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EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
BETWEEN
TPG PARTNERS II, L.P.
AND
ZILOG, INC.
DATED AS OF JULY 20, 1997
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TABLE OF CONTENTS
Page
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ARTICLE I THE MERGER.............................................................. 2
SECTION 1.1 The Merger............................................................ 2
SECTION 1.2 Closing............................................................... 2
SECTION 1.3 Effective Time........................................................ 2
SECTION 1.4 Effects of the Merger................................................. 2
SECTION 1.5 Certificate of Incorporation and By-laws; Officers and Directors...... 2
ARTICLE II EFFECT OF THE MERGER ON THE STOCK OF THE
CONSTITUENT CORPORATIONS; SURRENDER OF CERTIFICATES................... 3
SECTION 2.1 Effect on Stock....................................................... 3
SECTION 2.2 Options............................................................... 7
SECTION 2.3 Surrender of Certificates............................................. 8
SECTION 2.4 Adjustments to Prevent Dilution....................................... 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE
COMPANY............................................................... 11
SECTION 3.1 Organization.......................................................... 11
SECTION 3.2 Subsidiaries.......................................................... 11
SECTION 3.3 Capital Structure..................................................... 11
SECTION 3.4 Authority............................................................. 12
SECTION 3.5 Consent and Approvals; No Violations.................................. 12
SECTION 3.6 SEC Documents and Other Reports....................................... 13
SECTION 3.7 Absence of Material Adverse Change.................................... 14
SECTION 3.8 Information Supplied.................................................. 15
SECTION 3.9 Compliance with Laws.................................................. 15
SECTION 3.10 Tax Matters.......................................................... 15
SECTION 3.11 Liabilities.......................................................... 18
SECTION 3.12 Benefit Plans; Employees and Employment Practices.................... 18
SECTION 3.13 Litigation........................................................... 21
SECTION 3.14 Environmental Matters................................................ 21
SECTION 3.15 Intellectual Property................................................ 22
SECTION 3.16 State Takeover Statutes; Charter Provisions.......................... 24
SECTION 3.17 Brokers.............................................................. 24
SECTION 3.18 Required Vote of Stockholders........................................ 24
SECTION 3.19 Title to Property.................................................... 24
SECTION 3.20 Real Property........................................................ 25
SECTION 3.21 Outstanding Commitments.............................................. 26
SECTION 3.22 Insurance............................................................ 27
SECTION 3.23 Affiliate Transactions............................................... 27
SECTION 3.24 Management Payments.................................................. 27
SECTION 3.25 Accuracy of Information.............................................. 27
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT
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AND SUB............................................................... 28
SECTION 4.1 Organization.......................................................... 28
SECTION 4.2 Authority............................................................. 28
SECTION 4.3 Consents and Approvals; No Violations................................. 28
SECTION 4.4 Information Supplied.................................................. 29
SECTION 4.5 Interim Operations of Sub............................................. 29
SECTION 4.6 Brokers............................................................... 30
SECTION 4.7 Financing............................................................. 30
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS............................... 30
SECTION 5.1 Conduct of Business by the Company Pending the Merger................. 30
SECTION 5.2 No Solicitation....................................................... 33
SECTION 5.3 Third Party Standstill Agreements..................................... 35
ARTICLE VI ADDITIONAL AGREEMENTS.................................................. 35
SECTION 6.1 Stockholder Meeting................................................... 35
SECTION 6.2 Filings; Other Actions; Notification; Access to Information........... 35
SECTION 6.3 Fees and Expenses..................................................... 37
SECTION 6.4 Awards................................................................ 37
SECTION 6.5 Public Announcements.................................................. 38
SECTION 6.6 Real Estate Transfer Tax.............................................. 38
SECTION 6.7 State Takeover Laws................................................... 38
SECTION 6.8 Indemnification; Directors and Officers Insurance..................... 38
SECTION 6.9 Notification of Certain Matters....................................... 39
SECTION 6.10 Reasonable Best Efforts.............................................. 40
SECTION 6.11 Employee Benefits.................................................... 40
SECTION 6.12 Severance Policy and Other Agreements................................ 41
SECTION 6.13 1997 Bonus........................................................... 42
SECTION 6.14 401(k)/Profit Sharing Contributions for 1997......................... 42
SECTION 6.15 Certification........................................................ 42
SECTION 6.16 Recapitalization Accounting.......................................... 42
SECTION 6.17 NYSE Delisting....................................................... 43
SECTION 6.18 Formation of Sub..................................................... 43
SECTION 6.19 Stockholders Agreement............................................... 43
ARTICLE VII CONDITIONS PRECEDENT.................................................. 43
SECTION 7.1 Conditions to Each Party's Obligation to Effect the Merger............ 43
SECTION 7.2 Conditions to Obligations of Parent and Sub........................... 44
ARTICLE VIII TERMINATION AND AMENDMENT............................................ 45
SECTION 8.1 Termination........................................................... 45
SECTION 8.2 Effect of Termination................................................. 47
SECTION 8.3 Amendment............................................................. 47
SECTION 8.4 Extension; Waiver..................................................... 47
ARTICLE IX GENERAL PROVISIONS..................................................... 48
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SECTION 9.1 Non-Survival of Representations and Warranties and
Agreements........................................................... 48
SECTION 9.2 Notices............................................................... 48
SECTION 9.3 Interpretation........................................................ 48
SECTION 9.4 Counterparts.......................................................... 49
SECTION 9.5 Entire Agreement; No Third-Party Beneficiaries........................ 49
SECTION 9.6 Governing Law......................................................... 50
SECTION 9.7 Assignment............................................................ 50
SECTION 9.8 Severability.......................................................... 50
SECTION 9.9 Enforcement of This Agreement......................................... 50
SECTION 9.10 Obligations of Subsidiaries.......................................... 50
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AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of July 20, 1997 (this
"Agreement"), between TPG PARTNERS II, L.P., a Delaware limited partnership
("Parent"), and ZILOG, INC., a Delaware corporation (the "Company"),
W I T N E S S E T H:
WHEREAS, Parent will cause a wholly owned Delaware corporation to be
formed as soon as practicable following the date hereof ("Sub") (Sub and the
Company being hereinafter collectively referred to as the "Constituent
Corporations"); and
WHEREAS, the Board of Directors of the Company has determined that the
merger of Sub with and into the Company, upon the terms and subject to the
conditions set forth in this Agreement, would be fair to and in the best
interests of the stockholders of the Company, and such Board of Directors and
the general partner of Parent have approved such merger (the "Merger"), pursuant
to which each share of Common Stock, par value $.01 per share, of the Company
(individually a "Share" and collectively the "Shares"), issued and outstanding
immediately prior to the Effective Time (as defined in Section 1.3) will be
converted into either (A) the right to retain, at the election of the holder
thereof and subject to the terms hereof, a Share or (B) the right to receive
cash, other than for (i) Shares owned, directly or indirectly, by the Company or
any Subsidiary (as defined in Section 9.3) of the Company or by Parent, Sub or
any subsidiary of Parent and (ii) Dissenting Shares (as defined in Section
2.1(g)); and
WHEREAS, the Merger and this Agreement require the vote of a majority of
the Shares for the approval thereof (the "Company Stockholder Approval"); and
WHEREAS, concurrently with the execution and delivery of this Agreement
and as a condition and inducement to Parent's and Sub's willingness to enter
into this Agreement, each of Warburg, Xxxxxx Capital Company, L.P. and Warburg,
Xxxxxx & Co. (collectively, "Warburg Pincus") are entering into a Stockholders
Voting Agreement with Parent in substantially the form attached hereto as
Exhibit A (the "Stockholders Voting Agreement") which, among other things, (i)
requires them to vote all Shares owned by them in accordance with the
Stockholders Voting Agreement and (ii) requires them to make a Non-Cash Election
(as defined in Section 2.1(c)) with respect to a number (subject to adjustment
as provided in Section 2.4) of their Shares equal to the Non-Cash Election
Number (as defined in Section 2.1(d)) on the terms and subject to the conditions
specified therein; and
WHEREAS, it is intended that the Merger be recorded as a
recapitalization for financial reporting purposes:
NOW, THEREFORE, in consideration of the premises and the representations,
warranties, covenants and agreements herein contained, the parties hereto hereby
agree as follows:
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ARTICLE I
THE MERGER
SECTION 1.1 The Merger. Upon the terms and subject to the conditions
hereof, and in accordance with the General Corporation Law of the State of
Delaware (the "DGCL"), Sub shall be merged with and into the Company at the
Effective Time (as defined in Section 1.3). Following the Merger, the separate
corporate existence of Sub shall cease and the Company shall continue as the
surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all the rights and obligations of Sub and the Company in accordance with
the DGCL. At the election of Parent, any direct or indirect wholly owned
Subsidiary of Parent may be substituted for Sub as a constituent corporation in
the Merger. In such event, the parties agree to execute an appropriate amendment
to this Agreement in order to reflect the foregoing.
SECTION 1.2 Closing. Upon the terms and subject to the conditions of
this Agreement, the closing (the "Closing") of the Merger will take place at
10:00 a.m. on a date to be specified by Parent or Sub, which shall be no later
than the third business day after satisfaction or waiver of the conditions set
forth in Article VII (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the fulfillment or waiver of those
conditions at Closing), at the offices of Pillsbury Madison & Sutro LLP, unless
another date, time or place is agreed to in writing by the parties hereto (the
"Closing Date").
SECTION 1.3 Effective Time. The Merger shall become effective when a
Certificate of Merger (the "Certificate of Merger"), executed in accordance with
the relevant provisions of the DGCL, is duly filed with the Secretary of State
of the State of Delaware, or at such other time as Sub and the Company shall
have agreed upon and specified in the Certificate of Merger. When used in this
Agreement, the term "Effective Time" shall mean the later of the date and time
at which the Certificate of Merger is duly filed with the Secretary of State of
the State of Delaware or such later time established by the Certificate of
Merger. The filing of the Certificate of Merger shall be made as soon as
practicable after the satisfaction or waiver in accordance herewith of the
conditions to the Merger set forth in Article VII, provided that this Agreement
shall not have been terminated as provided in Section 8.1.
SECTION 1.4 Effects of the Merger. The Merger shall have the effects set
forth in the DGCL.
SECTION 1.5 Certificate of Incorporation and By-laws; Officers and
Directors.
(a) The Certificate of Incorporation of the Company, as in effect
immediately prior to the Effective Time, shall be amended as of the Effective
Time so that Article IV of such Certificate of Incorporation is amended to read
in its entirety as follows:
FOURTH: The total number of shares of all classes of stock which the
Corporation shall have the authority to issue is 10,000,000. There shall
be two classes of stock of the Corporation. The first class of stock of
the Corporation
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shall have a par value of $0.01 and shall be designated "Common Stock"
and the number of shares constituting such class shall be 4,000,000. The
second class of stock of the Corporation shall have a par value of $0.01
and shall be designated "Class A Non-Voting Common Stock" and the number
of shares constituting such class shall be 6,000,000. Holders of shares
of Common Stock shall be entitled to one vote for each share of such
stock held on all matters as to which stockholders may be entitled to
vote pursuant to the Delaware General Corporation Law. Holders of shares
of Class A Non-Voting Common Stock shall not have any voting rights,
except that the holders of shares of Class A Non-Voting Common Stock
shall have the right to vote as a class to the extent required by the
Delaware General Corporation Law. In all other respects the rights,
powers, preferences and limitations of the Common Stock and Class A
Non-Voting Common Stock shall be identical.
As so amended, such Certificate of Incorporation shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter changed or amended
as provided therein or by applicable law.
(b) The By-Laws of the Company, as in effect immediately prior to the
Effective Time, shall be the By-Laws of the Surviving Corporation until
thereafter changed or amended as provided therein, by the Certificate of
Incorporation of the Surviving Corporation or by applicable law.
(c) The directors of Sub immediately prior to the Effective Time shall
be the directors of the Surviving Corporation, until the next annual meeting of
stockholders (or the earlier of their resignation or removal) and until their
respective successors are duly elected and qualified, as the case may be.
(d) The officers of the Company immediately prior to the Effective Time
shall be the officers of the Surviving Corporation until the earlier of their
resignation or removal and until their respective successors are duly elected
and qualified, as the case may be.
ARTICLE II
EFFECT OF THE MERGER ON THE STOCK OF THE
CONSTITUENT CORPORATIONS; SURRENDER OF CERTIFICATES
SECTION 2.1 Effect on Stock. At the Effective Time, by virtue of the
Merger and without any action on the part of the holders of any securities of
the Constituent Corporations:
(a) Conversion (or Retention) of Shares. Except as otherwise provided
herein and subject to Section 2.1(d), each Share issued and outstanding
immediately prior to the Effective Time, other than Shares to be canceled
pursuant to Section 2.1(b) ("Excluded
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Shares") and any Dissenting Shares, shall be converted into the following (the
"Merger Consideration"):
(i) for each Share with respect to which an election to retain
pursuant to Section 2.1(c) has been effectively made, and not revoked or
lost ("Electing Shares"), the right to retain one fully paid and
nonassessable Share (a "Non-Cash Election Share"); and
(ii) for each Share (other than Electing Shares), the right to
receive in cash from the Company following the Merger an amount equal to
$25.00 (the "Cash Election Price").
(b) Treasury Stock and Parent Owned Stock. Each Share issued and held in
the Company's treasury or owned by the Company, any Subsidiary of the Company,
Parent, Sub or any other Subsidiary of Parent shall automatically be canceled
and retired and shall cease to exist, and no consideration shall be delivered in
exchange therefor.
(c) Share Elections. (i) Each person who, on or prior to the Election
Date referred to in (iii) below, is a record holder of Shares will be entitled,
with respect to all or any portion of such holder's Shares, to make an
unconditional election (a "Non-Cash Election") on or prior to such Election Date
to retain Non-Cash Election Shares, on the basis hereinafter set forth.
(ii) Sub shall prepare and mail a form of election, which form shall be
subject to the reasonable approval of the Company (the "Form of Election"), with
the Prospectus/Proxy Statement (as defined in Section 3.8) to the record holders
of Shares as of the record date for the Stockholder Meeting (as defined in
Section 6.1), which Form of Election shall be used by each record holder of
Shares that wishes to elect to retain Non-Cash Election Shares for any or all
Shares held by such holder. The Company will use its reasonable efforts to make
the Form of Election and the Prospectus/Proxy Statement available to all persons
who become holders of Shares during the period between such record date and the
Election Date referred to below. Any such holder's election to retain Non-Cash
Election Shares shall have been properly made only if the Exchange Agent (as
defined in Section 2.3(a)) shall have received at its designated office by 5:00
p.m., New York City time on the second trading day (the "Election Date") next
preceding the date of the Stockholder Meeting, a Form of Election properly
completed and signed and accompanied by certificates for the Shares to which
such Form of Election relates, duly endorsed in blank or otherwise in form
acceptable for transfer on the books of the Company (or by an appropriate
guarantee of delivery of such certificates as set forth in such Form of Election
from a firm which is a member of a registered national securities exchange or of
the National Association of Securities Dealers, Inc. or a commercial bank or
trust company having an office or correspondent in the United States, provided
such certificates are in fact delivered to the Exchange Agent within three New
York Stock Exchange trading days after the date of execution of such guarantee
of delivery).
(iii) Any Form of Election may be revoked by the holder submitting it to
the Exchange Agent only by written notice received by the Exchange Agent prior
to 5:00 p.m.,
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New York City time, on the Election Date (unless Sub and the Company determine
not less than two business days prior to the Election Date that the Effective
Time is not likely to occur within five business days following the date of the
Stockholder Meeting, in which case the Form of Election will remain revocable
until a subsequent date which shall be a date prior to the Effective Time
determined by Sub and the Company). In addition, all Forms of Election shall
automatically be revoked if the Exchange Agent is notified in writing by Sub and
the Company that the Merger has been abandoned. If a Form of Election is
revoked, the certificate or certificates (or guarantees of delivery, as
appropriate) for the Shares to which such Form of Election relates shall be
promptly returned to the holder submitting the same to the Exchange Agent.
