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Exhibit 99.1
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
APPLIED MATERIALS, INC.,
a Delaware corporation;
PENNSYLVANIA ACQUISITION SUB, INC.,
a Delaware corporation; and
CONSILIUM, INC.,
a Delaware corporation
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Dated as of October 12, 1998
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TABLE OF CONTENTS
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SECTION 1. DESCRIPTION OF TRANSACTION........................................................1
1.1 Merger of Merger Sub into the Company.........................................1
1.2 Effect of the Merger..........................................................1
1.3 Closing; Effective Time.......................................................2
1.4 Certificate of Incorporation and Bylaws; Directors and Officers...............2
1.5 Conversion of Shares..........................................................2
1.6 Closing of the Company's Transfer Books.......................................4
1.7 Exchange of Certificates......................................................4
1.8 Preferred Stock...............................................................6
1.9 Warrants......................................................................7
1.10 Appraisal Rights..............................................................8
1.11 Tax Consequences..............................................................8
1.12 Accounting Consequences.......................................................9
1.13 Further Action................................................................9
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.....................................9
2.2 Certificate of Incorporation and Bylaws.......................................9
2.3 Capitalization, Etc..........................................................10
2.4 SEC Filings; Financial Statements............................................11
2.5 Absence of Changes...........................................................12
2.6 Title to Assets..............................................................15
2.7 Receivables; Customers.......................................................15
2.8 Real Property; Leasehold.....................................................15
2.9 Intellectual Property........................................................16
2.10 Contracts....................................................................21
2.11 Sale of Products; Performance of Services....................................24
2.12 Liabilities..................................................................25
2.13 Compliance with Legal Requirements...........................................25
2.14 Certain Business Practices...................................................25
2.15 Governmental Authorizations..................................................25
2.16 Tax Matters..................................................................26
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TABLE OF CONTENTS
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2.17 Employee and Labor Matters; Benefit Plans....................................27
2.18 Environmental Matters........................................................29
2.19 Insurance....................................................................30
2.20 Transactions with Affiliates.................................................31
2.21 Legal Proceedings; Orders....................................................31
2.22 Authority; Inapplicability of Anti-takeover Statutes; Binding Nature of
Agreement....................................................................31
2.23 Section 203 of the DGCL Not Applicable.......................................32
2.24 Inapplicability of Section 2115 of California Corporations Code..............32
2.25 No Existing Discussions......................................................32
2.26 Accounting Matters...........................................................32
2.27 Vote Required................................................................32
2.28 Non-Contravention; Consents..................................................32
2.29 Fairness Opinion.............................................................33
2.30 Financial Advisor............................................................34
2.31 Full Disclosure..............................................................34
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB..........................34
3.1 Organization, Standing and Power.............................................34
3.2 SEC Filings; Financial Statements............................................35
3.3 Disclosure...................................................................35
3.4 Authority; Binding Nature of Agreement.......................................36
3.5 No Vote Required.............................................................36
3.6 Non-Contravention; Consents..................................................36
3.7 Valid Issuance...............................................................36
3.8 Accounting Matters...........................................................36
SECTION 4. CERTAIN COVENANTS OF THE COMPANY.................................................37
4.1 Access and Investigation.....................................................37
4.2 Operation of the Company's Business..........................................37
4.3 No Solicitation..............................................................40
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES..............................................42
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TABLE OF CONTENTS
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5.1 Registration Statement; Prospectus/Proxy Statement...........................42
5.2 Company Stockholders' Meeting................................................42
5.3 Regulatory Approvals.........................................................44
5.4 Stock Options................................................................44
5.5 Employee Benefits............................................................45
5.6 Indemnification of Officers and Directors....................................46
5.7 Pooling of Interests.........................................................47
5.8 Additional Agreements........................................................47
5.9 Disclosure...................................................................47
5.10 Affiliate Agreements.........................................................48
5.11 Tax Matters..................................................................48
5.12 Letter of the Company's Accountants..........................................48
5.13 Listing......................................................................48
5.14 Resignation of Officers and Directors........................................49
5.15 Termination of 401(k) Plan...................................................49
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB.....................49
6.1 Accuracy of Representations..................................................49
6.2 Performance of Covenants.....................................................49
6.3 Effectiveness of Registration Statement......................................50
6.4 Stockholder Approval; Appraisal Rights.......................................50
6.5 Consents.....................................................................50
6.6 Agreements and Documents.....................................................50
6.7 No Material Adverse Change...................................................51
6.8 HSR Act; German Anticompetition Law..........................................51
6.9 Listing......................................................................52
6.10 No Restraints................................................................52
6.11 No Governmental Litigation...................................................52
6.12 No Other Litigation..........................................................52
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY................................52
7.1 Accuracy of Representations..................................................52
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TABLE OF CONTENTS
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7.2 Performance of Covenants.....................................................53
7.3 Effectiveness of Registration Statement......................................53
7.4 Stockholder Approval.........................................................53
7.5 Documents....................................................................53
7.6 HSR Act; German Anticompetition Law..........................................53
7.7 Listing......................................................................54
7.8 No Restraints................................................................54
SECTION 8. TERMINATION......................................................................54
8.1 Termination..................................................................54
8.2 Effect of Termination........................................................55
8.3 Expenses; Termination Fees...................................................55
SECTION 9. MISCELLANEOUS PROVISIONS.........................................................56
9.1 Amendment....................................................................56
9.2 Waiver.......................................................................56
9.3 No Survival of Representations and Warranties................................56
9.4 Entire Agreement; Counterparts...............................................57
9.5 Applicable Law; Jurisdiction.................................................57
9.6 Disclosure Schedule..........................................................57
9.7 Attorneys' Fees..............................................................57
9.8 Assignability................................................................57
9.9 Notices......................................................................57
9.10 Cooperation..................................................................58
9.11 Construction.................................................................58
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AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION ("Agreement") is
made and entered into as of October 12, 1998, by and among: APPLIED MATERIALS,
INC., a Delaware corporation ("Parent"); PENNSYLVANIA ACQUISITION SUB, INC., a
Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"); and
CONSILIUM, INC., a Delaware corporation (the "Company"). Certain capitalized
terms used in this Agreement are defined in Exhibit A.
RECITALS
A. Parent, Merger Sub and the Company intend to effect a merger of
Merger Sub into the Company in accordance with this Agreement and the Delaware
General Corporation Law (the "Merger"). Upon consummation of the Merger, Merger
Sub will cease to exist, and the Company will become a wholly owned subsidiary
of Parent.
B. It is intended that the Merger qualify as a tax-free reorganization
within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). For financial reporting purposes, it is intended that the
Merger be accounted for as a "pooling of interests."
C. The respective boards of directors of Parent, Merger Sub and the
Company have approved this Agreement and approved the Merger.
D. In order to induce Parent to enter into this Agreement and to
consummate the Merger, certain stockholders of the Company are entering into
Voting Agreements pursuant to which they are agreeing to vote in favor of the
adoption and approval of this Agreement and the approval of the Merger.
AGREEMENT
The parties to this Agreement, intending to be legally bound, agree as
follows:
SECTION 1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF MERGER SUB INTO THE COMPANY. Upon the terms and
subject to the conditions set forth in this Agreement, at the Effective Time (as
defined in Section 1.3), Merger Sub shall be merged with and into the Company,
and the separate existence of Merger Sub shall cease. The Company will continue
as the surviving corporation in the Merger (the "Surviving Corporation").
1.2 EFFECT OF THE MERGER. The Merger shall have the effects set
forth in this Agreement and in the applicable provisions of the Delaware General
Corporation Law (the "DGCL").
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1.3 CLOSING; EFFECTIVE TIME. The consummation of the transactions
contemplated by this Agreement (the "Closing") shall take place at the offices
of Xxxxxx Godward LLP, located at Five Palo Alto Square, 0000 Xx Xxxxxx Xxxx,
Xxxx Xxxx, Xxxxxxxxxx, at 10:00 a.m. on a date to be designated by Parent (the
"Closing Date"), which shall be no later than the second business day after the
satisfaction or waiver of the conditions set forth in Sections 6 and 7.
Contemporaneously with or as promptly as practicable after the Closing, the
parties hereto shall cause a properly executed certificate of merger conforming
to the requirements of the DGCL (the "Certificate of Merger") to be filed with
the Secretary of State of the State of Delaware. The Merger shall take effect at
the time the Certificate of Merger is filed with the Secretary of State of the
State of Delaware or at such later time as may be specified in the Certificate
of Merger (the "Effective Time").
1.4 CERTIFICATE OF INCORPORATION AND BYLAWS; DIRECTORS AND
OFFICERS. Unless otherwise determined by Parent prior to the Effective Time:
(a) the Certificate of Incorporation of the Surviving
Corporation shall be amended and restated as of the Effective Time to
conform to Exhibit B;
(b) the Bylaws of the Surviving Corporation shall be amended
and restated as of the Effective Time to conform to the Bylaws of Merger
Sub as in effect immediately prior to the Effective Time; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the respective individuals
who are directors and officers of Merger Sub immediately prior to the
Effective Time.
1.5 CONVERSION OF SHARES
(a) Subject to Sections 1.5(b), 1.5(c) and 1.5(e), at the
Effective Time, by virtue of the Merger and without any further action on the
part of Parent, Merger Sub, the Company or any stockholder of the Company:
(i) any shares of Company Common Stock or Company
Preferred Stock then held by the Company or any Subsidiary of the
Company (or held in the Company's treasury) shall be canceled and
retired and shall cease to exist at the Effective Time, and no
consideration shall be delivered in exchange therefor;
(ii) any shares of Company Common Stock or Company
Preferred Stock then held by Parent, Merger Sub or any other Subsidiary
of Parent shall be canceled and retired and shall cease to exist at the
Effective Time, and no consideration shall be delivered in exchange
therefor;
(iii) each share of the common stock, $0.001 par value
per share, of Merger Sub then outstanding shall be converted into one
share of common stock of the Surviving Corporation; and
(iv) except as provided in clauses "(i)" and "(ii)" of
this sentence, each share of Company Common Stock then outstanding shall
be converted
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into the right to receive that fraction of a share of Parent Common
Stock equal to the "Exchange Ratio." The Exchange Ratio shall be equal
to a fraction (rounded to the nearest third decimal point), (A) the
numerator of which shall be equal to $5.50, and (B) the denominator of
which shall be equal to the Parent Average Stock Price; provided,
however, that if the Parent Average Stock Price is equal to or less than
$30.25, then the Exchange Ratio shall be 0.182, and if the Parent
Average Stock Price is equal to or greater than $33.43, then the
Exchange Ratio shall be 0.165.
(b) Notwithstanding anything to the contrary contained in
this Agreement, if the "Fully-Diluted Number of Shares" (as defined
below) exceeds the "Maximum Number of Shares" (as defined below), then
the Exchange Ratio shall be equal to the product of: (1) the number that
would have constituted the Exchange Ratio if the Exchange Ratio were
calculated in accordance with Section 1.5(a)(iv); multiplied by (2) a
fraction, the numerator of which shall be the Maximum Number of Shares,
and the denominator of which shall be the Fully Diluted Number of
Shares. For purposes of this Section 1.5(b):
(i) the "Fully-Diluted Number of Shares" shall be
equal to the sum of:
(A) the number of shares of Company Common
Stock outstanding immediately prior to
the Effective Time (assuming that shares
of Company Common Stock had been issued
pursuant to the ESPP in the manner
described in Section 5.4(d));
(B) the number of shares of Company Common
Stock issuable upon the conversion of any
shares of Company Preferred Stock
outstanding immediately prior to the
Effective Time;
(C) the number of shares of Company Common
Stock issuable upon the exercise of any
Company Options outstanding immediately
prior to the Effective Time (whether or
not such Company Options are then
exercisable); and
(D) the number of shares of Company Common
Stock issuable upon the exercise of any
Company Warrants outstanding immediately
prior to the Effective Time (whether or
not such Company Warrants are then
exercisable); and
(ii) the "Maximum Number of Shares" shall be equal
to 12,798,447.
(c) If, between the date of this Agreement and the
Effective Time, the outstanding shares of Company Common Stock or Parent Common
Stock are changed into a different number or class of shares by reason of any
stock split, division or subdivision of shares,
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stock dividend, reverse stock split, consolidation of shares, reclassification,
recapitalization or other similar transaction, then the Exchange Ratio shall be
appropriately adjusted.
(d) If any shares of Company Common Stock or Company
Preferred Stock outstanding immediately prior to the Effective Time are unvested
or are subject to a repurchase option, risk of forfeiture or other condition
under any applicable restricted stock purchase agreement or other agreement with
the Company or under which the Company has any rights, then the shares of Parent
Common Stock issued in exchange for such shares of Company Common Stock or
Company Preferred Stock will also be unvested and subject to the same repurchase
option, risk of forfeiture or other condition, and the certificates representing
such shares of Parent Common Stock may accordingly be marked with appropriate
legends. The Surviving Corporation shall take all action that may be necessary
to ensure that, from and after the Effective Time, Parent is entitled to
exercise any such repurchase option or other right set forth in any such
restricted stock purchase agreement or other agreement.
(e) No fractional shares of Parent Common Stock shall be
issued in connection with the Merger, and no certificates or scrip for any such
fractional shares shall be issued. Any holder of Company Common Stock, Company
Preferred Stock or Company Warrants who would otherwise be entitled to receive a
fraction of a share of Parent Common Stock (after aggregating all fractional
shares of Parent Common Stock issuable to such holder) shall, in lieu of such
fraction of a share and, upon surrender of such holder's Company Stock
Certificate(s) (as defined in Section 1.6) or warrants, as the case may be, be
paid in cash the dollar amount (rounded to the nearest whole cent), without
interest, determined by multiplying such fraction by the Parent Average Stock
Price.
1.6 CLOSING OF THE COMPANY'S TRANSFER BOOKS. At the Effective
Time: (a) all shares of Company Common Stock outstanding immediately prior to
the Effective Time shall automatically be canceled and retired and shall cease
to exist, and all holders of certificates representing shares of Company Common
Stock that were outstanding immediately prior to the Effective Time shall cease
to have any rights as stockholders of the Company; and (b) the stock transfer
books of the Company shall be closed with respect to all shares of Company
Common Stock outstanding immediately prior to the Effective Time. No further
transfer of any such shares of Company Common Stock shall be made on such stock
transfer books after the Effective Time. If, after the Effective Time, a valid
certificate previously representing any shares of Company Common Stock (a
"Company Stock Certificate") is presented to the Exchange Agent (as defined in
Section 1.7) or to the Surviving Corporation or Parent, such Company Stock
Certificate shall be canceled and shall be exchanged as provided in Section 1.7.
1.7 EXCHANGE OF CERTIFICATES.
(a) Xxxxxx Trust and Savings Bank or such other reputable
bank or trust company selected by Parent prior to the Closing Date shall act as
exchange agent in the Merger (the "Exchange Agent"). As soon as practicable
after the Effective Time, Parent shall deposit with the Exchange Agent (i)
certificates representing the shares of Parent Common Stock issuable pursuant to
this Section 1, and (ii) cash sufficient to make payments in lieu of fractional
shares in accordance with Section 1.5(e). The shares of Parent Common Stock and
cash amounts so deposited with the Exchange Agent, together with any dividends
or distributions received by
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the Exchange Agent with respect to such shares, are referred to collectively as
the "Exchange Fund."
(b) As soon as reasonably practicable after the Effective
Time, the Exchange Agent will mail to the record holders of Company Stock
Certificates (i) a letter of transmittal in customary form and containing such
provisions as Parent and the Company may reasonably specify (including a
provision confirming that delivery of Company Stock Certificates shall be
effected, and risk of loss and title to Company Stock Certificates shall pass,
only upon delivery of such Company Stock Certificates to the Exchange Agent),
and (ii) instructions for use in effecting the surrender of Company Stock
Certificates in exchange for certificates representing Parent Common Stock. Upon
surrender of a Company Stock Certificate to the Exchange Agent for exchange,
together with a duly executed letter of transmittal and such other documents as
may be reasonably required by the Exchange Agent or Parent, (1) the holder of
such Company Stock Certificate shall be entitled to receive in exchange therefor
a certificate representing the number of whole shares of Parent Common Stock
that such holder has the right to receive pursuant to the provisions of Section
1.5 (and cash in lieu of any fractional share of Parent Common Stock), and (2)
the Company Stock Certificate so surrendered shall be canceled. In the event of
a transfer of ownership of Company Common Stock which is not registered in the
transfer records of the Company, a certificate representing the proper number of
shares of Parent Common Stock may be issued to a transferee if the Company Stock
Certificate is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 1.7(b), each Company Stock Certificate shall be
deemed, from and after the Effective Time, to represent only the right to
receive shares of Parent Common Stock (and cash in lieu of any fractional share
of Parent Common Stock) as contemplated by Section 1. If any Company Stock
Certificate shall have been lost, stolen or destroyed, Parent may, in its
discretion and as a condition precedent to the issuance of any certificate
representing Parent Common Stock, require the owner of such lost, stolen or
destroyed Company Stock Certificate to provide an appropriate affidavit and to
deliver a bond (in such sum as Parent may reasonably direct) as indemnity
against any claim that may be made against the Exchange Agent, Parent or the
Surviving Corporation with respect to such Company Stock Certificate.
(c) No dividends or other distributions declared or made
with respect to Parent Common Stock with a record date after the Effective Time
shall be paid to the holder of any unsurrendered Company Stock Certificate with
respect to the shares of Parent Common Stock which such holder has the right to
receive upon surrender thereof until such holder surrenders such Company Stock
Certificate in accordance with this Section 1.7 (at which time such holder shall
be entitled, subject to the effect of applicable escheat or similar laws, to
receive all such dividends and distributions, without interest).
(d) Any portion of the Exchange Fund that remains
undistributed to holders of Company Stock Certificates as of the date 360 days
after the date on which the Merger becomes effective shall be delivered to
Parent upon demand, and any holders of Company Stock Certificates who have not
theretofore surrendered their Company Stock Certificates in accordance with this
Section 1.7 shall thereafter look only to Parent for satisfaction of their
claims for Parent Common Stock, cash in lieu of fractional shares of Parent
Common Stock and any dividends or distributions with respect to Parent Common
Stock.
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(e) Each of the Exchange Agent, Parent and the Surviving
Corporation shall be entitled to deduct and withhold from any consideration
payable or otherwise deliverable pursuant to this Agreement to any holder or
former holder of Company Common Stock such amounts as may be required to be
deducted or withheld therefrom under the Code or any provision of state, local
or foreign tax law or under any other applicable Legal Requirement. To the
extent such amounts are so deducted or withheld, such amounts shall be treated
for all purposes under this Agreement as having been paid to the Person to whom
such amounts would otherwise have been paid.
(f) Neither Parent nor the Surviving Corporation shall be
liable to any holder or former holder of Company Common Stock or Company
Preferred Stock or to any other Person with respect to any shares of Parent
Common Stock (or dividends or distributions with respect thereto), or for any
cash amounts, delivered to any public official pursuant to any applicable
abandoned property law, escheat law or similar Legal Requirement.
1.8 PREFERRED STOCK.
(a) Subject to Section 4.2(b)(xiv), the Company shall use
all reasonable efforts to:
(i) cause each holder of Company Preferred Stock who
has not converted all of such holder's Company Preferred Stock into
Company Common Stock prior to the Effective Time to enter into an
agreement with Parent pursuant to which each share of Company Preferred
Stock held by such holder which has not been converted into Company
Common Stock prior to the Effective Time will, at the Effective Time, be
exchanged for a number of shares of Parent Common Stock equal to the sum
of (A) the number of shares of Parent Common Stock that a holder of a
share of Company Preferred Stock would have received if (1) such share
of Company Preferred Stock had been converted into Company Common Stock
immediately prior to the Effective Time, and (2) such Company Common
Stock had been converted into the right to receive Parent Common Stock
in accordance with Section 1.5(a)(iv), plus (B) the number of shares of
Parent Common Stock as is equal to the quotient of (1) the sum of (x)
all dividends accrued as of the Effective Time with respect to such
share of Company Preferred Stock and (y) the present value of all
dividends that would accrue with respect to such share of Company
Preferred Stock if such share were to be held from the Effective Time
until August 19, 1999 and such dividends were to be calculated in
accordance with the Company's Certificate of Incorporation and
Certificate of Designation of Series A Convertible Preferred Stock (it
being understood that a discount factor of 7% shall be used in
calculating such present value), divided by (2) the Parent Average Stock
Price;
(ii) cause each holder of Company Preferred Stock who has
converted Company Preferred Stock into Company Common Stock prior to the
Effective Time to confirm in a writing delivered to Parent and the
Company prior to the Effective Time (which writing shall be in a form
reasonably satisfactory to Parent) that such holder received (upon the
conversion of such Company Preferred Stock into Company Common Stock) the
number of shares of Company Common Stock which such holder was entitled
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to receive pursuant to the Company's Certificate of Incorporation,
Certificate of Designation of Series A Convertible Preferred Stock and
otherwise; and
(iii) cause each holder of Company Preferred Stock who,
prior to the Effective Time, has not converted all of such holder's
shares of Company Preferred Stock into Company Common Stock or entered
into an agreement of the type referred to in Section 1.8(a)(i), to enter
into an agreement with Parent and the Company (in a form reasonably
satisfactory to Parent) which specifies the number of shares of Parent
Common Stock into which such Company Preferred Stock will be convertible
after the Effective Time.
