AGREEMENT AND PLAN OF MERGER
DATED AS OF MAY 1, 1999
AMONG
KONINKLIJKE PHILIPS ELECTRONICS N.V.,
KPE ACQUISITION INC.
AND
VLSI TECHNOLOGY, INC.
a Delaware corporation
TABLE OF CONTENTS
Page
ARTICLE I.
THE TENDER OFFER........................................................ 2
1.1. The Offer..................................................... 2
1.2. SEC Filings................................................... 3
1.3. Company Action................................................ 4
1.4. Composition of the Company Board.............................. 5
ARTICLE II.
THE MERGER.............................................................. 6
2.1. The Merger.................................................... 6
2.2. Closing....................................................... 6
2.3. Effective Time................................................ 6
2.4. Effect of the Merger.......................................... 6
2.5. Certificate of Incorporation.................................. 6
2.6. Bylaws........................................................ 7
2.7. Officers and Directors of Surviving Corporation............... 7
2.8. Effect on Capital Stock....................................... 7
2.9. Surrender and Payment......................................... 8
ARTICLE III.
REPRESENTATIONS AND WARRANTIES.......................................... 10
3.1. Representations and Warranties of the Company................. 10
3.2. Representations and Warranties of Parent...................... 21
3.3. Representations and Warranties of Parent and Merger Sub....... 23
ARTICLE IV.
COVENANTS RELATING TO CONDUCT OF BUSINESS............................... 24
4.1. Covenants of the Company...................................... 24
4.2. Covenants or Parent and Merger Sub............................ 26
4.3. Advice of Changes; Government Filings......................... 27
ARTICLE V.
ADDITIONAL AGREEMENTS................................................... 28
5.1. Approval by the Company's Stockholders........................ 28
5.2. Access to Information......................................... 29
5.3. Approvals and Consents; Cooperation........................... 30
5.4. Acquisition Proposals......................................... 31
i
5.5. Employee Benefits............................................. 32
5.6. Fees and Expenses............................................. 33
5.7. Indemnification; Directors' and Officers' Insurance........... 33
5.8. Public Announcements.......................................... 34
5.9. Takeover Statutes............................................. 34
5.10. Rights Agreement.............................................. 34
5.11. Employee Stock Options........................................ 35
5.12. Further Assurances............................................ 35
ARTICLE VI.
CONDITIONS PRECEDENT.................................................... 35
6.1. Conditions to Each Party's Obligation to Effect the Merger.... 35
ARTICLE VII.
TERMINATION AND AMENDMENT............................................... 36
7.1. Termination................................................... 36
7.2. Effect of Termination......................................... 39
7.3. Amendment..................................................... 40
7.4. Extension..................................................... 40
ARTICLE VIII.
GENERAL PROVISIONS...................................................... 40
8.1. Non-Survival of Representations, Warranties and Agreements;
No Other Representations and Warranties....................... 40
8.2. Notices....................................................... 41
8.3. Interpretation................................................ 41
8.4. Counterparts.................................................. 42
8.5. Entire Agreement; No Third Party Beneficiaries................ 42
8.6. Governing Law; Jurisdiction; Waiver of Jury Trial............. 42
8.7. Severability.................................................. 43
8.8. Assignment.................................................... 44
8.9. Enforcement................................................... 44
8.10. Definitions................................................... 44
8.11. Performance by Merger Sub..................................... 46
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GLOSSARY OF DEFINED TERMS
LOCATION OF
DEFINITION DEFINED TERM
---------- ------------
Acquisition Proposal.............................................Section 5.4(a)
Agreement..............................................................Preamble
Board of Directors..............................................Section 8.10(a)
Business Day....................................................Section 8.10(b)
Certificate of Merger...............................................Section 2.3
Certificates.....................................................Section 2.9(b)
Closing.............................................................Section 2.2
Closing Date........................................................Section 2.2
Code.............................................................Section 3.1(h)
Company................................................................Preamble
Company Benefit Plans.........................................Section 3.1(1)(i)
Company Board..........................................................Recitals
Company Common Stock...................................................Recitals
Company Disclosure Schedule.........................................Section 3.1
Company Equity Plans............................................Section 8.10(c)
Company Material Contracts.......................................Section 3.1(k)
Company Permits..................................................Section 3.1(f)
Company Products.................................................Section 3.1(q)
Company Rights Agreement......................................Section 3.1(b)(i)
Company SEC Reports...........................................Section 3.1(d)(i)
Company Stockholders Meeting.....................................Section 5.1(c)
Company Voting Debt.........................................Section 3.1(b)(iii)
Confidentiality Agreement...........................................Section 5.2
Continuing Directors.............................................Section 1.4(c)
DGCL...................................................................Recitals
Dissenting Shares................................................Section 2.9(h)
Effective Time......................................................Section 2.3
ERISA.........................................................Section 3.1(1)(i)
Environmental Law................................................Section 3.1(s)
Exchange Act................................................Section 3.1(c)(iii)
Exchange Agent...................................................Section 2.9(a)
Expenses............................................................Section 5.6
GAAP..........................................................Section 3.1(d)(i)
Governmental Entity.........................................Section 3.1(c)(iii)
Xxxxxxxxx & Xxxxx................................................Section 3.1(n)
Hazardous Substance..............................................Section 3.1(s)
iii
LOCATION OF
DEFINITION DEFINED TERM
---------- ------------
Indemnified Party...................................................Section 5.7
Information Statement.........................................Section 3.1(e)(i)
Intellectual Property...........................................Section 8.10(d)
Liens........................................................Section 3.1(b)(ii)
Material Adverse Effect.........................................Section 8.10(e)
Material Subsidiaries...........................................Section 8.10(f)
Merger.................................................................Recitals
Merger Consideration.............................................Section 2.8(c)
Merger Sub.............................................................Preamble
Minimum Condition................................................Section 1.1(a)
Minimum Shares...................................................Section 1.1(a)
Xxxxxx Xxxxxxx...................................................Section 3.1(n)
Multiemployer Plan............................................Section 3.1(l)(i)
Nasdaq......................................................Section 3.1(c)(iii)
Offer..................................................................Recitals
Offer Documents..................................................Section 1.2(a)
Organizational Documents........................................Section 8.10(g)
Option..........................................................Section 5.10(a)
Outside Date.....................................................Section 7.1(b)
Parent.................................................................Preamble
Parent Disclosure Schedule..........................................Section 3.2
Parent Representatives..............................................Section 5.2
Payment Fund.....................................................Section 2.9(a)
Person..........................................................Section 8.10(h)
Price Per Share........................................................Recitals
Proxy Statement...............................................Section 3.1(e)(i)
Required Company Votes...........................................Section 3.1(j)
Required Consents...............................................Section 8.10(i)
Required Regulatory Approvals....................................Section 6.1(d)
Schedule 14D-1...................................................Section 1.2(a)
Schedule 14D-9...................................................Section 1.2(b)
SEC..............................................................Section 1.2(a)
Securities Act..............................................Section 3.1(c)(iii)
Subsidiary......................................................Section 8.10(j)
Superior Proposal................................................Section 5.4(b)
Surviving Corporation...............................................Section 2.1
Takeover Statute....................................................Section 5.9
Tax.............................................................Section 8.10(k)
Taxable.........................................................Section 8.10(k)
Taxes...........................................................Section 8.10(k)
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LOCATION OF
DEFINITION DEFINED TERM
---------- ------------
Tax Return......................................................Section 8.10(k)
Terminating Company Breach.......................................Section 7.1(h)
Terminating Parent Breach........................................Section 7.1(i)
Termination Fee..................................................Section 7.2(b)
the other party.................................................Section 8.10(l)
Violation....................................................Section 3.1(c)(ii)
Year 2000 Compliant..............................................Section 3.1(q)
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This AGREEMENT AND PLAN OF MERGER, dated as of May 1, 1999 (this
"Agreement"), by and among KONINKLIJKE PHILIPS ELECTRONICS N.V., a company
incorporated under the laws of The Netherlands ("Parent"), KPE ACQUISITION INC.,
a Delaware corporation and an indirect wholly owned Subsidiary of Parent
("Merger Sub"), and VLSI TECHNOLOGY, INC., a Delaware corporation (the
"Company").
W I T N E S S E T H :
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company have each approved the acquisition of the Company by Parent upon the
terms and subject to the conditions of this Agreement;
WHEREAS, in furtherance of such acquisition, Parent proposes to cause
Merger Sub to amend its tender offer commenced on March 5, 1999 (as amended
prior to the date hereof and as it may be amended from time to time as permitted
under this Agreement, the "Offer") to purchase all of the issued and outstanding
shares of the Common Stock, par value $.01 per share, of the Company ("Company
Common Stock") at a price per share of Company Common Stock of $21.00 net to the
seller in cash (such price, as it may be increased in accordance with the terms
of this Agreement, the "Price Per Share") upon the terms and conditions set
forth in this Agreement, including Annex A hereto;
WHEREAS, in order to complete such acquisition, the respective Boards
of Directors of Parent, Merger Sub and the Company have approved the merger of
Merger Sub with and into the Company (the "Merger"), upon the terms and subject
to the conditions of this Agreement and in accordance with the Delaware General
Corporation Law (the "DGCL"), whereby each issued and outstanding share of
Company Common Stock not owned directly or indirectly by Parent or the Company
will be converted into the right to receive the Price Per Share in cash;
WHEREAS, the Board of Directors of the Company (the "Company Board")
has unanimously approved this Agreement, the Offer and the Merger, has
determined that the Offer and the Merger are fair to and in the best interests
of the Company's stockholders and is recommending that the Company's
stockholders accept the Offer, tender their shares of Company Common Stock
thereunder and adopt and approve the Merger and this Agreement:
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I.
THE TENDER OFFER
1.1. THE OFFER.
(a) Provided that this Agreement shall not have been terminated in
accordance with Article VII, then (i) not later than the first Business Day
after execution of this Agreement, Parent and the Company shall issue a public
announcement of the execution of this Agreement and (ii) Merger Sub shall, as
soon as practicable, but in no event later than two Business Days after the date
of such announcement, amend (within the meaning of Rule 14d-2(a) of the Exchange
Act) the Offer to provide for the purchase of all of the outstanding shares of
Company Common Stock at the Price Per Share subject to reduction only for any
applicable federal withholding taxes. The initial expiration date of the Offer
shall be the tenth Business Day from and after the date the Offer is amended to
provide for the purchase of all of the outstanding shares of Company Common
Stock in accordance with the terms hereof. The Offer shall be made pursuant to a
Supplemental Offer to Purchase and related Letter of Transmittal in form
reasonably satisfactory to the Company and containing terms and conditions set
forth in this Agreement. The obligation of Merger Sub to accept for payment,
purchase and pay for shares of Company Common Stock tendered pursuant to the
Offer shall be subject only to (i) at least that number of shares of Company
Common Stock equivalent to a majority of the total issued and outstanding shares
of Common Stock on a fully diluted basis on the date such shares are purchased
pursuant to the Offer (the "Minimum Shares") being validly tendered and not
withdrawn prior to the expiration of the Offer (the "Minimum Condition") and
(ii) the satisfaction of the other conditions set forth in Annex A hereto, any
of which conditions may be waived by Merger Sub in its sole discretion. The
Company agrees that no shares of Company Common Stock held by the Company or any
of its Subsidiaries will be tendered to Merger Sub pursuant to the Offer.
(b) Without the prior written consent of the Company, neither Parent
nor Merger Sub will (i) decrease the Price Per Share payable in the Offer, (ii)
decrease the number of shares of Company Common Stock sought pursuant to the
Offer or change the form of consideration payable in the Offer, (iii) change or
amend the conditions to the Offer (including the conditions set forth in Annex A
hereto) or impose additional conditions to the Offer, (iv) change the expiration
date of the Offer or (v) otherwise amend, add or waive any term or condition of
the Offer in any manner adverse to the holders of shares of Company Common
Stock; provided, however, that if on any scheduled expiration date of the Offer
all conditions to the Offer have not been satisfied or waived, Merger Sub may,
and at the request of the Company shall, from time to time, extend the
expiration date of the Offer for up to 10 additional Business Days (but in no
event shall Merger Sub be required to extend the expiration date of the Offer
beyond the Outside Date); and provided further that Merger Sub may, (x) without
the consent of the Company, extend the Offer for any period required by any
rule, regulation, interpretation or position of the SEC applicable to the Offer
and (y) extend the Offer if (1) the conditions to the Offer shall have
2
been satisfied or waived and (2) the number of shares of Company Common Stock
that have been validly tendered and not withdrawn represent more than 50% but
less than 90% of the issued and outstanding shares of the Company Common Stock;
provided, however, that in no event shall the extensions permitted under the
foregoing clause (y) exceed, in the aggregate, 10 Business Days. Parent and
Merger Sub will, subject to the terms and conditions of this Agreement, use
their best efforts to consummate the Offer. Assuming the prior satisfaction or
waiver of all the conditions to the Offer set forth in Annex A, and subject to
the terms and conditions of this Agreement, Merger Sub shall, and Parent shall
cause Merger Sub to, accept for payment, purchase and pay for, in accordance
with the terms of the Offer, all shares of Company Common Stock validly tendered
and not withdrawn pursuant to the Offer as soon as permitted under applicable
law, recognizing that the parties wish to close as expeditiously as possible
after all Required Regulatory Approvals are obtained and following the
expiration or termination of all applicable waiting periods under antitrust or
other competition laws of any applicable jurisdictions. Parent shall provide, or
cause to be provided, to Merger Sub, on a timely basis, the funds necessary to
purchase any shares of Company Common Stock that Merger Sub becomes obligated to
purchase pursuant to the Offer.
1.2. SEC FILINGS.
(a) As soon as reasonably practicable following the date hereof but
in no event later than two Business Days after the date of the announcement
referenced in Section 1.1(a), Parent and Merger Sub shall file with the
Securities and Exchange Commission (the "SEC") with respect to the Offer, an
amendment to the Tender Offer Statement on Schedule 14D-1 filed by Parent and
Merger Sub on March 5, 1999 (as so amended, and as amended prior to the date
hereof and from time to time hereafter, the "Schedule 14D-1") to provide for the
purchase of the issued and outstanding shares of Company Common Stock in
accordance with the terms hereof. The Schedule 14D-1 will comply as to form and
content in all material respects with the applicable provisions of the federal
securities laws and will contain or incorporate by reference the Supplemental
Offer to Purchase, the related Letter of Transmittal and other ancillary
documents and agreements pursuant to which the Offer will be made (the Schedule
14D-1, the Supplemental Offer to Purchase, the Letter of Transmittal and such
other documents being collectively referred to herein as the "Offer Documents").
