1
EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
MAXIM INTEGRATED PRODUCTS, INC.,
MI ACQUISITION SUB, INC.
AND
DALLAS SEMICONDUCTOR CORPORATION
Dated as of January 28, 2001
2
TABLE OF CONTENTS
Page
ARTICLE I THE MERGER ....................................................... 2
1.1. The Merger ............................................... 2
1.2. Effective Time ........................................... 2
1.3. Effect of the Merger ..................................... 2
1.4. Certification of Incorporation; Bylaws ................... 2
1.5. Directors and Officers ................................... 2
1.6. Conversion of Company Common Stock, Etc .................. 3
1.7. Cancellation of Treasury Stock and Parent-Owned Stock .... 4
1.8. Stock Options and Warrants ............................... 4
1.9. Capital Stock of Merger Sub. ............................. 4
1.10. Adjustments to Exchange Ratio ............................ 5
1.11. Fractional Shares ........................................ 5
1.12. Surrender of Certificates ................................ 5
1.13. Further Ownership Rights in Company Common Stock ......... 7
1.14. Closing .................................................. 7
1.15. Lost, Stolen or Destroyed Certificates ................... 7
1.16. Tax Consequences ......................................... 7
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY ................... 8
2.1. Organization and Qualification; Subsidiaries ............. 8
2.2. Certificate of Incorporation and Bylaws .................. 9
2.3. Capitalization ........................................... 9
2.4. Authority; Enforceability ................................ 10
2.5. Required Vote ............................................ 11
2.6. No Conflict; Required Filings and Consents ............... 11
2.7. Material Agreements ...................................... 12
2.8. Compliance ............................................... 14
2.9. SEC Filings; Financial Statements ........................ 15
2.10. Absence of Certain Changes or Events ..................... 16
2.11. No Undisclosed Liabilities ............................... 16
2.12. Absence of Litigation .................................... 17
2.13. Employee Benefit Plans ................................... 17
2.14. Employment and Labor Matters ............................. 19
2.15. Registration Statement; Proxy Statement/Prospectus ....... 19
2.16. Taxes .................................................... 20
2.17. Environmental Matters .................................... 22
2.18. Intellectual Property .................................... 24
2.19. Insurance ................................................ 25
2.20. No Restrictions on the Merger; Takeover Statutes ......... 25
2.21. Pooling; Tax Matters ..................................... 25
2.22. Brokers .................................................. 26
2.23. Interested Party Transactions ............................ 26
2.24. Opinion of Financial Advisor ............................. 26
2.25. Company Rights Agreement ................................. 26
ii
3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB ................. 27
3.1. Organization and Qualification .................................... 27
3.2. Capitalization .................................................... 27
3.3. Authority; Enforceability ......................................... 29
3.4. No Conflict; Required Filings and Consents ........................ 29
3.5. Compliance ........................................................ 30
3.6. SEC Filings; Financial Statements ................................. 31
3.7. Absence of Certain Changes or Events .............................. 31
3.8. No Undisclosed Liabilities ........................................ 32
3.9. Absence of Litigation ............................................. 32
3.10. Environmental Matters ............................................. 32
3.11. Registration Statement; Proxy Statement/Prospectus ................ 33
3.12. Brokers ........................................................... 33
3.13. Pooling; Tax Matters .............................................. 33
3.14. Taxes ............................................................. 33
3.15. Intellectual Property ............................................. 34
ARTICLE IV CONDUCT OF BUSINESS PENDING THE MERGER ................................... 35
4.1. Conduct of Business by the Company Pending the Merger ............. 35
4.2. Conduct of Business by Parent Pending the Merger .................. 38
4.3. Solicitation of Other Proposals ................................... 38
ARTICLE V ADDITIONAL AGREEMENTS ..................................................... 40
5.1. Registration Statement; Proxy Statement/Prospectus ................ 40
5.2. Meeting of Company's Stockholders ................................. 41
5.3. Access to Information; Confidentiality ............................ 42
5.4. Reasonable Best Efforts; Further Assurances ....................... 43
5.5. Stock Options and Stock Plan; Options ............................. 44
5.6. Employee Benefits ................................................. 45
5.7. Pooling; Reorganization ........................................... 46
5.8. Notification of Certain Matters ................................... 47
5.9. Listing on the NASDAQ National Market ............................. 48
5.10. Public Announcements .............................................. 48
5.11. Takeover Laws ..................................................... 48
5.12. Accountant's Letter ............................................... 48
5.13. Indemnification; Directors and Officer Insurance .................. 48
5.14. Option Agreement .................................................. 49
5.15. Company Rights Agreement .......................................... 49
5.16. Action by Board of Directors ...................................... 50
5.17. Board Seat ........................................................ 50
ARTICLE VI CONDITIONS OF MERGER ..................................................... 50
6.1. Conditions to Obligation of Each Party to Effect the Merger ....... 50
6.2. Additional Conditions to Obligations of Parent and Merger Sub. .... 51
6.3. Additional Conditions to Obligations of the Company ............... 53
iii
4
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER .............................. 54
7.1. Termination .............................................. 54
7.2. Effect of Termination .................................... 55
7.3. Fees and Expenses ........................................ 55
7.4. Amendment ................................................ 56
7.5. Waiver ................................................... 56
ARTICLE VIII GENERAL PROVISIONS ............................................ 57
8.1. Survival of Representations and Warranties ............... 57
8.2. Notices .................................................. 57
8.3. Disclosure Schedules ..................................... 58
8.4. Certain Definitions ...................................... 58
8.5. Interpretation ........................................... 62
8.6. Severability ............................................. 62
8.7. Entire Agreement ......................................... 62
8.8. Assignment ............................................... 62
8.9. Parties in Interest ...................................... 62
8.10. Failure or Indulgence Not Waiver; Remedies Cumulative .... 63
8.11. Governing Law; Enforcement ............................... 63
8.12. Counterparts ............................................. 63
EXHIBITS
EXHIBIT A - Form of Stock Option Agreement
EXHIBIT B - Form of Company Affiliate Pooling Agreement
iv
5
AGREEMENT AND PLAN OF MERGER, dated as of January 28, 2001 (the
"Agreement") among MAXIM INTEGRATED PRODUCTS, INC., a Delaware corporation
("Parent"), MI ACQUISITION SUB, INC., a Delaware corporation and a wholly-owned
subsidiary of Parent ("Merger Sub"), and DALLAS SEMICONDUCTOR CORPORATION, a
Delaware corporation (the "Company"). Capitalized terms not elsewhere defined
herein shall have the meaning ascribed to them in Section 8.4 hereof.
WHEREAS, the Board of Directors of the Company has determined
that it is consistent with the Company's long-term strategic plan and in the
best interests of its stockholders and employees for the Company to pursue a
strategic transaction with Parent in order to preserve the existence of the
Company's corporate entity;
WHEREAS, the Board of Directors of Parent, Merger Sub and the
Company have each determined that it is in the best interests of their
respective stockholders for Merger Sub to merge with and into the Company upon
the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance thereof, the Boards of Directors of
Parent, Merger Sub and the Company have each approved the merger (the "Merger")
of Merger Sub with and into the Company, in accordance with the General
Corporation Law of the State of Delaware (the "DGCL") and subject to the
conditions set forth herein, which Merger will result in, among other things,
the Company becoming a wholly-owned subsidiary of Parent;
WHEREAS, as a condition to the willingness of, and an inducement
to, Parent and Merger Sub to enter into this Agreement, contemporaneously with
the execution and delivery of this Agreement, the Company is entering into a
Stock Option Agreement dated as of the date hereof (the "Option Agreement") in
the form of Exhibit A attached hereto, granting Parent an irrevocable option to
purchase up to that number of shares of Company Common Stock as shall represent
14.9% (by voting power) of the total outstanding Company Common Stock (as
defined herein), on the terms and subject to the conditions set forth therein;
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code of 1986, as amended (the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger
shall qualify for "pooling-of-interests" treatment.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, and
intending to be legally bound hereby, Parent, Merger Sub and the Company hereby
agree as follows:
6
ARTICLE I
THE MERGER
1.1. THE MERGER.
At the Effective Time (as defined in Section 1.2) and subject to
and upon the terms and conditions of this Agreement and the DGCL, (a) Merger Sub
shall be merged with and into the Company, (b) the separate corporate existence
of Merger Sub shall cease, and (c) the Company shall, as the surviving
corporation in the Merger, continue its existence under Delaware law as a
wholly-owned subsidiary of Parent. The Company as the surviving corporation
after the Merger is hereinafter sometimes referred to as the "Surviving
Corporation."
1.2. EFFECTIVE TIME.
As promptly as practicable after the satisfaction or, to the
extent permitted hereunder, waiver of the conditions set forth in Article VI
hereof, the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger (the "Certificate of Merger") with the Secretary of State
of the State of Delaware, in such form as required by and executed in accordance
with the relevant provisions of the DGCL (the date and time of such filing, or
such later date and time as may be specified in the Certificate of Merger by
mutual agreement of Parent, Merger Sub and the Company, being the "Effective
Time").
1.3. EFFECT OF THE MERGER.
At the Effective Time, the effect of the Merger shall be as
provided in the applicable provisions of the DGCL, including Section 259
thereof. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all the assets, property, rights, privileges, immunities,
powers and franchises of the Company and Merger Sub shall vest in the Surviving
Corporation, and all debts, liabilities and duties of the Company and Merger Sub
shall become the debts, liabilities and duties of the Surviving Corporation.
1.4. CERTIFICATION OF INCORPORATION; BYLAWS.
Unless otherwise determined by Parent prior to the Effective
Time, at the Effective Time and without any further action on the part of the
parties hereto, (a) the Certificate of Incorporation of the Company shall be the
Certificate of Incorporation of the Surviving Corporation until thereafter
amended as provided therein and by the DGCL and (b) the Bylaws of Merger Sub
shall be the Bylaws of the Surviving Corporation until thereafter amended as
provided therein and by the DGCL.
1.5. DIRECTORS AND OFFICERS.
Except as set forth on Section 1.5 of the Company Disclosure
Schedule, the directors of Merger Sub immediately prior to the Effective Time
shall be the initial directors of the Surviving Corporation, each to hold office
in accordance with the Certificate of Incorporation and the Bylaws of the
Surviving Corporation until their respective successors are duly elected or
appointed and qualified or until their earlier death, resignation or removal in
accordance with the
2
7
Surviving Corporation's Certificate of Incorporation and Bylaws. Except as
determined by Parent prior to the Effective Time, the officers of the Company
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation.
1.6. CONVERSION OF COMPANY COMMON STOCK, ETC.
At the Effective Time, by virtue of the Merger and without any
action on the part of the parties hereto or the holders of the following
securities:
(a) Subject to the provisions of this Article I, each share of
common stock, par value $0.02 per share, of the Company ("Company Common Stock")
including the associated Company Rights issued and outstanding immediately prior
to the Effective Time (other than any shares of the Company Common Stock to be
canceled pursuant to Section 1.7 and subject to Section 1.10 and Section 1.11),
will be converted automatically into the right to receive from Merger Sub that
number of fully paid and nonassessable shares of Common Stock, par value $0.001
per share (the "Parent Common Stock"), of Parent equal to the Exchange Ratio.
For purposes of this Agreement, "Exchange Ratio" shall mean the decimal
equivalent (rounded to four decimal places) of the quotient obtained by dividing
the Aggregate Parent Share Amount (as defined below) by the Fully Diluted
Company Share Amount (as defined below). For purposes hereof, the "Fully Diluted
Company Share Amount" means the number of shares of Company Common Stock
calculated as of the close of business on the day immediately preceding the
Effective Time pursuant to the Treasury Stock Method (assuming a 35% effective
tax rate) as defined by GAAP (as defined herein), which as of the close of
business on January 26, 2001 and based on outstanding shares and options as of
January 25, 2001, would have resulted in an Exchange Ratio of 0.6163. For
purposes hereof, the "Aggregate Parent Share Amount" means the following:
(i) if the Average Closing Price (as defined below) of
Parent Common Stock is equal to or greater than $61.00 per share, then the
Aggregate Parent Share Amount is 40,000,000;
(ii) if the Average Closing Price of Parent Common Stock
is equal to or less than $52.00 per share, then the Aggregate Parent Share
Amount is 42,000,000; and
(iii) if the Average Closing Price of Parent Common
Stock is greater than $52.00 per share but less than $61.00 per share, then the
Aggregate Parent Share Amount is the sum of (x) 40,000,000 plus (y) the product
obtained by multiplying 2,000,000 times the quotient obtained by dividing (1)
$61.00 minus the Average Closing Price of Parent Common Stock by (2) $9.00.
The "Average Closing Price" means the average closing price of Parent Common
Stock (rounded to the nearest cent) on the NASDAQ National Market System for the
10 consecutive trading days ending on the trading day that is two trading days
prior to the Effective Time.
(b) Each share of the Company Common Stock shall be deemed
canceled and shall cease to exist, and each holder of a certificate representing
any such share of Company Common Stock shall cease to have any rights with
respect thereto, except the right to receive that number of shares of Parent
Common Stock equal to the Exchange Ratio upon surrender of the
3
8
certificate representing such share of Company Common Stock in the manner
provided in Section 1.12 (together with the cash in lieu of fractional shares of
Parent Common Stock as specified in Section 1.11, the "Merger Consideration").
Unless the context otherwise requires, each reference in this Agreement to
shares of Company Common Stock shall include the associated Company Rights
issued pursuant to the Company Rights Agreement.
1.7. CANCELLATION OF TREASURY STOCK AND PARENT-OWNED STOCK.
Each share of the Company Common Stock held in the treasury of
the Company, if any, and each share of Company Common Stock, if any, owned by
Parent or Merger Sub, in each case immediately prior to the Effective Time,
shall be canceled and extinguished without any conversion thereof and no payment
or distribution shall be made with respect thereto.
1.8. STOCK OPTIONS AND WARRANTS.
(a) At the Effective Time, all options to purchase Company
Common Stock then outstanding under the Company's (i) 1984 Stock Option Plan,
(ii) Amended 1987 Stock Option Plan and (iii) 1993 Officer and Director Stock
Option Plan (each as amended, collectively, the "Option Plans"), by virtue of
the Merger and without any action on the part of the holder thereof, shall be
assumed by Parent in accordance with Section 5.5.
(b) The Company and its Board of Directors shall promptly take
all actions necessary to ensure that (i) immediately prior to the Effective Time
the Purchase Plan (as defined in Section 2.3) shall be terminated and of no
further force and effect and without any liability of the Company thereunder,
and (ii) following the Effective Time no holder of any options or other rights
pursuant to, nor any participant in or party to, the Option Plans or any other
Employee Plan (as defined herein) or other plan, program, arrangement, agreement
or other commitment providing for the issuance or grant of any interest in
respect of the capital stock of the Company or any Subsidiary of the Company
will have any rights thereunder to acquire equity securities, or any right to
payment in respect of the equity securities, of Parent, the Company, or the
Surviving Corporation or any of their Subsidiaries, except as provided herein.
1.9. CAPITAL STOCK OF MERGER SUB.
Each share of common stock, par value $0.01 per share, of Merger
Sub (the "Merger Sub Common Stock") issued and outstanding immediately prior to
the Effective Time shall be automatically converted into one validly issued,
fully paid and nonassessable share of common stock of the Surviving Corporation
and shall thereafter constitute all of the issued and outstanding capital stock
of the Surviving Corporation. Each stock certificate of Merger Sub evidencing
ownership of any shares of Merger Sub Common Stock shall continue to evidence
ownership of such shares of capital stock of the Surviving Corporation.
1.10. ADJUSTMENTS TO EXCHANGE RATIO.
Without limiting any other provision of this Agreement, the
Exchange Ratio shall be adjusted to reflect fully the effect of any stock split,
reverse split, stock dividend (including any dividend or distribution of
securities convertible into Parent Common Stock or Company Common Stock),
reorganization, recapitalization or other like change with respect to Parent
4
9
Common Stock or Company Common Stock occurring after the date hereof and prior
to the Effective Time.
1.11. FRACTIONAL SHARES.
No certificates or scrip representing the right to acquire
fractional shares of Parent Common Stock shall be issued in connection with the
Merger, and such fractional interests will not entitle the owner thereof to any
rights of a stockholder of Parent. In lieu thereof, each holder of shares of
Company Common Stock exchanged pursuant to Section 1.6 or of options or warrants
exchanged pursuant to Section 1.8(a) who would otherwise be entitled to a
fraction of a share of Parent Common Stock (after aggregating all fractional
shares of Parent Common Stock to have been otherwise received by such holder)
shall receive from Parent an amount of cash (rounded down to the nearest whole
cent and without interest) equal to the product of such fractional part of a
share of Parent Common Stock multiplied by the Average Closing Price.
1.12. SURRENDER OF CERTIFICATES.
(a) Exchange Agent. Prior to the Effective Time, Parent shall
designate a bank or trust company to act as the Exchange Agent in the Merger.
(b) Parent to Provide Common Stock. When and as needed, Parent
shall make available to the Exchange Agent for exchange in accordance with this
Article I, through such reasonable procedures as Parent may adopt, sufficient
shares of Parent Common Stock (and any cash payable in lieu of any fractional
shares of Parent Common Stock) to be exchanged pursuant to Section 1.6 and
Section 1.11.
(c) Exchange Procedures. Promptly after the Effective Time, the
Surviving Corporation shall cause to be mailed to each holder of record of a
certificate or certificates (the "Certificates") that represented as of the
Effective Time outstanding shares of Company Common Stock to be exchanged
pursuant to Section 1.6, a letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon delivery of the Certificates to the Exchange Agent and shall be
in such form and have such other provisions as Parent may reasonably specify)
and instructions for use in effecting the surrender of the Certificates in
exchange for certificates representing shares of Parent Common Stock. Upon
surrender of a Certificate to the Exchange Agent, together with such letter of
transmittal, duly completed and validly executed in accordance with the
instructions thereto, and such other documents as may be required pursuant to
such instructions, the holder of such Certificate shall be entitled to receive
in exchange therefor a certificate representing the number of whole shares of
Parent Common Stock and payment in lieu of fractional shares which such holder
has the right to receive pursuant to Sections 1.6 and 1.11, after giving effect
to any required Tax (as defined herein) withholdings, and the Certificate so
surrendered shall forthwith be canceled. At any time following six months after
the Effective Time, all or any number of shares of Parent Common Stock (and any
or all cash payable in lieu of fractional shares of Parent Common Stock)
deposited with or made available to the Exchange Agent pursuant to Section
1.12(b), which remain undistributed to the holders of the Certificates
representing shares of Company Common Stock, shall be delivered to Parent upon
demand, and thereafter such holders of unexchanged shares of Company Common
Stock shall be entitled to look only to Parent
5
10
(subject to abandoned property, escheat or other similar laws) as general
creditors thereof with respect to the shares of Parent Common Stock for payment
upon due surrender of their Certificates.
(d) Distributions With Respect to Unexchanged Shares. No
dividends or other distributions declared or made after the Effective Time with
respect to shares of Parent Common Stock with a record date after the Effective
Time will be paid to the holder of any unsurrendered Certificate with respect to
the whole shares of Parent Common Stock represented thereby until the holder of
record of such Certificate shall surrender such Certificate. Following surrender
of any such Certificate, there shall be paid to the record holder of the
certificates representing whole shares of Parent Common Stock issued in exchange
therefor, without interest, at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time and
payable between the Effective Time and the time of such surrender with respect
to such whole shares of Parent Common Stock.
(e) Transfers of Ownership. If any certificate for shares of
Parent Common Stock is to be issued in a name other than the name in which the
Certificate surrendered in exchange therefor is registered, it will be a
condition of the issuance thereof that (i) the Certificate so surrendered will
be properly endorsed and otherwise in proper form for transfer and that the
Person requesting such exchange will have paid any transfer or other Taxes
required by reason of the issuance of a certificate for shares of Parent Common
Stock in a name other than the name of the registered holder of the Certificate
surrendered or (ii) established to the satisfaction of Parent, or any agent
designated by Parent, that such Tax has been paid or is not applicable.
(f) No Liability. Notwithstanding anything to the contrary in
this Agreement, none of the Exchange Agent, Parent, the Merger Sub or the
Surviving Corporation shall be liable to a holder of a Certificate for any
Parent Common Stock (and any cash payable for fractional shares of Parent Common
Stock or any other amount due, if any) that was properly delivered to a public
official pursuant to any applicable abandoned property, escheat or similar Law.
(g) Withholding of Tax. Parent or the Exchange Agent will be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement or the transactions contemplated hereby to any holder
of Company Common Stock such amounts as Parent (or any Affiliate thereof) or the
Exchange Agent are required to deduct and withhold with respect to the making of
such payment under the Code, or any applicable provision of federal, state,
local or foreign Tax Law (as defined herein). To the extent that amounts are so
properly withheld by Parent or the Exchange Agent, such withheld amounts will be
treated for all purposes of this Agreement as having been paid to the holder of
the Company Common Stock in respect of whom such deduction and withholding were
made by Parent.
1.13. FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK.
All shares of Parent Common Stock issued upon the surrender for
exchange of Company Common Stock in accordance with the terms of this Article I
(including any cash paid in respect thereof) shall be deemed to have been issued
in full satisfaction of all rights pertaining to such Company Common Stock. At
the Effective Time, the stock transfer books of the
6
11
Company shall be closed, and thereafter there shall be no further registration
of transfers of shares of Company Common Stock on the records of the Surviving
Corporation. From and after the Effective Time, the holders of Certificates
evidencing ownership of shares of Company Common Stock outstanding shall cease
to have any rights with respect to such shares of Company Common Stock except as
otherwise provided for herein. If, after the Effective Time, Certificates are
presented to the Surviving Corporation for any reason, they shall be canceled
and exchanged as provided in this Article I.
1.14. CLOSING.
Unless this Agreement shall have been terminated and the
transactions contemplated by this Agreement abandoned pursuant to the provisions
of Article VII, and subject to the provisions of Article VI, the closing of the
Merger (the "Closing") will take place at 10:00 a.m. (Pacific time) on a date
(the "Closing Date") to be mutually agreed upon by the parties, which date shall
be not later than the second Business Day after all the conditions set forth in
Article VI shall have been satisfied (or waived in accordance with Section 7.5,
to the extent the same may be waived), unless another time and/or date is agreed
by the parties hereto. The Closing shall take place at the offices of Xxxxxxx
Xxxxxxx & Xxxxxxxx, 0000 Xxxxxxxx Xxxxxx, Xxxx Xxxx, Xxxxxxxxxx 00000 or such
other place as the parties hereto otherwise agree.
1.15. LOST, STOLEN OR DESTROYED CERTIFICATES.
In the event any Certificates evidencing Company Common Stock
shall have been lost, stolen or destroyed, the Exchange Agent shall issue in
exchange for such lost, stolen or destroyed Certificates, upon the making of an
affidavit of that fact by the holder thereof, such shares of Parent Common Stock
and cash for fractional shares, if any, as may be required pursuant to Section
1.11; provided, however, that Parent may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificates to deliver a bond in such sum as it may reasonably direct
as indemnity against any claim that may be made against Parent or the Exchange
Agent with respect to the Certificates alleged to have been lost, stolen or
destroyed.
1.16. TAX CONSEQUENCES.
For federal income tax purposes, the parties intend that the
Merger be treated as a reorganization within the meaning of Section 368(a) of
the Code, and that this Agreement shall be, and is hereby, adopted as a plan of
reorganization for purposes of Section 368 of the Code. The parties shall not
take any action that would prevent or impede the Merger from qualifying as a
reorganization under Section 368(a) of the Code nor take a position on any Tax
Return (as defined herein) inconsistent with this Section 1.16.
7
12
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger
Sub as follows:
2.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) The Company is a corporation duly organized, validly
existing and in good standing under Delaware law and has all the requisite
corporate power and authority, and is in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, waivers, qualifications,
certificates, Orders (as defined herein) and approvals (collectively,
"Approvals") necessary to own, lease and operate its properties and to carry on
its business as it is now being conducted, except for such Approvals, the
failure of the Company to be in possession of which could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect. The
Company is duly qualified or licensed as a foreign corporation to do business,
and is in good standing, in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its activities makes
such qualification or licensing necessary, except where the failure to be so
qualified could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(b) Each Subsidiary of the Company is a legal entity, duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation or organization and has all the
requisite power and authority, and is in possession of all Approvals necessary
to own, lease and operate its properties and to carry on its business as it is
now being conducted, except for such Approvals, the failure of a Subsidiary of
the Company to be in possession of which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Each
Subsidiary is duly qualified or licensed as a foreign corporation or entity to
do business, and is in good standing, in each jurisdiction where the character
of the properties owned, leased or operated by it or the nature of its
activities makes such qualification or licensing necessary, except where the
failure to be so qualified could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(c) Section 2.1(c) of the Company Disclosure Schedule sets
forth, as of the date hereof, a true and complete list of all of the Company's
directly and indirectly owned Subsidiaries, together with the jurisdiction of
incorporation or organization of each Subsidiary and the percentage of each
Subsidiary's outstanding capital stock or other equity or other interest owned
by the Company or another Subsidiary of the Company. Except as set forth in
Section 2.1(c) of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries owns any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, directly or indirectly, any
equity or similar interest in, any Person.
8
13
2.2. CERTIFICATE OF INCORPORATION AND BYLAWS.
The Company has heretofore furnished or made available to Parent
a true and complete copy of each of its and each of its Subsidiaries'
Certificate of Incorporation and Bylaws or equivalent organizational documents,
as amended or restated to the date hereof. Such Certificate of Incorporation and
Bylaws or equivalent organizational documents of the Company and each of its
Subsidiaries are in full force and effect, and no other organizational documents
are applicable to or binding upon the Company or its Subsidiaries.