(b) Persons who hold any shares of Company Preferred Stock
that are not converted into Company Common Stock prior to the Effective Time or
exchanged for Parent Common Stock pursuant to the exchange offer referred to in
Section 1.8(a)(i) shall, in accordance with the Company's Certificate of
Incorporation and Certificate of Designation of Series A Convertible Preferred
Stock, continue to hold such shares of Company Preferred Stock after the
Effective Time in accordance with their terms (it being understood that, in
accordance with the Company's Certificate of Incorporation and Certificate of
Designation of Series A Convertible Preferred Stock, after the Effective Time,
each such share of Company Preferred Stock will be convertible into the number
of shares of Parent Common Stock that would have been issued in respect thereof
if (i) such share of Company Preferred Stock had been converted into Company
Common Stock immediately prior to the Effective Time, and (ii) such Company
Common Stock had been converted into the right to receive Parent Common Stock in
accordance with Section 1.5(a)(iv)).
1.9 WARRANTS.
(a) Neither Parent nor any other Person shall assume those
certain warrants to purchase shares of Company Common Stock issued to Imperial
Bancorp pursuant to that certain Warrant To Purchase Stock dated April 1, 1997
(the "Imperial Bancorp Warrant"); therefore, in accordance with the terms of the
Imperial Bancorp Warrant, any portion of such warrants that has not been
exercised as of the Effective Time shall be deemed to have been automatically
converted pursuant to Section 1.2 of the Imperial Bancorp Warrant into shares of
Company Common Stock.
(b) At the Effective Time, all rights with respect to Common
Stock under each Placement Agent Warrant then outstanding shall be converted
into and become rights with respect to Parent Common Stock, and Parent shall
assume each such Placement Agent Warrant in accordance with the terms (as in
effect as of the date of this Agreement) of the warrant agreement by which it is
evidenced. From and after the Effective Time, (i) each Placement Agent Warrant
assumed by Parent may be exercised solely for shares of Parent Common Stock,
(ii) the number of shares of Parent Common Stock subject to each such Placement
Agent Warrant shall be equal to the number of shares of Company Common Stock
subject to such Placement Agent Warrant immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounding down to the nearest whole share (with
the cash value of any fraction of a share of Parent Common Stock, less the
exercise price applicable to such fraction of a share, being payable for the
portion of such assumed Placement Agent Warrant relating to any
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such fraction of a share of Parent Common Stock), (iii) the per share exercise
price under each such Placement Agent Warrant shall be adjusted by dividing the
per share exercise price under such Placement Agent Warrant by the Exchange
Ratio and rounding up to the nearest cent and (iv) any restriction on the
exercise of any such Placement Agent Warrant shall continue in full force and
effect and the term, exercisability, vesting schedule and other provisions of
such Placement Agent Warrant shall otherwise remain unchanged; provided,
however, that each Placement Agent Warrant assumed by Parent in accordance with
this Section 1.9(b) shall, in accordance with its terms, be subject to further
adjustment as appropriate to reflect any stock split, division or subdivision of
shares, stock dividend, reverse stock split, consolidation of shares,
reclassification, recapitalization or other similar transaction subsequent to
the Effective Time.
1.10 APPRAISAL RIGHTS.
(a) Notwithstanding anything to the contrary contained in
this Agreement, Appraisal Shares (as defined in Section 1.10(c)) shall not be
converted into or represent the right to receive Parent Common Stock in
accordance with Section 1.5(a) (or cash in lieu of fractional shares in
accordance with Section 1.5(e)), and each holder of Appraisal Shares shall be
entitled only to such rights with respect to such Appraisal Shares as may be
granted to such holder in Section 262 of the DGCL. From and after the Effective
Time, a holder of Appraisal Shares shall not have and shall not be entitled to
exercise any of the voting rights or other rights of a stockholder of the
Surviving Corporation. If any holder of Appraisal Shares shall fail to perfect
or shall waive, rescind, withdraw or otherwise lose such holder's right of
appraisal under Section 262 of the DGCL, then (i) any right of such holder to
require the Company to purchase the Appraisal Shares for cash shall be
extinguished and (ii) such shares shall automatically be converted into and
shall represent only the right to receive (upon the surrender of the certificate
or certificates representing such shares) Parent Common Stock in accordance with
Section 1.5(a) (and cash in lieu of any fractional share in accordance with
Section 1.5(e)).
(b) The Company (i) shall give Parent prompt written notice
of any demand by any stockholder of the Company for appraisal of such
stockholder's shares of Company Preferred Stock pursuant to the DGCL and of any
other notice, demand or instrument delivered to the Company pursuant to the
DGCL, and (ii) shall give Parent's Representatives the opportunity to
participate in all negotiations and proceedings with respect to any such notice,
demand or instrument. The Company shall not make any payment or settlement offer
with respect to any such notice or demand unless Parent shall have consented in
writing to such payment or settlement offer.
(c) For purposes of this Agreement, "Appraisal Shares" shall
refer to any shares of Company Preferred Stock outstanding immediately prior to
the Effective Time that are held by stockholders who are entitled to demand and
who properly demand appraisal of such shares pursuant to, and who comply with
the applicable provisions of, Section 262 of the DGCL.
1.11 TAX CONSEQUENCES. For federal income tax purposes, the
Merger is intended to constitute a reorganization within the meaning of Section
368 of the Code. The
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parties to this Agreement hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368-2(g) and 1.368-3(a) of the
United States Treasury Regulations.
1.12 ACCOUNTING CONSEQUENCES. For financial reporting purposes,
the Merger is intended to be accounted for as a "pooling of interests."
1.13 FURTHER ACTION. If, at any time after the Effective Time,
any further action is determined by Parent to be necessary or desirable to carry
out the purposes of this Agreement or to vest the Surviving Corporation with
full right, title and possession of and to all rights and property of Merger Sub
and the Company, the officers and directors of the Surviving Corporation and
Parent shall be fully authorized (in the name of Merger Sub, in the name of the
Company and otherwise) to take such action.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Merger Sub as follows:
2.1 DUE ORGANIZATION; SUBSIDIARIES; ETC.
(a) The Company has no Subsidiaries, except for the Entities
identified in Part 2.1(a)(i) of the Company Disclosure Schedule; and neither the
Company nor any of the other Entities identified in Part 2.1(a)(i) of the
Company Disclosure Schedule owns any capital stock of, or any equity interest of
any nature in, any other Entity, other than the Entities identified in Part
2.1(a)(ii) of the Company Disclosure Schedule. (The Company and each of its
Subsidiaries are referred to collectively in this Agreement as the "Acquired
Corporations.") None of the Acquired Corporations has agreed or is obligated to
make, or is bound by any Contract under which it may become obligated to make,
any future investment in or capital contribution to any other Entity. None of
the Acquired Corporations has, at any time, been a general partner of, or has
otherwise been liable for any of the debts or other obligations of, any general
partnership, limited partnership or other Entity.
(b) Each of the Acquired Corporations is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all necessary power and authority: (i)
to conduct its business in the manner in which its business is currently being
conducted; (ii) to own and use its assets in the manner in which its assets are
currently owned and used; and (iii) to perform its obligations under all
Contracts by which it is bound.
(c) Each of the Acquired Corporations is qualified to do
business as a foreign corporation, and is in good standing, under the laws of
all jurisdictions where the nature of its business requires such qualification
and where the failure to be so qualified would reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations.
2.2 CERTIFICATE OF INCORPORATION AND BYLAWS. The Company has
delivered to Parent accurate and complete copies of the certificate of
incorporation, bylaws and other charter and organizational documents of the
respective Acquired Corporations, including all amendments thereto.
9.
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2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists of:
(i) 25,000,000 shares of Company Common Stock, of which 8,749,972 shares have
been issued and are outstanding as of September 30, 1998; and (ii) 4,000,000
shares of Preferred Stock, $.01 par value per share, of which 3,000 shares are
designated as "Series A Convertible Preferred Stock" (the "Company Preferred
Stock"), of which 3,000 shares are issued and outstanding as of the date of this
Agreement. The maximum number of shares of Company Common Stock issuable upon
the conversion of all outstanding shares of Company Preferred Stock is
1,538,462. The Company has not repurchased any shares of its capital stock
pursuant to the stock repurchase program announced by the Company on August 13,
1998 and does not hold any shares of its capital stock in its treasury. All of
the outstanding shares of Company Common Stock and Company Preferred Stock have
been duly authorized and validly issued, and are fully paid and nonassessable.
As of the date of this Agreement, there are no shares of Company Common Stock or
Company Preferred Stock held by any of the other Acquired Corporations. Except
as set forth in Part 2.3(a)(i) of the Company Disclosure Schedule: (i) none of
the outstanding shares of Company Common Stock or Company Preferred Stock is
entitled or subject to any preemptive right, right of participation, right of
maintenance or any similar right created by the Company or imposed under
applicable law with respect to capital stock of the Company; (ii) none of the
outstanding shares of Company Common Stock or Company Preferred Stock is subject
to any right of first refusal in favor of the Company; and (iii) there is no
Acquired Corporation Contract relating to the voting or registration of, or
restricting any Person from purchasing, selling, pledging or otherwise disposing
of (or granting any option or similar right with respect to), any shares of
Company Common Stock or Company Preferred Stock. None of the Acquired
Corporations is under any obligation, or is bound by any Contract pursuant to
which it may become obligated, to repurchase, redeem or otherwise acquire any
outstanding shares of Company Common Stock or Company Preferred Stock. As of
September 30, 1998, the aggregate dollar amount of dividends accrued with
respect to all outstanding shares of Company Preferred Stock is $270,000. The
Company has never paid any dividends with respect to any Company Preferred
Stock.
(b) As of September 30, 1998: (i) 1,937,797 shares of Company
Common Stock are subject to issuance pursuant to outstanding options to purchase
shares of Company Common Stock; (ii) 108,059 shares of Company Common Stock are
reserved for future issuance pursuant to the Company's Employee Stock Purchase
Plan (the "ESPP"); and (iii) 250,000 shares of Company Common Stock are reserved
for future issuance pursuant to the Company Warrants. (Stock options granted by
the Company pursuant to the Company's stock option plans and otherwise are
referred to in this Agreement as "Company Options.") Part 2.3(b)(i) of the
Company Disclosure Schedule sets forth the following information with respect to
each Company Option outstanding as of the date of this Agreement: (i) the
particular plan (if any) pursuant to which such Company Option was granted; (ii)
the name of the optionee; (iii) the number of shares of Company Common Stock
subject to such Company Option; (iv) the exercise price of such Company Option;
(v) the date on which such Company Option was granted; (vi) the applicable
vesting schedules (which applicable vesting schedule may be provided by means of
a general description of the vesting schedules applicable to outstanding Company
Options), and the extent to which such Company Option is vested and exercisable
as of the date of this Agreement; and (vii) the date on which such Company
Option expires. The
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Company has delivered to Parent accurate and complete copies of all stock option
plans pursuant to which the Company has ever granted stock options, the forms of
all stock option agreements evidencing such options and the actual Change of
Control Agreements with each employee of the Company who is a party to a Change
of Control Agreement with the Company (the "Change of Control Agreements"). The
Company has delivered to Parent accurate and complete copies of the Company
Warrants. Except as set forth in Part 2.3(b) of the Company Disclosure Schedule,
the exercise price of the warrants to purchase shares of Company Common Stock
held by Imperial Bancorp is $3.98 per share, and the exercise price of the
warrants to purchase shares of Company Common Stock held by Xxxxxx Xxxxxx and
Xxxxxx Xxxxxxx is $6.33 per share.
(c) Except as set forth in Section 2.3(b) or as reserved for
future issuance under the ESPP, there is no: (i) outstanding subscription,
option, call, warrant or right (whether or not currently exercisable) to acquire
any shares of the capital stock or other securities of the Company; (ii)
outstanding security, instrument or obligation that is or may become convertible
into or exchangeable for any shares of the capital stock or other securities of
the Company; (iii) stockholder rights plan (or similar plan commonly referred to
as a "poison pill") or Contract under which the Company is or may become
obligated to sell or otherwise issue any shares of its capital stock or any
other securities; or (iv) to the Knowledge of the Company, condition or
circumstance that may give rise to or provide a basis for the assertion of a
claim by any Person to the effect that such Person is entitled to acquire or
receive any shares of capital stock or other securities of the Company.
(d) All outstanding shares of Company Common Stock, all
outstanding shares of Company Preferred Stock, all outstanding Company Options,
all outstanding Company Warrants and all outstanding shares of capital stock of
each Subsidiary of the Company have been issued and granted in compliance with
(i) all applicable securities laws and other applicable Legal Requirements, and
(ii) all material requirements set forth in applicable Contracts.
(e) All of the outstanding shares of capital stock of the
corporations identified in Part 2.1(a)(ii) of the Company Disclosure Schedule
have been duly authorized and are validly issued, are fully paid and
nonassessable and are owned beneficially and of record by the Company, free and
clear of any Encumbrances.
2.4 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has delivered or made available (including
through the SEC XXXXX system) to Parent accurate and complete copies of all
registration statements, proxy statements and other statements, reports,
schedules, forms and other documents filed by the Company with the SEC since
October 31, 1997, and all amendments thereto (the "Company SEC Documents").
Except as set forth in Part 2.4(a) of the Company Disclosure Schedule, since
October 31, 1997, all statements, reports, schedules, forms and other documents
required to have been filed by the Company with the SEC have been so filed. As
of the time it was filed with the SEC (or, if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such filing): (i) each
of the Company SEC Documents complied in all material respects with the
applicable requirements of the Securities Act or the Exchange Act (as the case
may be); and (ii) none of the Company SEC Documents contained any untrue
statement of a material fact
11.
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or omitted to state a material fact required to be stated therein or necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) The consolidated financial statements (including any
related notes) contained in the Company SEC Documents: (i) complied as to form
in all material respects with the published rules and regulations of the SEC
applicable thereto; (ii) were prepared in accordance with generally accepted
accounting principles applied on a consistent basis throughout the periods
covered (except as may be indicated in the notes to such financial statements
or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC,
and except that the unaudited financial statements may not contain footnotes and
are subject to normal and recurring year-end adjustments which will not,
individually or in the aggregate, be material in amount), and (iii) fairly
present the consolidated financial position of the Company and its subsidiaries
as of the respective dates thereof and the consolidated results of operations
and cash flows of the Company and its subsidiaries for the periods covered
thereby.
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the
Company Disclosure Schedule, since July 31, 1998:
(a) there has not been any material adverse change in the
business, condition, assets, liabilities, operations or results of
operations of the Acquired Corporations taken as a whole (it being
understood that none of the following shall be deemed, in and of itself,
to constitute a material adverse change in the business, condition,
assets, liabilities, operations or results of operations of the Acquired
Corporations: (a) a change in the market price or trading volume of the
Company Common Stock, (b) a failure by the Company to meet any published
securities analyst estimates of revenue or earnings for any period
ending or for which earnings are released on or after the date of this
Agreement and prior to the Closing, (c) a failure to report earnings
results in any quarter ending on or after the date of this Agreement
consistent with the Company's historical earnings results for its
Semiconductor and Electronics business unit in any quarter during fiscal
1997 or 1998, (d) a change that results from conditions affecting the
U.S. economy or the world economy, (e) a change that results from
conditions affecting the semiconductor industry or the semiconductor
equipment industry so long as such conditions do not affect the Company
in a disproportionate manner as compared with companies of a similar
size, (f) a delay in customer orders arising primarily out of or
resulting primarily from the announcement of the transactions
contemplated by this Agreement, and (g) a change that results from the
taking of any action required by this Agreement), and no event has
occurred that would reasonably be expected to have a Material Adverse
Effect on the Acquired Corporations;
(b) there has not been any material loss, damage or
destruction to, or any material interruption in the use of, any of the
assets of any of the Acquired Corporations (whether or not covered by
insurance) that has had or would reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations;
(c) none of the Acquired Corporations has (i) other than
pursuant to the terms of the Company Preferred Stock as set forth in the
Company's Certificate of
12.
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Incorporation and Certificate of Designation of Series A Convertible
Preferred Stock, declared, accrued, set aside or paid any dividend or
made any other distribution in respect of any shares of capital stock,
or (ii) repurchased, redeemed or otherwise reacquired any shares of
capital stock or other securities;
(d) none of the Acquired Corporations has sold, issued or
granted, or authorized the issuance of, (i) any capital stock or other
security (except for Company Common Stock issued upon the valid exercise
of outstanding Company Options in accordance with the terms of the
option agreement pursuant to which such Company Options are outstanding
and shares of Company Common Stock to be issued (A) upon conversion of
Company Preferred Stock, (B) upon the valid exercise of Company
Warrants, and (C) pursuant to the ESPP), (ii) any option, warrant or
right to acquire any capital stock or any other security (except (A) for
Company Options described in Part 2.3(b)(i) of the Company Disclosure
Schedule, (B) subject to Section 4.2(b)(ii), for future grants of
options under the Company's stock option plans, and (C) pursuant to the
ESPP), or (iii) any instrument convertible into or exchangeable for any
capital stock or other security;
(e) the Company has not amended or waived any of its rights
under, or permitted the acceleration of vesting under, (i) any provision
of any of the Company's stock option plans, (ii) any provision of any
agreement evidencing any outstanding Company Option, or (iii) any
restricted stock purchase agreement;
(f) there has been no amendment to the certificate of
incorporation, bylaws or other charter or organizational documents of
any of the Acquired Corporations, and none of the Acquired Corporations
has effected or been a party to any merger, consolidation, amalgamation,
share exchange, business combination, recapitalization, reclassification
of shares, stock split, division or subdivision of shares, reverse stock
split, consolidation of shares or similar transaction;
(g) none of the Acquired Corporations has formed any
Subsidiary or acquired any equity interest or other interest in any
other Entity, except for rights of first refusal or similar rights that
the Company may have obtained (or may obtain) in connection with FAB300
third party software licenses;
(h) none of the Acquired Corporations has made any capital
expenditure which, when added to all other capital expenditures made on
behalf of the Acquired Corporations since July 31, 1998, exceeds
$250,000 in the aggregate;
(i) except in the ordinary course of business and consistent
with past practices, none of the Acquired Corporations has (i) entered
into or permitted any of the assets owned or used by it to become bound
by any Contract of the type referred to in clauses "(i)," "(ii)" and
"(v)" through "(xiv)" of Section 2.10(a), or (ii) amended or terminated,
or waived any material right or remedy under, any Contract of the type
referred to in Section 2.10(a);
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(j) except in the ordinary course of business and consistent
with past practices, none of the Acquired Corporations has (i) acquired,
leased or licensed any material right or other material asset from any
other Person, except for third party licenses relating to FAB300 as more
particularly described in Part 2.5 of the Company Disclosure Schedule,
(ii) sold or otherwise disposed of, or leased or licensed, any material
right or other material asset to any other Person, or (iii) waived or
relinquished any right, except for rights or other assets acquired,
leased, licensed or disposed of in the ordinary course of business and
consistent with past practices;
(k) none of the Acquired Corporations has made any pledge of
any of its assets or otherwise permitted any of its assets to become
subject to any Encumbrance, except (i) for pledges of immaterial assets
made in the ordinary course of business and consistent with past
practices, (ii) pursuant to those certain loan documents with Venture
Banking Group, (iii) for liens for current taxes which are not yet due
and payable, and (iv) for easements, covenants, rights of way or other
similar restrictions and imperfections of title which have not adversely
affected in any material respect, and which are not reasonably expected
to adversely affect in any material respect, the business or operations
of any of the Acquired Corporations;
(l) none of the Acquired Corporations has (i) lent money to
any Person, except for advances to employees for business expenses or
loans for relocation expenses, in each case, in the ordinary course of
business and consistent with past practices, or (ii) incurred or
guaranteed any indebtedness for borrowed money except pursuant to those
certain loan documents with Venture Banking Group (accurate and complete
copies of which have been provided to Parent);
(m) none of the Acquired Corporations has (i) established or
adopted any Plan (as defined in Section 2.17(a)), or (ii) caused or
permitted any Plan to be amended in any material respect,
(n) none of the Acquired Corporations has paid any bonus or
made any profit-sharing or similar payment to, or materially increased
the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers
or employees, except (i) pursuant to existing bonus plans and other
Plans referred to in Part 2.17(a) of the Company Disclosure Schedule or
new bonus or commission plans substantially consistent with the terms of
existing bonus or commission plans; and (ii) for normal increases in
wages, salaries or commissions to non-officer employees in accordance
with the Company's customary review process or otherwise in a manner
consistent with the Company's past practices;
(o) none of the Acquired Corporations has changed any of its
methods of accounting or accounting practices in any material respect;
(p) no event has occurred, and no circumstance or condition
exists, that has resulted in or that could reasonably be expected to
result in the impairment of the capitalized software asset reflected in
the Company's books and records;
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(q) none of the Acquired Corporations has made any material
Tax election inconsistent with past practices;
(r) none of the Acquired Corporations has settled any Legal
Proceeding involving payments by any of the Acquired Corporations in
excess of $100,000 or equitable relief against any of the Acquired
Corporations;
(s) none of the Acquired Corporations has entered into any
material transaction or taken any other material action that has had, or
would reasonably be expected to have, a Material Adverse Effect on the
Acquired Corporations; and
(t) none of the Acquired Corporations has agreed or committed
to take any of the actions referred to in clauses "(c)" through "(s)"
above.