The Company and its counsel shall be given an opportunity to review and comment
upon the Offer Documents and any amendment or supplement thereto prior to the
filing thereof with the SEC, and Parent and Merger Sub shall consider such
comments in good faith. Parent and Merger Sub agree to provide to the Company
and its counsel any comments which Parent, Merger Sub or their counsel may
receive from the Staff of the SEC with respect to the Offer Documents promptly
after receipt thereof. Parent, Merger Sub and the Company agree to correct
promptly any information provided by any of them for use in the Offer Documents
which shall have become false or misleading in any material respect, and Parent
and Merger Sub further agree to take all steps necessary to cause the Schedule
14D-1 as so corrected to be filed with the SEC and to disseminate any revised
Offer
3
Documents to the Company's stockholders, in each case as and to the extent
required by the applicable provisions of the federal securities laws.
(b) The Company shall file with the SEC an amendment to the
Solicitation/Recommendation Statement on Schedule 14D-9 filed by the Company on
March 18, 1999 (as so amended, and as amended prior to the date hereof and as
amended from time to time hereafter, the "Schedule 14D-9") containing the
recommendation of the Company Board described in Section 5.1(a) (subject to the
right of the Company Board to withdraw, amend or modify such recommendation in
accordance with the terms of this Agreement) which will comply as to form and
content in all material respects with the applicable provisions of the federal
securities laws. The Company will file its amended Schedule 14D-9 no later than
four Business Days following the filing of the amendment to the Schedule 14D-1
as required by Section 1.2(a). The Company will cooperate with Parent and Merger
Sub in mailing or otherwise disseminating the Schedule 14D-9 with the
appropriate Offer Documents to the stockholders of the Company.Parent and its
counsel shall be given an opportunity to review and comment upon the Schedule
14D-9 and any amendment or supplement thereto prior to the filing thereof with
the SEC, and the Company shall consider any such comments in good faith. The
Company agrees to provide to Parent and Merger Sub and their counsel any
comments which the Company or its counsel may receive from the Staff of the SEC
with respect to the Schedule 14D-9 promptly after receipt thereof. The Company,
Parent and Merger Sub agree to correct promptly any information provided by any
of them for use in the Schedule 14D-9 which shall hare become false or
misleading in any material respect, and the Company further agrees to take all
steps necessary to cause such Schedule 14D-9 as so corrected to be filed with
the SEC and disseminated to the Company's stockholders, in each case as and to
the extent required by the applicable provisions of the federal securities laws.
Parent, Merger Sub and the Company each hereby agree to provide promptly such
information necessary to the preparation of the exhibits and schedules to the
Schedule 14D-9 and the Offer Documents which the respective party responsible
therefor shall reasonably request.
1.3. COMPANY ACTION. Promptly upon execution of this Agreement and in
connection with the Offer, the Company shall furnish Merger Sub with such
information (including a list of the stockholders of the Company, mailing labels
and a list of securities positions, each as of a recent date), and shall
thereafter render such assistance, as Parent or Merger Sub may reasonably
request in communicating the Offer to the Company's stockholders. Subject to the
requirements of applicable law and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Merger, Parent and Merger Sub and each of their respective affiliates and
associates shall (a) hold in confidence the information contained in any of such
labels and lists, (b) use such information only in connection with the Offer and
the Merger and (c) if this Agreement is terminated, promptly deliver to the
Company all copies of such information then in their possession.
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1.4. COMPOSITION OF THE COMPANY BOARD.
(a) Promptly upon the acceptance for payment of, and payment by
Merger Sub in accordance with the Offer for, not less than a majority of the
outstanding shares of Company Common Stock on a fully diluted basis pursuant to
the Offer, Merger Sub shall be entitled to designate such number of members of
the Company Board, rounded up to the next whole number, equal to that number of
directors which equals the product of the total number of directors on the
Company Board (giving effect to the directors elected pursuant to this sentence)
multiplies by the percentage that such number of shares of Company Common Stock
owned in the aggregate by Merger Sub or Parent, upon such acceptance for
payment, bears to the number of shares of Company Common Stock outstanding;
provided, however, that until the Effective Time there shall be at least two
Continuing Directors. Upon the written request of Merger Sub, the Company shall,
on the date of such request, (i) either increase the size of the Company Board
or use its reasonable efforts to secure the resignations of such number of its
incumbent directors as is necessary to enable Parent's designees to be so
elected to the Company Board and (ii) cause Parent's designees to be so elected,
in each case as may be necessary to comply with the foregoing provisions of
this Section 1.4(a).
(b) The Company's obligation to cause designees of Merger Sub to be
elected or appointed to tho Company's Board shall be subject to Section 14(f) of
the Exchange Act and Rule 14f-1 promulgated thereunder. The Company shall
promptly take all actions required pursuant to Section 14(f) and Rule 14f-1 in
order to fulfill its obligations under this Section 1.4, and shall include in
the Schedule 14D-9 such information with respect to the Company and its officers
and directors as is required under Section 14(f) and Rule 14f-1. Parent and
Merger Sub will supply to the Company in writing and be solely responsible for
any information with respect to any of them and their nominees, officers,
directors and affiliates required by Section 14(f) and Rule 14f-1 and applicable
rules and regulations.
(c) After the time that Merger Sub's designees constitute at least a
majority of the Company's Board and until the Effective Time, any (i) amendment
or termination of this Agreement, (ii) amendment to the Organizational Documents
of the Company, (iii) extension of time for the performance or waiver of the
obligations or other acts of Parent or Merger Sub or waiver of the Company's
rights hereunder or (iv) action by the Company with respect to this Agreement
and the transactions contemplated hereby which materially and adversely affects
the interests of the stockholders of the Company, shall require the approval of
a majority of the then serving directors, if any, who are directors as of the
date hereof (the "Continuing Directors"), except to the extent that applicable
law requires that such action be acted upon by the full Company Board, in which
case such action will require the concurrence of a majority of the Company
Board, which majority shall include each of the Continuing Directors. If there
is more than one Continuing Director and prior to the Effective Time, the number
of Continuing Directors is reduced for any reason, the remaining Continuing
Director or Directors shall be entitled to designate persons to fill such
vacancies who shall be deemed Continuing Directors for purposes
5
of this Agreement. In the event there is only one Continuing Director and he or
she resigns or is removed or if all Continuing Directors resign or are removed,
he, she or they, as applicable, shall be entitled to designate his, her or their
successors, as the case may be, each of whom shall be deemed a Continuing
Director for purpose of this Agreement. The Company Board shall not delegate any
matter set forth in this Section 1.4 to any committee of the Company Board.
ARTICLE II.
THE MERGER
2.1. THE MERGER. Upon the terms and subject to the conditions set forth in this
Agreement, and in accordance with the DGCL, Merger Sub shall be merged with and
into the Company at the Effective Time. Following the Merger, the separate
corporate existence of Merger Sub shall cease, and the Company shall continue as
the surviving corporation (the "Surviving Corporation") in accordance with the
DGCL.
2.2. CLOSING. The closing of the Merger (the "Closing") will take place as soon
as practicable after satisfaction or waiver (as permitted by this Agreement and
applicable law) of the conditions (excluding conditions that, by their terms,
cannot be satisfied until the Closing Date) set forth in Article VI (the
"Closing Date"), unless another time or date is agreed to in writing by the
parties hereto. The Closing shall be held at the offices of Xxxxxx & Xxxxxxx,
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, XX 00000, unless another place
is agreed to in writing by the parties hereto.
2.3. EFFECTIVE TIME. Upon the Closing, the parties shall file with the
Secretary of State of the State of Delaware either (i) a certificate of merger,
in form and substance satisfactory to the Company and Parent, or (ii) in the
event Merger Sub shall have acquired 90% or more of the outstanding shares of
Company Common Stock, a certificate of ownership and merger (in either such
case, the "Certificate of Merger") executed in accordance with the relevant
provisions of the DGCL and shall make all other filings, recordings or
publications required under the DGCL in connection with the Merger. The Merger
shall become effective at such time as the Certificate of Merger is duly filed
with the Delaware Secretary of State, or at such other time as the parties may
agree and specify in the Certificate of Merger (the time the Merger becomes
effective being the "Effective Time").
2.4. EFFECT OF THE MERGER. At and after the Effective Time, the Merger will
have the effects set forth in Section 259 of the DGCL.
2.5. CERTIFICATE OF INCORPORATION. At the Effective Time and without any
further action on the part of the Company and Merger Sub, the certificate of
incorporation of the Company shall be amended to read in its entirety as the
certificate of incorporation of Merger Sub reads as in effect immediately prior
to the Effective Time until thereafter changed or amended as provided therein
6
or by applicable law, provided that such certificate of incorporation shall be
amended to reflect "VLSI Technology, Inc." as the name of the Surviving
Corporation.
2.6. BYLAWS. The bylaws of Merger Sub as in effect at the Effective Time shall
be the bylaws of the Company until thereafter changed or amended as provided
therein or by applicable law.
2.7. OFFICERS AND DIRECTORS OF SURVIVING CORPORATION. The directors of Merger
Sub immediately prior to the Effective Time shall be the initial directors of
the Surviving Corporation, until the earlier of their resignation or removal or
otherwise ceasing to be a director or until their respective successors are duly
elected and qualified, as the case may be. The officers of the Company
immediately prior to the Effective Time shall be the initial officers of the
Surviving Corporation, until the earlier of their resignation or removal or
otherwise ceasing to be an officer or until their respective successors are duly
elected and qualified, as the case may be.
2.8. EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of the Merger
and without any action on the part of Parent, Merger Sub, the Company or the
holder of any shares of Company Common Stock or any shares of capital stock of
Merger Sub:
(a) Capital Stock of Merger Sub. Each issued and outstanding
share of capital stock of Merger Sub shall be converted into and
become one fully paid and nonassessable share of common stock, par
value $.01 per share, of the Surviving Corporation.
(b) Cancellation of Treasury Stock and Parent-Owned Stock. Each
share of Company Common Stock that is owned by the Company or by a
wholly owned Subsidiary of the Company and each share of Company
Common Stock that is owned by Parent, Merger Sub or any other wholly
owned Subsidiary of Parent shall automatically be canceled and retired
and shall cease to exist, and no Merger Consideration shall be
delivered in exchange therefor.
(c) Conversion of Company Common Stock. Subject to Section
2.9(h), at the Effective Time each issued and outstanding share of
Company Common stock (other than shares to be canceled in accordance
with Section 2.8(b)) shall be converted into the right to receive
$21.00 in cash, without interest (the "Merger Consideration"). As of
the Effective Time, all such shares of Company Common Stock shall no
longer be outstanding and shall automatically be canceled and retired
and shall cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to
have any rights with respect thereto, except the right to receive upon
the surrender of such certificates, the Merger Consideration.
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2.9. SURRENDER AND PAYMENT.
(a) Exchange Agent. Prior to the Effective Time, Parent shall
designate a bank or trust company reasonably acceptable to the Company to act as
agent for the holders of shares of Company Common Stock in connection with the
Merger (the "Exchange Agent") to receive the Merger Consideration to which
holders of shares of Company Common Stock shall become entitled pursuant to
Section 2.8. Prior to the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, Parent or Merger Sub shall deposit with the
Exchange Agent cash in an aggregate amount equal to the product of (i) the
number of shares of Company Common Stock outstanding (and not to be canceled
pursuant to Section 2.8(b)) immediately prior to the Effective Time, multiplied
by (ii) the Price Per Share. The deposit made by Parent or Merger Sub pursuant
to the preceding sentence is hereinafter referred to as the "Payment Fund"). The
Exchange Agent shall cause the Payment Fund to be (i) held for the benefit of
the holders of Company Common Stock and (ii) promptly applied to making the
payments provided for in Section 2.8(c). The Payment Fund shall not be used for
any purpose that is not provided for herein.
(b) Exchange Procedures. As soon as reasonably practicable after the
Effective Time, the Exchange Agent shall mail to each holder of record of a
certificate or certificates (the "Certificates") which immediately prior to the
Effective Time represented outstanding shares of Company Common Stock, other
than shares to be canceled or retired in accordance with Section 2.8(b), (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 delivery of the
Certificates to the Exchange Agent) and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for the Merger Consideration. Upon
surrender of a Certificate for cancellation to the Exchange Agent, together with
such Letter of Transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the Exchange Agent shall pay the
holder of such Certificate the Merger Consideration in respect of such
Certificate, and the Certificate so surrendered shall forthwith be canceled. If
any portion of the Merger Consideration is to be paid to a Person other than the
registered holder of the shares represented by the Certificate or Certificates
surrendered in exchange therefor, it shall be a condition to such payment that
the Certificate or Certificates so surrendered shall be properly endorsed or
otherwise be in proper form for transfer and that the Person requesting such
payment shall pay to the Exchange Agent any transfer or other taxes required as
a result of such payment to a Person other than the registered holder of such
shares or establish to the satisfaction of the Exchange Agent that such tax has
been paid or is not payable. Until surrendered as contemplated by this Section
2.9, each Certificate (other than Certificates representing Dissenting Shares or
shares of Company Common Stock to be canceled pursuant to Section 2.8(b)) shall
be deemed at any time after the Effective Time to represent only the right to
receive the Merger Consideration upon such surrender.
8
(c) No Further Ownership Rights in Company Common Stock. All Merger
Consideration paid upon the surrender for exchange of Certificates in accordance
with the terms of this Article II shall be deemed to have been paid in full
satisfaction of all rights pertaining to the shares of Company Common Stock
theretofore represented by such Certificates. There shall be no further
registration of transfers on the stock transfer books of the Surviving
Corporation of the shares of Company Common Stock which were outstanding
immediately prior to the Effective Time. If, after the Effective Time,
Certificates are presented to the Surviving Corporation or the Exchange Agent
for any reason, they shall be canceled and exchanged as provided in this Article
II, except as otherwise provided by law.
(d) Unclaimed Funds. Any portion of the Payment Fund made available
to the Exchange Agent pursuant to Section 2.9(a) that remains unclaimed by
holders of the Certificates for six months after the Effective Time of the
Merger shall be delivered to Parent, upon demand, and any holders of
Certificates who have not theretofore complied with this Article II shall
thereafter look only to Parent for payment of their claim for Merger
Consideration.
(e) No Liability. None of Parent, Merger Sub, the Company or the
Exchange Agent shall be liable to any Person in respect of any Merger
Consideration delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(f) Investment of Funds. The Payment Fund shall be invested by the
Exchange Agent in obligations of, or guaranteed by, the United States of
America, in commercial paper obligations rated A-1 or P-l or better by Xxxxx'x
Investor Services or Standard & Poor's Corporation, respectively, in each case
with maturities not exceeding seven days. All earnings thereon shall inure to
the benefit of the Parent.
(g) Lost Certificates. In the event that any Certificate shall have
been lost, stolen or destroyed, upon the making of an affidavit of that fact by
the Person claiming such Certificate to be lost, stolen or destroyed and, if
required by Parent, the granting of an indemnity reasonably satisfactory to
Parent against any claim that may be made against it, the Surviving Corporation
or the Exchange Agent, with respect to such Certificate, the Exchange Agent will
issue in exchange for such lost, stolen or destroyed Certificate the Merger
Consideration with respect to such Certificate, to which such Person is entitled
pursuant hereto.