2.3. CAPITALIZATION.
(a) The authorized capital of the Company consists of
105,000,000 shares, divided into 100,000,000 shares of Company Common Stock and
5,000,000 shares of preferred stock, par value $0.10 per share (the "Company
Preferred Stock"). As of January 25, 2001, (i) 62,140,955 shares of Company
Common Stock were issued and outstanding, including the associated Company
Rights; (ii) no shares of Company Preferred Stock were issued or outstanding;
(iii) 1,282,052 shares of Company Common Stock were held in the treasury of the
Company; (iv) no shares of Company Common Stock were held by any Subsidiary of
the Company; (v) 10,987,128 shares of Company Common Stock were duly reserved
for future issuance pursuant to employee stock options granted pursuant to the
Option Plans (the "Outstanding Employee Options"); (vi) 287,700 shares of
Company Common Stock were duly reserved for future issuance pursuant to the
Company's Employee Stock Purchase Plan (the "Purchase Plan"); (vii) a sufficient
number of shares of Company Preferred Stock were reserved for issuance upon
exercise of Company Rights issued pursuant to the Company Rights Agreement; and
(viii) a sufficient number of shares of Company Common Stock were reserved for
issuance pursuant to the Option Agreement. None of the outstanding shares of
Company Common Stock are subject to, nor were they issued in violation of any,
purchase option, call option, right of first refusal, preemptive right,
subscription right or any similar right. Except as set forth above and in
Section 2.3(a) of the Company Disclosure Schedule, as of the date hereof, no
shares of voting or non-voting capital stock, other equity interests, or other
voting securities of the Company were issued, reserved for issuance or
outstanding. Except as described in Section 2.3(a) of the Company Disclosure
Schedule, all outstanding options to purchase Company Common Stock were granted
under the Company's Option Plans and the Option Agreement. Section 2.3(a) of the
Company Disclosure Schedule lists all outstanding options and warrants to
purchase Company Common Stock, the record holder thereof and the exercise prices
thereof. All outstanding shares of capital stock of the Company are, and all
shares which may be issued upon the exercise of stock options and warrants will
be, and all shares which may be issued pursuant to the Option Agreement will be,
when issued pursuant to the terms thereof, duly authorized, validly issued,
fully paid and nonassessable and not subject to any kind of preemptive (or
similar) rights. There are no bonds, debentures, notes or other indebtedness of
the Company with voting rights (or convertible into, or exchangeable for,
securities with voting rights) on any matters on which stockholders of the
Company may vote.
(b) Section 2.3(b) of the Company Disclosure Schedule sets forth
the number of authorized and outstanding shares of capital stock, and ownership
thereof, of each of the Company's Subsidiaries. Except as set forth on Section
2.3(b) of the Company Disclosure Schedule, all of the outstanding shares of
capital stock of each of the Company's Subsidiaries
9
14
have been duly authorized, validly issued, fully paid and nonassessable, are not
subject to, and were not issued in violation of, any preemptive (or similar)
rights, and are owned, of record and beneficially, by the Company or one of its
direct or indirect Subsidiaries, free and clear of all Liens whatsoever. Except
as set forth in Section 2.3(b) of the Company Disclosure Schedule, there are no
restrictions of any kind which prevent the payment of dividends by any of the
Company's Subsidiaries, and neither the Company nor any of its Subsidiaries is
subject to any obligation or requirement to provide funds for or to make any
investment (in the form of a loan or capital contribution) to or in any Person.
(c) Except for the Company Rights, the Option Agreement,
Outstanding Employee Options, options outstanding pursuant to the Purchase Plan
and as described in Section 2.3(c) of the Company Disclosure Schedule, as of the
date hereof, there are no outstanding securities, options, warrants, calls,
rights, convertible or exchangeable securities, commitments, agreements,
arrangements or undertakings of any kind (contingent or otherwise) to which the
Company or any of its Subsidiaries is a party or by which any of them is bound
obligating the Company or any of its Subsidiaries to issue, deliver or sell, or
cause to be issued, delivered or sold, additional shares of capital stock or
other voting securities of the Company or of any of its Subsidiaries or
obligating the Company or any of its Subsidiaries to issue, grant, extend or
enter into any such security, option, warrant, call, right, commitment,
agreement, arrangement or undertaking. Except as described in Section 2.3(c) of
the Company Disclosure Schedule, as of the date hereof, there are no outstanding
contractual obligations of the Company or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any shares of capital stock (or options or warrants
to acquire any such shares) of the Company or its Subsidiaries. Except as
described in Section 2.3(c) of the Company Disclosure Schedule, as of the date
hereof, there are no stock-appreciation rights, stock-based performance units,
"phantom" stock rights or other agreements, arrangements or commitments of any
character (contingent or otherwise) pursuant to which any Person is or may be
entitled to receive any payment or other value based on the revenues, earnings
or financial performance, stock price performance or other attribute of the
Company or any of its Subsidiaries or assets or calculated in accordance
therewith (other than ordinary course payments or commissions to employees or
sales representatives of the Company based upon revenues generated by them
without augmentation as a result of the transactions contemplated hereby)
(collectively, "Stock-Based Rights") or to cause the Company or any of its
Subsidiaries to file a registration statement under the Securities Act, or which
otherwise relate to the registration of any securities of the Company. Except as
set forth in Section 2.3(c) of the Company Disclosure Schedule, there are no
voting trusts, proxies or other agreements, commitments or understandings of any
character to which the Company or any of its Subsidiaries or, to the Knowledge
(as defined herein) of the Company, any of the Company's stockholders is a party
or by which any of them is bound with respect to the issuance, holding,
acquisition, voting or disposition of any shares of capital stock of the Company
or any of its Subsidiaries.
2.4. AUTHORITY; ENFORCEABILITY.
The Company has all necessary corporate power and authority to
execute and deliver this Agreement, the Option Agreement and each instrument
required to be executed and delivered by it at the Closing hereunder and
thereunder, perform its obligations hereunder and thereunder and consummate the
transactions contemplated hereby and thereby. The execution
10
15
and delivery by the Company of this Agreement and the Option Agreement, the
performance of its obligations hereunder and thereunder, and the consummation by
the Company of the transactions contemplated hereby and thereby, have been duly
and validly authorized by all corporate action and no other corporate
proceedings on the part of the Company are necessary to authorize this Agreement
or the Option Agreement or to consummate the transactions so contemplated (other
than, with respect to the Merger, the approval and authorization of this
Agreement by votes of the holders of a majority of the outstanding Company
Common Stock in accordance with Delaware law and the Company's Certificate of
Incorporation and Bylaws and the filing of the Certificate of Merger) herein or
therein. Each of this Agreement and the Option Agreement has been duly and
validly executed and delivered by the Company and, assuming the due
authorization, execution and delivery thereof by Parent and Merger Sub,
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms (subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in equity or at law)
and an implied covenant of good faith and fair dealing).
2.5. REQUIRED VOTE.
The Board of Directors of the Company has, at a meeting duly
called and held, (i) approved and declared advisable this Agreement and the
Option Agreement, (ii) determined that the transactions contemplated hereby and
thereby are advisable, fair to and in the best interests of the holders of
Company Common Stock, (iii) resolved to recommend adoption of this Agreement,
the Merger, and the other transactions contemplated hereby to the stockholders
of the Company and (iv) directed that this Agreement be submitted to the
stockholders of the Company for their approval and authorization. The
affirmative vote of a majority of all outstanding shares of Company Common Stock
is the only vote of the holders of any class or series of capital stock of the
Company necessary to approve and authorize this Agreement and the Merger. No
stockholder vote is required to approve or authorize the Option Agreement.
2.6. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery by the Company of this Agreement,
the Option Agreement or any instrument required by this Agreement to be executed
and delivered by the Company or any of its Subsidiaries at the Closing do not,
and the performance of this Agreement, the Option Agreement or any instrument
required by this Agreement to be executed and delivered by the Company or any of
its Subsidiaries at the Closing, shall not, (i) conflict with or violate the
Certificate of Incorporation or Bylaws or equivalent organizational documents of
the Company or any of its Subsidiaries, (ii) conflict with or violate any Law or
Order in each case applicable to the Company or any of its Subsidiaries or by
which its or any of their respective properties or assets is bound or affected,
or (iii) result in any breach or violation of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or impair the Company's or any of its Subsidiaries' rights or alter the rights
or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration, additional liabilities or fees or
cancellation of, or result in the creation of a Lien on any of the properties or
assets of the Company or any of its Subsidiaries pursuant to, any note, bond,
mortgage, indenture, Contract, permit, franchise or other instrument or
obligation to which the
11
16
Company or any of its Subsidiaries is a party or by which the Company or any of
its Subsidiaries or its or any of their respective properties or assets is bound
or affected, except (A) as set forth in Section 2.6(a) of the Company Disclosure
Schedule or (B) in the case of clause (ii) or (iii) above, for any such
conflicts, breaches, violations, defaults or other occurrences that could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(b) The execution and delivery by the Company of this Agreement,
the Option Agreement or any instrument required by this Agreement to be executed
and delivered by the Company or any of its Subsidiaries at the Closing do not,
and the performance of this Agreement, the Option Agreement and any instrument
required by this Agreement to be executed and delivered by the Company or any of
its Subsidiaries at the Closing, shall not, require the Company or any of its
Subsidiaries to, except as set forth in Section 2.6(b) of the Company Disclosure
Schedule, obtain any Approval of any Person or Approval of, observe any waiting
period imposed by, or make any filing with or notification to, any Governmental
Authority, domestic or foreign, except for (A) compliance with applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), state
securities laws ("Blue Sky Laws"), the rules and regulations at the New York
Stock Exchange and the NASDAQ Stock Market, the pre-merger notification
requirements of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), or Foreign Competition Laws, (B) the filing of the
Certificate of Merger in accordance with Delaware law or (C) where the failure
to obtain such Approvals, or to make such filings or notifications, could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
2.7. MATERIAL AGREEMENTS.
(a) Other than those set out in the Company SEC Reports (as
defined below) filed prior to the date hereof, the Company has delivered to
Parent true and complete copies of (or, with respect to those contracts that
consist solely of purchase orders, has delivered to Parent a materially true and
correct list identifying those purchase orders) all of the following Contracts
and other instruments to which the Company or any of its Subsidiaries is a party
or by which any of them or their properties or assets are bound as of the date
hereof (collectively, the "Material Agreements"):
(i) all equipment leases that involve payments by the
Company and/or its Subsidiaries in excess of $50,000 per year;
(ii) all software maintenance agreements or Intellectual
Property license arrangements that involve payments by the Company and/or its
Subsidiaries in excess of $10,000 per year;
(iii) all material agreements pursuant to which the
Company and/or its Subsidiaries license Company Intellectual Property (as
defined below);
(iv) all real property leases that involve payments by
the Company and/or its Subsidiaries in excess of $100,000 per year;
12
17
(v) all Contracts (other than those listed in clauses
(i) through (iv) above) that involve payments by the Company and/or its
Subsidiaries in excess of $100,000 per year or $250,000 in the aggregate;
(vi) all collective bargaining agreements;
(vii) promissory notes, loans, agreements, indentures,
evidences of indebtedness or other instruments and Contracts providing for the
borrowing or lending of money, whether as borrower, lender or guarantor, in each
case, relating to indebtedness or obligations in excess of $1,000,000;
(viii) Contracts containing a covenant limiting the
freedom of the Company or any of its Subsidiaries (or which purport to limit the
freedom of Parent after the Merger) to engage in any line of business or compete
with any Person or operate at any location in the world or that prohibits or
restricts the Company or its Subsidiaries (or which purport to prohibit or
restrict Parent after the Merger) from soliciting or retaining the employment of
any Person;
(ix) joint venture or partnership agreements or joint
development, distribution or similar agreements pursuant to which any third
party is entitled or obligated to develop or distribute any products on behalf
of the Company or its Subsidiaries or pursuant to which the Company or any of
its Subsidiaries is entitled or obligated to develop or distribute any products
on behalf of any third party;
(x) Contracts for the acquisition, directly or
indirectly (by merger or otherwise) of any business, all or substantially all of
the assets of any Person (whether tangible or intangible) or the capital stock
of another Person;
(xi) Contracts involving the issuance or repurchase of
any capital stock of the Company or any of its Subsidiaries (including newly
formed Subsidiaries), other than, with respect to the issuance of Company Common
Stock, the options or warrants listed in Section 2.3(a) of the Company
Disclosure Schedule;
(xii) Contracts under which the Company or any of its
Subsidiaries has granted or received exclusive rights with respect to Company
Intellectual Property or the distribution of the Company's products;
(xiii) any interest rate swaps, caps, floors or option
agreements or any other interest rate risk management arrangement or foreign
exchange Contracts;
(xiv) any employment or consulting agreements for
individuals with total annual compensation in excess of $100,000 pursuant to
which the Company or any of its Subsidiaries may incur any liability;
(xv) all agreements or insurance policies providing for
indemnification of any officer or director of the Company or any of its
Subsidiaries;
13
18
(xvi) all agreements evidencing a loan in excess of
$25,000 to any officer or director of the Company or any of its Subsidiaries;
and
(xvii) all Contracts relating to split-dollar life
insurance policies for any employee or director of the Company and its
Subsidiaries.
(b) (i) Except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, other than Material
Agreements that have terminated or expired in accordance with their terms, each
Material Agreement is in full force and effect, is a valid and binding
obligation of the Company or such Subsidiary and, to the Company's Knowledge, of
each other party thereto and is enforceable, in accordance with its terms,
against each party thereto (other than the Company or such Subsidiary), in each
case except that the enforcement thereof may be limited by (A) the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar Laws affecting creditors' rights generally, (B) general principles
of equity (whether in a proceeding in equity or at law) and (C) an implied
covenant of good faith and fair dealing, and (ii) to the Knowledge of the
Company, neither the Company nor any of its Subsidiaries is or alleged to be,
and, to the Knowledge of the Company, no other party is or alleged to be, in
material default under, or in material breach or material violation of, any
Material Agreement and, to the Knowledge of the Company, no event or failure to
act has occurred which, with the giving of notice or passage of time or both,
would constitute such a material default, breach or violation. The designation
or definition of Material Agreements for purposes of this Section 2.7 and the
disclosures made pursuant thereto will not be construed or utilized to expand,
limit or define the terms "material" and "Material Adverse Effect" as otherwise
referenced and used in this Agreement.
2.8. COMPLIANCE.
(a) The Company and each of its Subsidiaries are in compliance
with, and are not in default or violation of, (i) the Certificate of
Incorporation and Bylaws of the Company or the equivalent organizational
documents of such Subsidiary, (ii) any Law or Order by which any of their
respective assets or properties are bound or affected and (iii) the terms of all
notes, bonds, mortgages, indentures, Contracts, permits, franchises and other
instruments or obligations to which any of them are a party or by which any of
them or any of their respective assets or properties are bound or affected,
except, in the case of clauses (ii) and (iii), for any such failures of
compliance, defaults and violations which could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. To the
Knowledge of the Company, the Company and its Subsidiaries are in compliance
with the terms of all Approvals, except where the failure to so comply could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. To the Knowledge of the Company, the Company and its
Subsidiaries have conducted their export transactions in all material respects
in accordance with applicable provisions of United States export control laws
and regulations, including but not limited to (i) the Export Administration Act
and the Export Administration Regulations thereunder and (ii) the Arms Export
Control Act and the International Traffic in Arms Regulations thereunder.
Without limiting the foregoing, the Company represents and warrants that, to its
Knowledge, (A) it and its Subsidiaries have obtained all material export
licenses and other approvals required for their exports of products, software
and technologies from the United States, (B) it and its Subsidiaries are in
material compliance with the terms of all
14
19
applicable export licenses or other approvals, (C) there are no pending or
threatened material claims against the Company or its Subsidiaries with respect
to such export licenses or other approvals, (D) there are no actions, conditions
or circumstances pertaining to the Company's or its Subsidiaries' export
transactions that may give rise to any future material claim and (E) no consents
or approvals for the transfer of export licenses to Parent are required, or such
consents and approvals can be obtained expeditiously without material cost.
Except as set forth in Section 2.8 of the Company Disclosure Schedule or as
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect, neither the Company nor any of its Subsidiaries has
received notice of any revocation or modification of any federal, state, local
or foreign Governmental Authority, or any Approval of any federal, state, local
or foreign Governmental Authority that is material to the Company or any of its
Subsidiaries.
(b) To the Company's Knowledge, as of the date hereof, neither
the Company nor any of its Subsidiaries nor any director, officer, employee or
agent of the Company or any of its Subsidiaries has, except for any of such
uses, payments or transactions as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, (i) used any funds for
unlawful contributions, gifts, entertainment or other unlawful payments relating
to political activity, (ii) made any unlawful payment to any foreign or domestic
government official or employee or to any foreign or domestic political party or
campaign or violated any provision of the Foreign Corrupt Practices Act of 1977,
as amended, (iii) consummated any transaction, made any payment, entered into
any agreement or arrangement or taken any other action in violation of Section
1128B(b) of the Social Security Act, as amended, or (iv) made any other unlawful
payment.
2.9. SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports, schedules, statements and
documents required to be filed with the Securities and Exchange Commission
("SEC") since January 1, 1998 (collectively, the "Company SEC Reports") pursuant
to the federal securities Laws and the Regulations of the SEC promulgated
thereunder, and all Company SEC Reports have been filed in all material respects
on a timely basis. The Company SEC Reports were prepared in accordance, and
complied as of their respective filing dates in all material respects, with the
requirements of the Exchange Act, the Securities Act and the Regulations
promulgated thereunder and did not at the time they were filed (or if amended or
superseded by a filing prior to the date hereof, then on the date of such
filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of the Company's Subsidiaries has filed, or is
obligated to file, any forms, reports, schedules, statements or other documents
with the SEC.
(b) Each of the audited and unaudited consolidated financial statements
(including, in each case, any related notes thereto) contained in the Company
SEC Reports (the "SEC Financial Statements") (i) complied as to form in all
material respects with applicable accounting requirements and the published
Regulations of the SEC with respect thereto, (ii) were prepared in accordance
with generally accepted accounting principles ("GAAP") (except, in the case of
unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto) and (iii) fairly
15
20
present in all material respects the consolidated financial position of the
Company as at the respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that the unaudited
interim financial statements included in the Company's Form 10-Q reports were or
are subject to normal and recurring year-end adjustments.
(c) The unaudited consolidated financial statements previously provided
to Parent, as at December 31, 2000 and for the fiscal year then ended (the
"December 31 Financial Statements"), were prepared in accordance with GAAP (with
the exception of the absence of footnotes) applied on a consistent basis with
the SEC Financial Statements, and fairly present in all material respects the
consolidated financial position of the Company as at the date thereof and the
consolidated results of its operations and cash flows for the periods indicated.
2.10. ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as described in Section 2.10(a) of the Company Disclosure
Schedule or as set forth in the Company SEC Reports filed prior to the date of
this Agreement, since December 31, 2000, the Company and its Subsidiaries have
conducted their businesses only in the ordinary and usual course and in a manner
consistent with past practice, and, since such date, there has not been any
change, development, circumstance, condition, event, occurrence, damage,
destruction or loss that has had or could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
(b) Except as described in Section 2.10(b) of the Company Disclosure
Schedule or as set forth in the Company SEC Reports filed prior to the date of
this Agreement, during the period from December 31, 2000 to the date hereof, (i)
there has not been any change by the Company in its accounting methods,
principles or practices, any revaluation by the Company of any of its assets,
including, writing down the value of inventory or writing off notes or accounts
receivable, and (ii) there has not been any action or event, and neither the
Company nor any of its Subsidiaries has agreed in writing or otherwise to take
any action, that would have required the consent of Parent pursuant to Section
4.1 had such action or event occurred or been taken after the date hereof and
prior to the Effective Time.
2.11. NO UNDISCLOSED LIABILITIES.
Neither the Company nor any of its Subsidiaries has any
liabilities or obligations of any nature (whether absolute, accrued, fixed,
contingent or otherwise), and there is no existing fact, condition or
circumstance which could reasonably be expected to result in such liabilities or
obligations, except liabilities or obligations (i) reflected in the Company SEC
Reports filed and publicly available prior to the date hereof or in the December
31 Financial Statements, (ii) disclosed in Section 2.11 of the Company
Disclosure Schedule, or (iii) incurred in the ordinary course of business which
do not have, and could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
2.12. ABSENCE OF LITIGATION.
Except as described in Section 2.12 of the Company Disclosure
Schedule or expressly described in the Company SEC Reports filed and publicly
available prior to the date hereof, there is no Litigation pending against or,
to the Knowledge of the Company, threatened
16
21
against the Company, any of its Subsidiaries, or any of their respective
properties or rights, before or subject to any Court or Governmental Authority,
which, if adversely determined, could, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. Neither the Company
nor any of its Subsidiaries is subject to any outstanding Litigation or Order,
which, individually or in the aggregate, has had or could reasonably be expected
to have, a Material Adverse Effect.
2.13. EMPLOYEE BENEFIT PLANS.
(a) Section 2.13(a) of the Company Disclosure Schedule contains
a true and complete list of each "employee benefit plan" (within the meaning of
Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), including, without limitation, multiemployer plans within the meaning
of ERISA Section 3(37)), and all stock purchase, stock option, severance,
employment, change-in-control, fringe benefit, collective bargaining, bonus,
incentive, deferred compensation and all other employee benefit plans,
agreements, programs, policies or other arrangements, whether or not subject to
ERISA (including any funding mechanism therefor now in effect or required in the
future as a result of the transaction contemplated by this Agreement or
otherwise), whether formal or informal, oral or written, legally binding or not,
under which any employee or former employee of the Company or its Subsidiaries
(the "Company Employees") has any present or future right to benefits sponsored
or maintained by the Company or its Subsidiaries or under which the Company or
its Subsidiaries has any present or future liability. All such plans,
agreements, programs, policies and arrangements shall be collectively referred
to as the "Employee Plans".
(b) With respect to each Employee Plan, the Company has provided
to Parent a current, accurate and complete copy (or, to the extent no such copy
exists, an accurate description) thereof and, to the extent applicable: (i) any
related trust agreement or other funding instrument; (ii) the most recent
determination letter, if applicable; (iii) any summary plan description and
other written communications (or a description of any oral communications) by
the Company or its Subsidiaries to their employees concerning the extent of the
benefits provided under an Employee Plan; and (iv) for the three most recent
years (A) the Form 5500 and attached schedules, (B) audited financial
statements, and (C) actuarial valuation reports.
(c) (i) Each Employee Plan has been established and administered
in substantial compliance with its terms, and in substantial compliance with the
applicable provisions of ERISA, the Code and other applicable laws, rules and
regulations; (ii) each Employee Plan which is intended to be qualified within
the meaning of Code Section 401(a) has received a favorable determination letter
as to its qualification, and to the Knowledge of the Company, nothing has
occurred, whether by action or failure to act, that could reasonably be expected
to cause the loss of such qualification; (iii) to the Knowledge of the Company,
no event has occurred and no condition exists that would subject the Company or
its Subsidiaries, either directly or by reason of their affiliation with any
member of their "Controlled Group" (defined as any organization which is a
member of a controlled group of organizations within the meaning of Code
Sections 414(b), (c), (m) or (o)), to any tax, fine, lien, penalty or other
liability imposed by ERISA, the Code or other applicable laws, rules and
regulations; (iv) no "reportable event" (as such term is defined in ERISA
Section 4043), to the Knowledge of the Company, nonexempt "prohibited
transaction" (as such term is defined in ERISA Section 406 and Code Section
4975)
17
22
or "accumulated funding deficiency" (as such term is defined in ERISA Section
302 and Code Section 412 (whether or not waived)) has occurred with respect to
any Employee Plan; (v) except as disclosed in Schedule 2.13(c)(v), no Employee
Plan provides retiree welfare benefits except as defined under Section 4980B of
the Code, and except as disclosed on Schedule 2.13(c)(v), neither the Company
nor its Subsidiaries have any obligations to provide any retiree welfare
benefits except as required under Section 4980B of the Code; and (vi) neither
the Company nor any member of its Controlled Group has engaged in, or is a
successor or parent corporation to an entity that has engaged in, a transaction
described in Sections 4069 or 4212(c) of ERISA.
(d) None of the Employee Plans is subject to Title IV of ERISA
(including, without limitation, any multiemployer plan within the meaning of
ERISA Section 4001(a)(3)) and none of the Company, its Subsidiaries or any
member of their Controlled Group has incurred any liability under Title IV of
ERISA which remains unsatisfied.
(e) With respect to any Employee Plan, (i) no actions, suits or
claims (other than routine claims for benefits in the ordinary course) are
pending or, to the Knowledge of the Company, threatened, (ii) other than routine
benefits processing, to the Knowledge of the Company no facts or circumstances
exist that could give rise to any such actions, suits or claims and (iii) no
administrative investigation, audit or other administrative proceeding by the
Department of Labor, the Pension Benefit Guaranty Corporation, the Internal
Revenue Service or other governmental agencies are pending, in progress or, to
the Knowledge of the Company, threatened.
(f) Except as provided in Section 2.13(f) of the Company
Disclosure Schedule, no Employee Plan exists that could result in the payment to
any present or former employee of the Company or any of its Subsidiaries of any
money or other property or accelerate or provide any other rights or benefits to
any present or former employee of the Company or any of its Subsidiaries as a
result of the transactions contemplated by this Agreement. Except as provided in
Section 2.13(f) of the Company Disclosure Schedule, there is no Contract, plan
or arrangement (written or otherwise) covering any employee or former employee
of the Company or any of its Subsidiaries that, individually or collectively,
could give rise to the payment of any amount that would not be deductible
pursuant to the terms of Section 280G of the Code.
