Exhibit (d)(1)
EXECUTION COPY
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AGREEMENT AND PLAN OF MERGER
Among
SIEMENS CORPORATION,
MEMPHIS ACQUISITION INC.
and
EFFICIENT NETWORKS, INC.
Dated as of February 21, 2001
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS....................................................... 1
SECTION 1.01 Definitions............................................. 1
ARTICLE II THE OFFER........................................................ 5
SECTION 2.01 The Offer............................................... 5
SECTION 2.02 Company Action.......................................... 7
ARTICLE III THE MERGER...................................................... 8
SECTION 3.01 The Merger.............................................. 8
SECTION 3.02 Effective Time; Closing................................. 8
SECTION 3.03 Effect of the Merger.................................... 8
SECTION 3.04 Certificate of Incorporation; By-laws................... 9
SECTION 3.05 Directors and Officers.................................. 9
SECTION 3.06 Conversion of Securities................................ 9
SECTION 3.07 Employee Stock Options; Employee Stock Purchase Plan.... 9
SECTION 3.08 Dissenting Shares....................................... 10
SECTION 3.09 Surrender of Shares; Stock Transfer Books............... 11
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................... 12
SECTION 4.01 Organization and Qualification; Subsidiaries............ 12
SECTION 4.02 Certificate of Incorporation and By-laws................ 12
SECTION 4.03 Capitalization.......................................... 12
SECTION 4.04 Authority Relative to This Agreement.................... 13
SECTION 4.05 No Conflict; Required Filings and Consents.............. 13
SECTION 4.06 Permits; Compliance..................................... 14
SECTION 4.07 SEC Filings; Financial Statements....................... 15
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SECTION 4.08 Absence of Certain Changes or Events.................... 16
SECTION 4.09 Absence of Litigation................................... 16
SECTION 4.10 Employee Benefit Plans.................................. 16
SECTION 4.11 Labor and Employment Matters............................ 18
SECTION 4.12 Offer Documents; Schedule 14D-9; Proxy Statement........ 19
SECTION 4.13 Property and Leases..................................... 19
SECTION 4.14 Intellectual Property................................... 20
SECTION 4.15 Taxes................................................... 21
SECTION 4.16 Environmental Matters................................... 21
SECTION 4.17 Material Contracts...................................... 21
SECTION 4.18 Customers and Suppliers................................. 23
SECTION 4.19 Insurance............................................... 23
SECTION 4.20 Brokers................................................. 24
ARTICLE V REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER............ 24
SECTION 5.01 Corporate Organization.................................. 24
SECTION 5.02 Authority Relative to This Agreement.................... 24
SECTION 5.03 No Conflict; Required Filings and Consents.............. 24
SECTION 5.04 Financing............................................... 25
SECTION 5.05 Offer Documents; Proxy Statement........................ 25
SECTION 5.06 Brokers................................................. 26
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER........................... 26
SECTION 6.01 Conduct of Business by the Company Pending the Merger... 26
ARTICLE VII ADDITIONAL AGREEMENTS........................................... 28
SECTION 7.01 Stockholders" Meeting................................... 28
SECTION 7.02 Proxy Statement......................................... 28
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SECTION 7.03 Company Board Representations; Section 14(f)........... 29
SECTION 7.04 Access to Information; Confidentiality.................. 29
SECTION 7.05 No Solicitation of Transactions......................... 30
SECTION 7.06 Employee Benefits Matters............................... 30
SECTION 7.07 Directors' and Officers' Indemnification and Insurance.. 31
SECTION 7.08 Notification of Certain Matters......................... 32
SECTION 7.09 Further Action; Reasonable Best Efforts................. 32
SECTION 7.10 Public Announcements.................................... 33
SECTION 7.11 Confidentiality Agreement............................... 33
SECTION 7.12 Convertible Notes....................................... 33
ARTICLE VIII CONDITIONS TO THE MERGER....................................... 33
SECTION 8.01 Conditions to the Merger................................ 33
ARTICLE IX TERMINATION, AMENDMENT AND WAIVER................................ 34
SECTION 9.01 Termination............................................. 34
SECTION 9.02 Effect of Termination................................... 35
SECTION 9.03 Fees.................................................... 35
SECTION 9.04 Amendment.............................................. 36
SECTION 9.05 Waiver................................................. 36
ARTICLE X GENERAL PROVISIONS................................................ 36
SECTION 10.01 Notices................................................. 36
SECTION 10.02 Severability............................................ 37
SECTION 10.03 Entire Agreement; Assignment........................... 37
SECTION 10.04 Parties in Interest..................................... 37
SECTION 10.05 Specific Performance.................................... 37
SECTION 10.06 Governing Law........................................... 37
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SECTION 10.07 Waiver of Jury Trial.................................... 38
SECTION 10.08 Headings................................................ 38
SECTION 10.09 Counterparts............................................ 38
Annex A Conditions to the Offer
Schedule 3.05 Initial Directors of the Surviving Corporation
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AGREEMENT AND PLAN OF MERGER, dated as of February 21, 2001 (this
"Agreement"), among SIEMENS CORPORATION, a Delaware corporation ("Parent"),
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MEMPHIS ACQUISITION INC., a Delaware corporation and a wholly owned subsidiary
of Parent ("Purchaser"), and EFFICIENT NETWORKS, INC., a Delaware corporation
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(the "Company").
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WHEREAS, the Boards of Directors of Parent, Purchaser and the Company
have each determined that it is in the best interests of their respective
stockholders for Parent to acquire the Company upon the terms and subject to the
conditions set forth herein;
WHEREAS, in furtherance of such acquisition, Purchaser shall make a
cash tender offer (the "Offer") to acquire all the shares of common stock, par
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value $0.001 per share, of the Company ("Shares") that are issued and
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outstanding for $23.50 per Share (such amount, or any greater amount per Share
paid pursuant to the Offer, being the "Per Share Amount"), net to the seller in
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cash, upon the terms and subject to the conditions of this Agreement and the
Offer;
WHEREAS, the Board of Directors of the Company (the "Board") has
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unanimously approved the making of the Offer and resolved to recommend that
holders of Shares tender their Shares pursuant to the Offer (with Xx. Xxxxxxx X.
Xxxxx abstaining); and
WHEREAS, also in furtherance of such acquisition, the Boards of
Directors of Parent, Purchaser and the Company have each approved this Agreement
and declared its advisability and approved the merger (the "Merger") of
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Purchaser with and into the Company in accordance with the General Corporation
Law of the State of Delaware ("Delaware Law"), following the consummation of the
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Offer and upon the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Purchaser and the Company hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Definitions. (a) For purposes of this Agreement:
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"Acquisition Proposal" means (i) any proposal or offer from any person
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relating to any direct or indirect acquisition of (A) all or a substantial
part of the assets of the Company or of any Material Subsidiary or (B) more
than 20% of any class of equity securities of the Company or of any
Material Subsidiary; (ii) any tender offer or exchange offer, as defined
pursuant to the Exchange Act, that, if consummated, would result in any
person beneficially owning 20% or more of any class of equity securities of
the Company or any Material Subsidiary; or (iii) any merger, consolidation,
business combination, sale of all or a substantial part of the assets,
recapitalization, liquidation, dissolution or similar transaction involving
the Company or any Material Subsidiary other than the Transactions.
"affiliate" of a specified person means a person who, directly or
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indirectly through one or more intermediaries, controls, is controlled by, or is
under common control with, such specified person.
"beneficial owner", with respect to any Shares, has the meaning
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ascribed to such term under Rule 13d-3(a) of the Exchange Act.
"business day" means any day on which the principal offices of the SEC
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in Washington, D.C. are open to accept filings; or, in the case of determining a
date when any payment is due, any day (other than a Saturday or Sunday) on which
banks are not required or authorized to close in the City of New York.
"Company Software" means Software (i) material to the operation of the
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business of the Company or a Subsidiary and (ii) owned or exclusively licensed
by the Company or any Subsidiary.
"control" (including the terms "controlled by" and "under common
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control with") means the possession, directly or indirectly, of the power to
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direct or cause the direction of the management and policies of a person,
whether through the ownership of voting securities, by contract or otherwise;
"Environmental Laws" means any United States federal, state, local or
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non-United States laws relating to (i) releases or threatened releases of
Hazardous Substances or materials containing Hazardous Substances; (ii) the
manufacture, handling, transport, use, treatment, storage or disposal of
Hazardous Substances or materials containing Hazardous Substances; or (iii)
pollution or protection of the environment.
"ERISA Affiliate" means any trade or business (whether or not
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incorporated) under common control with the Company or any Subsidiary and which,
together with the Company or any Subsidiary, is treated as a single employer
within the meaning of Section 414(b), (c), (m) or (o) of the Code.
"German Competition Act" means the Act Against Restraints of
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Competition of the Federal Republic of Germany.
"Hazardous Substances" means (i) those substances defined in or
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regulated under the following United States federal statutes and their state
counterparts, as each may be amended from time to time, and all regulations
thereunder: the Hazardous Materials Transportation Act, the Resource
Conservation and Recovery Act, the Comprehensive Environmental Response,
Compensation and Liability Act, the Clean Water Act, the Safe Drinking Water
Act, the Atomic Energy Act, the Federal Insecticide, Fungicide, and Rodenticide
Act and the Clean Air Act; (ii) petroleum and petroleum products, including
crude oil and any fractions thereof; (iii) natural gas, synthetic gas, and any
mixtures thereof; (iv) polychlorinated biphenyls, asbestos and radon; and (v)
any substance, material or waste regulated by any Governmental Authority
pursuant to any Environmental Law.
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"Intellectual Property" means (i) United States, non-United States,
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and international patents, patent applications and invention registrations
of any type, (ii) trademarks, service marks, domain names, trade dress,
logos, trade names, corporate names and other source identifiers, and
registrations and applications for registration thereof, (iii)
copyrightable works, copyrights, and registrations and applications for
registration thereof, (iv) Software, and (v) trade secrets and know-how.
"knowledge of the Company" means the actual knowledge of any director
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or executive officer of the Company and such knowledge that any such
individual would obtain after the exercise of reasonable investigation.
"Licenses" mean (i) licenses of Intellectual Property by the Company
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to third parties, (ii) licenses of Intellectual Property by third parties
to the Company, and (iii) agreements between the Company and third parties
relating to the development or use of Intellectual Property excluding (a)
shrink-wrap, commodity and similar licenses available generally to the
public or industry participants and (b) end-user licenses.
"Material Adverse Effect" means, when used in connection with the
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Company or any Subsidiary, any event, circumstance, change or effect that,
when taken together with any other events, circumstances, changes and
effects occurring after the date hereof that does not individually have a
Material Adverse Effect, is or is reasonably likely to be materially
adverse to the business, financial condition or results of operations of
the Company and its Subsidiaries taken as a whole; provided that in no
event shall any of the following (alone or in combination with any other
event, circumstance, change or effect) be deemed to constitute or be taken
into account in determining a Material Adverse Effect: any event,
circumstance, change or effect that results from (i) changes affecting the
economy generally, (ii) changes affecting the industry in which the Company
operates generally, (iii) the public announcement or pendency of the Offer,
the Merger or the other transactions contemplated hereby, or (iv)
compliance by the Company with any of the terms hereof.
"person" means an individual (including, without limitation, a
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"person" as defined in Section 13(d)(3) of the Exchange Act), corporation,
partnership, limited partnership, limited liability company, syndicate,
person trust, association or entity or government, political subdivision,
agency or instrumentality of a government.
"Software" means computer software, programs and databases in any
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form, all versions, updates, corrections, enhancements, and modifications
thereof.
"subsidiary" or "subsidiaries" of the Company, the Surviving
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Corporation, Parent or any other person means an affiliate controlled by
such person, directly or indirectly, through one or more intermediaries.
"Superior Proposal" means any Acquisition Proposal which the Board
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determines, in its good faith judgment (after having received the advice of
a financial advisor of internationally recognized reputation), to be more
favorable to the Company's
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stockholders than the Offer and the Merger and for which financing, to the
extent required, is then committed.
"Taxes" shall mean any and all taxes, fees, levies, duties, tariffs,
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imposts and other charges of any kind (together with any and all interest,
penalties, additions to tax and additional amounts imposed with respect
thereto) imposed by any Governmental Authority or taxing authority,
including, without limitation: taxes or other charges on or with respect
to income, franchise, windfall or other profits, gross receipts, property,
sales, use, capital stock, payroll, employment, social security, workers'
compensation, unemployment compensation or net worth; taxes or other
charges in the nature of excise, withholding, ad valorem, stamp, transfer,
value-added or gains taxes; license, registration and documentation fees;
and customers' duties, tariffs and similar charges.
