assets of the Company, Parent or any of their respective
Subsidiaries, or compelling the Company, Parent or any of their
respective Subsidiaries to dispose of, grant rights in respect
of, or hold separate any portion of the business or assets of
the Company, Parent or any of their respective Subsidiaries; nor
shall any action have been taken or any statute, rule,
regulation or order have been enacted, entered or enforced or be
deemed applicable to the Merger which makes the consummation of
the Merger illegal or prevents or prohibits the Merger.
(e) Nasdaq. The shares of Parent Common Stock to be issued in the
Merger shall have been approved for quotation on The Nasdaq
National Market.
(f) Pooling. The Company shall have received the written opinion,
dated as of the Effective Time, of the Company Auditors that the
Company Auditors concur with management's conclusion that the
Company is eligible to be a party to a business combination
accounted for as a pooling of interests in accordance with GAAP
and applicable published rules and regulations of the SEC.
Parent shall have received the written opinion, dated as of the
Effective Time, of the Parent Auditors that the Parent Auditors
concur with management's conclusion that Parent is eligible to
be a party to a business combination accounted for as a pooling
of interests in accordance with GAAP and applicable published
rules and regulations of the SEC, and that the Merger will
qualify for pooling of interests accounting. Each of such
written opinions will be in form and substance reasonably
satisfactory to the Company and Parent.
Section 7.2. Additional Conditions to Obligations of Parent and Sub.
The obligations of Parent and Sub to effect the Merger are subject
to the satisfaction or waiver of each of the following conditions,
any of which may be waived in writing exclusively by Parent and Sub:
(a) Representations and Warranties. Each of the representations and
warranties of the Company set forth in this Agreement that is
qualified by materiality shall be true and correct at and as of
the Closing Date as if made at and as of the Closing Date and
each of such representations and warranties that is not so
qualified shall be true and correct in all material respects at
and as of the Closing Date as if made at and as of the Closing
Date, in each case except as contemplated by this Agreement, and
Parent shall have received a certificate signed on behalf of the
Company by the chief executive officer or chief financial
officer of the Company to such effect.
(b) Performance of Obligations. The Company shall have performed in
all material respects all obligations required to be performed
by it under this Agreement at or prior to the Closing Date, and
Parent shall have received a certificate signed on behalf of the
Company by the chief executive officer or chief financial
officer of the Company to such effect.
(c) Certain Agreements. A Company Affiliate Letter shall have been
executed and delivered to Parent by or on behalf of each
director and executive officer of the Company, and each such
Company Affiliate Letter shall be in full force and effect.
(d) Absence of the Material Adverse Effect on the Company. No
Material Adverse Effect with respect to the Company shall have
occurred, and no fact or circumstance shall exist which could
reasonably be expected to result in a Material Adverse Effect
with respect to the Company; provided, that if the event
resulting in such Material Adverse Effect was beyond the control
of the Company, such event shall not be deemed to have occurred
for purposes of this Section 7.2(d) unless Parent pays the
Company two million dollars ($2,000,000) in immediately
available funds.
(e) Tax Opinion. Parent shall have received an opinion of Sidley &
Austin, in form and substance reasonably satisfactory to Parent,
dated the Effective Time, substantially to the effect that, on
the basis of facts, representations and assumptions set forth in
such opinion that are consistent with the state of facts
existing as of the Effective Time, for federal income tax
purposes:
(i) the Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and the Company,
Sub and Parent will each be a party to such
reorganization within the meaning of Section 368(b) of
the Code;
(ii) no gain or loss will be recognized by Parent, Sub or the
Company as a result of the Merger;
(iii) no gain or loss will be recognized by the stockholders
of the Company upon the exchange of their Company Common
Stock solely for shares of Parent Common Stock pursuant
to the Merger, except with respect to cash, if any,
received in lieu of fractional shares of Parent Common
Stock;
(iv) the aggregate tax basis of the shares of Parent Common
Stock received solely in exchange for Company Common
Stock pursuant to the Merger (including fractional
shares of Parent Common Stock for which cash is
received) will be the same as the aggregate tax basis of
the Company Common Stock exchanged therefor;
(v) the holding period for shares of Parent Common Stock
received solely in exchange for Company Common Stock
pursuant to the Merger will include the holding period
of the Company Common Stock exchanged therefor, provided
such Company Common Stock was held as a capital asset by
the stockholder at the Effective Time; and
(vi) a stockholder of the Company who receives cash in lieu
of a fractional share of Parent Common Stock will
recognize gain or loss equal to the difference, if any,
between such stockholder's tax basis in such fractional
share (as described in clause (iv) above) and the amount
of cash received.