(h) Dissenting Shares. Notwithstanding anything in this Agreement to
the contrary, shares of Company Common Stock, outstanding immediately prior to
the Effective Time and held by a holder who has not voted in favor of the Merger
or consented thereto in writing and who has demanded appraisal for such shares
in accordance with the DGCL (the "Dissenting Shares"), shall not be converted
into a right to receive the Merger Consideration, unless such holder fails to
perfect or withdraws or otherwise loses its right to appraisal. If after the
Effective Time such holder fails to perfect or withdraws or loses its right to
appraisal, such shares shall be treated as if they had been converted as of the
Effective Time into a right to
9
receive the Merger Consideration. The Company shall give Parent prompt notice of
any demands received by the Company for appraisal of shares of Company Common
Stock, and Parent shall have the right to participate in all negotiations and
proceedings with respect to such demands. The Company shall not, except with the
prior written consent of Parent, make any payment with respect to, or settle or
offer to settle, any such demands.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Except as set forth in the
Company Disclosure Schedule delivered by the Company to Parent at or prior to
the execution of this Agreement (the "Company Disclosure Schedule") or the
Company SEC Reports, the Company represents and warrants to Parent and Merger
Sub as follows:
(a) Organization, Standing and Power. Each of the Company and
its Material Subsidiaries has been duly organized and is validly
existing and in good standing under the laws of its jurisdiction of
incorporation. Each of the Company and its Material Subsidiaries is
duly qualified and in good standing or otherwise authorized to do
business in each jurisdiction in which the nature of its business or
the ownership or leasing of its properties makes such qualification
necessary, except where the failure to so qualify, when taken together
with all other such failures, could not reasonably be expected to have
a Material Adverse Effect on the Company or materially impair or delay
the ability of the Company to consummate the transactions contemplated
hereby. The copies of the Organizational Documents of the Company
which were previously furnished or made available to Parent are true,
complete and correct copies of such documents as in effect on the date
of this Agreement. Each of the Company and its Subsidiaries has the
requisite corporate power and corporate authority to carry on its
respective businesses in all material respects as they are now being
conducted. The Company's Certificate of Incorporation and By-Laws and
the comparable governing instruments of each of its Subsidiaries are
in full force and effect.
(b) Capital Structure.
(i) As of the date of this Agreement, the authorized capital
stock of the Company consists of (A) 200,000,000 shares of Company
Common Stock, of which not more than 46,591,000 shares plus no more
than 600,000 shares issued pursuant to the Company's Employee Stock
Purchase Plan since December 31, 1998 are outstanding, and (B)
2,000,000 shares of preferred stock, par value $.01 per share, of
which no shares are outstanding. All issued and outstanding shares of
the capital stock of the Company are duly authorized, validly issued,
fully paid and nonassessable, and no class of capital stock is
entitled to preemptive rights. As of the date of this Agreement, there
are no outstanding options, warrants or other rights to acquire
capital stock from the Company
10
other than (C) rights issued pursuant to the Rights Agreement dated as
of November 7, 1989 between the Company and BankBoston, N.A., as
amended and restated as of August 12, 1992, amended as of August 24,
1992, and amended and restated as of March 7, 1999 (as amended, the
"Company Rights Agreement") and (D) options representing in the
aggregate the right to purchase not more than 11,293,000 shares of
Company Common Stock under the Company Equity Plans.
(ii) All of the issued and outstanding shares of capital
stock of the Company's Subsidiaries are duly authorized, validly
issued, fully paid and nonassessable and are owned by the Company,
free and clear of any liens, pledges, security interests, claims,
encumbrances, restrictions, preemptive rights or any other claims of
any third party ("Liens").
(iii) As of the date of this Agreement, no bonds,
debentures, notes or other indebtedness of the Company having the
right to vote on any matters on which stockholders may vote ("Company
Voting Debt") are issued or outstanding.
(iv) Except as otherwise set forth in this Section 3.1(b),
as of the date of this Agreement, there are no securities, options,
warrants, calls, rights, commitments, agreements, arrangements or
undertakings of any kind to which the Company or its Subsidiaries is a
party or by which any of them is bound obligating the Company or a
Subsidiary to issue, deliver or sell, or cause to be issued, delivered
or sold, additional shares of capital stock or other voting securities
of the Company or such Subsidiary or obligating the Company or such
Subsidiary to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or
undertaking. As of the date of this Agreement, there are no
outstanding obligations of the Company or any Subsidiary to
repurchase, redeem or otherwise acquire any shares of capital stock of
the Company or such Subsidiary. Immediately prior to the consummation
of the Offer and Merger, no shares of Company Common Stock or other
securities of the Company will be issuable pursuant to the Company
Rights Agreement, and, immediately after the Effective Time, the
Surviving Corporation will, assuming the execution of releases by
holders of outstanding Company stock options as described in Section
5.11, have no obligation to issue, transfer or sell any shares of
common stock of the Surviving Corporation pursuant to any compensation
and benefit plan.
(c) Authority; No Conflicts.
(i) The Company has all requisite corporate power and
corporate authority to enter into this Agreement and, subject to the
adoption of this Agreement and approval of the Merger by the requisite
vote of the holders of Company Common Stock, to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been
11
duly authorized by all necessary corporate action on the part of the
Company, subject in the case of the consummation of the Merger to the
adoption of this Agreement by the requisite vote of the stockholders
of the Company. This Agreement has been duly executed and delivered by
the Company and constitutes a valid and binding agreement of the
Company, enforceable against it in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and similar laws relating to or affecting
creditors generally and by general equity principles (regardless of
whether such enforceability is considered in a proceeding in equity or
at law). The Company Board has unanimously approved this Agreement,
the Offer and the Merger and determined that the Offer and the Merger
are fair to and in the best interests of the Company's stockholders.
(ii) The execution and delivery of this Agreement does not
or will not, as the case may be, and the consummation of the
transactions contemplated hereby will not, conflict with, or result in
any violation of, or constitute a default (with or without notice or
lapse of time, or both) under, or give rise to a right of consent,
termination, amendment, cancellation or acceleration of any obligation
or the loss of a material benefit under, or the creation of a Lien on
any assets (any such conflict, violation, default, right of consent,
termination, amendment, cancellation or acceleration, loss or
creation, a "Violation"), or result in any material adverse change in
the rights or obligations of the Company, pursuant to: (A) any
provision of the Organizational Documents of the Company or any of its
Subsidiaries or (B) except as could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect on
the Company or materially impair or delay the ability of the Company
to consummate the transactions contemplated hereby and, subject to
obtaining or making the consents, approvals, orders, authorizations,
registrations, declarations and filings referred to in paragraph (iii)
below, any loan or credit agreement, note, mortgage, bond, indenture,
lease, compensation or benefit plan (or any grant or award made
pursuant thereto) or other agreement, obligation, instrument,
contract, permit, concession, franchise, license, judgment, order,
award, decree, statute, law, ordinance, rule or regulation applicable
to the Company, the Company's Subsidiaries or their respective
properties or assets.
(iii) No consent, registration, permit, approval, order or
authorization of, or registration, declaration, notice, report, or
other filing with, any supranational, national, state, municipal or
local government, any instrumentality, subdivision, court,
administrative agency or commission or other authority thereof, or any
quasi-governmental or private body exercising any regulatory, taxing,
or other governmental or quasi-governmental authority (a "Governmental
Entity"), is required by or with respect to the Company or any
Material Subsidiary in connection with the execution and delivery of
this Agreement by the Company or the consummation by the Company of
the transactions contemplated hereby, except for (x) those required
under or in relation to (A) the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), (B) the DGCL with
12
respect to the filing and recordation of appropriate merger or other
documents, (C) rules and regulations of the Nasdaq National Market
("Nasdaq"), and (D) antitrust or other competition laws of any
applicable jurisdictions and (y) such consents, approvals, orders,
authorizations, registrations, declarations and filings the failure of
which to make or obtain could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the
Company or materially impair or delay the ability of the Company to
consummate the transactions contemplated hereby. Notwithstanding the
foregoing, the Company will use its commercially reasonable efforts to
obtain all the consents required to consummate the transactions
contemplated hereby.
(d) Reports and Financial Statements.
(i) Since December 31, 1998, the Company has timely filed
all required reports, schedules, forms, statements and other documents
required to be filed by it with the SEC (collectively, including all
exhibits thereto, the "Company SEC Reports"). The Company SEC Reports,
as of their respective dates (and, if amended or superseded by a
filing prior to the date of this Agreement or of the Closing Date,
then on the date of such filing), did not, and any Company SEC Reports
filed with the SEC subsequent to the date hereof and prior to the
purchase of shares pursuant to the Offer will not, contain any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. Each of the financial statements (including the
related notes) included or to be included in, or incorporated by
reference into, the Company SEC Reports presents or will present
fairly, in all material respects, the consolidated financial position
and consolidated results of operations and cash flows of the Company
and its Subsidiaries as of the respective dates or for the respective
periods set forth therein, all in conformity with U.S. generally
accepted accounting principles ("GAAP") consistently applied during
the periods involved except as otherwise noted therein, and subject,
in the case of the unaudited interim financial statements, to normal
and recurring year-end adjustments that have not been and will not be
material in amount. All of such Company SEC Reports, as of their
respective dates (and as of the date of any amendment to the
respective Company SEC Report filed prior to the date hereof),
complied as to form in all material respects with the applicable
requirements of the Securities Act and the Exchange Act and the rules
and regulations promulgated thereunder.
(ii) Except as set forth in the Company SEC Reports filed
prior to the date of this Agreement, and except for liabilities and
obligations incurred in the ordinary course of business or related to
the potential sale of the Company since December 31, 1998 (none of
which has had or could be reasonably expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company), the
Company does not have any undisclosed liabilities or obligations of
any nature required by GAAP to be set forth
13
on a consolidated balance sheet of the Company which have had or could
be reasonably expected to have, individually or in the aggregate, a
Material Adverse Effect on the Company.
(e) Information Supplied.
(i) None of the information supplied or to be supplied by
the Company for inclusion or incorporation by reference in (A) the
information statement (the "Information Statement") advising
stockholders of the Company that the requisite number of stockholders
have consented to the Merger, if applicable, (B) the proxy statement
relates the Company Stockholders Meeting (the "Proxy Statement"), if
applicable, (C) the Schedule 14D-9 or (D) the Offer Documents will, at
the respective times such documents are filed, and, with respect to
the Offer Documents, the Information Statement, if any, and the Proxy
Statement, if any, when first published, sent or given to the
stockholders of the Company, contain an untrue statement of material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, at the light of the
circumstances under which they are made, not false or misleading or,
in the case of the Offer Documents, the Information Statement, if any,
and the Proxy Statement, if any, or any amendment thereof or
supplement thereto, at the time of the Company Stockholders Meeting
(as defined below), if any, and at the Effective Time, contain an
untrue statement of a material fact or omit to date any material fact
required to be stated therein or necessary in order to make the
statements made therein, in the light of the circumstances under which
they are made, not false or misleading or necessary to correct any
statement in any earlier communication with respect to the Offer or
the solicitation of proxies for the Company Stockholders Meeting, if
any, which shall have become false or misleading. The Proxy Statement,
if any, the Information Statement, if any, and Schedule 14D-9 will
comply as to form in all material respects with the requirements of
the Exchange Act and the Securities Act and the rules and regulations
of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this
Section 3.1(e), no representation or warranty is made by the Company
with respect to statements made or incorporated by reference in the
Proxy Statement, if any, the Information Statement, if any, and
Schedule 14D-9 based on information supplied by Parent or Merger Sub
for inclusion or incorporation by reference therein.
(iii) The documents and information supplied by the
representatives of the Company to the representatives of Parent and
Merger Sub in connection with the Company's management presentation on
Thursday, April 8, 1999 with respect to commercial relationships,
volumes of business done with significant suppliers and customers and
total backlog were prepared in good faith by the Company on bases
reflecting the best then available estimates and judgments of the
Company.
14
(f) Compliance with Applicable Laws; Regulatory Matters. The
Company and its Material Subsidiaries hold all permits, licenses,
certificates, franchises, regis trations, variances, exemptions,
orders and approvals of all Governmental Entities which are material
to the operation of their businesses, taken as a whole (the "Company
Permits"). The Company and its Material Subsidiaries are in compliance
with the terms of the Company Permits, except where the failure so to
comply, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company. Except as
disclosed in the Company SEC Reports filed with the SEC prior to the
date hereof, the businesses of the Company and its Material
Subsidiaries are not being and have not been conducted in violation of
any law, ordinance, regulation, judgment, decree, injunction, rule or
order of any Governmental Entity, except for violations which could
not reasonably be expected to have a Material Adverse Effect on the
Company. As of the date of this Agreement, no investigation by any
Governmental Entity with respect to the Company or any Material
Subsidiary is pending or, to the knowledge of the Company, threatened,
other than investigations which, individually or in the aggregate,
could not reasonably be expected to have a Material Adverse Effect on
the Company.
(g) Litigation. There is no litigation, arbitration, claim,
suit, action, inves tigation or proceeding pending or, to the
knowledge of the Company, threatened against or affecting the Company
or any Subsidiary which could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the
Company, nor is there any judgment, award, decree, injunction, rule or
order of any Governmental Entity or arbitrator outstanding against the
Company or any Material Subsidiary which could reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect
on the Company.
(h) Taxes. Except as disclosed to Parent's representatives
during their due diligence investigation or in the Company SEC Reports
filed with the SEC prior to the date hereof: (i) the Company and its
Subsidiaries have duly and timely filed (taking into account any
extension of time within which to file) all material Tax Returns
required to be filed by any of them and all such filed Tax Returns are
complete and accurate in all material respects; (ii) the Company and
its Material Subsidiaries have paid all Taxes that are shown as due on
such filed Tax Returns or for which no Tax Return is required to be
filed for such amounts that, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect on the
Company; (iii) as of the date of this Agreement, there are no pending
or, to the knowledge of the Company, threatened in writing audits,
examinations, investigations or other proceedings in respect of Taxes
or Tax matters relating to the Company or any Subsidiary which, if
determined adversely to the Company or such Subsidiary, could
reasonably be expected to have a Material Adverse Effect on the
Company; (iv) there are no deficiencies or claims for any Taxes that
have been proposed, asserted or assessed, or material issues that have
been raised in connection with the examination of Tax Returns and that
could reasonably be expected to
15
give rise to such deficiencies or claims, against the Company or any
Subsidiary which, if such deficiencies or claims were finally resolved
against the Company or such Subsidiary, could reasonably be expected
to have a Material Adverse Effect on the Company; (v) there are no
material Liens for Taxes upon the assets of the Company or any
Subsidiary, other than Liens for current Taxes not yet due and payable
and Liens for Taxes that are being contested in good faith by
appropriate proceedings and that could not be reasonably expected to
have, individually or in the aggregate, Material Adverse Effect on the
Company if any such contest is unsuccessful; (vi) the Company is not,
nor was it at any time during the five-year period ending on the date
on which the Effective Time occurs, a "United States real property
holding corporation" within the meaning of Section 897(c) of the Code;
(vii) neither of the Company nor any Subsidiary has made an election
under Section 341(f) of the Internal Revenue Code of 1986, as amended
(the "Code"); and (viii) other than payments to the officers and
employees whose names are set forth on Schedule 3.1(1), no material
payment (or acceleration of benefits) required to be made to any
employee or former employee of the Company or any Subsidiary as a
result of the transactions contemplated by this Agreement under any
Company Benefit Plan or otherwise will, if made, constitute an "excess
parachute payment" within the meaning of Section 280G of the Code.