(b) The following terms have the meaning set forth in the Sections set
forth below:
Defined Term Location of Definition
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Action (S) 4.09
Agreement Preamble
Blue Sky Laws (S) 4.05(b)
Board Recitals
Certificate of Merger (S) 3.02
Certificates (S) 3.09(b)
Code (S) 4.10(b)
Company Preamble
Company Licensed Intellectual Property (S) 4.14(c)
Company Owned Intellectual Property (S) 4.14(c)
Company Preferred Stock (S) 4.03
Company Stock Option (S) 3.07
Company Stock Option Plans (S) 3.07
Confidentiality Agreement (S) 7.04(b)
Delaware Law Recitals
Disclosure Schedule (S) 4.01(b)
Dissenting Shares (S) 3.08(a)
Effective Time (S) 3.02
Environmental Permits (S) 4.16
ERISA (S) 4.10(a)
ESPP (S) 3.07(b)
ESPP Date (S) 3.07(b)
Exchange Act (S) 2.01(a)
Fairness Opinion (S) 2.02(a)
Fee (S) 9.03(a)
GAAP (S) 4.07(b)
Governmental Authority (S) 4.05(b)
HSR Act (S) 2.01(a)
Indenture (S) 5.04
IRS (S) 4.10(a)
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Law (S) 4.05(a)
Material Contracts (S) 4.17(a)
Material Subsidiary (S) 4.01(c)
Merger Recitals
Merger Consideration (S) 2.01(a)
Minimum Condition (S) 2.01(a)
Xxxxxx Xxxxxxx (S) 2.02(a)
Multiemployer Plan (S) 4.10(b)
Multiple Employer Plan (S) 4.10(b)
Offer Recitals
Offer Documents (S) 2.01(b)
Offer to Purchase (S) 2.01(b)
Option Payment (S) 3.07(a)
Parent Preamble
Paying Agent (S) 3.09(a)
Permits (S) 4.06
Per Share Amount Recitals
Plans (S) 4.10(a)
Proprietary Names (S) 4.14(a)
Proxy Statement (S) 4.12
Purchaser Preamble
Schedule 14D-9 (S) 2.02(b)
Schedule TO (S) 2.01(b)
SEC (S) 2.01(a)
SEC Reports (S) 4.07(a)
Securities Act (S) 4.07(a)
Shares Recitals
Stockholders' Meeting (S) 7.01(a)
Subsidiary (S) 4.01(a)
Surviving Corporation (S) 3.03
Transactions (S) 2.02(a)
2000 Balance Sheet (S) 4.07(c)
ARTICLE II
THE OFFER
SECTION 2.01 The Offer. (a) Provided that none of the events set
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forth in Annex A hereto shall have occurred or be continuing, Purchaser shall
commence the Offer as promptly as reasonably practicable after the date hereof,
but in no event later than 10 business days after the initial public
announcement of Purchaser's intention to commence the Offer. The obligation of
Purchaser to accept for payment Shares tendered pursuant to the Offer shall be
subject to (i) the condition (the "Minimum Condition") that at least the number
of Shares that when added to Shares already owned by Siemens Aktiengesellschaft
and its direct and indirect wholly owned subsidiaries shall constitute a
majority of the then outstanding Shares on a fully diluted basis (including,
without limitation, all Shares issuable upon the conversion of any
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convertible securities or upon the exercise of any options, warrants or rights,
excluding, however, any securities not convertible or exercisable on or prior to
July 31, 2001 or which have an effective conversion or exercise price in excess
of the Per Share Amount immediately prior to the expiration of the Offer) shall
have been validly tendered and not withdrawn prior to the expiration of the
Offer and (ii) the satisfaction or waiver of each of the other conditions set
forth in Annex A hereto. Purchaser expressly reserves the right to waive any
such condition, to increase the Per Share Amount, and to make any other changes
in the terms and conditions of the Offer; provided, however, that no change may
be made which decreases the Per Share Amount, waives the Minimum Condition,
reduces the maximum number of Shares to be purchased in the Offer or imposes
conditions to the Offer in addition to those set forth in Annex A hereto.
Notwithstanding the foregoing, Purchaser may, without the consent of the
Company, (i) extend the Offer beyond the scheduled expiration date, which shall
be 20 business days following the commencement of the Offer, if, at the
scheduled expiration of the Offer, any of the conditions to Purchaser's
obligation to accept for payment Shares shall not be satisfied or waived, (ii)
extend the Offer for any period required by any rule or regulation of the
Securities and Exchange Commission (the "SEC"), or the staff thereof, applicable
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to the Offer, or (iii) extend the Offer for an aggregate period of not more than
10 business days beyond the latest applicable date that would otherwise be
permitted under clause (i) or (ii) of this sentence, if, as of such date, all of
the conditions to Purchaser's obligations to accept for payment Shares are
satisfied or waived, but the number of Shares validly tendered and not withdrawn
pursuant to the Offer totals less than 90% of the outstanding Shares on a fully
diluted basis.
In addition, if, on the initial scheduled expiration date of the
Offer, the only conditions remaining unsatisfied are the failure of the waiting
period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), the German Competition Act or any other applicable
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foreign antitrust law, to have expired or been terminated, then, Purchaser shall
extend the Offer from time to time until July 31, 2001. The Per Share Amount
shall, subject to applicable withholding of taxes, be net to the seller in cash,
upon the terms and subject to the conditions of the Offer. Purchaser shall pay
for all Shares validly tendered and not withdrawn promptly following the
acceptance of Shares for payment pursuant to the Offer. Notwithstanding the
immediately preceding sentence and subject to the applicable rules of the SEC
and the terms and conditions of the Offer, Purchaser expressly reserves the
right to delay payment for Shares in order to comply in whole or in part with
applicable laws. Any such delay shall be effected in compliance with Rule 14e-
1(c) under the Securities Exchange Act of 1934, as amended (the "Exchange Act").
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If the payment equal to the Per Share Amount in cash (the "Merger
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Consideration") is to be made to a person other than the person in whose name
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the surrendered certificate formerly evidencing Shares is registered on the
stock transfer books of the Company, it shall be a condition of payment that the
certificate so surrendered shall be endorsed properly or otherwise be in proper
form for transfer and that the person requesting such payment shall have paid
all transfer and other taxes required by reason of the payment of the Merger
Consideration to a person other than the registered holder of the certificate
surrendered, or shall have established to the satisfaction of Purchaser that
such taxes either have been paid or are not applicable.
(b) As promptly as reasonably practicable on the date of commencement
of the Offer, Purchaser shall file with the SEC a Tender Offer Statement on
Schedule TO (together with all amendments and supplements thereto, the "Schedule
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TO") with respect to the Offer.
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The Schedule TO shall contain or shall incorporate by reference an offer to
purchase (the "Offer to Purchase") and forms of the related letter of
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transmittal and any related summary advertisement (the Schedule TO, the Offer to
Purchase and such other documents, together with all supplements and amendments
thereto, being referred to herein collectively as the "Offer Documents"). Each
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of Parent, Purchaser and the Company agrees to correct promptly any information
provided by it for use in the Offer Documents that shall have become false or
misleading in any material respect, and Parent and Purchaser further agree to
take all steps necessary to cause the Schedule TO, as so corrected, to be filed
with the SEC, and the other Offer Documents, as so corrected, to be disseminated
to holders of Shares, in each case as and to the extent required by applicable
federal securities laws. Parent and Purchaser shall give the Company and its
counsel a reasonable opportunity to review and comment on the Offer Documents
prior to such documents being filed with the SEC or disseminated to holders of
Shares. Parent and Purchaser shall provide the Company and its counsel with any
comments Parent, Purchaser or their counsel may receive from the SEC or its
staff with respect to the Offer Documents after the receipt of such comments and
shall provide the Company and its counsel with a reasonable opportunity to
participate in the response of Parent or Purchaser to such comments.
SECTION 2.02 Company Action. (a) The Company hereby approves of
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and consents to the Offer and represents that (i) the Board, at a meeting duly
called and held on February 21, 2001, has unanimously (with Xx. Xxxxxxx X. Xxxxx
abstaining) (A) determined that this Agreement and the transactions contemplated
hereby, including each of the Offer and the Merger (collectively, the
"Transactions"), are fair to, and in the best interests of, the holders of
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Shares, (B) approved, adopted and declared advisable this Agreement and the
Transactions (such approval and adoption having been made in accordance with
Delaware Law, including, without limitation, Section 203 thereof) and (C)
resolved to recommend that the holders of Shares accept the Offer and tender
their Shares pursuant to the Offer, and approve and adopt this Agreement and the
Transactions, and (ii) Xxxxxx Xxxxxxx & Co. Incorporated ("Xxxxxx Xxxxxxx") has
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delivered to the Board its opinion that the consideration to be received by the
holders of Shares pursuant to each of the Offer and the Merger is fair to the
holders of Shares from a financial point of view (the "Fairness Opinion"). The
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Company hereby consents to the inclusion in the Offer Documents of the
recommendation of the Board described in the immediately preceding sentence, and
the Company shall not withdraw or modify such recommendation in any manner
adverse to Purchaser or Parent except as provided in Section 7.05(b). The
Company has been advised by its directors (other than Xx. Xxxxxxx X. Xxxxx) and
executive officers that they intend to tender all Shares beneficially owned by
them to Purchaser pursuant to the Offer.
(b) On the date the Offer Documents are filed with the SEC, the
Company shall file with the SEC a Solicitation/Recommendation Statement on
Schedule 14D-9 containing the Fairness Opinion and, except as provided in
Section 7.05(b), the recommendation of the Board described in Section 2.02(a),
and an information statement (together with all amendments and supplements
thereto, the "Schedule 14D-9"), and shall disseminate the Schedule 14D-9 to the
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extent required by Rule 14d-9 promulgated under the Exchange Act, and any other
applicable federal securities laws. Each of Parent, Purchaser and the Company
agrees to correct promptly any information provided by it for use in the
Schedule 14D-9 which shall have become false or misleading in any material
respect, and the Company further agrees to take all steps necessary to
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cause the Schedule 14D-9, as so corrected, to be filed with the SEC and
disseminated to holders of Shares, in each case as and to the extent required by
applicable federal securities laws.
(c) The Company shall promptly furnish Purchaser with mailing labels
containing the names and addresses of all record holders of Shares and with
security position listings of Shares held in stock depositories, each as of a
recent date, together with all other available listings and computer files
containing names, addresses and security position listings of record holders and
beneficial owners of Shares. The Company shall promptly furnish Purchaser with
such additional information, including, without limitation, updated listings and
computer files of stockholders, mailing labels and security position listings,
and such other assistance in disseminating the Offer Documents to holders of
Shares as Parent or Purchaser may reasonably request. 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 Offer or the Merger, Parent and Purchaser shall hold in confidence the
information contained in such labels, listings and files, shall use such
information only in connection with the Transactions, and, if this Agreement
shall be terminated in accordance with Section 9.01, shall deliver to the
Company all copies of such information then in their possession.
ARTICLE III
THE MERGER
SECTION 3.01 The Merger. Upon the terms and subject to the
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satisfaction or waiver of the conditions set forth in Article VIII, and in
accordance with Delaware Law, Purchaser shall be merged with and into the
Company.
SECTION 3.02 Effective Time; Closing. As promptly as practicable
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after the satisfaction or, if permissible, waiver of the conditions set forth in
Article VIII, the parties hereto shall cause the Merger to be consummated by
filing this Agreement or a certificate of merger or certificate of ownership and
merger (in either case, the "Certificate of Merger") with the Secretary of State
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of the State of Delaware, in such form as is required by, and executed in
accordance with, the relevant provisions of Delaware Law (the date and time of
such filing being the "Effective Time"). Prior to such filing, a closing shall
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be held at the offices of Shearman & Sterling, 000 Xxxxxxxxxx Xxxxxx, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, or such other place as the parties shall agree, for
the purpose of confirming the satisfaction or waiver, as the case may be, of the
conditions set forth in Article VIII.
SECTION 3.03 Effect of the Merger. As a result of the Merger, the
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separate corporate existence of Purchaser shall cease and the Company shall
continue as the surviving corporation of the Merger (the "Surviving
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Corporation"). At the Effective Time, the effect of the Merger shall be as
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provided in the applicable provisions of Delaware Law. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all the
property, rights, privileges, powers and franchises of the Company and Purchaser
shall vest in the Surviving Corporation, and all debts, liabilities,
obligations, restrictions, disabilities and duties of the Company and Purchaser
shall become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Corporation.
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SECTION 3.04 Certificate of Incorporation; By-laws. (a) At the
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Effective Time, the Certificate of Incorporation of Purchaser, as in effect
immediately prior to the Effective Time, shall be the Certificate of
Incorporation of the Surviving Corporation until thereafter amended as provided
by law and such Certificate of Incorporation; provided, however, that, at the
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Effective Time, Article I of the Certificate of Incorporation of the Surviving
Corporation shall be amended to read as follows: "The name of the corporation is
Efficient Networks, Inc."
(b) Unless otherwise determined by Parent prior to the Effective Time,
and subject to Section 7.07(a), the By-laws of Purchaser, as in effect
immediately prior to the Effective Time, shall be the By-laws of the Surviving
Corporation until thereafter amended as provided by law, the Certificate of
Incorporation of the Surviving Corporation and such By-laws.
SECTION 3.05 Directors and Officers. The initial directors of the
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Surviving Corporation shall be the individuals listed on Schedule 3.05, each to
hold office in accordance with the Certificate of Incorporation and By-laws of
the Surviving Corporation, and the officers of the Company immediately prior to
the Effective Time shall be the initial officers of the Surviving Corporation,
in each case until their respective successors are duly elected or appointed and
qualified or until their earlier death, resignation or removal.
SECTION 3.06 Conversion of Securities. At the Effective Time, by
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virtue of the Merger and without any action on the part of Purchaser, the
Company or the holders of any of the following securities:
(a) each Share issued and outstanding immediately prior to the
Effective Time (other than any Shares to be canceled pursuant to Section
3.06(b) and any Dissenting Shares (as hereinafter defined)) shall be
canceled and shall be converted automatically into the right to receive an
amount equal to the Merger Consideration payable, without interest, to the
holder of such Share, upon surrender, in the manner provided in Section
3.09, of the certificate that formerly evidenced such Share;
(b) each Share held in the treasury of the Company and each Share
owned by Purchaser, Parent or any direct or indirect wholly owned
subsidiary of Siemens Aktiengesellschaft or of the Company immediately
prior to the Effective Time shall be canceled without any conversion
thereof and no payment or distribution shall be made with respect thereto;
and
(c) each share of common stock, par value $0.001 per share, of
Purchaser issued and outstanding immediately prior to the Effective Time
shall be converted into and exchanged for one validly issued, fully paid
and nonassessable share of common stock, par value $0.001 per share, of the
Surviving Corporation.