In rendering such opinion, counsel may rely upon representations
of Parent (including, without limitation, representations
contained in the Parent Tax Certificate), representations of the
Company (including, without limitation, representations
contained in the Company Tax Certificate) and representations by
others.
(f) No Litigation. There shall not be pending or threatened any
suit, action or proceeding by any Governmental Entity before any
court or governmental authority, agency or tribunal, domestic or
foreign, (i) seeking to restrain or prohibit the consummation of
the Merger or any of the other transactions contemplated by this
Agreement or seeking to obtain from the Company, Parent or Sub
any damages in connection therewith, (ii) seeking to prohibit or
limit the ownership, operation or control by the Company, Parent
or any of their respective Subsidiaries of any portion of the
business or assets of the Company, Parent or any of their
respective Subsidiaries, or to compel the Company, Parent or any
of their respective Subsidiaries to dispose of, grant rights in
respect of, or hold separate any portion of the business or
assets of the Company, Parent or any of their respective
Subsidiaries, or (iii) which otherwise is reasonably likely to
have a Material Adverse Effect on the Company.
Section 7.3. Additional Conditions to Obligations of the Company. The
obligation of the Company to effect the Merger is subject to the
satisfaction of each of the following conditions, any of which may
be waived, in writing, exclusively by the Company:
(a) Representations and Warranties. Each of the representations and
warranties of Parent and Sub set forth in this Agreement that is
qualified by materiality shall be true and correct at and as of
the Closing Date and each of such representations and warranties
that is not so qualified shall be true and correct in all
material respects at and as of the Closing Date as if made at
and as of the Closing Date, in each case except as contemplated
by this Agreement, and the Company shall have received a
certificate signed on behalf of Parent by the chief executive
officer or chief financial officer of Parent to such effect.
(b) Performance of Obligations. Parent and Sub shall have performed
in all material respects all obligations required to be
performed by them under this Agreement at or prior to the
Closing Date, and the Company shall have received a certificate
signed on behalf of Parent by the chief executive officer or
chief financial officer of Parent to such effect.
(c) Absence of the Material Adverse Effect on Parent. No Material
Adverse Effect with respect to Parent shall have occurred, and
no fact or circumstance shall exist which could reasonably be
expected to result in a Material Adverse Effect with respect to
Parent; provided, that, if the event resulting in such Material
Adverse Effect was beyond the control of Parent, such event
shall not be deemed to have occurred for purposes of this
Section 7.3(c) unless the Company pays the Parent two million
dollars ($2,000,000) in immediately available funds.
(d) Tax Opinion. The Company shall have received an opinion of
Xxxxxx, Xxxxx & Xxxxxxx LLP, in form and substance reasonably
satisfactory to the Company, dated the Effective Time,
substantially to the effect that, on the basis of facts,
representations and assumptions set forth in such opinion that
are consistent with the state of facts existing as of the
Effective Time, for federal income tax purposes:
(i) the Merger will constitute a "reorganization" within the
meaning of Section 368(a) of the Code, and the Company,
Sub and Parent will each be a party to such
reorganization within the meaning of Section 368(b) of
the Code.