(iv) The determination of the Exchange Agent shall be binding as to
whether or not elections to retain Non-Cash Election Shares have been properly
made or revoked pursuant to this Section 2.1 with respect to Shares and when
elections and revocations were received by it. If the Exchange Agent determines
that any election to retain Non-Cash Election Shares was not properly made with
respect to Shares, such Shares shall be treated by the Exchange Agent as Shares
which were not Electing Shares at the Effective Time. The Exchange Agent shall
also make all computations as to the allocation and the proration contemplated
by Section 2.1(d), and any such computation shall be conclusive and binding on
the holders of Shares. The Exchange Agent may, with the mutual agreement of Sub
and the Company, make such rules as are consistent with this Section 2.1 for the
implementation of the elections provided for herein as shall be necessary or
desirable fully to effect such elections.
(d) Proration.
(i) Notwithstanding anything in this Agreement to the contrary (but
subject to the provisions of Section 2.4), the aggregate number of Shares to be
converted into the right to retain Shares at the Effective Time (the "Non-Cash
Election Number") shall equal 400,000 Shares.
(ii) If the number of Electing Shares exceeds the Non-Cash Election
Number, then the Electing Shares covered by each Non-Cash Election shall be
converted into the right to retain Non-Cash Election Shares or receive cash in
accordance with the terms of Section 2.1(a) in the following manner:
(A) A proration factor (the "Non-Cash Proration Factor") shall be
determined by dividing the Non-Cash Election Number by the total number
of Electing Shares.
(B) The number of Electing Shares covered by each Non-Cash
Election to be converted into the right to retain Non-Cash Election
Shares shall be determined by multiplying the Non-Cash Proration Factor
by the total number of Electing Shares covered by such Non-Cash
Election.
(C) All Electing Shares, other than that number of shares
converted into the right to receive Non-Cash Election Shares in
accordance with Section
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2.1(d)(ii)(B), shall be converted into cash (on a consistent basis among
holders who made the election referred to in Section 2.1(a)(i), pro rata
to the number of Shares as to which they made such election) as if such
Shares were not Electing Shares in accordance with the terms of Section
2.1(a)(ii).
(iii) If the number of Electing Shares is less than the Non-Cash
Election Number, then:
(A) all Electing Shares shall be converted into the right to
retain Shares in accordance with the terms of Section 2.1(a)(i);
(B) additional Shares other than Electing Shares, Excluded Shares
and Dissenting Shares shall be converted into the right to retain
Non-Cash Election Shares in accordance with the terms of 2.1(a)(i) in
the following manner:
(1) a proration factor (the "Cash Proration Factor") shall
be determined by dividing (x) the difference between the Non-Cash
Election Number and the number of Electing Shares, by (y) the
total number of Shares other than Electing Shares, Excluded
Shares and Dissenting Shares; and
(2) the number of Shares in addition to Electing Shares to
be converted into the right to retain Non-Cash Election Shares
shall be determined by multiplying the Cash Proration Factor by
the total number of Shares other than Electing Shares, Excluded
Shares and Dissenting Shares; and
(C) subject to Sections 2.1(e) and (g), Shares subject to clause
(B) of this paragraph 2.1(d)(iii) shall be converted into the right to
retain Non-Cash Election Shares in accordance with Section 2.1(a)(i) (on
a consistent basis among holders who held Shares as to which they did
not make the election referred to in Section 2.1(a)(i), pro rata to the
number of Shares as to which they did not make such election).
(e) As of the Effective Time, all Shares (other than Shares referred to
in Sections 2.1(a)(i), Excluded Shares and Dissenting Shares) issued and
outstanding immediately prior to the Effective Time shall no longer be
outstanding and shall automatically be canceled and retired and shall cease to
exist, and each holder of a certificate representing any such Shares shall, to
the extent such certificate represents such Shares, cease to have any rights
with respect thereto, except the right to receive cash upon surrender of such
certificate in accordance with Section 2.3.
(f) Capital Stock of Sub. The shares of capital stock of Sub issued and
outstanding immediately prior to the Effective Time shall be converted into and
become in
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the aggregate 3,600,000 shares of Common Stock of the Surviving Corporation and
2,000,000 shares of Class A Non-Voting Common Stock of the Surviving
Corporation.
(g) Shares of Dissenting Stockholders. Notwithstanding anything in this
Agreement to the contrary, any issued and outstanding Shares held by a person (a
"Dissenting Stockholder") who has not voted in favor of or consented to the
Merger and complies with all the provisions of Delaware law concerning the right
of holders of Shares to require appraisal of their Shares pursuant to Section
262 of the DGCL ("Dissenting Shares") shall not be converted as described in
Section 2.1(a), but shall become the right to receive such consideration as may
be determined to be due to such Dissenting Stockholder pursuant to Delaware law.
If, after the Effective Time, such Dissenting Stockholder withdraws his demand
for appraisal or fails to perfect or otherwise loses his right of appraisal, in
any case pursuant to the DGCL, his Shares shall be deemed to be canceled as of
the Effective Time and to have become the right to receive the Merger
Consideration as provided in Section 2.1(a). The Company shall give Parent (i)
prompt notice of any demands for appraisal of Shares received by the Company and
(ii) the opportunity to participate in and direct all negotiations and
proceedings with respect to any such demands. The Company shall not, without the
prior written consent of Parent, make any payment with respect to, or settle,
offer to settle or otherwise negotiate, any such demands.
(h) Fractional Shares. Notwithstanding any other provision of this
Agreement, no fractional retained Share will be issued and any holder entitled
to receive a fractional retained Share but for this Section 2.1(h) shall be
entitled to receive a cash payment in lieu thereof, which payment shall
represent such holder's proportionate interest in the Cash Election Price for
such Share.
SECTION 2.2 Options.
(a) Each Company Stock Option (as defined in Section 3.3) which is
outstanding immediately prior to the Effective Time (an "Option"), whether or
not otherwise exercisable, shall become fully vested and exercisable. At the
Effective Time each Option shall be canceled by the Company in return for the
payment hereinafter provided, which the holder thereof shall thereupon be
entitled to receive. Each such holder shall receive promptly (but in no event
later than five days) after the Effective Time, a cash payment in respect of
such cancellation from the Company in an amount (if any) equal to (i) the
product of (x) the number of Shares subject or related to such Option and (y)
the excess, if any, of the Cash Election Price over the exercise or purchase
price per Share subject or related to such Option, minus (ii) all applicable
federal, state and local taxes required to be withheld by the Company as a
result of the cancellation and cash payment (the "Option Consideration"). No
interest shall accrue or be paid on the Option Consideration payable upon the
surrender of an Option to the Company. In the event that the Option
Consideration determined pursuant to this paragraph is equal to or less than
zero with respect to an Option, such Option shall be canceled by the Company at
the Effective Time without the payment of any consideration. The Company shall
use its reasonable best efforts to ensure that, after giving effect to the
foregoing, no Option shall be exercisable for Common Stock of the Surviving
Corporation following the Effective Time. With respect to employee contributions
pursuant to the
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Company's Employee Stock Purchase Plan, amounts held by the Company at the
Effective Time shall be disposed of in accordance with the terms of such Plan.
(b) The cancellation of an Option by the Company in accordance with
Section 2.2(a) shall be a release of any and all rights the holder had or may
have had in respect of such Option. The provisions in any plan, program or
arrangement providing for the issuance or grant of any interest in respect of
the capital stock of the Company or any Subsidiary thereof (the "Company Stock
Plans") shall be canceled as of the Effective Time. Prior to the Effective Time,
the Company shall use its best efforts to take all action necessary including
causing the Board of Directors (or any committee thereof) to take such actions
as are allowed by the Company Stock Plans to (i) ensure that, following the
Effective Time, no participant in the Company Stock Plans or any other plans,
programs or arrangements shall have any right thereunder to acquire equity
securities of the Company, the Surviving Corporation or any Subsidiary thereof
and (ii) terminate all such plans, programs and arrangements as of the Effective
Time.
(c) The Company shall use its best efforts to obtain, within 30 days
from the date of this Agreement, from each beneficial and record holder of
Company Stock Options, a release as contemplated by Section 2.2(b), duly
executed and delivered by each such holder.
SECTION 2.3 Surrender of Certificates.
(a) Exchange Agent. Prior to the Effective Time, Parent shall designate
a bank or trust company who shall be reasonably satisfactory to the Company to
act as paying agent in the Merger (the "Exchange Agent"), and as soon as
reasonably practicable as of or after the Effective Time, the Surviving
Corporation shall make available to the Exchange Agent cash in an amount
necessary for the payment of the cash portion of the Merger Consideration as
provided in Section 2.1 upon surrender of Certificates representing Shares as
part of the Merger. Funds made available to the Exchange Agent shall be invested
by the Exchange Agent as directed by the Surviving Corporation, provided that
such investments shall only be in obligations of or guaranteed by the United
States of America, in commercial paper obligations rated A-1 or P-1 or better by
Xxxxx'x Investors Service, Inc. or Standard & Poor's Corporation, respectively,
or in certificates of deposit, bank repurchase agreements or banker's
acceptances of commercial banks whose commercial paper is rated A-1 or P-1 (it
being understood that any and all interest or income earned on funds made
available to the Exchange Agent pursuant to this Agreement shall be turned over
to the Surviving Corporation).
(b) Exchange Procedure. As soon as reasonably practicable after the
Effective Time, the Surviving Corporation shall cause the Exchange Agent to mail
to each holder of record, as of the Effective Time, of a certificate or
certificates that immediately prior to the Effective Time represented Shares
(the "Certificates") (other than to holders of Excluded Shares), (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 a form and have such other
provisions as Parent may reasonably specify) and (ii) instructions for use in
effecting the surrender of the Certificates in
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exchange for a certificate or certificates representing the number of whole
retained Shares, if any, to be retained by the holder of such Certificates (and
cash in lieu of any fractional retained Shares) pursuant to this Agreement and
the amount of cash, if any, into which the number of Shares previously
represented by such Certificates shall have been converted pursuant to this
Agreement. Upon surrender of a Certificate for cancellation to the Exchange
Agent or to such other agent or agents as may be appointed by Parent, together
with such letter of transmittal, duly executed and completed in accordance with
the instructions thereto, and such other documents as may reasonably be required
by the Exchange Agent, the holder of such Certificate shall be entitled to
receive in exchange therefor the Merger Consideration into which the Shares
theretofore represented by such Certificate shall have been canceled and become
the right to receive pursuant to Section 2.1, less any required withholding tax
described below, and the Certificate so surrendered shall forthwith be canceled.
In the event of a transfer of ownership of Shares that is not registered in the
transfer records of the Company, payment may be made to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer and the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of such Certificate or establish to the satisfaction of the Surviving
Corporation that such tax has been paid or is not applicable. Until surrendered
as contemplated by this Section 2.3, each Certificate (other than Certificates
representing Dissenting Shares or Excluded Shares) shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the Merger Consideration, without interest, into which the Shares
theretofore represented by such Certificate shall have been converted pursuant
to Section 2.1. No interest will be paid or will accrue on the Merger
Consideration payable upon the surrender of any Certificate. The Exchange Agent
shall be entitled to deduct and withhold from the consideration otherwise
payable pursuant to this Agreement to any holder of a Certificate such amounts
as the Exchange Agent is required to deduct and withhold with respect to the
making of such payment under the Code (as hereinafter defined) or under any
provision of state, local or foreign tax law. To the extent that amounts are so
withheld by 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 in
respect of which such deduction and withholding was made by the Exchange Agent.
(c) No Further Ownership Rights in Shares Exchanged for Cash. All cash
paid upon the surrender of Certificates in accordance with the terms of this
Article II shall be deemed to have been paid in full satisfaction of all rights
pertaining to the Shares theretofore represented by such Certificates.
(d) Closing of Transfer Books. At the Effective Time, the stock transfer
books of the Company shall be closed, and there shall be no further registration
of transfers on the stock transfer books of the Surviving Corporation of the
Shares that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation or
the Exchange Agent for any reason, they shall be canceled and exchanged as
provided in this Article II.
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(e) Distributions With Respect to Unexchanged Shares. No dividends or
other distributions with respect to retained Shares with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Certificate
representing the right to retained Shares (and no cash payment in lieu of
fractional retained Shares shall be paid to any such holder pursuant to Section
2.1(h)) until the surrender of such Certificate in accordance with this Article
II. Subject to the effect of applicable laws, following surrender of any such
Certificate, there shall be paid to the holder of the Certificate representing
whole retained Shares issued in connection therewith, without interest, at the
time of such surrender or as promptly thereafter as practicable, the amount of
any cash payable in lieu of a fractional retained Share to which such holder is
entitled pursuant to Section 2.1(h) and the proportionate amount of dividends or
other distributions with a record date after the Effective Time theretofore paid
with respect to such whole retained Shares, and at the appropriate payment date,
the proportionate amount of dividends or other distributions with a record date
after the Effective Time but prior to such surrender and a payment date
subsequent to such surrender payable with respect to such whole retained Shares.
(f) Termination of Payment Fund. Any portion of the funds made available
to Exchange Agent which remains undistributed to the holders of Shares for six
months after the Effective Time shall be delivered to the Surviving Corporation,
upon demand, and any holders of Shares who have not theretofore complied with
this Article II and the instructions set forth in the letter of transmittal
mailed to such holders after the Effective Time shall thereafter look only to
the Surviving Corporation (subject to abandoned property, escheat or other
similar laws) and only as general creditors thereof for payment of their claim
for cash (without interest), if any, retained Shares, if any, any cash in lieu
of fractional retained Shares or any dividends or distributions with respect to
retained Shares, as applicable, to which such holders may be entitled.
(g) No Liability. None of Parent, Sub, the Company, the Exchange Agent
or any other person shall be liable to any person in respect of any retained
shares (or dividends or distribution with respect thereto) or cash delivered to
a public official pursuant to any applicable abandoned property, escheat or
similar law.
(h) Lost Certificates. In the event any Certificate shall have been
lost, stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by the Company, the posting by such person of a bond in such reasonable
amount as the Company may direct as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificate the amount to which such
person is entitled pursuant to this Agreement.
(i) Affiliates. Notwithstanding anything herein to the contrary,
Certificates surrendered for exchange by any "affiliate" (as determined pursuant
to Section 6.2(e)) of the Company shall not be exchanged until the Company has
received a written agreement from such person as provided in Section 6.2(e)
hereof.
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SECTION 2.4 Adjustments to Prevent Dilution. In the event that prior to
the Effective Time there is a change in the number of Shares issued and
outstanding as a result of a reclassification, stock split (including a reverse
split), stock dividend or distribution, or other similar transaction, the Cash
Election Price and Non-Cash Election Number shall be equitably adjusted to
eliminate the effects of such event.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as of the date
hereof as follows:
SECTION 3.1 Organization. The Company and each of its Subsidiaries (as
defined in Section 9.3) is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation and has
all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as now being conducted. The Company and
each of its Subsidiaries is duly qualified or licensed to do business and in
good standing in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except in such jurisdictions where the
failure to be so duly qualified or licensed and in good standing would not
reasonably be expected to have a Material Adverse Effect (as defined in Section
9.3) on the Company or prevent or result in a third party materially delaying
the consummation of the Merger and except as set forth in item 3.1 of the letter
from the Company to Parent dated the date hereof, which letter relates to this
Agreement and is designated therein as the Company Letter (the "Company
Letter"). The Company has delivered to Parent complete and correct copies of its
Certificate of Incorporation and By-laws and has made available to Parent
complete and correct copies of the Certificate of Incorporation and By-laws (or
similar organizational documents) of each of its Subsidiaries.
SECTION 3.2 Subsidiaries. Item 3.2 of the Company Letter lists each
Subsidiary of the Company as of the date hereof. Except as set forth in item 3.2
of the Company Letter, all of the outstanding shares of capital stock of each
such Subsidiary are owned by the Company, by another wholly owned subsidiary of
the Company or by the Company and another wholly owned subsidiary of the
Company, free and clear of all pledges, claims, liens, charges, encumbrances and
security interests of any kind or nature whatsoever (collectively, "Liens"), and
are duly authorized, validly issued, fully paid and nonassessable. Except as set
forth in item 3.2 of the Company Letter and except for the capital stock of its
Subsidiaries, neither the Company nor any of its Subsidiaries owns, directly or
indirectly, any capital stock or other ownership interest in any corporation,
partnership, joint venture, limited liability company or other entity.