SECTION 3.07 Employee Stock Options; Employee Stock Purchase Plan.
----------------------------------------------------
(a) Effective as of the Effective Time, the Company shall take all necessary
action, including obtaining the consent of the individual option holders, if
necessary, to (i) cancel the Company's 1999 Stock Plan and the 1999 Nonstatutory
Stock Option Plan, each as amended through the date of this Agreement (the
"Company Stock Option Plans"), and (ii) cancel, at the Effective
--------------------------
9
Time, each outstanding option to purchase shares of Company Common Stock (each,
a "Company Stock Option") that is outstanding and unexercised, whether or not
--------------------
vested and exercisable as of such date. Each holder of any cancelled Company
Stock Option that has an exercise price that is less than the Per Share Amount
shall be entitled (subject to the provisions set forth in this Section 3.07(a))
to be paid by the Surviving Corporation, with respect to each share subject to
the Company Stock Option, an amount in cash (subject to any applicable
withholding taxes) equal to the excess, if any, of the Per Share Amount over the
applicable exercise price of such Option (the "Option Payment"). In respect of
--------------
those Company Stock Options that have an exercise price that is less than the
Per Share Amount, the Surviving Corporation shall make each Option Payment to
the Company Stock Option holder as of the date on which the applicable number of
shares of Common Stock subject to such Company Stock Option would have otherwise
vested, subject to the conditions for vesting contained in the applicable
Company Stock Option award, notwithstanding the cancellation of such Company
Stock Option. The Surviving Corporation shall make such Option Payment at the
Effective Time with respect to any outstanding and fully vested Company Stock
Options that have an exercise price that is less than the Per Share Amount as of
such date. Any payment made hereunder shall be subject to all applicable
federal, state and local tax withholding requirements.
(b) The Company shall take all actions necessary to shorten any
pending Offering Period (as such term is defined in the Company's 1999 Employee
Stock Purchase Plan (the "ESPP")) and establish a New Exercise Date (as
----
contemplated in Section 19(c) of the ESPP) prior to the Effective Time (the
"ESPP Date"). After the ESPP Date, all offering and purchase periods pending
---------
under the ESPP shall be terminated and no new offering or purchasing periods
shall be commenced.
SECTION 3.08 Dissenting Shares. (a) Notwithstanding any provision of
-----------------
this Agreement to the contrary, Shares that are outstanding immediately prior to
the Effective Time and that are held by stockholders who shall have neither
voted in favor of the Merger nor consented thereto in writing and who shall have
demanded properly in writing appraisal for such Shares in accordance with
Section 262 of Delaware Law (collectively, the "Dissenting Shares") shall not be
-----------------
converted into, or represent the right to receive, the Merger Consideration.
Such stockholders shall be entitled to receive payment of the appraised value of
such Shares held by them in accordance with the provisions of such Section 262,
except that all Dissenting Shares held by stockholders who shall have failed to
perfect or who effectively shall have withdrawn or lost their rights to
appraisal of such Shares under such Section 262 shall thereupon be deemed to
have been converted into, and to have become exchangeable for, as of the
Effective Time, the right to receive the Merger Consideration, without any
interest thereon, upon surrender, in the manner provided in Section 3.09, of the
certificate or certificates that formerly evidenced such Shares.
(b) The Company shall give Parent (i) prompt notice of any demands
for appraisal received by the Company, withdrawals of such demands, and any
other instruments served pursuant to Delaware Law and received by the Company
and (ii) the opportunity to direct all negotiations and proceedings with respect
to demands for appraisal under Delaware Law. The Company shall not, except with
the prior written consent of Parent, make any payment with respect to any
demands for appraisal or offer to settle or settle any such demands.
10
SECTION 3.09 Surrender of Shares; Stock Transfer Books. (a) Prior to
-----------------------------------------
the Effective Time, Purchaser shall designate a bank or trust company to act as
agent (the "Paying Agent") for the holders of Shares to receive the funds to
------------
which holders of Shares shall become entitled pursuant to Section 3.06(a). Such
funds shall be invested by the Paying Agent as directed by the Surviving
Corporation.
(b) Promptly after the Effective Time, the Surviving Corporation
shall cause to be mailed to each person who was, at the Effective Time, a holder
of record of Shares entitled to receive the Merger Consideration pursuant to
Section 3.06(a) a form of letter of transmittal (which shall specify that
delivery shall be effected, and risk of loss and title to the certificates
evidencing such Shares (the "Certificates") shall pass, only upon proper
------------
delivery of the Certificates to the Paying Agent) and instructions for use in
effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Paying Agent of a Certificate, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, and such other documents as may be required
pursuant to such instructions, the holder of such Certificate shall be entitled
to receive in exchange therefor the Merger Consideration for each Share formerly
evidenced by such Certificate, and such Certificate shall then be canceled. No
interest shall accrue or be paid on the Merger Consideration payable upon the
surrender of any Certificate for the benefit of the holder of such Certificate.
If the payment equal to the Merger Consideration is to be made to a person other
than the person in whose name the surrendered certificate formerly evidencing
Shares is registered on the stock transfer books of the Company, it shall be a
condition of payment that the certificate so surrendered shall be endorsed
properly or otherwise be in proper form for transfer and that the person
requesting such payment shall have paid all transfer and other taxes required by
reason of the payment of the Merger Consideration to a person other than the
registered holder of the certificate surrendered, or shall have established to
the satisfaction of Purchaser that such taxes either have been paid or are not
applicable. If any holder of Shares is unable to surrender such holder's
Certificates because such Certificates have been lost, mutilated or destroyed,
such holder may deliver in lieu thereof an affidavit and indemnity bond in form
and substance and with surety reasonably satisfactory to the Surviving
Corporation.
(c) At any time following the sixth month after the Effective Time,
the Surviving Corporation shall be entitled to require the Paying Agent to
deliver to it any funds which had been made available to the Paying Agent and
not disbursed to holders of Shares (including, without limitation, all interest
and other income received by the Paying Agent in respect of all funds made
available to it), and, thereafter, such holders shall be entitled to look to the
Surviving Corporation and Parent (subject to abandoned property, escheat and
other similar laws) only as general creditors thereof with respect to any Merger
Consideration that may be payable upon due surrender of the Certificates held by
them. Notwithstanding the foregoing, neither the Surviving Corporation nor the
Paying Agent shall be liable to any holder of a Share for any Merger
Consideration delivered in respect of such Share to a public official pursuant
to any abandoned property, escheat or other similar law.
(d) At the close of business on the day of the Effective Time, the
stock transfer books of the Company shall be closed and thereafter there shall
be no further registration of transfers of Shares on the records of the Company.
From and after the Effective Time, the
11
holders of Shares outstanding immediately prior to the Effective Time shall
cease to have any rights with respect to such Shares except as otherwise
provided herein or by applicable law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
As an inducement to Parent and Purchaser to enter into this Agreement,
the Company hereby represents and warrants to Parent and Purchaser that:
SECTION 4.01 Organization and Qualification; Subsidiaries. (a) Each
--------------------------------------------
of the Company and each subsidiary of the Company ("Subsidiary") is a
----------
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the requisite corporate power
and authority and all necessary governmental approvals to own, lease and operate
its properties and to carry on its business as it is now being conducted. The
Company and each Material Subsidiary is duly qualified or licensed as a foreign
corporation to do business and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its business makes such qualification or licensing necessary.
(b) A true and complete list of all the Subsidiaries, together with
the jurisdiction of incorporation of each Subsidiary, the percentage of the
outstanding capital stock of each Subsidiary owned by the Company and each other
Subsidiary and the names of the directors and officers of each Subsidiary, is
set forth in Section 4.01(b) of the Disclosure Schedule, which has been prepared
by the Company and delivered by the Company to Parent and Purchaser prior to the
execution and delivery of this Agreement (the "Disclosure Schedule"). Except as
-------------------
disclosed in Section 4.01(b) of the Disclosure Schedule, the Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.
(c) Each Subsidiary that is material to the business, financial
condition or results of operations of the Company and the Subsidiaries taken as
a whole is so identified in Section 4.01(b) of the Disclosure Schedule and is
referred to herein as a "Material Subsidiary".
-------------------
SECTION 4.02 Certificate of Incorporation and By-laws. The Company
----------------------------------------
has heretofore furnished to Parent a complete and correct copy of the
Certificate of Incorporation and the By-laws or equivalent organizational
documents, each as amended to date, of the Company and each Material Subsidiary.
Such Certificates of Incorporation, By-laws or equivalent organizational
documents are in full force and effect. Neither the Company nor any Subsidiary
is in violation of any of the provisions of its Certificate of Incorporation,
By-laws or equivalent organizational documents.
SECTION 4.03 Capitalization. The authorized capital stock of the
--------------
Company consists of 200,000,000 Shares and 10,000 000 shares of preferred stock,
par value $0.001 per share ("Company Preferred Stock"). As of February 21, 2001,
-----------------------
(a) 59,332,385 Shares were issued and outstanding, all of which are validly
issued, fully paid and nonassessable, (b) no
12
Shares are held in the treasury of the Company, (c) no Shares are held by the
Subsidiaries and (d) 14,284,879 Shares are reserved for future issuance pursuant
to outstanding employee stock options or stock incentive rights granted pursuant
to the Company Stock Option Plans. As of the date hereof, no shares of Company
Preferred Stock are issued and outstanding. Except as set forth in this Section
4.03 or in Section 4.03 of the Disclosure Schedule, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of the Company or any
Subsidiary or obligating the Company or any Subsidiary to issue or sell any
shares of capital stock of, or other equity interests in, the Company or any
Subsidiary. Section 4.03 of the Disclosure Schedule sets forth the following
information with respect to each Company Stock Option outstanding on the date of
this Agreement: (i) the name of the option holder; (ii) the particular plan
pursuant to which such Company Stock Option was granted; (iii) the number of
Shares subject to such Company Stock Option; (iv) the exercise price of such
Company Stock Option; (v) the date on which such Company Stock Option was
granted; (vi) the applicable vesting schedule; (vii) the date on which such
Company Stock Option expires; and (viii) whether the exercisability of such
option will be accelerated in any way by the transactions contemplated by this
Agreement. All Shares subject to issuance as aforesaid, upon issuance on the
terms and conditions specified in the instruments pursuant to which they are
issuable, will be duly authorized, validly issued, fully paid and nonassessable.
There are no outstanding contractual obligations of the Company or any
Subsidiary to repurchase, redeem or otherwise acquire any Shares or any capital
stock of any Subsidiary or to provide funds to, or make any investment (in the
form of a loan, capital contribution or otherwise) in, any Subsidiary or any
other person. Each outstanding share of capital stock of each Subsidiary is duly
authorized, validly issued, fully paid and nonassessable, and each such share is
owned by the Company or another Subsidiary free and clear of all security
interests, liens, claims, pledges, options, rights of first refusal, agreements,
limitations on the Company's or any Subsidiary's voting rights, charges and
other encumbrances of any nature whatsoever.
SECTION 4.04 Authority Relative to This Agreement. The Company has
------------------------------------
all necessary corporate power and authority to execute and deliver this
Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by the Company and
the consummation by the Company of the Transactions have been duly and validly
authorized by all necessary corporate action, and no other corporate proceedings
on the part of the Company are necessary to authorize this Agreement or to
consummate the Transactions (other than, with respect to the Merger, the
approval and adoption of this Agreement by the holders of a majority of the
then-outstanding Shares, if and to the extent required by applicable law, and
the filing and recordation of appropriate merger documents as required by
Delaware Law). This Agreement has been duly and validly executed and delivered
by the Company and, assuming the due authorization, execution and delivery by
Parent and Purchaser, constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms. At a
meeting duly called and held on February 21, 2001, the Board unanimously
approved this Agreement and the Transactions (with Xx. Xxxxxxx X. Xxxxx
abstaining), and such approvals are sufficient so that the restrictions on
business combinations set forth in Section 203(a) of Delaware Law shall not
apply to the Merger.
SECTION 4.05 No Conflict; Required Filings and Consents. (a) The
------------------------------------------
execution and delivery of this Agreement by the Company do not, and the
performance of this
13
Agreement by the Company will not, (i) conflict with or violate the Certificate
of Incorporation or By-laws or equivalent organizational documents of the
Company or any Subsidiary, (ii) assuming that all consents, approvals,
authorizations and other actions described in Section 4.05(b) have been obtained
and all filings and obligations described in Section 4.05(b) have been made,
conflict with or violate any United States or non-United States national, state,
provincial, municipal, county or local statute, law, ordinance, regulation,
rule, code, executive order, injunction, judgment, decree or other order ("Law")
---
applicable to the Company or any Subsidiary or by which any property or asset of
the Company or any Subsidiary is bound or affected, or (iii) result in any
breach of or constitute a default (or an event which, with notice or lapse of
time or both, would become a default) under, or give to others any right of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or other encumbrance on any property or asset of the Company
or any Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any Subsidiary is a party or by which any property or
asset of the Company or any Subsidiary is bound or affected, except, with
respect to clause (ii) or (iii), for any such conflicts, violations, breaches,
defaults or other occurrences which would not prevent or materially delay
consummation of Offer or Merger, or otherwise prevent or materially delay the
Company from performing its obligations under this Agreement and would not have
a Material Adverse Effect.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of this Agreement by the Company will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any United States or non-United States national, state, provincial,
municipal, county or local government, governmental, regulatory or
administrative authority, agency, instrumentality or commission or any court,
tribunal, or judicial or arbitral body (a "Governmental Authority"), except (i)
----------------------
for applicable requirements, if any, of the Exchange Act, state securities or
"blue sky" laws ("Blue Sky Laws") and state takeover laws, (ii) the pre-merger
-------------
notification requirements of the HSR Act, (iii) the pre-merger notification
requirements of the German Competition Act, (iv) the requirements of any other
applicable foreign antitrust law, (v) filing and recordation of appropriate
merger documents as required by Delaware Law, and (vi) where the failure to
obtain such consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or materially delay consummation of
the Offer or the Merger, or otherwise prevent or materially delay the Company
from performing its obligations under this Agreement and would not have a
Material Adverse Effect.
