AGREEMENT AND PLAN OF MERGER
BY AND AMONG
XXX XXXXXXXXXXX,
EMERALD MERGER CORPORATION
and
DATA GENERAL CORPORATION
Dated as of August 6, 1999
TABLE OF CONTENTS
ARTICLE I THE MERGER............................................... 2
SECTION 1.1 The Merger............................................... 2
SECTION 1.2 Consummation of the Merger............................... 2
SECTION 1.3 Effects of the Merger.................................... 2
SECTION 1.4 Certificate of Incorporation of the Surviving Corporation 2
SECTION 1.5 By-Laws of the Surviving Corporation..................... 2
SECTION 1.6 Directors and Officers of the Surviving Corporation...... 2
SECTION 1.7 Closing.................................................. 3
ARTICLE II CONVERSION AND EXCHANGE OF SECURITIES.................... 3
SECTION 2.1 Conversion of Capital Stock.............................. 3
SECTION 2.2 Exchange of Certificates................................. 5
SECTION 2.3 Material Adverse Effect.................................. 9
ARTICLE III REPRESENTATIONS AND WARRANTIES
OF THE COMPANY........................................... 10
SECTION 3.1 Organization and Qualification; Subsidiaries............. 10
SECTION 3.2 Certificate of Incorporation and By-Laws................. 11
SECTION 3.3 Capitalization........................................... 11
SECTION 3.4 Authority Relative to this Agreement..................... 12
SECTION 3.5 Section 203 of the DGCL Not Applicable................... 13
SECTION 3.6 Agreements, Contracts and Commitments.................... 13
SECTION 3.7 No Conflict; Required Filings and Consents............... 14
SECTION 3.8 Compliance; Permits...................................... 15
SECTION 3.9 SEC Filings; Financial Statements........................ 15
SECTION 3.10 Absence of Certain Changes or Events..................... 16
SECTION 3.11 No Undisclosed Liabilities............................... 17
SECTION 3.12 Absence of Litigation.................................... 17
SECTION 3.13 Employee Benefit Plans, Options and
Employment Agreements.................................... 17
SECTION 3.14 Labor Matters............................................ 20
SECTION 3.15 Properties; Encumbrances................................. 20
SECTION 3.16 Taxes.................................................... 20
SECTION 3.17 Environmental Matters.................................... 22
SECTION 3.18 Intellectual Property.................................... 24
SECTION 3.19 Insurance................................................ 25
SECTION 3.20 Restrictions on Business Activities...................... 25
SECTION 3.21 Registration Statement; Proxy Statement/Prospectus....... 26
SECTION 3.22 Interested Party Transactions............................ 26
SECTION 3.23 Change in Control Payments............................... 26
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SECTION 3.24 Year 2000 Compliance..................................... 27
SECTION 3.25 Pooling; Tax Matters..................................... 29
SECTION 3.26 Rights Agreement......................................... 29
SECTION 3.27 No Existing Discussions.................................. 29
SECTION 3.28 Opinion of Financial Advisor............................. 29
SECTION 3.29 Brokers.................................................. 29
SECTION 3.30 Affiliates............................................... 30
ARTICLE IV REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB................................. 30
SECTION 4.1 Organization and Qualification........................... 30
SECTION 4.2 Capitalization........................................... 30
SECTION 4.3 Authority Relative to this Agreement..................... 31
SECTION 4.4 No Conflict, Required Filings and Consents............... 31
SECTION 4.5 SEC Filings; Financial Statements........................ 32
SECTION 4.6 Absence of Certain Changes or Events..................... 33
SECTION 4.7 Absence of Litigation.................................... 33
SECTION 4.8 Registration Statement; Proxy Statement/Prospectus....... 33
SECTION 4.9 Brokers.................................................. 34
SECTION 4.10 Ownership of Merger Sub; No Prior Activities............. 34
SECTION 4.11 Pooling; Tax Matters..................................... 34
ARTICLE V CONDUCT OF BUSINESS...................................... 34
SECTION 5.1 Conduct of Business by the Company
Pending the Merger....................................... 34
SECTION 5.2 Advice of Changes........................................ 37
SECTION 5.3 Cooperation.............................................. 38
SECTION 5.4 Company Stock Purchase Plan.............................. 38
ARTICLE VI ADDITIONAL AGREEMENTS.................................... 38
SECTION 6.1 Access to Information; Confidentiality................... 38
SECTION 6.2 No Solicitation.......................................... 38
SECTION 6.3 Proxy Statement/Prospectus; Registration Statement....... 41
SECTION 6.4 Company Stockholders Meeting............................. 42
SECTION 6.5 Legal Conditions to Merger............................... 42
SECTION 6.6 Agreements with Respect to Affiliates.................... 42
SECTION 6.7 Tax-Free Reorganization.................................. 43
SECTION 6.8 Pooling Accounting....................................... 43
SECTION 6.9 Letters of Accountants................................... 43
SECTION 6.10 Public Announcements..................................... 44
SECTION 6.11 Listing of Parent Shares................................. 44
SECTION 6.12 Employee Benefits; 401(k) Plan........................... 44
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SECTION 6.13 Stock Plans.............................................. 45
SECTION 6.14 Consents................................................. 46
SECTION 6.15 Rights Plan.............................................. 46
SECTION 6.16 Indemnification and Insurance............................ 46
SECTION 6.17 Company 6% Convertible Subordinated Notes................ 47
SECTION 6.18 Additional Agreements; Reasonable Best Efforts........... 47
ARTICLE VII CONDITIONS TO THE MERGER................................. 47
SECTION 7.1 Conditions to Obligation of Each
Party to Effect the Merger............................... 47
SECTION 7.2 Additional Conditions to Obligations
of Parent and Merger Sub................................. 49
SECTION 7.3 Additional Conditions to Obligation of the Company....... 50
ARTICLE VIII TERMINATION.............................................. 51
SECTION 8.1 Termination.............................................. 51
SECTION 8.2 Effect of Termination.................................... 52
SECTION 8.3 Fees and Expenses........................................ 52
ARTICLE IX GENERAL PROVISIONS....................................... 54
SECTION 9.1 Nonsurvival of Representations; Warranties
and Agreements........................................... 54
SECTION 9.2 Notices.................................................. 54
SECTION 9.3 Certain Definitions...................................... 55
SECTION 9.4 Amendment................................................ 56
SECTION 9.5 Extension; Waiver........................................ 56
SECTION 9.6 Headings................................................. 57
SECTION 9.7 Severability............................................. 57
SECTION 9.8 Entire Agreement, No Third Party Beneficiaries........... 57
SECTION 9.9 Assignment............................................... 57
SECTION 9.10 Interpretation........................................... 57
SECTION 9.11 Failure or Indulgence Not Waiver; Remedies
Cumulative............................................... 57
SECTION 9.12 Governing Law............................................ 58
SECTION 9.13 Counterparts............................................. 58
List of Exhibits
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Exhibit A Form of Stock Option Agreement
Exhibit B Form of Affiliate Agreement
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of August 6, 1999 (this
"Agreement"), by and among XXX Xxxxxxxxxxx, a Massachusetts corporation
("Parent"), Emerald Merger Corporation, a Delaware corporation and a wholly
owned subsidiary of Parent ("Merger Sub"), and Data General Corporation, a
Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have each determined that it is advisable and in the best interests
of their respective stockholders that Parent acquire the Company pursuant to the
terms and conditions of this Agreement, and, in furtherance of such acquisition,
such Boards of Directors have approved the merger of Merger Sub with and into
the Company (the "Merger") in accordance with the terms of this Agreement and
the applicable provisions of the General Corporation Law of the State of
Delaware ("DGCL");
WHEREAS, concurrently with the execution and delivery of this
Agreement and as a condition and inducement to Parent's willingness to enter
into this Agreement, Parent and the Company have entered into a Stock Option
Agreement, dated as of the date hereof, the form of which is attached as Exhibit
A hereto (the "Stock Option Agreement"), pursuant to which the Company has
granted Parent an option to purchase shares of common stock, par value $.01 per
share, of the Company ("Company Common Stock");
WHEREAS, for United States 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"), and that
this Agreement shall be, and is hereby, adopted as a plan of reorganization for
purposes of Section 368(a) of the Code; and
WHEREAS, for accounting purposes, it is intended that the Merger shall
be accounted for as a pooling of interests;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth below and in the
Stock Option Agreement, the parties hereto agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Subject to the terms and conditions of this
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Agreement, at the Effective Time (as defined in Section 1.2), Merger Sub shall
merge with and into the Company in accordance with the DGCL, the separate
corporate existence of Merger Sub shall cease, and the Company shall continue as
the surviving corporation in the Merger. The Company, in its capacity as the
corporation surviving the Merger, is hereinafter sometimes referred to as the
"Surviving Corporation."
SECTION 1.2 Consummation of the Merger. In order to effectuate the
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Merger, on the Closing Date (as defined in Section 1.7), the Company shall cause
a certificate of merger (the "Certificate of Merger") to be filed with the
Secretary of State of the State of Delaware, in such form as required by, and
executed in accordance with, the DGCL. The Merger shall be effective as of the
time of filing of the Certificate of Merger (the "Effective Time").
SECTION 1.3 Effects of the Merger. The Merger shall have the effects
---------------------
provided for in Section 259 of the DGCL.
SECTION 1.4 Certificate of Incorporation of the Surviving Corporation. At
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and after the Effective Time, the Certificate of Incorporation of Merger Sub
(the "Merger Sub Charter"), as in effect immediately prior to the Effective
Time, shall be the Certificate of Incorporation of the Surviving Corporation,
until amended in accordance with the DGCL, except that the name of the Surviving
Corporation shall be Data General Corporation.
SECTION 1.5 By-Laws of the Surviving Corporation. At and after the
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Effective Time, the By-laws of Merger Sub (the "Merger Sub By-Laws"), as in
effect immediately prior to the Effective Time, shall be the By-laws of the
Surviving Corporation, until amended in accordance with the DGCL.
SECTION 1.6 Directors and Officers of the Surviving Corporation.
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(a) The directors of Merger Sub immediately prior to the Effective
Time shall be the initial directors of the Surviving Corporation and shall
hold office from the Effective Time until their respective successors are
duly elected or appointed and qualified in the manner provided in the
Certificate of Incorporation or By-laws of the Surviving Corporation or as
otherwise provided by law.
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(b) The officers of the Company immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation and shall
hold office from the Effective Time until their respective successors are
duly elected or appointed and qualified in the manner provided in the
Certificate of Incorporation or By-laws of the Surviving Corporation or as
otherwise provided by law.
SECTION 1.7 Closing. Subject to the provisions of this Agreement, the
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closing of the Merger (the "Closing") shall take place at 10:00 a.m., E.S.T., at
the offices of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, One Beacon Street,
Boston, Massachusetts on a date to be specified by Parent and the Company which
shall be no later than the second business day after satisfaction or waiver of
each of the conditions set forth in Article VII or on such other date and such
other time and place as Parent and the Company shall agree. The date on which
the Closing shall occur is referred to herein as the "Closing Date."
ARTICLE II
CONVERSION AND EXCHANGE OF SECURITIES
SECTION 2.1 Conversion of Capital Stock. At the Effective Time, by
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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 Merger Sub:
(a) Company Common Stock. Subject to this Article II, each share of
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Company Common Stock issued and outstanding immediately prior to the
Effective Time (other than shares to be cancelled in accordance with
Section 2.1(b)) shall be converted into the right to receive .3262 (as such
ratio is adjusted pursuant to Section 2.1(e), the "Exchange Ratio") of a
share of Parent Common Stock, payable upon the surrender of the
Certificates (as defined in Section 2.2(b)). All such shares of Company
Common Stock, when so converted, shall no longer be outstanding and shall
automatically be cancelled 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 pursuant to this Section 2.1(a), any dividends or other
distributions payable pursuant to Section 2.2(c) and any cash in lieu of
fractional shares payable pursuant to Section 2.2(d), all to be issued or
paid in consideration therefor upon the surrender of such Certificates in
accordance with Section 2.2, without interest (collectively, the "Merger
Consideration"). Notwithstanding the foregoing, the Exchange Ratio shall
be adjusted to reflect fully the effect of any stock
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split, reverse split, reclassification, stock dividend (including any
dividend or distribution of securities convertible into Parent Common
Stock), reorganization, recapitalization or other like change with respect
to Parent Common Stock or Company Common Stock occurring after the date
hereof and prior to the Effective Time.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. All shares
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of Company Common Stock that are (i) held by the Company as treasury shares
or (ii) owned by Parent or any wholly owned Subsidiary (as defined below)
of Parent, shall be cancelled and retired and cease to exist, and no
securities of Parent or other consideration shall be delivered in exchange
therefor. As used in this Agreement, the word "Subsidiary" means, with
respect to any party, any corporation or other organization, whether
incorporated or unincorporated, of which (A) such party or any other
Subsidiary of such party is a general partner (excluding partnerships, the
general partnership interests of which held by such party or any Subsidiary
of such party do not have a majority of the voting interest in such
partnership), (B) such party or any Subsidiary of such party owns in excess
of a majority of the outstanding equity or voting securities or (C) at
least a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization is
directly or indirectly owned or controlled by such party or by any one or
more of its Subsidiaries.
(c) Capital Stock of Merger Sub. Each share of common stock, par
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value $.01 per share, of Merger Sub ("Merger Sub Common Stock") issued and
outstanding immediately prior to the Effective Time shall be converted into
and become one fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation.
(d) Stock Options. Outstanding options to purchase shares of Company
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Common Stock shall be treated in the manner set forth in Section 6.13
hereof.
(e) Adjustments to Exchange Ratio. In the event the average of the
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mean high and low per share trading prices on the New York Stock Exchange
(the "NYSE") of shares of Parent Common Stock (as reported for the NYSE
Composite Transactions in the Wall Street Journal) for each of the 20
consecutive trading days ending on the fifth day prior to the Company
Stockholders Meeting (as defined in Section 3.21) to consider approval and
adoption of this Agreement and the Merger (the "Pre-Closing Average Price")
is greater than $66.0625, then the Exchange Ratio shall be adjusted such
that each share of Company Common Stock is converted into the right to
receive a number of shares of Parent Common Stock equal to the quotient
obtained
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by dividing (A) $21.55 by (B) the Pre-Closing Average Price.
SECTION 2.2 Exchange of Certificates.
-------------------------
(a) Exchange Agent. Prior to the Closing Date, Parent shall
designate a bank or trust company to act as Exchange Agent hereunder (the
"Exchange Agent"). As soon as practicable after the Effective Time, Parent
shall deposit with or for the account of the Exchange Agent stock
certificates representing the number of shares of Parent Common Stock
issuable pursuant to Section 2.1(a) in exchange for outstanding shares of
Company Common Stock, which shares of Parent Common Stock shall be deemed
to have been issued at the Effective Time. From time to time, Parent shall
make available to the Exchange Agent sufficient cash to make all cash
payments in lieu of fractional shares pursuant to Section 2.2(d). (b)
Exchange Procedures. As soon as practicable after the Effective Time,
Parent will instruct the Exchange Agent to 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 (the "Certificates")
that were converted pursuant to Section 2.1(a) 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
Certificates shall pass, only upon proper delivery of the Certificates to
the Exchange Agent and shall be in such form and have such other provisions
as Parent may reasonably specify that are not inconsistent with the terms
of this Agreement), and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for the Merger Consideration.