2.6 TITLE TO ASSETS. The Acquired Corporations own, and have
good, valid and marketable title to, all tangible personal property purported to
be owned by them, including: (i) all tangible personal property reflected on the
Unaudited Interim Balance Sheet (except for inventory sold or otherwise disposed
of in the ordinary course of business since the date of the Unaudited Interim
Balance Sheet); and (ii) all other tangible personal property reflected in the
books and records of the Acquired Corporations as being owned by the Acquired
Corporations. All of said items of tangible personal property are owned by the
Acquired Corporations free and clear of any Encumbrances, except for (1) any
lien for current taxes not yet due and payable, (2) minor liens that have arisen
in the ordinary course of business and that do not (in any case or in the
aggregate) materially detract from the value of the tangible personal property
subject thereto or materially impair the operations of any of the Acquired
Corporations, (3) liens in favor of Venture Banking Group, and (4) liens
described in Part 2.6 of the Company Disclosure Schedule.
2.7 RECEIVABLES; CUSTOMERS. All existing accounts receivable of
the Acquired Corporations (including those accounts receivable reflected on the
Unaudited Interim Balance Sheet that have not yet been collected and those
accounts receivable that have arisen since July 31, 1998 and have not yet been
collected) represent valid obligations of customers of the Acquired Corporations
arising from bona fide transactions entered into in the ordinary course of
business. Between July 31, 1998 and the date of this Agreement, none of the
Acquired Corporations has written off as uncollectible, or established any
extraordinary reserve with respect to, any account receivable or other
indebtedness. Except as set forth in Part 2.7 of the Company Disclosure
Schedule, the Company has not received any notice or other communication (in
writing or otherwise), and, to the Knowledge of the Company, has not received
any other information, indicating that (a) any customer is likely to cease
dealing with the Company, or (b) any customer is dissatisfied in any material
respect with the operation of any product, system or program currently
maintained, sold or licensed by any of the Acquired Corporations or with any
services performed by any of the Acquired Corporations since January 1, 1996.
2.8 REAL PROPERTY; LEASEHOLD. None of the Acquired Corporations
own any real property or any interest in real property, except for the
leaseholds created under the real property leases identified in Part 2.8 of the
Company Disclosure Schedule.
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2.9 INTELLECTUAL PROPERTY.
(a) For purposes of this Section 2.9 and the other provisions
of this Agreement, "Intellectual Property" means:
(i) all issued patents, reissued or reexamined patents,
revivals of patents, utility models, certificates of invention,
registrations of patents and extensions thereof, regardless of country
or formal name (collectively, "Issued Patents");
(ii) all published or unpublished nonprovisional and
provisional patent applications, reexamination proceedings, invention
disclosures and records of invention (collectively "Patent Applications"
and, with the Issued Patents, the "Patents");
(iii) all copyrights, copyrightable works, semiconductor
topography and mask work rights, including all rights of authorship,
use, publication, reproduction, distribution, performance
transformation, moral rights and rights of ownership of copyrightable
works, semiconductor topography works and mask works, and all rights to
register and obtain renewals and extensions of registrations, together
with all other interests accruing by reason of international copyright,
semiconductor topography and mask work conventions (collectively,
"Copyrights");
(iv) trademarks, registered trademarks, applications for
registration of trademarks, service marks, registered service marks,
applications for registration of service marks, trade names, registered
trade names and applications for registrations of trade names
(collectively, "Trademarks");
(v) all technology, ideas, inventions, designs,
proprietary information, manufacturing and operating specifications,
know-how, formulae, trade secrets, technical data, computer programs,
hardware, software and processes; and
(vi) all other intangible assets, properties and rights
(whether or not appropriate steps have been taken to protect, under
applicable law, such other intangible assets, properties or rights).
(b) Except as set forth in Part 2.9(b) of the Company
Disclosure Schedule, each Acquired Corporation owns, or has a valid license (or
otherwise possesses legally enforceable rights) to use, all Intellectual
Property that is used in the business of such Acquired Corporation as currently
conducted by such Acquired Corporation, without any interference or conflict
with or misappropriation or infringement of any of the Intellectual Property
rights of others. To the Knowledge of the Company, neither the execution,
delivery or performance of this Agreement or any of the other agreements
referred to in this Agreement, nor the consummation of the Merger or any of the
other transactions contemplated by this Agreement, will contravene, conflict
with or result in an infringement on the ability of Parent or any of Parent's
Subsidiaries (including any of the Acquired Corporations) to own or use any item
of Intellectual Property. Except as set forth in Part 2.9(b) of the Company
Disclosure Schedule, each of the Acquired Corporations has taken reasonable
precautions to maintain and protect its respective rights in each item of
Intellectual Property that such Acquired Corporation owns or uses. Except as set
16.
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forth in Part 2.9(b) of the Company Disclosure Schedule, each of the Acquired
Corporations has secured valid written assignments from all consultants and
employees who contributed to the creation or development of any Intellectual
Property owned by any of the Acquired Corporations of the rights to such
contributions, except where the failure to secure such assignments has not had
and would not reasonably be expected to have a Material Adverse Effect on the
Acquired Corporations. No current or former officer, director, stockholder,
employee, consultant or independent contractor has any right, claim or interest
in or with respect to any Intellectual Property owned or used by any of the
Acquired Corporations as of the date hereof and material to the business of the
Acquired Corporations. Each Acquired Corporation caused backup copies of all
Acquired Corporation Source Code owned, licensed or used by such Acquired
Corporation to be made and maintains such backup copies pursuant to any
agreement with a third party contractor identified in Part 2.9(b) of the Company
Disclosure Schedule.
(c) Part 2.9(c) of the Company Disclosure Schedule lists:
(i) each Issued Patent owned by any of the Acquired
Corporations as of the date hereof;
(ii) each Patent Application owned by any of the Acquired
Corporations as of the date hereof;
(iii) each trademark registration, service xxxx
registration, copyright registration or mask work registration owned by
any of the Acquired Corporations as of the date hereof;
(iv) each application for a trademark registration,
service xxxx registration, copyright registration, mask work
registration owned by any of the Acquired Corporations as of the date
hereof;
(v) each trade name, d.b.a., unregistered trademark or
unregistered service xxxx that is material to the operation of the
current business of any of the Acquired Corporations as of the date
hereof;
(vi) each joint development agreement entered into since
January 1, 1996 relating to any Intellectual Property that is
incorporated into a material component of any product of any of the
Acquired Corporations; and
(vii) each license pursuant to which any exclusive rights
are granted.
The Corporation has delivered to Xxxxxx Godward LLP accurate and complete copies
of each of the items (as amended through the date of this Agreement) identified
in clauses "(i)" through "(iv)" and clauses "(vi)" and "(vii)" of this Section
2.9(c) and has made available to Parent accurate and complete copies of all
other written documentation evidencing valid ownership and prosecution (if
applicable) of each such item.
(d) With respect to each item of Intellectual Property that is
incorporated into any product of any of the Acquired Corporations or that is
otherwise material
17.
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to the business of any of the Acquired Corporations (other than "off the shelf"
or other software which is widely available through regular commercial
distribution channels on standard terms and conditions, as modified for the
Company's operations), except as set forth in Part 2.9(d) of the Company
Disclosure Schedule and except for any item of Intellectual Property that is
licensed to any of the Acquired Corporations pursuant to a license agreement
that has been provided by the Company to Cooley Godward LLP:
(i) one or more of the Acquired Corporations exclusively
own all right, title, and interest in and to such item, free and clear
of any Encumbrance (other than any rights licensed on a non-exclusive
basis in the ordinary course of business to distributors and customers
of any of the Acquired Corporations);
(ii) such item is not subject to any Order;
(iii) there is no outstanding option relating to such
item and no outstanding offer to grant an exclusive license with respect
to such item;
(iv) no Proceeding is pending or is threatened, nor has
any claim or demand been made, which challenges or challenged the
legality, validity, enforceability, use or exclusive ownership by any of
the Acquired Corporations of such item;
(v) each Issued Patent comprising or relating to such
item is, to the Knowledge of the Company, valid and subsisting; and
(vi) all maintenance and annuity fees have been fully
paid and all fees paid during prosecution and after issuance of any
Patent comprising or relating to such item have been paid in the correct
entity status amounts.
(e) Part 2.9(e) of the Company Disclosure Schedule lists each
material item of Intellectual Property that is owned by any Person (other than
the Acquired Corporations) and that any of the Acquired Corporations
incorporated or incorporates in any product of any of the Acquired Corporations
currently maintained, sold or licensed by any of the Acquired Corporations
pursuant to a license, sublicense or other Contract (other than any item of
Intellectual Property used by any of the Acquired Corporations and generally
available to the public), and all material royalty obligations of each of the
Acquired Corporations to any Person (including all royalty obligations of each
of the Acquired Corporations to Systematic Designs International, Inc. and Fast
Associates Pte. Ltd.). The Corporation has delivered to Parent accurate and
complete copies of each such license, sublicense and Contract (as amended
through the date of this Agreement). With respect to each item of Intellectual
Property required to be identified in Part 2.9(e) of the Company Disclosure
Schedule:
(i) to the Knowledge of the Company, any license,
sublicense or other Contract covering or relating to such item is legal,
valid, binding, enforceable and in full force and effect;
(ii) none of the Acquired Corporations nor (to the
Knowledge of the Company) any other party to any license, sublicense or
other Contract covering or
18.
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relating to such item is in breach of or default under any such license,
sublicense or other Contract, except for any such breach or default that
has not resulted in and would not reasonably be expected to result in a
Material Adverse Effect on the Acquired Corporations, or has performed
any act or omitted to perform any act which, with notice or lapse of
time or both, will become or result in a violation, breach or default
thereunder, except for any act or omission that has not resulted in and
would not reasonably be expected to result in a Material Adverse Effect
on the Acquired Corporations;
(iii) no party to any license, sublicense or other
Contract covering or relating to such item has given notice of
termination or repudiated any material provision thereof;
(iv) such item is not subject to any Order; and
(v) to the Knowledge of the Company, no Proceeding is
pending or is being or has been threatened, nor has any claim or demand
been made, which challenges the legality, validity, enforceability or
ownership of such item.
(f) To the Knowledge of the Company, except as set forth in Part
2.9(f) of the Company Disclosure Schedule, none of the Acquired Corporations has
interfered with, infringed upon or misappropriated any Intellectual Property
right of any other Person. To the Knowledge of the Company, except as set forth
in Part 2.9(f) of the Company Disclosure Schedule, since January 1, 1996, none
of the Acquired Corporations has received any complaint, claim, demand or notice
alleging any such interference, infringement or misappropriation, or that the
use by any of the Acquired Corporations of any Intellectual Property constitutes
unfair competition. To the Knowledge of the Company, no Person has interfered
with, infringed upon or misappropriated any Intellectual Property right owned or
used by any of the Acquired Corporations.
(g) To the Knowledge of the Company, except as set forth in Part
2.9(g) of the Company Disclosure Schedule, no current employee or consultant of
or to any of the Acquired Corporations is obligated under any Contract, or
subject to any Order or Legal Requirement, that would restrict in any material
respect the scope of such employee's or consultant's business activities for
Parent or for any of the Acquired Corporations.
(h) For purposes of this Section 2.9(h):
(i) "Software" means any computer program or other item of
software, including firmware.
(ii) "Internally Developed Software" means any Software
developed or created by or for any of the Acquired Corporations (whether
by its own employees or by independent contractors or otherwise and
whether for resale, internal use or otherwise).
(iii) "Internally Used Software" means any Software used by
any of the Acquired Corporations in its internal business operations
(whether such Software is Internally Developed Software or is licensed
from a third party).
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(iv) "Third Party Distributed Software" means any Software,
other than Internally Developed Software, distributed, licensed,
maintained, or supported by any of the Acquired Corporations (whether as
an embedded component of any software product of any of the Acquired
Corporations or as a separate product or otherwise).
(v) "Third Party Layered Software" means any Software,
other than Internally Developed Software and Third Party Distributed
Software, used in conjunction with any software product of any of the
Acquired Corporations.
(vi) "Year 2000 Compliant" means, with respect to a computer
or Software, (i) the functions, calculations, and other computing
processes of the computer or Software (collectively, "Processes")
perform in the same manner and with the same accuracy, functionality,
and data integrity regardless of the date on which the Processes are
actually performed and regardless of the date input to the applicable
computer, whether before, on, or after January 1, 2000, and without
interruption due to any date change or date data; (ii) the computer or
Software accepts, calculates, compares, sorts, extracts, sequences, and
otherwise processes date inputs and date values, and returns and
displays date values, in a consistent and correct manner regardless of
the dates used whether before, on, or after January 1, 2000; (iii) the
computer or Software accepts and responds to year input, if any, in a
manner that resolves any ambiguities as to century in a defined,
predetermined, and correct manner; (iv) the computer or Software stores
and displays date information in ways that are unambiguous as to the
determination of the century; and (v) leap years will be determined by
the following standard (A) if dividing the year by 4 yields an integer,
it is a leap year, except for years ending in 00, but (B) a year ending
in 00 is a leap year if dividing it by 400 yields an integer.
(vii) "Y2K Bug" means, with respect to a computer or
Software, any failure of such computer or Software to be Year 2000
Compliant.
To the Knowledge of the Company, except as set forth in Part 2.9(h)(i) of the
Company Disclosure Schedule, each computer that is owned or used by any of the
Acquired Corporations for its internal business operations is, and all
Internally Used Software are, Year 2000 Compliant. To the Knowledge of the
Company, except as set forth in Part 2.9(h)(ii) of the Company Disclosure
Schedule and except for any Y2K Bugs caused solely by one or more Y2K Bugs in
the Third Party Layered Software, all Internally Developed Software and all
Third Party Distributed Software are Year 2000 Compliant. Except as set forth in
Part 2.9(h)(iii) of the Company Disclosure Schedule, each of the Acquired
Corporations has conducted sufficient Year 2000 compliance testing for each
computer that is owned or used by any of the Acquired Corporations for its
internal business operations, all Internally Used Software, all Internally
Developed Software and all Third Party Distributed Software to be able to
determine whether such computer or Software is Year 2000 Compliant, and, with
respect to all Third Party Distributed Software, has obtained warranties or
other written assurances from the suppliers thereof to the effect that such
Software is Year 2000 Compliant.
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(i) The Intellectual Property assets owned by or licensed to
the Acquired Corporations constitute all of the Intellectual Property assets
necessary to enable the Acquired Corporations to conduct their respective
businesses as such businesses are currently being conducted.
2.10 CONTRACTS.
(a) Part 2.10 of the Company Disclosure Schedule identifies
each Acquired Corporation Contract that constitutes a "Material Contract" as of
the date of this Agreement. (For purposes of this Agreement, each of the
following Contracts (to the extent that any of the Acquired Corporations has (or
may have) any liability or obligation thereunder or with respect thereto after
the date of this Agreement) shall be deemed to constitute a "Material Contract":
(i) any Contract relating to the employment of, or the
performance of services by, any employee or consultant (other than any
offer letter provided to any employee of any of the Acquired
Corporations which provides for "at will" employment); any Contract
pursuant to which any of the Acquired Corporations is or may become
obligated to make any severance, termination or similar payment to any
current or former employee or director; and any Contract pursuant to
which any of the Acquired Corporations is or may become obligated to
make any bonus or similar payment (other than payments in respect of
salary) in excess of $25,000 to any current or former employee or
director;
(ii) any Contract (A) with any customer of any of the
Acquired Corporations for systems integration or similar services; or
(B) with respect to the distribution or marketing of any product of any
of the Acquired Corporations;
(iii) any Contract pursuant to which any third party
licenses to any of the Acquired Corporations (or otherwise permits any
of the Acquired Corporations to use) any Intellectual Property that is
incorporated as a material component of any product of any of the
Acquired Corporations or is otherwise material to the business of any of
the Acquired Corporations (other than "off the shelf" or other software
which is widely available through regular commercial distribution
channels on standard terms and conditions, as modified for the Company's
operations);
(iv) any factory automation Contract acquired from
Systematic Designs International, Inc. or Fast Associates Pte. Ltd.;
(v) any Contract which provides for indemnification of
any officer, director, employee or agent;
(vi) any Contract imposing any restriction on the right
or ability of any Acquired Corporation (A) to compete with any other
Person, (B) to acquire any material product or other asset or any
services from any other Person, (C) to solicit, hire or retain any
Person as an employee, consultant or independent contractor, (D) to
develop, sell, supply, distribute, offer, support or service any product
or any technology
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or other asset to or for any other Person, (E) to perform services for
any other Person, or (F) to transact business or deal in any other
manner with any other Person;
(vii) any Contract (A) relating to the acquisition,
issuance, voting, registration, sale or transfer of any securities,
other than pursuant to Company Options or the ESPP, (B) providing any
Person with any preemptive right, right of participation, right of
maintenance or any similar right with respect to any securities, or (C)
providing any of the Acquired Corporations with any right of first
refusal with respect to, or right to purchase or otherwise acquire, any
securities;
(viii) any Contract incorporating or relating to any
guaranty, any warranty or any indemnity or similar obligation, except
for Contracts entered into in the ordinary course of business;
(ix) any Contract relating to any currency hedging;
(x) any Contract to which any Governmental Body is a
party;
(xi) any Contract not otherwise identified in clause
"(ix)" of this sentence directly or indirectly benefiting any
Governmental Body (including any subcontract or other Contract between
any Acquired Corporation and any contractor or subcontractor to any
Governmental Body), except for Contracts entered into in the ordinary
course of business for the license, maintenance or service of products;
(xii) any Contract requiring that any of the Acquired
Corporations give any notice or provide any information to any Person
prior to considering or accepting any Acquisition Proposal or similar
proposal, or prior to entering into any discussions, agreement,
arrangement or understanding relating to any Acquisition Transaction or
similar transaction;
(xiii) any Contract that (A) contemplates or involves
the payment or delivery of cash or other consideration by any of the
Acquired Corporations in an amount or having a value in excess of
$100,000 in the aggregate, (B) contemplates or involves the payment or
delivery of cash or other consideration to any of the Acquired
Corporations in an amount or having a value in excess of $250,000 in the
aggregate, or (C) contemplates or involves the performance of services
by any of the Acquired Corporations having a value in excess of $250,000
in the aggregate; and
(xiv) any Contract (not otherwise identified in clauses
"(i)" through "(xiii)" of this sentence), if a breach of such Contract
could reasonably be expected to have a Material Adverse Effect on the
Acquired Corporations.
Without limiting the generality of the foregoing, Part 2.10 of the Company
Disclosure Schedule identifies each letter of intent, memorandum of
understanding and similar document relating to the Company's FAB300 software
project.
(b) The Company has delivered to Parent and to Xxxxxx
Godward LLP an accurate and complete copy of (i) each Material Contract; (ii)
each letter of intent,
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memorandum of understanding and other agreement relating to the Company's FAB300
software project; (iii) each Acquired Corporation Contract (to the extent that
any of the Acquired Corporations has (or may have) any liability or obligation
thereunder or with respect thereto after the date of this Agreement) of the type
referred to in Section 2.9; (iv) each Acquired Corporation Contract (to the
extent that any of the Acquired Corporations has (or may have) any liability or
obligation thereunder or with respect thereto after the date of this Agreement)
with any customer of any of the Acquired Corporations (except for Acquired
Corporation Contracts which are similar in all material respects to the standard
form of Software License Agreement and Maintenance Agreement described in that
certain document entitled "Negotiation Guidelines - A 'Walk Through' of the
Software License Agreement and Maintenance Agreement Terms and Conditions," an
accurate and complete copy of which has been provided to Cooley Godward LLP);
and (v) each other Acquired Corporation Contract (not otherwise identified in
clauses "(i)" through "(iv)" of this sentence) that is material to the business
of any of the Acquired Corporations.
(c) Each Acquired Corporation Contract is valid and in full
force and effect, and is enforceable in accordance with its terms, subject to
(i) laws of general application relating to bankruptcy, insolvency and the
relief of debtors, and (ii) applicable rules of law governing specific
performance, injunctive relief and other equitable remedies.
(d) Except as set forth in Part 2.10 of the Company
Disclosure Schedule: (i) none of the Acquired Corporations has violated or
breached, or committed any default under, any Acquired Corporation Contract,
except for violations, breaches and defaults that have not had and would not
reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations; and, to the Knowledge of the Company, no other Person has violated
or breached, or committed any default under, any Acquired Corporation Contract,
except for violations, breaches or defaults that have not had and would not
reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations; (ii) to the Knowledge of the Company, no event has occurred, and
no circumstance or condition exists, that (with or without notice or lapse of
time) will, or would reasonably be expected to, (A) result in a violation or
breach of any of the provisions of any Acquired Corporation Contract, (B) give
any Person the right to declare a default or exercise any remedy under any
Acquired Corporation Contract, (C) give any Person the right to receive or
require a rebate, chargeback or penalty under any Acquired Corporation Contract,
(D) give any Person the right to accelerate the maturity or performance of any
Acquired Corporation Contract, (E) result in the disclosure, release or delivery
of any Acquired Corporation Source Code, or (F) give any Person the right to
cancel, terminate or modify any Acquired Corporation Contract, except in each
such case for defaults, acceleration rights, termination rights and other rights
that have not had and would not reasonably be expected to have a Material
Adverse Effect on the Acquired Corporations; and (iii) since January 1, 1996,
none of the Acquired Corporations has received any notice or other communication
regarding any actual or possible violation or breach of, or default under, any
Acquired Corporation Contract, except in each such case for defaults,
acceleration rights, termination rights and other rights that have not had and
would not reasonably be expected to have a Material Adverse Effect on the
Acquired Corporations.