(ii) no gain or loss will be recognized by Parent, Sub or the
Company as a result of the Merger;
(iii) no gain or loss will be recognized by the stockholders
of the Company upon the exchange of their Company Common
Stock solely for shares of Parent Common Stock pursuant
to the Merger, except with respect to cash, if any,
received in lieu of fractional shares of Parent Common
Stock;
(iv) the aggregate tax basis of the shares of Parent Common
Stock received solely in exchange for Company Common
Stock pursuant to the Merger (including fractional
shares of Parent Common Stock for which cash is
received) will be the same as the aggregate tax basis of
the Company Common Stock exchanged therefor;
(v) the holding period for shares of Parent Common Stock
received solely in exchange for Company Common Stock
pursuant to the Merger will include the holding period
of the Company Common Stock exchanged therefor, provided
such Company Common Stock was held as a capital asset by
the stockholder at the Effective Time; and
(vi) a stockholder of the Company who receives cash in lieu
of a fractional share of Parent Common Stock will
recognize gain or loss equal to the difference, if any,
between such stockholder's tax basis in such fractional
share (as described in clause (iv) above) and the amount
of cash received.
In rendering such opinion, counsel may rely upon representations
of Parent (including, without limitation, representations
contained in the Parent Tax Certificate), representations of the
Company (including, without limitation, representations
contained in the Company Tax Certificate) and representations by
others.
ARTICLE VIII
TERMINATION AND AMENDMENT
Section 8.1. Termination. This Agreement may be terminated at any
time prior to the Effective Time (with respect to Sections 8.1(b)
through 8.1(g), by written notice by the terminating party to the
other party), whether before or after approval of the matters
presented in connection with the Merger by the stockholders of the
Company:
(a) by mutual written consent of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall not have
been consummated by August 15, 1998 (provided, however, that the
right to terminate this Agreement under this Section 8.1(b)
shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of or
resulted in the failure of the Merger to occur on or before such
date); or
(c) by either Parent or the Company if a court of competent
jurisdiction or other Governmental Entity shall have issued a
final order, decree or ruling, or taken any other action, having
the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger, and all appeals with respect to such
order, decree, ruling or action have been exhausted or the time
for appeal of such order, decree, ruling or action shall have
expired (provided, however, that the right to terminate this
Agreement under this Section 8.1(c) shall not be available to
any party which has not complied with its obligations under
Section 6.7); or
(d) by either Parent or the Company if, at the Stockholders Meeting
(including any adjournment or postponement thereof), the
requisite vote of the Company stockholders in favor of this
Agreement and approval of the Merger shall not have been
obtained (provided, however, that the right to terminate this
Agreement under this Section 8.1(d) shall not be available to
the Company if it has not complied with its obligations under
Sections 6.1, 6.2 and 6.6, and no termination shall be effective
by the Company if it has not complied with its obligations under
Section 8.3, if applicable, of this Agreement); or
(e) by Parent if (i) the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified its
recommendation of this Agreement or the Merger to the Company's
stockholders in a manner adverse to Parent; (ii) an Alternative
Transaction (as defined in Section 8.3(f)) involving the Company
shall have taken place or the Board of Directors of the Company
or any committee thereof shall have recommended such an
Alternative Transaction (or a proposal or offer therefor) to the
stockholders of the Company or shall have publicly announced its
intention to recommend such an Alternative Transaction (or a
proposal or offer therefor) to the stockholders of the Company
or to engage in an Alternative Transaction or shall have failed
to recommend against such Takeover Proposal; or (iii) a tender
offer or exchange offer for any of the outstanding shares of the
Company Common Stock shall have been commenced or a registration
statement with respect thereto shall have been filed (other than
by Parent or an affiliate thereof) and the Board of Directors of
the Company or any committee thereof shall have (A) recommended
that the stockholders of the Company tender their shares in such
tender or exchange offer or (B) publicly announced its intention
to take no position with respect to such tender or exchange
offer; or
(f) by Parent if a breach of any representation, warranty, covenant
or agreement on the part of the Company set forth in this
Agreement shall have occurred which if uncured would cause any
condition set forth in Sections 7.2(a) or 7.2(b) not to be
satisfied, and such breach is incapable of being cured or, if
capable of being cured, shall not have been cured within twenty
(20) business days following receipt by the Company of written
notice of such breach from Parent; or
(g) by the Company if a breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this
Agreement shall have occurred which if uncured would cause any
conditions set forth in Section 7.3(a) or 7.3(b) not to be
satisfied, and such breach is incapable of being cured or, if
capable of being cured, shall not have been cured within twenty
(20) business days following receipt by Parent of written notice
of such breach from the Company; or
(h) by the Company in accordance with Section 6.1(c); provided that
in order for the termination of this Agreement pursuant to this
paragraph (h) to be deemed effective, and as a condition
thereto, the Company shall have complied with all provisions
contained in Section 6.1, including the notice provisions
therein, and with all the applicable requirements of Section
8.3, including the payment of the Termination Fee.