Upon surrender of a Certificate for cancellation to the Exchange Agent
together with such letter of transmittal, duly executed, and such other
customary documents as may be required pursuant to such instructions, the
holder of such Certificate shall be entitled to receive in exchange
therefor (A) certificates evidencing that number of whole shares of Parent
Common Stock which such holder has the right to receive in accordance with
Section 2.1(a) in respect of the shares of Company Common Stock formerly
evidenced by such Certificate, (B) any dividends or other distributions to
which such holder is entitled pursuant to Section 2.2(c), and (C) any cash
in lieu of any fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 2.2(d), after giving effect to any
tax withholdings, and the Certificate so surrendered shall forthwith be
canceled. In the event of a transfer of ownership of shares of Company
Common Stock which is not registered in the transfer records of the Company
as of the Effective Time, a certificate representing the proper number of
shares of Parent Common Stock may be issued to a transferee if the
Certificate evidencing such Company Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and
effect such transfer pursuant to this Section 2.2(b) and
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by evidence that any applicable stock transfer taxes have been paid. Until
so surrendered, each outstanding Certificate that, prior to the Effective
Time, represented shares of Company Common Stock will be deemed from and
after the Effective Time, for all corporate purposes, to represent only the
right to receive upon surrender a certificate representing shares of Parent
Common Stock, any dividends or other distributions payable pursuant to
Section 2.2(c) and any cash in lieu of any fractional shares of Parent
Common Stock payable pursuant to Section 2.2(d).
(c) Distributions With Respect to Unexchanged Parent Shares. No
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dividends or other distributions with respect to shares of Parent Common
Stock for which the record date is after the Effective Time shall be paid
to the holder of any unsurrendered Certificate with respect to the shares
of Parent Common Stock they are entitled to receive until the holder of
such Certificate surrenders such Certificate. Subject to applicable law,
following surrender of any such 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, at the time of
such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore paid with respect to such
whole shares of Parent Common Stock. Promptly following the date which is
six months after the Effective Time, the Exchange Agent shall deliver to
the Surviving Corporation all cash, certificates and other documents in its
possession relating to the transactions described in this Agreement, and
any holders of Company Common Stock who have not theretofore complied with
this Article II shall look thereafter only to the Surviving Corporation for
the shares of Parent Common Stock, any dividends or distributions thereon,
and any cash in lieu of fractional shares thereof to which they are
entitled pursuant to this Article II.
(d) No Fractional Shares.
--------------------
(i) No certificates or scrip representing fractional shares of
Parent Common Stock shall be issued upon the surrender for exchange of
certificates formerly representing shares of Company Common Stock
pursuant to this Article II; no dividend, stock split or other change
in the capital structure of Acquiror shall relate to any fractional
security; and such fractional interests shall not entitle the owner
thereof to vote or to any rights of a security holder.
(ii) As promptly as practicable following the Effective Time, the
Exchange Agent will determine the excess of (A) the number of whole
shares of Parent Common Stock delivered to the Exchange Agent by
Parent pursuant to Section 2.2(a) over (B) the aggre-
6
gate number of whole shares of Parent Common Stock to be distributed
to holders of Company Common Stock pursuant to Section 2.2(b) (such
excess being herein called the "Excess Shares"). Following the
Effective Time, the Exchange Agent will, on behalf of former
stockholders of the Company, sell the Excess Shares at then-prevailing
prices on the New York Stock Exchange, Inc. (the "NYSE"), all in the
manner provided in Section 2.2(d)(iii).
(iii) The sale of the Excess Shares by the Exchange Agent will be
executed on the NYSE through one or more member firms of the NYSE and
will be executed in round lots to the extent practicable. The
Exchange Agent will use reasonable efforts to complete the sale of the
Excess Shares as promptly following the Effective Time as, in the
Exchange Agent's sole judgment, is practicable consistent with
obtaining the best execution of such sales in light of prevailing
market conditions. Until the net proceeds of such sale or sales have
been distributed to the holders of Company Common Stock, the Exchange
Agent will hold such proceeds in trust for the former holders of
Company Common Stock (the "Common Shares Trust"). The Surviving
Corporation will pay all commissions, transfer taxes and other out-of-
pocket transaction costs, including the expenses and compensation of
the Exchange Agent incurred in connection with such sale of the Excess
Shares. The Exchange Agent will determine the portion of the Common
Shares Trust to which each former holder of Company Common Stock is
entitled, if any, by multiplying the amount of the aggregate net
proceeds comprising the Common Shares Trust by a fraction, the
numerator of which is the amount of the fractional share interest to
which such former holder of Company Common Stock is entitled (after
taking into account all shares of Company Common Stock held at the
Effective Time by such holder) and the denominator of which is the
aggregate amount of fractional share interests to which all holders of
Company Common Stock are entitled. For purposes of this Section
2.2(d), shares of Company Common Stock of any former holder
represented by two or more certificates may be aggregated and in no
event shall any holder be paid an amount of cash in respect of more
than one share of Parent Common Stock.
(iv) As soon as practicable after the determination of the amount
of cash, if any, to be paid to the former holders of Company Common
Stock with respect to any fractional share interests, the Exchange
Agent will hold such cash amounts for the benefit of, and pay such
cash amounts to, such former holders of Company Common Stock subject
to and in accordance with the terms of Section 2.2(b).
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(e) Transfers of Ownership. If any certificate for shares of Parent
----------------------
Common Stock is to be issued in a name other than that in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition to the issuance thereof that the Certificate so surrendered will
be properly endorsed and otherwise in proper form for transfer and that the
person requesting such exchange will have paid to Parent or any agent
designated by it any transfer or other taxes required by reason of the
issuance of a certificate for shares of Parent Common Stock in any name
other than that of the registered holder of the Certificate surrendered, or
have established to the satisfaction of Parent or any agent designated by
it that such tax has been paid or is not payable.
(f) No Liability. Neither Parent, Merger Sub nor the Company shall be
------------
liable to any holder 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 following the passage of time
specified therein.
(g) Withholding Rights. Parent or the Exchange Agent shall be
------------------
entitled to deduct and withhold from the Merger Consideration otherwise
payable pursuant to this Agreement to any holder of Company Common Stock
such amounts as Parent or the Exchange Agent is required to deduct and
withhold with respect to the making of such payment under the Code, or any
provision of state, local or foreign tax law. 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 holder of the shares of Parent Common Stock in respect of which such
deduction and withholding was made by Parent or the Exchange Agent.
(h) No Further Ownership Rights in Company Stock. At the Effective
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Time, the stock transfer books of the Company shall be closed and
thereafter there shall be no further registration of transfers on the stock
transfer books of the Company or the Surviving Corporation of the shares of
Company Common Stock which were outstanding immediately prior to such time.
If, after such time, Certificates are presented to the Surviving
Corporation for any reason, they shall be canceled and exchanged as
provided in this Article II.
(i) Lost, Stolen or Destroyed Certificates. In the event any
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Certificates shall have been lost, stolen or destroyed, the Exchange Agent
shall issue in exchange for such lost, stolen or destroyed Certificates,
upon the
8
making of an affidavit of that fact by the holder thereof, such shares of
Parent Common Stock as may be required pursuant to Section 2.1(a) as well
as the other Merger Consideration as provided in this Article II; provided,
--------
however, that Parent may, in its discretion and as a condition precedent to
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the issuance thereof, require the owner of such lost, stolen or destroyed
Certificates to deliver an agreement of indemnification in form
satisfactory to Parent, or a bond in such sum as Parent may reasonably
direct as indemnity against any claim that may be made against Parent or
the Exchange Agent with respect to the Certificates alleged to have been
lost, stolen or destroyed.
(j) Taking of Necessary Action; Further Action. Each of Parent,
------------------------------------------
Merger Sub and the Company will take all such reasonable and lawful action
as may be necessary or appropriate in order to effectuate the Merger in
accordance with this Agreement as promptly as possible. If, at any time
after the Effective Time, any such further action is necessary or desirable
to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of the Company and Merger Sub,
the officers and directors of the Company and Merger Sub immediately prior
to the Effective Time are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and
necessary action.
SECTION 2.3. Material Adverse Effect.
-----------------------
(a) The term "Company Material Adverse Effect" means any change,
effect or circumstance that, individually or when taken together with all
other such similar or related changes, effects or circumstances that have
occurred prior to the date of determination of the occurrence of the
Company Material Adverse Effect, (i) is materially adverse to the business,
assets (including intangible assets), financial condition or results of
operations of the Company or (ii) is reasonably likely to materially delay
or prevent the consummation of the transactions contemplated hereby;
provided however, that "Company Material Adverse Effect" shall not be
deemed to include the impact of (A) changes in laws or interpretations
thereof by courts or Governmental Entities (as defined herein), (B) changes
in generally accepted accounting principles, (C) changes in economic
conditions affecting generally companies in the industries in which the
Company operates, (D) disruptions to the business of the Company as to
which the Company bears the burden of proof in establishing are directly
attributable to (x) the announcement of this Agreement and the transactions
contemplated hereby or (y) the actions of the other party hereto or its
affiliates and (E) the matter set forth in Section 2.3 of the Disclosure
Schedule.
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(b) The term "Parent Material Adverse Effect" means any change, effect
or circumstance that, individually or when taken together with all other
such similar or related changes, effects or circumstances that have
occurred prior to the date of determination of the occurrence of the Parent
Material Adverse Effect, (i) is materially adverse to the business, assets
(including intangible assets), financial condition or results of operations
of Parent or (ii) is reasonably likely to materially delay or prevent the
consummation of the transactions contemplated hereby; provided however,
that "Parent Material Adverse Effect" shall not be deemed to include the
impact of (A) changes in laws or interpretations thereof by courts or
Governmental Entities, (B) changes in generally accepted accounting
principles, (C) changes in economic conditions affecting generally
companies in the industries in which Parent operates and (D) disruptions to
the business of Parent as to which Parent bears the burden of proof in
establishing are directly attributable to (x) the announcement of this
Agreement and the transactions contemplated hereby or (y) the actions of
the other party hereto or its affiliates.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to Parent and Merger Sub that, except
as set forth in the written disclosure schedule prepared by the Company which is
dated as of the date hereof that is arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this Article III and previously
delivered to Parent in connection herewith (the "Disclosure Schedule")
(disclosure in any paragraph of the Disclosure Schedule shall qualify only the
corresponding paragraph in this Article III), as of the date of this Agreement,
except where another date is specified:
SECTION 3.1. Organization and Qualification; Subsidiaries. The
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Company and each of its Subsidiaries is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has the requisite corporate power and authority necessary to
own, lease and operate the properties it purports to own, lease or operate and
to carry on its business as it is now being conducted or presently proposed to
be conducted. The Company and each of its Subsidiaries is duly qualified or
licensed as a foreign corporation to do business, and is in good standing, in
each jurisdiction where the character of the properties owned, leased or
operated by it or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly qualified or
licensed and in good standing that could not reasonably be expected to have a
Company Material Adverse Effect. A true, complete and correct list of all of
the Company's Subsidiar-
10
ies, together with the jurisdiction of incorporation of each Subsidiary, the
authorized capitalization of each Subsidiary, and the percentage of each
Subsidiary's outstanding capital stock owned by the Company or another
Subsidiary, is set forth in Section 3.1 of the Disclosure Schedule. Except as
set forth in the Company SEC Reports (as defined in Section 3.9), the Company
does not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity, excluding securities in any publicly traded
company held for investment by the Company and comprising less than one percent
of the outstanding stock of such company.
SECTION 3.2. Certificate of Incorporation and By-Laws. The Company has
----------------------------------------
heretofore furnished to Parent a true, complete and correct copy of its Restated
Certificate of Incorporation, as amended to date (the "Company Charter"), and
By-Laws, as amended to date (the "Company By-Laws"), and has made available to
Parent true, complete and correct copies of the charter and by-laws (or
equivalent organizational documents), as amended to date, of each of its
Subsidiaries (the "Subsidiary Documents"). Such Company Charter, Company By-
Laws and Subsidiary Documents are in full force and effect. Neither the Company
nor any of its Subsidiaries is in violation of any of the provisions of the
Company Charter, Company By-Laws or Subsidiary Documents, as the case may be.
SECTION 3.3 Capitalization.
--------------
(a) The authorized capital stock of the Company consists of 150,000,000
shares of Company Common Stock, and 1,000,000 shares of preferred stock,
par value $.01 per share (the "Preferred Stock"). As of the date hereof,
51,145,010 shares of Company Common Stock are issued and outstanding;
8,122,000 shares of Company Common Stock are reserved for issuance on
conversion of the Company's 6% Convertible Subordinated Notes due 2004; an
aggregate of 5,835,796 shares of Company Common Stock are reserved for
issuance upon exercise of options granted pursuant to the Company's
Restricted Stock Option Plan, Employee Stock Option Plan, 1998 Employee
Stock Option Plan, 1994 Non-Employee Director Stock Option Plan, 1998 Non-
Employee Director Stock Option Plan and Employee Qualified Stock Purchase
Plan; 208,053 shares of Company Common Stock are issued and held in the
treasury of the Company; and 600,000 shares of Preferred Stock have been
designated Series A Junior Participating Preferred pursuant to the
Company's Rights Agreement, Renewed and Restated dated as of October 19,
1996 (the "Company Rights Agreement"), none of which are issued and
outstanding. The option plans referenced in the preceding sentence shall
be referred to herein collectively as the "Company Stock Option Plans."
All shares of Company Common Stock subject to issuance as
11
specified above, upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully paid and nonassessable. No material change in such
capitalization has occurred since March 31, 1999. All of the outstanding
shares of capital stock of each of the Company's Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable, and all such
shares (other than directors' qualifying shares in the case of foreign
Subsidiaries) are owned by the Company or a Subsidiary of the Company free
and clear of all security interests, liens, claims, pledges, agreements,
limitations in voting rights, charges or other encumbrances of any nature
whatsoever (collectively, "Liens"). There are no accrued and unpaid
dividends with respect to any outstanding shares of capital stock of the
Company.
(b) Except as described under Section 3.2(a) of this Agreement or as
set forth in Section 3.3(b) of the Disclosure Schedule, 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 as described under
Section 3.2(a) of this Agreement or as set forth in Section 3.3(b) of the
Disclosure Schedule, there are no options, warrants, calls, rights,
commitments or agreements of any character to which the Company or any of
its Subsidiaries is a party, or by which the Company or any of its
Subsidiaries is bound, obligating the Company or any of it 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 obligating the Company or any of its Subsidiaries to grant,
extend or accelerate the vesting of or enter into any such option, warrant,
call, right, commitment or agreement. There are no voting trusts, proxies
or other similar agreements or understandings with respect to the shares of
capital stock of the Company or any of its Subsidiaries. There are no
obligations, contingent or otherwise, of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of
capital stock of the Company or any of its Subsidiaries or to provide funds
to or make any investment (in the form of a loan, capital contribution or
otherwise) in any such Subsidiary or any other entity.
