Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
MOTOROLA, INC.,
LUCERNE ACQUISITION CORP.
and
GENERAL INSTRUMENT CORPORATION
Dated as of September 14, 1999
TABLE OF CONTENTS
Page
ARTICLE ITHE MERGER
SECTION 1.1. The Merger . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2. Effective Time . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.3. Effect of the Merger . . . . . . . . . . . . . . . . . . . 2
SECTION 1.4. Certificate of Incorporation; By-laws . . . . . . . . . . . 2
SECTION 1.5. Directors and Officers . . . . . . . . . . . . . . . . . . 2
ARTICLE IICONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.1. Conversion of Securities . . . . . . . . . . . . . . . . . 2
SECTION 2.2. Exchange of Certificates . . . . . . . . . . . . . . . . . 3
SECTION 2.3. Stock Transfer Books . . . . . . . . . . . . . . . . . . . 6
SECTION 2.4. Stock Options . . . . . . . . . . . . . . . . . . . . . . . 6
SECTION 2.5. Warrants . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE IIIREPRESENTATIONS AND WARRANTIES OF THE COMPANY
SECTION 3.1. Organization and Qualification; Subsidiaries . . . . . . . 7
SECTION 3.2. Certificate of Incorporation and By-laws; Corporate Books and
Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.3. Capitalization . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 3.4. Authority Relative to This Agreement . . . . . . . . . . . 10
SECTION 3.5. No Conflict; Required Filings and Consents . . . . . . . . 10
SECTION 3.6. Permits; Compliance With Law . . . . . . . . . . . . . . . 11
SECTION 3.7. SEC Filings; Financial Statements . . . . . . . . . . . . . 12
SECTION 3.8. Absence of Certain Changes or Events . . . . . . . . . . . 13
SECTION 3.9. Employee Benefit Plans; Labor Matters . . . . . . . . . . . 14
SECTION 3.10. Accounting and Tax Matters . . . . . . . . . . . . . . . . 16
SECTION 3.11. Contracts; Debt Instruments . . . . . . . . . . . . . . . . 17
SECTION 3.12. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 3.13. Environmental Matters . . . . . . . . . . . . . . . . . . . 18
SECTION 3.14. Intellectual Property . . . . . . . . . . . . . . . . . . . 19
SECTION 3.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 3.16. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.17. Opinion of Financial Advisors . . . . . . . . . . . . . . . 22
SECTION 3.18. Vote Required . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.19. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.20. Year 2000 Compliance . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.21. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE IVREPRESENTATIONS AND WARRANTIESOF PARENT AND MERGER SUB
SECTION 4.1. Organization and Qualification; Subsidiaries . . . . . . . 23
SECTION 4.2. Certificate of Incorporation and By-laws; Corporate
Books and Records . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.3. Capitalization . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.4. Authority Relative to This Agreement . . . . . . . . . . . 24
SECTION 4.5. No Conflict; Required Filings and Consents . . . . . . . . 24
SECTION 4.6. SEC Filings; Financial Statements . . . . . . . . . . . . . 25
SECTION 4.7. Absence of Certain Changes or Events . . . . . . . . . . . 26
SECTION 4.8. Accounting and Tax Matters . . . . . . . . . . . . . . . . 26
SECTION 4.9. Ownership of Merger Sub; No Prior Activities . . . . . . . 26
SECTION 4.10. Opinion of Financial Advisor . . . . . . . . . . . . . . . 27
SECTION 4.11. Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE VCOVENANTS
SECTION 5.1. Conduct of Business by the Company Pending the Closing . . 27
SECTION 5.2. Conduct of Business by Parent Pending the Closing . . . . . 30
SECTION 5.3. Cooperation . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.4. Next Level Communications . . . . . . . . . . . . . . . . . 31
ARTICLE VIADDITIONAL AGREEMENTS
SECTION 6.1. Registration Statement; Proxy Statement . . . . . . . . . . 31
SECTION 6.2. Stockholders' Meetings . . . . . . . . . . . . . . . . . . 33
SECTION 6.3. Access to Information; Confidentiality . . . . . . . . . . 33
SECTION 6.4. No Solicitation of Transactions . . . . . . . . . . . . . . 34
SECTION 6.5. Appropriate Action; Consents; Filings . . . . . . . . . . . 35
SECTION 6.6. Pooling . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.7. Letters of Accountants . . . . . . . . . . . . . . . . . . 37
SECTION 6.8. Certain Notices . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.9. Pooling Affiliates . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.10. Public Announcements . . . . . . . . . . . . . . . . . . . 38
SECTION 6.11. Stock Exchange Listing . . . . . . . . . . . . . . . . . . 38
SECTION 6.12. Employee Benefit Matters . . . . . . . . . . . . . . . . . 38
SECTION 6.13. Certain Employment Arrangements . . . . . . . . . . . . . . 39
SECTION 6.14. Indemnification of Directors and Officers . . . . . . . . . 39
SECTION 6.15. Plan of Reorganization . . . . . . . . . . . . . . . . . . 40
ARTICLE VIICLOSING CONDITIONS
SECTION 7.1. Conditions to Obligations of Each Party Under This Agreement
40
SECTION 7.3. Additional Conditions to Obligations of the Company . . . . 42
ARTICLE VIIITERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8.2. Effect of Termination . . . . . . . . . . . . . . . . . . . 44
SECTION 8.3. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.4. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE IXGENERAL PROVISIONS
SECTION 9.1. Non-Survival of Representations and Warranties . . . . . . 46
SECTION 9.2. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.3. Certain Definitions . . . . . . . . . . . . . . . . . . . . 47
SECTION 9.4. Headings . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.5. Severability . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.6. Entire Agreement . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.7. Assignment . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.8. Parties in Interest . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.9. Mutual Drafting . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.10. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.11. Counterparts . . . . . . . . . . . . . . . . . . . . . . . 48
EXHIBIT A VOTING AGREEMENT
EXHIBIT B CERTAIN EMPLOYMENT MATTERS
EXHIBIT 6.9(a) FORM OF COMPANY AFFILIATE LETTER
INDEX OF DEFINED TERMS
Section
Acquisition Agreement Section 6.4(d)
Acquisition Proposal Section 6.4(c)
affiliate Section 9.3(a)
Agreement Preamble
Benefit Plans Section 6.12(a)
Blue Sky Laws Section 3.5(b)
Business Day Section 9.3(b)
CERCLA Section 3.13
Certificate of Merger Section 1.2
Certificates Section 2.2(b)
Code Preamble
Company Preamble
Company Benefit Plans Section 3.9(a)
Company Breakup Fee Section 8.2(b)
Company By-laws Section 3.2(a)
Company Certificate Section 3.2(a)
Company Common Stock Section 2.1(a)
Company Disclosure Schedule Article III Preamble
Company Employees Section 6.12(a)
Company Financial Advisor Section 3.17
Company Material Adverse Effect Section 3.1
Company Material Contract Section 3.11
Company Option Section 2.4
Company Permits Section 3.6
Company Preferred Stock Section 3.3
Company Rights Agreement Section 3.4
Company SEC Filings Section 3.7(a)
Company Stock Option Plans Section 2.4
Company Stockholders' Meeting Section 6.2(a)
Company Subsidiaries Section 3.1
Confidentiality Agreement Section 6.3(b)
control Section 9.3(c)
DGCL Preamble
Distribution Agreement Section 3.7(d)
Effective Time Section 1.2
Environmental Laws Section 3.13
Environmental Permits Section 3.13
ERISA Section 3.9(a)
Excess Shares Section 2.2(e)(2)
Exchange Act Section 3.5(b)
Exchange Agent Section 2.2(a)
Exchange Fund Section 2.2(a)
Exchange Ratio Section 2.1(a)
GAAP Section 3.7(b)
Governmental Entity Section 3.5(b)
Hazardous Materials Section 3.13
HSR Act Section 3.5(b)
Indemnified Parties Section 6.14(b)
Insurance Amount Section 6.14(c)
Intellectual Property Section 3.14
IRS Section 3.9(a)
knowledge Section 9.3(d)
Law Section 3.5(a)
Material Intellectual Property Section 3.14(b)
Merger Preamble
Merger Consideration Section 8.3
Merger Sub Preamble
Merger Sub Common Stock Section 2.1(c)
Multiemployer Plan Section 3.9(b)
Multiple Employer Plan Section 3.9(b)
1997 Plan Section 2.4
1999 Plan Section 2.4
NL Section 3.7(a)
NLP Section 3.7(b)
NYSE Section 2.2(e)(2)
Parent Preamble
Parent Common Stock Section 2.1(a)
Parent Disclosure Schedule Article IV Preamble
Parent Financial Advisor Section 4.10
Parent Material Adverse Effect Section 4.1
Parent Preferred Stock Section 4.3
Parent SEC Filings Section 4.6(a)
Parent Stockholders' Meeting Section 6.2(b)
Parent Subsidiaries Section 4.1
PBGC Section 3.9(b)
person Section 9.3(e)
Pooling Affiliate Section 6.9(a)
Proxy Statement Section 6.1 (a)
Registration Statement Section 6.1(a)
Representatives Section 6.3(a)
Section 16 Section 6.12(b)
Securities Act Section 3.5(b)
Share Issuance Section 4.4
Spin-Offs Section 3.7(d)
subsidiary or subsidiaries Section 9.3(f)
Surviving Corporation Section 1.1
Tax Sharing Agreement Section 3.7(d)
Taxes Section 3.15(a)
Warrant Agreement Section 2.5
Warrants Section 2.5
AGREEMENT AND PLAN OF MERGER, dated as of September 14, 1999 (this
"Agreement"), by and among Motorola, Inc., a Delaware corporation ("Parent"),
Lucerne Acquisition Corp., a Delaware corporation and a wholly owned
subsidiary of Parent ("Merger Sub"), and General Instrument Corporation, a
Delaware corporation (the "Company").
WHEREAS, the respective Boards of Directors of Parent, Merger Sub
and the Company have approved and declared advisable the merger of Merger Sub
with and into the Company (the "Merger") upon the terms and subject to the
conditions of this Agreement and in accordance with the General Corporation
Law of the State of Delaware (the "DGCL");
WHEREAS, the respective Boards of Directors of Parent and the
Company have determined that the Merger is in furtherance of and consistent
with their respective business strategies and is in the best interest of
their respective stockholders, and Parent has approved this Agreement and the
Merger as the sole stockholder of Merger Sub;
WHEREAS, as a condition to, and in connection with the execution of
this Agreement, Lucerne Media Corporation has entered into a Voting Agreement
with Parent in the form attached hereto as Exhibit A;
WHEREAS, for federal income tax purposes, it is intended that the
Merger shall qualify as a tax-free reorganization under the provisions of
section 368(a) of the United States Internal Revenue Code of 1986, as amended
(the "Code"); and
WHEREAS, for accounting purposes, it is intended that the Merger
shall be accounted for as a "pooling of interests";
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth in
this Agreement and intending to be legally bound hereby, the parties hereto
agree as follows:
ARTICLE I
THE MERGER
SECTION 1.1. The Merger. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the DGCL, at
the Effective Time (as defined in Section 1.2), Merger Sub shall be merged
with and into the Company. As a result of the Merger, the separate corporate
existence of Merger Sub shall cease and the Company shall continue as the
surviving corporation of the Merger (the "Surviving Corporation").
SECTION 1.2. Effective Time. No later than three Business Days
after the satisfaction or, if permissible, waiver of the conditions set forth
in Article VII, 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 if another date and time is specified in such
filing, such specified date and time, being the "Effective Time").
SECTION 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. Without limiting the generality of the foregoing, and subject thereto,
at the Effective Time, except as otherwise provided herein, all the property,
rights, privileges, 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.
SECTION 1.4. Certificate of Incorporation; By-laws. At the
Effective Time, the Certificate of Incorporation and the By-laws of the
Surviving Corporation shall be amended in their entirety to contain the
provisions set forth in the Certificate of Incorporation and By-laws of
Merger Sub, as in effect immediately prior to the Effective Time.
SECTION 1.5. Directors and Officers. 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 By-laws of the Surviving Corporation. The officers of
the Company immediately prior to the Effective Time shall be the initial
officers of the Surviving Corporation, each to hold office in accordance with
the Certificate of Incorporation and By-laws of the Surviving Corporation.
ARTICLE II
CONVERSION OF SECURITIES; EXCHANGE OF CERTIFICATES
SECTION 2.1. Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub, the
Company or the holders of any of the following securities:
(a) Each share of common stock, par value $0.01 per share, of the
Company ("Company Common Stock") issued and outstanding immediately prior to
the Effective Time (other than any shares of Company Common Stock to be
canceled pursuant to Section 2.1(b)) shall be converted, subject to Section
2.2(e), into the right to receive 0.575 of a share of common stock, par value
$3.00 per share ("Parent Common Stock"), of Parent (the "Exchange Ratio"),
including the corresponding percentage of a right to purchase shares of
Junior Participating Preferred Stock, Series B, par value $100 per share, of
Parent pursuant to the Rights Agreement, dated November 5, 1998, between
Parent and Xxxxxx Trust and Savings Bank, as Rights Agent; provided, however,
2
that, in any event, if between the date of this Agreement and the Effective
Time the outstanding shares of Parent Common Stock or Company Common Stock
shall have been changed into a different number of shares or a different
class, by reason of any stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares, the Exchange
Ratio shall be correspondingly adjusted to reflect such stock dividend,
subdivision, reclassification, recapitalization, split, combination or
exchange of shares. All such shares of Company Common Stock shall no longer
be outstanding and shall automatically be canceled and retired and shall
cease to exist, and each certificate previously representing any such shares
shall thereafter represent the right to receive a certificate representing
the shares of Parent Common Stock into which such Company Common Stock was
converted in the Merger. Certificates previously representing shares of
Company Common Stock shall be exchanged for certificates representing whole
shares of Parent Common Stock issued in consideration therefor upon the
surrender of such certificates in accordance with the provisions of Section
2.2, without interest. No fractional share of Parent Common Stock shall be
issued, and in lieu thereof, a cash payment shall be made pursuant to
Section 2.2(e) hereof.
(b) Each share of Company Common Stock held in the treasury of the
Company immediately prior to the Effective Time shall be canceled and
extinguished without any conversion thereof and no payment shall be made with
respect thereto.
(c) Each share of common stock, par value $0.01 per share, of Merger
Sub ("Merger Sub Common Stock") issued and outstanding immediately prior to
the Effective Time shall be converted into and exchanged for one newly and
validly issued, fully paid and nonassessable share of common stock of the
Surviving Corporation.
SECTION 2.2. Exchange of Certificates.
(a) Exchange Agent. As of the Effective Time, Parent shall deposit, or
shall cause to be deposited, with Xxxxxx Trust and Savings Bank or another
bank or trust company designated by Parent and reasonably satisfactory to the
Company (the "Exchange Agent"), for the benefit of the holders of shares of
Company Common Stock, for exchange in accordance with this Article II,
through the Exchange Agent, certificates representing the shares of Parent
Common Stock (such certificates for shares of Parent Common Stock, together
with cash in lieu of fractional shares and any dividends or distributions
with respect thereto, being hereinafter referred to as the "Exchange Fund")
issuable pursuant to Section 2.1 in exchange for outstanding shares of
Company Common Stock. The Exchange Agent shall, pursuant to irrevocable
instructions, deliver the Parent Common Stock contemplated to be issued
pursuant to Section 2.1 out of the Exchange Fund. Except as contemplated by
Section 2.2(e) hereof, the Exchange Fund shall not be used for any other
purpose.
3
(b) Exchange Procedures. Promptly after the Effective Time, Parent
shall instruct the Exchange Agent to mail to each holder of record of a
certificate or certificates which immediately prior to the Effective Time
represented outstanding shares of Company Common Stock (the "Certificates")
(1) a letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only
upon proper delivery of the Certificates to the Exchange Agent and shall be
in customary form) and (2) 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 for cancellation to the
Exchange Agent together with such letter of transmittal, duly executed, 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 that number of whole shares of Parent Common Stock
which such holder has the right to receive in respect of the shares of
Company Common Stock formerly represented by such Certificate (after taking
into account all shares of Company Common Stock then held by such holder),
cash in lieu of fractional shares of Parent Common Stock to which such holder
is entitled pursuant to Section 2.2(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.2(c),
and the Certificate so surrendered shall forthwith be canceled. No interest
will be paid or accrued on any cash in lieu of fractional shares or on any
unpaid dividends and distributions payable to holders of Certificates.