(g) Section 2.13(g) of the Company Disclosure Schedule sets
forth a true and complete list of each current or former employee, officer,
director and investor of the Company or any of its Subsidiaries who holds, as of
the date hereof, any option, warrant or other right to purchase Company Common
Stock or Company Preferred Stock or any shares of restricted stock, if any,
together with the number of shares of Company Common Stock or Company Preferred
Stock, if any, subject to such option, warrant or right, the date of grant or
issuance of such option, warrant or right, the extent to which such option,
warrant or right is vested and/or exercisable, the exercise price of such
option, warrant or right, whether such option is intended to qualify as an
incentive stock option within the meaning of Section 422(b) of the Code, and the
expiration date of each such option, warrant and right. Section 2.13(g) of the
Company Disclosure Schedule also sets forth the total number of such options,
warrants and rights.
18
23
2.14. EMPLOYMENT AND LABOR MATTERS.
(a) Except as set forth in Section 2.14(a) of the Company
Disclosure Schedule, none of the Company's or any Subsidiary's employment
policies or practices is currently being audited or, to the Knowledge of the
Company, investigated by any Governmental Authority or Court. Except as set
forth in Section 2.14(a) of the Company Disclosure Schedule or as could not,
individually or in the aggregate reasonably be expected to have a Material
Adverse Effect, there is no pending or, to the Knowledge of the Company,
threatened Litigation, unfair labor practice charge, or other charge or inquiry
against the Company or any Subsidiary brought by or on behalf of any employee,
prospective employee, former employee, retiree, labor organization or other
representative of the Company's or Subsidiary's employees, or other individual
or any Governmental Authority with respect to employment practices.
(b) Except as set forth in Section 2.14(b) of the Company
Disclosure Schedule, (i) there are no material controversies pending or
threatened, between the Company or any of its Subsidiaries and any of their
respective employees; (ii) neither the Company nor any of its Subsidiaries is a
party to any collective bargaining agreement or other labor union Contract
applicable to Persons employed by the Company or its Subsidiaries nor are there
any activities or proceedings of any labor union to organize any such employees
of the Company or any of its Subsidiaries of which the Company is aware; (iii)
during the past five years there have been no strikes, slowdowns, work
stoppages, disputes, lockouts, or threats thereof, by or with respect to any
employees of the Company or any of its Subsidiaries; and (iv) neither the
Company nor any Subsidiary is a party to, or otherwise bound by, any consent
decree with, or citation or other Order by, any Governmental Authority relating
to employees or employment practices. The Company and each of its Subsidiaries
are in compliance in all material respects with all material Laws, Contracts,
and policies relating to employment, employment practices, wages, hours, and
terms and conditions of employment, including the obligations of the Worker
Adjustment and Retraining Notification Act of 1988, as amended ("WARN"), and all
other notification and bargaining obligations arising under any collective
bargaining agreement, by Law or otherwise. Neither the Company nor any
Subsidiary of the Company has effectuated a "plant closing" or "mass layoff" as
those terms are defined in WARN, affecting in whole or in part any site of
employment, facility, operating unit or employee of the Company, without
complying with all material provisions of WARN or implemented any early
retirement, separation or window program within the past five years, nor has the
Company or any Subsidiary planned or announced any such action or program for
the future.
2.15. REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS.
None of the information supplied by the Company for inclusion in
the registration statement on Form S-4, or any amendment or supplement thereto,
pursuant to which the shares of Parent Common Stock to be issued in the Merger
will be registered with the SEC (including any amendments or supplements, the
"Registration Statement") shall, at the time such document is filed, at the time
amended or supplemented and at the time the Registration Statement is declared
effective by the SEC, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied by the Company for
inclusion in the proxy statement/prospectus to be sent to the
19
24
stockholders of the Company in connection with the meeting of the stockholders
of the Company to consider the Merger and vote on a proposal to adopt the Merger
Agreement (the "Company Stockholders' Meeting") (such proxy
statement/prospectus, as amended or supplemented, is referred to herein as the
"Proxy Statement") shall, on the date the Proxy Statement is first mailed to the
stockholders of the Company, at the time of the Company Stockholders' Meeting
and at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not false or misleading. The Proxy Statement shall comply in all
material respects as to form and substance with the requirements of the Exchange
Act and the Regulations promulgated thereunder. Notwithstanding the foregoing,
the Company makes no representation or warranty with respect to any information
supplied by Parent or Merger Sub which is contained or incorporated by reference
in the Registration Statement or Proxy Statement.
2.16. TAXES.
For purposes of this Agreement, "Tax" or "Taxes" shall mean
taxes and governmental impositions of any kind in the nature of (or similar to)
taxes, payable to any federal, state, local or foreign taxing authority,
including those on or measured by or referred to as income, franchise, profits,
gross receipts, capital ad valorem, custom duties, alternative or add-on minimum
taxes, estimated, environmental, disability, registration, value added, sales,
use, service, real or personal property, capital stock, license, payroll,
withholding, employment, social security, workers' compensation, unemployment
compensation, utility, severance, production, excise, stamp, occupation,
premiums, windfall profits, transfer and gains taxes, and interest, penalties
and additions to tax imposed with respect thereto; and "Tax Returns" shall mean
returns, reports and information statements, including any schedule or
attachment thereto, with respect to Taxes required to be filed with the Internal
Revenue Service or any other governmental or taxing authority or agency,
domestic or foreign, including consolidated, combined and unitary tax returns.
Except as set forth in Section 2.16 of the Company Disclosure Schedule:
(a) All material Tax Returns required to be filed by or on
behalf of the Company, each of its Subsidiaries, and each affiliated,
combined, consolidated or unitary group of which the Company or any of
its Subsidiaries is a member have, to the extent required to be filed on
or before the date hereof, been timely filed, and all such Tax Returns
are true, complete and correct in all material respects.
(b) All material Taxes due and payable by or with respect to the
Company and each of its Subsidiaries shown on any Tax Return have been
timely paid. The Company and each of its Subsidiaries have established
adequate reserves (other than reserves for deferred Taxes established to
reflect timing differences between book and Tax treatment) in accordance
with GAAP on the respective company's Balance Sheet for any material
Taxes not yet due for all periods ending on or before the date of the
latest Balance Sheet. All assessments for material Taxes due and owing
by or with respect to the Company and each of its Subsidiaries with
respect to completed and settled examinations or concluded litigation
have been paid. Neither the Company nor any of its Subsidiaries has
incurred a Tax liability from the date of the latest Balance Sheet other
than a Tax liability in the
20
25
ordinary course of business. No material claim for unpaid Taxes has
become a Lien against the property of the Company or any of its
Subsidiaries or is being asserted against the property of the Company or
any of its Subsidiaries other than liens for Taxes not yet due and
payable or for Taxes contested in good faith and for which adequate
reserves have been established.
(c) No action, suit, proceeding, investigation, claim or audit
has formally commenced and no written notice has been received that such
audit or other proceeding is pending or threatened by any Governmental
Authority with respect to the Company or any of its Subsidiaries or any
group of corporations of which any of the Company and its Subsidiaries
has been a member, with regard to years or periods during which the
Company or its Subsidiaries were a member thereof in respect of any
Taxes, and all deficiencies proposed as a result of such actions, suits,
proceedings, investigations, claims or audits have been paid, reserved
against or settled.
(d) Neither the Company nor any of its Subsidiaries has
requested, or been granted any waiver of any federal, state, local or
foreign statute of limitations with respect to, or any extension of a
period for the assessment of, any Tax. No extension or waiver of time
within which to file any Tax Return of, or applicable to, the Company or
any of its Subsidiaries has been granted or requested which has not
since expired.
(e) To the Knowledge of the Company, none of the Company or any
of its Subsidiaries has been a member of an affiliated, consolidated,
combined or unitary group (other than a group the common parent of which
was the Company) or has any material liability for the Taxes of any
Person under Treasury Regulation Section 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor,
by contract or otherwise.
(f) None of the Company or any of its Subsidiaries is a party
to, or is bound by or has any obligation under any Tax sharing agreement
or similar contract or arrangement. No closing agreement pursuant to
Section 7121 of the Code (or any similar provision of state, local or
foreign law) has been entered into by the Company or any of its
Subsidiaries.
(g) The Company and its Subsidiaries have not made any material
payments, are not obligated to make any material payments, and are not a
party to any agreements that under any circumstances could obligate any
of them to make any material payments, that will not be deductible under
Section 280G or Section 162(m) of the Code.
(h) The Company has not been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code
during the applicable period specified in Section 897(c)(1)(A)(ii) of
the Code.
(i) The Company and each of its Subsidiaries have complied with
all applicable Laws relating to the payment, collection, withholding and
deposit, as the case may be, of Taxes (including, without limitation,
withholding of Taxes pursuant to Sections 1441, 1442 and 3406 of the
Code or similar provisions under any foreign Laws)
21
26
and, to the extent required, have paid all amounts to the relevant
Governmental Authority, and have, within the time and in the manner
required by Law, withheld from employee wages and paid over to the
proper Governmental Authorities all amounts required to be so withheld
and paid over under all applicable Laws. The Company and its
Subsidiaries have collected all material sales and use taxes required to
be collected, and have remitted, or will remit on a timely basis, such
amounts to the appropriate Governmental Authorities, or have been
furnished properly completed exemption certificates and have maintained
all such records and supporting documents in the manner required by all
applicable sales and use tax statutes an regulations for all periods for
which the statute of limitations has not expired.
(j) Neither the Company nor any of its Subsidiaries has made an
election under Section 341(f) of the Code.
(k) None of the Company and its Subsidiaries will be required to
include any material amount in taxable income for any taxable period (or
portion thereof) ending after the Closing Date as a result of a change
in the method of accounting for a taxable period ending prior to the
Closing Date, any "closing agreement" as described in Section 7121 of
the Code (or any corresponding provision of state, local or foreign Tax
Laws) entered into prior to the Closing Date, any sale reported on the
installment method that occurred prior to the Closing Date, or any
taxable income attributable to any amount that is economically accrued
prior to the Closing Date.
(l) None of the Company nor any of its Subsidiaries has been a
party to any distribution occurring during the last two years in which
the parties to the distribution treated the distribution as one to which
Section 355 of the Code is applicable.
2.17. ENVIRONMENTAL MATTERS.
(a) Except as described on Section 2.17 of the Company
Disclosure Schedule, as expressly described in the written materials provided to
the Parent or as expressly described in any Environmental Report obtained by
Parent with respect to the Company or any of its Subsidiaries, and except as
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect: (i) the Company and each of its Subsidiaries complies
and have complied, during all applicable statute of limitations periods, with
all applicable Environmental Laws, and possess and comply, and have possessed
and complied during all applicable statute of limitations periods, with all
Environmental Permits; (ii) to the Knowledge of the Company, there are and have
been no Materials of Environmental Concern or other conditions at any property
owned, operated, or otherwise used by the Company now or in the past, or at any
other location (including without limitation any facility to which Materials of
Environmental Concern from the Company or any of its Subsidiaries), that are in
circumstances that could reasonably be expected to give rise to any liability of
the Company or any of its Subsidiaries, or result in costs to the Company or any
of its Subsidiaries arising out of any Environmental Law; (iii) no Litigation
(including, to the Knowledge of the Company, any notice of violation or alleged
violation), under any Environmental Law or with respect to any Materials of
Environmental Concern to which the Company or any of its Subsidiaries is, or to
the Knowledge of the Company will be, named as a party, or affecting their
business, is pending or, to the Knowledge of the Company,
22
27
threatened, nor is the Company or any of its Subsidiaries the subject of any
investigation to its Knowledge or the recipient of any request for information
in connection with any such Litigation or potential Litigation; (iv) there are
no Orders or agreements under any Environmental Law or with respect to any
Materials of Environmental Concern to which the Company or any of its
Subsidiaries is a party or affecting their business; and (v) to the Knowledge of
the Company, each of the foregoing representations and warranties is true and
correct with respect to any entity for which the Company or any of its
Subsidiaries has assumed or retained liability, whether by Contract or operation
of Law.
(b) The Company has furnished or made available to Parent true
and complete copies of all Environmental Reports in the possession of the
Company or any of its Subsidiaries.
(c) For purposes of this Agreement, the terms below are defined
as follows:
"Environmental Laws" shall mean any and all Laws, Orders,
guidelines, codes, or other legally enforceable requirement (including,
without limitation, common law) of any foreign government, the United
States, or any state, local, municipal or other Governmental Authority,
regulating, relating to or imposing liability or standards of conduct
concerning protection of the environment or of human health.
"Environmental Permits" shall mean any and all permits,
licenses, registrations, notifications, exemptions and any other
Approvals required of the Company under any Environmental Law.
"Environmental Report" shall mean any report, study, assessment,
audit, or other similar document that addresses any issue of actual or
potential noncompliance with, actual or potential liability under or
cost arising out of, or actual or potential impact on business in
connection with, any Environmental Law or any proposed or anticipated
change in or addition to Environmental Law, that may in any way affect
the Company or any entity for which it may be liable or any Subsidiary.
"Materials of Environmental Concern" shall mean any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum
products, polychlorinated biphenyls, urea-formaldehyde insulation,
asbestos, pollutants, contaminants, radioactivity, and any other
substances of any kind, whether or not any such substance is defined as
hazardous or toxic under any Environmental Law, that is regulated
pursuant to or could give rise to liability under any Environmental Law.
2.18. INTELLECTUAL PROPERTY.
(a) The Company has provided or made available all material
United States and foreign patent, copyright, trademark, service xxxx, trade
dress, domain name and other registrations, and applications, and all material
unregistered Intellectual Property owned or used by the Company or its
Subsidiaries ("Company Intellectual Property").
(b) To the Knowledge of the Company, all material patents and
Company Intellectual Property (and all applications therefor) are currently in
compliance in all material respects with all applicable legal requirements
(including timely filings, proofs and payments of
23
28
fees), and to the Knowledge of the Company, are valid and enforceable, except
for such noncompliance, invalidity or unenforceability that could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(c) Except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, the Company and its
Subsidiaries own or have the valid right to use all of the Intellectual Property
used in the conduct of the Company's and each of its Subsidiaries' business as
currently conducted and for the ownership, maintenance and operation of the
Company's and its Subsidiaries' properties and assets, free of any obligation to
pay royalties, honoraria or other fees, except as set forth in Section 2.18(c)
of the Company Disclosure Schedule. Except as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, the Company
and its Subsidiaries own, free and clear of all Liens or adverse ownership
claims (including by current and former employees and contractors) all their
owned Company Intellectual Property.
(d) Except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, the Company and each
of its Subsidiaries have taken all commercially reasonable steps to maintain,
police and protect the Intellectual Property which they own or use, including
the execution of all appropriate Intellectual Property assignments and releases,
(including from past and current employees and contractors), true and complete
representative copies of which have been delivered to Parent. To the Knowledge
of the Company, except under written confidentiality agreements, there has been
no disclosure of any confidential Company Intellectual Property to any third
party, which could, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect. Except as disclosed in Section 2.18(d) of the
Company Disclosure Schedule, to the Knowledge of the Company and except as could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, (i) the conduct of the Company's and its Subsidiaries'
businesses as currently conducted or planned to be conducted does not infringe
or otherwise impair or conflict with ("Infringe") any Intellectual Property of
any third party, and the Company Intellectual Property is not being Infringed by
any third party, (ii) there is no Litigation or Order pending or outstanding, or
to the Knowledge of the Company, threatened, that seeks to limit or challenge or
that concerns the ownership, use, validity or enforceability of any Company
Intellectual Property.
2.19. INSURANCE.
The Company's policies of insurance and bonds as currently in
effect are of the type and in amounts customarily carried by Persons conducting
businesses similar to those of the Company and its Subsidiaries. To the
Knowledge of the Company, there is no material claim by the Company or any of
its Subsidiaries pending under any of such policies or bonds as to which
coverage has been questioned, denied or disputed by the underwriters of such
policies or bonds. All premiums payable under all such policies and bonds have
been paid and the Company and its Subsidiaries are in material compliance with
the terms of such policies and bonds (or other policies and bonds providing
substantially similar insurance coverage), and the Company shall, and shall
cause its Subsidiaries to, maintain in full force and effect all such insurance
during the period from the date hereof through the Closing Date. To the
Knowledge of the Company, there
24
29
is not any threatened termination of or material premium increase with respect
to any of such policies or bonds.
2.20. NO RESTRICTIONS ON THE MERGER; TAKEOVER STATUTES.
The Board of Directors of the Company has, on or prior to the
date hereof, approved this Agreement, the Option Agreement, the Merger and the
other transactions contemplated hereby and such approval is sufficient to render
inapplicable to this Agreement, the Option Agreement, the Merger and any other
transactions contemplated hereby, the restrictions on business combinations of
Section 203 of the DGCL. To the Company's Knowledge, no other takeover statute
or similar Law applicable to the Company or its Subsidiaries or any Material
Agreement to which any of them is a party (a) would or would purport to impose
restrictions which might adversely affect or delay the consummation of the
transactions contemplated by this Agreement, or the Option Agreement, or (b) as
a result of the consummation of the transactions contemplated by this Agreement
or the Option Agreement or the acquisition of securities of the Company or the
Surviving Corporation by Parent or Merger Sub (i) would or would purport to
restrict or impair the ability of Parent to vote or otherwise exercise the
rights of a stockholder with respect to securities of the Company or any of its
Subsidiaries that may be acquired or controlled by Parent or (ii) would or would
purport to entitle any Person to acquire securities of the Company.
2.21. POOLING; TAX MATTERS.
(a) To the Knowledge of the Company, neither the Company nor any
of its Affiliates has taken or agreed to take any action, failed to take any
action or is aware of any fact or circumstance that would prevent (i) the Merger
from being treated for financial accounting purposes as a "pooling of interests"
in accordance with GAAP and the Regulations of the SEC or (ii) the Merger from
constituting a reorganization within the meaning of Section 368(a) of the Code.
(b) The Company has no Knowledge of any reason why it may not
receive a letter from KPMG LLP (the "Company's Accountants") dated as of the
Closing Date and addressed to the Company in which the Company's Accountants
will concur with the Company management's conclusion that no conditions exist
related to the Company that would preclude Parent from accounting for the Merger
as a "pooling of interests."
(c) Section 2.21(c) of the Company Disclosure Schedule contains
a true and complete list of all Persons who, to the Knowledge of the Company,
may be deemed to be Affiliates of the Company, excluding all of its Subsidiaries
but including all directors and executive officers of the Company.
2.22. BROKERS.
No broker, financial advisor, finder or investment banker or
other Person is entitled to any broker's, financial advisor's, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of the Company, except
for Xxxxxxxxx Xxxxxxxx, Inc. (the "Company Financial Advisors"). Section 2.22 of
the Company Disclosure Schedule sets forth, and the Company has
25
30
heretofore furnished to Parent a true and complete copy of, all agreements
between the Company and the Company Financial Advisors pursuant to which such
Person would be entitled to any payment relating to the transactions
contemplated hereunder.
2.23. INTERESTED PARTY TRANSACTIONS.
Except as disclosed in Section 2.23 of the Company Disclosure
Schedule or in SEC Reports filed prior to the date hereof, there are no existing
Contracts, transactions, indebtedness or other arrangements, or any related
series thereof, between the Company or any of its Subsidiaries, on the one hand,
and any of the directors, officers, stockholders or other Affiliates of the
Company and its Subsidiaries, or any of their respective Affiliates or family
members, on the other (except for amounts due as normal salaries and bonuses and
in reimbursement of ordinary expenses).
2.24. OPINION OF FINANCIAL ADVISOR.
The Company has received the written opinion of the Company
Financial Advisors to the effect that, in its opinion, as of the date hereof,
the Exchange Ratio to be used in the Merger is fair to such stockholders of the
Company from a financial point of view, and the Company has provided copies of
such opinion to Parent.
2.25. COMPANY RIGHTS AGREEMENT.
The Company Board of Directors has approved and duly authorized
and the Company has executed an amendment and will amend, within two Business
Days of the date of this Agreement,(substantially in the form provided to
Parent) the Company Rights Agreement to the effect that neither of Parent or
Merger Sub or any of their respective Affiliates shall become an Acquiring
Person (as defined in the Company Rights Agreement), and that no Distribution
Date (as defined in the Company Rights Agreement) will occur, and that the
Company Rights will not separate from the underlying shares of Company Common
Stock or give the holders thereof the right to acquire securities of any party
hereto, in each case as a result of the approval, execution or delivery of this
Agreement, the Option Agreement or the consummation of the transactions
contemplated hereby or thereby. The Company Rights Agreement shall terminate and
be of no further force or effect immediately prior to the Effective Time,
without any consideration being payable with respect to the outstanding Company
Rights thereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub hereby, jointly and severally, represent
and warrant to the Company as follows:
3.1. ORGANIZATION AND QUALIFICATION.
Each of Parent and Merger Sub is a corporation duly organized,
validly existing and in good standing under the laws of Delaware. Parent has all
the requisite corporate power
26
31
and authority, and is in possession of all Approvals necessary to own, lease and
operate its properties and to carry on its business as it is now being
conducted, except where the failure to be so qualified, existing and in good
standing or to have such power, authority and Approvals could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
Each of Parent and Merger Sub is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that could
not, either individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Merger Sub is a newly-formed single purpose entity
which has been formed solely for the purposes of the Merger and will not carry
on any business or engage in any activities other than those reasonably related
to the Merger.
3.2. CAPITALIZATION.
(a) The authorized capital of Parent consists of 960,000,000
shares of Parent Common Stock and 2,000,000 shares of preferred stock, par value
$0.001 per share ("Parent Preferred Stock"). As of January 25, 2001, (i)
285,248,567 shares of Parent Common Stock were issued and outstanding; (ii) no
shares of Parent Preferred Stock were issued or outstanding; (iii) no shares of
Parent Common Stock were held by any Subsidiary of the Parent; (iv) 74,296,016
shares of Parent Common Stock were duly reserved for future issuance upon
exercise of options granted to employees under its employee stock option plans
(the "Parent Option Plans"); and (v) a sufficient number of shares of Parent
Common Stock were duly reserved for future issuance pursuant to the Employee
Stock Participation Plan. None of the outstanding shares of Parent Common Stock
are subject to, nor were they issued in violation of any, purchase option, call
option, right of first refusal, preemptive right, subscription right or any
similar right. Except as set forth above and in Section 3.2(a) of the Parent
Disclosure Schedule, as of the date hereof, no shares of voting or non-voting
capital stock, other equity interests, or other voting securities of Parent were
issued, reserved for issuance or outstanding. Except as described in Section
3.2(a) of the Parent Disclosure Schedule, all outstanding options to purchase
Parent Common Stock were granted under the Parent Option Plans. All of the
outstanding shares of Parent Common Stock are, and all shares to be issued as
part of the Merger Consideration will be, when issued in accordance with the
terms hereof, duly authorized, validly issued, fully paid and nonassessable.
There are no bonds, debentures, notes or other indebtedness of Parent with
voting rights (or convertible into, or exchangeable for, securities with voting
rights) on any matters on which stockholders of Parent may vote. As of the date
hereof, the authorized capital stock of Merger Sub consists of 1,000 shares of
Merger Sub Common Stock, of which 100 shares of Merger Sub Common Stock are
outstanding. All of the outstanding shares of Merger Sub Common Stock are owned
by Parent.
(b) Except as set forth on Section 3.2(b) of the Parent
Disclosure Schedule, all of the outstanding shares of capital stock of each of
the Parent's Subsidiaries have been duly authorized, validly issued, fully paid
and nonassessable, are not subject to, and were not issued in violation of, any
preemptive (or similar) rights, and are owned, of record and beneficially, by
Parent or one of its direct or indirect Subsidiaries, free and clear of all
Liens whatsoever. Except as set forth in Section 3.2(b) of the Parent Disclosure
Schedule, there are no restrictions of any kind which prevent the payment of
dividends by any of the Parent's Subsidiaries, and neither
27
32
Parent nor any of its Subsidiaries is subject to any obligation or requirement
to provide funds for or to make any investment (in the form of a loan or capital
contribution) to or in any Person.
(c) Except for outstanding options under the Parent Option Plans
and except as described in Section 3.2(c) of the Parent Disclosure Schedule, as
of the date hereof, there are no outstanding securities, options, warrants,
calls, rights, convertible or exchangeable securities, commitments, agreements,
arrangements or undertakings of any kind (contingent or otherwise) to which
Parent or any of its Subsidiaries is a party or by which any of them is bound,
obligating Parent or any of its Subsidiaries to issue, deliver or sell, or cause
to be issued, delivered or sold, additional shares of capital stock or other
voting securities of Parent or of any of its Subsidiaries or obligating Parent
or any of its Subsidiaries to issue, grant, extend or enter into any such
security, option, warrant, call, right, commitment, agreement, arrangement or
undertaking. Except as described in Section 3.2(c) of the Parent Disclosure
Schedule, as of the date hereof, there are no stock-appreciation rights,
stock-based performance units, "phantom" stock rights or other agreements,
arrangements or commitments of any character (contingent or otherwise) pursuant
to which any Person is or may be entitled to receive any payment or other value
based on the revenues, earnings or financial performance, stock price
performance or other attribute of Parent or any of its Subsidiaries or assets or
calculated in accordance therewith (other than ordinary course payments or
commissions to employees or sales representatives of Parent based upon revenues
generated by them without augmentation as a result of the transactions
contemplated hereby) (collectively, "Stock-Based Rights") or to cause Parent or
any of its Subsidiaries to file a registration statement under the Securities
Act, or which otherwise relate to the registration of any securities of Parent.