SECTION 3.4. Authority Relative to this Agreement. Subject only to the
------------------------------------
approval of the Company's stockholders described below, the Company has all
necessary corporate power and authority to execute and deliver this Agreement,
the Stock Option Agreement and each instrument required hereby to be executed
and delivered by it at the Closing and to perform its obligations hereunder and
to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement, the Stock Option Agreement and each instrument required
hereby to be executed and delivered at the Closing by the Company and the
consummation by the
12
Company of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action on the part of the Company, subject
only to the approval of this Agreement and the Merger by the Company's
stockholders under the DGCL and the Company Charter by the affirmative vote of
the holders of a majority of outstanding shares of Company Common Stock. This
Agreement and the Stock Option Agreement have been duly and validly executed and
delivered by the Company and, assuming the due authorization, execution and
delivery by Parent and Merger Sub, as applicable, constitute legal, valid and
binding obligations of the Company, enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights and by general equitable
principles (regardless of whether enforceability is considered in a proceeding
in equity or at law). The Board of Directors of the Company has determined that
it is advisable and in the best interests of the Company's stockholders for the
Company to enter into a business combination with Parent upon the terms and
subject to the conditions of this Agreement, and has recommended that the
Company's stockholders approve and adopt this Agreement and the Merger.
SECTION 3.5. Section 203 of the DGCL Not Applicable. The Board of
--------------------------------------
Directors of the Company has taken all actions so that the restrictions
contained in Section 203 of the DGCL applicable to a "business combination" (as
defined in Section 203 of the DGCL) will not apply to the execution, delivery or
performance of this Agreement or the Stock Option Agreement or the consummation
of the Merger or the other transactions contemplated by this Agreement or by the
Stock Option Agreement.
SECTION 3.6. Agreements, Contracts and Commitments.
-------------------------------------
(a) Section 3.6(a) of the Disclosure Schedule sets forth a list of (i)
all material original equipment manufacturer agreements with respect to the
Company's CLARiiON business, (ii) all material customer contracts with
respect to the Company's AViiON business, (iii) all material supplier
agreements, (iv) all Company agreements containing non-competition or
similar restrictive provisions with respect to the Company, and (v) all
agreements which, as of the date hereof, the Company is required to file as
"material contracts" with the Securities and Exchange Commission (the
"SEC") pursuant to the requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
(b) (i) Neither the Company nor any of its Subsidiaries has breached,
is in default under, or has received written notice of any breach of or
default under, any agreements, contracts or other instruments required to
be disclosed in Section 3.6(a) of the Disclosure Schedule (each, a
"Material
13
Contract"), (ii) to the Company's knowledge, no other party to any Material
Contract has breached or is in default of any of its obligations
thereunder, (iii) each Material Contract is in full force and effect,
except in any such case for breaches, defaults or failures to be in full
force and effect that is not currently having or would not have a Company
Material Adverse Effect and (iv) each Material Contract is a legal, valid
and binding obligation of the Company or its Subsidiary and each of the
other parties thereto, enforceable in accordance with its terms, except
that the enforcement thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (B) general principles of
equity.
SECTION 3.7. No Conflict; Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement, the Stock Option
Agreement or any instrument required hereby to be executed and delivered by
the Company at the Closing does not, and the performance of this Agreement
or the Stock Option Agreement by the Company will not, (i) conflict with or
violate the Company Charter or Company By-Laws, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to
the Company or any of its Subsidiaries or by which its or any of their
respective properties is bound or affected, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time
or both would become a default), or impair the Company's or any of its
Subsidiaries' rights or alter the rights or obligations of any third party
under, or give to others any rights of termination, amendment, acceleration
or cancellation of, or result in the creation of a Lien on any of the
properties or assets of the Company or any of its Subsidiaries pursuant to,
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its
Subsidiaries or its or any of their respective properties is bound or
affected, except in the case of (ii) and (iii) for any such conflicts,
violations, breaches, defaults or other occurrences that would not have a
Company Material Adverse Effect.
(b) The execution and delivery of this Agreement, the Stock Option
Agreement or any instrument required hereby to be executed and delivered by
the Company at the Closing does not, and the performance of this Agreement
or the Stock Option Agreement by the Company or its Subsidiaries will not,
require any consent, approval, authorization or permit of, or filing with
or notification to, any court, administrative or regulatory agency or
commission or other governmental authority or instrumentality (whether
domestic or foreign, a "Governmental Entity"), except (i) the filing of the
pre-
14
merger notification report under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), (ii) the filing of a
Registration Statement on Form S-4 (the "Registration Statement") with the
SEC in accordance with the Securities Act of 1933, as amended (the
"Securities Act"), and the filing of the Proxy Statement/Prospectus (as
defined in Section 3.21) with the SEC under the Exchange Act, (iii) such
consents, approvals, orders, authorizations, registrations, declarations
and filings as may be required under applicable federal and state
securities laws and the laws of any foreign country, (iv) the filing and
recordation of appropriate merger or other documents as required by the
DGCL and (v) such other consents, approvals, authorizations or permits
which, if not obtained or made, would not have a Company Material Adverse
Effect.
SECTION 3.8. Compliance; Permits.
-------------------
(a) Neither the Company nor any of its Subsidiaries is in conflict
with, or in default or violation of (and has not received any notices of
violation with respect to), any law, rule, regulation, order, judgment or
decree applicable to the Company or any of its Subsidiaries or by which its
or any of their respective properties is bound or affected, and the Company
is not aware of any such conflict, default or violation thereunder, except
in each case for any such conflicts, defaults or violations which could not
reasonably be expected to have a Company Material Adverse Effect.
(b) The Company and its Subsidiaries hold all permits, licenses,
easements, variances, exemptions, consents, certificates, authorizations,
registrations, orders and other approvals from Governmental Entities that
are material to the operation of the business of the Company and its
Subsidiaries taken as a whole as it is now being conducted (collectively,
the "Company Permits"). The Company Permits are in full force and effect,
have not been violated in any respect that would have a Company Material
Adverse Effect and, to the best knowledge of the Company, no suspension,
revocation or cancellation thereof has been threatened and there is no
action, proceeding or investigation pending or, to the Company's knowledge,
threatened regarding suspension, revocation or cancellation of any Company
Permits, except where the suspension, revocation or cancellation of such
Company Permits could not reasonably be expected to have a Company Material
Adverse Effect.
SECTION 3.9. SEC Filings; Financial Statements.
---------------------------------
(a) The Company has timely filed and made available to Parent all
forms, reports, schedules, statements and other documents, including any
exhibits thereto, required to be filed by the Company with the SEC since
Sep-
15
tember 26, 1998 (collectively, the "Company SEC Reports"). 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 filing prior to the date of this Agreement, then on the
date of such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated in such Company SEC
Reports or necessary in order to make the statements in such Company SEC
Reports, in light of the circumstances under which they were made, not
misleading. None of the Company's Subsidiaries are required to file any
forms, reports, schedules, statements 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 after the date of this Agreement until the
Closing, complied, as of its respective date, in all material respects with
all applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, was prepared in accordance
with generally accepted accounting principles ("GAAP") (except as may be
indicated in the notes thereto) applied on a consistent basis throughout
the periods involved and fairly presented 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 balance sheet of
the Company as of March 27, 1999 is referred to herein as the "Company
Balance Sheet."
SECTION 3.10 Absence of Certain Changes or Events. Since the date of the
------------------------------------
Company Balance Sheet, the Company has conducted its business in the ordinary
course consistent with past practice and, since such date, there has not
occurred: (i) any change, development, event or other circumstance, situation or
state of affairs that has had or may be reasonably expected to have a Company
Material Adverse Effect; (ii) any amendments to or changes in the Company
Charter or Company By-Laws; (iii) any damage to, destruction or loss of any
asset of the Company or any of its Subsidiaries (whether or not covered by
insurance) that could reasonably be expected to have a Company Material Adverse
Effect; (iv) any material change by the Company in its accounting methods,
principles or practices; (v) any material revaluation by the Company of any of
its assets, including, without limitation, writing down the value of inventory
or writing off notes or accounts receivable other than in the ordinary course of
business consistent with past practice; (vi) any sale of a material amount of
assets (tangible or intangible) of the Company; or (vii) any other action or
event that would have required the consent of Parent pursuant to Section 5.1
16
had such action or event occurred after the date of this Agreement.
SECTION 3.11 No Undisclosed Liabilities. Except as disclosed in the
--------------------------
Company SEC Reports, neither the Company nor any of its Subsidiaries has any
liabilities (absolute, accrued, contingent or otherwise), except liabilities (a)
adequately provided for in the Company Balance Sheet, (b) incurred in the
ordinary course of business consistent with past practice and not required under
GAAP to be reflected in the Company Balance Sheet, (c) incurred since the date
of the Company Balance Sheet in the ordinary course of business consistent with
past practice, (d) incurred in connection with this Agreement or (e) which would
not reasonably be expected to have a Company Material Adverse Effect.
SECTION 3.12 Absence of Litigation. There are no claims, actions, suits,
---------------------
proceedings or investigations (i) pending against the Company or any of its
Subsidiaries or any properties or assets of the Company or of any of its
Subsidiaries or (ii) to the knowledge of the Company, threatened against the
Company or any of its Subsidiaries, or any properties or assets of the Company
or of any of its Subsidiaries, in each case, which claims, actions, suits,
proceedings or investigations could reasonably be expected to have a Company
Material Adverse Effect.
SECTION 3.13 Employee Benefit Plans, Options and Employment Agreements.
---------------------------------------------------------
(a) Section 3.13(a) of the Disclosure Schedule lists all material
employee benefit plans of the Company, its Subsidiaries or any trade or
business (as "ERISA Affiliates") whether or not incorporated, that together
with the Company would be deemed a single employer within the meaning of
Section 4001(b) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), including without limitation any employment agreements
or any pension, retirement, profit-sharing, bonus, stock option, incentive,
deferred compensation, severance, termination pay, welfare or other plan,
contract, arrangement or practice in which one or more employees
(including, without limitation, former employees or beneficiaries of
employees or former employees) of the Company or a Subsidiary participates
or is eligible to participate (the "Plans"). For these purposes, such
Plans shall include, without limitation, any employee benefit plan (as such
term is described in Section 3(3) of ERISA, or any plan, practice or
arrangement that constitutes a "fringe benefit" plan, vacation plan or
policy, sick leave program, medical, disability or life insurance plan
(including, without limitation, those employment or other agreements that
contain "golden parachute" provisions). Neither the Company nor any of its
Subsidiaries has established or maintains any plan, program or arrangement
to provide post-retirement medical benefits to any employee, former
employee or beneficiary of any employee or former
17
employee, other than coverage mandated by applicable law. Each Plan has
been administered in compliance with its terms and is in compliance with
ERISA and the regulations promulgated thereunder (to the extent
applicable), as well as with all other applicable federal, state and local
statutes and regulations except as disclosed on Section 3.13(a) of the
Disclosure Schedule.
(b) Each Plan that is intended to qualify (the "Qualified Plans") under
Section 401(a) of the Code have been determined by the Internal Revenue
Service (the "IRS") to be so qualified. Except as disclosed in Section
3.13(a) of the Disclosure Schedule, all reports and other documents
required by law or contract to be filed with any Governmental Entity or
distributed to plan participants or beneficiaries have been timely filed or
distributed. Copies of the Plans and any amendments or trusts related
thereto, Form 5500 (including financial audits and schedules thereto as
required by law) for the immediately preceding three years, summary plan
descriptions, and the most recent determination letters or determination
letter requests have been made available to Parent. Neither the Company
nor any of its Subsidiaries nor any Plan has engaged in any transaction
prohibited under the provisions of Section 4975 of the Code or Section 406
of ERISA. No Plan has incurred an accumulated funding deficiency, as
defined in Section 412(a) of the Code and Section 302 of ERISA, and neither
the Company nor any of its Subsidiaries has incurred any resulting
liability for excise tax under Sections 4975 or 4976 of the Code or penalty
pursuant to Sections 409 or 502(i) of ERISA due to the IRS or the Pension
Benefit Guaranty Corporation (the "PBGC"). The Company further represents
that:
(1) there has been no termination, partial termination or
discontinuance of contributions to any Qualified Plan without
notice to and approval by the IRS, except as disclosed in Section
3.13(a) of the Disclosure Schedule;
(2) no Qualified Plan which is subject to the provisions of Title IV
of ERISA (a "Title IV Plan") has been terminated;
(3) there have been no "reportable events" (as such phrase is defined
in Section 4043 of ERISA) with respect to any Qualified Plan
except as disclosed in Section 3.13(a) of the Disclosure
Schedule; and
(4) the Company and its ERISA Affiliates have not incurred and do not
expect to incur any liability under Section 4062 of ERISA or with
respect to any "multi-employer plan" (as such term is defined in
Section 4001(a)(3) of ERISA).
18
(c) Section 3.13(c) of the Disclosure Schedule sets forth a true,
complete and correct list of (i) all employment or consulting agreements
with employees of the Company or any of its Subsidiaries obligating the
Company or any of its Subsidiaries to make annual cash payments in an
amount exceeding $100,000; (ii) all employees of the Company or any of its
Subsidiaries who have executed a non-competition agreement with the Company
or any of its Subsidiaries; (iii) all severance agreements, programs and
policies of the Company or any of its Subsidiaries with or relating to its
employees, in each case with outstanding commitments exceeding $100,000,
excluding programs and policies required to be maintained by law; and (iv)
all plans, programs, agreements and other arrangements of the Company or
any of its Subsidiaries with or relating to its employees which contain
change in control provisions. True, complete and correct copies of each of
the foregoing agreements to which the chief executive officer of the
Company is a party have been made available to Parent.
(d) No liability under Title IV or Section 302 of ERISA has been
incurred by the Company or any ERISA Affiliate that has not been satisfied
in full, and no condition exists that presents a material risk to the
Company or any ERISA Affiliate of incurring any such liability, other than
liability for premiums due the PBGC (which premiums have been paid when
due).
(e) With respect to each Title IV Plan, the present value of accrued
benefits under such plan, based upon the actuarial assumptions used for
funding purposes in the most recent actuarial report prepared by such
plan's actuary with respect to such plan did not exceed, as of its latest
valuation date, the then current value of the assets of such plan allocable
to such accrued benefits.
(f) All contributions required to be made with respect to any Plan on
or prior to the Effective Time have been timely made or are reflected on
the Company's balance sheet. There are no pending, threatened or
anticipated claims by or on behalf of any Plan, by any employee or
beneficiary covered under any such Plan, or otherwise involving any such
Plan (other than routine claims for benefits).
(g) Except as disclosed in Section 3.13(g) of the Disclosure Schedule,
the consummation of the transactions contemplated by this Agreement will
not, either alone or in combination with another event, (i) entitle any
current or former employee or officer of the Company or any Subsidiary to
severance pay, unemployment compensation or any other payment, except as
expressly provided in this Agreement, or (ii) accelerate the time of
pay-
19
ment or vesting, or increase the amount of compensation due any such
employee or officer. Except as disclosed in Section 3.13(g) of the
Disclosure Schedule, there is no contract, agreement, plan or arrangement,
including but not limited to the provisions of this Agreement, covering any
employee or former employee of the Company or any of its Subsidiaries that,
individually or collectively, could give rise to the payment of any amount
that would not be deductible pursuant to Sections 280G or 162(m) of the
Code.