Notwithstanding anything to the contrary contained herein, no certificate
representing Parent Common Stock or cash in lieu of a fractional share
interest shall be delivered to a person who is a Pooling Affiliate (as
defined in Section 6.9(a)) of the Company unless such Pooling Affiliate has
theretofore executed and delivered to Parent the agreement referred to in
Section 6.9(a). In the event of a transfer of ownership of shares of Company
Common Stock which is not registered in the transfer records of the Company, a
certificate representing the proper number of shares of Parent Common Stock may
be issued to a transferee if the Certificate representing such shares of Company
Common Stock is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed at any
time after the Effective Time to represent only the right to receive upon
such surrender the certificate representing shares of Parent Common Stock,
cash in lieu of any fractional shares of Parent Common Stock to which such
holder is entitled pursuant to Section 2.2(e) and any dividends or other
distributions to which such holder is entitled pursuant to Section 2.2(c).
(c) Distributions with Respect to Unexchanged Shares of Parent Common
Stock. No dividends or other distributions declared or made after the
Effective Time with respect to Parent Common Stock with a record date after
the Effective Time shall be paid to the holder of any unsurrendered
Certificate with respect to the shares of Parent Common Stock represented
4
thereby, and no cash payment in lieu of fractional shares shall be paid to
any such holder pursuant to Section 2.2(e), unless and until the holder of
such Certificate shall surrender such Certificate. Subject to the effect of
escheat, tax or other applicable Laws, following surrender of any such
Certificate, there shall be paid to the holder of the certificates
representing whole shares of Parent Common Stock issued in exchange therefor,
without interest, (1) promptly, the amount of any cash payable with respect
to a fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 2.2(e) and the amount of dividends or other distributions
with a record date after the Effective Time theretofore paid with respect to
such whole shares of Parent Common Stock and (2) at the appropriate payment
date, the amount of dividends or other distributions, with a record date
after the Effective Time but prior to surrender and a payment date occurring
after surrender, payable with respect to such whole shares of Parent Common
Stock.
(d) No Further Rights in Company Common Stock. All shares of Parent
Common Stock issued upon conversion of the shares of Company Common Stock in
accordance with the terms hereof (including any cash paid pursuant to Section
2.2(c) or (e)) shall be deemed to have been issued in full satisfaction of
all rights pertaining to such shares of Company Common Stock.
(e) No Fractional Shares. (1) No certificates or scrip representing
fractional shares of Parent Common Stock shall be issued upon the surrender
for exchange of Certificates, no dividend or distribution with respect to
Parent Common Stock shall be payable on or with respect to any fractional
share and such fractional share interests will not entitle the owner thereof
to any rights of a stockholder of Parent.
(2) As promptly as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (A) the number of full shares of
Parent Common Stock delivered to the Exchange Agent by Parent pursuant to
Section 2.2(a) over (B) the aggregate number of full shares of Parent Common
Stock to be distributed to holders of Company Common Stock pursuant to
Section 2.2(b) (such excess being herein called the "Excess Shares"). As
soon after the Effective Time as practicable, the Exchange Agent, as agent
for such holders of Parent Common Stock, shall sell the Excess Shares at then
prevailing prices on the New York Stock Exchange, Inc. (the "NYSE"), all in
the manner provided in paragraph (3) of this Section 2.2(e).
(3) The sale of the Excess Shares by the Exchange Agent shall be
executed on the NYSE through one or more member firms of the NYSE and shall
be executed in round lots to the extent practicable. Until the net proceeds
of any such sale or sales have been distributed to such holders of Company
Common Stock, the Exchange Agent will hold such proceeds in trust for such
holders of Company Common Stock as part of the Exchange Fund. The Company
shall pay all commissions, transfer taxes and other out-of-pocket transaction
5
costs of the Exchange Agent incurred in connection with such sale or sales of
Excess Shares. In addition, the Company shall pay the Exchange Agent's
compensation and expenses in connection with such sale or sales. The
Exchange Agent shall determine the portion of such net proceeds to which each
holder of Company Common Stock shall be entitled, if any, by multiplying the
amount of the aggregate net proceeds by a fraction the numerator of which is
the amount of the fractional share interest to which such holder of Company
Common Stock is entitled (after taking into account all shares of Parent
Common Stock to be issued to such holder) and the denominator of which is the
aggregate amount of fractional share interests to which all holders of
Company Common Stock are entitled.
(4) As soon as practicable after the determination of the amount of
cash, if any, to be paid to holders of Company Common Stock with respect to
any fractional share interests, the Exchange Agent shall promptly pay such
amounts to such holders of Company Common Stock subject to and in accordance
with the terms of Section 2.2(c).
(f) Termination of Exchange Fund. Any portion of the Exchange Fund
which remains undistributed to the holders of Company Common Stock for six
months after the Effective Time shall be delivered to Parent, upon demand,
and any holders of Company Common Stock who have not theretofore complied
with this Article II shall thereafter look only to Parent for the shares of
Parent Common Stock, any cash in lieu of fractional shares of Parent Common
Stock to which they are entitled pursuant to Section 2.2(e) and any dividends
or other distributions with respect to Parent Common Stock to which they are
entitled pursuant to Section 2.2(c), in each case, without any interest
thereon.
(g) No Liability. Neither Parent nor the Company shall be liable to
any holder of shares of Company Common Stock for any such shares of Parent
Common Stock (or dividends or distributions with respect thereto) or cash
from the Exchange Fund delivered to a public official pursuant to any
abandoned property, escheat or similar Law.
(h) Lost Certificates+. If any Certificate shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the
person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the posting by such person of a bond, in such reasonable
amount as Parent may direct, as indemnity against any claim that may be made
against it with respect to such Certificate, the Exchange Agent will issue in
exchange for such lost, stolen or destroyed Certificate the shares of Parent
Common Stock, any cash in lieu of fractional shares of Parent Common Stock to
which the holders thereof are entitled pursuant to Section 2.2(e) and any
dividends or other distributions to which the holders thereof are entitled
pursuant to Section 2.2(c), in each case, without any interest thereon.
6
(i) Withholding. Parent or the Exchange Agent shall be entitled to
deduct and withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of Company Common Stock such amounts as Parent or the
Exchange Agent are required to deduct and withhold under the Code, or any
provision of state, local or foreign tax law, with respect to the making of
such payment. To the extent that amounts are so withheld by Parent or the
Exchange Agent, such withheld amounts shall be treated for all purposes of
this Agreement as having been paid to the holder of Company Common Stock in
respect of whom such deduction and withholding was made by Parent or the
Exchange Agent.
SECTION 2.3. Stock Transfer Books. At the Effective Time, the
stock transfer books of the Company shall be closed and thereafter, there
shall be no further registration of transfers of shares of Company Common
Stock theretofore outstanding on the records of the Company. From and after
the Effective Time, the holders of certificates representing shares of
Company Common Stock outstanding immediately prior to the Effective Time
shall cease to have any rights with respect to such shares of Company Common
Stock except as otherwise provided herein or by Law. On or after the
Effective Time, any Certificates presented to the Exchange Agent or Parent
for any reason shall be converted into the shares of Parent Common Stock, any
cash in lieu of fractional shares of Parent Common Stock to which the holders
thereof are entitled pursuant to Section 2.2(e) and any dividends or other
distributions to which the holders thereof are entitled pursuant to Section
2.2(c).
SECTION 2.4. Stock Options. Prior to the Effective Time, the
Company and Parent shall take such action as may be necessary to cause each
unexpired and unexercised option to purchase shares of Company Common Stock
(each, a "Company Option") under (1) the Company's Amended and Restated 1997
Long-Term Incentive Plan (the "1997 Plan"), a true and complete copy of which
has heretofore been provided to Parent by the Company, and (2) the Company's
1999 Long-Term Incentive Plan (the "1999 Plan," and together with the 1997
Plan, the "Company Stock Option Plans"), a true and complete copy of which
has heretofore been provided to Parent by the Company, to be exercisable
solely for such number of shares of Parent Common Stock as is equal to the
number of shares of Company Common Stock that could have been purchased under
such Company Option immediately prior to the Effective Time multiplied by the
Exchange Ratio (rounded to the nearest whole number of shares of Parent
Common Stock), at a price per share of Parent Common Stock equal to the
per-share option exercise price specified in the Company Option divided by
the Exchange Ratio (rounded down to the nearest whole cent). Such Company
Option shall otherwise be subject to the same terms and conditions (including
provisions regarding vesting and the acceleration thereof) as in effect at
the Effective Time, including the date of grant. At the Effective Time, (1)
all references in the Company Stock Option Plans and in the related stock
option agreements to the Company shall be deemed to refer to Parent and (2)
7
Parent shall assume all of the Company's obligations with respect to Company
Options as so amended. Promptly after the Effective Time, to the extent
necessary to provide for registration of shares of Parent Common Stock
subject to such Company Options, Parent shall file a registration statement
on Form S-8 (or any successor form) with respect to such shares of Parent
Common Stock and shall use its best efforts to maintain such registration
statement (or any successor form), including the current status of any related
prospectus or prospectuses, for so long as the Company Options remain
outstanding. None of the Company Options are "incentive stock options"
within the meaning of Section 422 of the Code.
SECTION 2.5. Warrants. Effective as of the Effective Time,
pursuant to the terms of the agreements (collectively, the "Warrant
Agreements") governing the outstanding warrants to purchase shares of Company
Common Stock (the "Warrants"), Parent shall assume all of the rights and
obligations of the Company under all Warrant Agreements and the parties
hereto shall each take such action as may be necessary so that upon exercise
of each outstanding Warrant, on and after the Effective Time, subject to the
terms and provisions thereof, the holder shall receive such number of shares
of Parent Common Stock which such holder would have been entitled to receive
if such holder exercised such Warrant and thereby received shares of Company
Common Stock immediately prior to the Effective Time including, without
limitation, the entry into a supplemental agreement with each holder whereby
Parent assumes the performance and observance of the covenants and conditions
of the applicable Warrant Agreement theretofore to be performed and observed
by the Company.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedule delivered by the
Company to Parent prior to the execution of this Agreement (the "Company
Disclosure Schedule"), which identifies exceptions only by specific Section
references, the Company hereby represents and warrants to Parent as follows:
SECTION 3.1. Organization and Qualification; Subsidiaries. Each
of the Company and each subsidiary of the Company (collectively, the "Company
Subsidiaries") has been duly organized, and is validly existing and in good
standing, under the laws of the jurisdiction of its incorporation or
organization, as the case may be, and has the requisite power and authority
and all necessary governmental approvals 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 organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or
in the aggregate, reasonably be expected to have a Company Material Adverse
Effect. Each of the Company and the Company Subsidiaries is duly qualified
8
or licensed 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 business makes such qualification or licensing or good standing
necessary, except for such failures to be so qualified or licensed and in
good standing that would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. For purposes of this
Agreement, "Company Material Adverse Effect" means any change affecting, or
condition having an effect on, the Company and the Company Subsidiaries that
is, or would reasonably be expected to be, materially adverse to the assets,
liabilities, business, financial condition or results of operations of the
Company and the Company Subsidiaries, taken as a whole other than any change
or condition relating to the economy or securities markets in general, or the
industries in which the Company operates in general, and not specifically
relating to the Company. Section 3.1 of the Company Disclosure Schedule sets
forth a true and complete list of all of the Company Subsidiaries. Except as
set forth in Section 3.1 of the Company Disclosure Schedule, neither the
Company nor any Company Subsidiary holds rship or joint venture of any kind.
SECTION 3.2. Certificate of Incorporation and By-laws; Corporate
Books and Records. The copies of the Company's Restated Certificate of
Incorporation (the "Company Certificate") and Amended and Restated By-laws
(the "Company By-laws") that are set forth as exhibits to the Company's Form
10-K for the year ended December 31, 1998 are complete and correct copies
thereof as in effect on the date hereof. The Company is not in violation of
any of the provisions of the Company Certificate or the Company By-laws.
True and complete copies of all minute books of the Company have been made
available by the Company to Parent.
SECTION 3.3. Capitalization. The authorized capital stock of the
Company consists of (a) 400,000,000 shares of Company Common Stock and (b)
20,000,000 shares of preferred stock, par value $0.01 per share (the "Company
Preferred Stock"). As of September 10, 1999, (1) 173,591,700 shares of
Company Common Stock were issued and outstanding, all of which were validly
issued and fully paid, nonassessable and free of preemptive rights, (2)
7,302,575 shares of Company Common Stock were held in the treasury of the
Company or by the Company Subsidiaries, (3) 10,895,347 shares of Company
Common Stock were issuable (and such number was reserved for issuance) upon
exercise of Company Options outstanding as of such date and (4) 28,715,960
shares of Company Common Stock were issuable (and such number was reserved
for issuance) upon exercise of the Warrants. As of the date hereof, 400,000
shares of Company Preferred Stock are designated as Series A Junior
Participating Preferred Stock, and no shares of Company Preferred Stock are
issued or outstanding. Except for Company Options to purchase not more than
10,895,347 shares of Company Common Stock, Warrants to purchase 28,715,960
shares of Company Common Stock granted pursuant to the Warrant Agreements and
arrangements and agreements set forth in Section 3.3 of the Company
Disclosure Schedule, there are no options, warrants or other rights,
9
agreements, arrangements or commitments of any character to which the Company
or any Company Subsidiary is a party or by which the Company or any Company
Subsidiary is bound relating to the issued or unissued capital stock or other
equity interests of the Company or any Company Subsidiary, or securities
convertible into or exchangeable for such capital stock or equity interests,
or obligating the Company or any Company Subsidiary to issue or sell any
shares of capital stock or equity interests, or securities convertible into
or exchangeable for such capital stock, of, or other equity interests in, the
Company or any Company Subsidiary. The Company Options referred to in the
preceding sentence include, without limitation, all options to purchase Company
Common Stock granted in tandem with options to acquire equity interests in Next
Level Communications or NLP. NLP has agreed to assume all obligations of Next
Level Communications with respect to options to acquire equity interests in
Next Level Communications, and from and after the IPO Next Level
Communications will have no such obligations. Since September 10, 1999, the
Company has not issued any shares of its capital stock, or securities
convertible into or exchangeable for such capital stock or other equity
interest, other than those shares of capital stock reserved for issuance as
set forth in this Section 3.3 or Section 3.3 of the Company Disclosure
Schedule. The Company has previously provided Parent with a true and
complete list, as of the date hereof, of (A) the prices at which outstanding
Company Options may be exercised under the applicable Company Stock Option
Plan, the number of Company Options outstanding at each such price and the
vesting schedule of the Company Options for each officer of the Company who
may become a "Section 16(b)" officer of Parent and (B) the outstanding
Warrants, the price at which outstanding Warrants may be exercised and the
vesting schedule of the Warrants. All shares of Company Common Stock subject
to issuance under the Company Stock Option Plans or the Warrant Agreements,
upon issuance prior to the Effective Time on the terms and conditions
specified in the instruments pursuant to which they are issuable, will be
duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights. Except as set forth in Section 3.3 of the Company
Disclosure Schedule, there are no outstanding contractual obligations of the
Company or any Company Subsidiary (A) restricting the transfer of, (B)
affecting the voting rights of, (C) requiring the repurchase, redemption or
disposition of, or containing any right of first refusal with respect to, (D)
requiring the registration for sale of, or (E) granting any preemptive or
antidilutive right with respect to, any shares of Company Common Stock or any
capital stock of, or other equity interests in, any Company Subsidiary. Except
as set forth in Section 3.3 of the Company Disclosure Schedule, each outstanding
share of capital stock of, or other equity interest in, each Company Subsidiary
is duly authorized, validly issued, fully paid, nonassessable and free of
preemptive rights and is owned by the Company or another Company Subsidiary
free and clear of all security interests, liens, claims, pledges, options,
rights of first refusal, agreements, limitations on the Company's or such
other Company Subsidiary's voting rights, charges and other encumbrances of
any nature whatsoever. Except as set forth in Section 3.3 of the Company
10
Disclosure Schedule, there are no outstanding contractual obligations of the
Company or any Company Subsidiary to provide funds to, or make any investment
(in the form of a loan, capital contribution or otherwise) in, any Company
Subsidiary or any other person, other than guarantees by the Company of any
indebtedness or other obligations of any wholly-owned Company Subsidiary.