(i) Absence of Certain Changes or Events. Since December 31,
1998 through the date of this Agreement, (A) each of the Company and
the Company's Material Subsidiaries has conducted its business in the
ordinary course and has not incurred any material liability, except in
the ordinary course of their respective businesses; (B) there has not
been any change in the business, financial condition or results of
operations of the Company or its Subsidiaries that has had, or could
reasonably be expected to have, a Material Adverse Effect on the
Company; (C) there has not been any entry by the Company or its
Subsidiaries into any employment agreement, severance agreement or
termination agreement with any employee of the Company other than in
the ordinary course of business; (D) there has not been any
declaration, setting aside or payment of any dividend or other
distribution with respect to the capital stock of the Company nor has
there been any repurchase, redemption or other acquisition by the
Company or any of its Subsidiaries of any outstanding shares of
capital stock or other securities of, or other ownership interests in,
the Company or such Subsidiary; (E) there has not been any change by
the Company in accounting principles, practices or methods; (F) except
as provided for herein or as disclosed in the Company SEC Reports
filed with the SEC prior to the date hereof, there has not been any
material increase in the compensation payable or which could become
payable by the Company and its Subsidiaries to their officers or key
employees, or any amendment of any compensation and benefit plans; (G)
there has not been any amendment of any material term of any
outstanding security of the Company or any of its Subsidiaries other
than the amendments to the Company Rights Agreement; and (H) there has
not been any acquisition, sale or transfer of any material assets of
the Company or any of its Subsidiaries.
16
(j) Vote Required. The affirmative vote of the holders of a
majority of the outstanding shares of Company Common Stock (the
"Required Company Votes") is the only vote of the holders of any class
or series of the Company capital stock necessary to approve this
Agreement and the transactions contemplated hereby and is only
necessary in the event that the number of shares of the Company Common
Stock tendered pursuant to the Offer represents less than 90% of the
issued and outstanding shares of the Company Common Stock.
(k) Certain Agreements. (i) All contracts listed as an exhibit
to the Company's Annual Report on Form 10-K under the rules and
regulations of the SEC relating to the business of the Company and its
Subsidiaries and (ii) to the knowledge of the General Counsel of the
Company, any other agreement within the meaning set forth in item
601(b)(10) of Regulation S-K of Title 17, Part 229 of the Code of
Federal Regulations (the "Company Material Contracts") are valid and
in full force and effect except to the extent they have previously
expired in accordance with their terms, and neither the Company nor
its Subsidiaries has violated any provision of, or committed or failed
to perform any act which, with or without notice, lapse of time, or
both, could reasonably be expected to constitute a default under the
provisions of, any such Company Material Contract, except for defaults
which could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the Company. To the knowledge
of the Company, no counterparty to any such Company Material Contract
has violated any provision of, or committed or failed to perform any
act which, with or without notice, lapse of time, or both, could
reasonably be expected to constitute a default or other breach under
the provisions of, such Company Material Contract, except for defaults
or breaches which could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on the
Company.
(l) Employee Benefit Plans: Labor Matters.
(i) With respect to each employee benefit plan as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and with respect to each other material employee
benefit plan, program, arrangement and contract (including any bonus,
deferred compensation, stock bonus, stock purchase, restricted stock,
stock option, employment, termination, change in control and severance
plan, program, arrangement and contract), to which the Company or any
Subsidiary is a party, which is maintained or contributed to by the
Company or any Subsidiary, or with respect to which the Company or any
Subsidiary could incur material liability under Section 4069, 4201 or
4212(c) of ERISA other than any "multiemployer plan" within the
meaning of Section 3(37) of ERISA (a "Multiemployer Plan")
(collectively, the "Company Benefit Plans"), the Company has made
available to Parent a true and complete copy of such Company Benefit
Plan.
17
(ii) Each of the Company Benefit Plans that is an "employee"
pension benefit plan" within the meaning of Section 3(2) of ERISA and
that is intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter from the United States
Internal Revenue Service, and the Company is not aware of any
circumstances likely to result in the revocation of any such favorable
determination letter.
(iii) With respect to the Company Benefit Plans and any
Multiemployer Plan, no event has occurred and, to the knowledge of the
Company, there exists no condition or set of circumstances, in
connection with which the Company or any Material Subsidiary could be
subject to any liability under the terms of such Company Benefit
Plans, Multiemployer Plan, ERISA, the Code or any other applicable law
which could reasonably be expected to have a Material Adverse Effect
on the Company.
(iv) All Company Benefit Plans, to the extent subject to
ERISA, are in substantial compliance with ERISA. There is no material
pending or, to the knowledge of the Company threatened, litigation
relating to the Company Benefit Plans. No Company Benefit Plan is
subject to Title IV of ERISA and no liability under Title IV of ERISA
has been or is expected to be incurred by the Company or any of its
Subsidiaries with respect to any ongoing, frozen or terminated
"single-employer plan", within the meaning of Section 4001(a)(15) of
ERISA, of any entity which is considered one employer with the Company
under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate").
(v) Neither the Company nor any of its Subsidiaries has any
material obligations for retiree health and life benefits under any
Company Benefit Plan except to the extent required by applicable law.
(vi) All Company Benefit Plans maintained outside of the
United States are in substantial compliance and comply in all material
respects with applicable local law. The Company and its Subsidiaries
have no material unfunded liabilities with respect to any such Company
Benefit Plan.
(vii) Neither of the Company nor any Subsidiary is a party
to any collective bargaining or other labor union contracts and no
collective bargaining agreement is being negotiated by the Company or
any Subsidiary. There is no pending labor dispute, strike or work
stoppage against the Company or any Subsidiary which may interfere
with the respective business activities of the Company or any
Subsidiary, except where such dispute, strike or work stoppage could
not reasonably be expected to have a Material Adverse Effect on the
Company. There is no pending charge or complaint against the Company
or any Material Subsidiary by the National Labor Relations Board or
any comparable state agency, except where such unfair labor practice,
charge or
18
complaint could not reasonably be expected to have a Material Adverse
Effect on the Company.
(m) Intellectual Property.
(i) Except as would not have a Material Adverse Effect on
the Company, to the knowledge of the General Counsel of the Company,
all material patents, trademarks, trade names, service marks and
copyrights held by the Company and/or its Subsidiaries are valid and,
(A) neither the Company nor any of its Subsidiaries is, nor will the
Company or any of its Subsidiaries be as a result of the execution and
delivery of this Agreement or the performance of the Company's
obligations hereunder, in violation of, and no claims are pending or,
to the knowledge of the Company, threatened that the Company or any
Subsidiary is infringing on or otherwise violating the rights of any
person with regard to any Intellectual property and (B) to the
knowledge of the Company, no person is infringing on or otherwise
violating any right of the Company or any Subsidiary with respect to
any Intellectual Property owned by and/or licensed to the Company or
any Subsidiary.
(ii) It is the policy of the Company to require that its
employees execute agreements assigning to the Company all rights such
employees otherwise would have in Intellectual Property developed by
such employees while in the employ of the Company.
(n) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to
any broker's or finder's fee or any other similar commission or fee in
connection with any of the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of the Company, except
Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx Xxxxxxx") and Xxxxxxxxx &
Xxxxx LLC ("Xxxxxxxxx & Xxxxx"), the arrangements with which have been
disclosed in writing to Parent prior to the date hereof.
(o) Opinion of Financial Advisor. The Company has received the
opinion of each of Xxxxxx Xxxxxxx and Xxxxxxxxx & Xxxxx dated the date
of this Agreement, to the effect that, as of such date, the Merger
Consideration is fair, from a financial point of view, to the holders
of Company Common Stock other than Parent and its affiliates. A copy
of each written opinion will promptly be provided to Parent.
(p) Product Warranties. Except as would not have a Material
Adverse Effect on the Company, as of the date hereof, to the knowledge
of the Company, there are no pending or threatened material claims
with respect to any warranties, with respect to the products of the
Company or any of its Subsidiaries.
19
(q) Year 2000. Except as disclosed in the Company SEC Reports
filed with the SEC prior to the date hereof, the Company has a Year
2000 program in place which, to the knowledge of the Company, is
adequate to cause all computer software and data processing devices
designed by the Company (i) used in or for the manufacturing of
Company Products by the Company and/or any of its Subsidiaries, or
(ii) utilized in or by any Company Products, including any Company
Products sold and/or installed prior to the date hereof, to become
"Year 2000 Compliant" during 1999 and the Company reasonably believes
that all material costs associated with such program are included in
the Company's 1999 budget and in its 2000 strategic plan, in each case
except as had not had or would not reasonably be likely to have,
individually or in the aggregate, a Material Adverse Effect. "Year
2000 Compliant" means that the product or software accurately
processes and stores date/time data (including, but not limited to
calculating, comparing, displaying, recording and sequencing
operations involving date/time data) during, from and into and between
the twentieth and twenty-first centuries, and the years 1999 and 2000,
including correct processing of leap year data.
(r) Rights Agreement. The Company has amended the Company Rights
Agreement to provide that neither Parent nor any of its "affiliates"
or "associates" (each as defined in the Company Rights Agreement)
(including Merger Sub) shall be deemed an Acquiring Person (as defined
in the Company Rights Agreement) and that the Distribution Date (as
defined in the Company Rights Agreement) shall not be deemed to occur,
and that the Rights will not separate from the shares of Company
Common Stock, as a result of the entering into this Agreement, the
commencement of the Offer or the consummation of the Merger or the
other transactions contemplated hereby.
(s) Environmental Matters. Except as would not reasonably be
expected to have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole, to the knowledge of the Company: (i)
the Company and each Subsidiary has complied with all Environmental
Laws; (ii) no property that has been owned or operated by the Company
or any current or former Subsidiary contains any Hazardous Substance
which could be expected to require investigation or remediation under
any Environmental Law; (iii) the Company and its Subsidiaries are not
subject to liability for any off-site disposal or contamination; (iv)
the Company and its Subsidiaries have not received any claims, orders
or notices alleging responsibility or liability under any
Environmental Law; and (v) there are no other circumstances involving
the Company or any Subsidiary that are likely to result in any claims,
liabilities, costs or property restrictions in connection with any
Environmental Law. As used herein, "Environmental Law" means any law,
regulation, order, decree, common law or agency requirement relating
to the protection of the environment or human health and safety.
"Hazardous Substance" means any substance that is listed, classified
or regulated in any concentration under any Environmental Law
including petroleum products, asbestos and polychlorinated biphenyls.
20
3.2. REPRESENTATIONS AND WARRANTIES OF PARENT. Except as set forth in the
Parent Disclosure Schedule delivered by Parent to the Company at or prior to the
execution of this Agreement (the "Parent Disclosure Schedule") or the Parent SEC
Reports, Parent represents and warrants to the Company as follows:
(a) Organization, Standing and Power. Parent has been duly
organized and is validly existing under the laws of its jurisdiction
of organization. Parent is duly qualified or otherwise authorized to
do business in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification
necessary, except where the failure so to qualify could not reasonably
be expected to have a Material Adverse Effect on Parent.
(b) Authority; No Conflicts.
(i) Parent has all requisite corporate power and corporate
authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the
part of Parent. This Agreement has been duly executed and delivered by
Parent and constitutes a valid and binding agreement of Parent,
enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors generally, or by general equity principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(ii) The execution and delivery of this Agreement does not
or will not, as the case may be, and the consummation of the
transactions contemplated hereby will not, result in any Violation of:
(A) any provision of the Organizational Documents of Parent or any of
its Material Subsidiaries or (B) except as could not reasonably be
expected to have a Material Adverse Effect on Parent or material
impair or delay the ability of Parent to consummate the transactions
contemplated hereby and subject to obtaining or making the consents,
approvals, orders, authorizations, registrations, declarations and
filings referred to in paragraph (iii) below, any loan or credit
agreement, note, mortgage, bond, indenture, lease, benefit plan or
other agreement, obligation, instrument, permit, concession,
franchise, license, judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to Parent, any of its Material
Subsidiaries or their respective properties or assets.
(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, any Governmental Entity is
required by or with respect to Parent in connection with the execution
and delivery of this Agreement by Parent or the consummation by Parent
of the transactions contemplated hereby, except for (A) the
21
consents, approvals, orders, authorizations, registrations,
declarations and filings required under or in relation to clause (x)
of Section 3.1(c)(iii), (B) filings with Governmental Entities
administering, and the expiration of applicable waiting periods under,
applicable antitrust and other competition laws in any applicable
jurisdictions may be required, (C) any filings required to be made or
consents that have to be obtained or arrangements that have to be made
in order to ensure that the United States government or any agency
thereof will not challenge the consummation of the transactions
contemplated hereby on national security grounds and (D) such
consents, approvals, orders, authorizations, registrations,
declarations and filings the failure of which to make or obtain could
not reasonably be expected to have a Material Adverse Effect on Parent
or materially impair or delay the ability of Parent to consummate the
transactions contemplated hereby.
(c) Information Supplied.
(i) None of (A) the Offer Documents or (B) the information
supplied or to be supplied by Parent or Merger Sub for inclusion or
incorporation by reference in the Information Statement, if any, the
Proxy Statement, if any, the Schedule 14D-9 and any other documents to
be filed with the SEC in connection with the transactions contemplated
hereby, including any amendment or supplement to such documents, will,
at the respective times such documents are filed, and, with respect to
the Information Statement, if any, the Proxy Statement, if any, and
the Offer Documents, when first published, sent or given to
stockholders of the Company, 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 made therein, in
the light of the circumstances under which they are made, not false or
misleading or, in the case of the Information Statement, if any, the
Proxy Statement, if any, or any amendment thereof or supplement
thereto, at the time of the Company Stockholders Meeting, if any, and
at the Effective Time, contain any untrue statement of a material
fact, or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the
light of the circumstances under which they are made, not false or
misleading or necessary to correct any statement in any earlier
communication with respect to the Offer or the solicitation of proxies
for the Company Stockholders Meeting, if any, which shall have become
false or misleading. The Offer Documents will comply as to form in all
material respects with the requirements of the Exchange Act and
Securities Act and the rules and regulations of the SEC thereunder.
(ii) Notwithstanding the foregoing provisions of this
Section 3.2(d), no representation or warranty is made by Parent or
Merger Sub with respect to statements made or incorporated by
reference in the Information Statement, if any, the Proxy Statement,
if any, or the Offer Documents based on information supplied by the
Company for inclusion or incorporation by reference therein.
22
(d) Vote Required. No vote of the holders of the outstanding
shares of common stock of Parent is necessary to approve this
Agreement and the transactions contemplated hereby.