SECTION 3.3 Capital Structure. The authorized capital stock of the
Company consists of 75,000,000 shares of Common Stock and 190,000 shares of
Preferred Stock, par value $.01 per share (the "Company Preferred Stock"). As of
the close of business on
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July 18, 1997, (i) 20,229,412 shares of Common Stock were issued and
outstanding, all of which were validly issued, fully paid and nonassessable and
free of preemptive rights, (ii) no shares of Common Stock were held by the
Company in its treasury and (iii) no shares of Company Preferred Stock were
issued and outstanding. As of the date of this Agreement, except for (i)
outstanding stock options covering not in excess of 5,366,341 shares of Common
Stock under the Company's 1990 Employee Stock Option Plan, 1994 Long Term
Incentive Plan and 1989 Stock Option Plan (collectively, the "Company Stock
Options") with an average exercise price of $21.0365, and up to 149,373 shares
of Common Stock subject to subscription or reserved for issuance under the
Company's Employee Stock Purchase Plan, there are no options, warrants, calls,
subscriptions, convertible securities or other rights or agreements to which the
Company or any of its Subsidiaries is a party or by which any of them is bound
obligating the Company or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, any shares of capital stock, or any
securities convertible into or exchangeable for shares of capital stock, of the
Company or any Subsidiary or obligating the Company or any of its Subsidiaries
to grant, extend or enter into any such option, warrant, call, subscription or
other right or agreement, and there are no other obligations of any kind which
would require any person to sell, pledge, transfer or register any shares of
capital stock of the Company. Item 3.3 of the Company Letter sets forth a true
and complete list of the holders of the Company Stock Options as of July 14,
1997.
Except as set forth in the Company Filed SEC Documents (as
defined in Section 3.7) or the preceding paragraph, as of the date of this
Agreement, there are no outstanding contractual obligations of the Company or
any of its Subsidiaries (i) to repurchase, redeem or otherwise acquire any
shares of capital stock of the Company or any Subsidiary or (ii) to vote or to
dispose of any shares of the capital stock of any of the Company's Subsidiaries.
SECTION 3.4 Authority. The Company has all requisite corporate power and
authority to execute and deliver this Agreement, and, subject to approval by the
stockholders of the Company of the Merger, to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of the Company, and no other corporate action on the part of the
Company is necessary to authorize or execute this Agreement or to consummate the
transactions so contemplated, subject to approval by the stockholders of the
Company of this Agreement and the Merger (if required). This Agreement has been
duly executed and delivered by the Company and (assuming the valid
authorization, execution and delivery of this Agreement by Parent and Sub)
constitutes the valid and binding obligation of the Company enforceable against
the Company in accordance with its terms, except that such enforceability (i)
may be limited by bankruptcy, insolvency, moratorium or other similar laws
affecting or relating to the enforcement of creditors' rights generally and (ii)
is subject to general principles of equity.
SECTION 3.5 Consent and Approvals; No Violations. Except as set forth in
item 3.5 and in item 3.15 of the Company Letter and subject to Section 3.16, the
execution and delivery by the Company of this Agreement do not, and the
consummation by the Company
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of the transactions contemplated hereby and compliance by the Company with the
provisions hereof will not, conflict with, result in any violation of or default
(with or without notice or lapse of time, or both) under, or give rise to a
right of termination, cancellation or acceleration of any obligation or the loss
of a benefit under, or result in the creation of any Lien upon any of the
properties or assets of the Company or any of its Subsidiaries under, (i) any
provision of the Certificate of Incorporation, By-laws or comparable
organization documents of the Company or any of the Subsidiaries of the Company,
(ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or
other agreement (other than, with respect to termination, agreements terminable
at will or upon 90 days' or less notice by the terminating party), instrument,
permit, concession, franchise or license applicable to the Company or any of its
Subsidiaries or (iii) assuming all the consents, filings and registrations
referred to in the next sentence are made and obtained, any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to the Company or
any of its Subsidiaries or any of their respective properties or assets, other
than, in the case of clause (ii) or (iii), any such violations, defaults,
rights, losses or Liens, that, individually or in the aggregate, would not
reasonably be expected to have a Material Adverse Effect (without giving effect
to clause (iii) of the proviso to the definition thereof in Section 9.3) on the
Company or prevent or result in a third party materially delaying the
consummation of the Merger. No filing or registration with, or authorization,
consent or approval of, any domestic (federal and state) or foreign court,
commission, governmental body, regulatory agency, authority or tribunal (a
"Governmental Entity") is required by or with respect to the Company or any of
its Subsidiaries in connection with the execution and delivery of this Agreement
by the Company or is necessary for the consummation of the Merger and the other
transactions contemplated by this Agreement, except (i) in connection, or in
compliance, with the provisions of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), and the Securities Exchange Act of
1934, as amended (together with the rules and regulations promulgated
thereunder, the "Exchange Act"), (ii) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware and appropriate documents
with the relevant authorities of other states in which the Company or any of its
Subsidiaries is qualified to do business, (iii) such filings, authorizations,
orders and approvals as may be required by state takeover laws (the "State
Takeover Approvals") or state securities or "blue sky" laws, (iv) such filings
as may be required in connection with the taxes described in Section 6.6, and
(v) such other consents, orders, authorizations, registrations, declarations and
filings the failure of which to be obtained or made would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect
(without giving effect to clause (iii) of the proviso to the definition thereof
in Section 9.3) on the Company or prevent or result in a third party materially
delaying the consummation of the Merger.
SECTION 3.6 SEC Documents and Other Reports. The Company has filed all
required documents with the SEC since January 1, 1995 (the "Company SEC
Documents"). As of their respective filing dates, the Company SEC Documents
complied in all material respects with the requirements of the Securities Act of
1933, as amended (together with the rules and regulations promulgated
thereunder, the "Securities Act"), or the Exchange Act, as the case may be, each
as in effect on the date so filed, and at the time filed with SEC none of the
Company SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein,
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in light of the circumstances under which they were made, not misleading. The
financial statements (including the related notes and schedules) of the Company
included in or incorporated by reference into the Company SEC Documents comply
as of their respective dates as to form in all material respects with the then
applicable accounting requirements and the published rules and regulations of
the SEC with respect thereto, have been prepared in accordance with United
States generally accepted accounting principles (except, in the case of the
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto) and fairly present the consolidated financial position
of the Company and its consolidated Subsidiaries as at the dates thereof and the
consolidated results of their operations and their consolidated cash flows for
the periods then ended (subject, in the case of unaudited statements, to normal
year-end audit adjustments and to any other adjustments described therein).
SECTION 3.7 Absence of Material Adverse Change. Except as disclosed in
items 3.7 or 3.12(a) of the Company Letter or in the Company SEC Documents filed
and publicly available prior to the date of this Agreement (the "Company Filed
SEC Documents"), since December 31, 1996, the Company and its Subsidiaries have
conducted their respective businesses in all material respects only in the
ordinary course consistent with past practice, and there has not been (i) any
Material Adverse Change (as defined in Section 9.3), or any event that would
reasonably be expected to result in or give rise to a Material Adverse Change,
in either case with respect to the Company, (ii) any declaration, setting aside
or payment of any dividend or other distribution with respect to its capital
stock or any redemption, purchase or other acquisition of any of its capital
stock, (iii) any split, combination or reclassification of any of its capital
stock or any issuance or the authorization of any issuance of any other
securities in respect of, in lieu of or in substitution for shares of its
capital stock, (iv) (x) any granting by the Company or any of its Subsidiaries
to any officer of the Company or any of its Subsidiaries of any increase in
compensation, except in the ordinary course of business (including in connection
with promotions) consistent with past practice or as was required under
employment agreements in effect as of December 31, 1996, (y) any material change
to the Company's or any of its Subsidiaries' severance or termination plans,
agreements or arrangements with any of their employees, except as part of a
standard employment package to any person promoted or hired (but not including
the five most senior officers), or as was required under employment, severance
or termination agreements in effect as of December 31, 1996, or (z) except for
employment agreements in the ordinary course of business consistent with past
practice with employees other than any executive officer of the Company, any
entry by the Company or any of its Subsidiaries into any employment, consulting,
severance, termination or indemnification agreement with any such employee or
executive officer, (v) any damage, destruction or loss, whether or not covered
by insurance, that would reasonably be expected to have a Material Adverse
Effect on the Company, (vi) any revaluation by the Company of any of its
material assets, (vii) any material change in accounting methods, principles or
practices by the Company or (viii) any other action that occurred prior to the
date hereof that, if it occurred after the date of this Agreement and prior to
the Closing Date, would be prohibited by paragraphs (a), (b) (only with respect
to the Company's Subsidiaries), (c), (f), (g) or (p) of Section 5.1 of this
Agreement.
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SECTION 3.8 Information Supplied. None of the information supplied or to
be supplied by the Company specifically for inclusion therein or incorporation
by reference in (i) the Registration Statement on Form S-4 to be filed with the
SEC by the Company in connection with the Merger (including the proxy statement
and prospectus (the "Prospectus/Proxy Statement") constituting a part thereof)
(the "S-4 Registration Statement") will, at the time the S-4 Registration
Statement becomes effective under the Securities Act, and (ii) the
Prospectus/Proxy Statement and any amendment or supplement thereto will, at the
date of mailing to stockholders and at the time of the Stockholder Meeting,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, except that no representation or warranty is made by the Company in
connection with any of the foregoing with respect to statements made based on
information supplied in writing by Parent or Sub or any of their respective
representatives specifically for inclusion therein. The S-4 Registration
Statement and the Proxy Statement will comply as to form in all material
respects with the requirements of the Securities Act and the Exchange Act, as
appropriate, except that no representation or warranty is made by the Company in
connection with any of the foregoing with respect to statements made based on
information supplied in writing by Parent or Sub or any of their respective
representatives specifically for inclusion therein.
SECTION 3.9 Compliance with Laws. Except as disclosed in the Company
Filed SEC Documents, the businesses of the Company and its Subsidiaries are not
being conducted in violation of any law, ordinance, rule or regulation
(collectively, "Laws") or order of any Governmental Entity, except for possible
violations that would not reasonably be expected to have a Material Adverse
Effect on the Company or prevent or result in a third party materially delaying
the Merger.
SECTION 3.10 Tax Matters. Except as set forth in item 3.10 of the
Company Letter:
(a) The Company and each of its Subsidiaries has filed all federal and
state income tax returns and all other material tax returns and reports required
to be filed by it. All such returns are complete and correct in all material
respects. The Company and each of its Subsidiaries has paid (or the Company has
paid on its Subsidiaries' behalf) all taxes shown as due on such returns and all
material taxes (as defined below) for which no return was required to be filed,
and the most recent financial statements contained in the Company Filed SEC
Documents reflect an adequate reserve for all material amounts of taxes payable
by the Company and its Subsidiaries for all taxable periods and portions thereof
through the date of such financial statements.
(b) The Company shall be responsible for the timely filing (taking into
account any extensions received from the relevant tax authorities) of all tax
returns required by law to be filed by the Company or any of its Subsidiaries on
or prior to the Closing Date, (ii) such tax returns shall be true, correct and
complete in all material respects and accurately set forth in all material
respects all items to the extent required to be reflected or included in such
tax returns by applicable Federal, state, local or foreign tax laws, regulations
or rules and (iii) all
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taxes indicated as due and payable on such tax returns shall be paid by the
Company as and when required by law.
(c) The Company and each of the Subsidiaries have, or by the Closing
Date shall have, paid in full or set up reserves in accordance with United
States generally accepted accounting principles, (i) any and all material taxes
in respect of the income, business, property or operations of the Company and
all of its Subsidiaries (including, without limitation, all material taxes that
the Company and the Subsidiaries are obligated to withhold from amounts paid or
payable to or benefits conferred upon employees, creditors and third parties) or
for which the Company or any of its Subsidiaries may otherwise be liable for any
period ending prior to or on the Closing Date.
(d) Set forth in item 3.10 of the Company Letter is a complete list of
income and other tax returns filed by the Company or any of the Subsidiaries
pursuant to the laws or regulations of any Federal, state, local or foreign tax
authority that have been examined or audited by the IRS or other appropriate
authority during the preceding three years, and a list of all adjustments
resulting from each such examination or audit. Except as set forth in item 3.10,
all deficiencies proposed as a result of such examinations or audits have been
paid or finally settled and no issue has been raised in any such examination or
audit that, by application of similar principles, reasonably can be expected to
result in the assertion of a material deficiency for any other year not so
examined or audited. No action, suit, investigation, audit, claim or assessment
is pending or proposed or threatened in writing with respect to a material
amount of taxes of the Company or any of its Subsidiaries. There are no grounds
for any tax liability beyond amounts accrued with respect to years that have not
been examined or audited, except to the extent that such tax liability would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.
(e) There is no agreement or other document extending, or having the
effect of extending, the period of assessment or collection of any material
amount of taxes.
(f) No material liens for taxes exist with respect to any assets or
properties of the Company or any of its Subsidiaries, except for statutory liens
for taxes not yet due.
(g) None of the Company or any of its Subsidiaries is a party to or is
bound by any income tax allocation or sharing agreement with respect to a
material amount of taxes, and none of the Company or any Subsidiary has been a
member of any group of corporations filing federal tax returns on a consolidated
basis other than each such group of which it is currently a member.
(h) All material amounts of taxes which the Company or any Subsidiary is
required by law to withhold or to collect for payment have been duly withheld
and collected, and have been paid or accrued.
(i) No claim has ever been made by an authority in a jurisdiction where
any of the Company or its Subsidiaries does not file tax returns that it is or
may be subject to taxation
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by that jurisdiction, except to the extent that being so subject would not
reasonably be expected to have a Material Adverse Effect on the Company.
(j) Neither the Company nor any of its Subsidiaries are United States
Real Property Holding Corporations (a "USRPHC") within the meaning of Section
897 of the Code and were not USRPHC on any "determination date' (as defined in
Section 1.897-2(c) of the United States Treasury Regulations promulgated under
the Code (the "Treasury Regulations")) that occurred in the five-year period
preceding the Closing Date.
(k) Except as set forth in item 3.10 of the Company Letter, neither the
Company nor any of its Subsidiaries have executed any closing agreements
pursuant to Section 7121 of the Code or any predecessor provision thereof, or
any similar provision of state or local law.
(l) Neither the Company nor any of its Subsidiaries have filed consents
pursuant to 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 such term is
defined in Section 341(f)(4) of the Code) owned by the Company or such
Subsidiary.
(m) None of the assets owned by the Company or any of the Subsidiaries
is property that is required to be treated as owned by any other person pursuant
to Section 168(f)(8) of the Internal Revenue Code of 1954, as amended, as in
effect immediately prior to the enactment of the Tax Reform Act of 1986 or is
"tax-exempt use property" within the meaning of Section 168(h) of the Code,
except to the extent that such treatment would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
(n) Each of the Company and its Subsidiaries has disclosed on its
federal income tax returns all positions taken therein that could give rise to a
substantial understatement of federal income tax within the meaning of Code
section 6662, except to the extent that such treatment would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company.
(o) Neither the Company nor any of the Subsidiaries has agreed to make
any adjustments pursuant to Section 481(a) of the Code or any similar provision
of state or local law by reason of a change in accounting method initiated by it
or any other relevant party and neither the Company nor any of the Subsidiaries
has any knowledge that the IRS has proposed any such adjustment or change in
accounting method, nor has any application pending with any governmental or
regulatory authority requesting permission for any changes in accounting methods
that relate to the business or assets of the Company or any of the Subsidiaries.
Neither the Company nor any of the Subsidiaries is required to make any
adjustments pursuant to the Section 481(a) of the Code or any similar provision
of state or local law by reason of a change in accounting method initiated by it
or any other relevant party, except to the extent that any such adjustment would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on the Company.
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(p) Neither the Company nor any of the Subsidiaries have filed an
election under Rev. Proc. 91-11, 1991-1 C.B. 470, as modified by Rev. Proc.
91-39, 1991-2 C.B. 694, Treas. Reg. Section 1.1502-20(g) or Rev. Proc. 95-39,
1995-2 C.B. 399.