SECTION 3.14 Labor Matters. (a) There are no controversies pending or, to
-------------
the knowledge of the Company or any of its Subsidiaries, threatened, between the
Company or any of its Subsidiaries and any of their respective employees,
consultants or independent contractors, which controversies have or could
reasonably be expected to have a Company Material Adverse Effect; (b) neither
the Company nor any of its Subsidiaries is a party to any collective bargaining
agreement or other labor union contract applicable to persons employed by the
Company or its Subsidiaries, nor does the Company or any of its Subsidiaries
know of any activities or proceedings of any labor union to organize any such
employees; and (c) neither the Company nor any of its Subsidiaries has any
knowledge of any labor disputes, strikes, slowdowns, work stoppages, lockouts,
or threats thereof, by or with respect to any employees of, or consultants or
independent contractors to, the Company or any of its Subsidiaries.
SECTION 3.15 Properties; Encumbrances. The Company and each of its
------------------------
Subsidiaries have good, valid and marketable title to, or a valid leasehold
interest in, all the properties and assets which it purports to own or lease
(real, personal and mixed, tangible and intangible), including, without
limitation, all the properties and assets reflected in the Company Balance Sheet
(except for personal property sold since the date of the Company Balance Sheet
in the ordinary course of business consistent with past practice), except as
could not reasonably be expected to have a Company Material Adverse Effect. All
properties and assets reflected in the Company Balance Sheet are free and clear
of all Liens, except for Liens reflected on the Company Balance Sheet and Liens
for current taxes not yet due and other Liens that do not materially detract
from the value or impair the use of the property or assets subject thereto.
SECTION 3.16 Taxes.
-----
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes,
fees, levies, duties, tariffs, imposts and governmental impositions or
charges of any kind in the nature of (or similar to) taxes, payable to any
federal, state, local or foreign taxing authority, including without
limitation (i) income, franchise, profits, gross receipts, ad valorem, net
worth, value added, sales, use, service, real or personal property, special
assessments, capital
20
stock, license, payroll, withholding, employment, social security, workers'
compensation, unemployment compensation, utility, severance, production,
excise, stamp, occupation, premiums, windfall profits, transfer and gains
taxes, and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto; and "Tax Returns" shall mean returns, reports
and information statements with respect to Taxes required to be filed with
the IRS or any other taxing authority, domestic or foreign, including
without limitation, consolidated, combined or unitary tax returns.
(b) Other than as disclosed in Section 3.16(b) of the Disclosure
Schedule, the Company and its Subsidiaries have filed with the appropriate
taxing authorities all Tax Returns required to be filed by them, except
where the failure to file such Tax Returns would not have a Company
Material Adverse Effect. All Taxes due and owing by the Company and its
Subsidiaries have been paid or adequately reserved for, except to the
extent any failure to pay or reserve would not, individually or in the
aggregate, have a Company Material Adverse Effect or except to the extent
such Taxes are being contested in good faith by appropriate proceedings (to
the extent that any such proceedings are required). There are no Tax Liens
on any assets of the Company or any Subsidiary thereof other than liens
relating to Taxes not yet due and payable. Neither the Company nor any of
its Subsidiaries has granted any waiver of any statute of limitations with
respect to, or any extension of a period for the assessment of, any Tax.
The accruals and reserves for Taxes (including deferred taxes) reflected in
the Company Balance Sheet are in all material respects adequate to cover
all Taxes accruable through the date thereof (including interest and
penalties, if any, thereon and Taxes being contested) in accordance with
GAAP applied on a consistent basis with the Company Balance Sheet.
(c) Neither the Company nor any of its Subsidiaries is, or has been, a
United States real property holding corporation (as defined in Section
897(c)(2) of the Code) during the applicable period specified in Section
897(c)(1)(A)(ii) of the Code.
(d) The Company and each of its Subsidiaries have withheld with
respect to its employees all federal and state Taxes required to be
withheld, except to the extent any failure to withhold would not,
individually or in the aggregate, have a Company Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has been delinquent in the
payment of any Tax, except to the extent any failure to pay such Tax would
not, individually or in the aggregate, have a Company Material Adverse
Effect. Neither the Company nor any of its Subsidiaries has received any
written notice of any Tax deficiency outstanding, proposed or assessed
against the Company or any of its
21
Subsidiaries. Except as disclosed in Section 3.16(d) of the Disclosure
Schedule, neither the Company nor any of its Subsidiaries has received any
written notice of any audit examination, deficiency, refund litigation,
proposed adjustment or matter in controversy with respect to any Return of
the Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has filed any consent agreement under Section 341(f) of the
Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
the Code) owned by the Company. Neither the Company nor any of its
Subsidiaries is a party to or bound by any tax indemnity, tax sharing or
tax allocation agreements. Except for the group of which the Company and
its Subsidiaries are now currently members, neither the Company nor any of
its Subsidiaries has ever been a member of an affiliated group of
corporations within the meaning of Section 1504 of the Code. Neither the
Company nor any of its Subsidiaries has agreed to make nor is it required
to make any material adjustment under Section 481(a) of the Code by reason
of a change in accounting method or otherwise.
(e) As soon as practicable after the public announcement of the
execution of this Agreement, the Company will provide Parent with written
schedules of (i) the taxable years of the Company for which the statute of
limitations with respect to Taxes have not expired, (ii) with respect to
Taxes, those years for which examinations have been completed, those years
for which examinations are presently being conducted, those years for which
examinations have not yet been initiated and those years for which required
Tax Returns have not yet been filed, (iii) all elections with respect to
Taxes affecting the Company as of the date hereof, (iv) the Company's basis
in each Subsidiary, (v) the earnings and profits (including any adjustment
required by Section 1503(e) of the Code) for each Subsidiary, and (vi) the
foreign countries in which the Company or its Subsidiaries has or has had a
permanent establishment, as defined in any applicable Tax treaty or
convention between the United States and such foreign country.
SECTION 3.17 Environmental Matters.
---------------------
(a) The Company and its Subsidiaries are in full compliance with all
applicable Environmental Laws (as defined below); neither the Company nor
any of its Subsidiaries has received any communication whether from a
Governmental Entity, citizens group, employee or otherwise, that alleges
that the Company or any of its Subsidiaries are not in such full
compliance; and, to the Company's best knowledge, there are no
circumstances that may prevent or interfere with such full compliance in
the future.
22
(b) There is no Environmental Claim (as defined below) pending against
the Company or any of its Subsidiaries or, to the Company's best knowledge,
threatened against any person or entity whose liability for any
Environmental Claim the Company or any of its Subsidiaries have or may have
retained or assumed either contractually or by operation of law.
(c) There are no past or present actions, activities, circumstances,
conditions, events or incidents, including the Release, emission, discharge
or disposal of any Materials of Environmental Concern (as defined below),
that could form the basis of any Environmental Claim against the Company or
any of its Subsidiaries or, to the Company's best knowledge, against any
person or entity whose liability for any Environmental Claim the Company or
any of its Subsidiaries have or may have retained or assumed either
contractually or by operation of law.
(d) The Company and its Subsidiaries have delivered or otherwise made
available for inspection to Parent true, complete and correct copies and
results of any reports, studies, analyses, tests or monitoring possessed or
initiated by the Company or its Subsidiaries pertaining to Materials of
Environmental Concern in, on, beneath or adjacent to any property currently
or formerly owned, operated or leased by the Company or its Subsidiaries or
regarding the Company's or its Subsidiaries' compliance with applicable
Environmental Laws.
(e) "Environmental Claim" means any claim, action, cause of action,
investigation or notice by any person or entity alleging potential
liability arising out of, based on or resulting from (i) the presence, or
release into the environment, of any Material of Environmental Concern at
any location, whether or not owned by the Company or any of its
Subsidiaries or (ii) circumstances forming the basis of any violation, or
alleged violation, of any Environmental Law.
(f) "Environmental Laws" means all federal, state, local and foreign
laws and regulations relating to pollution or protection of human health or
the environment, including without limitation laws and regulations relating
to emissions, discharges, releases or threatened releases of Materials of
Environmental Concern, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern and all laws and regulations
with regard to recordkeeping, notification, disclosure and reporting
requirements respecting Materials of Environmental Concern.
23
(g) "Materials of Environmental Concern" means all substances defined
as Hazardous Substances, Oils, Pollutants or Contaminants in the National
Oil and Hazardous Substances Pollution Contingency Plan, 40 C.F.R. (S)
300.5, or defined as such by, or regulated as such under, any Environmental
Law.
(h) "Release" means any release, spill, emission, discharge, leaking,
pumping, injection, deposit, disposal, dispersal, leaching or migration
into the indoor or outdoor environment (including, without limitation,
ambient air, surface water, groundwater and surface or subsurface strata)
or into or out of any property, including the movement of Materials of
Environmental Concern through or in the air, soil, surface water,
groundwater or property.
SECTION 3.18 Intellectual Property.
---------------------
(a) The Company or its Subsidiaries owns, or is licensed or otherwise
possesses legally enforceable rights to use, all patents, trademarks, trade
names, service marks, copyrights, and any applications therefor,
technology, mask works, schematics, know-how, computer software programs or
applications, and tangible or intangible proprietary information or
material that are used in the business of the Company and its Subsidiaries
as currently conducted (the "Company Intellectual Property Rights"). Set
forth in Section 3.18(a) of the Disclosure Schedule is a list of all
Company-owned patents, trademarks and copyrights.
(b) Either the Company or one of its Subsidiaries is the sole and
exclusive owner of all right, title and interest in and to (free and clear
of any Liens), or is the exclusive or non-exclusive licensee of, the
Company Intellectual Property Rights, and, in the case of Company
Intellectual Property Rights owned by the Company or any of its
Subsidiaries, has sole and exclusive rights (and is not contractually
obligated to pay any compensation to any third party in respect thereof) to
the use thereof and the material covered thereby. Except as set forth in
Section 3.18(b) of the Disclosure Schedule, no claims with respect to the
Company Intellectual Property Rights have been asserted or are, to the
Company's knowledge, threatened by any person (i) to the effect that the
manufacture, sale, licensing or use of any of the products or services of
the Company or any of its Subsidiaries as now manufactured, sold or
licensed or used or proposed for manufacture, use, sale or licensing by the
Company or any of its Subsidiaries infringes on any intellectual property
rights of any third party, (ii) against the use by the Company or any of
its Subsidiaries of any trademarks, service marks, trade names, trade
secrets, copyrights, patents, technology or know-how and applications used
in the business of the Company and its Subsidiaries as currently conducted
or as
24
presently proposed to be conducted, or (iii) challenging the ownership or
use by the Company or any of its Subsidiaries or the validity of any of the
Company Intellectual Property Rights. All patents and registered
trademarks, service marks and copyrights held by the Company and its
Subsidiaries and used in the business of the Company or its Subsidiaries as
currently conducted or as presently proposed to be conducted are valid,
subsisting, in full force and effect, and have not expired or been
cancelled or abandoned. Except as set forth in Section 3.18(b) of the
Disclosure Schedule, to the knowledge of the Company, there is no
unauthorized use, infringement or misappropriation of any of the Company
Intellectual Property Rights by any third party, including any employee or
former employee of the Company or any of its Subsidiaries. No Company
Intellectual Property Right or product or service of the Company or any of
its Subsidiaries is subject to any outstanding decree, order, judgment or
stipulation restricting in any manner the use, sale or licensing thereof by
the Company or any of its Subsidiaries. Neither the Company nor any of its
Subsidiaries has entered into any agreement (other than exclusive
distribution agreements) under which the Company or its Subsidiaries is
restricted from using or licensing any Company Intellectual Property Right
or selling or otherwise distributing any of its products or services.
(c) Except as set forth in Section 3.18(c) of the Disclosure Schedule,
the consummation of the transactions contemplated hereby will not result in
any loss or impairment of the Company or any Subsidiary's ownership of or
right to use any of the material Company Intellectual Property, nor
require the consent of any Governmental Entity or third party with respect
to any of the material Company Intellectual Property.
SECTION 3.19 Insurance. All fire and casualty, general liability, business
---------
interruption, product liability, sprinkler and water damage insurance policies
and other forms of insurance maintained by the Company or any of its
Subsidiaries are with reputable insurance carriers, provide adequate coverage
for all normal risks incident to the business of the Company and its
Subsidiaries and their respective properties and assets and are in character and
amount and with such deductibles and retained amounts as generally carried by
persons engaged in similar businesses and subject to the same or similar perils
or hazards.
SECTION 3.20 Restrictions on Business. Except for this Agreement, to the
------------------------
best of the Company's knowledge, there is no agreement, judgement, injunction,
order or decree binding upon the Company or any of its Subsidiaries which has or
could reasonably be expected to have the effect of prohibiting or impairing any
material business practice of the Company or any of its Subsidiaries,
acquisition of material property by the Company or any of its Subsidiaries or
the conduct of business by the Company or any of its Subsidiaries as currently
conducted or as proposed to be
25
conducted by the Company.
SECTION 3.21 Registration Statement; Proxy Statement/Prospectus. The
--------------------------------------------------
information supplied by the Company for inclusion in the Registration Statement
shall not at the time the Registration Statement is declared effective by the
SEC contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The information supplied by the Company for inclusion or
incorporation by reference in the proxy statement/prospectus (as amended or
supplemented, the "Proxy Statement/ Prospectus") to be sent to the stockholders
of the Company in connection with the meeting of the stockholders of the Company
to consider the Merger (the "Company Stockholders Meeting"), shall not, on the
date the Proxy Statement/Prospectus (or any amendment thereof or supplement
thereto) is first mailed to stockholders or at the time of the Company
Stockholders Meeting contain any statement which, at such time and in light of
the circumstances under which it shall be made, is false or misleading with
respect to any material fact, or shall omit to state any material fact necessary
in order to make the statements made therein 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 Company
Stockholders Meeting which has become false or misleading. If at any time prior
to the Company Stockholders Meeting any event relating to the Company or any of
its respective affiliates, officers or directors 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/Prospectus, the Company shall promptly
inform Parent. The Proxy Statement/Prospectus shall comply in all material
respects as to form and substance with the requirements of the Securities Act,
the Exchange Act and the rules and regulations thereunder. Notwithstanding the
foregoing, the Company makes no representation or warranty with respect to any
information supplied by Parent or Merger Sub which is contained in any of the
foregoing documents.
SECTION 3.22 Interested Party Transactions. Except as set forth in Section
-----------------------------
3.22 of the Disclosure Schedule, since the date of the Company's proxy statement
dated December 17, 1998, no event has occurred that would be required to be
reported as a Certain Relationship or Related Transaction, pursuant to Item 404
of Regulation S-K promulgated by the SEC.
SECTION 3.23 Change in Control Payments. Except as set forth in Section
--------------------------
3.13 or Section 3.23 of the Disclosure Schedule, neither the Company nor any of
its Subsidiaries have any plans, programs or agreements to which they are
parties, or to which they are subject, pursuant to which payments (or
acceleration of benefits) may be required upon, or may become payable directly
or indirectly as a result of, a change of control of the Company.
26
SECTION 3.24 Year 2000 Compliance.
--------------------
(a) All of (i) the internal systems used in the business or operations
of the Company and its Subsidiaries, including without limitation computer
hardware systems, software, applications, firmware, equipment containing
embedded microchips and other embedded systems, and (ii) the software,
hardware, firmware and other technology that constitute part of the
products and services manufactured, marketed, licensed or sold by the
Company or any of its Subsidiaries to third parties are Year 2000 Compliant
(as defined below) and will not be adversely affected with respect to
functionality, interoperability, connectivity, performance, reliability or
volume capacity (including without limitation the processing, storage,
recall and reporting of data) by the passage of any date, including without
limitation the year change from December 31, 1999 to January 1, 2000.