SECTION 3.4. Authority Relative to This Agreement.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and
to consummate the transactions contemplated herein to be consummated by the
Company. The execution and delivery of this Agreement by the Company and the
consummation by the Company of such transactions have been duly and validly
authorized by all necessary corporate action and no other corporate
proceedings on the part of the Company and no stockholder votes are necessary
to authorize this Agreement or to consummate such transactions other than,
with respect to the Merger, the adoption of this Agreement by the affirmative
vote of a majority of the outstanding shares of Company Common Stock entitled
to vote thereon. The Board of Directors of the Company has approved this
Agreement and the transactions contemplated hereby and has directed that this
Agreement and the transactions contemplated hereby be submitted to the
Company's stockholders for approval at a meeting of such stockholders. This
Agreement has been duly authorized and validly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
(b) The Company has taken all appropriate actions so that the
restrictions on business combinations contained in Section 203 of the DGCL
will not apply with respect to or as a result of this Agreement, the Voting
Agreement and the transactions contemplated hereby and thereby, including the
Merger, without any further action on the part of the stockholders or the
Board of Directors of the Company. True and complete copies of all Board
resolutions reflecting such actions have been previously provided to Parent.
No other state takeover statute is applicable to the Merger.
(c) The Rights Agreement, dated as of June 12, 1997, between the
Company and ChaseMellon Shareholder Services, L.L.C., as Rights Agent, as
amended by Amendment dated as of December 16, 1997, has been amended (as so
amended, the "Company Rights Agreement") so that: (1) Parent and Merger Sub
are each exempt from the definition of "Acquiring Person" contained in the
Company Rights Agreement, and no "Shares Acquisition Date" or "Distribution
Date" or "Triggering Event" (as such terms are defined in the Company Rights
Agreement) will occur as a result of the execution of this Agreement or the
Voting Agreement or the consummation of the Merger and the other transactions
contemplated by this Agreement or the Voting Agreement and (2) the Company
Rights Agreement will terminate and the Rights will expire immediately prior
to the Effective Time. The Company Rights Agreement, as so amended, has not
been further amended or
11
modified. True and complete copies of all such amendments to the Company
Rights Agreement have been previously provided to Parent.
SECTION 3.5. No Conflict; Required Filings and Consents.
(a) The execution and delivery of this Agreement by the Company do not,
and the performance of this Agreement by the Company will not, except as set
forth in Section 3.5(a) of the Company Disclosure Schedule, (1) (assuming,
the stockholder approval set forth in Section 3.4 is obtained) conflict with
or violate any provision of the Company's Certificate or the Company's
By-laws or any equivalent organizational documents of any Company Subsidiary,
(2) assuming that all consents, approvals, authorizations and permits
described in Section 3.5(b) have been obtained and all filings and
notifications described in Section 3.5(b) have been made, conflict with or
violate any foreign or domestic law, statute, code, ordinance, rule,
regulation, order, judgment, writ, stipulation, award, injunction, decree or
arbitration award or finding ("Law") applicable to the Company or any Company
Subsidiary or by which any property or asset of the Company or any Company
Subsidiary is bound or affected or (3) require any consent or approval under,
result in any breach of, any loss of any benefit under or constitute a
default (or an event which with notice or lapse of time or both would become
a default) under, or give to others any right of termination, vesting,
amendment, acceleration or cancellation of, or result in the creation of a
lien or other encumbrance on any property or asset of the Company or any
Company Subsidiary pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, Company Permit (as defined in Section
3.6) or other instrument or obligation, except, with respect to clauses (2)
and (3), for any such conflicts, violations, breaches, defaults or other
occurrences which would not, individually or in the aggregate, reasonably be
expected to either (A) have a Company Material Adverse Effect or (B) prevent
or materially delay the performance of this Agreement by the Company.
(b) Except as set forth in Section 3.5(a) or 3.5(b) of the Company
Disclosure Schedule, the execution and delivery of this Agreement by the
Company do not, and the performance of this Agreement by the Company will
not, require any consent, approval, authorization or permit of, or filing
with or notification to, any domestic or foreign governmental,
administrative, judicial or regulatory authority ("Governmental Entity") or
any other person, except (1) under the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder (the "Exchange
Act"), the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (the "Securities Act"), state securities or "blue sky"
laws ("Blue Sky Laws"), the rules and regulations of the NYSE, the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and the
rules and regulations thereunder (the "HSR Act"), foreign antitrust and
competition laws and the filing and recordation of the Certificate of Merger
as required by the DGCL and (2) where failure to obtain such consents,
12
approvals, authorizations or permits, or to make such filings or
notifications, would not, individually or in the aggregate, reasonably be
expected to (A) prevent or materially delay consummation of the Merger, (B)
otherwise prevent the Company from performing its material obligations under
this Agreement or (C) have a Company Material Adverse Effect.
SECTION 3.6. Permits; Compliance With Law. Each of the Company
and the Company Subsidiaries is in possession of all authorizations,
licenses, permits, certificates, approvals and clearances of any Governmental
Entity necessary for the Company or any Company Subsidiary to own, lease and
operate its properties or to carry on their respective businesses
substantially in the manner described in the Company SEC Filings filed prior
to the date hereof and substantially as it is being conducted as of the date
hereof (the "Company Permits"), and all such Company Permits are valid, and
in full force and effect, except where the failure to have, or the suspension
or cancellation of, or failure to be valid or in full force and effect of,
any of the Company Permits would neither, individually or in the aggregate,
reasonably be expected to (a) have a Company Material Adverse Effect nor (b)
prevent or materially delay the performance of this Agreement by the Company.
Neither the Company nor any Company Subsidiary is in conflict with, or in
default or violation of, (1) any Law applicable to the Company or any Company
Subsidiary or by which any property or asset of the Company or any Company
Subsidiary is bound or affected or (2) any Company Permits, except for any
such conflicts, defaults or violations that would neither, individually or in
the aggregate, reasonably be expected to (A) have a Company Material Adverse
Effect nor (B) prevent or materially delay the performance of this Agreement
by the Company.
SECTION 3.7. SEC Filings; Financial Statements.
(a) The Company has timely filed all registration statements,
prospectuses, forms, reports and documents required to be filed by it under
the Securities Act or the Exchange Act, as the case may be, since July 25,
1997 (collectively, the "Company SEC Filings"). The Company SEC Filings (1)
as of their respective dates, were prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be,
and (2) did not at the time they were filed 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 made therein, in the light of
the circumstances under which they were made, not misleading. As of the date
of this Agreement, no Company Subsidiary is subject to the periodic reporting
requirements of the Exchange Act. The registration statement on Form S-1
(the "IPO Registration Statement") filed by Next Level Communications, Inc.
("NL") (1) will, at the time it becomes effective, comply with the
requirements of the Securities Act and (2) will not at the time it becomes
effective, 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
13
statements made therein, in light of the circumstances under which they were
made, not misleading.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Company SEC Filings was prepared in
accordance with United States generally accepted accounting principles
("GAAP") applied (except as may be indicated in the notes thereto and, in the
case of unaudited quarterly financial statements, as permitted by Form 10-Q
under the Exchange Act) on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto), and each
presented fairly the consolidated financial position, results of operations
and cash flows of the Company and the consolidated Company Subsidiaries as of
the respective dates thereof and for the respective periods indicated therein
(subject, in the case of unaudited statements, to normal year-end adjustments
which did not and would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect). Each of the
consolidated financial statements (including, in each case, any notes
thereto) of Next Level Communications, L.P. ("NLP") contained in the Company
SEC Filings was prepared in accordance with GAAP applied (except as may be
indicated in the notes thereto) on a consistent basis throughout the periods
indicated (except as may be indicated in the notes thereto), and each
presented fairly the consolidated financial position, results of operation
and cash flows of NLP as of the respective dates thereof and for the
respective periods indicated therein. The books and records of the Company
and the Company Subsidiaries have been, and are being, maintained in
accordance with applicable legal and accounting requirements.
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and the consolidated Company Subsidiaries as of December
31, 1998 included in the Company's Form 10-K for the year ended December 31,
1998, including the notes thereto (the "Company's Form 10-K"), neither the
Company nor any consolidated Company Subsidiary has any liabilities or
obligations of any nature (whether accrued, absolute, contingent or
otherwise) that would be required to be reflected on a balance sheet or in
notes thereto prepared in accordance with GAAP, except for liabilities or
obligations incurred in the ordinary course of business since December 31,
1998 that would neither, individually or in the aggregate, reasonably be
expected to (1) have a Company Material Adverse Effect nor (2) prevent or
materially delay the performance of this Agreement by the Company. Except as
and to the extent set forth on the consolidated balance sheet of NLP as of
December 31, 1998 included in the Company's Form 10-K, NLP has no liabilities
or obligations of any nature (whether accrued, absolute, contingent or
otherwise) that would be required to be reflected on a balance sheet or in
notes thereto prepared in accordance with GAAP, except for liabilities or
obligations incurred in the ordinary course of business since December 31,
1998 that would not, individually or in the aggregate, reasonably be expected
14
to either (1) have a Company Material Adverse Effect or (2) prevent or
materially delay the performance of this Agreement by the Company.
(d) Except as and to the extent set forth in Section 3.7(d) of the
Company Disclosure Schedule, on the date hereof, there is no suit, claim,
action, proceeding, dispute, indemnification claim, or investigation pending
or, to the knowledge of the Company, threatened in writing against the
Company or any Company Subsidiary, or for which the Company or any Company
Subsidiary is obligated to indemnify a third party, arising out of, or
relating to, the spin-off of the Company by General Semiconductor, Inc.
("GSI"), and the spin-off of Commscope Inc. by the Company (collectively, the
"Spin-Offs"), pursuant to the Distribution Agreement among GSI, the Company
and Commscope Inc. dated as of June 12, 1997 (the "Distribution Agreement"),
any of the Ancillary Agreements (as defined in the Distribution Agreement) or
otherwise. The Company has not and, to the Company's knowledge, neither GSI
nor Commscope Inc. has taken any action that would constitute a breach of, or
be inconsistent with its obligations under, the Tax Sharing Agreement dated
as of July 25, 1997 among GSI, the Company and Commscope Inc. (the "Tax
Sharing Agreement"). The Company knows of no reason why the Spin-Offs would
fail to be qualified as tax-free transactions under Section 355 of the Code.
(e) The business purpose for the Spin-Offs was to permit the Company
and the businesses now known as GSI and Commscope Inc. to more effectively
focus efforts on their respective businesses.
(f) There was no plan at the time of the Spin-Offs to engage in any
subsequent transactions whereby one or more persons would directly or
indirectly acquire stock representing a 50% or greater interest in the
Company.
SECTION 3.8. Absence of Certain Changes or Events. Since December
31, 1998, except as specifically contemplated by, or as disclosed in, this
Agreement or as and to the extent set forth in Section 3.8 of the Company
Disclosure Schedule, the Company and the Company Subsidiaries have conducted
their businesses in the ordinary course consistent with past practice, and,
since such date, there has not been (a) any Company Material Adverse Effect
or an event or development that would, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect, (b) any
event or development that would, individually or in the aggregate, reasonably
be expected to prevent or materially delay the performance of this Agreement
by the Company, or (c) any action taken by the Company or any of the Company
Subsidiaries during the period from January 1, 1999 through the date of this
Agreement that, if taken during the period from the date of this Agreement
through the Effective Time, would constitute a breach of Section 5.1.
SECTION 3.9. Employee Benefit Plans; Labor Matters.
15
(a) Section 3.9(a) of the Company Disclosure Schedule sets forth a true
and complete list as of the date hereof of each material employee benefit
plan, program, arrangement and contract (including, without limitation, any
"employee benefit plan", as defined in section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")), maintained, or
contributed to, by the Company or any Company Subsidiary, or to which the
Company or any Company Subsidiary is required to contribute (the "Company
Benefit Plans"). With respect to each Company Benefit Plan, the Company has
heretofore delivered or made available to Parent a true, correct and complete
copy of: (1) each writing constituting a part of such Company Benefit Plan,
including without limitation all plan documents, trust agreements, and
insurance contracts and other funding vehicles; (2) the most recent Annual
Report (Form 5500 Series) and accompanying schedule, if any; (3) the current
summary plan description and any material modifications thereto, if any (in
each case, whether or not required to be furnished under ERISA); (4) the most
recent annual financial report, if any; (5) the most recent actuarial report,
if any; and (6) the most recent determination letter from the IRS, if any.
Except as specifically provided in the foregoing documents delivered to
Parent, there are no amendments to any Company Benefit Plan that have been
adopted or approved nor has the Company or any Company Subsidiary undertaken
to make any such amendments or to adopt or approve any new Plan.
(b) With respect to each Company Benefit Plan which is subject to Title
IV of ERISA, or Section 302 of ERISA or Section 412 or 4971 of the Code (1)
the present value of accrued benefits under such Company Benefit Plan, based
upon the actuarial assumptions used for funding purposes in the most recent
actuarial report prepared by such Company Benefit Plan's actuary with respect
to such Company Benefit Plan, did not, as of its latest valuation date,
exceed the then current value of the assets of such Company Benefit Plan
allocable to such accrued benefits, (2) no "reportable event" (within the
meaning of Section 4043 of ERISA) has occurred with respect to any Company
Benefit Plan for which the 30-day notice requirement has not been waived, (3)
there does not exist any accumulated funding deficiency within the meaning of
Section 412 of the Code or Section 302 of ERISA, whether or not waived, (4)
all premiums to the Pension Benefit Guaranty Corporation ("PBGC") have been
timely paid in full, (5) except as set forth in Section 3.9(b) of the Company
Disclosure Schedule, no liability (other than for premiums to the PBGC) under
Title IV of ERISA has been or is expected to be incurred by the Company or
any of its subsidiaries, and (6) the PBGC has not instituted proceedings to
terminate any such Company Benefit Plan and, to the Company's knowledge, no
condition exists that presents a risk that such proceedings will be
instituted or which would constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, any such
Company Benefit Plan. No Company Benefit Plan is a "multiemployer pension
plan" (as such term is defined in section 3(37) of ERISA) (a "Multiemployer
Plan") or a plan that has two or more contributing sponsors at least two of
whom are not under common control, within the meaning of Section 4063 of
16
ERISA (a "Multiple Employer Plan"). Neither the Company nor any Company
Subsidiaries nor any of their respective ERISA Affiliates t any time during
the last six years, contributed to or been obligated to contribute to any
Multiemployer Plan or Multiple Employer Plan, or (2) incurred any withdrawal
liability to a Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan that has not been satisfied in full.
Except as set forth in Section 3.9(b) of the Company Disclosure Schedule,
there does not now exist, nor, to the knowledge of the Company, do any
circumstances exist that could result in, any liability that would be a
liability of the Company or any of the Company Subsidiaries following the
Closing (1) under Title IV of ERISA, (2) under section 302 of ERISA, (3)
under sections 412 and 4971 of the Code, or (4) as a result of a failure to
comply with the continuation coverage requirements of section 601 et seq. of
ERISA and section 4980B of the Code, other than such liabilities that arise
solely out of, or relate solely to, the Company Benefit Plans.
(c) Each of the Company Benefit Plans has been operated and
administered in all material respects in accordance with applicable Laws and
administrative rules and regulations of any Governmental Entity, including,
but not limited to, ERISA and the Code, except where a violation of any such
Law, rule or regulation would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect. Each of
the Company Benefit Plans intended to be "qualified" within the meaning of
Section 401(a) of the Code has received a favorable determination letter as
to such qualification from the IRS, and no event has occurred, either by
reason of any action or failure to act, which would cause the loss of any
such qualification, except where such action or failure to act can be cured
without having, individually or in the aggregate, a Company Material Adverse
Effect. Except as set forth in Section 3.9(c) of the Company Disclosure
Schedule, no Company Benefit Plan provides benefits, including, without
limitation, death or medical benefits (whether or not insured), with respect
to current or former employees of the Company or any Company Subsidiary
beyond their retirement or other termination of service, other than (1)
coverage mandated by applicable Law, (2) death benefits or retirement
benefits under any "employee pension plan" (as such term is defined in
Section 3(2) of ERISA), (3) deferred compensation benefits accrued as
liabilities on the books of the Company or any Company Subsidiary or (4)
benefits the full cost of which is borne by the current or former employee
(or his beneficiary). All contributions or other amounts payable by the
Company or any Company Subsidiary as of the Effective Time with respect to
each Company Benefit Plan in respect of current or prior plan years will have
been paid or accrued by such time in accordance with GAAP.