(e) Brokers or Finders. No agent, broker, investment banker,
financial advisor or other firm or Person is or will be entitled to
any broker's or finder's fee or any other similar commission or fee in
connection with any of the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of Parent on Merger Sub,
except Credit Suisse First Boston Corporation.
(f) Ownership of Company Capital Stock. Except for 1,235,000
shares of Company Common Stock owned by affiliates of Parent, as of
the date of this Agreement, neither Parent nor any of its Subsidiaries
or, to the best of its knowledge, any of its affiliates or associates
(as such terms are defined under the Exchange Act) (i) beneficially
owns, directly or indirectly or (ii) is party to any agreement,
arrangement or understanding for the purpose of acquiring, holding,
voting or disposing of, in case of either clause (i) or ii), shares of
capital stock of the Company.
(g) Financing. Parent has available, and will make available to
Merger Sub, sufficient funds to consummate the Offer and the Merger on
the terms contemplated by this Agreement.
3.3. REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB. Parent and Merger
Sub represent and warrant to the Company as follows:
(a) Organization and Corporate Power. Merger Sub is an indirect
wholly owned Subsidiary of Parent and a corporation duly incorporated,
validly existing and in good standing under the laws of Delaware.
(b) Corporate Authorization. Merger Sub has all requisite
corporate power and corporate authority to enter into this Agreement
and to consummate the transactions contemplated hereby. The execution,
delivery and performance by Merger Sub of this Agreement and the
consummation by Merger Sub of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the
part of Merger Sub. This Agreement has been duly executed and
delivered by Merger Sub and constitutes a valid and binding agreement
of Merger Sub, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating
to or affecting creditors generally, or by general equity principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
23
(c) Non-Contravention. The execution, delivery and performance
by Merger sub of this Agreement and the consummation by Merger Sub of
the transactions contemplated hereby do not and will not contravene
or conflict with the Organizational Document of Merger Sub.
(d) No Business Activities. Merger Sub is not a party to any
material agreements and has not conducted any activities other than in
connection with the organization of Merger Sub, the commencement of
the Offer, the negotiation and execution of this Agreement and the
consummation of the transactions contemplated hereby. Merger Sub has
no Subsidiaries.
ARTICLE IV.
COVENANTS RELATING TO CONDUCT OF BUSINESS
4.1. COVENANTS OF THE COMPANY. During the period from the date of this
Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement or to the extent that Parent shall
otherwise consent in writing):
(a) Ordinary Course. The Company and its Subsidiaries shall
carry on their respective businesses in the usual, regular and
ordinary course in all material respects, and shall use all
commercially reasonable efforts to preserve intact their present
business organizations and preserve their existing relationships with
customers, suppliers, employees and others having business dealings
with them; provided, however, that no action by the Company or its
Subsidiaries with respect to matters specifically addressed by any
other provision of this Section 4.1 shall be deemed a breach of this
Section 4.1(a) unless such action would constitute a breach of one or
more of such other provisions.
(b) Dividends; Changes in Share Capital. The Company shall not,
and shall not propose to, (i) declare or pay any dividends on or make
other distributions in respect of any of its capital stock, (ii)
split, combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its capital stock,
(iii) repurchase, redeemed or otherwise acquire any shares of its
capital stock or any securities convertible into or exercisable for
any shares of its capital stock except as otherwise permitted under
certain option agreements to effect cashless option exercises.
(c) Issuance of Securities. The Company shall not and shall
cause its Subsidiaries not to issue, pledge, dispose of or encumber,
deliver or sell, or authorize or propose the issuance, disposition,
encumbrance, pledge, delivery or sale of, any shares of its capital
stock of any class, any Company Voting Debt or any securities
convertible into or exercisable for, or any rights, warrants or
options to acquire, any such shares or Company Voting Debt, or enter
into any agreement with respect to any of the foregoing,
24
other than (i) the issuance of Company Common Stock upon the exercise
of stock options or stock appreciation rights issued in the ordinary
course of business in accordance with the terms of the Company Equity
Plans as in effect on the date of this Agreement and (ii) issuances
of options, rights or other awards in the ordinary course of business
pursuant to the Company Equity plans as in effect on the date of this
Agreement.
(d) Organizational Documents and Company Rights Agreement.
Except to the extent required to comply with their respective
obligations hereunder or required by law, the Company and its Material
Subsidiaries shall not amend or propose to amend their respective
Organizational Documents or amend, modify or terminate the Company
Rights Agreement.
(e) Indebtedness. The Company shall not (i) incur any
indebtedness for borrowed money or guarantee any such indebtedness or
issue or sell any debt securities or warrants or rights to acquire any
debt securities of the Company or guarantee any debt securities of
other Persons other than indebtedness of the Company or its
Subsidiaries to the Company or its Subsidiaries and other than in the
ordinary course of business, (ii) make any loans, advances or capital
contributions to, or investments in, any other Person, other than by
the Company or its Subsidiaries to or in the Company or its
Subsidiaries or (iii) pay, discharge, modify or satisfy any claims,
liabilities or obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than in the case of clauses (ii) and
(iii), loans, advances, capital contributions, investments, payments,
discharges or satisfactions incurred or committed to in the ordinary
course of business.
(f) Compensation. The Company shall not, and shall not permit
its Subsidiaries to (i) increase the compensation payable or to become
payable to any of its executive officers or employees or (ii) take an
action with respect to the grant of any severance or termination pay,
or stay, bonus or other incentive arrangement (other than as required
pursuant to benefit plans and policies in effect on the date of this
Agreement), except any such increases or grants made in the ordinary
course of business, pursuant to agreements, plans or policies existing
on the date hereof or as otherwise provided under this Agreement.
(g) Tax Elections. The Company shall not, and shall not permit
its Subsidiaries to, make any material Tax election or change its (or
its Subsidiaries') method of accounting for Tax purposes.
(h) Employment. The Company shall not, and shall not permit its
Subsidiaries to, release or otherwise terminate the employment of any
employee or hire any new employees, except in the ordinary course of
business.
25
(i) Benefit Plans and Agreements. The Company shall not, and
shall not permit its Subsidiaries to, establish, adopt or enter into
any new employee benefit plans or agreements (including pension,
profit sharing, bonus, incentive compensation, director and officer
compensation, severance, medical, disability, life or other insurance
plans, and employment agreements) or amend or modify any existing
Company Benefit Plans, or extend coverage of the Company Benefit
Plans, except in each case for amendments or modifications required by
applicable law and except as set forth in the Company Disclosure
Schedule.
(j) Other Actions.
(i) The Company shall not, and shall not permit its
Subsidiaries to, take any action that could reasonably be expected to
result in (A) any of the representations and warranties of the Company
set forth in this Agreement that are qualified as to materiality
becoming untrue, (B) any of such representations and warranties that
are not so qualified becoming untrue in any material respect or (C)
except as otherwise permitted by Section 5.4, any of the conditions to
the Merger set forth in Article VI not being satisfied.
(ii) The Company shall not, and shall not permit its
Subsidiaries to, (A) transfer, lease, license, guarantee, sell,
mortgage, pledge, dispose of or encumber any assets except in the
ordinary course of business; (B) authorize capital expenditures in any
manner not reflected in the capital budget of the Company as currently
in effect or make any acquisition of, or investment in, any business
or stock of any other person or entity except in the ordinary course
of business; (C) settle or compromise any material claims or
litigation or, except in the ordinary course of business, modify,
amend or terminate any of the Company Material Contracts or waive,
release or assign any material rights or claims; (D) permit any
material insurance policy naming it as a beneficiary or a loss payable
payee to be canceled or terminated without the prior written approval
of Parent, except in the ordinary course of business; or (E) terminate
the employment of any employee who is covered by a change in control,
employment, termination or similar agreement, except for Cause (as
defined in such agreements) or permit circumstances to exist that
would provide such employee with Good Reason (as defined in such
agreements) to terminate employment.
4.2. COVENANTS OR PARENT AND MERGER SUB. During the period from the date of
this Agreement and continuing until the Effective Time (except as expressly
contemplated or permitted by this Agreement or to the extent that the Company
shall otherwise consent in writing) Parent shall not, and shall not permit any
of its Subsidiaries to, take any action that could reasonably be expected to
result in (i) any of the representations and warranties of the Parent or Merger
Sub set forth in this Agreement that are qualified as to materiality becoming
untrue in any material respect or (ii) any of the conditions to the Merger set
forth in Article VI not being satisfied.
26
4.3. ADVICE OF CHANGES; GOVERNMENT FILINGS.
(a) Each party shall (a) confer on a regular and frequent basis
with the other, (b) report (to the extent permitted by law, regulation
and any applicable confidentiality agreement) to the other on
operational matters and (c) promptly advise the other orally and in
writing of (i) any representation or warranty made by it contained in
this Agreement that is qualified as to materiality becoming untrue or
inaccurate in any respect or any such representation or warranty that
is not so qualified becoming untrue or inaccurate in any material
respect, (ii) the failure by it (A) to comply with or satisfy in any
respect any covenant, condition or agreement required to be complied
with or satisfied by it under this Agreement that is qualified as to
materiality or (B) to comply with or satisfy in any material respect
any covenant, condition or agreement required to be complied with or
satisfied by it under this Agreement that is not so qualified as to
materiality or (iii) any change, event or circumstance that has had or
could reasonably be expected to have a Material Adverse Effect on such
party or material adversely affect its ability to consummate the
Merger in a timely manner; provided, however, that no such
notification shall affect the representations, warranties, covenants
or agreements of the parties or the conditions to the obligations of
the parties under this Agreement. The Company shall file all reports
required to be filed by it with the SEC (and all other Governmental
Entities) between the date of this Agreement and the Effective Time
and shall (to the extent permitted by law or regulation or any
applicable confidentiality agreement) deliver to Parent copies of all
such reports promptly after the same are filed. Subject to applicable
laws relating to the exchange of information, each of the Company and
Parent shall have the right to review in advance, and to the extent
practicable each will consult with the other, with respect to all the
information relating to the other party and each of their respective
Subsidiaries, which appears in any filings, announcements or
publications made with, or written materials submitted to, any third
party or any Governmental Entity in connection with the transactions
contemplated by this Agreement. In exercising the foregoing right,
each of the parties hereto agrees to act reasonably and as promptly as
practicable. Each party agrees that, to the extent practicable, it
will consult with the other party with respect to the obtaining of all
permits, consents, approvals and authorizations of all third parties
and Governmental Entities necessary or advisable to consummate the
transactions contemplated by this Agreement and each party will keep
the other party apprised of the status of matters relating to
completion of the transactions contemplated hereby.
(b) Each party shall cooperate with each other and shall use its
respective reasonable best efforts to reach a mutually satisfactory
arrangement with the United States government or an appropriate agency
thereof so that Parent's acquisition of the Company Common Stock would
not present national security concerns on account of the Company being
a party to United States government contracts (it being agreed that in
determining whether any such arrangement is satisfactory, Parent shall
take into account
27
the relative materiality of the Company's government contract business
as compared to the business of the Company as a whole). For purposes
of the foregoing sentence, reasonable best efforts shall include
making available knowledgeable individuals and retaining suitable
advisors and conducting meetings and discussions with representatives
of the United States government.
ARTICLE V.
ADDITIONAL AGREEMENTS
5.1. APPROVAL BY THE COMPANY'S STOCKHOLDERS.
(a) Subject to the last sentence of this subparagraph (a), if the
Minimum Condition is satisfied, at the request of Merger Sub, the Company will
take all action necessary to enable Merger Sub to adopt this Agreement by
written consent (the "Written Consent") (including the completion and mailing of
the Information Statement) in accordance with the DGCL and its Certificate of
Incorporation and bylaws and otherwise to notify the holders of Company Common
Stock as promptly as practicable of the approval of this Agreement and the
Merger. The record date for purposes of determining the holders of record
entitled to consent to the Merger pursuant to this subparagraph shall be the
close of business on the first business day after Merger Sub acquires shares of
Company Common Stock pursuant to the Offer. Notwithstanding the foregoing and
notwithstanding any other provision of this Agreement to the contrary, to the
extent the Company is unable or it becomes reasonably impractical for the
Company, pursuant to the rules and regulations of the SEC and/or of Nasdaq to
obtain the requisite stockholder approval for this Agreement and the Merger, by
means of the Written Consent and as contemplated by this subparagraph, the
Company shall and shall be entitled to seek to obtain such stockholder approval
pursuant to subparagraph (c) below.
(b) Neither a preliminary nor a definitive Information Statement
shall be filed, and no amendment or supplement to a preliminary or definitive
Information Statement will be made by the Company, without consultation with
Parent and its counsel. The Information Statement shall contain the notices and
other information required by Section 228(d) and 262(d)(2) of the DGCL as
applicable.
(c) If required by the DGCL or the Company's Organizational Documents
in order to consummate the Merger, the Company shall, as soon as practicable
following the acquisition by Merger Sub of the shares of the Company Common
Stock pursuant to the Offer, duly call, give notice of, convene and hold a
meeting of its stockholders (the "Company Stockholders Meeting") for the purpose
of obtaining the Required Company Votes, and, the Company shall, through the
Company Board, recommend to its stockholders that they accept the Offer and
tender all of their shares of Company Common Stock to Merger Sub and vote in
favor of the adoption of this Agreement; provided, however, that the Company
Board may withdraw, modify or change such recommendation to the extent that the
Company Board determines to do
28
so in exercise of its fiduciary duties or as permitted under Section 5.4.
Notwithstanding anything to the contrary contained in this Agreement, in the
event the Minimum Condition is not met, the Company shall hold the Company
Stockholders Meeting for the purpose of allowing the Company's stockholders to
vote on the adoption of this Agreement (including in the event that the Company
Board has determined at any time subsequent to the date hereof that this
Agreement is no longer advisable and recommends that the stockholders of the
Company reject it). Parent shall vote or cause to be voted all the shares of
Company Common Stock owned of record by Parent, Merger Sub or any of its other
Subsidiaries in favor of the approval of the Merger and adoption of this
Agreement. After the date hereof and prior to the expiration of the Offer,
Parent shall not purchase, offer to purchase, or enter into any contract,
agreement or understanding regarding the purchase of shares of Company Common
Stock, except pursuant to the terms of the Offer and the Merger.
(d) Notwithstanding the preceding paragraph or any other provision
of this Agreement, in the event Parent, Merger Sub or any other Subsidiary of
Parent shall beneficially own, in the aggregate, at least 90% of the outstanding
shares of the Company Common Stock, the Company shall not be required to call
the Company Stockholders Meeting or to file or mail the Proxy Statement, and the
parties hereto shall, at the request of Parent and subject to Article VI, take
all necessary and appropriate action to cause the Merger to become effective as
soon as practicable after the acceptance for payment of and payment for shares
of the Company Common Stock by Merger Sub pursuant to the Offer without a
meeting of stockholders of the Company in accordance with Section 253 of the
DGCL.
