EXHIBIT (C)(1)
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AGREEMENT AND PLAN OF MERGER
AMONG
STEAG ELECTRONIC SYSTEMS GMBH,
MIG ACQUISITION CORPORATION
AND
AG ASSOCIATES, INC.
DATED AS OF JANUARY 18, 1999
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TABLE OF CONTENTS
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ARTICLE I. THE OFFER...................................................... 2
SECTION 1.1. The Offer.................................................... 2
SECTION 1.2. Company Action............................................... 3
SECTION 1.3. SEC Actions.................................................. 3
SECTION 1.4. Directors.................................................... 5
ARTICLE II. THE MERGER..................................................... 6
SECTION 2.1. The Merger................................................... 6
SECTION 2.2. Effect of the Merger......................................... 6
SECTION 2.3. Consummation of the Merger................................... 6
SECTION 2.4. Articles of Incorporation; Bylaws; Directors and Officers.... 6
SECTION 2.5. Effect on Securities......................................... 7
SECTION 2.6. Company Stock Plans.......................................... 7
SECTION 2.7. Payment for Shares........................................... 8
SECTION 2.8. Dissenting Shares............................................ 10
SECTION 2.9. Shareholders' Meeting........................................ 10
SECTION 2.10. Subsequent Actions........................................... 12
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................. 12
SECTION 3.1. Organization and Qualification; Subsidiaries................. 12
SECTION 3.2. Charter Documents............................................ 13
SECTION 3.3. Capitalization............................................... 13
SECTION 3.4. Authority.................................................... 14
SECTION 3.5. No Conflict; Required Filings and Consents................... 14
SECTION 3.6. Compliance; Permits.......................................... 16
SECTION 3.7. SEC Reports; Financial Statements............................ 16
SECTION 3.8. Absence of Certain Changes or Events......................... 17
SECTION 3.9. No Undisclosed Liabilities................................... 17
SECTION 3.10. Absence of Litigation........................................ 17
SECTION 3.11. Employee Benefit Plans; Employment Agreements............... 17
SECTION 3.12. Employment Matters........................................... 19
SECTION 3.13. Information Supplied......................................... 19
SECTION 3.14. Title to Property............................................ 20
SECTION 3.15. Taxes........................................................ 20
SECTION 3.16. Environmental Matters........................................ 21
SECTION 3.17. Brokers...................................................... 21
SECTION 3.18. Full Disclosure.............................................. 22
SECTION 3.19. Opinion of Financial Advisor................................. 22
SECTION 3.20. Intellectual Property........................................ 22
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SECTION 3.21. Interested Party Transactions................................ 23
SECTION 3.22. Insurance.................................................... 23
SECTION 3.23. Vote Required................................................ 23
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO............ 24
SECTION 4.1. Organization and Qualification............................... 24
SECTION 4.2. Authority.................................................... 24
SECTION 4.3. Non-Contravention............................................ 25
SECTION 4.4. Governmental Approvals....................................... 25
SECTION 4.5. Brokers...................................................... 25
SECTION 4.6. Financing.................................................... 25
SECTION 4.7. Information Supplied......................................... 26
ARTICLE V. CERTAIN COVENANTS............................................. 26
SECTION 5.1. Conduct of the Company's Business............................ 26
SECTION 5.2. Access to Information........................................ 28
SECTION 5.3. Consents and Approvals; Further Assurances................... 29
SECTION 5.4. Inquiries and Negotiations................................... 30
SECTION 5.5. Notification of Certain Matters.............................. 31
SECTION 5.6. FIRPTA Certificate........................................... 31
SECTION 5.7. Employee Benefits............................................ 31
ARTICLE VI. ADDITIONAL AGREEMENTS......................................... 31
SECTION 6.1. Loan......................................................... 31
SECTION 6.2. Options...................................................... 32
SECTION 6.3. Proxy Statement.............................................. 33
SECTION 6.4. Company Shareholders' Meeting................................ 33
SECTION 6.5. Consents; Approvals.......................................... 33
SECTION 6.6. Indemnification.............................................. 33
ARTICLE VII. CONDITIONS TO THE MERGER...................................... 34
SECTION 7.1. Conditions to Each Party's Obligation to Effect the Merger... 34
SECTION 7.2. Conditions to Parent's and Newco's Obligation to Effect
the Merger................................................. 34
ARTICLE VIII. TERMINATION AND ABANDONMENT................................... 35
SECTION 8.1. Termination and Abandonment.................................. 35
SECTION 8.2. Effect of Termination........................................ 36
ARTICLE IX. MISCELLANEOUS................................................. 37
SECTION 9.1. Nonsurvival of Representations and Warranties................ 37
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SECTION 9.2. Expenses, Etc............................................. 37
SECTION 9.3. Publicity................................................. 37
SECTION 9.4. Execution in Counterparts................................. 37
SECTION 9.5. Notices................................................... 37
SECTION 9.6. Waivers................................................... 38
SECTION 9.7. Entire Agreement.......................................... 39
SECTION 9.8. Applicable Law............................................ 39
SECTION 9.9. Specific Performance...................................... 39
SECTION 9.10. Binding Effect, Benefits.................................. 39
SECTION 9.11. Assignability............................................. 40
SECTION 9.12. Amendments................................................ 40
SECTION 9.13. Headings.................................................. 40
SECTION 9.14. Mutual Drafting........................................... 40
ANNEX I Defined Terms
ANNEX II Conditions to the Offer
EXHIBIT A Form of Voting Agreements
EXHIBIT B Form of Stock Option Agreement
EXHIBIT C Form of Common Stock Option
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (the "Agreement"), dated as of
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January 18, 1999, is entered into by and among STEAG Electronic Systems GmbH, a
German business entity ("Parent"), MIG Acquisition Corporation, a Delaware
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corporation and a wholly-owned subsidiary of Parent ("Newco"), and AG
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Associates, Inc., a California corporation (the "Company" and, collectively with
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Parent and Newco, the "Parties"). The Company and Newco are hereinafter
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sometimes referred to as the "Constituent Corporations." Certain capitalized
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terms used herein are defined in Annex I hereto.
WHEREAS, Parent, Newco and the Company have each approved, upon the
terms and subject to the conditions hereinafter provided (including approval by
the FCO pursuant to the AARC), the acquisition of the Company by Newco pursuant
to a tender offer (the "Offer") by Newco for all the issued and outstanding
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shares (the "Shares") of Common Stock, no par value ("Company Common Stock"), of
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the Company, followed by a merger (the "Merger") of Newco with and into the
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Company, with the Company as the surviving corporation, and all other
transactions contemplated by this Agreement (such acquisition, Offer, Merger and
other transactions, collectively the "Transactions");
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WHEREAS, concurrently herewith Parent has entered into voting
agreements, a form of which is attached hereto as Exhibit A ( the "Voting
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Agreements"), with the following holders of capital stock of the Company: the
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Company's Chief Executive Officer, his spouse, Bank Poalim Investments Ltd.,
Canon Sales Co., Inc. ("Canon") and Clal Electronics Industries Ltd., pursuant
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to which such holders have, among other things, agreed to tender their Company
Common Stock pursuant to the Offer and, if required, vote their shares of
Company capital stock in favor of the Merger and have granted Parent irrevocable
proxies to vote such shares in such manner;
WHEREAS, as an inducement to Parent to enter into this Agreement,
Parent, Newco and the Company have entered into a Stock Option Agreement (the
"Stock Option Agreement"), a form of which is attached hereto as Exhibit B,
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pursuant to which the Company has granted to Newco an option to purchase newly
issued shares of Company Common Stock under certain circumstances; and
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants, agreements and conditions contained herein, and in order
to set forth the terms and conditions of the Merger and the mode of carrying the
same into effect, the Parties hereby agree as follows:
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ARTICLE I.
THE OFFER
SECTION 1.1. THE OFFER.
(a) Offer. Parent shall cause Newco, as promptly as reasonably practicable
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after the date hereof, but in no event later than five (5) U.S. Business Days
following the public announcement of the terms of this Agreement, to commence
(within the meaning of Rule 14d-2 under the Exchange Act) the Offer to purchase
any and all of the issued and outstanding shares (the "Shares") of Company
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Common Stock (other than those Shares currently owned by Newco or Parent) at a
price of $5.50 per Share, net to the seller in cash, without interest, (or at
such higher price as Newco elects to offer) (the "Offer Price"), but subject to
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any withholding required by law, provided, that Newco shall not be required to
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commence the Offer if an event shall have occurred that, had the Offer already
been commenced, would give rise to a right to terminate the Offer under any of
the conditions set forth in Annex II hereto. The Offer shall have a scheduled
expiration date not less than twenty (20) U.S. Business Days following the
commencement thereof. The obligation of Parent and Newco to accept and pay for
Shares tendered shall be subject to the condition that there shall be validly
tendered prior to the expiration date of the Offer and not withdrawn a number of
Shares which, when added to the Shares owned by Parent, represent at least 90%
of the Shares issued and outstanding on a fully diluted basis (the "Minimum
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Condition") and to the other conditions set forth in Annex II. Parent and Newco
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expressly reserve the right to waive the Minimum Condition or any of the other
conditions to the Offer, to increase the price per Share payable in the Offer
and to make any other change or changes in the terms or conditions of the Offer,
including without limitation extending the expiration date, provided, that no
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change may be made that changes the form of consideration to be paid or
decreases the price per Share or the number of Shares sought in the Offer or
which imposes conditions to the Offer in addition to those set forth in Annex
II.
(b) Waiver of Minimum Condition. Notwithstanding any other provision
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contained herein, including, without limitation, Section 1.1(a), in the event
the Minimum Condition is not satisfied on any scheduled expiration date of the
Offer, Newco may either (x) extend the Offer pursuant to Section 1.1(a) or (y)
amend the Offer to provide that, in the event (i) the Minimum Condition is not
satisfied at the next scheduled expiration date of the Offer (after giving
effect to the issuance of any shares of Company Common Stock theretofore issued
under the Stock Option Agreement) and (ii) the number of shares of Company
Common Stock tendered pursuant to the Offer and not withdrawn as of such next
scheduled expiration date is more than 50% of the then outstanding shares of
Company Common Stock, Newco must waive the Minimum Condition and amend the Offer
to reduce the number of shares of Company Common Stock subject to the Offer to
49.9% of the shares of Company Common Stock then outstanding (the "Revised
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Minimum Number") and, if a greater number of shares is tendered into the Offer
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and not withdrawn, purchase, on a pro rata basis, the Revised Minimum Number of
shares (it being understood that Newco shall not in any event be required to
accept for payment, or pay for, any shares of Company Common Stock if less than
the Revised Minimum Number of shares are tendered pursuant to the Offer and not
withdrawn at the expiration date).
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(c) Acceptance and Payment. Newco shall, on the terms and subject to the
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prior satisfaction or waiver of the conditions of the Offer, accept for payment
Shares validly tendered within five (5) Business Days after such satisfaction or
waiver of all conditions of the Offer, and pay for accepted Shares as promptly
thereafter as reasonably practicable.
SECTION 1.2. COMPANY ACTION.
(a) Board of Directors. The Company hereby approves and consents to the
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Offer and represents that its Board of Directors, at a meeting duly called and
held (the "Company Board"), has (i) determined that this Agreement, the Common
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Stock Option, the Stock Option Agreement and the Transactions, including the
Offer and the Merger, are fair to and in the best interest of the Company's
shareholders, (ii) approved this Agreement, the Common Stock Option, the Stock
Option Agreement and the Transactions, including the Offer and the Merger, which
approval satisfies in full the requirements of the California General
Corporation Law (the "CGCL") including, without limitation, Section 1101
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thereof, and (iii) resolved to recommend acceptance of the Offer and approval
and adoption of the Merger and the provisions relating to the Merger in this
Agreement by its shareholders. The Company represents that it has been advised
that all of the directors on the Company Board and all of the executive officers
intend to tender their Shares pursuant to the Offer.
(b) Stockholder Lists; Other Assistance. The Company will promptly, and in
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any event within three (3) Business Days after the execution of this Agreement,
furnish, or cause its transfer agent to furnish, Newco with a list of its
shareholders, mailing labels and any available listing or computer file
containing the names and addresses of all record holders of Shares and lists of
securities positions of Shares held in stock depositories, in each case which,
to the Company's best knowledge, are true and correct as of a recent date, and
will provide, or cause its transfer agent to provide, to Newco such additional
information (including, without limitation, updated lists of shareholders,
mailing labels and lists of securities positions) and such other assistance as
Parent or Newco or any of their respective agents may reasonably request in
connection with the Offer and Merger.
SECTION 1.3. SEC ACTIONS.
(a) Schedule 14D-1. On the date of commencement of the Offer, Parent and
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Newco shall file with the Securities and Exchange Commission ("SEC") a Tender
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Offer Statement on Schedule 14D-1 with respect to the Offer (including all
supplements and amendments thereto, the "Schedule 14D-1"), which shall contain
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an offer to purchase, a related letter of transmittal and summary advertisement
(such Schedule 14D-1 and all other documents required to be filed by Parent and
Newco with the SEC in connection with the Transactions, are collectively
referred to as the "Offer Documents").
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(b) Schedule 14D-9. Concurrently with the filing of the Schedule 14D-1, the
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Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 (including all supplements and amendments thereto, the "Schedule
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14D-9"), which shall reflect the recommendations of the Company Board referred
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to in Section 1.2(a).
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(c) Action by Parties.
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(i) Parent and Newco will take all steps necessary to ensure that the
Offer Documents, and the Company will take all steps necessary to ensure that
the Schedule 14D-9 and all other documents required to be filed by the Company
with the SEC in connection with the Transactions (collectively, the "Company
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Disclosure Documents"), comply or complies in all material respects with the
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provisions of applicable federal securities laws and, on the date filed with the
SEC and on the date first published, sent or given to the Company's
shareholders, shall not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading, provided, that Parent and Newco make no
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representation with respect to information furnished by the Company for
inclusion in the Offer Documents and that the Company makes no representation
with respect to information furnished by Parent or Newco for inclusion in the
Company Disclosure Documents.
(ii) The Company represents and warrants to Parent and Newco that the
information with respect to the Company or any Subsidiary that (A) the Company
or any Subsidiary furnishes to Parent in writing specifically for inclusion in
the Offer Documents, (B) is incorporated in the Offer Documents by reference to
any of the SEC Reports or (C) is set forth in the Company Disclosure Documents
(other than any information set forth in the Company Disclosure Documents that
is furnished by Parent or Newco for inclusion therein), will not, at the time of
the filing of the Offer Documents, at the time of any distribution thereof and
at the time of the consummation of the Offer, contain any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. Parent and Newco jointly and severally represent to the Company
that the information with respect to Parent and Newco that (X) Parent or Newco
furnishes to the Company in writing specifically for inclusion in the Company
Disclosure Documents, (Y) is incorporated in the Company Disclosure Documents by
reference to any of the Offer Documents (other than any information set forth in
any of the Offer Documents that is furnished by the Company or any Subsidiary
for inclusion therein), or (Z) is set forth in the Schedule 14D-1 (other than
any information set forth in the Schedule 14D-1 that is furnished by the Company
or any Subsidiary for inclusion therein), will not, at the time of the filing of
the Offer Documents, at the time of any distribution thereof and at the time of
the consummation of the Offer, contain any untrue statement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. Each of
Parent and Newco, on the one hand, and the Company, on the other hand, will
promptly correct any information provided by it for use in the Offer Documents
and the Company Disclosure Documents, as the case may be, if and to the extent
that it shall have become false and misleading in any material respect.