Except as set forth in Section 3.2(c) of the Parent Disclosure Schedule, there
are no voting trusts, proxies or other agreements, commitments or understandings
of any character to which Parent or any of its Subsidiaries or, to the Knowledge
(as defined herein) of Parent, any of Parent's stockholders is a party or by
which any of them is bound with respect to the issuance, holding, acquisition,
voting or disposition of any shares of capital stock of Parent or any of its
Subsidiaries.
3.3. AUTHORITY; ENFORCEABILITY.
Each of Parent and Merger Sub has all requisite corporate power
and authority to execute and deliver this Agreement and each instrument required
hereby to be executed and delivered by it at the Closing, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by each of Parent
and Merger Sub of this Agreement and each instrument required hereby to be
executed and delivered by Parent and Merger Sub at the Closing and the
performance of their respective obligations hereunder and thereunder have been
duly and validly authorized by the Board of Directors of each of Parent and
Merger Sub and by Parent as the sole stockholder of Merger Sub. Except for
filing of the Certificate of Merger, no other corporate proceedings on the part
of Parent or Merger Sub are necessary to authorize the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by each of Parent and Merger Sub and, assuming due authorization,
execution and delivery hereof by the Company, constitutes a legal, valid and
binding obligation of each of Parent and Merger Sub, enforceable against each of
Parent and Merger Sub in accordance with its terms.
28
33
3.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery by Parent and Merger Sub of this
Agreement, the Option Agreement or any instrument required by this Agreement to
be executed and delivered by Parent or Merger Sub at the Closing do not, and the
performance of this Agreement, the Option Agreement or any instrument required
by this Agreement to be executed and delivered by Parent or Merger Sub at the
Closing, shall not, (i) conflict with or violate the Certificate of
Incorporation or Bylaws or equivalent organizational documents of Parent, Merger
Sub or any Subsidiary of Parent, (ii) conflict with or violate any Law or Order
in each case applicable to Parent, Merger Sub or any Subsidiary of Parent or by
which its or any of their respective properties or assets is bound or affected,
or (iii) result in any breach or violation of or constitute a default (or an
event that with notice or lapse of time or both would become a default) under,
or impair Parent's, Merger Sub's or any Subsidiary of Parent's rights or alter
the rights or obligations of any third party under, or give to others any rights
of termination, amendment, acceleration or cancellation of, or result in the
creation of a Lien on any of the properties or assets of Parent, Merger Sub or
any Subsidiary of Parent pursuant to, any note, bond, mortgage, indenture,
Contract, permit, franchise or other instrument or obligation to which Parent,
Merger Sub or any Subsidiary of Parent is a party or by which Parent, Merger Sub
or any Subsidiary of Parent or its or any of their respective properties or
assets is bound or affected, except (A) as set forth in Section 3.4(a) of the
Parent Disclosure Schedule or (B) in the case of clause (ii) or (iii) above, for
any such conflicts, breaches, violations, defaults or other occurrences that
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(b) The execution and delivery by Parent and Merger Sub of this
Agreement do not, and the performance by Parent and Merger Sub of this Agreement
shall not, require Parent, Merger Sub or any Subsidiary of Parent to obtain the
Approval of, observe any waiting period imposed by, or make any filing with or
notification to, any Governmental Authority, domestic or foreign, except for (A)
compliance with applicable requirements of the Securities Act, the Exchange Act,
Blue Sky Laws, or the pre-Merger notification requirements of the HSR Act or
Foreign Competition Laws, (B) the filing of the Certificate of Merger in
accordance with Delaware law, (C) the filing of a listing application or other
documents as required by the New York Stock Exchange and the NASDAQ National
Market System or (D) where the failure to obtain such Approvals, or to make such
filings or notifications, would not individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
3.5. COMPLIANCE.
(a) Parent, Merger Sub and each Subsidiary of Parent are in
compliance with, and are not in default or violation of (i) their respective
Certificates of Incorporation and Bylaws or equivalent organizational documents,
(ii) any Law or Order or by which any of their respective assets or properties
are bound or affected and (iii) the terms of all notes, bonds, mortgages,
indentures, Contracts, permits, franchises and other instruments or obligations
to which any of them is a party or by which any of them is or any of their
respective assets or properties are bound or affected, except, in the case of
clauses (ii) and (iii), for any such failures of compliance, defaults and
violations which could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. To the Knowledge of Parent, Parent
and its Subsidiaries have conducted their export transactions in all material
respects in
29
34
accordance with applicable provisions of United States export control laws and
regulations, including but not limited to (A) the Export Administration Act and
the Export Administration Regulations thereunder and (B) the Arms Export Control
Act and the International Traffic in Arms Regulations thereunder. Without
limiting the foregoing, Parent represents and warrants that, to its Knowledge,
(1) it and its Subsidiaries have obtained all material export licenses and other
approvals required for their exports of products, software and technologies from
the United States, (2) it and its Subsidiaries are in material compliance with
the terms of all applicable export licenses or other approvals, (3) there are no
pending or threatened material claims against Parent or its Subsidiaries with
respect to export licenses or other approvals, and (4) there are no actions,
conditions or circumstances pertaining to Parent's or its Subsidiaries' export
transactions that may give rise to any future material claim. Parent, Merger Sub
and each Subsidiary of Parent are in compliance with the terms of all Approvals,
except where the failure to so comply could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. Except as
set forth in Section 3.5 of the Parent Disclosure Schedule or as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, neither Parent nor Merger Sub nor any of Parent's Subsidiaries
has received notice of any revocation or modification of any federal, state,
local or foreign Governmental Authority, or any Approval of any federal, state,
local or foreign Governmental Authority that is material to Parent, Merger Sub
or any Subsidiary of Parent.
(b) To Parent's Knowledge, as of the date hereof, none of the
Parent, Merger Sub nor any Subsidiary of Parent, nor any director, officer,
employee or agent of Parent, Merger Sub or any such Subsidiary has, except for
any such use, payment or transaction as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, (i) used
any funds for unlawful contributions, gifts, entertainment or other unlawful
payments relating to political activity, (ii) made any unlawful payment to any
foreign or domestic government official or employee or to any foreign or
domestic political party or campaign or violated any provision of the Foreign
Corrupt Practices Act of 1977, as amended, (iii) consummated any transaction,
made any payment, entered into any agreement or arrangement or taken any other
action in violation of the Social Security Act, as amended, or (iv) made any
other unlawful payment.
3.6. SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has filed all reports and documents required to be
filed with the SEC since January 1, 1998 (collectively, the "Parent SEC
Reports") pursuant to the federal securities Laws and Regulations of the SEC
promulgated thereunder, and all Parent SEC Reports have been filed in all
material respects on a timely basis. The Parent SEC Reports were prepared in
accordance, and complied as of their respective filing dates in all material
respects, with the requirements of the Exchange Act and the Regulations
promulgated thereunder and did not at the time they were filed (or if amended or
superseded by a filing prior to the date hereof, then on the date of such
filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in Parent SEC Reports (i)
complied in all material respects with
30
35
applicable accounting requirements and the published Regulations of the SEC with
respect thereto, (ii) were prepared in accordance with GAAP (except, in the case
of unaudited statements, as permitted by Form 10-Q of the SEC) applied on a
consistent basis throughout the periods involved (except as may be expressly
described in the notes thereto) and (iii) fairly presents the consolidated
financial position of Parent as at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements included in the Company's
Form 10-Q reports were or are subject to normal and recurring year-end
adjustments that have not been and are not expected to be material in amount to
Parent.
3.7. ABSENCE OF CERTAIN CHANGES OR EVENTS.
(a) Except as described in Section 3.7(a) of the Parent
Disclosure Schedule, since September 30, 2000, Parent has conducted its
businesses in the ordinary and usual course and in a manner consistent with past
practice, and, since such date, there has not been any change, development,
circumstance, condition, event, occurrence, damage, destruction or loss that has
had or could reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(b) Except as described in Section 3.7(b) of the Parent
Disclosure Schedule, during the period from September 30, 2000 to the date
hereof, (i) there has not been any change by Parent in its accounting methods,
principles or practices, any revaluation by Parent of any of its assets,
including, writing down the value of inventory or writing off notes or accounts
receivable, and (ii) there has not been any action or event, and neither Parent
nor any of its Subsidiaries has agreed in writing or otherwise to take any
action, that would have required the consent of the Company pursuant to Section
4.2 had such action or event occurred or been taken after the date hereof and
prior to the Effective Time.
3.8. NO UNDISCLOSED LIABILITIES.
Neither Parent nor any of its Subsidiaries has any liabilities
or obligations of any nature (whether absolute, accrued, fixed, contingent or
otherwise), and there is no existing fact, condition or circumstance which could
reasonably be expected to result in such liabilities or obligations, except
liabilities or obligations (i) reflected in Parent SEC Reports filed and
publicly available prior to the date hereof, (ii) disclosed in Section 3.8 of
the Parent Disclosure Schedule, or (iii) incurred in the ordinary course of
business which do not have, and could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
3.9. ABSENCE OF LITIGATION.
Except as described in Section 3.8 of the Parent Disclosure
Schedule or expressly described in the Parent SEC Reports filed and publicly
available prior to the date hereof, there is no Litigation pending on behalf of
or against or, to the Knowledge of Parent, threatened against Parent, any of its
Subsidiaries, or any of their respective properties or rights, before or subject
to any Court or Governmental Authority which if adversely determined could,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Neither Parent nor any of
31
36
its Subsidiaries is subject to any outstanding Litigation or Order which,
individually or in the aggregate, has had or could reasonably be expected to
have a Material Adverse Effect.
3.10. ENVIRONMENTAL MATTERS.
Except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect: (i) Parent and each of
its Subsidiaries complies and have complied, during all applicable statute of
limitations periods, with all applicable Environmental Laws, and possess and
comply, and have possessed and complied during all applicable statute of
limitations periods, with all Environmental Permits; (ii) to the Knowledge of
Parent, there are and have been no Materials of Environmental Concern or other
conditions at any property owned, operated, or otherwise used by Parent now or
in the past, or at any other location (including without limitation any facility
to which Materials of Environmental Concern from Parent or any of its
Subsidiaries), that are in circumstances that could reasonably be expected to
give rise to any liability of Parent or any of its Subsidiaries, or result in
costs to PaRent or any of its Subsidiaries arising out of any Environmental Law;
(iii) no Litigation (including, to the Knowledge of Parent, any notice of
violation or alleged violation), under any Environmental Law or with respect to
any Materials of Environmental Concern to which Parent or any of its
Subsidiaries is, or to the Knowledge of Parent will be, named as a party, or
affecting their business, is pending or, to the Knowledge of Parent, threatened;
nor is Parent or any of its Subsidiaries the subject of any investigation or the
recipient of any request for information in connection with any such Litigation
or potential Litigation; (iv) there are no Orders or agreements under any
Environmental Law or with respect to any Materials of Environmental Concern to
which Parent or any of its Subsidiaries is a party or affecting their business;
and (v) to the Knowledge of Parent, each of the foregoing representations and
warranties is true and correct with respect to any entity for which Parent or
any of its Subsidiaries has assumed or retained liability, whether by Contract
or operation of Law.
3.11. REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS.
None of the information supplied by Parent for inclusion in the
Registration Statement shall, at the time such document is filed, at the time
amended or supplemented, or at the time the Registration Statement is declared
effective by the SEC, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied by Parent for inclusion
in the Proxy Statement shall, on the date the Proxy Statement is first mailed to
the stockholders of the Company, at the time of Company Stockholders' Meeting
and at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein necessary in order
to make the statements therein, in light of the circumstances under which they
are made, not false or misleading. The Registration Statement will comply as to
form in all material respects with the provisions of the Securities Act.
Notwithstanding the foregoing, Parent makes no representation, warranty or
covenant with respect to any information supplied by the Company which is
contained in the Registration Statement or Proxy Statement.
32
37
3.12. BROKERS.
No broker, financial advisor, finder or investment banker or
other Person is entitled to any broker's, financial advisor's, finder's or other
fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of Parent, except for
Xxxxxx Xxxxxx Partners (the "Parent Financial Advisors").
3.13. POOLING; TAX MATTERS.
(a) The Parent intends that the Merger be accounted for under
the "pooling of interests" method under the requirements of Opinion No. 16
(Business Combinations) of the Accounting Principles Board of the American
Institute of Certified Public Accountants, the Financial Accounting Standards
Board, and the Regulations of the SEC.
(b) To the Knowledge of Parent, neither Parent and Merger Sub
nor any of their Affiliates has taken or agreed to take any action or failed to
take any action that would prevent (a) the Merger from being treated for
financial accounting purposes as a "pooling of interests" in accordance with
GAAP and the Regulations of the SEC or (b) the Merger from constituting a
reorganization within the meaning of Section 368(a) of the Code.
(c) Parent has no Knowledge of any reason why it may not receive
a letter from Ernst & Young LLP (the "Parent's Accountants") dated as of the
Closing Date and addressed to Parent in which the Parent's Accountants will
concur with Parent management's conclusion that no conditions exist related to
Parent that would preclude Parent from accounting for the Merger as a "pooling
of interests."
3.14. TAXES.
Except as set forth in Section 3.14 of the Parent Disclosure
Schedule:
(a) All material Tax Returns required to be filed by or on
behalf of the Parent, each of its Subsidiaries, and each affiliated,
combined, consolidated or unitary group of which the Parent or any of
its Subsidiaries is a member have, to the extent required to be filed on
or before the date hereof, been timely filed, and all such Tax Returns
are true, complete and correct in all material respects.
(b) All material Taxes due and payable by or with respect to the
Parent and each of its Subsidiaries shown on any Tax Return have been
timely paid. The Parent and each of its Subsidiaries have established
adequate reserves (other than reserves for deferred Taxes established to
reflect timing differences between book and Tax treatment) in accordance
with GAAP on the respective company's Balance Sheet for any material
Taxes not yet due for all periods ending on or before the date of the
latest Balance Sheet. All assessments for material Taxes due and owing
by or with respect to the Parent and each of its Subsidiaries with
respect to completed and settled examinations or concluded litigation
have been paid. Neither the Parent nor any of its Subsidiaries has
incurred a Tax liability from the date of the latest Balance Sheet other
than a Tax liability in the ordinary course of business. No material
claim for unpaid Taxes has become a Lien against the property of the
Parent or any of its Subsidiaries or is being asserted against the
33
38
property of the Parent or any of its Subsidiaries other than liens for
Taxes not yet due and payable or for Taxes contested in good faith and
for which adequate reserves have been established.
(c) No action, suit, proceeding, investigation, claim or audit
has formally commenced and no written notice has been received that such
audit or other proceeding is pending or threatened by any Governmental
Authority with respect to the Parent or any of its Subsidiaries or any
group of corporations of which any of the Parent and its Subsidiaries
has been a member, with regard to years or periods during which the
Parent or its Subsidiaries were a member thereof in respect of any
Taxes, and all deficiencies proposed as a result of such actions, suits,
proceedings, investigations, claims or audits have been paid, reserved
against or settled.
3.15. INTELLECTUAL PROPERTY
(a) To the Knowledge of the Parent, all material patents and all
material United States and foreign patent, copyright, trademark, service xxxx,
trade dress, domain name and other registrations, and applications, and all
material unregistered Intellectual Property owned or used by the Parent or its
Subsidiaries ("Parent Intellectual Property") (and all application therefor) are
currently in compliance in all material respects with all applicable legal
requirements (including timely filings, proofs and payments of fees), and to the
Knowledge of the Parent, are valid and enforceable, except for such
noncompliance, invalidity or unenforceability that could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect.
(b) Except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, the Parent and its
Subsidiaries own or have the valid right to use all of the Intellectual Property
used in the conduct of the Parent's and each of its Subsidiaries' business as
currently conducted and for the ownership, maintenance and operation of the
Parent's and its Subsidiaries' properties and assets, free of any obligation to
pay royalties, honoraria or other fees, except as set forth in Section 3.15(b)
of the Parent Disclosure Schedule. Except as could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect, the Parent
and its Subsidiaries own, free and clear of all Liens or adverse ownership
claims (including by current and former employees and contractors) all their
owned Parent Intellectual Property.
(c) Except as could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect, the Parent and each of
its Subsidiaries have taken all commercially reasonable steps to maintain,
police and protect the Intellectual Property which they own or use, including
the execution of all appropriate Intellectual Property assignments and releases,
(including from past and current employees and contractors. To the Knowledge of
the Parent, except under written confidentiality agreements, there has been no
disclosure of any confidential Parent Intellectual Property to any third party,
which could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Except as disclosed in Section 3.15(c) of the Parent
Disclosure Schedule, to the Knowledge of Parent, and except as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse
34
39
Effect , (i) the conduct of the Parent's and its Subsidiaries' businesses as
currently conducted or planned to be conducted does not Infringe any
Intellectual Property of any third party, and the Parent Intellectual Property
is not being Infringed by any third party, (ii) there is no Litigation or Order
pending or outstanding, or to the Knowledge of the Parent, threatened, that
seeks to limit or challenge or that concerns the ownership, use, validity or
enforceability of any Parent Intellectual Property.
ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.1. CONDUCT OF BUSINESS BY THE COMPANY PENDING THE MERGER.
The Company covenants and agrees that, between the date hereof
and the Effective Time, except as expressly required or permitted by this
Agreement or unless Parent shall otherwise agree in writing in advance (which
consent shall not be unreasonably withheld or delayed) or as otherwise set forth
on Section 4.1 of the Company Disclosure Schedule prior to the date hereof, the
Company shall conduct and shall cause the businesses of each of its Subsidiaries
to be conducted only in, and the Company and its Subsidiaries shall not take any
action except in, the ordinary course of business and in a manner consistent
with past practice and in compliance with applicable laws. The Company shall use
its reasonable best efforts to preserve intact the business organization and
assets of the Company and each of its Subsidiaries, to keep available the
services of the present officers, employees and consultants of the Company and
each of its Subsidiaries, to maintain in effect Material Agreements and to
preserve the present relationships of the Company and each of its Subsidiaries
with customers, licensees, suppliers and other Persons with which the Company or
any of its Subsidiaries has significant business relations. Except as set forth
on Section 4.1 of the Company Disclosure Schedule, neither the Company nor any
of its Subsidiaries shall, between the date hereof and the Effective Time,
directly or indirectly do, or propose to do, any of the following without the
prior written consent of Parent:
(a) other than ministerial changes not adverse to Parent or
Merger Sub, amend or otherwise change the Certificate of Incorporation
or Bylaws or equivalent organizational document of the Company or any of
its Subsidiaries or alter through merger, liquidation, reorganization,
restructuring or in any other fashion the corporate structure or
ownership of the Company or any of its Subsidiaries;
(b) issue, grant, sell, transfer, deliver, pledge, promise,
dispose of or encumber, or authorize the issuance, grant, sale,
transfer, deliverance, pledge, promise, disposition or encumbrance of,
any shares of capital stock of any class, or any options, warrants,
convertible or exchangeable securities or other rights of any kind to
acquire any shares of capital stock or any other ownership interest or
Stock-Based Rights of the Company or any of its Subsidiaries (except for
the issuance of Company Common Stock issuable pursuant to the
Outstanding Employee Options and options granted to new employees in the
ordinary source of business consistent with past practice); or redeem,
35
40
purchase or otherwise acquire, directly or indirectly, any of the
capital stock of the Company or interest in or securities of any
Subsidiary;
(c) other than regular quarterly dividends of $0.0325 per share
of Company Stock with regular record, declaration and payment dates in
accordance with past practice, declare, set aside or pay any dividend or
other distribution (whether in cash, stock or property or any
combination thereof) in respect of any of its capital stock (except that
a wholly-owned Subsidiary of the Company may declare and pay a dividend
to its parent); split, combine or reclassify any of its capital stock,
or issue or authorize the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its capital stock; or
amend the terms of, repurchase, redeem or otherwise acquire, or permit
any Subsidiary to repurchase, redeem or otherwise acquire, any of its
securities or any securities of its Subsidiaries; or propose to do any
of the foregoing;
(d) other than (i) as disclosed to and agreed by Parent prior to
the date hereof or (ii) in the ordinary course of business consistent
with past practice, sell, transfer, deliver, lease, license, sublicense,
mortgage, pledge, encumber or otherwise dispose of (in whole or in
part), or create, incur, assume or subject any Lien on, any of the
assets of the Company or any of its Subsidiaries (including any
Intellectual Property) without the prior written consent of Parent
(which consent shall not be unreasonably withheld or delayed);
(e) acquire (by merger, consolidation, acquisition of stock or
assets or otherwise) any corporation, limited liability company,
partnership, joint venture, trust or other entity or any business
organization or division thereof; incur any indebtedness for borrowed
money or issue any debt securities or any warrants or rights to acquire
any debt security or assume, guarantee or endorse or otherwise as an
accommodation become responsible for, the obligations of any Person;
make any loans, advances or enter into any financial commitments other
than in the ordinary course of business consistent with past practice or
with the prior written consent of Parent (which consent shall not be
unreasonably withheld or delayed); or, without the prior written consent
of Parent (which consent shall not be unreasonably withheld or delayed)
authorize or make any material capital expenditures other than capital
expenditures in the ordinary course of business; provided, however, that
the Company shall review and consult with Parent and use commercially
reasonable efforts in order to avoid redundant spending with Parent with
respect to fabrication and test equipment;
(f) hire or terminate any employee or consultant, except in the
ordinary course of business consistent with past practice, and except to
the extent required under applicable law or under existing employee or
director benefit plans, agreements or arrangements; increase the
compensation or fringe benefits (including, without limitation, bonus)
payable or to become payable to its directors or officers, except (i)
with the prior written consent of Parent (which consent shall not be
unreasonably withheld or delayed), or (ii) for increases in salary or
wages of employees of the Company or its Subsidiaries who are not
officers of the Company in the ordinary course of business consistent
with past practice, or loan or advance any money or other asset or
property to, or grant any bonus, severance or termination pay not
required under existing severance plans to, or
36
41
enter into any employment or severance agreement with, any director,
officer or other employee of the Company or any of its Subsidiaries, or
establish, adopt, enter into, terminate or amend any Employee Plan or
any collective bargaining, bonus, profit sharing, thrift, compensation,
stock option, stock purchase, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any
current or former directors, officers or employees other than as
required by the terms thereof or applicable law;
(g) change any accounting policies or procedures (including
procedures with respect to reserves, revenue recognition, payments of
accounts payable and collection of accounts receivable) or method of Tax
accounting unless required by a change in Law or GAAP used by it;
(h) without the prior written consent of Parent (which consent
shall not be unreasonably withheld or delayed) (x) enter into any
agreement that if entered into prior to the date hereof would be a
Material Agreement required to have been delivered to Parent pursuant to
Section 2.7; or (y) modify, amend in any material respect, transfer or
terminate any Material Agreement;
(i) without the prior written consent of Parent (which consent
shall not be unreasonably withheld or delayed) make or change any
material Tax election other than an election in the ordinary course of
business consistent with the past practices of the Company, file any
amended Tax Return, settle or compromise any federal, state, local or
foreign income tax liability, agree to an extension of a statute of
limitations, enter into any closing agreement relating to any Tax or
surrender any right to claim a Tax refund;
(j) without the prior written consent of Parent (which consent
shall not be unreasonably withheld or delayed) pay, discharge, satisfy
or settle any Litigation except any settlement that would not: (A)
impose any injunctive or similar Order on the Company or any of its
Subsidiaries or restrict in any way the business of the Company or any
of its Subsidiaries or (B) exceed $250,000 in cost or value to the
Company or any of its Subsidiaries. Without the prior written consent of
Parent (which consent shall not be unreasonably withheld or delayed),
the Company and its Subsidiaries shall not pay, discharge or satisfy any
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), except in the ordinary course of business
consistent with past practice;
(k) without the prior written consent of Parent (which consent
shall not be unreasonably withheld or delayed), engage in, enter into or
amend any Contract, transaction, indebtedness or other arrangement with,
directly or indirectly, any of the directors or other Affiliates of the
Company and its Subsidiaries, or any of their respective Affiliates or
family members, except for (i) amounts due as normal salaries and
bonuses and in reimbursement of ordinary expenses and (ii) those items
existing as of the date hereof and listed in Section 4.1(k) of the
Company Disclosure Schedule;
37
42
(l) fail to use commercially reasonable best efforts to maintain
in full force and effect all self-insurance and insurance, as the case
may be, currently in effect; or
(m) authorize, recommend, propose or announce an intention to do
any of the foregoing, or agree or enter into or amend any Contract or
arrangement to do any of the foregoing.
4.2. CONDUCT OF BUSINESS BY PARENT PENDING THE MERGER.
Parent covenants and agrees that, between the date hereof and
the Effective Time, except as expressly required or permitted by this Agreement
or unless the Company shall otherwise agree in writing in advance, Parent shall
conduct and shall cause the business of each of its Subsidiaries to be conducted
only in the ordinary course of business and in a manner consistent with past
practice and in compliance with applicable laws (it being understood that,
except as provided in the immediately succeeding sentence, this Section 4.2
shall not prohibit Parent or its Subsidiaries from taking any action of the
nature specified in Sections 4.1(a) through (l) (inclusive)). Parent shall not,
between the date hereof and the Effective Time, directly or indirectly, or
propose to, without the prior written consent of the Company, declare, set aside
or pay any dividend or other distribution (whether in cash, stock or property or
any combination thereof) in respect of any of its capital stock; split, combine
or reclassify any of its capital stock.