(e) If required by applicable law, as soon as practicable following
Parent's request, the Company and Parent shall prepare and file with the SEC the
Proxy Statement. Each of the Company and Parent shall use reasonable efforts to
cause the Proxy Statement to be mailed to the Company's stockholders, as
promptly as practicable.
5.2. ACCESS TO INFORMATION. From the date hereof until the earlier of the
Effective Time or the termination of this Agreement, upon reasonable notice, the
Company shall afford to the officers, employees, accountants, counsel, financial
advisors and other representatives of Parent ("Parent Representatives")
reasonable access during normal business hours, to all of its and its
Subsidiaries" properties, books, contracts, commitments and records and its
officers, management employees and representatives and, during such period, the
Company shall furnish promptly to Parent, consistent with its legal obligations,
all information concerning its business, properties and personnel as the other
party may reasonably request; provided, however, the Company may restrict the
foregoing access to the extent that (i) a Governmental Entity requires the
Company or any of its Subsidiaries to restrict access to any properties or
information reasonably related to any such contract on the basis of applicable
laws and regulations or (ii) any law, treaty, rule or regulation of any
Governmental Entity applicable to the Company or any of its Subsidiaries
requires the Company or any of its Subsidiaries to restrict access to any
properties or information (subject, however, to existing confidentiality and
similar nondisclosure obligations
29
and the preservation of attorney client and work product privileges). Such
information shall be held in confidence to the extent required by, and in
accordance with, the provisions of the letter (the "Confidentiality Agreement")
dated April 7, 1999, between the Company and Parent, which Confidentiality
Agreement shall, notwithstanding language in such Confidentiality Agreement to
the contrary, remain in full force and effect.
5.3. APPROVALS AND CONSENTS; COOPERATION. Each of the Company and Parent shall
cooperate with each other and use (and shall cause their respective
Subsidiaries to use) its reasonable best efforts to take or cause to be taken
all actions, and do or case to be done all things, necessary, proper or
advisable on their part under this Agreement and applicable laws to consummate
and make effective the Merger and the other transactions contemplated by this
Agreement as soon as practicable, including (i) preparing and filing as promptly
as practicable all documentation to effect all necessary applications, notices,
petitions, filings, tax ruling requests and other documents and to obtain as
promptly as practicable all consents, waivers, licenses, orders, registrations,
approvals, permits, tax rulings and authorizations necessary or advisable to be
obtained from any third party and/or any Governmental Entity in order to
consummate the Merger or any of the other transactions contemplated by this
Agreement and (ii) taking all reasonable steps as may be necessary to obtain all
such consents, waivers, licenses, registrations, permits, authorizations, tax
rulings, orders and approvals. Without limiting the generality of the foregoing,
each of the Company and Parent agrees to make all necessary filings in
connection with the Required Regulatory Approvals as promptly as practicable
after the date of this Agreement, and to use its reasonable efforts to furnish
or cause to be furnished, as promptly as practicable, all information and
documents requested with respect to such Required Regulatory Approvals and shall
otherwise cooperate with the applicable Governmental Entity in order to obtain
any Required Regulatory Approvals in as expeditious a manner as possible. Each
of the Company and Parent shall use its reasonable efforts to resolve such
objections, if any, as any Governmental Entity may assert with respect to this
Agreement and the transactions contemplated hereby in connection with the
Required Regulatory Approvals. In the event that a suit is instituted by a
Person or Governmental Entity challenging this Agreement and the transactions
contemplated hereby as violative of applicable antitrust or competition laws,
each of the Company and Parent shall use its reasonable efforts to resist or
resolve such suit. The Company and Parent each shall, upon request by the other,
furnish the other with all information concerning itself, its Subsidiaries,
directors, officers and stockholders and such other matters as may reasonably be
necessary or advisable in connection with the Offer Documents, Schedule 14D-9,
Proxy Statement or any other statement, filing, tax ruling request, notice or
application made by or on behalf of the Company, Parent or any of their
respective Subsidiaries to any third party and/or any Governmental Entity in
connection with the Offer, the Merger or the other transactions contemplated by
this Agreement.
30
5.4. ACQUISITION PROPOSALS.
(a) Unless and until this Agreement shall have been terminated by
either party pursuant to Article VII hereof, the Company, its Subsidiaries, or
any of the respective officers and directors of the Company or its Subsidiaries,
shall not, and the Company shall direct and use its reasonable best efforts to
cause its employees, agents and representatives (including, without limitation,
any investment banker, attorney or accountant retained by the Company or any of
its Subsidiaries) not to, take or cause, directly or indirectly, any of the
following actions with any party other than Parent, Merger Sub or their
respective designees: (i) solicit, knowingly encourage, initiate, participate in
or otherwise facilitate any negotiations, inquiries or discussions with respect
to any offer, indication or proposal to acquire all or more than 15% of its
business, assets or capital shares whether by merger, consolidation, other
business combination, purchase of assets, reorganization, tender or exchange
offer or otherwise (each of the foregoing, an "Acquisition Proposal") or (ii)
disclose, in connection with an Acquisition Proposal, any information or provide
access to its properties, books or records, except as required by law or
pursuant to a governmental request for information. The Company will immediately
cease and cause to be terminated any existing activities, discussions or
negotiations with any parties conducted heretofore with respect to any of the
foregoing. The Company will take the necessary steps to promptly inform the
individuals or entities referred to in the first sentence of Section 5.4(a)
hereof of the obligations undertaken in this Section 5.4. The Company also will
promptly request each person which has heretofore executed a confidentiality
agreement in connection with its consideration of acquiring the Company and/or
any of its Subsidiaries to return or destroy all confidential information
heretofore furnished to such person by or on behalf of the Company.
(b) Notwithstanding anything to the contrary contained in Section
5.4(a) or elsewhere in this Agreement, prior to the Effective Time, the Company
may participate in discussions or negotiations with, and furnish non-public
information, and afford access to the properties, books, records, officers,
employees and representatives of the Company to any Person, entity or group if
such Person, entity or group has delivered to the Company, prior to the date of
the Company Stockholders Meeting or the Written Consent, as applicable, and in
writing, an Acquisition Proposal which the Company Board in its good faith
reasonable judgment determines if consummated would be more favorable, from a
financial point of view, to the Company's stockholders than the transactions
contemplated by this Agreement, which determination may be made only after the
Company Board (i) receives advice of its legal counsel that the Company Board
would breach its fiduciary duties if it did not accept the Acquisition Proposal
and (ii) an opinion of its financial advisors to the effect that the Acquisition
Proposal is superior, from a financial point of view, to the Company's
stockholders than the transactions contemplated by this Agreement (a "Superior
Proposal"). In the event the Company receives a Superior Proposal, nothing
contained in this Agreement (but subject to the terms of this paragraph (b))
will prevent the Company Board from executing or entering into an agreement
relating to such Superior Proposal and recommending such Superior Proposal to
its stockholders,
31
if the Company Board determines in accordance with the preceding sentence that
its fiduciary duties require it to do so; in such case, the Company Board may
withdraw, modify or refrain from making its recommendation of the Merger;
provided, however that the Company shall (i) promptly notify Parent, and in any
event within 24 hours, if any such Acquisition Proposal is received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, the Company or any of its
Subsidiaries, indicating, in connection with such notice, the name of such
person and the material terms of any such Acquisition Proposal, (ii) provide
Parent at least 48 hours prior written notice of the Company's intention to
execute or enter into an agreement relating to such Superior Proposal and (iii)
terminate this Agreement by written notice to Parent provided no sooner than 48
hours after Parent's receipt of a copy of such Superior Proposal (or a
description of the significant terms and conditions thereof). Notwithstanding
anything to the contrary contained in Section 5.4 or elsewhere in this
Agreement, prior to the Effective Time, the Company may, in connection with a
possible Acquisition Proposal, refer any third party to this Section 5.4 and
Section 7.2(b) and make a copy of this Section 5.4 and Section 7.2(b) available
to a third party.
5.5. EMPLOYEE BENEFITS.
(a) Subject to subparagraph 5.5(c) below, for a period of two years
immediately following the Closing Date, Parent shall or shall cause the
Surviving Corporation to maintain in effect employee benefit plans and
arrangements for employees of the Company and its Subsidiaries which provide
benefits which have a value which is at least comparable in the aggregate to the
benefits provided by the Company Benefit Plans other than Company Equity Plans.
(b) Employees of the Company and its Subsidiaries as of the Effective
Time shall receive credit for service with the Company and its Subsidiaries to
the same extent such service credit was granted under the Company Benefit Plans
under the comparable employee benefit plans, programs and policies of Parent,
the Surviving Corporation or their respective Subsidiaries in which such
employees become participants, solely for purposes of eligibility to
participate, vesting, vacation entitlement and severance benefits; it being
understood, that such service prior to the Effective Time shall not be credited
for purposes of benefit accrual under any defined benefit pension plan or
eligibility for post-retirement medical benefits.
(c) Parent shall cause the Surviving Corporation to assume and honor
in accordance with their terms all written employment, severance, retention and
termination agreements (including change in control provisions and including the
Employee Retention Plan adopted by the Company on April 17, 1999) applicable to
employees of the Company and its Subsidiaries provided to Parent on or prior to
the date of this Agreement or described on the Company's SEC Reports.
Notwithstanding the foregoing, (i) Parent agrees to include the employees of the
Company and its Subsidiaries in a sabbatical policy that is substantially
comparable to the Company Sabbatical Policy listed in Section 5.5(c) of the
Company
32
Disclosure Schedule and (ii) except as provided in this Agreement, nothing shall
in any way limit or restrict the ability of Parent or the Surviving Corporation
following the Effective Time to modify, amend or terminate any Company Benefit
Plan, in accordance with the terms of such Company Benefit Plan. Nothing
contained herein shall limit or restrict the ability of Parent to terminate the
employment of any employee.
5.6. FEES AND EXPENSES. Whether or not the transactions contemplated hereby are
consummated, all Expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
Expenses, except (a) if the Merger is consummated, the Surviving Corporation
shall pay, or cause to be paid, any and all property or transfer taxes imposed
on the Company or its Subsidiaries and any real property transfer tax imposed on
any holder of shares of capital stock of the Company resulting from the Merger,
(b) the Expenses incurred in connection with the printing, filing and mailing to
stockholders of the Information Statement, if any, or the Proxy Statement and
the solicitation of stockholder approvals shall be shared equally by the Company
and Parent, and (c) as provided in Section 7.2. As used in this Agreement,
"Expenses" includes all out-of-pocket expenses (including, without limitation,
all fees and expenses of counsel, accountants, investment bankers, experts and
consultants to a party hereto and its affiliates) incurred by a party or on its
behalf in connection with or related to the authorization, preparation,
negotiation, execution and performance of this Agreement and the transactions
contemplated hereby, including the preparation, printing, filing and mailing of
the Offer Documents and the Information Statement, if any, or the Proxy
Statement, if any, and the solicitation of stockholder approvals and all other
matters related to the transactions contemplated hereby.
5.7. INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE. Parent and the
Surviving Corporation shall cause to be maintained in effect (i) for a period of
six years after the Effective Time, the current provisions regarding
indemnification of current or former officers and directors (each an
"Indemnified Party") contained in the Organizational Documents of the Company or
its Subsidiaries and in any agreements between an Indemnified Party and the
Company or its Subsidiaries, provided that in the event any claim or claims are
asserted or made within such six year period, all rights to indemnification in
respect of any claim or claims shall continue until final disposition of any and
all such claims, and (ii) for a period of six years, the current policies of
directors' and officers' liability insurance and fiduciary liability insurance
maintained by the Company (provided that Parent or the Surviving Corporation may
substitute therefor policies of at least the same coverage and amounts
containing terms and conditions which are, in the aggregate, no less
advantageous to the insured and provided that such substitution shall not result
in any gaps or lapses in coverage with respect to matters occurring prior to the
Effective Time) with respect to claims arising from facts or events that
occurred on or before the Effective Time. Parent shall not be obligated to pay
annual premiums to the extent such premiums exceed 150% of the annual premiums
paid as of the date hereof by the Company for such insurance (such 150% amount,
the "Maximum Premium"). If such insurance coverage cannot be obtained at all, or
can only be obtained at an annual premium in excess of the Maximum Premium,
Parent shall
33
maintain the most advantageous policies of directors' and officers' insurance
obtainable for an annual premium equal to the Maximum Premium.
This covenant is intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Parties and their respective heirs and
legal representatives. For a period of six years after the Effective Time
(provided that in the event any claim or claims are asserted or made within such
six year period, all rights to indemnification in respect of any claim or claims
shall continue until final disposition of any and all such claims), Parent shall
indemnify the Indemnified Parties to the same extent as such Indemnified are
entitled to indemnification pursuant to clause (i) of the first sentence of this
Section 5.7. Without limitation of the foregoing, in the event any such
Indemnified Party is or becomes involved in any action, proceeding or
investigation in connection with any matter occurring prior to or on the
Effective Time, including the transactions contemplated hereby, Parent will pay
as incurred such Indemnified Party's reasonable fees and expenses of counsel
selected by the Indemnified Party and reasonably acceptable to Parent (including
the cost of any investigation and preparation and the cost of any appeal)
incurred in connection therewith. This covenant shall survive the closing of the
transactions contemplated hereby and is intended to be for the benefit of, and
shall be enforceable by, each of the Indemnified Parties and their respective
heirs and legal representatives.
5.8. PUBLIC ANNOUNCEMENTS. So long as this Agreement is in effect, the Company
and Parent shall use all reasonable efforts to develop a joint communications
plan and each party shall use all reasonable efforts (i) to ensure that all
press releases and other public statements with respect to the transactions
contemplated hereby shall be consistent with such joint communications plan and
(ii) unless otherwise required by applicable law or by obligations pursuant to
any listing agreement with or rules of any securities exchange, to consult with
each other before issuing any press release or otherwise making any public
statement with respect to this Agreement or the transactions contemplated
hereby.
5.9. TAKEOVER STATUTES. If Section 203 of the DGCL or any other "fair price",
"moratorium", "control share acquisition", "interested shareholder", "business
combination" or other similar antitakeover statute or regulation (including,
without limitation, the business combination provisions of Section 203 of the
DGCL) (each a "Takeover Statute") shall become applicable to the transactions
contemplated hereby, the Company and the members of the Company Board, subject
to its fiduciary duties, shall grant such approvals and take such actions as are
necessary so that the transactions contemplated hereby may be consummated as
promptly as practicable on the terms contemplated hereby and otherwise act to
eliminate or minimize the effects of such Takeover Statute on the transactions
contemplated hereby.
5.10. RIGHTS AGREEMENT. The Company shall take all necessary action to cause
the dilution provisions of the Company Rights Agreement to be inapplicable to
the transactions contemplated
34
by this Agreement, without any payment to holders of rights issued pursuant to
such rights agreement.