(e) Without limiting the generality of the representations
contained in Section 2.10(d), (i) none of the Acquired Corporations has violated
or breached, or committed
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any default under, and no event has occurred, and no circumstance or condition
exists, that (with or without notice or lapse of time) will, or would reasonably
be expected to, result in a claim against any of the Acquired Corporations under
or pursuant to (A) that certain Asset Purchase Agreement dated February 19,
1998, by and among the Company, Base Ten Flowstream, Inc. and Base Ten Systems,
Inc. (including under or pursuant to Section 12 thereof), (B) that certain Asset
Purchase Agreement dated July 31, 1997, by and among the Company, Fast
Associates Pte., Ltd. and Ng Boon Thiong (including under or pursuant to Section
2.4 thereof), or (C) that certain Settlement Agreement dated January 30, 1998,
by and among the Company, Systematic Designs International, Inc. and Jen-Shih
Xxxxx Xxxx; and (ii) to the Knowledge of the Company, no other Person has
violated or breached, or committed any default under, and no event has occurred,
and no circumstance or condition exists, that (with or without notice or lapse
of time) will, or would reasonably be expected to, result in a claim by any of
the Acquired Corporations under or pursuant to (A) that certain Asset Purchase
Agreement dated February 19, 1998, by and among the Company, Base Ten
Flowstream, Inc. and Base Ten Systems, Inc., (B) that certain Asset Purchase
Agreement dated July 31, 1997, by and among the Company, Fast Associates Pte.,
Ltd. and Ng Boon Thiong, or (C) that certain Settlement Agreement dated January
30, 1998, by and among the Company, Systematic Designs International, Inc. and
Jen-Shih Xxxxx Xxxx. None of the Acquired Corporations has any liability or
obligation under that certain Asset Purchase Agreement dated July 2, 1996, by
and among the Company, Consilium Taiwan, Inc., Systematic Designs International,
Inc. and Jen-Shih Xxxxx Xxxx.
2.11 SALE OF PRODUCTS; PERFORMANCE OF SERVICES
(a) The Company has delivered to Cooley Godward LLP an
accurate and complete copy of the "bug list" as of September 30, 1998 with
respect to each product, system, program and software module of each of the
Acquired Corporations. Assuming the products, systems, programs and software
modules of the Acquired Corporations are used in the manner in which they are
intended to be used (including platform specifications and other product
literature) and were maintained in accordance with the Company's regular
maintenance program, none of the products, systems, programs or software modules
of any of the Acquired Corporations would reasonably be expected to (A) disrupt,
disable, harm or otherwise impede in any material respect the operation of a
computer program or a computer system or the equipment on which such code
resides, or (B) damage or destroy any data or files residing on a computer or
computer system without the consent of the user of such computer or computer
system.
(b) To the Knowledge of the Company, all installation
services, programming services, repair services, maintenance services, support
services, training services, upgrade services and other services that have been
performed by the Acquired Corporations were performed properly and in
substantial conformity with the terms and requirements of all applicable
warranties and other Contracts and with all applicable Legal Requirements.
(c) Except as set forth in Part 2.11(c) of the Company
Disclosure Schedule, since January 1, 1996, no customer or other Person has
asserted or threatened to assert any claim against any of the Acquired
Corporations (i) under or based upon any warranty provided by or on behalf of
any of the Acquired Corporations, or (ii) based upon any services performed by
any of the Acquired Corporations.
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2.12 LIABILITIES. None of the Acquired Corporations has any
accrued, contingent or other liabilities of any nature, either matured or
unmatured, except for: (a) liabilities identified as such in the "liabilities"
column of the Unaudited Interim Balance Sheet; (b) normal and recurring current
liabilities that have been incurred by the Acquired Corporations since July 31,
1998 in the ordinary course of business and consistent with past practices; (c)
liabilities described in Part 2.12 of the Company Disclosure Schedule; and (d)
liabilities that have not had, and would not reasonably be expected to have, a
Material Adverse Effect on the Acquired Corporations.
2.13 COMPLIANCE WITH LEGAL REQUIREMENTS. Except as set forth in
Part 2.13 of the Company Disclosure Schedule, each of the Acquired Corporations
is, and has at all times since January 1, 1996 been, in compliance with all
applicable Legal Requirements, except where the failure to comply with such
Legal Requirements has not had and would not reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations. Except as set forth in
Part 2.13 of the Company Disclosure Schedule, since January 1, 1996, none of the
Acquired Corporations has received any notice or other communication from any
Governmental Body or other Person regarding any actual or possible violation of,
or failure to comply with, any Legal Requirement.
2.14 CERTAIN BUSINESS PRACTICES. None of the Acquired
Corporations nor (to the Knowledge of the Company) any director, officer, agent
or employee of any of the Acquired Corporations has (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful expenses relating
to political activity, (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political parties or
campaigns or violated any provision of the Foreign Corrupt Practices Act of
1977, as amended, or (iii) made any other unlawful payment.
2.15 GOVERNMENTAL AUTHORIZATIONS.
(a) The Acquired Corporations hold all Governmental
Authorizations necessary to enable the Acquired Corporations to conduct their
respective businesses in the manner in which such businesses are currently being
conducted, except where the failure to hold such Governmental Authorizations has
not had and would not reasonably be expected to have a Material Adverse Effect
on the Acquired Corporations. Each Acquired Corporation is, and at all times
since January 1, 1996 has been, in substantial compliance with the terms and
requirements of such Governmental Authorizations, except where the failure to be
in compliance with the terms and requirements of such Governmental
Authorizations has not had and would not reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations. Since January 1, 1996,
none of the Acquired Corporations has received any notice or other communication
from any Governmental Body regarding (a) any actual or possible violation of or
failure to comply with any term or requirement of any material Governmental
Authorization, or (b) any actual or possible revocation, withdrawal, suspension,
cancellation, termination or modification of any material Governmental
Authorization.
(b) The Company has provided Parent with an accurate and
complete copy of the grant received by the Company from the National Institute
of Standards and Technology ("NIST"). None of the Acquired Corporations is the
beneficiary of any grant,
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incentive or subsidy other than NIST. Except as set forth in Part 2.15(b) of the
Company Disclosure Schedule, each of the Acquired Corporations is in substantial
compliance with all of the terms and requirements of NIST. Except as set forth
in Part 2.15(b) of the Company Disclosure Schedule, neither the execution,
delivery or performance of this Agreement, nor the consummation of the Merger or
any of the other transactions contemplated by this Agreement, will (with or
without notice or lapse of time) give any Person the right to revoke, withdraw,
suspend, cancel, terminate or modify, NIST.
2.16 TAX MATTERS.
(a) Each Tax Return required to be filed by or on behalf of
the respective Acquired Corporations with any Governmental Body with respect to
any taxable period ending on or before the Closing Date (the "Acquired
Corporation Returns") (i) has been or will be filed on or before the applicable
due date, as extended by such Governmental Body, and (ii) has been, or will be
when filed, prepared in all material respects in compliance with all applicable
Legal Requirements. All amounts shown on the Acquired Corporation Returns to be
due on or before the Closing Date have been or will be paid on or before the
Closing Date.
(b) Except as set forth in Part 2.16(b) of the Company
Disclosure Schedule, the Unaudited Interim Balance Sheet fully accrues all
actual and contingent liabilities for Taxes with respect to all periods through
July 31, 1998 in accordance with generally accepted accounting principles. Since
July 31, 1998, none of the Acquired Corporations has incurred any liability for
any Tax other than in the ordinary course of its business.
(c) Except as set forth in Part 2.16(c) of the Company
Disclosure Schedule, since January 1, 1993, no Acquired Corporation Return has
been audited by any Governmental Body. No extension or waiver of the limitation
period applicable to any of the Acquired Corporation Returns has been granted
(by the Company or any other Person), and no such extension or waiver has been
requested from any Acquired Corporation.
(d) Except as set forth in Part 2.16(d) of the Company
Disclosure Schedule, no claim or Legal Proceeding is pending or, to the
Knowledge of the Company, has been threatened against or with respect to any
Acquired Corporation in respect of any material Tax. There are no unsatisfied
liabilities for material Taxes (including liabilities for interest, additions to
tax and penalties thereon and related expenses) with respect to any notice of
deficiency or similar document received by any Acquired Corporation with respect
to any material Tax (other than liabilities for Taxes asserted under any such
notice of deficiency or similar document which are being contested in good faith
by the Acquired Corporations and with respect to which adequate reserves for
payment have been established on the Unaudited Interim Balance Sheet). There are
no liens for material Taxes upon any of the assets of any of the Acquired
Corporations except liens for current Taxes not yet due and payable. None of the
Acquired Corporations has entered into or become bound by any agreement or
consent pursuant to Section 341(f) of the Code (or any comparable provision of
state or foreign Tax laws). None of the Acquired Corporations has been, and none
of the Acquired Corporations will be, required to include any adjustment in
taxable income for any tax period (or portion thereof) pursuant to Section 481
or 263A of the Code (or any comparable provision under state or foreign Tax
laws)
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as a result of transactions or events occurring, or accounting methods employed,
prior to the Closing.
(e) There is no agreement, plan, arrangement or other
Contract covering any employee or independent contractor or former employee or
independent contractor of any of the Acquired Corporations that, considered
individually or considered collectively with any other such Contracts, will, or
could reasonably be expected to, give rise directly or indirectly to the payment
of any amount that would not be deductible pursuant to Section 280G or Section
162 of the Code (or any comparable provision under state or foreign Tax laws).
None of the Acquired Corporations is, or has ever been, a party to or bound by
any tax indemnity agreement, tax sharing agreement, tax allocation agreement or
similar Contract.
2.17 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Part 2.17(a) of the Company Disclosure Schedule
identifies each salary, bonus, deferred compensation, incentive compensation,
stock purchase, stock option, severance pay, termination pay, hospitalization,
medical, insurance, supplemental unemployment benefits, profit-sharing, pension
or retirement plan, program or material agreement maintained, sponsored,
contributed to or required to be contributed to by any of the Acquired
Corporations for the benefit of any current or former employee of any of the
Acquired Corporations (including any such plan, program or material agreement
maintained, sponsored, contributed to or required to be contributed to by any of
the Acquired Corporations for the benefit or any current or former employee
located in Korea, Singapore, Taiwan or India. (All plans, programs and material
agreements of the type referred to in the prior sentence are referred to in this
Agreement as the "Plans.")
(b) Except as set forth in Part 2.17(a) of the Company
Disclosure Schedule, none of the Acquired Corporations maintains, sponsors or
contributes to, and none of the Acquired Corporations has since January 1, 1996
maintained, sponsored or contributed to, any employee pension benefit plan (as
defined in Section 3(2) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) or any similar pension benefit plan under the laws of any
foreign jurisdiction (including Korea, Singapore, Taiwan or India), whether or
not excluded from coverage under specific Titles or Merger Subtitles of ERISA),
for the benefit of any current or former employee or director of any of the
Acquired Corporations (a "Pension Plan").
(c) Except as set forth in Part 2.17(a) of the Company
Disclosure Schedule, none of the Acquired Corporations maintains, sponsors or
contributes to any: (i) employee welfare benefit plan (as defined in Section
3(1) of ERISA) or any similar welfare benefit plan under the laws of any foreign
jurisdiction (including Korea, Singapore, Taiwan or India), whether or not
excluded from coverage under specific Titles or Merger Subtitles of ERISA, for
the benefit of any current or former employee or director of any of the Acquired
Corporations (a "Welfare Plan"), or (ii) self-funded medical, dental or other
similar Plan. None of the Plans identified in the Company Disclosure Schedule is
a multiemployer plan (within the meaning of Section 3(37) of ERISA).
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(d) With respect to each Plan, the Company has delivered to
Parent: (i) an accurate and complete copy of such Plan (including all amendments
thereto); (ii) an accurate and complete copy of the annual report, if required
under ERISA, with respect to such Plan for each of the last two years; (iii) an
accurate and complete copy of the most recent summary plan description, together
with each Summary of Material Modifications, if required under ERISA, with
respect to such Plan, (iv) if such Plan is funded through a trust or any third
party funding vehicle, an accurate and complete copy of the trust or other
funding agreement (including all amendments thereto) and accurate and complete
copies the most recent financial statements thereof; (v) accurate and complete
copies of all Contracts relating to such Plan, including service provider
agreements, insurance contracts, minimum premium contracts, stop-loss
agreements, investment management agreements, subscription and participation
agreements and recordkeeping agreements; and (vi) an accurate and complete copy
of the most recent opinion letter received from the Internal Revenue Service
with respect to such Plan (if such Plan is intended to be qualified under
Section 401(a) of the Code).
(e) None of the Acquired Corporations is or has ever been
required to be treated as a single employer with any other Person under Section
4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the Code. None of the
Acquired Corporations has ever been a member of an "affiliated service group"
within the meaning of Section 414(m) of the Code. None of the Acquired
Corporations has ever made a complete or partial withdrawal from a multiemployer
plan, as such term is defined in Section 3(37) of ERISA, resulting in
"withdrawal liability," as such term is defined in Section 4201 of ERISA
(without regard to any subsequent reduction or waiver of such liability under
either Section 4207 or 4208 of ERISA).
(f) None of the Acquired Corporations has any plan or
commitment to create any Welfare Plan or any Pension Plan, or to modify or
change any existing Welfare Plan or Pension Plan (other than to comply with
applicable law) in a manner that would affect any current or former employee or
director of any of the Acquired Corporations.
(g) No Plan provides death, medical or health benefits
(whether or not insured) with respect to any current or former employee or
director of any of the Acquired Corporations after any termination of service of
such employee or director (other than (i) benefit coverage mandated by
applicable law, including coverage provided pursuant to Section 4980B of the
Code, (ii) deferred compensation benefits accrued as liabilities on the
Unaudited Interim Balance Sheet, and (iii) benefits the full cost of which are
borne by current or former employees or directors of any of the Acquired
Corporations (or their beneficiaries)).
(h) Except as set forth in Part 2.17(h) of the Company
Disclosure Schedule, with respect to any Plan constituting a group health plan
within the meaning of Section 4980B(g)(2) of the Code, the provisions of Section
4980B of the Code ("COBRA") have been complied with in all material respects.
(i) Except as set forth in Part 2.17(i) of the Company
Disclosure Schedule, to the Knowledge of the Company, each of the Plans has been
operated and administered in all material respects in accordance with applicable
Legal Requirements, including ERISA and the Code, each Legal Requirement
pursuant to which any of the Acquired Corporations is required to establish any
reserve or make any contribution for the benefit of any
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current or former employee located in Korea, Singapore, Taiwan, India or any
other foreign jurisdiction and each other applicable foreign Legal Requirement.
(j) Each of the Plans intended to be qualified under Section
401(a) of the Code has received a favorable opinion letter from the Internal
Revenue Service, and the Company is not aware of any reason why any such
determination letter could be revoked.
(k) Except pursuant to the Change of Control Agreements or
as set forth in Part 2.17(k) of the Company Disclosure Schedule, neither the
execution, delivery or performance of this Agreement, nor the consummation of
the Merger or any of the other transactions contemplated by this Agreement, will
result in any bonus, golden parachute, severance or other payment or obligation
to any current or former employee or director of any of the Acquired
Corporations (whether or not under any Plan), or materially increase the
benefits payable or provided under any Plan, or result in any acceleration of
the time of payment, provision or vesting of any such benefits. Without limiting
the generality of the foregoing (and except pursuant to the Change of Control
Agreements or as set forth in Part 2.17(k) of the Company Disclosure Schedule),
the consummation of the Merger will not result in the acceleration of vesting of
any unvested Company Options.
(l) Part 2.17(l) of the Company Disclosure Schedule
identifies each employee of each of the Acquired Corporations as of the date of
this Agreement, and correctly reflects, in all material respects, the current
salary and any other compensation payable to such employee (including
compensation payable pursuant to bonus, deferred compensation or commission
arrangements), such employee's employer, date of hire and position and the
principal office of such employee. None of the Acquired Corporations is a party
to any collective bargaining contract or other Contract with a labor union
involving any of its employees. All of the employees of the Acquired
Corporations are "at will" employees.
(m) Part 2.17(m) of the Company Disclosure Schedule
identifies each employee of any of the Acquired Corporations who is not fully
available to perform work because of disability or other leave and sets forth
the basis of such disability (to the extent known by the Company) or leave and
the anticipated date of such employee's return to full service.
(n) Each of the Acquired Corporations is in compliance in
all material respects with all applicable Legal Requirements and Contracts
relating to employment, employment practices, wages, bonuses and terms and
conditions of employment, including employee compensation matters.
(o) Each of the Acquired Corporations has good labor
relations, and the Company has no knowledge of any facts indicating that (i) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement will have a material adverse effect on the labor relations of any of
the Acquired Corporations, or (ii) any of the employees of any of the Acquired
Corporations intends to terminate his or her employment with such Acquired
Corporation.
2.18 ENVIRONMENTAL MATTERS. Each of the Acquired Corporations is
in compliance in all material respects with all applicable Environmental Laws,
which compliance
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includes the possession by each of the Acquired Corporations of all permits and
other Governmental Authorizations required of them under applicable
Environmental Laws, and compliance in all material respects with the terms and
conditions thereof. To the Knowledge of the Company, since January 1, 1996, none
of the Acquired Corporations has received any notice or other communication (in
writing or otherwise), whether from a Governmental Body, citizens group,
employee or otherwise, that alleges that any of the Acquired Corporations is not
in compliance in all material respects with any Environmental Law. To the
Knowledge of the Company, no current or prior owner of any property leased by
any of the Acquired Corporations has received any notice or other communication
(in writing or otherwise), whether from a Government Body, citizens group,
employee or otherwise, that alleges that such current or prior owner or any of
the Acquired Corporations is not in compliance in all material respects with any
Environmental Law. To the Knowledge of the Company (a) all property that is
leased to or used by the Company, and all surface water, groundwater and soil
associated with such property is free of any material environmental
contamination of any nature, (b) none of the property leased to or used by any
of the Acquired Corporations presently contains any underground storage tanks,
asbestos, equipment using PCBs or underground injection xxxxx, and (c) none of
the property leased to or used by any of the Acquired Corporations presently
contains any septic tanks in which process wastewater or any Materials of
Environmental Concern have been disposed. To the Knowledge of the Company, no
Acquired Corporation has sent or transported, or arranged to send or transport,
any Materials of Environmental Concern to a site that, pursuant to any
applicable Environmental Law (i) has been placed on the "National Priorities
List" of hazardous waste sites or any similar state list, (ii) is otherwise
designated or identified as a potential site for remediation, cleanup, closure
or other environmental remedial activity, or (iii) is subject to a Legal
Requirement to take "removal" or "remedial' action as detailed in any applicable
Environmental Law or to make payment for the cost of cleaning up the site. (For
purposes of this Section 2.18: (A) "Environmental Law" means any federal, state,
local or foreign Legal Requirement relating to pollution or protection of human
health from Materials of Environmental Concern or protection of the environment
(including ambient air, surface water, ground water, land surface or subsurface
strata), including any law or regulation relating to emissions, discharges,
releases or threatened releases of Materials of Environmental Concern, or
otherwise relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Materials of Environmental Concern;
and (B) "Materials of Environmental Concern" means chemicals, pollutants,
contaminants, wastes, toxic substances, petroleum and petroleum products and any
other substance that is regulated by any Governmental Body with respect to the
environment.)
2.19 INSURANCE. The Company has delivered to Parent a copy of all
material insurance policies and all material self insurance programs and
arrangements relating to the business, assets and operations of the Acquired
Corporations. Except as set forth in Part 2.19 of the Company Disclosure
Schedule, each of such insurance policies is in full force and effect. Since
January 1, 1996, none of the Acquired Corporations has received any notice or
other communication regarding any actual or possible (a) cancellation or
invalidation of any insurance policy, (b) refusal of any coverage or rejection
of any material claim under any insurance policy, or (c) material adjustment in
the amount of the premiums payable with respect to any insurance policy. Except
as set forth in Part 2.19 of the Company Disclosure Schedule, there is no
pending workers' compensation or other claim under or based upon any insurance
policy of any of the Acquired Corporations.
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2.20 TRANSACTIONS WITH AFFILIATES. Except as set forth in the
Company SEC Reports, since the date of the Company's last proxy statement filed
with the SEC, no event has occurred that would be required to be reported by the
Company pursuant to Item 404 of Regulation S-K promulgated by the SEC. Part 2.20
of the Company Disclosure Schedule identifies each person who is (or who may be
deemed to be) an "affiliate" (as that term is used in Rule 145 under the
Securities Act) of the Company as of the date of this Agreement.
2.21 LEGAL PROCEEDINGS; ORDERS.
(a) There is no pending Legal Proceeding, and (to the
Knowledge of the Company) no Person has threatened to commence any Legal
Proceeding: (i) that involves any of the Acquired Corporations or any of the
assets owned or used by any of the Acquired Corporations and that, if adversely
determined, would reasonably be expected to have a Material Adverse Effect on
the Acquired Corporations; or (ii) that challenges, or that may have the effect
of preventing, delaying, making illegal or otherwise interfering with, the
Merger or any of the other transactions contemplated by this Agreement. To the
Knowledge of the Company, no event has occurred, and no claim, dispute or other
condition or circumstance exists, that would reasonably be expected to, give
rise to or serve as a basis for the commencement of any such Legal Proceeding.