(d) Except as set forth in Section 3.9(d) of the Company Disclosure
Schedule, neither the Company nor any Company Subsidiary is a party to any
collective bargaining or other labor union contract applicable to persons
employed by the Company or any Company Subsidiary, and no collective
17
bargaining agreement or other labor union contract is being negotiated by the
Company or any Company Subsidiary. There is no labor dispute, strike,
slowdown or work stoppage against the Company or any Company Subsidiary
pending or, to the knowledge of the Company, threatened which may interfere
in any respect that would have a Company Material Adverse Effect with the
respective business activities of the Company or any Company Subsidiary. To
the knowledge of the Company, none of the Company, any Company Subsidiary or
their respective representatives or employees has committed any unfair labor
practices in connection with the operation of the respective businesses of
the Company or any Company Subsidiary, and there is no charge or complaint
against the Company or any Company Subsidiary by the National Labor Relations
Board or any comparable state or foreign agency pending or, to the knowledge
of the Company, threatened, except where such unfair labor practice, charge
or complaint would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
(e) The Company has identified in Section 3.9(e) of the Company
Disclosure Schedule and has made available to Parent true and complete copies
of (1) all severance and employment agreements with directors, executive
officers, key employees or consultants of the Company; (2) all severance
programs and policies of each of the Company and each Company Subsidiary with
or relating to its employees; and (3) all plans, programs, agreements and
other arrangements of each of the Company and each Company Subsidiary with or
relating to its employees which contain change in control provisions. Except
as set forth in Section 3.9(e) of the Company Disclosure Schedule, neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (either alone or in conjunction with
any other event, such as termination of employment) (A) result in any
material payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or
any employee of the Company or any Company Subsidiary or affiliate from the
Company or any Company Subsidiary or affiliate under any Company Benefit Plan
or otherwise, (B) materially increase any benefits otherwise payable under
any Company Benefit Plan or (C) result in any acceleration of the time of
payment or vesting of any material benefits. No individual who is a party to
an employment agreement listed in Section 3.9 (a) of the Disclosure Schedule
or any change-of-control employment agreement with the Company has terminated
employment or been terminated, nor has any event occurred that could give
rise to a termination event, in either case under circumstances that has
given, or could give, rise to a severance obligation on the part of the
Company under such agreement.
SECTION 3.10. Accounting and Tax Matters.
(a) None of the Company, any Company Subsidiary or, to the knowledge of
the Company, any of the Company's affiliates has taken or agreed to take any
action that would prevent the Merger from qualifying for "pooling of
18
interests" accounting treatment under applicable U.S. accounting rules,
including, without limitation, GAAP and applicable SEC accounting standards,
or would prevent the Merger from constituting a transaction qualifying under
section 368(a) of the Code. The Company is not aware of any agreement, plan
or other circumstance that would prevent the Merger from so qualifying under
the accounting rules and section 368(a) of the Code and, as of the date of
this Agreement, the Company has no reason to believe that the Merger will not
qualify as a "pooling of interests" for accounting purposes.
(b) The Company has been orally advised by Deloitte & Touche LLP that
such firm believes that, assuming consummation of the transactions
contemplated hereby in accordance herewith, such firm should be able to
deliver the opinion contemplated by Section 7.3(e).
SECTION 3.11. Contracts; Debt Instruments. Except as disclosed in
or filed as exhibits to the Company SEC Filings filed prior to the date
hereof, or as disclosed in Section 3.11 of the Company Disclosure Schedule,
neither the Company nor any of the Company Subsidiaries is a party to or
bound by any contract, arrangement, commitment or understanding (whether
written or oral) (a) except as set forth in Sections 3.5(a) and 3.9(e) of the
Company Disclosure Schedule, any of the benefits of which will be increased,
or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement, or the
value of any of the benefits of which will be calculated on the basis of any
of the transactions contemplated by this Agreement, (b) as of the date
hereof, (A) which is a "material contract" (as such term is defined in Item
601(b)(10) of Regulation S-K of the SEC), (B) which involves expenditures in
excess of $40,000,000 or (C) which involves annual expenditures in excess
$20,000,000 and is not cancelable within one year, (c) which contains any
non-compete or exclusivity provisions with respect to any material line of
business or material geographic area with respect to the Company or any of
the Company Subsidiaries, or which restricts the conduct of any material line
of business by the Company or any of the Company Subsidiaries or any material
geographic area in which the Company or any of the Company Subsidiaries may
conduct business, in each case in any material respect, or (d) which would
prohibit or materially delay the consummation of the Merger or any of the
transactions contemplated by this Agreement. The Company has previously made
available to Parent true and complete copies of all (1) material supply or
similar agreements with the parties listed on Schedule 3.11 and any
affiliates thereof to which the Company or any of the Company Subsidiaries is
a party and (2) employment and deferred compensation agreements with
directors, executive officers and key employees, and material agreements with
consultants, which are in writing and to which the Company or any of the Company
Subsidiaries is a party. Each contract, arrangement, commitment or
understanding of the type described in this Section 3.11, whether or not set
forth in Section 3.11 of the Company Disclosure Schedule, is referred to
herein as a "Company Material Contract." Each Company Material Contract is
19
valid and binding on the Company or a Company Subsidiary, as applicable, and
in full force and effect, and the Company and each of the Company
Subsidiaries have in all material respects performed all obligations required
to be performed by them to the date hereof under each Company Material
Contract, except as would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect. Neither the Company
nor any Company Subsidiary knows of, or has received notice of, any violation
or default under (or any condition which with the passage of time or the
giving of notice would cause such a violation of or default under) any
Company Material Contract or any other loan or credit agreement, note, bond,
mortgage, indenture or lease, or any other contract, agreement, arrangement
or understanding to which it is a party or by which it or any of its
properties or assets is bound, except for violations or defaults that would
not, individually or in the aggregate, reasonably be expected to result in a
Company Material Adverse Effect.
SECTION 3.12. Litigation. Except as and to the extent set forth
in Section 3.12 of the Company Disclosure Schedule or in the Company SEC
Filings filed prior to the date hereof, there is no suit, claim, action,
proceeding or investigation pending or, to the knowledge of the Company,
threatened in writing against the Company or any Company Subsidiary or for
which the Company or any Company Subsidiary is obligated to indemnify a third
party that (a) would, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect or (b) as of the date
hereof, challenges the validity or propriety, or seeks to prevent
consummation of, the transactions contemplated by this Agreement. Neither
the Company nor any Company Subsidiary is subject to any outstanding order,
writ, injunction, decree or arbitration ruling, award or other finding which
has had or would, individually or in the aggregate, reasonably be expected to
have a Company Material Adverse Effect.
SECTION 3.13. Environmental Matters. Except as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect:
(a) the Company and the Company Subsidiaries (1) are in compliance with
all, and are not subject to any liability, in each case with respect to any,
applicable Environmental Laws, (2) hold or have applied for all Environmental
Permits necessary to conduct their current operations and (3) are in
compliance with their respective Environmental Permits;
(b) neither the Company nor any Company Subsidiary has received any
written notice, demand, letter, claim or request for information alleging
that the Company or any of its Subsidiaries may be in violation of, or liable
under, any Environmental Law;
20
(c) neither the Company nor any Company Subsidiary (1) has entered into
or agreed to any consent decree or order or is subject to any judgment,
decree or judicial order relating to compliance with Environmental Laws,
Environmental Permits or the investigation, sampling, monitoring, treatment,
remediation, removal or cleanup of Hazardous Materials and, to the knowledge
of the Company, no investigation, litigation or other proceeding is pending
or threatened in writing with respect thereto, or (2) is an indemnitor in
connection with any claim threatened or asserted in writing by any
third-party indemnitee for any liability under any Environmental Law or
relating to any Hazardous Materials; and
(d) none of the real property owned or leased by the Company or any
Company Subsidiary is listed or, to the knowledge of the Company, proposed
for listing on the "National Priorities List" under CERCLA, as updated
through the date hereof, or any similar state or foreign list of sites
requiring investigation or cleanup.
For purposes of this Agreement:
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended as of the date hereof.
"Environmental Laws" means any federal, state, local or foreign
statute, law, ordinance, regulation, rule, code, treaty, writ or order and
any enforceable judicial or administrative interpretation thereof, including
any judicial or administrative order, consent decree, judgment, stipulation,
injunction, permit, authorization, policy, opinion, or agency requirement, in
each case having the force and effect of law, relating to the pollution,
protection, investigation or restoration of the environment, health and
safety as affected by the environment or natural resources, including,
without limitation, those relating to the use, handling, presence,
transportation, treatment, storage, disposal, release, threatened release or
discharge of Hazardous Materials or noise, odor, wetlands, pollution or
contamination.
"Environmental Permits" means any permit, approval, identification
number, license and other authorization required under any applicable
Environmental Law.
"Hazardous Materials" means (a) any petroleum, petroleum products,
byproducts or breakdown products, radioactive materials, asbestos-containing
materials or polychlorinated biphenyls or (b) any chemical, material or other
substance defined or regulated as toxic or hazardous or as a pollutant or
contaminant or waste under any applicable Environmental Law.
21
SECTION 3.14. Intellectual Property.
(a) "Intellectual Property" means all intellectual property or other
proprietary rights of every kind, including all domestic or foreign patents,
domestic or foreign patent applications, inventions (whether or not
patentable), processes, products, technologies, discoveries, copyrightable
and copyrighted works, apparatus, trade secrets, trademarks, trademark
registrations and applications, service marks, service xxxx registrations and
applications, trade names, trade dress, copyright registrations, customer
lists, confidential marketing and customer information, licenses,
confidential technical information, software, and all documentation thereof.
(b) The Company owns or has the defensible right to use, whether
through ownership, licensing or otherwise, all Intellectual Property
significant to the businesses of the Company and the Company Subsidiaries in
substantially the same manner as such businesses are conducted on the date
hereof ("Material Intellectual Property"). Except as set forth in Section
3.14 of the Company Disclosure Schedule and except as would not, individually
or in the aggregate, reasonably be expected to have a material adverse impact
on the validity or value of any Material Intellectual Property: (1) no
written claim of invalidity or conflicting ownership rights with respect to
any Material Intellectual Property has been made by a third party and no such
Intellectual Property is the subject of any pending or, to the Company's
knowledge, threatened action, suit, claim, investigation, arbitration or
other proceeding; (2) no person or entity has given notice to the Company or
any Company Subsidiary that the use of any Material Intellectual Property by
the Company, any Company Subsidiary or any licensee is infringing or has
infringed any domestic or foreign patent, trademark, service xxxx, trade
name, or copyright or design right, or that the Company, any Company
Subsidiary or any licensee has misappropriated or improperly used or
disclosed any trade secret, confidential information or know-how; (3) to the
Company's knowledge after due inquiry for such purpose, the making, using,
selling, manufacturing, marketing, licensing, reproduction, distribution, or
publishing of any process, machine, manufacture or product related to any
Material Intellectual Property, does not and will not infringe any domestic
or foreign patent, trademark, service xxxx, trade name, copyright or other
intellectual property right of any third party, and does not and will not
involve the misappropriation or improper use or disclosure of any trade
secrets, confidential information or know-how of any third party; (4) to the
Company's knowledge, there exists no prior act or current conduct or use by the
Company, any Company Subsidiary or any third party that would void or
invalidate any Material Intellectual Property; and (5) the execution,
delivery and performance of this Agreement by the Company and the
consummation of the transactions contemplated hereby and thereby will not
breach, violate or conflict with any instrument or agreement concerning any
Material Intellectual Property, will not cause the forfeiture or termination
or give rise to a right of forfeiture or termination of any of
the Material
22
Intellectual Property or impair the right of Parent or the Surviving
Corporation to make, use, sell, license or dispose of, or to bring any action
for the infringement of, any Material Intellectual Property. In addition,
the matters disclosed on Section 3.14 of the Company Disclosure Schedule
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect.
SECTION 3.15. Taxes.
(a) The Company and the Company Subsidiaries have timely filed or will
timely file all material returns and reports required to be filed with any
taxing authority with respect to Taxes for any period ending on or before the
Effective Time, taking into account any extension of time to file granted to
or obtained on behalf of the Company and the Company Subsidiaries. Except as
would not, individually or in the aggregate, reasonably be expected to have a
Company Material Adverse Effect, (1) all Taxes that are due prior to the (A)
date hereof have been paid or accrued and (B) Effective Time will be paid or
accrued prior thereto and (2) no deficiency for any Tax has been asserted or
assessed by a taxing authority against the Company or any of the Company
Subsidiaries which deficiency has not been paid or is not being contested in
good faith. The Company and the Company Subsidiaries have provided adequate
reserves (in accordance with GAAP) in their financial statements for any
Taxes that have not been paid, whether or not shown as being due on any
returns. As used in this Agreement, "Taxes" shall mean any and all taxes,
fees, levies, duties, tariffs, imposts and other charges of any kind
(together with any and all interest, penalties, additions to tax and
additional amounts imposed with respect thereto) imposed by any Governmental
Entity or taxing authority, including, without limitation: taxes or other
charges on or with respect to income, franchise, windfall or other profits,
gross receipts, property, sales, use, capital stock, payroll, employment,
social security, workers' compensation, unemployment compensation or net
worth; taxes or other charges in the nature of excise, withholding, ad
valorem, stamp, transfer, value-added or gains taxes; license, registration
and documentation fees; and customers' duties, tariffs and similar charges.
(b) There are no audits or disputes pending, or claims asserted in
writing for, Taxes or assessments for which the Company or any of its
Subsidiaries is responsible, nor has the Company or any of its Subsidiaries
been requested in writing to give any currently effective waivers extending
the statutory period of limitation applicable to any federal or state income
tax return for which the Company is responsible for any period which audits,
disputes, claims, assessments or waivers would reasonably be expected,
individually or in the aggregate, to have a Company Material Adverse Effect.
(c) There are no material Tax liens upon any property or assets of the
Company or any of the Company Subsidiaries except liens for current Taxes not
yet due.
23
(d) Neither the Company nor any of its Subsidiaries has been required
to include in income any adjustment pursuant to Section 481 of the Code by
reason of a voluntary change in accounting method initiated by the Company or
any of its Subsidiaries, and the IRS has not initiated or proposed any such
adjustment or change in accounting method, in either case which adjustment or
change has had or would reasonably be expected, individually or in the
aggregate, to have a Company Material Adverse Effect.
(e) Neither the Company nor any of its Subsidiaries has entered into a
transaction which is being accounted for under the installment method of
Section 453 of the Code, which could reasonably be expected to have a Company
Material Adverse Effect.
(f) Each of the Company and its Subsidiaries has withheld and paid all
material Taxes required to have been withheld and paid in connection with
amounts paid or owing to any employee, independent contractor, creditor,
stockholder, or other third party.
(g) Neither the Company nor any of its Subsidiaries is a party to any
material Tax allocation or sharing agreement, other than the Tax Sharing
Agreement. To the best knowledge of the Company, neither the Company nor any
of its Subsidiaries is responsible for the Taxes of any other person under
Treasury Regulation Section 1.1502-6 (or any similar provision of state,
local, or foreign law), as a transferee, by contract, or otherwise which
could reasonably be expected to give rise to a Company Material Adverse
Effect.
(h) The Company has not been a United States real property holding
corporation within the meaning of Code Section 897(c)(2) during the
applicable period described in Code Section 897(c)(1)(A)(ii).
(i) Except as would not, individually or in the aggregate, reasonably
be expected to have a Company Material Adverse Effect, none of the interest
payable by the Company or any of its Subsidiaries under outstanding
indebtedness is nondeductible under Code Section 163 or is treated as
interest on corporate acquisition indebtedness under Code Section 279.
(j) Neither the Company nor any of its Subsidiaries is a party to any
contract, plan, or arrangement under which it is obligated to make or to
provide, or could become obligated to make or to provide, a payment or
benefit that would be nondeductible under Code Section 280G.