(q) As used in this Agreement, (i) "tax" and "taxes" shall include any
federal, state, local or foreign net income, gross income, gross receipts,
windfall profit, severance, real and personal property, production, sales, use,
transfer, stamp, license, excise, franchise, employment, payroll, withholding,
alternative or add-on minimum or any other tax, custom, duty, governmental fee
or other like assessment or charge of any kind whatsoever, together with any
interest or penalty, or addition to tax imposed by any governmental entity and
(ii) "tax return" shall include any return, report or similar statement required
to be filed with respect to any tax including, without limitation, any
information return, claim for refund, amended return or declaration of estimated
tax.
(r) "IRS" means the U.S. Internal Revenue Service.
(s) "Code" means the U.S. Internal Revenue Code of 1986, as amended.
SECTION 3.11 Liabilities. Except (a) for liabilities incurred in the
ordinary course of business consistent with past practice, (b) for transaction
expenses payable to its accountants, legal and financial advisors incurred in
connection with this Agreement not in excess of $6,000,000, (c) for liabilities
which individually or in the aggregate would not reasonably be expected to
exceed $500,000, (d) for liabilities set forth on any balance sheet (including
the notes thereto) included in the Company's financial statements included in
the Company Filed SEC Documents filed with the SEC since December 31, 1996, or
(e) as set forth in item 3.11 of the Company Letter, during the period from
December 31, 1996 until the date hereof neither the Company nor any of its
Subsidiaries has incurred any liabilities that would be required to be reflected
or reserved against in a consolidated balance sheet of the Company and its
Subsidiaries prepared in accordance with United States generally accepted
accounting principles as applied in preparing the consolidated balance sheet of
the Company and its Subsidiaries as of December 31, 1996 contained in the
Company's Annual Report on Form 10-K for the fiscal year ended December 31,
1996.
SECTION 3.12 Benefit Plans; Employees and Employment Practices.
(a) Except as disclosed in the Company Filed SEC Documents filed with
the SEC since December 31, 1996, and item 3.12(a) of the Company Letter, since
the date of the most recent audited financial statements included in the Company
Filed SEC Documents there has not been any adoption or amendment in any material
respect (including any increase or improvements in benefits or coverage) by the
Company or any of its Subsidiaries of any collective bargaining agreement or any
bonus, pension, profit sharing, deferred compensation, incentive compensation,
stock ownership, stock purchase, stock option, phantom stock, retirement,
vacation, severance, disability, death benefit, hospitalization, medical, fringe
benefit, excess, supplemental executive compensation, employee stock purchase,
stock appreciation, restricted stock or other material employee benefit plan,
policy, arrangement or understanding (whether or not in writing) providing
benefits relating to the employment of
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any current or former employee, officer or director of the Company or any of its
Subsidiaries (collectively, the "Benefit Plans") or any Employee Agreement (as
hereinafter defined). Except as disclosed in item 3.12(a) of the Company Letter
or in the Company Filed SEC Documents, neither the Company nor any of its
Subsidiaries has any material obligations under any employment, consulting,
severance, termination or indemnification agreements between the Company or any
of its Subsidiaries and any current or former employee, officer, director or
consultant of the Company or any of its Subsidiaries ("Employee Agreements") or
any Benefit Plans.
(b) Item 3.12(a) of the Company Letter identifies all "employee pension
benefit plans" (as defined in Section 3(2) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") (sometimes referred to herein as
"Pension Plans") and "employee welfare benefit plans" (as defined in Section
3(1) of ERISA) maintained, sponsored or contributed to, by the Company or any of
its U.S. or foreign Subsidiaries for the benefit of any current or former
employees, officers or directors of the Company or any of such Subsidiaries
(collectively, the "ERISA Benefit Plans"). The Company has made available to
Parent true, complete and correct copies of (i) each ERISA Benefit Plan (or, in
the case of any unwritten ERISA Benefit Plans, descriptions thereof), (ii) the
most recent annual report on Form 5500 (and related schedules and financial
statements or opinions required in connection therewith) filed with the Internal
Revenue Service with respect to each ERISA Benefit Plan (if any such report was
required), (iii) the most recent actuarial report with respect to each ERISA
Benefit Plan, as applicable, (iv) the most recent summary plan description (and
a summary of material modifications, if applicable) for each ERISA Benefit Plan,
(v) each trust agreement and group annuity contract relating to any ERISA
Benefit Plan and (vi) each other Benefit Plan or Employee Agreement.
(c) Except as disclosed in item 3.12(c) of the Company Letter, all
Pension Plans which are intended to be tax-qualified have received determination
letters in respect of such Pension Plans from the Internal Revenue Service to
the effect that such Pension Plans are qualified and exempt from Federal income
taxes under Section 401(a) and 501(a), respectively, of the Code, and, to
knowledge of the Company, there is no basis for any such Pension Plan not
currently being so qualified.
(d) Except as disclosed in item 3.12(d) of the Company Letter, each
Benefit Plan has been administered in all material respects in conformity with
its terms and the applicable requirements of ERISA and the Code and other
applicable laws and all contributions required to be made have been made in
accordance with the provisions of each such Benefit Plan and with ERISA and the
Code and other applicable laws, except where the failure to comply or to make
the required contributions would not be reasonably expected to have a Material
Adverse Effect on the Company.
(e) None of the Company or any of its Subsidiaries, or any other person
or entity that, together with the Company, is treated as a single employer under
Section 414 of the Code (an "ERISA Affiliate"), currently maintains or
contributes to, or has maintained or contributed to during the six-year period
preceding the date hereof, or has had during such period the obligation to
maintain or contribute to, or may have any liability with respect to,
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any "multiemployer plan" (within the meaning of Section 3(37) of ERISA), or any
plan subject to Title IV of ERISA or Section 412 of the Code. To the Company's
knowledge, none of the Company, any of its Subsidiaries, any officer of the
Company or any of its Subsidiaries or any of the Benefit Plans which are subject
to ERISA, including the Pension Plans, any trusts created thereunder or, to the
knowledge of the Company, any trustee or administrator thereof, has engaged in a
"prohibited transaction" (as such term is defined in Section 406 of ERISA or
Section 4975 of the Code) or any other breach of fiduciary responsibility that
could reasonably be expected to subject the Company, any of its Subsidiaries or
any officer of the Company or any of its Subsidiaries, directly or indirectly,
to any material tax or penalty on prohibited transactions imposed by such
Section 4975 or to any material liability under Section 502(i) or (l) of ERISA,
except where the liability that would be reasonably expected to occur would have
a Material Adverse Effect on the Company. With respect to each Pension Plan
subject to Title IV of ERISA (other than a multiemployer plan within the meaning
of Section 3(37) of ERISA) (i) no proceeding has been initiated to terminate
such plan, (ii) there has been no "reportable event" (as such term is defined in
Section 4043(b) of ERISA), (iii) no "accumulated funding deficiency" (within the
meaning of Section 412 of the Code), whether or not waived, has occurred, (iv)
no person has failed to make a required installment or any other payment
required under Section 412 of the Code before the applicable due date and (v)
neither the Company nor any ERISA Affiliate has provided or is required to
provide security to such plan under Section 401(a)(29) of the Code due to a plan
amendment that results in an increase in current liability, where the liability,
individually or in the aggregate, that would be reasonably expected to result
would have a Material Adverse Effect on the Company.
(f) There is no dispute, arbitration, claim, suit or grievance, pending
or to its knowledge threatened, involving a Benefit Plan (other than routine
claims for benefits payable under any such plan), and to the knowledge of the
Company, there is no basis for any such claim, which would reasonably be
expected to have a Material Adverse Effect on the Company.
(g) Except as disclosed in item 3.12(g) of the Company Letter, there are
no controversies, strikes, work stoppages or disputes pending or to its
knowledge threatened between the Company or any of its Subsidiaries and any
current or former employees, and, to the Company's knowledge, no organizational
effort by any labor union or other collective bargaining unit currently is under
way or threatened with respect to any employee, which would reasonably be
expected to have a Material Adverse Effect on the Company. No employee of the
Company or its Subsidiaries is a member of a collective bargaining unit.
(h) Except as set forth in item 3.12(h) of the Company Letter, there is
no controversy pending between the Company or any Subsidiary and any of their
respective employees, or former employees or applicants for employment, that,
individually or in the aggregate with other such controversies, could reasonably
be expected to have a Material Adverse Effect on the Company. To the knowledge
of this Company, there is no basis for any claim, grievance, arbitration,
negotiation, suit, action or change of or by any employee of the Company or any
Subsidiary, and no complaint is pending against the Company or any Subsidiary
before the National Labor Relations Board or any state or local agency that
would
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reasonably be expected to have a Material Adverse Effect on the Company. The
Company and its Subsidiaries have complied, in respect of their employees, in
all materials respects with all applicable statutes, regulations, orders and
restrictions of the United States of America, all states and other subdivisions
thereof, all foreign jurisdictions and all agencies and instrumentalities of the
foregoing, including without limitation workers' compensation laws, the Fair
Labor Standards Act, Title VII of the Civil Rights Act of 1964, the Age
Discrimination in Employment Act of 1967, the Equal Pay Act of 1963, the
National Labor Relations Act of 1935 ("NLRA"), the Occupational Safety and
Health Act of 1970, the Vocational Rehabilitation Act of 1973 and Immigration
Act of 1986, as amended, except where noncompliance would not reasonably be
expected to have a Material Adverse Effect on the Company.
SECTION 3.13 Litigation. Except as disclosed in item 3.13 of the Company
Letter or in the Company Filed SEC Documents, there is no suit, claim (including
product warranty claims), action, proceeding or investigation pending or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries (i) as of the date hereof, that would reasonably be expected to be
successful and, if adversely determined, would result in a liability for the
Company or any of its Subsidiaries in excess of $300,000 or (ii) that otherwise,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company or prevent or result in a third party
materially delaying the consummation of the Merger. Except as disclosed in item
3.13 of the Company Letter or in the Company Filed SEC Documents, neither the
Company nor any of its Subsidiaries is subject to any outstanding judgment,
order, writ, injunction or decree that would reasonably be expected to have a
Material Adverse Effect on the Company or prevent or result in a third party
materially delaying the consummation of the Merger.
SECTION 3.14 Environmental Matters. Except as set forth in the Company
Filed SEC Documents or in item 3.14 of the Company Letter, neither the Company
nor any of its Subsidiaries has (i) placed, held, located, released, transported
or disposed of any Hazardous Substances (as defined below) on, under, from or at
any of the Company's or any of its Subsidiaries' properties or any other
properties, other than in a manner that would not, in all such cases taken
individually or in the aggregate, reasonably be expected to result in a Material
Adverse Effect on the Company, (ii) any knowledge of the release or threatened
release of any Hazardous Substances into the environment on, under or at any of
the Company's or any of its Subsidiaries' properties other than that which would
not reasonably be expected to result in a Material Adverse Effect on the
Company, or (iii) received any written notice (A) of any violation of any
applicable statute, law, ordinance, regulation, rule, judgment, decree or order
of any Governmental Entity relating to any matter of pollution, protection of
the environment or natural resources or environmental regulation or control,
including worker health or safety or regarding Hazardous Substances
(collectively, "Environmental Laws") that has not been resolved or settled with
the relevant Governmental Entity, (B) of the institution or pendency of any
suit, action, claim, proceeding or investigation by any Governmental Entity or
any third party in connection with any such violation, (C) requiring the
response to or remediation of Hazardous Substances at or arising from any of the
Company's or any of its Subsidiaries' properties or any other properties, (D)
alleging noncompliance by the Company or any of its Subsidiaries with the terms
of any
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permit required under any Environmental Law or (E) demanding payment for
response to or remediation of Hazardous Substances at or arising from any of the
Company's or any of its Subsidiaries' properties or any other properties, except
in each case for the notices set forth in item 3.14 of the Company Letter and
except in each case for notices that would not, individually or in the
aggregate, reasonably be expected to result in a Material Adverse Effect on the
Company. For purposes of this Agreement, the term "Hazardous Substance" shall
mean any material or substance defined or classified as waste or toxic or
hazardous materials or substances or otherwise regulated as pollutants or
contaminants, including any petroleum and petroleum products, under any
applicable Environmental Law.
SECTION 3.15 Intellectual Property.
(a) For purposes of this Agreement and the representations and
warranties contained in this section: (1) the term "Intellectual Property" shall
mean: all patents, trademarks, trade names, service marks, registered and
unregistered copyrights, maskworks and any applications therefor, technology,
know-how, computer software programs or applications (in both source code and
object code form), customer lists, trade secrets and tangible or intangible
proprietary information or material; and the term "Company's knowledge" shall
mean the knowledge of an officer or director of Company. Except as set forth in
item 3.15(a) of the Company Letter:
(i) To the Company's knowledge, the Company owns, is licensed or
otherwise possesses legally sufficient rights to use all Intellectual
Property that Company uses in any material respect in the business of
the Company.
(ii) Item 3.15(a) of the Company Letter lists and identifies the
nature and status of all current patents, registered copyrights,
registered trademarks and maskwork registrations (including any
application(s) therefor) owned by the Company (the "Company IP
Registrations"), and specifies the jurisdictions in which each such
Company IP Registration has been issued or registered or in which an
application for such issuance and registration has been filed, including
the respective registration or application numbers and the names of all
registered owners.
(iii) Item 3.15(a) of the Company Letter lists:
(A) all material licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to
which any person is authorized to use any Company Intellectual
Property Rights (as hereinafter defined); and
(B) all material licenses, sublicenses and other
agreements as to which the Company is a party and pursuant to
which the Company is authorized to use any Intellectual Property
of any third party ("Third Party Intellectual Property Rights")
in or as part of any product and includes the identity of all
parties to such material licenses, sublicenses and/or agreements.
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(iv) To the Company's knowledge, no claims as described below are
currently pending or, to the knowledge of the Company, threatened by any
person, nor does the Company know of any grounds for any bona fide
claims:
(A) to the effect that the manufacture, sale, licensing or
use of any product as now used, sold or licensed by the Company
infringes on any Intellectual Property right;
(B) against the use by the Company of any Intellectual
Property used in the Company's business as currently conducted by
the Company;
(C) challenging the ownership, validity or effectiveness
of any of the Intellectual Property owned by Company ("Company
Intellectual Property Rights"); or
(D) challenging the Company's license or legally
enforceable right to use of the Third Party Intellectual Property
Rights.
(v) To the Company's knowledge, there is no material unauthorized
use, infringement or misappropriation of any of the Company Intellectual
Property by any third party, including any employee or former employee
of the Company or any of its Subsidiaries.
(vi) To the Company's knowledge, neither the Company nor any of
its Subsidiaries (A) has been sued or charged in writing as a defendant
or party in any claim, suit, action or proceeding which involves a claim
or infringement of any Intellectual Property right and which has not
been finally terminated prior to the date hereof, (B) has been informed
or notified by any third party that the Company may be engaged in such
infringement or that any such action described in (A) above may be
instituted or (C) is or has any alleged or actual infringement liability
with respect to any alleged or actual infringement by the Company or any
of its Subsidiaries or any Intellectual Property right of another.
(vii) To the Company's knowledge, neither the Company nor any of
its Subsidiaries are using or in any way making use of any confidential
information or Intellectual Property of any third party, including
without limitation a former employer of any present or past employee of
the Company or any Subsidiary, without a written license or other
agreement.
(viii) To the Company's knowledge, no director, officer or
employee of the Company or any of its Subsidiaries owns, directly or
indirectly, in whole or in part, any material Intellectual Property
right which the Company or any of its Subsidiaries has used or is
presently using which is reasonably necessary to Company or its
Subsidiaries' respective businesses as now conducted.
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(b) Except as explicitly set forth in Section 3.15(a) above and in item
3.15(a) of the Company Letter, to the Company's knowledge, all rights to the
Company Intellectual Property are: (i) owned exclusively by the Company or a
Subsidiary, free and clear of any attachments, liens, or encumbrances, and no
other person has any right or interest in or license to use or right to license
others to use any of them, except as reasonable in the course of Company's
business; (ii) freely transferable (except as otherwise required by law) and
(iii) are not subject to any outstanding order, decree, judgment or stipulation.
(c) Each current and former employee (with date of hire after June 1,
1987) of the Company has executed a confidentiality, invention and assignment
agreement with the Company in substantially the form(s) previously delivered to
Parent.