(iii) Each of Parent and Newco will take all steps necessary to cause
the Offer Documents, and the Company will take all steps necessary to cause the
Company Disclosure Documents, in each case including all amendments thereto, to
be filed with the SEC and to be disseminated to holders of the Shares as and to
the extent required by applicable federal securities laws.
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(iv) Each of the Company, on the one hand, and Parent and Newco on the
other hand, will give the other, and their respective counsel, the opportunity
to review and provide comments with respect to the Company Disclosure Documents
and the Offer Documents, as the case may be, before they are filed with the SEC,
in each case including all amendments thereto. In addition, each Party will
provide the other Parties and their counsel with any comments, whether written
or oral, which it may receive from time to time from the SEC or its staff with
respect to the Company Disclosure Documents or the Offer Documents promptly
after the receipt of such comments.
SECTION 1.4. DIRECTORS.
(a) Entitlement. Effective upon the purchase by Newco of such number of
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Shares as shall constitute satisfaction of the Minimum Condition or the Revised
Minimum Number, as the case may be, Newco shall be entitled, at its option, to
designate the number of directors, rounded up to the next whole number, on the
Company Board for the period following such purchase (the "Post-Acceptance
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Board") that equals the product of (i) the total number of directors on the
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Post-Acceptance Board (giving effect to the election of any additional directors
and/or the resignation of any existing directors pursuant to this Section) and
(ii) the percentage that the number of Shares owned by Newco (including Shares
accepted for payment) and Parent bears to the total number of Shares issued and
outstanding, and the Company shall take all action necessary to cause Newco's
designees to be elected or appointed to the Post-Acceptance Board, including,
without limitation, increasing the number of directors and seeking and accepting
resignations of incumbent directors. The Company will use its best efforts to
cause individuals designated by Newco as provided in the previous sentence to
constitute the same percentage as such individuals represent on the Post-
Acceptance Board of (A) each committee of such Board (other than any committee
of such Board established to take action under this Agreement), (B) each board
of directors of each Subsidiary and (C) each committee of each such board.
Notwithstanding the foregoing, at all times prior to the Effective Time the
Post-Acceptance Board shall include at least two (2) directors in office as of
the date hereof who are not employees of the Company or any of its Subsidiaries
or affiliates of Parent or Newco (any such director remaining in office being a
"Continuing Director"). The provisions of this Section 1.4(a) are in addition to
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and shall not limit any rights which Parent or Newco or any of their affiliates
may have as a holder or beneficial owner of Shares as a matter of law with
respect to the election of directors or otherwise.
(b) Company Actions. Upon any request by Newco following the purchase by
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Newco of such number of Shares as shall constitute satisfaction of the Minimum
Condition or the Revised Minimum Number, as the case may be, the Company shall
promptly take all actions required in order to fulfill its obligations under
this Section, including without limitation, in the case of satisfaction of the
Minimum Condition, all actions required pursuant to Section 14(f) of the
Exchange Act and Rule 14f-1 promulgated thereunder, which shall include without
limitation filing with the Commission and transmitting to the record
shareholders of the Company such information with respect to the Company and its
officers and directors and Newco's designees as is necessary to enable Newco's
designees to be elected to the Post-Acceptance Board. Parent or Newco will
supply to the Company any information with respect to itself and such nominees,
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officers, directors and affiliates required by such Section 14(f) and Rule 14f-
1, and Parent and Newco jointly and severally represent to the Company that such
information will not, at the time of the filing with the SEC of any document
required to be filed pursuant to this Section 1.4(b), contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order that the statements made therein, in light
of the circumstances under which they were made, are not misleading.
ARTICLE II.
THE MERGER
SECTION 2.1. THE MERGER.
As promptly as reasonably practicable after consummation of the Offer,
subject to the terms and conditions of this Agreement, at the Effective Time, as
defined below, in accordance with this Agreement, CGCL and the Delaware General
Corporation Law (the "DGCL"), Newco shall, pursuant to the Merger be merged with
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and into the Company, the separate existence of Newco (except as it may be
continued by operation of law) shall cease, and the Company shall continue as
the surviving corporation (the "Surviving Corporation").
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SECTION 2.2. EFFECT OF THE MERGER.
Upon the effectiveness of the Merger, the Surviving Corporation shall
succeed to and assume all the rights and obligations of the Company and Newco in
accordance with the CGCL, and the Merger shall otherwise have the effects set
forth in Section 1107 of the CGCL and Section 252 of the DGCL.
SECTION 2.3. CONSUMMATION OF THE MERGER.
The closing of the Merger (the "Closing") will take place as soon as
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practicable after the satisfaction or waiver of the conditions to the
obligations of the parties to effect the Merger set forth herein, provided that
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this Agreement has not been terminated previously, at the offices of Xxxxxxxx &
Xxxxxxxx LLP, San Francisco, California, or such other location as the Parties
may agree. On the date of the Closing, the Parties will cause the Merger to be
consummated by filing (i) with the Secretary of State of the State of California
a properly executed agreement of merger in accordance with the CGCL and (ii)
with the Secretary of State of the State of Delaware a properly executed
certificate of merger in accordance with the DGCL, each of which shall be
effective upon filing or on such later date as may be specified therein (the
time of such effectiveness being the "Effective Time").
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SECTION 2.4. ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS.
The Certificate of Incorporation of Newco in effect at the Effective
Time shall be the Articles of Incorporation of the Surviving Corporation, until
thereafter amended in accordance with the provisions thereof and as provided by
the CGCL. The Bylaws of Newco in effect at the
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Effective Time shall be the Bylaws of the Surviving Corporation, until
thereafter amended in accordance with the provisions thereof and the Articles of
Incorporation of the Surviving Corporation and as provided by the CGCL. From and
after the Effective Time and until their respective successors are duly elected
or appointed and qualified, (a) the directors of Newco at the Effective Time
shall be the directors of the Surviving Corporation and (b) the officers of
Newco at the Effective Time shall be the officers of the Surviving Corporation.
SECTION 2.5. EFFECT ON SECURITIES.
By virtue of the Merger and without any action on the part of either
Constituent Corporation or any holder of the capital stock thereof, at the
Effective Time:
(a) Each share of common stock, $1.00 par value per share, of Newco issued
and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of
common stock of the Surviving Corporation;
(b) Each Share that is held in the treasury of the Company or by any
Subsidiary immediately prior to the Effective Time shall be canceled
and retired, and no consideration shall be paid or delivered in
exchange therefor;
(c) Each Share issued and outstanding immediately prior to the Effective
Time and registered in the name of Parent or Newco shall not be
converted but shall be canceled and retired, and no consideration shall
be paid or delivered in exchange therefor; and
(d) Each Share issued and outstanding immediately prior to the Effective
Time (other than Shares referred to in Section 2.5(b) or 2.5(c) above
and Dissenting Shares (which are to be treated in accordance with
Section 2.8)) shall be converted into the right to receive, upon
surrender of the certificate formerly representing such Share, in the
manner provided below, an amount in cash, without interest, equal to
the Offer Price or any higher price paid for each Share in the Offer
(the "Merger Consideration"). As of the Effective Time, each such
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remaining Share shall no longer be issued and outstanding and shall
automatically be canceled and retired and shall cease to exist, and
each holder of a certificate representing any such Share shall cease to
have any rights with respect thereto, except the right to receive the
Merger Consideration, without interest.
SECTION 2.6. COMPANY STOCK PLANS.
The options granted pursuant to the Company's 1994 Directors Stock
Option Plan shall vest automatically at the Effective Time and, if not exercised
at such time, will terminate thereupon. Prior to the Effective Time, the Company
and each employee identified on Schedule 2.6 (each, a "Holder") shall enter into
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a written agreement in form reasonably satisfactory to Parent and Company
pursuant to which each Holder shall agree to terminate and cancel all
outstanding options issued pursuant to the Company's 1993 Employee Stock Option
Plan (the "Existing Option Plan") as of the Closing Date. In consideration of
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such surrender and
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cancellation of options by Holders, on the date which is twelve months following
the Effective Time (the "Payment Date"), each Holder employed by the Company on
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the Payment Date shall receive a cash bonus equal to the product of (i) the
number of vested options (using monthly vesting) to purchase Company Common
Stock held by Holder pursuant to the Existing Option Plan as of the Effective
Time times (ii) the difference between $10.00 per share of Company Common Stock
and the exercise price per share to purchase Company Common Stock of such
options; provided, however, that the aggregate amount the Company or the
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Surviving Corporation agrees to pay as of the Effective Time shall not exceed
$2,040,000. If the aggregate amount payable by the Company or the Surviving
Corporation exceeds $2,040,000, any such cash bonus payable to a Holder shall be
reduced pro rata to the extent of any such excess. Any consideration payable
hereunder shall be subject to all tax withholdings as required by Applicable
Law, which shall be deducted from the amount of the consideration payable to
Holder. The Company shall take all other actions it deems appropriate to cause
all outstanding options to be terminated and canceled as of or prior to the
Effective Time.
SECTION 2.7. PAYMENT FOR SHARES.
(a) Paying Agent. Prior to the Effective Time, Parent shall designate a
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bank or trust company to act as paying agent (the "Paying Agent") for the
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purpose of exchanging certificates representing issued and outstanding Shares
(each, a "Certificate") for the Merger Consideration. Parent or Newco shall,
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from time to time, make available or cause to be made available to the Paying
Agent funds in such amounts and at times necessary for the payment of the Merger
Consideration in the manner provided herein. The Paying Agent shall invest
portions of the Merger Consideration as Parent directs (it being understood that
any and all interest earned on funds made available to the Paying Agent pursuant
to this Agreement shall be the property of, and shall be turned over to,
Parent), provided that such investments shall be in obligations of or guaranteed
by the United States of America or of any agency thereof and backed by the full
faith and credit of the United States of America, in commercial paper
obligations rated A-1 or P-1 or better by Xxxxx'x Investors Services, Inc. or
Standard & Poor's Corporation, respectively, or in deposit accounts,
certificates of deposit or banker's acceptances of, repurchase or reverse
repurchase agreements with, or Eurodollar time deposits purchased from,
commercial banks with capital, surplus and undivided profits aggregating in
excess of US$100 million (based on the most recent financial statements of such
bank which are then publicly available at the SEC or otherwise).
(b) Letter of Transmittal. Promptly after the Effective Time, the Surviving
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Corporation shall instruct the Paying Agent to mail to each holder of record of
one or more Shares, (i) a letter of transmittal, which shall specify that
delivery shall be effected, and risk of loss and title to the Certificates shall
pass, only upon proper delivery of the Certificates to the Paying Agent, and
which shall have such other provisions as Parent shall specify, and (ii)
instructions for use in effecting the surrender of the Certificates in exchange
for the Merger Consideration.
(c) Entitlement of Shares. Upon surrender of a Certificate for cancellation
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to the Paying Agent, together with such letter of transmittal, duly executed and
completed in
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accordance with the instructions thereto, and such other documents as may
reasonably be required by the Paying Agent, the holder of such Certificate shall
be entitled to receive in exchange therefor the Merger Consideration payable in
respect of Shares previously represented by such Certificates, after giving
effect to any withholding tax required by Applicable Law, and the Certificates
so surrendered shall forthwith be canceled. Until surrendered as contemplated by
this Section 2.7, each Certificate shall be deemed at any time after the
Effective Time to represent only the right to receive the Merger Consideration.
No interest will be paid or accrued on the Merger Consideration.
(d) Payments to Other Persons. If Merger Consideration is to be paid to any
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person other than the person in whose name the Certificates for Shares
surrendered for conversion are registered, it shall be a condition of the
payment that such Certificates be properly endorsed and the signatures thereon
properly guaranteed and otherwise in proper form for transfer and that the
person requesting such payment shall have paid to the Paying Agent any transfer
or other taxes required by reason of the delivery of Merger Consideration to a
person other than the registered holder of such Certificate, or shall have
established to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable.
(e) Termination. Any portion of the exchange funds held by the Paying Agent
-----------
for delivery pursuant to this Section 2.7 and unclaimed at the end of six months
after the Effective Time shall be paid or delivered to the Surviving
Corporation, upon demand, and any holders of Certificates who have not
theretofore complied with this Section 2.7 shall, subject to Applicable Law,
thereafter look only to the Surviving Corporation for payment of the Merger
Consideration in respect of Shares. Notwithstanding the foregoing, none of
Parent, the Surviving Corporation or the Paying Agent shall be liable to any
holder of Shares for any amount paid to any Governmental Authority pursuant to
any applicable abandoned property, escheat or similar law. Any amounts unclaimed
by holders of Shares two years after the Effective Time (or such earlier date
immediately prior to such time as such amounts would otherwise escheat to or
become the property of any Governmental Authority) shall, to the extent
permitted by Applicable Law, become the property of the Surviving Corporation
free and clear of any claims or interest of any person previously entitled
thereto.
(f) Stock Transfer Books; No Further Ownership Rights. At and after the
-------------------------------------------------
Effective Time, the stock transfer books of the Company shall be closed, and
there shall be no further registrations of transfers of Shares thereafter on the
records of the Company. From and after the Effective Time, the holders of
Certificates evidencing ownership of the Shares issued and outstanding
immediately prior to the Effective Time shall cease to have any rights with
respect to such Shares, except as otherwise provided for herein or by Applicable
Law. If, after the Effective Time, Certificates are presented to the Surviving
Corporation, Parent or the Paying Agent for any reason, they shall be canceled
and exchanged for the Merger Consideration as provided in this Section 2.7.
9
SECTION 2.8. DISSENTING SHARES.
(a) Notwithstanding any provisions of this Agreement to the contrary, any
shares of Company Common Stock held by a holder who has exercised such holder's
dissenters' rights in accordance with the CGCL and who, as of the Effective
Time, has not effectively withdrawn or lost such dissenters' rights ("Dissenting
----------
Shares"), shall not be converted into or represent a right to receive the Merger
------
Consideration, but the holder of the Dissenting Shares shall only be entitled to
such rights as are granted by the CGCL.
(b) Notwithstanding the provisions of subsection (a) above, if any holder
of shares of Company Common Stock who demands dissenters' rights with respect to
such shares shall effectively withdraw or lose (through the failure to perfect
or otherwise) such holder's dissenters' rights under the CGCL, then, as of the
Effective Time or the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to receive the
Merger Consideration upon surrender of the applicable Certificate(s) as provided
herein.
(c) The Company shall give Parent (i) prompt written notice of any written
demands for payment with respect to any shares of Company Common Stock pursuant
to dissenters' rights, and any withdrawals of such demands or losses of such
rights, and any other instruments served pursuant to the CGCL, and (ii) the
opportunity to participate in all negotiations and proceedings with respect to
demands for dissenters' rights. The Company shall not, except with the prior
written consent of Parent, voluntarily make any payment with respect to demands
for dissenters' rights or offer to settle or settle any such demands.