SECTION 3.16. Insurance. The Company maintains insurance coverage
with reputable insurers, or maintains self-insurance practices, in such
amounts and covering such risks as are in accordance with normal industry
practice for companies engaged in businesses similar to that of the Company
(taking into account the cost and availability of such insurance).
24
SECTION 3.17. Opinion of Financial Advisors. Each of Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and CIBC World Markets Corp.
(collectively, the "Company Financial Advisors") has delivered to the Board
of Directors of the Company its separate oral opinion as of the date hereof
that, as of the date hereof, the Exchange Ratio was fair from a financial
point of view to the holders of Company Common Stock.
SECTION 3.18. Vote Required. The affirmative vote of the holders
of a majority of the outstanding shares of Company Common Stock is the only
vote of the holders of any class or series of capital stock or other equity
interests of the Company or any Company Subsidiary necessary to approve the
Merger.
SECTION 3.19. Brokers. No broker, finder or investment banker
(other than the Company Financial Advisors) is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger based upon
arrangements made by or on behalf of the Company or any Company Subsidiary.
The Company has heretofore made available to Parent a true and complete copy
of all agreements between the Company and the Company Financial Advisors
pursuant to which such firm would be entitled to any payment relating to the
Merger.
SECTION 3.20. Year 2000 Compliance. The Company has taken steps
that are reasonable to ensure that the occurrence of the year 2000 will not
materially and adversely affect the information and business systems of the
Company or its Subsidiaries, and it is the Company's reasonable expectation
that no material expenditures in excess of currently budgeted items will be
required in order to cause such systems to operate properly following the
change of the year 1999 to 2000.
SECTION 3.21. Disclosure. Notwithstanding anything to the
contrary herein, any matter disclosed in any section of the Company
Disclosure Schedule shall be considered disclosed for other sections of the
Company Disclosure Schedule (but only to the extent such matter on its face
would reasonably be expected to be pertinent to a particular section of the
Company Disclosure Schedule in light of the disclosure made in such section).
25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF PARENT AND MERGER SUB
Except as set forth in the Disclosure Schedule delivered by Parent
and Merger Sub to the Company prior to the execution of this Agreement (the
"Parent Disclosure Schedule"), which shall identify exceptions by specific
Section references, Parent and Merger Sub hereby jointly and severally
represent and warrant to the Company as follows:
SECTION 4.1. Organization and Qualification; Subsidiaries. Each
of Parent, Merger Sub and each other subsidiary of Parent (collectively, the
"Parent Subsidiaries") has been duly organized, and is validly existing and
in good standing, under the laws of the jurisdiction of its incorporation or
organization, as the case may be, and has the requisite power and authority
and all necessary governmental approvals 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 organized, existing or in good standing or to have
such power, authority and governmental approvals would not, individually or
in the aggregate, reasonably be expected to have a Parent Material Adverse
Effect. Each of Parent, Merger Sub and the other Parent Subsidiaries is duly
qualified or licensed 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 business makes such qualification or licensing or
good standing necessary, except for such failures to be so qualified or
licensed and in good standing that would not, individually or in the
aggregate, reasonably be expected to have a Parent Material Adverse Effect.
For purposes of this Agreement, "Parent Material Adverse Effect" means any
change affecting, or condition having an effect on, Parent, Merger Sub and
the Parent Subsidiaries that is, or would reasonably be expected to be,
materially adverse to the assets, liabilities, business, financial condition
or results of operations of Parent and the Parent Subsidiaries, taken as a
whole, other than any change or condition relating to the economy or
securities markets in general, or the industries in which Parent operates in
general, and not specifically relating to Parent.
SECTION 4.2. Certificate of Incorporation and By-laws; Corporate
Books and Records. The copies of Parent's Restated Certificate of
Incorporation and By-laws that are set forth as exhibits to Parent's Form
10-K for the year ended December 31, 1998 are complete and correct copies
thereof as in effect on the date hereof. Parent is not in violation of any
of the provisions of its Restated Certificate of Incorporation or By-laws.
SECTION 4.3. Capitalization. The authorized capital stock of
Parent consists of (a) 1,400,000,000 shares of Parent Common Stock and (b)
500,000 shares of preferred stock, par value $100 per share (the "Parent
26
Preferred Stock"). As of August 27, 1999, (1) 608,392,300 shares of Parent
Common Stock were issued and outstanding, all of which were validly issued
and fully paid, nonassessable and free of preemptive rights and (2) 80,192
shares of Parent Common Stock were held in the treasury of Parent or by the
Parent Subsidiaries. As of September 13, 1999, 35,687,689 shares of Parent
Common Stock were reserved for issuance upon exercise of stock options,
rights and warrants outstanding as of such date. As of August 27, 1999,
1,927,908 shares of Parent Common Stock were issuable in connection with
Parent's Liquid Yield Option Notes due 2009 and Liquid Yield Option Notes due
2013. As of the date hereof, 250,000 shares of the Parent Preferred Stock
are designated as Junior Participating Preferred Stock, Series B and no
shares of Parent Preferred Stock are issued and outstanding. As of August
27, 1999, except for stock options and agreements or arrangements described
in Section 4.3 or Section 4.3 of the Parent Disclosure Schedule and for
Parent's preferred share purchase rights, there were no options, warrants or
other rights to purchase capital stock of Parent, or securities convertible
into or exchangeable for such capital stock or obligating Parent to issue or
sell any shares of capital stock, or securities convertible into or
exchangeable for such capital stock of Parent. The shares of Parent Common
Stock to be issued in connection with the Merger, when issued as contemplated
herein, will be duly authorized, validly issued, fully paid and nonassessable
and will not be issued in violation of any preemptive rights.
SECTION 4.4. Authority Relative to This Agreement. Each of Parent
and Merger Sub has all necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated herein to be consummated by Parent.
Each of (a) the execution and delivery of this Agreement by each of Parent
and Merger Sub and the consummation by Parent and Merger Sub of such
transactions and (b) the issuance (the "Share Issuance") of shares of Parent
Common Stock in accordance with the Merger have been duly and validly
authorized by all necessary corporate action and no other corporate
proceedings on the part of Parent and Merger Sub and no other stockholder
votes are necessary to authorize this Agreement or to consummate such
transactions other than, with respect to the Share Issuance, the approval of
the Share Issuance by an affirmative vote of a majority of the shares of
Parent Common Stock represented at a meeting of the stockholders of Parent
called for such purpose and entitled to vote thereon (provided that at least
a majority of such shares are represented in person or by proxy at such
meeting), if required for NYSE purposes. This Agreement has been duly
authorized and validly executed and delivered by Parent and Merger Sub and
constitutes a legal, valid and binding obligation of Parent and Merger Sub,
enforceable against Parent and Merger Sub in accordance with its terms.
SECTION 4.5. No Conflict; Required Filings and Consents.
27
(a) The execution and delivery of this Agreement by Parent and Merger
Sub do not, and the performance of this Agreement by Parent and Merger Sub
will not, (1) conflict with or violate any provision of the Certificate of
Incorporation or By-laws of Parent or Merger Sub, (2) assuming that all
consents, approvals, authorizations and permits described in Section 4.5(b)
have been obtained, that all filings and notifications described in Section
4.5(b) have been made, and that the stockholders have approved the Share
Issuance (if required for NYSE purposes) as described in Section 4.4,
conflict with or violate any foreign or domestic Law applicable to Parent or
Merger Sub or any Parent Subsidiary or by which any property or asset of
Parent, Merger Sub or any Parent Subsidiary is bound or affected or (3)
except as set forth in Section 4.5(a) of the Parent Disclosure Schedule,
result in any breach of, any loss of any benefit under or constitute a
default (or an event which with notice or lapse of time or both would become
a default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Parent, Merger Sub or any Parent
Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, other instrument or obligation, except,
with respect to clauses (2) and (3), for any such conflicts, violations,
breaches, defaults or other occurrences which would not, individually or in
the aggregate, reasonably be expected to either (A) have a Parent Material
Adverse Effect nor (B) prevent or materially delay the performance of this
Agreement by Parent and Merger Sub.
(b) Except as set forth in Section 4.5(b) of the Parent Disclosure
Schedule, the execution and delivery of this Agreement by Parent and Merger
Sub do not, and the performance of this Agreement by Parent and Merger Sub
will not, require any consent, approval, authorization or permit of, or
filing with or notification to, any domestic or foreign Governmental Entity,
except (1) under the Exchange Act, the Securities Act, Blue Sky Laws, the
rules and regulations of NYSE, the HSR Act, foreign antitrust and competition
laws, filing and recordation of the Certificate of Merger as required by the
DGCL and as otherwise set forth in Section 4.5(b) of the Parent Disclosure
Schedule and (2) where failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would
not, individually or in the aggregate, reasonably be expected to (A) prevent
or materially delay consummation of the Merger, (B) otherwise prevent Parent
from performing its material obligations under this Agreement or (C) have a
Parent Material Adverse Effect.
SECTION 4.6. SEC Filings; Financial Statements.
(a) Parent has timely filed all registration statements, prospectuses,
forms, reports and documents required to be filed by it under the Securities
Act or the Exchange Act, as the case may be, since January 1, 1998
(collectively, the "Parent SEC Filings"). Except as set forth in Section 4.6
28
of the Parent Disclosure Schedule, the Parent SEC Filings (1) as of their
respective dates were prepared in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (2) did not at
the time they were filed 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 made therein, in the light of the circumstances
under which they were made, not misleading.
(b) Except as set forth in Section 4.6 of the Parent Disclosure
Schedule, each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the Parent SEC Filings was prepared in
accordance with GAAP applied (except as may be indicated in the notes thereto
and, in the case of unaudited quarterly financial statements, as permitted by
Form 10-Q under the Exchange Act) on a consistent basis throughout the
periods indicated (except as may be indicated in the notes thereto), and each
presented fairly the consolidated financial position of Parent and the
consolidated Parent Subsidiaries as at the respective dates thereof and for
the respective periods indicated therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which did not and
would not, individually or in the aggregate, reasonably be expected to have a
Parent Material Adverse Effect). The books and records of Parent and the
Parent Subsidiaries have been, and are being, maintained in accordance with
GAAP and any other applicable legal and accounting requirements.
SECTION 4.7. Absence of Certain Changes or Events. Since December
31, 1998, except as specifically contemplated by, or as disclosed in, this
Agreement or as set forth in Section 4.7 of the Parent Disclosure Schedule,
there has not been (a) any Parent Material Adverse Effect or an event or
development that would, individually or in the aggregate, reasonably be
expected to have a Parent Material Adverse Effect, (b) any event or
development that would, individually or in the aggregate, reasonably be
expected to prevent or materially delay the performance of this Agreement by
Parent, or (c) any action taken by Parent or any of the Parent Subsidiaries
during the period from January 1, 1999 through the date of this Agreement
that, if taken during the period from the date of this Agreement through the
Effective Time, would constitute a breach of Section 5.2.
SECTION 4.8. Accounting and Tax Matters.
(a) None of Parent, Merger Sub, any Parent Subsidiary or, to the
knowledge of Parent, any of Parent's affiliates has taken or agreed to take
any action that would prevent the Merger from qualifying for "pooling of
interests" accounting treatment under applicable U.S. accounting rules,
including, without limitation, GAAP and applicable SEC accounting standards,
or would prevent the Merger from constituting a transaction qualifying under
section 368(a) of the Code. Parent is not aware of any agreement, plan or
other circumstance that would prevent the Merger from so qualifying under the
29
accounting rules and section 368(a) of the Code and, as of the date of this
Agreement, Parent has no reason to believe that the Merger will not qualify
as a "pooling of interests" for accounting purposes.
(b) Parent has been orally advised by KPMG LLP that such firm believes
that, assuming consummation of the transactions contemplated hereby in
accordance herewith, such firm should be able to deliver the opinion
contemplated by Section 7.2(e).
SECTION 4.9. Ownership of Merger Sub; No Prior Activities.
(a) Merger Sub was formed solely for the purpose of engaging in the
transactions contemplated by this Agreement.
(b) All of the outstanding capital stock of Merger Sub is owned
directly by Parent. There are no options, warrants or other rights
(including registration rights), agreements, arrangements or commitments to
which Merger Sub is a party of any character relating to the issued or
unissued capital stock of, or other equity interests in, Merger Sub or
obligating Merger Sub to grant, issue or sell any shares of the capital stock
of, or other equity interests in, Merger Sub, by sale, lease, license or
otherwise. There are no obligations, contingent or otherwise, of Merger Sub
to repurchase, redeem or otherwise acquire any shares of the capital stock of
Merger Sub.
(c) Except for obligations or liabilities incurred in connection with
its incorporation or organization and the transactions contemplated by this
Agreement, Merger Sub has not and will not have incurred, directly or
indirectly, through any subsidiary or affiliate, any obligations or
liabilities or engaged in any business activities of any type or kind
whatsoever or entered into any agreements or arrangements with any person.
SECTION 4.10. Opinion of Financial Advisor. Xxxxxxx, Xxxxx & Co.
(the "Parent Financial Advisor") has delivered to the Board of Directors of
Parent its oral opinion as of the date hereof that, as of the date hereof,
the Exchange Ratio is fair from a financial point of view to Parent.
SECTION 4.11. Brokers. No broker, finder or investment banker
(other than the Parent Financial Advisor) is entitled to any brokerage,
finder's or other fee or commission in connection with the Merger based upon
arrangements made by or on behalf of Parent or any Parent Subsidiary.
SECTION 4.12. Disclosure. Notwithstanding anything to the
contrary herein, any matter disclosed in any section of the Parent Disclosure
Schedule shall be considered disclosed for other sections of the Parent
Disclosure Schedule (but only to the extent such matter on its face would
30
reasonably be expected to be pertinent to a particular section of the Parent
Disclosure Schedule in light of the disclosure made in such section).