Section 8.2. Effect of Termination. In the event of any termination
of this Agreement pursuant to Section 8.1, there shall be no
liability or obligation on the part of Parent, the Company, Sub, or
any of their respective officers, directors, stockholders or
affiliates, except as set forth in Section 8.3. The foregoing
limitations shall not apply, and the remedies provided by Section
8.3 shall not be exclusive, to the extent that such termination
results from the willful breach by a party of any of its material
representations, warranties, covenants or agreements in this
Agreement. The provisions of Section 8.3 of this Agreement shall
remain in full force and effect and survive any termination of this
Agreement.
Section 8.3. Fees and Expenses.
(a) Except as set forth in this Section 8.3, all fees and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such
expenses, whether or not the Merger is consummated; provided,
however, that Parent and the Company shall share equally all
fees and expenses, other than attorneys' and accounting fees and
expenses, incurred in relation to the printing and filing of the
Proxy Statement (including any related preliminary materials)
and the Registration Statement (including financial statements
and exhibits) and any amendments or supplements thereto and the
fee(s) required to be paid by Parent in connection with the
filing(s) required under the HSR Act and applicable foreign laws
(if any) in connection with the transactions contemplated by
this Agreement; provided, further, that the amount of fees and
expenses to be paid by the Company pursuant to the immediately
preceding proviso shall not exceed two hundred thousand dollars
($200,000).
(b) If any Takeover Proposal is made between the date hereof and the
termination of this Agreement, and this Agreement is terminated
(i) by Parent pursuant to Section 8.1(f), or (ii) by Parent or
the Company pursuant to Section 8.1(d) as a result of the
failure to receive the requisite vote for adoption of this
Agreement and approval of the Merger by the stockholders of the
Company at the Stockholders Meeting, then if an Alternative
Transaction involving the Company shall take place or the
Company shall enter into any letter of intent, agreement in
principle, acquisition agreement or other similar agreement with
respect to an Alternative Transaction (each, an "Acquisition
Agreement") within twelve (12) months of such termination, then
the Company shall pay to Parent a termination fee in the amount
of twelve million dollars ($12,000,000) (the "Termination Fee")
simultaneously with the earlier to occur of such Alternative
Transaction or execution of such Acquisition Agreement.
(c) If this Agreement is terminated by Parent pursuant to Section
8.1(e), then the Company shall pay to Parent the Termination Fee
no later than one business day following such termination.
(d) If this Agreement is terminated by the Company pursuant to
Section 8.1(h), then the Company shall pay to Parent the
Termination Fee prior to, and as a condition to, effectiveness
of such termination.
(e) Any Termination Fee payable under this Section 8.3 shall be paid
in immediately available funds.
(f) As used in this Agreement, an "Alternative Transaction"
involving the Company means (i) a transaction or series of
transactions pursuant to which any person or group (as such term
is defined under the Exchange Act), other than Parent or Sub, or
any affiliate thereof (a "Third Party"), acquires (or would
acquire upon completion of such transaction or series of
transactions) more than thirty-five percent (35%) of the equity
securities or voting power of the Company or any of its
Subsidiaries, pursuant to a tender offer or exchange offer or
otherwise, (ii) a merger, consolidation, share exchange or other
business combination involving the Company or any of its
Subsidiaries pursuant to which any Third Party acquires
ownership (or would acquire ownership upon consummation of such
merger, consolidation, share exchange or other business
combination) of more than thirty-five percent (35%) of the
outstanding equity securities or voting power of the Company or
any of its Subsidiaries or of the entity surviving such merger
or business combination or resulting from such consolidation,
(iii) any other transaction or series of transactions pursuant
to which any Third Party acquires (or would acquire upon
completion of such transaction or series of transactions)
control of assets of the Company or any of its Subsidiaries
(including, for this purpose, outstanding equity securities of
Subsidiaries of such party) having a fair market value equal to
more than thirty-five percent (35%) of the fair market value of
all the consolidated assets of the Company immediately prior to
such transaction or series of transactions, or (iv) any
transaction or series of transactions pursuant to which any
Third Party acquires (or would acquire upon completion of such
transaction or series of transactions) control of the Board of
Directors of the Company or by which nominees of any Third Party
are (or would be) elected or appointed to a majority of the
seats on the Board of Directors of the Company.