(b) To the Company's knowledge, all third-party systems used in
connection with the business, products, services or operations of the
Company or any of its Subsidiaries, including without limitation any system
belonging to any of the Company's or its Subsidiaries' vendors, co-
venturers, service providers or customers are Year 2000 Compliant. The
Company and its Subsidiaries have received satisfactory written assurances
and warranties from all of their respective vendors, co-venturers, service
providers and customers that are material to the ongoing operation of the
business of the Company and its Subsidiaries that past and future products,
software, equipment, components or systems provided by such parties are (or
in the case of future products, will be) Year 2000 Compliant.
(c) The Company has conducted "year 2000" audits with respect to (i)
each of the internal systems used in the business, products, services and
operations of the Company and its Subsidiaries, including without
limitation computer hardware systems, software, applications, firmware,
equipment containing embedded microchips and other embedded systems, and
(ii) all of the software, applications, hardware, firmware and other
technology which constitute part of the products and services manufactured,
marketed, performed or sold by the Company or any of its Subsidiaries or
licensed by the Company or any of its Subsidiaries to third parties. The
Company has obtained "year 2000" certifications with respect to all
material third-party systems used in connection with the business or
operations of the Company and its Subsidiaries, including without
limitation systems belonging to the vendors, co-venturers, service
providers and customers of the Company of any or its Subsidiaries. The
Company has made available to Parent true, complete and correct copies of
all "year 2000" audits, certifications, reports and other
27
similar documents that have been prepared or performed by or on behalf of
the Company or any third party with respect to the systems, business,
operations, products or services of the Company or any of its Subsidiaries.
(d) Except as set forth in Section 3.24 of the Disclosure Schedule,
neither the Company nor any of its Subsidiaries has provided any
representation, warranty or guarantee for any product sold or licensed, or
service provided, by the Company or its Subsidiaries to the effect that
such product or service (i) complies with or accounts for the fact of the
year change from December 31, 1999 to January 1, 2000, (ii) will not be
adversely affected with respect to functionality, interoperability,
connectivity, performance, reliability or volume capacity (including
without limitation the processing storage, recall and reporting of data) by
the passage of any date, including without limitation the year change from
December 31, 1999 to January 1, 2000 or (iii) is otherwise Year 2000
Compliant.
(e) For purposes of this Agreement, "Year 2000 Compliant" means that
the applicable system, product, service or item:
(i) will accurately receive, record, store, provide, recognize,
recall and process all date and time data from, during, into and
between the years 1999, 2000 and 2001, and all years pertinent
thereafter;
(ii) will accurately perform all date-dependent calculations and
operations (including without limitation, mathematical operations,
sorting, comparing and reporting) from, during, into and between the
years 1999, 2000 and 2001, and all pertinent years thereafter; and
(iii) will not malfunction, cease to function or provide invalid
or incorrect results as a result of (A) the change of years from 1999
to 2000 or from 2000 to 2001, (B) date data, including date data which
represents or references different centuries, different dates during
1999, 2000 and 2001, or more than one century or (C) the occurrence of
any particular date;
in each case without human intervention, provided, in each case, that all
software, applications, hardware and other systems used in conjunction with
such system or item that are not owned or licensed by the Company or its
Subsidiaries correctly exchange date data with or provide data to such
system or item.
28
SECTION 3.25 Pooling; Tax Matters. Neither the Company nor any of its
--------------------
affiliates has taken or agreed to take any action or failed to take any action
that would prevent (a) Parent from accounting for the business combination to be
effected by the Merger as a pooling of interests or (b) the Merger from
constituting a reorganization within the meaning of Section 368(a) of the Code.
Without limiting the effect of a breach of any other representation or warranty
set forth in this Agreement, the failure of this representation to be true and
correct, shall, if as a result the Merger is not able to be accounted for as a
pooling of interests or a reorganization within the meaning of Section 368(a) of
the Code, constitute a breach of this Agreement by the Company for the purposes
of Section 8.1(e).
SECTION 3.26 Rights Agreement. The Company has taken all action necessary
----------------
to ensure that so long as this Agreement shall not have been terminated pursuant
to Article VIII, (i) neither Parent nor Merger Sub shall, by virtue of the
execution and delivery of this Agreement or the Stock Option Agreement or the
consummation of the transactions contemplated hereby or thereby, be deemed an
"Acquiring Person" (as that term is defined in the Company Rights Agreement) and
(ii) no "Rights" (as that term is defined in the Company Rights Agreement) are
issued or required to be issued to the stockholders of the Company by virtue of
the execution and delivery of this Agreement or the Stock Option Agreement or
the consummation of the transactions contemplated hereby or thereby. As of the
date of this Agreement, the Company has not amended the Company Rights
Agreement, redeemed the Rights thereunder or taken any other action to make the
Company Rights Agreement or the Rights thereunder inapplicable, in each case,
with respect to (a) any person or entity other than Parent or Merger Sub or (b)
any Acquisition Proposal (as defined in Section 6.2(a)) (or any other
substantially similar proposal).
SECTION 3.27 No Existing Discussions. As of the date hereof, the Company
-----------------------
is not engaged, directly or indirectly, in any discussions or negotiations with
any other party with respect to an Acquisition Proposal or any other
substantially similar proposal.
SECTION 3.28 Opinion of Financial Advisor. The financial advisor of the
----------------------------
Company, Xxxxxx Xxxxxxx Xxxx Xxxxxx, has delivered to the Company an opinion
dated the date of this Agreement to the effect that as of the date of this
Agreement, the consideration to be received in the Merger by the stockholders of
the Company is fair, from a financial point of view, to the stockholders of the
Company. The Company has provided a complete and correct copy of such opinion
to Parent.
SECTION 3.29 Brokers. No broker, finder or investment banker (other than
-------
Xxxxxx Xxxxxxx Xxxx Xxxxxx, whose brokerage, finder's or other fee will be paid
by the Company) is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon ar-
29
rangements made by or on behalf of the Company or any of its Subsidiaries. The
Company has heretofore furnished to Parent a complete and correct copy of all
agreements between the Company and Xxxxxx Xxxxxxx Xxxx Xxxxxx pursuant to which
such firm would be entitled to any payment relating to the transactions
contemplated hereunder.
SECTION 3.30 Affiliates. Section 3.30 of the Disclosure Schedule contains
----------
a true, complete and correct list of all persons who, as of the date hereof, to
the best knowledge of the Company, may be deemed to be affiliates of the Company
excluding all its Subsidiaries but including all directors and executive
officers of the Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company that:
SECTION 4.1 Organization and Qualification. Parent and each of its
------------------------------
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its respective incorporation and
has the requisite corporate power and authority necessary to own, lease and
operate the properties it purports to own, lease or operate and to carry on its
business as it is now being conducted or presently proposed to be conducted.
Parent is duly qualified or licensed as a foreign corporation to do business,
and is in good standing, in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its activities makes
such qualification or licensing necessary, except for such failures to be so
duly qualified or licensed and in good standing that could not reasonably be
expected to have a Parent Material Adverse Effect.
SECTION 4.2 Capitalization.
--------------
(a) The authorized capital stock of Parent consists of 3,000,000,000
shares of Parent Common Stock and 25,000,000 shares of preferred stock, par
value $.01 per share ("Parent Preferred Stock"). As of June 30, 1999,
1,013,385,208 shares of Parent Common Stock were outstanding.
(b) All of the shares of Parent Common Stock to be issued in the
Merger have been duly authorized by all necessary corporate action and will
be, when issued in accordance with this Agreement, duly authorized, validly
issued, fully paid and nonassessable.
30
(c) The authorized capital stock of Merger Sub consists of 100 shares
of Merger Sub Common Stock, all of which are issued and outstanding and
fully paid and nonassessable.
SECTION 4.3 Authority Relative to this Agreement. Each of Parent and
------------------------------------
Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, the Stock Option Agreement and each instrument required
hereby to be executed and delivered by it at Closing and to perform its
obligations hereunder and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement, the Stock Option Agreement and
each instrument required hereby to be executed and delivered at Closing by
Parent and Merger Sub and the consummation by Parent and Merger Sub of the
transactions contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of Parent and Merger Sub. This Agreement
and the Stock Option Agreement have been duly and validly executed and delivered
by Parent and Merger Sub and, assuming the due authorization, execution and
delivery by the Company, constitutes legal, valid and binding obligations of
Parent and Merger Sub, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights and by general equitable principles (regardless of
whether enforceability is considered in a proceeding in equity or at law).
SECTION 4.4 No Conflict, Required Filings and Consents.
------------------------------------------
(a) The execution and delivery of this Agreement, the Stock Option
Agreement and each instrument required hereby to be executed and delivered
at Closing by Parent and Merger Sub do not, and the performance of this
Agreement or the Stock Option Agreement by Parent and Merger Sub will not,
(i) conflict with or violate the Restated Articles of Organization, as
amended, of Parent (the "Parent Charter"), the Amended and Restated By-Laws
of Parent (the "Parent By-Laws"), the Merger Sub Charter or the Merger Sub
By-Laws or (ii) conflict with or violate any law, rule, regulation, order,
judgment or decree applicable to Parent or Merger Sub by which its or their
respective properties are bound or affected, except in the case of (ii) for
any such conflicts, violations, breaches, defaults or other occurrences
that could not reasonably be expected to have a Parent Material Adverse
Effect.
(b) The execution and delivery of this Agreement, the Stock Option
Agreement or any instrument required hereby to be executed and delivered by
Parent and Merger Sub does not, and the performance of this Agreement or
the Stock Option Agreement by Parent and Merger Sub will not, require any
consent, approval, authorization or permit of, or filing with or
noti-
31
fication to, any Governmental Entity, except (i) the filing of the pre-
merger notification report under the HSR Act, (ii) the filing of the
Registration Statement with the SEC in accordance with the Securities Act,
and the filing of the Proxy Statement/Prospectus with the SEC under the
Exchange Act, (iii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws and the laws of any foreign country, (iv)
the filing and recordation of appropriate merger or other documents as
required by the DGCL and (v) such other consents, approvals, authorizations
or permits which, if not obtained or made, would not be reasonably likely
to have a Parent Material Adverse Effect.
SECTION 4.5 SEC Filings; Financial Statements.
---------------------------------
(a) Parent has timely filed and made available to the Company all
forms, reports, schedules, statements and other documents required to be
filed by Parent with the SEC since December 31, 1998 (collectively, the
"Parent SEC Reports"). 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 filing prior
to the date of this Agreement, then on the date of such filing) contain any
untrue statement of a material fact or omit to state a material fact
required to be stated in such Parent SEC Reports or necessary in order to
make the statements in such Parent SEC Reports, in light of the
circumstances under which they were made, not misleading. None of Parent's
Subsidiaries are required to file any forms, reports, schedules, statements
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 after the date of this Agreement until the
Closing, complied, as of its respective date, in all material respects with
all applicable accounting requirements and the published rules and
regulations of the SEC with respect thereto, was prepared in accordance
with GAAP applied on a consistent basis throughout the periods involved and
fairly presented 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 balance sheet of Parent as of March 31,
1999 is referred to herein as the "Parent Balance Sheet."
32
SECTION 4.6 Absence of Certain Changes or Events. Since the date of the
------------------------------------
Parent Balance Sheet and except as disclosed in the Parent SEC Reports, Parent
has conducted its business in the ordinary course consistent with past practice
and, since such date, there has not occurred: (i) any change, development, event
or other circumstance, situation or state of affairs that has had or may be
reasonably expected to have a Parent Material Adverse Effect; (ii) any
amendments to or changes in the Parent Charter or Parent By-Laws, except for the
amendment to the Parent Charter approved by the stockholders of Parent on May 5,
1999; (iii) any damage to, destruction or loss of any asset of Parent or any of
its Subsidiaries (whether or not covered by insurance) that could reasonably be
expected to have a Parent Material Adverse Effect; (iv) any material change by
Parent in its accounting methods, principles or practices; (v) any material
revaluation by Parent of any of its assets, including, without limitation,
writing down the value of inventory or writing off notes or accounts receivable
other than in the ordinary course of business consistent with past practice; or
(vi) any sale of a material amount of assets (tangible or intangible) of Parent.
SECTION 4.7 Absence of Litigation. Except as disclosed in the Parent SEC
---------------------
Reports, there are no claims, actions, suits, proceedings or investigations (i)
pending against Parent or any of its Subsidiaries or any properties or assets of
Parent or of any of its Subsidiaries or (ii) to the knowledge of Parent,
threatened against Parent or any of its Subsidiaries, or any properties or
assets of Parent or of any of its Subsidiaries, in each case, which claims,
actions, suits, proceedings or investigations could reasonably be expected to
have a Parent Material Adverse Effect.
SECTION 4.8 Registration Statement; Proxy Statement/Prospectus. The
--------------------------------------------------
information supplied by Parent for inclusion in the Registration Statement shall
not at the time the Registration Statement is declared effective by the SEC
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. The information supplied by Parent for inclusion or incorporation
by reference in the Proxy Statement/Prospectus to be sent to the stockholders of
the Company in connection with the Company Stockholders Meeting, shall not, on
the date the Proxy Statement/Prospectus (or any amendment thereof or supplement
thereto) is first mailed to stockholders or at the time of the Company
Stockholders Meeting, contain any statement which, at such time and in light of
the circumstances under which it shall be made, is false or misleading with
respect to any material fact, or shall omit to state any material fact necessary
in order to make the statements made therein 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 Company
Stockholders Meeting which has become false or misleading. If at any time prior
to the Company Stockholders Meeting any event relating to Parent or any of its
respective affiliates, officers or directors should be discovered by Parent
which
33
should be set forth in an amendment to the Registration Statement or a
supplement to the Proxy Statement/Prospectus, Parent shall promptly inform the
Company. The Registration Statement shall comply in all material respects as to
form and substance with the requirements of the Securities Act, the Exchange Act
and the rules and regulations thereunder. Notwithstanding the foregoing, Parent
makes no representation or warranty with respect to any information supplied by
the Company which is contained in any of the foregoing documents.
SECTION 4.9 Brokers. No broker, finder or investment banker (other than
-------
Xxxxxx Brothers Inc., whose brokerage, finder's or other fee will be paid by
Parent) is entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent.
SECTION 4.10 Ownership of Merger Sub; No Prior Activities. As of the date
--------------------------------------------
hereof and as of the Effective Time, except for obligations or liabilities
incurred in connection with its incorporation or organization and the
transactions contemplated by this Agreement and except for this Agreement and
any other agreements or arrangements contemplated by this Agreement, Merger Sub
has not and will not have incurred, directly or indirectly, any obligations or
liabilities or engaged in any business activities of any type or kind whatsoever
or entered into any agreements or arrangements with any person.
SECTION 4.11 Pooling; Tax Matters. Neither Parent nor any of its
--------------------
affiliates has taken or agreed to take any action or failed to take any action
that would prevent (a) Parent from accounting for the business combination to be
effected by the Merger as a pooling of interests or (b) the Merger from
constituting a reorganization within the meaning of Section 368(a) of the Code.