(d) If Parent is not required under the CGCL to obtain the approval of the
other shareholders of the Company in order to effect the Merger and effects the
Merger without holding a meeting of the shareholders, then, prior to
consummating the Merger, Parent will provide notice, as required by the CGCL,
that the Merger will become effective on or after a specified date and that
shareholders are entitled to exercise their dissenters' rights.
SECTION 2.9. SHAREHOLDERS' MEETING.
(a) Special Meeting and Proxy Statement. If required by Applicable Law in
-----------------------------------
order to consummate the Merger, the Company, acting through the Post-Acceptance
Board, shall, in accordance with Applicable Law:
(i) duly call, give notice of, convene and hold a special meeting of
its shareholders (the "Special Meeting"), as promptly as practicable following
---------------
the acceptance for payment and purchase of Shares by Newco pursuant to the
Offer, for the purpose of considering and taking action upon the approval of the
Merger and this Agreement;
(ii) prepare and file with the SEC a preliminary proxy or information
statement relating to the Merger and this Agreement, and use its best efforts
(x) to obtain and furnish the information required to be included by the SEC in
the Proxy Statement (as hereinafter defined) and, after consultation with
Parent, to respond promptly to any comments made by the SEC with respect to the
preliminary proxy or information statement, (y) to cause a definitive proxy or
10
information statement, including any amendment or supplement thereto (the "Proxy
-----
Statement"), to be mailed to its shareholders, provided, that the Company (1)
--------- --------
will promptly notify Parent of its receipt of any comments from the SEC or its
staff and of any request by the SEC or its staff for amendments or supplements
of the Proxy Statement or for additional information; (2) will promptly provide
Parent with copies of all correspondence between the Company or any of its
representatives, on the one hand, and the SEC or its staff, on the other hand,
with respect to the Proxy Statement or the Merger and (3) will not amend or
supplement the Proxy Statement without first consulting with and obtaining the
approval of Parent and its counsel, and (z) to obtain the necessary approvals of
the Merger and this Agreement by its shareholders to the extent required by the
CGCL;
(iii) prepare and revise the Proxy Statement so that, at the date
mailed to Company shareholders and at the time of the Special Meeting, the Proxy
Statement will (x) not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in order
that the statements made therein, in light of the circumstances under which they
are made, are not misleading (except that the Company shall not be responsible
under this clause (iii) with respect to statements made therein based on
information supplied by Parent or Newco expressly for inclusion in the Proxy
Statement), and (y) comply in all material respects with the provisions of the
Exchange Act and the rules and regulations thereunder;
(iv) subject to the fiduciary obligations of the Company Board under
Applicable Law as advised in writing by counsel to the Company Board, include in
the Proxy Statement the recommendation of such Board that shareholders of the
Company vote in favor of the approval of the Merger and the adoption of this
Agreement; and
(v) without limiting the generality of the foregoing, the Company
agrees that its obligations pursuant to Section 2.9(a)(i) shall not be affected
by (1) the commencement, public proposal, public disclosure or communication to
the Company of any Alternative Transaction (as hereinafter defined) or (2) any
withdrawal or modification by the Company Board of its approval or
recommendation of the Merger or this Agreement.
(b) Parent Information. Parent shall furnish to the Company such
------------------
information concerning itself and Newco, for inclusion in the Proxy Statement,
as may be requested by the Company and required to be included in the Proxy
Statement. Parent and Newco jointly and severally represent to the Company that
such information provided in writing expressly for inclusion in the Proxy
Statement will not, at the date the Proxy Statement is mailed to Company
shareholders and (including any corrections or modifications made by Parent or
Newco to such information) at the time of the Special Meeting, contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order that the statements made therein, in
light of the circumstances under which they were made, are not misleading.
(c) Merger Without Meeting of Shareholders. Notwithstanding the
--------------------------------------
foregoing, in the event that Parent or Newco shall acquire at least 90% of the
issued and outstanding Shares, the Parties agree, at the request of Parent, to
take all appropriate and necessary action to cause the Merger to become
effective as soon as practicable after the expiration or termination of the
Offer,
11
without a meeting of shareholders of the Company, in accordance with
Section 1110 of the CGCL.
SECTION 2.10. SUBSEQUENT ACTIONS.
If, at any time after the Effective Time, the Surviving Corporation shall
consider or be advised that any deeds, bills of sale, assignments, assurances or
any other actions or things are necessary or desirable to vest, perfect or
confirm of record or otherwise in the Surviving Corporation its right, title or
interest in, to or under any of the rights, properties or assets of either of
the Constituent Corporations acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or otherwise to
carry out this Agreement and the Stock Option Agreement, the officers and
directors of the Surviving Corporation are hereby authorized to execute and
deliver, in the name and on behalf of each of the Constituent Corporations or
otherwise, all such deeds, bills of sale, assignments and assurances and to take
and do, in the name and on behalf of each of the Constituent Corporations or
otherwise, all such other actions and things as may be necessary or desirable to
vest, perfect or confirm any and all right, title and interest in, to and under
such rights, properties or assets in the Surviving Corporation or otherwise to
carry out this Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Newco that, except as
set forth in the written Company Disclosure Schedule previously delivered by the
Company to Parent:
SECTION 3.1. ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of California and has the requisite
corporate power and authority and is in possession of all franchises, grants,
authorizations, licenses, permits, easements, consents, certificates, approvals
and orders ("Approvals") necessary to own, lease and operate the properties it
---------
purports to own and to carry on its business as it is now being conducted,
except where the failure to have any such power, authority or Approvals
individually or in the aggregate, is not reasonably expected to have a Material
Adverse Effect. The Company is duly qualified as a foreign corporation to do
business and is in good standing in each jurisdiction in which the character of
the properties owned, leased or operated by it or the nature of its activities
makes such qualification necessary, except where the failure to be so qualified
or in good standing, individually or in the aggregate, is not reasonably
expected to have a Material Adverse Effect. Set forth in Section 3.1 of the
Company Disclosure Schedule are the number of shares of capital stock of the
Israeli Affiliate owned by the Company and the percentage such shares represent
of the total number of outstanding shares of the Israeli Affiliate.
(b) Rapro Technology, Inc., a Delaware Corporation ("Rapro"), and A.G.
-----
Associates Foreign Sales Corporation, a Barbados corporation ("FSC"), are the
---
Company's only
12
Subsidiaries. Each of the Subsidiaries is wholly-owned by the Company and is a
duly organized and validly existing corporation under the laws of the
jurisdiction in which it was organized. To the knowledge of the Company, the
Israeli Affiliate is duly organized and validly existing under the laws of the
jurisdiction in which it was organized. Rapro is not a party to any executory
contracts and FSC is not a party to any contracts other than organizational
sales agreements with the Company.
SECTION 3.2. CHARTER DOCUMENTS.
The Company has heretofore furnished to Parent a complete and correct
copy of the Company's Articles of Incorporation and Bylaws, Rapro's Certificate
of Incorporation and Bylaws and FSC's charter documents as in effect on the date
hereof. Each such charter document is in full force and effect. None of the
Company, Rapro or FSC is in material violation of its respective charter
documents.
SECTION 3.1. CAPITALIZATION.
The authorized capital stock of the Company consists of 25,000,000
shares of Company Common Stock and 5,000,000 shares of preferred stock, no par
value per share ("Company Preferred Stock"). As of November 30, 1998, (i)
-----------------------
6,202,743 shares of Company Common Stock were issued and outstanding, all of
which are validly issued, fully paid and nonassessable, (ii) no shares of
Company Common Stock were held in the Company's treasury or by any Subsidiary,
(iii) no shares of Company Preferred Stock were issued and outstanding and (iv)
1,009,900 shares of Company Common Stock were reserved for future issuance
pursuant to outstanding options granted pursuant to the Company's 1993 Employee
Stock Option Plan and 1994 Directors Stock Option Plan (the "Company Option
--------------
Plans"). Except as set forth in Section 3.3 of the Company Disclosure Schedule,
-----
no shares of Company Common Stock have been issued between November 30, 1998 and
the date hereof, except pursuant to options outstanding as of such date. Except
as set forth in Section 3.3 or Section 3.11 of the Company Disclosure Schedule,
there are no options, warrants or other rights, agreements, arrangements or
commitments of any character granted by the Company relating to unissued shares
of the Company or of any Subsidiary or obligating the Company or any Subsidiary
to issue or sell any shares of, or other equity interests in, the Company or any
Subsidiary. All shares of Company Common Stock subject to issuance under the
Company Option Plans, as aforesaid, upon issuance on the terms and conditions
specified in the applicable plan, shall be duly authorized, validly issued,
fully paid and nonassessable. There are no obligations, contingent or otherwise,
of the Company or of any Subsidiary to repurchase, redeem or otherwise acquire
any shares of Company Common Stock or the shares of any Subsidiary or to provide
funds to or make any investment (in the form of a loan, capital contribution or
otherwise) in any Subsidiary or any other entity. None of the options, warrants,
rights, agreements, arrangements or commitments identified in Section 3.3 or
3.11 of the Company Disclosure Schedule provide that, absent action by the
Company Board or a committee thereof, upon exercise or conversion the holder
thereof shall receive cash, and no such action of the Company Board or a
committee thereof has been taken. Except as set forth in Section 3.3 of the
Company Disclosure Schedule, all of the outstanding shares of each Subsidiary
(and all shares to be issued prior to the Effective Time)
13
and all of the shares of the Israeli Affiliate held by the Company are duly
authorized, validly issued, fully paid and nonassessable, and all such shares
are owned by the Company free and clear of all security interests, liens,
claims, pledges, agreements, limitations in the Company's voting rights, charges
or other encumbrances of any nature whatsoever (collectively, "Liens").
-----
SECTION 3.4. AUTHORITY.
(a) The Company has all necessary corporate power and authority to execute
and deliver this Agreement, the Stock Option Agreement and such other agreements
and documents as may be contemplated by this Agreement and subject to obtaining
any necessary shareholder approval of this Agreement (to the extent required
under the CGCL), to perform its obligations hereunder and to consummate the
Transactions. This Agreement, the Common Stock Option and the Stock Option
Agreement have been duly and validly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by Parent and Newco,
constitute a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with their terms, except as such
enforceability may be subject to or limited by bankruptcy, insolvency,
reorganization, or other similar laws, now or hereafter in effect, affecting the
enforcement of creditors' rights generally, and except that the availability of
equitable remedies, including specific performance, may be subject to the
discretion of the court before which any proceeding therefor may be brought.
(b) The Company Board has determined that it is advisable and in the best
interest of the Company's shareholders for the Company to enter into the
Transactions with Parent and Newco upon the terms and subject to the conditions
of this Agreement.
SECTION 3.5. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Section 3.5(a) of the Company Disclosure Schedule includes a list of
all of the material agreements and instruments to which the Company currently is
party or by which the Company currently is bound that either (i) have been or
were required to be filed as an exhibit to the Company's periodic reports under
the Exchange Act as "material contracts" or "instruments defining the rights of
security holders," (ii) were entered into by the Company after the date of the
periodic report most recently filed by the Company under the Exchange Act or
(iii) relate to any joint ventures or joint development projects involving the
Company, non-competition agreements, distribution agreements, the Israeli
Affiliate or employment or termination of employment of any executive officers
of the Company (collectively, the "Material Contracts"). The Company has made
------------------
available to Parent true, correct and complete copies in all material respects
of each Material Contract. There are no material agreements to which Rapro or
FSC currently is a party or by which Rapro or FSC currently is bound which has
been or is required to be filed as an exhibit to the Company's periodic reports
under the Exchange Act.
(b) Except as set forth in Section 3.5(b) of the Company Disclosure
Schedule, (i) the Company has not breached, is not in default under and has not
received written notice of any breach of or default under any Material Contract,
except for any such breach or default which is not reasonably expected to have a
Material Adverse Effect, (ii) to the best knowledge of the Company, no other
party to any of the Material Contracts has breached or is in default of any of
14
its obligations thereunder, except for any such breach or default which is not
reasonably expected to have a Material Adverse Effect and (iii) to the knowledge
of the Company, each of the Material Contracts is in full force and effect.
(c) Except as set forth in Section 3.5(c) of the Company Disclosure
Schedule, the execution and delivery of this Agreement, the Common Stock Option
and the Stock Option Agreement by the Company does not, and the performance of
this Agreement, the Common Stock Option and the Stock Option Agreement by the
Company will not, and the consummation of the Transactions will not, (i)
conflict with or violate the Articles of Incorporation or Bylaws of the Company,
(ii) conflict with or violate any Applicable Law relating to the Company, or by
which any of its properties are bound or affected, or (iii) result in any breach
of or constitute a default (or an event that with notice or lapse of time or
both would become a default) under, or impair the Company's rights or alter the
rights or obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of any Material Contract,
or result in the creation of a lien or encumbrance on any of the properties or
assets of the Company or, to the best knowledge of the Company, the Israeli
Affiliate and the pursuant to any Material Contract, except for any conflicts,
violations, breaches, defaults or other occurrences described in clauses (ii) or
(iii) of this paragraph (c) that are not reasonably expected, individually or in
the aggregate, to have a Material Adverse Effect.
(d) The execution and delivery of this Agreement, the Common Stock Option
and the Stock Option Agreement by the Company does not, and the performance of
this Agreement, the Common Stock Option and the Stock Option Agreement by the
Company will not, require the Company to obtain any consent, approval,
authorization or permit of, or to make any filing with or notification to, any
governmental or regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the Securities Act, the Exchange Act, the
rules of the National Association of Securities Dealers ("NASD"), and state
----
securities laws ("Blue Sky Laws"), (ii) the pre-merger notification requirements
-------------
of the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and the expiration or termination of the waiting period thereunder,
-------
(iii) the rules and regulations thereunder, and the filing and recordation of
appropriate documents relating to the Merger as required by the CGCL, (iv) the
Schedule 14D-9, (v) a Proxy Statement relating to any required approval by the
Company's shareholders of this Agreement, (vi) shareholder approval of the
Merger, if required by the CGCL, and the filing of the appropriate documents
with the relevant authorities of other states in which the Company is qualified
to do business, (vii) the filing of reports with the U.S. Department of Commerce
regarding foreign direct investment in the United States, (viii) notification
under the German Law Against Restraints of Competition (the "AARC") and the
----
approval of the German Federal Cartel Office (the "FCO") thereunder and any
---
filings or notifications under other similar laws throughout the world and (ix)
where the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent or delay the Company from
performing its obligations under this Agreement, the Common Stock Option or the
Stock Option Agreement and is not reasonably expected to have a Material Adverse
Effect.
15
SECTION 3.6. COMPLIANCE; PERMITS.
(a) Except as set forth in Section 3.6 of the Company Disclosure Schedule,
the Company, Rapro, FSC and, to the best knowledge of the Company, the Israeli
Affiliate holds all permits, licenses, franchises, easements, variances,
exemptions, consents, certificates, orders and approvals from governmental
authorities which are material to the operation of the business of the Company
and its Subsidiaries taken as a whole or the Israeli Affiliate, as the case may
be, as it is now being conducted, except where failure to obtain any of the
aforementioned is not reasonably expected to have a Material Adverse Effect on
such entity (collectively, the "Company Permits"). The Company, Rapro, FSC and,
---------------
to the best knowledge of the Company, the Israeli Affiliate are in compliance
with the terms of the Company Permits.