SECTION 4.06 Permits; Compliance. Each of the Company and the
-------------------
Subsidiaries is in possession of all franchises, grants, authorizations,
licenses, permits, easements, variances, exceptions, consents, certificates,
approvals and orders of any Governmental Authority necessary for each of the
Company or the Subsidiaries to own, lease and operate its properties or to carry
on its business as it is now being conducted, or as presently contemplated to be
conducted (the "Permits"), except where the failure to have, or the suspension
-------
or cancellation of, any of the Permits would not prevent or materially delay
consummation of the Offer or the Merger or otherwise prevent or materially delay
the Company from performing its obligations under this Agreement and would not
have a Material Adverse Effect. No suspension or cancellation of any of the
Permits is pending or, to the knowledge of the Company, threatened. Neither the
Company nor any Subsidiary is in conflict with, or in
14
default, breach or violation of, (a) any Law applicable to the Company or any
Subsidiary or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (b) any note, bond, mortgage, indenture, contract,
agreement, lease, license, Permit, franchise or other instrument or obligation
to which the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or any property or asset of the Company or any Subsidiary is bound,
except for any such conflicts, defaults, breaches or violations that would not
prevent or materially delay consummation of the Offer or the Merger or otherwise
prevent or materially delay the Company from performing its obligations under
this Agreement and would not have a Material Adverse Effect. Neither the Company
nor any Subsidiary holds or is required to hold any security clearance issued by
a Governmental Authority or is required to be a party to any special security
arrangement with a Governmental Authority to conduct any portion of its
business.
SECTION 4.07 SEC Filings; Financial Statements. (a) The Company has
---------------------------------
filed all forms, reports and documents required to be filed by it with the SEC
since May 1, 1999, including (i) its Annual Report on Form 10-K for the fiscal
years ended June 30, 1999 and 2000, respectively, (ii) its Quarterly Reports on
Form 10-Q for the periods ended September 30, 2000 and December 31, 2000, (iii)
all proxy statements relating to the Company's meetings of stockholders (whether
annual or special) held since May 1, 1999 and (iv) all other forms, reports and
other registration statements (other than Quarterly Reports on Form 10-Q not
referred to in clause (ii) above) filed by the Company with the SEC since May 1,
1999 (the forms, reports and other documents referred to in clauses (i), (ii),
(iii) and (iv) above being, collectively, the "SEC Reports"). The SEC Reports
-----------
(i) were prepared in accordance with either the requirements of the Securities
Act of 1933, as amended (the "Securities Act"), or the Exchange Act, as the case
--------------
may be, and the rules and regulations promulgated thereunder, and (ii) did not,
at the time they were filed, or, if amended, as of the date of such amendment,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading. No Subsidiary is required to file any form, report or other document
with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any notes thereto) contained in the SEC Reports was prepared in accordance
with United States generally accepted accounting principles ("GAAP") applied on
----
a consistent basis throughout the periods indicated (except as may be indicated
in the notes thereto) and each fairly presents, in all material respects, the
consolidated financial position, results of operations and cash flows of the
Company and its consolidated Subsidiaries as at the respective dates thereof and
for the respective periods indicated therein except as otherwise noted therein
and for normal, recurring year-end adjustments.
(c) Except as and to the extent set forth on the consolidated balance
sheet of the Company and the consolidated Subsidiaries as at December 31, 2000
including the notes thereto (the "2000 Balance Sheet") or as specifically
------------------
disclosed in SEC Reports filed since December 31, 2000 and prior to the date of
this Agreement, (i) neither the Company nor any Subsidiary has any liability or
obligation of any nature (whether accrued, absolute, contingent or otherwise),
except for liabilities and obligations incurred in the ordinary course of
business
15
consistent with past practice since December 31, 2000, and (ii) the warranty
reserve reflected therein is adequate to provide for expected warranty costs in
accordance with GAAP.
(d) The Company has heretofore furnished to Parent complete and
correct copies of all amendments and modifications that have not been filed by
the Company with the SEC to all agreements, documents and other instruments that
previously had been filed by the Company with the SEC and are currently in
effect.
SECTION 4.08 Absence of Certain Changes or Events. Since December 31,
------------------------------------
2000, except as set forth in Section 4.08 of the Disclosure Schedule, or as
expressly contemplated by this Agreement, or specifically disclosed in the SEC
Reports filed since December 31, 2000 and prior to the date of this Agreement,
(a) the Company and the Subsidiaries have conducted their businesses only in the
ordinary course and in a manner consistent with past practice, (b) there has not
been any Material Adverse Effect, and (c) none of the Company nor any Subsidiary
has taken any action that, if taken after the date of this Agreement, would
constitute a breach of any of the covenants set forth in Section 6.01.
SECTION 4.09 Absence of Litigation. Except as set forth in Section
---------------------
4.09 of the Disclosure Schedule, there is no litigation, suit, claim, action,
proceeding or investigation (an "Action") pending or, to the knowledge of the
Company, threatened against the Company or any Subsidiary, or any property or
asset of the Company or any Subsidiary, before any Governmental Authority that
would have a Material Adverse Effect. Neither the Company nor any Subsidiary nor
any property or asset of the Company or any Subsidiary is subject to any
continuing order of, consent decree, settlement agreement or similar written
agreement with, or, to the knowledge of the Company, continuing investigation
by, any Governmental Authority, or any order, writ, judgment, injunction,
decree, determination or award of any Governmental Authority that would prevent
or materially delay consummation of the Offer or the Merger or otherwise prevent
or materially delay the Company from performing its obligations under this
Agreement or would have a Material Adverse Effect.
SECTION 4.10 Employee Benefit Plan. (a) Section 4.10(a) of the
---------------------
Disclosure Schedule lists (i) all employee benefit plans (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and all bonus, stock option, stock purchase, restricted stock,
-----
incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other contracts or
agreements, whether legally enforceable or not, to which the Company or any
Subsidiary is a party, with respect to which the Company or any Subsidiary has
any obligation or which are maintained, contributed to or sponsored by the
Company or any Subsidiary for the benefit of any current or former employee,
officer or director of, or any current or former consultant to, the Company or
any Subsidiary, (ii) each employee benefit plan for which the Company or any
Subsidiary could incur liability under Section 4069 of ERISA in the event such
plan has been or were to be terminated, (iii) any plan in respect of which the
Company or any Subsidiary could incur liability under Section 4212(c) of ERISA,
and (iv) any contracts, arrangements or understandings between the Company or
any Subsidiary and any employee of the Company or any Subsidiary including,
without limitation, any contracts, arrangements or understandings relating in
any way to a sale of the Company or any Subsidiary (collectively, the "Plans").
-----
Each Plan is in writing
16
(or a written summary exists) and the Company has made available to Purchaser a
true and complete copy of each Plan and has delivered to Purchaser a true and
complete copy of each material document, if any, prepared in connection with
each such Plan, including, without limitation, (i) a copy of each trust or other
funding arrangement, (ii) each summary plan description and summary of material
modifications thereto, (iii) the most recently filed Internal Revenue Service
("IRS") Form 5500, (iv) the most recently received IRS determination letter for
---
each such Plan, and (v) the most recently prepared actuarial report and
financial statement in connection with each such Plan.
(b) None of the Plans is a multiemployer plan (within the meaning of
Section 3(37) or 4001(a)(3) of ERISA) (a "Multiemployer Plan") or a single-
------------------
employer plan (within the meaning of Section 4001(a)(15) of ERISA) for which the
Company or any Subsidiary could incur liability under Section 4063 or 4064 of
ERISA (a "Multiple Employer Plan"). None of the Plans (i) provides for the
----------------------
payment of separation, severance or similar-type benefits to any person, (ii)
obligates the Company or any Subsidiary to pay separation, severance or similar-
type benefits solely or partially as a result of any transaction contemplated by
this Agreement, or (iii) obligates the Company or any Subsidiary to make any
payment or provide any benefit as a result of a "change in control", within the
meaning of such term under Section 280G of the Internal Revenue Code of 1986, as
amended (the "Code"). None of the Plans provides for or promises retiree
----
medical, disability or life insurance benefits to any current or former
employee, officer or director of the Company or any Subsidiary.
(c) Each Plan is now and always has been operated in all material
respects in accordance with its terms and the requirements of all applicable
Laws including, without limitation, ERISA and the Code. The Company and the
Subsidiaries have performed all obligations required to be performed by them
under, are not in any material respect in default under or in violation of, and
have no knowledge of any material default or violation by any party to, any
Plan. No Action is pending or, to the knowledge of the Company, threatened with
respect to any Plan (other than claims for benefits in the ordinary course) and
no fact or event exists that could reasonably be expected to give rise to any
such Action.
(d) Each Plan that is intended to be qualified under Section 401(a)
of the Code has timely received a favorable determination, opinion, advisory or
notification letter from the IRS covering all of the provisions applicable to
the Plan for which such letters are currently available that the Plan is so
qualified and each trust established in connection with any Plan which is
intended to be exempt from federal income taxation under Section 501(a) of the
Code has received an opinion, advisory or modification letter from the IRS that
it is so exempt, and no fact or event has occurred since the date of such letter
or letters from the IRS that could reasonably be expected to adversely affect
the qualified status of any such Plan or the exempt status of any such trust.
(e) There has not been any prohibited transaction (within the meaning
of Section 406 of ERISA or Section 4975 of the Code) that is not otherwise
exempt or for which an administrative class exemption exists with respect to any
Plan. Neither the Company nor any Subsidiary has incurred any liability under,
arising out of or by operation of Title IV of ERISA (other than liability for
premiums to the Pension Benefit Guaranty Corporation arising in the ordinary
course), including, without limitation, any liability in connection with (i) the
17
termination or reorganization of any employee benefit plan subject to Title IV
of ERISA, or (ii) the withdrawal from any Multiemployer Plan or Multiple
Employer Plan, and no fact or event exists which could reasonably be expected to
give rise to any such liability.
(f) All contributions, premiums or payments required to be made with
respect to any Plan have been made on or before their due dates. All such
contributions have been fully deducted for income tax purposes and no such
deduction has been challenged or disallowed by any Governmental Authority and no
fact or event exists which could reasonably be expected to give rise to any such
challenge or disallowance.
(g) All directors, officers, management employees, and technical and
professional employees of the Company and the Subsidiaries are under written
obligation to the Company and the Subsidiaries to maintain in confidence all
confidential or proprietary information acquired by them in the course of their
employment and to assign to the Company and the Subsidiaries all inventions made
by them within the scope of their employment during such employment and for a
reasonable period thereafter.
(h) None of the Plans is subject to the laws of any country other
than the United States.
SECTION 4.11 Labor and Employment Matters. (a) Except as set forth in
----------------------------
Section 4.11 of the Disclosure Schedule, (i) there are no controversies pending
or, to the knowledge of the Company, threatened between the Company or any
Subsidiary and any of their respective employees, which controversies would
prevent or materially delay consummation of the Offer or the Merger or otherwise
prevent or materially delay the Company from performing its obligations under
this Agreement or would have a Material Adverse Effect; (ii) neither the Company
nor any Subsidiary is a party to any collective bargaining agreement or other
labor union contract applicable to persons employed by the Company or any
Subsidiary, nor, to the knowledge of the Company, are there any activities or
proceedings of any labor union to organize any such employees; (iii) there are
no unfair labor practice complaints pending against the Company or any
Subsidiary before the National Labor Relations Board or any current union
representation questions involving employees of the Company or any Subsidiary;
and (iv) there is no strike, slowdown, work stoppage or lockout, or, to the
knowledge of the Company, threat thereof, by or with respect to any employees of
the Company or any Subsidiary.
(b) The Company and the Subsidiaries are in compliance with all
applicable laws relating to the employment of labor, including those related to
wages, hours, collective bargaining and the payment and withholding of taxes and
other sums as required by the appropriate Governmental Authority, and have
withheld and paid to the appropriate Governmental Authority or are holding for
payment not yet due to such Governmental Authority all amounts required to be
withheld from employees of the Company or any Subsidiary and are not liable for
any arrears of wages, taxes, penalties or other sums for failure to comply with
any of the foregoing. The Company and the Subsidiaries have paid in full to all
employees or adequately accrued for in accordance with GAAP consistently applied
all wages, salaries, commissions, bonuses, benefits and other compensation due
to or on behalf of such employees, and there is no claim with respect to payment
of wages, salary or overtime pay that has been asserted or is now pending or
threatened before any Governmental Authority with respect to any
18
persons currently or formerly employed by the Company or any Subsidiary. Neither
the Company nor any Subsidiary is a party to, or otherwise bound by, any consent
decree with, or citation by, any Governmental Authority relating to employees or
employment practices. There is no charge of discrimination in employment or
employment practices, for any reason, including, without limitation, age,
gender, race, religion or other legally protected category, which has been
asserted or is now pending or, to the knowledge of the Company, threatened
before the United States Equal Employment Opportunity Commission, or any other
Governmental Authority in any jurisdiction in which the Company or any
Subsidiary have employed or employ any person, except as would not have a
Material Adverse Effect.
SECTION 4.12 Offer Documents; Schedule 14D-9; Proxy Statement.