Without limiting the effect of a breach of any other representation or warranty
set forth in this Agreement, the failure of this representation to be true and
correct shall, if as a result the Merger is not able to be accounted for as a
reorganization within the meaning of Section 368(a) of the Code, constitute a
breach of this Agreement by Parent for purposes of Section 8.1(f).
ARTICLE V
CONDUCT OF BUSINESS
SECTION 5.1 Conduct of Business by the Company Pending the Merger. The
-----------------------------------------------------
Company covenants and agrees that, during the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Effective Time, unless Parent shall otherwise agree in writing, the
Company shall
34
conduct its business and shall cause the businesses of its Subsidiaries to be
conducted only in, and the Company and its Subsidiaries shall not take any
action except in, the ordinary course of business and in a manner consistent
with past practice and in compliance in all material respects with all
applicable laws and regulations; and the Company shall use reasonable best
efforts to preserve substantially intact the business organization of the
Company and its Subsidiaries, to keep available the services of the current
officers, employees and consultants of the Company and its Subsidiaries and to
preserve the present relationships of the Company and its Subsidiaries with
customers, suppliers and other persons with which the Company or any of its
Subsidiaries has significant business relations. By way of amplification and not
limitation, except as contemplated by this Agreement or set forth in Section 5.1
of the Disclosure Schedule, the Company shall not and shall not permit its
Subsidiaries to, during the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the
Effective Time, directly or indirectly do, or propose to do, any of the
following without the prior written consent of Parent:
(a) amend or otherwise change the Company Charter or Company By-Laws;
(b) issue, sell, pledge, dispose of or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any shares of
capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital
stock, or any other ownership interest (including, without limitation, any
phantom interest) in the Company, any of its Subsidiaries or affiliates,
other than pursuant to the exercise of currently outstanding options under
the Company Stock Option Plans;
(c) sell, pledge, dispose of or encumber any assets of the Company or
any of its Subsidiaries (except for (i) sales of assets in the ordinary
course of business and in a manner consistent with past practice, not to
exceed $1,000,000 in the aggregate, (ii) dispositions of obsolete or
worthless assets, or (iii) sales of immaterial assets not in excess of
$100,000);
(d) (i) declare, set aside, make or pay any dividend or other
distribution (whether in cash, stock or property or any combination
thereof) in respect of any of its capital stock, except that a wholly owned
Subsidiary of the Company may declare and pay a dividend to its parent,
(ii) split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect of, in
lieu of or in substitution for shares of its capital stock, or (iii) amend
the terms or change the period of exercisability of, purchase, repurchase,
redeem or otherwise acquire, or permit any Subsidiary to purchase,
repurchase, redeem or otherwise acquire, any of its securities or any
securities of its Subsidiaries, or any option, warrant or right, di-
35
rectly or indirectly, to acquire any such securities, or propose to do any
of the foregoing, other than pursuant to the exercise of currently
outstanding options under the Company Stock Option Plans;
(e) (i) acquire (by merger, consolidation or acquisition of stock or
assets) any corporation, partnership or other business organization or
division thereof; (ii) incur any indebtedness for borrowed money or issue
any debt securities or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any person, or
make any loans or advances or capital contributions to or investments in
any other person, except in the ordinary course of business and consistent
with past practice; (iii) enter into or amend any material contract or
agreement, or enter into, renew, amend or terminate any lease relating to
real property; (iv) authorize any capital expenditures or purchase of fixed
assets which are, in the aggregate, in excess of $30,000,000 for the
Company and its Subsidiaries taken as a whole; or (v) enter into or amend
any contract, agreement, commitment or arrangement to effect any of the
matters prohibited by this Section 5.1(e);
(f) increase the compensation payable or to become payable to its
directors, officers or employees (except such increases payable to non-
officer employees made in the ordinary course of business consistent with
past practice), grant any severance or termination pay to, or enter into or
amend any employment or severance agreement with, any director, officer
(except for officers who are terminated on an involuntary basis) or other
employee of the Company or any of its Subsidiaries, establish, adopt, enter
into or amend any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any current or former
directors, officers or employees, pay any bonuses to any officer of the
Company (except as set forth in Section 5.1(f) of the Disclosure Schedule),
materially change any actuarial assumption or other assumption used to
calculate funding obligations with respect to any pension or retirement
plan, or change the manner in which contributions to any such plan are made
or the basis on which such contributions are determined, except, in each
case, as may be required by law or contractual commitments which are
existing as of the date hereof and listed in Section 3.13 of the Disclosure
Schedule;
(g) take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to revenue
recognition, payments of accounts payable and collection of accounts
receivable), except as required by GAAP;
36
(h) make any material Tax election inconsistent with past practice or
settle or compromise any material federal, state, local or foreign Tax
liability or agree to an extension of a statute of limitations, except to
the extent the amount of any such settlement has been reserved for in the
financial statements contained in the Company SEC Reports filed prior to
the date of this Agreement;
(i) pay, discharge or satisfy any 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 and consistent with past practice of liabilities reflected or
reserved against in the financial statements contained in the Company SEC
Reports filed prior to the date of this Agreement or incurred in the
ordinary course of business and consistent with past practice; or
(j) take, or agree in writing or otherwise to take, any of the actions
described in Sections 5.1 (a) through (i) above, or any action which would
make any of the representations or warranties of the Company contained in
this Agreement untrue or incorrect or prevent the Company from performing
or cause the Company not to perform its covenants hereunder, in each case,
such that the conditions set forth in Sections 7.2(a) or 7.2(b), as the
case may be, would not be satisfied.
SECTION 5.2. Advice of Changes. Parent and the Company shall promptly
-----------------
advise the other party orally and in writing to the extent it has knowledge of
(i) any representation or warranty made by it (and, in the case of Parent, made
by Merger Sub) contained in this Agreement or the Stock Option Agreement
becoming untrue or inaccurate in any respect where the failure of such
representation to be so true and correct (without giving effect to any
limitation as to "materiality," "Company Material Adverse Effect" or "Parent
Material Adverse Effect" set forth therein), individually or in the aggregate,
has had or is reasonably likely to have a Company Material Adverse Effect or
Parent Material Adverse Effect, as the case may be, (ii) the failure by it (and,
in the case of Parent, by Merger Sub) to comply in any material respect with or
satisfy in any material respect any covenant, condition or agreement to be
complied with or satisfied by it under this Agreement or the Stock Option
Agreement and (iii) any change or event having, or which is reasonably likely to
have, a Company Material Adverse Effect or a Parent Material Adverse Effect, as
the case may be, on such party or the ability for the conditions set forth in
Article VII to be satisfied; provided, however, that no such notification shall
affect in any manner the representations, warranties, covenants or agreements of
the parties (or remedies with respect thereto) or any matter set forth in the
Disclosure Schedule or the conditions to the obligations of the parties under
this Agreement or the Stock Option Agreement.
37
SECTION 5.3. Cooperation. Subject to compliance with applicable law, from
-----------
the date hereof until the Effective Time, (a) the Company shall confer on a
regular and frequent basis with one or more representatives of the Parent to
report operational matters that are material and the general status of ongoing
operations and (b) each of Parent and the Company shall promptly provide the
other party or its counsel with copies of all filings made by such party with
any Governmental Entity in connection with this Agreement, the Merger and the
transactions contemplated hereby and thereby.
SECTION 5.4 Company Stock Purchase Plan. The Company shall take all
---------------------------
necessary and appropriate actions with respect to the Company Employee Qualified
Stock Purchase Plan so that (a) the offering period ending July 31, 1999 is the
final offering period under such plan and (b) such plan is terminated
immediately prior to the Effective Time, without any additional offering periods
having commenced thereunder.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1. Access to Information; Confidentiality. The Company shall
--------------------------------------
(and shall cause its Subsidiaries and its and their respective officers,
directors, employees, auditors and agents to) afford to Parent and to Parent's
officers, employees, financial advisors, legal counsel, accountants, consultants
and other representatives reasonable access during normal business hours
throughout the period prior to the Effective Time to all of its books and
records (other than privileged documents) and its properties, plants and
personnel and, during such period, the Company shall furnish promptly to Parent
a copy of each report, schedule and other document filed or received by it
pursuant to the requirements of federal securities laws, provided that no
investigation pursuant to this Section 6.1 shall affect any representations or
warranties made herein or the conditions to the obligations of the respective
parties to consummate the Merger. Unless otherwise required by law, each party
agrees that it (and its Subsidiaries and its and their respective
representatives) shall hold in confidence all non-public information acquired in
accordance with the terms of the Non-Disclosure Agreement dated June 30, 1999
between Parent and the Company (the "Confidentiality Agreement").
SECTION 6.2 No Solicitation.
---------------
(a) The Company and each of its Subsidiaries and affiliates shall not,
directly or indirectly, through any officer, director, employee,
representative or agent of the Company or any of its Subsidiaries (and it
shall use
38
reasonable efforts to cause such officers, directors, employees,
representatives and agents not to, directly or indirectly), (i) solicit,
initiate, facilitate or encourage any inquiries or proposals that
constitute, or could reasonably be expected to lead to, an Acquisition
Proposal (as herein defined) or (ii) engage in negotiations or discussions
concerning, or provide any non-public information to any person or entity
relating to, any Acquisition Proposal; provided, however, that if, at any
-------- -------
time prior to the date of the Company Stockholders Meeting (the "Applicable
Period"), the Board of Directors of the Company determines in good faith,
after consultation with outside counsel, that it is necessary to do so in
order to comply with its fiduciary duties to the Company's stockholders
under applicable law, the Company may, in response to a Superior Proposal
(as defined in Section 6.2(b)) which was not solicited by it or which did
not otherwise result from a breach of this Section 6.2(a), and subject to
providing prior written notice of its decision to take such action to
Parent (a "Section 6.2 Notice") and compliance with Section 6.2(c), (x)
furnish information with respect to the Company and its Subsidiaries to any
person making an Superior Proposal pursuant to a confidentiality agreement
containing terms no less favorable to the Company than the Confidentiality
Agreement and (y) participate in discussions or negotiations regarding such
Superior Proposal. For purposes of this Agreement, "Acquisition Proposal"
means any inquiry, proposal or offer from any person relating to any direct
or indirect acquisition or purchase of a business that constitutes 15% or
more of the net revenues, net income or the assets of the Company and its
Subsidiaries, taken as a whole, or 15% or more of any class of equity
securities of the Company or any of its Subsidiaries, any tender offer or
exchange offer that if consummated would result in any person beneficially
owning 15% or more of any class of equity securities of the Company or any
of its Subsidiaries, or any merger, consolidation, business combination,
recapitalization, liquidation, dissolution or similar transaction involving
the Company or any of its Subsidiaries, other than the transactions
contemplated by this Agreement.
(b) Except as expressly permitted by this Section 6.2, neither the
Board of Directors of the Company nor any committee thereof shall (i)
withdraw or modify, or propose publicly to withdraw or modify, in a manner
adverse to Parent, the approval or recommendation by such Board of
Directors or such committee of the Merger or this Agreement, (ii) approve
or recommend, or propose publicly to approve or recommend, any Acquisition
Proposal, or (iii) cause the Company to enter into any letter of intent,
agreement in principle, acquisition agreement or other similar agreement
related to any Acquisition Proposal. Notwithstanding the foregoing, during
the Applicable Period, in response to a Superior Proposal which was not
solicited by the Company and which did not otherwise result from a breach
of Section 6.2(a), the Board of Directors of the Company may (subject to
this and the following
39
sentences) terminate this Agreement, but only at a time that is during the
Applicable Period and is after the fifth business 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. For purposes of this Agreement, a
"Superior Proposal" means any proposal made by a third party to acquire,
directly or indirectly, including pursuant to a tender offer, exchange
offer, merger, consolidation, business combination, recapitalization,
liquidation, dissolution or similar transaction, for consideration
consisting of cash and/or securities, more than 50% of the combined voting
power of the shares of Company Common Stock then outstanding or all or
substantially all the assets of the Company and otherwise on terms which
the Board of Directors of the Company determines in its good faith judgment
(based on the advice of a financial advisor of nationally recognized
reputation) to be more favorable to the Company's stockholders than the
Merger and for which financing, to the extent required, is then committed
or which, in the good faith judgment of the Board of Directors of the
Company, is reasonably capable of being obtained by such third party.
(c) The Company agrees that as of the date hereof, it, its
Subsidiaries and affiliates (and their respective officers, directors,
employees, representatives and agents) shall immediately cease and cause to
be terminated any existing activities, discussions or negotiations with any
person (other than Parent or its representatives) conducted heretofore with
respect to any Acquisition Proposal. The Company shall notify Parent
immediately after receipt by the Company (or its advisors) of any
Acquisition Proposal or any request for nonpublic information in connection
with an Acquisition Proposal or for access to the properties, books or
records of the Company or any of its Subsidiaries by any person or entity
that informs the Company that it is considering making, or has made, an
Acquisition Proposal. Such notice to Parent shall be made orally and in
writing and shall indicate in reasonable detail the identity of the offeror
and the terms and conditions of such proposal, inquiry or contact. The
Company shall keep Parent informed of all material developments and the
status of any Acquisition Proposal, any negotiations or discussions with
respect to any Acquisition Proposal or any request for nonpublic
information in connection with any Acquisition Proposal or for access to
the properties, books or records of the Company or any of its Subsidiaries
by any person or entity that is considering making, or has made, an
Acquisition Proposal. The Company shall provide Parent with copies of all
documents received from or delivered or sent to any person or entity that
is considering making or has made an Acquisition Proposal.
40
(d) Nothing contained in this Section 6.2 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by
Rule 14e-2(a) promulgated under the Exchange Act or from making any
disclosure to the Company's stockholders if, in the good faith judgment of
the Board of Directors of the Company, after consultation with outside
counsel, failure so to disclose would be inconsistent with its obligations
under applicable law; provided, however, that neither the Company nor its
Board of Directors nor any committee thereof shall withdraw or modify, or
propose publicly to withdraw of modify, its position with respect to this
Agreement or the Merger or approve or recommend, or propose publicly to
approve or recommend, an Acquisition Proposal.
SECTION 6.3 Proxy Statement/Prospectus; Registration Statement.
--------------------------------------------------
(a) As promptly as practicable after execution of this Agreement,
Parent and the Company shall in consultation with each other prepare, and
the Company shall file with the SEC, preliminary proxy materials which
shall constitute the Proxy Statement/Prospectus. As promptly as
practicable after comments are received from the SEC thereon and after the
furnishing by the Company and Parent of all information required to be
contained therein, (i) the Company shall file with the SEC the Proxy
Statement/Prospectus and (ii) Parent shall file with the SEC the
Registration Statement. The Company and Parent shall use all reasonable
efforts to cause the Registration Statement to become effective as soon
thereafter as practicable.
(b) The Company shall use all reasonable efforts to mail the Proxy
Statement/Prospectus to the stockholders of the Company as soon as
practicable after the Registration Statement is declared effective by the
SEC. Subject to the Company's right to terminate this Agreement pursuant
to Section 6.2(b), the Proxy Statement/Prospectus shall include the
recommendation of the Board of Directors of the Company in favor of the
Merger.