SECTION 3.16 State Takeover Statutes; Charter Provisions. The action of
the Board of Directors of the Company in approving the Merger, this Agreement
and the transactions contemplated by this Agreement (including the execution of
the Stockholder Voting Agreement) is sufficient to render inapplicable to the
Merger, this Agreement and the Stockholders Voting Agreement the provisions of
Section 203 of the DGCL and the provisions of any California takeover laws.
SECTION 3.17 Brokers. No broker, investment banker, financial advisor or
other person, other than Xxxxxx Brothers the fees and expenses of which will be
paid by the Company (and are reflected in an agreement between Xxxxxx Brothers
and the Company, a complete copy of which has been furnished to Parent), is
entitled to any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company. Other than the
foregoing agreement, the Company is not aware of any claim for payment by the
Company of any broker's, finder's, financial advisor's or other similar fee or
commission in connection with the negotiations leading to this Agreement or the
consummation of the transactions contemplated hereby.
SECTION 3.18 Required Vote of Stockholders. The affirmative vote of not
less than a majority of the outstanding Shares is required to adopt the plan of
merger contained in this Agreement and approve the Merger. No other vote of the
stockholders of the Company is required by law, the Certificate of Incorporation
or By-Laws of the Company as currently in effect or otherwise to adopt the plan
of merger contained in this Agreement and approve the Merger.
SECTION 3.19 Title to Property. The Company and each of its Subsidiaries
has good and marketable title to all of its properties and assets, free and
clear of all Liens, except for liens for taxes not yet due and payable and such
liens or other imperfections of title, if any, as do not materially detract from
the value of or interfere with the present use of the property affected thereby
or which, individually or in the aggregate, would not have a Material Adverse
Effect on the Company.
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SECTION 3.20 Real Property.
(a) Item 3.20 of the Company Letter sets forth a list of all fee and
leasehold interests in real property of the Company and the Subsidiaries of the
Company, which collectively constitute the "Specified Real Estate."
(b) Neither the Company nor any of its Subsidiaries has given or
received notice of any material default under any material lease under which the
Company or any of its Subsidiaries is the lessee of real property (each a
"Lease" and collectively the "Leases") and, to the knowledge of the Company,
neither the Company nor any of its Subsidiaries nor any other party thereto is
in default in any material respect under any of the Leases. Item 3.20 of the
Company Letter contains a complete list of all leases (including all amendments,
modifications, waivers, supplements and other agreements relating thereto) under
which the Company or any of its Subsidiaries is the lessee of the real property.
Except as set forth in item 3.20, none of the Leases has been modified in any
material respect and such Leases are in full force and effect. Except as set
forth in item 3.20, neither the Company nor any of its Subsidiaries has leased,
subleased, licensed or assigned, as the case may be, all or any portion of its
fee or leasehold interest in any Specified Real Estate to any person and the
Company or one or more of its Subsidiaries is in sole and exclusive possession
of and has the right to use all of the Specified Real Estate. Except as set
forth in item 3.20, no person other than the Company or one or more of its
Subsidiaries has any option or right to purchase, lease or use any portion of
the Specified Real Estate. Item 3.20 sets forth all rights of the Company and
its Subsidiaries to purchase the Specified Real Estate leased by the Company or
its Subsidiaries under any Lease.
(c) Except as disclosed in item 3.20 of the Company Letter, the
buildings and improvements on the Specified Real Estate (including all fixtures,
roofs, plumbing systems, fire protection systems, electrical systems, equipment,
elevators and all structural components) in all material respects are in good
operating condition and in a state of good and working maintenance and repair,
ordinary wear and tear excepted, are adequate and suitable for the purposes for
which they are presently being used, and to the knowledge of the Company, there
are no condemnation or appropriation proceedings pending or threatened against
any of such Specified Real Estate or the improvements thereon, and, to the
knowledge of the Company, no buildings or improvements on such Specified Real
Estate encroach on real property not leased to or owned by the Company or any of
its Subsidiaries, to the extent that removal of such encroachment would have a
material adverse effect on the current use, value, occupancy or operation of
such improvements. To the knowledge of the Company, no improvements or buildings
not located on Specified Real Estate encroach upon any of the Specified Real
Estate to the extent that the same would have a material adverse effect on the
current use, value, occupancy or operation of such Specified Real Estate.
(d) To the knowledge of the Company, no part of any Specified Real
Estate is subject to any building or use restriction that materially restricts
or prevents the present use and operation of such property. To the knowledge of
the Company, none of the Specified Real Estate nor the use thereof by the
Company or any of its Subsidiaries constitutes a nonconforming use or legal
non-conforming use.
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(e) The Company or one or more of its Subsidiaries is in possession of
and has good title to, or has valid leasehold interests in or valid rights under
contract to use, all tangible personal property used in the business of the
Company and its Subsidiaries or reflected in the audited financial statements of
the Company and its consolidated subsidiaries dated as of December 31, 1996,
except for personal property disposed of in the ordinary course since the date
thereof.
(f) No labor has been performed or material furnished for any portion of
any property owned by the Company or any of its Subsidiaries for which a Lien in
excess of $500,000 in value can be claimed against any such property. All of the
Specified Real Estate has rights of access to dedicated public ways (and makes
no material use of any means of access or egress that is not pursuant to such
dedicated public ways or recorded, irrevocable rights-of-way) and is served by
water, sewer, sanitary sewer, telephone, electric, gas and other public
utilities necessary or desirable for the current use thereof which utilities are
available to such Specified Real Estate through a public right-of-way. There are
no pending or proposed special or other assessments for public improvements on
the Specified Real Estate.
(g) To the knowledge of the Company, there is no pending or threatened
proceeding or governmental action to modify the zoning classification of, or to
condemn or take by power or eminent domain (or any purchase in lieu thereof), or
to classify as a landmark, all or any material part of the Specified Real Estate
except, in each case, for any proceeding or action that would not have a
Material Adverse Effect on the Company.
SECTION 3.21 Outstanding Commitments.
(a) Item 3.21 of the Company Letter contains a list, accurate and
complete in all material respects, as of the date hereof of all material
contracts, true and complete copies of which have been furnished (or made
available) to Parent and Sub (excluding purchase orders), to which the Company
or any of its Subsidiaries is a party or by which any of the assets or
operations of the Company or any of its Subsidiaries are bound. Each material
contract is a valid and binding obligation of at least the Company or one of its
Subsidiaries and, to the knowledge of the Company, each other party thereto, and
is enforceable against the Company or one or more of its Subsidiaries and, to
the knowledge of the Company, each other party thereto, in accordance with its
terms, except to the extent that such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to creditors' rights generally and is subject to general principles of
equity, and neither the Company nor any of its Subsidiaries, nor to the
knowledge of the Company, any other party, is in default under any material
contract, except in each case for such failures to be valid, binding and
enforceable and for such defaults which, individually or in the aggregate, would
not have a Material Adverse Effect on the Company.
(b) Except as would not have a Material Adverse Effect on the Company,
neither the Company nor any of its Subsidiaries is in default under any of the
material contracts. No proceeding (to the knowledge of the Company in the case
of any investigation) or event or condition has occurred or exists, or to the
knowledge of the Company, is alleged by any party to have occurred or exist
which, with notice or lapse of time or both, would constitute a
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default by any of the parties thereto of their respective obligations under a
material contract (or would give rise to any right of termination or
cancellation), except as would not have a Material Adverse Effect on the
Company.
SECTION 3.22 Insurance. The insurance carried by the Company and its
Subsidiaries is in such types and amounts and covering such risks as are
consistent with customary practices and standards of companies engaged in
businesses and operations similar to those of the Company and its Subsidiaries.
Except as would not have a Material Adverse Effect on the Company, all such
insurance is in full force and effect and none of the Company nor any of its
Subsidiaries is in default thereunder. Except as would not have a Material
Adverse Effect on the Company, all claims thereunder have been filed in a due
and timely fashion. Except as would not have a Material Adverse Effect on the
Company, neither the Company nor any of its Subsidiaries has been notified in
writing of a refusal of any material insurance coverage relating to products
liability (including renewals of any such products liability coverage) by any
insurance carrier to which it has applied for insurance during the past three
years.
SECTION 3.23 Affiliate Transactions. Except as set forth in item 3.23 of
the Company Letter, (a) there is no indebtedness (other than indebtedness
between the Company and its Subsidiaries) between the Company or any of its
Subsidiaries, on the one hand, and any holder of record of 5% or more of the
Shares outstanding on the date hereof or officer, director or affiliate of the
Company or any of its Subsidiaries, on the other hand, (b) no such officer,
director, stockholder or affiliate provides or causes to be provided any assets,
services (other than in such capacity as officer or director) or facilities to
the Company or any of its Subsidiaries which are individually or in the
aggregate material to the business or condition of the Company and its
Subsidiaries, taken as a whole, (c) neither the Company nor any of its
Subsidiaries provides or causes to be provided any assets, services or
facilities to any such officer, director, stockholder or affiliate other than in
the ordinary course of the Company's business, affiliate which are individually
or in the aggregate material to the business or condition of the Company and its
Subsidiaries, taken as a whole, and (d) neither the Company nor any of its
Subsidiaries owns any capital stock, indebtedness or other securities issued by
any such officer, director, stockholder or affiliate.
SECTION 3.24 Management Payments. Other than payments under Benefit
Plans and Employee Agreements, payments properly accrued in the Company's budget
for the 1997 fiscal year, or as provided in this Agreement, no employee or
former employee will be entitled to additional compensation or to the early
vesting or acceleration of payment of any compensation that arises out of or are
related to the consummation of the Merger and the transactions contemplated
thereby.
SECTION 3.25 Accuracy of Information. The financial forecasts for fiscal
1997 and 1998 previously furnished to the Parent, as updated through the date
hereof, have been prepared in good faith, represent the reasonable judgment of
the Company's management and are based on assumptions which the Company believes
as of the date hereof are reasonable. No representation is made, however, as to
whether the assumptions on which the projections are based are true and correct
or that events will not occur which would make such
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assumptions incorrect. All of the information furnished to Parent or Sub by the
Company (including the information set forth in the Company Letter) was
furnished in the good faith belief that, as of the date furnished, such
information taken as a whole was accurate and complete in all material respects.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND SUB
Parent and (at such time as Sub becomes a party to this Agreement) Sub
represent and warrant to the Company as of the date hereof (provided, that the
following representations and warranties relating to Sub shall instead be made
as of such time as Sub becomes a party hereto) as follows:
SECTION 4.1 Organization. Parent is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Sub is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has all
requisite corporate power and authority to carry on its business as now being
conducted.
SECTION 4.2 Authority. Parent and Sub have all requisite partnership or
corporate power and authority to execute and deliver this Agreement and all
documents and agreements contemplated hereby and to consummate the transactions
contemplated hereby. The execution, delivery and performance of this Agreement
by Parent and Sub and the consummation by Parent and Sub of the transactions
contemplated hereby have been duly authorized by all necessary partnership or
corporate action on the part of Parent and Sub and no other partnership or
corporate action on the part of Parent or Sub is necessary to authorize or
execute this Agreement or to consummate the transactions so contemplated. This
Agreement has been duly executed and delivered by Parent and Sub and (assuming
the valid authorization, execution and delivery of this Agreement by the
Company) constitutes a valid and binding obligation of each of Parent and Sub
enforceable against them in accordance with its terms, except that such
enforceability (i) may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to the enforcement of creditors' rights
generally and (ii) is subject to general principles of equity.
SECTION 4.3 Consents and Approvals; No Violations. The execution and
delivery by Parent and Sub of this Agreement do not, and the consummation by
Parent and Sub of the transactions contemplated hereby and compliance with the
provisions hereof will not, conflict with, result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or the
loss of a benefit under, or result in the creation of any Lien upon any of the
properties or assets of Parent or any of its Subsidiaries under, (i) any
provision of the partnership agreement, Certificate of Incorporation, By-laws or
comparable organization documents of Parent, Sub or any Significant Subsidiaries
of Parent, (ii) any loan or credit agreement, note,
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xxxx, xxxxxxxx, xxxxxxxxx, lease or other agreement (other than, with respect to
termination, agreements terminable at will or upon 90 days' or less notice by
the terminating party), instrument, permit, concession, franchise or license
applicable to Parent or any of its Significant Subsidiaries or (iii) assuming
all the consents, filings and registrations referred to in the next sentence are
made and obtained, any judgment, order, decree, statute, law, ordinance, rule or
regulation applicable to Parent or any of its Significant Subsidiaries or any of
their respective properties or assets, other than, in the case of clause (ii) or
(iii), any such violations, defaults, rights, losses or Liens, that,
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on Parent or Sub or prevent or result in a third party
materially delaying the consummation of the Merger. No filing or registration
with, or authorization, consent or approval of, any Governmental Entity is
required by or with respect to Parent or any of its Subsidiaries in connection
with the execution and delivery of this Agreement by Parent or Sub or is
necessary for the consummation of the Merger and the other transactions
contemplated by this Agreement, except (i) in connection, or in compliance, with
the provisions of the HSR Act and the Exchange Act, (ii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate documents with the relevant authorities of other states in which
Parent or any of its Subsidiaries is qualified to do business, (iii) such
filings and consents as may be required under any environmental, health or
safety law or regulation pertaining to any notification, disclosure or required
approval triggered by the Merger or the other transactions contemplated by this
Agreement, (iv) such filings, authorizations, orders and approvals as may be
required to obtain the State Takeover Approvals or state securities or "blue
sky" laws, (v) such filings as may be required in connection with the taxes
described in Section 6.6, (vi) such other consents, approvals, orders,
authorizations, registrations, declarations and filings as may be required under
the laws of any foreign country in which Parent or any of its Subsidiaries
conducts any business or owns any property or assets and (vii) such other
consents, orders, authorizations, registrations, declarations and filings the
failure of which to be obtained or made would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on Parent or
prevent or result in a third party materially delaying the consummation of the
Merger.
SECTION 4.4 Information Supplied. None of the information supplied or to
be supplied by Parent or Sub specifically for inclusion in (i) the S-4
Registration Statement will, at the time the S-4 Registration Statement becomes
effective under the Securities Act, and (ii) the Prospectus/Proxy Statement and
any amendment or supplement thereto will, at the date of mailing to stockholders
and at the time of the Stockholder Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except that no
representation or warranty is made by Parent or Sub in connection with any of
the foregoing with respect to statements made or incorporated by reference
therein based on information supplied by the Company or any of its
representatives specifically for inclusion or incorporation by reference
therein.
SECTION 4.5 Interim Operations of Sub. Sub was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby.
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SECTION 4.6 Brokers. No broker, investment banker, financial advisor or
other person, other than any person the fees and expenses of which will be paid
by Parent or Sub, is entitled to any broker's, finder's, financial advisor's or
other similar fee or commission in connection with the negotiations leading to
this Agreement or the transactions contemplated by this Agreement based upon
arrangements made by or on behalf of Parent or Sub. Other than as aforesaid,
Parent is not aware of any claim for payment by Parent of any broker's,
finder's, financial advisor's or other similar fee or commission in connection
with the negotiations leading to this Agreement or the consummation of the
transactions contemplated hereby.
SECTION 4.7 Financing. Parent has binding written commitments, addressed
to Parent or Sub, from one or more financially responsible financial
institutions, true and complete copies of which have been furnished to the
Company (collectively, the "Commitments") to obtain, together with the other
funds to be provided by Parent, the financing necessary to pay the Cash Election
Price with respect to each Share outstanding at the Effective Time (other than
Electing Shares), to pay (or provide the funds for the Company to pay) all
amounts contemplated by Section 2.2 when due, to refinance any indebtedness or
other obligation of the Company and its Subsidiaries which may become due as a
result of this Agreement or any of the transactions contemplated hereby, to pay
all related fees and expenses and to provide for the anticipated working capital
needs of the Surviving Corporation following the Merger (the financing necessary
to provide such funds being hereinafter referred to as the "Financing"), which
Commitments are in full force and effect as of the date hereof. There are no
conditions precedent or other contingencies related to the funding of the full
amount of the Financing other than as set forth in the Commitments. Subject to
the terms and conditions of this Agreement and receipt of the proceeds of the
Financing as set forth in the Commitments (or on other terms reasonably
satisfactory to Parent), at the closing of the Merger, Parent will capitalize
Sub with an aggregate equity contribution of at least $140 million. Parent will
be under no obligation pursuant to the preceding sentence unless and until the
proceeds of the Financing are received as set forth in the Commitments. In
addition, Parent will be under no obligation under any circumstances to
capitalize Sub with equity of more than $140 million.
ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS
SECTION 5.1 Conduct of Business by the Company Pending the Merger.
During the period from the date of this Agreement until the Effective Time, the
Company shall, and shall cause each of its Subsidiaries to, except as
contemplated by this Agreement, carry on its business in the ordinary course of
its business as currently conducted, maintain all assets other than those
disposed of in the ordinary course of business in good repair and condition,
confer on a regular basis with Parent to report material operational matters and
any proposals to engage in material transactions and, to the extent consistent
therewith, use reasonable efforts to preserve intact its current business
organizations, keep available the services of its current officers and employees
and preserve its present relationships with customers, suppliers
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and others having significant business dealings with it. Without limiting the
generality of the foregoing, during such period, except as contemplated by this
Agreement, the Company shall not, and shall not permit any of its Subsidiaries
to, without the prior written consent of Parent (which consent shall not be
unreasonably withheld or delayed):
(a) (x) declare, set aside or pay any dividends on, or make any other
actual, constructive or deemed distributions in respect of, any of its capital
stock, or otherwise make any payments to its stockholders in their capacity as
such (other than the payment by a Subsidiary of a dividend or distribution to
the Company or another wholly owned Subsidiary), (y) split, combine or
reclassify any of its capital stock or issue or authorize the issuance of any
other securities in respect of, in lieu of or in substitution for shares of its
capital stock or (z) purchase (other than issuances by a wholly owned
Subsidiary), redeem or otherwise acquire any shares of its capital stock or
those of any Subsidiary or any other securities thereof or any rights, warrants
or options to acquire any such shares or other securities;
(b) except as set forth in item 3.12(a) of the Company Letter, issue,
deliver, sell, pledge, dispose of or otherwise encumber any shares of its
capital stock, any other voting securities or equity equivalent or any
securities convertible into, or any rights, warrants or options to acquire any
such shares, voting securities, equity equivalent or convertible securities
(other than issuances by a wholly owned Subsidiary of the Company of its capital
stock to the Company), or modify or alter the terms of any of the foregoing;
(c) amend its Certificate of Incorporation or By-laws or other similar
organizational documents;
(d) acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of or equity in, or by any other
manner, any business or any corporation, partnership, limited liability company,
association or other business organization or division thereof or otherwise
acquire or agree to acquire any assets, other than (i) transactions which
involve assets having a purchase price not in excess of $100,000 individually or
$500,000 in the aggregate or (ii) acquisitions or purchases of assets to the
extent permitted by Section 6.1(m);
(e) sell, lease, license, encumber or otherwise dispose of, or agree to
sell, lease, encumber or otherwise dispose of, any of its assets, other than
transactions that are in the ordinary course of business consistent with past
practice or which involve assets which in the aggregate are not in excess of
$500,000;
(f) incur any indebtedness for borrowed money or guarantee any such
indebtedness or issue or sell, or vary the terms of, any debt securities or
warrants or rights to acquire any debt securities of the Company or any of its
Subsidiaries, guarantee any debt securities of others, enter into any
"keep-well" or other agreement to maintain any financial statement condition of
another person or enter into any arrangement having the economic effect of any
of the foregoing, except for borrowings incurred in the ordinary course of
business consistent with past practice not to exceed $100,000 in the aggregate
or non-acquisition-related borrowings under existing credit facilities not to
exceed $100,000 in the aggregate, or make
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any loans, advances or capital contributions to, or other investments in, any
other person, other than to or in the Company or any wholly owned Subsidiary of
the Company;
(g) alter (through merger, liquidation, reorganization, restructuring or
in any other fashion) the corporate structure or ownership of the Company or any
Subsidiary;
(h) except as disclosed in item 3.12(a) of the Company Letter, increase
the compensation payable or to become payable to its directors, officers or
employees, except for increases required under employment agreements existing on
the date hereof, and increases for employees other than officers in the ordinary
course of business consistent with past practice, or grant any severance or
termination pay, or make any loan, to, or enter into any employment or severance
agreement, or establish, adopt, enter into, or amend or take action to enhance
or accelerate any rights or benefits under, 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
director, officer or employee, except, in each case, for changes which are less
favorable to participants in plans, agreements, trusts, funds, policies or
arrangements, or as may be required by the terms of any such plan, agreement,
trust, fund, policy or arrangement existing on the date hereof or to comply with
applicable law or regulation;
(i) knowingly violate or fail to perform any material obligation or duty
imposed upon it by any applicable material federal, state or local law, rule,
regulation, guideline or ordinance;
(j) settle or compromise any suit, proceeding, investigation or claim or
threatened suit, proceeding, investigation or claim for an amount that is more
than $100,000 in the case of any individual suit, proceeding or claim or
$500,000 for all suits, proceedings or claims;
(k) except to the extent required by law or agreed to by Parent, (i)
compromise any material tax liability or (ii) prepare or file any material tax
return inconsistent with past practice or, on any such tax return or otherwise,
take any position, make any material election, or adopt any material accounting
method that is inconsistent with positions taken, elections made or methods used
in the past in preparing or filing similar tax returns;
(l) except as may be required as a result of a change in law or in
United States generally accepted accounting principles, make any material change
in its method of accounting;
(m) make or agree to make any new capital expenditure not previously
finally committed to that, individually, exceeds $2,000,000; provided, however,
that as to any individual capital expenditure in an amount equal to or greater
than $500,000 but less than or equal to $2,000,000, the Company will consult
with Parent (it being understood that no consent is required hereunder);
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(n) except to the extent permitted by Section 5.1(j), pay, discharge,
settle or satisfy any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise), other than the payment,
discharge, settlement or satisfaction, (1) in the ordinary course of business
consistent with past practice or in accordance with their terms, of liabilities
recognized or disclosed in the most recent consolidated financial statements (or
the notes thereto) of the Company included in the Company Filed SEC Documents or
incurred since the date of such financial statements in the ordinary course of
business consistent with past practice or (2) of liabilities required to be
paid, discharged or satisfied pursuant to the terms of any contract in existence
on the date hereof;
(o) enter into, modify in any material respect, amend in any material
respect or terminate any material contract or agreement to which the Company or
any of its Subsidiaries is a party or waive (except to the extent permitted by
Section 5.3), release or assign any material rights or claims;
(p) commence any voluntary petition, proceeding or action under any
bankruptcy, insolvency or other similar laws;
(q) except in the ordinary course of business consistent with past
practice, sell, assign, transfer, license or permit to lapse any material right
with respect to the Company Intellectual Property Rights; or
(r) authorize, recommend, propose or announce an intention to do any of
the foregoing, or enter into any contract, agreement, commitment or arrangement
to do any of the foregoing.
SECTION 5.2 No Solicitation.
(a) The Company shall, and shall direct and cause its officers,
directors, employees, representatives and agents to, immediately cease any
discussions or negotiations with any parties that may be ongoing with respect to
a Takeover Proposal (as hereinafter defined). The Company shall not, nor shall
it permit any of its Subsidiaries to, nor shall it authorize or permit any of
its officers, directors or employees or any investment banker, financial
advisor, attorney, accountant or other representative or agent retained by it or
any of its Subsidiaries to, directly or indirectly, (i) solicit, initiate or
knowingly encourage (including by way of furnishing information) any inquiries
or the making of any proposal which constitutes, or may reasonably be expected
to lead to, any Takeover Proposal or (ii) participate in any discussions or
negotiations regarding any Takeover Proposal; provided, however, that if, at any
time prior to the receipt of the Company Stockholder Approval the Board of
Directors of the Company determines in good faith, after consultation with
outside counsel, that it would be consistent with its fiduciary responsibilities
to the Company's stockholders under applicable law, the Company may, in response
to a Superior Proposal (as defined below) which was not solicited subsequent to
the date hereof, (x) furnish information with respect to the Company to any
person pursuant to a confidentiality agreement substantially identical to the
Confidentiality Agreement (as defined in Section 6.2 hereof) and (y) participate
in discussions, investigations and/or negotiations regarding such Superior
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Proposal. The Company will promptly notify Parent in the event of the occurrence
of any matter referred to in the foregoing proviso. For purposes of this
Agreement, "Takeover Proposal" means any inquiry, proposal or offer from any
person relating to any direct or indirect acquisition or purchase of 25% or more
of the aggregate assets of the Company and its Subsidiaries, taken as a whole,
or 25% or more of the voting power of the shares of Common Stock then
outstanding or any tender offer or exchange offer that if consummated would
result in any person beneficially owning 25% or more of the voting power of the
shares of Common Stock then outstanding or any merger, consolidation, business
combination, recapitalization, liquidation, dissolution or similar transaction
involving the Company, other than the transactions contemplated by this
Agreement. For purposes of this Agreement, a "Superior Proposal" means any
proposal determined by the Board of Directors of the Company in good faith,
after consultation with outside legal counsel, to be a bona fide proposal and
made by a third party to acquire, directly or indirectly, for consideration
consisting of cash, property and/or securities, more than 50% of the combined
voting power of the shares of 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, after
consultation with outside counsel and with a financial advisor of nationally
recognized reputation, to be more favorable to the Company's stockholders than
the Merger.
(b) Except as set forth in this Section 5.2, 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; provided that, the Board of Directors may, (A) in
response to any Takeover Proposal, suspend such recommendation pending its
analysis of such Takeover Proposal or (B) at any time prior to the receipt of
the Company Stockholder Approval, modify or withdraw such recommendation if the
Board of Directors of the Company determines in good faith that a Takeover
Proposal is a Superior Proposal and, after consultation with outside counsel,
that it would be consistent with its fiduciary responsibilities to so modify or
withdraw such recommendation, (ii) approve or recommend, or propose publicly to
approve or recommend, any Takeover Proposal or (iii) cause the Company to enter
into any acquisition agreement or other similar agreement (an "Acquisition
Agreement") related to any Takeover Proposal. Notwithstanding the foregoing, in
the event that prior to the receipt of the Company Stockholder Approval, the
Board of Directors of the Company determines in good faith, after consultation
with outside counsel, that it would be consistent with its fiduciary
responsibilities to the Company's stockholders under applicable law, the Board
of Directors of the Company may approve or recommend a Superior Proposal or
terminate this Agreement, but in each case, subject to the provisions of Section
6.3 hereof and only at a time that is after the second business day following
Parent's receipt of written notice (a "Notice of Superior Proposal") advising
Parent that the Board of Directors of the Company has received a Takeover
Proposal that may constitute a Superior Proposal, specifying the material terms
and conditions of such Superior Proposal and identifying the person making such
Superior Proposal.
(c) Nothing contained in this Section 5.2 shall prohibit the Company
from taking and disclosing to its stockholders a position contemplated by Rules
14d-9 and 14e-2
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promulgated under the Exchange Act or 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, such disclosure is necessary
in order to comply with its fiduciary duties to the Company's stockholders under
applicable law or is otherwise required under applicable law.
SECTION 5.3 Third Party Standstill Agreements. During the period from
the date of this Agreement through the Effective Time, the Company shall not,
except in connection with the making of a Superior Proposal, terminate, amend,
modify or waive any provision of any confidentiality or standstill agreement to
which the Company or any of its Subsidiaries is a party (other than any
involving Parent) unless the Company's Board of Directors shall have determined
in good faith, after consultation with outside counsel, that such release of any
third party or amendment, modification or waiver of such provisions is necessary
in order to comply with its fiduciary duties to the Company's stockholders under
applicable law.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1 Stockholder Meeting. The Company will take, in accordance
with applicable law and its certificate of incorporation and by-laws, all action
necessary to convene a meeting of holders of Shares (the "Stockholder Meeting")
as promptly as practicable after the S-4 Registration Statement is declared
effective to consider and vote upon the approval of this Agreement and the
Merger. Except as otherwise expressly provided herein, the Company's Board of
Directors shall recommend approval of the transactions contemplated hereby and
shall take all lawful action to solicit such approval.
SECTION 6.2 Filings; Other Actions; Notification; Access to Information.
(a) Parent and the Company shall promptly prepare and file with the SEC
the Prospectus/Proxy Statement and the S-4 Registration Statement as promptly as
practicable. Parent and the Company each shall use all reasonable efforts to
have the S-4 Registration Statement declared effective under the Securities Act
as promptly as practicable after such filing, and promptly thereafter mail the
Prospectus/Proxy Statement to the stockholders of the Company. Parent and the
Company shall also use all reasonable efforts to obtain prior to the effective
date of the S-4 Registration Statement all necessary state securities law or
"blue sky" permits and approvals required in connection with the Merger and to
consummate the other transactions contemplated by this Agreement and will pay
all expenses incident thereto.
(b) The Company shall notify Parent promptly of the receipt of any
comments from the SEC or its staff and of any request by the SEC or its staff
for amendments or supplements to the Proxy Statement or for additional
information and will supply Parent with copies of all correspondence between the
Company or any of its representatives, on the one hand, and the SEC or its
staff, on the other hand, with respect to the Proxy Statement or the Merger. If
at any time prior to the Stockholder Meeting there shall occur any event that
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should be set forth in an amendment or supplement to the Proxy Statement, the
Company shall promptly prepare and mail to its stockholders such an amendment or
supplement. Parent shall cooperate with the Company in the preparation of the
Proxy Statement or any amendment or supplement thereto.
(c) The Company and Parent each shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may be reasonably
necessary or advisable in connection with the Prospectus/Proxy Statement, the
S-4 Registration Statement or any other statement, filing, notice or application
made by or on behalf of Parent, the Company or any of their respective
Subsidiaries to any third party and/or any Governmental Entity in connection
with the Merger and the transactions contemplated by this Agreement.
(d) The Company and Parent each shall keep the other apprised of the
status of matters relating to completion of the transactions contemplated
hereby, including promptly furnishing the other with copies of notices or other
communications received by Parent or the Company, as the case may be, or any of
its Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Merger and the other transactions contemplated by this Agreement.
Each of the Company and Parent shall give prompt notice to the other of any
change that is reasonably likely to result in a Material Adverse Effect on it.
(e) The Company shall deliver to Parent a letter identifying all persons
whom the Company believes to be, at the date of the Stockholder Meeting,
"affiliates" of the Company for purposes of Rule 145 under the Securities Act.
Each of the Company and Parent shall use all reasonable efforts to cause each
Person who is identified as an "affiliate" in the letter referred to above to
deliver to Parent at least thirty-five days prior to the date of the Stockholder
Meeting a written agreement substantially in the form of Exhibit B. Prior to the
Effective Time, the Company shall amend and supplement such letter and use all
reasonable efforts to cause each additional person who is identified as an
"affiliate" to execute a written agreement as set forth in this Section 6.2(e).
(f) The Company shall, and shall cause each of its Subsidiaries to, upon
reasonable notice, afford to Parent and to the officers, employees, accountants,
counsel, financial advisors and other representatives and agents of Parent
reasonable access to all their respective key employees, properties, books,
contracts, commitments, documents and records of the Company or its Subsidiaries
during normal business hours during the period from the date of this Agreement
through the Effective Time and, during such period, the Company shall, and shall
cause each of its Subsidiaries to, furnish promptly to Parent (i) a copy of each
report, schedule, registration statement and other document filed by it during
such period pursuant to the requirements of federal or state securities laws and
(ii) all other information concerning its business, properties and personnel as
Parent may reasonably request; provided that the Company shall not be required
to furnish to Parent any information which is subject to an attorney-client
privilege or which constitutes attorney work product. All information obtained
by or on behalf of Parent pursuant to this Section 6.2 shall be kept
confidential in accordance with the letter agreement dated May 27, 1997 between
Parent and Xxxxxx Brothers, on behalf of the Company (the "Confidentiality
Agreement").
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SECTION 6.3 Fees and Expenses.