------------------------------------------------
Neither the Schedule 14D-9 nor any information supplied by the Company for
inclusion in the Offer Documents shall, at the times the Schedule 14D-9, the
Offer Documents or any amendments or supplements thereto are filed with the SEC
or are first published, sent or given to stockholders of the Company, as the
case may be, contain any untrue statement of a material fact or omit to state
any 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. Neither the proxy statement to be sent to the stockholders
of the Company in connection with the Stockholders' Meeting (as hereinafter
defined) or the information statement to be sent to such stockholders, as
appropriate (such proxy statement or information statement, as amended or
supplemented, being referred to herein as the "Proxy Statement"), shall, at the
---------------
date the Proxy Statement (or any amendment or supplement thereto) is first
mailed to stockholders of the Company, at the time of the Stockholders' Meeting
and at the Effective Time, contain any statement which, at the time and in light
of the circumstances under which it was made, is false or misleading with
respect to any material fact, or which omits to state any material fact
necessary in order to make the statements therein not false or misleading or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the Stockholders' Meeting which shall have
become false or misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty with respect to any information supplied by Parent,
Purchaser or any of Parent's or Purchaser's representatives for inclusion in the
foregoing documents. The Schedule 14D-9 and the Proxy Statement shall comply in
all material respects as to form with the requirements of the Exchange Act and
the rules and regulations thereunder.
SECTION 4.13 Property and Leases. (a) The Company and the
-------------------
Subsidiaries have sufficient title to all their properties and assets to conduct
their respective businesses as currently conducted or as contemplated to be
conducted, with only such exceptions as would not have a Material Adverse
Effect.
(b) Neither the Company nor any Subsidiary owns any real property.
(c) All material leases of real property leased for the use or
benefit of the Company or any Subsidiary to which the Company or any Subsidiary
is a party and all amendments and modifications thereto are in full force and
effect and have not been modified or amended, and there exists no default under
any such lease by the Company or any Subsidiary, nor any event which, with
notice or lapse of time or both, would constitute a default thereunder by the
Company or any Subsidiary, except as would not prevent or materially delay
consummation of the Offer or the Merger or otherwise prevent or materially delay
19
consummation of the Offer or the Merger or otherwise prevent or materially delay
the Company from performing its obligations under this Agreement and would not
have a Material Adverse Effect.
(d) There are no contractual or legal restrictions that preclude or
restrict the ability to use any real property owned or leased by the Company or
any Subsidiary for the purposes for which it is currently being used.
SECTION 4.14 Intellectual Property. (a) Section 4.14(a) of the
---------------------
Disclosure Schedule sets forth a true and complete list of (i) all U.S. and
foreign patents and patent applications, (ii) all trademarks, servicemarks,
trade names, brand names or the like, whether registered or unregistered
(collectively, "Proprietary Names"), and registrations and applications for
-----------------
registration of such Proprietary Names in all countries of the world, (iii) all
copyright registrations and applications for registration of copyrights, and
(iv) all Licenses (other than Licenses which were granted to third-parties in
the ordinary course of business, consistent with past practice) that are owned
or controlled (in the sense of having the right to license others) by the
Company and any of its Subsidiaries.
(b) Except as set forth in Section 4.14(b) of the Disclosure
Schedule: (i) the conduct of the business of the Company and the Subsidiaries
as currently conducted, the use of the Company Owned Intellectual Property and
the Company Licensed Intellectual Property in connection therewith and the
Company's transmission, use, linking and other practices related to its web
sites, the content thereof and the advertisements contained therein, do not
conflict with, infringe upon, misappropriate or otherwise violate the
Intellectual Property rights of any third party, and no claim has been asserted
to the Company or any Subsidiary that the conduct of the business of the Company
and the Subsidiaries as currently conducted conflicts with, infringes upon or
may infringe upon, misappropriates or otherwise violates the Intellectual
Property rights of any third party; (ii) with respect to each item of
Intellectual Property owned by the Company or a Subsidiary ("Company Owned
-------------
Intellectual Property"), the Company or a Subsidiary is the exclusive owner of
---------------------
the entire unencumbered right, title and interest in and to such Company Owned
Intellectual Property and is entitled to use such Company Owned Intellectual
Property in the continued operation of its respective business without
limitation; (iii) with respect to each item of Intellectual Property licensed to
the Company or a Subsidiary pursuant to a License ("Company Licensed
----------------
Intellectual Property"), the Company or a Subsidiary has the valid right to use
---------------------
such Company Licensed Intellectual Property in the continued operation of its
respective business in accordance with the terms of the license agreement
governing such Company Licensed Intellectual Property; (iv) to the knowledge of
the Company, the Company Owned Intellectual Property is valid and enforceable,
and has not been adjudged invalid or unenforceable in whole or in part; (v) to
the knowledge of the Company, no person is engaging in any activity that
infringes upon or misappropriates the Company Owned Intellectual Property; (vi)
to the knowledge of the Company, each license of the Company Licensed
Intellectual Property is valid and enforceable, is binding on all parties to
such license, and is in full force and effect; (vii) to the knowledge of the
Company, no party to any license of the Company Licensed Intellectual Property
is in breach thereof or default thereunder; and (viii) neither the execution of
this Agreement nor the consummation of any Transaction shall adversely affect
any of the Company's and/or its Subsidiary's rights with respect to the Company
Owned Intellectual Property or the Company Licensed Intellectual Property.
20
(c) The Company and the Subsidiaries have taken reasonable steps in
accordance with normal industry practice to maintain the confidentiality of
their trade secrets and other Intellectual Property.
SECTION 4.15 Taxes. The Company and the Subsidiaries have filed all
-----
United States federal, state, local and non-United States Tax returns and
reports required to be filed by them and have paid and discharged all Taxes
required to be paid or discharged, other than (a) such payments as are being
contested in good faith by appropriate proceedings and (b) such filings,
payments or other occurrences that would not have a Material Adverse Effect.
Neither the IRS nor any other United States or non-United States taxing
authority or agency is now asserting or, to the knowledge of the Company,
threatening to assert against the Company or any Subsidiary any deficiency or
claim for any Taxes or interest thereon or penalties in connection therewith
which could have a Material Adverse Effect. Neither the Company nor any
Subsidiary has granted any waiver of any statute of limitations with respect to,
or any extension of a period for the assessment of any Tax. The accruals and
reserves for Taxes reflected in the 2000 Balance Sheet are adequate to cover all
Taxes accruable through such date (including interest and penalties, if any,
thereon) in accordance with GAAP. Neither the Company nor any Subsidiary has
made an election under Section 341(f) of the Code. There are no Tax liens upon
any property or assets of the Company or any of the Subsidiaries except liens
for current Taxes not yet due. Neither the Company nor any of the Subsidiaries
has been required to include in income any adjustment pursuant to Section 481 of
the Code by reason of a voluntary change in accounting method initiated by the
Company or any of the Subsidiaries, and the IRS has not initiated or proposed
any such adjustment or change in accounting method, in either case which
adjustment or change would have a Material Adverse Effect.
SECTION 4.16 Environmental Matters. Except as would not prevent or
---------------------
materially delay consummation of the Offer or the Merger or otherwise prevent or
materially delay the Company from performing its obligations under this
Agreement and would not have a Material Adverse Effect, (a) the Company has not
violated and is not in violation of any Environmental Law; (b) none of the
properties currently or formerly owned, leased or operated by the Company
(including, without limitation, soils and surface and ground waters) are
contaminated with any Hazardous Substance; (c) the Company is not actually,
potentially or allegedly liable for any off-site contamination by Hazardous
Substances; (d) the Company is not actually, potentially or allegedly liable
under any Environmental Law (including, without limitation, pending or
threatened liens); (e) the Company has all Permits required under any
Environmental Law ("Environmental Permits"); and (f) the Company is in
---------------------
compliance with its Environmental Permits.
SECTION 4.17 Material Contracts. (a) Subsections (i) through (xvi) of
------------------
Section 4.17 of the Disclosure Schedule contain a list of the following types of
contracts and agreements to which the Company or any Subsidiary is a party (such
contracts, agreements and arrangements as are required to be set forth in
Section 4.17(a) of the Disclosure Schedule being the "Material Contracts"):
------------------
(i) each contract or agreement that contemplates an exchange of
consideration with a value of more than $1,000,000;
21
(ii) all management contracts (excluding contracts for employment)
and contracts with other consultants, including any contracts involving the
payment of royalties or other amounts calculated based upon the revenues or
income of the Company or any Subsidiary or income or revenues related to
any product of the Company or any Subsidiary, which require continued
payment thereunder and cannot be terminated by the Company or Subsidiary,
as the case may be, with 30-day notice;
(iii) all contracts and agreements evidencing indebtedness of the
Company;
(iv) all contracts and agreements with any Governmental Authority;
(v) all contracts and agreements that limit, or purport to limit,
the ability of the Company or any Subsidiary to compete in any line of
business or with any person or entity or in any geographic area or during
any period of time;
(vi) all contracts and agreements providing for benefits under any
Plan, excluding individual stock option grant agreements and stock
subscription agreements;
(vii) all Licenses required to be listed in Section 4.14(a);
(viii) all framework agreements with customers of the Company or any
Subsidiary that have generated more than $2,500,000 in revenue for the
Company or any Subsidiary during the six-month period ended December 31,
2000;
(ix) all framework agreements with manufacturers or suppliers of
the Company or any Subsidiary from which the Company or any Subsidiary has
purchased more than $1,000,000 of products, equipment, goods or services
during the 12-month period preceding the date hereof;
(x) all agreements related to professional services rendered to
the Company or any Subsidiary in connection with the Offer, the Merger and
this Agreement;
(xi) all contracts providing for "earn-out" or similar contingent
payments in excess of $1 million by the Company or any Subsidiary;
(xii) all exclusive distribution contracts to which the Company or
any Subsidiary is a party;
(xiii) all joint venture, partnership, and strategic alliance
agreements;
(xiv) all contracts for employment required to be listed in Section
4.10 of the Disclosure Schedule; and
(xv) all other contracts and agreements, whether or not made in the
ordinary course of business, which are material to the Company, any
Subsidiary or the conduct of their respective businesses, or the absence of
which would prevent or materially delay consummation of the Offer or the
Merger or otherwise prevent or materially delay the
22
Company from performing its obligations under this Agreement or would have
a Material Adverse Effect.
(b) Except as would not prevent or materially delay consummation of
the Offer or the Merger or otherwise prevent or materially delay the Company
from performing its obligations under this Agreement and would not have a
Material Adverse Effect, (i) each Material Contract is a legal, valid and
binding agreement, and none of the Material Contracts is in default by its terms
or has been canceled by the other party; (ii) to the Company's knowledge, no
other party is in breach or violation of, or default under, any Material
Contract; (iii) the Company and the Subsidiaries are not in receipt of any claim
of default under any such agreement; and (iv) neither the execution of this
Agreement nor the consummation of any Transaction shall constitute default, give
rise to cancellation rights, or otherwise adversely affect any of the Company's
material rights under any Material Contract. The Company has furnished or made
available to Parent true and complete copies of all Material Contracts,
including any amendments thereto.
SECTION 4.18. Customers and Suppliers. Section 4.18 of the Disclosure
-----------------------
Schedule sets forth a true and complete list of the Company's top 20 customers
(based on the revenue from such customer during the six-month period ending
December 31, 2000). As of the date hereof, none of the Company's customers
listed in Section 4.18 of the Disclosure Schedule and no material supplier of
the Company and its Subsidiaries, (a) has cancelled or otherwise terminated any
contract with the Company or any Subsidiary prior to the expiration of the
contract term, (b) has returned, or threatened to return, a substantial amount
of any of the products, equipment, goods and services purchased from the Company
or any Subsidiary, or (c) to the Company's knowledge, has threatened, or
indicated its intention, to cancel or otherwise terminate its relationship with
the Company or its Subsidiaries or to substantially reduce its purchase from or
sale to the Company or any Subsidiary of any products, equipment, goods or
services.
SECTION 4.19 Insurance. (a) Section 4.19(a) of the Disclosure
---------
Schedule sets forth, with respect to each insurance policy under which the
Company or any Subsidiary is insured (other than such policies contemplated in
Section 4.10), a named insured or otherwise the principal beneficiary of
coverage which is currently in effect, (i) the names of the insurer, the
principal insured and each named insured, (ii) the policy number, (iii) the
period, scope and amount of coverage and (iv) the premium charged. All material
insurable risks of the Company and the Subsidiaries in respect of the businesses
of each are covered by such insurance policies and the types and amounts of
coverage provided therein are usual and customary in the context of the
businesses and operations in which the Company and the Subsidiaries are engaged.
(b) With respect to each such insurance policy: (i) the policy is
legal, valid, binding and enforceable in accordance with its terms and, except
for policies that have expired under their terms in the ordinary course, is in
full force and effect; (ii) neither the Company nor any Subsidiary is in
material breach or default (including any such breach or default with respect to
the payment of premiums or the giving of notice), and no event has occurred
which, with notice or the lapse of time, would constitute such a breach or
default, or permit termination or modification, under the policy; and (iii) to
the knowledge of the Company, no insurer on the policy has been declared
insolvent or placed in receivership, conservatorship or liquidation.
23
(c) At no time subsequent to January 1, 1998 has the Company or any
Subsidiary (i) been denied any insurance or indemnity bond coverage which it has
requested, (ii) made any material reduction in the scope or amount of its
insurance coverage, or (iii) received notice from any of its insurance carriers
that any insurance premiums will be subject to increase in an amount materially
disproportionate to the amount of the increases with respect thereto (or with
respect to similar insurance) in prior years or that any insurance coverage
listed in Section 4.19(a) of the Disclosure Schedule will not be available in
the future substantially on the same terms as are now in effect.