ARTICLE V
COVENANTS
SECTION 5.1. Conduct of Business by the Company Pending the
Closing. The Company agrees that, between the date of this Agreement and the
Effective Time, except as set forth in Section 5.1 of the Company Disclosure
Schedule or as specifically permitted by any other provision of this
Agreement, unless Parent shall otherwise agree in writing: (a) the business
of the Company and the Company Subsidiaries shall be conducted in the
ordinary course of business consistent with past practice and (b) the Company
shall use its reasonable best efforts to keep available the services of such
of the current officers, key employees and consultants of the Company and the
Company Subsidiaries and to preserve the current relationships of the Company
and the Company Subsidiaries with such of the customers, suppliers and other
persons with which the Company or any Company Subsidiary has significant
business relations as is reasonably necessary in order to preserve
substantially intact its business organization. By way of amplification and
not limitation, except as set forth in Section 5.1 of the Company Disclosure
Schedule or as specifically permitted by any other provision of this
Agreement, the Company shall not (unless required by applicable Laws or stock
exchange regulations), and shall not permit any Company Subsidiary to,
between the date of this Agreement and the Effective Time, directly or
indirectly, do, or agree to do, any of the following without the prior
written consent of Parent:
(a) amend or otherwise change its Certificate of Incorporation or
By-laws or equivalent organizational documents;
(b) (1) issue, sell, pledge, dispose of, grant, transfer, encumber, or
authorize the issuance, sale, pledge, disposition, grant, transfer, or
encumbrance of any shares of capital stock of, or other equity interests in,
the Company or any Company Subsidiary of any class, or securities convertible
or exchangeable or exercisable for any shares of such capital stock or other
equity interests, or any options, warrants or other rights of any kind to
acquire any shares of such capital stock or other equity interests or such
convertible or exchangeable securities, or any other ownership interest
(including, without limitation, any phantom interest), of the Company or any
Company Subsidiary, other than the issuance of Company Common Stock upon the
exercise of Company Options or Warrants in accordance with their terms or (2)
except in the ordinary course of business consistent with past practice,
sell, pledge, dispose of, transfer, lease, license, guarantee or encumber, or
authorize the sale, pledge, disposition, transfer, lease, license, guarantee
31
or encumbrance of, any material property or assets of the Company or any
Company Subsidiary;
(c) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of its
capital stock (other than dividends paid by wholly-owned Company Subsidiaries
to the Company or to other wholly-owned Company Subsidiaries) or enter into
any agreement with respect to the voting of its capital stock;
(d) reclassify, combine, split, subdivide or redeem, purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (1) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets) any interest in any
corporation, partnership, other business organization, person or any division
thereof (other than a wholly-owned Company Subsidiary) or any assets, other
than acquisitions of assets in the ordinary course of business consistent
with past practice and any other acquisitions for consideration that is
individually not in excess of $10,000,000, or in the aggregate, not in excess
of $40,000,000; (2) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise as an
accommodation become responsible for, the obligations of any person (other
than a wholly-owned Company Subsidiary) for borrowed money, except for
indebtedness for borrowed money incurred in the ordinary course of business
or other indebtedness for borrowed money with a maturity of not more than one
year in a principal amount not, in the aggregate, in excess of $5,000,000;
(3) terminate, cancel or request any material change in, or agree to any
material change in, any Company Material Contract other than in the ordinary
course of business consistent with past practice; (4) make or authorize any
capital expenditure in excess of the Company's budget as disclosed to Parent
prior to the date hereof, other than capital expenditures that are not, in
the aggregate, in excess of $10,000,000 for the Company and the Company
Subsidiaries taken as a whole; or (5) enter into or amend any contract,
agreement, commitment or arrangement that, if fully performed, would not be
permitted under this Section 5.1(e);
(f) except as may be required by contractual commitments or corporate
policies with respect to severance or termination pay in existence on the
date hereof as disclosed in Section 3.9 of the Company Disclosure Schedule:
(1) increase the compensation payable or to become payable to its officers or
employees (except for increases in accordance with past practices in salaries
or wages of employees of the Company or any Company Subsidiary which are not
across-the-board increases), (2) grant any rights to severance or termination
pay to, or enter into any employment or severance agreement with, any
director, officer or other employee of the Company or any Company Subsidiary,
or establish, adopt, enter into or amend any collective bargaining, bonus,
profit sharing, thrift, compensation, stock option, restricted stock,
32
pension, retirement, deferred compensation, employment, termination,
severance or other plan, agreement, trust, fund, policy or arrangement for
the benefit of any director, officer or employee, except to the extent
required by applicable Law or the terms of a collective bargaining agreement
or (3) take any affirmative action to accelerate the vesting of any
stock-based compensation;
(g) make any change in accounting policies or procedures, other than in
the ordinary course of business consistent with past practice or except as
required by GAAP or by a Governmental Entity;
(h) waive, release, assign, settle or compromise any material claims, or any
material litigation or arbitration;
(i) make any material tax election or settle or compromise any material
federal, state, local or foreign income tax liability;
(j) take any action that would prevent or impede the Merger from
qualifying (1) for "pooling-of-interests" accounting treatment or (2) as a
reorganization within the meaning of Section 368 of the Code;
(k) amend or modify, or propose to amend or modify, or otherwise take
any action under, the Company Rights Agreement;
(l) modify, amend or terminate, or waive, release or assign any
material rights or claims with respect to any confidentiality or standstill
agreement to which the Company is a party;
(m) write up, write down or write off the book value of any assets,
individually or in the aggregate, in excess of $5,000,000 except for
depreciation and amortization in accordance with GAAP consistently applied;
(n) take any action to exempt or make not subject to (1) the provisions
of Section 203 of the DGCL, (2) any other state takeover law or state law
that purports to limit or restrict business combinations or the ability to
acquire or vote shares or (3) the Company Rights Agreement, any person or
entity (other than Parent or its subsidiaries) or any action taken thereby,
which person, entity or action would have otherwise been subject to the
restrictive provisions thereof and not exempt therefrom;
(o) take any action that is intended or would reasonably be expected to
result in any of the conditions to the Merger set forth in Article VII not
being satisfied, except, in every case, as may be required by applicable Law;
or
(p) authorize or enter into any agreement or otherwise make any
commitment to do any of the foregoing.
33
SECTION 5.2. Conduct of Business by Parent Pending the Closing.
Except as set forth in Section 5.2 of the Parent Disclosure Schedule or as
specifically permitted by any other provision of this Agreement, Parent shall
not (unless required by applicable Laws or stock exchange regulations), and
shall not permit any Parent Subsidiary (unless required by applicable Laws or
stock exchange regulations) to, between the date of this Agreement and the
Effective Time, directly or indirectly, do, or agree to do, any of the
following, without the prior written consent of the Company:
(a) amend or otherwise change Parent's Certificate of Incorporation or
By-laws or equivalent organizational documents in a manner that adversely
affects the rights of holders of Parent Common Stock;
(b) declare, set aside, make or pay any dividend or other distribution,
payable in cash, stock, property or otherwise, with respect to any of
Parent's capital stock (other than regular quarterly cash dividends);
(c) make any change in accounting policies or procedures, other than in
the ordinary course of business consistent with past practice or except as
required by GAAP or a Governmental Entity;
(d) take any action that would prevent or impede the Merger from
qualifying (1) for "pooling of interests" accounting treatment or (2) as a
reorganization within the meaning of Section 368 of the Code;
(e) take any action that is intended or could reasonably be expected to
result in any of the conditions to the Merger set forth in Article VII not
being satisfied, except, in every case, as may be required by applicable Law;
or
(f) authorize or enter into any agreement or otherwise make any
commitment to do any of the foregoing.
SECTION 5.3. Cooperation. The Company and Parent shall coordinate
and cooperate in connection with (a) the preparation of the Registration
Statement (as defined in Section 6.1(a)) and the Proxy Statement (as defined
in Section 6.1(a)), (b) determining whether any action by or in respect of,
or filing with, any Governmental Entity is required, or any actions,
consents, approvals or waivers are required to be obtained from parties to
any Company Material Contracts, in connection with the consummation of the
Merger and (c) seeking any such actions, consents, approvals or waivers or
making any such filings, furnishing information required in connection
therewith or with the Registration Statement and the Proxy Statement and
timely seeking to obtain any such actions, consents, approvals or waivers.
SECTION 5.4. Next Level Communications. The parties hereby agree
and acknowledge that the Company may proceed to effect the initial public
34
offering and other associated transactions upon the terms and subject to the
conditions set forth in the registration statement on Form S-1 filed prior to
the date hereof (as so filed, without giving effect to any amendments
thereto, the "Form S-1") by NL (the "IPO"); provided that (1) except as set
forth in Section 5.4 of the Company Disclosure Schedule, in no event shall
the Company own, following the IPO, less than 65-70% of the fully diluted
equity of NL, (2) no action shall be taken by the Company in connection with
the IPO that would prevent the Merger from qualifying for "pooling of
interests" accounting treatment or would prevent the Merger from qualifying
under Section 368(a) of the Code, (3) no change shall be made by the Company
to any material term or condition of the IPO from those set forth in the Form
S-1 without the consent of Parent and (4) prior to the effectiveness of the
IPO, the certificate of incorporation and bylaws of NL, along with the voting
trust agreement described in the Form S-1, shall be amended such that, upon
the effectiveness of the Merger, the voting trust shall terminate, NL shall
have one class of common stock with one vote per share and the Company shall
be able to exercise voting control of NL including, without limitation, to
elect a majority of the Board of NL. The parties acknowledge and agree that
so long as the Company complies with the foregoing sentence, there shall be
no breach of any representation, warranty or covenant herein by virtue of the
IPO. Each of Parent and the Company agree to certain additional matters set
forth in Section 5.4 of the Company Disclosure Schedule.
ARTICLE VI
ADDITIONAL AGREEMENTS
SECTION 6.1. Registration Statement; Proxy Statement.
(a) As promptly as practicable after the execution of this Agreement,
Parent and the Company shall prepare and file with the SEC a joint proxy
statement relating to the meeting of the Company's stockholders to be held in
connection with the Merger and, if required for NYSE purposes, the meeting of
the Parent's stockholders to be held in connection with the Share Issuance
(together with any amendments thereof or supplements thereto, the "Proxy
Statement") and Parent shall prepare and file with the SEC a registration
statement on Form S-4 (together with all amendments thereto, the
"Registration Statement") in which the Proxy Statement shall be included as a
prospectus, in connection with the registration under the Securities Act of
the shares of Parent Common Stock to be issued to the stockholders of the
Company pursuant to the Merger. Each of Parent and the Company will use all
reasonable efforts to cause the Registration Statement to become effective as
promptly as practicable, and, prior to the effective date of the Registration
Statement, Parent shall take all or any action required under any applicable
federal or state securities laws in connection with the issuance of shares of
Parent Common Stock in the Merger. Each of Parent and the Company shall
furnish all information concerning it and the holders of its capital stock as
35
the other may reasonably request in connection with such actions and the
preparation of the Registration Statement and Proxy Statement. As promptly
as practicable after the Registration Statement shall have become effective,
each of the Company and, if required for NYSE purposes, Parent shall mail the
Proxy Statement to its stockholders. The Proxy Statement shall include the
recommendation of the Board of Directors of the Company in favor of the
Merger (subject to the last sentence of Section 6.4(d) hereof) and, if Parent
stockholder approval is sought, the recommendation of the Board of Directors
of Parent in favor of the Share Issuance.
Subject to the last sentence of Section 6.4(d) hereof, no amendment
or supplement to the Proxy Statement or the Registration Statement will be
made by Parent or the Company without the approval of the other party (which
approval shall not be unreasonably withheld or delayed). Parent and the
Company each will advise the other, promptly after it receives notice
thereof, of the time when the Registration Statement has become effective or
any supplement or amendment has been filed, of the issuance of any stop
order, the suspension of the qualification of the Parent Common Stock
issuable in connection with the Merger for offering or sale in any
jurisdiction, or any request by the SEC for amendment of the Proxy Statement
or the Registration Statement or comments thereon and responses thereto or
requests by the SEC for additional information.
(b) The information supplied by Parent for inclusion in the
Registration Statement and the Proxy Statement shall not, at (1) the time the
Registration Statement is declared effective, (2) the time the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the stockholders of the Company, (3) if applicable, the time the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
stockholders of Parent, (4) the time of the Company Stockholders' Meeting (as
defined in Section 6.2(a)), (5) if applicable, the time of the Parent
Stockholders' Meeting (as defined in Section 6.2(b)), and (6) 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 not misleading. If at any time prior to the Effective
Time any event or circumstance relating to Parent or any Parent Subsidiary,
or their respective officers or directors, should be discovered by Parent
which should be set forth in an amendment or a supplement to the Registration
Statement or Proxy Statement, Parent shall promptly inform the Company. All
documents that Parent is responsible for filing with the SEC in connection
with the transactions contemplated herein will comply as to form and
substance in all material respects with the applicable requirements of the
Securities Act and the rules and regulations thereunder and the Exchange Act
and the rules and regulations thereunder.
(c) The information supplied by the Company for inclusion in the
Registration Statement and the Proxy Statement shall not, at (1) the time the
36
Registration Statement is declared effective, (2) the time the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
the stockholders of the Company, (3) if applicable, the time the Proxy
Statement (or any amendment thereof or supplement thereto) is first mailed to
stockholders of Parent, (4) the time of the Company Stockholders' Meeting,
(5) if applicable, the time of the Parent Stockholders' Meeting (as defined
in Section 6.2(b)), and (6) 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 not misleading.
If at any time prior to the Effective Time any event or circumstance relating
to the Company or any Company Subsidiary, or their respective officers or
directors, should be discovered by the Company which should be set forth in
an amendment or a supplement to the Registration Statement or Proxy
Statement, the Company shall promptly inform Parent. All documents that the
Company is responsible for filing with the SEC in connection with the
transactions contemplated herein will comply as to form and substance in all
material respects with the applicable requirements of the Securities Act and
the rules and regulations thereunder and the Exchange Act and the rules and
regulations thereunder.
SECTION 6.2. Stockholders' Meetings.
(a) Company Stockholders' Meeting. The Company shall call and hold a
meeting of its stockholders (the "Company Stockholders' Meeting") as promptly
as practicable for the purpose of voting upon the approval of the Merger, and
the Company shall use its best efforts to hold the Company Stockholders'
Meeting as soon as practicable after the date on which the Registration
Statement becomes effective. Without limiting the generality of the
foregoing, the Company agrees that it shall continue to be obligated to call
a meeting pursuant to the first sentence of this Section 6.2(a) even if the
withdrawal or modification in any adverse manner of its approval or
recommendation of this Agreement is permitted under the last sentence of
Section 6.4(d) hereof.
(b) Parent Stockholders' Meeting. If required for NYSE purposes,
Parent shall call and hold a meeting of its stockholders (the "Parent
Stockholders' Meeting) as promptly as practicable for the purpose of voting
upon the approval of the Share Issuance, and, if so required, Parent shall
use its best efforts to hold the Parent Stockholders' Meeting as soon as
practicable after the date on which the Registration Statement becomes
effective.
SECTION 6.3. Access to Information; Confidentiality.
37
(a) Except as required pursuant to any confidentiality agreement or
similar agreement or arrangement to which the Company or Parent or any of
their respective subsidiaries is a party (which such person shall use
reasonable best efforts to cause the counterparty thereto to waive) or
pursuant to applicable Law or the regulations or requirements of any stock
exchange or other regulatory organization with whose rules the parties are
required to comply, from the date of this Agreement to the Effective Time,
each party shall (and shall cause its subsidiaries to): (1) provide to the
other party (and its officers, directors, employees, accountants,
consultants, legal counsel, agents and other representatives, collectively,
"Representatives") access at reasonable times upon prior notice to the
officers, employees, agents, properties, offices and other facilities of such
party and its subsidiaries and to the books and records thereof and (2)
furnish promptly such information concerning the business, properties,
contracts, assets, liabilities, personnel and other aspects of such party and
its subsidiaries as the other party or its Representatives may reasonably
request. No investigation conducted pursuant to this Section 6.3 shall
affect or be deemed to modify any representation or warranty made in this
Agreement.
(b) The parties shall comply with, and shall cause their respective
Representatives to comply with, all of their respective obligations under the
Confidentiality Agreement previously executed by the Company and Parent (the
"Confidentiality Agreements") with respect to the information disclosed
pursuant to this Section 6.3.
SECTION 6.4. No Solicitation of Transactions.
(a) Neither the Company nor any of the Company Subsidiaries shall,
directly or indirectly, take (nor shall the Company authorize or permit its
Representatives or, to the extent within the Company's control, other
affiliates to take) any action to (1) encourage (including by way of
furnishing nonpublic information), solicit, initiate or facilitate any
Acquisition Proposal (as defined in Section 6.4(c)), (2) enter into any
agreement with respect to any Acquisition Proposal or (3) participate in any
way in discussions or negotiations with, or furnish any information to, any
person in connection with, or take any other action to facilitate any
inquiries or the making of any proposal that constitutes, or could reasonably
be expected to lead to, any Acquisition Proposal; provided, however, that if,
at any time prior to the obtaining of the Company's stockholders' approval of
the Merger, the Board of Directors of the Company determines in good faith,
based on the advice of outside counsel, that it is necessary to do so to
discharge properly its fiduciary duties to stockholders, the Company may, in
response to a Superior Proposal and subject to such party's compliance with
Section 6.4(b), (A) furnish information with respect to the Company and the
Company Subsidiaries to the person making such Superior Proposal pursuant to
a customary confidentiality agreement the benefits of the terms of which are
38
no more favorable to the other party to such confidentiality agreement than
those in place with Parent and (B) participate in discussions with respect to
such Superior Proposal. It is expressly understood and agreed that with
respect to the foregoing proviso, the Company's legal and financial advisors
shall be able to make inquiries, and engage in discussions, with any party
that has made an Acquisition Proposal (and such party's legal and financial
advisors) in order to elicit information to allow the Board of Directors of
the Company to determine in good faith if such Acquisition Proposal is a
Superior Proposal. The Company shall cease immediately and cause to be
terminated any and all existing discussions or negotiations with any parties
conducted heretofore with respect to an Acquisition Proposal and promptly
request that all confidential information furnished on behalf of the
Company be returned.
(b) The Company will as promptly as practicable communicate to Parent
any inquiry received by it relating to any potential Acquisition Proposal and
the material terms of any proposal or inquiry, including the identity of the
person and its affiliates making the same, that it may receive in respect of
any such transaction, or of any such information requested from it or of any
such negotiations or discussions being sought to be initiated with it; and
shall keep Parent fully informed on a prompt basis with respect to any
developments with respect to the foregoing.