(a) The Company shall pay to Parent by wire transfer $15,000,000 (the
"Company Termination Fee") if:
(i) the Company terminates this Agreement pursuant to Section
8.1(e), in which case, the Company Termination Fee must be paid
simultaneously with such termination;
(ii) Parent terminates this Agreement pursuant to Section 8.1(d),
in which case, the Company Termination Fee must be paid no later than
one business day after the termination of this Agreement; or
(iii) (A) Parent or the Company terminates this Agreement
pursuant to Section 8.1(b)(iii), (B) the approval of this Agreement by
the stockholders of the Company shall not have been obtained by reason
of the failure to obtain the required vote at a meeting of stockholders
duly convened thereon as contemplated by this Agreement (a "Company
Negative Vote"), (C) at the time of such Company Negative Vote there
shall be pending a Takeover Proposal, and (D) within one year after such
termination, the Company consummates either (1) a merger, consolidation
or other business combination between the Company and any other person
(other than Parent, Sub or an affiliate of Parent) or (2) the sale of
30% or more (in voting power) of the voting securities of the Company or
of 30% or more (in fair market value) of the assets of the Company and
its Subsidiaries, on a consolidated basis, in which case, the Company
Termination Fee must be paid simultaneously with the closing of the
event described in clause (1) or (2) of this subparagraph.
(b) Parent shall pay to the Company by wire transfer $5,000,000 (the
"Parent Termination Fee") if this Agreement is terminated by either Parent or
the Company pursuant to Section 8.1(b)(i) and at the time of such termination
(A) the condition set forth in Section 7.2(c) to the obligations of Parent and
Sub shall not have been satisfied or waived and (B) each of the other conditions
set forth in Article VII to the obligations of the Company, Parent and Sub shall
have been satisfied or waived and Parent and Sub shall not have then been
entitled to terminate this Agreement pursuant to any of the provisions of
Section 8.1 (other than Section 8.1(b)(i)). If payable, the Parent Termination
Fee shall be paid no later than one business day after the termination of this
Agreement.
(c) Except as set forth above, all fees and expenses incurred in
connection with the Merger, this Agreement and the transactions contemplated
hereby shall be paid by the party incurring such fees or expenses, whether or
not the Merger is consummated; provided, however, that all filing fees related
to compliance with the HSR Act in connection with the transactions contemplated
hereby shall be borne equally by Parent and the Company.
SECTION 6.4 Awards. No further awards of any type shall be made under
any Company Stock Plan after the date of this Agreement.
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SECTION 6.5 Public Announcements. Parent and the Company will consult
with each other before issuing any press release or otherwise making any public
statements with respect to the transactions contemplated by this Agreement and
shall not issue any such press release or make any such public statement prior
to such consultation, except as may be required by applicable law, fiduciary
duties or by obligations pursuant to any listing agreement with any national
securities exchange.
SECTION 6.6 Real Estate Transfer Tax. Parent and the Company agree that
either the Surviving Corporation or Parent (without any liability to any of the
Company's stockholders) will pay any state or local tax which is attributable to
the transfer of the beneficial ownership of the Company's or its Subsidiaries'
real property, if any (collectively, the "Transfer Taxes"), and any penalties or
interest with respect to the Transfer Taxes, payable in connection with the
consummation of the Merger. The Company agrees to cooperate with Parent in the
filing of any returns with respect to the Transfer Taxes, including supplying in
a timely manner a complete list of all real property interests held by the
Company and its Subsidiaries and any information with respect to such property
that is reasonably necessary to complete such returns. The portion of the
consideration allocable to the real property of the Company and its Subsidiaries
shall be determined by Parent in its reasonable discretion. To the extent
permitted by law, the stockholders of the Company shall be deemed to have agreed
to be bound by the allocation established pursuant to this Section 6.6 in the
preparation of any return with respect to the Transfer Taxes.
SECTION 6.7 State Takeover Laws. If any "fair price" or "control share
acquisition" statute or other similar statute or regulation shall become
applicable to the transactions contemplated hereby, the Company and its Board of
Directors shall use reasonable best efforts to grant such approvals and take
such actions as are necessary so that the transactions contemplated hereby may
be consummated as promptly as practicable on the terms contemplated hereby and
otherwise act to minimize the effects of any such statute or regulation on the
transactions contemplated hereby.
SECTION 6.8 Indemnification; Directors and Officers Insurance.
(a) From and after the Effective Time, the Surviving Corporation agrees
that it will indemnify and hold harmless each present and former director and
officer of the Company (when acting in such capacity) determined as of the
Effective Time (the "Indemnified Parties"), against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, losses, claims,
damages or liabilities (collectively, "Costs") incurred in connection with any
claim, action, suit, proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or pertaining to matters
existing or occurring at or prior to the Effective Time, whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent that the
Company would have been permitted under the DGCL and its articles of
incorporation or by-laws in effect on the date hereof to indemnify such Person
(and the Surviving Corporation shall also advance expenses as incurred to the
fullest extent permitted under applicable law, provided the Person to whom
expenses are advanced provides an undertaking to repay such advances if it is
ultimately determined that such Person is not entitled to indemnification).
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(b) Any Indemnified Party wishing to claim indemnification under
paragraph (a) of this Section 6.8, upon learning of any such claim, action,
suit, proceeding or investigation, shall promptly notify the Surviving
Corporation thereof, but the failure to so notify shall not relieve the
Surviving Corporation of any liability it may have to such Indemnified Party if
such failure does not materially prejudice the indemnifying party. In the event
of any such claim, action, suit, proceeding or investigation (whether arising
before or after the Effective Time), (i) the Surviving Corporation shall have
the right to assume the defense thereof and the Surviving Corporation shall not
be liable to such Indemnified Parties for any legal expenses of other counsel or
any other expenses subsequently incurred by such Indemnified Parties in
connection with the defense thereof, except that if the Surviving Corporation
does not elect to assume such defense or counsel for the Indemnified Parties
advises that there are issues which raise conflicts of interest between the
Surviving Corporation and the Indemnified Parties, the Indemnified Parties may
retain counsel satisfactory to them, and the Surviving Corporation shall pay all
reasonable fees and expenses of such counsel for the Indemnified Parties
promptly as statements therefor are received; provided, however, that the
Surviving Corporation shall be obligated pursuant to this paragraph (b) to pay
for only one firm of counsel for all Indemnified Parties in any jurisdiction
(unless there is a conflict of interest as provided above), (ii) the Indemnified
Parties will cooperate in the defense of any such matter and (iii) the Surviving
Corporation shall not be liable for any settlement effected without the prior
written consent of the Surviving Corporation.
(c) The Surviving Corporation shall maintain a policy of officers' and
directors' liability insurance for acts and omissions occurring prior to the
Effective Time with coverage in amount and scope at least as favorable as the
Company's existing directors' and officers' liability insurance coverage for a
period of six years after the Effective Time; provided, however, that in
satisfying the obligations under this provision, the Surviving Corporation shall
not be obligated to pay annual premiums in excess of 200% of the amount per
annum paid by the Company in its last full fiscal year. The amount per annum of
premiums paid by the Company in its last full fiscal year equaled $270,000.
(d) The provisions of this Section are intended to be for the benefit
of, and shall be enforceable by, each of the Indemnified Parties, their heirs
and their representatives and shall be binding on all successors and assigns of
the Surviving Corporation.
SECTION 6.9 Notification of Certain Matters. Parent shall give prompt
notice to the Company, and the Company shall give prompt notice to Parent, of:
(i) the occurrence, or non-occurrence of any event the occurrence, or
non-occurrence, of which would be reasonably likely to cause (x) any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect, and (ii) the failure of the Company or
Parent to comply with in any material respect or satisfy in any material respect
any covenant, condition or agreement of such entity to be complied with or
satisfied by it hereunder; provided, however, that the delivery of any notice
pursuant to this Section 6.9 shall not limit or otherwise affect the remedies
available hereunder to the party receiving such notice.
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SECTION 6.10 Reasonable Best Efforts.
(a) Subject to the terms and conditions of this Agreement and the
fiduciary responsibilities of the Board of Directors of the Company, each of the
Company, Parent and Sub agrees to use its reasonable best efforts to cause the
consummation of the Merger to occur as soon as practicable. Without limiting the
foregoing, (i) each of the Company, Parent and Sub agree to use its reasonable
best efforts to take, or cause to be taken, all actions necessary to comply
promptly with all legal requirements that may be imposed on itself with respect
to the Merger (which actions shall include furnishing all information required
under the HSR Act and in connection with approvals of or filings with any other
Governmental Entity) and shall promptly cooperate with and 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 and (ii) each of the
Company, Parent and Sub shall, and shall cause its Subsidiaries to, use its
reasonable best efforts to obtain (and shall cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, any Governmental Entity or other public or private third party required to
be obtained or made by Parent, Sub, the Company or any of their Subsidiaries in
connection with the Merger or the taking of any action contemplated thereby or
by this Agreement. In connection with any action to be taken by Parent, the
Company or any of its respective Subsidiaries to consummate the Merger or the
other transactions contemplated in this Agreement, the Company shall not,
without Parent's prior written consent, commit to any divestiture of assets or
businesses of the Company and its Subsidiaries if such divested assets and/or
businesses are material to the assets or profitability of the Company and its
Subsidiaries taken as a whole; and neither Parent nor any of its Subsidiaries
shall be required to divest or hold separate or otherwise take or commit to take
any action that materially limits its freedom of action with respect to, or its
ability to retain, the Company or any of the businesses or assets of Parent or
that would have a Material Adverse Effect on Parent or the Company.
(b) Parent hereby agrees to use its reasonable best efforts to arrange
and complete the Financing including, (i) to negotiate definitive agreements
with respect thereto and (ii) to satisfy all conditions applicable to Parent and
Sub in such definitive agreements. Parent will keep the Company informed at all
times with respect to the status of its efforts to arrange and complete the
Financing, including, without limitation, with respect to the occurrence of any
event which Parent believes may have a materially adverse effect on the ability
of Parent to obtain the Financing. In the event Parent is unable to arrange or
complete any portion of the Financing in the manner or from the sources
originally contemplated, Parent will use its reasonable best efforts to arrange
any such portion from alternative sources. The Company hereby agrees to use its
reasonable best efforts to assist Parent to arrange and complete the Financing,
including to satisfy all conditions applicable to the Company in connection
therewith; provided that the Company shall not be obligated to incur any
monetary obligations or expenditures in connection with such assistance.
SECTION 6.11 Employee Benefits.
(a) During the period from the Effective Time until December 31, 1997,
the Surviving Corporation shall maintain or cause to be maintained wages,
compensation levels,
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employee pension and welfare plans for the benefit of employees and former
employees of the Company or its Subsidiaries which, in the aggregate, are not
less favorable than those wages, compensation levels and other benefits under
the Benefit Plans that are in effect as of the date hereof; provided, however,
that the Surviving Corporation shall not have any obligation to provide benefits
based on equity securities or any equivalent thereof. For all purposes of
eligibility to participate in and vesting in benefits provided under employee
benefits plans maintained by the Surviving Corporation (but not for purposes of
determining benefits (or accruals thereof) under such plans) which employees and
former employees of the Company become eligible to participate in after the
Effective Time, all persons previously employed by the Company and its
Subsidiaries and then employed by the Surviving Corporation shall be credited
with their years of service with the Company and its Subsidiaries and years of
service with prior employers to the extent service with prior employers is taken
into account under the Benefit Plans. With respect to the Company's Deferred
Compensation Plan and the trust established thereunder (collectively, the
"Deferred Compensation Plan"), the Surviving Corporation shall cause the
Deferred Compensation Plan to be amended such that all amounts payable
thereunder shall become fully vested as of the Effective Time. The Deferred
Compensation Plan shall be continued (but Company contributions to the Deferred
Compensation Plan may be discontinued after December 31, 1997) and, except as
provided in the preceding sentence, may not be amended or terminated until all
benefits payable thereunder are distributed in accordance with the Deferred
Compensation Plan and any and all elections thereunder.
(b) The foregoing shall not constitute any commitment, contract,
understanding or guarantee (express or implied) on the part of the Surviving
Corporation of a post-Effective Time employment relationship of any term of
duration or on any terms other than those that the Surviving Corporation may
establish. Employment of any of the employees by the Surviving Corporation will
be "at will" and may be terminated by the Surviving Corporation at any time for
any reason (subject to any legally binding agreement other than this Agreement,
or any applicable laws or collective bargaining agreement, or any other
arrangement or commitment). Except as otherwise provided in Sections 6.11
through 6.14, nothing in this Agreement shall be interpreted as limiting the
power of the Surviving Corporation to amend or terminate any particular Benefit
Plan or any other employee benefit plan, program, agreement or policy or as
requiring the Surviving Corporation to offer to continue (other than as required
by its terms) any written employment contract.
SECTION 6.12 Severance Policy and Other Agreements.
(a) With respect to any officer or employee who is covered by a
severance policy or plan separate from the standard severance policy for the
Company's employees (all of which separate severance policies or plans are
incorporated in the terms of the employment agreements listed in item 6.12 of
the Company Letter), the Surviving Corporation shall maintain (or shall cause to
be maintained) such separate policy or plan as in effect as of the date hereof,
and, as to all other officers and employees, the Surviving Corporation shall
maintain (or shall cause to be maintained) the Company's standard severance
policy as in effect as of the date hereof until at least December 31, 1997;
provided, however, that with
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respect to any severance policy maintained pursuant to any statutory
requirement, such policy shall continue to be maintained in compliance with the
applicable statute.
(b) The Surviving Corporation shall honor or cause to be honored all
severance agreements and employment agreements with the Company's directors,
officers and employees to the extent disclosed in item 6.12 of the Company
Letter (it being understood that nothing herein shall be deemed to mean that the
Company shall not be required to honor its obligations under any severance
agreement or employment agreement to which it is a party).
(c) The Company shall furnish to Parent as soon as practicable, but in
no event later than two days after the date hereof, a listing which specifies as
of July 18, 1997 the maximum number of shares of Common Stock covered by Company
Stock Options with an exercise price of less than $25.00 per share and the
average exercise price for such Company Stock Options.
SECTION 6.13 1997 Bonus. Subject to any executive employment agreements,
the Surviving Corporation will maintain the Company's bonus plans (as in effect
on or before March 1, 1997) through the end of the 1997 fiscal year, with
bonuses to be paid to the employee participating thereunder at the greater of
(i) the target level, if applicable, (ii) the prior year's bonus, or (iii) such
bonus as the employee would have earned if the transaction contemplated by this
Agreement had not occurred, in all events on a basis consistent with past
practices; provided, however, that with respect to any bonus which will be paid
in installments, the dividend amount payable with respect to the payment shall
be equal to an annual interest rate of fifteen percent (15%). The maximum
amounts that may be payable under the Company's bonus plans pursuant to this
Section 6.13 are set forth in item 6.13 of the Company Letter.
SECTION 6.14 401(k)/Profit Sharing Contributions for 1997. The Surviving
Corporation, prior to the end of the third month following the end of the
current fiscal year, will make all Company contributions to the Company's
Tax-Deferred Investment Plan on behalf of each eligible Company employee who was
employed on the last day of the current fiscal year. The Surviving Corporation
will make a Discretionary Contribution with respect to the 1997 Plan Year which
is not less than the amount of the Discretionary Contribution (on a percentage
basis) that the Company made for the 1996 Plan Year.
SECTION 6.15 Certification. The Company and each of its Subsidiaries
agree to provide to the Sub the statement described in Treasury Regulation
Section 1.1445-2(c)(3), certifying that none of the interests in the Company
held by the Company's stockholders are U.S. real property interests for purposes
of Section 1445 of the Code. Such statement will be complete, accurate and valid
on the Closing Date. If such statement is not received by or on the Closing
Date, the Sub shall withhold all amounts required to be withheld by Section 1445
of the Code.
SECTION 6.16 Recapitalization Accounting. The Company shall cooperate
with any reasonable requests of Parent or the SEC related to the recording of
the Merger as a
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recapitalization for financial reporting purposes, including, without
limitation, to assist Parent and Sub with any presentation to the SEC with
regard to such recording and to include appropriate disclosure with regard to
such recording in all filings with the SEC and all mailings to stockholders made
in connection with the Merger. In furtherance of the foregoing, the Company
shall provide to Parent for the prior review of Parent's advisors any
description of the transactions contemplated by this Agreement which is meant to
be disseminated.