(b) Except as set forth in Section 3.6 of the Company Disclosure Schedule,
the Company, Rapro, FSC and, to the best knowledge of the Company, the Israeli
Affiliate are not in conflict with, or in default or violation of any Applicable
Law relating to the Company, Rapro, FSC or the Israeli Affiliate, as the case
may be, or by which their properties are bound or affected other than any such
conflict, default or violation which is not reasonably expected to have a
Material Adverse Effect on such entity.
SECTION 3.7. SEC REPORTS; FINANCIAL STATEMENTS.
(a) The Company has filed all forms, reports and documents required to be
filed with the SEC since its initial public offering on May 16, 1995 and has
made available to Parent (i) its quarterly report on Form 10-Q for the period
ended June 30, 1998 and its annual report on Form 10-K for the fiscal years
ended September 30, 1995, 1996 and 1997, respectively, (ii) all proxy statements
relating to the Company's meetings of shareholders (whether annual or special)
held since its initial public offering, (iii) all other reports or registration
statements filed by the Company with the SEC since May 16, 1995, and (iv) all
amendments and supplements to all such reports and registration statements filed
by the Company with the SEC (collectively, the "SEC Reports"). The Company has
-----------
also made available to Parent the most recent draft of its annual report on Form
10-K for the fiscal year ended September 30, 1998. The SEC Reports (i) were
prepared in accordance with the requirements of the Securities Act or the
Exchange Act, as the case may be, and (ii) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement,
then on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. No Subsidiary is required to file any
forms, reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the SEC Reports was prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
----
consistent basis throughout the periods involved (except as may be indicated in
the notes thereto) and each fairly presented the consolidated financial position
of the Company and its Subsidiaries as at the respective dates thereof and the
consolidated results of its operations and cash flows and shareholder equity for
the periods
16
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments which were not or are not
expected to be material in amount.
SECTION 3.8. ABSENCE OF CERTAIN CHANGES OR EVENTS.
Since September 30, 1998, except as set forth in Section 3.8 of the
Company Disclosure Schedule or the SEC Reports, the Company has conducted its
business in the ordinary course and there has not occurred: (a) any Material
Adverse Effect; (b) any amendments or changes in the Articles of Incorporation
or Bylaws of the Company; (c) any damage to, destruction or loss of any asset of
the Company (whether or not covered by insurance) which damages, destruction or
loss is reasonably expected to have a Material Adverse Effect; (d) any change by
the Company in its accounting methods, principles or practices; (e) any
revaluation of any of the Company's assets, including, without limitation,
writing down the value of inventory or writing off notes or accounts receivable;
(f) any other action or event that would have required the consent of Parent
pursuant to Section 5.1 had such action or event occurred after the date of this
Agreement; or (g) any sale, pledge, disposition of or encumbrance upon a
material amount of property of the Company, except in the ordinary course of
business and consistent with past practice.
SECTION 3.9. NO UNDISCLOSED LIABILITIES.
Except as is disclosed in Section 3.9 of the Company Disclosure
Schedule or the SEC Reports, neither the Company nor any Subsidiary has any
liabilities (absolute, accrued, contingent or otherwise) which are, in the
aggregate, material to the business, operations or financial condition of the
Company and its Subsidiaries taken as a whole, except liabilities (a) adequately
provided for in the Company's unaudited balance sheet (including any related
notes thereto) for the fiscal year ended September 30, 1998 (the "1998 Company
------------
Balance Sheet"); or (b) incurred in the ordinary course of business and not
-------------
required under GAAP to be reflected on the 1998 Company Balance Sheet and
liabilities incurred in connection with this Agreement.
SECTION 3.10. ABSENCE OF LITIGATION.
Except as set forth in Section 3.10 of the Company Disclosure Schedule
or the SEC Reports, (a) there are no claims, actions, suits, proceedings or
investigations pending or, to the best knowledge of the Company, threatened
against the Company or the Israeli Affiliate, or any properties or rights of the
Company or the Israeli Affiliate, as the case may be, before any court,
arbitrator or administrative, governmental or regulatory authority or body,
domestic or foreign and (b) there is no judgment, decree, injunction, rule or
order of any court, arbitrator or administrative, governmental or regulatory
authority or body, domestic or foreign, outstanding against the Company, Rapro,
FSC or, to the best knowledge of the Company, the Israeli Affiliate.
SECTION 3.11. EMPLOYEE BENEFIT PLANS; EMPLOYMENT AGREEMENTS.
(a) Section 3.11 of the Company Disclosure Schedule lists all employee
benefit plans (as defined in Section 3(3) of the Employee Retirement Income
Security Act of 1974, as
17
amended ("ERISA")) and all bonus, stock option, stock purchase, incentive,
-----
deferred compensation, supplemental retirement superannuated, severance and
other similar fringe or employee benefit plans, programs or arrangements, and
any employment or executive compensation or severance agreements for the benefit
of or relating to any employee of the Company, any trade or business (whether or
not incorporated) which is a member of a controlled group including the Company
or which is under common control with the Company (a "Company ERISA Affiliate"),
-----------------------
as well as each plan with respect to which the Company or a Company ERISA
Affiliate could incur liability under applicable law (if such plan has been or
were terminated) (together, the "Company Employee Plans"), excluding agreements
----------------------
under which the Company has no remaining monetary obligations. A copy of each
such written Company Employee Plan has been made available to Parent.
(b) Except as set forth in Section 3.11(b) of the Company Disclosure
Schedule, (i) none of the Company Employee Plans promises or provides retiree
medical or other retiree welfare or superannuated benefits to any person; (ii)
there has been no "prohibited transaction" (as such term is defined in Section
406 of ERISA and Section 4975 of the Code) with respect to any Company Employee
Plan, which could result in any material liability of the Company or of any
subsidiary; (iii) all Company Employee Plans are in compliance in all material
respects with the requirements prescribed by any and all statutes, orders, or
governmental rules and regulations currently in effect with respect thereto
(including all applicable requirements for notification to participants or the
Department of Labor, Pension Benefit Guaranty Corporation, U.S. Internal Revenue
Service (the "IRS") or Secretary of the Treasury), and the Company and each
---
subsidiary have performed all material obligations required to be performed by
them under, are not in any material respect in default under or violation of,
and have no knowledge of any default or violation by any other party of, any of
the Company Employee Plans; (iv) each Company Employee Plan intended to qualify
under Section 401(a) of the Code and each trust intended to qualify under
Section 501(a) of the Code is the subject of a favorable determination letter
from the IRS, and nothing has occurred which may reasonably be expected to
impair such determination; (v) all contributions required to be made to any
Company Employee Plan pursuant to Section 412 of the Code, or the terms of the
Company Employee Plan or any collective bargaining agreement, have been made on
or before their due dates and a reasonable amount has been accrued for
contributions to each Company Employee Plan for the current plan years; (vi)
with respect to each Company Employee Plan, no "reportable event" within the
meaning of Section 4043 of ERISA (excluding any such event for which the thirty
(30) day notice requirement has been waived under the regulations to Section
4043 of ERISA) nor any event described in Section 4062, 4063 or 4041 of ERISA
has occurred, (vii) no withdrawal (including a partial withdrawal) has occurred
with respect to any multiemployer plan within the meaning set forth in Section
3(37) of ERISA that has resulted in, or could reasonably be expected to result
in, any withdrawal liability for the Company or any subsidiary, and (viii)
neither the Company nor any Company ERISA Affiliate has incurred, nor reasonably
expects to incur, any liability under Title IV of ERISA (other than liability
for premium payments to the Pension Benefit Guaranty Corporation arising in the
ordinary course).
(c) Section 3.11(c) of the Company Disclosure Schedule sets forth a
true and complete list of each current or former employee, officer or director
of the Company or of any
18
Subsidiary who holds any option to purchase Company Common Stock as of the date
hereof, together with the number of shares of Company Common Stock subject to
such option, the date of grant of such option, the extent to which such option
is vested (or will become vested within six months from the date hereof, or as a
result of, the Merger), the option price of such option and the expiration date
of such option. Section 3.11(c) of the Company Disclosure Schedule also sets
forth the total number of such options.
(d) Except as set forth in Section 3.11(d) of the Company Disclosure
Schedule, the Company has made available to Parent (i) copies of all employment
agreements with officers of the Company; (ii) copies of all agreements with
consultants who are individuals obligating the Company to make annual cash
payments in an amount exceeding $50,000; (iii) a schedule listing all officers
and employees of the Company who have executed a non-competition agreement with
the Company; (iv) copies (or descriptions) of all severance agreements, programs
and policies of the Company with or relating to its employees, excluding
programs and policies required to be maintained by Applicable Law, and (v)
copies of all plans, programs, agreements and other arrangements of the Company
with or relating to its employees which contain change in control provisions.
SECTION 3.12. EMPLOYMENT MATTERS.
Except as set forth in Section 3.12 of the Company Disclosure Schedule,
(a) there are no controversies pending or, to the knowledge of the Company or
any Subsidiary, threatened, between the Company and any of its employees, which
controversies are reasonably expected to have a Material Adverse Effect; (b) the
Company is not a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by the Company nor does the
Company know of any activities or proceedings of any labor union to organize any
such employees; and (c) the Company does not have any knowledge of any strikes,
slowdowns, work stoppages, lockouts, or threats thereof, by or with respect to
any employees of the Company.
SECTION 3.13. INFORMATION SUPPLIED.
Subject to the accuracy of the representations of Parent in Section 4,
the information supplied by the Company for (a) inclusion in the Offer Documents
and (b) inclusion or incorporation by reference in the Proxy Statement to be
sent to the shareholders of the Company in connection with the Special Meeting
will not, on the date the Proxy Statement (or any amendment thereof or
supplement thereto) is first mailed to shareholders, at the time of the Special
Meeting, or at the Effective Time, contain any statement which, at such time and
in light of the circumstances under which it shall be made, is false or
misleading with respect to any material fact, or shall omit to state any
material fact necessary in order to make the statements made therein not false
or misleading; or omit to state any material fact necessary to correct any
statement in any earlier communication with respect to the solicitation of
proxies for the Special Meeting which has become false or misleading. If at any
time prior to the Effective Time any event relating to the Company or any of its
respective affiliates, officers or directors should be discovered by the Company
which should be set forth in an amendment or supplement to the Proxy Statement,
the Company shall promptly inform Parent and Newco. The Proxy Statement
19
shall comply in all material respects as to form and substance with the
requirements of the Securities Act, the Exchange Act and the rules and
regulations thereunder. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent or
Newco which is contained in any of the foregoing documents.
SECTION 3.14. TITLE TO PROPERTY.
The Company owns and leases only the real property set forth on Section
3.14 of the Company Disclosure Schedule. Except as set forth in Section 3.14 of
the Company Disclosure Schedule, the Company has good and marketable title to
all of its properties and assets, free and clear of all Liens except Liens for
taxes not yet due and payable and such Liens or other imperfections of title, if
any, as do not detract from the value of or interfere with the present use of
the property affected thereby and which, individually or in the aggregate, are
not reasonably expected to have a Material Adverse Effect; and, to the knowledge
of the Company, all leases pursuant to which the Company leases from others
material amounts of real or personal property, are in good standing, valid and
effective in accordance with their respective terms, and there is not, to the
knowledge of the Company, under any of such leases, any existing material
default or event of default (or event which with notice or lapse of time, or
both, would constitute a material default and in respect of which the Company
has not taken adequate steps to prevent such a default from occurring) except
where the lack of such validity and effectiveness or the existence of such
default or event of default is not reasonably expected to have a Material
Adverse Effect.
SECTION 3.15. TAXES.
(a) For purposes of this Agreement, "Tax" or "Taxes" shall mean taxes,
--- -----
fees, levies, duties, tariffs, imposts and governmental impositions or charges
of any kind in the nature of (or similar to) taxes, payable to any federal,
state, local or foreign taxing authority, including (without limitation) (i)
income, franchise, profits, gross receipts, ad valorem, net worth, goods and
services, fringe benefits, withholding, sales, use, service, real or personal
property, special assessments, license, payroll, withholding, employment, social
security, accident compensation, unemployment compensation, utility, severance,
production, excise, stamp, occupation, premiums, windfall profits, transfer and
gains taxes and (ii) interest, penalties, additional taxes and additions to tax
imposed with respect thereto; and "Tax Returns" shall mean returns, reports and
-----------
information statements with respect to Taxes required to be filed with the IRS
or any other taxing authority, domestic or foreign, including, without
limitation, consolidated, combined and unitary tax returns.
(b) The Company has furnished to Parent all Tax Returns filed by the
Company and its Subsidiaries for all periods ending on or after December 31,
1995. Except as disclosed in Section 3.15(b) of the Company Disclosure Schedule,
the Company and each Subsidiary has filed all United States federal income Tax
Returns and all other material Tax Returns required to be filed by them, and
have duly paid or made adequate provision on their books for the payment of all
taxes which have been incurred or are due and payable. Except as disclosed in
Section 3.15(b) of the Company Disclosure Schedule (i) there are no pending
audits, examinations or proposed audits or examinations of any tax returns filed
by the Company or by
20
any Subsidiary, (ii) there are no other Taxes that would be due if asserted by a
taxing authority, except with respect to which the Company or applicable
Subsidiary is maintaining reserves to the extent currently required and (iii)
neither the Company nor any Subsidiary has given or been requested to give
waivers or extensions of any statute of limitations relating to the payment of
Taxes for which the Company or any Subsidiary may be liable. Except as set forth
on Section 3.15(b) of the Company Disclosure Schedule, as of the date of this
Agreement the consolidated Tax Returns of the Company have not been audited by
the IRS (or the appropriate statute of limitations has expired) in the last five
fiscal years.
(c) The Company is not a party to any agreement providing for the
allocation, payment or sharing of taxes among the Company, and any third
parties. The Company does not have an application pending with respect to any
Tax requesting permission for a change in accounting method.
SECTION 3.16. ENVIRONMENTAL MATTERS.
Except as set forth in Section 3.16 of the Company Disclosure Schedule,
the Company (a) obtained all applicable permits, licenses and other
authorizations which are required under federal, state, foreign or local laws
relating to pollution or protection of the environment, including laws relating
to emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic materials or wastes into ambient air, surface
water, ground water or land or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
by the Company ("Environmental Approvals"), (b) is in material compliance with
-----------------------
all terms and conditions of the Environmental Approvals, and also is in
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
such laws or contained in any regulation, code, plan, order, decree, judgment,
notice or demand letter issued, entered, promulgated or approved thereunder, (c)
as of the date hereof, is not aware of nor has it received notice of any past or
present violation relating to or any event, condition, circumstance, activity,
practice, incident, action or plan which is reasonably likely to interfere with
or prevent continued compliance with or which would give rise to any common law
or statutory liability, or otherwise form the basis of any claim, action, suit
or proceeding, based on or resulting from the Company's manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling, or the
emission, discharge or release into the environment, of any pollutant,
contaminant or hazardous or toxic material or waste and (d) taken all actions
necessary under applicable requirements of federal, state, foreign and local
laws, rules or regulations to register any products or materials required to be
registered by the Company thereunder.