(c) "Acquisition Proposal" means any offer or proposal concerning any
(1) merger, consolidation, business combination, or similar transaction
involving the Company, (2) sale, lease or other disposition directly or
indirectly by merger, consolidation, business combination, share exchange,
joint venture, or otherwise of assets of the Company or the Company
Subsidiaries representing 20% or more of the consolidated assets of the
Company and the Company Subsidiaries, (3) issuance, sale, or other
disposition of (including by way of merger, consolidation, business
combination, share exchange, joint venture, or any similar transaction)
securities (or options, rights or warrants to purchase, or securities
convertible into or exchangeable for, such securities) representing 20% or
more of the voting power of the Company or (4) transaction in which any
person shall acquire beneficial ownership (as such term is defined in Rule
13d-3 under the Exchange Act), or the right to acquire beneficial ownership
or any "group" (as such term is defined under the Exchange Act) shall have
been formed which beneficially owns or has the right to acquire beneficial
ownership of, 20% or more of the outstanding voting capital stock of the
Company. "Superior Proposal" means a bona fide Acquisition Proposal made by
a third party which was not solicited by the Company, its subsidiaries,
Representatives or other affiliates and which, in the good faith judgment of
the Company's Board of Directors, taking into account, to the extent deemed
appropriate by the Company's Board of Directors, the various legal, financial
and regulatory aspects of the proposal and the person making such proposal
(A) if accepted, is reasonably likely to be consummated, and (B) if
consummated, is reasonably likely to result in a transaction that is more
39
favorable to the Company's stockholders (in their capacity as stockholders),
from a financial point of view, than the transactions contemplated by this
Agreement.
(d) Neither the Board of Directors of the Company nor any committee
thereof shall (1) withdraw or modify, or propose publicly to withdraw or
modify, in a manner adverse to Parent, the approval or recommendation by the
Board of Directors or such committee of the adoption and approval of the
Merger and the matters to be considered at the Company Stockholders' Meeting,
(2) other than the Merger, approve or recommend, or propose publicly to
approve or recommend, any Acquisition Proposal, or (3) other than the Merger,
cause the Company to enter into any letter of intent, agreement in principle,
acquisition agreement or other similar agreement (each, an "Acquisition
Agreement") related to any Acquisition Proposal. Nothing contained in this
Section 6.4 shall prohibit the Company (A) from taking and disclosing to its
stockholders a position contemplated by Rule 14d-9 or Rule 14e-2(a)
promulgated under the Exchange Act or from making any disclosure to its
stockholders if, in the good faith judgment of its Board of Directors, based
on the advice of outside counsel, failure to so disclose would result in a
violation of applicable Law, or (B) in the event that a Superior Proposal is
made, from withdrawing or modifying its recommendation of the Merger no
earlier than two business days following written notice to Parent of its
intention to do so, so long as the Company continues to comply with all other
provisions of this Agreement including, without limitation, Section 6.2(a)
hereof.
SECTION 6.5. Appropriate Action; Consents; Filings.
(a) The Company and Parent shall use their reasonable best efforts to
(1) take, or cause to be taken, all appropriate action, and do, or cause to
be done, all things necessary, proper or advisable under applicable Law or
otherwise to consummate and make effective the transactions contemplated by
this Agreement as promptly as practicable, (2) obtain from any Governmental
Entities any consents, licenses, permits, waivers, approvals, authorizations
or orders required to be obtained or made by Parent or the Company or any of
their subsidiaries, or to avoid any action or proceeding by any Governmental
Entity (including, without limitation, those in connection with the HSR Act),
in connection with the authorization, execution and delivery of this
Agreement and the consummation of the transactions contemplated herein,
including, without limitation, the Merger, and (3) make all necessary
filings, and thereafter make any other required submissions, with respect to
this Agreement and the Merger required under (A) the Securities Act and the
Exchange Act, and any other applicable federal or state securities Laws, (B)
the HSR Act and (C) any other applicable Law; provided, that Parent and the
Company shall 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 filing and, if requested, to
accept all reasonable additions, deletions or changes suggested in connection
therewith and, provided, further, that nothing in this Section 6.5(a) shall
40
require Parent to agree to (1) the imposition of conditions, (2) the
requirement of divestiture or (3) the requirement of expenditure of money by
Parent or the Company to a third party in exchange for any such consent that,
in any such case, would be materially adverse to Parent, the Company and
their subsidiaries, taken as a whole). The Company and Parent shall furnish
to each other all information required for any application or other fithe
rules and regulations of any applicable Law (including all information
required to be included in the Proxy Statement and the Registration
Statement) in connection with the transactions contemplated by this
Agreement. The Company and Parent shall not take any action, or refrain from
taking any action, the effect of which would be to delay or impede the
ability of the Company and Parent to consummate the transactions contemplated
by this Agreement.
(b) (1) The Company and Parent shall give (or shall cause their respective
subsidiaries to give) any notices to third parties, and use, and cause their
respective subsidiaries to use, all reasonable efforts to obtain any third
party consents, (A) necessary, proper or advisable to consummate the
transactions contemplated in this Agreement, (B) required to be disclosed in
the Company Disclosure Schedule or the Parent Disclosure Schedule, as
applicable, or (C) required to prevent a Company Material Adverse Effect from
occurring prior to or after the Effective Time or a Parent Material Adverse
Effect from occurring after the Effective Time.
(2) In the event that either party shall fail to obtain any third party
consent described in subsection (b)(1) above, such party shall use all
reasonable efforts, and shall take any such actions reasonably requested by
the other party hereto, to minimize any adverse effect upon the Company and
Parent, their respective subsidiaries, and their respective businesses
resulting, or which could reasonably be expected to result after the
Effective Time, from the failure to obtain such consent.
(c) From the date of this Agreement until the Effective Time, the
Company shall promptly notify Parent in writing of any pending or, to the
knowledge of the Company, threatened action, suit, arbitration or other
proceeding or investigation by any Governmental Entity or any other person
(1) challenging or seeking material damages in connection with the Merger or
the conversion of Company Common Stock into Parent Common Stock pursuant to
the Merger or (2) seeking to restrain or prohibit the consummation of the
Merger or otherwise limit the right of Parent or its subsidiaries to own or
operate all or any portion of the businesses or assets of the Company or its
subsidiaries, which in either case would reasonably be expected to have a
Company Material Adverse Effect prior to or after the Effective Time or a
Parent Material Adverse Effect after the Effective Time.
SECTION 6.6. Pooling. From and after the date hereof and until
the Effective Time, none of Parent, Merger Sub, the Company, or any of their
41
respective subsidiaries or other affiliates over which they exercise control,
shall knowingly take any action, or knowingly fail to take any action, that
would reasonably be expected to jeopardize the treatment of the Merger as a
"pooling of interests" for accounting purposes. Between the date of this
Agreement and the Effective Time, each of Parent, Merger Sub and the Company
shall take all reasonable actions necessary to cause the Merger to be
characterized as a "pooling of interests" for accounting purposes if such a
characterization shall have been jeopardized by action taken by Parent,
Merger Sub or the Company prior to the Effective Time.
SECTION 6.7. Letters of Accountants. Each of Parent and the
Company shall use their reasonable best efforts to cause to be delivered to
the other two letters from their respective independent public accountants,
one dated the date on which the Registration Statement shall become effective
and one dated a date within two business days before the Effective Time, in
form and substance reasonably satisfactory to the recipient and customary in
scope and substance for comfort letters delivered by independent public
accountants.
SECTION 6.8. Certain Notices. From and after the date of this
Agreement until the Effective Time, each party hereto shall promptly notify
the other party hereto of (a) the occurrence, or non-occurrence, of any event
that would be likely to cause any condition to the obligations of any party
to effect the Merger and the other transactions contemplated by this
Agreement not to be satisfied or (b) the failure of the Company or Parent, as
the case may be, to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied by it pursuant to this Agreement
which would reasonably be expected to result in any condition to the
obligations of any party to effect the Merger and the other transactions
contemplated by this Agreement not to be satisfied; provided, however, that
the delivery of any notice pursuant to this Section 6.8 shall not cure any
breach of any representation or warranty requiring disclosure of such matter
prior to the date of this Agreement or otherwise limit or affect the remedies
available hereunder to the party receiving such notice.
SECTION 6.9. Pooling Affiliates.
(a) Not less than 45 days prior to the Effective Time, the Company
shall deliver to Parent a list of names and addresses of each person who, in
the Company's reasonable judgment, is an affiliate within the meaning of Rule
145 of the rules and regulations promulgated under the Securities Act or
otherwise applicable SEC accounting releases with respect to "pooling of
interests" accounting treatment (each such person, a "Pooling Affiliate") of
the Company. The Company shall provide Parent such information and documents
as Parent shall reasonably request for purposes of reviewing such list. The
Company shall deliver or cause to be delivered to Parent, not later than 30
days prior to the Effective Time, an affiliate letter in the form attached
42
hereto as Exhibit 6.9(a), executed by each of the Pooling Affiliates of the
Company identified in the foregoing list. Parent shall be entitled to place
legends as specified in such affiliate letters on the certificates evidencing
any of the Parent Common Stock to be received by such Pooling Affiliates
pursuant to the terms of this Agreement, and to issue appropriate stop
transfer instructions to the transfer agent for the Parent Common Stock,
consistent with the terms of such Letters.
(b) Not less than 45 days prior to the Effective Time, Parent shall
deliver to the Company a list of names and addresses of each person who, in
Parent's reasonable judgment is a Pooling Affiliate of Parent. Parent shall
provide the Company such information and documents as the Company shall
reasonably request for purposes of reviewing such list. Parent shall deliver
or cause to be delivered to the Company, not later than 30 days prior to the
Effective Time, an affiliate letter in form comparable to Exhibit 6.9(a),
with such modifications as may be appropriate, executed by each of the
Pooling Affiliates of Parent identified in the foregoing list.
SECTION 6.10. Public Announcements. Parent and the Company shall
consult with each other before issuing any press release or otherwise making
any public statements with respect to the Merger and shall not issue any such
press release or make any such public statement prior to such consultation,
except as may be required by applicable Law or any listing agreement with the
NYSE or the National Association of Securities Dealers, Inc.
SECTION 6.11. Stock Exchange Listing. Parent shall promptly
prepare and submit to the NYSE and any other applicable exchange a listing
application covering the shares of Parent Common Stock to be issued in the
Merger and shall use reasonable best efforts to cause such shares to be
approved for listing on such exchange, subject to official notice of
issuance, prior to the Effective Time.
SECTION 6.12. Employee Benefit Matters.
(a) Obligations of Parent; Comparability of Benefits. Except with
respect to the incentive, benefits and perquisite plans and programs
("Benefit Plans") specifically provided for in Exhibit B hereto, as to which
the specific provisions therein shall override the provisions set forth
herein, following the Merger employees and former employees of the Company
and the Company Subsidiaries ("Company Employees") shall be eligible to
participate in all Benefit Plans of Parent on a basis no less favorable, in
the aggregate, than that for comparable officers and employees of Parent.
Notwithstanding the foregoing, nothing herein shall require (1) the
continuation of any particular Parent benefit plan or prevent the amendment
or termination thereof (subject to the maintenance, in the aggregate, of the
benefits as provided in the preceding sentence) or (2) Parent or the
Surviving Corporation to continue or maintain any stock purchase or other
43
equity plan related to the equity of the Company or the Surviving
Corporation.
(b) Pre-Existing Limitations; Deductible; Service Credit. With respect
to any Benefit Plans of Parent or any Parent Subsidiary in which the Company
Employees participate effective as of the Effective Time, Parent shall, or
shall cause the Surviving Corporation to (1) waive any limitations as to
pre-existing conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the Company Employees
under which any welfare Benefit Plan in which such Company Employees may be
eligible to participate after the Effective Time (provided, however, that no
such waiver shall apply to a pre-existing condition of any Company Employee
to the extent that he or she was, as of the Effective Time, excluded from
participation in a Company Benefit Plan by nature of such pre-existing
condition), (2) provide each Company Employee with credit for any co-payments
and deductibles paid prior to the Effective Time in satisfying any applicable
deductible or out-of-pocket requirements under any welfare Benefit Plan in
which such employees may be eligible to participate after the Effective Time
and (3) recognize all service of the Company Employees with the Company, for
all purposes other than benefit accrual, in any Benefit Plan in which such
Company Employees may be eligible to participate after the Effective Time.
Prior to the Effective Time, the Board of Directors of Parent, or an
appropriate committee of non-employee directors thereof, shall adopt a
resolution consistent with the interpretive guidance of the SEC so that the
acquisition by any officer or director of the Company who may become a
covered person of Parent for purposes of Section 16 of the Exchange Act and
the rules and regulations thereunder ("Section 16") of shares of Parent
Common Stock or options to acquire Parent Common Stock pursuant to this
Agreement and the Merger shall be an exempt transaction for purposes of
Section 16.
SECTION 6.13. Certain Employment Arrangements. Parent agrees to
treat the outstanding Company arrangements, set forth in Exhibit B, and to
undertake new arrangements set forth in Exhibit B, from and after the
Effective Time in the manner, and upon the terms and conditions, set forth in
such Exhibit B.
SECTION 6.14. Indemnification of Directors and Officers.
(a) Parent and the Surviving Corporation agree that the indemnification
obligations set forth in the Company's Certificate and the Company's By-laws,
in each case as of the date of this Agreement, shall survive the Merger (and,
prior to the Effective Time, Parent shall cause the Certificate of
Incorporation and By-laws of Merger Sub to reflect such provisions) and shall
not be amended, repealed or otherwise modified for a period of six years
after the Effective Time in any manner that would adversely affect the rights
thereunder of the individuals who on or prior to the Effective Time were
44
directors, officers, employees or agents of the Company or the Company
Subsidiaries.
(b) The Company shall, to the fullest extent permitted under applicable
Law and regardless of whether the Merger becomes effective, indemnify and
hold harmless, and, after the Effective Time, Parent and the Surviving
Corporation shall, to the fullest extent permitted under applicable Law,
indemnify and hold harmless, each present and former director, officer,
trustee, fiduciary, employee or agent of the Company and each Company
Subsidiary and each such person who served at the request of the Company or
any Company Subsidiary as a director, officer, trustee, partner, fiduciary,
employee or agent of another corporation, partnership, joint venture, trust,
pension or other employee benefit plan or enterprise (collectively, the
"Indemnified Parties") against all costs and expenses (including reasonable
attorneys' fees), judgments, fines, losses, claims, damages, liabilities and
settlement amounts paid in connection with any claim, action, suit,
proceeding or investigation (whether arising before or after the Effective
Time), whether civil, administrative or investigative, arising out of or
pertaining to any action or omission in their capacity as an officer or
director, in each case occurring before the Effective Time (including the
transactions contemplated by this Agreement).
(c) For six years from the Effective Time, the Surviving Corporation
shall use its best efforts to provide to the Company's current directors and
officers liability insurance protection of the same kind and scope as that
provided by the Company's directors' and officers' liability insurance
policies (true and complete copies of which have been made available to
Parent); provided, however, that in no event shall Parent be required to
expend more than 200% of the current amount expended by the Company (the
"Insurance Amount") to maintain or procure insurance coverage pursuant hereto
and further provided that if Parent is unable to maintain or obtain the
insurance called for by this Section 6.14(c), Parent shall use its best
efforts to obtain as much comparable insurance as available for the Insurance
Amount.
SECTION 6.15. Plan of Reorganization. The Agreement is intended
to constitute a "plan of reorganization" within the meaning of section
1.368-2(g) of the income tax regulations promulgated under the Code. From
and after the date hereof and until the Effective Time, each party hereto
shall use its reasonable best efforts to cause the Merger to qualify, and
will not knowingly take any actions or cause any actions to be taken which
could reasonably be expected to prevent the Merger from qualifying, as a
reorganization under the provisions of section 368(a) of the Code. Following
the Effective Time, neither the Surviving Corporation, Parent nor any of
their affiliates shall knowingly take any action or knowingly cause any
action to be taken which could reasonably be expected to cause the Merger to
fail to qualify as a reorganization under section 368(a) of the Code.
45
ARTICLE VII
CLOSING CONDITIONS
SECTION 7.1. Conditions to Obligations of Each Party Under This
Agreement. The respective obligations of each party to effect the Merger and
the other transactions contemplated herein shall be subject to the
satisfaction at or prior to the Effective Time of the following conditions,
any or all of which may be waived, in whole or in part, to the extent
permitted by applicable Law:
(a) Effectiveness of the Registration Statement. The Registration
Statement shall have been declared effective by the SEC under the Securities
Act. No stop order suspending the effectiveness of the Registration
Statement shall have been issued by the SEC and no proceedings for that
purpose 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 and, if applicable, by the requisite vote of the stockholders of
Parent.