Section 8.4. Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters
presented in connection with the Merger by the stockholders of the
Company, but, after any such approval, no amendment shall be made
which by law requires further approval by such stockholders without
such further approval. This Agreement may not be amended except by
an instrument in writing signed on behalf of each of the parties
hereto.
Section 8.5. Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally allowed,
(i) extend the time for the performance of any of the obligations or
other acts of the other parties hereto, (ii) waive any inaccuracies
in the representations and warranties contained herein or in any
document delivered pursuant hereto, and (iii) waive compliance with
any of the agreements or conditions contained herein. Any agreement
on the part of a party hereto to any such extension or waiver shall
be valid only if set forth in a written instrument signed on behalf
of such party.
ARTICLE IX
MISCELLANEOUS
Section 9.1. Nonsurvival of Representations, Warranties and
Agreements. None of the representations, warranties and agreements
in this Agreement or in any instrument delivered pursuant to this
Agreement shall survive the Closing and the Effective Time, except
for the agreements contained in Section 6.14 (Indemnification), this
Article IX, the Company Affiliate Letters delivered pursuant to
Sections 3.17 and 6.11, the Parent Tax Certificate, the Company Tax
Certificate and any other agreement contemplated by this Agreement
which, by its terms, does not terminate until a later date.
Section 9.2. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered
personally, telecopied (which is confirmed) or mailed by registered
or certified mail (return receipt requested) to the parties at the
following addresses (or at such other address for a party as shall
be specified by like notice):
(a) if to Parent or Sub, to:
-----------------------
Tellabs, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
with a copy to:
--------------
Sidley & Austin
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxx and
Xxxx X. Xxxxx
Facsimile No.: (000) 000-0000
(b) if to the Company, to:
---------------------
Coherent Communications Systems Corporation
00000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. XxXxxxxx
Chief Executive Officer
Facsimile No.: (000) 000-0000
with a copy to:
--------------
Xxxxxx Xxxxx & Bockius LLP
0000 Xxx Xxxxx Xxxxxx
Xxxxxxxxxxxx, XX 00000
Attention: N. Xxxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
Section 9.3. Interpretation. When a reference is made in this
Agreement to an Article or a Section, such reference shall be to an
Article or a Section of this Agreement unless otherwise indicated.
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. Whenever the words
"include," "includes" or "including" are used in this Agreement they
shall be deemed to be followed by the words "without limitation."
Section 9.4. Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same
agreement and shall become effective when two or more counterparts
have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
Section 9.5. Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents and the instruments referred to
herein) and the Confidentiality Agreement (other than Section 7
thereof) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof. Except as
provided in Section 6.14 and Section 6.17, this Agreement is not
intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
Section 9.6. Governing Law. This Agreement shall be governed and
construed, and any controversy arising out of or otherwise relating
to the Agreement shall be determined, in accordance with the
internal laws of the State of Delaware without regard to conflicts
of law rules thereof. Each party hereto consents and submits to the
exclusive jurisdiction of the courts of the State of Delaware and
the courts of the United States located in such state for the
adjudication of any action, suit, proceeding, claim or dispute
arising out of or otherwise relating to this Agreement.
Section 9.7. Assignment. Neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any
of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties, and any
attempted assignment thereof without such consent shall be null and
void. Subject to the preceding sentence, this Agreement will be
binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.