SECTION 4.20 Brokers. No broker, finder or investment banker (other
-------
than Xxxxxx Xxxxxxx) is entitled to any brokerage, finder's or other fee or
commission in connection with the Transactions based upon arrangements made by
or on behalf of the Company. The Company has heretofore furnished to Parent a
complete and correct copy of all agreements between the Company and Xxxxxx
Xxxxxxx pursuant to which such firm would be entitled to any payment relating to
the Transactions.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND PURCHASER
As an inducement to the Company to enter into this Agreement, Parent
and Purchaser hereby, jointly and severally, represent and warrant to the
Company that:
SECTION 5.01 Corporate Organization. Each of Parent and Purchaser is
----------------------
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and has the requisite corporate power and
authority and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted, except
where the failure to be so organized, existing or in good standing or to have
such power, authority and governmental approvals would not prevent or materially
delay consummation of the Transactions, or otherwise prevent Parent or Purchaser
from performing its material obligations under this Agreement.
SECTION 5.02 Authority Relative to This Agreement. Each of Parent and
------------------------------------
Purchaser has all necessary corporate power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
Transactions. The execution and delivery of this Agreement by Parent and
Purchaser and the consummation by Parent and Purchaser of the Transactions have
been duly and validly authorized by all necessary corporate action, and no other
corporate proceedings on the part of Parent or Purchaser are necessary to
authorize this Agreement or to consummate the Transactions (other than, with
respect to the Merger, the filing and recordation of appropriate merger
documents as required by Delaware Law). This Agreement has been duly and validly
executed and delivered by Parent and Purchaser and, assuming due authorization,
execution and delivery by the Company, constitutes a legal, valid and binding
obligation of each of Parent and Purchaser enforceable against each of Parent
and Purchaser in accordance with its terms.
SECTION 5.03 No Conflict; Required Filings and Consents. (a) The
------------------------------------------
execution and delivery of this Agreement by Parent and Purchaser do not, and the
performance
24
of this Agreement by Parent and Purchaser will not, (i) conflict with or violate
the Certificate of Incorporation or By-laws of either Parent or Purchaser, (ii)
assuming that all consents, approvals, authorizations and other actions
described in Section 5.03(b) have been obtained and all filings and obligations
described in Section 5.03(b) have been made, conflict with or violate any Law
applicable to Parent or Purchaser or by which any property or asset of either of
them is bound or affected, or (iii) result in any breach of, or constitute a
default (or an event which, with notice or lapse of time or both, would become a
default) under, or give to others any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or other
encumbrance on any property or asset of Parent or Purchaser pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which Parent or Purchaser is a
party or by which any property or asset of either of them is bound or affected,
except, with respect to clause (ii) or (iii), for any such conflicts,
violations, breaches, defaults or other occurrences which would not prevent or
materially delay consummation of the Offer or Merger, or otherwise prevent or
materially delay Parent and Purchaser from performing their obligations under
this Agreement.
(b) The execution and delivery of this Agreement by Parent and
Purchaser do not, and the performance of this Agreement by Parent and Purchaser
will not, require any consent, approval, authorization or permit of, or filing
with, or notification to, any Governmental Authority, except (i) for applicable
requirements, if any, of the Exchange Act, Blue Sky Laws and state takeover
laws, (ii) the pre-merger notification requirements of the HSR Act, (iii) the
pre-merger notification requirements of the German Competition Act, (iv) the
requirements of any other applicable foreign antitrust law, (v) filing and
recordation of appropriate merger documents as required by Delaware Law, and
(vi) where the failure to obtain such consents, approvals, authorizations or
permits, or to make such filings or notifications, would not prevent or
materially delay consummation of the Offer or Merger, or otherwise prevent or
materially delay Parent or Purchaser from performing their obligations under
this Agreement.
SECTION 5.04 Financing. Parent has sufficient funds to permit
---------
Purchaser to consummate the Transactions, including, without limitation,
acquiring all the outstanding Shares in the Offer and the Merger, and to assume
the Company's obligations under the Indenture, dated as of March 1, 2000 (the
"Indenture"), between the Company and State Street Bank and Trust Company of
---------
California, N.A., a national banking association organized and existing under
the laws of the United States, as Trustee.
SECTION 5.05 Offer Documents; Proxy Statement. The Offer Documents
--------------------------------
shall not, at the time the Offer Documents are filed with the SEC or are first
published, sent or given to stockholders of the Company, as the case may be,
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 were made, not
misleading. The information supplied by Parent for inclusion in the Proxy
Statement shall not, at the date the Proxy Statement (or any amendment or
supplement thereto) is first mailed to stockholders of the Company, at the time
of the Stockholders' Meeting or at the Effective Time, contain any untrue
statement of a material fact, or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not false or misleading, or
necessary to correct any statement in any earlier communication with respect to
the solicitation of proxies for the
25
Stockholders' Meeting which shall have become false or misleading.
Notwithstanding the foregoing, Parent and Purchaser make no representation or
warranty with respect to any information supplied by the Company or any of its
representatives for inclusion in any of the foregoing documents or the Offer
Documents. The Offer Documents shall comply in all material respects as to form
with the requirements of the Exchange Act and the rules and regulations
thereunder.
SECTION 5.06 Brokers. No broker, finder or investment banker (other
-------
than Xxxxxxx, Sachs & Co.) is entitled to any brokerage, finder's or other fee
or commission in connection with the Transactions based upon arrangements made
by or on behalf of Parent or Purchaser.
ARTICLE VI
CONDUCT OF BUSINESS PENDING THE MERGER
SECTION 6.01 Conduct of Business by the Company Pending the Merger.
-----------------------------------------------------
The Company agrees that, between the date of this Agreement and the Effective
Time, unless Parent shall otherwise agree in writing and except for actions
taken or omitted for the purpose of complying with this Agreement, the
businesses of the Company and the Subsidiaries shall be conducted only in, and
the Company and the Subsidiaries shall not take any action except in, the
ordinary course of business and in a manner consistent with past practice; and
the Company shall use its reasonable best efforts to preserve substantially
intact the business organization of the Company and the Subsidiaries, to keep
available the services of the current officers, employees and consultants of the
Company and the Subsidiaries and to preserve the current relationships of the
Company and the Subsidiaries with customers, suppliers and other persons with
which the Company or any Subsidiary has significant business relations. By way
of amplification and not limitation, except as expressly contemplated by this
Agreement and Section 6.01 of the Disclosure Schedule, neither the Company nor
any Subsidiary shall, between the date of this Agreement and the Effective Time,
directly or indirectly, do any of the following without the prior written
consent of Parent:
(a) amend or otherwise change its Certificate of Incorporation or By-
laws or equivalent organizational documents;
(b) issue, sell, pledge, dispose of, grant, encumber, or authorize
the issuance, sale, pledge, disposition, grant or encumbrance of, (i) any
shares of any class of capital stock of the Company or any Subsidiary, or
any options, warrants, convertible securities or other rights of any kind
to acquire any shares of such capital stock, or any other ownership
interest (including, without limitation, any phantom interest), of the
Company or any Subsidiary or (ii) any assets of the Company or any
Subsidiary, except in the ordinary course of business and in a manner
consistent with past practice;
(c) declare, set aside, make or pay any dividend or other
distribution, payable in cash, stock, property or otherwise, with respect
to any of its capital stock, except for dividends by any direct or indirect
wholly owned Subsidiary to the Company or any other Subsidiary;
26
(d) reclassify, combine, split, subdivide or redeem, or purchase or
otherwise acquire, directly or indirectly, any of its capital stock;
(e) (i) acquire (including, without limitation, by merger,
consolidation, or acquisition of stock or assets or any other business
combination) any corporation, partnership, other business organization or
any division thereof or any significant amount of assets, except for
purchases of inventory in the ordinary course of business consistent with
past practice; (ii) incur any indebtedness for borrowed money or issue any
debt securities or assume, guarantee or endorse, or otherwise become
responsible for, the obligations of any person, or make any loans or
advances; (iii) enter into any contract or agreement other than in the
ordinary course of business and consistent with past practice; (iv)
authorize any capital expenditure in excess of $2,500,000 in the aggregate;
or (v) enter into or amend any contract, agreement, commitment or
arrangement with respect to any matter set forth in this Section 6.01(e);
(f) increase the compensation payable or to become payable or the
benefits provided to its directors, officers or employees, except for
increases in the ordinary course of business and consistent with past
practice in salaries or wages of employees of the Company or any Subsidiary
who are not directors or officers of the Company or any Material
Subsidiary, or grant any severance or termination pay to, or enter into any
severance agreement with, any director, officer or other employee of the
Company or of any Subsidiary, or enter into any employment with any
director, officer or other employee (other than with a newly hired
employee, who is not an officer or a director, with an annual salary of
less than $125,000) of the Company or any Subsidiary, or establish, adopt,
enter into or amend (except as may be required by law) any collective
bargaining, bonus, profit-sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation, employment,
termination, severance or other plan, agreement, trust, fund, policy or
arrangement for the benefit of any director, officer or employee;
(g) take any action, other than reasonable and usual actions in the
ordinary course of business and consistent with past practice, with respect
to accounting policies or procedures;
(h) make any material tax election or settle or compromise any
material United States federal, state, local or non-United States income
tax liability;
(i) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise), other
than the payment, discharge or satisfaction, in the ordinary course of
business and consistent with past practice, of liabilities reflected or
reserved against in the 2000 Balance Sheet or subsequently incurred in the
ordinary course of business and consistent with past practice;
(j) amend, modify or consent to the termination of any Material
Contract, or amend, waive, modify or consent to the termination of the
Company's or any Subsidiary's material rights thereunder;
27
(k) commence or settle any material Action; or
(l) publicly announce an intention, enter into any formal or informal
agreement or otherwise make a commitment, to do any of the foregoing.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01 Stockholders' Meeting. (a) If required by applicable law
---------------------
in order to consummate the Merger, the Company, acting through the Board, shall,
in accordance with applicable law and the Company's Certificate of Incorporation
and By-laws, (i) duly call, give notice of, convene and hold an annual or
special meeting of its stockholders as promptly as practicable following
consummation of the Offer for the purpose of considering and taking action on
this Agreement and the Transactions (the "Stockholders' Meeting") and (ii) (A)
---------------------
include in the Proxy Statement, and not subsequently withdraw or modify in any
manner adverse to Purchaser or Parent, the unanimous recommendation of the Board
that the stockholders of the Company approve and adopt this Agreement and the
Transactions and (B) use its best efforts to obtain such approval and adoption.
At the Stockholders' Meeting, Parent and Purchaser shall cause all Shares then
owned by them and their subsidiaries to be voted in favor of the approval and
adoption of this Agreement and the Transactions.
(b) Notwithstanding the foregoing, in the event that Purchaser shall
acquire at least 90% of the then outstanding Shares, the parties shall take all
necessary and appropriate action to cause the Merger to become effective, in
accordance with Section 253 of Delaware Law, as promptly as reasonably
practicable after such acquisition, without a meeting of the stockholders of the
Company.
SECTION 7.02 Proxy Statement. If approval of the Company's
---------------
stockholders is required by applicable law to consummate the Merger, promptly
following consummation of the Offer, the Company shall file the Proxy Statement
with the SEC under the Exchange Act, and shall use its best efforts to have the
Proxy Statement cleared by the SEC as promptly as practicable. Parent, Purchaser
and the Company shall cooperate with each other in the preparation of the Proxy
Statement, and the Company shall notify Parent of the receipt of any comments of
the SEC with respect to the Proxy Statement and of any requests by the SEC for
any amendment or supplement thereto or for additional information and shall
provide to Parent promptly copies of all correspondence between the Company or
any representative of the Company and the SEC with respect thereto. The Company
shall give Parent and its counsel the opportunity to review the Proxy Statement,
including all amendments and supplements thereto, prior to its being filed with
the SEC and shall give Parent and its counsel the opportunity to review all
responses to requests for additional information and replies to comments prior
to their being filed with, or sent to, the SEC. Each of the Company, Parent and
Purchaser agrees to use its reasonable best efforts, after consultation with the
other parties hereto, to respond promptly to all such comments of and requests
by the SEC and to cause the Proxy Statement and all required amendments and
supplements thereto to be mailed to the holders of Shares entitled to vote at
the Stockholders' Meeting at the earliest practicable time.
28
SECTION 7.03 Company Board Representation; Section 14(f). (a)
-------------------------------------------
Promptly upon the purchase by Purchaser of Shares pursuant to the Offer and from
time to time thereafter, Purchaser shall be entitled to designate up to such
number of directors, rounded up to the next whole number, on the Board as shall
give Purchaser representation on the Board equal to the product of the total
number of directors on the Board (giving effect to the directors elected
pursuant to this sentence) multiplied by the percentage that the aggregate
number of Shares beneficially owned by Purchaser or any affiliate of Purchaser
following such purchase bears to the total number of Shares then outstanding,
and the Company shall, at such time, promptly take all actions necessary to
cause Purchaser's designees to be elected as directors of the Company, including
increasing the size of the Board or securing the resignations of incumbent
directors, or both. At such times, the Company shall use its best efforts to
cause persons designated by Purchaser to constitute the same percentage as
persons designated by Purchaser shall constitute of the Board of (i) each
committee of the Board, (ii) each board of directors of each Subsidiary, and
(iii) each committee of each such board, in each case only to the extent
permitted by applicable law. Notwithstanding the foregoing, until the Effective
Time, the Company shall use its best efforts to ensure that at least two members
of the Board and each committee of the Board and such boards and committees of
the Subsidiaries, as of the date hereof, who are not employees of the Company
shall remain members of the Board and of such boards and committees.