(b) There is no material order, writ, injunction, judgment
or decree to which any of the Acquired Corporations, or any of the assets owned
or used by any of the Acquired Corporations, is subject. To the Knowledge of the
Company, no officer or key employee of any of the Acquired Corporations is
subject to any order, writ, injunction, judgment or decree that prohibits such
officer or other key employee from engaging in or continuing any conduct,
activity or practice relating to the business of any of the Acquired
Corporations.
2.22 AUTHORITY; INAPPLICABILITY OF ANTI-TAKEOVER STATUTES;
BINDING NATURE OF AGREEMENT. The Company has the absolute and unrestricted
right, power and authority to enter into and to perform its obligations under
this Agreement. The board of directors of the Company (at a meeting duly called
and held on October 12, 1998) has (a) determined (pursuant to a unanimous vote
of all members of the board of directors of the Company) that the Merger is
advisable and fair and in the best interests of the Company and its
stockholders, (b) authorized and approved (pursuant to a unanimous vote of all
members of the board of directors of the Company) the execution, delivery and
performance of this Agreement by the Company and approved (pursuant to a
unanimous vote of all members of the board of directors of the Company) the
Merger, (c) recommended (pursuant to a unanimous vote of all members of the
board of directors of the Company) the approval of this Agreement and the Merger
by the holders of Company Common Stock and directed that this Agreement and the
Merger be submitted for consideration by the Company's stockholders at the
Company Stockholders' Meeting (as defined in Section 5.2), and (d) adopted
(pursuant to a unanimous vote of all members of the board of directors of the
Company) a resolution having the effect of causing the Company not to be subject
to any state takeover law or similar Legal Requirement that might otherwise
apply to the Merger or any of the other transactions contemplated by this
Agreement. This Agreement constitutes the legal, valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
subject to (i) laws of general application
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relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law governing specific performance, injunctive relief and other equitable
remedies.
2.23 SECTION 203 OF THE DGCL NOT APPLICABLE. As of the date
hereof and at all times on or prior to the Effective Time, the restrictions
applicable to business combinations contained in Section 203 of the DGCL are,
and will be, inapplicable to the execution, delivery and performance of this
Agreement and to the consummation of the Merger and the other transactions
contemplated by this Agreement. Prior to the execution of those certain Voting
Agreements of even date herewith between Parent and each of the Persons
identified in Part 2.23 of the Company Disclosure Schedule, the Board of
Directors of the Company approved said Voting Agreements and the transactions
contemplated thereby.
2.24 INAPPLICABILITY OF SECTION 2115 OF CALIFORNIA CORPORATIONS
CODE. The Company is not subject to Section 2115 of the California Corporations
Code.
2.25 NO EXISTING DISCUSSIONS. As of the date of this Agreement
(and since the date of the "no-shop" agreement dated September 17, 1998 executed
by the Company), none of the Acquired Corporations has engaged, directly or
indirectly, in any discussions or negotiations with any other Person with
respect to any Acquisition Proposal.
2.26 ACCOUNTING MATTERS. To the Knowledge of the Company, neither
the Company nor any affiliate (as that term is used in Rule 145 under the
Securities Act) of any of the Acquired Corporations has taken or agreed to take,
or plans to take, any action that could prevent Parent from accounting for the
Merger as a "pooling of interests" in accordance with generally accepted
accounting principles, Accounting Principles Board Opinion No. 16 and all
published rules, regulations and policies of the SEC. Xxxxxx Xxxxxxxx LLP has
confirmed in a letter the date of this Agreement and addressed to the Company,
an executed copy of which has been delivered to Parent and
PricewaterhouseCoopers LLP, that (subject to the qualifications contained in
such letter) Xxxxxx Xxxxxxxx LLP's concurrence with the Company's management's
conclusion that the Company is a "poolable entity" in accordance with generally
accepted accounting principles, Accounting Principles Board Opinion No. 16 and
all published rules, regulations and policies of the SEC.
2.27 VOTE REQUIRED. The affirmative vote of the holders of a
majority of the shares of Company Common Stock outstanding on the record date
for the Company Stockholders' Meeting (the "Required Company Stockholder Vote")
is the only vote of the holders of any class or series of the Company's capital
stock necessary to approve this Agreement, the Merger and the other transactions
contemplated by this Agreement. Without limiting the generality of the
foregoing, no vote of the holders of Company Preferred Stock is necessary to
approve this Agreement, the Merger or any of the other transactions contemplated
by this Agreement.
2.28 NON-CONTRAVENTION; CONSENTS. Neither (1) the execution,
delivery or performance of this Agreement by the Company, nor (2) the
consummation of the Merger or any of the other transactions contemplated by this
Agreement by the Company, will (with or without notice or lapse of time):
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(a) contravene, conflict with or result in a violation of
(i) any of the provisions of the certificate of incorporation, bylaws or
other charter or organizational documents of any of the Acquired
Corporations, or (ii) any resolution adopted by the stockholders, the
board of directors or any committee of the board of directors of any of
the Acquired Corporations;
(b) contravene, conflict with or result in a violation of
any Legal Requirement, or give any Governmental Body or other Person the
right to challenge the Merger or any of the other transactions
contemplated by this Agreement or to exercise any remedy or obtain any
relief under any order, writ, injunction, judgment or decree to which
any of the Acquired Corporations, or any of the assets owned or used by
any of the Acquired Corporations, is subject;
(c) contravene, conflict with or result in a violation of
any of the terms or requirements of, or give any Governmental Body the
right to revoke, withdraw, suspend, cancel, terminate or modify, any
Governmental Authorization that is held by any of the Acquired
Corporations or that otherwise relates to the business of any of the
Acquired Corporations or to any of the assets owned or used by any of
the Acquired Corporations;
(d) contravene, conflict with or result in a material
violation or breach of, or result in a material default under, any
provision of any Acquired Corporation Contract of the type referred to
in Section 2.10(a), or give any Person the right to (i) declare a
default or exercise any remedy under any such Acquired Corporation
Contract, (ii) accelerate the maturity or performance of any such
Acquired Corporation Contract, or (iii) cancel, terminate or modify any
term of such Acquired Corporation Contract; or
(e) result in the imposition or creation of any Encumbrance
upon or with respect to any asset owned or used by any of the Acquired
Corporations (except for minor liens that will not, in any case or in
the aggregate, materially detract from the value of the assets subject
thereto or materially impair the operations of any of the Acquired
Corporations).
Except as may be required by the Exchange Act, the DGCL, the HSR Act, the GWB
and the NASD Bylaws (as they relate to the Form S-4 Registration Statement and
the Prospectus/Proxy Statement) and except as set forth in Part 2.28 of the
Company Disclosure Schedule, none of the Acquired Corporations was, is or will
be required to make any filing with or give any notice to, or to obtain any
Consent from, any Person in connection with (x) the execution, delivery or
performance of this Agreement or any of the other agreements referred to in this
Agreement, or (y) the consummation of the Merger or any of the other
transactions contemplated by this Agreement.
2.29 FAIRNESS OPINION. The Company's board of directors has
received the written opinion of Broadview International LLC, financial advisor
to the Company, dated the date of this Agreement, to the effect that the
consideration to be received by the stockholders of
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the Company in the Merger is fair to the stockholders of the Company from a
financial point of view.
2.30 FINANCIAL ADVISOR. Except for Broadview International LLC,
no broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the Merger or any of the other
transactions contemplated by this Agreement based upon arrangements made by or
on behalf of any of the Acquired Corporations. The total of all fees,
commissions and other amounts that have been paid by the Company to Broadview
International LLC and all fees, commissions and other amounts that may become
payable to Broadview International LLC by the Company if the Merger is
consummated will not exceed $150,000, plus reasonable expenses that have been or
may be incurred by Broadview International LLC pursuant to its engagement by the
Company; provided, however, that if (a) an Acquisition Proposal is made, and (b)
the Company engages Broadview International LLC to advise the Company with
respect to such Acquisition Proposal, the Company may agree to pay additional
fees, commissions and other amounts to Broadview International LLC (in which
case, the Company will promptly advise Parent of the amount of such fees,
commissions and other amounts). The Company has furnished to Parent accurate and
complete copies of all agreements under which any such fees, commissions or
other amounts have been paid to and all indemnification and other agreements
related to the engagement of Broadview International LLC.
2.31 FULL DISCLOSURE. None of the information supplied or to be
supplied by or on behalf of the Company for inclusion or incorporation by
reference in the Form S-4 Registration Statement will, at the time the Form S-4
Registration Statement becomes effective under the Securities Act, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they are made, not misleading. None
of the information supplied or to be supplied by or on behalf of the Company for
inclusion or incorporation by reference in the Prospectus/Proxy Statement will,
at the time the Prospectus/Proxy Statement is mailed to the stockholders of the
Company or at the time of the Company Stockholders' Meeting, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they are made, not misleading. The
Prospectus/Proxy Statement will comply as to form in all material respects with
the provisions of the Exchange Act and the rules and regulations promulgated by
the SEC thereunder, except that no representation or warranty is made by the
Company with respect to statements made or incorporated by reference therein
based on information supplied by Parent for inclusion or incorporation by
reference in the Prospectus/Proxy Statement.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub represent and warrant to the Company as follows:
3.1 ORGANIZATION, STANDING AND POWER. Each of Parent and Merger
Sub is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware and has all necessary power and authority: (a)
to conduct its business in the manner in which its business is currently being
conducted; (b) to own and use its assets in the manner in
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which its assets are currently owned and used; and (c) to perform its
obligations under all Contracts by which it is bound. Each of Parent and Merger
Sub is duly qualified to do business as a foreign corporation, and is in good
standing, under the laws of all jurisdictions where the nature of its business
requires such qualification and where the failure to be so qualified would have
a Material Adverse Effect on Parent.
3.2 SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has delivered or made available to the Company
(including through the SEC XXXXX system) accurate and complete copies (excluding
copies of exhibits) of each report, registration statement and definitive proxy
statement filed by Parent with the SEC between October 26, 1997 and the date of
this Agreement (the "Parent SEC Documents"). Since October 26, 1997, all
statements, reports, schedules, forms and other documents required to have been
filed by Parent with the SEC have been so filed. As of the time it was filed
with the SEC (or, if amended or superseded by a filing prior to the date of this
Agreement, then on the date of such filing): (i) each of the Parent SEC
Documents complied in all material respects with the applicable requirements of
the Securities Act or the Exchange Act (as the case may be); and (ii) none of
the Parent SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(b) The consolidated financial statements contained in the
Parent SEC Documents: (i) complied as to form in all material respects with the
published rules and regulations of the SEC applicable thereto; (ii) were
prepared in accordance with generally accepted accounting principles applied on
a consistent basis throughout the periods covered (except as may be indicated in
the notes to such financial statements and, in the case of unaudited statements,
as permitted by Form 10-Q of the SEC, and except that unaudited financial
statements may not contain footnotes and are subject to year-end audit
adjustments); and (iii) fairly present the consolidated financial position of
Parent and its subsidiaries as of the respective dates thereof and the
consolidated results of operations of Parent and its subsidiaries for the
periods covered thereby.
3.3 DISCLOSURE. None of the information supplied or to be
supplied by or on behalf of Parent for inclusion in the Form S-4 Registration
Statement will, at the time the Form S-4 Registration Statement becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading. None of the information
supplied or to be supplied by or on behalf of Parent for inclusion or
incorporation by reference in the Prospectus/Proxy Statement will, at the time
the Prospectus/Proxy Statement is mailed to the stockholders of the Company or
at the time of the Company Stockholders' Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in the light of
the circumstances under which they are made, not misleading. The
Prospectus/Proxy Statement will comply as to form in all material respects with
the provisions of the Exchange Act and the rules and regulations promulgated by
the SEC thereunder, except that no representation or warranty is made by Parent
with respect to
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statements made or incorporated by reference therein based on information
supplied by the Company for inclusion or incorporation by reference in the
Prospectus/Proxy Statement.
3.4 AUTHORITY; BINDING NATURE OF AGREEMENT. Parent and Merger Sub
have the absolute and unrestricted right, power and authority to perform their
obligations under this Agreement; and the execution, delivery and performance by
Parent and Merger Sub of this Agreement have been duly authorized by all
necessary action on the part of Parent and Merger Sub and their respective
boards of directors. This Agreement constitutes the legal, valid and binding
obligation of Parent and Merger Sub, enforceable against them in accordance with
its terms, subject to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (ii) rules of law governing specific
performance, injunctive relief and other equitable remedies.
3.5 NO VOTE REQUIRED. No vote of the holders of Parent Common
Stock is required to authorize the Merger.
3.6 NON-CONTRAVENTION; CONSENTS. Neither the execution and
delivery of this Agreement by Parent and Merger Sub nor the consummation by
Parent and Merger Sub of the Merger will (a) conflict with or result in any
breach of any provision of the certificate of incorporation or bylaws of Parent
or the certificate of incorporation or bylaws of Merger Sub, (b) result in a
default by Parent or Merger Sub under any Contract to which Parent or Merger Sub
is a party, except for any default which has not had and will not have a
Material Adverse Effect on Parent, or (c) result in a violation by Parent or
Merger Sub of any order, writ, injunction, judgment or decree to which Parent or
Merger Sub is subject, except for any violation which has not had and will not
have a Material Adverse Effect on Parent. Except as may be required by the
Securities Act, the Exchange Act, state securities or "blue sky" laws, the DGCL,
the HSR Act and the NASD Bylaws (as they relate to the S-4 Registration
Statement and the Prospectus/Proxy Statement), Parent is not and will not be
required to make any filing with or give any notice to, or to obtain any Consent
from, any Person in connection with the execution, delivery or performance of
this Agreement or the consummation of the Merger.
3.7 VALID ISSUANCE. The Parent Common Stock to be issued in the
Merger will, when issued in accordance with the provisions of this Agreement, be
validly issued, fully paid and nonassessable.
3.8 ACCOUNTING MATTERS. To the knowledge of Parent, neither
Parent nor any of its affiliates has taken or agreed to, or plans to, take any
action that would prevent Parent from accounting for the Merger as a "pooling of
interests" in accordance with generally accepted accounting principles,
Accounting Principles Board Opinion No. 16 and all published rules, regulations
and policies of the SEC. Parent has received a letter dated the date of this
Agreement, from PricewaterhouseCoopers LLP, a copy of which has been delivered
to the Company, regarding PricewaterhouseCoopers LLP's concurrence with Parent's
management's conclusion (subject to the qualifications contained in such letter)
that the Merger should be treated as a "pooling of interests" in accordance with
generally accepted accounting principles, Accounting Principles Board Opinion
No. 16 and all published rules, regulations and policies of the SEC.
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SECTION 4. CERTAIN COVENANTS OF THE COMPANY
4.1 ACCESS AND INVESTIGATION. During the period from the date of
this Agreement through the Effective Time (the "Pre-Closing Period"), the
Company shall, and shall cause the respective Representatives of the Acquired
Corporations to: (a) provide Parent and Parent's Representatives with reasonable
access to the Acquired Corporations' Representatives, personnel and assets and
to all existing books, records, Tax Returns, work papers and other documents and
information relating to the Acquired Corporations; and (b) provide Parent and
Parent's Representatives with such copies of the existing books, records, Tax
Returns, work papers and other documents and information relating to the
Acquired Corporations, and with such additional financial, operating and other
data and information regarding the Acquired Corporations, as Parent may
reasonably request. Without limiting the generality of the foregoing, during the
Pre-Closing Period, the Company shall promptly provide Parent with copies of:
(i) all material operating and financial reports
prepared by the Company and its Subsidiaries for the Company's senior
management, including (A) copies of the unaudited quarterly consolidated
balance sheets of the Acquired Corporations and the related unaudited
quarterly consolidated statements of operations, statements of
stockholders' equity and statements of cash flows and (B) copies of any
sales forecasts, development plans and hiring reports prepared for the
Company's senior management;
(ii) any written materials or communications sent by or
on behalf of the Company to its stockholders;
(iii) any notice, report or other document (A) filed with
or sent to NIST, or (B) filed with or sent to any Governmental Body in
connection with the Merger or any of the other transactions contemplated
by this Agreement; and
(iv) any material notice, report or other document
received by any of the Acquired Corporations from any Governmental Body.
4.2 OPERATION OF THE COMPANY'S BUSINESS.
(a) During the Pre-Closing Period: (i) the Company shall
ensure that each of the Acquired Corporations conducts its business and
operations (A) in the ordinary course and in accordance with past practices and
(B) in substantial compliance with all applicable Legal Requirements and the
material requirements of all Acquired Corporation Contracts of the type referred
to in Section 2.10(a); (ii) the Company shall use all reasonable efforts to
ensure that each of the Acquired Corporations preserves intact its current
business organization, keeps available the services of its current officers and
other employees and maintains its relations and goodwill with all suppliers,
customers, landlords, creditors, licensors, licensees, employees and other
Persons having business relationships with the respective Acquired Corporations;
and (iii) the Company shall keep in full force or renew all insurance policies
referred to in Section 2.19.
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(b) During the Pre-Closing Period, the Company shall not
(without the prior written consent of Parent), and shall not permit any of the
other Acquired Corporations to:
(i) declare, accrue, set aside or pay any dividend
(other than in accordance with the Company's Certificate of Designation
of Series A Convertible Preferred Stock) or make any other distribution
in respect of any shares of capital stock, or repurchase, redeem or
otherwise reacquire any shares of capital stock or other securities;
(ii) sell, issue, grant or authorize the issuance or
grant of (A) any capital stock or other security, (B) any option, call,
warrant or right to acquire any capital stock or other security, or (C)
any instrument convertible into or exchangeable for any capital stock or
other security (except that (1) the Company may issue shares of Company
Common Stock (x) upon the valid exercise of Company Options or Company
Warrants outstanding as of the date of this Agreement, (y) pursuant to
the ESPP, or (z) upon the valid conversion of shares of Company
Preferred Stock outstanding as of the date of this Agreement, and (2)
the Company may, in the ordinary course of business and consistent with
past practices, grant options under its stock option plans to purchase
no more than a total of 100,000 shares of Company Common Stock to
employees of the Company);
(iii) amend or waive any of its rights under, or
accelerate the vesting under, any provision of any of the Company's
stock option plans, any provision of any agreement evidencing any
outstanding stock option or any restricted stock purchase agreement, or
otherwise modify any of the terms of any outstanding option, warrant or
other security or any related Contract;
(iv) amend or permit the adoption of any amendment to
its certificate of incorporation or bylaws or other charter or
organizational documents, or effect or become a party to any merger,
consolidation, amalgamation, share exchange, business combination,
recapitalization, reclassification of shares, stock split, division or
subdivision of shares, reverse stock split, consolidation of shares or
similar transaction;
(v) form any Subsidiary or acquire any equity interest
or other interest in any other Entity;
(vi) make any capital expenditure (except that the
Acquired Corporations may make capital expenditures in the ordinary
course of business and consistent with past practices that, when added
to all other capital expenditures made on behalf of the Acquired
Corporations during the Pre-Closing Period, do not exceed $250,000 in
the aggregate);
(vii) enter into or become bound by, or permit any of the
assets owned or used by it to become bound by (A) any Contract with any
semiconductor equipment manufacturer; or (B) any Contract of the type
referred to in clauses "(i)," "(ii)" and "(v)" through "(xiv)" of
Section 2.10(a) (other than licenses of third party software
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for FAB300 and Contracts with the parties referred to in Part
4.2(b)(vii) of the Company Disclosure Schedule);
(viii) amend or terminate, or waive or exercise any
material right or remedy under, any Material Contract, other than in the
ordinary course of business consistent with past practices;
(ix) acquire, lease or license any right or other asset
from any other Person or sell or otherwise dispose of, or lease or
license, any right or other asset to any other Person (except in the
ordinary course of business and consistent with past practices), or
waive or relinquish any material right;
(x) lend money to any Person, or incur or guarantee
any indebtedness (except that the Company may (A) make routine
borrowings in the ordinary course of business and consistent with past
practices under its current line of credit with Venture Banking Group;
(B) (in the ordinary course of business and consistent with past
practices) make advances to employees for valid business purposes); and
(C) negotiate and post a guarantee bond in order to proceed with its
opposition of the claims asserted by the French Tax Administration
against Consilium SARL related to its audit of the 1993-1995 fiscal year
tax returns);
(xi) establish, adopt or amend any employee benefit
plan, pay any bonus or make any profit-sharing or similar payment to, or
increase the amount of the wages, salary, commissions, fringe benefits
or other compensation or remuneration payable to, any of its directors,
officers or employees (except that the Company may in the ordinary
course of business and consistent with past practices (A) make routine,
reasonable salary increases in connection with the Company's customary
employee review process, (B) pay customary bonuses in accordance with
existing bonus plans referred to in Part 2.17(a) of the Company
Disclosure Schedule or new bonus plans consistent with existing bonus
plans, (C) make profit sharing or similar payments, (D) adopt a new
sales commission plan as long as the Company provides Parent with a copy
of such plan and consults with Parent with respect to such plan prior to
the adoption of such plan, and (E) pay performance bonuses as
contemplated by Part 4.2(b)(xi) of the Company Disclosure Schedule;
(xii) hire any employee at the level of vice president
or above;
(xiii) change any of its methods of accounting or
accounting practices in any respect;
(xiv) take or permit to be taken any action that could
preclude Parent from accounting for the merger as a "pooling of
interests" for accounting purposes;
(xv) make any Tax election inconsistent with past
practices;
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(xvi) settle any Legal Proceeding involving payments by
any of the Acquired Corporations in excess of $250,000 or equitable
relief against any of the Acquired Corporations;
(xvii) enter into any material transaction or take any
other material action outside the ordinary course of business or
inconsistent with past practices; or
(xviii) agree or commit to take any of the actions
described in clauses "(i)" through "(xvii)" of this Section 4.2(b).