5.11. EMPLOYEE STOCK OPTIONS. The Company shall use its best efforts to take
all action necessary so that each outstanding stock option granted by the
Company to employees, directors or consultants under the Company Equity Plans
(an "Option") whether or not then vested or exercisable, shall be canceled
immediately prior to the Effective Time, and shall thereafter represent the
right to receive at the Effective Time from the Company or as soon as
practicable thereafter from the Surviving Corporation in consideration for such
cancellation an amount in cash equal to the product of (A) the number of shares
of Company Common Stock previously subject to such Option and (B) the excess, if
any, of the Merger Consideration over the exercise price per share of Company
Common Stock previously subject to such Option, less any required withholding
taxes. Promptly following the execution of this Agreement, the Company shall
mail to each person who is a holder of outstanding stock options granted
pursuant to the Company Equity Plans (regardless of whether such stock options
are vested or exercisable at the time) a letter in a form acceptable to Parent
which describes the treatment of and payment for such options pursuant to this
Section 5.11 and provides instructions for use in obtaining payment for such
options hereunder. The Company shall use its reasonable best efforts to obtain a
release from each such holder, prior to or as soon as practicable following the
Effective Time, by which such holder effectively relinquishes all rights with
respect to such holder's outstanding stock options upon payment therefor in
accordance with this Section 5.11. The Company shall take all actions necessary
to cause the Company Equity Plans to be terminated effective as of the Effective
Time.
5.12. FURTHER ASSURANCES. In case at any time after the Effective Time any
further action is reasonably necessary to carry out the purposes of this
Agreement, the proper officers of the Company, Parent and Merger Sub shall take
any such necessary action.
ARTICLE VI.
CONDITIONS PRECEDENT
6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE MERGER. The
obligations of the Company, Parent and Merger Sub to effect the Merger are
subject to the satisfaction or waiver (subject to Section 1.4(c)) on or prior to
the Effective Time of the following conditions:
(a) Stockholder Approval. The Company shall have obtained all
approvals of holders of shares of capital stock of the Company necessary to
approve this Agreement and all the transactions contemplated hereby (including
the Merger) to the extent required by law.
(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.
35
(c) No Injunction or Restraints; Illegality. No temporary restraining
order, preliminary or permanent injunction or other order issued by a court or
other Governmental Entity of competent jurisdiction shall be in effect and have
the effect of making the Merger illegal or otherwise prohibiting consummation of
the Merger; provided, however, that the provisions of this Section 6.1(c) shall
not be available to any party whose failure to fulfill its obligations pursuant
to Section 5.3 shall have been the cause of, or shall have resulted in, such
order or injunction.
(d) Required Regulatory Approvals. All authorizations, consents,
orders and approvals of, and declarations and filings with, and all expirations
of waiting periods imposed by, any Governmental Entity which, if not obtained in
connection with the consummation of the transactions contemplated hereby, could
reasonably be expected to have a Material Adverse Effect on the Company or
materially impair or delay the ability of the Company, Parent or Merger Sub to
consummate the transactions contemplated hereby (collectively, "Required
Regulatory Approvals"), shall have been obtained, have been declared or filed or
have occurred, as the case may be, and all such Required Regulatory Approvals
shall be in full force and effect.
(e) Completion of the Offer. Merger Sub shall have (i) commenced the
Offer pursuant to Article I hereof and (ii) purchased, pursuant to the terms and
conditions of such Offer, all shares of Company Common Stock duly tendered and
not withdrawn; provided, however, that neither Parent nor Merger Sub shall be
entitled to rely on the condition in clause (ii) above if either of them shall
have failed to purchase shares of Company Common Stock pursuant to the Offer in
breach of their obligations under this Agreement.
ARTICLE VII.
TERMINATION AND AMENDMENT
7.1. TERMINATION. This Agreement may be terminated at any time prior to the
Effective Time, by action taken or authorized by the Board of Directors of the
terminating party or parties, whether before or after approval of this Agreement
and the matters contemplated herein, including the Merger, by the stockholders
of the Company
(a) By mutual written consent of Parent and the Company, by action
of their respective Boards of Directors;
(b) By either the Company or Parent if the Merger shall not have
been consummated by the date which is four months from the date of this
Agreement (the "Outside Date"); provided further that the right to terminate
this Agreement under this Section 7.1(b) shall not be available to any party
whose failure to fulfill any obligation or condition under this Agreement has
been the cause of, or resulted in, the failure of the Merger to occur on or
before such date and shall not be available to Parent if it has purchased shares
of the Company Common Stock pursuant to the Offer;
36
(c) By the Company or Parent if the Offer is terminated or withdrawn
pursuant to its terms without any shares of Company Common Stock being purchased
thereunder; provided that Parent may terminate this Agreement pursuant to this
Section 7.1(c) only if Parent's or Merger Sub's termination or withdrawal of the
Offer is not in violation of the terms of this Agreement or the Offer;
(d) By either the Company or Parent if any Governmental Entity shall
have issued an order, decree or ruling or taken any other action (which order,
decree, ruling or other action the parties shall have used their reasonable
efforts to resist, resolve or lift, as applicable, subject to the provisions of
Section 5.3) permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by this Agreement, and such order, decree, ruling or
other action shall have become final and nonappealable;
(e) By either Parent or the Company if any approval by the
stockholders of the Company required for the consummation of the Merger or the
other transactions contemplated hereby shall not have been obtained at the
Company Stockholders Meeting or any adjournment thereof by reason of the failure
to obtain the required vote at a duly held meeting of stockholders or at any
adjournment thereof;
(f) By Parent, prior to the purchase by Merger Sub of shares of
Company Common Stock pursuant to the Offer, if (i) the Company Board shall have
withdrawn or adversely modified its recommendation of the Offer, the Merger or
this Agreement or the Company Board, upon request by Parent, shall fail to
reaffirm such approval or recommendation within 10 business days after such
request if an Acquisition Proposal is pending, or shall have resolved to do any
of the foregoing; (ii) the Company Board shall have recommended to the
stockholders of the Company that they approve, an Acquisition Proposal other
than transactions contemplated by this Agreement; (iii) a tender offer or
exchange offer that, if successful, would result in any Person or "group"
becoming a "beneficial owner" (such terms having the meaning in this Agreement
as is ascribed under Regulation 13D under the Exchange Act) of 15% or more of
the outstanding shares of Company Common Stock is commenced (other than by
Parent or an affiliate of Parent) and the Company Board recommends that the
stockholders of the Company tender their shares in such tender or exchange
offer; (iv) for any reason the Company fails to call and hold the Company
Stockholders Meeting by the Outside Date (provided that Parent's right to
terminate this Agreement under such clause (iv) shall not be available if at
such time the Company would be entitled to terminate this Agreement under
Section 7.1(c) or Section 7.1(i) or following the purchase by Merger Sub of a
number of shares of Company Common Stock that satisfies the Minimum Condition);
or (v) if the Company or any of the Persons described in Section 5.4(a) shall
(A) willfully and materially breach Section 5.4(a) or (B) take any of the
actions that would be proscribed by Section 5.4(a) but for the provisions of
Section 5.4(b) allowing certain actions to be taken pursuant to Section 5.4(b)
under the conditions set forth therein.
37
(g) By the Company, prior to the purchase by Merger Sub of shares of
Company Common Stock pursuant to the Offer, if the Company Board determines to
accept a Superior Proposal;
(h) By Parent, prior to the purchase by Merger Sub of shares of
Company Common Stock pursuant to the Offer, upon a material breach of any
covenant or agreement on the part of the Company set forth in this Agreement, or
if (i) any representation or warranty of the Company that is qualified as to
materiality shall have become untrue or (ii) any representation or warranty of
the Company that is not so qualified shall have become untrue in any material
respect (a "Terminating Company Breach"); provided, however, that, such
Terminating Company Breach must be reasonably likely to materially adversely
affect the Company or the consummation of the Offer or the Merger and if such
Terminating Company Breach is capable of being cured by the Company prior to the
Effective Time through the exercise of its best efforts, so long as the Company
continues to exercise such best efforts, Parent may not terminate this Agreement
under this Section 7.1(h); or
(i) By the Company, upon a material breach of any covenant or
agreement on the part of Parent or Merger Sub set forth in this Agreement, or if
(i) any representation or warranty of Parent or Merger Sub that is qualified as
to materiality shall have become untrue or (ii) any representation or warranty
of Parent or Merger Sub that is not so qualified shall have become untrue in any
material respect ("Terminating Parent Breach"); provided, however, that, such
Terminating Parent Breach must be reasonably likely to materially adversely
effect the consummation of the Offer or the Merger and if such Terminating
Parent Breach is capable of being cured by Parent prior to the Effective Time
through the exercise of best efforts, so long as Parent continues to exercise
such best effort, the Company may not terminate this Agreement under this
Section 7.1(i);
(j) By the Company, if Merger Sub shall have failed to amend the
Offer within the two Business Day period specified in Section 1.1(a) or Merger
Sub fails to purchase validly tendered shares of the Company Common Stock in
violation of the terms of the Offer or this Agreement; or
(k) By Parent or the Company, if the Offer terminates or expires on
account of the failure of any condition specified in Annex A without Merger Sub
having purchased any shares of Company Common Stock thereunder (provided that
the right to terminate this Agreement pursuant to this subparagraph shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of any such
condition).
38
7.2. EFFECT OF TERMINATION.
(a) In the event of termination of this Agreement by either the
Company or Parent as provided in Section 7.1, this Agreement shall forthwith
become void and there shall be no liability or obligation on the part of Parent
or the Company or their respective officers or directors except (i) with respect
to the last sentence of Section 5.2, Section 5.6, this Section 7.2 and Article
VIII and (ii) with respect to any liabilities or damages incurred or suffered by
a party as a result of the willful breach by the other party of any of its
covenants or other agreements set forth in this Agreement.
(b) In the event that (x) this Agreement is terminated pursuant to
Section 7.1(f) or 7.1(g), or (y) (i) the Offer shall have remained open for a
minimum of at least 20 Business Days from the date that it is amended pursuant
to Section 1.1(a), (ii) after the date hereof any corporation, partnership,
person, other entity or group (as defined in Section 13(d)(3) of the Exchange
Act) other than Parent or Merger Sub or any of their respective Subsidiaries or
affiliates shall have become the beneficial owner of 15% or more of the
outstanding shares of Company Common Stock or made any Acquisition Proposal,
(iii) the Minimum Condition shall not have been satisfied and the Offer is
terminated pursuant to Section 7.1(c) and Merger Sub shall not have accepted for
payment any shares of Company Common Stock pursuant to the Offer and (iv) within
twelve months of such termination the Company enters into an agreement providing
for the consummation of an Acquisition Proposal (as such term is defined in
Section 5.4(a), except that the reference in such definition to 15% shall be
deemed a reference to 40% for purposes of this clause (iv) only) or any other
person or other entity (other than Parent or any of its affiliates) becomes the
beneficial owner of 40% or more of the outstanding shares of Company Common
Stock, then the Company shall pay the Parent in cash (A) $30,000,000 plus (B) up
to $7,500,000 of Parent's reasonable and documented expenses incurred in
connection with the Offer and Merger ((A) and (B) together, the "Termination
Fee"), which amount shall be payable by wire transfer of immediately available
funds no later than two Business Days after such termination, in the case of
clause (x), or within two business days of the Company entering into an
agreement or a person becoming the beneficial owner of 40% or more of the
Company's outstanding shares of Company Common Stock, in the case of clause (y);
provided, however, the Termination Fee shall not be payable following
termination by Parent pursuant to Section 7.1 (f)(v)(B) unless within one year
of the date of such termination the Company or one or more of its affiliates
enters into an agreement providing for the consummation of an Acquisition
Proposal (as defined in Section 5.4(a), except that the reference in such
definition to 15% shall be deemed to be a reference to 40% for purposes of this
proviso only), in which case the Company shall pay Parent the Termination Fee
within two business days after the entry into such agreement; provided, further,
however, that the one year period in the period in the preceding provision shall
be deemed to be two years if the Company enters into an agreement providing for
the consummation of an Acquisition Proposal with the Person that made the
Superior Proposal that caused the Company to take the actions that triggered
Parent's right to terminate under Section 7.1(f)(v)(B). The Company acknowledges
that the agreements contained in this Section 7.2(b)
39
are an integral part of the transactions contemplated in this Agreement, and
that, without these agreements, the Parent and Merger Sub would not enter into
this Agreement; accordingly, if the Company fails to promptly pay the amount due
pursuant to this Section 7.2(b), and, in order to obtain such payment, Parent or
Merger Sub commences a suit which results in a judgment against the Company for
the fee set forth in this paragraph (b), the Company shall pay to Parent or
Merger Sub its costs and expenses (including attorneys' fees) in connection with
such suit, together with interest on the amount of the fee at the prime rate of
Citibank N.A. on the date such payment was required to be made.
7.3. AMENDMENT. Subject to Section 1.4(c), this Agreement may be amended by
the parties hereto, by action taken or authorized by their respective Boards of
Directors, at any time before or after approval of the matters presented in
connection with the Merger by the stockholders of the Company, but, after any
such approval, no amendment shall be made which by law or in accordance with the
rules of Nasdaq requires further approval by such stockholders without such
further approval. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto.
7.4. EXTENSION; WAIVER. Subject to Section 1.4(c), at any time prior to the
Effective Time, the parties hereto, by action taken or authorized by their
respective Boards of Directors, may, to the extent legally allowed, (i) extend
the time for the performance of any of the obligations or other acts of the
other parties hereto, (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on behalf
of such party. No delay on the part of any party hereto in exercising any right,
power or privilege hereunder shall operate as a waiver thereof, nor shall any
waiver on the part of any party hereto of any right, power or privilege
hereunder operate as a waiver of any other right, power or privilege hereunder,
nor shall any single or partial exercise of any right, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or privilege hereunder. Unless otherwise provided, the rights
and remedies herein provided are cumulative and are not exclusive of any rights
or remedies which the parties hereto may otherwise have at law or in equity. The
failure of any party to this Agreement to assert any of its rights under this
Agreement or otherwise shall not constitute a waiver of those rights.
ARTICLE VIII.
GENERAL PROVISIONS
8.1. NON-SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS; NO OTHER
REPRESENTATIONS AND WARRANTIES. None of the representations, warranties,
covenants and other agreements in this Agreement or in any instrument delivered
pursuant to this Agreement, including any rights arising out of any breach of
such representations, warranties, covenants and
40
other agreements, shall survive the Effective Time, except for those covenants
and agreements contained herein and therein shall by their terms apply or are to
be performed in whole or in part after the Effective Time and this Article VIII.
Each party hereto agrees that, except for the representations and warranties
contained in this Agreement, none of the Company, Parent or Merger Sub makes any
other representations or warranties, and each hereby disclaims an other
representations or warranties made by itself or any of its officers, directors,
employees, agents, financial and legal advisors or other representatives, with
respect to the execution and delivery of this Agreement, the documents and the
instruments referred to herein, or the transactions contemplated hereby or
thereby, notwithstanding the delivery or disclosure to the other party or the
other party's representatives of any documentation or other information with
respect to any one or more of the foregoing.