4.3. SOLICITATION OF OTHER PROPOSALS.
(a) From the date hereof until the earlier of the Effective Time
or the termination of this Agreement in accordance with its terms, the Company
shall not, nor shall it permit any of its Affiliates or Subsidiaries to, nor
shall it authorize or permit any of its or their respective stockholders,
directors, officers, employees, representatives or agents (collectively, the
"Company Representatives"), to directly or indirectly, (i) solicit, facilitate,
initiate, entertain, knowingly encourage or take any action to solicit,
facilitate, initiate, entertain or knowingly encourage, any inquiries or
communications or the making of any proposal or offer that constitutes or may
constitute an Acquisition Proposal (as defined herein) or (ii) participate or
engage in any discussions or negotiations with, or provide any information to or
take any other action with the intent to facilitate the efforts of, any Person
concerning any possible Acquisition Proposal or any inquiry or communication
which might reasonably be expected to result in an Acquisition Proposal. For
purposes of this Agreement, the term "Acquisition Proposal" shall mean any
inquiry, proposal or offer from any person (other than Parent, Merger Sub or any
of their Affiliates) relating to any merger, consolidation, recapitalization,
liquidation or other direct or indirect business combination, involving the
Company or any Material Subsidiary (as defined herein) or the issuance or
acquisition of shares of capital stock or other equity securities of the Company
or any Material Subsidiary representing 15% or more of the outstanding capital
stock of the Company or such Material Subsidiary or any tender or exchange offer
that if consummated would result in any Person, together with all Affiliates
thereof, beneficially owning shares of capital stock or other equity securities
of the Company or any Material Subsidiary representing 15% or more of the
outstanding capital stock of the Company or such Material Subsidiary, or the
sale, lease, exchange, license (whether exclusive or not), or other disposition
of any significant portion of the business or assets of the Company or any
Material
38
43
Subsidiary. The Company shall immediately cease and cause to be terminated, and
shall cause its Subsidiaries and all Company Representatives to immediately
terminate and cause to be terminated, all existing discussions or negotiations
with any Persons conducted heretofore with respect to, or that could reasonably
be expected to lead to, an Acquisition Proposal. The Company shall promptly
notify each Company Representative of its obligations under this Section 4.3.
(b) Notwithstanding the foregoing, the Company may participate
in discussions or negotiations with, or furnish information with respect to the
Company pursuant to a confidentiality agreement with terms no less favorable to
the Company than those in effect between the Company and Parent to, any Person
if and only if (x) such Person has submitted an unsolicited bona fide written
Acquisition Proposal to the Company (y) neither the Company nor any of the
Company Representatives shall have violated Section 4.3(a) and (z) the Board of
Directors of the Company (i) determines by a majority vote in its good faith
judgment, after consultation with outside counsel, that taking such action is
necessary to comply with the fiduciary duties of such Board under applicable Law
and (ii) provides prior written notice to Parent of its decision to so
participate or furnish.
(c) Except as set forth in the following sentence, neither the
Board of Directors of the Company nor any committee thereof shall (1) approve or
recommend, or propose to approve or recommend, any Acquisition Proposal other
than the Merger, (2) withdraw or modify or propose to withdraw or modify in a
manner adverse to Parent or Merger Sub its approval or recommendation of the
Merger, this Agreement or the transactions contemplated hereby, (3) upon a
written request by Parent to reaffirm its approval or recommendation of this
Agreement or the Merger following the delivery, making or announcement of an
Acquisition Proposal, fail to do so within five Business Days after such request
is made, (4) approve, enter, or permit or cause the Company or any Material
Subsidiary to enter, into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement related to any Acquisition
Proposal, or (5) resolve or announce its intention to do any of the foregoing.
The immediately preceding sentence notwithstanding, in the event that prior to
the Company Stockholders' Meeting the Board of Directors of the Company receives
a Superior Proposal (as defined herein), the Board of Directors of the Company
may (i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Parent or Merger Sub its approval or recommendation of the Merger,
this Agreement or the transactions contemplated hereby, (ii) fail to reaffirm
its approval or recommendation of this Agreement or the Merger within five
Business Days after a written request by Parent to do so, or (iii) resolve or
announce its intention to do any of the actions set forth in the preceding
clauses (i) or (ii), if (x) after consultation with outside counsel, such Board
determines by a majority vote of directors in their good faith judgment that
taking such action is necessary to comply with the fiduciary duties of such
Board under applicable Law and (y) the Company furnishes Parent two Business
Days' prior written notice of the taking of such action (which notice shall
include a description of the material terms and conditions of the Superior
Proposal and identify the person making the same). For purposes of this
Agreement, (A) "Material Subsidiary" means any Subsidiary of the Company whose
consolidated revenues, net income or assets constitute 10% or more of the
revenues, net income or assets of the Company and its Subsidiaries taken as a
whole, and (B) the term "Superior Proposal" means any bona fide Acquisition
Proposal to effect a merger, consolidation, sale of all or substantially all of
the assets of the Company or acquisition of a majority of the outstanding
39
44
capital stock of the Company which is on terms which the Board of Directors of
the Company determines by a majority vote of its directors in their good faith
judgment (after consultation with its outside counsel and investment advisors of
nationally recognized reputation), after taking into account all relevant
factors, including any conditions to such Acquisition Proposal, the form of
consideration contemplated by such Acquisition Proposal, the timing of the
closing thereof, the risk of nonconsummation, the ability of the Person making
the Acquisition Proposal to finance the transactions contemplated thereby and
any required filings or Approvals, to be more favorable to the stockholders of
the Company than the Merger (or any revised proposal made by Parent).
(d) In addition to the other obligations of the Company set
forth in this Section 4.3, the Company shall promptly (and in any event within
one Business Day) advise Parent orally and in writing of any request for
information with respect to any Acquisition Proposal, or any inquiry with
respect to or which could result in an Acquisition Proposal, the material terms
and conditions of such request, Acquisition Proposal or inquiry, and the
identity of the Person making the same. The Company shall inform Parent on a
prompt and current basis of the status, terms and content of any discussions
regarding any Acquisition Proposal with a third party. Nothing contained in this
Section 4.3(d) shall prevent the Board of Directors of the Company from
complying with Rule 14d-9 and Rule 14e-2 promulgated under the Exchange Act.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1. REGISTRATION STATEMENT; PROXY STATEMENT/PROSPECTUS.
(a) The Company shall, promptly following the date hereof,
prepare and file with the SEC a Proxy Statement relating to the Merger and this
Agreement, obtain and furnish the information required to be included by the SEC
in the Proxy Statement and respond promptly to any comments made by the SEC with
respect to the Proxy Statement, and cause the Proxy Statement and the prospectus
to be included in the Registration Statement, including any amendment or
supplement thereto, to be mailed to its stockholders at the earliest practicable
date after the Registration Statement is declared effective by the SEC. The
Company shall use all reasonable efforts to obtain the necessary approval of the
Merger and this Agreement by its stockholders. Unless the Company shall have
taken action permitted by the second sentence of Section 4.3(c), the Company
shall not file with or supplementally provide to the SEC or mail to its
stockholders the Proxy Statement or any amendment or supplement thereto without
Parent's prior consent, which consent shall not be unreasonably withheld or
delayed. The Company shall allow Parent's full participation in the preparation
of the Proxy Statement and any amendment or supplement thereto and shall consult
with Parent and its advisors concerning any comments from the SEC with respect
thereto.
(b) Parent shall, promptly following the date hereof, prepare
and file with the SEC a Registration Statement on Form S-4, in which the Proxy
Statement shall be included as part of the prospectus, and the parties hereto
shall use all reasonable efforts to have the
40
45
Registration Statement declared effective by the SEC as promptly as practicable
after such filing. Parent shall obtain and furnish the information required to
be included in the Registration Statement and, after consultation with the
Company, respond promptly to any comments made by the SEC with respect to the
Registration Statement. Parent shall allow the Company's full participation in
the preparation of the Registration Statement and any amendment or supplement
thereto and shall consult with the Company and its advisors concerning any
comments from the SEC with respect thereto.
(c) The Proxy Statement shall include the recommendation of the
Board of Directors of the Company in favor of approval and adoption of this
Agreement and the Merger, except to the extent that the Company shall have
withdrawn or modified its recommendation of this Agreement or the Merger as
permitted by Section 4.3(c).
(d) Parent and the Company shall, as promptly as practicable,
make all necessary filings with respect to the Merger under the Securities Act
and the Exchange Act and the Regulations thereunder and under applicable Blue
Sky or similar securities Laws, and shall use all reasonable efforts to obtain
required Approvals with respect thereto.
(e) Each party hereto agrees to furnish all information
concerning itself as may be reasonably required to prepare the Proxy Statement
or Registration Statement or to make such filings pursuant to Section 5.1(d).
Each party hereto agrees to correct any information provided by it for use in
the Proxy Statement or Registration Statement that has become false or
misleading in any material respect.
5.2. MEETING OF COMPANY'S STOCKHOLDERS.
The Company shall promptly after the date hereof take all action
necessary in accordance with the DGCL and its Certificate of Incorporation and
Bylaws to duly call, give notice of and hold the Company Stockholders' Meeting
as soon as practicable following the date upon which the Registration Statement
becomes effective and shall consult with Parent in connection therewith. The
Board of Directors of the Company has declared that this Agreement is advisable
and, subject to Section 4.3(c), shall recommend that this Agreement and the
transactions contemplated hereby be approved and authorized by the stockholders
of the Company and include in the Registration Statement and Proxy Statement a
copy of such recommendations; provided, however, that the Board of Directors of
the Company shall submit this Agreement to the stockholders of the Company
whether or not the Board of Directors of the Company at any time subsequent to
making such declaration takes any action permitted by Section 4.3(c). The
Company shall solicit from its stockholders proxies in favor of the Merger and
shall take all other action reasonably necessary or advisable to secure the vote
or consent of its stockholders to authorize and approve the Merger. Without
limiting the generality of the foregoing, (i) the Company agrees that its
obligation to duly call, give notice of, convene and hold the Company
Stockholders' Meeting as required by this Section 5.2, shall not be affected by
the withdrawal, amendment or modification of the Board of Directors'
recommendation of approval and adoption of this Agreement and the transactions
contemplated hereby, and (ii) the Company agrees that its obligations under this
Section 5.2 shall not be affected by the commencement, public proposal, public
disclosure or communication to the Company of any Acquisition Proposal.
41
46
5.3. ACCESS TO INFORMATION; CONFIDENTIALITY.
(a) In order to facilitate the consummation of the Merger and
the integration of the operations of Parent and Company after the Effective
Time, during the period prior to the Effective Time, upon reasonable notice, the
Company shall (and shall cause each of its Subsidiaries to) afford to the
officers, employees, accountants, counsel and other representatives and agents
of Parent (collectively "Parent Representatives"), reasonable access during
normal business hours, to all its properties, books, Contracts, commitments and
records and, during such period, the Company shall (and shall cause each of its
Subsidiaries to) furnish promptly to Parent all information concerning its
business, properties, books, Contracts, commitments, records and personnel as
Parent may reasonably request. All of the activities of Parent Representatives
pursuant to this Section 5.3(a) shall be conducted in a manner that does not
unreasonably interfere with the ongoing operations of the Company and its
Subsidiaries. In addition, Parent Representatives shall present any request for
such access pursuant to this Section 5.3(a) to, and coordinate all such access
with, M.D. Sampels and Xxxx X. Xxxx. The Company shall (and shall cause each of
its Subsidiaries to) make available to Parent the appropriate individuals for
discussion of such entity's business, properties and personnel as Parent or the
Parent Representatives may reasonably request. No investigation pursuant to this
Section 5.3(a) shall affect any representations or warranties of the parties
herein or the conditions to the obligations of the parties hereto.
(b) Parent shall keep all information obtained pursuant to
Section 4.1 or Section 5.3(a) confidential in accordance with the terms of the
Confidential Non-Disclosure Agreement, dated January 24, 2001 (the
"Confidentiality Agreement"), between Parent and the Company. Anything contained
in the Confidentiality Agreement to the contrary notwithstanding, the Company
and Parent hereby agree that each such party may issue press release(s) or make
other public announcements in accordance with Section 5.10.
5.4. REASONABLE BEST EFFORTS; FURTHER ASSURANCES.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each party hereto shall use its reasonable best efforts to take,
or cause to be taken, all actions, and do, or cause to be done, and to assist
and cooperate with the other party or parties in doing, all things necessary,
proper or advisable to consummate and make effective, the Merger and the other
transactions contemplated hereby (including Section 6.2(g) hereof), and by the
Option Agreement as soon as reasonably practicable after the date hereof. The
Company and Parent shall use its reasonable best efforts to (i) as promptly as
practicable, obtain all Approvals (including those referred to in Sections
2.6(a) and 2.6(b) of the Company Disclosure Schedule), and the Company and
Parent shall make all filings under applicable Law required in connection with
the authorization, execution and delivery of this Agreement and the Option
Agreement by the Company and Parent and the consummation by them of the
transactions contemplated hereby and thereby, including the Merger (in
connection with which Parent and the Company will cooperate with each other in
connection with the making of all such filings, including providing copies of
all such documents to the non-filing party and its advisors prior to filings
and, if requested, will accept all reasonable additions, deletions or changes
suggested in connection therewith) or (ii) furnish all information required for
any application or other filing to be made pursuant to the DGCL or any other Law
or any applicable Regulations of any Governmental
42
47
Authority (including all information required to be included in the Proxy
Statement or the Registration Statement) in connection with the transactions
contemplated by this Agreement and the Option Agreement. Anything in this
Agreement to the contrary notwithstanding, neither Parent nor any of its
Affiliates shall be under any obligation to (x) make proposals, execute or carry
out agreements or submit to Orders providing for the sale or other disposition
or holding separate (through the establishment of a trust or otherwise) of any
assets or categories of assets of Parent, any of its Affiliates, including its
Subsidiaries, the Company or the holding separate of the Company Common Stock or
imposing or seeking to impose any limitation on the ability of Parent or any of
its Affiliates, including its Subsidiaries, to conduct their business or own
such assets or to acquire, hold or exercise full rights of ownership of Company
Common Stock, or (y) otherwise take any step to avoid or eliminate any
impediment which may be asserted under any Law governing competition, monopolies
or restrictive trade practices which, in the reasonable judgment of Parent,
might result in a limitation of the benefit expected to be derived by Parent as
a result of the transactions contemplated hereby or might adversely affect the
Company or Parent or any of Parent's Affiliates, including its Subsidiaries.
Anything in this Agreement to the contrary notwithstanding, without the prior
written consent of Parent neither the Company nor any of its Subsidiaries will
take any action specified in clause (x) or clause (y) of the immediately
preceding sentence.
(b) The parties hereto shall use their reasonable best efforts
to satisfy or cause to be satisfied all of the conditions precedent that are set
forth in Article VI, as applicable to each of them, and to cause the
transactions contemplated by this Agreement to be consummated as soon as
reasonably practicable after the date hereof. Each party hereto, at the
reasonable request of another party hereto, shall execute and deliver such other
instruments and do and perform such other acts and things as may be necessary or
desirable for the consummation of this Agreement and the transactions
contemplated hereby.
(c) The Company and Parent shall cooperate with one another:
(i) in connection with the preparation of the
Registration Statement and the Proxy Statement;
(ii) in connection with the preparation of any filing
required by the HSR Act or any Foreign Competition Laws;
(iii) in determining whether any action by or in respect
of, or filing with, any Governmental Authority or other third party, is
required, or any Approvals are required to be obtained from parties in
connection with the consummation of the transactions contemplated hereby;
(iv) in seeking any Approvals or making any filings,
including furnishing information required in connection therewith or with the
Registration Statement or the Proxy Statement, and seeking timely to obtain any
such Approvals, or making any filings; and
(v) in connection with the listing on the NASDAQ
National Market System of the Parent Common Stock to be issued in the Merger.
43
48
5.5. STOCK OPTIONS AND STOCK PLAN; OPTIONS.
(a) At the Effective Time, each Outstanding Employee Option,
whether vested or unvested, will be assumed by Parent. Each such Outstanding
Employee Option so assumed by Parent under this Agreement shall continue to
have, and be subject to, the same terms and conditions set forth in the Option
Plans, option agreements thereunder and other relevant documentation immediately
prior to the Effective Time, except that such Outstanding Employee Option will
be exercisable solely for that number of whole shares of Parent Common Stock
equal to the product of the number of shares of Company Common Stock that were
purchasable under such Outstanding Employee Option immediately prior to the
Effective Time multiplied by the Exchange Ratio, rounded down to the nearest
whole number of shares of Parent Common Stock, and the per-share exercise price
for the shares of Parent Common Stock issuable upon exercise of such assumed
Outstanding Employee Option will be equal to the quotient determined by dividing
the exercise price per share of Company Common Stock at which such Outstanding
Employee Option was exercisable immediately prior to the Effective Time by the
Exchange Ratio, and rounding the resulting exercise price up to the nearest
whole cent.
(b) Parent shall reserve for issuance a sufficient number of
shares of Parent Common Stock for delivery upon exercise of Outstanding Employee
Options assumed by Parent under this Agreement. Parent shall file as soon as
practicable after the Effective Date (but in any event within ten (10) days) a
registration statement on Form S-8 under the Securities Act covering the shares
of Parent Common Stock issuable upon the exercise of the Outstanding Employee
Options assumed by Parent pursuant to Section 5.5(a), and shall use its
reasonable efforts to cause such registration statement to become effective as
soon thereafter as practicable and to maintain such registration in effect until
the exercise or expiration of such assumed Outstanding Employee Options.
(c) Except as set forth in Section 5.5(c) of the Company
Disclosure Schedule, the vesting of each Outstanding Employee Option shall not
accelerate as a result of, or in connection with, the transactions contemplated
hereby. In addition, the Company shall ensure that no discretion is exercised by
the Board of Directors or any committee thereof or any other body or Person so
as to cause the vesting of any Outstanding Employee Option or any other warrant
or right to acquire shares of Company Common Stock to accelerate.
(d) On and after the date hereof, the Company shall ensure that
no options to purchase Company Common Stock shall be granted under the Purchase
Plan. The Company shall provide that the current offering period under the
Purchase Plan shall terminate prior to the Merger.
5.6. EMPLOYEE BENEFITS.
(a) Parent agrees that individuals who are employed by the
Company or any Subsidiary of the Company immediately prior to the Effective Time
shall become employees of the Surviving Corporation or one of its Subsidiaries
upon the Effective Time (each such employee, a "Company Employee"); provided,
however, that this Section 5.6(a) shall not be construed to limit the ability of
the Company or any of its Subsidiaries to terminate the employment of any
Company Employee at any time and provided further that prior to the fifth
44
49
anniversary of the Effective Date, salaried employees will not be terminated on
less than ninety (90) days notice.
(b) After the Effective Time, the Company Employees shall be
eligible to participate in the employee benefit plans of Parent (other than
equity-based compensation plans) to the same extent as any similarly situated
employee of Parent located in the same country; provided, however, that, Company
Employees may continue to participate in their benefits (without duplication)
under the employee benefits plans of the Company (other than equity-based
compensation plans) provided to such Company Employees immediately prior to the
Effective Time, as elected by the on-site management of the Surviving
Corporation. The Company Employees will be allowed credit for their service with
the Company and its Subsidiaries for purposes of vesting and participation only
(and not for benefit accrual purposes), with respect to the employee benefit
plans in which such Company Employees are entitled to participate following the
Effective Time.
(c) With respect to any plan that is a "welfare benefit plan"
(as defined in Section 3(1) of ERISA) maintained by the Parent, Parent shall (i)
cause there to be waived any pre-existing condition limitation to the same
extent such pre-existing condition was waived under an Employee Plan and (ii)
give effect, in determining any deductible and maximum out-of-pocket
limitations, to claims incurred and amounts paid by, and amounts reimbursed to,
such employees with respect to similar plans maintained by Company and its
Affiliates immediately prior to the Closing Date.
(d) Parent agrees that, from and after the Effective Time,
Company's employees may participate in the employee stock purchase plan
sponsored by Parent ("Parent ESPP"), subject to the terms and conditions of the
Parent ESPP, and that service with Company shall be treated as service with the
Parent for determining eligibility of Company's employees under the Parent ESPP.
(e) The Company shall terminate, effective as of the day
immediately preceding the Effective Time, any and all 401(k) plans sponsored or
maintained by the Company unless Parent provides written notice to the Company
prior to the Effective Time that any such 401(k) plan shall not be terminated.
Parent shall receive from the Company evidence that the Company's plan(s) and/or
program(s) have been terminated pursuant to resolutions of the Company's Board
of Directors (the form and substance of such resolutions shall be subject to
review and approval of Parent), effective as of the day immediately preceding
the Effective Time. The Company employees shall be eligible to participate in a
401(k) plan sponsored by Parent no later than the first day of the next
commencing month immediately after the Effective Time.
(f) Parent will negotiate in good faith new employment
agreements with each of Xxxx X. Xxx, Xxxx X. Xxxx, and Xxxxxxx X. Xxxxx, which
may include compensation opportunities in lieu of a portion of the compensation
and benefits to which such employees would be entitled pursuant to those certain
Letter Agreements, dated May 20, 1999, as amended on November 19, 2000 and
further amended on January 28, 2001 (the "Change of Control Agreements"), and
which employment agreements are expected to include customary noncomeptition,
nonsolicitation and confidentiality provisions.
45
50
5.7. POOLING; REORGANIZATION.
(a) The Company shall not knowingly take, or knowingly permit
any controlled Affiliate of the Company to take, any action that could prevent
the Merger from being treated (i) for financial accounting purposes as a
"pooling of interests" under GAAP; it being understood and agreed that if the
Company's Accountants and Parent's Accountants both advise the Company and
Parent in writing that such an action would not prevent the Merger from being so
treated, such action will be conclusively deemed not to constitute a breach of
this Section 5.7 or (ii) as a reorganization within the meaning of Section
368(a) of the Code.
(b) The Company shall use its reasonable best efforts to obtain
an executed affiliate pooling agreement substantially in the form attached
hereto as Exhibit B (each, a "Company Affiliate Pooling Agreement") from each of
the Persons identified in Section 2.21(c) of the Company Disclosure Schedule
concurrently with the execution of this Agreement and thereafter from any other
person who may be deemed an affiliate of the Company regarding compliance with
Rule 145 under the Securities Act and the requirements for accounting treatment
of the Merger as a "pooling of interests."
(c) Parent shall not knowingly take, or knowingly permit any
controlled Affiliate of Parent to take, any action that could prevent the Merger
from being treated (i) for financial accounting purposes as a "pooling of
interests" under GAAP; it being understood and agreed that if Parent's
Accountants, advise Parent in writing that such an action would not prevent the
Merger from being so treated, such action will be conclusively deemed not to
constitute a breach of this Section 5.7; or (ii) as a reorganization within the
meaning of Section 368(a) of the Code.
(d) Parent shall use its reasonable efforts to obtain an
executed affiliate pooling agreement containing substantially the substance of
the second and third paragraphs of the Company Affiliate Pooling Agreement from
each of the Persons identified in Section 5.7(d) of the Parent Disclosure
Schedule regarding compliance with the requirements for accounting treatment of
the Merger as a "pooling of interests."
46
51
5.8. NOTIFICATION OF CERTAIN MATTERS.
(a) The Company shall give prompt notice to Parent, and Parent
shall give prompt notice to the Company, of the occurrence, or non-occurrence,
of any event the occurrence, or non-occurrence, of which results in any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect (or, in the case of any representation or
warranty qualified by its terms by materiality or Material Adverse Effect, then
untrue or inaccurate in any respect) and any failure of the Company, Parent or
Merger Sub, as the case may be, to comply with or satisfy in any material
respect any covenant, condition or agreement to be complied with or satisfied by
it hereunder; provided, however, that the delivery of any notice pursuant to
this Section 5.8 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
(b) Each of the Company and Parent shall give prompt notice to
the other of (i) any notice or other communication from any Person alleging that
the Approval of such Person is or may be required in connection with the Merger
or the Option Agreement, (ii) any notice or other communication from any
Governmental Authority in connection with the Merger or the Option Agreement;
(iii) any Litigation, relating to or involving or otherwise affecting the
Company or its Subsidiaries or Parent or its Subsidiaries that relates to the
Merger or the Option Agreement; and (iv) any change that could reasonably be
expected to have a Material Adverse Effect or is likely to delay or impede the
ability of either Parent or the Company to consummate the transactions
contemplated by this Agreement or the Option Agreement or to fulfill their
respective obligations set forth herein or therein.
(c) Each of the Company and Parent shall give (or shall cause
their respective Subsidiaries to give) any notices to third Persons, and use,
and cause their respective Subsidiaries to use, its reasonable best efforts to
obtain any consents from third Persons (i) necessary, proper or advisable to
consummate the transactions contemplated by this Agreement, (ii) otherwise
required under any Contracts in connection with the consummation of the
transactions contemplated hereby or (iii) required to prevent a Material Adverse
Effect from occurring. If any party shall fail to obtain any such consent from a
third Person, such party shall use its reasonable best efforts, and will take
any such actions reasonably requested by the other parties, to limit the adverse
effect upon the Company and Parent, their respective Subsidiaries, and their
respective businesses resulting, or which would result after the Effective Time,
from the failure to obtain such consent.
(d) Recognizing that the retention of the Company's employees is
to the material benefit of Parent, in the event that the Company receives any
written or oral indication from any engineer or other key employee that such
person is considering or has decided to terminate his or her employment with the
Company or any of its Subsidiaries, the Company shall notify Parent by the next
Business Day in order that Parent may meet with such employee.