(b) The Company shall promptly take all actions required pursuant to
Section 14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder to
fulfill its obligations under this Section 7.03, 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 to fulfill such
obligations. Parent or Purchaser shall supply to the Company, and be solely
responsible for, any information with respect to either of them and their
nominees, officers, directors and affiliates required by such Section 14(f) and
Rule 14f-1.
(c) Following the election of designees of Purchaser pursuant to this
Section 7.03, prior to the Effective Time, any amendment of this Agreement or
the Certificate of Incorporation or By-laws of the Company, any termination of
this Agreement by the Company, any extension by the Company of the time for the
performance of any of the obligations or other acts of Parent or Purchaser, or
waiver of any of the Company's rights hereunder, shall require the concurrence
of a majority of the directors of the Company then in office who neither were
designated by Purchaser nor are employees of the Company or any Subsidiary.
SECTION 7.04 Access to Information; Confidentiality. (a) From the
--------------------------------------
date hereof until the Effective Time, the Company shall, and shall cause the
Subsidiaries and the officers, directors, employees, auditors and agents of the
Company and the Subsidiaries to, afford the officers, employees and agents of
Parent and Purchaser and persons providing or proposing to provide Parent or
Purchaser with financing for the Transactions complete access at all reasonable
times to the officers, employees, agents, properties, offices, plants and other
facilities, books and records of the Company and each Subsidiary, and shall
furnish Parent and Purchaser and persons providing or proposing to provide
Parent or Purchaser with financing for the Transactions with such financial,
operating and other data and information as Parent or Purchaser, through its
officers, employees or agents, may reasonably request.
29
(b) All information obtained by Parent or Purchaser pursuant
to this Section 6.04 shall be kept confidential in accordance with the
confidentiality agreement, dated November 16, 2000 (the "Confidentiality
---------------
Agreement"), between Parent and the Company.
---------
(c) No investigation pursuant to this Section 7.04 shall
affect any representation or warranty in this Agreement of any party hereto or
any condition to the obligations of the parties hereto or any condition to the
Offer.
SECTION 7.05 No Solicitation of Transactions. (a) Neither the
-------------------------------
Company nor any Subsidiary shall, directly or indirectly, through any officer,
director, employee, agent or otherwise, (i) solicit, initiate or encourage the
submission of, any Acquisition Proposal or (ii) except as required by the
fiduciary duties of the Board under applicable law after having received advice
from outside legal counsel, participate in any discussions or negotiations
regarding, or furnish to any person, any information (provided that prior to
furnishing such information, the Company enters into a customary confidentiality
agreement on terms no less favorable to the Company than those contained in the
Confidentiality Agreement) with respect to, or otherwise cooperate in any way
with respect to, or assist or participate in, facilitate or encourage, any
unsolicited proposal that constitutes, or may reasonably be expected to lead to,
an Acquisition Proposal.
(b) Except as set forth in this Section 7.05(b), neither the
Board nor any committee thereof shall (i) withdraw or modify, or propose to
withdraw or modify, in a manner adverse to Parent or Purchaser, the approval or
recommendation by the Board or any such committee of this Agreement, the Offer
or the Merger, (ii) approve or recommend, or propose to approve or recommend,
any Acquisition Proposal or (iii) enter into any agreement with respect to any
Acquisition Proposal. Notwithstanding the foregoing, in the event that, prior to
the time of acceptance for payment of Shares pursuant to the Offer, the Board
determines in good faith that it is required to do so by its fiduciary duties
under applicable law after having received advice from outside legal counsel,
the Board may withdraw or modify its approval or recommendation of the Offer and
the Merger, but only to terminate this Agreement in accordance with Section
9.01(d)(ii) (and, concurrently with such termination, cause the Company to enter
into an agreement with respect to a Superior Proposal).
(c) The Company shall, and shall direct or cause its directors,
officers, employees, representatives and agents to, immediately cease and cause
to be terminated any discussions or negotiations with any parties that may be
ongoing with respect to any Acquisition Proposal.
(d) The Company shall promptly advise Parent orally (within
one business day) and in writing (within two business days) of (i) any
Acquisition Proposal or any request for information with respect to any
Acquisition Proposal, the material terms and conditions of such Acquisition
Proposal or request and the identity of the person making such Acquisition
Proposal or request and (ii) any changes in any such Acquisition Proposal or
request.
SECTION 7.06. Employee Benefits Matters. (a) From and after the
-------------------------
Effective Time, Parent shall cause the Surviving Corporation and its
subsidiaries to honor in accordance with their terms, all contracts, agreements,
arrangements, policies, plans and
30
commitments of the Company and the Subsidiaries as in effect immediately prior
to the Effective Time that are applicable to any current or former employees or
directors of the Company or any Subsidiary. Employees of the Company or any
Subsidiary shall receive credit for purposes of eligibility to participate and
vesting (but not for benefit accruals) under any employee benefit plan, program
or arrangement established or maintained by the Surviving Corporation or any of
its subsidiaries for service accrued or deemed accrued prior to the Effective
Time with the Company or any Subsidiary; provided, however, that such crediting
-------- -------
of service shall not operate to duplicate any benefit or the funding of any such
benefit.
(b) With respect to any employee benefit plans in which any
employees of the Company or any subsidiary first become eligible to participate,
on or after the Effective Time, and in which the Company employees did not
participate prior to the Effective Time, Parent shall: (i) waive all pre-
existing conditions, exclusions and waiting periods with respect to
participation and coverage requirements applicable to the employees of the
Company or any Subsidiary under any such new plans in which such employees may
be eligible to participate after the Effective Time, except to the extent such
pre-existing conditions, exclusions or waiting periods would apply under the
analogous plan; (ii) provide each employee of the Company and the Subsidiaries
with credit for any co-payments and deductibles paid prior to the Effective Time
(to the same extent such credit was given under the analogous plan prior to the
Effective Time) in satisfying any applicable deductible or out-of-pocket
requirements under any such new plan in which such employees may be eligible to
participate after the Effective Time; and (iii) with respect to flexible
spending accounts, provide each employee of the Company and its subsidiaries
with a credit for any salary reduction contributions made thereto and a debit
for any expenses incurred thereunder with respect to the plan year in which the
Effective Time occurs; provided, that the foregoing shall not apply to the
extent it would result in duplications of benefits.
(c) Parent will implement the employee retention programs
described in Schedule I as soon as practicable following the Effective Time.
SECTION 7.07 Directors' and Officers' Indemnification and
--------------------------------------------
Insurance. (a) The Certificate of Incorporation of the Surviving Corporation
---------
shall contain provisions no less favorable with respect to indemnification than
are set forth in Article VI of the By-laws of the Company, which provisions
shall not be amended, repealed or otherwise modified for a period of six years
from the Effective Time in any manner that would affect adversely the rights
thereunder of individuals who, at or prior to the Effective Time, were
directors, officers, employees, fiduciaries or agents of the Company, unless
such modification shall be required by law.
(b) Parent shall maintain in effect for six years from the
Effective Time, if available, the current directors" and officers" liability
insurance policies maintained by the Company (provided that the Surviving
Corporation may substitute therefor policies of at least the same coverage
containing terms and conditions that are not materially less favorable) with
respect to matters occurring prior to the Effective Time; provided, however,
-------- -------
that in no event shall Parent be required to expend pursuant to this Section
7.07(b) more than an amount per year equal to 150% of current annual premiums
paid by the Company for such insurance (which premiums the Company represents
and warrants to be approximately $622,000 in the aggregate).
31
(c) In the event the Company, Parent or the Surviving Corporation
or any of their respective successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger or (ii) transfers all or substantially
all of its properties and assets to any person, then, and in each such case,
proper provision shall be made so that the successors and assigns of the
Company, Parent or the Surviving Corporation, as the case may be, or at Parent"s
option, Parent, shall assume the obligations set forth in this Section 7.07.
SECTION 7.08 Notification of Certain Matters. The Company shall
-------------------------------
give prompt notice to Parent, and Parent shall give prompt notice to the
Company, of (a) the occurrence, or non-occurrence, of any event the occurrence,
or non-occurrence, of which reasonably could be expected to cause any
representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect, (b) any failure of the Company, Parent or
Purchaser, as the case may be, to comply with or satisfy any covenant or
agreement to be complied with or satisfied by it hereunder, and (c) any other
material development relating to the business, prospects, financial condition or
results of operations of the Company and the Subsidiaries; provided, however,
that the delivery of any notice pursuant to this Section 7.08 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice.
SECTION 7.09 Further Action; Reasonable Best Efforts. (a) Upon the
---------------------------------------
terms and subject to the conditions hereof, each of the parties hereto shall (i)
make promptly its respective filings, and thereafter make any other required
submissions, under the HSR Act, the German Competition Act or any other
applicable foreign antitrust law with respect to the Transactions and (ii) use
its reasonable best efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the Transactions, including, without limitation, using its reasonable best
efforts to obtain all Permits, consents, approvals, authorizations,
qualifications and orders of Governmental Authorities and parties to contracts
with the Company and the Subsidiaries as are necessary for the consummation of
the Transactions and to fulfill the conditions to the Offer and the Merger;
provided that neither Purchaser nor Parent will be required by this Section 7.09
to take any action, including entering into any consent decree, hold separate
orders or other arrangements, that (A) requires the divestiture of any assets of
any of the Purchaser, Parent, Company or any of their respective subsidiaries or
(B) limits Parent"s ability to operate, the Company and the Subsidiaries or any
portion thereof or any of Parent"s or its affiliates" other assets or businesses
in a manner consistent with past practice. In case, at any time after the
Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement, the proper officers and directors of each party to
this Agreement shall use their reasonable best efforts to take all such action.
(b) Each of the parties hereto agrees to cooperate and use its
reasonable best efforts to vigorously contest and resist any Action, including
administrative or judicial Action, and to have vacated, lifted, reversed or
overturned any decree, judgment, injunction or other order (whether temporary,
preliminary or permanent) that is in effect and that restricts, prevents or
prohibits consummation of the Transactions, including, without limitation, by
vigorously pursuing all available avenues of administrative and judicial appeal.
32
SECTION 7.10 Public Announcements. Parent and the Company agree
--------------------
that no public release or announcement concerning the Transactions, the Offer or
the Merger shall be issued by either party without the prior consent of the
other party (which consent shall not be unreasonably withheld), except as such
release or announcement may be required by Law or the rules or regulations of
any United States or non-United States securities exchange, in which case the
party required to make the release or announcement shall use its best efforts to
allow the other party reasonable time to comment on such release or announcement
in advance of such issuance.
SECTION 7.11 Confidentiality Agreement. The Company hereby waives
-------------------------
the provisions of the Confidentiality Agreement as and to the extent necessary
to permit the consummation of each Transaction. Upon the acceptance for payment
of Shares pursuant to the Offer, the Confidentiality Agreement shall be deemed
to have terminated without further action by the parties thereto.
SECTION 7.12 Convertible Notes. Prior to the consummation of the
-----------------
Merger, the Purchaser shall execute a supplemental indenture which complies with
Section 4.11 and Article 7 of the Indenture and deliver such supplemental
indenture to the Company.
ARTICLE VIII
CONDITIONS TO THE MERGER
SECTION 8.01 Conditions to the Merger. The obligations of each
------------------------
party to effect the Merger shall be subject to the satisfaction, at or prior to
the Effective Time, of the following conditions:
(a) Stockholder Approval. If and to the extent required by
--------------------
Delaware Law, this Agreement and the Transactions shall have been
approved and adopted by the affirmative vote of the stockholders of the
Company;
(b) Competition Filings. Any waiting period (and any extension
-------------------
thereof) applicable to the consummation of the Merger under the HSR Act
or, the German Competition Act, and all other applicable foreign
antitrust laws shall have expired or been terminated;
(c) No Order. No Governmental Authority shall have enacted,
--------
issued, promulgated, enforced or entered any Law (whether temporary,
preliminary or permanent) which is then in effect and has the effect of
making the acquisition of Shares by Parent or Purchaser or any
affiliate of either of them illegal or otherwise restricting,
preventing or prohibiting consummation of the Transactions; and
(d) Offer. Purchaser or its permitted assignee shall have
-----
purchased all Shares validly tendered and not withdrawn pursuant to the
Offer; provided, however, that this condition shall not be applicable
-------- -------
to the obligations of Parent or Purchaser if, in breach of this
Agreement or the terms of the Offer, Purchaser fails to purchase any
Shares validly tendered and not withdrawn pursuant to the Offer.