SECTION 3.17. BROKERS.
No broker, finder or investment banker (other than SoundView Financial
Group) is entitled to any brokerage, finder's or other fee or commission in
connection with the Transactions based upon arrangements made by or on behalf of
the Company. The Company has heretofore furnished to Parent a complete and
correct copy of all agreements between
21
the Company and SoundView Financial Group pursuant to which such firm would be
entitled to any payment relating to the Transactions.
SECTION 3.18. FULL DISCLOSURE.
No statement contained in any certificate or schedule furnished or to
be furnished by the Company to Parent or Newco pursuant to the provisions of
this Agreement contains or will contain any untrue statement of a material fact
or omits or will omit to state any material fact necessary, in the light of the
circumstances under which it was made, in order to make the statements herein or
therein not misleading.
SECTION 3.19. OPINION OF FINANCIAL ADVISOR.
The Company has received the opinion of its financial advisor,
SoundView Financial Group, to the effect that, as of December 17, 1998, the
Merger Consideration to be received by holders of the Company Common Stock is
fair, from a financial point of view, to the Company's shareholders, and the
Company has delivered a written copy of such opinion to the Parent.
SECTION 3.20. INTELLECTUAL PROPERTY.
(a) Except as set forth in Section 3.20(a) of the Company Disclosure
Schedule, the Company and, to the best knowledge of the Company, the Israeli
Affiliate, directly or indirectly, own, or license or otherwise possess legally
enforceable rights to use, all patents, trademarks, trade names, service marks,
copyrights, and any applications therefor, technology, know-how and tangible or
intangible proprietary information or material that are used in any product or
service of the Company or the Israeli Affiliate, as the case may be, previously
sold or now being sold by the Company, now in beta phase by the Company or the
Israeli Affiliate, as the case may be, or otherwise in or material to the
business of the Company or the Israeli Affiliate, as the case may be, as
currently conducted (the "Intellectual Property Rights").
----------------------------
(b) Section 3.20(b) of the Company Disclosure Schedule sets forth (i)
each patent owned by the Company and (ii) each license agreement under which the
Company licenses, either to or from a third party, Intellectual Property Rights
on an exclusive or non-exclusive basis. Except as set forth in Section 3.20(b)
of the Company Disclosure Schedule, the Company is the sole and exclusive owner
of the Intellectual Property Rights and has sole and exclusive rights (and is
not contractually obligated to pay any compensation to any third party in
respect thereof) to the use thereof or the material covered thereby in
connection with the services or products in respect of which the Intellectual
Property Rights are being used. Except as set forth in Section 3.20(b) of the
Company Disclosure Schedule, no claims with respect to the Intellectual Property
Rights have been asserted or, to the best knowledge of the Company, are
threatened by any Third Party: (i) to the effect that the manufacture, sale,
licensing, or use of any of the products or processes of the Company infringes
on any copyright, patent, trade xxxx, service xxxx or trade secret of such
person; (ii) against the use by the Company of any Intellectual Property Rights;
or (iii) challenging the ownership by the Company or the validity of any of the
Intellectual Property Rights.
22
(c) Section 3.20(c) of the Company Disclosure Schedule sets forth all
registered trademarks, service marks and copyrights held by the Company and each
are valid and subsisting. To the knowledge of the Company, there is no
unauthorized use, infringement or misappropriation of any of the Intellectual
Property Rights by any third party, including any employee or former employee of
the Company. No Intellectual Property Right or product or process of the Company
is subject to any outstanding decree, order, judgment, or stipulation
restricting in any manner the licensing thereof by the Company.
(d) Except as set forth in Section 3.20(d) of the Company Disclosure
Schedule, the Company and, to the best knowledge of the Company, the Israeli
Affiliate is not bound by any agreement which restricts the Company or the
Israeli Affiliate, as the case may be, from selling, licensing or otherwise
distributing any of its products to any class of customers, in any geographic
area, during any period of time or in any segment of the market.
SECTION 3.21. INTERESTED PARTY TRANSACTIONS.
Except as set forth in Section 3.21 of the Company Disclosure Schedule
or in the SEC Reports, since the date of the Company's most recent draft of the
annual report on Form 10-K for the fiscal year ended September 30, 1998, no
event has occurred that would be required to be reported as a Certain
Relationship or Related Transaction, pursuant to Item 404 of Regulation S-K
promulgated by the SEC.
SECTION 3.22. INSURANCE.
The Company maintains fire and casualty, general liability, business
interruption, product liability and sprinkler and water damage insurance with
reputable insurance carriers that the Company believes to be reasonably prudent
for its business and are similar in character and amount to policies carried by
entities engaged in similar businesses. Except as set forth in Section 3.22 of
the Company Disclosure Schedule, there are no claims by the Company under any
such insurance as to which any insurance company is denying liability or
defending under a reservation of rights clause.
SECTION 3.23. VOTE REQUIRED.
If applicable, the affirmative vote of the holders (entitled to vote
and voting on the Merger) of at least a majority of the shares is the only vote
of the holders of Company Common Stock necessary to approve the Merger.
23
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF PARENT AND NEWCO
Parent and Newco, jointly and severally, represent and warrant to the
Company as follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION.
(a) Organization. Parent is a business entity duly organized, validly
------------
existing and in good standing under the laws of the Federal Republic of Germany.
Newco is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Each of the Parent and Newco has all
requisite corporate power and authority and is in possession of all Approvals
necessary to own, or lease and operate its properties and assets and to carry on
its business as it is now being conducted. Each of Parent and Newco is duly
qualified as a foreign corporation to do business, and is in good standing, in
each jurisdiction in which the character of the properties owned, leased or
operated by it, or the nature of its activities makes such qualification
necessary, except where the failure to be so qualified is not reasonably
expected to have a material adverse effect on Parent's or Newco's ability to
perform its respective obligations hereunder.
(b) Newco Activities. Since the date of its incorporation, Newco has
----------------
not engaged in any activity other than in connection with or as contemplated by
this Agreement, the Offer and the Merger or in connection with arranging
financing required to consummate the Transactions.
SECTION 4.2. AUTHORITY.
Each of Parent and Newco has all requisite corporate power and
authority to execute and deliver this Agreement and the Stock Option Agreement
and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement and the Stock Option Agreement by Parent and Newco
and the consummation by Parent and Newco of the Transactions have been duly
authorized by Parent and Newco, and no other corporate proceedings on the part
of Parent or Newco (including, without limitation, any action by their
respective shareholders) are necessary to authorize this Agreement, the Stock
Option Agreement and the Transactions. Each of this Agreement and the Stock
Option Agreement has been duly executed and delivered by each of Parent and
Newco and constitute a legal, valid and binding obligation of each of Parent and
Newco, enforceable against Parent and Newco in accordance with their terms,
except as such enforceability may be subject to or limited by bankruptcy,
insolvency, reorganization, or other similar laws, now or hereafter in effect,
affecting the enforcement of creditors' rights generally, and except that the
availability of equitable remedies, including specific performance, may be
subject to the discretion of the court before which any proceeding therefor may
be brought.
24
SECTION 4.3. NON-CONTRAVENTION.
The execution and delivery of this Agreement and the Stock Option
Agreement by Parent and Newco and the consummation by Parent and Newco of the
Transactions will not (i) conflict with any provision of their respective
Certificates of Incorporation or Bylaws or equivalent organizational documents
or (ii) result (with the giving of notice or the lapse of time or both) in any
violation of or default or loss of a benefit under, or permit the acceleration
of any obligation under, any mortgage, indenture, lease, agreement or other
instrument, permit, concession, grant, franchise or license or any Applicable
Law applicable to Parent or Newco or any of their respective properties, other
than any such violation, default, loss or acceleration that is not reasonably
expected to materially adversely affect the ability of Parent or Newco, as the
case may be, to perform its respective obligations hereunder.
SECTION 4.4. GOVERNMENTAL APPROVALS.
No filing, declaration or registration with, or permit, authorization,
consent or approval, of, any Governmental Authority is required to be made or
obtained by Parent or Newco in connection with the execution and delivery of
this Agreement and the Stock Option Agreement by Parent or Newco or the
consummation by Parent or Newco of the Transactions, except for (i) the filing
of a premerger notification and report form under the HSR Act, and the
expiration or termination of the waiting period thereunder, (ii) the filing with
the SEC of (x) the Offer Documents and (y) such reports under the Exchange Act
as may be required in connection with this Agreement, the Stock Option Agreement
and the Transactions, (iii) the filing of the applicable documents with the
Secretary of State of the State of California, and the filing of appropriate
documents with the relevant authorities of other states in which the Company is
qualified to do business, (iv) as may be required by any applicable Blue Sky
Laws, (v) the filing of reports with the U.S. Department of Commerce regarding
foreign direct investment in the United States, (vi) notification under the AARC
and the approval by the FCO thereunder and any filings or notifications under
other similar laws throughout the world and (vii) such other consents,
approvals, orders, authorizations, registrations, declaration, filings and
notices the failure of which to be obtained or made would not prevent or
materially delay the consummation of the transactions contemplated by this
Agreement or the performance by Parent or Newco of any of their respective
material obligations hereunder or thereunder.
SECTION 4.5. BROKERS.
No person is entitled to any brokerage or finder's fee or commission in
connection with the Transactions as a result of any action taken by or on behalf
of Parent or Newco, other than Xxxxxx Roja Corporation.
SECTION 4.6. FINANCING.
Parent has available to it cash, credit lines or other sources of
financing to provide the funds necessary for completion of the Transactions.
25
SECTION 4.6. INFORMATION SUPPLIED.
None of the information supplied or to be supplied by Parent or Newco
for inclusion in (i) the Schedule 14D-9, or (ii) the Proxy Statement will, in
the case of the Schedule 14D-9, at the time the Schedule 14D-9 is filed with the
SEC or first published, sent or given to the Company's shareholders, or, in the
case of the Proxy Statement, at the time the Proxy Statement is first mailed to
the Company's shareholders or at the time of the Special Meeting, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading.
ARTICLE V.
CERTAIN COVENANTS
SECTION 5.1. CONDUCT OF THE COMPANY'S BUSINESS.
The Company covenants and agrees that, prior to the Effective Time,
unless Parent shall otherwise consent in writing or as otherwise expressly
contemplated by this Agreement:
(a) the business of the Company shall be conducted only in, and
the Company shall not take any action except in, the ordinary course of
business consistent with past practice;
(b) the Company shall not, directly or indirectly, do any of the
following: (i) amend or propose to amend its Articles of Incorporation
or Bylaws or reincorporate in any jurisdiction; (ii) split, combine or
reclassify any issued and outstanding shares of its capital stock, or
declare, set aside or pay any dividend or other distribution (payable
in cash, stock, property or otherwise) with respect to such shares;
(iii) redeem, purchase, acquire or offer to acquire (or permit any
Subsidiary to redeem, purchase, acquire or offer to acquire) any shares
of its capital stock; or (iv) issue, sell, pledge, accelerate, modify
the terms of or dispose of, or agree to issue, sell, pledge,
accelerate, modify the terms of or dispose of, any additional shares
of, or securities convertible or exchangeable for, or any options,
warrants, calls, commitments or rights of any kind to acquire any
shares of, its capital stock of any class or other property or assets,
provided, that the Company (x) may issue shares of Company
--------
Common Stock upon the exercise of currently outstanding options as of
the date hereof; (y) grant options under the Company's 1993 Employee
Stock Option Plan to any new employee in amounts consistent with past
practices; and (z) may enter into agreements or arrangements
contemplated by Section 2.6;
(c) the Company shall not (i) transfer, lease, license, sell,
mortgage, pledge, dispose of or encumber any material assets, except in
the ordinary course of business consistent with past practice; (ii)
acquire (by merger, consolidation or acquisition of stock or assets)
any corporation, partnership or other business organization or division
thereof or any material assets; (iii) enter into or modify any material
contract, lease, agreement or
26
commitment, except in the ordinary course of business consistent with
past practice; (iv) terminate, modify, assign, waive, release or
relinquish any material rights or claims or amend any material rights
or claims not in the ordinary course of business consistent with past
practice; (v) pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction of any such claims, liabilities or obligations, in the
ordinary course of business, reflected or reserved against in, or
contemplated by, the consolidated financial statements of the Company
included in the SEC Reports; or (vi) settle or compromise any material
claim, action, suit or proceeding pending or threatened against the
Company, or, if the Company may be liable or obligated to provide
indemnification, against the Company's directors or officers, before
any court, governmental agency or arbitrator;
(d) except as provided in this Agreement, the Company shall not
(i) incur or adversely modify any material indebtedness or other
liability; provided, however, that the Company shall be permitted to
-------- -------
draw upon its existing credit lines as the Company may deem
appropriate; (ii) assume, guarantee, endorse or otherwise become liable
or responsible (directly or indirectly, contingent or otherwise) for
the obligations of any other person; or (iii) make any loans, advances
or capital contributions to, or investments in, any other person (other
than to wholly-owned Subsidiaries or customary loans or advances to
employees in the ordinary course of business consistent with past
practice);
(e) the Company shall not grant any increase in the salary or
other compensation of its employees, or grant any bonus to any employee
or enter into any employment agreement or make any loan to or enter
into any material transaction of any other nature with any employee of
the Company or any Subsidiary, except in the ordinary course of
business consistent with past practices, or as contemplated by Section
2.6;
(f) the Company shall not, except as contemplated by this
Agreement or as may be required by Applicable Law or, in the case of
employees who are not executive officers of the Company, in the
ordinary course of business consistent with past practices (i) adopt,
increase, accelerate the vesting of or payment of any amounts in
respect of, or otherwise amend, in any respect, any collective
bargaining, bonus, profit sharing, incentive or other compensation,
stock option, stock purchase or restricted stock, insurance, pension,
retirement, deferred compensation, employment or other employee benefit
plan, agreement, trust, fund, plan or arrangement for the benefit or
welfare of any directors, officers or employees (including, without
limitation, any such plan or arrangement relating to severance or
termination pay); or (ii) enter into any employment or severance
agreement with or grant any severance or termination pay to any officer
or director of the Company;
(g) the Company shall not take or knowingly permit any action that
would make any representation or warranty of the Company hereunder
materially inaccurate at, or as of any time prior to, the Effective
Time, or omit to take any action reasonably
27
necessary to prevent any such representation or warranty from being
materially inaccurate at any such time;
(h) the Company shall not change any of the accounting methods
used by it without providing advance notice to Parent in writing;
(i) the Company shall not make any Tax election (other than in
the ordinary course of preparing and filing its Tax returns) or settle
or compromise any Tax liability or investigation;
(j) the Company shall not enter into any agreement, contract,
commitment or arrangement to do, or to authorize, recommend, propose or
announce an intention to do, any of the actions described in the above
paragraphs of Section 5.1, other than paragraph (a); and
(k) the Company shall use its reasonable efforts, to the extent
not prohibited by the foregoing provisions of this Section 5.1, to
maintain its relationships with its suppliers, customers and employees,
and, if and as requested by Parent or Newco, (i) to the extent
permitted by Applicable Law, the Company shall use its reasonable best
efforts to make reasonable arrangements for representatives of Parent
or Newco to meet with customers and suppliers of the Company or any
Subsidiary, and (ii) the Company shall schedule, and the management of
the Company shall participate to the extent requested in, meetings of
representatives of Parent or Newco with employees of the Company or any
Subsidiary.