Parent agrees not to unreasonably withhold or delay its consent to any of the
actions referred to in clause "(vi)" of this Section 4.2(b).
Without limiting any other provision of this Section 4.2(b), during the
Pre-Closing Period, the Company agrees to consult with Parent a reasonable
period of time prior to: (A) permitting any of the Acquired Corporations to
enter into (1) any letter of intent, memorandum of understanding or other
Contract relating to the Company's FAB300 software project, or (2) any Contract
of the type referred to in Section 2.10(a)(iii), and (B) hiring any employee at
the level of manager through (but not including) vice president (it being
understood that the actions referred to in this sentence shall not require the
prior written consent of Parent).
(c) During the Pre-Closing Period, the Company shall promptly
notify Parent in writing of: (i) the discovery by the Company of any event,
condition, fact or circumstance that occurred or existed on or prior to the date
of this Agreement and that caused or constitutes a material inaccuracy in any
representation or warranty made by the Company in this Agreement; (ii) any
event, condition, fact or circumstance that occurs, arises or exists after the
date of this Agreement and that would cause or constitute a material inaccuracy
in any representation or warranty made by the Company in this Agreement if (A)
such representation or warranty had been made as of the time of the occurrence,
existence or discovery of such event, condition, fact or circumstance, or (B)
such event, condition, fact or circumstance had occurred, arisen or existed on
or prior to the date of this Agreement; (iii) any material breach of any
covenant or obligation of the Company; and (iv) any event, condition, fact or
circumstance that would make the timely satisfaction of any of the conditions
set forth in Section 6 or Section 7 impossible or unlikely or that has had or
could reasonably be expected to have a Material Adverse Effect on the Acquired
Corporations. Without limiting the generality of the foregoing, the Company
shall promptly advise Parent in writing of any Legal Proceeding or material
claim threatened, commenced or asserted against or with respect to any of the
Acquired Corporations. No notification given to Parent pursuant to this Section
4.2(c) shall limit or otherwise affect any of the representations, warranties,
covenants or obligations of the Company contained in this Agreement.
4.3 NO SOLICITATION.
(a) The Company shall not directly or indirectly, and shall
not authorize or permit any of the other Acquired Corporations or any
Representative of any of the Acquired Corporations directly or indirectly to,
(i) solicit, initiate, encourage or induce the
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making, submission or announcement of any Acquisition Proposal or take any
action that could reasonably be expected to lead to an Acquisition Proposal,
(ii) furnish any information regarding any of the Acquired Corporations to any
Person in connection with or in response to an Acquisition Proposal, (iii)
engage in discussions or negotiations with any Person with respect to any
Acquisition Proposal, (iv) approve, endorse or recommend any Acquisition
Proposal or (v) enter into any letter of intent or similar document or any
Contract contemplating or otherwise relating to any Acquisition Transaction;
provided, however, that prior to the adoption and approval of this Agreement by
the Required Company Stockholder Vote, the Company shall not be prohibited by
this Section 4.3(a) from furnishing nonpublic information regarding the Acquired
Corporations to, or entering into discussions with, any Person in response to a
Superior Offer that is submitted by such Person (and not withdrawn) if (1)
neither the Company nor any Representative of any of the Acquired Corporations
shall have violated any of the restrictions set forth in this Section 4.3, (2)
the board of directors of the Company concludes in good faith, after
consultation with its outside legal counsel, that the failure to take such
action would be inconsistent with the fiduciary obligations of such board of
directors to the Company's stockholders under applicable law, (3) prior to
furnishing any such nonpublic information to, or entering into discussions with,
such Person, the Company gives Parent written notice of the identity of such
Person and of the Company's intention to furnish nonpublic information to, or
enter into discussions with, such Person, and the Company receives from such
Person an executed confidentiality agreement containing customary limitations on
the use and disclosure of all nonpublic written and oral information furnished
to such Person by or on behalf of the Company, and (4) prior to furnishing any
such nonpublic information to such Person, the Company furnishes such nonpublic
information to Parent (to the extent such nonpublic information has not been
previously furnished by the Company to Parent). The parties agree that for
purposes of the preceding sentence (but for no other purpose), an offer which is
conditioned on completion of due diligence (and regarding which the board of
directors of the Company determines, in good faith, based on the advice of its
financial advisor, that financing is likely to be obtained) shall be deemed to
constitute a "Superior Offer" if such offer otherwise meets the definition of
"Superior Offer" set forth in Exhibit A (other than the financing portion of
such definition). Without limiting the generality of the foregoing, the Company
acknowledges and agrees that any violation of any of the restrictions set forth
in the preceding sentence by any Representative of any of the Acquired
Corporations, whether or not such Representative is purporting to act on behalf
of any of the Acquired Corporations, shall be deemed to constitute a breach of
this Section 4.3 by the Company.
(b) The Company shall promptly advise Parent orally and in
writing of any Acquisition Proposal (including the identity of the Person making
or submitting such Acquisition Proposal and the terms thereof) that is made or
submitted by any Person during the Pre-Closing Period. The Company shall keep
Parent fully informed with respect to the status of any such Acquisition
Proposal and any modification or proposed modification thereto.
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SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 REGISTRATION STATEMENT; PROSPECTUS/PROXY STATEMENT.
(a) As promptly as practicable after the date of this
Agreement, Parent and the Company shall prepare and cause to be filed with the
SEC the Prospectus/Proxy Statement and Parent shall prepare and cause to be
filed with the SEC the Form S-4 Registration Statement, in which the
Prospectus/Proxy Statement will be included as a prospectus. provided, however,
that notwithstanding anything to the contrary contained in this Section 5.1(a),
if (and to the extent) Parent so elects: (i) the Proxy Statement Prospectus
shall initially be filed with the SEC on a confidential basis as a proxy
statement of Parent under the Securities Act); (ii) until such time as Parent
has determined that it is reasonably likely that the SEC will promptly declare
the Form S-4 Registration Statement effective under the Securities Act, all
amendments to the Proxy Statement/Prospectus shall be filed with the SEC on a
confidential basis as amendments to the proxy statement of the Company under
Section 14 of the Exchange Act; and (iii) Parent shall not be obligated to file
the Form S-4 Registration Statement with the SEC until such time as Parent has
determined that it is reasonably likely that the SEC will promptly declare the
Form S- 4 Registration Statement effective under the Securities Act. Each of
Parent and the Company shall use all reasonable efforts to cause the Form S-4
Registration Statement and the Prospectus/Proxy Statement to comply with the
rules and regulations promulgated by the SEC, to respond promptly to any
comments of the SEC or its staff and to have the Form S-4 Registration Statement
declared effective under the Securities Act as promptly as practicable after it
is filed with the SEC. The Company will use all reasonable efforts to cause the
Prospectus/Proxy Statement to be mailed to the Company's stockholders as
promptly as practicable after the Form S-4 Registration Statement is declared
effective under the Securities Act. The Company shall promptly furnish to Parent
all information concerning the Acquired Corporations and the Company's
stockholders that may be required or reasonably requested in connection with any
action contemplated by this Section 5.1. If any event relating to any of the
Acquired Corporations occurs, or if the Company becomes aware of any
information, that should be disclosed in an amendment or supplement to the Form
S-4 Registration Statement or the Prospectus/Proxy Statement, then the Company
shall promptly inform Parent thereof and shall cooperate with Parent in filing
such amendment or supplement with the SEC and, if appropriate, in mailing such
amendment or supplement to the stockholders of the Company.
(b) Prior to the Effective Time, Parent shall use reasonable
efforts to obtain all regulatory approvals needed to ensure that the Parent
Common Stock to be issued in the Merger will be registered or qualified under
the securities law of every jurisdiction of the United States in which any
registered holder of Company Common Stock has an address of record on the record
date for determining the stockholders entitled to notice of and to vote at the
Company Stockholders' Meeting; provided, however, that Parent shall not be
required (i) to qualify to do business as a foreign corporation in any
jurisdiction in which it is not now qualified or (ii) to file a general consent
to service of process in any jurisdiction.
5.2 COMPANY STOCKHOLDERS' MEETING.
(a) The Company shall take all action necessary under all
applicable Legal Requirements to call, give notice of, convene and hold a
meeting of the holders of
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Company Common Stock to consider, act upon and vote upon the adoption and
approval of this Agreement and the approval of the Merger (the "Company
Stockholders' Meeting"). The Company Stockholders' Meeting will be held as
promptly as practicable and in any event within 45 days after the Form S-4
Registration Statement is declared effective under the Securities Act. The
Company shall ensure that the Company Stockholders' Meeting is called, noticed,
convened, held and conducted, and that all proxies solicited in connection with
the Company Stockholders' Meeting are solicited, in compliance with all
applicable Legal Requirements. The Company's obligation to call, give notice of,
convene and hold the Company Stockholders' Meeting in accordance with this
Section 5.2(a) shall not be limited or otherwise affected by the commencement,
disclosure, announcement or submission of any Superior Offer or other
Acquisition Proposal, or by any withdrawal, amendment or modification of the
recommendation of the board of directors of the Company with respect to the
Merger.
(b) Subject to Section 5.2(c): (i) the board of directors of
the Company shall unanimously recommend that the Company's stockholders vote in
favor of and adopt and approve this Agreement and approve the Merger at the
Company Stockholders' Meeting; (ii) the Prospectus/Proxy Statement shall include
a statement to the effect that the board of directors of the Company has
unanimously recommended that the Company's stockholders vote in favor of and
adopt and approve this Agreement and approve the Merger at the Company
Stockholders' Meeting; and (iii) neither the board of directors of the Company
nor any committee thereof shall withdraw, amend or modify, or propose or resolve
to withdraw, amend or modify, in a manner adverse to Parent, the unanimous
recommendation of the board of directors of the Company that the Company's
stockholders vote in favor of and adopt and approve this Agreement and approve
the Merger. For purposes of this Agreement, said recommendation of the board of
directors of the Company shall be deemed to have been modified in a manner
adverse to Parent if said recommendation shall no longer be unanimous.
(c) Nothing in Section 5.2(b) shall prevent the board of
directors of the Company from withdrawing, amending or modifying its unanimous
recommendation in favor of the Merger at any time prior to the adoption and
approval of this Agreement by the Required Company Stockholder Vote if (i) a
Superior Offer is made to the Company and is not withdrawn, (ii) neither the
Company nor any of its Representatives shall have violated any of the
restrictions set forth in Section 4.3, (iii) the board of directors of the
Company concludes in good faith, after consultation with its outside counsel,
that, in light of such Superior Offer, it would be inconsistent with the
fiduciary obligations of the board of directors of the Company to the Company's
stockholders under applicable law not to withdraw, amend or modify such
recommendation, (iv) the Company provides Parent with at least 24 hours prior
notice of any meeting of the Company's board of directors at which such board of
directors is expected to consider such Superior Offer, and (v) the Company's
board of directors does not withdraw, amend or modify its unanimous
recommendation in favor of the Merger for at least 48 hours after the Company
provides Parent with the name of the Person making such Superior Offer and a
copy of such Superior Offer. Nothing contained in this Section 5.2 shall limit
the Company's obligation to call, give notice of, convene and hold the Company
Stockholders' Meeting (regardless of whether the unanimous recommendation of the
board of directors of the Company shall have been withdrawn, amended or
modified).
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5.3 REGULATORY APPROVALS. Each party shall use all reasonable
efforts to file, as promptly as practicable after the date of this Agreement,
all notices, reports and other documents required to be filed by such party with
any Governmental Body with respect to the Merger and the other transactions
contemplated by this Agreement, and to submit promptly any additional
information requested by any such Governmental Body. Without limiting the
generality of the foregoing, the Company and Parent shall, promptly after the
date of this Agreement, prepare and file the notifications required under the
HSR Act in connection with the Merger. The Company and Parent shall respond as
promptly as practicable to (i) any inquiries or requests received from the
Federal Trade Commission or the Department of Justice for additional information
or documentation and (ii) any inquiries or requests received from any state
attorney general or other Governmental Body in connection with antitrust or
related matters. Each of the Company and Parent shall (1) give the other party
prompt notice of the commencement of any Legal Proceeding by or before any
Governmental Body with respect to the Merger or any of the other transactions
contemplated by this Agreement, (2) keep the other party informed as to the
status of any such Legal Proceeding, and (3) promptly inform the other party of
any communication to or from the Federal Trade Commission, the Department of
Justice or any other Governmental Body regarding the Merger. The Company and
Parent will consult and cooperate with one another, and will consider in good
faith the views of one another, in connection with any analysis, appearance,
presentation, memorandum, brief, argument, opinion or proposal made or submitted
in connection with any Legal Proceeding under or relating to the HSR Act or any
other federal or state antitrust or fair trade law. In addition, except as may
be prohibited by any Governmental Body or by any Legal Requirement, in
connection with any Legal Proceeding under or relating to the HSR Act or any
other federal or state antitrust or fair trade law or any other similar Legal
Proceeding, each of the Company and Parent will permit authorized
Representatives of the other party to be present at each meeting or conference
relating to any such Legal Proceeding and to have access to and be consulted in
connection with any document, opinion or proposal made or submitted to any
Governmental Body in connection with any such Legal Proceeding.
5.4 STOCK OPTIONS.
(a) Subject to Section 5.4(b), at the Effective Time, all
rights with respect to Company Common Stock under each Company Option then
outstanding shall be converted into and become rights with respect to Parent
Common Stock, and Parent shall assume each such Company Option in accordance
with the terms (as in effect as of the date of this Agreement) of the stock
option plan under which it was issued, the stock option agreement by which it is
evidenced and any applicable Change of Control Agreement. From and after the
Effective Time, (i) each Company Option assumed by Parent may be exercised
solely for shares of Parent Common Stock, (ii) the number of shares of Parent
Common Stock subject to each such Company Option shall be equal to the number of
shares of Company Common Stock subject to such Company Option immediately prior
to the Effective Time multiplied by the Exchange Ratio, rounding down to the
nearest whole share, (iii) the per share exercise price under each such Company
Option shall be adjusted by dividing the per share exercise price under such
Company Option by the Exchange Ratio and rounding up to the nearest cent and
(iv) any restriction on the exercise of any such Company Option shall continue
in full force and effect and the term, exercisability, vesting schedule and
other provisions of such Company Option shall otherwise remain unchanged;
provided, however, that each Company Option
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assumed by Parent in accordance with this Section 5.4(a) shall, in accordance
with its terms, be subject to further adjustment as appropriate to reflect any
stock split, division or subdivision of shares, stock dividend, reverse stock
split, consolidation of shares, reclassification, recapitalization or other
similar transaction subsequent to the Effective Time. Parent shall file with the
SEC, within 7 days after the date on which the Merger becomes effective, a
registration statement on Form S-8 relating to the shares of Parent Common Stock
issuable with respect to the Company Options assumed by Parent in accordance
with this Section 5.4(a). As soon as practicable after the Effective Time (but
in no event later than 30 days thereafter), Parent shall deliver to each holder
of a Company Option an appropriate notice setting forth such holder's rights
with respect to such Company Option and indicating that such Company Option
shall continue in effect on the same terms and conditions as were in effect
immediately prior to the Effective Time (subject to the adjustments required
pursuant to Section 5.4(a)).
(b) Notwithstanding anything to the contrary contained in
this Section 5.4, in lieu of assuming outstanding Company Options in accordance
with Section 5.4(a), Parent may, at its election, cause such outstanding Company
Options to be replaced by issuing reasonably equivalent replacement stock
options in substitution therefor ("Replacement Options"). The number of shares
of Parent Common Stock subject to a Replacement Option, as well as the per share
exercise price of such Replacement Option, shall be determined in the manner
specified in Section 5.4(a). If Parent elects to substitute Replacement Options
in lieu of assuming outstanding Company Options, Parent shall take all corporate
action necessary to approve the Replacement Options described in this Section
5.4(b) in a manner qualifying under Section 424(a) of the Code and shall deliver
an agreement evidencing such Replacement Options to each applicable holder of a
Company Option within 30 days after the Effective Time. Shares of Parent Common
Stock issuable pursuant to the Replacement Options granted pursuant to this
Section 5.4(b) shall be registered on the Form S-8 Registration Statement
referred to in Section 5.4(a).
(c) The Company shall take all action that may be necessary
(under the plans pursuant to which Company Options are outstanding and
otherwise) to effectuate the provisions of this Section 5.4 and to ensure that,
from and after the Effective Time, holders of Company Options have no rights
with respect thereto other than those specifically provided in this Section 5.4.
(d) As of the Effective Time, the ESPP shall be terminated.
The rights of participants in the ESPP with respect to any offering period then
underway under the ESPP shall be determined by treating the last business day
prior to the Effective Time as the last day of such offering period and by
making such other pro-rata adjustments as may be required pursuant to the ESPP
to reflect the reduced offering period but otherwise treating such offering
period as a fully effective and completed offering period for all purposes of
such Plan. Prior to the Effective Time, the Company shall take all actions that
are necessary to give effect to the transactions contemplated by this Section
5.4(d); provided, however, that the change in the offering period referred to in
this Section 5.4(d) shall be conditioned upon the consummation of the Merger.
5.5 EMPLOYEE BENEFITS. Parent agrees that all employees of the
Company who continue employment with Parent after the Effective Time shall be
eligible to participate in Parent's health, vacation and other employee benefit
plans, to the same extent as employees of
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Parent in similar positions and at similar grade levels (it being understood
that such employees' shall be eligible to begin to participate (i) in Parent's
employee stock purchase plan upon the commencement of the first new offering
period that commences following the Effective Time, and (ii) in Parent's other
employee benefit plans in accordance with the terms of such plans; provided,
however, that in the case of plans for which the Company maintains a plan
offering the same type of benefit, such eligibility need not be offered by
Parent until the corresponding plan of the Company ceases to be available after
the Effective Time). As soon as administratively feasible following the
Effective Time, Parent agrees to take whatever action is necessary to transition
Company employees into Parent's employee benefits plans as contemplated by the
first sentence of this Section 5.5. Further, until such time that the continuing
Company employees are covered under an employee benefit plan of Parent, they
shall continue to be covered under the corresponding Company Plan that offers
the same type of benefit. Parent also agrees to provide each such continuing
employee with full credit for service as an employee of the Company or any
affiliate thereof prior to the Effective Time for the following purposes only:
for purposes of eligibility, vesting and determination of the level of benefits
under any employee benefit plan or arrangement maintained by Parent, including
Parent's 401(k) plan, and for Parent's vacation program. Notwithstanding the
foregoing, to the extent permitted by law, Parent reserves the right to enforce,
on a nondiscriminatory basis, any otherwise applicable pre-existing condition
limitation under its medical plan with respect to any Company employee who does
not enroll in Parent's medical plan at the time Parent's medical plan is first
made available to such Company employee.
5.6 INDEMNIFICATION OF OFFICERS AND DIRECTORS.
(a) All rights to indemnification existing in favor of those
Persons who are directors and officers of the Company as of the date of this
Agreement (the "Indemnified Persons") for acts and omissions occurring prior to
the Effective Time, as provided in the Company's Bylaws (as in effect as of the
date of this Agreement) and as provided in the indemnification agreements
between the Company and said Indemnified Persons (as in effect as of the date of
this Agreement), shall survive the Merger and shall be observed by the Surviving
Corporation to the fullest extent available under Delaware law for a period of
five years from the Effective Time.
(b) From the Effective Time until the fifth anniversary of
the Effective Time, the Surviving Corporation shall maintain in effect, for the
benefit of the Indemnified Persons with respect to acts or omissions occurring
prior to the Effective Time, the existing policy of directors' and officers'
liability insurance maintained by the Company as of the date of this Agreement
(the "Existing Policy"); provided, however, that (i) the Surviving Corporation
may substitute for the Existing Policy a policy or policies of comparable
coverage, and (ii) the Surviving Corporation shall not be required to pay an
annual premium for the Existing Policy (or for any substitute policies) in
excess of $168,750. In the event any future annual premium for the Existing
Policy (or any substitute policies) exceeds $168,750, the Surviving Corporation
shall be entitled to reduce the amount of coverage of the Existing Policy (or
any substitute policies) to the amount of coverage that can be obtained for a
premium equal to $168,750.
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(c) If the Surviving Corporation does not have sufficient
capital to comply with its obligations under Section 5.6, Parent shall provide
the Surviving Corporation with such capital.