33
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. Termination. This Agreement may be terminated and
-----------
the Merger and the other Transactions may be abandoned at any time prior to the
Effective Time, notwithstanding any requisite approval and adoption of this
Agreement and the Transactions by the stockholders of the Company:
(a) by mutual written consent of each of Parent, Purchaser and the
Company duly authorized by the Boards of Directors of Parent, Purchaser
and the Company; or
(b) by either Parent, Purchaser or the Company if (i) the
Effective Time shall not have occurred on or before July 31, 2001;
provided, however, that the right to terminate this Agreement under
-------- -------
this Section 9.01(b) 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 the Effective Time to occur on or before
such date or (ii) any Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any injunction, order, decree
or ruling which has become final and nonappealable and has the effect
of making consummation of the Offer or the Merger illegal or otherwise
preventing or prohibiting consummation of the Offer or the Merger; or
(c) by Parent if (i) due to an occurrence or circumstance that
would result in a failure to satisfy any condition set forth in Annex A
hereto, Purchaser shall have (A) failed to commence the Offer within 30
days following the date of this Agreement, (B) terminated the Offer
without having accepted any Shares for payment thereunder or (C) failed
to accept Shares for payment pursuant to the Offer within 90 days
following the commencement of the Offer (provided, however, that the
-------- -------
applicable time period specified in (A) and (C) above shall be extended
until July 31, 2001), unless such action or inaction under (A), (B) or
(C) shall have been caused by or resulted from the failure of Parent or
Purchaser to perform, in any material respect, any of their material
covenants or agreements contained in this Agreement, or the material
breach by Parent or Purchaser of any of their material representations
or warranties contained in this Agreement or (ii) prior to the purchase
of Shares pursuant to the Offer, the Board or any committee thereof
shall have withdrawn or modified in a manner adverse to Purchaser or
Parent its approval or recommendation of this Agreement, the Offer or
the Merger, or shall have recommended or approved any Acquisition
Proposal, or shall have resolved to do any of the foregoing; or
(d) by the Company, upon approval of the Board, if (i) Purchaser
shall have (A) failed to commence the Offer within 30 days following
the date of this Agreement, (B) terminated the Offer without having
accepted any Shares for payment thereunder or (C) failed to accept
Shares for payment pursuant to the Offer within 90 days following the
commencement of the Offer (provided, however, that the applicable time
-------- -------
period specified in (A) and (C) above shall be extended until July 31,
2001), unless such action or inaction under (A), (B) or (C) shall have
been caused by or resulted from the failure of the Company to perform,
in any material respect, any of its material covenants or
34
agreements contained in this Agreement or the material breach by the
Company of any of its material representations or warranties contained
in this Agreement or (ii) prior to the purchase of Shares pursuant to
the Offer, the Board determines in good faith that it is required to do
so by its fiduciary duties under applicable law after having received
advice from outside legal counsel in order to enter into a definitive
agreement with respect to a Superior Proposal, upon five calendar days'
prior written notice to Parent, setting forth in reasonable detail the
identity of the person making, and the final terms and conditions of,
the Superior Proposal; provided, however, that any termination of this
-------- -------
Agreement pursuant to this Section 9.01(d)(ii) shall not be effective
until the Company has made full payment of all amounts provided under
Section 9.03.
SECTION 9.02 Effect of Termination. In the event of the
---------------------
termination of this Agreement pursuant to Section 9.01, this Agreement
shall forthwith become void, and there shall be no liability on the
part of any party hereto, except (a) as set forth in Section 9.03 and
(b) nothing herein shall relieve any party from liability for any
intentional breach hereof prior to the date of such termination;
provided, however, that the Confidentiality Agreement shall survive any
-------- -------
termination of this Agreement.
SECTION 9.03 Fees. (a) In the event that:
----
(i) any person shall have commenced, publicly proposed or
communicated to the Company an Acquisition Proposal that is publicly
disclosed and (A) the Offer shall have remained open for at least 20
business days, (B) the Minimum Condition shall not have been satisfied
and (C) this Agreement shall have been terminated pursuant to Section
9.01; or
(ii) this Agreement is terminated pursuant to Section
9.01(c)(ii) or 9.01(d)(ii); or
(iii) the Company enters into an agreement with respect to an
Acquisition Proposal, or an Acquisition Proposal is consummated, in
each case within 12 months after the termination of this Agreement
pursuant to Section 9.01, and the Company shall not theretofore have
been required to pay the Fee to Parent pursuant to Section 9.03(a)(i)
or 9.03(a)(ii);
then, in any such event, the Company shall pay Parent promptly (but in no event
later than one business day after the first of such events shall have occurred)
a fee of $50,000,000 (the "Fee"), which amount shall be payable in immediately
---
available funds, plus all Expenses.
(b) Except as set forth in this Section 9.03, all costs and
expenses incurred in connection with this Agreement and the Transactions shall
be paid by the party incurring such expenses, whether or not any Transaction is
consummated.
(c) In the event that the Company shall fail to pay the Fee it
shall also pay Parent interest on such unpaid Fee, commencing on the date that
the Fee became due, at a rate equal to the rate of interest publicly announced
by Citibank, N.A., from time to time, in the City of New York, as such bank"s
Base Rate plus two percent.
35
SECTION 9.04 Amendment. Subject to Section 7.03, this Agreement
---------
may be amended by the parties hereto by action taken by or on behalf of their
respective Boards of Directors at any time prior to the Effective Time;
provided, however, that, after the approval and adoption of this Agreement and
-------- -------
the Transactions by the stockholders of the Company, no amendment may be made
that would reduce the amount or change the type of consideration into which each
Share shall be converted upon consummation of the Merger. This Agreement may not
be amended except by an instrument in writing signed by each of the parties
hereto.
SECTION 9.05 Waiver. Subject to Section 7.03, at any time prior
------
to the Effective Time, any party hereto may (a) extend the time for the
performance of any obligation or other act of any other party hereto, (b) waive
any inaccuracy in the representations and warranties of any other party
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any agreement of any other party or any condition to its own
obligations contained herein. Any such extension or waiver shall be valid if set
forth in an instrument in writing signed by the party or parties to be bound
thereby.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01 Notices. All notices, requests, claims, demands
-------
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
overnight courier or by registered or certified mail (postage prepaid, return
receipt requested) to the respective parties at the following addresses (or at
such other address for a party as shall be specified in a notice given in
accordance with this Section 10.01):
if to Parent or Purchaser:
Siemens Corporation
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
with a copy to:
Shearman & Sterling
0000 Xx Xxxxxx Xxxx
Xxxxx Xxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
if to the Company:
Efficient Networks, Inc.
0000 Xxxxx Xxxx
Xxxxxx, XX 00000
36
Attention: General Counsel
with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, Professional Corporation
One Market, Xxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Xxxx X. Xxxxxxx, Esq.
SECTION 10.02 Severability. If any term or other provision of
------------
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Transactions 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 a mutually acceptable manner in
order that the Transactions be consummated as originally contemplated to the
fullest extent possible.
SECTION 10.03 Entire Agreement; Assignment. This Agreement
----------------------------
constitutes the entire agreement among the parties with respect to the subject
matter hereof and supersedes, except as set forth in Sections 7.04(b) and 7.12,
all prior agreements and undertakings, both written and oral, among the parties,
or any of them, with respect to the subject matter hereof. This Agreement shall
not be assigned (whether pursuant to a merger, by operation of law or
otherwise), except that Parent and Purchaser may assign all or any of their
rights and obligations hereunder to any affiliate of Parent, provided that no
such assignment shall relieve the assigning party of its obligations hereunder
if such assignee does not perform such obligations.
SECTION 10.04 Parties in Interest. 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 Section 7.07 (which is intended to be for
the benefit of the persons covered thereby and may be enforced by such persons).
SECTION 10.05 Specific Performance. The parties hereto agree
--------------------
that irreparable damage would occur in the event any provision of this Agreement
were not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or equity.
SECTION 10.06 Governing Law. This Agreement shall be governed
-------------
by, and construed in accordance with, the laws of the State of Delaware
applicable to contracts executed in and to be performed in that State. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined exclusively in any New York state or federal court sitting
in the Borough of Manhattan of the City of New York. The parties hereto
37
hereby (a) submit to the exclusive jurisdiction of any state or federal court
sitting in the Borough of Manhattan of the City of New York for the purpose of
any Action arising out of or relating to this Agreement brought by any party
hereto, and (b) irrevocably waive, and agree not to assert by way of motion,
defense, or otherwise, in any such Action, any claim that it is not subject
personally to the jurisdiction of the above-named courts, that its property is
exempt or immune from attachment or execution, that the Action is brought in an
inconvenient forum, that the venue of the Action is improper, or that this
Agreement or the Transactions may not be enforced in or by any of the above-
named courts.
SECTION 10.07 Waiver of Jury trail. Each of the parties hereto
--------------------
hereby waives to the fullest extent permitted by applicable law any right it may
have to a trial by jury with respect to any litigation directly or indirectly
arising out of, under or in connection with this Agreement or the Transactions.
Each of the parties hereto (a) certifies that 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 that
foregoing waiver and (b) acknowledges that it and the other hereto have been
induced to enter into this Agreement and the Transactions, as applicable, by,
among other things, the mutual waivers and certifications in this Section 10.07.
SECTION 10.08 Headings. The descriptive headings contained in
--------
this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 10.09 Counterparts. This Agreement may be executed and
------------
delivered (including by facsimile transmission) in one or more counterparts, and
by the different parties hereto in separate counterparts, each of which when
executed shall be deemed to be an original but all of which taken together shall
constitute one and the same agreement.
38
IN WITNESS WHEREOF, Parent, Purchaser and the Company have
caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
SIEMENS CORPORATION
By /s/ Xxxxxxx X. Xxxxx
-------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
By /s/ E. Xxxxxx Xxxxxx
-------------------------
Name: E. Xxxxxx Xxxxxx
Title: Senior Vice President, General
Counsel & Secretary
MEMPHIS ACQUISITION INC.
By /s/ Xxxxxxxxx Xxxxxx
--------------------------
Name: Xxxxxxxxx Xxxxxx
Title: President
By /s/ Xxxxxxx Xxxxx
--------------------------
Name: Xxxxxxx Xxxxx
Title: Vice President
EFFICIENT NETWORKS, INC.
By /s/ Xxxx X. Xxxxx
--------------------------
Name: Xxxx X. Xxxxx
Title: Chairman of the Board
Annex A
-------
Conditions to the Offer
-----------------------
Notwithstanding any other provision of the Offer, Purchaser shall not
be required to accept for payment any Shares tendered pursuant to the Offer, and
may extend, terminate or amend the Offer, if (i) immediately prior to the
expiration of the Offer, the Minimum Condition shall not have been satisfied,
(ii) any applicable waiting period under the HSR Act, the German Competition Act
or any other applicable foreign antitrust law shall not have expired or been
terminated prior to the expiration of the Offer or (iii) at any time on or after
the date of this Agreement and prior to the expiration of the Offer, any of the
following conditions shall exist:
(a) there shall have been instituted or be pending any Action by
any Governmental Authority (i) challenging or seeking to make illegal,
materially delay, or otherwise, directly or indirectly, restrain or
prohibit or make materially more costly, the making of the Offer, the
acceptance for payment of any Shares by Parent, Purchaser or any other
affiliate of Parent, or the consummation of any other Transaction, or
seeking to obtain damages in connection with any Transaction; (ii) seeking
to prohibit or limit the ownership or operation by the Company, Parent or
any of their subsidiaries of all or any of the business or assets of the
Company, Parent or any of their subsidiaries or to compel the Company,
Parent or any of their subsidiaries, as a result of the Transactions, to
dispose of or to hold separate all or any portion of the business or assets
of the Company, Parent or any of their subsidiaries; (iii) seeking to
impose or confirm any limitation on the ability of Parent, Purchaser or any
other affiliate of Parent to exercise effectively full rights of ownership
of any Shares, including, without limitation, the right to vote any Shares
acquired by Purchaser pursuant to the Offer or otherwise on all matters
properly presented to the Company's stockholders, including, without
limitation, the approval and adoption of this Agreement and the
Transactions; or (iv) seeking to require divestiture by Parent, Purchaser
or any other affiliate of Parent of any Shares;
(b) any Governmental Authority or court of competent jurisdiction
shall have issued an order, decree, injunction or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibiting or
preventing the Transactions and such order, decree, injunction, ruling or
other action shall have become final and non-appealable;
(c) there shall have been any statute, rule, regulation,
legislation or interpretation enacted, promulgated, amended, issued or
deemed applicable to (i) Parent, the Company or any subsidiary or affiliate
of Parent or the Company or (ii) any Transaction, by any United States or
non-United States legislative body or Governmental Authority with
appropriate jurisdiction, other than the routine application of the waiting
period provisions of the HSR Act, the German Competition Act or any other
applicable foreign antitrust law to the Offer or the Merger, that is
reasonably likely to result, directly or indirectly, in any of the
consequences referred to in clauses (i) through (v) of paragraph (a) above;
(d) (i) the Board, or any committee thereof, shall have withdrawn
or modified, in a manner adverse to Parent or Purchaser, the approval or
recommendation of the Offer, the Merger, the Agreement, or approved or
recommended any Acquisition Proposal or any other acquisition of Shares
other than the Offer, the Merger or (ii) the Board, or any committee
thereof, shall have resolved to do any of the foregoing;
(e) (i) any representation or warranty of the Company in the
Agreement that is qualified as to Material Adverse Effect shall not be true
and correct as so qualified or (ii) any representation or warranty that is
not so qualified shall not be true and correct (except where the failure to
be true and correct would not have a Material Adverse Effect), in each case
as if such representation or warranty was made as of such time on or after
the date of this Agreement (except as to any representation or warranty
made as of a specified date);
(f) the Company shall have failed to perform, in any material
respect, any obligation or to comply, in any material respect, with any
agreement or covenant of the Company to be performed or complied with by it
under the Agreement;
(g) the Agreement shall have been terminated in accordance with its
terms; or
(h) Purchaser and the Company shall have agreed that Purchaser
shall terminate the Offer or postpone the acceptance for payment of Shares
thereunder; which, in the reasonable judgment of Purchaser in any such
case, and regardless of the circumstances (including any action or inaction
by Parent or any of its affiliates) giving rise to any such condition,
makes it inadvisable to proceed with such acceptance for payment.
The foregoing conditions are for the sole benefit of Purchaser and
Parent and may be asserted by Purchaser or Parent regardless of the
circumstances giving rise to any such condition or may be waived by Purchaser or
Parent in whole or in part at any time and from time to time in their sole
discretion. The failure by Parent or Purchaser 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.
2
Schedule 3.05
Initial Directors of the Surviving Corporation
Xxxxxx Xxxxx
Xxxx X. Xxxxx
Xxxxxx Xxxx
E. Xxxxxx Xxxxxx
Xxxxxxx Xxxxx