SECTION 5.2. ACCESS TO INFORMATION.
(a) Access and Disclosure. Subject to the requirements of any binding
---------------------
confidentiality agreements with customers and subject to any applicable
limitations imposed by law, from the date hereof to the Effective Time, the
Company shall (and shall cause its officers, directors, employees,
representatives and agents to) afford the officers, employees, counsel,
representatives and agents of Parent reasonable access during regular business
hours to the Company's officers, employees, agents, properties, books, records
and work papers, and shall promptly furnish Parent all financial, operating and
other information and data as Parent, through its officers, employees or agents,
may reasonably request, provided, that in the event such access or the
--------
furnishing of such information is prohibited or limited due to binding customer
agreements or Applicable Law, the Company will so inform Parent and will upon
request use its reasonable best efforts to obtain any necessary consent to allow
such access or to provide such information. During such period, the Company
shall furnish promptly to Parent (i) a copy of each report, schedule,
registration statement or other document filed or received by it during such
period pursuant to the requirements of federal securities laws, and (ii) all
other information concerning its business, properties and personnel as Parent
may reasonably request.
(b) Mutual Non-Disclosure Agreement. Parent, Newco and the Company
-------------------------------
agree that the confidentiality provisions agreed to in the Mutual Non-Disclosure
Agreement dated as of August 6, 1998, as amended (the "Mutual Non-Disclosure
---------------------
Agreement") shall remain binding and
---------
28
in full force and effect in accordance with the terms of such agreement and that
the terms thereof are incorporated herein by reference.
(c) Effect. No investigation pursuant to this Section 5.2 shall
------
affect, add to or subtract from any representations or warranties of the parties
hereto or the conditions to the obligations of the parties hereto to consummate
the Offer or effect the Merger.
SECTION 5.3. CONSENTS AND APPROVALS; FURTHER ASSURANCES.
(a) Consents and Approvals. Each of the Company, Parent and Newco will
----------------------
take all reasonable actions necessary to comply promptly with all legal
requirements which may be imposed on it with respect to this Agreement, the
Common Stock Option, the Stock Option Agreement and the Transactions (which
actions shall include, without limitation, furnishing all information, making
all filings and taking all other acts (i) required under the Exchange Act, the
Securities Act and all other federal or state securities laws, (ii) required
under the HSR Act or any applicable foreign competition and antitrust statutes
and regulations, including any required by the FCO under the AARC, or (iii)
required or requested by any bank, stock exchange, or by any other Governmental
Authority) and will cooperate promptly with and furnish information to each
other in connection with any such requirements imposed on any of them or their
respective subsidiaries in connection with this Agreement, the Common Stock
Option, the Stock Option Agreement and the Transactions. Each of the Company,
Parent and Newco will, and will cause their respective subsidiaries to, take all
commercially reasonable action to obtain (and will cooperate with each other in
obtaining) any consent, authorization, order or approval of, or any exemption
by, or to provide any required notice to, any Governmental Authority or other
public or private third party required to be obtained or made by Parent, Newco
or the Company or any of their respective subsidiaries in connection with the
Merger or the taking of any action contemplated in connection with the Merger or
otherwise by this Agreement.
(b) Antitrust and Competition Filings. Without limiting the generality
---------------------------------
of sub-section (a) above, the Company and Parent shall take all reasonable
actions necessary to file as soon as practicable notifications under the HSR Act
and any applicable foreign competition and antitrust statutes and regulations,
including, to respond in a commercially reasonable manner to any inquiries
received from the Federal Trade Commission, the Antitrust Division of the
Department of Justice, the FCO any other Governmental Authority for additional
information or documentation and to respond in a commercially reasonable manner
to all inquiries and requests received from any Governmental Authority in
connection with antitrust and competition matters.
(c) Further Assurances. Subject to the terms and conditions herein
------------------
provided, each of the Parties agrees to use all commercially reasonable efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the Transactions, including, without limitation, using
all commercially reasonable efforts to obtain all necessary waivers, consents
and approvals.
(d) Shareholder Litigation. The Company shall give Parent the
----------------------
opportunity to participate in the defense and settlement of any shareholder
litigation against the Company or its
29
directors or officers relating to any of the Transactions and shall not enter
into any such settlement without Parent's consent, which consent shall not be
unreasonably withheld.
(e) Limits. Nothing in this Agreement shall require Parent or Newco to
------
agree to make, or to permit the Company to make, any divestiture of or grant any
rights to a significant asset in order to obtain any waiver, consent or
approval.
SECTION 5.4. INQUIRIES AND NEGOTIATIONS.
(a) Notice. The Company shall immediately notify Parent if any
------
proposal, offer, inquiry or other contact is received by, any information is
requested from, or any discussions or negotiations are sought to be initiated or
continued with, the Company by or from any person, corporation, entity or
"group" (as defined in Section 13(d) of the Exchange Act) other than Parent and
its affiliates, representatives and agents (each, a "Third Party") in connection
-----------
with any Alternative Transaction, and shall, in any such notice to Parent,
indicate the identity of the Third Party and the terms and conditions of any
proposals or offers or the nature of any inquiries or contacts, and thereafter
shall keep Parent informed, on a current basis, of the status and terms of any
such proposals or offers and the status of any such discussions or negotiations.
Without limiting the generality of the foregoing, the Company shall provide
Parent with not less than two (2) Business Days' notice prior to the execution
by the Company of any definitive agreement with respect to any Alternative
Transaction or any public announcement relating to any Alternative Transaction.
(b) Third Parties. Prior to furnishing any non-public information to,
-------------
or entering into negotiations or discussions with, any Third Party, the Company
will obtain an executed confidentiality agreement from such Third Party on terms
substantially the same as, or no less favorable to the Company in any material
respect than, those contained in the Mutual Non-Disclosure Agreement. The
Company shall not release any Third Party from, or waive any provision of, any
such confidentiality agreement or any other confidentiality or standstill
agreement to which the Company is a party.
(c) Non-Solicitation. Neither the Company nor its officers, directors
----------------
or representatives, or any of their respective affiliates shall initiate,
solicit or encourage, directly or indirectly, or take any action to facilitate
inquiries or the making of any proposal with respect to or participation in
negotiations concerning any proposal with respect to or participation in
negotiations concerning any merger, consolidation, acquisition of more than 2%
of the capital stock of the Company, a business combination involving the
Company or the purchase of all or a significant portion of the assets of the
Company (an "Alternative Transaction"), except that the Company Board may
-----------------------
provide information to any third person making a bona fide, written and
unsolicited inquiry concerning an Alternative Transaction that would result in
the payment to the Company shareholders of a higher price per share in cash than
the Offer Price (a "Superior Proposal"), provided that counsel to the Company
-----------------
has advised the Company Board in writing that its fiduciary duties require it to
consider the Superior Proposal.
30
SECTION 5.5. NOTIFICATION OF CERTAIN MATTERS.
The Company shall give prompt notice to Parent and Newco, and Parent
and Newco shall give prompt notice to the Company, of (a) the occurrence, or
failure to occur, of any event that such Party believes would be likely to cause
any of its representations or warranties contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the date hereof to
the Effective Time and (b) any material failure of the Company, Parent or Newco,
as the case may be, or any officer, director, employee or agent thereof, to
comply with or satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; provided, however, that the delivery of any such
-------- -------
notice shall not limit or otherwise affect the remedies available hereunder to
the Party receiving such notice.
SECTION 5.7. FIRPTA CERTIFICATE.
Prior to the date of expiration of the Offer, the Company shall deliver
to Newco a certification that the Shares do not constitute U.S. real property
interests within the meaning of Section 897 of the Code, in form satisfactory to
Newco.
SECTION 5.7. EMPLOYEE BENEFITS.
For a period of twelve months from the Effective Time, Parent shall
cause the Surviving Corporation to provide active employees of the Company and
its Subsidiaries with benefits (including, without limitation, welfare benefits)
that are reasonably comparable, taken as a whole, to the benefits provided under
the Company's benefit plans (other than equity-based plans) as in effect
immediately prior to the Effective Time. Without limiting the generality of the
foregoing, it is expressly understood that the Company currently provides a
two-month paid sabbatical (the "Sabbatical") to its employees who have been
----------
employed by the Company for at least seven (7) years, and Parent shall cause the
Surviving Corporation to provide such benefit to such employees identified in
Sections 3.11 or 5.7 of the Company Disclosure Schedule. Parent shall provide
the Sabbatical if Surviving Corporation is merged with, or transfers all its
assets to, Parent or an affiliate of Parent.
ARTICLE VI.
ADDITIONAL AGREEMENTS
SECTION 6.1. LOAN.
(a) Subject to the limitations set forth herein, in the event that the
Merger is not consummated on or before March 5, 1999, Parent shall make
available a loan (the "Loan") to the Company in the aggregate principal sum of
----
$3,000,000 (the "Principal"). Interest on the Principal shall accrue at a
---------
floating rate per annum equal to the internal rate of interest assessed by
Parent or its affiliates on intercorporate loans made to or among subsidiaries
of Parent (the "Interest"). All Principal and accrued Interest shall be due and
--------
payable two years from the date such Loan is made (the "Maturity Date"). The
-------------
Loan and all payments of Principal and Interest
31
shall be made in lawful money of the United States of America; the Loan shall be
evidenced by a promissory note in form reasonably satisfactory to Parent and
Company (the "Note").
----
(b) Parent shall not be obligated to make the Loan if any of the
following events occur: (i) the Offer has not expired by its terms or, if the
Offer has expired, the Shares tendered in the Offer are insufficient to satisfy
the Minimum Condition or the Revised Minimum Number; (ii) this Agreement shall
have been terminated by Parent pursuant to its rights under Section 8.1(e);
(iii) any shareholder of the Company shall default under the Voting Agreements;
(iv) any representation or warranty made by the Company under this Agreement,
the Common Stock Option or the Stock Option Agreement shall have been untrue at
the time such representation or warranty was made or shall be untrue on the date
the Loan is to be made and such failure to be true shall have been caused by an
event that would constitute a Material Adverse Effect under this Agreement; (v)
there shall be any preliminary or permanent injunction or other order, decree or
ruling issued by any court of competent jurisdiction or any statute, rule,
regulation or order entered, promulgated or enacted by any governmental,
regulatory or administrative agency or authority in effect that would impact the
effective operation of the business of the Company resulting in a Material
Adverse Effect from and after the Effective Time; (vi) any waiting period under
the HSR Act applicable to the purchase of Shares in connection with the Offer
shall not have expired or been terminated and the satisfaction of any applicable
foreign competition and antitrust statutes and regulations (including approval
by the FCO pursuant to the AARC) shall not have been obtained; (vii) there shall
be pending any proceeding or litigation, initiated prior to or after the date of
this Agreement, challenging this Agreement or the Transactions or seeking to
prohibit, alter, prevent or materially delay the Merger; (viii) there shall be
pending or threatened against the Company any claim, action, suit, proceeding or
investigation which would or could reasonably be expected to have a Material
Adverse Effect; or (ix) the Company shall have terminated this Agreement
pursuant to Section 8.1(f).
SECTION 6.2. OPTIONS.
The Company hereby grants to Parent options (the "Options"), to
-------
purchase an aggregate of 600,000 shares of Company Common Stock at an exercise
price of $2.00 per share evidenced by a Common Stock Option (the "Common Stock
------------
Option"), a form of which is attached hereto as Exhibit C. Options to purchase
------
100,000 shares of Company Common Stock shall become immediately exercisable if
and when the Loan is made by Parent to the Company as set forth in Section
6.1(a) (the "Loan Date"). The remaining Options shall become exercisable if and
---------
when a default occurs under the Note. All of the Options shall expire (a) on
March 5, 1999, if the Loan is not made, or (b) on the first anniversary of the
Maturity Date. The Company shall adjust the number of shares of Company Common
Stock subject to the Options to maintain the percentage of Company Common Stock
subject to the Options at the date of this Agreement, based on the number of
outstanding shares of the Company's fully diluted capital stock, if at any time
after the Loan Date the Company shall cause or effect: (i) a subdivision or
combination of the outstanding shares of the Company's capital stocks, (ii) a
stock distribution or dividend on its capital stock; or (iii) a recapitalization
or reclassification of its capital stock.
32
SECTION 6.3 PROXY STATEMENT
If required, as promptly as practicable, the Company shall prepare and
file with the SEC the Proxy Statement with respect to approval of the Merger.
The Proxy Statement shall, subject to the fiduciary duties of the Company Board,
include the recommendation of the Company Board in favor of the Merger.
SECTION 6.4 COMPANY SHAREHOLDERS' MEETING
If required by the CGCL, the Company shall duly call, give notice of,
convene and hold the Special Meeting as promptly as practicable following the
acceptance for payment and purchase of Shares pursuant to the Offer for the
purpose of voting upon the approval of the Merger. The Company shall use its
best efforts to solicit from its shareholders proxies in favor of the approval
of the Merger, and shall take all other action necessary or advisable to secure
the vote or consent of shareholders required by the CGCL and the Articles of
Incorporation and Bylaws of the Company to obtain such approvals, unless
otherwise required under the applicable fiduciary duties of the Company Board,
as advised by its legal advisor.
SECTION 6.5 CONSENTS; APPROVALS
The Company and Parent shall each use their reasonable efforts to
obtain all consents, waivers, approvals, authorizations or orders (including,
without limitation, all governmental and regulatory rulings and approvals), and
the Company and Parent shall make all filings (including, without limitation,
all filings with any Governmental Authority) required in connection with the
authorization, execution and delivery of this Agreement by the Company and
Parent and the consummation by them of the Transactions. If required under
Applicable Law, the Company and Parent shall furnish all information required to
be included in the Proxy Statement, or for any application or other filing to be
made pursuant to the rules and regulations of any governmental body in
connection with the Transactions. Except where prohibited by applicable statutes
and regulations, and subject to the Mutual Non-Disclosure Agreement, each Party
shall promptly provide the other (or its counsel) with copies of all filings
made by such party with any state or federal government entity in connection
with this Agreement or the Transactions.
SECTION 6.6 INDEMNIFICATION.
For four years after the Effective Time, the Surviving Corporation (or
any successor to the Surviving Corporation) shall indemnify, defend and hold
harmless the present and former officers, directors, employees and agents of the
Company and its Subsidiaries (each an "Indemnified Party") against all losses,
-----------------
claims, damages, liabilities, fees, costs and expenses (including reasonable
fees and disbursements of counsel approved by the Surviving Corporation in
advance of disposition of judgments, fines, losses, claims, liabilities and
amounts paid in settlement (provided that any such settlement is effected with
the written consent of Parent or the Surviving Corporation)) based in whole or
in part on the fact that such person is or was such a director, officer,
employee or agent and arising out of actions or omissions occurring at or prior
to the Effective Time (including, without limitation, matters arising out of or
pertaining to the Transactions) to the full extent provided under the terms of
the Company's Articles of
33
Incorporation, Bylaws and indemnification agreements, all as in effect at the
date hereof, including provisions relating to advancement of expenses incurred
in the defense of any action or suit, and subject to applicable law; provided,
that, in the event any claim or claims are asserted or made within such four
year period, all rights to indemnification or advancement of expenses in respect
of such claim or claims shall continue until disposition of any and all such
claims; and provided, further, that nothing herein shall impair any existing
rights or obligations of any present or former directors or officers of the
Company. In the event of any threatened or actual claim, suit, proceeding or
investigation as to which an Indemnified Party is entitled to indemnification or
advancement of expenses hereunder (whether asserted before, at or after the
Effective Time), the Indemnified Party may retain counsel satisfactory to
Parent, but in no event shall the Surviving Corporation be required to reimburse
the costs of such counsel hereunder unless (i) the Surviving Corporation shall
have declined to assume the defense of such claim within ten Business Days of a
written request for indemnification given in accordance with Section 9.5.