5.7 POOLING OF INTERESTS. Each of the Company and Parent agrees
(and the Company agrees to cause the Acquired Corporations) (a) not to take any
action during the PreClosing Period that would adversely affect the ability of
Parent to account for the Merger as a "pooling of interests," and (b) to use all
reasonable efforts to attempt to ensure that none of its "affiliates" (as that
term is used in Rule 145 under the Securities Act) takes any action that could
adversely affect the ability of Parent to account for the Merger as a "pooling
of interests." The Company agrees to provide to PricewaterhouseCoopers LLP and
Xxxxxx Xxxxxxxx LLP such letters as shall be reasonably requested by
PricewaterhouseCoopers LLP or Xxxxxx Xxxxxxxx LLP with respect to the letters
referred to in Sections 2.26, 3.8, 6.6(e) and 6.6(f).
5.8 ADDITIONAL AGREEMENTS.
(a) Subject to Section 5.8(b), Parent and the Company shall
use all reasonable efforts to take, or cause to be taken, all actions necessary
to effectuate the Merger and make effective the other transactions contemplated
by this Agreement. Without limiting the generality of the foregoing, but subject
to Section 5.8(b), each party to this Agreement (i) shall make all filings (if
any) and give all notices (if any) required to be made and given by such party
in connection with the Merger and the other transactions contemplated by this
Agreement, (ii) shall use all reasonable efforts to obtain each Consent (if any)
required to be obtained (pursuant to any applicable Legal Requirement or
Contract, or otherwise) by such party in connection with the Merger or any of
the other transactions contemplated by this Agreement, and (iii) shall use all
reasonable efforts to lift any restraint, injunction or other legal bar to the
Merger. The Company shall promptly deliver to Parent a copy of each such filing
made, each such notice given and each such Consent obtained by the Company
during the Pre-Closing Period.
(b) Notwithstanding anything to the contrary contained in
this Agreement, Parent shall not have any obligation under this Agreement: (i)
to dispose or transfer or cause any of its Subsidiaries to dispose of or
transfer any assets, or to commit to cause any of the Acquired Corporations to
dispose of any assets; (ii) to discontinue or cause any of its Subsidiaries to
discontinue offering any product or service, or to commit to cause any of the
Acquired Corporations to discontinue offering any product or service; (iii) to
license or otherwise make available, or cause any of its Subsidiaries to license
or otherwise make available, to any Person, any technology, software or other
Intellectual Property, or to commit to cause any of the Acquired Corporations to
license or otherwise make available to any Person any technology, software or
other Intellectual Property; (iv) to hold separate or cause any of its
Subsidiaries to hold separate any assets or operations (either before or after
the Closing Date), or to commit to cause any of the Acquired Corporations to
hold separate any assets or operations; or (v) to make or cause any of its
Subsidiaries to make any commitment (to any Governmental Body or otherwise)
regarding its future operations or the future operations of any of the Acquired
Corporations.
5.9 DISCLOSURE. Parent and the Company shall consult with each
other before issuing any press release or otherwise making any public statement
with respect to the
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Merger or any of the other transactions contemplated by this Agreement. Without
limiting the generality of the foregoing, the Company shall not, and shall not
permit any of its Subsidiaries or any Representative of any of the Acquired
Corporations to, make any disclosure regarding the Merger or any of the other
transactions contemplated by this Agreement unless (a) Parent shall have
approved such disclosure or (b) the Company shall have been advised by its
outside legal counsel that such disclosure is required by applicable law.
5.10 AFFILIATE AGREEMENTS. The Company shall use all reasonable
efforts to cause each Person identified in Part 2.20 of the Company Disclosure
Schedule and each other Person who is or becomes (or may be deemed to be) an
"affiliate" (as that term is used in Rule 145 under the Securities Act) of the
Company to execute and deliver to Parent, prior to the date of the mailing of
the Prospectus/Proxy Statement to the Company's stockholders, an Affiliate
Agreement in the form of Exhibit C.
5.11 TAX MATTERS. At or prior to the filing of the Form S-4
Registration Statement, the Company and Parent shall execute and deliver to
Xxxxxx Godward LLP and to Xxxx Xxxx Xxxx & Freidenrich LLP tax representation
letters in customary form. Parent, Merger Sub and the Company shall each confirm
to Cooley Godward LLP and to Xxxx Xxxx Xxxx & Freidenrich LLP the accuracy and
completeness as of the Effective Time of the tax representation letters
delivered pursuant to the immediately preceding sentence. Parent and the Company
shall use all reasonable efforts prior to the Effective Time to cause the Merger
to qualify as a tax free reorganization under Section 368(a)(1) of the Code.
Following delivery of the tax representations letters pursuant to the first
sentence of this Section 5.11, each of Parent and the Company shall use its
reasonable efforts to cause Xxxxxx Godward LLP and Xxxx Xxxx Xxxx & Freidenrich
LLP, respectively, to deliver to it a tax opinion satisfying the requirements of
Item 601 of Regulation S-K promulgated under the Securities Act. In rendering
such opinions, each of such counsel shall be entitled to rely on the tax
representation letters referred to in this Section 5.11. The parties hereto
shall report the Merger as a reorganization within the meaning of Section 368(a)
of the Code, and neither Parent, Merger Sub nor the Company shall take any
action prior to or following the Closing that would reasonably be expected to
cause the Merger to fail to qualify as a reorganization.
5.12 LETTER OF THE COMPANY'S ACCOUNTANTS. The Company shall use
all reasonable efforts to cause to be delivered to Parent and the Company a
"comfort" letter prepared by Xxxxxx Xxxxxxxx LLP in accordance with Statement of
Auditing Standards No. 72 "Letters For Underwriters and Certain Other Requesting
Parties," subject to receipt by Xxxxxx Xxxxxxxx LLP of a customary
representation letter from Parent, dated no more than two business days before
the date on which the Form S-4 Registration Statement becomes effective (and
reasonably satisfactory in form and substance to Parent and the Company), that
is customary in scope and substance for "comfort" letters delivered by
independent public accountants in connection with registration statements
similar to the Form S-4 Registration Statement.
5.13 LISTING. Parent shall use reasonable efforts to cause the
shares of Parent Common Stock being issued in the Merger to be approved for
listing as of the Effective Time (subject to notice of issuance) on the Nasdaq
National Market.
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5.14 RESIGNATION OF OFFICERS AND DIRECTORS. The Company shall use
all reasonable efforts to obtain and deliver to Parent on or prior to the
Closing the resignation of each officer and director from positions as an
officer and director of each of the Acquired Corporations (it being understood
that such resignations shall not constitute a voluntary or an "Involuntary
Termination" under the Change of Control Agreements and shall not effect in any
manner any rights of any officer of the Company or any of the Company's
obligations under the Change of Control Agreements).
5.15 TERMINATION OF 401(k) PLAN. To the extent requested by
Parent, the Company shall ensure that its 401(k) Savings and Retirement Plan
shall be terminated immediately prior to the Effective Time.
SECTION 6. CONDITIONS PRECEDENT TO OBLIGATIONS OF PARENT AND MERGER SUB
The obligations of Parent and Merger Sub to effect the Merger and
otherwise consummate the transactions contemplated by this Agreement are subject
to the satisfaction, at or prior to the Closing, of each of the following
conditions:
6.1 ACCURACY OF REPRESENTATIONS.
(a) The representations and warranties of the Company
contained in this Agreement shall have been accurate in all respects as of the
date of this Agreement, except that any inaccuracies in such representations and
warranties will be disregarded if the circumstances giving rise to all such
inaccuracies (considered collectively) do not constitute, and are not reasonably
expected to result in, a Material Adverse Effect on the Acquired Corporations
(it being understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all "Material Adverse Effect" qualifications
and other materiality qualifications contained in such representations and
warranties shall be disregarded, and (ii) any update of or modification to the
Company Disclosure Schedule made or purported to have been made after the date
of this Agreement shall be disregarded).
(b) The representations and warranties of the Company
contained in this Agreement (except that any representation or warranty that
specifically refers to "the date of this Agreement," "the date hereof" or any
other date other than the Closing Date speaks as of such date) shall be accurate
in all respects as of the Closing Date as if made on and as of the Closing Date,
except that any inaccuracies in such representations and warranties will be
disregarded if the circumstances giving rise to all such inaccuracies
(considered collectively) do not constitute, and are not reasonably expected to
result in, a Material Adverse Effect on the Acquired Corporations (it being
understood that, for purposes of determining the accuracy of such
representations and warranties, (i) all "Material Adverse Effect" qualifications
and other materiality qualifications contained in such representations and
warranties shall be disregarded and (ii) any update of or modification to the
Company Disclosure Schedule made or purported to have been made after the date
of this Agreement shall be disregarded).
6.2 PERFORMANCE OF COVENANTS. Each covenant or obligation that
the Company is required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all material respects.
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6.3 EFFECTIVENESS OF REGISTRATION STATEMENT. The Form S-4
Registration Statement shall have become effective in accordance with the
provisions of the Securities Act, and no stop order shall have been issued by
the SEC with respect to the Form S-4 Registration Statement.
6.4 STOCKHOLDER APPROVAL; APPRAISAL RIGHTS. This Agreement shall
have been duly adopted and approved, and the Merger shall have been duly
approved, by the Required Company Stockholder Vote, and the aggregate of all
"Appraisal Shares" and shares of Company Preferred Stock that have not been
converted into Company Common Stock prior to the Effective Time or been
exchanged for Parent Common Stock at the Effective Time in accordance with
Section 1.8(a)(i) shall represent on conversion of such shares into Company
Common Stock no more than 7% of the number of shares of Company Common Stock
outstanding immediately prior to the Effective Time.
6.5 CONSENTS. All Consents required to be obtained in connection
with the Merger and the other transactions contemplated by this Agreement shall
have been obtained and shall be in full force and effect, except where the
failure to obtain such Consents would not reasonably be expected to have a
Material Adverse Effect on the Acquired Corporations.
6.6 AGREEMENTS AND DOCUMENTS. Parent and the Company shall have
received the following agreements and documents, each of which shall be in full
force and effect:
(a) Affiliate Agreements in the form of Exhibit C, executed by
each Person who could reasonably be deemed to be an "affiliate" of the
Company (as that term is used in Rule 145 under the Securities Act);
(b) Noncompetition Agreements in the form of Exhibit D, executed
by Xxxxxxxx X. Xxxxxxx and Xxxxxxxx X. Xxxxxxxx;
(c) Releases in the form of Exhibit E, executed by Xxxxxxxx X.
Xxxxxxx, Xxxxxxxx X. Xxxxxxxx, Xxxxxxx Xxxxx, Xxxxxxx Xxxx, Xxxxx Xxxxxx
and Xxxxxxx Xxxxxxxxx;
(d) a letter from Xxxxxx Xxxxxxxx LLP, dated as of the Closing
Date and addressed to Parent and the Company, reasonably satisfactory in
form and substance to Parent, updating the "comfort" letter referred to
in Section 5.12;
(e) a letter from Xxxxxx Xxxxxxxx LLP, dated as of the Closing
Date and addressed to the Company, reasonably satisfactory in form and
substance to Parent and PricewaterhouseCoopers LLP, to the effect that,
after reasonable investigation, Xxxxxx Xxxxxxxx LLP is not aware of any
fact concerning the Acquired Corporations or any of the stockholders or
affiliates of the Acquired Corporations that could preclude the Company
from being a "poolable entity" in accordance with generally accepted
accounting principles, Accounting Principles Board Opinion No. 16 and
all published rules, regulations and policies of the SEC;
(f) a letter from PricewaterhouseCoopers LLP, dated as of the
Closing Date and addressed to Parent, reasonably satisfactory in form
and substance to Parent, to
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the effect that PricewaterhouseCoopers LLP concurs with Parent's
management's conclusion that the Merger may be accounted for as a
"pooling of interests" in accordance with generally accepted accounting
principles, Accounting Principles Board Opinion No. 16 and all published
rules, regulations and policies of the SEC;
(g) a legal opinion of Xxxxxx Godward LLP dated as of the
Closing Date and addressed to Parent, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368 of the
Code (it being understood that, in rendering such opinion, Xxxxxx
Godward LLP may rely upon the tax representation letters referred to in
Section 5.11);
(h) a certificate executed on behalf of the Company by its Chief
Executive Officer confirming that the conditions set forth in Sections
6.1, 6.2, 6.4, 6.5, 6.7, 6.10, 6.11 and 6.12 have been duly satisfied;
and
(i) the written resignations of all officers and directors from
positions as an officer and director of each of the Acquired
Corporations effective as of the Effective Time (it being understood
that such resignations shall not constitute a voluntary or an
"Involuntary Termination" under the Change of Control Agreements and
shall not effect in any manner any rights of any officer of the Company
or any of the Company's obligations under the Change of Control
Agreements).
6.7 NO MATERIAL ADVERSE CHANGE. There shall have been no material
adverse change in the business, condition, assets, liabilities, operations or
results of operations of the Acquired Corporations since the date of this
Agreement (it being understood that none of the following shall be deemed, in
and of itself, to constitute a material adverse change in the business,
condition, assets, liabilities, operations or results of operations of the
Acquired Corporations since the date of this Agreement: (a) a change in the
market price or trading volume of the Company Common Stock, (b) a failure by the
Company to meet any published securities analyst estimates of revenue or
earnings for any period ending or for which earnings are released on or after
the date of this Agreement and prior to the Closing, (c) a failure to report
earnings results in any quarter ending on or after the date of this Agreement
consistent with the Company's historical earnings results for its Semiconductor
and Electronics business unit in any quarter during fiscal 1997 or 1998, (d) a
change that results from conditions affecting the U.S. economy or the world
economy, (e) a change that results from conditions affecting the semiconductor
industry or the semiconductor equipment industry so long as such conditions do
not affect the Company in a disproportionate manner as compared with companies
of a similar size, (f) a delay in customer orders arising primarily out of or
resulting primarily from the announcement of the transactions contemplated by
this Agreement; and (g) a change that results from the taking of any action
required by this Agreement).
6.8 HSR ACT; GERMAN ANTICOMPETITION LAW. The waiting period
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated, and the waiting period applicable to the
consummation of the Merger under the GWB shall have expired or been terminated.
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6.9 LISTING. The shares of Parent Common Stock to be issued in
the Merger shall have been approved for listing (subject to notice of issuance)
on the Nasdaq National Market.
6.10 NO RESTRAINTS. No temporary restraining order, preliminary
or permanent injunction or other order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
6.11 NO GOVERNMENTAL LITIGATION. There shall not be pending or
threatened any Legal Proceeding in which a Governmental Body is or is threatened
to become a party or is otherwise involved, and neither Parent nor the Company
shall have received any communication from any Governmental Body in which such
Governmental Body indicates the probability of commencing any Legal Proceeding
or taking any other action: (a) challenging or seeking to restrain or prohibit
the consummation of the Merger; (b) relating to the Merger and seeking to obtain
from Parent or any of its Subsidiaries, or any of the Acquired Corporations, any
damages or other relief that would be material to Parent; (c) seeking to
prohibit or limit in any material respect Parent's ability to vote, receive
dividends with respect to or otherwise exercise ownership rights with respect to
the stock of any of the Acquired Corporations; or (d) which would materially and
adversely affect the right of Parent or any of the Acquired Corporations to own
the assets or operate the business of the Acquired Corporations.
6.12 NO OTHER LITIGATION. There shall not be pending any Legal
Proceeding in which there is a reasonable likelihood of an outcome that would
have a Material Adverse Effect on the Acquired Corporations or a Material
Adverse Effect on Parent: (a) challenging or seeking to restrain or prohibit the
consummation of the Merger or any of the other transactions contemplated by this
Agreement; (b) relating to the Merger and seeking to obtain from Parent or any
of its Subsidiaries, or any of the Acquired Corporations, any damages or other
relief that would be material to Parent; (c) seeking to prohibit or limit in any
material respect Parent's ability to vote, receive dividends with respect to or
otherwise exercise ownership rights with respect to the stock of any of the
Acquired Corporations; or (d) which would affect adversely the right of Parent
or any of the Acquired Corporations to own the assets or operate the business of
the Acquired Corporations.
SECTION 7. CONDITIONS PRECEDENT TO OBLIGATION OF THE COMPANY
The obligation of the Company to effect the Merger and otherwise
consummate the transactions contemplated by this Agreement are subject to the
satisfaction, at or prior to the Closing, of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS.
(a) The representations and warranties of Parent and Merger
Sub contained in this Agreement shall have been accurate in all respects as of
the date of this Agreement, except that any inaccuracies in such representations
and warranties will be disregarded if the circumstances giving rise to all such
inaccuracies (considered collectively) do
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not constitute, and are not reasonably expected to result in, a Material Adverse
Effect on Parent (it being understood that, for purposes of determining the
accuracy of such representations and warranties, all "Material Adverse Effect"
qualifications and other materiality qualifications contained in such
representations and warranties shall be disregarded).
(b) The representations and warranties of Parent and Merger
Sub contained in this Agreement (except that any representation or warranty that
specifically refers to "the date of this Agreement," "the date hereof" or any
other date other than the Closing Date speaks as of such date) shall be accurate
in all respects as of the Closing Date as if made on and as of the Closing Date,
except that any inaccuracies in such representations and warranties will be
disregarded if the circumstances giving rise to all such inaccuracies
(considered collectively) do not constitute, and are not reasonably expected to
result in, a Material Adverse Effect on Parent (it being understood that, for
purposes of determining the accuracy of such representations and warranties, all
"Material Adverse Effect" qualifications and other materiality qualifications
contained in such representations and warranties shall be disregarded).
7.2 PERFORMANCE OF COVENANTS. All of the covenants and
obligations that Parent and Merger Sub are required to comply with or to perform
at or prior to the Closing shall have been complied with and performed in all
material respects.
7.3 EFFECTIVENESS OF REGISTRATION STATEMENT. The Form S-4
Registration Statement shall have become effective in accordance with the
provisions of the Securities Act, and no stop order shall have been issued by
the SEC with respect to the Form S-4 Registration Statement.
7.4 STOCKHOLDER APPROVAL. This Agreement shall have been duly
adopted and approved, and the Merger shall have been duly approved, by the
Required Company Stockholder Vote.
7.5 DOCUMENTS. The Company shall have received the following
documents:
(a) a legal opinion of Xxxx Xxxx Xxxx & Freidenrich LLP, dated
as of the Closing Date, to the effect that the Merger will constitute a
reorganization within the meaning of Section 368 of the Code (it being
understood that, in rendering such opinion, Xxxx Xxxx Xxxx & Freidenrich
LLP may rely upon the tax representation letters referred to in Section
5.11); and
(b) a certificate executed on behalf of Parent by an executive
officer of Parent, confirming that conditions set forth in Sections 7.1
and 7.2 have been duly satisfied.
7.6 HSR ACT; GERMAN ANTICOMPETITION LAW. The waiting period
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated, and the waiting period applicable to the
consummation of the Merger under the GWB shall have expired or been terminated.
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7.7 LISTING. The shares of Parent Common Stock to be issued in
the Merger shall have been approved for listing (subject to notice of issuance)
on the Nasdaq National Market.
7.8 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other order preventing the consummation of the Merger by
the Company shall have been issued by any court of competent jurisdiction and
remain in effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger by the Company
illegal.
SECTION 8. TERMINATION
8.1 TERMINATION. This Agreement may be terminated prior to the
Effective Time (whether before or after approval of the Merger by the Required
Company Stockholder Vote):
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company if the Merger shall not have
been consummated by March 31, 1999 (unless the failure to consummate the
Merger is attributable to a failure on the part of the party seeking to
terminate this Agreement to perform any material obligation required to
be performed by such party at or prior to the Effective Time);
(c) by either Parent or the Company if a court of competent
jurisdiction or other Governmental Body shall have issued a final and
nonappealable order, decree or ruling, or shall have taken any other
action, having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger;
(d) by either Parent or the Company if (i) the Company
Stockholders' Meeting shall have been held and (ii) this Agreement and
the Merger shall not have been approved at such meeting by the Required
Company Stockholder Vote; provided, however, that the Company shall not
be permitted to terminate this Agreement pursuant to this Section 8.1(d)
unless the Company shall have paid to Parent any fee required to be paid
to Parent pursuant to Section 8.3(b);
(e) by Parent (at any time prior to the adoption and approval of
this Agreement and the Merger by the Required Company Stockholder Vote)
if a Triggering Event shall have occurred;
(f) by Parent if any of the Company's representations and
warranties contained in this Agreement shall have been materially
inaccurate as of the date of this Agreement or shall have become
materially inaccurate as of any subsequent date (as if made on such
subsequent date), or if any of the Company's covenants contained in this
Agreement shall have been breached in any material respect; provided,
however, that Parent may not terminate this Agreement under this Section
8.1(f) (i) on account of an inaccuracy in the Company's representations
and warranties that is curable by the
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Company or on account of a breach of a covenant by the Company that is
curable by the Company unless the Company fails to cure such inaccuracy
or breach within 30 days after receiving written notice from Parent of
such inaccuracy or breach; or (ii) if such inaccuracy or breach
(considered in the aggregate with all other inaccuracies or breaches)
would not result in a failure of the conditions set forth in Section 6.1
hereof); or
(g) by the Company if any of Parent's representations and
warranties contained in this Agreement shall have been materially inaccurate as
of the date of this Agreement or shall have become materially inaccurate as of
any subsequent date (as if made on such subsequent date), or if any of Parent's
covenants contained in this Agreement shall have been breached in any material
respect; provided, however, that the Company may not terminate this Agreement
under this Section 8.1(g) (i) on account of an inaccuracy in Parent's
representations and warranties that is curable by Parent or on account of a
breach of a covenant by Parent that is curable by Parent unless Parent fails to
cure such inaccuracy or breach within 30 days after receiving written notice
from the Company of such inaccuracy or breach; or (ii) if such inaccuracy or
breach (considered in the aggregate with all other inaccuracies or breaches)
would not result in a failure of the conditions set forth in Section 7.1
hereof).