47
52
5.9. LISTING ON THE NASDAQ NATIONAL MARKET.
Parent shall use its reasonable best efforts to cause the Parent
Common Stock to be issued in the Merger and pursuant to Parent's options to be
issued pursuant to Section 5.5 to be approved for listing on the NASDAQ National
Market System, subject to official notice of issuance, prior to the Effective
Time.
5.10. PUBLIC ANNOUNCEMENTS.
Parent and the Company shall consult with and obtain the
approval of the other party before issuing any press release or other public
announcement with respect to the Merger or this Agreement and shall not issue
any such press release prior to such consultation and approval, except as may be
required by Law or any listing agreement related to the trading of the shares of
either party on any national securities exchange or national automated quotation
system, in which case the party proposing to issue such press release or make
such public announcement shall use its reasonable best efforts to consult in
good faith with the other party before issuing any such press release or making
any such public announcement.
5.11. TAKEOVER LAWS.
If any form of anti-takeover statute, Regulation or charter
provision or Contract is or shall become applicable to the Merger or the
transactions contemplated hereby or by the Option Agreement, the Company and the
Board of Directors of the Company shall grant such Approvals and take such
actions as are necessary under such Laws and provisions so that the transactions
contemplated hereby and thereby may be consummated as promptly as practicable on
the terms contemplated hereby and thereby and otherwise act to eliminate or
minimize the effects of such Law, provision or Contract on the transactions
contemplated hereby or thereby.
5.12. ACCOUNTANT'S LETTER.
The Company shall use its reasonable best efforts to cause to be
delivered to Parent a "comfort" letter of the Company's Accountants, dated a
date within two business days before the date on which the Registration
Statement shall become effective and addressed to Parent and the Company, in
form and substance reasonably satisfactory and customary in scope and substance
for letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
5.13. INDEMNIFICATION; DIRECTORS AND OFFICER INSURANCE.
(a) All rights to indemnification, advancement of Litigation
expenses and limitation of personal liability existing in favor of the directors
and officers of the Company and its Subsidiaries under the provisions existing
on the date hereof in their respective certificates of incorporation, bylaws or
similar organizational documents, as well as related director indemnification
agreements in accordance with their terms in existence on the date hereof as
well as officer and other indemnification agreements listed on Section 5.13 of
the Company Disclosure Schedule in accordance with their terms, shall, with
respect to any matter existing or occurring at or prior to the Effective Time
(including the transactions contemplated by this Agreement), survive the
Effective Time for a period of not less than six years.
48
53
(b) For six years after the Effective Time, Parent and the
Surviving Corporation shall cause to be maintained in effect the current
policies of the directors' and officers' liability insurance maintained by the
Company (provided that Parent may substitute therefore policies of at least the
same coverage containing terms and conditions which are not materially less
advantageous) with respect to matters or events occurring prior to the Effective
Time to the extent available (the "D&O Insurance"); provided, however, that in
no event shall Parent be required to expend more than an amount per year equal
to 1.50 times the premium paid by the Company as of the date hereof to maintain
or procure the D&O Insurance pursuant hereto; and, provided, further that if the
annual premiums of the D&O Insurance coverage exceed such amount, Parent shall
be obligated to obtain a policy with the greatest coverage reasonably available
for a cost not exceeding such amount.
(c) After the Effective Time, Parent agrees that it will cause
the Surviving Corporation to indemnify and hold harmless each present and former
director and officer of the Company, determined as of the Effective Time (the
"Indemnified Parties"), against any costs or expenses (including reasonable
attorney's fees), judgments, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit, proceeding or
investigation, whether civil, criminal, administrative or investigative, arising
out of or pertaining to matters relating to their duties or actions in their
capacity as officers and directors and existing or occurring at or prior to the
Effective Time (including as a result of this Agreement), whether asserted or
claimed prior to, at or after the Effective Time, to the fullest extent
permitted under applicable Law (and Parent shall, or shall cause the Surviving
Corporation to, also advance fees and expenses (including reasonable attorney's
fees) as incurred to the fullest extent permitted under applicable Law provided
the Person to whom expenses are advanced provides a customary undertaking
complying with applicable Law to repay such advances if it is ultimately
determined that such Person is not entitled to indemnification). To the extent
not satisfied by the D&O Insurance or the Surviving Corporation, Parent hereby
unconditionally guarantees the obligations of the Surviving Corporation under
this Section 5.13(c).
(d) Nothing in this Agreement is intended to, shall be construed
to or shall release, waive or impair any rights to directors' and officers'
insurance claims under any policy that is or has been in existence with respect
to the Company or any of its officers, directors or employees, it being
understood and agreed that the indemnification provided for in this Section 5.13
is not prior to or in substitution for any such claims under such policies.
5.14. OPTION AGREEMENT.
Contemporaneously with the execution and delivery of this
Agreement, the Company shall deliver to Parent an executed version of the Option
Agreement. The Company agrees to fully perform to the fullest extent permitted
under applicable Law its obligations under the Option Agreement.
5.15. COMPANY RIGHTS AGREEMENT.
The Board of Directors of the Company shall take all action (in
addition to that referred to in Section 2.25) necessary or desirable (including
amending the Company Rights Agreement) in order to render the Company Rights
inapplicable to the Merger and the other
49
54
transactions contemplated by this Agreement and the Option Agreement. Except in
connection with the foregoing sentence, the Board of Directors of the Company
shall not, without the prior written consent of Parent, (i) amend the Company
Rights Agreement or (ii) take any action with respect to, or make any
determination under, the Company Rights Agreement, in each case in order to
facilitate any Acquisition Proposal with respect to the Company.
5.16. ACTION BY BOARD OF DIRECTORS.
Prior to the Effective Time, the Boards of Directors of Parent
and/or Company, as applicable, or an appropriate committee of non-employee
directors thereof, shall adopt a resolution consistent with the interpretative
guidance of the SEC so that (i) the assumption of Outstanding Employee Options
held by Company Insiders (as defined below) pursuant to this Agreement, and (ii)
the receipt by Company Insiders of Parent Common Stock in exchange for Company
Common Stock pursuant to the Merger, shall be an exempt transaction for purposes
of Section 16 of the Exchange Act by any officer or director of Company who may
become a covered person of Parent for purposes of Section 16 of the Exchange Act
(a "Company Insider").
5.17. BOARD SEAT.
Promptly following the Effective Time, consistent with
applicable law and its Bylaws, the number of directors on Parent's Board shall
be increased by one (unless a current vacancy exists, in which case no new
vacancy need be created), and M.D. Sampels shall be elected to fill such
vacancy, to serve as such until the next annual meeting of Parent's stockholders
or such time as his successor shall have been duly elected or appointed and
qualified.
ARTICLE VI
CONDITIONS OF MERGER
6.1. CONDITIONS TO OBLIGATION OF EACH PARTY TO EFFECT THE MERGER.
The respective obligations of each party to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Effectiveness of the Registration Statement. The
Registration Statement shall have been declared effective; no stop order
suspending the effectiveness of the Registration Statement or the use of the
Proxy Statement shall have been issued by the SEC, and no proceedings for that
purpose shall have been initiated or, to the Knowledge of Parent or the Company,
threatened by the SEC.
(b) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the requisite vote of the stockholders of the
Company in accordance with the DGCL and the Certificate of Incorporation and
Bylaws of the Company.
50
55
(c) NASDAQ National Market. The shares of Parent Common Stock
issuable to the stockholders of the Company pursuant to this Agreement shall
have been approved for listing on the NASDAQ National Market System subject to
official notice of issuance.
(d) HSR Act and Foreign Competition Laws. All applicable waiting
periods or approvals under the HSR Act and Foreign Competition Laws shall have
expired or been terminated or received.
(e) No Injunctions or Restraints; Illegality. No temporary
restraining order, preliminary or permanent injunction or other Order (whether
temporary, preliminary or permanent) issued by any Court of competent
jurisdiction or other legal restraint or prohibition shall be in effect which
prevents the consummation of the Merger on substantially the same terms as
contemplated herein, and there shall not be any action taken, or any Law or
Order enacted, entered, enforced or deemed applicable to the Merger, which makes
the consummation of the Merger on substantially the same terms as contemplated
herein illegal.
(f) Tax Opinion. The Company shall have received a written
opinion of, Jenkens & Xxxxxxxxx, P.C., dated as of the Closing Date, in form and
substance reasonably satisfactory to the Company to the effect that the Merger
will constitute a reorganization within the meaning of Section 368(a) of the
Code. The issuance of such opinion shall be conditioned on the receipt by such
tax counsel of representation letters from each of Parent, Merger Sub and the
Company. The specific provisions of each such representation letter shall be in
form and substance reasonably satisfactory to such tax counsel, and such
representation letter shall be dated on or before the date of such opinion and
shall not have been withdrawn or modified in any material respect.
6.2. ADDITIONAL CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB.
The obligations of Parent and Merger Sub to effect the Merger
are also subject to the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of the Company contained in this Agreement and the Option Agreement
that are qualified as to Material Adverse Effect shall be true and correct as of
the date of this Agreement and as of immediately prior to the Effective Time
(other than representations and warranties which address matters only as of a
particular date, in which case such representations and warranties shall be true
and correct, on and as of such particular date), with the same force and effect
as if then made and (ii) the representations and warranties of the Company
contained in this Agreement and the Option Agreement that are not qualified as
to Material Adverse Effect shall be true and correct as of the date of this
Agreement and as of immediately prior to the Effective Time (other than
representations and warranties which address matters only as of a particular
date, in which case such representations and warranties shall be true and
correct, on and as of such particular date), with the same force and effect as
if then made, except where the failure of such representations and warranties
(other that the representation contained in Section 2.3, which shall be true and
correct in all material respects) to be true and correct would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
the Company; and Parent and
51
56
Merger Sub shall have received a certificate to such effect signed by a member
of the Interim Office of the Chief Executive and by the Chief Financial Officer
of the Company.
(b) Agreements and Covenants. The Company shall have performed
or complied with all agreements and covenants required by this Agreement and the
Option Agreement to be performed or complied with by it on or prior to the
Effective Time except for such failures to perform or comply with such
agreements and covenants that do not and will not have any material effects that
are adverse to either the Company or Parent (after giving effect to the Merger);
and Parent and Merger Sub shall have received a certificate to such effect
signed by a member of the Interim Office of the Chief Executive and by the Chief
Financial Officer of the Company.
For purposes of this Section 6.2(b), any failures to perform or
comply with Section 4.1(h) relating to Contracts of the type described in
clauses (i), (ii), (iii), (iv), (v), (viii), (xii) or (xiv) of Section 2.7 shall
not be considered to have a material effect unless the aggregate effect of all
such failures to perform or comply would result in the incurrence of (i)
additional consolidated expenses and/or reductions in consolidated revenues of
the Company or Parent (after giving effect to the Merger) in excess of
$5,000,000 in the aggregate in any fiscal quarter or (ii) additional
consolidated liabilities of the type required to be reflected or reserved
against in accordance with GAAP and/or reductions in consolidated assets of the
type set forth on a balance sheet in accordance with GAAP of the Company or
Parent (after giving effect to the Merger) in the aggregate of more than
$20,000,000.
(c) Third Party Consents. Parent shall have received evidence,
in form and substance reasonably satisfactory to it, that those Approvals of
Governmental Authorities and other third parties set forth in Section 2.6(a) or
(b) of the Company Disclosure Schedule (or not described in Section 2.6(a) or
(b) of the Company Disclosure Schedule but required to be so described) have
been obtained, except where failure to have been so obtained, either
individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect on the Company.
(d) Letter from Parent's Accountants; Pooling of Interests.
Parent shall have received a letter from Parent's Accountants in form and
substance reasonably satisfactory to Parent, dated the Closing Date, concurring
with management's conclusions that the transactions contemplated by this
Agreement, including the Merger, will qualify as a "pooling of interests"
business combination in accordance with GAAP and the criteria of Accounting
Principles Board Opinion No. 16 and the Regulations of the SEC.
(e) Company Affiliate Pooling Agreements. Each of the Persons
identified in Section 2.21(c) of the Company Disclosure Schedule shall have
executed and delivered Company Affiliate Pooling Agreement with Parent which
shall be in full force and effect.
(f) Option Agreement. The Option Agreement shall be in full
force and effect as of the Effective Time and become effective in accordance
with the terms thereof.
(g) Change of Control Agreements. The Change of Control
Agreements shall be amended (in addition to any other amendments effected
pursuant to Section 5.6(f) hereof) to
52
57
provide that (i) the amounts payable thereunder as a result of the consummation
of the transactions contemplated by this Agreement shall be reduced by $498,462,
$793,846, and $1,007,728, with respect to Messrs. Xxxx X. Xxxx, Xxxxxxx X. Xxxxx
and Xxxx X. Xxx, respectively; and (ii) in consideration for their continued
services to the Surviving Corporation after the Effective Time, Messrs. Xxxx,
Xxxxx and Mai shall be entitled to receive $249,231, $396,923, and $553,864,
respectively, on the earlier to occur of (A) the first anniversary of the
Effective Time or (B) the date of the Constructive Termination (as defined
below) of such person, subject to the condition that, with respect to clause (A)
above, such person is employed by the Company, the Parent, or an affiliate
thereof, on such date, unless the failure to be so employed is the result of the
termination by the Company, the Parent or an affiliate thereof, of such person's
employment for any reason (other than such employees' voluntary termination of
his own employment). For purposes hereof, "Constructive Termination" means (i)
the adverse change in such person's responsibilities or direct report as
described on Section 6.2(g) of the Company Disclosure Schedule; or (ii) a
decrease in such person's salary, benefits or perquisites (other than
equity-based awards or grants), other than as a result of any amendment or
termination of any employee and/or executive benefit plan or arrangement, which
amendment or termination is applicable to all qualifying executives of the
Company.
6.3. ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE COMPANY.
The obligation of the Company to effect the Merger is also
subject to the following conditions:
(a) Representations and Warranties. (i) The representations and
warranties of Parent and Merger Sub contained in this Agreement and the Option
Agreement that are qualified as to Material Adverse Effect shall be true and
correct as of the date of this Agreement and as of immediately prior to the
Effective Time (other than representations and warranties which address matters
only as of a particular date, in which case such representations and warranties
shall be true and correct, on and as of such particular date), with the same
force and effect as if then made and (ii) the representations and warranties of
Parent contained in this Agreement and the Option Agreement that are not
qualified as to Material Adverse Effect shall be true and correct as of the date
of this Agreement and as of immediately prior to the Effective Time (other than
representations and warranties which address matters only as of a particular
date, in which case such representations and warranties shall be true and
correct, on and as of such particular date), with the same force and effect as
if then made, except where the failure of such representations and warranties
(other that the representation contained in Section 3.2, which shall be true and
correct in all material respects) to be true and correct would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect on
Parent; and the Company shall have received a certificate to such effect signed
by the Chief Executive Officer and Chief Financial Officer of Parent.
(b) Agreements and Covenants. Parent and Merger Sub shall have
performed or complied with all agreements and covenants required by this
Agreement to be performed or complied with by them on or prior to the Effective
Time except for such failures to perform or comply that do not and will not have
any material effects that are adverse to the Company; and the Company shall have
received a certificate to such effect signed by the Chief Executive Officer and
Chief Financial Officer of Parent.
53
58
(c) Certain Obligations. (i) To the extent not satisfied by the
Company prior to the Closing, Purchaser shall have made arrangements for the
payment at Closing of the obligations set forth on Section 6.3(c) of the Company
Disclosure Schedules. (ii) Parent shall have expressly assumed the obligations
set forth in Section 6.3(c)(ii) of the Company Disclosure Schedule.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
7.1. TERMINATION.
This Agreement may be terminated and the Merger contemplated
hereby may be abandoned at any time prior to the Effective Time, notwithstanding
approval thereof by the stockholders of the Company:
(a) By mutual written consent duly authorized by the Boards of
Directors of Parent and the Company;
(b) By either Parent or the Company if the Merger shall not have
been consummated on or before June 30, 2001; provided, however, that the right
to terminate this Agreement under this Section 7.1(b) shall not be available to
any party whose willful failure to fulfill any material obligation under this
Agreement has been the cause of, or resulted in, the failure of the Merger to
have been consummated on or before such date;
(c) By either Parent or the Company, if a Court or Governmental
Authority shall have issued an Order or taken any other action, in each case
which has become final and non-appealable and which restrains, enjoins or
otherwise prohibits the Merger;
(d) By either Parent or the Company, if, at the Company
Stockholders' Meeting (including any adjournment or postponement thereof), the
requisite vote of the stockholders of the Company to approve and adopt this
Agreement and to consummate the Merger shall not have been obtained;
(e) By Parent, if the Board of Directors of the Company or any
committee thereof shall have (i) approved or recommended, or proposed to approve
or recommend, any Acquisition Proposal other than the Merger, (ii) failed to
present and recommend the approval and adoption of this Agreement and the Merger
to the stockholders of the Company, or withdrawn or modified, or proposed to
withdraw or modify, in a manner adverse to Parent or Merger Sub, its
recommendation or approval of the Merger, this Agreement or the transactions
contemplated hereby, (iii) failed to mail the Proxy Statement to the
stockholders of the Company within a reasonable time of when the Proxy Statement
was available for mailing or failed to include therein such approval and
recommendation (including the recommendation that the stockholders of the
Company vote in favor of the adoption of this Agreement), (iv) upon a written
request by Parent to publicly reaffirm the approval and recommendation of the
Merger, this Agreement and the transactions contemplated hereby following the
delivery, making or announcement of an Acquisition Proposal, failed to do so
within five Business Days after such
54
59
request is made, (v) entered, or caused the Company or any Material Subsidiary
to enter, into any letter of intent, agreement in principle, acquisition
agreement or other similar agreement related to any Acquisition Proposal, (vi)
taken any other action prohibited by Section 4.3, (vii) materially breached the
Option Agreement or (viii) resolved or announced its intention to do any of the
foregoing;
(f) By Parent, if any Person (other than Parent or an Affiliate
of Parent) acquires beneficial ownership of or the right to acquire 15% or more
of the outstanding shares of capital stock or other equity interests of the
Company;
(g) By Parent, if neither Parent nor Merger Sub is in material
breach of its obligations under this Agreement, and if (i) at any time that any
of the representations and warranties of the Company herein become untrue or
inaccurate such that Section 6.2(a) would not be satisfied (treating such time
as if it were the Effective Time for purposes of this Section 7.1(g)) or (ii)
there has been a breach on the part of the Company of any of its covenants or
agreements contained in this Agreement such that Section 6.2(b) would not be
satisfied (treating such time as if it were the Effective Time for purposes of
this Section 7.1(g)), and, in both case (i) and case (ii), such breach (if
curable) has not been cured within 30 days after notice to the Company; or
(h) By the Company, if it is not in material breach of its
obligations under this Agreement, and if (i) at any time that any of the
representations and warranties of Parent or Merger Sub herein become untrue or
inaccurate such that Section 6.3(a) would not be satisfied (treating such time
as if it were the Effective Time for purposes of this Section 7.1(h)) or (ii)
there has been a breach on the part of Parent or Merger Sub of any of their
respective covenants or agreements contained in this Agreement such that Section
6.3(b) would not be satisfied (treating such time as if it were the Effective
Time for purposes of this Section 7.1(h)), and such breach (if curable) has not
been cured within 30 days after notice to Parent.
7.2. EFFECT OF TERMINATION.
Except as provided in this Section 7.2, in the event of the
termination of this Agreement pursuant to Section 7.1, this Agreement (other
than this Section 7.2 and Sections 5.3(b), 5.10, 7.3 and Article VIII, which
shall survive such termination) will forthwith become void, and there will be no
liability on the part of Parent, Merger Sub or the Company or any of their
respective officers or directors to the other and all rights and obligations of
any party hereto will cease, except that nothing herein will relieve any party
from liability for any breach, prior to termination of this Agreement in
accordance with its terms, of any representation, warranty, covenant or
agreement contained in this Agreement.
7.3. FEES AND EXPENSES.
(a) Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall and are permitted to be paid by the party incurring
such expenses, whether or not the Merger is consummated, including, but not
limited to, legal and accounting fees and expenses and the fees payable to the
Parent Financial Advisors and the Company Financial Advisors, as the case may
be; provided,
55
60
however, that Parent and the Company shall share equally all fees and expenses,
other than attorneys' fees, incurred in relation to the printing and filing of
the Proxy Statement (including any preliminary materials related thereto), the
Registration Statement (including financial statements and exhibits) and any
amendments or supplements thereto and all filing fees payable in connection with
filings made under the HSR Act or Foreign Competition Laws.
(b) If (A) (I) Parent shall terminate this Agreement pursuant to
(x) Section 7.1(d), Section 7.1(f), or Section 7.1(g) or (y) pursuant to Section
7.1(b) without the Company Stockholders' Meeting having occurred, (II) at any
time after the date of this Agreement and before such termination an Acquisition
Proposal with respect to the Company shall have been publicly announced or
otherwise communicated to the Board of Directors and stockholders of the Company
and not withdrawn prior to (1) the Company Stockholders' Meeting having
occurred, in the case of a termination pursuant to Section 7.1(d) only or (2)
such termination in the case of a termination pursuant to Section 7.1(b),
Section 7.1(f) or Section 7.1(g) only (a "Company Public Proposal") and (III)
within twelve months of such termination the Company or any of its Subsidiaries
enters into a definitive agreement with respect to, or consummates, any
Acquisition Proposal or (B) Parent shall terminate this Agreement pursuant to
Section 7.1(e); then the Company shall promptly, but in no event later than the
date of such termination (or in the case of clause (A), if later, the date the
Company or its Subsidiary enters into such agreement with respect to, or
consummates, such Acquisition Proposal), pay Parent an amount equal to
$75,000,000 by wire transfer of immediately available funds).
7.4. AMENDMENT.
This Agreement may be amended by the parties hereto by action
taken by or on behalf of their respective Boards of Directors at any time prior
to the Effective Time; provided, however, that, after approval of the Merger by
the stockholders of the Company, no amendment may be made which would reduce the
amount or change the type of consideration into which each share of Company
Common Stock shall be converted upon consummation of the Merger. This Agreement
may not be amended except by an instrument in writing signed by all of the
parties hereto.
7.5. WAIVER.
At any time prior to the Effective Time, any party hereto may
extend the time for the performance of any of the obligations or other acts
required hereunder, waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and waive
compliance with any of the agreements or conditions contained herein. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
56
61
ARTICLE VIII
GENERAL PROVISIONS
8.1. SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
The representations, warranties and agreements of each party
hereto will remain operative and in full force and effect regardless of any
investigation made by or on behalf of any other party hereto, any Person
controlling any such party or any of their officers, directors, representatives
or agents whether prior to or after the execution of this Agreement. The
representations and warranties in this Agreement will terminate at the Effective
Time.
8.2. NOTICES.
All notices or other communications which are required or
permitted hereunder shall be in writing and sufficient if delivered personally
or sent by nationally recognized overnight courier or by registered or certified
mail, postage prepaid, return receipt requested, or by electronic mail, with a
copy thereof to be delivered or sent as provided above or by facsimile or
telecopier, as follows:
(a) If to Parent or Merger Sub:
Maxim Integrated Products, Inc.
000 Xxx Xxxxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxxxxxx, President
With copy to:
57
62
Xxxxxxx Xxxxxxx & Xxxxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
(a) If to the Company:
Dallas Semiconductor Corporation
0000 Xxxxx Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxx X. Xxx, President
With copies to:
Jenkens & Xxxxxxxxx, P.C.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
or to such other address as the party to whom notice is to be given may have
furnished to the other party in writing in accordance herewith. All such notices
or communications shall be deemed to be received (i) in the case of personal
delivery, nationally recognized overnight courier or registered or certified
mail, on the date of such delivery and (ii) in the case of facsimile or
telecopier or electronic mail, upon confirmed receipt.
8.3. DISCLOSURE SCHEDULES.
The Company Disclosure Schedule and the Parent Disclosure
Schedule each shall be divided into sections corresponding to the sections and
subsections of this Agreement. Disclosure of any fact or item in any section of
a party's Disclosure Schedule shall, if such disclosure reasonably appears to do
so, be deemed to be disclosed with respect to all other relevant sections.
8.4. CERTAIN DEFINITIONS.
For purposes of this Agreement, the term:
(a) "Affiliate" means any Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned Person, including, with respect to the
Company, any corporation, partnership, limited liability company or joint
venture in which the Company (either alone, or through or together with any
other Subsidiary) has, directly or indirectly, an interest of 10% or more.
58
63
(b) "Balance Sheet" means, as the context requires, either (i)
the balance sheet of the Company contained in the Company's December 31
Financial Statements or (ii) the balance sheet of the Parent contained in the
Parent's Quarterly Report on Form 10-Q for the quarter ended September 30, 2000.
(c) "beneficial owner" (including the terms "beneficial
ownership" and "to beneficially own") with respect to a Person's ownership of
any securities means such Person or any of such Person's Affiliates or
associates (as defined in Rule 12b-2 under the Exchange Act) is deemed to
beneficially own, directly or indirectly, within the meaning of Rule 13d-3 under
the Exchange Act.
(d) "Business Day" means any day other than a Saturday, Sunday
or day on which banks are permitted to close in the State of California.
(e) "Company Disclosure Schedule" means a schedule of even date
herewith delivered by the Company to Parent concurrently with the execution of
this Agreement, which, among other things, will identify exceptions and other
matters with respect to the representations, warranties and covenants of the
Company contained herein.
(f) "Company Rights" means the rights issued pursuant to the
Company Rights Agreement.
(g) "Company Rights Agreement" means that certain Rights
Agreement, dated as of September 10, 1999, between the Company and ChaseMellon
Shareholder Services, L.L.C.
(h) "Contract" means any contract, plan, undertaking,
understanding, agreement, license, lease, note, mortgage or other binding
commitment, whether written or oral.