ARTICLE VII.
CONDITIONS TO THE MERGER
SECTION 7.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER.
The respective obligation of each Party to effect the Merger shall be
subject, at its option, to the fulfillment at or prior to the Effective Time of
the following conditions:
(a) Shareholder Approval. If required by the CGCL, this Agreement
--------------------
and the Merger shall have been approved and adopted by the requisite
vote of the shareholders of the Company in accordance with applicable
provisions of the Company's Articles of Incorporation and the CGCL; and
(b) No Illegality. No Applicable Law shall prohibit consummation
-------------
of the Merger.
SECTION 7.2. CONDITIONS TO PARENT'S AND NEWCO'S OBLIGATION TO EFFECT THE
MERGER.
The obligation of Parent and Newco to effect the Merger in addition
shall be subject, at their option, to the fulfillment at or prior to the
Effective Time of the following conditions:
(a) Governmental Approvals. (i) Any waiting period under the HSR
----------------------
Act applicable to the purchase of shares of Company Common Stock
pursuant to the Merger shall have expired or been terminated and (ii)
all requirements of any applicable foreign competition and antitrust
statutes and regulations to the consummation of the Merger shall have
been satisfied, including approval by the FCO pursuant to the AARC;
(b) No Governmental Actions. No preliminary or permanent
-----------------------
injunction or other order, decree or ruling issued by any court of
competent jurisdiction nor any statute,
34
rule, regulation or order entered, promulgated or enacted by any
governmental, regulatory or administrative agency or authority shall be
in effect that would restrain the effective operation of the business
of the Company and the Subsidiaries from and after the Effective Time,
and no proceeding challenging this Agreement, the Common Stock Option,
the Stock Option Agreement or the Transactions or seeking to prohibit,
alter, prevent or materially delay the Merger shall be pending before
any Governmental Authority;
(c) No Breach of Covenants. The Company shall not have breached or
----------------------
failed to perform in any material respect any of its covenants or
agreements under this Agreement;
(d) Consummation of Offer. Newco shall have purchased Shares
---------------------
pursuant to the Offer (provided that this condition shall be deemed
fulfilled if Newco shall have failed to purchase Shares in violation of
the Offer);
(e) Opinion of Counsel. Parent and Newco shall have received an
------------------
opinion from Xxxxxx, Xxxx & Priest LLP, counsel to the Company, the
substance of which shall be in form reasonably satisfactory to Parent,
dated the Closing;
(f) Consents Obtained. All consents waivers or notices required to
-----------------
be obtained or made by the Company, for the authorization, execution,
delivery and performance of this Agreement and the consummation by it
of the Transactions shall have been obtained and made.
ARTICLE VIII.
TERMINATION AND ABANDONMENT
SECTION 8.1. TERMINATION AND ABANDONMENT.
Any Party desiring to terminate this Agreement pursuant to this Section
8.1 shall give notice to the other party in accordance with Section 9.5. This
Agreement, the Stock Option Agreement and the Voting Agreements may be
terminated and the Merger may be abandoned at any time prior to the Effective
Time, whether before or after approval by the shareholders of the Company:
(a) by mutual written consent of Parent and the Company;
(b) by either Parent or the Company, if (i) prior to the Effective
Time, any Governmental Authority shall have issued an order, decree or ruling or
taken any other action, in each case permanently restraining, enjoining or
otherwise prohibiting all or any material part of the Transactions and such
order, decree, ruling or other action shall have become final and non-
appealable; or (ii) the Merger shall not have been completed by June 30, 1999;
35
(c) by Parent, if (i) the Offer is terminated or expires without the
purchase of any Shares thereunder, unless such termination or expiration has
been caused by the failure of Parent or Newco to perform in any material respect
its obligations under this Agreement, (ii) due to an occurrence that, if
occurring after the commencement of the Offer, could reasonably be expected to
result in a failure to satisfy any of the conditions set forth in Annex II
hereto, or (iii) Parent and Newco shall have failed to commence the Offer on or
prior to the fifth U.S. Business Day following the date of the initial public
announcement of the Offer;
(d) by Parent if: (i) the Company Board shall have resolved to enter
into a letter of intent, agreement in principle or similar agreement, whether or
not legally binding, or into any definitive written agreement with respect to an
Alternative Transaction with a Third Party; (ii) a Third Party has commenced a
tender offer, proxy solicitation or exchange offer for any shares of capital
stock of the Company; (iii) the Company Board shall have withdrawn, or modified
or amended in a manner adverse to Parent or Newco, its approval or
recommendation of the Offer and the Merger, or approved, recommended or endorsed
any proposal for an Alternative Transaction; (iv) SoundView Financial Group
shall have withdrawn the Fairness Opinion; or (v) the required approval of the
shareholders of the Company shall not have been obtained by reason of a failure
to obtain the required vote at a duly held meeting of shareholders or at any
adjournment thereof;
(e) by either Parent or Newco, on the one hand, or the Company, on the
other hand, if the other Party shall have failed to comply in any material
respect with any covenant or obligation contained in this Agreement to be
complied with or performed by such Party at or prior to such date of
termination; or
(f) by the Company, if, prior to acceptance for payment of Shares by
Newco under the Offer, the Company shall have done each of the following: (i)
entered into a definitive written agreement with respect to an Alternative
Transaction with a Third Party; (ii) determined, after receipt of written advice
from legal counsel to the Company Board, that the failure to take such action as
described in the preceding clause (i) would cause the Company Board to violate
its fiduciary duties to the Company's shareholders under Applicable Law; and
(iii) given notice to Parent and Newco of its intent to terminate this Agreement
and of the terms and conditions of the Alternative Transaction, such notice to
be given at least five Business Days prior to the date of termination of this
Agreement.
SECTION 8.2. EFFECT OF TERMINATION.
Except as provided in Section 5.2 and Section 9.2 hereof, in the event
of the termination of this Agreement, the Stock Option Agreement or the Voting
Agreements and the abandonment of the Merger all strictly pursuant to Section
8.1, this Agreement, the Stock Option Agreement or the Voting Agreements shall
thereafter become void and have no effect, and no Party shall have any liability
to any other Party or its shareholders or directors or officers in respect
thereof, except that nothing herein shall relieve any Party from liability for
any willful breach hereof. Notwithstanding anything to the contrary set forth
herein, if Parent terminates this Agreement, the Stock Option Agreement or the
Voting Agreements pursuant to Sections 8.1(d)(i), 8.1(d)(ii)
36
or 8.1(d)(iii), or if the Company terminates this Agreement pursuant to Section
8.1(f), then Company shall pay to Parent, on the second U.S. Business Day
following any such termination, an amount equal to $1,023,000.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.1. NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES.
None of the representations and warranties in this Agreement or in any
instrument delivered pursuant hereto shall survive the Effective Time, provided
--------
that this Section 9.1 shall not limit any covenant or agreement of the Parties
that by its terms contemplates performance after the Effective Time.
SECTION 9.2. EXPENSES, ETC.
Except as contemplated by this Agreement, all costs and expenses
incurred in connection with this Agreement and the consummation of the
Transactions shall be paid by the Party incurring such costs and expenses,
except that Parent and the Company shall each pay one half of the costs incurred
in printing and distributing the Proxy Statement, if any.
SECTION 9.3. PUBLICITY.
The Company and Parent agree that they will not issue any press release
or make any other public announcement concerning this Agreement, the Stock
Option Agreement, the Voting Agreements or the Transactions without the prior
consent of the other Party, except that the Company or Parent may make such
public disclosure that it believes in good faith to be required by law (in which
event such Party shall consult with the other prior to making such disclosure).
SECTION 9.4. EXECUTION IN COUNTERPARTS.
For the convenience of the Parties, this Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 9.5. NOTICES.
All notices requests, claims, demands and other communications that are
required or may be given pursuant to the terms of this Agreement shall be in
writing and shall be deemed given on the day delivered personally or sent by
telecopy (with a confirmation copy by a means permitted hereunder), if delivered
or sent on a Business Day or on the first Business Day thereafter if not, and
one Business Day after consignment to an overnight courier (providing proof of
delivery), or mailed by registered or certified mail, postage prepaid, to the
respective parties at their addresses as follows:
37
If to Newco or Parent to:
STEAG Electronic Systems GmbH
Xxxxxxxxxxxxxx Xxxxxxx 0-0
00000 Xxxxx, Xxxxxxx
Attention: Xx. Xxxxx Xxxxxxxxxx
with a copy to:
Northrop, Stradar & Xxxxx, P.C.
Xxx Xxxxxx Xxxxx
X.X. Xxx 0000
Xxxxxxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Xx., Esq.
Telecopy: (000) 000-0000
and to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx, Esq.
Telecopy: (000) 000-0000
If to the Company, to:
AG Associates, Inc.
0000 Xxxxxxx Xxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxx Gat
with a copy to:
Xxxxxx Xxxx & Priest LLP
000 Xxxx Xxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxx X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
or such other address or addresses as any Party shall have designated by notice
in writing to the other parties hereto.
SECTION 9.6. WAIVERS.
The Company, on the one hand, and Parent and Newco, on the other hand,
may, by written notice to the other, at any time prior to the Effective Time (i)
extend the time for the
38
performance of any of the obligations or other actions of the other under this
Agreement; (ii) waive any inaccuracies in the representations or warranties of
the other contained in this Agreement or in any document delivered pursuant to
this Agreement; (iii) waive compliance by the other with any of the conditions
contained in this Agreement; or (iv) waive performance of any of the obligations
of the other under this Agreement. Except as provided in the preceding sentence,
no action taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any Party, shall be deemed to constitute a
waiver by the Party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any Party of a breach of any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach.
SECTION 9.7. ENTIRE AGREEMENT.
This Agreement, the Stock Option Agreement, the Voting Agreements, the
Mutual Non-Disclosure Agreement, the Company Disclosure Schedule and the
documents executed at the Effective Time in connection herewith, constitute the
entire agreement among the Parties with respect to the subject matter hereof and
supersede all prior agreements and understandings, oral and written, among the
Parties with respect to the subject matter hereof. No representation, warranty,
promise, inducement or statement of intention has been made by any Party that is
not embodied in this Agreement or such other documents, and none of the Parties
shall be bound by, or be liable for, any alleged representation, warranty,
promise, inducement or statement of intention not embodied herein or therein.
SECTION 9.8. APPLICABLE LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of California, without regard to principles of conflict of
laws.
SECTION 9.9. SPECIFIC PERFORMANCE.
The Parties agree that irreparable damage would occur in the event any
provision of this Agreement were not performed in accordance with the terms
hereof and that the Parties shall be entitled to specific performance of the
terms hereof, in addition to any other remedy at law or in equity.
SECTION 9.10. BINDING EFFECT, BENEFITS.
This Agreement shall inure to the benefit of and be binding upon the
Parties and their respective permitted successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, nothing in this Agreement,
expressed or implied, is intended to confer on any person other than the Parties
or their respective permitted successors and assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement; provided,
--------
however, that the provisions of Sections 5.7 and 6.6 hereof shall accrue to the
-------
benefit of, and shall be enforceable by, each of the current and former
directors and officers of the Company and the provisions of Section 5.7 hereof
shall accrue to the benefit of, and shall be enforceable by each active employee
of the Company and its Subsidiaries as provided in Section 5.7 hereof.
39
SECTION 9.11. ASSIGNABILITY.
Neither this Agreement nor any of the Parties' rights hereunder shall
be assignable by any Party without the prior written consent of the other
Parties.
SECTION 9.12. AMENDMENTS.
This Agreement may be varied, amended or supplemented at any time
before or after the approval and adoption of this Agreement by the shareholders
of the Company, by action of the respective boards of directors of the Company
and Newco and by the proper officers of Parent, without action by the
shareholders thereof; provided that, after approval and adoption of this
--------
Agreement by the Company's shareholders, if required, no such variance,
amendment or supplement shall, without consent of such shareholders, reduce the
amount or alter the form of the consideration that the holders of the capital
stock of the Company shall be entitled to receive following the Effective Time
pursuant to Section 2.5 hereof. Without limiting the generality of the
foregoing, this Agreement may only be amended, varied or supplemented by an
instrument in writing, signed by the Parties.
SECTION 9.13. HEADINGS.
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 9.14. MUTUAL DRAFTING.
Each Party has participated in the drafting of this Agreement, which
each Party acknowledges is the result of extensive negotiations between the
Parties.
40
IN WITNESS WHEREOF, the Parties have caused their duly authorized
representatives to execute and deliver this Agreement as of the date first above
written.
STEAG ELECTRONIC SYSTEMS GMBH
By: /s/ Xxxx-Xxxxx Xxxx
-----------------------------------------
Name: Xxxx-Xxxxx Xxxx
---------------------------------------
Title: Chief Executive Officer
--------------------------------------
By: /s/ Xxxxx Xxxxxxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxxxxxx
---------------------------------------
Title: Officer with Statutory Authority
---------------------------------------
MIG ACQUISITION CORPORATION
By: /s/ Xxxxxxxx Xxxxx-Xxxxxxx
-----------------------------------------
Name: Xxxxxxxx Xxxxx-Xxxxxxx
---------------------------------------
Title: Chief Financial Officer
---------------------------------------
AG ASSOCIATES, INC.
By: /s/ Arnon Gat
-----------------------------------------
Name: Arnon Gat
----------------------------------------
Title: Chief Executive Officer and Chairman
-------------------------------------
of the Board of Directors
-------------------------------------
41
ANNEX I
DEFINED TERMS
"AARC" shall have the meaning ascribed to it in Section 3.5.
----
"Agreement" shall mean the Agreement and Plan of Merger to which this
---------
Annex I is attached. References in this Annex I to a "Section" shall mean a
-------
reference to the specified Section of the Agreement.
"Alternative Transactions" shall have the meaning ascribed to it in
------------------------
Section 5.4(c).
"Applicable Law" shall mean any foreign or domestic, federal, state or
--------------
local, statute, law, ordinance, rule, administrative interpretation, regulation,
order, writ, injunction, directive, permit, judgment, decree or other
requirement of any Governmental Authority.
"Approvals" shall have the meaning ascribed to it in Section 3.1.
---------
"Blue Sky" shall have the meaning ascribed to it in Section 3.5.
--------
"Business Day" shall mean a weekday other than a public holiday in the
------------
U.S. or the Federal Republic of Germany, as the case may be. The term "U.S.
----
Business Day" shall mean a business day for purposes of the Exchange Act.
------------
"Canon" shall have the meaning ascribed to it in the Recitals hereto.