IN WITNESS WHEREOF, Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly
authorized as of the date first written above.
TELLABS, INC.
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: President and Chief Executive Officer
CARDINAL MERGER CO.
By: /s/ Xxxxxxx X. Xxxxx
Name: Xxxxxxx X. Xxxxx
Title: President
COHERENT COMMUNICATIONS SYSTEMS CORPORATION
By: /s/ Xxxxxx X. XxXxxxxx
Name: Xxxxxx X. XxXxxxxx
Title: Chief Executive Officer
EXHIBIT A
---------
FORM OF AFFILIATE LETTER FOR AFFILIATES OF
COHERENT COMMUNICATIONS SYSTEMS CORPORATION
-------------------------------------------
February __, 1998
Tellabs, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of Coherent Communications Systems Corporation, a
Delaware corporation (the "Company"), as the term "affiliate" is (i)
defined for purposes of paragraphs (c) and (d) of Rule 145 of the rules
and regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933,
as amended (the "Act"), and/or (ii) used in and for purposes of
Accounting Series Releases 130 and 135, as amended, of the Commission.
Pursuant to the terms of the Agreement and Plan of Merger dated as of
February 16, 1998 (the "Merger Agreement") among Tellabs, Inc., a
Delaware corporation ("Parent"), Cardinal Merger Co., a Delaware
corporation and a wholly owned subsidiary of Parent ("Sub"), and the
Company, Sub will be merged with and into the Company (the "Merger"),
with the Company surviving as a wholly-owned subsidiary of Parent.
Capitalized terms used in this letter without definition shall have the
meanings assigned to them in the Merger Agreement.
As a result of the Merger, I may receive shares of common stock, par
value $.01 per share, of Parent (the "Parent Shares") in exchange for
shares of the Company's Common Stock, par value $.01 per share (the
"Company Shares") owned by me or purchasable upon exercise of stock
options.
1. I represent and warrant to, and covenant with, Parent as follows:
A. I shall not make any sale, transfer or other disposition of any
Parent Shares in violation of the Act or the Rules and
Regulations.
B. I have carefully read this letter and the Merger Agreement and
have discussed the requirements of such documents and other
applicable limitations upon my ability to sell, transfer or
otherwise dispose of the Parent Shares, to the extent I felt
necessary, with my counsel.
C. I have been advised that the issuance of the Parent Shares to me
pursuant to the Merger has been or will be registered with the
Commission under the Act on a Registration Statement on Form
S-4. However, I have also been advised that, because at the time
the Merger is submitted for a vote of the stockholders of the
Company, (a) I may be deemed to be an "affiliate" of the Company
and (b) the sale, transfer or other distribution by me of the
Parent Shares has not been registered under the Act, I may not
sell, transfer or otherwise dispose of the Parent Shares issued
to me in the Merger unless (i) such sale, transfer or other
disposition is made in conformity with the volume limitations
and other conditions of Rule 145 promulgated by the Commission
under the Act, (ii) such sale, transfer or other disposition has
been registered under the Act or (iii) in the opinion of counsel
reasonably acceptable to Parent, such sale, transfer or other
disposition is otherwise exempt from registration under the Act.
D. I understand that Parent is under no obligation to register the
sale, transfer or other disposition of any Parent Shares by me
or on my behalf under the Act or to take any other action
necessary in order to make compliance with an exemption from
such registration available.
E. I will not, during the 30 days prior to the Effective Time,
sell, transfer or otherwise dispose of or reduce my risk (as
contemplated by SEC Accounting Series Release No. 135) with
respect to the Company Shares or shares of the capital stock of
Parent that I may hold and, furthermore, that I will not sell,
transfer or otherwise dispose of or reduce my risk (as
contemplated by SEC Accounting Series Release No. 135) with
respect to the Parent Shares received by me in the Merger or any
other shares of the capital stock of Parent until after such
time as results covering at least 30 days of combined operations
of the Company and Parent have been published by Parent, in the
form of a quarterly earnings report, an effective registration
statement filed with the Commission, a report to the Commission
on Form 10-K, 10-Q, or 8-K, or any other public filing or
announcement which includes the combined results of operations.