(c) The Company shall furnish Parent with all information concerning
the Company and the holders of its capital stock and shall take such other
action as Parent may reasonably request in connection with the Registration
Statement and the issuance of the shares of Parent Common Stock. If at any
time prior to the Effective Time any event or circumstance relating to the
Company, Parent or any of their respective Subsidiaries, affiliates,
officers or directors should be discovered by such party which should be
set forth in an amendment or a supplement to the Registration Statement or
Proxy Statement/Prospectus, such party shall promptly inform the other
thereof and take appropriate action in respect thereof.
41
(d) The Company and Parent shall make any necessary filing with
respect to the Merger under the Securities Act and the Exchange Act and the
rules and regulations thereunder.
SECTION 6.4 Company Stockholders Meeting.
----------------------------
(a) The Company shall, subject to and in accordance with applicable
law and the Company Charter and Company By-Laws, promptly and duly call,
give notice of, convene and hold the Company Stockholders Meeting to be
held as promptly as practicable following the date upon which the
Registration Statement becomes effective for the purpose of voting on the
Merger and this Agreement. Subject to its right to terminate this
Agreement pursuant to Section 6.2(b), the Company will, through its Board
of Directors, recommend to its stockholders the approval and adoption of
this Agreement, the Merger and the other transactions contemplated thereby
and will use its best efforts to solicit from its stockholders proxies in
favor of the Merger and this Agreement.
(b) At or prior to the Closing, the Company shall deliver to Parent a
certificate of its Corporate Secretary setting forth the voting results
from the Company Stockholders Meeting.
SECTION 6.5 Legal Conditions to Merger. Each of Parent and, subject to
--------------------------
Section 6.2, the Company will use all reasonable best efforts to comply promptly
with all legal requirements which may be imposed 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 will promptly cooperate with and furnish
information to each other in connection with any such requirements imposed upon
any of them or any of their Subsidiaries in connection with the Merger. Each of
Parent and the Company will, and will cause its Subsidiaries to, take all
reasonable actions necessary to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity required to be obtained or made by Parent, the
Company or any of their Subsidiaries in connection with the Merger or taking of
any action contemplated thereby or by this Agreement.
SECTION 6.6 Agreements with Respect to Affiliates. The Company will cause
-------------------------------------
each person who is identified in Section 3.30 of the Disclosure Schedule and any
other person who may be or become an "affiliate" of the Company as of the time
of the Company Stockholders Meeting for purposes of Rule 145 under the
Securities Act ("Rule 145") to deliver to Parent, as soon as practicable but not
later than thirty days preceding the Effective Time, a written agreement (an
"Affiliate Agreement") in connection with restrictions on affiliates under Rule
145 and pooling of interests ac-
42
counting treatment, substantially in the form of Exhibit B hereto. The Company
shall provide prompt notice to Parent of any such other person who may be or
become an "affiliate" of the Company as of the time of the Company Stockholders
Meeting who is not identified in Section 3.30 of the Disclosure Schedule.
SECTION 6.7 Tax-Free Reorganization. Parent and the Company intend that
-----------------------
the Merger will qualify as a reorganization within the meaning of Section 368(a)
of the Code. Parent and the Company shall each use its reasonable best efforts
to cause the Merger to so qualify. The parties agree and acknowledge that if
(i) Parent has, not later than three days prior to the Effective Time, provided
written notice to the Company of its intention to merge the Surviving
Corporation with and into Parent with Parent surviving the merger (the "Upstream
Merger"), and (ii) the Company consents to the Upstream Merger, which consent
shall not be unreasonably withheld, then the Upstream Merger shall occur
immediately following the Effective Time. Neither Parent nor the Company shall
knowingly take any action, or knowingly fail to take any action, that would be
reasonably likely to jeopardize the qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code.
SECTION 6.8 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 for accounting purposes.
Neither Parent nor the Company shall knowingly take any action, or knowingly
fail to take any action, that would be reasonably likely to jeopardize the
treatment of the Merger as a pooling of interests for accounting purposes. Each
of Parent and the Company agrees to take such action as may be reasonably
required to negate the impact of any past actions which to its knowledge could
be reasonably likely to jeopardize the treatment of the Merger as a pooling of
interests for accounting purposes.
SECTION 6.9 Letters of Accountants.
----------------------
(a) Parent shall use its reasonable best efforts to cause to be
delivered to the Company (i) a letter of PricewaterhouseCoopers LLP,
Parent's independent auditors, dated a date within two business days before
the date on which the Registration Statement shall become effective and
addressed to the Company, in form and substance reasonably satisfactory to
the Company and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement, which letter shall be brought down
to the Effective Time, and (ii) the letter of PricewaterhouseCoopers LLP
referred to in Section 7.2(d).
(b) The Company shall use its reasonable best efforts to cause to be
delivered to Parent (i) a letter of PricewaterhouseCoopers LLP, the
Com-
43
pany's independent auditors, dated a date within two business days before
the date on which the Registration Statement shall become effective and
addressed to Parent, in form and substance reasonably satisfactory to
Parent and customary in scope and substance for letters delivered by
independent public accountants in connection with registration statements
similar to the Registration Statement, which letter shall be brought down
to the Effective Time, and (ii) the letter of PricewaterhouseCoopers LLP
referred to in Section 7.2(d).
SECTION 6.10 Public Announcements. Parent and the Company shall consult
--------------------
with each other before issuing any press release or making any public statement
with respect to the Merger or this Agreement and shall not issue any such press
release or make any such public statement without the prior written consent of
the other party, which shall not be unreasonably withheld or delayed; provided,
however, that a party may, without the prior consent of the other party, issue
such press release or make such public statement as may upon the advice of
counsel be required by law or the rules and regulations of the NYSE if it has
used all reasonable efforts to consult with the other party prior thereto.
SECTION 6.11 Listing of Parent Shares. Parent shall use its reasonable
------------------------
best efforts to have authorized for listing on the NYSE, upon official notice of
issuance, the shares of Parent Common Stock to be issued in the Merger.
SECTION 6.12 Employee Benefits; 401(k) Plan.
------------------------------
(a) From and after the Effective Time, Parent will, or will cause the
Surviving Corporation to, recognize the prior service with the Company or
its Subsidiaries of each employee of the Company or its Subsidiaries as of
the Effective Time (the "Company Employees") in connection with all
employee benefit plans of Parent or its affiliates in which Company
Employees are eligible to participate following the Effective Time, for
purposes of eligibility, vesting and levels of benefits (but not for
purposes of benefit accruals under any defined benefit pension plan). From
and after the Effective Time, Parent will, or will cause the Surviving
Corporation to (i) cause any pre-existing conditions or limitations and
eligibility waiting periods under any group health plans of Parent or its
affiliates to be waived with respect to Company Employees and their
eligible dependents and (ii) give each Company Employee credit for the plan
year in which the Effective Time occurs towards applicable deductibles and
annual out-of-pocket limits for expenses incurred prior to the Effective
Time. Notwithstanding anything contained herein to the contrary, Parent
and its Subsidiaries agree to honor in accordance with their terms and not
contest all benefits accrued or vested as of the Effective Time under the
employee benefit plans and agreements of the Com-
44
pany and its Subsidiaries (including those set forth in Section 3.13 of the
Disclosure Schedule), including, without limitation, any rights or benefits
arising as a result of the transactions contemplated by this Agreement
(either alone or in combination with any other event); it being understood
that for purposes of all such plans and agreements, the transactions
contemplated by this Agreement are, or will be deemed to be, a "change of
control".
(b) Prior to the Effective Time, the Company shall take such actions
as Parent may reasonably request so as to enable the Surviving Corporation
to effect as of the Effective Time such actions relating to the Data
General Corporation Savings and Investment Plan (the "401(k) Plan") as
Parent may deem necessary or appropriate, subject to the terms of the
401(k) Plan and applicable law and provided that such action does not
preclude the immediate participation of the Company Employees in any
successor plan.
SECTION 6.13 Stock Plans.
-----------
(a) Each option granted to a Company employee to acquire shares of
Company Common Stock (a "Company Stock Option") that is issued under a
Company Stock Option Plan (other than the Company Qualified Employee Stock
Purchase Plan) and which is outstanding immediately prior to the Effective
Time, whether or not then vested or exercisable, shall, effective as of the
Effective Time, become and represent an option to acquire the number of
shares of Parent Common Stock (a "Substitute Option") determined by
multiplying (i) the number of shares of Company Stock subject to such
Company Stock Option immediately prior to the Effective Time by (ii) the
Exchange Ratio (rounded down to the nearest whole share), at an exercise
price per share of Parent Common Stock (increased to the nearest whole
cent) equal to the exercise price per share of such Company Stock Option
divided by the Exchange Ratio; provided, however, that in the case of any
-------- -------
Company Stock Option to which Section 421 of the Code applies by reason of
its qualification as an incentive stock option under Section 422 of the
Code, the conversion formula shall be adjusted if necessary to comply with
Section 424(a) of the Code. After the Effective Time, except as provided
above in this Section 6.13, each Substitute Option shall be exercisable
upon the same terms and conditions as were applicable to the related
Company Stock Option immediately prior to the Effective Time.
45
(b) Prior to the Effective Time, the Company shall (i) obtain any
consents from holders of Company Stock Options and (ii) amend the terms of
its equity incentive plans or arrangements, in each case as is necessary to
give effect to the provisions of paragraph (a) of this Section 6.13.
SECTION 6.14 Consents. The Company shall use all reasonable best efforts
--------
to obtain all necessary consents, waivers and approvals under any of the
Company's material agreements, contracts, licenses or leases in connection with
the Merger, including without limitation each of the consents listed in Section
6.14 of the Disclosure Schedule.
SECTION 6.15 Rights Plan. So long as this Agreement shall not have been
-----------
terminated pursuant to Article 8, the Company shall not redeem the Company
Rights, or amend or modify (other than to delay the Distribution Date (as
defined in the Company Rights Agreement) or to render the Rights inapplicable to
the Merger or any action permitted under this Agreement) or terminate the
Company Rights Agreement (including any such redemption, amendment, modification
or termination which would make the Company Rights Agreement or Rights
inapplicable to any Acquisition Proposal, prior to the Effective Time). The
Company shall take all action necessary so that none of Parent or Merger Sub
will be an "Acquiring Person" under the Company Rights Agreement and to ensure
that neither the Company Rights Agreement nor the Rights will apply to Parent or
Merger Sub as a result of this Agreement, the Stock Option Agreement or the
transactions contemplated hereby or thereby.
SECTION 6.16 Indemnification and Insurance.
-----------------------------
(a) All rights to indemnification, advancement of litigation expenses
and limitation of personal liability existing in favor of the directors,
officers and employees of the Company and its Subsidiaries under the
provisions existing on the date hereof in the Company Charter or Company
By-Laws shall, with respect to any matter existing or occurring at or prior
to the Effective Time (including the transactions contemplated by this
Agreement), survive the Effective Time, and, as of the Effective Time,
Parent and the Surviving Corporation shall assume all obligations of the
Company in respect thereof as to any claim or claims asserted prior to or
within a four-year period immediately after the Effective Time.
(b) For a period of four years after the Effective Time, the Surviving
Corporation shall cause to be maintained in effect the current policies of
directors' and officers' and fiduciary liability insurance maintained by
the
46
Company (provided that the Surviving Corporation may substitute
therefor policies of at least the same coverage and amounts containing
terms and conditions which are no less advantageous to former officers and
directors of the Company) only with respect to claims arising from facts or
events which occurred at or before the Effective Time; provided, however,
that in no event shall the Surviving Corporation be required to expend
pursuant to this Section 6.16(b) more than an aggregate amount equal to
150% of current aggregate annual premiums paid by the Company for such
insurance (the "Maximum Amount") (which premiums the Company represents and
warrants to be $108,000 in the aggregate). If the amount of the aggregate
annual premiums necessary to maintain or procure such insurance coverage
exceeds the Maximum Amount, the Surviving Corporation during such four-year
period shall maintain or procure as much coverage as possible for aggregate
annual premiums not to exceed the Maximum Amount.
SECTION 6.17 Company 6% Convertible Subordinated Notes. Effective at the
-----------------------------------------
Effective Time, the Company shall enter into a supplemental indenture under the
Indenture dated as of May 21, 1997 between the Company and the Bank of New York,
as Trustee (the "Indenture"), providing for the Company's 6% Convertible
Subordinated Notes after the Effective Time to be convertible into shares of
Parent Common Stock as provided in Section 15.6 of the Indenture.
SECTION 6.18 Additional Agreements; Reasonable Best 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 actions 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.
ARTICLE VII
CONDITIONS TO THE MERGER
SECTION 7.1 Conditions to Obligation of Each Party to Effect the Merger.
-----------------------------------------------------------
The respective obligations of each party to effect the Merger shall be subject
to the satisfaction at or prior to the Effective Time of the following
conditions:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the
Securities Act. No stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no proceedings
for that purpose and no similar proceeding in respect of the Proxy
Statement/Prospectus shall
47
have been initiated or threatened by the SEC;
(b) Stockholder Approval. This Agreement and the Merger shall have
--------------------
been approved and adopted by the requisite vote of the stockholders of the
Company;
(c) HSR Act and Other Approvals. The waiting period applicable to the
---------------------------
consummation of the Merger under the HSR Act and under any other legal
requirement (including without limitation any authorization, consent, order
or approval, or dedication, filing or expiration of any waiting period) of
any Governmental Entity shall have expired or been terminated, as the case
may be, and any requirements of other jurisdictions applicable to the
consummation of the Merger shall have been satisfied, unless the failure of
such requirements to be satisfied does not constitute a Company Material
Adverse Effect or Parent Material Adverse Effect;
(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 restraint or
prohibition preventing the consummation of the Merger shall be in effect,
nor shall any proceeding brought by any administrative agency or commission
or other Governmental Entity seeking any of the foregoing be pending; and
there shall not be any action taken, or any statute, rule, regulation or
order enacted, entered, enforced or deemed applicable to the Merger which
makes the consummation of the Merger illegal;
(e) Tax Opinions. (i) Parent shall have received an opinion of its tax
------------
counsel, Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, special counsel to
Parent, based on reasonably requested representation letters and customary
assumptions, dated as of the Closing Date, substantially to the effect that
for U.S. federal income tax purposes the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Code and (ii)
the Company shall have received an opinion of its tax counsel, Wachtell,
Lipton, Xxxxx & Xxxx, special counsel to the Company, based on reasonably
requested representation letters and customary assumptions, dated as of the
Closing Date, substantially to the effect that for U.S. federal income tax
purposes the Merger will qualify as a reorganization within the meaning of
Section 368(a) of the Code. The opinion conditions referred to in the
preceding sentence shall not be waivable after receipt of the stockholder
approval referred to in Section 7.1(b), unless further stockholder approval
is obtained with appropriate disclosure;
48
(f) Governmental Actions. There shall not be pending or threatened
--------------------
any action or proceeding (or any investigation or other inquiry that might
result in such an action or proceeding) by any Governmental Entity or
administrative agency before any Governmental Entity, administrative agency
or court of competent jurisdiction, nor shall there be in effect any
judgment, decree or order of any Governmental Entity, administrative agency
or court of competent jurisdiction, in either case, seeking to prohibit or
limit Parent from exercising all material rights and privileges pertaining
to its ownership of the Surviving Corporation or the ownership or operation
by Parent of all or a material portion of the business or assets of Parent,
or seeking to compel Parent to dispose of or hold separate all or any
material portion of the business or assets of Parent (including the
Surviving Corporation and its subsidiaries), as a result of the Merger or
the transactions contemplated by this Agreement; and
(g) NYSE Listing. The shares of Parent Common Stock issuable in the
------------
Merger shall have been authorized for listing on the NYSE upon official
notice of issuance.