-----
"Certificate" shall have the meaning ascribed to it in Section 2.7(a).
-----------
"CGCL" shall have the meaning ascribed to it in Section 1.2(a).
----
"Closing" shall have the meaning ascribed to it in Section 2.3.
-------
"Code" shall mean the Internal Revenue Code of 1986, as amended.
----
"Common Stock Option" shall have the meaning ascribed to it in Section
-------------------
6.2.
"Company" shall have the meaning ascribed to it in the Recitals to the
-------
Agreement.
"1998 Company Balance Sheet" shall have the meaning ascribed to it in
--------------------------
Section 3.9.
"Company Board" shall have the meaning ascribed to it in Section
-------------
1.2(a).
"Company Common Stock" shall have the meaning ascribed to it in the
--------------------
Recitals to the Agreement.
"Company Option Plans" shall have the meaning ascribed to it in Section
--------------------
3.3.
II-1
"Company Permits" shall have the meaning ascribed to it in Section 3.6.
---------------
"Company Preferred Stock" shall have the meaning ascribed to it in
-----------------------
Section 3.3.
"Constituent Corporations" shall have the meaning ascribed to it in the
------------------------
Recitals to the Agreement.
"Continuing Director" shall have the meaning ascribed to it in Section
-------------------
1.4(a).
"Defined Benefit Plan" shall have the meaning ascribed to it in Section
--------------------
3.14(a).
"DGCL" shall have the meaning ascribed to it in Section 2.1.
----
"Dissenting Shares" shall have the meaning ascribed to it in Section
-----------------
2.8.
"Effective Time" shall have the meaning ascribed to it in Section 1.3.
--------------
"Encumbrance" shall mean any pledge, security interest, lien, claim,
-----------
encumbrance, mortgage, charge, hypothecation, option, right of first refusal or
offer, preemptive right, voting agreement, voting trust, proxy, power of
attorney, escrow, option, forfeiture, penalty, action at law or in equity,
security agreement, shareholder agreement or other agreement, arrangement,
contract, commitment, understanding or obligation, or any other restriction,
qualification or limitation on the use, transfer, right to vote, right to
dissent and seek appraisal, receipt of income or other exercise of any attribute
of ownership.
"Environmental Approvals" shall have the meaning ascribed to it in
-----------------------
Section 3.16 hereof.
"ERISA" shall have the meaning ascribed to it in Section 3.11(a).
-----
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
"Existing Option Plan" shall have the meaning ascribed to it in Section
--------------------
2.6.
"Fairness Opinion" shall have the meaning ascribed to it in Section
----------------
3.21.
"FCO" shall have the meaning ascribed to it in Section 3.5.
---
"FSC" shall have the meaning ascribed to it in Section 3.1(b).
---
"GAAP" shall have the meaning ascribed to it in Section 3.7(b).
----
"Governmental Authority" shall mean any: (a) nation, principality,
----------------------
state, commonwealth, province, territory, county, municipality, district or
other jurisdiction of any nature; (b) federal, state, local, municipal, foreign
or other government; (c) governmental or quasi-governmental authority of any
nature (including any governmental division, subdivision, department, agency,
bureau, branch, office, commission, council, board, instrumentality, officer,
official, representative, organization, unit, body or Entity and any court or
other tribunal);
II-2
(d) multinational organization or body; or (e) individual, Entity or body
exercising, or entitled to exercise, any executive, legislative, judicial,
administrative, regulatory, police, military or taxing authority or power of any
nature.
"Holder" shall have the meaning ascribed to it in Section 2.6.
------
"HSR Act" shall have the meaning ascribed to it in Section 3.5.
-------
"Intellectual Property Rights" shall have the meaning ascribed to it in
----------------------------
Section 3.20(b).
"Interest" shall have the meaning ascribed to it in Section 6.1(a).
--------
"IRS" shall have the meaning ascribed to it in Section 3.11(b).
---
"Israeli Affiliate" shall mean AG Associates (Israel) Ltd., a company
-----------------
formed under the laws of Israel.
"Knowledge" or "best knowledge" of the Company shall mean the knowledge
--------- --------------
of any of the executive officers of the Company (within the meaning of Section
16 of the Exchange Act) which they have or would have had if they had discharged
their obligations as such officers in a reasonably prudent and customary manner.
"Liens" shall have the meaning ascribed to it in Section 3.3.
-----
"Loan" shall have the meaning ascribed to it in Section 6.1(a).
----
"Loan Date" shall have the meaning ascribed to it in Section 6.2.
---------
"Material" means material to the value of the Company and its
--------
Subsidiaries, taken as a whole.
"Material Adverse Effect" shall mean an effect on the business, assets,
-----------------------
condition (financial or other), operating results or prospects of the Company
that is material and adverse to the value of the Company and its Subsidiaries,
taken as a whole, other than the direct effects of (A) the announcement of the
Transactions, (B) general economic conditions or (C) conditions that are
generally applicable to the business segments in which the Company or its
Subsidiaries conducts business. In addition, and without limiting the generality
of the foregoing sentence, the term "Material Adverse Effect" shall not include
the effect on the Company of general business declines or reverses, such as
lower than forecast revenues or bookings (whether as a result of economic
conditions, actions of competitors or business interruptions), reductions in
gross margins or technical problems with product development, introduction or
evaluation or increases in operating expenses attributable to changes in product
shipment volumes or changes in supplier pricing.
"Material Contracts" shall have the meaning ascribed to it in Section
------------------
3.5.
"Maturity Date" shall have the meaning ascribed to it in Section
-------------
6.1(a).
II-3
"Merger" shall have the meaning ascribed to it in the Recitals to the
------
Agreement.
"Merger Consideration" shall have the meaning ascribed to it in Section
--------------------
2.5(d).
"Mutual Non-Disclosure Agreement" shall have the meaning ascribed to it
-------------------------------
in Section 5.2(b).
"NASD" shall have the meaning ascribed to it in Section 3.5.
----
"Newco" shall have the meaning ascribed to it in the Recitals to the
-----
Agreement.
"Offer" shall have the meaning ascribed to it in the Recitals to the
-----
Agreement.
"Offer Documents" shall have the meaning ascribed to it in Section 1.3.
---------------
"Offer Price" shall have the meaning ascribed to it in Section 1.1(a).
-----------
"Options" shall have the meaning ascribed to it in Section 6.2.
-------
"Parent" shall have the meaning ascribed to it in the Recitals to the
------
Agreement.
"Paying Agent" shall have the meaning ascribed to it in Section 2.7(a).
------------
"Payment Date" shall have the meaning ascribed to it in Section 2.6.
------------
"Post-Acceptance Board" shall have the meaning ascribed to it in
---------------------
Section 1.4(a).
"Principal" shall have the meaning ascribed to it in Section 6.1(a).
---------
"Proxy Statement" shall have the meaning ascribed to it in Section 2.9.
---------------
"Rapro" shall have the meaning ascribed to it in Section 3.1(b).
-----
"Sabbatical" shall have the meaning ascribed to it in Section 5.7.
----------
"SEC" shall have the meaning ascribed to it in Section 1.3(a).
---
"SEC Reports" shall have the meaning ascribed to it in Section 3.7.
-----------
"Securities Act" shall mean the Securities Act of 1933, as amended.
--------------
"Schedule 14D-1" shall have the meaning ascribed to it in Section
--------------
1.3(a).
"Schedule 14D-9" shall have the meaning ascribed to it in Section
--------------
1.3(b).
"Shares" shall have the meaning ascribed to it in the Recitals to the
------
Agreement.
"Special Meeting" shall have the meaning ascribed to it in Section
---------------
2.9(a).
II-4
"Stock Option Agreement" shall have the meaning ascribed to it in the
----------------------
Recitals to the Agreement.
"Subsidiary" shall mean any corporation, partnership, joint venture or
----------
other entity of which securities or other ownership interests having ordinary
voting power to elect a majority of the board of directors or other persons
performing similar functions are at the time owned by the Company and/or one or
more other direct or indirect Subsidiaries.
"Superior Proposal" shall have the meaning ascribed to it in Section
-----------------
4.4(c).
"Surviving Corporation" shall have the meaning ascribed to it in
---------------------
Section 2.1.
"Tax" and "Taxes" shall have the meanings ascribed to it in Section
--- -----
3.15(e).
"Tax Returns" shall have the meaning ascribed to it in Section 3.15(a).
-----------
"Third Party" shall have the meaning ascribed to it in Section 5.4(a).
-----------
"Transaction Expenses" shall mean all legal and accounting fees and
--------------------
expenses incurred by or on behalf of the Company in connection with the
Transactions and the preparation, execution and delivery of this Agreement, it
being expressly understood that "Transaction Expenses" shall not include amounts
due to SoundView Financial Group arising out of their agreement with the Company
dated as of June 25, 1998.
"Transactions" shall have the meaning ascribed to it in the Recitals to
------------
the Agreement.
"Voting Agreements" shall have the meaning ascribed to it in the
-----------------
Recitals to the Agreement.
II-5
ANNEX II
CONDITIONS TO THE OFFER
Capitalized terms used in this Annex II shall have the meanings
assigned to them in the Agreement to which it is attached (the "Merger
------
Agreement").
---------
Notwithstanding any other provision of the Offer, and in addition to
(and not in limitation of) Newco's rights to extend and amend the Offer at any
time in its sole discretion (subject to the provisions of the Merger Agreement),
Newco shall not be required to accept for payment or pay for any Shares, and may
delay the acceptance for payment of or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act, the
payment for, any tendered Shares, and may terminate or amend the Offer as to any
Shares not then paid for, if:
(1) at or prior to the expiration date of the Offer, the number of
Shares validly tendered and not withdrawn, together with any Shares then owned
by Parent or Newco, shall not satisfy the Minimum Condition or the Revised
Minimum Number; or
(2) at or prior to the expiration date of the Offer, (i) any waiting
period under the HSR Act applicable to the purchase of shares of Company Common
Stock pursuant to the Offer shall not have expired or been terminated or (ii)
all requirements of any applicable foreign competition and antitrust statutes
and regulations to the consummation of the Offer shall not have been satisfied,
including approval by the FCO pursuant to the AARC;
(3) immediately prior to the expiration date of the Offer, the
Transaction Expenses (as defined in the Merger Agreement) shall be in excess of
$250,000, as calculated by a schedule delivered by the Company to Newco (i)
identifying and disclosing any and all actual Transaction Expenses as of the
date of such schedule and (ii) identifying and providing reasonable estimates of
any and all other Transaction Expenses following the date of such schedule; or
(4) at any time prior to acceptance for payment of or payment for
Shares, any of the following events or conditions shall occur or exist:
(a) There shall have been instituted or be pending any action or
proceeding by any Governmental Authority, whether or not having the
force of law: (i) challenging or seeking to make illegal, to delay or
otherwise directly or indirectly to restrain or prohibit the making of
the Offer, the acceptance for payment of or payment for some of or all
the Shares by Newco, Parent or any affiliate of Parent or the
consummation by Newco or Parent of any other Transaction, or seeking to
obtain damages in connection with any Transaction; (ii) seeking to
restrain or prohibit Parent's or Newco's full rights of ownership or
operation (or that of Parent's subsidiaries or affiliates) of any
material portion of the business or assets of the Company, or to compel
Parent or any of its subsidiaries or affiliates to dispose of or hold
separate all or any portion of the business or assets of the Company or
of Parent or any of its subsidiaries; (iii) seeking to impose material
limitations on the ability of Parent or any of its Subsidiaries or
affiliates effectively to exercise full rights of ownership of the
Shares, including, without
II-1
limitation, the right to vote any Shares acquired or owned by Parent or
any of its subsidiaries or affiliates on all matters properly presented
to the Company's shareholders; (iv) seeking to require divestiture by
Parent or any of its subsidiaries of any Shares; or (v) that otherwise,
in the judgment of Parent or Newco, may materially adversely affect the
Company, any of the subsidiaries or Parent or any of its subsidiaries;
or
(b) there shall have been any action taken or any statute, rule,
regulation, judgment, administrative interpretation, injunction, order
or decree proposed, enacted, enforced, promulgated, issued or deemed
applicable to Parent or Newco or any subsidiary or affiliate of Parent,
the Company or any of its subsidiaries or the Offer, the acceptance for
payment of or payment for any Shares, the Merger or any other
Transaction, by any Governmental Authority (other than the application
of the routine waiting period provisions of the HSR Act), that has,
directly or indirectly, resulted, or is reasonably likely to, directly
or indirectly, result in any of the consequences referred to in
paragraph (a) above; or
(c) an event shall have occurred that has had or could
reasonably be expected to have a Material Adverse Effect; or
(d) there shall have occurred and be continuing as of the
Effective Time (i) any general suspension of trading in securities on
the New York Stock Exchange or the Nasdaq National Market, (ii) the
declaration of any banking moratorium or any suspension of payments in
respect of banks or any limitation (whether or not mandatory) which is
material to the Transactions on the extension of credit by lending
institutions in the United States or the Federal Republic of Germany
(iii) a commencement of a war, armed hostilities or other national or
international crisis directly involving the United States or the
Federal Republic of Germany or otherwise having a significant adverse
effect on the functioning of the financial markets in the United States
or the Federal Republic of Germany, (iv) any significant change in the
United States or German currency exchange rates or suspension of the
markets therefor (whether or not mandatory) or the imposition of, or
any significant change in, any currency or exchange control laws in the
United States or the Federal Republic of Germany which change or
suspension is material to the Transactions, or (v) any limitation by
any Governmental Authority that is likely to materially and adversely
affect the financing of the Offer or the Merger; or
(e) it shall have been publicly disclosed or Parent or Newco
shall have otherwise learned that any Third Party shall have entered
into a definitive agreement or an agreement in principle with respect
to an Alternative Transaction; or
(f) the Company Board (i) shall have withdrawn, or modified or
changed in a manner adverse to Parent or Newco (including by amendment
of the Schedule 14D-9) its approval or recommendation of the Offer, the
Merger Agreement or the Merger, (ii) shall have recommended an
Alternative Transaction, or (iii) upon request of the Parent or Newco,
shall have failed to reaffirm such approval or recommendation or shall
have resolved to do any of the foregoing; or
II-2
(g) the Company shall have breached or failed to perform in any
material respect any of its covenants or agreements under the Merger
Agreement. The representations and warranties of the Company set forth
in the Merger Agreement, the Common Stock Option or the Stock Option
Agreement shall not be true in any respect when made or at the
Effective Time as if made at and as of such time (other than
representations and warranties which by their terms address matters
only as of a certain date, which shall be true as of such date), and in
either case the effect thereof shall have had or could reasonably be
expected to have a Material Adverse Effect on the Company; or
(h) the Merger Agreement shall have been terminated in
accordance with its terms or amended in accordance with its terms to
provide for such termination or amendment of the Offer.
The foregoing conditions are for the sole benefit of Parent and Newco
and may be asserted or waived by Parent or Newco, regardless of the
circumstances giving rise to any such condition, in whole or in part at any time
and from time to time in their sole discretion. The failure by Parent or Newco
at any time to exercise any of the foregoing rights shall not be deemed a waiver
of any such right, and each such right shall be deemed an ongoing right and may
be asserted at any time and from time to time.