8.2. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed duly given (a) on the date of delivery if delivered
personally, (b) on the first Business Day following the date of dispatch if
delivered by a nationally recognized next-day courier service, (c) on the tenth
Business Day following the xxxx of mailing if delivered by registered or
certified mail, return receipt requested, postage prepaid or (d) if sent by
facsimile transmission, with a copy mailed on the same day in the manner
provided in (a) or (b) above, when transmitted and receipt is confirmed by
telephone. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice:
(a) if to Parent or Merger Sub, to, Koninklijke Philips Electronics
N.V., Xxxxxxxxx Xxxxx, Xxxxxxxxxxx 0, 0000 XX Xxxxxxxxx, Xxx Xxxxxxxxxxx,
Attention: Guido X.X. Xxxxxxx, Director and Deputy Secretary, Facsimile No:
011-31-20-597-7230, with copies to Xxxx X. Xxxxxxxx, Esq., Xxxxxxxx & Xxxxxxxx,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Facsimile No.: 000-000-0000;
(b) if to the Company, to, VLSI Technology, Inc., 0000 XxXxx Xxxxx,
Xxx Xxxx, Xxxxxxxxxx 00000, Attention: Xxxxxx X. Xxxxx, Chairman and Chief
Executive Officer, Facsimile No.: 000-000-0000, with a copy to Xxxxxxxxxxx X.
Xxxxxxx, Esq., Xxxxxx & Xxxxxxx, 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxxxxxxx, Xxxxxxxxxx, 00000, Facsimile No.: 000-000-0000.
8.3. INTERPRETATION. When a reference is made in this Agreement to Sections,
Exhibits or Schedules, such reference shall be to a Section of or Exhibit or
Schedule to this Agreement unless otherwise indicated. The table of contents,
glossary of defined terms and headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words "include", "includes" or
"including" are used in this Agreement, they shall be deemed to be followed by
the words "without limitation." The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this
41
Agreement shall be construed as if drafted jointly by the parties and no
presumption or burden or proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement. Any
reference to any federal, state, local or foreign statute or law shall be deemed
also to refer to all rules and regulations promulgated thereunder, unless the
content requires otherwise. It is understood and agreed that neither the
specifications of any dollar amount in this Agreement nor the inclusion of any
specific item in the Schedules or Exhibits is intended to imply that such
amounts or higher or lower amounts, or the items so included or other items, are
or are not material, and neither party shall use the fact of setting of such
amounts or the fact of the inclusion of such item in the Schedules or Exhibits
in any dispute or controversy between the parties as to whether any obligation,
item or matter is or is not material for purposes hereof.
8.4. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement and shall become
effective when one or more counterparts have been signed by each of the parties
and delivered to the other party, it being understood that both parties need not
sign the same counterpart.
8.5. ENTIRE AGREEMENT; NO THIRD PARTY BENEFICIARIES.
(a) This Agreement (including the Schedules and Exhibits) consti-
tutes the entire agreement and supersedes all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, other than the Confidentiality Agreement, which shall
survive the execution and delivery of this Agreement.
(b) This Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this Agreement, other than
Article II and Sections 1.4(c) and 5.7 (which is intended to be for the benefit
of the Persons covered thereby and may be enforced by such Persons).
8.6. GOVERNING LAW; JURISDICTION; WAIVER OF JURY TRIAL.
(a) This Agreement shall be governed and construed in accordance
with the laws of the State of Delaware, without regard to the laws that might
be applicable under conflicts of laws principles.
(b) Each of the parties hereto hereby irrevocably and unconditionally
submits, for itself and its property, to the exclusive jurisdiction of any
Delaware State court, or Federal court of the United States of America, sitting
in Delaware, and any appellate court from any thereof, in any action or
proceeding arising out of or relating to this Agreement or the agreements
delivered in connection herewith or the transactions contemplated hereby or
thereby or for recognition or enforcement of any judgment relating thereto, and
each of the parties hereby
42
irrevocably and unconditionally (i) agrees not to commence any such action or
proceeding except in such courts, (ii) agrees that any claim in respect of any
such action or proceeding may be heard and determined in such Delaware State
court or, to the extent permitted by law, in such Federal court, (iii) waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any such action or
proceeding in any such Delaware State or Federal court, and (iv) waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such Delaware State or Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Each party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 8.2. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
(c) EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH
MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT
ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT AND ANY OF THE
AGREEMENTS DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (i) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE EITHER OF SUCH WAIVERS, (ii) IT MAKES SUCH WAIVERS VOLUNTARILY, AND
(iii) IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 8.6(c).
8.7. SEVERABILITY. If any term or other provision of this Agreement is invalid,
illegal or incapable of being enforced by any law or public policy, all other
terms and provisions of this Agreement shall nevertheless remain in full force
and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner materially adverse to any
party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner in order that the
transactions contemplated hereby are consummated as originally contemplated to
the greatest extent possible. Any provision of this Agreement held invalid or
unenforceable only in part, degree or certain jurisdictions will remain in full
force and effect to the extent not held invalid or unenforceable. To the extent
permitted by applicable law, each party waives any provision of law which
renders any provision of this Agreement invalid, illegal or unenforceable in any
respect.
43
8.8. ASSIGNMENT. Neither this Agreement nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto, in whole
or in part (whether by operation of law or otherwise), without the prior written
consent of the other parties, and any attempt to make any such assignment
without such consent shall be null and void. Subject to the preceding sentence,
this Agreement will be binding upon, inure to the benefit of and be enforceable
by the parties and their respective permitted successors and assigns.
8.9. ENFORCEMENT. The parties agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms. It is accordingly agreed that the parties
shall be entitled to specific performance of the terms hereof, this being in
addition to any other remedy to which they are entitled at law or in equity.
8.10. DEFINITIONS. As used in this Agreement:
(a) "Board of Directors" means the Board of Directors of any
specified Person and any properly serving and acting committees thereof.
(b) "Business Day" means any day on which banks are not required or
authorized to close in The City of New York.
(c) "Company Equity Plans" means the Company's 1986 Directors' Stock
Option Plan, Amended and Restated Employee Stock Purchase Plan, Compass Design
Automation, Inc. 1992 Stock Option Plan, as amended, 1992 Stock Plan, as
amended, and the 1998 Nonstatutory Stock Option Plan.
(d) "Intellectual Property" shall mean patents, copyrights, trade-
marks (registered and unregistered), service marks, brand names, trade names,
and registrations in any jurisdiction of, and applications in any jurisdiction
to register, the foregoing, technology, know-how, software, and tangible or
intangible proprietary information or materials that are used in the business of
the Company and its Subsidiaries as currently conducted and any other trade
secrets related thereto.
(e) "Material Adverse Effect" means, with respect to any Person, any
adverse change, circumstance, development, event or effect that, individually or
in the aggregate with all other adverse changes, circumstances, developments,
events and effects, is or is reasonably likely to be materially adverse to the
business, operations, assets, liabilities, financial condition or results of
operations of such entity and its Subsidiaries taken as a whole; provided,
however, that with respect to the Company the term Material Adverse Effect shall
not include (i) any change, circumstance, development, event or effect that
relates to or results primarily from the announcement or other disclosure or
consummation of the transactions contemplated by this Agreement or (ii) changes
in general economic conditions, financial markets generally (including
44
fluctuations in the price of shares of the Company Common Stock or shares of
capital stock of Parent) or conditions in the semiconductor and related
industries generally.
(f) "Material Subsidiaries" of a Person shall mean the "Significant
Subsidiaries" of such Person as defined under Regulation S-X of the Securities
Act.
(g) "Organizational Documents" means, with respect to any entity,
the certificate of incorporation, bylaws or other governing documents of such
entity.
(h) "Person" means an individual, corporation, partnership, limited
liability company association, trust, unincorporated organization, entity or
group (as defined in the Exchange Act).
(i) "Required Consents" means (i) all material required approvals and
consents of any Governmental Entity obtained on terms and conditions reasonably
satisfactory to Parent and (ii) Parent or the Merger Sub shall not have received
notice under Section 721 of Title VII of the United States Defense Production
Act of 1950, as amended by Section 5021 of the Omnibus Trade and Competitiveness
Act of 1988 (the "Exon-Xxxxxx Amendment") that the Committee on Foreign
Investment in the United States ("CFIUS") has determined to investigate the
Offer or any related transaction and the time that CFIUS can decide to take such
action shall have expired.
(j) "Subsidiary" when used with respect to any Person means any
corporation or other organization, whether incorporated or unincorporated, (i)
of which such Person or any other Subsidiary of such Person is a general partner
(excluding partnerships, the general partnership interests of which held by such
Person or any Subsidiary of such Person do not have a majority of the voting and
economic interests in such partnership) or (ii) at least a majority of the
securities or other interests of which having by their terms ordinary voting
power to elect a majority of the Board of Directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such Person or by any one or more of its
Subsidiaries, or by such Person and one or more of its Subsidiaries.
(k) (i) "Tax" (including, with correlative meaning, the terms "Taxes"
and "Taxable") means all federal, state, local and foreign income, profits,
franchise, gross receipts, environmental, customs duty, capital stock,
severance, stamp, payroll, sales, employment, unemployment disability, use,
property, withholding, excise, production, value added, occupancy and other
taxes, duties or assessments of any nature whatsoever, together with all
interest, penalties, fines and additions to tax imposed with respect to such
amounts and any interest in respect of such penalties and additions to tax, and
(ii) "Tax Return" means all returns and reports (including elections, claims,
declarations, disclosures, schedules, estimates, computations and information
returns) required to be supplied to a Tax authority in any jurisdiction relating
to Taxes.
45
(l) "the other party" means, with respect to the Company, Parent and
means, with respect to Parent, the Company.
8.11. PERFORMANCE BY MERGER SUB.
Parent hereby agrees to cause Merger Sub to comply with its
obligations hereunder and under the Offer and to cause Merger Sub to consummate
the Merger as contemplated herein and whenever this Agreement requires Merger
Sub to take any action, such requirement shall be deemed to include an
undertaking of Parent to cause Merger Sub to take such action.
46
IN WITNESS WHEREOF, Parent, the Company and Merger Sub have caused
this Agreement to be signed by their respective officers thereunto duly
authorized, all as of May 1, 1999.
KONINKLIJKE PHILIPS ELECTRONICS N.V.,
a company incorporated under the laws
of The Netherlands
By: /s/ Xxxxxx van der Poel
-----------------------------------
Name: Xxxxxx van der Poel
Title: Executive Vice President
KPE ACQUISITION INC.,
a Delaware corporation
By: /s/ Guido X.X. Xxxxxxx
-----------------------------------
Name: Guido X.X. Xxxxxxx
Title: Vice President and Treasurer
VLSI TECHNOLOGY, INC.,
a Delaware corporation
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title: Chairman and Chief Executive
Officer
47
ANNEX A
CONDITIONS TO THE OFFER
The Offer shall be conditioned upon the Minimum Shares being validly
tendered and not withdrawn prior to the date which is 10 Business Days following
the amendment of the Offer in accordance with the terms of Section 1.1(a) of the
Agreement or such later date as the Offer may be extended by an amendment to the
Agreement in accordance with the provisions thereof. Moreover, notwithstanding
any other provision of the Offer, and subject to the terms and conditions of the
Agreement, Merger Sub shall not be obligated to accept for payment any shares of
Company Common Stock until all Required Regulatory Approvals shall have been
obtained, made or satisfied and until the expiration of any waiting periods
applicable under antitrust or competition laws of any applicable jurisdiction
and Merger Sub shall not be required to accept for payment, purchase or pay for,
and may delay the acceptance for payment of or payment for, any shares of
Company Common Stock tendered in the Offer, or if the Minimum Shares shall not
have been validly tendered pursuant to the Offer and not withdrawn, may
terminate or amend the Offer, subject to the terms and conditions of the
Agreement and Merger Sub's obligation to extend the Offer pursuant to Section
1.1(b) if, prior to the time of acceptance for payment of any such shares of
Company Common Stock (whether or not any other shares of Company Common Stock
have theretofore been accepted for payment or paid for pursuant to the Offer),
any of the following shall occur and remain in effect:
(a) the Company, Parent and the United States government or
appropriate agency thereof shall not have reached a mutually satisfactory
arrangement so that Parent's acquisition of the Company Common Stock would not
present national security concerns on account of the Company being a party to
government contracts; provided that Parent's invocation of this condition shall
be subject to Parent's satisfaction of its obligations under Section 4.3(b) of
the Agreement;
(b) there shall be pending any action, litigation or proceeding
(hereinafter, an "Action") by any Governmental Entity: (i) challenging the
acquisition by Parent or Merger Sub of shares of Company Common Stock or seeking
to restrain or prohibit the consummation of the Offer or the Merger; (ii)
seeking to prohibit or impose any material limitations on Parent's, Merger Sub's
or any of their respective affiliates' ownership or operation of all or any
material portion of the business or assets of the Company and its Subsidiaries
taken as a whole or the business or assets of any significant Subsidiary of
Koninklijke Philips Electronics N.V., or to compel Parent or Merger Sub to
dispose of or hold separate all or any material portion of Parent's or Merger
Sub's or the Company's business or assets (including the business or assets of
their respective affiliates and
48
Subsidiaries) as a result of the Offer or the Merger; (iii) seeking to impose
material limitations on the ability of Parent or Merger Sub effectively to
acquire or hold, to exercise full rights of ownership of, the shares of Company
Common Stock including, without limitation, the right to vote the shares of
Company Common Stock purchased by them on an equal basis with all other shares
of Company Common Stock on all matters properly presented to the shareholders of
the Company, which in the case of clause (i), (ii) or (iii), if successful or if
the Offer were consummated prior to the resolution thereof, would have a
Material Adverse Effect on the Company or Parent or would materially and
adversely effect the ability of Parent to conduct its business or the business
of the Company following the consummation of the Offer or Parent demonstrates
would reasonably be determined to have a Material Adverse Effect on the economic
or business benefits of the Merger;
(c) any statute, rule, regulation, order or injunction shall be
enacted, promulgated, entered, enforced or deemed to or become applicable to the
Offer or the Merger, or any other action shall have been taken by any court or
other Governmental Entity, that is reasonably expected to result in any of the
effects of any Action referred to in clauses (i) through (iii) of paragraph (b)
above;
(d) there shall have been a Material Adverse Effect on the Company; or
(e) the Agreement shall have been terminated by the Company or Parent
or Merger Sub pursuant to its terms.
The foregoing conditions are for the sole benefit of Parent and Merger
Sub and may be asserted by Parent and Merger Sub regardless of the circumstances
giving rise to such condition or, except for the Minimum Condition, may be
waived by Parent and Merger Sub in whole or in part at any time and from time to
time, by express and specific action to that effect, in whole or in part at any
time and from time to time in their sole discretion. The failure by Parent or
Merger Sub at any time to exercise any of the foregoing rights shall not be
deemed a waiver of any such right, the waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances, and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
The capitalized terms used in this Annex A shall have the meanings set
forth in the Agreement to which it is annexed, except that the term Merger
Agreement shall be deemed to refer to the Agreement to which this Annex A is
appended.
49