8.2 EFFECT OF TERMINATION. In the event of the termination of
this Agreement as provided in Section 8.1, this Agreement shall be of no further
force or effect (and, except as provided in this Section 8.2, there shall be no
liability or obligation hereunder on the part of any of the parties hereto or
their respective officers, directors, stockholders or Affiliates); provided,
however, that (i) this Section 8.2, Section 8.3 and Section 9 shall survive the
termination of this Agreement and shall remain in full force and effect, and
(ii) the termination of this Agreement shall not relieve any party from any
liability for any willful breach of any representation, warranty or covenant
contained in this Agreement.
8.3 EXPENSES; TERMINATION FEES.
(a) Except as set forth in this Section 8.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses, whether or not the Merger is consummated; provided, however, that
Parent and the Company shall share equally all fees and expenses, other than
attorneys' and accounting fees and expenses, incurred in connection with (i) the
filing, printing and mailing of the Form S-4 Registration Statement and the
Prospectus/Proxy Statement and any amendments or supplements thereto and (ii)
the filing of the premerger notification and report forms relating to the Merger
under the HSR Act.
(b) If (i) this Agreement is terminated by Parent or the Company
pursuant to Section 8.1(d) and at or prior to the time of such termination an
Acquisition Proposal shall have been disclosed, announced, commenced, submitted
or made (and shall not have been publicly, absolutely and unconditionally
withdrawn and abandoned), or (ii) this Agreement is terminated by Parent
pursuant to Section 8.1(e), then, in either such case, the Company shall pay to
Parent, in cash at the time specified in the next sentence, a nonrefundable fee
in the amount of $1,000,000 (the "Initial Termination Fee"). In the case of
termination of this Agreement by the Company pursuant to Section 8.1(d), the fee
referred to in the preceding sentence shall be paid by the Company prior to such
termination, and in the case of termination of this Agreement by
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Parent pursuant to Section 8.1(d) or Section 8.1(e), the fee referred to in the
preceding sentence shall be paid by the Company within two business days after
such termination. If, within 360 days after the payment of the Initial
Termination Fee, an Acquisition Transaction (other than with Parent or one of
Parent's Affiliates) is consummated, or the Company enters into a definitive
agreement with respect to an Acquisition Transaction (other than with Parent or
one of Parent's Affiliates), the Company shall pay to Parent in cash an
additional nonrefundable fee of $1,000,000, such payment to be made at or prior
to the consummation of such Acquisition Transaction or the entering into of such
definitive agreement, whichever is earlier.
(c) In no event shall the Company be required to pay any
termination fee to Parent pursuant to Section 8.3(b) if (i) prior to the
applicable termination of this Agreement, Parent was in material breach of its
obligations under this Agreement; (ii) prior to the applicable termination of
this Agreement (and promptly, and in any event, no more than two business days,
after the Company discovers any such material breach), the Company shall have
advised Parent in writing that Parent is in material breach of its obligations
under this Agreement; and (iii) prior to the applicable termination of this
Agreement, Parent shall not have substantially cured such material breach.
SECTION 9. MISCELLANEOUS PROVISIONS
9.1 AMENDMENT. This Agreement may be amended with the approval of
the respective boards of directors of the Company and Parent at any time
(whether before or after the adoption and approval of this Agreement and the
approval of the Merger by the stockholders of the Company); provided, however,
that after any such adoption and approval of this Agreement and approval of the
Merger by the Company's stockholders, no amendment shall be made which by law
requires further approval of the stockholders of the Company without the further
approval of such stockholders. This Agreement may not be amended except by an
instrument in writing signed on behalf of each of the parties hereto.
9.2 WAIVER.
(a) No failure on the part of either party to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the part
of either party in exercising any power, right, privilege or remedy under this
Agreement, shall operate as a waiver of such power, right, privilege or remedy;
and no single or partial exercise of any such power, right, privilege or remedy
shall preclude any other or further exercise thereof or of any other power,
right, privilege or remedy.
(b) Neither party shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such party; and any such waiver shall not be applicable
or have any effect except in the specific instance in which it is given.
9.3 NO SURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties contained in this Agreement or in any certificate
delivered pursuant to this Agreement shall survive the Merger.
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9.4 ENTIRE AGREEMENT; COUNTERPARTS. This Agreement and the other
agreements referred to herein constitute the entire agreement and supersede all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and thereof. This Agreement may be
executed in several counterparts, each of which shall be deemed an original and
all of which shall constitute one and the same instrument
9.5 APPLICABLE LAW; JURISDICTION. 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. In any action between the parties
arising out of or relating to this Agreement or any of the transactions
contemplated by this Agreement: (a) each of the parties irrevocably and
unconditionally consents and submits to the exclusive jurisdiction and venue of
the state and federal courts located in the State of California; (b) if any such
action is commenced in a state court, then, subject to applicable law, no party
shall object to the removal of such action to any federal court located in the
Northern District of California; (c) each of the parties irrevocably waives the
right to trial by jury; and (d) each of the parties irrevocably consents to
service of process by first class certified mail, return receipt requested,
postage prepaid, to the address at which such party is to receive notice in
accordance with Section 9.9.
9.6 DISCLOSURE SCHEDULE. The Company Disclosure Schedule shall be
arranged in separate parts corresponding to the numbered and lettered sections
contained in Section 2, and the information disclosed in any numbered or
lettered part shall be deemed to relate to and to qualify only the particular
representation or warranty set forth in the corresponding numbered or lettered
section in Section 2, and shall not be deemed to relate to or to qualify any
other representation or warranty.
9.7 ATTORNEYS' FEES. In any action at law or suit in equity to
enforce this Agreement or the rights of any of the parties hereunder, the
prevailing party in such action or suit shall be entitled to receive a
reasonable sum for its attorneys' fees and all other reasonable costs and
expenses incurred in such action or suit.
9.8 ASSIGNABILITY. This Agreement shall be binding upon, and
shall be enforceable by and inure solely to the benefit of, the parties hereto
and their respective successors and assigns; provided, however, that neither
this Agreement nor any of the Company's rights hereunder may be assigned by the
Company without the prior written consent of Parent, and any attempted
assignment of this Agreement or any of such rights by the Company without such
consent shall be void and of no effect. Nothing in this Agreement, express or
implied, is intended to or shall confer upon any Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
9.9 NOTICES. Any notice or other communication required or
permitted to be delivered to any party under this Agreement shall be in writing
and shall be deemed properly delivered, given and received (a) upon receipt when
delivered by hand, or (b) two business days after sent by registered mail or by
courier or express delivery service, or by facsimile, provided that in each case
the notice or other communication is sent to the address or facsimile telephone
number set forth beneath the name of such party below (or to such other address
or facsimile
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telephone number as such party shall have specified in a written notice given to
the other parties hereto):
if to Parent:
Applied Materials, Inc.
0000 Xxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Mail Stop: 2061
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx Xxxxx
Mail Stop: 1954
Facsimile: (000) 000-0000
if to Merger Sub:
c/o Applied Materials, Inc.
0000 Xxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Mail Stop: 2061
Facsimile: (000) 000-0000
Attention: Xxxxxxxxx Xxxxx
Mail Stop: 1954
Facsimile: (000) 000-0000
if to the Company:
Consilium, Inc.
000 Xxxxx Xxxxxx
Xxxxxxxx xxxx, XX 00000
Attention:
Facsimile:
9.10 COOPERATION. The Company and Parent agree to cooperate fully
with each other and to execute and deliver such further documents, certificates,
agreements and instruments and to take such other actions as may be reasonably
requested by the other to evidence or reflect the transactions contemplated by
this Agreement and to carry out the intent and purposes of this Agreement.
9.11 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the
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feminine and neuter genders; the feminine gender shall include the masculine
and neuter genders; and the neuter gender shall include masculine and feminine
genders.
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party shall
not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections," "Exhibits" and "Schedules" are intended to refer to
Sections of this Agreement and Exhibits or Schedules to this Agreement.
(e) The bold-faced headings contained in this Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as of the date first above written.
APPLIED MATERIALS, INC.
By:_____________________________________
PENNSYLVANIA ACQUISITION SUB, INC.
By:_____________________________________
CONSILIUM, INC.
By:_____________________________________
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
ACQUIRED CORPORATION CONTRACT. "Acquired Corporation Contract" shall
mean any Contract: (a) to which any of the Acquired Corporations is a party; (b)
by which any of the Acquired Corporations or any asset of any of the Acquired
Corporations is or may become bound or under which any of the Acquired
Corporations has, or may become subject to, any obligation; or (c) under which
any of the Acquired Corporations has or may acquire any right or interest.
ACQUIRED CORPORATION SOURCE CODE. "Acquired Corporation Source Code"
shall mean any source code, or any portion, aspect or segment of any source
code, relating to any Intellectual Property owned by or licensed to any of the
Acquired Corporations or otherwise used by any of the Acquired Corporations.
ACQUISITION PROPOSAL. "Acquisition Proposal" shall mean any offer,
proposal or inquiry (other than an offer or proposal by Parent) contemplating or
otherwise relating to any Acquisition Transaction.
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction or series of transactions involving:
(a) any merger, consolidation, amalgamation, share exchange,
business combination, issuance of securities, acquisition of securities,
tender offer, exchange offer or other similar transaction (i) in which
any of the Acquired Corporations is a constituent company, (ii) in which
a Person or "group" (as defined in the Exchange Act and the rules
promulgated thereunder) of Persons directly or indirectly acquires the
Company or more than 40% of the Company's business or directly or
indirectly acquires beneficial or record ownership of securities
representing, or exchangeable for or convertible into, more than 40% of
the outstanding securities of any class of voting securities of any of
the Acquired Corporations, or (iii) in which any of the Acquired
Corporations issues securities representing more than 40% of the
outstanding securities of any class of voting securities of the Company;
(b) any sale, lease, exchange, transfer, license, acquisition or
disposition of more than 40% of the assets of the Company; or
(c) any liquidation or dissolution of the Company.
AGREEMENT. "Agreement" shall mean the Agreement and Plan of Merger and
Reorganization to which this Exhibit A is attached, as it may be amended from
time to time.
COMPANY COMMON STOCK. "Company Common Stock" shall mean the Common
Stock, $0.01 par value per share, of the Company.
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67
COMPANY DISCLOSURE SCHEDULE. "Company Disclosure Schedule" shall mean
the Company Disclosure Schedule that has been prepared by the Company in
accordance with the requirements of Section 9.6 of the Agreement and that has
been delivered by the Company to Parent on the date of the Agreement and signed
by the President of the Company.
COMPANY WARRANTS. "Company Warrants" shall mean those certain warrants
to purchase 70,000 shares of Company Common Stock held by Imperial Bancorp and
those certain warrants to purchase 75,000 shares of Company Common Stock held by
each of Xxxxxx Xxxxxx and Xxxxxx Xxxxxxx.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
CONTRACT. "Contract" shall mean any written, oral or other agreement,
contract, subcontract, lease, understanding, instrument, note, option, warranty,
purchase order, license, sublicense, insurance policy, benefit plan or legally
binding commitment or undertaking of any nature.
ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, claim, infringement,
interference, option, right of first refusal, preemptive right, community
property interest or restriction of any nature (including any restriction on the
voting of any security, any restriction on the transfer of any security or other
asset, any restriction on the receipt of any income derived from any asset, any
restriction on the use of any asset and any restriction on the possession,
exercise or transfer of any other attribute of ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, company (including any company
limited by shares, limited liability company or joint stock company), firm,
society or other enterprise, association, organization or entity.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
FORM S-4 REGISTRATION STATEMENT. "Form S-4 Registration Statement" shall
mean the registration statement on Form S-4 to be filed with the SEC by Parent
in connection with issuance of Parent Common Stock in the Merger, as said
registration statement may be amended prior to the time it is declared effective
by the SEC.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean any:
(a) permit, license, certificate, franchise, permission, variance, clearance,
registration, qualification or authorization issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or (b) right under any Contract with any Governmental
Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation,
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; or (c) governmental or
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quasi-governmental authority of any nature (including any governmental division,
department, agency, commission, instrumentality, official, ministry, fund,
foundation, center, organization, unit, body or Entity and any court or other
tribunal).
HSR ACT. "HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
GWB. "GWB" shall mean the following act enacted by the Republic of
Germany: Act Against Restraints on Competition of 1958 (Gesetz gegen
Wettbewerbsbeschrankungen).
KNOWLEDGE. The Company shall be deemed to have "Knowledge" of a
particular fact or other matter if any of the following individuals is actually
aware of such fact or other matter: Xxxxxxxx X. Xxxxxxx, Xxxxxxxx X. Xxxxxxxx,
Xxxxxxx X. Field, Xxxxxxx Xxxx, Xxxxx Xxxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxxx Ma,
Xxxxxxx Xxxxxxx or Xxxxxxx Xxxxx.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding), hearing, inquiry, audit,
examination or investigation commenced, brought, conducted or heard by or
before, or otherwise involving, any court or other Governmental Body or any
arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, constitution, principle of
common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling
or requirement issued, enacted, adopted, promulgated, implemented or otherwise
put into effect by or under the authority of any Governmental Body (or under the
authority of the Nasdaq National Market).
MATERIAL ADVERSE EFFECT. An event, violation, inaccuracy, circumstance
or other matter will be deemed to have a "Material Adverse Effect" on the
Acquired Corporations if such event, violation, inaccuracy, circumstance or
other matter (considered together with all other matters that would constitute
exceptions to the representations and warranties set forth in the Agreement but
for the presence of "Material Adverse Effect" or other materiality
qualifications, or any similar qualifications, in such representations and
warranties) would have a material adverse effect on (i) the business, condition,
assets, liabilities, operations or results of operations of the Acquired
Corporations taken as a whole; provided, however, that none of the following
shall be deemed, in and of itself, to have a Material Adverse Effect on the
Acquired Corporations for purposes of Section 6.1(b): (A) a change in the market
price or trading volume of the Company Common Stock, (B) a failure by the
Company to meet any published securities analyst estimates of revenue or
earnings for any period ending or for which earnings are released on or after
the date of this Agreement and prior to the Closing, (C) a failure to report
earnings results in any quarter ending on or after the date of this Agreement
consistent with the Company's historical earnings results for its Semiconductor
and Electronics business unit in any quarter during fiscal 1997 or 1998, (D) an
event, violation, inaccuracy, circumstance or other matter that results from
conditions affecting the U.S. economy or the world economy, (E) an event,
violation, inaccuracy, circumstance or other matter that results from conditions
affecting the semiconductor industry or the semiconductor equipment industry so
long as such conditions do not affect the Company in a disproportionate manner
as compared with companies of a similar size, (F) a delay in customer
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69
orders arising primarily out of or resulting primarily from the announcement of
the transactions contemplated by this Agreement; and (G) an event, violation,
inaccuracy, circumstance or other matter that results from the taking of any
action required by this Agreement), (ii) the ability of the Company to
consummate the Merger or any of the other transactions contemplated by the
Agreement or to perform any of its material obligations under the Agreement, or
(iii) Parent's ability to vote, receive dividends with respect to or otherwise
exercise ownership rights with respect to the stock of the Surviving
Corporation. An event, violation, inaccuracy, circumstance or other matter will
be deemed to have a "Material Adverse Effect" on Parent if such event,
violation, inaccuracy, circumstance or other matter (considered together with
all other matters that would constitute exceptions to the representations and
warranties set forth in the Agreement but for the presence of "Material Adverse
Effect" or other materiality qualifications, or any similar qualifications, in
such representations and warranties) would have a material adverse effect on the
business, condition, assets, liabilities, operations or results of operations of
Parent and its Subsidiaries taken as a whole; provided, however, that none of
the following shall be deemed, in and of itself, to have a Material Adverse
Effect on Parent for purposes of Section 7.1(b): (A) an event, violation,
inaccuracy, circumstance or other matter that results from conditions affecting
the U.S. economy or the world economy, (B) an event, violation, inaccuracy,
circumstance or other matter that results from the semiconductor industry or the
semiconductor equipment industry conditions that do not affect Parent in a
disproportionate manner as compared with companies of a similar size, and (C) an
event, violation, inaccuracy, circumstance or other matter that results from the
taking of any action required by this Agreement.
PARENT AVERAGE STOCK PRICE. "Parent Average Stock Price" shall mean the
average of the closing sales price of a share of Parent Common Stock as reported
on the Nasdaq National Market for each of the twenty consecutive trading days
ending on and including the second trading day immediately preceding the date on
which a final vote of the stockholders of the Company on the adoption and
approval of this Agreement and the approval of the Merger shall have been held.
PARENT COMMON STOCK. "Parent Common Stock" shall mean the Common Stock,
$.01 par value per share, of Parent.
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
PLACEMENT AGENT WARRANTS. "Placement Agent Warrants" shall mean those
certain warrants to purchase 75,000 shares of Company Common Stock held by each
of Xxxxxx Xxxxxx and Xxxxxx Xxxxxxx.
PROSPECTUS/PROXY STATEMENT. "Prospectus/Proxy Statement" shall mean the
proxy statement to be sent to the Company's stockholders in connection with the
Company Stockholders' Meeting.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives.
SEC. "SEC" shall mean the United States Securities and Exchange
Commission.
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SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933,
as amended.
SUBSIDIARY. An entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly owns, beneficially or of record,
(a) an amount of voting securities of other interests in such Entity that is
sufficient to enable such Person to elect at leased a majority of the members of
such Entity's board of directors or other governing body, or (b) at least 50% of
the outstanding equity or financial interests or such Entity.
SUPERIOR OFFER. "Superior Offer" shall mean an unsolicited, bona fide
written offer made by a third party to purchase (by means of a merger,
consolidation, amalgamation, share exchange, business combination, issuance of
securities, acquisition of securities, tender offer, exchange offer or other
similar transaction) more than 50% of the outstanding shares of Company Common
Stock, which the board of directors of the Company determines, in good faith,
based on the written advice of its financial advisor, has terms more favorable
to the Company's stockholders than the terms of the Merger; provided, however,
that any such offer shall not be deemed to be a "Superior Offer" unless any
financing required to consummate the transaction contemplated by such offer is
either (i) in the possession of such third party at the time such offer is made,
or (ii) committed and likely to be obtained by such third party on a timely
basis.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, gross receipts tax, value-added tax, surtax, estimated tax,
unemployment tax, national health insurance tax, excise tax, ad valorem tax,
transfer tax, stamp tax, sales tax, use tax, property tax, business tax,
withholding tax or payroll tax), levy, assessment, tariff, duty (including any
customs duty), deficiency or fee, and any related charge or amount (including
any fine, penalty or interest), imposed, assessed or collected by or under the
authority of any Governmental Body.
TAX RETURN. "Tax Return" shall mean any return (including any
information return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information filed
with or submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment, collection
or payment of any Tax or in connection with the administration, implementation
or enforcement of or compliance with any Legal Requirement relating to any Tax.
TRIGGERING EVENT. A "Triggering Event" shall be deemed to have occurred
if: (i) the board of directors of the Company shall have failed to recommend, or
shall for any reason have withdrawn or shall have amended or modified in a
manner adverse to Parent its unanimous recommendation in favor of, the adoption
and approval of the Agreement or the approval of the Merger; (ii) the Company
shall have failed to include in the Prospectus/Proxy Statement the unanimous
recommendation of the board of directors of the Company in favor of the adoption
and approval of the Agreement and the approval of the Merger; (iii) the board of
directors of the Company fails to reaffirm its unanimous recommendation in favor
of the adoption and approval of the Agreement and the approval of the Merger
within ten business days after Parent requests in writing that such
recommendation be reaffirmed; (iv) the board of directors of the Company shall
have approved, endorsed or recommended any Acquisition Proposal; (v) the Company
shall have entered into any letter of intent or similar document or any Contract
relating to any Acquisition Proposal; (vi) the Company shall have failed to hold
the Company Stockholders'
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Meeting as promptly as practicable and in any event within 60 days after the
Form S-4 Registration Statement is declared effective under the Securities Act;
(vii) a tender or exchange offer relating to securities of the Company shall
have been commenced and the Company shall not have sent to its securityholders,
within ten business days after the commencement of such tender or exchange
offer, a statement disclosing that the Company recommends rejection of such
tender or exchange offer; (viii) an Acquisition Proposal is publicly announced,
and the Company (A) fails to issue a press release announcing its opposition to
such Acquisition Proposal within ten business days after such Acquisition
Proposal is announced or (B) otherwise fails to actively oppose such Acquisition
Proposal within ten business days after such Acquisition Proposal is announced;
or (ix) the Company breaches any of its obligations under Section 4.3 of the
Agreement.
UNAUDITED INTERIM BALANCE SHEET. "Unaudited Interim Balance Sheet" shall
mean the unaudited consolidated balance sheet of the Company and its
subsidiaries as of July 31, 1998 as filed by the Company in its Quarterly Report
on Form 10-Q filed with the SEC on September 14, 1998.
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EXHIBITS
Exhibit A - Certain Definitions
Exhibit B - Form of Certificate of Incorporation of Surviving Corporation
Exhibit C - Form of Affiliate Agreement
Exhibit D - Form of Noncompetition Agreement
Exhibit E - Form of Release Agreement
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