(i) "control" (including the terms "controlled by" and "under
common control with") means the possession, directly or indirectly, of the power
to direct or cause the direction of the management or policies of a Person,
whether through the ownership of stock, as trustee or executor, by Contract or
otherwise.
(j) "Court" means any court or arbitration tribunal of the
United States, any domestic state, or any foreign country, and any political
subdivision or agency thereof.
(k) "Exchange Agent" means any bank or trust company organized
under the Laws of the United States or any of the states thereof and having a
net worth in excess of $100 million designated and appointed to act as the
exchange agent in the Merger.
(l) "Foreign Competition Laws" means any foreign statutes,
rules, Regulations, Orders, administrative and judicial directives, and other
foreign Laws, that are designed or intended to prohibit, restrict or regulate
actions having the purpose or effect of monopolization, lessening of competition
or restraint of trade.
(m) "Governmental Authority" means any governmental agency or
authority of the United States, any domestic state, or any foreign country, and
any political subdivision or
59
64
agency thereof, and includes any authority having governmental or
quasi-governmental powers, including any administrative agency or commission.
(n) "Intellectual Property" means all United States and foreign
intellectual property, including, without limitation, all trademarks, service
marks, trade names, brand names, URLs and Internet domain names, designs,
slogans, logos, trade dress and all other source indicators, together with all
goodwill related to the foregoing; patents, copyrights and copyrightable works
(including Software), technology, trade secrets and confidential or proprietary
information, customer lists, know-how, processes, formulae, algorithms, models,
user interfaces, inventions, semiconductors, mask works, systems, networks,
hardware, firmware, middleware, and all registrations, applications, recordings,
renewals, continuations, continuations-in-part, divisions, reissues,
reexaminations, foreign counterparts, and other legal protections and rights
related to the foregoing.
(o) "Knowledge" means (i) with respect to the Company, the
actual knowledge of any of the individuals listed on Section 8.4(o)(i) of the
Company Disclosure Schedule and (ii) with respect to Parent, the actual
knowledge of any of the individuals listed on Section 8.4(o)(ii) of the Parent
Disclosure Schedule.
(p) "Law" means all laws, statutes, ordinances and Regulations
of any Governmental Agency including all decisions of Courts having the effect
of law in each such jurisdiction.
(q) "Lien" means any mortgage, pledge, security interest,
attachment, encumbrance, lien (statutory or otherwise), license, claim, option,
conditional sale agreement, right of first refusal, first offer, termination,
participation or purchase or charge of any kind (including any agreement to give
any of the foregoing); provided, however, that the term "Lien" shall not include
(i) statutory liens for Taxes, which are not yet due and payable or are being
contested in good faith by appropriate proceedings, (ii) statutory or common law
liens to secure landlords, lessors or renters under leases or rental agreements
confined to the premises rented, (iii) deposits or pledges made in connection
with, or to secure payment of, workers' compensation, unemployment insurance,
old age pension or other social security programs mandated under applicable
Laws, (iv) statutory or common law liens in favor of carriers, warehousemen,
mechanics and materialmen, to secure claims for labor, materials or supplies and
other like liens, and (v) restrictions on transfer of securities imposed by
applicable state and federal securities Laws.
(r) "Litigation" means any claim, suit, action, arbitration,
cause of action, claim, complaint, criminal prosecution, investigation, demand
letter, or proceeding, whether at law or at equity, before or by any Court or
Governmental Authority, any arbitrator or other tribunal.
(s) "Material Adverse Effect" means any fact, event, change,
development, circumstance or effect (i) that, when such term is used in relation
to the Company, is materially adverse to the business, condition (financial or
otherwise), results of operations, assets, liabilities, properties or prospects
of the Company and its Subsidiaries, taken as a whole, or (ii) that, when such
term is used in relation to Parent or Merger Sub, is materially adverse to the
60
65
business, condition (financial or otherwise), results of operations, assets,
liabilities, properties or prospects of Parent and its Subsidiaries, taken as a
whole; provided, however, that a Material Adverse Effect with respect to any
party hereto shall not include any fact, event, change, development,
circumstance or effect resulting from (A) general economic conditions, (B)
conditions generally affecting the semiconductor industry, (C) actions
contemplated by the parties in connection with, or which is attributable to, the
announcement of this Agreement and the transactions contemplated hereby
(including loss of customers, suppliers or employees or the delay or
cancellation of orders for products to the extent attributable to such factors),
or (D) any litigation or litigation by any Government Authority, in each case
brought or threatened against such entity or any member of its Board of
Directors in respect of this Agreement or the transaction contemplated hereby;
and provided, further, that neither (x) any change in the market price or
trading volume of the Company Common Stock or Parent Common Stock nor (y) a
failure by the Company or Parent to meet the revenue or earnings predictions or
expectations, for any period ending on or after the date of this Agreement
shall, in and of itself, constitute a Material Adverse Effect (it being
understood that this proviso, as it relates to (y), shall not exclude any
underlying fact, event, change, development, circumstance or event which
resulted in such failure to meet such estimates, predictions or expectations).
(t) "Order" means any judgment, order, writ, injunction, ruling
or decree of, or any settlement under the jurisdiction of, any Court or
Governmental Authority.
(u) "Person" means an individual, corporation, partnership,
association, trust, unincorporated organization, limited liability company,
other entity or group (as defined in Section 13(d)(3) of the Exchange Act).
(v) "Regulation" means any rule or regulation of any
Governmental Authority having the effect of Law.
(w) "Software" means any and all (i) computer programs,
including any and all software implementations of algorithms, models and
methodologies, whether in source code or object code, (ii) databases and
compilations, including any and all data and collections of data, whether
machine readable, on paper or otherwise, (iii) descriptions, flow-charts and
other work product used to design, plan, organize and develop any of the
foregoing, (iv) the technology supporting, and the contents and audiovisual
displays of any Internet site(s) operated by or on behalf of Company or any of
its Subsidiaries, and (v) all documentation and other works of authorship,
including user manuals and training materials, relating to any of the foregoing.
(x) "Subsidiary" or "Subsidiaries" of the Company, the Surviving
Corporation, Parent or any other Person means any corporation, partnership,
joint venture, limited liability company or other legal entity of which the
Company, the Surviving Corporation, Parent or such other Person, as the case may
be, owns, directly or indirectly, greater than 50% of the stock or other equity
interests the holder of which is generally entitled to vote as a general partner
or for the election of the board of directors or other governing body of a
corporation, partnership, joint venture, limited liability company or other
legal entity.
61
66
8.5. INTERPRETATION.
When a reference is made in this Agreement to sections,
subsections, Schedules or Exhibits, such reference shall be to a section,
subsection, Schedule or Exhibit to this Agreement unless otherwise indicated.
The words "include," "includes" and "including" when used herein shall be deemed
in each case to be followed by the words "without limitation." The word "herein"
and similar references mean, except where a specific section or Article
reference is expressly indicated, the entire Agreement rather than any specific
section or Article. The table of contents and the headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
8.6. SEVERABILITY.
If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any rule of Law, or public policy, all
other conditions and provisions of this Agreement shall nevertheless remain in
full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
8.7. ENTIRE AGREEMENT.
This Agreement and the Option Agreement (including all exhibits
and schedules hereto and thereto) and other documents and instruments delivered
in connection herewith constitute the entire agreement and supersedes all prior
agreements and undertakings (other than the Confidentiality Agreement), both
written and oral, among the parties, or any of them, with respect to the subject
matter hereof and thereof.
8.8. ASSIGNMENT.
This Agreement shall not be assigned by operation of Law or
otherwise.
8.9. PARTIES IN INTEREST.
This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and, except as set forth in Section 5.6(a),
Section 5.6(f) and Section 5.13, nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
62
67
8.10. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
No failure or delay on the part of any party hereto in the
exercise of any right hereunder will impair such right or be construed to be a
waiver of, or acquiescence in, any breach of any representation, warranty or
agreement herein, nor will any single or partial exercise of any such right
preclude other or further exercise thereof or of any other right. All rights and
remedies existing under this Agreement are cumulative to, and not exclusive to,
and not exclusive of, any rights or remedies otherwise available.
8.11. GOVERNING LAW; ENFORCEMENT.
This Agreement and the rights and duties of the parties
hereunder shall be governed by, and construed in accordance with the Law of the
State of Delaware applicable to contracts executed and to be performed entirely
within that state. The parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement or the Option Agreement were
not performed in accordance with their specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement or the Option
Agreement and to enforce specifically the terms and provisions of this Agreement
or the Option Agreement in the United Stated District Court for the District of
Delaware, this being in addition to any other remedy to which they are entitled
at law or in equity. In addition, each of the parties hereto, (a) consents to
submit itself to the personal jurisdiction of the United Stated District Court
for the District of Delaware in the event any dispute arises out of this
Agreement or the Option Agreement or any transaction contemplated hereby or
thereby, (b) agrees that it will not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, (c)
agrees that it will not bring any action relating to this Agreement or the
Option Agreement or any transaction contemplated hereby or thereby in any other
court and (d) waives any right to trial by jury with respect to any action
related to or arising out of this Agreement or the Option Agreement or any
transaction contemplated hereby or thereby.
8.12. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
[Remainder of this page intentionally left blank]
63
68
IN WITNESS WHEREOF, Parent, Merger Sub and the Company have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
MAXIM INTEGRATED PRODUCTS, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
MI ACQUISITION SUB, INC.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Chief Executive Officer
DALLAS SEMICONDUCTOR CORPORATION
By: /s/ Xxxx X. Xxx
-------------------------------------
Name: Xxxx X. Xxx
Title: President
69
EXHIBIT A
STOCK OPTION AGREEMENT, dated as of January 28, 2001 (the "Agreement"),
between Maxim Integrated Products, Inc., a Delaware corporation (the "Grantee"),
Dallas Semiconductor Corporation, a Delaware corporation (the "Issuer").
RECITALS
WHEREAS, Grantee and Issuer are, concurrently with the execution and
delivery of this Agreement, entering into an Agreement and Plan of Merger, dated
as of the date hereof (the "Merger Agreement"), pursuant to which the parties
will engage in a business combination (the "Merger") (capitalized terms not
otherwise defined herein shave have the meanings assigned to them in the Merger
Agreement).
WHEREAS, as a condition to its willingness to enter into the Merger
Agreement, Grantee has required that Issuer agree, and believing it to be in the
best interests of Issuer, Issuer has agreed, among other things, to grant to
Grantee the Option (as hereinafter defined) to purchase shares of common stock,
par value $0.02 per share, of Issuer ("Issuer Common Stock") at a price per
share equal to the Exercise Price (as hereinafter defined).
AGREEMENT
NOW THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and agreements herein contained, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
OPTION TO PURCHASE SHARES
1.1 Grant of Option.
(a) Issuer hereby grants to Grantee an irrevocable option to
purchase, in whole or in part, an aggregate of up to 9,259,002 duly authorized,
validly issued, fully paid and nonassessable shares of Issuer Common Stock
(representing 14.9% of the issued and outstanding shares of Issuer Common Stock
as of January 25, 2001), on the terms and subject to the conditions set forth
herein (the "Option"); provided, however, that in no event shall the number of
shares of Issuer Common Stock, for which this Option is exercisable, exceed
14.9% of the issued and outstanding shares of Issuer Common Stock at the time of
exercise without giving effect to the issuance of any Option Shares (as defined
below). The number of shares of Issuer Common Stock that may be received upon
the exercise of the Option and the Exercise Price are subject to adjustment as
herein set forth.
70
(b) In the event that any additional shares of Issuer Common
Stock are issued or otherwise become outstanding after January 25, 2001 (other
than pursuant to this Agreement and other than pursuant to an event described in
Section 3.1 hereof), the number of shares of Issuer Common Stock subject to the
Option shall be increased so that, after such issuance, such number together
with any shares of Issuer Common Stock previously issued pursuant hereto, equals
14.9% of the number of shares of Issuer Common Stock then issued and
outstanding, without giving effect to any shares subject or issued pursuant to
the Option. Nothing contained in this Section 1.1(b) or elsewhere in this
Agreement shall be deemed to authorize Issuer to breach or fail to comply with
any provision of the Merger Agreement. As used herein, the term "Option Shares"
means the shares of Issuer Common Stock issuable pursuant to the Option, as the
number of such shares shall be adjusted pursuant to the terms hereof.
1.2 Exercise of Option.
(a) The Option may be exercised by Grantee, in whole or in part,
at any time, or from time to time, commencing upon the Exercise Date and prior
to the Expiration Date. As used herein, the term "Exercise Date" means the date
on which Grantee becomes unconditionally entitled to receive a termination fee
pursuant to Section 7.3(b) of the Merger Agreement (the "Termination Fee"). As
used herein, the term "Expiration Date" means the first to occur prior to
Grantee's exercise of the Option pursuant to Section 1.2(b) of:
(i) the Effective Time;
(ii) written notice of termination of this Agreement
by Grantee to Issuer;
(iii) 12 months after the first occurrence of an
Exercise Date; or
(iv) the date of termination of the Merger Agreement,
unless, in the case of this clause (iv), Grantee
has the right to receive the Termination Fee
either (x) upon, or (y) following, such
termination upon the occurrence of certain
events, in which case the Option will not
terminate until the later of (A) 15 business
days following the time the Termination Fee
becomes unconditionally payable, and (B) the
expiration of the period referred to in Section
7.3(b)(A)(III) of the Merger Agreement.
Notwithstanding the termination of the Option, Grantee shall be entitled to
purchase those Option Shares with respect to which it may have exercised the
Option by delivery of an Option Notice (as defined below) prior to the
Expiration Date, and the termination of the Option will not affect any rights
hereunder that by their terms do not terminate or expire prior to or at the
Expiration Date.
(b) In the event Grantee wishes to exercise the Option, Grantee
shall send a written notice to Issuer of its intention to so exercise the Option
(an "Option Notice"), specifying the number of Option Shares to be purchased
(and the denominations of the certificates, if more than one), whether the
aggregate Exercise Price will be paid in cash or by surrendering a portion of
the Option in accordance with Section 1.3(b) or a combination thereof, and the
place in the United States, time and date of the closing of such purchase (the
"Option Closing" and the date of such Closing, the "Option Closing Date"), which
date shall not be less than two Business
2
71
Days nor more than ten Business Days from the date on which an Option Notice is
delivered; provided, however, that the Option Closing shall be held only if (i)
such purchase would not otherwise violate or cause the violation of, any
applicable material law, statute, ordinance, rule or regulation (including the
HSR Act) (individually, a "Law" and collectively, "Laws"), and (ii) no material
judgment, order, writ, injunction, ruling or decree of any Governmental
Authority (collectively, "Orders") shall have been promulgated, enacted, entered
into, or enforced by any Governmental Authority that prohibits delivery of the
Option Shares, whether temporary, preliminary or permanent; provided, however,
that the parties hereto shall use their reasonable best efforts to (x) promptly
make and process all necessary filings and applications and obtain all consents,
approvals, Orders, authorizations, registrations and declarations or expiration
or termination of any required waiting periods (collectively, "Approvals") and
to comply with any such applicable Laws and (y) have any such Order vacated or
reversed. In the event the Option Closing is delayed pursuant to clause (i) or
(ii) above, the Option Closing shall be within ten Business Days following the
cessation of such restriction, violation, Law or Order or the receipt of any
necessary Approval, as the case may be (so long as the Option Notice was
delivered prior to the Expiration Date); provided further, that, notwithstanding
any prior Option Notice, Grantee shall be entitled to rescind such Option Notice
and shall not be obligated to purchase any Option Shares in connection with such
exercise upon written notice to such effect to Issuer.
(c) At any Option Closing, (i) Issuer shall deliver to Grantee
all of the Option Shares to be purchased by delivery of a certificate or
certificates evidencing such Option Shares in the denominations designated by
Grantee in the Option Notice, and (ii) if the Option is exercised in part and/or
surrendered in part to pay the aggregate Exercise Price pursuant to Section
1.3(b), Issuer and Grantee shall execute and deliver an amendment to this
Agreement reflecting the Option Shares for which the Option has not been
exercised and/or surrendered. If at the time of issuance of any Option Shares
pursuant to an exercise of all or part of the Option hereunder, Issuer shall
have issued any rights or other securities which are attached to or otherwise
associated with the Issuer Common Stock, then each Option Share issued pursuant
to such exercise shall also represent such rights or other securities with terms
substantially the same as and at least as favorable to Grantee as are provided
under any shareholder rights agreement or similar agreement of Issuer then in
effect. At the Option Closing, Grantee shall pay to Issuer by wire transfer of
immediately available funds to an account specified by Issuer to Grantee in
writing at least two Business Days prior to the Option Closing an amount equal
to the Exercise Price multiplied by the number of Option Shares to be purchased
for cash pursuant to this Article I; provided, however, that the failure or
refusal of Issuer to specify an account shall not affect Issuer's obligation to
issue the Option Shares.
(d) Upon the delivery by Grantee to Issuer of the Option Notice
and the tender of the applicable aggregate Exercise Price in immediately
available funds or the requisite portion of the Option in accordance with
Section 1.3, Grantee shall be deemed to be the holder of record of the Option
Shares issuable upon such exercise, notwithstanding that the stock transfer
books of Issuer may then be closed, that certificates representing such Option
Shares may not then have been actually delivered to Grantee, or Issuer may have
failed or refused to take any action required of it hereunder. Issuer shall pay
all expenses that may be payable in connection with the preparation, issuance
and delivery of stock certificates or an amendment to this Agreement under this
Section 1.2 and any filing fees and other expenses arising from the performance
of the transactions contemplated hereby.
3
72
1.3 Payments.
(a) The purchase and sale of the Option Shares pursuant to
Section 1.2 of this Agreement shall be at a purchase price equal to $26.8125 per
share (as such amount may be adjusted pursuant to the terms hereof, the
"Exercise Price"), payable at Grantee's option in cash, by surrender of a
portion of the Option in accordance with Section 1.3(b), or a combination
thereof.
(b) Grantee may elect to purchase Option Shares issuable, and
pay some or all of the aggregate Exercise Price payable, upon an exercise of the
Option by surrendering a portion of the Option with respect to such number of
Option Shares as is determined by dividing (i) the aggregate Exercise Price
payable in respect of the number of Option Shares being purchased in such manner
by (ii) the excess of the Fair Market Value (as defined below) per share of
Issuer Common Stock as of the last trading day preceding the date Grantee
delivers its Option Notice (such date, the "Option Exercise Date") over the per
share Exercise Price. The "Fair Market Value" per share of Issuer Common Stock
shall be (x) if the Issuer Common Stock is listed on the New York Stock Exchange
(the "NYSE") or any other nationally recognized exchange or trading system as of
the Option Exercise Date, the average of last reported sale prices per share of
Issuer Common Stock thereon for the ten trading days commencing on the 12th
trading day immediately preceding the Option Exercise Date, or (y) if the Issuer
Common Stock is not listed on the NYSE or any other nationally recognized
exchange or trading system as of the Option Exercise Date, the amount determined
by a mutually acceptable independent investment banking firm as the value per
share the Issuer Common Stock would have if publicly traded on a nationally
recognized exchange or trading system (assuming no discount for minority
interest, illiquidity or restrictions on transfer). That portion of the Option
so surrendered under this Section 1.3(b) shall be canceled and shall thereafter
be of no further force and effect.
(c) Certificates for the Option Shares delivered at an Option
Closing will have typed or printed thereon a restrictive legend which will read
substantially as follows:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR
SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS
ON TRANSFER AS SET FORTH IN THE STOCK OPTION AGREEMENT DATED AS OF
JANUARY 28, 2001, A COPY OF WHICH MAY BE OBTAINED FROM THE SECRETARY OF
STAR CORPORATION AT ITS PRINCIPAL EXECUTIVE OFFICES."
It is understood and agreed that (i) the reference to restrictions arising under
the Securities Act in the above legend will be removed by delivery of substitute
certificate(s) without such reference if such Option Shares have been registered
pursuant to the Securities Act, such Option Shares have been sold in reliance on
and in accordance with Rule 144 under the Securities Act or Grantee has
delivered to Issuer a copy of a letter from the staff of the SEC, or an opinion
of counsel in form and substance reasonably satisfactory to Issuer and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act and (ii) the reference to restrictions pursuant to this Agreement
in the above legend will be removed by delivery of substitute certificate(s)
without such reference if the Option Shares evidenced by certificate(s)
containing such reference
4
73
have been sold or transferred in compliance with the provisions of this
Agreement under circumstances that do not require the retention of such
reference.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2.1 Representations and Warranties of Grantee. Grantee hereby represents
and warrants to Issuer that any Option Shares or other securities acquired by
Grantee upon exercise of the Option will not be taken with a view to the public
distribution thereof and will not be transferred or otherwise disposed of except
in a transaction registered or exempt from registration under the Securities
Act.
2.2 Representations and Warranties of Issuer. Issuer hereby represents
and warrants to Grantee as follows:
(a) Option Shares. Issuer has taken all necessary corporate and
other action to authorize and reserve for issuance, and, subject to receipt of
any Approvals, to permit it to issue, the Option Shares and all additional
shares or other securities that may be issued pursuant to Section 3.1 upon
exercise of the Option, and, at all times from the date hereof until such time
as the obligation to deliver Option Shares hereunder terminates, will have
reserved for issuance upon exercise of the Option the Option Shares and such
other additional shares or securities, if any. All of the Option Shares and all
additional shares or other securities or property that may be issuable pursuant
to Section 3.1, upon exercise of the Option and issuance pursuant hereto, shall
be duly authorized, validly issued, fully paid and nonassessable, shall be
delivered free and clear of all Liens of any nature whatsoever, and shall not be
subject to any preemptive or similar right of any Person.
(b) No Restrictions. No Delaware law or other takeover statute
or similar Law and no provision of the Restated Certificate of Incorporation or
Bylaws of Issuer or any agreement to which Issuer is a party (i) would or would
purport to impose restrictions that might adversely affect or delay the
consummation of the transactions contemplated by this Agreement, or (ii) as a
result of the consummation of the transactions contemplated by this Agreement,
(x) would or would purport to restrict or impair the ability of Grantee to vote
or otherwise exercise the rights of a stockholder with respect to securities of
Issuer or any of its Subsidiaries that may be acquired or controlled by Grantee,
or (y) would or would purport to entitle any Person to acquire securities of
Issuer.
ARTICLE III
ADJUSTMENT UPON CHANGES IN CAPITALIZATION
3.1 In addition to the adjustment in the number of shares of
Issuer Common Stock that may be purchased upon exercise of the Option pursuant
to Section 1.1, the number of shares of Issuer Common Stock that may be
purchased upon the exercise of the Option and the Exercise Price shall be
subject to adjustment from time to time as provided in this Section 3.1. In the
event of any change in the number of issued and outstanding shares of Issuer
Common Stock by reason of any stock dividend, split-up, merger,
recapitalization, combination, conversion,
5
74
exchange of shares, spin-off or other change in the corporate or capital
structure of Issuer that would have the effect of diluting or otherwise
diminishing Grantee's rights hereunder, the number and kind of Option Shares or
other securities subject to the Option and the Exercise Price therefor shall be
appropriately adjusted so that Grantee shall receive upon exercise of the Option
(or, if such a change occurs between exercise and the Option Closing, upon the
Option Closing) the number and kind of shares or other securities or property
that Grantee would have received in respect of the Option Shares that Grantee is
entitled to purchase upon exercise of the Option if the Option had been
exercised (or the purchase thereunder had been consummated, as the case may be)
immediately prior to such event or the record date for such event, as
applicable. The rights of Grantee under this Article III shall be in addition
to, and shall in no way limit, its rights against Issuer for breach of or the
failure to perform any provision of the Merger Agreement.
ARTICLE IV
REGISTRATION RIGHTS
4.1 Registration of Option Shares Under the Securities Act.
(a) If requested by Grantee at any time and from time to time
within two years after receipt by Grantee of Option Shares (the "Registration
Period"), Issuer shall use its reasonable best efforts, as promptly as
practicable, to effect the registration under the Securities Act and any
applicable state law (a "Demand Registration") of such number of Option Shares
or such other Issuer securities owned by or issuable to Grantee in accordance
with the method of sale or other disposition contemplated by Grantee, including
a "shelf" registration statement under Rule 415 of the Securities Act or any
successor provision, and to obtain all consents or waivers of other parties that
are required therefor. Except with respect to such a "shelf" registration,
Issuer shall keep such Demand Registration effective for a period of not less
than 180 days, unless, in the written opinion of counsel to Issuer, which
opinion shall be delivered to Grantee and which shall be reasonably satisfactory
in form and substance to Grantee and its counsel, such registration under the
Securities Act is not required in order to lawfully sell and distribute such
Option Shares or other Issuer securities in the manner contemplated by Grantee.
Issuer shall only have the obligation to effect three Demand Registrations
pursuant to this Section 4.1; provided, however, that only requests relating to
a registration statement that has become effective under the Securities Act
shall be counted for purposes of determining the number of Demand Registrations
made. Issuer shall be entitled to postpone for up to 90 days from receipt of
Grantee's request for a Demand Registration the filing of any registration
statement in connection therewith if the Board of Directors of Issuer determines
in its good faith reasonable judgment that such registration would materially
interfere with any material event involving the Issuer or require premature
disclosure of any material non-public information, the disclosure of which would
materially and adversely affect the Issuer; provided, however, that Issuer shall
not have postponed any Demand Registration pursuant to this sentence during the
twelve month period immediately preceding the date of delivery of Grantee's
request for a Demand Registration.