(c) No Order. No Governmental Entity, nor any federal or state court
of competent jurisdiction or arbitrator shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, executive
order, decree, judgment, injunction or arbitration award or finding or other
order (whether temporary, preliminary or permanent), in any case which is in
effect and which prevents or prohibits consummation of the Merger or any
other transactions contemplated in this Agreement.
(d) Consents and Approvals. All consents, approvals and authorizations
of any Governmental Entity or other person required to be set forth in
Section 3.5 or 4.5 or the related sections of the Company Disclosure Schedule
or the Parent Disclosure Schedule as necessary to consummate the Merger shall
have been obtained (in each case, without (1) the imposition of conditions,
(2) the requirement of divestiture or (3) the requirement of expenditure of
money by Parent or the Company to a third party in exchange for any such
consent that, in any such case, would be materially adverse to Parent, the
Company and their subsidiaries, taken as a whole), except for such consents,
approvals and authorizations the failure of which to obtain would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect or a Parent Material Adverse Effect after the
Effective Time.
(e) HSR Act. The applicable waiting period, together with any
extensions thereof, under the HSR Act shall have expired or been terminated.
46
(f) NYSE. The shares of Parent Common Stock issuable to the Company's
stockholders in the Merger shall have been approved for listing on the NYSE,
subject to official notice of issuance.
SECTION 7.2. Additional Conditions to Obligations of Parent and
Merger Sub. The obligations of Parent and Merger Sub to effect the Merger
and the other transactions contemplated herein are also subject to the
following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of the Company contained in this Agreement shall be true and
correct in all material respects (except that where any statement in a
representation or warranty expressly includes a standard of materiality, such
statement shall be true and correct in all respects giving effect to such
standard) as of the date hereof and as of the Effective Time as though made
on and as of the Effective Time, except that those representations and
warranties which address matters only as of a particular date shall remain
true and correct in all material respects (except that where any statement in
a representation or warranty expressly includes a standard of materiality,
such statement shall be true and correct in all respects giving effect to
such standard) as of such date. Parent shall have received a certificate of
the Chief Executive Officer or Chief Financial Officer of the Company to that
effect.
(b) Agreements and Covenants. The Company shall have performed or
complied in all material respects with all agreements and covenants required
by this Agreement to be performed or complied with by it on or prior to the
Effective Time. Parent shall have received a certificate of the Chief
Executive Officer or Chief Financial Officer of the Company to that effect.
(c) Tax Opinion. Parent shall have received the opinion of KPMG LLP,
special tax advisors to Parent, in form and substance reasonably satisfactory
to Parent, based upon facts, representations and assumptions set forth in
such opinion which are consistent with the state of facts existing at the
Effective Time, to the effect that for federal income tax purposes (1) the
Merger will be treated as a reorganization qualifying under the provisions of
Section 368(a) of the Code, and Parent, Merger Sub and the Company will each
be a party to the reorganization, (2) no gain or loss will be recognized by
Parent, Merger Sub or the Company as a result of the Merger, and (3) no gain
or loss will be recognized by the stockholders of the Company who exchange
their Company Common Stock solely for Parent Common Stock pursuant to the
Merger (except with respect to cash received in lieu of a fractional share
interest), dated the date of the Effective Time. In rendering such opinion,
counsel may require and rely upon representations contained in certificates
of officers of Parent, the Company and certain stockholders of Parent and the
Company.
47
(d) Accountant Letters. Parent shall have received from the Company
"cold comfort" letters of Deloitte & Touche LLP, dated the date on which the
Registration Statement shall become effective and a date within two business
days before the Effective Time and addressed to Parent, in form and substance
reasonably satisfactory to Parent and reasonably customary in scope and
substance for comfort letters delivered by independent public accountants.
(e) Pooling Opinion. Parent shall have received a report from KPMG
LLP, dated as of the date on which the Registration Statement shall become
effective and the Effective Time, to the effect that as of the date of the
report, they concur with Parent's conclusion that no conditions exist that
would preclude Parent's ability to be a party to a business combination with
the Company to be accounted for as a pooling of interests.
(f) Material Adverse Effect. Since the date of this Agreement, there
shall not have occurred any Company Material Adverse Effect or any event or
development that would, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect.
SECTION 7.3. Additional Conditions to Obligations of the Company.
The obligation of the Company to effect the Merger and the other transactions
contemplated in this Agreement is also subject to the following conditions:
(a) Representations and Warranties. Each of the representations and
warranties of Parent contained in this Agreement shall be true and correct in
all material respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall
be true and correct in all respects giving effect to such standard) as of the
date hereof and as of the Effective Time as though made on and as of the
Effective Time, except that those representations and warranties which
address matters only as of a particular date shall remain true and correct in
all material respects (except that where any statement in a representation or
warranty expressly includes a standard of materiality, such statement shall
be true and correct in all respects giving effect to such standard) as of
such date. The Company shall have received a certificate of a responsible
officer of Parent to that effect.
(b) Agreements and Covenants. Parent shall have performed or complied
in all material respects with all agreements and covenants required by this
Agreement to be performed or complied with by it on or prior to the Effective
Time. The Company shall have received a certificate of the Chief Executive
Officer or Chief Financial Officer of Parent to that effect.
(c) Tax Opinion. The Company shall have received the opinion of
Simpson, Thacher & Xxxxxxxx, in form and substance reasonably satisfactory to
the Company based upon facts, representations and assumptions set forth in
such opinion which are consistent with the state of facts existing at the
48
Effective Time, to the effect that for federal income tax purposes (1) the
Merger will be treated as a reorganization qualifying under the provisions of
section 368(a) of the Code, and Parent, Merger Sub and the Company will each
be a party to the reorganization, (2) no gain or loss will be recognized by
Parent, Merger Sub or the Company as a result of the Merger, and (3) no gain
or loss will be recognized by the stockholders of the Company who exchange
their Company Common Stock solely for Parent Common Stock pursuant to the
Merger (except with respect to cash received in lieu of a fractional share
interest), dated the date of the Effective Time. In rendering such opinion,
counsel may require and rely upon representations contained in certificates
of officers of Parent, the Company and certain stockholders of Parent and the
Company.
(d) Accountant Letters. The Company shall have received from Parent
"cold comfort" letters of KPMG LLP, dated the date on which the Registration
Statement shall become effective and a date within two business days before
the Effective Time and addressed to the Company, in form and substance
reasonably satisfactory to the Company and reasonably customary in scope and
substance for comfort letters delivered by independent public accountants.
(e) Pooling Opinion. The Company shall have received a report from
Deloitte & Touche LLP, dated as of the date on which the Registration
Statement shall become effective and the Effective Time, to the effect that
as of the date of the report, they concur with the Company's conclusion that
no conditions exist that would preclude the Company's ability to be a party
to a business combination with Parent to be accounted for as a pooling of
interests.
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
SECTION 8.1. Termination. This Agreement may be terminated at any
time prior to the Effective Time, whether before or after approval of this
Agreement and the Merger by the stockholders of the Company:
(a) by mutual consent of Parent and the Company;
(b) (1) by Parent (provided that Parent is not then in material breach of
any representation, warranty, covenant or other agreement contained herein),
if there has been a breach by the Company of any of its representations,
warranties, covenants or agreements contained in this Agreement, or any such
representation and warranty shall have become untrue, in any such case such
that Section 7.2(a) or Section 7.2(b) will not be satisfied and, in either
such case, such breach or condition has not been promptly cured within 30
days following receipt by the Company of written notice of such breach;
49
(2 by the Company (provided that the Company is not then in material
breach of any representation, warranty, covenant or other agreement contained
herein), if there has been a breach by Parent of any of its representations,
warranties, covenants or agreements contained in this Agreement, or any such
representation and warranty shall have become untrue, in any such case such
that Section 7.3(a) or Section 7.3(b) will not be satisfied and such breach
or condition has not been promptly cured within 30 days following receipt by
Parent of written notice of such breach;
(c) by either Parent or the Company if any decree, permanent
injunction, judgment, order or other action by any court of competent
jurisdiction, any arbitrator or any Governmental Entity preventing or
prohibiting consummation of the Merger shall have become final and
nonappealable (so long as the party seeking termination is not in breach of
Section 6.5(a) hereof);
(d) by either Parent or the Company if the Merger shall not have been
consummated before March 31, 2000 unless the failure of the Effective Time to
occur by such date shall be due to the failure of the party seeking to
terminate this Agreement to perform or observe in all material respects the
covenants and agreements of such party set forth herein; or
(e) by either Parent or the Company if (1) this Agreement shall fail to
receive the requisite vote for approval and adoption by the stockholders of
the Company at the Company Stockholders' Meeting or any adjournment or
postponement thereof or (2) the Share Issuance shall fail to receive the
requisite vote for approval by the stockholders of Parent at the Parent
Stockholders' Meeting or any adjournment or postponement thereof, if such
vote of the stockholders of Parent was, in Parent's sole judgment, required
for NYSE purposes.
SECTION 8.2. Effect of Termination.
(a) In the event of the termination of this Agreement by either the
Company or Parent pursuant to Section 8.1, this Agreement shall forthwith
become void, there shall be no liability under this Agreement on the part of
Parent or the Company, other than the provisions of this Section 8.2 and
Section 8.5, and except to the extent that such termination results from the
willful and material breach by a party of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
(b) Parent and the Company agree that the Company shall pay to Parent
the sum of $300 million (the "Company Breakup Fee") solely as follows: (1)
if (A) the Company or Parent shall terminate this Agreement pursuant to
50
Section 8.1(d) or (e)(1) where the Company's stockholders have failed to
adopt this Agreement, (B) at any time after the date of this Agreement and
prior to the Company Stockholders Meeting, if any, there shall have been
publicly announced an Acquisition Proposal, (C) the Company shall not at any
time prior to the Company Stockholders Meeting have withdrawn, or modified or
changed in a manner adverse to Parent, its approval or recommendation of the
Merger and (D) within 9 months of the termination of this Agreement, the
Company enters into a definitive Acquisition Agreement, or (2) if (A) Parent
shall terminate this Agreement pursuant to Section 8.1(b)(1) due to a breach
of Section 6.1, Section 6.2 or Section 6.4, or (B) Parent shall terminate
this Agreement pursuant to Section 8.1(d) or (e)(1) where the Company's
stockholders have failed to adopt this Agreement and the Company shall have
withdrawn, or modified or changed in a manner adverse to Parent, its approval
or recommendation of the Merger.
(c) The Termination Fee required to be paid to Parent pursuant to
Section 8.2(b)(1) shall be made to Parent not later than five Business Days
after the entering into of an Acquisition Agreement. The Termination Fee
required to be paid to Parent pursuant to Section 8.2(b)(2) shall be made to
Parent within two Business Days after notice of termination of this Agreement
by Parent. All payments under Section 8.2(b) shall be made by wire transfer
of immediately available funds to an account designated by Parent.
SECTION 8.3. 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 without further stockholder approval which, by law or in
accordance with the rules of any relevant stock exchange, requires further
approval by such stockholders. This Agreement may not be amended except by
an instrument in writing signed by the parties hereto.
SECTION 8.4. Waiver. At any time prior to the Effective Time, any
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party
contained herein or in any document delivered pursuant hereto and (c) waive
compliance by the other party with any of the agreements or conditions
contained herein; provided, however, that after any approval of the
transactions contemplated by this Agreement by the stockholders of the
Company, there may not be, without further approval of such stockholders, any
extension or waiver of this Agreement or any portion thereof which reduces
the amount or changes the form of the consideration to be issued to holders
of Company Common Stock as provided for in this Agreement (the "Merger
Consideration") other than as contemplated by this Agreement. 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, but such
51
extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure.
SECTION 8.5. Fees and Expenses. Subject to Section 8.2(b) hereof,
all expenses incurred by the parties hereto shall be borne solely and
entirely by the party which has incurred the same; provided, however, that
each of Parent and the Company shall pay one-half of the expenses related to
printing, filing and mailing the Registration Statement and the Proxy
Statement and all SEC and other regulatory filing fees incurred in connection
with the Registration Statement and the Proxy Statement.
ARTICLE IX
GENERAL PROVISIONS
SECTION 9.1. Non-Survival of Representations and Warranties. None
of the representations and warranties in this Agreement or in any instrument
delivered pursuant to this Agreement shall survive the Effective Time. This
Section 9.1 shall not limit any covenant or agreement of the parties which by
its terms contemplates performance after the Effective Time.
SECTION 9.2. Notices. All notices and other communications given
or made pursuant hereto shall be in writing and shall be deemed to have been
duly given or made as of the date delivered, mailed or transmitted, and shall
be effective upon receipt, if delivered personally, mailed by registered or
certified mail (postage prepaid, return receipt requested) or delivered by a
nationally recognized courier service to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission to the telecopier
number specified below:
(a) If to Parent or Merger Sub, addressed to it at:
Motorola, Inc.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: General Counsel
With a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxxx X. Xxxxxxxx, Esq.
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(b) If to the Company, addressed to it at:
General Instrument Corporation
000 Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: General Counsel
With a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxxxx X. Xxxxx, Esq.
Xxxxx X. Xxxxx, Esq.
SECTION 9.3. Certain Definitions. For purposes of this Agreement,
the term:
(a) "affiliate" means a person that directly or indirectly, through one
or more intermediaries, controls, is controlled by, or is under common
control with, the first-mentioned person;
(b) "Business Day" shall mean any day other than a day on which banks
in the State of New York are authorized or obligated to be closed;
(c) "control" (including the terms "controlled by" and "under common
control with") means the possession, directly or indirectly or as trustee or
executor, of the power to direct or cause the direction of the management or
policies of a person, whether through the ownership of stock or as trustee or
executor, by contract or credit arrangement or otherwise;
(d) "knowledge" will be deemed to be present when the matter in
question was brought to the attention of any officer of Parent or the
Company, as the case may be;
(e) "person" means an individual, corporation, limited liability
company, partnership, association, trust, unincorporated organization, other
entity or group (as defined in Section 13(d) of the Exchange Act);
(f) "subsidiary" or "subsidiaries" of Parent, the Company, the
Surviving Corporation or any other person means any corporation, partnership,
joint venture or other legal entity of which Parent, the Company, the
Surviving Corporation or such other person, as the case may be (either alone
or through or together with any other subsidiary), owns, directly or
indirectly, a majority of the stock or other equity interests the holders of
53
which are generally entitled to vote for the election of the Board of
Directors or other governing body of such corporation or other legal entity,
including, without limitation, in the case of the Company, NL, NLP and their
respective subsidiaries.
SECTION 9.4. Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning
or interpretation of this Agreement.
SECTION 9.5. 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 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 to the end that transactions contemplated hereby are
fulfilled to the extent possible.
SECTION 9.6. Entire Agreement. This Agreement (together with the
Exhibits, Parent and Company Disclosure Schedules and the other documents
delivered pursuant hereto), the Voting Agreement and the Confidentiality
Agreement constitute the entire agreement of the parties and supersede all
prior agreements and undertakings, both written and oral, between the
parties, or any of them, with respect to the subject matter hereof and,
except as otherwise expressly provided herein, are not intended to confer
upon any other person any rights or remedies hereunder.
SECTION 9.7. Assignment. This Agreement shall not be assigned by
operation of law or otherwise.
SECTION 9.8. Parties in Interest. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto and their
respective successors and assigns, and nothing in this Agreement, express or
implied, other than pursuant to Section 6.13, 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.
SECTION 9.9. Mutual Drafting. Each party hereto has participated
in the drafting of this Agreement, which each party acknowledges is the
result of extensive negotiations between the parties.
SECTION 9.10. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the Laws of the State of Delaware.
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SECTION 9.11. 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.
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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.
MOTOROLA, INC.
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title Executive Vice President and
President, Americas Region
LUCERNE ACQUISITION CORP.
By: /s/ Xxxxx X. Xxxx
Name: Xxxxx X. Xxxx
Title: Vice President
GENERAL INSTRUMENT CORPORATION
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Chairman of the Board and
Chief Executive Officer
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