SECTION 7.2 Additional Conditions to Obligations of Parent and Merger Sub.
-------------------------------------------------------------
The obligations of Parent and Merger Sub to effect the Merger are also subject
to the following conditions:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties of the Company contained in this Agreement shall be true and
correct without reference to any qualification as to materiality such that
the aggregate effect of any inaccuracies in such representations and
warranties will not have a Company Material Adverse Effect, in each case as
of the date of this Agreement and (except to the extent such
representations speak as of an earlier date) as of the Closing Date as
though made on and as of the Closing Date, except for changes contemplated
by this Agreement; and Parent and Merger Sub shall have received a
certificate signed on behalf of the Company by the chief executive officer
and chief financial officer of the Company to such effect;
(b) Agreements and Covenants. The Company shall have performed or
------------------------
complied in all material respects with all agreements and covenants
required by this Agreement to be performed or complied with by it at or
prior to the Closing Date; and Parent and Merger Sub shall have received a
certificate signed by the chief executive officer and the chief financial
officer of the Company to such effect;
49
(c) Consents Obtained. All consents, waivers, approvals,
-----------------
authorizations and orders required to be obtained, and all filings required
to be made, by the Company for the authorization, execution and delivery of
this Agreement and the consummation by it of the transactions contemplated
hereby shall have been obtained and made by the Company except where the
failure to obtain such consents, waivers, approvals, authorizations or
orders or to make such filings, in the aggregate shall not be or have a
Company Material Adverse Effect;
(d) Opinion of Accountants. Parent shall have received letters from
----------------------
PricewaterhouseCoopers LLP, dated a date within two business days of the
Proxy Statement/Prospectus and within two business days of the Closing Date
and addressed to Parent, stating that the business combination to be
effected by the Merger will qualify as a pooling of interests transaction
under generally accepted accounting principles. The Company shall have
received (and delivered to Parent copies of) letters from
PricewaterhouseCoopers LLP, dated a date within two business days of the
Proxy Statement/Prospectus and within two business days of the Closing Date
and addressed to the Company, stating that neither the Company nor any of
its Subsidiaries has taken or agreed to take any action that (without
giving effect to this Agreement, the transactions contemplated hereby, or
any action taken or agreed to be taken by Parent or any of its
Subsidiaries) would prevent Parent from accounting for the business
combination to be effected by the Merger as a pooling of interests
transaction under generally accepted accounting principles; and
(e) Affiliate Agreements. Parent shall have received from each person
--------------------
within the time frame specified in Section 6.6 who is identified in Section
3.30 of the Disclosure Schedule or in any notice delivered by the Company
to Parent pursuant to Section 6.6 as an "affiliate" of the Company, an
Affiliate Agreement, and such Affiliate Agreement shall be in full force
and effect.
SECTION 7.3 Additional Conditions to Obligation of the Company. The
--------------------------------------------------
obligation of the Company to effect the Merger is also subject to the following
conditions:
(a) Representations and Warranties. Each of the representations and
------------------------------
warranties of Parent and Merger Sub contained in this Agreement shall be
true and correct without reference to any qualification as to materiality
such that the aggregate effect of any inaccuracies in such representations
and warranties will not have a Parent Material Adverse Effect, in each case
as of the date of this Agreement and (except to the extent such
representations speak as of an earlier date) as of the Closing Date as
though made on and as
50
of the Closing Date, except for changes contemplated by this Agreement; and
the Company shall have received a certificate signed on behalf of the
Company by the chief executive officer and chief financial officer of
Parent to such effect; and
(b) Agreements and Covenants. Parent and Merger Sub shall have
------------------------
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
them at or prior to the Closing Date; and the Company shall have received a
certificate signed by the chief executive officer and the chief financial
officer of Parent to such effect.
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination. This Agreement may be terminated at any time
-----------
prior to the Effective Time, notwithstanding approval thereof by the
stockholders of the Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not have been
consummated by February 29, 2000 (provided 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);
(c) by either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or
commission shall have issued a nonappealable final order, decree or ruling
or taken any other action having the effect of permanently restraining,
enjoining or otherwise prohibiting the Merger (provided that the party
seeking to terminate pursuant to this Section 8.1(c) shall have complied
with its obligations under Section 6.5 and used its reasonable best efforts
to have any such order, decree, ruling or other action vacated or lifted);
(d) by either Parent or the Company, if at the Company Stockholders
Meeting (including any adjournment or postponement), the requisite vote of
the stockholders of the Company in favor of this Agreement and the
51
Merger shall not have been obtained;
(e) by Parent, if the Company shall have breached or failed to perform
any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform would cause
the conditions set forth in Sections 7.2(a) or 7.2(b) to not be satisfied
and which breach shall not have been cured within 10 business days
following receipt by the Company of written notice of such breach from
Parent;
(f) by the Company, if Parent shall have breached or failed to perform
any of its representations, warranties, covenants or other agreements
contained in this Agreement, which breach or failure to perform would cause
the conditions set forth in Sections 7.3(a) or 7.3(b), to not be satisfied
and which breach shall not have been cured within 10 business days
following receipt by Parent of written notice of such breach from the
Company;
(g) by the Company in accordance with the provisions of Section
6.2(b); provided that the termination described in this clause (g) shall
not be effective unless and until the Company shall have paid to Parent in
full the fee and expense reimbursement described in Section 8.3; or
(h) by Parent (i) if the Company or any of its officers or directors
participate in discussions or negotiations in breach of Section 6.2; (ii)
if the Company or any of its officers or directors are otherwise in
material breach of Section 6.2; or (iii) in the event of a breach of
Section 6.4(a).
SECTION 8.2 Effect of Termination. In the event of the termination of
---------------------
this Agreement pursuant to Section 8.1, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or stockholders except (i) that the
provisions of Sections 3.29, 4.9, 8.3, this Section 8.2 and Article IX hereof
shall survive termination and (ii) nothing herein shall relieve any party from
liability for any willful breach hereof. The Confidentiality Agreement shall
survive termination of this Agreement as provided therein.
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' fees and expenses, incurred in
connection with the printing and filing of the Proxy Statement/Prospectus
(including any preliminary
52
materials related thereto), the Registration Statement (including financial
statements and exhibits) and any amendments or supplements thereto and filings
under the HSR Act.
(b) The Company shall reimburse Parent for all fees and expenses of Parent
actually incurred relating to the transactions contemplated by this Agreement
prior to termination (including without limitation fees and expenses of Parent's
counsel, accountants and financial advisors), upon the termination of this
Agreement (i) by Parent or the Company pursuant to Section 8.1(d), (ii) by
Parent pursuant to Sections 8.1(e) or 8.1(h) or (iii) by the Company pursuant to
Section 8.1(g).
(c) The Company shall pay Parent a termination fee of $44,630,000 upon the
earliest to occur of the following events (each, a "Termination Event"):
(i) the entry by the Company into an agreement with respect to,
or the consummation of, any Acquisition Proposal or the acquisition by
any person of beneficial ownership of 20% or more of the equity or
voting interests of the Company in any such case within one year of
the termination of this Agreement pursuant to Sections 8.1(b) or
8.1(d) if prior to such termination an Acquisition Proposal shall have
been publicly announced or otherwise become publicly known or any
person shall have publicly announced an intention (whether or not
conditional) to make an Acquisition Proposal;
(ii) the termination of this Agreement by Parent pursuant to
Section 8.1(h); or
(iii) the termination of this Agreement by the Company pursuant
to Section 8.1(g).
(d) The expenses and fees, if applicable, payable pursuant to Sections
8.3(b) and 8.3(c) shall be paid promptly, but in no event later than the
date of the first to occur of the events described in Sections 8.3(b)(i),
(ii) or (iii) or 8.3(c)(i), (ii) or (iii); provided, that in no event shall
the Company be required to pay the expenses and fees of Parent, if,
immediately prior to the termination of this Agreement, Parent was in
material breach of its obligations under this Agreement. The Company
acknowledges that the agreements contained in Section 8.3(c) are an
integral part of the transactions contemplated by this Agreement, and that,
without these agreements, Parent would not enter into this Agreement;
accordingly, if the Company fails promptly to pay the amount due pursuant
to Section 8.3(c), and, in order to obtain such payment, Parent commences a
suit which results in a judgment against the Company for the fee set forth
in Section 8.3(c), the Company shall pay to
53
Parent its costs and expenses (including attorneys' fees and expenses) in
connection with such suit, together with interest on the amount of the fee
at the prime rate of Citibank, N.A. in effect on the date such payment was
required to be made.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Nonsurvival of Representations; Warranties and Agreements.
---------------------------------------------------------
None of the representations, warranties or agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Articles I and II, Sections 6.10,
6.12, 6.13, 6.16, 6.17, 6.18, 8.2 and 8.3, the last sentence of Section 9.4,
this Article IX and the Affiliate Agreements. The Confidentiality Agreement
shall survive the execution and delivery of this Agreement pursuant to its terms
and conditions.
SECTION 9.2 Notices. All notices and other communications given or made
-------
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made if and when delivered personally or by overnight courier to the parties
at the following addresses or sent by electronic transmission, with confirmation
received, to the telecopy numbers specified below (or at such other address or
telecopy number for a party as shall be specified by like notice):
(a) If to Parent or Merger Sub:
XXX Xxxxxxxxxxx
00 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Vice President, Corporate Development
Telecopier No.: 000-000-0000
Telephone No.: 000-000-0000
54
With a copy to:
XXX Xxxxxxxxxxx
00 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Office of the General Counsel
Telecopier No.: 000-000-0000
Telephone No.: 000-000-0000
(b) If to the Company:
Data General Corporation
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Attention: Xxxxxx X. Skates
Telecopier No.: 000-000-0000
Telephone No.: 000-000-0000
With a copy to:
Wachtell, Rosen, Lipton & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxxxx X. Xxxxxxx
Telecopier No.: 212-403-2000
Telephone No.: 000-000-0000
SECTION 9.3 Certain Definitions. For purposes of this Agreement, the
-------------------
term:
(a) "affiliate" means a person that directly or indirectly, through
one or more intermediaries, controls, is controlled by, or is under common
control with, the first mentioned person; including, without limitation,
any partnership or joint venture in which the first mentioned person
(either alone, or through or together with any other subsidiary) has,
directly or indirectly, an interest of 5% or more;
(b) "beneficial owner" with respect to any shares of Company Common
Stock means a person who shall be deemed to be the beneficial
55
owner of such shares (i) which such person or any of its affiliates or
associates (as such term is defined in Rule 12b-2 of the Exchange Act)
beneficially owns, directly or indirectly, (ii) which such person or any of
its affiliates or associates has, directly or indirectly, (A) the right to
acquire (whether such right is exercisable immediately or subject only to
the passage of time), pursuant to any agreement, arrangement or
understanding or upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (B) the right to vote pursuant to any
agreement, arrangement or understanding, or (iii) which are beneficially
owned, directly or indirectly, by any other persons with whom such person
or any of its affiliates or associates has any agreement, arrangement or
understanding for the purpose of acquiring, holding, voting or disposing of
any shares;
(c) "business day" means any day other than a Saturday or Sunday or
any day on which banks in The Commonwealth of Massachusetts are required or
authorized to be closed;
(d) "control" including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee
or executor, of the power to direct or cause the direction of the
management or policies of a person, whether through the ownership of stock,
as trustee or executor, by contract or credit arrangement or otherwise; and
(e) "person" means an individual, corporation, partnership,
association, trust, unincorporated organization, other entity or group (as
defined in Section 13(d)(3) of the Exchange Act).
SECTION 9.4 Amendment. This Agreement may be amended by the parties
---------
hereto by action taken by or on behalf of their respective Boards of Directors
at any time prior to the Effective Time; provided, however, that, after approval
of the Merger by the stockholders of the Company, no amendment may 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 by the parties hereto.
SECTION 9.5 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, (a) extend the time for the
performance of any of the obligations or other acts of any other party hereto,
(b) waive any inaccuracies in the representations and warranties of any other
party hereto contained herein or in any document delivered pursuant hereto or
(c) waive compliance with any of the agreements or conditions of any other party
hereto contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only
56
if set forth in an instrument in writing signed on behalf of such party.
SECTION 9.6 Headings. The headings contained in this Agreement are for
--------
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.7 Severability. If any term or other provision of this
------------
Agreement is invalid, illegal or incapable of being enforced by any rule of law,
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that the transactions contemplated hereby are fulfilled to the fullest extent
possible.
SECTION 9.8 Entire Agreement, No Third Party Beneficiaries. This
----------------------------------------------
Agreement (including the documents and instruments referred to herein, including
the Confidentiality Agreement) (a) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the parties, or any of them, with respect to the subject matter hereof, and (b)
is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder, other than the persons intended to benefit from
the provisions of Section 6.16, who shall have the right to enforce such
provisions directly.
SECTION 9.9 Assignment. This Agreement shall not be assigned by operation
----------
of law or otherwise, except that Parent and Merger Sub may assign all or any of
their rights hereunder to any wholly owned subsidiary thereof; provided,
however, that no such assignment pursuant to this Section 9.9 shall relieve
Parent of its obligations hereunder.
SECTION 9.10 Interpretation. When a reference is made in this Agreement to
--------------
Sections, such reference shall be to 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 9.11 Failure or Indulgence Not Waiver; Remedies Cumulative. No
-----------------------------------------------------
failure or delay on the part of any party hereto in the exercise of any right
hereunder shall impair such right or be construed to be a waiver of, or
acquiescence
57
in, any breach of any representation, warranty or agreement herein, nor shall
any single or partial exercise of any such right preclude any other or further
exercise thereof or of any other right. All rights and remedies existing under
this Agreement are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
SECTION 9.12 Governing Law. This Agreement shall be governed by, and
-------------
construed in accordance with, the internal laws of The Commonwealth of
Massachusetts, without regard to the conflict of law provisions thereof,
provided that the Merger of Merger Sub with and into the Company shall be
effected in accordance with the applicable provisions of the DGCL. Each of the
parties hereto agrees that any action or proceeding brought to enforce the
rights or obligations of any party hereto under this Agreement will be commenced
and maintained in any court of competent jurisdiction located in The
Commonwealth of Massachusetts. Each of the parties hereto further agrees that
process may be served upon it by certified mail, return receipt requested,
addressed as more generally provided in Section 9.2 hereof, and consents to the
exercise of jurisdiction of a court of the Commonwealth of Massachusetts over it
and its properties with respect to any action, suit or proceeding arising out of
or in connection with this Agreement or the transactions contemplated hereby or
the enforcement of any rights under this Agreement.
SECTION 9.13 Counterparts. This Agreement may be executed in two or more
------------
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
58
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
XXX XXXXXXXXXXX
By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title:President & CEO
EMERALD MERGER CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title:President & CEO
DATA GENERAL CORPORATION
By: /s/ Xxxxxx X. Skates
---------------------------------
Name: Xxxxxx X. Skates
Title:President & CEO
59