(b) If Issuer effects a registration under the Securities Act of
Issuer Common Stock for its own account or for any other stockholders of Issuer
(other than on Form S-4 or Form S-8, or any successor form), Grantee shall have
the right to participate in such registration and include in such registration
the number of shares of Issuer Common Stock or such other Issuer securities as
Grantee shall designate by notice to Issuer (an "Incidental Registration" and,
together with a
6
75
Demand Registration, a "Registration"); provided, however, that, if the
Incidental Registration is in connection with an underwritten public offering,
the managing underwriters of such offering advise Issuer in writing that, in
their opinion, the number of shares of Issuer Common Stock or other Issuer
securities requested to be included in such Incidental Registration exceeds the
number which can be sold in such offering, Issuer shall include therein (i)
first, all shares proposed to be included therein by Issuer, (ii) second,
subject to the rights of any other holders of registration rights in effect as
of the date hereof, the shares requested to be included therein by Grantee, and
(iii) third, shares proposed to be included therein by any other stockholder of
Issuer. Participation by Grantee in any Incidental Registration shall not affect
the obligation of Issuer to effect Demand Registrations under this Section 4.1.
Issuer may withdraw any registration under the Securities Act that gives rise to
an Incidental Registration without the consent of Grantee.
(c) In connection with any Registration pursuant to this Section
4.1 that is an underwritten public offering, (i) Issuer and Grantee shall
provide each other and any underwriter of the offering with customary
representations, warranties, covenants, indemnification and contribution
obligations in connection with such Registration, (ii) Issuer shall use
reasonable best efforts to cause any Option Shares included in such Registration
to be approved for listing on the NYSE or any other nationally recognized
exchange or trading system upon which Issuer's securities are then listed,
subject to official notice of issuance, which notice shall be given by Issuer
upon issuance, and (iii) Grantee shall provide all information reasonably
requested by Issuer that is required for inclusion in any registration statement
covering the Option Shares. Grantee will provide all information reasonably
requested by Issuer for inclusion in any registration statement to be filed
hereunder. The costs and expenses incurred by Issuer in connection with any
Registration pursuant to this Section 4.1 (including any fees related to
qualifications under Blue Sky Laws and SEC filing fees) (the "Registration
Expenses") shall be borne by Issuer, excluding legal fees of Grantee's counsel
and underwriting discounts or commissions with respect to Option Shares to be
sold by Grantee included in a Registration.
4.2 Transfers of Option Shares.
(a) The Option Shares may not be sold, assigned, transferred, or
otherwise disposed of except (i) as provided in Section 4.1 or (ii) other than
in accordance with Section 5.3 hereof, to any purchaser or transferee who would
not, to the knowledge of Grantee after reasonable inquiry, immediately following
such sale, assignment, transfer or disposal beneficially own more than five
percent (5%) of the then-outstanding voting power of the Issuer; provided,
however, that Grantee shall be permitted to sell any Option Shares if such sale
is made pursuant to a tender or exchange offer that has been approved or
recommended by a majority of the members of the Board of Directors of Issuer
(which majority shall include a majority of directors who were directors as of
the date hereof).
ARTICLE V
REPURCHASE RIGHTS; SUBSTITUTE OPTION; FIRST REFUSAL
5.1 Repurchase Rights.
(a) At any time on or after the Exercise Date and prior to the
Expiration Date, Grantee shall have the right (the "Repurchase Right") to
require Issuer to repurchase from Grantee (i) the Option or any part thereof as
Grantee shall designate at a price (the "Option Repurchase Price") equal to the
amount by which (A) the Market/Offer Price (as defined below) exceeds (B) the
Exercise Price, multiplied by the number of Option Shares as to which the
7
76
Option is to be repurchased, and (ii) such number of Option Shares as Grantee
shall designate at a price (the "Option Share Repurchase Price") equal to the
Market/Offer Price multiplied by the number of Option Shares so designated. The
term "Market/Offer Price" shall mean the highest of (x) the highest price per
share of Issuer Common Stock offered or paid in any Acquisition Proposal (as
defined in the Merger Agreement), or (y) the highest closing price for shares of
Issuer Common Stock during the six-month period immediately preceding the date
Grantee gives the Repurchase Notice (as hereinafter defined). In determining the
Market/Offer Price, the value of consideration other than cash shall be
determined by a nationally recognized investment banking firm selected by
Grantee and reasonably acceptable to Issuer, which determination, absent
manifest error, shall be conclusive for all purposes of this Agreement.
(b) Grantee shall exercise its Repurchase Right by delivering to
Issuer written notice (a "Repurchase Notice") stating that Grantee elects to
require Issuer to repurchase all or a portion of the Option and/or the Option
Shares as specified therein. The closing of the Repurchase Right (the
"Repurchase Closing") shall take place in the United States at the place, time
and date specified in the Repurchase Notice, which date shall not be less than
two Business Days nor more than ten Business Days from the date on which the
Repurchase Notice is delivered. At the Repurchase Closing, subject to the
receipt of a writing evidencing the surrender of the Option and/or certificates
representing Option Shares, as the case may be, Issuer shall deliver to Grantee
the Option Repurchase Price therefor or the Option Share Repurchase Price
therefor, as the case may be, or the portion thereof that Issuer is not then
prohibited under applicable Law from so delivering. At the Repurchase Closing,
(i) Issuer shall pay to Grantee the Option Repurchase Price for the portion of
the Option that is to be repurchased or the Option Shares Repurchase Price for
the number of Option Shares to be repurchased, as the case may be, by wire
transfer of immediately available funds to an account specified by Grantee at
least 24 hours prior to the Repurchase Closing, and (ii) if the Option is
repurchased only in part, Issuer and Grantee shall execute and deliver an
amendment to this Agreement reflecting the Option Shares for which the Option is
not being repurchased.
(c) To the extent that Issuer is prohibited under applicable Law
from repurchasing the portion of the Option or the Option Shares designated in
such Repurchase Notice, Issuer shall immediately so notify Grantee and
thereafter deliver, from time to time, to Grantee the portion of the Option
Repurchase Price and the Option Share Repurchase Price, respectively, that it is
no longer prohibited from delivering, within five Business Days after the date
on which Issuer is no longer so prohibited; provided, however, that if Issuer at
any time after delivery of a Repurchase Notice is prohibited under applicable
Law from delivering to Grantee the full amount of the Option Repurchase Price
and the Option Share Repurchase Price for the Option or Option Shares to be
repurchased, respectively, Grantee may rescind the exercise of the Repurchase
Right, whether in whole, in part or to the extent of the prohibition, and, to
the extent rescinded, no part of the amounts, terms or the rights with respect
to the Option or Repurchase Right shall be changed or affected as if such
Repurchase Right were not exercised. Issuer shall use its reasonable best
efforts to obtain all required regulatory and legal approvals and to file any
required notices to permit Grantee to exercise its Repurchase Right and shall
use its reasonable best efforts to avoid or cause to be rescinded or rendered
inapplicable any prohibition on Issuer's repurchase of the Option or the Option
Shares.
8
77
5.2 Substitute Option.
(a) In the event that Issuer enters into an agreement (i) to
consolidate with or merge into any Person, other than Grantee or any Subsidiary
of Grantee (each an "Excluded Person"), and Issuer is not the continuing or
surviving corporation of such consolidation or merger, (ii) to permit any
Person, other than an Excluded Person, to merge into Issuer and Issuer shall be
the continuing or surviving or acquiring corporation, but, in connection with
such merger, the then outstanding shares of Issuer Common Stock shall be changed
into or exchanged for stock or other securities of any other Person or cash or
any other property or the then outstanding shares of Issuer Common Stock shall
after such merger represent less than 50% of the outstanding voting securities
of the merged or acquiring company, or (iii) to sell or otherwise transfer all
or substantially all of its assets to any Person, other than an Excluded Person,
then, and in each such case, the agreement governing such transaction shall make
proper provision so that, unless earlier exercised by Grantee, the Option shall,
upon the consummation of any such transaction and upon the terms and conditions
set forth herein, be converted into, or exchanged for, an option with identical
terms appropriately adjusted to acquire the number and class of shares or other
securities or property that Grantee would have received in respect of Issuer
Common Stock if the Option had been exercised immediately prior to such
consolidation, merger, sale, or transfer, or the record date therefor, as
applicable and make any other necessary adjustments; provided, however, that if
such a conversion or exchange cannot, because of applicable Law be the same as
the Option, such terms shall be as similar as possible and in no event less
advantageous to Grantee than the Option.
(b) In addition to any other restrictions or covenants, Issuer
agrees that it shall not enter or agree to enter into any transaction described
in Section 5.2(a) unless the Acquiring Corporation (as hereinafter defined) and
any Person that controls the Acquiring Corporation assume in writing all the
obligations of Issuer hereunder and agree for the benefit of Grantee to comply
with this Article V.
(c) For purposes of this Section 5.2, the term "Acquiring
Corporation" shall mean (i) the continuing or surviving Person of a
consolidation or merger with Issuer (if other than Issuer), (ii) Issuer in a
consolidation or merger in which Issuer is the continuing or surviving or
acquiring Person, and (iii) the transferee of all or substantially all of
Issuer's assets.
5.3 First Refusal.
(a) If Grantee desires to sell, assign, transfer or otherwise
dispose of all or any of the shares of Issuer Common Stock or other securities
acquired by it pursuant to the exercise of the Option, it will give Issuer
written notice of the proposed transaction (the "Offeror's Notice"), identifying
the proposed transferee, the proposed purchase price and the terms of such
proposed transaction. For ten business days following receipt of such notice,
Issuer shall have the option to elect by written notice to purchase all, but not
less than all, of the Issuer Common Stock or other securities specified in
Offeror's Notice at the price and upon the terms set froth in such notice.
(b) The closing of any repurchase of Option Shares pursuant to
this Section 5.3 shall take place within ten business days of Issuer's election
to purchase such Option Shares. On such closing date, Issuer shall pay the
purchase price to Grantee in immediately available funds, and Grantee shall
thereupon surrender to Issuer the certificate or certificates evidencing
9
78
the shares of Issuer Common Stock or other securities repurchased by the Issuer
pursuant to this Section 5.3.
(c) If Issuer does not elect to purchase the shares of Issuer
Common Stock or other securities designated in the Offeror's Notice, Grantee
may, within 60 days from the date of the Offeror's Notice, sell such shares of
Issuer Common Stock or other securities to the proposed transferee at no less
than the price specified and on terms not more favorable to the transferee than
those set forth in the Offeror's Notice; provided, however, that the provisions
of this Section 5.3(c) will not limit the rights Grantee many otherwise have if
Issuer has elected to purchase such shares of Issuer Common Stock or other
securities and wrongfully refuses to complete such purchase.
(d) The requirements of this Section 5.3 will not apply to (i)
any sale, assignment, transfer or disposition to an affiliate of Grantee;
provided, however, that such affiliate agrees to be bound by the terms hereof,
(ii) any sale, assignment, transfer or disposition as a result of which the
proposed transferee would own beneficially not more than 5% of the outstanding
voting power of the Issuer, or (iii) any sales or transfers by Grantee in a
registered underwritten offering.
ARTICLE VI
MISCELLANEOUS
6.1 Total Profit.
(a) Notwithstanding any other provision of this Agreement, in no
event shall Grantee's Total Profit (as hereinafter defined) plus any termination
fees paid by Issuer pursuant to Section 7.3(b) of the Merger Agreement (such
fees, collectively, the "Total Issuer Fees") exceed in the aggregate an amount
(the "Limitation Amount") equal to $75,000,000, and, if the total amount that
would otherwise be received by Grantee otherwise would exceed such amount,
Grantee, at its sole election, shall either (i) reduce the number of shares of
Issuer Common Stock subject to this Option, (ii) deliver to Issuer for
cancellation Option Shares previously purchased by Grantee, (iii) reduce the
amount of the Option Repurchase Price or the Option Share Repurchase Price, (iv)
pay cash to Issuer, or (v) any combination thereof, so that Grantee's actually
realized Total Profit, when aggregated with the Total Issuer Fees so paid to
Grantee, shall not exceed the Limitation Amount after taking into account the
foregoing actions.
(b) Notwithstanding any other provision of this Agreement, the
Option may not be exercised for a number of Option Shares as would, as of the
date of exercise, result in a Notional Total Profit (as defined below) which,
together with the Total Issuer Fees theretofore paid to Grantee, would exceed
the Limitation Amount; provided, however, that nothing in this sentence shall
restrict any exercise of the Option permitted hereby on any subsequent date.
(c) As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) the amount received by
Grantee pursuant to Issuer's repurchase of the Option (or any portion thereof)
pursuant to Section 5.1, (ii) (x) the amount received by Grantee pursuant to
Issuer's repurchase or purchase of Option Shares pursuant to Section 5.1 or
Section 5.3, as the case may be, less (y) Grantee's purchase price for such
Option Shares, and (iii) (x) the net cash amounts or the fair market value of
any property received by Grantee pursuant to any consummated arm's-length sales
of Option Shares (or any other
10
79
securities into which such Option Shares are converted or exchanged) to any
unaffiliated party, less (y) Grantee's purchase price of such Option Shares.
(d) As used herein, the term "Notional Total Profit" with
respect to any number of Option Shares as to which Grantee may propose to
exercise the Option shall be the Total Profit determined as of the date of such
proposal assuming that the Option was exercised on such date for such number of
Option Shares and assuming that such Option Shares, together with all other
Option Shares held by Grantee and its affiliates as of such date, were sold for
cash at the closing market price (less customary brokerage commissions) for
shares of Issuer Common Stock on the preceding trading day on the NASDAQ
National Market System (or on any other nationally recognized exchange or
trading system on which shares of Issuer Common Stock are then so listed or
traded).
6.2 Further Assurances; Listing.
(a) From time to time, at the other party's request and without
further consideration, each party hereto shall execute and deliver such
additional documents and take all such further action as may be necessary or
desirable to consummate the transactions contemplated by this Agreement,
including, without limitation, to vest in Grantee good and marketable title,
free and clear of all Liens, to any Option Shares purchased hereunder. Issuer
agrees not to avoid or seek to avoid (whether by charter amendment or through
reorganization, consolidation, merger, issuance of rights or securities, the
Company Rights Agreement or similar agreement, dissolution or sale of assets, or
by any other voluntary act) the observance or performance of any of the
covenants, agreements or conditions to be observed or performed hereunder by it.
(b) If the Issuer Common Stock or any other securities to be
acquired upon exercise of the Option are then listed on the NYSE (or any other
national securities exchange or trading system), Issuer, upon the request of
Grantee, will promptly file an application to list the shares of Issuer Common
Stock or such other securities to be acquired upon exercise of the Option on the
NYSE (and any other national securities exchange or trading system) and will use
reasonable best efforts to obtain approval of such listing as promptly as
practicable.
6.3 Division of Option; Lost Options. The Agreement (and the Option
granted hereby) are exchangeable, without expense, at the option of Grantee,
upon presentation and surrender of this Agreement at the principal office of
Issuer, for other agreements providing for Options of different denominations
entitling Grantee to purchase, on the same terms and subject to the same
conditions as are set forth herein, in the aggregate the same number of Option
Shares purchasable hereunder. Upon receipt by Issuer of evidence reasonably
satisfactory to it of the loss, theft or destruction or mutilation of this
Agreement, and (in the case of loss, theft or destruction) of reasonably
satisfactory indemnification, and upon surrender and cancellation of this
Agreement, if mutilated, Issuer will execute and deliver a new agreement of like
tenor and date.
6.4 Amendment. This Agreement may not be amended except by an instrument
in writing signed on behalf of each of the parties hereto.
6.5 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally, or by telecopy or telefacsimile, upon confirmation of receipt, (b)
on the first Business Day following the date of
11
80
dispatch if delivered by a recognized next-day courier service, or (c) on the
tenth Business Day following the date of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid. All notices hereunder
shall be delivered as set forth below, or pursuant to such other instructions as
may be designated in writing by the party to receive such notice:
(a) if to Grantee to:
Maxim Integrated Products
000 Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
0000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx Xxxxxxxxx, Esq.
(b) if to Issuer to:
Dallas Semiconductor Corporation
0000 Xxxxx Xxxxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxx X. Xxx, President
with a copy to:
Jenkens & Xxxxxxxxx
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
6.6 Interpretation. When a reference is made in this Agreement to
Articles, Sections, Exhibits or Schedules, such reference shall be to an Article
or Section of or Exhibit or Schedule to this Agreement unless otherwise
indicated. The headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation of this
Agreement. Whenever the words "include," "includes" or "including" are used in
this Agreement, they shall be deemed to be followed by the words "without
limitation."
6.7 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that both
parties need not sign the same counterpart.
12
81
6.8 Entire Agreement; No Third Party Beneficiaries.
(a) This Agreement and the other agreements of the parties
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.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement.
6.9 Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Delaware applicable to contracts
executed and to be performed entirely within that State.
6.10 Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any law or public policy, all
other terms and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible.
6.11 Assignment. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto, in
whole or in part (whether by operation of law or otherwise), without the prior
written consent of the other party, and any attempt to make any such assignment
without such consent shall be null and void. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective successors and assigns.
6.12 Submission to Jurisdiction; Waivers. Each of Grantee and Issuer
irrevocably agrees that any legal action or proceeding with respect to this
Agreement or for recognition and enforcement of any judgment in respect hereof
brought by the other party hereto or its successors or assigns may be brought
and determined in the Chancery or other Courts of the State of Delaware, and
each of Grantee and Issuer hereby irrevocably submits with regard to any such
action or proceeding for itself and in respect to its property, generally and
unconditionally, to the nonexclusive jurisdiction of the aforesaid courts. Each
of Grantee and Issuer hereby irrevocably waives, and agrees not to assert, by
way of motion, as a defense, counterclaim or otherwise, in any action or
proceeding with respect to this Agreement, (a) any claim that it is not
personally subject to the jurisdiction of the above-named courts for any reason
other than the failure to lawfully serve process, (b) that it or its property is
exempt or immune from jurisdiction of any such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior to
judgment, attachment in aid of execution of judgment, execution of judgment or
otherwise), (c) to the fullest extent permitted by applicable law, that (i) the
suit, action or proceeding in any such court is brought in an inconvenient
forum, (ii) the venue of such
13
82
suit, action or proceeding is improper, and (iii) this Agreement, or the subject
matter hereof, may not be enforced in or by such courts, and (d) any right to a
trial by jury.
6.13 Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
6.14 Failure or Indulgence Not Waiver; Remedies Cumulative. No failure
or delay on the part of any party hereto in the exercise of any right hereunder
will impair such right or be construed to be a waiver of, or acquiescence in,
any breach of any representation, warranty or agreement herein, nor will any
single or partial exercise of any such right preclude other or further exercise
thereof or of any other right. All rights and remedies existing under this
Agreement are cumulative to, and not exclusive to, and not exclusive of, any
rights or remedies otherwise available.
14
83
IN WITNESS WHEREOF, Grantee and Issuer have caused this Stock Option
Agreement to be duly executed as of the date first above written.
GRANTEE: MAXIM INTEGRATED PRODUCTS, INC.
By:_____________________________________
Name:___________________________________
Title:__________________________________
ISSUER: DALLAS SEMICONDUCTOR CORPORATION
By:_____________________________________
Name:___________________________________
Title:__________________________________
15
84
EXHIBIT B
AFFILIATE POOLING AGREEMENT
January 28, 2001
Maxim Integrated Systems, Inc.
000 Xxx Xxxxxxx
Xxxxxxxxx, XX 00000
Ladies and Gentlemen:
The undersigned has been advised that, as of the date hereof, the
undersigned may be deemed to be an "affiliate"("Affiliate") of Dallas
Semiconductor Corporation., a Delaware corporation (the "Company"), as that term
is defined for purposes of paragraphs (c) and (d) of Rule 145 of the Regulations
of the Securities and Exchange Commission (the "SEC") under the Securities Act
of 1933, as amended (the "Securities Act").
Pursuant to the terms and subject to the conditions of that certain
Agreement and Plan of Merger by and among Maxim Integrated Systems, Inc., a
Delaware corporation ("Parent"), MI Acquisition Sub, Inc., a newly formed
Delaware corporation and a wholly owned subsidiary of Parent ("Merger Sub"), and
the Company, dated as of January 28, 2001 (the "Merger Agreement"), providing
for, among other things, the merger of Merger Sub with and into the Company (the
"Merger"), the undersigned will be entitled to receive shares of common stock of
Parent [or options or warrants to acquire Parent Common Stock] (collectively
"Parent Common Stock") in exchange for shares of common stock of the Company [or
options or warrants to acquire Company Common Stock] (collectively "Company
Common Stock") owned by the undersigned at the Effective Time of the Merger as
determined pursuant to the Merger Agreement. Capitalized terms used but not
defined herein are defined in the Merger Agreement and are used herein with the
same meanings ascribed to them therein.
The undersigned understands that the Merger will be treated for
financial accounting purposes as a "pooling of interests" in accordance with
GAAP, and that the staff of the SEC has issued certain guidelines that should be
followed to ensure the application of pooling of interests accounting to the
Merger.
In consideration of the agreements contained herein, Parent's reliance
on this letter in connection with the consummation of the Merger and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the undersigned hereby agrees that the undersigned will not make
any sale, pledge, transfer or other disposition of, or hedge or reduce its risk
with respect to, (i) Company Common Stock during the period from the 30th day
prior to the Effective Time until the earlier of the Effective Time or the
termination of the Merger Agreement or (ii) Parent Common Stock now owned or
hereafter acquired by the undersigned, including, without limitation, Parent
Common Stock to be received by the undersigned pursuant to the Merger, until
such time as financial statements that include at least 30 days of combined
operations of the Company and Parent after the Merger will have been
85
publicly reported, unless the undersigned delivers to Parent, prior to any such
sale, transfer or other disposition, written advice from Ernst & Young LLP,
independent public accountants for Parent, or a written no-action letter from
the accounting staff of the SEC, in either case in form and substance reasonably
satisfactory to Parent, to the effect that such sale, transfer or other
disposition will not cause the Merger not to be treated as a "pooling of
interests" for financial accounting purposes in accordance with GAAP and the
Regulations of the SEC.
The undersigned has been advised that the offering, sale and delivery of
the shares of Parent Common Stock pursuant to the Merger will have been
registered with the SEC under the Securities Act on a Registration Statement on
Form S-4. The undersigned also has been advised, however, that, because the
undersigned may be deemed to be an Affiliate of the Company at the time the
Merger is submitted for a vote of the stockholders of the Company, Parent Common
Stock received by the undersigned pursuant to the Merger can be sold by the
undersigned only (i) pursuant to an effective registration statement under the
Securities Act, (ii) in conformity with the volume and other limitations of Rule
145 promulgated by the SEC under the Securities Act or (iii) in reliance upon an
exemption from registration that is available under the Securities Act.
The undersigned also understands that "stop transfer" instructions will
be given to the transfer agent for the Company Common Stock with respect to
shares of the Company Common Stock now owned or hereafter acquired by the
undersigned and that there will be placed on the certificates representing such
shares of Company Common Stock, or any substitutions therefor, a legend stating
in substance as follows:
"These shares may be transferred only in accordance with the
terms of an Affiliate Pooling Agreement between the original holder of
such shares and Sun, Inc., a copy of which agreement is on file at the
principal offices of Maxim Integrated Systems, Inc."
It is understood and agreed that the legend set forth above will be removed upon
surrender of certificates bearing such legend by delivery of substitute
certificates without such legend (i) if the undersigned will have delivered to
Parent the above-referenced advice of Ernst & Young LLP, or the above-referenced
no-action letter from the accounting staff of the SEC or (ii) upon the
termination of the Merger Agreement.
The undersigned also understands that "stop transfer" instructions will
be given to the transfer agent for Parent Common Stock with respect to shares of
Parent Common Stock to be received by the undersigned pursuant to the Merger and
that there will be placed on the certificates representing such shares of Parent
Common Stock, or any substitutions therefor, a legend stating in substance as
follows:
"These shares were issued in a transaction to which Rule 145
promulgated under the Securities Act of 1933, as amended, applies. These
shares may be transferred only in accordance with the terms of such Rule
and an Affiliate Pooling Agreement between the original holder of such
shares and Sun, Inc., a copy of which agreement is on file at the
principal offices of Sun, Inc."
2
86
It is understood and agreed that the legend set forth above will be removed upon
surrender of certificates bearing such legend by delivery of substitute
certificates without such legend if the undersigned will have delivered to
Parent an opinion of counsel, in form and substance reasonably satisfactory to
Parent, to the effect that (i) the sale or disposition of the shares represented
by the surrendered certificates may be effected without registration of the
offering, sale and delivery of such shares under the Securities Act, and (ii)
the undersigned will have delivered to Parent the above-referenced advice of
Ernst & Young LLP or the above-referenced no-action letter from the accounting
staff of the SEC.
Parent agrees that it will not unreasonably refuse to consent to, or
unreasonably delay, the removal of the foregoing legends.
By its execution hereof, Parent agrees that it will, as long as the
undersigned owns any Parent Common Stock to be received by the undersigned
pursuant to the Merger, take all reasonable efforts to make timely filings with
the SEC of all reports required to be filed by it pursuant to the Exchange Act
of 1934, as amended, and will promptly furnish upon written request of the
undersigned a written statement confirming that such reports have been so timely
filed.
[Remainder of this page intentionally left blank]
3
87
If you are in agreement with the foregoing, please so indicate by
signing below and returning a copy of this Affiliate Pooling Agreement to the
undersigned, and this Affiliate Pooling Agreement will become a binding
agreement between us as of the date first above written.
Very truly yours,
-----------------------------------------
Name
ACCEPTED by:
MAXIM INTEGRATED PRODUCTS, INC.
By:
-------------------------
Name:
-----------------------
Title:
----------------------