Notwithstanding the foregoing, I understand that during the
aforementioned period, subject to providing written notice to
and obtaining the consent of Parent, which such consent shall
not be unreasonably withheld, I will not be prohibited from de
minimis dispositions and charitable contributions or bona fide
gifts of the Parent Shares which, in each case, will not
disqualify the accounting for the Merger as a pooling of
interests.
2. Execution of this letter should not be considered an admission on my
part that I am an "affiliate" of the Company as described in the
first paragraph of this letter, nor as a waiver of any rights I may
have to object to any claim that I am such an affiliate on or after
the date of this letter.
3. I understand that the Parent may cause to be placed on the
certificates of the Parent Shares issued to me, or any substitutions
therefor, a legend stating in substance:
"The shares represented by this certificate were issued pursuant to
a business combination which is being accounted for as a pooling of
interests in a transaction to which Rule 145, promulgated under the
Securities Act of 1933, as amended, applies. The shares have been
acquired by the holder not with a view to, or for resale in
connection with, any distribution thereof within the meaning of the
Securities Act of 1933, as amended. The shares may not be sold,
pledged or otherwise transferred nor may any owner reduce the
owner's risk relative thereto in any other way (i) until such time
as Tellabs, Inc. shall have published financial results covering at
least 30 days of combined operations after [Closing Date] and (ii)
except in accordance with an exemption from the registration
requirement of the Securities Act of 1933, as amended."
Very truly yours,
Name: -----------------------------------
AGREED AND ACCEPTED THIS ___ DAY
OF FEBRUARY, 1998, BY
TELLABS, INC.
By: -------------------------------------
Name: -----------------------------------
Title: ----------------------------------
EXHIBIT B
---------
FORM OF
AFFILIATE LETTER FOR AFFILIATES OF
TELLABS, INC.
------------
February __, 1998
Tellabs, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be deemed
to be an "affiliate" of Tellabs, Inc., a Delaware corporation
("Parent"), as the term "affiliate" is used in and for purposes of
Accounting Series Releases 130 and 135, as amended, of the Securities
and Exchange Commission ("Commission"). Pursuant to the terms of the
Agreement and Plan of Merger dated as of February 16, 1998 (the "Merger
Agreement") among Parent, Cardinal Merger Co., a Delaware corporation
and a wholly-owned subsidiary of Parent ("Sub"), and Coherent
Communications Systems Corporation, a Delaware corporation (the
"Company"), Sub will be merged (the "Merger") with and into the Company,
with the Company surviving as a wholly-owned subsidiary of Parent.
Capitalized terms not defined herein have the meaning specified in the
Merger Agreement.
I will not, during the 30 days prior to the Effective Time, sell,
transfer or otherwise dispose of or reduce my risk (as contemplated by
SEC Accounting Series Release No. 135) with respect to the shares that I
may hold of the capital stock of Parent, including any purchasable upon
exercise of stock options ("Parent Shares"). Furthermore, I will not
sell, transfer or otherwise dispose of or reduce my risk (as
contemplated by SEC Accounting Series Release No. 135) with respect to
any shares of the capital stock of Parent until after such time as
results covering at least 30 days of combined operations of the Company
and Parent have been published by Parent, in the form of a quarterly
earnings report, an effective registration statement filed with the
Commission, a report to the Commission on Form 10-K, 10-Q, or 8-K, or
any other public filing or announcement which includes the combined
results of operations. Notwithstanding the foregoing, I understand that
during the aforementioned period, subject to providing written notice to
and obtaining the consent of Parent, which such consent shall not be
unreasonably withheld, I will not be prohibited from de minimis
dispositions and charitable contributions or bona fide gifts of the
Parent Shares which, in each case, will not disqualify the accounting
for the Merger as a pooling of interests.
Very truly yours,
Name: -----------------------------------
AGREED AND ACCEPTED THIS ___ DAY
OF FEBRUARY, 1998, BY
TELLABS, INC.
By: -------------------------------------
Name: -----------------------------------
Title: ----------------------------------