SECTION 6.17 NYSE Delisting. Each of the parties agrees to cooperate
with each other in taking, or causing to be taken, all actions necessary to
delist the Company Common Stock from the New York Stock Exchange, Inc. ("NYSE"),
provided that such delisting shall not be effective until after the Effective
Time. The parties also acknowledge that it is Parent's intent that the Common
Stock following the Merger will not be quoted on NASDAQ or listed on any
national securities exchange.
SECTION 6.18 Formation of Sub. As soon as practicable following the
execution of this Agreement, but no later than one week following such date,
Parent shall cause Sub to be formed in the State of Delaware and to take all
corporate action necessary to approve and to become a party to this Agreement.
Each of the parties hereto agrees that upon formation of Sub it shall execute an
amendment to this Agreement and such other documents as may be necessary to
cause Sub to become a party to this Agreement.
SECTION 6.19 Stockholders Agreement. The Company and Parent agree that,
prior to the Effective Time, they, Warburg Pincus and the other stockholders
retaining shares in the Merger will enter into a Stockholders Agreement
consistent with the provisions of Schedule B to the Stockholders Voting
Agreement.
ARTICLE VII
CONDITIONS PRECEDENT
SECTION 7.1 Conditions to Each Party's Obligation to Effect the Merger.
The respective obligation of each party to effect the Merger is subject to the
satisfaction or waiver at or prior to the Effective Time of each of the
following conditions:
(a) Stockholder Approval. This Agreement and the transactions
contemplated hereby shall have been approved in the manner required by
applicable law or the applicable regulations of any stock exchange or regulatory
body, as the case may be, by the holders of the issued and outstanding shares of
capital stock of the Company;
(b) Governmental Consents. The waiting period applicable to the
consummation of the Merger under the HSR Act shall have expired or been
terminated, and other than the filing provided for in Section 1.3, all notices,
reports and other filings required to be made prior to the Effective Time by the
Company or Parent or any of their respective Subsidiaries with, and all
consents, registrations, approvals, permits and authorizations required to be
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obtained prior to the Effective Time by the Company or Parent or any of their
respective Subsidiaries from, any Governmental Entity in connection with the
execution and delivery of this Agreement and the consummation of the Merger and
the other transactions contemplated hereby shall have been made or obtained (as
the case may be) upon terms and conditions that are not reasonably likely to
have a Material Adverse Effect on the Company.
(c) Litigation. No court or Governmental Entity of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
Law, order, decree or ruling (whether temporary, preliminary or permanent) that
is in effect and would (i) restrain, enjoin or otherwise prohibit consummation
of the Merger or make the acquisition or holding by Parent of the common stock
of the Surviving Corporation illegal, (ii) compel Parent or any of its
Subsidiaries, on the one hand, or the Company or any of its Subsidiaries, on the
other, to dispose of or hold separate all or a material portion of the business
or assets of Parent and its Subsidiaries, taken as a whole, or the Company and
its Subsidiaries, taken as a whole, respectively, or (iii) impose any financial
burden on Parent or the Surviving Corporation or any limitation on the ability
of Parent to hold or operate the business of the Company or any of its
Subsidiaries, in either such case, which would materially reduce the economic or
business benefits Parent expects, as of the date hereof, to realize from the
Merger.
(d) S-4 Registration Statement. The S-4 Registration Statement shall
have become effective under the Securities Act. No stop order suspending the
effectiveness of the S-4 Registration Statement shall have been issued, and no
proceedings for that purpose shall have been initiated or be threatened by the
SEC.
(e) Blue Sky Approvals. The Company shall have received all state
securities and "blue sky" permits and approvals necessary to consummate the
transactions contemplated hereby.
SECTION 7.2 Conditions to Obligations of Parent and Sub. The obligations
of Parent and Sub to effect the Merger are also subject to the satisfaction or
waiver by Parent at or prior to the Effective Time of the following conditions:
(a) Performance of Obligations; Representations and Warranties. The
Company shall have performed in all material respects all obligations contained
in this Agreement required to be performed by it prior to the Closing Date; each
of the representations and warranties of the Company contained in this Agreement
that is qualified by materiality shall be true and correct at and as of the
Closing Date as if made at and as of the Closing Date and each of such
representations and warranties that is not so qualified shall be true and
correct in all material respects at and as of the Closing Date as if made at and
as of the Closing Date, provided that representations and warranties that speak
as of a specified date shall only be true and correct (to the extent required by
this sentence) as of such date; and Parent shall have received a certificate
signed on behalf of the Company by its Chief Executive Officer and its Chief
Financial Officer to such effect.
(b) Consents Under Agreements. The Company shall have obtained the
consent or approval of each Person whose consent or approval shall be required
in order to consummate
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the transactions contemplated by this Agreement under any agreement to which the
Company or any of its Subsidiaries is a party, except those for which the
failure to obtain such consent or approval, individually or in the aggregate, is
not reasonably likely to have a Material Adverse Effect on the Company or is not
reasonably likely to materially adversely affect the ability of the Company to
consummate the transactions contemplated by this Agreement.
(c) Financing. The Financing shall have been obtained on the terms set
forth in the Commitments or on other terms reasonably satisfactory to Parent.
(d) Non-Cash Election. Warburg Pincus shall have made a Non-Cash
Election with respect to a number (subject to adjustment as provided in Section
2.4 of this Agreement) of its Shares equal to the Non-Cash Election Number in
accordance with the terms of the Stockholders Voting Agreement and such election
shall be in full force and effect and shall not have been revoked.
SECTION 7.3 Conditions to Obligation of the Company. The obligation of
the Company to effect the Merger is also subject to the satisfaction or waiver
by the Company at or prior to the Effective Time of the following conditions:
(a) Performance of Obligations; Representations and Warranties. Parent
and Sub each shall have performed in all material respects all obligations
contained in this Agreement required to be performed by it at or prior to the
Closing Date; each of the representations and warranties of Parent and Sub
contained in this Agreement that is qualified by materiality shall be true and
correct at and as of the Closing Date as if made at and as of the Closing Date
and each of such representations and warranties that is not so qualified shall
be true and correct in all material respects at and as of the Closing Date as if
made at and as of the Closing Date, provided that representations and warranties
that speak as of a specified date shall only be true and correct (to the extent
required by this sentence) as of such date; and the Company shall have received
a certificate signed on behalf of Parent by the Chief Executive Officer and the
Chief Financial Officer of the General Partner of Parent to such effect.
(b) Consents Under Agreements. Parent shall have obtained the consent or
approval of each person whose consent or approval shall be required in order to
consummate the transactions contemplated by this Agreement under any agreement
to which Parent or any of its Subsidiaries is a party, except those for which
failure to obtain such consents and approvals, individually or in the aggregate,
is not reasonably likely to have a Material Adverse Effect on the Company or is
not reasonably likely to materially adversely affect the ability of Parent to
consummate the transactions contemplated by this Agreement.
ARTICLE VIII
TERMINATION AND AMENDMENT
SECTION 8.1 Termination. This Agreement may be terminated at any time
prior to the Effective Time, whether before or after Company Stockholder
Approval:
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(a) by mutual written consent of Parent, Sub and the Company;
(b) by either Parent or the Company:
(i) if the Merger shall not have been consummated by January 31,
1998; provided that the terminating party shall not have breached in any
material respect its obligations under this Agreement in any manner that
shall have proximately contributed to the failure to consummate the
Merger by January 31, 1998;
(ii) if any court or Governmental Entity of competent
jurisdiction shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise prohibiting
the transactions contemplated by this Agreement and such order, decree
or ruling or other action shall have become final and nonappealable;
provided, however, that the right to terminate this Agreement pursuant
to this Section 8.1(b)(ii) shall not be available to any party who has
not used its reasonable best efforts to cause such order to be lifted;
(iii) the approval of the Company's stockholders required by
Section 7.1(a) shall not have been obtained at the Stockholder Meeting
or any adjournment thereof;
(c) by Parent or Sub if:
(i) (A) as of such time of determination, any of the
representations or warranties of the Company set forth in this Agreement
(other than as to the absence of a Material Adverse Change contained in
Section 3.7(i)) that are qualified as to materiality shall not be true
and correct in any respect or any such representations or warranties
that are not so qualified shall not be true and correct in any material
respect, or (B) the Company shall have failed to perform in any material
respect any material obligation or to comply in any material respect
with any material agreement or covenant of the Company to be performed
or complied with by it under this Agreement and, in the case of (A) such
untruth or incorrectness cannot be or has not been cured within 60 days
after the giving of written notice to the Company, and, in the case of
(B) such failure cannot be or has not been cured within 20 days after
the giving of written notice to the Company;
(ii) as of such time of determination, the representation and
warranty by the Company as to the absence of a Material Adverse Change
contained in Section 3.7(i) shall not be true and correct in any
respect, and such untruth or incorrectness cannot be or has not been
cured within 60 days after the giving of written notice to the Company;
(d) by Parent or Sub if the Board of Directors of the Company or any
committee thereof shall have withdrawn or modified in a manner adverse to Parent
or Sub its approval or recommendation of the Merger or this Agreement, or
approved or recommended any Takeover Proposal or Acquisition Agreement (other
than the Merger), or shall have resolved to take any of the foregoing actions;
provided that the suspension of the recommendation of
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the Company's Board of Directors referred to herein in accordance with Section
5.2(b) shall not give rise to a right of termination pursuant to this Section
8.1(d);
(e) by the Company in accordance with Section 5.2(b); provided, however,
that it has complied with all provisions thereof, including the notice
provisions therein and the requirements of Section 6.3 hereof;
(f) by the Company, if (i) as of such time of determination, any of the
representations or warranties of Parent or Sub set forth in this Agreement that
are qualified as to materiality shall not be true and correct in any respect or
any such representations or warranties that are not so qualified shall not be
true and correct in any material respect, or (ii) Parent or Sub shall have
failed to perform in any material respect any material obligation or to comply
in any material respect with any material agreement or covenant of Parent or Sub
to be performed or complied with by it under this Agreement and, in the case of
(i) such untruth or incorrectness cannot be or has not been cured within 60 days
after the giving of written notice to Parent or Sub, and, in the case of (ii)
such failure cannot be or has not been cured within 20 days after the giving of
written notice to Parent or Sub.
SECTION 8.2 Effect of Termination. In the event of a termination of this
Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
officers or directors, except with respect to Section 6.3, this Section 8.2 and
Article IX and the last sentence of Section 6.2; provided, however, that nothing
herein shall relieve any party from liability for any breach hereof.
SECTION 8.3 Amendment. This Agreement may be amended by the parties
hereto, by action taken or authorized by their respective Board of Directors or
General Partner, as applicable, at any time before or after obtaining Company
Stockholder Approval, but after Company Stockholder Approval no amendment shall
be made which by law requires further approval by the stockholders of the
Company without obtaining such further approval. This Agreement may not be
amended except by an instrument in writing signed on behalf of each of the
parties hereto.
SECTION 8.4 Extension; Waiver. At any time prior to the Effective Time,
the parties hereto, by action taken or authorized by their respective Board of
Directors or General Partner, as applicable, may, to the extent legally allowed,
(i) extend the time for the performance of any of the obligations or other acts
of the other parties hereto, (ii) waive any inaccuracies in the representations
and warranties contained herein or in any document delivered pursuant hereto or
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party. The failure of any party to this Agreement to assert any of its
rights under this Agreement or otherwise shall not constitute a waiver of those
rights.
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ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1 Non-Survival of Representations and Warranties and
Agreements. None of the representations and warranties in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time except that the agreements set forth in Article II, Sections 6.8, 6.11,
6.12, 6.13 and 6.14 and Article IX shall survive the Effective Time.
SECTION 9.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given when delivered personally, one day
after being delivered to an overnight courier or when telecopied (with a
confirmatory copy sent by overnight courier) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(a) if to Parent or Sub, to:
TPG Partners II, L.P.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attn: Xx. Xxxxx X. Xxxxxxx
with a copy to:
Cleary, Gottlieb, Xxxxx & Xxxxxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
(b) if to the Company, to:
Zilog, Inc.
000 X. Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
with a copy to:
Pillsbury Madison & Sutro LLP
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Attn: Xxxxxxxxx X. Xxxxxxxx III, Esq.
SECTION 9.3 Interpretation. When a reference is made in this Agreement
to a Section, such reference shall be to a Section of this Agreement unless
otherwise indicated.
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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." As used in this Agreement, the term "subsidiary" or "Subsidiary" of
any person means another person, an amount of the voting securities, other
voting ownership or voting partnership interests of which is sufficient to elect
at least a majority of its Board of Directors or other governing body (or, if
there are no such voting interests, 50% or more of the equity interests of
which) is owned directly or indirectly by such first person. As used in this
Agreement, "Material Adverse Change" or "Material Adverse Effect" means, when
used in connection with the Company or Parent, as the case may be, any change or
effect that is materially adverse to the business, financial condition or
results of operations of such entity and its Subsidiaries taken as a whole;
provided, however, that (i) any adverse change, event or effect that is
demonstrated to be primarily caused by conditions affecting the United States
economy generally or the economy of any nation or region in which such entity or
any of its Subsidiaries conducts business that is material to the business of
such entity and its Subsidiaries, taken as a whole, shall not be taken into
account in determining whether there as been or would be a "Material Adverse
Change" or "Material Adverse Effect" on or with respect to such entity, (ii) any
adverse change, event or effect that is demonstrated to be primarily caused by
conditions generally affecting the semiconductor industry shall not be taken
into account in determining whether there has been or would be a "Material
Adverse Change" or "Material Adverse Effect" on or with respect to such entity
and (iii) any adverse change, event or effect that is demonstrated to be
primarily caused by the announcement or pendency of the Merger or the
transactions contemplated hereby shall not be taken into account in determining
whether there has been or would be a "Material Adverse Change" or "Material
Adverse Effect" on or with respect to such entity. Whenever the word "knowledge"
is used in this Agreement, it shall mean the actual knowledge of any officer of
the Company, in the case of the Company, or any officer of TPG Advisors II,
Inc., in the case of Parent.
SECTION 9.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties.
SECTION 9.5 Entire Agreement; No Third-Party Beneficiaries. Except for
the Confidentiality Letter referred to in the last sentence of Section 6.2, the
Company Letter and the Stockholders Voting Agreement, this Agreement constitutes
the entire agreement and supersedes all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof; provided, however, that it is expressly agreed that the transactions
contemplated by this Agreement do not violate any provision of the
Confidentiality Letter. This Agreement, except for the provisions of Section
6.8, is not intended to confer upon any person other than the parties hereto any
rights or remedies hereunder.
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SECTION 9.6 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Delaware, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
SECTION 9.7 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto without the prior written consent of the other parties, except that
Parent or Sub may assign, in its sole discretion, any of or all of its rights,
interests and obligations under this Agreement to Parent (in the case of Sub) or
to any direct or indirect wholly owned Subsidiary of Parent or Sub or to any
affiliate of Parent or Sub, but no such assignment shall relieve Parent or Sub
of any of its obligations hereunder. Subject to the preceding sentence, this
Agreement shall be binding upon, inure to the benefit of, and be enforceable by,
the parties and their respective successors and assigns.
SECTION 9.8 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 and legal
substance of the transactions contemplated hereby are not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement may be consummated as
originally contemplated to the fullest extent possible.
SECTION 9.9 Enforcement of This Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, such remedy being in addition to any
other remedy to which any party is entitled at law or in equity.
SECTION 9.10 Obligations of Subsidiaries. Except as specifically set
forth herein, whenever this Agreement requires any Subsidiary of Parent
(including Sub) or of the Company to take any action, such requirement shall be
deemed to include an undertaking on
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the part of Parent or the Company, as the case may be, to cause such Subsidiary
to take such action.
IN WITNESS WHEREOF, Parent and the Company have caused this Agreement to
be signed by their respective officers thereunto duly authorized all as of the
date first written above.
TPG PARTNERS II, L.P.
By TPG GenPar II, L.P., its General Partner
By TPG Advisors II, Inc., its General Partner
By /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President
ZILOG, INC.
By /s/ Xxxxx X. Xxxx
------------------------------------------
Name: Xxxxx X. Xxxx
Title: President and Chief
Executive Officer
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